Annual Reporting and Audit Time Frames Extensions Legislation Bill

I present a legislative statement on the Annual Reporting and Audit Time Frames Extensions Legislation Bill.

💬 DEPUTY SPEAKER: That statement is published under the authority of the House and can be found on the Parliament website.

I move, That the Annual Reporting and Audit Time Frames Extensions Legislation Bill be now read a first time.

This is a relatively simple piece of legislation that the Auditor-General has asked to be passed through the House, and Cabinet has considered his request and agreed to it. There are three main reasons behind the shortage of auditors that has led to this bill. The Auditor-General has advised us that the ability of auditors to do their audit work and meet statutory audit time frames and produce sufficiently robust audits is under pressure due to severe capacity constraints within the auditor profession. The three main factors involved are an ongoing shortage of auditors in New Zealand and Australia, caused by increased demand for auditing expertise with more complex requirements. The current border settings have disrupted the traditional model of private audit firms bringing in offshore staff to assist with audit workloads, limiting the additional resources that these firms can provide for public sector audits. There is also the issue of the turnover of Audit New Zealand staff, and a constrained recruitment environment due to difficulties, as already mentioned.

This auditor shortage is more widespread than just Audit New Zealand and the public sector. Recently, the Financial Markets Authority provided temporary relief to some businesses to give them additional time with certain regulatory reporting requirements if their reporting was delayed because of auditor capacity constraints across the private sector. Even in normal times, there is a peak of resourcing for auditing in the public sector—the so-called audit season, much like an apple or a kiwifruit season—and with the financial year for most public entities ending on 30 June, there is high pressure on audit teams and organisations to complete public sector audits to time. With the shortage of auditors now, the current time frames do put additional stress on staff, and increase the likelihood of compromises in the processes and of reporting quality. The Auditor-General has advised us that there are currently 1,000 vacancies in the audit profession in Australia and 200 vacancies in the New Zealand profession. So this is a shortage not just here in New Zealand but also in Australia, and indeed, around the world.

The bill recognises and addresses these issues by providing extensions to the annual reporting and audit time frames so that the audits can be spread out over a slightly longer period, ensuring a robust assurance and audit opinion to support continued public accountability.

The amendments in this bill change the time frames in two Acts: the Crown Entities Act 2004 and the Local Government Act 2002. The Auditor-General informs me that these two Acts are pivotal to the scheduling of audits and that, by providing extensions, robust audits can be undertaken and legislative time frames met.

The bill achieves this by extending the time lines for audits—or having an audit done—by a period of two months. The bill provides these extensions for a period of the next two financial years, to reflect the need to address longer-term workforce supply issues. It is important to note the audits will still be done, but there is a two-month extension provided for in the two Acts being amended.

The type of provisions in this bill are technical, but they are important. It is important that audits are done well, and that robust assurance underpins and supports this fundamental aspect of public accountability and transparency. These provisions do need to be in place as soon as possible so that those entities who are being audited have certainty about when that will occur, and to make sure that the auditors themselves can plan and sequence this work.

The Auditor-General is proposing a sequencing, which he has communicated to members of Parliament, which includes putting at the start the financial statements of Government and related activities along with other larger entities, such as large councils, and that those audits will be done within the normal time frame, and that other audits will take the two months that will be added by this legislation to be completed. These are minor amendments. They recognise a workforce shortage, and I think the House should not delay itself too long in passing this legislation through.

The question is that the motion be agreed to.

Thank you, Mr Speaker. It is a duty to be talking on the Annual Reporting and Audit Time Frames Extensions Legislation Bill. I want to start out by saying that National is going to be opposing this legislation, not because we don’t think that the Audit Office does a good job, because I want to just put on record that they do do a good job. They do an extensive number of audits—over 3,000 a year. So I think we should just make that an important aspect, that we respect the institution and what they do.

But I think that the issue with this is that—I think there are four major issues. The first one is—I think this highlighted a Minister who should have had greater oversight of what was going on with this entity.

💬 Hon Grant Robertson: He’s an Officer of Parliament.

I know, but this is an issue that even when the Auditor-General comes before the Finance and Expenditure Committee, there has been repeated questioning around staffing requirements. It seems inconceivable at this late stage that we have a request to extend the time line for two months for the different entities, both central government and local government entities. I just think, in terms of the liaison and oversight by the Government over this entity, it has been something that just raises a few issues as to why we’ve been suddenly surprised with this issue that has now required urgency to be passed. I think these types of issues should be considered and should be contemplated in a time frame that people are aware of it and can make sure that proper planning has gone on. Obviously, we’re at a stage where it has to be passed through and rammed through under urgency. That’s the first point.

I think the other thing is this shows that the Audit Office has been losing staff, and the Minister alluded to that. There’s been some reduction in the staff of the Audit Office. I understand there’s been possibly up to about 30 people that have left the Audit Office. As we understand, the Audit Office has its own staff and they do a good job, but also rely on third-party auditors to do that. I think the first question is: why is the Audit Office in a situation where it is losing substantial numbers of staff and would appear to be in a position where it cannot compete? I think there’s inability to compete in a market where a lot of these people have been taken from the Audit Office into the private sector. It gives rise to the issue of the funding of the Audit Office and how it’s being managed and whether, in fact, it is being properly structured and funded to make sure that it can meet its duties. Clearly, it hasn’t been in the situation where it can do that, because otherwise we wouldn’t be doing this bill under urgency today.

Just on that, we have heard from many Government Ministers across multiple portfolios who’ve quite simply said to the private sector—virtually to every component of the private sector—that they should just pay more. It’s been a pretty tough message that the Government has given to, virtually, every employer in New Zealand who has been screaming for additional staff. Yet, when it comes to a Government entity, the response to the Government is: “We’re not going to pay you more. Let’s just defer the timetable.” I think there’s a lack of consistency around that message, which I think’s a pretty important aspect that needs to be taken into account. If we talk about apple orchardists, farmers, manufacturers—everyone has been saying, from the Government Ministers, that they should be paying more to attract staff; I think, quite simply, that it hasn’t been able to in some cases. In this situation, the Government’s not prepared to front up. I think that just gives rise to this. Is this a case of the Government not doing what it’s saying it should do to everyone else?

The other aspect about this is the issue of immigration. I think there is an absolute need for skilled migrants. Again, the Government’s been pretty robust and tough on private sector wanting to get people into New Zealand. We’ve just heard from the Minister that there’s a shortage of 200 auditors required in New Zealand to be able to deal with this issue. If we accept the Minister at his word at 200 auditors that are required, the question that should be asked is why aren’t they getting allowed to come through as skilled workers and enter into the managed isolation and quarantine (MIQ) facilities? As TVNZ 1 reported on 3 July, there were currently, at that point 2,000 rooms unavailable in the MIQ facilities. And what’s more, the Government made an absolute commitment that 10 percent of MIQ facilities would be made available to skilled migrants to assist all types of businesses. I think this has been a case where what we are seeing—if you go and talk to any business around New Zealand—is the ability to attract and get anyone through MIQ’s facilities, particularly in terms of skilled staff, has been absolutely stymied. I think, again, if we’re going to be consistent, the Government should also be consistent in its approach. Again, do what we say, not what we’re going to do as a Government. This is a case of the Government changing the rules for a Government entity.

The third thing I’d like to talk about is that businesses don’t have the luxury of changing the law—they don’t have the luxury of changing the law. We don’t have vineyards who can legislate that vines don’t need pruning. We are not in a position for legislation to be passed that cows have got to milk themselves. The whole type of approach around this is that businesses have had to deal with the framework that the Government has dealt to them. Yet when we get to a Government entity like this, the Government again says, “We’re going to legislate. We’re going to make a one-off change just for one particular sector.” Yet all the other businesses, the 350,000 active businesses in New Zealand—“Hey presto. Don’t you worry about it. You just get on and operate and pay people more.”

I think all that just comes together in terms of saying, look, this is a situation where we’ve got considerable inconsistency by the Government in terms of the way it wants to operate for Government entities and the way it wants to impose conditions on New Zealand employers. I see the Minister for social welfare over here talking earlier, talking today about the issue—

💬 Hon Carmel Sepuloni: There’s no Minister for social welfare; it’s social development.

—social development—talking about doing the mahi and training up people and doing all that sort of stuff. Well, that’s the same reason that the Government has given to employers that they should go and train people up. Well, if we had had a better visibility around that, maybe the Audit Office, supported by the Government, should have been actually looking at training activities. Yet what we’ve done is we’ve got to this point or juncture where the Government decided that it needed to pass urgent legislation to drive this through.

Again, I just think that it is a bit of a concern for every employer who will be looking at this piece of legislation and saying, “This Government simply wants the right rules for itself, and yet imposes difficult conditions on everyone else in the country who is trying to get on with their lives, trying to grow their business, trying to take on a risk, but are unable to because they literally can’t get staff—in many cases can’t get one or two staff members who are critical to come and drive or operate parts of their factory because they simply cannot get access to MIQ facilities.” I think that argument needs to be explained more by the Government, because, I think, once you’ve got clarity around that, then the justification for moving and providing an extension to the Audit Office, in terms of passing special legislation under urgency, therefore becomes a key part.

The other aspect we haven’t heard about is reprioritisation of Audit New Zealand’s work, which is another option that could have been considered, but I haven’t heard that from the Minister who spoke earlier. So I think the options that should have been on the table is reprioritisation of work—the Government could have contemplated entering into a payment arrangement even for the short term—and the opening up of MIQ facilities to allow auditors to come into this country which are desperately needed.

Just for the avoidance of doubt, I wish to state that my initial job when I left university was as an auditor, and I even did work under contract for the Audit Office at some stages.

The Opposition raised a number of objections to this particular bill. They raised the objection around oversight by the Minister. They raised an objection around how the Audit Office is performing, they raised an objection around funding of the Audit Office, and they raised an objection around immigration. I am not a greedy person, so I will deal with one of these arguments, and leave the remainder for my colleagues.

I wish to talk about the special status of the Audit Office, particularly in terms of the Opposition saying it should have been better supervised by the Minister. The Audit Office is not supervised by a Minister. It is an Office of Parliament. The Auditor-General is an independent officer of this Parliament, of all of us. There are three independent Officers of Parliament: there is the Parliamentary Commissioner for the Environment, there is the Ombudsman, and there is the Auditor-General. As a Parliament, we rely on the Auditor-General so that we may perform our role of supervising the work of Government departments and inquiring into it. It is an office that ought to be cherished, in particular by the Opposition. It ought to be cherished and given the resources it needs as easily as it needs them, and, in particular, the Opposition ought to defend the Auditor-General at all opportunities.

The Auditor-General has properly seen that, given the constraints of the market at the moment, given the world in which we’re operating, which has COVID, he will not be able to perform the job that this Parliament needs him to do, and, quite properly, he has come to this Parliament and asked us to give him a little bit of leeway, two months—two months—so that he can reprioritise his work, make sure that the most critical work gets done first, and that all the work gets done within the statutory deadlines. This is why, as a Parliament, we ought to support this bill, and I am astonished that the Opposition is choosing not to. I commend this bill to the House.

Well, that’s us being thoroughly lectured to by the good doctor Deborah Russell. Like her, I was actually offered a role in Audit New Zealand, as it was known then, in the mid-1990s, and rather pertinently I turned it down to work for a KPMG associate in Dunedin. Not because of the money—in fact, I think the starting salary at Audit New Zealand was higher than the KPMG salary—but because of the variety of work and the opportunities for progression.

But I do agree that the integrity and probity of our public spending and of the public accounts that are produced is absolutely fundamental to the reputation New Zealand has for good governance. And, frankly, this bill significantly undermines that confidence and that integrity. But my, my, aren’t the chickens coming home to roost? Because this Government—not only is Dr Russell a good lecturer but this Government has been lecturing to businesses for 3½ years about how they should fix their own houses. When they came to the Ministers of immigration and said, “Try as we might, we cannot find the staff we need”, the doors were closed on them—and that was before COVID. But now the Government has a problem and it finds itself a solution. It has a problem with teachers, so it just mandates that 300 teachers can come through the border when every other company that’s not Government-owned is having to just suck it up and, as so many Ministers of the Crown have said, pay more.

Then, when they get a problem identified by the Office of the Auditor-General (OAG) that they cannot meet their legislative obligations: “But that’s OK, we’ll give them a pass, we’ll come to this Parliament, bypass that pesky democracy thing.”, like having a reasonable exposure draft and a select committee process, and use the weight of their numbers to ram through a piece of legislation that undermines confidence in our public accounts. And the Government wonders why we don’t support this. It’s frustrated that we don’t think this is a good idea. Well, they better lock themselves in for a long evening and an early morning start, because there’s a lot to be said about this and a lot to be unpacked.

I agree with Dr Russell—the Auditor-General office is an independent Officer of Parliament, but they’re not independent of the law and they’re not independent of the need to come to Parliament to have their funding appropriated. It is true that auditors, I understand, who are employed by the Office of the Auditor-General are paid less on average and that they are vulnerable to being picked off by accounting firms here in New Zealand, but those same accounting firms are under the same sort of salary pressure because Australian firms are picking them off. It’s a vicious cycle that, frankly, the Government should fix. They’ve told businesses for 3½ years that if there’s supply side problems, meet the market. When there’s a shortage of supply, what happens? Fourth form economics says the price goes up. That’s what they’ve told businesses for 3½ years. But, apparently, what’s good for the goose isn’t good for the gander. The Government just says, “No, no, we’re not going to do that; we’re just going to legislate softer public accounting processes.” And they wonder why we oppose that.

That’s one of the first questions in this debate and throughout the evening that we’ve got to be examining. We found out about this, what, Mr Bayly, last Thursday, last Friday? When did the Minister, or the Speaker, who is responsible for the appropriation for the independent Offices of Parliament, first find out that this was an issue? And why didn’t they say anything about that? We’ve just gone through a whole Budget process. There was an Estimates review. Yes, look, I preface this comment with an agreement with Mr Robertson, Mr Bayly, and Dr Russell: I have the highest regard for the Office of the Auditor-General and for Mr Ryan, but we’ve got to know more about when this was first raised. Why was this not made aware to the Governance and Administration Committee when they reviewed the Budget Estimates? Was a Budget bid put in for an increased appropriation in order that Mr Ryan could meet the market and save, not lose, some of the 27 auditors that over the last year or so he has lost? So why wasn’t this raised? Was the Budget bid put in? Was it turned down by the Government?

I also want to know what the Auditor-General’s priorities are now. The Finance and Expenditure Committee considered this document only this morning and we haven’t yet reported back to the House, but the report is a public document and it is the annual plan of the Office of the Auditor-General for 2021/22. It sets out a number of projects, processes, things that it wants to investigate that aren’t core business, I would suggest. I’ll go through this list—I’m not ranking them, but this is where the Auditor-General wants to work in 2021: “Improving outcomes for Māori; reducing family violence; improving housing outcomes; improving education outcomes; improving health outcomes; implementing the well-being agenda; resilience and climate change; integrity in the public sector; processes underpinning significant Government investments”—all good things. But first things first: the first role of the Office of the Auditor-General is to audit the accounts of Government and its entities. So my question, and we have no answer to these questions either in the communication from the Minister, the Auditor-General, the legislative statement, or this skinny-as-all-hell departmental disclosure statement—

💬 David Seymour: You should get the A-G to investigate it!

—is how are these plans going to change as a consequence? It’s a very good suggestion, Mr Seymour: get the OAG to investigate it. But this just shows how we are becoming unhooked from the first principle and the first priority of the office, and that is to audit the integrity, the truth, and the fairness of the Crown accounts. That’s the number one priority. And if we are going to have to defer the timetable for doing that, are we deferring the other things that the Auditor-General has told the committee and the public that he wants to do this year? No answers to those questions. I hope, through this long debate, we can glean them out.

The obvious question, actually, is why does the bill go broader than the Office of the Auditor-General has asked for? The Minister has told us that there are certain entities that will stick to the four-month reporting time frame and there are other organisations that will get a two-month extension from these current statutory obligations by an amendment to the Crown Entities Act and the Local Government Act. The Auditor-General has told us that he’s going to look at the big material entities and do them within the statutory time frame. But the smaller DHBs, the smaller council-controlled organisations (CCOs), other Crown entities that aren’t as material will be subject to that extension of time. That’s not what the bill says. The bill gives a pass for two months for all of those Crown entities and all of those local councils and their CCOs. So the bill does not line up with the policy intent. I’ll be having more to say about that, as will Mr Bayly and my colleagues, throughout this debate.

The last thing I want to just mention in this first reading is the Minister’s reference to the Financial Markets Authority and the fact that they have given some businesses a pass. Well, they did that last year for COVID, that’s true. And they did it again just last month, but they did it for one month for one reporting period. This bill doubles that. It gives it for two months for two years. So what the Minister is saying is that this problem that we only found out about four days ago—they’re giving themselves two years to fix it. Well, I’m sorry, that’s not good enough. The public scrutiny and the integrity of Crown accounts deserves a much more proactive response. So, again, we will be examining this bill from the point of view of why is it so broad and why is it in for so long. There are a heck of a lot of other questions, and for the Minister and his colleagues to say, “Oh, this is just a simple tidy-up, short-term issue” on the very thing that underpins the confidence that the public should have in the probity of our spending of their money I think speaks volumes to this Government.

Thank you, Mr Speaker. It is disappointing that we don’t have unanimity in the House on this important matter, because we all agree on the role of the Auditor-General and the importance of it. I was surprised to hear Mr Woodhouse pooh-pooh, if you like, some of the other work that the Auditor-General’s doing and say that the Auditor-General should shove to one side the work on delivery of health, shove to one side the work on domestic violence, the work on Māori equity, and the wellbeing of all of New Zealand—that those things should be shoved to one side so that the audit reports of Crown entities can be completed on time.

Well, I suppose, in his world, that would be one thing you could do, but on this side of the House we think they’re very important tasks and that we shouldn’t constrain the Auditor-General in doing things like self-initiated audits and inquiries, because that is also a core part of the role. And if he was required only to do the Crown audits on the time line set out in the law, notwithstanding these very difficult times, then other important work would fall to one side, and this Government wouldn’t be subject to the scrutiny that it should be from the Auditor-General. We’re not going to let that happen, because we think that the role of the Auditor-General is very important and that he should be, and his team should be, given every resource that he needs to discharge his independent functions. That’s why this bill is a good bill.

The fact of the matter is that the Auditor-General has come to Parliament and said, “I can’t do my job because of existing constraints. Can you give some leeway through Parliament, through this House, to achieve that?” On this side of the House, we say yes. We want the Auditor-General to do his job and to scrutinise everything that this Government does, and we will be supporting this bill. I commend it to the House.

Tēnā koe, Mr Speaker. The Green Party doesn’t have a really strong opinion on this bill. I mean, we understand the reasons for it; they are perfectly understandable. We didn’t support the urgency motion. We do think this is something that could have been handled in another way, other than urgency, if it had been dealt with sooner, but we are supporting the bill.

I just want to make a couple of comments about the importance of the Auditor-General—that the work they do is really critical to the transparency and function of democracy; that their statutory requirements are incredibly important. But many of the other inquiries they’ve undertaken are also really useful to the functioning of our country. It is totally understandable, in the post-COVID environment, where they’ve undertaken a lot of extra work because of COVID, like many other private and public entities in Aotearoa New Zealand, that this has led to scheduling issues as well as the shortage of auditors internationally and here in New Zealand.

Now, I guess the only thing that we can say, aside from supporting this short-term measure to deal with the constraints, is the overall long-term changes that are needed so that this sort of problem doesn’t arise in the future—that there is sufficient capacity in bodies like the Auditor-General to undertake this really important work. And, I guess, that just speaks to the overall need for building up capacity and support of the State, of the Government, to undertake these public-good activities. That is something that will not happen if you get an ideological right-wing Government like the National Party or the ACT Party, who consistently run down public services—Government services. I mean, obviously, we’re still sort of dealing with that because, ultimately, after National had nine years, with ACT in part, to do this, unfortunately, when the coalition Government came in, we had a lot of promises about things that we wanted to deliver that had great public benefit but there wasn’t the revenue promised to enable it.

So, because we’re stuck in this environment where we’re not raising enough revenue from the wealthiest New Zealanders—like, for example, with a capital gains tax or a wealth tax—we’ve had an enormous increase, a windfall increase, in the value of property in New Zealand, and all of that is going into private hands rather than some of it coming back to the public, to the things that actually benefit the public; public services like the Auditor-General, which are really important, and they need to be properly funded. And I think most of the Offices of Parliament haven’t had major increases in their funding, and a lot of commissions haven’t either, over the years, and that means they aren’t able to do that work that benefits all of us in a variety of different ways.

So, ultimately, building up that capacity for public-good functions requires a commitment to us working together as a country, and it also requires a fair tax system which sees those who have gained the most from the status quo putting back to the things that benefit us all. And, of course, there will be those in this House who, I can hear, just love to demonise the whole idea, but, really, it’s not low-income or middle-income people who need to pay more tax; if anything, they pay too much. It is the highest-income earners, but mostly the wealth owners and the properties owners, who are getting rich off no work of their own, just by being in the right place at the right time, and the quantitative easing that the Reserve Bank has engaged in—just general inflation. It makes sense that that financial representation of our efforts as a country, that some of that comes back to the public good that benefits us all.

And so the Green Party supports the bill, and we will continue to support a fairer tax system where the wealthiest pay their share.

Every time Julie Anne Genter gives a speech, I sit and I hope and I pray that she has had an original thought, but every time exactly the same, no matter what the bill, the same thing: very little attention to what this House is actually up to.

I rise on behalf of ACT in support of the Annual Reporting and Audit Time Frames Extensions Legislation Bill. I take issue with some of the claims of my friends in the National Party. I don’t think that this will dilute the standards of auditing. What it will do is allow some of the report-back dates for the Auditor-General to be later than they would otherwise be, but I think it’s well worth canvassing just why we are in this situation.

I think there are basically two reasons: one that started to be canvassed is the massive shortage of auditors and accountants. The reason that we have a shortage is simply because New Zealand is an island nation, an economy of 5 million people that relies on being able to attract skills from outside our borders for the economy to go and grow. If you think about it, there’s no example in the world—or at least the economically functioning world—where we actually have only 5 million people in a labour market and no access for businesses to hire skills from outside that 5 million. You think about it: Denmark, 5 million people, access to the entire European Union; Colorado, 5 million people, access to the United States labour market; British Columbia, 5 million people, part of Canada’s labour market of 38 million. No one else in the world tries to wall off a labour market of 5 million people and get the mix of skills required for businesses to operate in a modern economy, so that’s not surprising.

The problem is the Government has given its Auditor-General—or at least Parliament’s Auditor-General—an out by introducing this legislation, but what is the remedy for everybody else who is facing exactly the same problem? It’s not just auditors in the public sector; it’s in the private sector. I visited a “big four” accounting firm in Auckland a couple of weeks ago. They said, “We have 88 vacancies for our Auckland office right now.”, they can’t get them. I was talking to someone who was getting their taxes done two months late. They asked their accountant, “What’s the hold up?” They said, “Like everybody, we’re facing a skills shortage.”

So here’s the question: when people have to file with the IRD, are they going to get an extension of time because their accountant was busy like the Auditor-General is? And what about every other sector of the economy? What about Olaf the baker in Mount Eden Village? He’s across the road from Frasers, the iconic cafe—it’s got a sign on the door saying, “We don’t open on Mondays, because we can’t get enough people.” Are they going to get a law passed to make their lives easier? Olaf himself is down so many bakers that he can’t produce the bread to keep his 28 staff that he’s still got going. Is he going to get any special dispensation? Of course he’s not. The Government is solving this problem for the Auditor-General, and the ACT Party agrees it might as well happen—if we can save them, we shouldn’t spite them—but what is the Government going to do about immigration? How is it going to innovate in regards to isolation and managed isolation and quarantine (MIQ) so more than a few hundred people a day can enter New Zealand? It has no plan.

And even if it did, Immigration New Zealand are not processing visas. What is it going to do about the shambles of the department that drives more constituents through the doors of local MPs than any other department? When I was first elected, I didn’t think any department could drive more constituents through my office door than Auckland Transport—how wrong I was. I hadn’t thought about Immigration New Zealand. Somebody walks through my door, I can almost guarantee you, 50:50, it’ll be an Immigration New Zealand problem. When the lockdown happened last year, Immigration New Zealand went home and had a holiday for seven weeks. They couldn’t work because their IT systems don’t work. If we don’t put a bomb under Immigration New Zealand, there won’t be any visas, even if the problem of MIQ shortages is solved.

And then there’s the question of: what’s the policy? This Government campaigned on 30,000 net permanent or long-term arrivals per year. They delivered, two years later, 92,000, so they didn’t carry out their policy, but COVID did. Last year, we had only 6,000 permanent net long-term arrivals. So what is the future of immigration in New Zealand? The Minister helpfully read out a speech from another Minister, because the wrong Minister showed up—that’s what this Government’s like—and said it’s time for a once-in-a-generation reset. Everybody is facing this problem. Nobody knows if they’re going to be able to get skilled labour. The Government, if it was serious, instead of rushing through this legislation under urgency at the last minute before the winter recess, would actually have a broader solution to safely reconnecting with the world post-COVID, but, as we see time and again, the Prime Minister gets asked in question time, “What’s the plan?” and all she does is discombobulate, dissemble, and otherwise fail to answer the question, relying on the Speaker to say, “Well, at least she addressed part of it.”

💬 DEPUTY SPEAKER: Order! Do not bring the Speaker into the debate.

Mr Speaker, I have not brought the Speaker into the debate at all. What I have said—

💬 DEPUTY SPEAKER: I disagree with you. Don’t bring the Speaker into the debate.

Well, Mr Speaker, I don’t understand why that is, but I’ll continue anyway. That is the Prime Minister’s strategy—it doesn’t involve the Speaker. I was describing her strategy.

In any case, the other problem that the Auditor-General has, other than a shortage of staff, is so much demand to fix up the Government’s various screw-ups. And here’s just a few they’ve had to do recently: the Provincial Growth Fund. We had a joker called Shane Jones, who gave out money to people who were associated with his boss’s lawyer, his boss’s lawyer’s son, I think his boss’s partner were all involved—

💬 DEPUTY SPEAKER: And I’ll ask the member to come back to the bill. You haven’t mentioned anything relating to the bill in the last two minutes.

The Auditor-General’s under time pressure—I’ve been talking about the bill the whole way through—

💬 DEPUTY SPEAKER: That’s the second and final warning, by the way.

And the Auditor-General said, “improvements … needed in how appropriations administered, how conflicts of interest in contracts were managed, and how investments were tracked and reported.” I mean, the reason he’s so busy is that’s the kind of thing that this Government has been serving up—that was the Provincial Growth Fund.

Then there’s the vaccine roll-out: “Given the significance of the challenge, I did not expect to find a perfect plan.”, says the Auditor-General—at least he’s sporting and gives them a chance—“However, to successfully navigate these challenges, a clear strategy, a well thought-out path, and fit-for-purpose governance arrangements are required. In particular, I expected to see a level of planning that matched the public commitments the Government has made.” These are the kinds of things that Auditor-General is finding all the time about the way that this Government screws up its own programmes, that’s why he’s so busy. That was his report on the vaccine roll-out.

What about light rail? Now, we’re getting into a power force in New Zealand politics called the “Twyford effect”. Light rail: “Our initial concern was that given the strong presumption in the rules that the best way to ensure value for money is some form of competitive market process, a parallel process involving only two parties did not, on the face of it, seem proportionate to the value, risk, and complexity of this particular procurement. We therefore wanted to understand what consideration officials had given to the rules … [and] taken to ensure the good practice principles underlying the rules were given effect to, even though the rules were not.” That’s light rail.

And then there’s Ihumātao—the kinds of things the Auditor-General has been kept so busy with because this Government seems to be able to screw up everything it touches. “In our view, the intent of the document prepared by the ministry, and the intent of the joint Ministers, was to establish a new appropriation that would provide authority for the purchase of the land at Ihumātao. However, as described above, there were two important omissions from the approval for the expenditure. As a result, the payment of $29.9 million used to purchase the land was incurred without the proper authority.”

No wonder the Auditor-General needs an extension of time, there are so many screw-ups and, in many cases, downright dodgy activities happening with the expenditure of public money under this Government, the Auditor-General needs to work double time, and compounded by the fact that this Government has no plan to safely reconnect with the world so we can actually get some skills into our economy of only 5 million people. He needs this extension of time, so we’d rather that the Government solve the problem in other ways, but they seem incapable of that, so we can only, as ACT, commend this bill to the House. Thank you, Mr Speaker.

I rise to speak in favour of this bill. It’s a very urgent matter and it requires urgent action. There is nothing more simple than that. It is so disappointing when the National Party just says it’s not going to support something for the sake of it. We need to get on and let the Auditor-General’s office have two months—two months. That’s all it is: two months. Why is that so hard for the National Party to agree to? What will happen in those two months?

They talk about this being a New Zealand problem. It’s not. It’s a worldwide problem. Australia has a population of 25.5 million and they’re 1,000 auditors short. We’re 200 auditors short, and we just need two months to get everything back into place so that we can report back and do the job that’s required of this Parliament. It’s practical. It’s a working solution. It just needs to be done. It just is such a little thing to do, an urgent matter, but Mr Woodhouse wants to go all night and apparently into the morning just to complain, just to carry on like the negative National Party of the day. I mean, come on. Let’s just get this urgent matter under way. Vote for it. It’s not hard to do. Give them the time they need—two months. That’s two months, team—two months. I commend this bill to the House.

This is a split call. I call Simon Watts.

Thank you very much, Mr Speaker, and I rise on behalf of National and as the member of Parliament for North Shore. I must say, just listening to the comments by the last speaker, when I was in the Hawke’s Bay earlier this year, talking to apple growers about the significant workforce gaps that they had at that point in time, and came back and asked them “What is this Government doing about resolving those problems?”, the answer was “Nothing.” So have a look in your own backyard and have a talk to your own businesses. National oppose this bill, and I’m going to articulate a few reasons why that is the case. As one of the few people who actually has a financial background as a chartered accountant and over 25 years in this sector, I am someone that understands this challenge.

The reality of what we’re being told in regards to this bill, which is a bill which seeks to extend the deadline by two months, is this is because it is of a workforce gap. Well, how can this workforce gap have just appeared? If anyone knows how to plan an audit, the planning for resourcing of an audit is undertaken months and months before the work even started. There is no way that this is a surprise. This Government, on that side of the House, have known about this problem for a long, long time, and they have decided, under the auspices of urgency, to throw it on us and say, “Oh, well, you know what? The changes need to happen.”, and push it through under urgency. Well, I’m sorry. You can’t just change the rules of the game to suit yourself when other people and other businesses in this country are significantly struggling because of a workforce crisis. So this bill, in terms of that extension of the deadline, is basically symptomatic of a Government that is unable to manage the problems that we have around workforce in this country, and that is why National are opposing this quite strongly.

Within my home electorate of the North Shore, Peter and Susan Reeves, who own Manuka Cafe in Devonport, had to close their doors for a period because of a lack of workforce. Sid and Chand Sahrawat, who own Cassia and major restaurant chains in Auckland, were in the Herald yesterday saying that they have to close for two weeks, at losses of over $300,000, because they do not have the workforce to operate their business. But is the Government going to legislate to try and help those businesses? No. What are they going to do? Nothing. Are they going to do the right thing and put releases around immigration to let some of that workforce come in to fill those significant labour gaps? No. But what are they going to do in their own backyard when the auditor teams can’t complete the work that is required for them because of Government? Well, how about we just change the legislation? Well, I’m sorry. That is a lazy approach, and this is something that is not a surprise and should have been well planned out.

What this indicates is we’ve got a Minister who is out of touch. He is not over the detail in regards to this, and while the Auditor-General’s office do an absolutely wonderful job and I do appreciate the advisory they provide to us across the board, basically this problem has been caused by the Government, and the Auditor-General’s office are basically symptomatic of the issues underlying that, and that is simply not good enough. Basically, what we’re trying to get through here is around whether this two-month issue is going to actually provide the changes required. But what we know in this articulation is actually the Auditor-General has articulated that there are a number of entities which they will be able to complete the audits for. However, the legislation on the Table here is a catch-all driftnet of every single entity, with a whole lot of, basically, no limitations on the Minister around that, and I don’t think that is good enough either.

We should be looking, if they want to be putting in place exemptions, to at least advise what are the entities that can’t be audited within this time line. But no, none of that detail is here. It’s basically just a big catch-all, and that is not good enough. The other aspect I’m looking forward to in speaking a little bit later on—because I’m running out of time, so I won’t be able to cover it this evening in this speech—is the other aspect around what’s actually driving these vacancies, but we’ll hear a little bit more of that later.

Dr Tracey McLellan—five minutes.

Thank you, Mr Speaker. I am happy—happy enough, at least—to take a very short call on the Annual Reporting and Audit Time Frames Extensions Legislation Bill. This bill, in a nutshell, really arises in an acknowledgment that robust reporting supports the principles of accountability and transparency, which are important—very important—to this Government. But, alas, there is a shortage of auditors—a shortage of auditors caused in part by the ongoing impacts of COVID-19 and, in part, by the increases in auditor demand arising out of the increased complexity of the work. So, very briefly, the bill seeks to mitigate these impacts by extending the audit report time frames by two months in two specific Acts—it’s as simple as that.

As the Minister, the very hard-working Grant Robertson, said at the beginning of this debate, it’s a simple bill, but it is still an important bill, and I certainly have no desire to delay it any further. No, it’s not frustrating, as members opposite might lead us to believe, but just a bit blandly, and, quite frankly, boringly disappointing to see them doing just that. Nevertheless, however, I have no hesitancy to commend this bill to the House. Thank you.

Tēnā rā tātou. It’s come time for me to leave the Chair for the dinner break. I will return at 7 p.m. Kia ora.

Sitting suspended from 5.55 p.m. to 7 p.m.

Members, the House is resumed. We are currently on the first reading of the Annual Reporting and Audit Time Frames Extensions Legislation Bill.

I’ve been listening to the speeches in the House tonight about this bill, and people have said that it should come as no surprise that extra auditors would be needed, but, in fact, it has been a little bit of a surprise, I would say, especially to the private sector. If I read the article on Politik from Richard Harman, a well-respected journalist, he talks about the shortage of auditors being the oddest shortage. If I read his article correctly—this came out today in Politik—he has said that the economy has come roaring back to life and in a way that has caused some surprise to people in the private sector who are needing more financial services, and auditing is, of course, one of them.

If we look at the employment rates and if we look at other economic indicators, the economy certainly is roaring back. We have numbers from the end of May that show that the deficit is $5.8 billion better than forecast, and, actually, Richard Harman’s article quotes Bill English from another time saying that it’s a nice problem to have. So we want that to continue.

We want our economy to keep roaring back to life. We want it to keep being transparent and keep being stable. To do that, we need to have audits that are done properly and that are done in a timely way and that they are quality audits. We want to hit that mark in 2022, as we did in 2020, from Transparency International, which places New Zealand at the top of the rankings when it comes to being the least corrupt country. To do those quality audits, it’s very simple. As my colleague Anna Lorck said, we just need two more months.

So it’s a sensible proposition. This bill simply asks for a two-month extension for those audits. I commend it to the House.

This debate here has seen a display of the most breathtaking arrogance that could ever be put on in front of the people of New Zealand—quite extraordinary. So while the members over there have said, “Nothing to see here. Just a bit of a problem. We can’t get enough auditors to do the auditing that they’re supposed to do, so let’s just ignore the problem”—which affects not just the Auditor-General’s office but all businesses throughout the country—“and just put it off for two months, for the next two years.” The question I’ve got is: when is there a catch-up point? That’s something we’ll tease out during the committee stages of this debate.

But what is most extraordinary is that the Government has decided to do this largely for itself. Maybe the Auditor-General did come in and say, “I can’t do it. I don’t have the personnel. I can’t get to that point. You”—as he would be speaking, not to you, Madam Speaker, but to the Government—“have to help me. The Government has to help me.” And the Minister of Finance over there nods his head.

Well, every MP, at least on this side of the House, and, I know, on that side as well, has businesses coming to them on a weekly basis saying, “I need help. I need personnel. I’ve got to get them through the gate.”, and what do we get? We get the process that one goes through to the Minister of Immigration, making a good case, and what do we get? Nothing—not a thing—and told, “Employ locally.” “Employ locally.”, we’re told. It doesn’t matter how qualified a person is. Apparently, they can come in and do the job.

So why wasn’t the Auditor-General just told, “Employ locally. Employ from the New Zealand pool.”?

💬 Anna Lorck: And they are—and they are.

It’s because there aren’t enough people here, Anna Lorck There aren’t enough people with the expertise necessary. So we’ve got this extraordinary situation where the Auditor-General, the person who is supposed to protect the integrity of the financial system inside the Government, who would pillory—pillory—any organisation that fails to meet their deadlines, coming along and asking the Government, asking the Parliament, to give him or his office an extension because they can’t meet a deadline, and that’s outrageous.

I think one of the questions that remains unanswered is how has this happened, and if it is just because “Oh, they’ve lost 27 staff members.”, why have they lost them? If the answer is because they are being taken out into the private sector by other accounting firms, well, that would tell us that’s a good thing. That would tell us it’s a good thing. But where there is no capacity to bring in people with audit experience into New Zealand, then it is an unreasonable thing to say to this Parliament, “Just pass this law for this office and ignore all the problems that others have got.”

I went to the Minister of Immigration, asking him could we get one refrigeration engineer in for a firm that employs over 200 New Zealanders, 40-odd of whom are apprentices, for a position in Invercargill, and the Minister, when I spoke to him directly—all very friendly—said, “Oh look, send me a note. Yep, we should be able to fix that.” What did we get three weeks later? A note saying, “No, we believe that the vacancy can be filled from our domestic personnel.”, yet that business has been 18 months trying to get new staff and can’t get them. That’s just one, and across this side of the House, through the evening, there will be other examples of workplaces where more people could be employed and the effect on the economy could be improved by a better immigration scheme.

💬 Dr Duncan Webb: In the bill? Would there be any refrigeration in here, do you reckon?

And there we have the Hon—no, no, he’s not quite yet. He’s a man who holds himself out to be a fairly honourable member. Dr Duncan Webb is saying, “Read the bill.” Well, the bill is just symptomatic of the problem that this House is being asked to deal with. It is not unreasonable to carve out some of the problems that we currently face in this country.

The finance Minister—the Deputy Prime Minister—came into the House today and, I think, enjoyed being able to talk about how well the economy’s going, and we agree with him. That’s a good thing. We agree with him.

💬 Hon Grant Robertson: Oh, there you go—write that down.

It’s a good thing. He says, “Write it down.” Well, that’s good that you write it down, Mr Robertson. Please remember it so that next time you get up to give one of those speeches about how the Opposition doesn’t want the economy to grow, just refer back to that note and give yourself a bit of correction.

Madam Speaker, I apologise for the use of the term “you”. We do, of course, live in a time of some confusion around some of those sorts of affirmations—

ASSISTANT SPEAKER (Hon Jacqui Dean): Well, that member might be confused.

—so I do apologise. I don’t mean to bring you into the debate.

However—however—if, in fact, we are to have the economy continuing to grow at the rate it is, there does have to be something done about the flow of people into the country who could augment that. The current unemployment level is extremely low, extremely low; almost as low as it was under a National Government—almost. But, of course, the National Government did not constrain the economy by having the sort of tight immigration policy that leads to this sort of bill in front of the House tonight. So the question simply is: why is it that there can be one rule for a Government agency and a different rule for businesses that are providing jobs for New Zealanders out in the private sector?

The thing that’s really interesting is that—I hate to say this—auditors kind of sit at the top of the commercial pyramid, metaphorically, because unless there is activity, broad activity, inside the economy, there’s no need to audit. So if we’ve got a shortage of auditors, it tells us just how much activity is going on in that economy, and one way, of course, to prevent it getting any better is to continue with the terrible immigration policy that the Government’s currently got where skilled people are told they cannot come to this country—cannot come to this country—and that we have to fill it all somehow, magically, from local persons. Eventually, that will start to slow things—no question about that.

So I hope that, perhaps, the Government might just think about this and recognise that asking Parliament to, effectively, vote one of its officers an exemption to the existing law by passing a new one, albeit temporary, is completely unreasonable.

There are a number of cases that I could go into about—

💬 Hon Grant Robertson: None of them will be relevant to the bill.

I beg your pardon, sir?

💬 Hon Grant Robertson: None of them will be relevant to the bill.

Well, no, it’s not so much that anything I might say wouldn’t be relevant to the bill; it would appear to be beyond the Minister of Finance’s capacity to understand that if there is a need for auditors in the country, it’s because there is a huge amount of business activity taking place, and that activity—

💬 Hon Members: Yes, there is.

—is what’s going to—look at them over there. They seem excited. They’re like a bunch of performing seals suddenly clapping. It’s as if they’ve just suddenly realised that New Zealanders are very good at dealing with bad situations—they always have been—and they have done a good job. But they have done it. It’s not necessarily anything the Government’s done, and what is now happening is that their efforts are being constrained by the lack of ability to get skilled workforces into the country. It’s just extraordinary that the Government comes in here tonight, demonstrates that there is a problem, and then says, “Oh no, we’re only going to solve it for our part of it—only going to solve it for our part of it.”

It’s like the 300 teachers. Suddenly, when the Government realises “Oh heck, we could be in trouble with staffing our schools. Oh look, we’ll just give ourselves an exemption and we’ll bring in 300 teachers.”, well, what about all of those businesses that need staff? No answer—absolute silence. It’s as if somehow the economy is a magical thing that works all on its own. The economy works because it has workers in it. Then, we have over there—[Interruption] I’ll tell you what, I don’t think that member should engage in fire across the House after the dinner break. I don’t think that’s wise for her to do that.

I don’t want to go into any further comment on this bill, other than to say it is a disgrace. It is a complete disgrace that the—

💬 Hon Grant Robertson: This speech is a disgrace—you’re right.

Well, the member over there says my speech is a disgrace. I guess that’s the guilty man hiding behind the veil of what he thinks is a sharp critic across the House. It’s not. Why is it that the Government is doing one thing for itself, when it will not do it for the rest of the economy?

I am pleased to stand and talk to this to this bill and in support of it. I’m also pleased that the Hon Gerry Brownlee is realising that this really is something that is a product of success: a very successful economy that’s bounced back and a business sector that’s thriving.

We have had an Auditor-General who’s had an enormous year. It’s been an incredibly difficult job, and it has been a difficult job for the local bodies and for the Government departments that have been dealing with one of the greatest crises that I have ever had in my lifetime. They’ve done an exemplary job, and I have great respect for anyone who chooses the life of an auditor. It is not something that I would want to do, and I think that they are doing excellent work there. What we need to do, as a Government and as a Parliament, as my friend Deborah Russell said just earlier in the debate, is we actually need to support and respect those independent bodies that do that work so thoroughly.

I notice that the Hon Michael Woodhouse talked about how this bill would somehow undermine the quality of audits. This isn’t a bill about undermining the quality of audits. This—

💬 Hon Michael Woodhouse: No, I didn’t. I said it was the confidence in them; not the quality of them.

I think the words were that it would undermine confidence. It won’t undermine confidence, because people will see this and they will know that, actually, two months has been given and the Auditor-General has prioritised work and the work that is being done is thorough and robust and has integrity—and I, for one, am grateful.

I’d just like to take the last nine seconds to wish my father, who turned 90 yesterday, a happy birthday.