New Public Trust board likely to raid funds

Friday 10th August 2001

By Rob Hosking

The government has already appointed a board to modernise the Public Trust Office - before it has passed the law to bring that modernisation into effect.

The government expects the legislation to be passed by October, the minister in charge of the Public Trust, Jim Anderton, said this week in announcing appointments to the board.

Among those changes is likely to be a raid on part or all of the $86 million which has been built up in the Public Trust Office's funds since its inception in 1872.

The Public Trust manages $6 million in assets in addition to the $86 million in reserves and the last government initiated legal action to obtain a ruling about whether those reserves were owned by the Crown or by the legatees of former Public Trust clients. The Privy Council ruled in the government's favour. Use of the Public Trust's funds was at one point mooted as one of many options for helping fund Mr Anderton's People's Bank but a spokesman for Mr Anderton said the government did not intend to link the two.

The move to tidy up the status of the Public Trust was also initiated by the last government after officials from the Treasury and the State Services Commission advised that reform was long overdue. The office is a government department but it is also totally self funding, and it is governed by no fewer than 88 different pieces of legislation.

It was widely believed the last government intended to sell off all or part of the office but briefing papers released by Mr Anderton last year stated that "no decision was taken to sell Public Trust and I am not aware that the matter was ever formally considered."

However, the proposed changes - and the more aggressive commercial tack already taken by the Public Trust with its "Your Word is Law" advertising campaign - have been strenuously criticised by such groups as the Law Society.

The society's gripe is that although the Public Trust maintains its ability to provide free estate planning to individuals, it also then requires them to name the office as executor.

This entitles the office to charge up to 5% of the value of the estate - a higher price than most lawyers charge, the society recently told Parliament's finance and expenditure select committee. The committee noted the anti-competitive implications but did not recommend any changes.

One firm, Whangarei-based Henderson Reeves, has lodged a complaint with the commission over the issue.

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