Business Payment Practices Act Repeal Bill

Members, we now come to our final debate, on clauses 1 and 2. This is the debate on the title and commencement—so we were straying a bit into that territory before. If we can have not a repeat of the questions that the Minister has already answered: title and commencement.

Thank you, Madam Chair. I would like to really take some time on this part, because, in fact, it’s at the heart of this bill, really. We have a situation where, as I understand it, Minister, you’ve got concerns that are based on the Australian research, and when you were going through the process, Minister, of participating in the select committee of the Act that is going to be repealed today, as is your proposal, it was stated by you that you considered it might be better—

CHAIRPERSON (Barbara Kuriger): “The Minister” rather than the word “you”.

—stated by the Minister in his capacity as a member of that select committee and in this House by way of a Supplementary Order Paper that a preferable approach would be to trial this process, which is just about to get under way, for two years. So there’s a Supplementary Order Paper to that effect. I can see that that would allow the process to be actually trialled to start it—up and running and get it going—but it would also allow a window in which some of the amendments, which members on this side of the Chamber have not actually had an opportunity to speak to, could be trialled, in addition. So there could be a window of opportunity there to put the best foot forward in this situation, to learn from the Australian research, and to add to it. So I would like to ask the Minister about that.

For example, one of the amendments, which wasn’t spoken about, is adding a clause which is about allowing interest for a default so that when payments are not made by a big entity, there is an automatic interest rate that would apply. So it’s giving teeth to the Act that is about to be repealed.

I can see the trial period amendment working. So extending out the period before this bill is repealed—

CHAIRPERSON (Barbara Kuriger): Can I just point out to the member that it has already been mentioned that it’s hard to add amendments to an Act that’s going to be repealed, because it won’t exist, and that the debate, really, around here is around the title and commencement?

Yes. So—

CHAIRPERSON (Barbara Kuriger): So if the questions could be around that, thank you.

Thank you, Madam Chair. So the suggestion is not that—obviously, the amendments belong to another section, but the ideas are free for everyone. So extending the bill—having that is absolutely in scope of this point, Madam Chair, because we’re talking about extending the time period before the Act is repealed. So extending it—it’s about enforcement. Allowing that window of opportunity of two years, which is actually the very window proposed by the Minister in the earlier Act—so it’s exactly in line with that. It’s also exactly in line with what the Australians did in terms of reviewing their own legislation. Then, in that period, you would still have the Business Payment Practices Act in force. It would still be in force because we would extend the period out.

Now, we’re absolutely up for time frame differences, but two years seems the minimum for doing that. So, for 24 months, we would try this, and we could add to it some of the things that are lessons learnt so we could give it the best possible opportunity of working. We could add things like actually having a sting in the tail if the people hadn’t paid, because one of the things that’s been happening is that there’s been a calculation of this behaviour by big businesses, and it actually is worth money to them not to give over the money that is paid to small businesses and not to pay those invoices.

So we could trial that in that period, that big amount of time—two years. We’re almost up and running already. We could do that. We could give it a go, and if the Minister was not satisfied with the results at the end of that two years, he could pull the trigger, because it would already be happening. So we wouldn’t be wasting any time; it would already be there that this bill was about to be repealed.

The member’s time has expired.

Thank you, Madam Chair. Firstly, I do want to acknowledge the Minister for the engagement that he has shown, particularly to the constructive discussion we’ve had. Despite it being railroaded through urgency, I think there has been some very, very constructive and productive discussion at the moment.

So I would like to address the title and the commencement and I seek some response from the Minister about clause 1. As the title suggests, the clause states that “This Act is the Business Payment Practices Repeal Act”. What advice, if any, did the Minister receive about clause 1—that is, the title clause—which states that “This Act is the Business Payment Practices Act Repeal Act 2024.” What was the advice that the Minister received, and what alternative titles were considered to create more clarity for the public and for the small businesses about the impact of repealing this Act compared to if it had been left in place?

So that’s my first question for the Minister. What was the advice, and what consideration was there given to a more accurate title for the repeal Act, because we do need to make sure that our small businesses can thrive and have an understanding of what happens in the House? Some of it can seem very, very opaque. I think clarity is really, really important, and a title can give us that.

On commencement, my question concerns clause 2, and I’m interested very much—as Helen White mentioned—to know from the Minister whether he considered a commencement date after the register had been allowed to be established. Perhaps, as has been suggested, it could be after two years in order to determine whether the regime would be useful for small businesses. So that’s, effectively, a test period, and then, if not repealing it at all at that point, replacing it with a more effective regime.

We’ve heard that the Minister has seven points, and perhaps Stuart Smith upped it to nine. That’s really good—we’re in a bargaining position. But if we can make something happen here that is positive, instead of breaking, that would be a really, really good outcome, and I think we do need to know if there’s an opportunity to have a bit of a test period. Yes, we’ve certainly heard about the cost to the Ministry of Business, Innovation and Employment for doing this, but we know that there’s a $425 million cost to small businesses in the status quo. So the cost of doing it and of having a trial period is actually minimal compared to the cost of having a test period and giving something a go.

We have heard that there are amendments that could be incredibly helpful. Were this to be a trial that we held for two years, we could really make something work here, because what I’ve heard from this side has been some really productive, constructive elements that could inform how we can do so much better than the Australians, how we could make something work for our small and medium enterprises, and how we can have a thriving business community, but we need to give it a go. We need to be not afraid and not tribal about this. We need to give up this tribalism and simply opposing for the sake of opposing, and work on solutions together. That’s, effectively, what has been proposed from members on this side of the Chamber, and I beseech you to think about how we can do something better rather than simply rejecting, stopping. That’s, effectively, what we’re doing.

So the questions I’ve put to you, Minister, are about the title. If I could come back to the two questions that I’ve asked: what advice, if any, did the Minister receive about clause 1—that is, the title clause—which states that “This Act is the Business Payment Practices Act Repeal Act 2024.”, and what alternative titles were considered to create more clarity for the public and for small businesses, in particular, about the impact of repealing this Act, compared to if it had been left in place?

So what would have been a clearer title, and then will the Minister consider a later commencement date to give a trial period that would be useful for small businesses and enable some of the innovations that we’ve been hearing about? Those are my two questions to the Minister, and I would really appreciate an engagement. Thank you.

I’m going to take a call from the Hon Dr Deborah Russell, but I think the Minister, in the course of this debate, has made it very clear why a trial period wasn’t tenable for the reason that he is actually undertaking this repeal. So I would like questions for the Minister outside of that concept, thank you.

Thank you, Madam Chair, and I do appreciate the opportunity to speak to one of my proposed amendments. I have two proposed amendments for the title and commencement date, and I want to speak to one which I think the Clerk might well suggest is frivolous, but, to me, it actually gets to the heart of something that the Minister has talked about, and it gets to the heart of what the Minister is proposing to put in place for this particular Business Payment Practices Act. It’s the amendment in my name that suggests that in clause 1, we should delete the words “Act Repeal” and we should insert the words “(Asking Big Business to Play Nicely)”. So I think we should call this the “Business Payment Practices (Asking Big Business to Play Nicely) Bill”.

That sounds frivolous, but it points up a very, very serious issue in this bill, and it goes to the heart of this bill. Now, part of our problem for small businesses is that they don’t know when they’re going to get paid. They struggle to get paid on time, and there’s research from Xero which shows that—I’d have to dig it out. This is going back for a long time now, but—oh no, 2023. So research from the New Zealand Institute of Economic Research shows that it costs small businesses when they get paid late.

So what is the solution? Well, it’s to get paid on time, and part of what the Business Payment Practices Act did was it required big business to disclose how long it was taking them to pay bills. It was a—

CHAIRPERSON (Barbara Kuriger): Could we come back to the title and commencement, please.

—name and shame strategy. Yes, I will, thank you, Madam Chair. The Minister has mentioned many times in the course of this debate his solutions. We’re taking this Business Payment Practices Act away, and he’s got some solutions, and one of the solutions he has proposed is a voluntary code of practice—exactly—from big business. He’s going to get together with Business New Zealand and draw up a voluntary code of practice for big business. In other words, he’s going to ask big business to play nicely when it comes to paying their bills on time. I don’t think it’s what’s going on with this bill.

Now, of course it is, I think, not a very suitable strategy. We know that when times are tough, one of the easiest ways for a business to get low-cost financing is to stretch out the payment of its bills. It’s a long-known strategy. If a business just stretches out that payment, it reduces its need for working capital and it reduces its financing costs, and all at the expense of small businesses. The Minister has proposed a solution to that. He said, “Let’s have a voluntary code of practice.” Now, I think that is—well, we’ll see; it sounds pretty toothless to me. What we could have done with is, in fact, what this original bill did: provide access to information about how long businesses take to pay their bills. That’s critical information for a small firm. They need to know it.

This Minister, who says—I do believe him, because he’s a decent guy. He says that he is concerned for small business, he does care about what happens to them, and he does care about them. But the solution he’s proposed isn’t going to work, because it’s one that requires people to play nicely. With respect, business—

💬 Carl Bates: You guys know all about what doesn’t work.

Oh, it’s great to have this engagement from the member across the other side, but, sir, take a call—take a call. We have seen on the record that big businesses in this country do not always play nicely—all right—and, famously, Fonterra a few years ago just didn’t play nicely.

Now, I appreciate that the Minister wants a solution in place and that the Minister is going to try to get a set-up where the big businesses do pay their bills on time, but I put it to you that a voluntary code is not it. Nevertheless, that’s what he is proposing, and that’s why I have put up this amendment. It does look like it’s just frivolous—

💬 Carl Bates: Because it is.

—take a call, take a call—but it goes to the heart of this bill. It says that we’re asking big business to play nicely.

I move, That debate on this question now close.

Helen White’s tabled amendment to clause 1 is ruled out of order as being inconsistent with the principles and objects of the bill.

The question is that the Hon Dr Deborah Russell’s tabled amendment to clause 1, replacing the words “Act Repeal” with “(Non-Reporting)” be agreed to.

The Hon Dr Deborah Russell’s remaining amendment to clause 1 is ruled out of order as not being a serious amendment.

The question is that Helen White’s tabled amendment to clause 2 be agreed to.

Madam Speaker, the committee has considered the Business Payment Practices Act Repeal Bill and reports it without amendment. I move, That the report be adopted.

Motion agreed to.

Report adopted.

This bill is set down for third reading immediately. Members, the time has come to break for the lunch break. The House will resume after question time.

Sitting suspended from 1 p.m. to 2 p.m.