Prime Minister John Key’s big gig in New York went well—but the real issue is building security on the home front.

Winning U.S. backing for a New Zealand-led research effort to cut climate-warming agricultural emissions, trading one-liners with Letterman the late show giant, those casual, cordial exchanges with Barack Obama, doing the ring-a-ding thing on Wall Street, and launching New Zealand’s campaign for a seat on the Security Council in 2015 was a good week’s work for New Zealand and for John Key.

The voters at home will be more impressed if he demonstrates similar ease in pushing ahead with measures to rebuild our security before we start setting the rest of the world to rights.

Key has the capacity to communicate big picture economics in every day terms. He needs to use it now. His first 100 days showed he can move with a sense of priority, inclusiveness, and urgency. He needs to do it again.

Currently, his government looks like it is trying to do too much on too many fronts, and getting lost in detail and diversions instead of staying focused on the main mission: jobs and growth, growth and jobs.

Of course, his government cannot be left to try and pull New Zealand out of recession on its own. Unless we all want to end up working for the government, or, worse still, totally dependent on it.

The private sector has to rise to the challenge—and, for that to happen, it needs private funding from banks, other lending institutions, investors as well as shareholders.

Start with the banks. Bill English likes to remind us that, unlike the United States and Europe , our bankers did not engage in the risk-taking that threw the rest of the world into recession. Unfortunately, our bankers are not going to change the habits of a lifetime by taking risks now. Business assets and plans are much more difficult to evaluate than land and property.

Anyway, Australia ’s big four banks—which dominate banking here—have their own risks to worry about. They are currently setting aside $1.8 billion in case they fail in the defence of their structured financing transactions against tax claims from our Inland Revenue Department. So, expect them to stay cautious about their New Zealand exposures.

Turn to the finance companies. Remember them? Of those that survive today, 12 have locked in $2 billion of their investors’ funds with moratorium arrangements to avoid receivership. Another $4 billion has gone up in the smoke left by those whose mirrors stopped working. Here is our homegrown recession-builder, and this is where some of the government’s energy needs to be directed.

Last week, parliament’s commerce select committee received an interesting and under-reported insight into the shortcomings of governance with and surveillance of New Zealand ’s finance companies from the Securities Commission.

The Commission had called on independent reviewers to examine its powers and performance, and tabled their findings at the select committee hearing last week. The reviewers’ findings have been sadly under-reported, as the following excerpts will indicate.

“Much of the current securities market legislation is uneven in its coverage, heavily prescriptive and in many areas badly out of date…

“The Securities Commission currently lacks the teeth to give full effect to the legislation and regulations. It must be given more extensive powers, including the power to issue rulings, stronger investigative and enforcement powers throughout the life cycle of a security, the ability to monitor the conduct of financial intermediaries such as trustees, asset managers and auditors,[and] a closer supervisory role over directors’ activities …

“We conclude that the main constraints on the Commission’s effectiveness lie outside its direct control. They stem from weaknesses in the current legislation, the Commission’s narrow mandate and lack of powers, the proliferation of regulatory bodies, inadequate resourcing, and bottlenecks in the judicial process.”

An appendix to the reviewer’s report shows that the Securities Commission was flagging concerns to the government about the adequacy of disclosure by finance companies as early as September 2004. In September 2007, it called for urgent changes to regulations to strengthen reporting by finance companies to their trustees, and additional powers to enable trustees to gather information.

So far, this year, the Securities Commission has come in for some rather contradictory treatment by the new Government and its officials.

The Ministry of Economic Development has cut the Securities Commission’s funding for court proceedings by $2 million to $781,000, while Commerce Minister Simon Power is promising new regulations on finance company moratoria and a new regime for licensing, monitoring, and direction of their trustees by the Securities Commission – “to be introduced by the end of this year.”

The independent review suggests a far more urgent and comprehensive reform is needed to rebuild investor confidence in financial intermediaries who can help deliver the mission: growth and jobs, jobs and growth.