New Financial Markets Authority to get NZ$24 mln funding this year, up from NZ$18 mln for current regulators

New Financial Markets Authority to get NZ$24 mln funding this year, up from NZ$18 mln for current regulators

The new Financial Markets Authority, which will be up and running on May 1, will receive funding of NZ$24 million for the 2011/12 year, up from an NZ$18 million budget for current financial market regulators.

Commerce Minister Simon Power made the announcement this morning. The FMA's budget will increase to NZ$28 million in the 2012/13 year, but then fall back to NZ$26 million for 2014/15 and beyond, Power said in a media release (see below).

The NZ$24 million is less than what the FMA Establishment Board chairman Simon Botherway wanted. Botherway told interest.co.nz in a Double Shot interview last October that double the Securities Commission's NZ$15 million annual budget would see a "very good regulatory apparatus" established with "very good regulatory outcomes" expected from it.

Power said the FMA's funding will be a combination of Crown (taxpayer) funding, to reflect the broader public good, and third-party funding. The latter will be sourced from fees and levies where services are provided to specific market participants for their individual or group benefit, said Power.

The government will publish a discussion document soon seeking public comment on the proposed fees and levies. This discussion document will also contain fee and levy proposals for the Companies Office, the Insolvency and Trustee Service, and the External Reporting Board.

In submissions on the Financial Markets (Regulators and KiwiSaver) Bill, which has now been passed by Parliament establishing the FMA, the big banks made clear their lack of excitement at the prospect of being levied to help fund the FMA.

The FMA is being set up to consolidate the powers and functions of the Securities Commission, some of the functions of the Registrar of Companies and the Government Actuary, plus some of sharemarket operator NZX's regulatory roles.

Power has tasked the FMA with leading a drive to restore investor confidence after the demise of 63 finance companies and other entities over the past that has put NZ$8.59 billion of investors' money, held in more than 205,000 deposits, on the line. See our Deep Freeze List for full details.

See Gareth Vaughan's interview with FMA CEO Sean Hughes here.

Here is the announcement from Power:

Commerce Minister Simon Power today announced Cabinet approval for the operating budget for the Financial Markets Authority, which begins operation on 1 May.

The budget for 2011/12 will be $24 million, increasing to $28 million in 2013/14 to reflect the emphasis on market intelligence, investigation and enforcement, and some additional transition costs.

The budget for 2014/15 and beyond will be about $26 million – an increase of around 44 per cent over the $18 million budget for the current regulators.

Mr Power said the FMA needs to be adequately resourced and funded to carry out its functions effectively.

“This budget shows that the Government is committed to ensuring the FMA has the right tools to keep our capital markets working for mum and dad investors. 

"With this level of funding it can focus on proactively monitoring and enforcing regulation of our financial markets.”

The approved funding will provide additional investment in the areas of market intelligence, investigation, and enforcement.

The funding will be a combination of Crown funding, to reflect broader public good,and third-party funding, where services are provided to specific market participants for their individual or group benefit. Third-party funding will be sourced from fees and levies paid under the new legislation.

Mr Power said he intends to publish a discussion document shortly seeking public comment on the proposed fees and levies.

The discussion document will also contain fees and levy proposals for the Companies Office, the Insolvency and Trustee Service, and the External Reporting Board. This will provide a clearer picture of government fee and levy changes in the financial sector.

(Update adds detail on funding plans, including on private sector to be levied).

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I agree Ivan. Totally outside any sensible role for government at any level.

Giving $36m to Team NZ in economic times like these seems outrageous. What do people in Christchurch think?

Gareth : Didn't Helen Clark mention that the $ 36 million was a support for NZ's yacht building industry , as well as for tourism  ? ... That  being so , why isn't the boat-building industry directly supporting Team NZ . At one time they were boasting that they added a billion dollars to NZ's economy , annually .

This is how the boat building industry makes its money.   http://www.stuff.co.nz/auckland/local-news/western-leader/4892282/Land-to-cost-15m

 "Mr Lloyd's company Hudson Bay Holdings bought a 4.3 hectare block of land at Hobsonville airbase from the government in 2000 for just under $500,000"

"Waitakere City Council agreed to back Mr Lloyd's proposed marine park. In June 2005 the council's property development arm, Waitakere Properties, entered an agreement with Hudson Bay Holdings to subdivide the company's land and then buy just over 3ha of the site for $7.65m"

 

I'd like the government to give me $38 million to establish a gold mine on the West Coast, where do I apply?

 

AAGH. Please do not take that seriously.

Excellent idea , Rogie !

...... Anyone else got suggestions for what to do with a spare $ 36 million ....... What would be a more productive use of that munny , than biffing it at a team of yachties ?

C'mon gang , thinking caps on ............!