Need for action

Evening Post, Volume CXVIII, Issue 34, 9 August 1934, Page 9

Need for action

MEMBERS CONCUR

THE BILL PASSED

"HARD TO BELIEVE"

Surprtso and consternation- at tho disclosures mado in tho interim report of the Commission were expressed by members during tho discussion which followed the second reading speech of tho Minister of Finance, and general approval or. the measures being taken by the Government was expressed. The Bill had passed through all stages in the House by 10.30 o'clock.

"It seems hard to believe that activities of this description are possible in the Dominion," said the Leader of the Opposition .(Mr. M. J. Savage). "When one reads the interim report of the Commission —and I havo read it from cover,to cover—one is amazed at what the report contains; one can't feel any other way. I can hardly imagine that it is possible." Mr. Savage said that there was one point on which, he would like to comment. Tho report was dated June 9. Ho supposed that thero was somo reasonable explanation for inactivity in the open up till now, but he would expect tho Minister to givo an explanation why action had not been taken sooner. '' Why, it seems to mo that wo aro rapidly developing into modern Hatrys,"Mr. Savage continued. "Shall I say, perhaps, not on us largo a scale, but for an ingenious scheme I don't think thero is any improvement on this."

Mr. Savage said that seeing that the Bill only asked for the right to investigate the position, with any necessary action to be taken after, as far as he could' see it was impossible for any voice to be- raised against tho passing of tho Bill. "One couldn't stand for activities of this description," he added. "I am bound to accept the statement of the Boyal Commissioners, till those who aro respondents in the matter can convince mo and others that they have been misrepresented; but with tho information in front of us I find it very difficult to believo that there is any reply to what has been stated in the interim report of tho Boyal Comission. If this state of affairs were allowed to develop, anything in tho nature of investment would soon become an im-

possibility altogether. One would not bo safe in doing anything. I am not worrying, about anything I have to invest, because no one can take me down for what I have. (Laughter.) It is quite evident that tho Government, while they haven't been saying anything that we could hear, have evidently been investigating. The Minister has told us that similar action is being taken in New South Wales, by the Commonwealth Government, and in South Australia, Thoy have come to the conclusion that it's no use trying to yard a bunuy if they only watch ono burrow; they must watch tho lot." "The figures," continued Mr. Savage, •'why, they're astounding! There are big possibilities here; high finance, surely. I was struck by that twentytwo million cheque, but, oh! This is only a small matter alongside that." A FAIR TRIAL.' Mr. Savage said' that he would protest against anybody not having a failtrial, but the House had the assurance of the Minister that the Bill was tho only means of having the light of day let into activities of these particular companies. Any future action would be taken as a result of those investigations, and ho took it from what was contained in tho Bill that any action would be taken through tho Supreme Court. Ho saw nothing at all to which one could take exception. Ho had thought about the matter since he had seen the report,, and had discussed it to some extent, and further than expressing amazement at the possibility of such a thing developing as it had done in New Zealand, it seemed that there was nothing else to bo said except that tho House could not do better than put the Bill through so that the inyestiga tion could be made at the earliest opportunity, and so that those who were affected would have an opportunity of putting all their cards on the table. "Then we can all hope that they will •come out of it with a clean skin," he said. Mr. B. Semple (Labour, Wellington East): They're like the Irishman with tho wheelbarrow: they have the job ahead of them. Mr. Savage said that in view of thereport it would be very difficult for them to come out of it with a clean sheet. If there were any others of the same character it was to be hoped that they would be treated in the same impartial way. It might bo .that there were others. The Commission was entitled to the thanks of those who were affected, and. also to tho thanks of thosp likoly to be affected in the future by similar developments. Mr. A. Harris (Government, Waitemata) said that he appreciated tho oxtremo urgency of the Bill, No objection could bo raised to tho investigation. Probably nothing of greater importance had come before the Houso for many years. Mr. D. G. Sullivan (Labour, • Avon) asked whether there was a weakness in the law regarding the control of investment trusts and whether the New Zealand law was on all fours with that of other countries such as Great Britain and Australia. Mr. H. G. Dickie (Government, Patea) said that he was glad tho Government had taken action. It was to be hoped that tho promoters of the companies would be brought to book as speedily as possible. These companies preyed on the small investors and great harm was done. ; Mr. H. G. B. Mason (Labour, Auckland Suburbs) said that New Zealand company law did ,not prevent swindles, but rather facilitated swindling. Tho companies mentioned in the Bill had como into conflict with wealthy investors and had drawn attention to their ramifications. Had they kept to the poor people nothing would havo been done. It was only when the wealthy section of tho community, was affected that the law was changed. Tho law should ■■■protect, the public in every possible way. Captain H. M. Eushworth (Country Party,,-Bay of,lslands) said that there could bo no objection to the Bill, which was . designed to protect the people against themselves. He was sorry that tho Bill had not a wider seopo. There was a considerable number of people who had been robbed of their equities in another manner. FOR ALL COMPANIES. Mr. W. Nash (Labour, Hutt) suggested that the powers in the Bill should be taker, for all companies. General powers ought to be taken immediately to investigate any companies. There was a danger that through the limitation of powers, some companies might escape. He suggested that the Government should set up a national investment body which would approve or otherwise of all investments. An investment trust should not bo subject to private control. It should be a national organisation. Mr. F. Langstone (Labour, Wainiarino): Let tho Public Trustee do it. Mr. Nash: Yes. Let any person who is competent do it. Ho said that if they could not have an investment board, then they should havo a Government audit of all companies. Ho hoped that no future commission would bo placed in tho position of not being ablo to obtain all the information it desired. Mr. W. P. Endean (Government, Parnell) said that it was the duty of Parliament not only to suppress crime, but also to prevent fraud. Mr. Langstone said that ho hoped there would be a 100 per cent. Toundup. So far the Bill had touched the petty matters in comparison with what was going on. Mr. B. A. Wright (Independent, Wellington Suburbs) said that ono of tho difficulties was that tho Supreme Court was not willing to interfere with the public companies unless the matter was glaring indeed. It. was essential that tho public should bo educated in tho buying of shares. It was to bo hoped that a scare would not be created and that investors in other companies would not take alarm. Some of tho companies mentioned in the Bill had names similar to very good companies. For example, ono of the concerns named in the Bill was the Investment Executive Trust of New Zealand, and its title wa3 similar to that of the New Zealand Investment Trust Company, which was a good company. PREVENTING REPETITION. Mr. Semple said that the Minister was to be congratulated on his prompt action. He asked whether tlie Government would pass legislation immediately to prevent a repetition of theso ' swindles. It was absolutely necessary to prevent futuro swindles. No prospectus should be permitted to bo issued until it was investigated by an investment board appointed by tho Government.: Mr. J. A. Leo (Labour, Grey Lynn) said that two of the persons mentioned in tho report had been candidates at tho last General Election. If they had como into tho Houso, they might have showed Parliament how to "raise tho wind." Everybody had fallen to tho wiles of the "got, rich quick" artist. Even the Beform Government had paid £27,000 for a property that it could havo purchased twelvo mouths earlier for £5000, and probably would give away today for £1000. Mr. W. J. Broadfoot (Government, Waitomo) said he hoped that tho Government would, take stops to tax adequately reserves that were beyond being safo and reasonable. When they could bo distributed in fully paid-up shares it was positive that the earnings of tho company had been too high and ■an undue tax on the community. MINISTER REPLIES. Replying, the Minister of Finance, in answering tho point about delay, raised, by Mr. Savage, said it had been

difficult to decide upon the procedure to bo followed. The Government had dealt with tho matter -with dispatch, but tho present dato was tho first which was suitable to all the Governments involved.' The law was now practically on all fours with the English Act, but thero were alterations to be made in Great Britain.

Boforring to the matter raised by Mr. AY. Nash, Mr. Coates said that the report was only of an interim nature, and consequently powers were being taken only' as far as the report was concerned, and tho main Bill would appear later in tho session.

The Bill was read a second time on tho voices, put through its remaining stages, and passed.