Securities Disclosure and Financial Advisers  Amendment Bill — First Reading 
Securities Disclosure and Financial Advisers  Amendment Bill — First Reading 
[Volume:652;Page:1547] 
Securities Disclosure and Financial Advisers  Amendment Bill 
First Reading 
Debate resumed. 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 I begin my contribution to the debate on the first reading of the Securities Disclosure and Financial Advisers Amendment Bill by simply noting that I am very pleased it was not introduced under urgency. A number of bills were dealt with under urgency during the first 2 parliamentary weeks this year in order to meet the Government’s—what was it called? 
Moana Mackey 
: The 100 days of action. 
Hon LIANNE DALZIEL 
: Yes the action plan. But I do want to make this point seriously because tabling a bill and giving that 3 days’ time for scrutiny is always a preferable course of action when it can be achieved. Obviously because this bill will be referred to a select committee it was able to be achieved and I am very pleased that it could be done. I think this is particularly the case where we talk about securities law reform because confidence lies at the heart of everything that we do in respect of securities law. Therefore it is very important that we get the framework right when we make changes. I listened very carefully to the Minister of Commerce’s comments and as the chair of the Commerce Committee I will certainly undertake to ensure that full scrutiny is applied to this bill—as indeed I would with any bill. 
That being said Labour generally supports the bill. As the Minister said it is designed to provide for the use and regulation of a simplified disclosure prospectus by stock exchange - listed issuers offering certain debt and equity securities. In that regard it does not reduce the information required to be disclosed. In many respects it merely removes the duplication of information already provided pursuant to continuous disclosure obligations. Although the stock exchange has those obligations around continuous disclosure the information that needs to be provided in a prospectus is essentially provided anyway so this bill removes duplication. I guess that is why the Minister is able to say with reasonable confidence that the bill is designed to remove impediments to capital-raising without undermining investor protection. 
I think the Minister’s point though about why it is so important that close scrutiny is applied to this legislation is important because the substance of this particular reform lies within the Review of Financial Products and Providers and it was to be included in the current review of the Securities Act. I am certainly pleased to see that the Government is proceeding with that. In many respects this bill is simply bringing forward something that would have happened otherwise. 
We have already had a number of bills go through this House that have failed their regulatory impact statement requirements. So I will give praise to this Minister for having an excellent regulatory impact statement even though this brings forward something that has not been fully consulted on yet. I will give him 10 out of 10 for this regulatory impact statement. It will be a relief to Rodney Hide I would imagine to— 
Moana Mackey 
: Finally. 
Hon LIANNE DALZIEL 
:—finally have legislation introduced that meets the requirements of the framework that the previous Government put in place around regulatory impact statements. 
What I like about this regulatory impact statement is that it acknowledges that in fact this issue was part-way through a process of consultation because the Capital Market Development Taskforce had suggested a mechanism for bringing this forward in order to improve access to capital under the current conditions. I think that the way it has been presented in this report and undertaken in this consultation beyond that in a very short time frame has been excellent. I take my hat off to the people involved. 
According to the regulatory impact statement the Ministry of Economic Development consulted with a targeted group of industry experts in order to agree technical details to give proper effect to the policy and worked very closely with the Securities Commission in the development of the policy. Given the role of the commission in terms of oversight that it will pick up as a result of this legislation I think the right people have certainly been chosen to meet and discuss this bill. 
The other thing I will comment on is that officials have notified Australian authorities of the proposals in the context of the Agreement Between the Government of Australia and the Government of New Zealand in relation to Mutual Recognition of Securities Offerings. Again this is a vital piece of making the relationship between Australia and New Zealand work and that is to give advance warning of any changes that we make in our legislative framework. Having been the Minister who signed that agreement with the Australians I am very pleased that that has been picked up and that the notification has been made. I know that the Commerce Committee will want to know what the Australian Government’s response to the proposals in the legislation has been because how that mutual agreement works will be very dependent on the answer that is given. 
The other thing the regulatory impact statement does—and it is an excellent approach one that is required by the process that the previous Government put in place—is to set out the alternative options with option 1 being the status quo. That is not an option if we really do have a desire to bring down the barriers to capital-raising. The fact that the regulatory impact statement starts with the words “The world is currently in the midst of the worst financial crisis for many decades. The most immediate and pressing financial sector issue has been the breakdown in credit markets.” really does get to the nub of the problem. I think it is a little bit better than the Job Summit’s cycle track idea which is probably why it came from the Capital Market Development Taskforce. 
The next option was “listed issuers may offer securities with only an investment statement”. The third option was “listed issuers may use a term sheet for debt offerings”. The preferred option was “to provide for a new prospectus that may be issued by listed issuers of designated debt or equity securities who are subject to continuous disclosure requirements and to amend the provisions for exemptions from standard disclosure requirements.” 
As I say the regulatory impact statement does exactly what the regulatory impact process was designed to achieve. It alerts people to all of the options that are available. It critiques each one of them. Then it sets out a preferred path which is based on the information that has been collated from the consultation process. It really is a very good process. So I say 10 out of 10 to the Government for its regulatory impact statement. Given that it got nought out of 10 for all of its other bills this is a marked improvement and I hope to see all of the Government’s subsequent legislation meeting the very high standard that the Hon Simon Power has set for this House. The Labour Opposition will support the referral of the Securities Disclosure and Financial Advisers Amendment Bill to the Commerce Committee. 
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
: 
 I rise to support the Securities Disclosure and Financial Advisers Amendment Bill as well. I am glad that I follow the previous Minister of Commerce and I acknowledge the role she has played in this process. 
I will give a bit of background. We have heard that this bill addresses some of the issues around the global downturn. In my experience in my electorate I know from talking to a number of both large and small businesses—corporates—that one of the big issues facing our business community and workers in our country is the global credit crisis and the problem of gaining access to funds. This bill addresses that by providing for the removal of some of the impediments to capital-raising while acknowledging that the timely disclosure of relevant information to potential and actual investors is still critical to the process of investing in companies. 
Part 1 talks about how we can simplify the prospectuses that are sent out to investors in the form of an investment statement. Having worked on prospectuses myself—from the legal perspective of compiling prospectuses and offer documents for the raising of capital both debt and equity—I do understand how this bill will streamline some of the duplication of the information that is disclosed by companies. One thing that we should be careful to ensure is that investors still get the right type of information on which to make informed and sensible decisions. This bill does not lighten the load on the disclosure of that information but it does try to eliminate some of the duplication that comes out of some of the disclosure documents. 
I am glad that the—she has gone now—previous Minister of Commerce Lianne Dalziel referred to the regulatory impact statement in the explanatory note of the bill. That states quite clearly that the preferred option for some of the amendments relating to listed issuers is to streamline the disclosure requirements and to amend the existing definitions for exemptions from standard disclosure requirements. One of the examples that has been put forward is in terms of the persons who are subject to such requirements. One of them concerns those persons who have made investments in the last 12 months. I think that is a positive and I think the Minister has done very well. 
The issue really is about building up the confidence and trust of our investors. We have seen both here and across the world that the equity markets are really suffering. Last night the Dow Jones plummeted to an all-time low since the US presidential election. I think what we need from our legislators are a sense of purpose and an understanding that a lot of our corporates are suffering because credit is not readily available. I think the Government has done a great job in its first 100 days. Some people would disagree with that but we have tried in a number of different ways and in a number of different areas to make business easier to transact. That has been done through the Resource Management Act reforms through the recently enacted legislation that has put in place a 90-day probationary period of employment and through passing bills like this one which is business-friendly while still acknowledging the roles that workers and businesses play in our communities. 
I support this bill. It recognises that we are in a predicament that we have not been in for a number of years. It is about helping our businesses to raise the requisite capital—not only the working capital that is needed for the day-to-day operations of our corporates but also the type of capital that businesses raise to build plants and machinery and to hire workers. The issue is about growth it is about productivity and it is about jobs. The recent Job Summit which was a success last Friday— 
Nathan Guy 
: Hugely successful. 
PESETA SAM LOTU-IIGA 
: Hugely successful as the chief Government whip would say. It was hugely successful because we brought together a number of different parties from across the political spectrum a number of different parties from across the community the unions business leaders and various other community leaders. It was not dominated by politicians. We need to understand that the job will not be easy. If we are to get out of this recession the right people need to be in place the right Government has to be in place and the right type of legislation has to be in place. That is what this bill is about. It is about protecting investors who need to be protected from corporates—and there are some out there—that are shall we say unsavoury and not very trustworthy. 
But this bill is also about allowing our businesses to grow and develop. Many of the changes we see in the bill are about avoiding double-ups and reducing compliance costs. Businesses are totally run down by compliance costs in terms of overburdening taxes and also the reporting requirements that have been put in place by Governments. We need to free businesses up a little and allow them to do what they do best which is to deliver products and services to New Zealanders and to deliver products and services to foreign countries so that we can reduce an overburdening balance of payments deficit. 
I speak in favour of this bill not because it will save us from the economic recession—it is a small step. The previous Minister of Commerce mentioned that the Securities Act needs to be looked at reviewed and reformed and we will give careful consideration not just here in the House but also in the select committee to producing the type of legislation that promotes growth and businesses and also promotes the interests of our workers who need their jobs to be protected. 
In summary I speak in favour of this bill. I think it is a good bill and I think it will be passed with the generous support of our friends across the House. The bill does need to go through the select committee process where we will refine certain clauses. But the bill is a good start. We have made a good start to our administration and we will move forward with certain legislation. 
CHARLES CHAUVEL (Labour) 
: 
 I rise to speak in support of the Securities Disclosure and Financial Advisers Amendment Bill. I do not intend to repeat at length the reasons why Labour will be supporting this legislation. They have been very ably set out by the previous Minister of Commerce Lianne Dalziel. 
Nathan Guy 
: You support everything nowadays. 
CHARLES CHAUVEL 
: It is great to be able to support legislation that we began and that the National Government has wisely on this occasion adopted. The main proposal in the legislation is to provide for the use and regulation of simplified disclosure prospectuses by stock exchange - listed issuers that offer certain debt and security instruments. As I understand the proposal it does not reduce the information that is already required to be disclosed. Rather it removes duplication requirements for information that is already provided under the continuous disclosure regime that is now in place in our markets. It will also remove unnecessary impediments to capital raising while hopefully—if the balance in the legislation is struck right as we believe it is—not undermining investor protection which certainly we on this side of the House think is a very important part of the armoury that is required in this area. 
The proposal that is set out in the legislation comes from a set of recommendations made in an interim report issued by the Capital Market Development Taskforce at the end of last year in response to the global financial situation. I would like to pay tribute to the task force for the work it did and also to Lianne Dalziel for her foresight back in July last year in setting up the Capital Market Development Taskforce. It was clearly the right thing to do given the work that Labour had done to build up New Zealand’s capital markets for example by encouraging—at that stage—700000 people to join KiwiSaver our business tax package and the changes to the portfolio investment entity regime. All of these played a real and vital role in strengthening capital markets in New Zealand and the work of Rob Cameron and his team on the development task force particularly judging by the interim report in November 2008 took all those steps further by suggesting that a more sensible regulatory regime be put in place. My colleague Stuart Nash is going to talk at further length about the desirability of strong capital markets in New Zealand and about the credibility of the New Zealand Exchange as a result of the regulatory and other reforms put in place over the last 8 years by the Labour Government. 
The substance of the capital market development task force interim report proposal was consulted on as part of the review of financial products and providers. It was intended as I think the Minister said to be included in the current review of the Securities Act. But in that regard clearly the bill just brings forward something that one would expect to be introduced in any event later this year. 
I see that the bill also tidies up rules for exempt persons and people deemed by the Act not to be members of the public for the purposes of disclosure. Clearly that is a sensible technical amendment that ought to be supported. Anything that removes duplicating requirements in this area is to be supported. There are also minor amendments to the Financial Advisers Act—legislation that came before the Finance and Expenditure Committee in the last Parliament when I was chair of that committee and I hope I can say that it is very good legislation. 
It is useful to reflect on the much better regime that now exists in New Zealand in this area as a result of that legislation to which this bill will make a technical amendment. That is also as a result of the Financial Service Providers (Registration and Dispute Resolution) Act which for the first time has put in place a registration requirement for non-bank financial providers to tidy up what was at one stage a real Wild West situation something that really embarrassed New Zealand as far as our international reputation was concerned. 
The other important measure that was a counterpart to the Financial Advisers Act and also to the Financial Service Providers (Registration and Dispute Resolution) Act was the Reserve Bank Amendment Act—legislation that also came before the Finance and Expenditure Committee last year and that had cross-party support. The Reserve Bank Amendment Act in respect of non-bank deposit takers put in place for the first time a proper prudential supervision regime so that people who put their money in credit unions or in other non-bank entities that take money from the public can have the confidence that there is proper oversight of those entities proper oversight of their governance and proper oversight of the deposit levels they must have so that people can have real confidence that if as in many cases they are putting their life-savings with these institutions they are doing so within the framework put in place by the last Government—a much more responsible regime as far as the whole prudential oversight of the market is concerned. This legislation continues in that vein and helps to tidy up this general area of the law. 
I would like to observe that there is probably one area of the law that still needs some tidying up and that is the area of pay day lenders or loan sharks. I have said that the bill before the House will do some good tidying up in its respective area and it will also make the technical amendment that I have mentioned to the Financial Advisers Act. But the one thing that the suite of measures that I have also spoken of—the Financial Advisers Act the Financial Service Providers (Registration and Dispute Resolution) Act and the Reserve Bank Amendment Act—does not do is to regulate the activities of these pay day lenders many of whom are frankly loan sharks. Their activities are going to become of even greater concern as we head into the sort of economic climate described by Lianne Dalziel and by the previous speaker—a very difficult climate particularly for the less well-off in society. 
When those people coming into Wellington City see a sign off the Vivian Street motorway on-ramp that says: “Loans available at only 8 percent” and do not see the “per week” addendum at the bottom of the sign they probably do not realise that “only” 8 percent per week amounts to 5370 percent per annum. That is what so-called “only 8 percent” interest a week means on the sign that people see. This Parliament is one of the few in the Western World that has not yet done anything to regulate the outrageous interest rates charged by pay day lenders in suburbs like Porirua Newtown and in South Auckland. We need to rise to that challenge. 
So I am delighted to use the concluding moments of my speech today to foreshadow that I will at the next opportunity put forward in the ballot a Credit Reforms (Responsible Lending) Bill. One of the things that that legislation will do is allow for the regulation of those usurious rates of interest so that our fellow citizens will not be facing 5370 percent per annum interest charges just because they need a loan to tide them over from pay day to pay day. This legislation that I propose will also amend the Credit (Repossession) Act so that if a lender does not make a proper inquiry about the borrower’s ability to repay then in the event of a default the lender will be required to repay only the principal amount rather than an outrageous set of charges in interest. Once we get the legislation that we are now speaking about through the House it will go through along with that suite of measures that I have mentioned—the Financial Service Providers (Registration and Dispute Resolution) Act the Financial Advisers Act and the Reserve Bank Amendment Act—and we will then be able to hold our heads high and say we do not have a Wild West financial system in this country. 
KEVIN HAGUE (Green) 
: 
 The Green Party will oppose the Securities Disclosure and Financial Advisers Amendment Bill. I spoke earlier in this House in support of the Government’s assistance package for small business but at the same time I expressed frustration at the lack of coherence in the Government’s response to the overall financial crisis. At the same time that small business was being lent a helping hand in the form of relief from taxation and over-regulation an extra obstacle was being put in its place in the form of the withdrawal of the research and development tax credit. I said that the response to the crisis from this Government and indeed from other Governments around the world would in fact stoke the fires that will lead to the next larger financial crisis. An economy based on the paradigm of continuous economic growth through consumerism irrespective of the environmental and resource constraints within which it must operate is doomed to failure. 
It is typical of such paradigm failure that Governments also fail to make important distinctions. Green Parties around the world have been campaigning for the use of more useful indicators of the health of an economy than the GDP. GDP makes no distinction at all between economic activities that are helpful and productive and those that are damaging and destructive. Both count equally towards GDP. It is like using both wellness and sickness indistinguishably to measure someone’s health. Yet that is what our Government does. Any kind of economic activity and any kinds of goods that consumers are persuaded to buy are equally encouraged. 
We see the same failure to make a critical distinction in relation to jobs. In the House the Green Party has asked how many of the jobs the Government hopes to create from its infrastructure package would be green-collar jobs—in other words jobs that would form part of a sustainable economy. The Prime Minister’s response to that indicated that the Government neither knew nor cared; a job is a job as far as it is concerned. There is not time in this speech to really unpack the idea that anything that one person is prepared to pay another to do is of equal value to something else but only a moment’s thought should be sufficient to see that the question goes to the heart of what kind of society we wish to live in let alone what kind of natural environment we want to leave for future generations. It seems extraordinary that the Government does not care about that. 
Once again in this bill we see the Government’s failure to make appropriate value judgments and recognise that a more sophisticated response is needed. Not all deregulation is created equal. Some regulations are more trouble than they are worth and by all means let us get rid of them. That is why we supported the Government’s small-business package. But other regulations serve a useful purpose or as in this case provide an important safeguard for New Zealanders. 
The speculative economy perches vulture-like bloated and flatulent upon the shoulders of the real economy weighing it down. It is failure in that speculative economy that now threatens the real economy in which people actually make products or services that others really need. The succession of burst bubbles in the speculative economy has been fuelled by greed. But the reality is that productive businesses will need capital particularly as it happens because of the withdrawal of Government assistance for research and development. The goal of the bill to remove unnecessary impediments to raising capital is therefore a sound one. 
But given the dynamics that led to the credit crunch we have to wonder whether the Government has been seeking guidance from the Red Queen in  
Alice in Wonderland 
 in bringing this bill forward. Requiring less disclosure to potential investors and providing fewer safeguards are the absolute reverse of what is required. It is important to recognise that giving good businesses access to capital requires a rebuilding of investor confidence. That will not be achieved by providing less information; rather that will require greater transparency greater Government scrutiny and increased regulation. Unsurprisingly that is what most Governments around the world have been doing. I guess we should like the fact that our Government is prepared to think for itself but the outcome in this case is bizarre. 
I want to say a word or two about those special investors the sophisticated habitual investors who are putting in $500000 or more for whom even less disclosure is proposed. My mother used to talk about some people having more money than sense. Perhaps in this case it would be more correct to talk about having had more money than sense. If the unmitigated and still ongoing series of corporate failures arguably starting with Enron and the credit crunch have taught us anything it must surely be that the so-called experts show exactly the same lapses into gullibility and greed that Roosevelt railed against in launching the New Deal. For example how about all the good and the great the experts who have lost their shirts investing in Madoff’s transparent Ponzi scheme? That is just like the aeroplane game and numerous other pyramid-style investment and moneymaking schemes that plagued New Zealand in days gone by. 
The lack of expertise by so-called experts was also demonstrated in the audit and accountability mechanisms in many of those cases and indeed at international level also. As recently as 2006 the International Monetary Fund was pointing to Iceland as one of the absolute stars of the world economy. The most recent number I heard was that at the point of collapse of Iceland’s economy its financial institutions owed six times the entire economic product of the country. 
The point is that the decisions made by those special investors have been proven again and again in recent times to be ill-judged and to have in very large measure shaped the crisis we are now experiencing. Their bad decisions affect us all profoundly. More disclosure and regulation is required not less. Clearly in Iceland’s case a lot changed between 2006 and the present day. Actually the same applies here and with all due respect to the consultation work done by the Ministry of Economic Development which is referred to in the explanatory note of the bill consultation undertaken on these matters in 2006 is almost certainly completely worthless. It seems extraordinary that a Government that was paying attention to international events would apparently be unaware of that. I am drawn to an irony in the fact that the Minister says this bill has been drafted in a hurry in response to the crisis but the Labour members instead talk about the Government having inherited Labour’s bill. I suspect that the latter explanation could be the real one. 
Right now the priority for consultation on how to improve the sector is consultation with the many thousands of New Zealanders who have been victims of the numerous collapses of apparently sound investment and finance companies. When I first started drafting this speech it appeared that there had been 26 of those collapses. More recently I have been informed that the number had grown by yesterday to 45—and counting. It is good that the bill is going to a select committee and I praise the Minister for that. If the bill passes its first reading then I urge the select committee to seek out the views of those investors who have lost their money and if it does not then the Green Party will. 
Ever since the economic crisis first struck the Green Party has been speaking about the need for a Green New Deal: a raft of measures intended to address the crises in the environment and in energy concurrently with the financial crisis moving our economy on to a long-term sustainable basis. To pretend that it is possible to do otherwise is ultimately futile and will condemn New Zealanders to more and more severe consequences for our way of life including bigger and worse financial meltdowns while mortgaging our kids’ future. The Green Party has for example supported the call for a new Bretton Woods agreement. Our central bank needs to be more proactive in supervising our own financial industry. 
We also support the very sensible recommendations of the bank workers’ union FinSec for the reform of the finance industry including the establishment of an independent financial consumer agency establishing a New Zealand code of lending practice establishing a code of responsibility for the finance sector and strengthening the role of the Reserve Bank in licensing and supervising financial institutions’ lending practices. In many cases the interaction between an institution and a person who is borrowing money is similar to that between an institution and a person who is investing. Both transactions require full transparency full disclosure understanding consent and ethical behaviour from both parties with appropriate independent oversight and enforcement. 
The Green Party will be voting against the first reading of the bill. It is an artefact of the past left behind by changed circumstances and it needs to be consigned to the dustbin of history save for the minor amendments to the Financial Advisers Act. The Green Party wants to see investor confidence rebuilt because that is the only way that we will reduce the barriers to raising capital for good sustainable businesses. That will be accomplished only through greater disclosure not less and by a more active role being taken by the Government. 
JOHN BOSCAWEN (ACT) 
: 
 I rise on behalf of the ACT Party to support the first reading of the Securities Disclosure and Financial Advisers Amendment Bill. Unlike the Green Party we will be supporting this bill going to the select committee. However I agree with my colleague Kevin Hague that this country is facing a total failure of investor confidence and that is one of the biggest challenges that we have to rebuild. The Minister said that this bill will be broken into two parts when we reach the Committee of the whole House. The first part will be the Securities Disclosure Amendment Bill and the second part will be the Financial Advisers Amendment Bill. The regulatory impact statement which the Hon Lianne Dalziel referred to earlier states that the world is currently in the midst of the worst financial crisis for many decades. The most important and pressing financial sector issue has been the breakdown in credit markets. This bill seeks to go some way towards building up that confidence in the wholesale investor markets with larger institutions dealing with publicly listed issuers. Although I acknowledge the lack of confidence that Mr Hague referred to our party will be supporting this bill. We think the bill is very important because it takes some small steps towards minimising the cost of regulation and making it easier for companies to raise finance in this current market. 
The part that will become the Securities Disclosure Amendment Bill seeks to make it easier for listed issuers to raise either equity capital or debt capital when it comes to raising money from if you like habitual investors or those investors who have already committed over $500000 to the company in the last 12 months. What it enables the issuer to do is to issue a simplified disclosure prospectus so rather than having to repeat information that is already in the public domain that information is assumed to be there. We do not believe that the concerns the Green Party has in that regard are real and we think this legislation will go some way to minimising the cost of raising capital. 
The part that will become the Financial Advisers Amendment Bill makes a number of technical amendments to the Financial Advisers Act that was passed last year. I thought it was very interesting that in question time earlier this afternoon the Labour Opposition continually referred to the job losses at Sealord Irwin Industrial Tools and GE Money. Although I acknowledge that those potential job losses are very real I think that one of the biggest issues this country has faced has been the absolute devastation of many thousands of families mainly retired families who have invested money over the last 4 or 5 years in finance companies. As Mr Hague says the losses now total 46. That I think has been a disgrace on the previous administration. It concerns me greatly that those losses in some part are still continuing. 
I think what we have to do is address the lack of confidence because we have seen a number of straight outright rorts. Some of the companies concerned are being brought to justice in the courts. I will give an example. What some of the finance companies have done over recent years is to simply create artificial profits. They have lent large sums of money to their client customers they have done it at a market interest rate—for finance companies below the going rate—but they have loaded the loan with large upfront fees. For example a finance company lending a major property development $50 million might charge an upfront fee of $10 million and that immediately allows the finance company to bring that $10 million charge to profit in the current year. It has not received that money in cash but it can book the money as profit and the finance company charges it or capitalises that sum to the loan. 
What then happens is that new money comes in the door of a finance company as cash and because the company is then solvent and has that cash it is able to pay that money out in dividends to its shareholders. What we have seen in the last 2 or 3 years is the collapse of a large number of finance companies which can be put down to one thing and one thing only and that is straight-out fraud. We need to bring the people who perpetrated and initiated those schemes to justice. 
I notice also that Mr Hague referred to the fact that the Government needs to seek out the people who have lost money. He says that if the Government does not do so the Green Party will. I am also very conscious of that and I actually met some investors yesterday. I met Ron Jensen and his wife Kathleen Jensen who invested $200000 supposedly in an apartment to be built by Blue Chip. Mr Jensen was told by the solicitor acting for him that the solicitor could look out of the window and see the building under construction that it was in strong shape and that it was a good and sturdy building. That building does not even exist; it is a car-park. That gentleman Mr Jensen is in his mid-70s and he faces losing the sum of $200000. 
I met Owen and Margaret Dawe yesterday afternoon in Auckland. Their losses could exceed $500000. They were sold an apartment—admittedly their apartment existed—but they were sold two apartments with a guaranteed income. A number of representations were made to them and those representations were false and fraudulent. They have evidence that the document they completed for their application was falsified after they had signed it. 
The measures contained in this bill go some way to making it easier for our listed companies to raise money in the current environment but the biggest challenge we face is restoring the confidence of the smaller investors. Those are people who have worked their entire lives are in their 60s and 70s and have invested money with organisations they deemed to be safe based on representations that have been proved to be fraudulent. What this Government needs to do if it is concerned about the people of this country is to look into those schemes investigate them and bring appropriate legal action. It also needs to put a moratorium on attempts by finance companies to put properties through mortgagee sales particularly when it involves an issue of fraud. Until those cases are brought to court and determined the ACT Party believes there needs to be some sort of moratorium. 
Finally I would like to comment on one of the issues that the last Government introduced—the Government guarantee of finance companies. Mr Hague referred to the fact that up until yesterday 45 finance companies had collapsed and now there are 46. There is something very special about that 46th company which is called Mascot Finance in that it has collapsed with the benefit of a Government guarantee. What is surprising about that Government guarantee is that Mascot Finance has not raised one single dollar since that guarantee was put in place. That guarantee will guarantee the former investors—and good on them because they may well have been duped by fraud. But no charge has been made to that finance company so essentially what we have is the Government subsidising private companies which enables private companies to offer a guarantee at interest rates that are now well and truly above the market rate. 
Yesterday we saw the collapse of Mascot Finance. Many millions of dollars will need to be reimbursed at cost to the taxpayer and the taxpayer will not get an appropriate return on those funds—on that guarantee. I do not deny that there is a need for a guarantee to shore up confidence but it should be done at a commensurate return to the taxpayer. Yesterday we saw the first loss and I have no doubt there will be many more. We need to ensure that we are not subsidising private business. Thank you Mr Assistant Speaker. 
RAHUI KATENE (Maori Party—Te Tai Tonga) 
: 
 On the eve of the first reading of the Securities Disclosure and Financial Advisers Amendment Bill the New Zealand dollar plunged to a 6-year low. Anyone trading on our dollar yesterday would have earned a meagre US49c per New Zealand dollar. Suddenly the precarious state of the global financial economy is hitting home in dollars and cents. Then by the end of yesterday came the other shocker: Sealord was planning to lay off 180 workers with further wage cuts imminent. That announcement has particular meaning for our whanau. Many of my nieces nephews and cousins have been working for Sealord for decades. Indeed Sealord provided me with my first pay packet many years ago. We then learnt overnight that not only are there worst-laid plans about discarding workers many of whom are Maori but also there are rumours afoot of a possible $70-a-week cut in wages. 
The signs certainly indicate that we are facing the worst international financial crisis for many years. Desperate situations can strike fear in the hearts of even confident investors who will be nervous that Government interventions may undermine their interests. In this context the Government has moved slowly surely and soundly. While the dollar fell in one direction the Government moved in another yesterday placing Mascot Finance in receivership. It has become the first finance company to benefit from the Government’s retail deposit guarantee. With that move depositors can expect to enjoy a certain confidence that even if an approved financial institution fails their money will be secure. 
But as any reputable financial adviser will know the change needed to address the current credit crisis will not occur from one initiative alone. And so enters the Securities Disclosure and Financial Advisers Amendment Bill. The decision to remove unnecessary impediments to the raising of capital is not a new idea by any means. But as they say if an idea is worth having once it is worth having twice. The bill is a response to a recommendation from the Capital Market Development Taskforce—launched last July—to develop capital markets for New Zealand. The task force which includes Ngati Porou business leader and the chair of the Business Roundtable Rob McLeod had been meeting along with the Ministry of Economic Development Treasury the Reserve Bank and the Inland Revenue Department to find ways to improve businesses’ access to capital. The 10 representatives of the private sector in the task force along with Government officials have been working to develop a simplified disclosure prospectus. But it has not just been a job for the boys or a report written by and for the chosen 10 experts; the bill also reflects recommendations made by the New Zealand Exchange. Furthermore having the Cabinet paper and various related documents available for download from the Ministry of Economic Development website means that the concepts are virtually open to receive the broadest public support. That is how it should be. 
The interest of all parties is about the clarity of the arrangement. The bill seeks to ensure that the rules work better that information is efficient and duplication avoided and that the disclosure documents are simplified. Disclosure statements must be kept up to date and must not be deceptive misleading or confusing. The ultimate goal is that the amendments set out in this bill provide greater certainty to businesses wanting to raise capital in today’s troubled markets. Part 1 makes the simplicity explicit: instead of an investment statement investors will be sent a simplified disclosure prospectus. Before investors are asked or encouraged to subscribe potential investors will be given time to consider all the necessary information. 
The Securities Disclosure and Financial Advisers Amendment Bill is a result of the Government’s decision to act boldly. It ensures that all relevant information is available to prospective investors while at the same time ensuring that any unnecessary barriers are removed. The bill implements ways to improve businesses’ access to capital and reduce the costs of raising capital. It is about making things easier streamlining the raising of capital and making things happen for listed issuers. Instead of duplicating the information faced by many businesses listed on the stock exchange when they make a securities offer there will now be a simpler clearer process. 
We have to be aware however that no matter how successful this bill is in making it easier for all companies—listed and unlisted—to raise capital there are still huge problems with the assumption that exponential growth is an ideal we all want to sign up to. No one can ignore the fact that the global financial system is on the cusp of ultimate failure. The recklessness of some banks in squandering depositors’ funds and the drowning of a market that was already flooded is simply not sustainable on a finite planet. Simply printing more money or assuming that the stock exchange is the all-important vehicle for creating wealth will only exacerbate the problem. Theoretically we may end up with a lot of money and no resources. 
The New Zealand Exchange chief executive Mark Weldon told Maori who were gathered at the Maori economic workshop that the economic crisis posed threats to Maori especially those in low-skilled occupations such as construction. The enormity of this issue must not be trivialised. We are at a turning point where not only must we tackle inflation raise capital and find ways to support the productive sector but also we must ask searching questions about the very nature of the economy and the society we are producing. Central in this must be the question of how well the living standards of New Zealanders are being taken into account. This bill is but one of many strategies that must be taken into account in order to lift living standards for New Zealanders. The Maori Party will support it at the first reading to enable the doors to be opened and new ideas to come in. Thank you. 
JO GOODHEW (National—Rangitata) 
: 
 It is my pleasure to speak today on the first reading of the Securities Disclosure and Financial Advisers Amendment Bill. The bill is part of the National Government’s response to the current economic crisis. I have been very interested to hear previous speakers all traversing parts of the economy at the moment and talking about how they believe this Government should be addressing the current economic crisis. The previous speakers have spoken from their own experience of what is important to the people they know and the businesses they understand. This bill is typical of a National Government that is determined to look at all ways that we can reduce unnecessary impediments within the business world. Not for many decades has this been so important. 
It is probably a good idea to look back at how the problem was identified that necessitated this bill and others as well. In doing so I acknowledge the Capital Market Development Taskforce which was established back in July 2008. It was to produce a plan to develop New Zealand’s capital market and it released a report in response to the financial crisis. It focused primarily on increasing the availability of capital for New Zealand firms and reducing the costs of raising capital. I acknowledge the report which was released in November 2008 and the fact the task force was set up under the previous Labour Government. This bill is part of a process where we are responding to the current economic crisis. 
Today I would like to focus on the aims of the bill as well as more specifically focusing on National’s wider commitments to New Zealand and to New Zealand businesses. The overarching aim of the bill is as I have said to free up available capital for business and ultimately to help business to do business. The Securities Disclosure and Financial Advisers Amendment Bill responds to the current international crisis by removing the unnecessary impediments to capital raising while ensuring at the same time timely disclosure of relevant information to prospective investors. We all know from our own territory within New Zealand where we are the representatives of our local people how nervous New Zealanders are and how nervous businesses are right now. This bill will help to reduce compliance costs and it will help businesses through tough economic times. 
The bill principally provides for the use and regulation of a simplified disclosure prospectus. The new type of prospectus will in connection with regulations that will be made under existing regulation-making powers enable stock exchange - listed issuers to offer certain debt and equity securities but without the need to duplicate information that has already been publicly disclosed under their continuous disclosure obligations. I want to reflect on a couple of words within that description. We actually need to make sure that if there is duplication of information within our business environment we get rid of that. That is just one more of those compliance costs that New Zealand businesses have asked us to look at to make the environment they are working in more simplified and more user-friendly. 
The bill will amend two separate pieces of legislation—the Securities Act 1978 and the Financial Advisers Act 2008. The bill implements changes to simplify the process and reduce the cost of compliance within existing securities legislation. As I have already said the bill is part of the recommendations made by the Capital Market Development Taskforce. It made other non-legislative recommendations that the office of the Minister of Commerce is currently assessing. It is part of an urgent response to the current global financial crisis and it is part of the Government’s plan to actually come through the economic downturn. We want to enable our businesses to forge ahead when the recovery period is upon us. 
The Financial Advisers Act 2008 amendment corrects an error made by the Office of the Clerk when the Financial Advisers Bill was being prepared for Royal assent. It corrects the phrase: “This Act applies to a financial adviser service performed in New Zealand by a person in New Zealand regardless of where the person performing the financial adviser service is resident . . . or carries on business.” It changes that phrase to read: “This Act applies to a financial adviser service performed in New Zealand regardless of where the person performing the financial adviser service is resident . . .or carries on business.” That is an important little alteration. 
As I have said the purpose of the bill is to free up capital for business and to help businesses to do business. National is committed to cutting red tape for businesses and this bill is just part of the many steps that this Government intends on delivering for business. As other speakers before me have done I want to reflect on what is happening out there for business. National has already addressed some of the issues for small to medium enterprises in a package that was widely supported in the House. We know that those small businesses are vital to the New Zealand economy and we believe that that small and medium enterprise package unveiled last month will help to lighten the load on those small and medium sized businesses. They employ a large number of New Zealanders and employment and maintaining employment is of course uppermost in our minds right now. That package has five parts which included tax changes an expansion of the export credit scheme an extension of the jurisdiction of the disputes tribunal the expansion of business advice services and a prompt-payment requirement for Government agencies. It is only fair that Government agencies should be required to pay promptly as do private agencies. 
The package as a whole was aimed at urgently improving the business environment by reducing the impact of taxes on firms’ cash flows and improving firms’ access to credit thus importantly reducing business compliance costs. The reaction I have had in my own electorate of Rangitata has simply been one of people saying “Wow! This is just absolute common sense. This is what we have been waiting”—in some cases they tell us—“9 long years for.” In fact they are just common-sense measures to help our businesses to do business. 
National’s jobs and growth plan is also about keeping the economy running as strongly as possible easing the sharpest impacts of the recession and preparing our economy for future growth. Unlike the previous Government the National Government believes in creating a business-friendly economy. We are taking a hard look at any possible action from any angle to help business; this bill is part of that package. It is all about businesses staying in business and helping New Zealanders to stay in employment. We have seen action from this Government. Times have changed and again many constituents have said to me how wonderful it is to see action. In the first 100 days we have certainly seen this Government deliver on all 27 actions within our 100-day plan. Again we have had congratulations from many that the Government is getting on with the job of Government and adding to the confidence that New Zealanders can feel. 
New Zealand—and in fact the whole world—is in the midst of the worst financial crisis for decades and no one disputes that. Credit markets are in disarray and confidence is low and unfortunately falling. But this bill and other bills that are part of the measures to address what the task force identified as problems will help create some confidence—confidence of investors and confidence so that credit markets can in fact best meet our business needs. 
The bill will address the simplification of the disclosure prospectus that may be used by listed issuers subject to continuous disclosure requirements. The remedy is to amend the existing definitions for exemptions from standard disclosure requirements. This bill is about removing unnecessary impediments to capital raising while—importantly—making sure there is still timely disclosure of relevant information. That is absolutely essential for prospective investors. 
I look forward to participating as a member of the Commerce Committee as we examine this bill and as we hear submissions on it. I commend this bill to the House as others have done before me. I am pleased there is quite a lot of support for this bill and I look forward to seeing it again at the select committee. 
STUART NASH (Labour) 
: 
 I rise to speak in support of the Securities Disclosure and Financial Advisers Amendment Bill for a number of reasons. First and foremost in these difficult economic times the ability of any company to raise capital in a timely manner is imperative in order to stimulate economic development and advance measures that will facilitate employment export revenue business growth and quite possibly business survival. 
Current securities legislation is in place to ensure that all who invest in New Zealand’s capital markets can invest their hard-earned money with confidence in the knowledge that any risk around negligence incompetence and—worse still—unlawful or misleading information is mitigated. Registered prospectuses are a very important part of the capital fundraising process. Not only do they allow the company to ensure that its business planning and financial analysis is sound robust and correct but they provide a legal document that allows any potential investor to fully investigate and undertake an analysis of any offering in a prudent and thoughtful way. 
As the Minister said the provision of relevant information in a timely manner is imperative. I would not in any way support any motion to do away with this investment tool. However in certain circumstances I fully support the recommendation of the Capital Market Development Taskforce—set up by the previous Labour Government with a mandate to identify key constraints and key opportunities for the development of the New Zealand financial system—to identify and debate options to improve the performance of New Zealand’s financial system and to develop a blueprint for the development of New Zealand’s financial system. That is very very important. 
I support any measure that provides security of process to the investing public and that protects New Zealand’s reputation as a safe place to invest whilst also ensuring that companies that seek to raise capital are still subject to the legal rigour and regulatory requirements needed to ensure a robust financial system and robust capital markets. New Zealand needs to be very sure that its regulations governing public and private capital market activity meet not only the international standards expected of New Zealand’s investors but also the criteria of global investors. 
Our stock exchange once had a reputation of being run by cowboys from the Wild West and that was alluded to by Mr Charles Chauvel. I say that having spoken to senior investment strategists and finance people who often travelled offshore to raise capital for New Zealand companies listed on the New Zealand stock exchange. Their anecdotes paint a picture of New Zealand as a place the vast majority of international investors would not touch with a bargepole. I am very pleased to report that now under the direction of the current chief executive and as a result of the regulations and legal environment created by the previous Labour Government our stock exchange has achieved an international reputation for transparency and good governance. We must ensure that that transparency good governance and robustness remain in place if we are to have any chance of developing our capital market—which at this point I think is acknowledged by all as being underdeveloped. 
I also support this bill because I understand that the ability to raise capital through traditional financial institutions like banks has suddenly become extremely difficult in the current economic climate. This situation is not likely to change in the short to medium term as the so-called credit crunch continues to limit the amount of capital available for institutional financing. I also understand that this bill may ensure the survival of certain companies when under current legislation that might not have been the case. Companies therefore do need another avenue or at least a simplified process to raise capital in a timely manner. The simplifying of the prospectus process is therefore welcome at a time when regulation must work to ease the regulatory burden—whilst maintaining the very important transparency we have all talked about—upon the business sector. 
Cost-effective access to capital is essential and important. There are investors who are feeling a little bit burnt under the current environment and we have talked about 43 finance companies that have gone under so I am encouraged that this bill arises out of extensive collaboration with those from both sides of the fence—investors even bankers company representatives and companies that are required to raise capital. I hope further recommendations in the report tabled by the Capital Market Development Taskforce set up by the last Labour Government will appear before this House in an effort to continue to stimulate the investment environment and ease the capital fundraising process thereby removing any real barrier to economic and business growth. 
In conclusion I pass on my congratulations to a previous speaker and former Minister of Commerce my colleague the Hon Lianne Dalziel for without her foresight effort and energy we would not be here debating this excellent legislation. Just to close I would also like to show my support for my colleague Charles Chauvel’s comments on loan sharks. They are truly social parasites in my humble opinion. Mr Chauvel’s member’s bill will be a welcome addition to the continual tidying up and timely revision of the mess that is this insidious industry. Thank you. 
KATRINA SHANKS (National) 
: 
 It is my pleasure to stand here today and talk on the Securities Disclosure and Financial Advisers Amendment Bill. This bill has been needed for quite some time and particularly in the current environment when credit is very hard to get globally and in New Zealand. It is important that this bill comes into place now as it implements changes to simplify the process and reduce the cost of complying with existing securities legislation. 
This bill is based on the recommendations made by the Capital Market Development Taskforce. This task force produced a report at the end of last year and I will quote a couple of pieces of the report: “In large part the impact of the financial crisis on firms and households will depend on how we respond. … Ensuring that capital markets remain well functioning is an important part of that package. … The recommendations set out in Section II of this report concentrate on easing barriers to firms raising capital without undermining investor protection.” 
The last part I will read states: “In this case much of the material in a prospectus is costly duplication and a simpler offer document would contain the relevant information potential investors need without undermining their protections. Some of these proposals draw on practice in Australia so are not out of line with settings in other countries. 
The second principle is that in a number of cases the existing exemptions under which firms are able to issue securities without offer documents can be simplified and clarified. … Given the importance of ensuring that firms can access capital as efficiently as possible in the current economic environment we encourage the Government to consider implementing these recommendations by March 2009 where possible.” 
I found it very interesting when Charles Chauvel stated earlier that under a Labour-led Government this legislation would eventually have come into play near the end of this year anyway. We have to move quickly in the environment we are in if we are serious about getting our economy moving forward and about allowing capital and credit to be freed up in New Zealand. To have legislation like this coming in at the end of this year would not be timely enough. The quick introduction of this legislation shows how focused John Key is on delivering an environment for New Zealand where this country can prosper move forward and not be disadvantaged by red tape and bureaucracy. 
Lianne Dalziel gave 10 out of 10 to the Minister sitting in front of me Simon Power in terms of how good this legislation is. I stand here proudly as a National member of Parliament in support of this legislation at its first reading before it goes to the Commerce Committee. 
We have heard many speakers today talk about many things. We have heard them talk about finance companies loan sharks financial advisers and the securities sector. It was all interesting but the focus of the legislation is not on loan sharks; it is on how we can cut red tape and bureaucracy. What does the bill do? It reduces compliance costs to help New Zealand businesses focus on business rather than on reporting. It is absolutely important that we allow businesses to get on with business instead of having to file reports or prospectuses that are duplicating what has already been done. 
This bill is not about taking away information from investors or hiding things from them; it is about making sure that investors get what they need from a prospectus that they can clearly understand—in simple English. Where a securities company has more than one prospectus it does not have to repeat information over and over again. Exemptions are in place in this legislation as well. 
The provisions in the bill cover both stock market - listed and unlisted businesses which benefits all sectors that are lending money or raising security out there. The bill will free up capital for businesses. This means that there is going to be more capital available out there for businesses to help them get through the crisis we are in and it will also help growth and productivity moving forward. 
We have to remember that credit is not just for right now; there are many people who need credit for their working capital for their businesses. This is where many companies are struggling right now because they cannot get credit for their working capital. The bill not only frees up working capital but also frees up capital for those who are in a growth stage. Believe it or not some sectors out there are absolutely thriving and doing really well at the moment. Although many sectors are struggling some businesses are doing very very well. We have to ensure that they can grow in the economic environment we are in and allow them to be able to get capital more freely. This legislation is also focused on all those types of businesses. 
The bill is about issuing shares and the information that must be provided when shares and security are offered. Currently there are double-ups in the system when shares are provided for offer. The bill’s provisions aim to reduce inefficiencies in reporting processes by reducing that duplication leading to less time and money being taken up without losing information. In effect that sounds really really simple but this is legislation that we have not had in place to be able to allow companies to do that. 
It is really forward thinking in terms of the duplication and bureaucracy in this environment. It will help small medium and large sized enterprises to access capital and investors at all levels are going to be able to understand information more easily. Many investors come along pick up an investment prospectus and see that it is 100 pages long. Not many people can honestly say they read the full 100 pages. The bill will make it easier for those people to understand information but at the same time it will keep transparency there. People will be getting all the important information they need to make decisions when they invest money. 
Part of the Government’s response to the current economic climate will help to ease the credit crunch currently being experienced by all New Zealand businesses across all sectors. That is the good thing about this legislation: it is open to all businesses and all sectors. When we look at this legislation and at the regulatory impact statement we see that it clearly reflects what is in the task force report and what we are trying to achieve as a Government. 
I will read just a little bit. It states: “The world is currently in the midst of the worst financial crisis for many decades. The most immediate and pressing financial sector issue has been the breakdown in credit markets. The preferred option is to provide for a simplified disclosure prospectus that may be used by listed issuers who are subject to continuous disclosure requirements and to amend the existing definitions for exemptions from standard disclosure requirements. These changes should remove unnecessary impediments to capital raising while still securing the timely disclosure of relevant information to prospective investors.”  
That is what the bill is all about. It is about simplifying things for people who are trying to invest money and simplifying the process for those who are issuing money security or shares.  
It is with pleasure that I stand here today and recommend this bill to go to the select committee and we look forward to hearing all the submitters who come in and give their opinions on this bill and the way it stands. I look forward to it coming into the House for a second reading and to discussing it further. I thank the Minister Simon Power for getting this bill ready so quickly because having a bill put forward this quickly is quite incredible. It takes a lot of hard work and commitment to get a bill to this stage. I look forward to seeing it at the select committee. 
RAYMOND HUO (Labour) 
: 
 I rise to support the Securities Disclosure and Financial Advisers Amendment Bill in its first reading. The bill amends both the Securities Act 1978 and the Financial Advisers Act 2008. The explanatory note states that the bill “responds to the current international financial crisis by removing unnecessary impediments to capital raising while ensuring the timely disclosure of relevant information to prospective investors.” It also makes a number of minor tidying-up changes to the Financial Advisers Act. 
From the explanatory note it is clear that the bill will undoubtedly streamline the raising of capital for New Zealand businesses. Central to the bill’s key provisions is the objective of making it easier for businesses to raise capital by introducing a simplified disclosure prospectus regime into the Securities Act 1978 doing away with a lot of duplicated information for New Zealand stock exchange - listed issuers. At the same time the simplified disclosure prospectus aims to ensure that accurate and timely disclosure of information is made to prospective investors. The bill does not reduce the information required to be disclosed; it merely removes the duplication of information already provided pursuant to continuous disclosure obligations. It therefore removes unnecessary impediments to capital raising without undermining investor protection. 
This bill also tidies up the rules for exempt persons and people deemed by the Act not to be members of the public for the purposes of disclosure making it easier for all companies both listed and unlisted to raise capital. The Labour-led Government passed legislation in September last year to toughen up the rules of professional conduct and competence for financial advisers. This bill follows recommendations made by the Capital Market Development Taskforce in November 2008 for steps to respond to current financial conditions which are particularly relevant for listed issuers and also reflect recommendations made by the New Zealand Exchange. The Capital Market Development Taskforce should be applauded for the speed with which it has come up with a series of recommendations in November 2008 that address a number of impediments to capital raising particularly by listed issuers. The measures recommended are practical conceptually sound and will significantly reduce the barriers to capital raising by listed issuers. 
The Capital Market Development Taskforce was established in July 2008 and included members from the Government and the private sector. The objectives of the taskforce were to identify key constraints and opportunities for the development of New Zealand’s financial system identify and debate options to improve the performance of New Zealand’s financial system and develop a blueprint for the development of New Zealand’s financial system. Originally the task force had a year to produce its specific outputs but in response to the global financial situation it produced an interim report in November 2008. It outlined a package of proposals designed to boost access to capital for New Zealand businesses and reduce the cost of raising capital. As a commercial lawyer I recall that on 21 July 2008 both my fellow lawyers and our clients from the financial sector were excited at the news that the Capital Market Development Taskforce which was launched by the then Minister of Commerce the Hon Lianne Dalziel would see the Government and the private sector working together to develop New Zealand’s capital markets. The Hon Lianne Dalziel rightly stated at that time that improving the investment environment was a key part of the former Labour Government’s economic transformation strategy. The Hon Lianne Dalziel went on to say: “To deliver wealth and jobs New Zealand firms need ready access to affordable capital. The taskforce will identify ways to make this happen.” Now this has happened. 
I am delighted that the Government considered and adopted those recommendations by introducing this bill. It is worth reiterating that the Hon Lianne Dalziel in her speech this afternoon gave the regulatory impact statement 10 out of 10. To introduce legislation such as this bill is important particularly at this time when New Zealand along with the rest of the world is in the midst of a financial crisis. In large part the impact of the financial crisis on firms and households will depend on how we will respond. New Zealand will need to adopt a comprehensive package of measures if we are to minimise the costs of the downturn and speed the recovery. Ensuring that capital markets remain well functioning is an important part of that package. Thank you. 
AMY ADAMS (National—Selwyn) 
: 
 I am pleased to rise this afternoon and add my voice in support of the Securities Disclosure and Financial Advisers Amendment Bill. As we have already heard today this bill aims to respond to the current troubled financial climate by removing the unnecessary barriers to capital-raising that exist currently. At the same time the bill seeks to ensure that relevant information is disclosed in a timely manner to prospective investors. In essence what the bill does is provide for a simplified disclosure prospectus allowing certain debt and equity instruments to be issued without the need to duplicate already disclosed information. 
As we have also heard this afternoon the bill arose from the recommendations of the Capital Market Development Taskforce after it completed in November last year its very considered analysis of the technical rules that surround this complex area of law. The point to remember is that the provisions of this bill will make it easier for applicable businesses to raise capital while protecting the timely and accurate disclosure of information to those considering investing. 
The Securities Disclosure and Financial Advisers Amendment Bill will do away with a lot of unnecessary duplication notably for companies listed on the stock exchange and in doing so it will reduce compliance time and costs. In that regard it is one more example of this Government putting getting business done ahead of the value of bureaucracy for bureaucracy’s sake. This Government understands that New Zealand must support the productive commercial sector if we are to navigate our way through the current international crisis and do so with the minimum amount of impact on ordinary New Zealanders. We all know that unfortunately there is nothing we can do to prevent the hard times ahead but we can take steps to soften the hard edges of that crisis and to put New Zealand in a good position for a strong recovery when the time comes. This bill is part of achieving that aim. 
In addition to addressing issues of duplication as we have already heard from the Minister of Commerce the Hon Simon Power the bill also usefully clarifies the law around the category of persons who are exempt from the securities disclosure regimes by adding a further category of exempt persons and it does so through an amendment to section 3(2)(a)(iia) of the Securities Act. Notably this will remove from these strict disclosure regimes only people who already possess all the necessary information or who are very experienced in the business of investing. What it does in this regard in effect is create further safe harbour provisions for those who have already made an investment of $500000 or more in identical securities within the past 12 months. 
We will not of course accept any changes that would undermine investor confidence in the securities market—and now more so than ever—but where unnecessary red tape compliance and double-ups have been identified it is the duty of any prudent Government to remove those unjustified hurdles in favour of a capital market in which businesses can raise funds more easily. 
Although this bill falls outside the National-led Government’s 100-day plan of action it is none the less part of what we are doing to help New Zealand through the economic downturn. It should also be remembered that the existing safeguards within the Securities Act are maintained that a full and complete disclosure of the risks that come with the investment remains compulsory and that in addition the extensive penalties continue to apply. From my experience within this area of law I know that the Securities Commission in conjunction with the Companies Office acts as a particularly vigorous watchdog in this regard. 
In difficult financial times access to capital is fundamental. The importance of this fact is coming into sharp focus for many New Zealand businesses right now. Many businesses that are otherwise strong and should not by reason of any inherent problems fall victim to the worldwide financial crisis may well still fail simply due to issues relating to their ability to access capital. Keeping capital flowing through business communities is vital now more than ever. This bill is a step towards doing this and it is before this House as part of a number of matters including non-legislative matters that are being looked at. 
The Taxation (Business Tax Measures) Bill which we saw previously in the House focused on small to medium sized businesses. The bill before the House now is more relevant to the listed issuers so it is looking at a different sector of our productive economy. But I would also touch on the fact that it will be very relevant to start-up businesses angel investors and those going through initial public offerings. Let us remember that if we want to bring growth and productivity back into the economy then it is important that we support those businesses and not just those that already have a place on our stock exchange and this bill will be a part of doing that. 
Even in these tough times I find it very interesting that several businesses in my electorate of Selwyn have tremendous expansion opportunities ahead of them and when we consider the economic climate in which they are operating that is quite a feat. Some of them have the potential to double their existing operation. The markets are there the willingness is there but the one thing between them and achieving that growth is capital. 
This bill by removing some of the barriers and some of the duplication and excessive cost will help to create that growth and more important it will help to create and keep jobs in our economy—which is the one thing that I think this House agrees is crucial at this time. But it can do that only with capital and that is worth remembering. Freeing up capital markets is therefore a very important part of keeping the growth in the economy. 
The Capital Market Development Taskforce has identified some ways we can assist in that process. Therefore I am very pleased to support this bill. On that point I will just take a moment to agree with the previous speaker Raymond Huo. As a lawyer who has worked in this area of law I agree that the people who practise in this area support these measures. They have been calling out for them. They were very pleased to see the task force brought about and they will be equally pleased to see the measures given effect to. 
I think we can summarise the effect and the importance of the bill by taking a moment to reflect on the first paragraph of the explanatory note of the bill: “The Securities Disclosure and Financial Advisers Amendment Bill responds to the current international financial crisis by removing unnecessary impediments to capital raising while ensuring the timely disclosure of relevant information to prospective investors.” It seeks and achieves that balance of getting rid of unnecessary duplication freeing up red tape and continuing to help the capital flow through to our business sector. 
Finally I should make reference to the fact that the bill also has another objective which is to make technical admittedly but necessary amendments to the Financial Advisers Act 2008. That legislation obviously had errors in it when it was passed through the House last year and taking the opportunity to address those errors is I think timely and I support doing that. This bill is a necessary step towards addressing the current situation. It is not a silver bullet or a panacea but it is a small step in the right direction and for the companies that are affected it will be of particular benefit. I am very pleased to commend this bill to the House. 
A party vote was called for on the question  
That the Securities Disclosure and Financial Advisers Amendment Bill be now read a first time. 
Ayes 113 
New Zealand National 58; New Zealand Labour 43; ACT New Zealand 5; Maori Party 5; Progressive 1; United Future 1. 
Noes 9 
Green Party 9. 
Bill read a first time. 
Hon SIMON POWER (Minister of Commerce) 
: 
 I move  
That the Commerce Committee 
 consider the bill and report finally to the House on or before 30 April 2009. 
Motion agreed to.