Third Readings

on behalf of the Minister of Commerce and Consumer Affairs: I move, That the Auditor Regulation Amendment Bill, the Charities Amendment Bill (No 3), the Financial Reporting Amendment Bill, and the New Zealand Institute of Chartered Accountants Amendment Bill be now read a third time. The legislation arising from the Accounting Infrastructure Reform Bill will enable the accounting and audit industry to be more effective and more efficient. This Government has progressed a raft of important changes for the Business Growth Agenda, which began with the passing of the Financial Markets Conduct Act 2013 and the Financial Reporting Act 2013.

The Financial Markets Conduct Act ensures financial markets are fairer. It regulates how financial products are offered, promoted, issued, and sold, to support confident and informed market participation. The Financial Reporting Act improves transparency. It has reformed reporting obligations by removing the requirement for smaller companies to produce complex financial statements. It allows shareholders of small and medium sized companies to decide whether the company must prepare financial statements, enabling companies to better direct resources where the need is greatest, growing their businesses. The accounting infrastructure legislation is the third step and will build on these improvements. It will realign the structure of the audit and accounting industry so that participants are able to quickly adapt in an evolving environment. A more competitive and efficient accounting market will ensure better business advice for New Zealand firms, while a robust audit industry will provide improved assurance for users of financial statements, building confidence in our financial markets.

Together, these pieces of legislation will encourage the confident and informed participation of businesses, investors, and consumers in the financial markets. They support a key plank of the Government’s Business Growth Agenda—that is, the development of our capital markets by promoting fair, transparent, and efficient financial markets. I thank all the submitters who took the time to contribute to this very important legislation. I commend these bills to the House.

I am going to confine my comments to only some of the legislation arising from the Accounting Infrastructure Reform Bill. The legislation is, of course, supported by the Labour Opposition. The legislation is relatively straightforward. I do agree with the Minister of Commerce and Consumer Affairs that it brings accounting practices in New Zealand and Australia closer together in similar ways to what has been done by both Governments, over many years, in terms of trans-Tasman commercial arrangements in banking and legal entities and sectors. It will indeed promote a far more efficient arrangement and better business outcomes, I think, for that profession, and it is supported, in large part, by the accounting sectors both here and by CPA Australia.

That being said, as I said last night, when we last dealt with this, we did have some difficulties—well, not so much some difficulties, but we did probe officials on a number of areas—around charities and the impact of the legislation on the charitable sector, which I think was a concern shared by both sides of the House. I think Mr Young was the chair of the Commerce Committee. We did not want to impose undue difficulties or costs on the charitable sector. I think we worked through those issues pretty well. There was also the thorny issue of the religious objection clause. The select committee, I think, tested our officials. The motivation was not to test out, if you will, the religious notions of the particular group of submitters—the Exclusive Brethren—who came before us. It was to ensure, bluntly—and I know this may sound reasonably humorous, but it is not—that we were not setting up a situation where bureaucrats were having to make religious judgments, as it were, and where nefarious folks could use the exemptions that are in the legislation to somehow walk round the legislation and the rules in terms of membership and the obligations that membership and the entity governing it would entail. There was quite lengthy scrutiny of officials and they were sent away to deal with that issue.

There are indeed a number of precedents. The one that I recall reasonably vividly is the Labour Relations Act amendments that were made going back many, many years, where that particular scheme of arrangement and exemption was allowed. In respect of the Exclusive Brethren, I note for the record that both Damien O’Connor and I actually ended up getting a meeting with the then Minister of Labour, Margaret Wilson, to make the case for that particular group that that exemption should be extended in the new and amended legislation. I have to say in passing that little did we know what that particular sect was up to, and neither did the public—

💬 Kris Faafoi: As a principle—as a principle.

—as a principle—realise that it was trying to buy an election with a million bucks and put a knife in the throat of our democracy. But putting that aside, we were grateful to the officials and, I think, both sides of the House worked through the issue in a bipartisan way. I would hope—and we did seek assurances in the Committee stage from the Minister of Commerce and Consumer Affairs—that that particular exemption clause could not be abused. We hope that is the case. To be fair, in other pieces of legislation, it has worked pretty well.

The bills and the main provisions deal with reducing restrictions on legal form for audit firms, charity assurance, members of accredited bodies performing statutory audits, qualified accountants performing statutory accounting roles, and a number of amendments in respect of the New Zealand Institute of Chartered Accountants. I think that it is appropriate that the House keep dealing with—and I am glad to hear the Minister say that there is further legislation to come, in terms of this—the trans-Tasman relationship. Australia is our closest neighbour, and is, effectively, one of the biggest, if not the biggest, markets we have. We have had CER for many, many years, we are getting closer and closer as one market, and business is being transacted in more modern ways with a greater frequency. So it is appropriate that these pieces of legislation are progressed through in order to make it more efficient and easier for the commercial sector on both sides of the Tasman to transact business.

I will say in passing also that it is—and this is no disrespect to the new Minister—a bit of a worry that on the one hand the Government says that these measures form part of its growth and business agenda, but on the other hand it took out the portfolio of commerce from within Cabinet. The Government did not downgrade it within Cabinet; it took it right out of Cabinet, and it not only downgraded it to outside Cabinet but dropped it to the basement, or closer, probably, to the political dunny—to No. 25. This is the Minister of Commerce and Consumer Affairs we are talking about. We have had some substantial Ministers of Commerce on both sides of the House who have made substantial contributions. I am thinking of Simon Power—

💬 Hon Member: Paul Goldsmith?

—Lianne Dalziel, and, with a bit of luck, Paul Goldsmith might get there, as long as his performance is a bit better than when he was chairing the select committee. But he may well get there.

💬 Kris Faafoi: He’s on watch—he’s on watch.

Yes, he is on probation. We will give him the benefit of the doubt—a fair go.

💬 Hon Member: 90 days.

Yes, we will give him the 90-day rule—we will give him that. I will just say that it is a bit of a contradiction and a bit of a worry when the Minister of Commerce is dropped to the even darker depths of where Maurice Williamson was dropped once or twice, I suspect, and dropped right outside Cabinet. What signal does that send to commercial entities? We know there are priorities in Government—I have been a Cabinet Minister inside—and we know the more senior you are, generally, the faster you can get things through. If you are not in the ring it is harder to do. This piece of legislation, other pieces of legislation, and future pieces of legislation will not, it seems, have the priority that they once did. We know that Minister Foss took an inordinate amount of time within Cabinet to drag commerce legislation through the process and through this House. Maybe, sadly, that is one reason why he was bounced, but that should not have been the case for the portfolio that is commerce.

It is slightly odd that the Government does wax on about its support for the commercial sector, which we all support; the need for creating greater, appropriate efficiencies, which we support; and its need to cut through red tape and the regulatory frameworks, which, appropriately, we do support. But when you take the Minister and the portfolio and you bump them right down to the most junior of junior ministerial portfolios right outside Cabinet, I just wonder what signal that sends. It would be great if speakers who are going to speak on this legislation would get up and give us some sort of an assurance that that does not mean that an appropriate commerce or consumer affairs law is going to somehow—[Bell rung] Was that you or the bell, Mr Assistant Speaker? Ha, ha! We may have a problem here. Thank you. Ha, ha! Is there a doctor in the House? At the risk of being thrown out—but what signal does that send to the commercial sector?

Does this mean that commerce legislation will not only be delayed through some of the former incompetence but be delayed because it struggles to get the priority it should? If you want to have a business framework and you want to grow a business and you want to do things to help the commercial sectors, surely that was one portfolio that should have remained not only within Cabinet but at a senior level within Cabinet. I recall Simon Power as Minister of Commerce, I think, at No. 3, or No. 4 at worst. He sat on the front row, got his legislation through, got it through swiftly, and much of that legislation, to be fair to him, was positive and supported by this House. Now there are no impact players. They are on the bench. The water boy or the oranges boy, or whatever, has got the portfolio and that is where it sits.

We do support the legislation. It is a good piece of legislation. It went through a good process with the Commerce Committee, but I just hope that when we look at the priorities of the Government—there are a lot of commercial guys over there—that Government members are going to have a chat to the Leader of the House or the Prime Minister and still promote commerce legislation as a high priority, as it has been in the past.

💬 Hon Peseta Sam Lotu-Iiga: I will.

Mr Lotu-Iiga says: “We will.” I will hold him to that. We wait and see.

I rise with great pleasure to take this short call to commend this legislation—the bills arising from the Accounting Infrastructure Reform Bill—in its third readings in the House. It is a pleasure, too, that I am speaking on legislation that has broad support across the House. I recall watching this legislation being debated in the Committee of the whole House, and it is fair to say that it was treated very much with multipartisan support, which was great to see. Although this particular legislation is not perhaps as sexy as some other areas of legislation are reputed to be, it is indeed important legislation and in fact it has some important changes.

This Government is focused on our Business Growth Agenda as a policy engine to drive growth in this country, to provide higher-paying and more jobs. That includes things like investing in infrastructure, investing in skills, opening new markets, harnessing our natural resources, and also strengthening our capital markets, which is where this legislation and these changes sit.

What is most important, and what I talk about today, is confidence: confidence from investors, confidence from lenders, and confidence that will translate to market conditions that will mean that our businesses can find people to invest in them, they can borrow money to grow, and, in growing, they will create more jobs. They will be able to strengthen their businesses and they will be able to pay people more.

This is the third part of a legislative programme promoting fair, transparent, and efficient markets. The programme had the Financial Markets Conduct Act to give confidence in market behaviours. It had the Financial Reporting Act, which improved transparency and also removed some costly complexity for smaller companies. That is always very pleasing to see.

This legislation, of course, improves efficiency. It realigns the structure of the audit and accounting industry so that participants can adapt more quickly in an evolving environment, and it provides a more competitive and efficient accounting market that will ensure better business advice for New Zealand firms. This will improve confidence in capital markets and it will support our economic growth, and that ultimately delivers more prosperity for New Zealanders.

This legislation will also improve competition and our international outlook in our market. I am pleased to say that it has tidied up some areas that were obviously of concern to the industry and to businesses, as well as to members within this House, obviously. The Registrar of Companies now has some criteria to use when considering applications for approval for people as qualified auditors who are overseas individuals. I am very pleased to see that it also addressed an issue that was raised by the Institute of Chartered Accountants around making sure that statutory audits could still be performed. It is my great pleasure to commend this legislation to the House. Thank you.

Malo ni. Mr Assistant Speaker, I think this is my first opportunity to speak in the House with you in the Chair. So can I congratulate you face to face on your appointment, and I hope you do not read what I said about you in Hansard in my earlier speech in this Parliament during the Address in Reply debate.

This is legislation that does have broad support across Parliament. As Clayton Cosgrove said earlier in his contribution on this legislation, there are advantages to the merger of the New Zealand Institute of Chartered Accountants and its sister body across the Tasman. We do support that in this age of a global economy where suitable and compatible regulations are going to be advantageous to both New Zealand and Australia. We on this side of the House do support any efficiencies that we can get from it.

This legislation was in the Commerce Committee of the previous Parliament, so I would like to acknowledge everyone who sat on that. It was a bipartisan process, and I would like to extend our thanks for the way it was handled by the committee chair, Jonathan Young. As Clayton Cosgrove pointed out, there were some tricky issues around the exemption of particular people from the membership of chartered accountants’ organisations. That was a tricky one, which I will get to later.

There was a democratic process for the New Zealand Institute of Chartered Accountants members to decide as to whether or not it thought this merger was a good idea. I understand that close to 70 percent of the membership who did vote were in favour of this. That is not to say that there were not some members who were opposed to it. They were predominantly smaller practices in rural areas, and we did hear a number of submissions from those types of practitioners. I hope that those people who oppose the merger can be kept happy, despite being opposed to this merger.

I did want to talk to the issue that Clayton Cosgrove brought up in regard to the Exclusive Brethren. We gave its members what I thought was a pretty fair hearing. You may have thought, because of our past dealings with them from this side of the House, that we might not have, but we did take a principled approach to the request for which they came to the select committee—for an exemption to be members of the professional body. Their religion excludes them from being members of other organisations if those organisations go against what their fundamental religious beliefs are, but the changes in this legislation meant that you could not be a qualified accountant if you were not a member of the organisation, which would have put them out of business. So they came to the select committee asking for an exemption.

I think they were probably a little bit nervous because of their previous history with politics, but as Clayton Cosgrove said, we did look at it in a principled way. They did want to make sure that they were abiding by whatever rules the organisation was going to have and also that they would be subject to any disciplinary measures that may come about. But their religion meant that they could not be members of that organisation. So I would like to thank the members of that committee and also the officials for what was a pretty tricky negotiation to try to make sure that we got the balance right.

This legislation contains an amendment to the Financial Reporting Act—the parent bill has been split up into four separate bills now—to insert new section 36M. There are some conditions that an accountant who does hold these religious beliefs has to make sure that they meet if they want to practice as accountants. First of all, the body has to be satisfied that the religion that the people have is bona fide, and they have to have a written agreement with that body to make sure that they keep to the rules, and that if they do break the rules, any disciplinary action that may be forced upon them will be adhered to. If at any stage the organisation thinks that that particular accountant who does have those religious beliefs is not going to stick to that, they can have that exemption removed.

This took up quite a bit of the time of the select committee. Again, I do want to thank the officials, because it did perplex us. There was not a lot of precedent floating around. It obviously was a tricky issue with the issue of religious beliefs, but there was one similar exemption in a piece of labour law, which we looked at closely. I think we came to what was a very happy place for the members of the committee itself and also those businesses that came to submit to us.

As Clayton Cosgrove said, this is a piece of legislation that we agree with. We now hope that the new Minister of Commerce and Consumer Affairs has some time to look at other things in his new portfolio area. I do understand he is outside Cabinet, so he may not get the impetus that we would want from a Minister of Commerce and Consumer Affairs, especially around the area of what was in the Credit Contracts and Consumer Finance Amendment Act, which was passed last year—around loan sharks. I hope that will be a priority for the new Minister of Commerce and Consumer Affairs. It was this Government in the previous term that did not take any action on putting interest rate caps on loan sharks. I hope that the Minister, now that this bill has been completed, might be able to take a fresh look in the 51st Parliament at those loan sharks who are out there terrorising the most vulnerable people out in our communities, charging the most exorbitant interest rates. The new Minister of Commerce and Consumer Affairs might be able to look at that.

As we have said on this side of the House, this is a piece of legislation that we know will be beneficial for New Zealand. The industry wants it on this side of the Tasman, as do the accountants’ organisations on the other side of the Tasman. We hope it will open up new business opportunities for us. We understand it might also create some new jobs in New Zealand, because the new omni-organisation may set up its back office here in New Zealand. We think that is obviously one of the spin-offs of making sure that these two sets of regulations, both here in New Zealand and in Australia, can be closely related.

But, as I say, now that this piece of legislation will be disposed of very soon, we hope that the new Minister of Commerce and Consumer Affairs can get some new legislation through the Commerce Committee, of which the Hon Maurice Williamson is now a member. I look forward to having many robust discussions with him. Today we talked about stereos from the 1970s in Fiji. I look forward to his colour and his incisive mind on the Commerce Committee from now on.

This is legislation that I believe has cross-party support, so Labour will support it, but there are some reservations. Cheers.

Mr Assistant Speaker, I will not trouble you with using the entire time and then having to put up with that dreadfully flatulent sound that you were making over there before because of your squeaker—

💬 Hon Ruth Dyson: Oh, that’s outrageous.

Well, it is not outrageous. If you had heard the sound he made, you would know what I was talking about.

In the words of Henry VIII when he was speaking to Anne of Cleves, I will not keep you long, but I will just talk about a few things, and they are to do with the changing world we live in. As a young man growing up in Matamata I used to go with my dad to see the local accountant. He had a big Friden machine. It was big, with buttons down and with big handles, and you turned them all and it kept adding things up. That is where we were just during my lifetime. No such thing—

💬 Kris Faafoi: When was that?

That was in the 1960s—the early 1960s. So that is how far we have gone now, where most accounting is done online. It is done through phenomenal companies like Xero, that wonderful New Zealand-based accounting firm, which is taking on the world.

I give notice to this House that we will probably be back here many times in future years, changing the law again, because what used to be a set in the office, with the armbands up and the quill pen and the Friden machine, is now going to become a global service, like a whole lot of other industries. We need to open up our minds and get rid of all the shackles that have stopped some of those people growing. The more we can open it up to the rest of the world to participate, and the more we can open it up for New Zealand accountants to participate in the rest of the world, we will be doing the whole country a great service.

So it is part of the Business Growth Agenda, and it is something that is well and truly overdue. I tell this House that we will be back in many years to come doing the next tranche, and the next tranche, as accounting changes before our very eyes and morphs into forms that we have yet to be able to even understand. I support the legislation.

The assurance industry is a critical component of our economic framework. The idea that there is a trusted independent watchdog of the public interest underpins investor confidence and ensures financial probity on behalf of our country’s leading institutions. New Zealand has generally been isolated from the kinds of catastrophic audit failures such as Enron and WorldCom that shook up the industry and led to such restructuring back in the early 2000s.

When the Accounting Infrastructure Reform Bill first came before the House we did have a number of concerns. Although not opposed to widening the pool of people who are able to perform audits, we did have a concern that in New Zealand’s comparatively light regulatory environment, there was some risk that to do so would lower the quality of audits being performed.

Second, we were concerned that the regulatory impact statements indicated that there was little or no evidence that the proposed changes would bring about the benefits that we were looking for, such as quality audits or being aligned with other jurisdictions. Many of those benefits could be achieved if we were to move to a co-regulatory regime, such as in the UK, or a direct regulatory regime, such as that in Australia—which are two of our major trading partners—rather than retaining the relatively light self-regulatory environment that New Zealand has.

Our third main concern was that, really, this represented a bit of a missed opportunity for a broader review of New Zealand’s regulatory environment in the wake of the global financial crisis and domestic finance sector meltdowns. However, obviously, the bill contained a number of other measures that we supported, such as introducing the requirement for financial statements of medium and large sized charities.

However, we heard the submissions and we were assured that the proposed changes are relatively minor and will not substantially change the status quo within the confines of the current framework. We do still hold the concern that the current framework, which relies on self-regulation, is out of line with some of our major trading partners—for example, Australia and the United Kingdom—and that a co-regulatory or direct regulatory framework, such as those employed, would reduce economic risk in New Zealand. However, given that the changes in the final set of bills do have the support of all submitters and that, if enacted, they do seem to make our regulatory framework more efficient and more effective, we are supporting these bills. Thank you.

May I take this opportunity to congratulate you personally, Mr Assistant Speaker, on your appointment to the Chair. It is great to see you there. On behalf of New Zealand First, I rise in support of the bills divided from the Accounting Infrastructure Reform Bill. It is an exciting topic. I am sure one of the Ministers would class it as exciting and sexy.

New Zealand First is very much supportive of enabling business and making business practice that much more efficient through the simplification of processes, especially for our Kiwi-owned organisations. The question does arise, however, at what point does efficiency go beyond what is reasonable and fair? I reflect on previous discussions in the House today, in fact, on matters also of great importance to business and the people of New Zealand. It should not be the role of this Government, for example, to allow private enterprises to spend the next few generations treating their people as guinea pigs, trialling employment scenarios that undermine the humanity inherent in their own human resource. It will come to a stage of protest and revolution, as those in our casualised workforce, desperate for what work they can find, slowly realise they are not just numbers on a balance sheet, and businesses will be forced to learn or, hopefully, will learn once again, the true cost of undermining their human resource. They will be cutting and slicing up the livelihoods of people in New Zealand.

But I do digress.

The ASSISTANT SPEAKER (Hon Trevor Mallard): You do.

It is important to note the intent of the bills divided from the Accounting Infrastructure Reform Bill. The legislation widens the definition of those entitled to perform audits—a more comprehensive and accountable system, which will authorise registration of overseas audit firms, for example. At the same time it fixes an anomaly that has very much restricted the structure of firms or organisations wanting to be recognised auditors. Now New Zealand auditing firms can incorporate using the company form if they so desire. New Zealand First expects to see an improvement in efficiencies in this area as firms structure themselves as they see fit.

At the same time, the legislation does remove some of the requirements set out in law. Initially, one would be wary of the intent to broaden those qualified to undertake such a task, and then, additionally, remove some of the rules outlining how certain tasks can be undertaken, especially with regard to this very important role within our business sector. Many of us may think of a small, bespectacled individual sitting in a darkened room and hovering over spreadsheets and calculators with their three coloured pens at the ready, but let them show up in your office and one will invariably see the quiet power they wield. Woe betide you if you have a bad audit.

Auditing is a tool for accountability. An audit is a thorough examination of a company’s financial records, and typically involves a chartered accountant working through them to ensure they are a true and accurate reflection of a company’s financial position. An audit provides more financial transparency to shareholders and stakeholders, and security that its financial position has been checked by a chartered accountant. New Zealand First is content, however, with the increase in those able to undertake audits, given new section 42E, being inserted in the Charities Act where, for example, with regard to charities, if a charity entity fails to comply with new section 42C, the charitable entity commits an offence and is liable on conviction to a fine not exceeding $50,000. Further, the legislation outlines the newly formed institute of accountants’ statutory requirements to control and regulate the profession of accountancy practised by members in New Zealand. We are satisfied there are checks and balances.

A name change away from the New Zealand Institute of Chartered Accountants’ “chartered accountant” endorsement to a generic “qualified statutory accountant” title will allow for religious considerations and what the committee has decided are conflicts with the New Zealand Bill of Rights Act 1990. The legislation will improve the effectiveness of charities offering different criteria for different-sized charities.

As outlined under the new Section 42D, a charitable entity is defined as “large” essentially if its expenditure over the two preceding periods is more than $1 million, or “medium” if over the two preceding periods its total operating expenditure is less than $500,000. Because these are large sums of money, it would seem to me it is important that our larger charities provide financial statements that are of a high quality. As noted earlier, it is also heartening to see that our smaller charities will be able to use money as it is intended, rather than towards overly onerous compliance costs.

The intent of the legislation was to free up some of the restraints that were being imposed at the time on the Institute of Chartered Accountants. I note, despite the legislation not having passed yet, that the New Zealand Institute of Chartered Accountants is no longer and that we already have the organisation now named Chartered Accountants Australia and New Zealand. I was privy to some of the discussions held by the membership of the former New Zealand Institute of Chartered Accountants over the past year or more as a stakeholder, as head of the business school. It was in this role that I was aware of the debate that did in fact rage up and down the country. I take this opportunity to commend my friends and those members for their decision to merge. I hope the combined approach works for you all as you hoped it would. I have seen much change within the organisation itself already. I acknowledge that the combined branding brings some inherent strengths, especially for labour mobility across Australia and New Zealand particularly, but also into the wider world.

It was of interest to note also that the new legislation will allow the New Zealand Institute of Chartered Accountants to disestablish the role of president and vice-president. Unfortunately, one of the arguments for this is that the Australian equivalent will have its own presidential roles, rendering the New Zealand equivalent unnecessary. New Zealand First hopes that the New Zealand branch of the amalgamation can maintain its side of the relationship and hold New Zealand’s perspectives and interests to the fore.

If this legislation was created in order to help businesses in meeting their obligations and, in so doing, to save them some costs and time, then I commend the committee for its work. This legislation does what it sets out to do. The accounting and audit industry will now be that little bit more efficient and effective in what it can do. This is why New Zealand First stands in support of the legislation. New Zealand First will always stand in support of any legislation that is good for New Zealand business. We know the incredible work of the businessmen and businesswomen of New Zealand, and this type of legislation, which serves to lower costs of compliance, is an example of a common-sense policy we can and will always support.

The work of the Commerce Committee is indicative of what can be achieved when a bipartisan approach is taken, when a committee is open to submissions and is willing to listen to those most affected by the changes proposed. I commend the committee for the amount of work, the level of complexity, that had to be worked through together in order to achieve this outcome. Can I suggest that this committee provides a good working model that should be followed by all other committees in this 51st Parliament. Thank you.

Mr Assistant Speaker, it is my pleasure to take a call, my first call in your presence as a presiding officer. I congratulate you. I look forward to the day when a member tests your patience and you send him or her out of this House. It will be a real pleasure to see that.

The ASSISTANT SPEAKER (Hon Trevor Mallard): The odds would not be high on that member.

I would love to do that.

It is my pleasure to take this call on the legislation arising out of the Accounting Infrastructure Reform Bill. It is part of the Government’s Business Growth Agenda. It is wonderful legislation that the Commerce Committee, which I was a part of, did a lot of work on. I commend this legislation to the House. Thank you.

I understand this is a split call. Or am I taking another party’s call?

The ASSISTANT SPEAKER (Hon Trevor Mallard): If that is what you want.

Sure. I probably will not take the full 10 minutes, even if it is not a split call. Kia ora, Mr Assistant Speaker. Ngā mihi nui ki a koutou. Kia ora. My dad worked for the Inland Revenue Department for many, many years. I do not know whether anyone else has had the experience where you do not really want to tell people at parties whom you work for. So he would make a joke, because he did not really want to say he worked for the Inland Revenue Department and taxed people. He would say: “Oh, it’s a taxing job. I don’t want to tell you.”, and then he would have to, under his breath, say: “I work for the IRD.”

I wonder whether auditors are the same because it is not a particularly, in the words of Minister Bennett, sexy job, but it is a critical job in our economy. Although maybe they do not get the kudos other sectors have, auditors play a critical role in the financial health of our economy—everything from the surety in the stock market and the key role they play there for investors through to avoiding fraud and malpractice in some of our companies, through to the critical role they play in our Parliament in advising us on the financial health of some of our State-owned enterprises.

We have also seen, as James Shaw pointed out in his contribution, where auditors have failed. We can see catastrophic consequences, as we saw with that absolutely gigantic Enron collapse in the US, which you can pin to the failure of auditing requirements. They play a critical role. That is why we were a little bit reluctant in the first reading of this legislation—and in fact voted against it. We did not think the case had been made for why we needed to broaden the scope for auditors and take the risk of a light-handed regulatory approach.

We went into the select committee process with an open mind. We would like to acknowledge the chair, thank the submitters, and thank the officials. What we heard there was unanimous support for the changes adopted. We think they are common-sense changes. For example, the merging of the New Zealand and Australian bodies makes some sense, with the two bodies supporting it. We think widening the ability of people to become auditors, as long as they are accredited, within a standardised approach makes sense because ultimately auditors play a critical role in our economy.

I know that previous Green speakers in the series of debates on this legislation have talked about the risks of a light-handed regulatory approach. This is something we have learnt from New Zealand’s history, when you look at the leaky homes fiasco and the billions of dollars of liability that has accrued to central government and local government. We need to make sure that regulation is appropriate, but we cannot have this approach where all regulation is bad by virtue of the fact that it is regulation. Regulation, like auditors, plays a critical role in our economy, and that is why the Green Party will continue to support smart, targeted, appropriate regulation and auditing. Thank you. Kia ora.

It is good to speak on legislation that we do support. Labour does support this legislation, and we do agree with its intent. We have heard from a broad spectrum of voices from the accountancy, audit, and professional services industries, including small and regional practitioners, regarding this legislation. We are aware that there is a diverse range of views on the future and the shape of the industry, not just those put forward by the Institute of Chartered Accountants and other representative bodies.

The intent of this legislation makes the accounting and audit industry more efficient and effective, hence we will be supporting it. We are happy about the common-sense approach that appears to have been taken with this, and we congratulate the new Minister of Commerce and Consumer Affairs, Paul Goldsmith, on attaining the commerce portfolio. In saying that we congratulate him, we are concerned that the Government has placed the commerce portfolio at the very bottom of the executive totem, outside Cabinet at No. 25. So on this side of the House we are concerned that the Government is not giving it the recognition or prioritising it in the way that we would expect and, actually, that we think that the general public of New Zealand would expect any Government to do.

There are important issues within the commerce portfolio that do need addressing, such as the reform of section 36 of the Commerce Act to improve the policing of competition law by the Commerce Commission. I have to say that National has had a really poor track record on modernising commerce legislation since the departure of Simon Power. You know, on this side of the House, despite the fact that he was a National Minister, we did have a lot of respect for Minister Simon Power, and we just have not had a Minister from that Government with the same ability and competence since he departed.

💬 Chris Bishop: You wait for Goldie. You watch Goldie. Just wait.

We are really lacking that level of competence, just in general, across the board with the National Government.

💬 Hon Ruth Dyson: Chris Bishop thinks he’s going to be a Minister in 5 minutes.

Chris Bishop thinks he is going to be the next Minister. Given the low levels of competence, that is possible.

National has had, as I said, a really poor track record and has let important commerce legislation languish on the Order Paper for inordinate periods of time. We ae hoping that Minister Goldsmith will be able to pick up the pace from outside Cabinet, but, again, despite the fact we do support this legislation and we support the purpose of this legislation and we support the provisions of the legislation, we are concerned that the priority being given to the commerce portfolio has been really low and, actually, really insulting. We are concerned about that.

The five main proposed law changes with this are, one, reducing restrictions on legal form for audit firms; two, charities assurance; three, members of accredited bodies performing statutory audits; four, qualified accountants performing statutory accountancy roles; and, five, the structure of the New Zealand Institute of Chartered Accountants. So all of those things and the detail that is involved with that are things that the Labour Party supports.

In terms of the main provisions we see there that the amending rules on who may perform statutory audits—[Bell rung]—I am sorry my time is nearly up. Just going back to what I was saying, we do support this legislation. We support the intent of the legislation. We have concerns about the recognition that the Government is giving to the commerce portfolio. That is all I have to offer today. We support the legislation in front of us. Thank you.

I congratulate you, Mr Assistant Speaker Mallard, on your election. My views on the legislation arising from the Accounting Infrastructure Reform Bill equal those of my colleagues. This legislation aligns with the Government’s Business Growth Agenda as it proposes a number of important changes to enable more efficiency and effectiveness and also an improved international outlook. It is a great pleasure to commend this legislation to the House. Thank you.

What a lot of people do not realise is that about 80 percent of all legislation that passes through this House is actually done in a bipartisan way. We all support this. We like the sort of regulation—80 percent—

💬 Hon Member: Multipartisan.

Well, bipartisan, tripartisan—whatever it might be. But the Accounting Infrastructure Reform Bill is one of those bills that I know the Commerce Committee worked really hard on, because what has happened since 2008—since the financial crisis, I suppose—is that there has been a lack of confidence in a lot of our financial markets and in the auditing response, etc., and, actually, a lack of confidence in the people who are charged with carrying out a lot of the duties in terms of looking after people’s investments. So this legislation is, essentially, just another piece of legislation that improves the confidence and improves the level of transparency across our whole financial markets structure.

I did have to laugh when my colleague Carmel Sepuloni said that we were disappointed in the Minister of Commerce, and Chris Bishop said: “Just wait.” I am not too sure whether Chris Bishop thinks he is going to be the new Minister of Commerce, but maybe he is.

💬 Hon Member: Trying to roll him already.

Yes, I know. Those members talk about what goes on in our caucus. Well, I think if I was the Minister of Commerce—and who is the Minister of Commerce these days? It used to be Mr Foss. I am not too sure who the new Minister of Commerce is. Who is it? Who is it, whip?

💬 Tim Macindoe: Paul Goldsmith.

Paul Goldsmith. If I were Paul Goldsmith, I would be watching my back, actually, because Chris Bishop has those knives out. It is that old adage, you know: “They are the Opposition.” And the enemy? “They are the ones behind you.” So well done. It is good to have someone who is ambitious—there is no doubt about that—and I love your ambition, Chris. Well done! But—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!

—just wait a couple of seconds, Mr Bishop.

When I said that we support this legislation—and we do support it—there were a couple of concerns that were brought up, and I would just like to bring those concerns up, just to talk about them and put them out there. Who knows—maybe there will be amendments going forward. I was not a member of the Commerce Committee that deliberated on the Accounting Infrastructure Reform Bill. I did not hear the submissions. I have had a look at a couple of them.

By and large, it is a good legislation, but I did have a couple of concerns. One of them was on the commencement date. The commencement date for a lot of these parts is actually 1 April 2017. I just sort of wondered aloud—but unfortunately I did not get a response from the Minister—why we were leaving this for 2½ years and whether there were a whole lot of processes that were going on at the time, or whether there were some things that needed to be worked through the system. But I just thought that 2017 was a long time to wait for parts of this legislation to be given the Royal assent. And the unfortunate thing was that the Minister could not actually tell me which parts of the legislation were going to be implemented upon gaining the Royal assent and which parts had to wait for 2½ years. I think the last parts of this legislation do gain the Royal assent on 1 April 2017, which makes sense from a financial year perspective, but it just provides a little bit of uncertainty, which this legislation is actually trying to mitigate. We try to avoid uncertainty in legislation, I suspect.

The other thing that I was a little bit concerned about was actually new sections 42C and 42D, to be inserted into the Charities Act by the Charities Amendment Bill (No 3). This is the stuff around charities. There are over 3,000 registered charities in New Zealand. A lot of them go to the public of New Zealand seeking funds, wearing the badge of goodwill, as they should, because we are not a particularly giving society compared with a lot of others, and that is the truth. However, when we do give money, we like to think that that money is given and is being disturbed in good faith. What this legislation actually says is that if you are a large charity—and by “large” the definition was that you have an operating expenditure of over a million dollars—then you have to have your accounts audited. That makes absolute sense, because if you have got an operating expenditure of over a million dollars, that is a lot of money and you have solicited a lot of donations from a lot of hard-working Kiwis.

But what it also says is that if you are a medium-sized charity—and the definition of a medium-sized charity is a charity with an operating expenditure of between $500,000 and $1 million—you do not actually have to have your accounts audited. What does have to happen is a qualified auditor has to do a review of the accounts, but that is not a full audit. I was just a little bit concerned that whenever New Zealanders do give money, they do like to think that it is given in good faith, and to me $500,000 in operating expenses is quite a large charity. Would you not agree, Sam? It is quite a large charity, and I would have thought—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!

Oh, sorry, Mr Assistant Speaker.

The ASSISTANT SPEAKER (Hon Trevor Mallard): And I am “you”—so two errors.

Sorry, you are right. I mean—[Interruption] Ha, ha! I apologise for my indiscretions. This is something I am passionate about—[Interruption] In this House, during this speech. [Interruption] Ha, ha!

The ASSISTANT SPEAKER (Hon Trevor Mallard): The member has 4½ minutes left.

Thank you, Mr Assistant Speaker. I suppose the one thing I am passionate about, and the one thing that I really do not want to see again, is the confidence of the New Zealand public take another knock because there has been a charity that has not had its accounts audited because it does not have to have them audited by law. I just think it is a concern. I would have liked to see this legislation include medium-sized charities as well. According to the definition of a medium-sized charity, it has an operating expenditure of $500,000 to a million dollars. I just think that there should have been a provision in the legislation that said that these accounts had to be audited. But the interesting thing is, in fact, that the fine for not undertaking the provisions was the same for medium-sized charities and large-sized charities—that is, $50,000. So there does seem to be a little bit of inequity there.

The other thing is also that the cost of an audit really is not that much when it does provide a level of investor certainty. It is anything from $2,000 to $4,000, and I would have thought that to provide your philanthropists or the people who have given you money with a level of certainty, $4,000 or $5,000 is not much to pay at all to get that certainty. But, as mentioned, we do support this legislation. It goes a long way in terms of reducing the restrictions on the legal forms for audit firms.

There was one other point, which I think is quite important, from Part 2 of the Financial Reporting Amendment Bill. Part 2 was quite a technical part of this bill, and so it is difficult to argue because it is very technical. But one thing it did do is it muzzled what the members of a disciplinary tribunal for the Institute of Chartered Accountants could actually say in public. I found this a little bit strange, and I wondered whether this was dealing with an issue that had arisen before. The chartered accountants came to the select committee and actually said: “You know, we do have problems with people on our disciplinary committees actually going to the media and”—[Bell rung]

The ASSISTANT SPEAKER (Hon Trevor Mallard): That is the bell for 2 minutes.

Oh, thank you very much. Phew, that is a relief—I thought I had left my cellphone on for a second.

💬 Jami-Lee Ross: It’s as limp as this speech.

Mr Assistant Speaker, can you believe that that member has called this speech limp? All members on this side heard that member speak and, I tell you what, he used the word “you” 15 times in 15 sentences, and I was astounded that the Assistant Speaker, whom I have immense respect for, did not pull him up, because that member has been in the House for long enough to know that you do not turn to your colleagues and say “you”, “you”, “you”—I am just quoting the member, Mr Assistant Speaker.

But, anyway, what I was saying is that I was interested in the fact—

💬 Jami-Lee Ross: Take a point of order to withdraw and apologise.

Well, I was about to take a point of order, I say to the honourable member, but I decided not to because the Assistant Speaker had given a ruling earlier in this week, I think it might have been, when he said that it is not appropriate to raise a point of order during a speech just because someone says the word “you” two or three times. That member did cross the line, but I thought he was going hell for leather. I did not want you to just implode in front of all your members. So that is why I did not take a point of order, but I was quite tempted to.

But, anyway, just coming back to the legislation, I did think it was quite strange that what this legislation did is muzzle what members of the disciplinary committee could actually say in public. The reason why I was a little bit surprised about that is that I think what needs to happen is that when you are engaging an auditor, or when anyone is engaging an auditor—you, Mr Assistant Speaker, myself, or any charity that is engaging an auditor—they need to know that that auditor is a person of good character. Could I make one more point, Mr Assistant Speaker?

The member’s time is expired.

Notwithstanding Mr Nash’s long list of indiscretions, this has been a mostly intelligent debate. I thank all members for their constructive contributions, and if I stop now, we will get the vote in before the House rises.

Bills read a third time.