Financial Reporting Bill

It is with delight that I rise to speak to the title and commencement clauses of the Financial Reporting Bill. This bill, as I noted in my earlier contributions, is something that we on this side of the Chamber can agree with. Although we think it may have slipped through unnoticed by the Government that here is a bill that actually does reduce compliance on small entities that do not need it, certainly the Government’s record suggests that it is interested in doing otherwise, and I raise the matter of the child support payments that come on to small businesses now, the compliance requirements around the paper boy tax, and so on and so forth. I note the red tape that this Government has built—it has tried to do an iPad tax, and it has tried to do a car-park tax. There is a constant flow of additional requirements on small businesses. But this one—

💬 Hon Clayton Cosgrove: They came a gutser.

They came a gutser—they certainly did come a gutser. The word “gutser” is a technical tax term, which my colleague is using. There is an opportunity in this bill for the compliance to be reduced where it is not required. So that is why we heartily support this bill. It was well debated in the Commerce Committee, and we have covered the charities matters there. The “Financial Reporting Bill” is probably a good title for this bill, I would suggest. That is what it is about. We might even want to add in there “(Transparency and Appropriateness)” as descriptors, because the transparency arrangements here are ones that we can agree with. If there is no wider public interest and if shareholders are comfortable with the arrangements, unnecessary reporting requirements should be abandoned, and that is one idea that we on this side of the Chamber are quite comfortable with.

However, we need to be really clear that where there are public funds at play, there should be transparency. That is why, of course, when it came to the Supplementary Order Paper 376 changes and the energy companies were being sold off—being flogged off—for less than the $5 billion to $7 billion that Bill English said that he might get when he sold New Zealand taxpayers’ best revenue-generating assets, we protested at the loss of public scrutiny of those entities. So we have a principled stance. We are glad to see that that is reflected in this bill. It does not seem to be normally the Government’s practice where it does these shady deals, with the casino deal being the most obvious one—John Key meeting with the Skycity chief executive, saying one thing to him whilst there was supposed to be a transparent process running. We know that this Government has a bad track record of doing deals behind closed doors, and the business community is sick of it. Those in the wider business community whom I meet with are saying that they just want transparent arrangements, so that they know that when they are bidding for something, it is really being taken seriously.

That means that in this case, where there is a sensible offering being put forward—and I thank the officials for their hard work. They will have put many, many hours into this Financial Reporting Bill and put many more hours in over the years in background and supporting papers and consultation. I thank the officials for their work. It is a good bill, and that is why we on this side of the Chamber are very pleased to support it.

We wish that the Government would apply these transparency principles to its wider practice and that it would not put those ideas, I guess, of transparency and responsibility to one side when the Auditor-General makes a criticism in, say, the Earthquake Commission report or of the Crown Retail Deposit Guarantee Scheme. We wish that the Government would adopt these principles for its own practice, not just for the wider business community. We know that there are examples. We think of the power sector, and the $4.3 billion worth of price gouging that was estimated to have occurred between 2001 and 2007 by the world’s leading modeller of energy markets at the time, Professor Wolak, because of effectively cartel-like behaviour, where market power could be used to extract excess profits from the market at the expense of mums and dads at home.

Of course, that risk is going to be increased with the asset sell-offs, where the interests are not aligned with the taxpayer. The silver lining back then was that much of that excess profit went back into the taxpayer purse. We now know that so much of that is going offshore. Treasury said that those State-owned enterprise sell-downs will take the Government books backwards by about $100 million a year—$100 million a year.

So I urge people at home to vote “No” in the referendum when they have their chance to say no to the asset sales that this Government has put in place. Say no to the lack of transparency that goes with the deals that it is doing around those energy assets, and around deals more generally, and say no to this Government at the next election.

I disagree with my colleague Dr David Clark in one respect, and it is simply this. The title of this legislation is slightly incomplete, in that it could well be the “Walk the Talk Bill” or the “Practise What You Preach Bill”, because if we look at financial reporting in this piece of legislation, the Financial Reporting Bill—which we support—we see that this Government has the great habit of preaching to everybody about standards, transparency, and accountability, until it comes to itself.

One of the best examples of that—and I do partly blame Treasury for this; it stood by and allowed it to happen—is the fact that the Government, in its budgetary documents, booked the proceeds from the sale of State-owned assets that it had not sold, and it estimated that they would be $5 billion to $7 billion. We know that Bill English ain’t even going to get close, or he might get close to $5 billion at best. The Government booked the proceeds from the sale of assets before they had been sold, but did not book the loss of dividends from those sales once the assets went out the door. So the Government booked it coming in but did not book it coming out. So these guys are great—even though we support the legislation—at preaching to everybody else about standards and accountability, whether it be to a beneficiary or to a flash guy on the high street. It is very, very good at preaching about accountability and transparency and standards, and even accounting standards, until it comes to itself.

I have been in business. A number of people in this Chamber have been in business. Can you tell me of anybody in their right mind who would book the proceeds from a sale that has not happened—the Government did not know how much it was going to get; “best guess” was the quote from the Minister of Finance, Bill English—but fail to book the loss of dividends that would flow from said sale? That is dishonest—

💬 Paul Goldsmith: Well, you get interest from it.

—and “Goldfinger” at the back knows it. That is dishonest—utterly unaccountable, utterly un-transparent, and totally dishonest. So I say that maybe this bill should be called the “Financial Reporting (Walk the Talk) Bill”, the “Practise What You Preach Bill”, or “Do Unto Others”, to quote the biblical phrase.

Those members ought to actually look at themselves as they pass this piece of legislation. It is right that we have appropriate and high-quality standards in our financial businesses—and, generally, businesses do, actually; they do—and in our charitable sector, and for those transacting business. But as the Government passes this legislation tonight or tomorrow morning, I wonder whether those businesses are looking at how a Government cooks its own books in respect of the mixed-ownership model—$5 billion to $7 billion? No, it was $7 billion from the get-go. Then it went to being from $5 billion to $7 billion. Now we think that it will be about $4.8 billion or $4.9 billion.

It is $1 billion down on Meridian Energy, $100 million down on Mighty River Power, and those members get up and they celebrate because they got $100 million extra—$365 million for Air New Zealand—which equates to 36 hours of operating expenditure for the Government. They say: “We got $100 million. We’re heroes.” Yeah! So it has gone from a $1.1 billion stuff-up to a $1 billion stuff-up. “Grab a seat, grab a share, we are all happy.”, and they take the dough and run. But they did not account for it appropriately, and they did not live up to their own accounting standards, which they preach in this legislation. So I say to the Minister of Commerce that he might want to reflect on that, and his own colleagues might want to reflect on that, in the passage of this legislation. I am sure that there might be—

💬 David Bennett: Yeah, who sabotaged the sale?

—one or two people, even in Hamilton, or the outer-terrestrial areas that that member comes from, and there might be a few businesses in his patch that actually look at this and say: “Well, if we’re expected to adhere to these standards, why doesn’t the Government? Why doesn’t the Government adhere to these standards, if we are expected to?”. What business in that member’s electorate would book the proceeds from a sale that had not happened but not book the dividends? I ask the member. Does he know of a business? Oh, the old “Billiard Ball”—yes, the old can rattled. But there is silence. The silence is deafening. There is no such business. They would be in jail, I say to that member, as he crawls behind his desk.

Clause 1 agreed to.

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

Amendments agreed to.

Clause 2 as amended agreed to.

The Committee divided the bill into the Financial Reporting Bill and the Financial Reporting (Amendments to Other Enactments) Bill, pursuant to Supplementary Order Paper 392.

Bill reported with amendment.

Report adopted.