New Securities Bill a Government Smokescreen

Wednesday 7 Nov 2001 Stephen Franks Press Releases -- Commerce

ACT Commerce Spokesman Stephen Franks says that Commerce Minister Paul Swain is misusing his power by suddenly pushing forward a large Securities Bill. "It is to divert attention away from the Prime Minister's bizarre behaviour during the last weeks of the Air New Zealand debacle."

"Paul Swain claims the Securities Markets and Institutions Bill will improve confidence in the New Zealand sharemarket. The Bill has a lot of legal ya da ya da ya da, but is really a move to import Australian securities law into New Zealand. Nobody should take confidence from that.

"The Securities Commission should have reported before now on uninformed and misinformed trading in Air New Zealand shares. There is no doubt the Government breached the due diligence rules. With this Bill in the House the Securities Commission can boldly blame the NZSE and the Market Surveillance Panel, and allege poor rules, but avoid dealing directly with the PM's conduct, unless public reaction now forces otherwise. Springing the new Bill at this time is just the Government's tactic for distracting people away from its own behaviour.

"The Government has not published any proper policy analysis on this Australianisation. There should have been a White Paper months ago so that New Zealanders had facts on which to base evaluation of this move. The real reason for low confidence in our sharemarket is the failure of our justice system to ensure that existing law is enforced. That does not take new law, it just takes commitment to ethical conduct. Why then should the Government expect its new laws to work - except perhaps in a few political show trials? There has been no Government will even to fund show trials. A government that connives to block enforcement of existing law against the powerful (but not the small fry) will never generate basic honesty, which is the main reason for legitimate investor concern.

"The Bill will lead to the transfer of most of our broking and capital raising industry to Sydney. Australian practice requires constant contact and good relations with the regulators, who have enormous discretions. As NZ companies have to employ Australian advisers, local activity will be strangled by Australian level compliance costs. They are about three times the level in New Zealand, with no evidence of routinely better outcomes in terms of market honesty, or access to capital for growing smaller enterprises.

"This legislation effectively signals the abandonment of New Zealanders' opportunities to develop as competitors, using better law than Australia," Stephen Franks said.

For more information visit ACT online at http://www.act.org.nz or contact the ACT Parliamentary Office at act@parliament.govt.nz.

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