New bill has wide powers
A bill currently going through Parliament goes too far for some in the financial services industry.
Thursday, April 29th 2004, 6:48AM
by Rob Hosking
The Public Finance (State Sector) Bill, which is currently being discussed by Parliament’s finance and expenditure select committee, is aimed at tidying up management of government finances and bringing government agencies more in line with government financial management.
However the bill includes the GSF as a “Crown Agent” which means the responsible minister can direct the GSF board on where to invest. It also would require specific ministerial approval when the fund wants to use offshore-based banks.
“Our investment managers and custodian are large international organisations,” GSF chairman Basil Logan told MPs.
“It would be impossible, and inappropriate, to dictate to these organisations which banks to use.”
The bill is inconsistent with the moves by the Labour government only three years ago to provide much greater level of independence for the GSF, Logan says.
The bill also contains “conflict of interest” provisions that would make the GSF’s outsourced structure impossible, he says.
Other government agencies also have concerns about the bill. The Securities Commission says it would damage its independence as it gives ministers wide ranging and undefined powers to remove commission members.
“Perceptions are vital in securities markets,” the commission says, “Accordingly the commission must be, and must be seen to be, fully independent both of the government and of commercial interests.”
While the procedures for removing a commission member are carefully laid out in the Securities Act, the current bill would cut right across them, simply allowing a minister to remove a commission member at any time for “just cause.” “Just cause “ is not defined in the bill.
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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