Clark David: Financial Markets Conduct Bill Financial Markets (Repeals and Amendments) Bill — Third ReadingsText is incorporated into the Bound VolumeClark David: Financial Markets Conduct Bill Financial Markets (Repeals and Amendments) Bill — Third Readings[Sitting date: 27 August 2013. Volume:693;Page:13002. Text is incorporated into the Bound Volume.]Dr DAVID CLARK (Labour—Dunedin North): I too want to congratulate those who have worked on the Financial Markets Conduct Bill following on from that contribution from the chair of the Commerce Committee Jonathan Young. I identified with his comments about 150 pages of jargon. It sounds like our select committee papers that we get on a Thursday morning. No one wants to wade through that if they do not have to it is fair to say.This legislation is an attempt to make sure that retail investors and ordinary folk who do wish to get into this space have the kinds of protections that they ought to be offered. It is about transparency and the efficient functioning of markets. So I want to congratulate Ms Dalziel Ms Curran and others who have worked on this over a period of time and the Minister of Commerce Mr Foss for guiding this through the House. There is a huge amount of detail in these bills the Financial Markets Conduct Bill and the Financial Markets (Repeals and Amendments) Bill and in the legislation relating tosecurities law—over 700 pages as many have pointed out—here in this pamphlet that we have before us.The purposes of the bill are commendable being to promote the confident and informed participation of businesses investors and consumers in the financial markets. That cannot be argued against. Nor can the other main purpose which is to promote and facilitate the development of fair efficient and transparent financial markets. Markets are after all a source of information to guide capital flows so that capital flows to its most efficient point. That underpins good economic development so we commend the purposes of these bills. The way it flows out means that Labour will be supporting these bills through their third readings.Of course there are plenty of other areas that the Government is neglecting. This is a part of the economic picture. The markets and the effective functioning of markets are the starting point for many but there are other policies that guide the economy as a whole that are not contained within this legislation.It has taken 5 years to get this particular legislation to the House and it is strange that we are passing it under urgency. That perhaps speaks to some poor House management as with the previous bill the Patents Bill. Nevertheless we commend the actual material within it.Peseta Sam Lotu-Iiga: You said that last speech. Say something different.Dr DAVID CLARK: Mr Lotu-Iiga is right. I need to raise this new material about the general direction of Government policy which does not deal with the bigger issues of monetary policy reform. It does not really shape an export-led recovery and it does not deal with savings and the capital depth issue. We are talking about transparency here—where capital flows to—but the actual capital depth problem that we have as a country where we do not have the savings that other countries have to support an export-led recovery is a concern that this Government seems to sidestep time after time after time.Likewise with pro-growth tax reform we know—a capital gains tax—that the OECD the IMF every other Western country a former Treasury head and so on all say that New Zealand should have that kind of pro-growth tax reform. It should have a capital gains tax and it should have research and development tax credits. But this Government has its head in the sand. At least it is sorting out these nuts and bolts and for that I want to commend this Government’s work.Of course it was started by a Labour Government and let us not forget that. Labour started the financial markets reform process and we are pleased that the Government is continuing our good work. Of course Lianne Dalziel set up the Capital Market Development Taskforce. This will be something of her legacy as she leaves this place. That was set up in 2008 to develop a blueprint and an action plan for the development of New Zealand’s financial system. So we are pleased that the Government is acting on this and acting on the recommendations of the task force’s report one of which was a single market regulator.The Labour-led Government of course took a number of measures in the wake of the financial crisis and the spate of finance company collapses which accelerated these measures. The Crown Retail Deposit Guarantee Scheme is of course still fresh in people’s minds as the Government bailed out South Canterbury Finance to the tune of $1.6 billion in taxpayers’ funds. That was largely due to poor monitoring. We do not know the extent that that was due to poor monitoring. We do know that the company’s dodgy loan book increased 25 percent in 4 months at one stage and that the Minister of Finance did not have oversight of that and did not request the appropriate briefings although he could have got them through Treasury and from the Reserve Bank about thestate of those dodgy loan books and the kind of risky lending that was being done against the blank cheque of the Government.So we know taxpayers have forked out hundreds of millions of dollars unnecessarily in the case of the Crown Retail Deposit Guarantee Scheme. Of course Labour put in the scheme. Let us not forget that Labour put it in in a 24-hour period to address the issue of a run on banks. The basic premise was sound. We know that but it was not monitored and it is the failure of monitoring by this Government that has cost the taxpayer hundreds of millions of dollars.Unfortunately the Government was too afraid to investigate it. It did not really want the light of day on that poor monitoring because it would have reflected badly on the current Government and I think it owes New Zealanders an apology on that front. It really does owe New Zealanders an apology on that. I hope that some member from the National benches will apologise for the hundreds of millions of taxpayer dollars that have been lost unnecessarily through that Crown Retail Deposit Guarantee Scheme and particularly through the failure of monitoring of the Minister of Finance.Peseta Sam Lotu-Iiga: I’ll apologise for Cullen. Cullen brought it in.Dr DAVID CLARK: No no Mr Lotu-Iiga. It is the failure of monitoring that is the problem not the scheme itself. Of course this Government did not remove the scheme because it knew it was a good scheme. But it did fail to watch it closely. Of course I do not say this on my lonesome. This is something that the Auditor-General Lyn Provost drew attention to in her report. That begs many questions and it has just been swept under the carpet. This poor poor oversight of the scheme has been swept under the carpet by this Government because it knows it would be incredibly embarrassing to see exposed to sunlight those hundreds of millions of taxpayer dollars that went away without any real investigation.Of course the Finance and Expenditure Committee did request that Treasury come before it to explain what had happened in that failure of monitoring after the Auditor-General’s report revealed the extent of the issue. The then chairman was very keen to sweep it under the table. I expect we may get an apology out of him later in the piece. I am certainly hopeful as I look across the floor.Hon Todd McClay: I’m sorry for the speech. A sorry speech.Dr DAVID CLARK: He says that he is sorry for the speech. That tells you that this is a Government that does not really care about these bigger issues about where taxpayer money goes. I say Government members should hang their heads in shame and I can see many of them there at the back hanging their heads in shame at the behaviour of this Government around this scheme.But back to the legislation itself—not what is not in it not the things that are not in it and that ought to be—and in its 700 pages it does implement a new one-stop shop for securities law. These are good steps forward. It is about time obviously 5 years after Labour kicked the process off that we had these things in. The regulations in the area of derivatives have been inefficient and Labour does welcome these measures and initiatives by the Government to address the problems. Derivatives have been brought within the framework of the four financial products which include debt equity and managed investment schemes.So I think we can claim that this is a success and a bipartisan approach. It is a shame that some of the earlier bills we debated yesterday were not subjected to the same test—the ones that look at where we go from here about responsible fiscal management—and were not developed in a bipartisan way. No doubt they will not stand the test of time in the same fashion. That is a shame because generally in this area we like to have a bipartisan approach. It is one of those great moments when we can celebrate across the House the value of transparency of appropriate regulation and of seeing that those whoinvest—retail investors—do not have the wool pulled over their eyes and that documentation can be clear and that capital can then flow to its best use for the long-term productivity of our country.So I commend the Government for bringing this legislation to the House. I commend it for getting it through. I would have liked to have seen it come a little earlier but transparency accountability and consequences are important in this legislation as they are elsewhere. They are important for the efficient functioning of markets so that markets become good and effective servants and not the terrible masters we know they can be if they are not properly regulated. Thank you.