Auckland Regional Amenities Funding Amendment Bill

We are going to need to keep going on this point, and it’s a point that’s very similar to what has been raised in respect of clause 5 of this bill. I’m afraid it needs to be raised again in respect of clause 6 of this bill. To date, we haven’t actually received an answer from the member in the chair, Dr Parmjeet Parmar.

Now, my colleague Mr Michael Wood gave a pretty important speech, I thought—

💬 Michael Wood: One of my best.

—one of his best; one of his best—on clause 5 of the bill. He raised the very important point that it seems, at face value, that the reporting required under the amended bill is less than the reporting required under the original bill. Now, he raised that all in respect of clause 5, which is amending section 39 of the Act, and that was applying to the amenities—the specified amenities; the actual individual amenities that are funded through the amenities funding board. We’ve all said they’re all very worthwhile amenities—entities that I think contribute greatly to the life of Auckland in both cultural and sporting and scientific ways. So that was applying to the entities.

But clause 6 of the bill applies not to the amenities themselves but to the funding board—the overall board that collects the funding and distributes it. Like the individual specified amenities, it has a set of reporting standards.

Now, if we look at clause 6 of this bill, it amends section 40 of the Auckland Regional Amenities Funding Act, board—whatever. Sorry, I’ve just got to look that up exactly, in some ways. Act—thank you. What it does is it takes out section 40(1)(c) of that and replaces it with just section 40(1)(c). In the bill, paragraph (c) says that the annual report of the funding board, in effect, has to contain audited financial statements for the year prepared in accordance with generally accepted accounting practice.

But, if we go back to the Act—the Act that’s being amended, section 40(1)(c)—like section 39(2)(b), or whatever it was—really talks through exactly the financial statements that must be presented by the funding board every year. In section 40(1)(c)(i), it’s “a statement of financial position of the Funding Board;”—so lots of people would just call that a balance sheet, really. Section 40(1)(c)(ii) is “an overall operating statement of the Funding Board;”. Now, that’s, in effect, a profit and loss statement—so pretty simple accounting thing there. Section 40(1)(c)(iii) is “a statement of cash flows of the Funding Board;”, and that’s just money in, money out—always important to know how much money you’ve got in your bank account and where it’s coming from and where it’s going to. Section 40(1)(c)(iv) says—and this is pretty interesting—“any other statements necessary to fairly reflect the Board’s financial position, the resources available to it, the financial results of its operations, and the financial results of the specified amenities operations;”. Any other statements—that’s a pretty interesting one, because we know that the funding for this board comes via the Auckland City Council, in effect. And so there’s a whole lot of questions there, particularly in the current environment.

It’s quite a long list of financial statements of various sorts that are in the original Act, and in clause 6 of the bill they are replaced just by “(c) contains audited financial statements for the year prepared in accordance with generally accepted accounting practice;”. So that’s quite a shift.

As you might do, you sort of think: well, what then are generally accepted accounting practice? They’re defined in the definition section of this bill. It’s the same meaning as in section 8 of the Financial Reporting Act. So if you go to section 8 of the Financial Reporting Act—if I can just pull it up—the meaning of generally accepted accounting practice, it’s financial statements, group financial statements, a report; they comply with generally accepted accounting practice only if they comply with acceptable applicable financial reporting standards. So what are the applicable reporting standards? Well, a financial reporting standard means a financial reporting standard issued by the board under section 12. Section 12 of the Financial Reporting Act really just sets up the functions of the board, and so on.

On the face of it—on the face of it—it looks as though by going from section 40 of the original Act—the Auckland Regional Amenities Funding Act—the original one which we are now amending really does specify those financial statements. But then, going to the amended bill, it just goes to generally accepted accounting practice. So it looks like quite a reduction in the standards required under section 40 of the original Act versus what we think will become section 40 of the amended Act.

I think this goes back to some of the questions that I have been asking all along and which, to be honest, have not actually been satisfactorily answered yet. What is contained within generally accepted accounting practice? How do those standards actually differ—actually make a difference—in this case between generally accepted accounting practice and what was in section 40 of the original Act? I think we do all agree with the justification for this bill, but we need to understand that the member who is promoting this bill to us, the member who is supporting this bill, actually understands those differences and that we can rely on that. Certainly, we can rely on the select committee process there, as has been pointed out earlier by Mr Simon O’Connor. But, equally, I would have thought that the member herself would have had some understanding of it going in or, quite reasonably, as we all do, relied on an expert to explain to her why this particular bill was needed and what difference was made in that case.

So I am inviting the member to stand up and explain to us what assurance she has, or what assurance she can give us—not just that there are different standards for charities and not-for-profits—of what the difference is between section 40(1)(c)(i), (ii), (iii), and (iv) of the original Act and the sorts of financial statements required by generally accepted accounting practice. Now, it may be that, in effect, for the standards required, in fact, there is no difference. But we need to understand—we actually need to hear that, and we need to understand what assurance the member can give us of what she’s relied on to get to that opinion and so on.

I would appreciate the member actually answering this question, which I have asked in several different forms this afternoon. So far, I haven’t actually gotten the answer. I’ve gotten a variety of answers, which I agree with in terms of the differences between charities and not-for-profits, but not this particular answer, and I would really appreciate the member perhaps giving us that particular answer. And, in doing that, of course, it will answer the question that was raised just in respect of clause 5 by my colleague Mr Michael Wood.

I know we’ve been persistent on this. I know we’ve asked it several times. We’ve tried to ask it in several different ways. We are still looking for that straightforward answer, and, as I said, even if it was just the experts that the member relied on, it would be very, very helpful to know that. So I do invite the member to take a call and to actually answer the question. Thank you.

Clause 6 agreed to.

Clause 7 New Schedule 1AA inserted