New Zealand Guardian Trust Company Amendment Bill

Hon JUDITH TIZARD (Labour—Auckland Central) Link to this

I move, That the New Zealand Guardian Trust Company Amendment Bill be now read a second and a third time. This is a private bill, and it has been promoted by the New Zealand Guardian Trust Co. Ltd for Parliament’s consideration. It is the third time in 7 years that we have had legislation of this sort before the House, and I want to thank the House for its patience in dealing with it. I also thank the members of the Finance and Expenditure Committee for their work in reviewing this bill and for their recommendation that the bill be passed without amendment. I have since requested that the Business Committee agree to omit the Committee of the whole House stage of this bill and proceed to its third reading, as permitted under Standing Order 76(b). This has been accepted, and I look forward to moving ahead with this bill.

This bill substitutes the name of the Guardian Trust parent company from the Promina Group Ltd to Suncorp-Metway Ltd, in order to enable the company to transact business with its parent company. Over time, Parliament has decided that this privilege—and I emphasise the fact that this is a privilege that Parliament is giving Guardian Trust—is to be given with a great deal of careful consideration and with suitable warning to the public. New Zealanders put their trust, literally, in the trustee companies, and in Guardian Trust, and they are entitled to know what business arrangements are being entered into and to know that their interests are being protected. I note that it has been said in the House before that there are some business commercial laws—for example, in Australia—that give preference to Australians over New Zealanders, and we have to be very careful in this House about how we give this sort of privilege.

I further say that Guardian Trust is one of New Zealand’s oldest and most respected companies. It was established in 1852 and has been operating as a trustee company in New Zealand since 1883, when the Guardian, Trust, and Executors Company Act was passed. In 1982 the Guardian Trust merged with the trust department of the New Zealand Insurance Co. Ltd, necessitating the passing of the New Zealand Guardian Trust Company Act in that year. The trust has 14 branches and acts on trusts and estates for many thousands of New Zealanders and their families.

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, a trustee company, and in other fiduciary capacities. This Act currently allows the trust to transact business with its parent company, which is named, and any subsidiary or company associated with its parent company. The Act also allows it to attain the financial benefit from such transactions that would otherwise be precluded under trust law. The ability to transact business in these circumstances is necessary given the size of the corporate group with which Guardian Trust is associated, and the many opportunities that could be lost if the ability to transact business with such companies were not available. Similar concessions exist for all other trustee companies.

The Act currently defines the parent company to mean the Promina Group Ltd. In March 2007 the businesses of Promina and Suncorp-Metway were merged by way of a scheme of arrangement. Under this scheme Suncorp-Metway acquired all shares in Promina. Accordingly, Suncorp-Metway is not the ultimate parent company of the New Zealand Guardian Trust any more, thus rendering the name of the parent Act now inaccurate.

I recognise that a number of select committees, and, indeed, this House, have wrestled with the issue of whether generic legislation could adequately protect people who have dealings with the New Zealand Guardian Trust Co. and other trustee companies. However, in respect of the second and third readings of the New Zealand Guardian Trust Company Amendment Bill, we can deal only with the Guardian Trust. Each select committee has recommended that generic legislation be introduced to deal with the need of various trust companies to bring legislation of this sort before the House. I hope that the work the Finance and Expenditure Committee has done on this bill will be taken up by the Ministry of Justice, because I think that we have to balance the trust relationship and the ability for trustee companies to operate in the best commercial interests of their beneficiaries, along with the protection of those beneficiaries. This legislation, which the Finance and Expenditure Committee has said should proceed unamended, will allow the legislation to go forward so that any changes in the parent company of the Guardian Trust Co. can be notified by way of Order in Council.

This is the third time in 7 years that the Guardian Trust has been required to promote a private bill to maintain this authorisation, and I think it is a good use of the House’s time to consider the broader issues rather than the individual issues each time they come up, and to retain the need to notify beneficiaries, and New Zealanders more generally, very carefully that these changes have taken place. I again thank the Finance and Expenditure Committee for the work it has done on this bill, and I commend the bill to the House for its second and third readings.

Dr the Hon LOCKWOOD SMITH (National—Rodney) Link to this

Let me make clear at the outset that the National Opposition will be supporting the New Zealand Guardian Trust Company Amendment Bill. I have to say that it is good that Labour is at last seeing some sense in this legislation. As the Minister Judith Tizard just told the House, this is the third time in 7 years that the New Zealand Guardian Trust Co. has had to come to Parliament to get its 1982 Act amended to cover the circumstances of a change of parent company.

The last time this legislation was in front of Parliament, National members—and there may well have been members from some other smaller parties, as well—tried to get a change in the New Zealand Guardian Trust Co. legislation to enable future changes of parent companies to be made by Order in Council. If I look back at the Commerce Committee report on the bill of 2005—when the New Zealand Guardian Trust Co. was last in front of this Parliament having this kind of change considered—I see that the National Party had a minority view in the report. It stated: “The National Party supports the proposal to approve a new parent company by Order in Council and is disappointed with the decision of the committee in not supporting this initiative.”

So there we have it. The last time the New Zealand Guardian Trust Co. was in front of Parliament with a private bill on this issue Labour refused to do the sensible thing. So here we are today spending more of Parliament’s time on one of these amendments to the legislation to provide for a change in the parent company of the New Zealand Guardian Trust.

It is good that this legislation is going through, and I am pleased that the Parliament is dealing promptly with it today, because I think on one of the three occasions in the last 7 years when the Guardian Trust was in front of Parliament the legislation took 18 months to get through the process. At least it is being dealt with more quickly this time, and we can look to the future with the Order in Council process. This process is not just a rubber stamp; the Minister of Justice will be involved. The provision in the legislation requires the Minister of Justice to consult the Minister of Commerce on the matter, so there are appropriate safeguards, if you like, for the beneficiaries of the trust.

As the Minister explained, the New Zealand Guardian Trust Co. was formed in 1982 through the merger of the trust department of the New Zealand Insurance Co. Ltd and the South British Guardian Trust Co. Of course, the current Act for the Guardian Trust states that the Promina Group is the parent company. The Act has to do that. In New Zealand trust law if a trust company conducts business with a related company, and pays itself for doing that business, it would be outside our trust laws, because these trust administrators cannot gain—they are not allowed to profit—from the administration of their own trust. So we have to provide in law—in the legislation that provides for these trust companies—the ability for trust companies to trade or conduct business with their own parent companies and associated subsidiaries, because they can actually give benefit to their beneficiaries through being able to do that.

That is why we have these provisions in the legislation, but it is crazy that each time the parent company changes, the trust has to come back to Parliament to get approval for that. In fact, as we look at this particular case—the Promina Group being taken over by Suncorp-Metway—it is a very major company that has now become the parent company. Suncorp-Metway has, I think, a market capitalisation of $19 billion. It is a very, very major financial institution. I think there is absolutely no risk in respect of the beneficiaries of the trusts that are administered by the New Zealand Guardian Trust Co.

The Finance and Expenditure Committee looked at whether it would be possible to pass some generic legislation that would provide for this Order in Council process for a change of parent company for all the trust companies caught up in similar provisions as the New Zealand Guardian Trust Co. In fact, when we had a look at this we found that there are actually four trust companies in New Zealand that have these specific Acts of Parliament: the New Zealand Guardian Trust Co. Ltd; the Trustees Executors Ltd, which was formerly called TOWER Trust; Perpetual Trust Ltd and PGG Trust Ltd, which operate together; and the New Zealand Permanent Trustees Co. Ltd. Those four companies have these kinds of specific pieces of legislation.

We were advised at select committee that one of these four—the Trustees Executors Ltd, formerly TOWER Trust—already has in its legislation an Order in Council provision similar to that going into this New Zealand Guardian Trust Co. legislation. One of the four already has the Order in Council process, so it does not have to come back to Parliament. The New Zealand Guardian Trust Co., once we pass this legislation, will have the Order in Council provision, so it will not have to come back to Parliament. That leaves just two of the four trust companies. One of them, I gather, is largely Government-owned, so it is not likely to have its parent company change. That leaves only one trust company. It may well be that this Parliament will yet have to address a further private bill should the parent company of that trust change.

I think Parliament is doing the sensible thing this time. It is a shame this was not done in 2005. When the New Zealand Guardian Trust was last in front of Parliament, National recommended this change. The National members of the Commerce Committee actually recorded a minority view following the select committee consideration, arguing that it should be an Order in Council process, and it is good that Labour has finally agreed. The Order in Council process is robust. It does not leave beneficiaries of the trust at risk.

I am pleased that this legislation now means that the New Zealand Guardian Trust Co. will not have to go to that huge expense or that time. Members should not forget that this bill not only changes the name of the parent company but actually validates the transactions that have taken place between the new parent company, Suncorp-Metway, and the New Zealand Guardian Trust Co. since May 2007. There have been 9 months of transactions that the bill validates since May last year when the change in parent company actually happened.

All in all this is good legislation. National is pleased that the bill has the Order in Council provision. We will not have to address this for the New Zealand Guardian Trust Co. in the future, and that is why National is supporting the bill.

R DOUG WOOLERTON (NZ First) Link to this

New Zealand First, likewise, supports the New Zealand Guardian Trust Company Amendment Bill. I cannot add anything to the contribution of the honourable Minister Judith Tizard or to that of Dr the Hon Lockwood Smith, either. Between those two experienced members, the full story has been laid out. It is clearly a nonsense that we have to come back to this House each time there is a change in this company, and the simple amendment being proposed makes sure that we do not have to do that. As the previous speakers have said, this is not some penny ha’penny outfit; this is a company with robust procedures around it, and it is in good hands. So without further ado I say that New Zealand First supports the bill, and I will leave it to other speakers.

TIM GROSER (National) Link to this

First of all, in response to the member who shouted across the House at me: “We’d like to hear you talk about the WTO.”, I say that since I am not sure that I am capable of speaking for anything less than 2 hours on that subject, the old phrase “Be careful what you wish for.” came to mind.

On this occasion, the danger of my speaking even up to my allotted time limit is zero, as my knowledge of this issue is—I will be kind to myself—less than encyclopaedic. However, I have looked at the issue, and it seems to be a very sensible thing for this Parliament to do. It is obviously not a partisan issue; it is supported by the parties concerned. Of course, it has become what seems to be, if not quite a hardy annual, a very frequent affair for this Parliament to address. Its purpose, I think we understand, is to validate the transactions of this very important financial institution, in terms of its dealings with its new parent company, and to try to change the procedure, for the reasons that my colleague Dr Lockwood Smith very succinctly pointed out, in order to try to avoid so much of Parliament’s time in the future being taken up with this type of procedure.

Nevertheless, it is important that things are done properly. There is, as far as National members can see—and, obviously, as far as other members can see—absolutely nothing remotely dodgy about this. It is simply that the normal provisions of trust law in this country are necessarily conservatively drafted—they have to be; they are protecting the assets of thousands of New Zealanders who use this trust or other trusts, who quite often are quite vulnerable New Zealanders.

We have just seen the collapse of the finance companies, and how would we describe that? On a nationwide scale it is, frankly, entirely manageable, simply because the assets of the finance companies were, I think, only 5 percent of the total banking sector. But I do not think the individuals involved would want to hear anyone say what I have just said, because it has been an absolute disaster for them individually. I have always had the view that the phrase caveat emptor, though it is necessarily the only practical way to proceed in these financial matters, is as cold as charity, and makes assumptions of people’s knowledge that are probably completely unrealistic. The law governing the actions of these trusts is necessarily conservative, and we would not want to change that, but for this particular reason, because of the change of parent company, we need to change the legislation through Parliament and validate those transactions.

I am glad that the Government has now agreed with the proposal that National put forward the last time this occurred. It will, I think, expedite this matter. It is a reflection, I suppose, of the pace of corporate activity—mergers and acquisitions are happening, not only in our country but around the world, at an extraordinary pace. Although I suppose many New Zealanders may think that Suncorp-Metway is nothing more than a rugby stadium, it is, I believe, one of the five or six largest financial institutions in Australia.

I also reflect on the fact that the change in the name over the course of the last 30 years, from South British Guardian Trust Co. to Suncorp-Metway, tells us a lot about the distance we have travelled culturally. It is fascinating that our predecessors would have used the phrase “South British” as a winning name, but there we have it. We have moved on, I suppose, as a country.

The legislation seems eminently sensible, and technical, and National is very happy to support it so we can get on with rather more important business—or so I hope. Thank you.

Dr PITA SHARPLES (Co-Leader—Māori Party) Link to this

Tēnā koe, Mr Assistant Speaker. The concept of guardianship is well known in Māoridom. In fact, we live by the concept of kaitiaki, where there is spiritual and cultural care and guardianship of others. It is something that is derived from one’s whakapapa, and one has a responsibility to look after things. We also refer to our taniwha tipu, which act as protectors over water, land, and other things. This is represented in our carvings. So it is an important concept to us.

It is with these thoughts in mind that the Māori Party comes to consider the New Zealand Guardian Trust Company Amendment Bill. The bill amends the New Zealand Guardian Trust Company Act 1982 to enable the New Zealand Guardian Trust Co. to establish business with its present parent company, Suncorp-Metway Ltd. The Guardian Trust is our largest independent investment funds manager, and has been in existence since 1859. Twenty-three years later it merged with the South British Guardian Trust, then later, in 1916, it merged with the New Zealand Insurance Trust Department. One could say that mergers are fairly common in this line of business.

Suncorp-Metway is an Australian banking, insurance, and financial services company. The company boasts over 7 million customers, with approximately 223,000 shareholders. Numbers are all well and good, but the central issue concerning the Māori Party is what these groups do and what relevance this work has to tangata whenua, to Māori. Does the notion of “guardian” as understood in this bill bear any relationship to the concepts and philosophies in Te Ao Mārama?

The work of the Guardian Trust is pretty much as expected—wills, trusts, mortgages, estate administration, enduring power of attorney, property finance, financial planning—and so it goes on. But there are a few interesting features. The Guardian Trust is a major supporter of the Cancer Society, and it has recently been funding research with the Canterbury Respiratory Research Group into the key causes of asthma and allergies in young children.

That is a good start, given the disproportionately high statistics for Māori in all these areas. It has never been clear to me why Māori are 18 percent more likely to be diagnosed with cancer than non-Māori, but nearly twice as likely as non-Māori to die from cancer. One would hope that the Guardian Trust, in supporting key advocacy groups, will advance our knowledge in unpacking such inequities. Similarly, I must ask why it is that although the prevalence of paediatric asthma in New Zealand is similar for Māori and non-Māori, Māori children have more severe symptoms when they present to the health provider, require hospitalisation twice as often as non-Māori, and are less likely to receive adequate asthma education or to be prescribed preventive medication. All these questions of the day may, of course, now be answered through the support of the Guardian Trust.

There was a third area of support, and I think this is important to refer to when thinking of the Guardian Trust. This is in relation to its trusteeship role of the Palmerston North Māori Reserve as a trust under the Te Ture Whenua Maori Act. The Palmerston North Māori Reserve Trust owners are descendents of the Taranaki people who settled in Wellington in the early 1800s. The Guardian Trust and 10 managing trustees appointed by beneficial owners are motivated by the primary objective of retaining and growing the core asset, as well as being risk-averse in terms of decision making.

All these examples of the role of the Guardian Trust are by way of background to our support for this bill. We believe that there are some potential gains through lower costs and increased financial stability, through the merger of Guardian Trust with Promina Group and Suncorp-Metway. If these changes are able to assist the work programme of the Guardian Trust in protecting the ongoing welfare of the people, then clearly nothing should stand in their way.

Finally, I make a brief comment on clause 5(4) of the bill as it relates to the conclusions of the Finance and Expenditure Committee. This provision authorises the Governor-General by Order in Council to amend the principal Act whenever there is a new parent company, without the need for legislative amendments. The issues of the day that this House could be debating include another series of police raids on Tūhoe, the revelation that the district health boards have committed 182 serious mistakes involving patients, the current situation in which so many New Zealanders are caught in the midst of a severe housing unaffordability crisis, or even the fact that the vital mechanism for maintaining our electricity supply, the Cook Strait cable, is old, unreliable, and in need of major repair. Instead, the House has been debating whether a trustee company can change its parent company. It just defies reason.

We do, however, support the bill in its final readings, and welcome the initiative taken to move the responsibility for parliamentary scrutiny of the amendments included here to the approval of the Regulations Review Committee—a committee that I can vouch to this House will do a proper job, and give proper scrutiny as it does with every item that comes before it on the table. Thank you, Mr Assistant Speaker.

CRAIG FOSS (National—Tukituki) Link to this

I rise to speak in rather unusual circumstances. It is the first time I have spoken in a combined second and third reading of a bill—the New Zealand Guardian Trust Company Amendment Bill 2007. I know that we are allocated normally 10 minutes for the second reading and 10 minutes for the third reading, but, as Mr Groser recently said, I would struggle. On a bill that takes probably 3 or 4 minutes to read, it is hard to speak for a combined 20 minutes. However, I acknowledge the previous speaker, Dr Pita Sharples, who brought a whole raft of new material into the debate on this bill. I listened with interest, and I also acknowledge that we were hosted by his iwi the other day and had a very, very enjoyable time. I acknowledge the Hon Judith Tizard and the background that she gave recently to the private bill in her name. It covered all aspects, and I thank the Minister.

On Tuesday we received the message from the Governor-General to facilitate this bill through the House—a speedy passage—and I think we should also acknowledge the Business Committee for making this happen. I acknowledge the sentiments of the previous speaker in regard to the time that we are spending on this bill. Yes, they are technical matters, and, yes, they have to happen, but in a legal sense there are much larger issues that the House could be debating.

There is one part of this amendment bill that grates with me—though I appreciate and understand the reasons for it—and that is the retrospective nature of the bill. It legitimises the formal ownership of the Guardian Trust with the Promina Group, back to 20 March 2007. That retrospectivity grates with me. I fully understand and appreciate why that is, and in a legal context we could argue about it forever, but this Parliament should get its act together and predict and have a schedule of bills that will mature, rather than coming to a crisis point as in this instance—I guess it is not a crisis, but we are doing something retrospectively. Let us try to do something proactive.

That brings me to the point that the previous time this bill was before the House—