Securities Legislation Bill

I congratulate you, Madam Chairperson, on becoming the fourth Assistant Speaker or Deputy Speaker of the New Zealand Parliament. We are making history in New Zealand—this is a very historical moment. Last night I was 25 seconds into my speech, and I invited the listeners to come back this afternoon to continue listening to it. I welcome back the Chairman, who is the properly elected Deputy Speaker of the House. Certainly, the Government is in disarray. Only National’s Deputy Speaker is in the Chamber, and it is not even 6 p.m. So everybody is rushing away. Well, I am glad that National Party members are hard-working and take their part seriously.

National supports the Securities Legislation Bill, which has an aim to increase, inspire, and enhance the confidence of investors in New Zealand’s capital and securities markets. I have one complaint about the time taken to bring the bill to the second reading and Committee stage. It has been sitting on the Order Paper for a whole year after it was reported back from the Commerce Committee. One of the provisions relates to additional disclosure by investment advisers, and, in the light of three very high-profile collapses of financial companies, the public would have benefited if this legislation had been passed earlier. There would have been greater disclosure requirements of investment advisers.

I say that because after Provincial Finance withdrew its prospectus to invite people to invest in that company, $9.5 million was invested in that company. That shows that a lot of investment advisers out there are not properly qualified, or whatever. I hope the Minister will not take as long to introduce the second part of the complementary legislation for registration of those investment advisers.

I also comment that we passed this legislation to inspire confidence in investors to invest in our capital and securities markets, but it will not work. We saw just yesterday the sacking of the electricity commissioner because he stood up to the Government, wanted to do his job independently, and wanted to inspire confidence in the working of the electricity industry. The Minister said: “No way!”. The Government did not know the answer, but it wants to be popular, so if the electricity commissioner wants to do his job independently, objectively, and according to the legislation, well, that is not good enough for the Minister. So the commissioner was sacked.

I doubt, after we pass this legislation and the Securities Commission wants again to adhere to the legislation, whether confidence will be inspired. Once again, I ask how, with political interference, this legislation will be helpful in inspiring confidence.

I rise to support the Securities Legislation Bill, and, given that we are looking at the title, I would like to recall the central objective, because I do not think it is contested on this side of the Chamber. The objective is to strengthen our capital markets. We have structurally weak capital markets. Members may recall the Ernst and Young study that put New Zealand 21st out of 22 OECD economies in 2005 in terms of the capital raised through initial public offerings. If we look at the NZX and go back 10 years, we see that market capitalisation was 60 percent of GDP, which was not a stellar result. Today it is a little under 40 percent, and if we compare that with Australia, with a market capital of 150 percent of its much larger GDP, we see the dimension of the problem. So we do have structurally weak capital markets and this bill is an attempt to address some aspects of that problem.

Of course, I have to say in passing that the answers lie in doing more than just talking about economic transformation. But I understand we are at that phase of the electoral cycle where the Government is engaging in a nice little conversation with the electorate about redistribution politics, and not about the next phase of wealth creation. We know where that leads us. It leads us to where we were in the 1960s and 1970s: back towards sclerosis. We have been there before and that is where we are heading.

On this issue, yes, there are some structural weaknesses that this bill is addressing, and on balance National thinks it is a move in the right direction. We all understand that for capital markets to function properly, investors have to have confidence in the integrity of those markets. We understand that confidence is important for the institutional investors right through to the mom and pop investors, and even, perhaps, down to the proverbial bellboy—by legend, when he is in the share market it is time to sell everything.

So the bill takes some steps to strengthen the integrity of our systems and does a number of sensible things; that is why the National Party is supporting it. For example, adoption of the standard of civil liability in this bill has the promise of providing an easier juridical path for pursuing remedies to insider-trading practices. At the same time, we seek to introduce in this bill a penalty regime that is, well, anything but a slap across the back of the hand with a wet bus ticket. Quite severe penalties are introduced by this bill, and we have to be sure that certain other, compensatory changes are taken in the legislation. I think there are some important steps in that respect.

This legislation is about proportionality and it is about fairness; tidying it up so that it applies only to serious offences is one of those steps in the right direction. Equally, the provisions for the three regulatory authorities that have statutory responsibilities for pursuing misleading and deceptive conduct—that is, the Securities Commission, the Takeovers Panel, and the Commerce Commission—are a very sensible change and we welcome that.

I guess my main concern—and it is not original; it is shared by a number of the submitters, many of whom are extremely well informed—relates to the unintended effects of legislation of this nature. We are certainly not helping our weak capital markets if, in adopting this bill, we frighten the horses, if you like. I can see that a lot of considerations have been given to this legislation and some of those considerations move us in the right direction—for example, the improved standards of defence.

If I may just shorten my speech, I think what we need to be sure about here is that we are ready to come back and have another look at this; it is a work in progress. There are still some problems with the legislation but, on balance, the National Party supports it.

I rise to speak on the title clause of the Securities Legislation Bill. The purpose of the bill is to increase confidence in New Zealand’s capital markets. How can a few words do that? May I suggest phrases like “The buck stops here.”, by Harry Truman, “My word is my bond.”, and “By our work we will be known.” Those undertakings are the sorts of statements that have been used in previous decades by people charged with leading Governments, commercial organisations, and community groups, to provide increased confidence. I would guess that no members in this Parliament—indeed, I would guess that few people listening—are unfamiliar with those phrases. They are phrases that would be nice to hear coming from the Government side of the Chamber.

In company with other members of the 2005 intake, I have been privileged to serve in this Parliament just a few days short of a year. What a journey! [Interruption] My companions over there have made it with me. It has been like a train journey—sometimes going like a goods train, and sometimes going like an express.

Progress reported.

Report adopted.

The House adjourned at 5.56 p.m.