KEY POINTS:
Details of a new taskforce designed to maintain and strengthen New Zealand's capital markets have been revealed by the Government.
Commerce Minister Lianne Dalziel said the new "Capital Market Development Taskforce" will see government and the private sector work together to develop New Zealand's capital markets.
The taskforce is chaired by investment banker Rob Cameron and has been asked to "develop a blueprint and action plan" that will be released late next year.
Many will feel the taskforce has a big job on its hands, with the NZX's third biggest company, Fletcher Buildings, revealing today that it had come under pressure to shift its headquarters and primary listing to Australia. Its share price has halved in the past year.
In a statement released today, Lianne Dalziel said improving the investment environment was "a key part of the government's economic transformation strategy".
"To deliver wealth and jobs, New Zealand firms need ready access to affordable capital. The taskforce will identify ways to make this happen."
"I am delighted that Rob Cameron has agreed to lead this team which includes a range of participants from different parts of our capital markets."
Dalziel said the high calibre of taskforce members reflectedthe importance of capital market development to New Zealand's economic success.
The taskforce will report to a group of senior Ministers including Finance Minister Michael Cullen, Economic Development Minister Pete Hodgson, and Associate Finance Minister Trevor Mallard.
"New Zealand's capital markets have improved over recent years, boosted by the 700,000 people who have joined KiwiSaver, the business tax package and the changes to the Portfolio Investment Entity regime. But to strengthen this position we must continue to develop the breadth and depth of our capital markets."
The press statement said taskforce chair Rob Cameron had described the initiative as "a timely opportunity to position New Zealand's capital markets in a rapidly evolving global environment."
"In order to produce a working blueprint that will support the growth of New Zealand's firms, we'll need to look at the current state of our capital markets, the international context, future risks and opportunities and key changes necessary to deliver the best possible financial system for New Zealand. It will be a challenge but one that the taskforce welcomes. "
Taskforce members from the private sector are: Rob Cameron Adrian Orr, Cathy Quinn, Franceska Banga, Gareth Morgan, Jonathan Ling, Mark Weldon, Nigel Williams, Rob McLeod and Scott St John.
It will have its first meeting next Thursday and its work will be supported by officials from the Ministry of Economic Development, Treasury, the Reserve Bank and the Inland Revenue Department.
Questions and Answers about the Taskforce supplied by Commerce Minister Lianne Dalziel:
What is the purpose of the Capital Markets Development Taskforce?
Thriving capital markets are increasingly recognised as essential for New Zealand's economic growth. Greater depth and breadth in New Zealand's financial system will help firms raise funds in New Zealand and allow New Zealand to capture more of the gains for business growth. Better developed local capital markets will also deliver other benefits, including encouraging firms to locate to this country.
The purpose of the taskforce is to develop and launch a blueprint and action plan to improve New Zealand's financial system for the benefit of the New Zealand economy and its business. The taskforce will:
* Identify key constraints and key opportunities for the development of NZ's financial system
* Identify and debate options to improve the performance of New Zealand's financial system; and
* Develop a blueprint and action plan for the development of New Zealand's financial system.
Why is it necessary? Why now?
The taskforce was first proposed at an Investment Forum on 27 November 2007 at which approximately 60 people, drawn from the business and finance sectors, academics and senior staff from relevant public sector bodies, debated how best to improve the investment environment for New Zealand firms. A key recurring theme throughout the day was willingness for the private sector to engage with government to advance "NZ Inc" interests.
Many participants agreed that although New Zealand's capital markets had improved over recent years, noting in particular the success of KiwiSaver and the Portfolio Investment Entity (PIE) regime, more work was needed to strengthen and deepen our capital markets. Also stressed was the importance of developing an agreed vision of New Zealand's financial system.
A report entitled "Improving the Investment Environment for New Zealand Firms" was the central discussion paper at the forum. It was a summary of extensive research and discussions held between officials and private sector stakeholders.
Who are the members? How were they chosen?
The taskforce is drawn from the business, finance, economic analysis and legal communities. It is these areas that were identified as providing the taskforce with a broad enough perspective of New Zealand's economy and the depth of expertise to tackle a wide range of finance and investment issues. What was most critical however was identifying people who are committed to enhancing New Zealand's economic performance and intrinsically, the wealth of all New Zealanders.
The taskforce is chaired by Rob Cameron of Cameron Partners, Investment Bankers.
The private sector members are: Franceska Banga (NZVIF), Jonathan Ling (Fletcher Building), Rob McLeod (Ernst and Young), Gareth Morgan (Gareth Morgan Investments), Adrian Orr (New Zealand Superfund), Cathy Quinn (MinterEllisonRuddWatts), Scott St John (First New Zealand Capital), Mark Weldon (NZX) and Nigel Williams (ANZNational). Members are appointed as experts, and not as representatives of their organisations.
Will the taskforce seek support from other industry representatives?
Open dialogue and well-informed robust debate based on high quality analysis will be a key operating feature for the taskforce. To contribute to this operating style, the taskforce will regularly seek the expertise and perspectives of others in their sectors and networks.
One of the key deliverables of the taskforce is to develop an action plan - including actions that can be taken by the private and public sectors. To garner support for this action plan, taskforce members will seek to work with other key players in their sectors.
The secretariat will also consult widely with other opinion leaders as part of its duties in supporting the taskforce.
How will the taskforce go about its work? For example, what are some of the areas of research and interest that the taskforce will explore?
The terms of reference allow the taskforce to identify the areas it considers key to improving New Zealand's capital markets. This reflects the government's confidence in the expertise and capability of the taskforce to advise on ways to improve New Zealand's financial system.
The public sector participants (drawn from the Ministry of Economic Development, the Treasury, the Reserve Bank and the Inland Revenue Department) will ensure that relevant data and information held by government agencies is made available to the taskforce. This will ensure that members are kept well informed of current research and analysis and are kept abreast of developments within relevant policy environments.
The taskforce will begin the process of defining specific areas of research at its first meeting. It will then produce possible visions for New Zealand's Capital Markets from which they will seek to choose the one that is most favourable based on state of the art research and analysis.
Are there issues or areas that will NOT be considered by the taskforce?
The taskforce's terms of reference are quite open, and the group has the scope to focus on whatever it thinks is most important and most likely to make a difference.
However, the government recognises that the group is likely to explore a wide range of policy areas in its discussions. The functioning of the financial system is influenced by settings in many areas of the economy including tax and immigration for example. To avoid duplication of effort, the taskforce will be kept informed about relevant issues being undertaken by government agencies or advisory bodies. Any taskforce recommendations for policy change will need to go through the appropriate processes.
What is the government's role?
The government has set up this taskforce because it sees the value that can be gained from the private and public sectors working together on complex issues that can contribute to New Zealand's economic performance: the answers do not lie in any one place.
Government agencies will support the role of the taskforce by contributing their perspectives and views, and by providing a dedicated secretariat from the Ministry of Economic Development. This secretariat will provide analytical and administrative support.
What is the government's expectation of the taskforce?
In setting up this taskforce, the government took the view that it was important to build consensus around the importance of capital markets to New Zealand's future growth. Also, expert advice was required to provide well informed and analytically robust views and insights and that any taskforce recommendations required an open-minded response.
The government expectation is that the taskforce will come up with a blueprint and action plan that is both visionary and pragmatic.
What is happening internationally in this area?
Other economies recognise the importance of robust capital markets to their economic performance. In fact, in the last month the UK and Australia announced major work in this area. These initiatives follow a similar design to what is happening in New Zealand, in that each has a significant focus on bringing the views of industry leaders and experts together. Australia is undertaking a similar strategy. Also, the new Mayor of London, Boris Johnson, has recently announced that he has asked senior city executives to work with the City of London Corporation to examine how London can sustain its position as the world's leading financial centre.
Once the taskforce has done its work, what then?
The idea of asking the taskforce to develop a blueprint and action plan, and to work closely with public sector agencies, is designed to allow the government to respond quickly to the taskforce's recommendations.
We anticipate that when the taskforce releases its blueprint, government should be in a position to outline some actions it will be able to take in response to the recommendations. Clearly, some recommendations will require further work through the usual policy processes.
It is also expected that the action plan will include initiatives that the private sector will commit to implementing.
- HERALD ONLINE
