Business Payment Practices Bill

Members, we come now to Part 4, the debate on clauses 46 to 48. The question is that Part 4 stand part.

Thank you, Mr Chair. Part 4 is the Melissalla—“Miscellaneous Provisions”—the “Melissallaneous Provisions” of this bill

Chlöe Swarbrick: Melissa Lee!

That’s a new girl’s name! And the first of those is “Exemptions”. Now, the Minister, in the passage of this bill, will be given pretty broad powers, which don’t have too much guidance on why the Minister might actually exercise it. It says at clause 46(1) that the Minister may exempt classes of entities from the requirements of this Act if the Minister is “satisfied that there is good reason for granting the exemption that outweighs the interests of the public in having the obligation met.”

So I have two questions for the Minister. The first is if she could give an example, perhaps, of what good reasons there might be for granting exemptions that outweigh the interests of the public, particularly given the very strident purpose of this bill as stated by the Government, that this is so necessary.

The second question in relation to clause 46 is: can she give a commitment that those exemptions will not apply to Crown entities who have—in my view, I can’t think of any good reason why a Crown entity would be granted an exemption from the obligations of this Act as distinct from other organisations. So there’s my opening bat—what’s an example of good reasons for granting the exemptions, and, indeed, why do we need the exemptions regime at all? And secondly, can she rule out that the Crown will not be exempted from those obligations?

Thank you very much, Mr Chair. I want to refer to Supplementary Order Paper 365 in the name of Andrew Bayly, who is proposing the addition of new clause 48A, which is part of Part 4 of the “Miscellaneous” section that we’re currently discussing. And this Supplementary Order Paper is—well, I think it’s quite a sensible recommendation from Mr Andrew Bayly. And that’s not to say that his normal recommendations are not sensible; it’s just more reinforcing the fact that this is particularly sensible. But what is proposed here is the addition of a review of the Act clause in which the Minister must, within one year of the commencement of this Act, and then subsequently in two-yearly intervals, arrange for an independent review of the operation and effectiveness of this Act. And as has been highlighted, I think, throughout the passing of this bill to date, there are and remain a number of concerns in terms of the bill’s operation and effectiveness. And while I acknowledge the Government’s desire to pass this into law—and actually will, by majority—I think the inclusion of the ability for the bill to have a formal review around those components noted is something that on this side of the House, if anything, would add some value.

And in regards to 48A(2), the aspects in relation to what that review would consider include the interrelationship around some of the interrelated Government policy aspects; we talk about electronic invoicing and also payment terms and other aspects that relate to the interrelationship with small-business suppliers. I think it’s important with any independent review process that this is undertaken in a timely manner and reports back to the Minister. And so we’re suggesting under new clause 48A(3) that this would occur within a six-month period, which seems, again, quite pragmatic.

And lastly, of course, in terms of full disclosure, ensuring that the Minister presents a copy of that report back to this House as soon as practical thereafter.

And I think, overall, the value that will be created through the addition of this new clause in this bill will, in effect, put the belts and braces review mechanism in place. Some may say, “Well, you know, end of the day, Government can do that anyway” but I think in this case, because it has quite an impact in regards to the overall operation in payment terms—it’s in the detail. I think having this in there, and regular review is important. I think it’s also important to acknowledge that the way in which payments to businesses occur is being enhanced continuously by the use of technology. And, you know, the good old days of getting an invoice in the mail and writing a cheque and sending the cheque off by mail are well gone. But, you know, one can envisage, even within a couple of years from now, potentially, where we are at in regards to making payments to businesses—and, no doubt, in many cases, already across our economy—that, actually, this may potentially be a point where it’s completely automated and even occur on a real-time basis. So the need for such legislation could quite quickly become redundant because of technology.

So I ask that the Minister to consider Supplementary Order Paper 365 on the basis on which it has been presented, as being constructive and helpful, and I would appreciate any comments in regards to that and, of course, we’ll take that on board and work with the Government. Thank you.

Thank you, Mr Chair. I want to take a call briefly to add my commendation to the committee for the Supplementary Order Paper (SOP) in the name of my colleague and friend Andrew Bayly, Supplementary Order Paper 365. The reason this is really important is twofold. One is that we are trying to create a reporting regime and a review regime that enables the public and the House to test whether or not the purpose of the Act is being achieved. But I would also add that clause 3, the purpose clause, is actually pretty amorphous.

It says “The purpose of the Act is to (a) improve transparency … and (b) to enable members of the public … to access information about … [these] payment practices”. Well, actually, I would have thought that the Government, in believing that this was necessary and appropriate, would say that the purpose of the Act is to improve payment timeliness, ultimately, and to reduce the number of late payments and defaults and credit problems for the businesses affected by them. So transparency is important, but it’s only a means to an end and the bill doesn’t even set out that end as its purpose.

So Supplementary Order Paper 365, I think, is extremely important. And I think that the Minister, if she sees the merits of it, should instruct her officials to make sure that data is collected—regardless of whether this Act is going to be reviewed in the manner in which Mr Bayly would like it to be—that data is actually collected; not that measures transparency, because we’ll know that by the number of people that have to comply, but that collects data to monitor payment timeliness. Because one of the reasons the National Party is opposed to this bill is that we still haven’t established the case for it being necessary.

The best data is actually the payment timeliness in this country is better than in other countries, but also that those other countries who put similar legislation in place did not see an improvement in that key metric: payment timeliness. And I think we should all agree that if legislation doesn’t work, we should either amend it or repeal it. But the only way to be able to do that is to collect information useful for making that decision. The bill doesn’t have that in its reporting requirements, and Mr Bayly’s SOP will add that. If the Minister isn’t satisfied with a one-year review, I think perhaps it could be longer and it says that subsequent intervals of not more than two years. I think that’s probably a better duration, but review it we must to ensure whether or not we’re wrong in our belief that we’re wasting the House’s time and the time, effort, and money of businesses that will need to comply with it. If that’s the case, then a review will reveal that. But at the moment, that option, that requirement, isn’t in the bill and it should be.

Thank you, Mr Chair. I just wanted to add a couple of comments around that in support of the Supplementary Order Paper (SOP) put forward by Andrew Bayly. It’s been noted around how it should be more focused on the reporting times, and I want to agree with that. But, I think, when we’re putting forward—as we are with this bill—something that is going to put time and cost impediments on businesses, it’s really important that we do have that regular review mechanism in place, or something in there like the SOP would allow for, because we are putting further compliance and time costs on business and we need to know how successful the new legislation has been, and is the cost of it better than the benefit or does the benefit outweigh the costs? So that’s important for us to know. And it also gives us the opportunity then to test what the different users, notably businesses going into it—to look at someone else’s payment times and what their feedback is on this. And I don’t think it’s just a set and forget thing where we say, you know, “This is all perfect and it’s going to be wonderful.” I think having that mechanism in there to review gives us the opportunity to go back out to market and then get that feedback and, you know, look to sharpen or perhaps focus some areas of this going forward.

So I would like to see that side of the Chamber really consider that, and the Minister for Small Business and the officials consider it, because, ultimately, we want this, if it is implemented, to be something that works in the best interests of the people that are using it—also to test how many people do use it. It has been noted—and I noted it when I spoke earlier in the Chamber on this—that you’re reporting on this two times a year. It’s not always going to be up to date. It’s not going to be real time. It may be 5½ months out of date when someone goes in there to check on that. So, yeah, I just wanted to put my voice to the support of that Supplementary Order Paper. Thank you.

Thank you, Mr Chair. I do feel like some of these questions are a little bit circular, but I will play ball. We’ve, I think, been through some of these issues before.

In terms of what feedback, whenever I speak to small-business owner, either groups—there is strong demand for this bill. So the feedback I get when out speaking with, whether it be businesses at chambers of commerce or other groups that come together and represent small-business owners, the feedback I get from those small businesses is that this legislation is long overdue and they are eagerly waiting for it to be enacted.

In terms of some of the other questions I’ve received, the issue of the Supplementary Order Paper put forward in the name of Andrew Bayly, which specifically asks for a review in the first year and then subsequent every two years thereafter—so, presently, what occurs is officials report to the Minister on a six-monthly basis. So providing that in legislation, I would particularly argue that—for a party that’s all for removing bureaucracy and red tape and unnecessary, I guess, hoops to jump through—that providing that in legislation is actually adding to cost within the Public Service, unnecessarily, when there’s already a six-month reporting regime that’s built in as part of keeping the Minister informed of what’s going on.

That is already done to parliamentarians through the normal reporting regimes and available to those members on all sides of the House through the select committee process as well, and annual reviews. So I would argue that putting it in statute is onerous and heavy in compliance, and it would tie up the bureaucracy in simply reporting, not getting the work done.

In terms of the issue raised under Part 4, “Miscellaneous”, clause 46, “Exemptions”. So this was the point raised in relation to the ability of, “The Minister may exempt … a class of entities from [some or] all of [the] obligations under the Act.”, having regard, obviously, “to the purpose of the Act” and being “satisfied that there [are] good [reasons] … [that] the exemption is not broader than … reasonably necessary”.

So while I’ve asked for some examples, it’s interesting that I’ll provide you with some examples, as requested, of what those exemptions may well be. It’s interesting to note that there’s not been one of these, to date, where such of those actually would happen.

So here are some hypothetical examples where you would have a class of entities where, to disclose, would be unnecessarily onerous—so if it goes, if it’s able to be shown. Another area of an example would be that entities must disclose their payment practices as part of another regime already. So if they’re already doing so in a similar jurisdiction such as Australia, then that would not be required. Finally, another example would be entities that make limited business-to-business payments. So if, in their regular course of business, they’re not doing that type of payment, then that potentially may not be an exemption as specified under clause 46 of Part 4 of the Act.

Thank you very much, Mr Chair. Let’s move now to clause 47, “Regulations”, Part 4 of this bill. This regulations section actually relates to a question that I’ve asked previously in regards to the rates at which infringement offences and the amount for the prescribed fees or fines and what they have been set at, and clause 47(1)(b) refers to “prescribing fees for infringement offences … must not exceed $3,000”, and then 47(1)(c) then says that the “maximum fines for infringement offences under this Act … must not exceed $9,000”.

I think the context for the question around the amounts that have been noted here is relevant in the context of again going back to the Minister’s comments around ensuring that there are appropriate consequences here for, in the Minister’s words, “the big fish” or the big businesses. I’m interested in whether the Minister remains confident that a $3,000 fine, or even a $9,000 fine is actually going to be of the level that is going to be appropriate to actually change the behaviour of, say, a large Government department that pays millions and millions of dollars—maybe the New Zealand Police, potentially, if you look at their accounts payable department, and think about the amount of invoices that they pay to a number of small suppliers. And I’m sure they always pay those invoices on time, pay them accurately, of course—no doubt they do—

💬 Hon David Bennett: Especially overpay.

—or maybe they don’t but, again, you know, is the Minister confident those amounts are appropriate?

Thank you, Mr Chair. I think that in the Minister for Small Business’ response to my commendation of Mr Bayly’s Supplementary Order Paper, the Minister said that it was unnecessary because there was an obligation on the registrar to report to her every six months. I wonder if she could, for my benefit—and I apologise if it’s obvious—point out the clause in the bill that provides for that requirement.

The question is that Andrew Bayly’s amendment to Part 4 set out on Supplementary Order Paper 365 be agreed to.