Financial Reporting Bill

Part 3, debate on clauses 49 to 60, includes schedules 1 and 2 stand part.

This part refers to the standards and provisions relating to auditor qualifications and access to information. I am sure members of the Committee would have looked at this part of the bill very closely and will be debating the finer points. I am interested to see whether anyone from the other side takes a call or whether the Minister of Commerce will get up.

💬 Hon Clayton Cosgrove: They haven’t so far.

They have not so far. They have not so far. They are a bit quiet on regulations that are designed to reduce compliance. They do not quite know what to say. It is a new experience for them, I suspect.

💬 Hon Clayton Cosgrove: Especially for John Banks.

Especially—especially for John Banks. The interesting thing about this one is that when we specify the qualifications of the auditor, as we see in clause 35, “Qualifications of auditor”, they must be a chartered accountant, and so on, they must be a member of this organisation; the notice must be put in the Gazette, they must be eligible to act as an auditor in a country, State, or territory outside New Zealand, and so on and so forth—all of these rules and regulations. They must be a fellow of this or that institution. It means nothing, at the end of the day, if no one listens to them.

In this bill, the Financial Reporting Bill, it is expected that businesses will comply, but the Government’s own record on this stuff would send a very different message. We think of some of the examples of that. We think of the recent Earthquake Commission report that found huge failures—huge failures. The Auditor-General found disastrous processes there. I will not rehearse all of the terrible things that were found in that process, but the Government dismissed it immediately. So we see a Government that says that it is above any kind of auditing, any kind of review of its work, and that arrogantly carries on as before.

We think of the Law Society advice on the Government Communications Security Bureau (GCSB) bill—damning of the process. Why would you pass such an important piece of legislation under urgency? Why would you not have a process in place to review decisions? All of these things are basic, fundamental democratic processes that were obviated or not complied with by the Government. The Government arrogantly said that it would not agree with them, that it does not listen to them, and that they are talking a load of nonsense. This is the behaviour of a Government whose members say there has to be a standard for businesses, there has got to be a standard for citizens, but it is not for them. They are on their own level. They are out of touch, they are arrogant, and New Zealanders are getting sick of it.

The other example that springs to mind is the Crown Retail Deposit Guarantee Scheme. We think back to that one. This Government may have lost New Zealand taxpayers $500 million.

💬 Andrew Little: What?

It could be up to $500 million, Mr Little, that was lost in the Crown Retail Deposit Guarantee Scheme as a result of a failure—an absolute and abysmal failure—to monitor that process. The Minister of Finance did not ask to have regular updates. He basically signed a blank cheque. The scheme itself was a sensible scheme. It was put in with the right intentions in the nick of time to stop a run on the banks, and that was a very, very sensible thing to do. But thereafter, when the National Government took over, it did not monitor the scheme and the liability grew. One of the deposit takers had its balance sheet increased tenfold—risky loans left, right, and centre—but the Crown was guaranteeing it. It is no wonder that people were piling money into it, but that was at the expense of the New Zealand taxpayer.

Then we had South Canterbury Finance. Everyone remembers that one. Its loan book blossomed. It bloomed with all this dodgy debt and again there was a failure of monitoring. The Minister of Finance had his head firmly in the sand. He did not ask for reports, Treasury did not ask for reports it could have got from the Reserve Bank to tell it how much that scheme was costing the New Zealand taxpayer over time, and they failed to put measures in place to stop those dodgy loan books growing. But that is a Government that has failed to monitor.

If we remember back, what happened next was that the Auditor-General—again, the Auditor-General, the same one who wrote the Earthquake Commission report said there was a failure of process. What did this National Government do? Just as with the Earthquake Commission report it said: “It doesn’t matter. We don’t care. We’re just going to carry on. We won’t read it.” That is John Key’s favourite line. When he gets the police report on John Banks’ conduct, he will not read the report.

This is the kind of arrogance. Everyone else must comply. Everyone else must be audited, the auditing must be accurate and precise, and it must be done to these standards and those standards. But when it comes to the Government’s own conduct, it is dismissive—completely dismissive—of the Auditor-General. In the case of the Crown Retail Deposit Guarantee Scheme, there are a whole lot of anomalies there, and $500 million of taxpayer money was probably lost unnecessarily by this Government, but it would not hold an independent inquiry into that. It would not go further.

The question was put that the amendments set out on Supplementary Order Paper 376 in the name of the Hon Craig Foss to Part 3 be agreed to.

Amendments agreed to.

Part 3 as amended agreed to.

Part 4 Amendments to other Acts