Commerce Minister Simon Power won't make himself available for comment on two major issues which are denting the credibility of NZ's capital markets at the very time the Government is preparing to wean Kiwis off their penchant for property investment.
The Commerce Minister's press secretary cited the Securities Commission's separate probes into Allied Farmers share trades and the operation of a Huljich KiwiSaver fund as the reason for Power's silence.
The NZX's operation of a two-tier information regime relating to the since-jettisoned proposal to include Allied Farmers in the Top 50 index has been slated by the company's chief executive Peter Alloway.
The prop-up payments Peter Huljich made to boost the returns from a Huljich KiwiSaver fund has also been the subject of frank comment from prominent capital markets players - not only rival KiwiSaver provider Gareth Morgan.
Just last week Power issued the Government's response to the Capital Markets Taskforce report. He gave the regulators a serve: "After the last financial crash, with respect to finance companies, a number of regulatory bodies [were] standing there looking at each other as investors' money fell to the ground."
But it will be up to 20 months before investors can expect any concerted moves to introduce more regulatory rigor into New Zealand's capital markets according to the Government's improbably named "action plan".
Most of the taskforce's recommendations that deal with issues which are critical to securing investors' trust in our capital market - particularly the very enforcement regime that Power complains about - are on a slow burner tied to the lengthy review of the Securities Act.
Yet more discussion documents will be issued with potential changes - including the establishment of a super regulator - not due to be in place until October 2011.
Yet, the PM's pet project - the financial services hub - is on a fast-burner with decisions to be taken by May 31.
This is frankly arse-about-face.
Take the two current issues which are casting a pall on our markets.
First, NZX and the Allied Farmers botch-up.
NZX boss Mark Weldon is considered an untouchable. A member of Key's "Kitchen Cabinet", Weldon chaired the PM's Job Summit and was a member of both the capital markets and taxation taskforces. Even before the two taskforces reported he was calling on the Government to axe property investors' tax breaks - or as he called it "rorts".
These tax breaks on investment property were driving money away from both listed and unlisted companies, he claimed.
The problem is that while Weldon has driven the NZX hard and posted year on year gains for the listed company he heads, he clearly finds it difficult to separate out the exchange's regulatory responsibilities from his drive to increase commercial performance.
Why else has he condoned the issuance of the two absurd press statements the NZX has put out justifying why the paid subscribers to the exchange's data service were given price sensitive information that Allied Farmers was about to be included in the Top 50 index at what is clearly the expense of mum-and-dad shareholders?
Weldon will argue this until the cows come home: Financial reporters are too dim to get it. Yadda. Yadda. Yadda.
But if Power is really intent on building confidence in our capital markets, he should simply hive off NZX Regulation (NZR) now to sit as a separate wing of the Securities Commission, not wait another 20 months.
That would remove Weldon's obvious conflict of interest and clear the way for NZR to perform its surveillance and enforcement role as far as NZX is concerned.
Second, ensuring the integrity of KiwiSaver.
Don Brash was lending more than his own expertise when he accepted the chairmanship of KiwiSaver provider Huljich Funds Management.
A former Reserve Bank Governor and former leader of the National Party, Brash's name has considerable cachet and would have acted as a security blanket for investors considering assuring their own retirement through the Huljich fund.
His involvement in the Huljich venture came about through top-level political linkages. Auckland mayor and former National Cabinet minister John Banks is also a director of Huljich Wealth Management, but he is closer to the Huljich family than Brash.
Peter Huljich is well-known in Auckland's "celeb" circles.
He features frequently in celebrity photographer Norrie Montgomery's A List website as well as sister Rachel, a former Miss New Zealand. But he had not forged a track record in public funds management before launching a KiwiSaver fund.
Neither Brash nor Banks came down in the last shower.
As Brash disclosed to the Herald yesterday he was aware Peter Huljich had contributed $1.3 million to Huljich unit trusts soon after they were formed which was the major reason the board decided to close off those trusts.
"I don't recall registering the fact that this payment had affected the performance of the KiwiSaver funds, probably because at that time the funds were extremely small (and the dollar amount to which they benefited from that payment was less then $9000).
"To the best of my recollection, neither I nor the board were aware of the second payment."
Brash is genuine when he describes the whole affair as "regrettable".
A new prospectus and investment statement has been issued.
A Securities Commission investigation is in full swing and the board is now meeting weekly to review the investment performance.
Huljich and Brash argue that no investor has been disadvantaged through the prop-up payments.
But they miss the point.
The real issue is the integrity of the information that Huljich Wealth Management put in front of punters which posted a better performance than had actually been achieved.
This is not a simply issue of buyers beware. KiwiSaver has a competitive advantage that many other asset classes don't enjoy: Explicit tax benefits for savers and a legislative requirement for employers to invest 2 per cent of employees' wages or salaries in their funds.
If Power was smart he would use the Huljich issue to force greater regulatory requirements over just who qualifies to be a KiwiSaver provider, and, greater powers for the Government actuary to investigate providers' accounts and some rules around inter-party dealing.
The Capital Markets Taskforce began its deliberations in September 2008.
It should not take another "crash and burn" fallout in our markets before enforcement is stepped up.