Companies (Levies) Amendment Bill

Members, we come now to Part 2. Part 2 is the debate on clause 5—“New Schedules 14 and 15 inserted”. The question is that Part 2 stand part.

Part 2 of the bill contains two schedules, setting out which Companies Officer registers and users the levies can be applied to. I’m tabling a short Supplementary Order Paper with some minor amendments to the bill. The purpose of those amendments is to take account of a new register to be added to the Companies Office group of registers for climate-related disclosures.

Starting at the end of 2024, this new register is where the public will be able to find the climate statements from around 200 of New Zealand’s largest financial entities that disclose the risks and opportunities climate change presents to their business. This register will support investors and other stakeholders to assess the merits of how these financial entities are considering those risks and opportunities, by making these disclosures publicly accessible.

So that is an important new function for the Companies Office, and the amendments will bring that new register within the new funding model provided for by this bill. I wanted to draw the attention of the House to that matter.

Thank you, Minister. Now, as far as climate-related disclosures go, I’m assuming that this is the imposition on New Zealand businesses which requires them to identify whether their business activities might involve the use of, say, driving a car that uses petrol or diesel, or whether they use energy in a manufacturing or an industrial process that might be derived from, say, natural gas—say, for example, there was a business that recycled all of the cardboard collected in New Zealand where to process it, it required steam heat only able to be generated by hot coal or hot natural gas. But, of course, in New Zealand, we’re a modern, developed country and we mostly rely on natural gas for industrial processes. So the climate-related disclosures component, Minister—I mean, I am surprised, on behalf of the ACT Party, that this appears here. In fact, I’m looking down the list in Schedules 14 and 15, and I’m actually struggling to identify where that is.

So, like a lot of people who run businesses, who just fairly assume that if they pay for their emissions by paying a carbon component for, say, petrol or diesel, and it’s about 23c a litre for diesel under the emissions trading scheme—if they’re paying for their emissions, why on earth do they have to go through this charade of carrying out a climate-related disclosure, because, if we think about it, every single human activity on planet Earth involves doing something in the environment. Breathing out—a human being breathes in oxygen and breathes out carbon dioxide, and why on earth is it necessary to include in this bill a register of companies’ climate-related disclosures? I would have thought, on behalf of the ACT Party, that that’s a matter between a company, its board of directors, its shareholders, and its customers.

If we think about the implications of including climate-related disclosures and forcing this Government agency, the Ministry of Business, Innovation and Employment, to administer it, won’t that take away from their core function of administering companies, and incorporated societies and building societies—and even New Zealand’s auditors are under the companies register. Won’t it take away from some of their core activities?

There is nothing that’s going to change about a company’s emissions profile except the incentive that a price on carbon puts on a business that uses hot energy—like, for example, Oji Fibre, which recycles all of New Zealand’s cardboard and turns it into a product that’s able to be reused. They know that they need natural gas for the process. They spend part of their revenue on the energy, they pay for their emissions in part, and then we get this lovely recycled cardboard product. Now, having them make a climate-related disclosure and then being administered under this Act—and, no doubt, they’ll be charged a levy for it—doesn’t seem to make a lot of sense, because they don’t have any choices when it comes to their climate-related discharges, except to stop recycling cardboard, stop using natural gas, and leave New Zealand and maybe go to a country like most countries in the world, which don’t waste the time of business people and their citizens with climate-related disclosures.

So, Minister, would you please describe to the committee and to those who are listening to this urgent debate, fascinated by the matters that have been raised here tonight, or who are watching on Parliament TV at home—would you explain to the committee exactly where climate-related disclosures are mentioned in Part 2 and in the schedules, and explain how much that’s going to cost businesses subject to that regime, Minister.

The Schedule will be in Schedule 14(h). It’s administered by the Financial Markets Conduct Act. It’s a Financial Markets Authority regulated disclosure regime.

In respect of questions that the member asked during the course of his contribution—why should we have in this Act the provision for such reporting? It’s because, in the Labour Party, we believe in making it easy for businesses to comply with the law. Why do we believe in having such a regime in place? Because we believe in transparency and the benefit of information for efficient market outcomes. I hope those are sentiments the ACT Party could agree to.

Thank you very much, Mr Chair. Just building on some further questions in regards to this addition by the Minister of climate-related disclosures. I’ve got four questions, in particular, related to New Schedule 14 and also New Schedule 15, particularly Part 1 (db), “climate reporting entities”. I’d like the Minister to outline to us what he foresees to be the nature of the disclosures that will be provided in regards to this climate-related disclosure. What is the estimated impact in terms of compliance costs and regulatory burden on businesses as a result of implementation of this step, because, as a prior colleague said—Simon Court from ACT—I mean, this is a pretty significant addition and these things don’t come without cost, and, at the end of the day, business will feel the burden of that cost. I take the Minister’s point around how we need somewhere to get transparency and all that, and that’s all nice. But, in this current climate, any additional red tape and regulation brings cost to business and that’s a cost that businesses cannot afford at the moment.

The third question I’ve got is in regards to—so what other considerations did you place around where these disclosures could have been made or how that could have been undertaken? What sort of assessment or evaluation have you undertaken that ends up that this is the optimal place for those disclosures—minimising costs, but also maximising the outcomes you were referring to around transparency, etc.?

The last question is in regards to: what other things are on the list that are going to get added in? We’re talking—you know, here’s an addition of climate-related disclosures that are getting added in in sort of the last hour while we’re in urgency. But what else is in the pipeline? That’s all I’ve got to say for the moment.

Just in respect to the member’s question around the climate-related disclosures Act, I would refer him to the Act itself. It was recently debated in this Parliament, and, if I recall correctly, I think he was in the House when that debate was happening. It’s not so long ago. It’s all laid out in there how that regime will operate.

What Acts might get added to these schedules in the future—that will be for future Parliaments to determine.

Oh, thank you, Mr Chair. I’ve got a very quick question of the Minister. I just wonder, Minister, if the climate-related disclosures are going to be in a format easily accessible for a savvy investor to ascertain what companies are likely to have a higher price-earnings ratio, given that they will have higher climate-related emissions and be likely to scare off investors, and therefore have a higher price-earnings ratio. Was that ever considered? It could be an effect of this legislation. I think it’s quite a serious thing that should have been considered.

I move, That the question be now put.

Thank you, Mr Chair. I’m seeking some clarity from the Minister. Minister, I sat on the Finance and Expenditure Committee while ACT’s permanent member, Damian Smith, had other duties. I do not recall climate-related disclosures and that they would be added into the mix of things that the Ministry of Business, Innovation and Employment—the superministry in charge of managing our economic affairs, our energy affairs, and our immigration even. I do not recall the need to include administration of the Financial Markets Conduct Act; those registers kept under section 2 of that Act would include climate-related disclosures.

Now, in all fairness to officials, I only attended one session of the select committee, but I can’t find it anywhere in the regulatory impact statement, funding of Companies Office functions, I can’t find it in the departmental disclosure statement, but I see the Minister is getting advice from officials. It would be very helpful, because while we in the ACT Party understand why some bills are—at very rare times—required to be brought to the House under urgency, like the bill which we debated just a short time ago, the amendment to the Arms Act which would make it lawful for licensed firearms holders whose license expire and the police can’t relicense them in time—there’s a need for urgency to resolve that situation. And then here we are, hearing this bill under urgency, and the Minister drops this remarkable disclosure on the committee, which is that a whole lot of other organisations, which pay levies—or fees, and will now be paying levies—under this amendment to the Companies Act. Actually, some of the costs—maybe if you’re an auditor or a charitable trust or an industrial and provident society or even a registered union that some of your levies will go towards administering the overheads of the Financial Markets Conduct Act requirements to record climate-related disclosures.

So, Minister, would you care to describe for the benefit of the people listening on their radio—I think it’s 882 AM, from memory. I used to listen to Parliament on the radio when I was an engineer working on landfills, or when it was late at night and I was supervising asphalt crews—maybe it’s 882 AM. Or if they’re watching on Parliament TV—because we don’t understand how on earth the need to fund climate-related disclosures administration ended up in a bill where it’s not mentioned. Those three words aren’t mentioned, if you were to search this using some kind of word or Google search tool, and yet this remarkable disclosure of the Minister’s own has now been presented to the committee for consideration at just before 11 p.m. on a Thursday night.

If we think about, say, the charitable trusts who dutifully tell their donors—those earnest, often young people, often backpackers wearing sandals and some ethnic clothing they picked up backpacking in India—who will approach you with a clipboard and earnestly tell you that, if you donate to Greenpeace, you will help save a polar bear or a whale, you’ll help to stop microplastics—

💬 Andrew Bayly: What’s wrong with polar bears?

I love polar bears, let it be on the record. You’ll help to save those animals, but it turns out that if you’re donating to Surf Life Saving, for example, then some of the money that your organisation is paying in fees will in fact be siphoned off to the until now opaque, not mentioned anywhere in the document, climate-related disclosures administration component of the Financial Markets Conduct Act 2013.

Minister, you’ve revealed this to us and I’m always prepared to be amazed by something that the Labour Government does. Would you amaze us, and tell us more about how this is intended to be funded? Thank you.

I move, That the question be now put.

Motion agreed to.