By RICHARD BRADDELL
The Public Trust, after reporting an $8.5 million loss, says promised reform of its governing legislation is vital if it is to be a profitable enterprise.
The loss, for the June 2000 year, includes one-off abnormal charges of $6.1 million and compares with a $1.6 million profit last year.
Even last year's profit would have been a loss but for a $2.5 million gain from the sale of property assets.
In spite of legislative constraints, the Public Trust was profitable in the first quarter of the present financial year, said the Public Trustee, David Hutton.
Mr Hutton said that while the Public Trust had lost money, its clients who had money invested with it had done well with its managed funds performing near the top of the market.
However, he said, legislation that prevented it from charging management fees on group investment funds seriously eroded its performance.
Since a 1988 change in the trustee law requiring a "prudent person" approach to investment, a third, or $300 million of the Public Trust's funds, were managed in group investment funds.
Describing the result as unsatisfactory, Mr Hutton said that an acceptable return on the $77.8 million in reserves could be achieved only through legislative change.
The Public Trust's loss was foreshadowed in Parliament three weeks ago by its minister, Jim Anderton, when he said it was basically a sound business that had suffered from operating with its hands tied behind its back.
Legislation would be introduced before Christmas for implementation next year, Mr Anderton said.
The Public Trust cannot charge when it prepares wills, its highest volume product, and it is prevented from open competition with lawyers for conveyancing work.
And its flexibility is hampered because interest rate changes on lending can only be made after an Order in Council.
Public Trust looks for relief
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