New Zealand Guardian Trust Company Amendment Bill

I move, That the New Zealand Guardian Trust Company Amendment Bill be now read a first time. This is a private bill, promoted by the New Zealand Guardian Trust Co. Ltd for Parliament’s consideration. The bill substitutes the name of the Guardian Trust’s parent company, Promina Group Ltd, with Suncorp-Metway Ltd in order to enable the company to transact business with its parent company. At the appropriate time I intend to move that the bill be considered by the Finance and Expenditure Committee.

As honourable members will recall—those who have served more than a term in this House—this is not the first time that this company has needed private legislation. Nor indeed is it the first time that the other three companies that provide trustee services have come to this House for private legislation enabling them to have the privilege to transact business with their parent company. I will briefly outline the history of the New Zealand Guardian Trust Co. Ltd, and members who want more detail can go back to the 2004 bill, which has a great deal more history involved.

The Guardian Trust has been operating as a trustee in New Zealand since 1883, when the Guardian, Trust, and Executors Company Act was passed. Indeed, the trust was part of the old New Zealand Insurance Co. Ltd, which was established in Auckland in 1852, so the history of this company goes back almost as long as the history of New Zealand as a country. In 1982 the Guardian Trust merged with the trust department of the New Zealand Insurance Co., necessitating the passing of a New Zealand Guardian Trust Company Act in that year. The trust has 14 branches throughout New Zealand at present, and acts on trusts and estates for many thousands of New Zealanders. The Guardian Trust is a trustee company authorised under the New Zealand Guardian Trust Company Act 1982 to carry on business as an executor, a trustee, and a trustee company, and in other fiduciary capacities.

This Act currently allows the trust the privilege of transacting business with its parent company, which is named in any subsidiary or company associated with its parent company. It also allows it to attain the financial benefit from such transactions, which would otherwise be precluded under trust law. The ability to transact business in these circumstances is necessary given the size of the corporate group in which the Guardian Trust is associated and the opportunities that may be lost if the ability to transact business with such companies is not available. Similar concessions exist for all other trustee companies. However, it has been pointed out in this House that this concession is a privilege.

I think that the House needs to consider seriously how Acts of this sort—and this Act in particular—are dealt with. The Act currently defines the parent company to mean Promina Group Ltd. In March this year the businesses of Promina Group Ltd and Suncorp-Metway were merged by way of a scheme of arrangement. Under this scheme Suncorp-Metway acquired all shares in Promina Group Ltd, and accordingly Suncorp-Metway is not the ultimate parent company of the New Zealand Guardian Trust. This now renders the name of the parent in the Act inaccurate.

As I mentioned earlier, a number of select committees, and, indeed, Parliament, have dealt—wrestled, one would say—with this issue of whether generic legislation would better protect people who have dealings with this trustee company and other trustees. I am asking the select committee to recognise that most select committees have recommended that generic legislation be introduced to deal with the need for various trust companies to bring legislation of this sort before the House. Although I hope that the select committee will be able to deal with this particular issue in relation to the New Zealand Guardian Trust Co. in this bill, I also hope that we will get to an understanding of how to deal with these issues in future for the New Zealand Guardian Trust Co. and for other trustee companies.

I am concerned—and the matter has been raised in this House in 2004 and 2005—that the committees have tended to see this issue as a frequent irritation and perhaps even a time-waster for select committees and for the House. I thank Stephen Franks, the former ACT MP, who made a very spirited opposition to this legislation passing when it came before the House last. He made the point that the Reserve Bank had grappled with this area, and indeed the Governor of the Reserve Bank had made a number of speeches around the fact that the Australian banking law means that Australians have an Australian preference. Now, as members will understand, both Promina Group Ltd and Suncorp-Metway are primarily Australian banks. I quote Stephen Franks where he said: “Quite nakedly, Australian banking law states that if there is a banking collapse, Aussies will come first—the Kiwis come second.” He said: “That, I fear, is what will happen to people dealing with trustee companies, if the trust assets are allowed to be deployed through a head office treasury, or through an accounting system, that is in Australia—suddenly, the shutters will go up.”

I ask the select committee to take those words—and, indeed, the words of Alan Bollard, the Governor of the Reserve Bank—very seriously and discuss the matter of whether it is a useful exercise that the owners of, and subsequent owners of, trustee companies are required to reflect on their duties as trustees to those New Zealand beneficiaries. I have made the point in previous private bills that have come before the House for this organisation that it tends to be people who are very vulnerable in some cases who use trustee companies, and they are not necessarily people who are able to make the most informed decisions about the structures of the companies they choose to deal with.

So I would ask the select committee to look very seriously at this matter and to look at this bill. Obviously, we need this private legislation. I am happy that the petition of the New Zealand Guardian Trust Company Amendment Bill is required, otherwise I, as MP for Auckland Central, would not have agreed to bring this bill to the House. But in accordance with the Standing Orders the notice of my intention to promote this bill has been distributed to those persons who have a direct interest in the subject matter of the bill, and it has been publicly advertised. I commend the bill to the House and to the select committee.

Let me make it clear at the outset that National will support the first reading of the New Zealand Guardian Trust Company Amendment Bill, for the obvious reason that we must not leave this very important trust company in a situation where it cannot operate legally. In fact, the legislation is needed not only to change the name of the parent company—as the Hon Judith Tizard has just mentioned—from Promina Group to Suncorp-Metway, but it is needed to validate any transactions that have already taken place since the change in the parent company’s status after 20 March this year. So the legislation is undoubtedly needed.

I think the comments the Hon Judith Tizard has just made are useful. One has to ask oneself why we have to have this kind of legislation. In fact, when I had a look at this bill I took some trouble myself to research back to 1982—as this bill amends the New Zealand Guardian Trust Company Act 1982—to see why we actually needed specific legislation to cover the New Zealand Guardian Trust Co. It is easy to say that the legislation is needed because of the activities of the New Zealand Guardian Trust Co.—the fact that it carries out functions as executors, trustees, or fiduciaries, who are persons who hold positions of trust in relation to another person and therefore have to act in the interests of another person.

The legislation empowers the New Zealand Guardian Trust Co. to act as an executor of wills, as an administrator of estates of any deceased person, and that kind of thing. Even though those are special functions, I still ask myself why we need to have legislation for each one of the companies that are empowered to carry out these activities. Why is it beyond the wit of us as legislators to make the Trustee Companies Act of 1967—an Act that includes this company as a trustee company and that is the principal Act that covers issues relating to trustee companies—have a more generic component to it that can cover these companies, which at the moment have to have specific legislation?

This bill will establish a schedule so we will not need to have this legislation come back to Parliament every time the parent company changes its name or changes itself in substance. I am not sure whether the parent company just changing its name requires an amendment to the legislation, but if the substance of the parent company changed in the past, then the legislation certainly had to come back to this Parliament—as happened in 2004, as the Minister just mentioned.

I think the amendment to schedule 2 that a new parent company can be handled by Order in Council rather than by taking the time of this House is certainly a sensible step. But the select committee hardly needs to devote great time to adjust the change of a name, or to the possibility of amending schedule 2 to enable this process to be done more simply in the future.

It would be worthwhile for the Finance and Expenditure Committee to take some advice on whether it is possible to handle these trustee companies in different ways, because there are not a large number of companies carrying out these kinds of functions. Is it possible through amendment to the Trustee Companies Act to cover the activities of these particular companies? I do not know the answer to that; I suspect that not very many members of this House would know the answer. The Hon Judith Tizard has raised a number of issues that are rather more generic in nature, which she has asked the select committee to consider. I certainly would like the select committee to have a look at whether it is possible to cover these particular kinds of companies through more generic legislation rather than have a separate bill for each company, which is what I presume we have at the moment. It seems to me somewhat unnecessary to have a separate piece of legislation for every company that, like the New Zealand Guardian Trust Co., carries out these particular functions; I would have thought it possible to have legislation that covers them all. So I hope the select committee can look at that for the future and see whether it is possible.

But in the meantime National fully accepts that this legislation is needed. We must change the name of the parent company in the legislation so that the New Zealand Guardian Trust Co. can transact business with the parent company legally. We must validate those transactions as long as they are proper transactions that have taken place since the merger of Promina Group and Suncorp-Metway back on 20 March 2007, and we must validate any transactions that take place between then and when this bill becomes law.

So with those thoughts, I again indicate that National will support this legislation to the select committee. I hope the select committee looks at some of the wider issues rather than just stamping the legislation through under the simple provisions of it. I think there are wider issues that it would be worth the select committee having a serious thought about. I confirm that National will support the bill to the select committee.

Tēnā koe, Madam Assistant Speaker. Tēnā tātou katoa. First of all, I would like to thank Doug Woolerton for giving me the opportunity to speak before him.

Three weeks ago, on the summit of Tangi te keo, 4,000 native shrubs and grasses were planted from the legacies of gifts administered by the New Zealand Guardian Trust Co. Tangi te keo, also known as Mount Victoria, was named after the soul of Whātaitai, who flew up to the top of this hill in the shape of a bird and proceeded to tangi—to weep, to mourn. It is a site of great significance to Te Ātiawa, so the grant of $36,500 from the Guardian Trust towards the cost of landscaping this area is one way of supporting the ongoing cultural heritage of this place.

From the coastal flaxes of Tangi te keo to the Nikau Centre in Napier, the Guardian Trust plays an important role in maintaining and supporting people and places across Aotearoa. The Nikau Centre is a programme to support young people who have found the prospect of mainstream education daunting, and require individualised and specialised relearning programmes. The programme offers a second chance, an early intervention to guide young people into a future based on hope, rather than their being caught in a situation of injury, of neglect, or of helplessness. It provides an opportunity for success, for young people to thrive.

Back here in Wellington, another field of work that upholds a commitment to health and well-being is being pioneered by the Wellington asthma research group. This group has identified major differences in prevalence and severity between Māori and non-Māori regarding asthma prevalence and management. Its research activities have led the way for developing long-term strategies for prevention and intervention.

Coastal flaxes, alternative education, and asthma research are but a few of the outcomes and opportunities provided by the Guardian Trust. I believe that it is really important when we look at legislation such as this that we know the substance of the role and responsibilities the Guardian Trust undertakes. In effect, this bill is but a paper exercise to amend the 1982 Act in order to authorise the company to transact business with its new parent company, Suncorp-Metway Ltd. But in order to comment on whether this is a useful exercise, it is critical that we understand the context of the banking, insurance, and financial services undertaken by this company.

The company has been around for a long time. It was first formed in 1882, and this year is its 125th anniversary. It is still doing pretty much the same line of business: taking care of the growth and protection of assets for its clients. They are fairly significant assets, too. In excess of $30 billion of assets and investments are managed by the company’s corporate trust team. Inevitably, the Guardian Trust works alongside Te Kooti Whenua Māori in the administration and care of titles and investments related to Māori land. In order to do so, the trust must work in such a way as to respect the profound spiritual and emotional importance that land has to Māori. In the Court of Appeal case, Re Ham—in relation to Mahu and the Guardian Trust—the court affirmed: “when dealing with Māori families the Court must pay regard to the strong attachment of the Māori to the land and to closely held deeply felt feelings within the family in that respect.”

The bill we are debating today, therefore, cuts to the heart of so many issues of importance to Māori: education, health, land, conservation, and the ethic of kaitiakitanga. The Resource Management Act specifies that kaitiakitanga means “the exercise of guardianship by the tangata whenua of an area in accordance with tikanga Maori in relation to natural and physical resources; and includes the ethic of stewardship”. I have taken the initiative to explore the meaning of guardianship, of kaitiakitanga, and of stewardship as they relate to this bill, because I believe they are concepts worthy of supporting.

The focus for this bill is very much about the basis for business transactions. The 1982 Act, in its simplest form, authorised the Guardian Trust to transact business with its parent company, Promina Group Ltd, and with that company’s subsidiaries. Twenty-five years later the Promina Group merged with Suncorp-Metway, and, as a result, the Guardian Trust has a new parent body, Suncorp-Metway. Of course, this is not a new scenario. Over the century and more there have been many previous mergers, including with the South British Guardian Trust Co., the New Zealand Insurance Trust Department, and this latest one.

There are two key issues that I want to raise about such a merger. The first is to do with the work of Parliament. The Guardian Trust most recently came before the House in 2004 and 2005. I remember at that point there being debate around the value of this company basically having to come before Parliament every time it entered into change of ownership arrangements. The object of this bill is basically to rubber-stamp a commercial transaction, and one has to ask whether it is a useful exercise for Parliament to undertake when a simple change by Order in Council might suffice. As such, we welcome the fact that the effect of this bill is now to authorise the Governor-General, by Order in Council, to amend new schedule 2 of the principal Act by changing the name listed there, without the need for legislative amendment, whenever it has a new parent company.

The other point of interest I would raise is simply to point out again the continuing trend towards closer economic relations between Aotearoa and Australia. The Promina Group is a major enterprise listed on the New Zealand and Australian stock exchanges, and it hosts over 200 offices in Australia and New Zealand. It has joined hands with Suncorp-Metway. Suncorp-Metway is Autralia’s sixth-largest bank and has some 450 branches throughout Aotearoa and Australia. These are two big companies, and we note the new combinations of risk and profitability that are being extended outside our own domestic shores, making us move further towards a single economic market. Inevitably, we wonder how the indigenous people of Australia are involved in such a merger, and whether there is an opportunity for recognising these relationships in the discussion of this bill.

We support this bill going forward, and recognise the importance of doing so, in order that the legislation will most accurately reflect the current ownership structure of the Guardian Trust. We support the bill also in the hope that 2 years from now, if Suncorp-Metway seeks to branch off into other arrangements, or if the Guardian Trust considers that other options may assist it in enhancing the financial stability of its business, we know that they will not have to come back here for approval to do so. Thank you, Madam Assistant Speaker.

I will take just a couple of seconds. New Zealand First supports the New Zealand Guardian Trust Company Amendment Bill going to the Finance and Expenditure Committee, and we trust that the debate there will bring out any shortcomings, if there are any. As usual, our interests are that New Zealanders are protected as much as they can be alongside our Australian neighbours, and that we do not end up in a situation where people in this country are playing second fiddle to Australians. We will look to ensure that that is not the case in the Finance and Expenditure Committee. So New Zealand First obviously supports the bill going to the select committee, and it looks forward to the debate.

I begin by saying that National supports the New Zealand Guardian Trust Company Amendment Bill. We will be taking the bill to the Finance and Expenditure Committee, where it will be ably steered through by the chairman, Mr Shane Jones, who sits on the other side of the House.

It is probably quite easy to be flippant about this bill. It is one of those bills that comes before the House and one wonders why the House’s time is being wasted on it, given that it is such small and insignificant legislation. I will pick up on a couple of points raised by members who have spoken earlier about why the bill is important, and why it is important that we change the way that we look at dealing with the change in names going forward.

The first point I will pick up on was made by Minister Judith Tizard when she quoted Stephen Franks, who said that if there were a banking collapse, the Aussies would come first and the Kiwis would come second. The point that Stephen Franks was trying to make was that we owe it to ourselves as a nation to look at the ownership of the Guardian Trust and to look at the parent company, and to run it through a parliamentary process. We need to look at the company that will ultimately be the parent trustee, and to pay due consideration to whether we should allow that legislation to pass and allow that parent company to be allowed to continue to transact in that way.

That raises a bit of a point, because the reality of the situation is that Suncorp-Metway has been trading since 20 March with transactions in this regard anyway. The size of the transactions that take place between the parent company and the minor company is significant, so that brings me back to thinking that maybe the fact that the bill is coming through the House is somewhat flippant and does not pay due consideration to the situation. I will have to ask the Minister whether we could change the legislation and stop the parent company from being acknowledged. I do not think we could do so, and that is why we have to bring these other changes to the bill that are proposed.

Before moving on and getting to the guts of the bill, I acknowledge what Tariana Turia said in regard to the support of the Guardian Trust for community groups, particularly the Nikau Centre in Napier, which is a school that has been set up to support young children who fall through the cracks and need a second chance. I want to emphasise that this school in Napier is supported by the Guardian Trust, and it is doing a very good job.

This bill has three purposes. Firstly, it is to enable the New Zealand Guardian Trust Co. to transact business with its parent company, Suncorp-Metway.

The second purpose is to allow for the identity of the parent company to change in the future without having to amend the legislation every time, so that we do not have to come before the House time after time whenever there is a change in the parent company. New section 2(2), which is to be inserted into the New Zealand Guardian Trust Company Act by clause 5(4), states: “The Governor-General may, by Order in Council made on the recommendation of the Minister of Justice given after consultation with the Minister of Commerce, … (a) add the name of a body corporate that is a holding company of the new company: … (c) omit the name of a body corporate that ceases to be a holding company of the new company.” So that section will allow that particular purpose to occur.

The third purpose is to retrospectively validate transactions that have occurred between the change in the parent company on 20 March 2007 and the commencement date of this bill. That is where I wonder how much power or authority Parliament has in actually making these name changes. If we decided, for instance, that the parent company was not of good merit, that it should not be the parent company for the Guardian Trust in New Zealand, do we have the authority to go back and stop the transactions? I would doubt it, and I would be interested in the Minister taking a call on that. I am not sure what authority or power we have to do that. If it is just a box-ticking exercise, then I totally agree that perhaps it should be done by Order in Council. If Parliament does not have the ability to reverse the transaction, then it is just a box-ticking exercise.

The New Zealand Guardian Trust, as the Māori Party member Tariana Turia said, has been in existence for 125 years. In fact, its anniversary is this year. It currently has about $30 billion under management through its corporate trustee. The Guardian Trust is empowered by a special Act of Parliament that facilitated the merging of the trust operations of South British Guardian Trust, which was originally formed in 1882, and of New Zealand Insurance. The trust department is authorised as a trustee company. The primary operation of these companies has been as a trustee acting for their clients in the growth and protection of their wealth, and this continues to be a core competency of the business going forward. The trust, on its website, states that its aim is to be New Zealand’s premier provider of trustee and financial solutions.

Since its inception the trust has been through many ownership changes. More recently, as Minister Tizard pointed out, the parent company was bought by Promina Group, and a change to the legislation was required back in 2001 and 2004. The Act currently defines Promina Group as the parent company, but earlier this year Promina Group was bought out by Suncorp-Metway. Incidentally, Promina Group, which is defined as the parent company, currently owns Asteron, Guardian Trust, Vero, and—members will be interested to know—the Tindall Foundation.

Promina Group’s merger with Suncorp-Metway is a deal worth about $7.9 billion, so it is pretty significant. I had a mind to vacillate about Suncorp and its sponsorship of various rugby venues in Australia, but I thought I would not bore the House with that particular line of attack. In essence, the merger between Suncorp-Metway and Promina Group brought about the name of the new parent company that has now taken on the ownership of the New Zealand Guardian Trust. That merger requires a change to the legislation, and that is what we are discussing in the House today.

In summary, the purpose of the bill is to enable the New Zealand Guardian Trust Co. to transact business with its parent company. I argue whether, in allowing that to happen, we have any ability to change what has already happened and whether it is a box-ticking exercise. In that regard, I agree with the Minister that there should be a change to the legislation, through the amendment in clause 5(4), to allow it to happen by Order in Council without having to go through this legislative process. One way or the other, and whether or not I agree, validating those transactions is important going forward.

Kia ora anō tātou. I stand to support the other speakers this afternoon and to endorse the content and direction of this bill. I look forward to the bill coming to the Finance and Expenditure Committee. Of course that committee met today, and we noted the absence—sadly, really, for the smooth proceedings and good humour of the committee—of Dr Lockwood Smith, although we did celebrate the absence of Mr Foss, so it is a case of swings and roundabouts.

I will come very briefly to the New Zealand Guardian Trust Company Amendment Bill. I have no doubt that when the bill arrives at the select committee, my colleagues will pay particular attention to ensuring that any changes we make meet the threshold of ongoing fiduciary responsibility. This is not the first member’s bill that the committee has dealt with in the short time I have been a parliamentarian, and a number of submitters raised the issue of the importance of parliamentarians paying attention to corporate restructuring in the context of fiduciary responsibilities. What is being promoted here is not unusual, and the device strikes at the heart as to why Parliaments have inherent sovereignty and why in New Zealand one Parliament cannot bind another. What this Parliament has been asked to do is to effect a modest restructuring change that will leave in law the ability for the Governor-General to pass, by regulation, a host of other changes when they are needed, and it will not be required for such a bill to come back to the House.

The trust plays an important role in the corporate infrastructure of the nation. I need not outline or repeat what other parliamentarians have had to say this afternoon, other than to say that the bill will be in capable hands when it falls to the Finance and Expenditure Committee. I look forward to hearing what submitters might have to say, and we will pay particular attention to ensure that none of these changes weaken administrators or cause them to overlook their ongoing responsibilities of a fiduciary nature. I look forward to receiving the bill as chairman of the Finance and Expenditure Committee. Kia ora tātou.

Bill read a first time.

Bill referred to the Finance and Expenditure Committee