LAWFUEL – The Legal Newswire –
The ability of local authorities to raise funds from the public for infrastructure projects rather than having to pay for them out of rates will be restored if an exemption to the Securities Act introduced today by the Labour-led government is passed by Parliament, Commerce Minister Lianne Dalziel says.
“This will take some of the pressure off rates by allowing the cost of infrastructure assets, which are essentially long-term investments, to be spread across the life of the asset.
“It will also reduce compliance costs by easing the process for local authorities to offer securities to the public, while expanding and diversifying the investment options available to retail investors,” Lianne Dalziel said.
“The removal of the local authorities exemption in 1998 made it too costly for most local government’s to meet the level of disclosure required under the Act to raise money from the public.
“This is because the costs of preparing a prospectus can be prohibitive, and the signature and liabilities provisions of the Act in its current form do not suit the legal framework of a local authority. The principle of collective responsibility under which company directors tend to operate does not exist within local government where elected members are not liable for decisions or actions they don’t support,” Lianne Dalziel said.
Since the 1998 changes only one local authority – Auckland City Council – has issued debt securities to the public.
The Bill to amend the Securities Act 1978 had its first reading in Parliament today. Lianne Dalziel said it had been welcomed by local government and she was hopeful if would receive cross-party support.
Contact: Elspeth (Ellie) McIntyre, Press Secretary, ph 04 471 9397 cell 021 227 9397
All Lianne Dalziel’s media statements and speeches are at www.beehive.govt.nz/dalziel