Standards and Conformance Bill

Before I give the call, I point out that some members may have thought I was hasty in putting Part 2 to the vote. That was not the case. We had a number of speakers on a previous sitting day. All bar one of those contributors were not speaking to the part in question. In no way were they speaking to Part 2, so I thought we had had enough and I took the question. We are now on to clauses 1 and 2. It is a wide-ranging debate.

I have been going through the standards update. I do not know how up to date it is, but I have been going through the local government component of it because local government is a subject dear to my heart.

My colleague Sandra Goudie very ably raised concerns about the by-laws and the standards for the water supply standard. I just want to reconfirm what my colleague Sandra Goudie has been saying about water quality standards, and to perhaps give members a bit of a picture of the impact that those standards have had on rural communities throughout New Zealand. They have had an impact on all communities, obviously, but in my experience the impact has been felt in rural and provincial communities. I can tell members that the drinking water standards have added an awful lot of cost to the people in local government, particularly where I come from, where there are a lot of people but not many people to pay for these new standards. We really need to keep that in mind when we are passing legislation.

I will now talk to the title of the bill. One thing that worries me about this bill is that we seem to have a daily diet of rhetoric from the Government on reducing compliance costs. I find it ironic that Minister Dalziel touts herself as being business-friendly, because in the general debate today it appeared that big business had become the enemy. I am not sure why big business should be anybody’s enemy, especially given that big business is a large employer, it seems to make a great contribution to our GDP, and it also pays an awful lot of tax. If somebody could tell me what is so wrong about big business, I would be very interested to hear.

I come back to the Minister’s comments on reducing compliance costs, and I turn now to the business compliance costs statement, which appears on page 10 of the Standards and Conformance Bill. Here is the issue I wonder about. The business compliance costs statement covers the effect the bill will have on businesses. It will affect businesses run by a couple of people, businesses involved in manufacturing, or, perhaps, a large company.

The business compliance costs statement—and I will read from the explanatory note of the bill because I think it is very interesting—states: “One-off compliance costs arise as the 2 bodies that are affected by the proposal will be required to shift their accreditation from IANZ to JAS-ANZ, and they will need to understand the requirements imposed by JAS-ANZ in order to obtain accreditation by that organisation.” Those requirements seem to be imposing an awful lot of work on some of the small businesses that I represent. I read further: “This will require staff of the affected organisations”, or businesses and people in offices who are otherwise trying to earn a living—and I know that the Minister is enjoying my speech, so I will continue—“spending time with JAS-ANZ accreditation staff so that the latter can have confidence that the 2 organisations are issuing certificates to their clients in accordance with IAF procedures.” This is riveting stuff, and it is also costly. “The size of these compliance costs will depend on the confidence JAS-ANZ has in the previous accreditations undertaken by IANZ.”

I ask the Minister whether we will hold seminars for people so that they understand how to do this. But she should not worry about it, because the statement then goes on to state: “These compliance costs will be mitigated by the Ministry of Economic Development …”. Well, that is good; I feel better! And I am sure our businesses will feel better, too! Our little businesses, trying to make a dollar in Central Otago and Cromwell, which is a wonderful hub—[Interruption] No, in the middle of the picking season for stone fruit. Those businesses have all the time in the world! All the staff necessary will sit down with this business compliance costs statement, and it will not cost them a thing and will take no time, at all! They are not to worry about it, because the compliance costs will be mitigated by the Ministry of Economic Development!

The title of this bill is the Standards and Conformance Bill, and one cannot have much argument with a bill that is designed to make sure that the Standards Council, which develops standards for goods and services, and the Testing Laboratory Registration Council, which makes sure those standards are being met, both conform to international standards, norms, and practices. But we can have an argument about how much this legislation will cost—what my colleague Jacqui Dean has just been talking about—and we can oppose it because of the costs and level of compliance it demands.

The business compliance costs statement accompanying the bill—which my colleague also referred to—lacks detail, but it does show significant increases in costs, particularly in the fees of the new certification body. In fact, there is a huge increase in those fees, as was explained by Pansy Wong last night. She calculated it as being nine times—

💬 Pansy Wong: Ten times.

NICKY WAGNER:—10 times the existing cost, and the worst thing is that the increase is for no discernible improvements in service. I have to say that for someone who comes from a background in small business, compliance costs, especially any huge increases in compliance costs, are like a red rag to a bull.

New Zealand businesses believe that regulation and increased costs of red tape are their biggest problems. We can look at the latest findings of Grant Thornton’s international business owners survey 2006, which shows that companies in New Zealand rate red tape as the most significant constraint to business expansion—at a 42 percent rating. These results are reflected in a global trend. Australia, with a 32 percent rating, and Ireland, with 30 percent, were among those countries that fretted less about red tape, but the least concerned was Singapore, which is at the foot of the global worry league. In fact, only two Asian nations, Malaysia and the Philippines, rated above 30 percent. Of course, the worry for New Zealand manufacturers and service deliverers is that, increasingly, we are competing with those Asian markets.

The Grant Thornton survey was conducted among more than 7,000 owners of medium-sized businesses—businesses with between 10 and 50 employees—around 30 countries. Its chairman, Warwick Jones, said that he was not surprised at the New Zealand results from the survey. He said that New Zealand business is strongly wrapped up inside regulations, rules, and bureaucracy. The situation here is in stark contrast with our competitor State in the shape of Singapore, which many people perceive as being authoritarian, but which clearly has a much more open view on making it easy to do business.

It is also a concern that for our neighbour Australia, red tape is very much second among concerns about constraints—well behind its concern about the availability of skilled workers. That is not good news for New Zealand, for two reasons. One reason is that it could further encourage New Zealand businesses to relocate their operations to Australia, and the other is that it could mean that Australia will lure more skilled workers across from New Zealand, in order to alleviate its chief block to expansion.

So, because of the costs and the increased demands of certification, National opposes this bill. We also oppose it because New Zealand business does not want, and does not need, any more red tape. Thank you, Mr Chairman.

I rise to take a call on behalf of New Zealand First. I was not going to do so, but I am compelled to get to my feet by the speakers I have heard. I have never heard so many erroneous statements in my life. It is important to realise that this is not a compulsory accreditation being imposed on the businesses of New Zealand. It is a totally voluntary regime that is there to help businesses in the export industry to have some accreditation to an internationally recognised standard.

The businesses involved in this accreditation know the costs before they become involved. I know that, because in my previous employment I was involved in working to an international standard ISO 9002, and we knew the costs. We knew what was involved. So for members to say that this is extra red tape and that it will increase costs is absolutely ridiculous, and for them to say that the businesses do not know the requirements to meet these standards and will need seminars to get them to meet the standards is outrageous. The manuals are there, in clear black and white, to assist businesses to reach the standards.

When we hear about accreditation costs, the costs are dependent on the size of the business, and one expects to have those costs. One knows the costs before one gets into this particular regime. They are outlined by the agencies when one applies to have one’s product or service certified. So it is quite astounding for members to say that there will be extra red tape and costs, when a business actually goes into this accreditation regime knowing that this will happen.

We know that these standards support New Zealand’s trade. They support a health and safety environment. In a manufacturing industry particularly—like the dairy industry—one has to have that certification to sell product overseas. It is the only way that one can give one’s customers an assurance that the product meets the standards that are required, and often the product standards are set by the country one is exporting to.

Before I left my previous employment I was very pleased to see that standards were made fit for purpose, because prior to that, one could manufacture a lead lifejacket—which I know some National members would like to have—but that lifejacket was absolutely not fit for purpose. Not many people want a lead lifejacket; they want one that will actually help them when they get into difficulties out on the water.

So some of the arguments I have heard tonight are totally astounding. This is a good Standards and Conformance Bill. It meets the requirements of the people who are involved in this particular industry. I hope that I hear some more accuracy in speeches before the end of the night.

I am delighted to be speaking to the Standards and Conformance Bill, and to the title, even more so when I know that we are opposing it. One of the things I wanted to do was to see why these changes were being made, and why we were going down this path with this bill, which makes changes to various pieces of legislation. I could find only one reason—it is stated in the explanatory note that international practice is that only one body in any country has the function of registering certification bodies. I would have thought the system we had was fine. I did not see any reason for the change, and I still do not. Perhaps the Minister in the chair, the Hon Lianne Dalziel, might like to take a call and give us an explanation, but I will not hold my breath.

I was interested to look at what the Joint Accreditation System of Australia and New Zealand—JAS-ANZ—is required to do, particularly when it is meant to be a not-for-profit organisation yet is making $773,000-odd before tax. What does that not-for-profit organisation do? It is about strengthening trade. It is to be the joint accreditation body for Australia and New Zealand, to develop mutual recognition in overseas markets for Australian and New Zealand producers, exports, and personnel. I thought that was a bit strange when I thought about our apple exports. I think Craig Foss would be interested in that. If he has a little look at the objectives of the Joint Accreditation System of Australia and New Zealand, he will wonder why on earth we cannot get our apples to Australia, and he will see what those guys are doing.

💬 Hon Lianne Dalziel: Ha, ha!

Well, it is all part of free trade. Do they or do they not meet the standards? Can it not do something in this regard? This is meant to be about trade.

I would also like to take on the points made by Barbara Stewart. She said that this is a voluntary situation. It may be a voluntary situation, but if people want accreditation for international trade they are caught between a rock and a hard place, and they do not have much of a choice if that is to be the process by which they can improve their market access. With a captured clientele the Joint Accreditation System of Australia and New Zealand can screw the cost and, from the concerns raised by submitters, it seems that that is exactly what it is intending to do.

If we look at the submissions from Telarc and from Health and Disability Auditing New Zealand Ltd, we can see quite clearly that they have major concerns about the increases in costs. They have set out those cost increases quite clearly to the Minister and the select committee, and one has to wonder why those concerns have not been addressed. If we look at the explanatory note in relation to the compliance cost report, we can see quite clearly that the Joint Accreditation System of Australia and New Zealand itself acknowledges that there will be some confusion amongst organisations wanting accreditation, and some confusion about what is to be complied with, what the procedures are, and what has to be done to meet its new certification.

Perhaps the Minister would like to take a call and explain the situation around compliance costs, and how she can justify increased costs—to a degree of 10 times the original—which is what has been mooted by submitters. These submitters have some expertise in this field and it is to be hoped that the Minister has taken some cognisance of the substantial outline of fees that will be imposed. I draw her attention to the outline of fees by Health and Disability Auditing New Zealand. It has shown, in summary, that a 3-year certification period will cost $155,000, compared with the $18,000 it used to be through International Accreditation New Zealand. That is a huge difference in cost—$155,000 as opposed to $18,000. Could the Minister please take a call and give us an explanation about the difference in those costs, and why she is condoning a compliance cost that will be incurred to that degree by all participants. The Joint Accreditation System of Australia and New Zealand is supposed to be a not-for-profit organisation. It is supposed to be there to assist not only consumers but also businesses. I cannot see businesses being assisted by compliance costs to that degree. So could the Minister please take a call.

I move, That the Committee divide the bill into the Standards Amendment Bill and the Testing Laboratory Registration Amendment Bill pursuant to Supplementary Order Paper 49.