Financial Reporting Bill

In this part there are a number of points to be made, and I am certainly keen for the Minister of Commerce, should he feel moved to take a call, to explain to the Committee the rationale behind the substantial Supplementary Order Paper that has appeared before us tonight, in order to provide the Committee with some of the information that lies behind it. I think that presumably within this Supplementary Order Paper lies an important rationale and explanation as to why—particularly for the overseas companies—we have moved to the position that the Minister has taken.

It is also important to say that this Financial Reporting Bill—which has taken some time to go through the committee—has been a really substantial piece of work and there has been a lot of work done by the Commerce Committee on this. I would like to acknowledge all the officials here tonight for the work that has been done, and also the good, solid work done by the committee generally.

It is actually 20 years old, this piece of legislation that is being replaced, and it is an amendment to 80 pieces of legislation. So it is quite a substantial piece of work, and it has taken quite some time to move through. It is part of a number of pieces of legislation that have come before the Commerce Committee on the reform of financial accountability and around the importance of transparency. I know that my colleagues have talked quite a lot about both of those things tonight—transparency and accountability—and I will certainly be doing that myself. But I think it is absolutely an acknowledgment that moving these things forward in this modernised piece of legislation is really important and it should be acknowledged for all the work, submissions, and considerations that have gone into it.

In talking about transparency and accountability though, I think it is really important that, if we are being serious about these things—and I am sure the Minister in the chair would acknowledge that—we have to practise what we preach. We are seeing, time and time again, examples where there are questions being raised about the transparency of particular contractual arrangements and the transparency of practices that are emerging.

Chorus has been mentioned a number of times tonight. I do want to touch on that, obviously, because there is a piece of legislation that underpinned the demerger of Telecom, that then turned into a contract for Chorus, which has been rolling out over the last couple of years. But since then we have had a decision by the Commerce Commission that the Government and Chorus did not like, then we have had a review instigated by a Minister that has questions around its legality and is now under judicial review, and subsequently we have another inquiry, which was announced last week, into the viability of Chorus.

All of those things have taken place as a result of a lack of transparency, and a potential lack of the disclosure of information that should have been made right from the very beginning, whether it was through the demerger process, the legislative process, or the contractual process. All of those things have resulted in a situation that is costing the taxpayers more money through reviews and inquiries, through more officials’ time, through legal bills, and through all kinds of procedures, and impacting on the viability of a substantial infrastructure project.

It all comes down to transparency and disclosure. It would seem to me that if we are going to be serious about the legislation that we are pushing through, which is about requiring accountability by companies to their shareholders and accountability to the taxpayers, then we have to practise what we preach.

This particular instance, which I know is embarrassing to the Government, is going to be an increasing embarrassment to the Government—in fact, it could be described as a running sore for the Government. This is going to go on and on, and ultimately the shareholders are going to be demanding accountability from their company, from Chorus, and the taxpayers are demanding accountability from the Government around the disclosure—or the lack of disclosure—around that accountability.

I think what that all boils down to is that there is a disconnect between what the Government says it is doing and some of the good work that is actually being done through legislative processes. On this occasion the Minister in the chair, the Minister of Commerce, has presented to the Committee this reasonably fine piece of legislation that has had a lot of cross-party work done on it and agreement on it, but alongside that is a process that is running counter to it. I think the people listening to this at 10 to 11 at night, if they are listening, have got the right to ask how that can be, why that is, what is happening about it, and where the accountability is on it.

I do want to raise one other matter in this legislation, at clause 45, “Meaning of specified not-for-profit entity”. It is essentially around the threshold for determining a specified non-profit entity, which I think is one of the examples in this bill where there was very good work done and good listening and understanding of the impact of this legislation on the not-for-profit sector. It was important to ensure transparency and disclosure. But also it had to be acknowledged that for the 2,000 to 3,000 churches around New Zealand that had operating expenses, that being initially in the bill meant that they would have to have a much greater requirement for operating, for disclosure, and for the compliance—and they rely hugely on voluntary treasurers and hugely on other voluntary people to meet the requirements of the bill as it stood originally—they would have had to end up employing professional people, at great cost.

So I would like to commend the committee for the advice that it took and for the conclusions that it came to around this, where the compliance dropped so that it was not going to be such an onerous task for these organisations—these 2,000 to 3,000 churches around New Zealand. I think that that was a very responsible outcome. There are still compliance requirements and that is extremely important, but I think that what it showed is that this bill, this particular bill, had the ability to be flexible and to recognise the importance of the not-for-profit sector, in particular, for the impact that it would have on churches.

I would ask that the Minister take a call to explain Supplementary Order Paper 376 and the rationale behind it, in terms of the overseas companies that carry on business in New Zealand and their requirement to file audited financial statements. It was proposed that there would be obligations removed if the New Zealand business had both total assets of no more than $60 million and total revenue of no more than $30 million. These amounts have been changed in this bill, through this rather large Supplementary Order Paper, to $20 million and $10 million respectively. I am curious and would like to know what the rationale is for that, and I just wonder whether the Minister will take a call.

The question was put that the amendments set out on Supplementary Order Paper 393 in the name of the Hon Craig Foss to the proposed amendments set on Supplementary Order Paper 376 in his name to clause 44 be agreed to.

Amendments to the amendments agreed to.

The question was put that the amendments as amended set out on Supplementary Order Paper 376 in the name of the Hon Craig Foss to Part 2 be agreed to.

Amendments as amended agreed to.

Part 2 as amended agreed to.

Part 3 Miscellaneous provisions