New Zealand Business Number Bill

When we were last debating the second reading of the New Zealand Business Number Bill, the honourable Minister was speaking and has 7 minutes remaining.

on behalf of the Minister for Economic Development: In continuation of the speech on the New Zealand Business Number Bill, the purpose of which is to enable easier and more efficient interactions for business in New Zealand, I would just like to carry on and make a few points, if I may. The bill has been clarified in its intent that all corporate and public entities will be eligible for New Zealand Business Numbers, whether or not they are in business, but that unincorporated entities must be in business. What is meant by “in business” for unincorporated entities has been clearly set out in the legislation, and I support these amendments, following the Commerce Committee’s investigation of the bill. I also support that criteria have been added to regulation-making powers, so that the flexibility required to respond to a changing ecosystem is retained but with appropriate controls. I am pleased to note that the committee has recognised that the New Zealand Business Number will also benefit entities when they interact with each other and it has inserted an additional purpose clause to that effect. The committee has also recommended that the trading name of a corporate or public entity be publicly available. The committee has also taken the opportunity to examine the privacy implications of the bill and the controls that have been put in place. I am pleased that the committee is satisfied that the bill’s privacy safeguards are indeed adequate.

I would like to comment on two points raised by the Labour Party in its minority view. Firstly, the Labour Party asks why the IRD number is not used as the New Zealand Business Number. The IRD number would be a very poor choice for a publicly visible business identifier. The IRD number merely represents a set of tax and social policy affairs, it is subject to tax secrecy provisions, and it is actually not a unique entity identifier. Entities are entitled to have none, one, several, or many IRD numbers. The global location number that has been chosen for use as the New Zealand Business Number is an international identifier. It is part of a wider system that enables businesses to meet sophisticated needs such as supply chain processes, and where country locations of businesses need to be accurately identified in a standardised way.

Secondly, I disagree with the Labour Party that the New Zealand Business Number will be yet another number. I note that some submitters raised concerns about the removal from the bill, as introduced, of the requirement for eight Government agencies to recognise businesses by their New Zealand Business Number. Along with my colleagues the Minister of Finance and the Minister of State Services we have commenced the development of a directive to Government departments and a direction to Crown entities that interact with business to drive the implementation of a whole-of-Government approach to the New Zealand Business Number. I am pleased to inform the House that the proposed directions are more ambitious both in scope and breadth than what was contained in the exposed draft of the bill mentioned by submitters. The directions have been consulted on and will be in place early next year. They will set out clear expectations around uptake and use of the New Zealand Business Number by Government agencies.

The benefits of the New Zealand Business Number ecosystem cannot be realised without this legislation. The New Zealand Business Number ecosystem will provide an opportunity for a step change in how Government works, but also how entities work with each other. Businesses will spend more time on their business and less time on administration. I commend this bill to the House.

After listening to that speech, I wonder whether that Minister really is as familiar with the bill as he ought to be. Unfortunately, this bill will actually increase costs to business in the short term—this bill will increase costs to business in the short term. That is why we on this side of the House are reluctant to support this bill without reservations. We will be supporting it; we will be lending our support because we hope that this policy can be properly implemented over time. We are embarrassed for the Government, for the fact that it has not ironed out the obvious things that could be fixed up front that could make this a real boon for business.

The idea of a single number for business has been around for a long time. This Government has had attempts at it before, and it is an excellent idea—it is an excellent idea. It is incredibly frustrating for business to have several different numbers, and to have to come back again and again and again to different Government departments with different numbers in order to get what should by right be access to Government services for every business. Instead, with this multi-numbered system there is an increased overhead, and there is increased compliance as those numbers are updated and tested and verified throughout Government. So we have an overly complex system.

Nobody in this House, I hazard to say, would disagree with the intent of this bill. The intent is very, very worthy indeed, but what the Government has failed to outline is a plan, a clear plan, for how the bill’s stated purpose will be achieved—that is (a) to enable businesses in New Zealand to interact more easily with Government, and (b) to reduce the costs of business transactions in New Zealand. I will explain this more in my address, because initially at least, it is absolutely beyond dispute that we are creating another number. There are only a small group of Government departments that will have this service available initially. For all other interactions with Government, other numbers will be required. So there will be multiple numbers right from the start and there will be a hurdle initially because a new number will have to be set up for this New Zealand Business Number system to work.

Existing businesses will get another number—yet another number. We only hope that the next step will happen, which will mean that the existing numbers are gradually reduced. But hope we must—hope is all that is left to us when one has read through this bill and seen that the Government has not allocated suitable resources to make this happen.

Why is no IRD number used? Well, Mr Goldsmith explained to us that an IRD number would not be suitable as an international business number. Nobody is disputing that—that was not the point at issue. If the international business number was suitable, why would the Inland Revenue Department not adopt it? Is it worried about security issues? Is the Government saying that this new number will not be secure enough? Is that what it is saying, or is it saying that it does not have joined-up government? Because what I hear from officials is that they were never able to resolve those issues behind closed doors, and now Ministers are wearing the consequences of that. Cabinet is forced into an embarrassing position where it has not got the policy straightened out and it is trying to implement it anyway. There are still many hurdles to get over.

The Labour Party finds itself agreeing with Federated Farmers on this. The initial list of Government departments does not include agencies such as WorkSafe New Zealand and Immigration New Zealand, and people are interacting more often with local government, which also is not a part of this system—so you have multiple numbers. Imagine your average worm farmer out there wanting to interact with Government, doing the right thing. The average worm farmer, completely worried by the new legislation introduced, is trying to find out from WorkSafe New Zealand what their obligations are, in order to avoid the kinds of catastrophes that happen all the time from worm farming—according to this Government. Well, I am afraid, that worm farmer will have to have—probably, if they are interacting with some departments—this new number, and also a completely separate number for their interactions with WorkSafe New Zealand. If they have got workers from overseas working at their worm farm they will have to have another number again for Immigration New Zealand—a whole series of numbers.

We see very quickly that this bill has not yet got to the place that it needs to get to. We see that this Government has not yet shown how it will get to this utopian single number, because it has not done its homework yet. It is a good idea; it needs to be supported, but this Government needs to outline a plan as to how it is going to get there. Instead of worrying about what is going on this week at Waitangi, instead of the Prime Minister worrying about the flag and where the next $26 million is going to be spent on this pet project or that pet project, the Government should be focusing on the nuts and bolts of making sure that New Zealand businesses can get on with the productive stuff that they do.

It is wrapping them up in red tape, and that is not unusual for this Government. We know with the child support legislation it has put additional obligations on small business. It tried to introduce car-park taxes. It has a penchant—this Government—for introducing new obligations on businesses. Unfortunately, here we have another example in the short term. As I say, on this side of the House we hope it will get there; we hope that it will get to the single number, but at the moment we find ourselves agreeing with Federated Farmers that the system is not right.

We also agree with Chartered Accountants Australia and New Zealand, which says that “without significant uptake there is a risk that the identifier is not integrated and utilised widely, and just becomes another number, rather than a replacement for the many current identifiers—as is intended.” It shares the same concern. So we see these business organisations also expressing this concern.

The Labour Party is certainly not on its own here. It is clear that businesses that work with a number of departments will have to obtain a number of numbers. The additional, yet another, number is the opposite of the purpose of the bill—that point is clear. It will cost more in the short term. So businesses will have to comply, and that could be tolerated if we had the long-term plan. I want to urge this Government to outline that plan and to say how it is going to roll it out across the whole of Government and how it is going to resource departments to implement the necessary changes so that they can make interaction a whole lot easier for business. That is what is missing here. That is what is missing from that side of the House—a credible plan for rolling this business number out across the whole of Government.

I look forward to the next speaker explaining how that may happen and where the resources are coming from. Is it going to be in the next Budget? I guess we will wait and see, but my hunch—and what has been shown up from the appearances of officials at select committees—is that the Government has not done that work yet, it has not outlined how it is going to roll out over time, and so it is asking in this bill, effectively, New Zealand businesses to carry more costs and more compliance until it sorts its act out. We urge it to get busy on that project rather than the distractions it has been busy on up until now.

And there is a real risk, too, with this number, that it will not ever get across that hurdle. There is a very real risk that businesses will wait and see, that they will not sign up too quickly to this new system because they are not convinced it is going to be implemented. They are worried that it is going to be another number, and then that other Government departments will not invest in that resource because they do not want to sign up to a system that is going to become redundant—be yet another number and replace their existing systems—if there is not a plan for a complete roll-out.

This is a bill, as I said at the beginning, that has a very good intended outcome. But, as we have seen before with this Government, there have been other attempts at this that have failed. This Government needs to sort out how it is going to do this in a way that is credible. It needs to allocate the necessary resource to make this happen in a way that is credible. We do not want another—what was the name of that system for the education payroll?

💬 Hon Members: Novopay.

Novopay. We certainly do not want another Novopay, and Minister Parata across there, the Minister of Education, I think, would agree with me. We do not want to go down that track again.

But that is the risk with coming out with half-baked solutions and trying to implement half-baked solutions before you have outlined where the end point is, before you have signed up all of your departments to deliver the services, and before you know that the plan is in place. And that is why this Government needs to display to New Zealanders that it has done its homework. This is a Government that is getting more arrogant, it is getting more out of touch, and it is losing the track that it once had, and so we see it is happy to implement this system, which is imposing extra costs on business, in the vague hope that it will sort itself out over time. We urge it to do that, from this side of the House. We will be supporting the bill, but we are doing it with those reservations—and they are significant reservations.

We stand alongside Federated Farmers, we stand alongside Chartered Accountants Australia and New Zealand, and we stand alongside most of the business people who submitted, who expressed their concerns about the way that this bill is being implemented. This Government needs to do its homework. It needs to lay out a credible plan. It needs to have a bigger vision. And we urge it to do that so that this bill can be implemented in a way that really and truly does make doing business easier with the Government. It is about time.

Thank you for the opportunity to rise and take a call on this piece of important legislation for the Government’s agenda to promote innovation and business. From the way the previous speaker, Dr David Clark, was speaking, I was considering for a moment that he might be opposing the bill, but I am glad that he is actually supporting the bill. Just a reminder that he spoke about Novopay, and I just want to remind that member that it was actually one of his colleagues who advised the previous Government to take that on.

It is important to remember that a key goal of Government is to cut red tape where possible, and a key measure in doing so is creating efficiencies in transactions between business, sole traders, and others engaged in business with the Government as well. As stated in the report of the Commerce Committee, we noted that the bill’s efficacy will depend on Government agencies’ widespread adoption of the New Zealand Business Number. Without this, the bill’s outcome would be in danger of becoming another overhead for business and Government, which could increase businesses’ overhead rather than minimise them. And I know that members opposite have also mentioned this.

In New Zealand at the moment many businesses, trading companies, sole traders, and active societies are hampered by the problems of dealing with multiple Government agencies without cross-sharing of data. Their business can actually be hampered by the bureaucracy when dealing with trading partners internationally as well. This bill addresses these problems, most succinctly by giving each New Zealand business a one-size-fits-all, globally recognised data number with the Global Location Number, the “GLN”—a number that allows businesses to step up their engagement with the State and business partners without compromising costs or their own opportunity to get wider advice.

Implementation of the New Zealand Business Number is the result of the Government’s legislation agenda to promote better business, and it is a key component of the Better Public Services programme as part of Result 9, “Delivering better public services to business customers”. This programme is aimed at reducing by 25 percent—25 percent by 2017—the costs to businesses of dealing with Government. So far, more than 1 million New Zealand businesses, and counting, have been allocated a Business Number. Through Government and business working with the new Global Location Number model, there will be a number of positive benefits for business around New Zealand.

Many businesses, traders, and suppliers want to take advantage of the initiative, which will give them a much better relationship with New Zealand Government agencies and will decrease their costs by the end of 2017. I know that the member opposite David Clark was slightly concerned that initially there might be an increase in costs. Often when new things actually take place, there are some increasing costs, including, I guess, when there was a new leader on the Opposition benches—you know, they had to change their stationery, and these things do actually cost a little bit of money.

This bill is one of many actions that our Government has been taking over the last several years. This bill is actually a way of helping all New Zealanders get smart about business and of helping businesses get more services from Government. It is not about red tape; it is about reducing red tape. Through the adoption of the New Zealand Business Number, companies and traders will have far fewer repeat occurrences in Government administration that arise from the high level of red tape that our Government is currently trying to unwind and reduce. National believes in improvement to public services, and we believe in innovation and better business. The New Zealand Business Number is, simply, a promotion of those key principles. This is a great bill. I have enjoyed the process the Commerce Committee has run—

💬 Dr David Clark: It was a good process. Congratulations to the chair.

—and I believe that we actually had good advice and we have actually had thorough debate. There was some disagreement, but, as the member opposite David Clark said, we believe in the principle, and I am glad that the Opposition is actually in agreement that this is a bill that we should all commend. I agree with those members, and I commend the bill to the House.

I have it on good authority from my colleague David Clark, who was obviously a Labour representative in the debate on this bill, that it was indeed a good select committee process in the Commerce Committee, and, of course, that is what select committees provide for us: an opportunity to have a thorough debate and listen to the public view and sentiment as to the quality of the legislation that we are examining in those committees. Interestingly, we have come out on the side, after all of that thorough process, of having decided that, actually, our reservations, in part, are around whether or not this has been done in the most efficient way, but I also sense a lost opportunity here, as well.

I will come back to the Government’s own Better Public Services target that it has set for itself around small business, because I want to ask some questions as to whether or not that is as ambitious as it could be, and, indeed, whether or not this bill really should be sitting at the heart of the Government’s agenda for small business when there are so many other things that we need to be considering for that sector. I want to start off by paying tribute to the fact that small businesses in New Zealand generate more than 40 percent of the jobs per annum, if the past has been anything to go by.

If we want to look at boosting employment in New Zealand, if we want to look at supporting the productive economy, we should be looking at what we do to support small businesses. There is no argument on that front on this side of the House. That is why Andrew Little used his state of the nation speech last year to articulate Labour’s view that small business needed to be at the heart of our regional economic development plan, and that is the reason that David Clark and I work so closely together on those issues.

If you ask small businesses what it is that they want central government to be tackling for them you will see some common themes, and I would roughly like to put them under these generic headings. First is about the team. They want the right staff, and that means well qualified in the areas that they need them to be qualified in, or readily able to be trained, and—this is what small businesses say to me often—they want the right attitude.

But there is a role for the Government to play in that space—for instance, if you look at the fact that we have had a massive shortage of people in particular industries, like, for instance, the trades. We have had a massive shortage of skilled people in that area. When you go out and ask small businesses why they are not training people in that space when they have got that work they will tell you that it is because it costs to train a person on the job: “If I’m training someone in an apprenticeship it is going to take me at least a year before they are productive in my business. Why am I going to make that investment? There is no incentive for a business owner to do that.”

If central government wants to answer that call, why are we not looking to create that incentive? That is something that Labour looked very closely at. That is why we decided to implement the Dole for Apprenticeships scheme, where we are saying: “Look, you give something by training your employees, we’ll give something back by giving you the equivalent of the dole for a year to train that individual, but you finish their training through 3 years.” That is an example of listening to the needs of those small businesses, and it is something that Labour is very mindful of.

So it is about the right staff, the right time, and having the right team. Having the right team, though, almost ignores the fact that, actually, small-business owners themselves have their own needs in terms of training and capacity. If you talk to a lot of small-business owners, when they go into the role of becoming a small-business owner or manager they often do not necessarily anticipate the growth they experience, or they will have gone in with the ultimate goal that they would have the bach, the boat, and more time to spend with their family. They very rarely achieve all three, particularly time. We almost need to be asking small businesses to give a little of their time in order to gain a little of their time, and by that I mean capacity building, and training. Those are some of the needs that they have articulated.

How do we service those gaps at the moment? Well, banks might offer the occasional training as part of their offerings to attract small businesses to them. On the other end of the scale you have Icehouse with its $20,000 programmes that, yes, generate enormous returns for those businesses, but in terms of the cost it is just unaffordable. So there are massive gains to be made in that space if we partner with those who have some experience in that area and whom businesses trust. So that is another area where I think, again, it is a missed opportunity. Finally, I come back to the notion of time—giving back businesses time to work on their business rather than on the compliance around their business. It is a massive issue. It is what we all talk about—the cutting of red tape and so on.

There are layers to this, though, and the Government has decided to pick off a layer with its Better Public Services targets. It wants to reduce the amount of time that business spends basically providing the Government with information. That is not about doing things more efficiently, for instance, in the way that we might deal with provisional tax. It is not about the meaty stuff—it is simply about the form filling. That is not to diminish its importance, but we could be doing so much more. The Government has set itself a low bar. For instance, cutting 25 percent off the time it takes to register a company is probably going to save a company about 40 bucks. We could have been much more ambitious—and that is the point Labour is trying to make.

The Business Number initiative—12 million bucks of investment—is actually, in the very early stages, going to produce very little reward for the small businesses that we are so heavily reliant on in our economy. So that is where, I think, we would express some disappointment. Why did we not go bigger? And on that note I just want to say that we are still waiting for the Government to produce its plans around provisional tax. Labour has already presented a very comprehensive plan on a pay-as-you-go regime. We are yet to see anything other than a couple of flow diagrams and lovely charts from that side of the House. I would love to hear in this environment whether or not the Government—

The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt the honourable member. The time has come for me to leave the Chair.

Debate interrupted.

The House adjourned at 10 p.m.