Business Payment Practices Bill

I present a legislative statement on the Business Payment Practices Bill.

ASSISTANT SPEAKER (Hon Jenny Salesa): That legislative statement is published under the authority of the House and can be found on the Parliament website.

Hon GINNY ANDERSEN: I move, That the Business Payment Practices Bill be now read a second time.

Thank you, Madam Speaker. As the New Zealand economy recovers from COVID-19 and the recent extreme weather events that we’ve seen, particularly on the East Coast, it is more important than ever that we support small-business owners and operators, who are the bedrock of our country’s economy and also so ingrained within our local communities. Timely payment for goods and services delivered is crucial for the financial health of any business, and especially New Zealand’s small businesses. Recent years have seen some improvements in business payment times, but this movement, while positive, is marginal and low. Since taking on the small business portfolio, I’ve heard from many small businesses right across New Zealand that delays in receiving payment are hurting their cash flow, increasing their stress, and inhibiting their business growth.

Larger firms are often set in a position to take it or leave it when making payments and are making use of the advantage of their size. That advantages themselves at the expense of those smaller suppliers. When this happens, small suppliers often feel unable to ask for more reasonable terms, powerless for fear of losing their income. Furthermore, when the bill payer doesn’t meet the terms they’ve agreed to, the small business affected may not be able to do much about it.

Research from Xero is interesting. It says that almost half of all invoices are paid late in New Zealand. Again, the perception of a power imbalance often is too great for the small-business owner to risk upsetting their large customer. If small businesses rely on large payers for a lot of their revenue, they will be anxious not to rock the boat as their livelihood may well be at stake. This is preventing a significant segment of our business ecosystem from realising their full potential. The effects of poor payment behaviours can run through supply chains and have consequences for the broader economy—for example, higher cost on capital or unnecessary insolvencies. In 2019, the Small Business Council reported that, among the big issues facing small businesses, it considered timely payments was top of that list. The council said it had problems with payment practices, and they found that they were particularly difficult to deal with given the current tools available to them and a new approach was needed.

The bill being debated today will deliver that change. The Business Payment Practices Bill will establish a disclosure regime that brings transparency to business, to business payments and practices in New Zealand. Small businesses will have better information to inform their decision making when engaging in new customers. They will be able to decide who they wish to do business with. Large businesses who care about their reputations will want to ensure that their business practices stand up to scrutiny. The bill requires entities with more than $33 million in revenue and $10 million in third-party expenditure to have to disclose information about their payment practices twice each year. The Government needs to lead by example, so the bill will also apply to Government entities just as much as the private sector. Disclosed information will include information relating to payment times, reporting entities, payment terms, and conditions. This information will be submitted and stored on a publicly available, searchable register administered by the Ministry of Business, Innovation and Employment (MBIE). The register will be free for users to access.

I would like to take a moment to thank the people and organisations that took their time to submit on this piece of legislation, and the Economic Development, Science and Innovation Committee for their work that they did on this bill. I am pleased that the committee has unanimously recommended some important changes to make this legislation more effective. These include more clarity on what counts as payment information, more specificity around which reporting entities the new transparency regime will apply to, measures to minimise compliance costs, and a range of technical improvements. I thank them for their work, and those officials that have supported their work to happen as well.

One other important change the committee has recommended was to provide a six-month transitional period before reporting entities must start reporting and collecting this information. I acknowledge that many reporting entities will need to make changes, some of them quite technical, to their payment systems to be able to adapt to the new transparency requirements. This is unavoidable. To make it easier for reporting entities to provide the required transparency, the select committee has suggested that initially only reporting entities with $100 million of annual revenue will need to report. Many of these companies will already be reporting in Australia, which has a similar requirement in place. So they will need to be well placed to extend this transparency to their New Zealand operators, and, to be quite frank, that’s only fair.

The bill provides for the appointment of a registrar who will be responsible for establishing and maintaining the register and the associated compliance and enforcement functions. It will also provide infringements, penalties, and criminal offences for any contraventions of its obligations. The bill’s penalties would, of course, only apply to the most wilful and problematic offending. In Australia, which operates a similar regime, reporting entities were provided with a 12-month compliance holiday before its regime’s compliance tools came into effect. We are not proposing that here, but, none the less, the primary compliance lever will still be reporting entities’ desire to enhance their reputation as good business operators who pay fair terms. Reporting entities that offer good payment terms will want to shout this out from the rooftops, no doubt. The transparency this regime requires will enable them to be able to do that. Favourable comparisons will be made against reporting entities that offer less desirable payment terms or are slow to provide the required transparency.

Important details of the bill will be determined through secondary legislation. Most importantly, the bill’s regulations will specify the exact information reporting entities will need to disclose. MBIE officials are working on those draft regulations now and, to this end, are consulting with stakeholders, subject matter experts in both New Zealand and Australia, where a similar regime is already in place. I’m confident that the regulations will achieve the right balance, making sure that useful information is made available to small businesses while also keeping in mind minimising compliance costs for large ones and enabling the smoothest possible implementation phase. I intend to publish the regulations as soon as possible after the bill receives Royal assent. This will ensure that reporting entities have as long as possible to get to grips with the new requirements and make any required systems or process changes that they need to do to IT systems.

I’d like to conclude by acknowledging the select committee, the department officials, the select committee staff for their hard work, and for all those who took the time to submit on this bill. I commend it to the House.

The question is that the motion be agreed to.

Thank you, Madam Speaker. It’s a pleasure to be talking on the Business Payment Practices Bill in its second reading. This is an interesting bill.

First of all, I’ve just got to congratulate the Minister, because this is her first piece of legislation that she’s had to talk about in respect of small businesses. Newly minted, and here she is, up today, little bloop at the start that mucked it up a little bit, but, none the less, trying to put forward a bill for supporting small businesses. And, of course, it wasn’t her idea; this came from her predecessor, the Hon Stuart Nash.

Hon Member: Oh!

ANDREW BAYLY: Oh, Mr Nash, that’s right. So, anyway, the Minister’s got the wonderful opportunity of actually trying to put through a bill that might support small businesses.

And, of course, this is a Government that has just set about killing small businesses. How many things have they done to add compliance costs, to make it harder? Last night, we did the WorkSafe rule: now anyone, even if you’ve got a business with one person, can request a business to set up a health and safety committee and have a representative—one person. So, rather than talk to a boss or something, we’ve now got this situation. And this is just the cascade. We’ve just done the ACC one. There is a cascade of legislation that this Government has set about for the last six years to make it so much harder for small business. And that is the issue. If the Minister actually got out and talked to people, rather than saying she’s been in contact, or whatever, that is the single-biggest issue for small-business owners. They just feel like they’re getting socked all the time. The issue is that they believe that the Government thinks they are just a pile of cash for the Government to go and raid, to take a whole lot of money off them and spend it on a whole load of rubbishy projects, and that’s what’s happened over the last six years.

ASSISTANT SPEAKER (Hon Jenny Salesa): On that note, can the member come back to the bill. Thank you.

ANDREW BAYLY: Yes, I’m very happy to, Madam Speaker. This bill is all about intent, it’s all about being seen to do something for small businesses at the end of a six-year-long period, and it is about trying to work out and assist businesses around business payment systems. The issue is that the bill doesn’t actually deal with the problem.

We are opposed to this bill because, on a number of counts—and it really is a bad piece of legislation to try and deal with the issue of poor payments. We recognise that businesses need to have prompt payments, but this is not the solution to it. We’ve done our best in the select committee to improve it, because we know that this bill will go through the House because Labour dominate Parliament. That’s why we’ve worked very proactively in the committee, and a number of the amendments that the Minister spoke of were generated by National Party members. That’s because, if this thing is to go through, we want to make sure it at least has some reasonable conditions to it to make it try and actually get to some point of being useful. But it will not solve the big issue.

The biggest issue is its focus on large companies. Perhaps, the worst-paying group in New Zealand is actually Government departments. We spend $42 billion as a Government, and if you talk to anyone who has dealings with the Government, actually, Government departments, in the main, are often slow payers. All it would take is for the affected Ministers to tell their departments to make payments on time, and you wouldn’t need a piece of legislation to do that. That’s the first bit.

The other thing is that it’s focused on large businesses. For instance, there are certain agencies that are slow payers, and one of those particularly is the building and construction sector. That is why the National Government changed the rules and implemented some new rules to make sure that contractors particularly were protected when it came to liquidations and those types of events, because that’s really dealing with the nub of the issue.

What this bill requires is large companies—and, often, they are good-paying companies; it’s actually the smaller companies that have got cash-flow problems that are the ones that are slow-paying. It is focused on the large ones, and it requires them, every six months, to send some information in to the Ministry of Business, Innovation and Employment (MBIE), and MBIE are then going to set up a register.

Of course, I start to get a little bit worried at this point, because the reality is, first of all, that such a system has been in place in England and Australia. The Australians put it in place about three years ago and are currently reviewing it because it is not working. In fact, the evidence from Australia that having put this regime in place, which is what this is modelled on, has actually led, on some occasions, to even slower payments occurring to smaller businesses—slower payments; it actually resulted in a worse outcome.

One of the reasons for that—and I think we’ll find out, in time, from the Australian review of it—is that there’s an assumption, because many MPs from Labour don’t actually come from a business background, that every business person sits around in their office in Howick, in Eketāhuna, and in Mataura in the South Island, thinking, “You know, I’m very worried about my business; I’m very worried about how I’m going to get paid. Oh, guess what I’m going to do! I’m going to go on to an MBIE website and have a check as to whether someone is going to pay me on time.” I say to you that the register will be out of date immediately as soon as it’s published. So that’s the first thing: the reliance on data that will be out of date.

The second thing is that business owners don’t sit there waiting to go on an MBIE website to see whether, in fact, that’s the source of truth in New Zealand, because, normally, business people are a lot more busy than that. If you do want to get a credit assessment, guess what, you ring up one of the four credit assessment firms in New Zealand that have been operating for years and that have history of doing it. Centrix put out a survey this morning, and guess what! To get an up-to-date, comprehensive assessment on a business, as of today, is 33 bucks—$33. That’s all it costs, right? But hey presto, MBIE now—and this is what really scared us in the select committee—rather than going and saying to one of those four providers, “Guess what! You’ve got a good service, you’ve been doing it for years, and, actually, you know what you do, because you’re in the business of providing independent credit assessments. Why don’t we contract with you and we might even post some of the data on our website?”—even if they want to run their own website; I’m talking about MBIE—what they want to do is set up their own system.

So we asked some of the own-credit places, “What would it cost to set up a system to do this?” The estimate was $3 million to $5 million. And guess what! IT projects—hmm, yeah, they have a bit of risk and Governments are not particularly good at it, so you could probably assume at least at the top of that spectrum. And then the ongoing costs are about $1.5 million to $2 million. On top of that, MBIE are going to go out and hire a whole lot of people—a big swag of them—because, of course, they’ve got to report every six months; put it on the website. So we’re going to create a new department at MBIE. Why wouldn’t you just go and get the 33 bucks? I think the biggest thing MBIE could do is to tell people where they could go and get an up-to-date assessment.

So that’s the prime stuff. It didn’t work in Australia particularly, and it’s a system that’s going to be Government-run, and, of course, no one follows what Government does when you’re in business, because if you want to go and get something, you go and get the source of truth from the right people.

I think the issue with this whole thing is that we are trying to solve something. What we should have been doing is focusing on is those companies, those industries that have specific issues and dealing with it. I would suggest to you that the Government agencies are the number one that Ministers should have dealt with. But we should also deal with specific sectors. This is a poor outcome. I’ve spoken to a number of the business agencies, and when they start to hear this is going to cost a couple of thousand dollars for small businesses to operate and to do this—this is a poor outcome. That is the reason why we’re opposing this bill.

Talofa lava. There is nothing more than that speech by Andrew Bayly that tells us who the National Party really cares about. Their interests are in the big players in our economy, in the larger companies, and they don’t want to look after the small businesses that are actually propping up middle New Zealand. They don’t want to look after the interests of our mum and pop businesses; they just want to look after the interests of all big companies, the ones with over $100 million.

I think this bill goes to the heart of the difference in values of the two parties. This is a bill that makes sure that we protect our small companies and businesses, the ones that make up 80 percent of New Zealand companies. It is making sure that they can go to a publicly available register to make sure that, if they’re going to engage with a bigger company, they can see their business payment practices and whether they’ve paid their suppliers on time, and whether they have a good track record.

I do want to thank the select committee as well—the Economic Development, Science and Innovation Committee, the best select committee around here—for making sure that we have worked in the detail during the select committee process as well. As the Minister has already mentioned, we’ve now implemented a six-month transitional period.

But one thing I really wanted to talk about was that $10 million in expenditure threshold to make sure that the big companies that we do see and that have to come in and declare their payment-practice time lines on this register are the ones who actually have a big market share in spending here in New Zealand. We were given some of those examples, in select committee, where it could be a digital company where the majority of their so-called bills will go towards paying people’s wages or paying Government taxes or paying other things, and we wanted to make sure that their suppliers were actually a significant part of the business’s expenditure as well.

So this is a very sensible bill. We’ve made the relevant changes. We’ve listened to submitters, and we’ve listened to small businesses—it was actually their idea—who wanted the bill in the first place. That’s why I commend this bill to the House.

Talofa lava, Madam Speaker. Well, I must say I’m surprised and somewhat disappointed by the chair of the Economic Development, Science and Innovation Committee. I have watched Naisi Chen as the chair of that committee, and I thought she was better than that speech, and one of the disappointing aspects of that—and, typically, in a gaslighting sort of theme—is that because somebody doesn’t agree with the solution that is being proposed, they either don’t understand the problem or they’re in the pockets of fat cat business people. I think that’s the most disappointing aspect of what Naisi Chen has just told us, because, actually, the committee worked extremely constructively through this process, and certainly better than was described by that speech.

The select committee now has an even, three-three split on it of three Government members and three Opposition members. Therefore, if some consensus can’t be reached, bills being considered by that committee would be reported back unamended, and, actually, that’s not what we want to do. We want to make sure that we are constructive, even if we don’t support legislation. So the committee has reported back to say that we couldn’t agree on whether the bill should pass, but we bring the bill back in an improved form to allow this place to consider it on its merits, and, as Mr Bayly said, it will pass because the Government has a majority. But we have worked extremely constructively even though we didn’t support the bill.

Now, I will agree with the Minister on the case for change, and this is the point: we understand the problem. I want to quote or paraphrase from the submission that we received from Chartered Accountants Australia and New Zealand, an organisation of which I’m a member. They did survey their members and they said that extended payment terms for members’ clients do “exacerbate cash flow issues, place strain on business relationships and, in some cases, impact business solvency.” Members told them that the power in the relationship tends to reside with the large businesses and their payment practices, despite that, “are unlikely to impact a decision to do business with them.” And that’s inherently the problem: smaller businesses may be aware from their past experience that larger businesses are not good payers, but nevertheless they rely heavily on them for their business and are caught in a—it almost sounds like an unhealthy relationship.

So there is a problem—there’s no doubt about that—and it’s appropriate, I think, that we should be debating this bill hard on the heels of the ACC bill that’s just passed into law, which I described as a well-meaning waste of time. So is this, because it will not achieve the goal it purports to achieve.

Chartered Accountants Australia and New Zealand did cite the international evidence for that very purpose, because they presented that since Australia had put in place a regime—and the Minister describes this as similar to Australia’s. Well, it’s not, really, because the threshold for reporting is much, much higher and their problem was much, much greater. One in four big businesses in Australia is taking more than 120 days to pay their small-business suppliers. They didn’t find that out; they already knew that when they put that regime in place. But the evidence from both Australia and the United Kingdom, who have a similar regime, is that it hasn’t worked.

If the goal was to improve payment timeliness by big businesses, it’s failed; not only that, but in Australia, it’s got slightly worse. So the idea that transparency would be some kind of cash-flow disinfectant for larger businesses so that they might be named and shamed into compliance is actually not borne out by the international evidence.

I’m a bit of a pragmatist: frankly, if it works, do it; if it doesn’t, don’t—particularly when it comes at a cost. As Mr Bayly mentioned, there are significant costs, firstly, on the Crown for the establishment of the regime, the IT platform, and the reporting networks that are required to be got along with that, and, again, we’re not sure exactly what it is because we haven’t seen what the regulations will look like. We certainly have better guidance from the bill coming out of select committee than when it went in, but that’s not the full cost by a long chalk. In fact, the vast bulk of the effort and cost is going to fall on businesses, as usual. Now, one might think that was appropriate if, indeed, it was going to improve things. The international evidence, and my prediction for New Zealand, is that it won’t.

Now, $33 million is the threshold in New Zealand, but, as Mr Bayly said, 33 is a very pertinent number in this regard, because that’s all it takes to get a credit report in New Zealand—$33. For that amount, a small business, who perhaps has not had a trading history with a larger organisation, can get a credit score, company information, credit default information, and any insolvencies and judgments that have been entered against the company or its directors, and it can make credit inquiries—for $33. That is already in place—that’s all this needs.

I would also add that, actually, the problem that we have in this country isn’t as great as Australia’s. The information provided to the select committee was that, while there are problems with credit payment timeliness, it is the Government that is one of the worst offenders, but our average days to pay is actually pretty good. It’s under 30 days—that’s the average. Obviously, there are outliers, but there are also reasons for doing so.

One of the things that the National members on the committee worked hard to do was to make it a little bit more sensible, and we’ve got three concessions that I think are quite important to mention. Firstly, we’re talking about trade supply. The bill wasn’t clear about what on earth we should be asking large businesses to provide in respect of payments, but for a service organisation—take a hospital, for example—about 75 percent of that cost base is going to be staff. If one includes those payments in the calculation, the days to pay are, basically, zero—you’re paid on pay day—and that could materially skew the average credit timeliness data. So wages and salaries had to be taken out. Rent, bank fees, and utility bills—which are always paid, effectively, often by direct debit—could also skew timeliness data. They are now going to be left out. So we’re talking about credit terms on trade only, because that’s really what we want to know: how good is an organisation doing on that?

Disputed invoices: it’s not unusual, and sometimes they can be quite prolonged. Even moderately sized invoices—if they’re taking months to resolve because of concerns about the quality of the work being provided, or whether the service or good has been provided at all, again, it could affect payment term calculations. So they are also being excluded.

We had, as Naisi Chen mentioned—and, in fact, was claiming credit for it in a way—this minimum threshold of when companies are required to report. The original bill specified a minimum of $5 million for all creditor accounts. We got—finally—the committee to agree to go to $10 million for that, because that’s a much better proxy for the trade creditor’s proportion of a company with $33 million of turnover. But I can tell you that it was like pulling teeth to get the Labour members—and, indeed, it needed the perhaps less than idle threat of returning the bill back unamended had this very sensible change not been made, and it was made and suggested because the National members of the committee are accountants and merchant bankers and business owners, not unionists and lecturers.

We did get it in a better shape, so we are bringing it back to this House for its consideration. I thank the submitters, many of whom agree with me that this is a well-meaning waste of time, and we won’t support it. We’ll continue to oppose it. But I can also tell the House that, when the National Government comes into office at the end of the year and it is established that the process won’t work, we will be removing the burdens on small and large businesses that are dead-weight costs on our economy where the costs of doing business far outweigh the benefits to it—and that’s coming very soon.

This change will be good for small business. I’ve been a small-business owner, where I had staff and contractors, between five and 25 people at any one time, and a turnover, occasionally, of more than a million dollars. I learnt very quickly that cash flow is incredibly important to small business, and being across my cash flow was a way, at precarious times, to stay afloat. It was the number one discipline in running a small business. I would have welcomed a scheme like this.

I also worked for an international organisation that quite callously changed its payment terms from one week or two weeks to the four- to six-week minimum—whatever it could get away with. It didn’t matter how that impacted on the trade suppliers; those trade suppliers were a widget in the system when it came to that international organisation, and it made life very, very difficult for them. So I’ve seen the impact from both ends.

I think the National Party missed the point, really, that this is not about small businesses paying money to go and get a credit check; it is about incentivising the right behaviours from big business. What this bill does is it rewards good payment terms. That, in itself, drives good behaviours—that’s the point of this.

The other change, actually, that I don’t think National can take full credit for is the change to the $10 million threshold on expenditure. That was something agreed to by all of us as a committee, and, certainly, as a small-business owner, I understood that making this change and making this scheme proportionate so that it didn’t cast a net a too widely was really important. So we worked very collegially with the members of the other side of the House to make sure that we did have a fit for purpose scheme.

So this is great for small business. I’m not sure why the National Party don’t want to back small business. I’ve been a small-business owner, I know how important cash flow is, and this will make a real difference to small business.

Thank you, Madam Speaker. I rise on behalf of ACT to speak to the second reading of the Business Payment Practices Bill. I wasn’t in the select committee, but I don’t think it takes much to look through the bill and to see how silly it really is.

The bill’s intention is to improve transparency about business-to-business payment terms and practices, such as the amount of time it takes for entities to pay their suppliers. The bill would require entities to report on their payment practices twice a year if they have revenue over $33 million. And this is where the silliness of the Government is visible to see: revenue over $33 million. Most small businesses employ up to 20 staff, and this bill won’t help them one little bit.

I talk to small-business owners every day and ask them how they have felt they’ve been treated over the last five or six years, and they are hurting; they think that they’ve been treated with utter contempt. And then you ask them, “What about this Business Payment Practices Bill?” and explain it to them, and they just shake their head and laugh. I listened to Mr Bayly before and he had the temerity to mention that very few Labour people have owned businesses. And I heard the outcry—I heard the outcry—but the outcry was all in the past tense: “I used to own a business.” “I owned a business.”—“I owned a business.”

Hon Dr Deborah Russell: That’s because we are MPs. Our job is here.

CHRIS BAILLIE: Try and do it—well, you might need to go back to the business in October, because it is a lot harder—[Interruption]

ASSISTANT SPEAKER (Hon Jenny Salesa): Order!

CHRIS BAILLIE: —to do business now than in the old days. The fact that similar schemes introduced in Australia and the UK have shown no noticeable improvement in payment practices should raise concern, and Ministry of Business, Innovation and Employment officials have admitted that they don’t know the scale of what the issue is. So there might be a chance that business owners actually don’t really want to do this—hurt other businesses and their staff on purpose. The bill is designed to keep up the appearance that the Government cares about small business, but it is actually doing nothing to help. Once again, it is a solution looking for a problem.

When introducing the bill to the House, Stuart Nash stated, “Small-business owners in New Zealand continue to report that delays receiving payments are hurting cash flow, increasing stress levels, and inhibiting their business growth.” It was as if the biggest problem that small business is facing is payment from big business, and it just showed a complete ignorance of what businesses are facing. Small businesses do have cash-flow problems, they have ever increasing stress levels, and they do have many things that are inhibiting their business growth. All of these things have been caused by this Labour Government—a Government that doesn’t understand or care about business and what is required to make this country thrive and so workers can be rewarded for their efforts.

I listened to Minister Andersen’s disingenuous introduction alluding to really caring about business, but we look at the absolute nonsensical wage rises: 44 percent increase in minimum wage and a 7 percent increase in productivity. Extra stat holidays: $450 million to businesses. Extra sick leave: almost $2 billion to business, and where Andrew Little just said, “Oh, it won’t hurt them very much; that’s OK.” The list can go on. All of these additional costs are being sucked up by businesses who have had to continue to try and make a profit to pay their staff. They’ve contributed to our high inflation and the struggle with the cost of living that New Zealanders are dealing with at the moment.

This bill won’t help small businesses a bit. What will help is some common sense and genuine support for those hard-working employers by voting ACT on 14 October, and we don’t support the bill.

Thank you, Madam Speaker. I just wanted to make a quick reflection, listening to previous speakers on this bill, that it is often those politicians that deride so-called identity politics that will start their statements saying things like “as a merchant” or “as a business owner” and then go and talk about the “woke reign of terror of identity politics”. I don’t really care whether anyone was a previous business owner if they’re perpetuating systems that drive inequities. And I think it’s important to ground our debates in this bill and what this is trying to achieve, which is greater transparency in terms of business-to-business payments, with an attempt to even the scales between big and smaller players.

The Green Party does support the intent of this bill and particularly its attempt to bring forward greater transparency when it comes to this. In terms of alleviating unethical practices from bigger players, I don’t think anyone has said in their speech that this is some form of silver bullet, and when it comes to the practices of the big players, there are many other levers this Government could be using, such as an excess-profits tax, which would actually even the scales even further.

But when it comes to the comments made regarding the select committee, I do want to acknowledge that there obviously were challenges with an even number of people from Government and Opposition when it came to recommending whether this bill would go through or otherwise. But, from what I can understand, both parties were engaging with submitters in good faith, and that ultimately, I think, was one of the key things that needed to happen. So, as I said previously, the Green Party does support greater transparency in business practices and will be supporting this bill.

Thank you, Madam Speaker. It’s my privilege to speak on the Business Payment Practices Bill, second reading, this afternoon. Like any good local MP, and there are very many across the House, we all worked hard to engage well with businesses in our electorate. We know that the majority of businesses in our electorates are small businesses, and I’m very proud of the work that this Government has done to support small businesses over what has been a very difficult period and challenging time in the last few years, particularly over the pandemic. But those of us who would have spoken to their small-business owners will know that delays receiving payment are hurting their cash flow, increasing their stress in their business in already difficult times, and inhibiting their business growth.

This bill is about disclosing practices like the amount of time it takes for entities to pay their suppliers. It requires large firms—and we are talking large firms; those with an excess of $33 million annual revenue—as well as Government departments and other large entities, to publicly disclose information about their payment practices. They will need to report on their payment practices twice a year if they have that level of revenue, and that data would be stored and made publicly searchable by the Ministry of Business, Innovation and Employment.

I said that I’m proud of the work I do as the local MP working with my local businesses, ensuring that they get the resources and support from not only our Government but I encourage future Governments to do the same. So I commend this bill to the House.

Manuia le aoauli. Thank you for the chance to pass comment on this bill. It’s suggested this bill will lead to businesses mitigating reputational risk by improving their business payment practices. We know that New Zealand Aotearoa is a nation of small to medium sized enterprises—97 percent of our companies. They’re doing it tough, coming out of COVID—that lockdown for years in Auckland—coming out of the regulatory chill but getting frozen along the way, finding it tough to get staff with all the immigration bottlenecks in arcane, Orwellian employment legislation. Unless you’re a recruitment or consultancy practice in Wellington, waiting for a call from your local bureaucrat, business can be a tough gig right now.

This piece of proposed legislation is out of touch, out of mind, out of control, and demonstrates the wrong Kiwi SMEs. Apprentices paying for ute taxes for more Tesla subsidies—

Helen White: You’re going to cut those credits too, aren’t you?

TAMA POTAKA: —especially in Central Auckland, Helen. More tax for SMEs running their affairs through trusts. Now more compliance for business—effectively, a new tax; what I’ll call the “B2B” tax.

The real undercurrent of this bill, however, whānau, is more control. Not only does this Government want us to suppress education aspirations or raise more tax from the hard-working people of Hamilton West, it wants to take more charge on business payment practices in a potentially parasitic manner. Our various respective committee members have feverishly paddled the parliamentary waka in a multi-partisan manner, and I appreciate there were some changes made at the Economic Development, Science and Innovation Committee—kei te mihi ki a koutou; massive thanks—but increasing the minimum threshold when companies are required to report was a great idea. I wish you all took it up further—to, say, $100 million.

More compliance for SMEs is just not right, and definitely not right, right now. We could have just amended the Financial Reporting Act. Instead, we’ve sent the destroyer to sink business with the omnipotence of the current Government’s regulatory wave. With the power of majority Government—with 62 members—comes responsibility to be careful with overregulating everything in business. That responsibility, and this piece of legislation, has been wielded in an imbalanced manner and deserves more caution.

Members, if this bill turns into legislation, it will worsen the cost of living crisis. The hard-working people of Hamilton West know it; ditto the people of Papakura, whaea Judith; ditto Tauranga Moana, Master Uffindell—two areas often referred as “Hamilton North” and “Hamilton Far East”, respectively! And I caution the Government around going too far with the dictates of what is right and left—I mean wrong—with business. We’ve seen this in the environmental space, the immigration space, and the collection of injury information around Māori, and, ad nauseum, we see it right down there in the weeds of business payments practice.

My friends and peers, hear ye, hear me, we’re going too far yet again in telling business how to run business. The value of big Government is one that the current Government lives by. And I remind listeners this afternoon that limited Government is something to cherish and behold. But, when you get an imbalance of Kāwanatanga with community and business, when Kāwanatanga, like the factory in The Lorax, just keeps biggering and biggering, we end up in a stylishly squishy and opaque situation never contemplated by my ancestors who signed up to the Treaty of Waitangi. Kao, kei te hē. [No, that’s wrong.]

Of all the problems that face SMEs, this was not one to pick today. We believe SMEs need to be paid on time, but we don’t believe that this bill will achieve its objectives. We’ve seen recent international examples—Australia, UK—where there’s been no discernible improvement in payment terms by big business despite similarities in the regulatory impositions that are proposed today.

The cost for firms, $2,000 or $3,000 over in Aussie. Imagine putting those costs back on SMEs today, here in Aotearoa—another cost; effectively, another tax; I repeat, the “B2B” tax. It would be a lot easier to use one of the credit assessment companies, like Centrix, to assess it in real time—33 bucks.

Whānau, big business should be allowed to run big business. Legislation and .govt.nz should not run big business. The Ministry for Business, Innovation and Employment (MBIE) have stated they don’t know the prevalence of the issue of delayed payment and whether practices are intentionally exploitative. I propose the question: should we be legislating without evidence of the benefits of legislation, or whether the relevant agency is not aware of the scale of the issue?

The MBIE proposal to build its own IT platform to employ people to collate data sounds like another recommendation from a consultant. Was it from one of the big four, an IT consultant? Folks, we can’t even count the number of people in New Zealand on any given night, let alone create another IT ether—like springing a leak in our multi-partisan waka and curtailing any ballast it might have had.

Let’s get New Zealand back on track, people—back on track. Let SMEs use the funds directly and in areas like e-invoicing and technology solutions. Let’s reduce the red tape. And, as I said, way back then in the days of Victoria University law school, when my friend and colleague over there on the other side—I repeat to him today: stop the war on mums and dads, stop the war on communities, and stop the war on business. Kāti rā, tēnā tātou katoa. Kia ora! [Well, greetings to all of us. Thanks!]

Talofa lava, Mr Speaker. It’s a pleasure to rise and take a call on the Business Payment Practices Bill, which is a bill that will provide for hard-working business owners and will provide for an increased level of transparency. I was sitting here listening to the ACT member Chris Baillie, before—

Hon Kelvin Davis: Oh, you poor thing!

TANGI UTIKERE: —who talked about—yes, it was rather unfortunate, but he talked about the fact that members on this side of the House talk about how they used to be a small-business owner, how they used to be this, and how they used to be that. Well, unlike the ACT Party, we’re not part-time members of Parliament on this side of the House. We prefer to put all of our focus into supporting our communities rather than the ACT Party, who seem to have adopted a part-time approach.

But that to one side, I want to acknowledge the work of the Economic Development, Science and Innovation Committee for the work that they’ve done in bringing some of the changes to the House, changes that look quite sensible: locking in a transition period for this piece of legislation to apply, looking at that first reporting period applying to those entities for which the threshold is a minimum of more than $100 million over a two-year period—actually a two-year consecutive period, according to the select committee’s report. But it also introduces other provisions that make a lot of sense—for example, the entities’ ability to separate or distinguish those invoices that might be in dispute vis-à-vis those that might be paid late. So those are just some examples of some good changes of a hard-working select committee that will make a difference to small businesses and other businesses. I commend the bill to the House.

Kia ora, Mr Speaker. It’s lovely to be here talking about the Business Payment Practices Bill today. As we continue the theme of small-business owners, I was one also. Many years ago, I owned a small coffee business, back before coffee carts were cool. I led the way—don’t take that as a complete fact! For three years, I ran a small coffee cart. It was part of a lot of the other work I was doing, and it was always a challenge in terms of payment, in terms of ensuring that I got through. I would often run events for companies or they’d put on a breakfast and you’d turn up and you’d make them the coffees. It really was a challenge. I wasn’t out to make a lot of money. I was doing other work and also running a social enterprise at the time.

When you look at companies that are slow to pay, I was looking at the facts from Xero saying that almost half of invoices are paid late. That creates stress. That creates uncertainty. If you’re financially on a knife edge, that can make or break things for you, and we don’t want that.

This is good legislation. I was surprised to hear Tama Potaka telling us to stop telling businesses how to run businesses. Well, I would happily do that if they actually paid their bills on time, if they actually did what was right. I’m not sure what this “war on mum and dads” is all about, but I think it’s a war on my vocal chords and my ears, actually, when Tama Potaka was talking.

This is what we are doing. It has been good to be a part of the select committee to work through this, to explore some of the options, to make some changes to ensure that we’ve got it right for the sake of small business and for the sake of all business in New Zealand. Of all businesses in New Zealand, 97 percent are small. They need support, they need us to walk alongside them, and we walk alongside them with this bill.

Great to rise on a Friday afternoon to speak. I can see the excitement on the other side of the House. I might need a coffee, though, soon, Mr Bennett. I hope you would bring your small business back to Parliament. I’d be very keen to entertain that. I’m not sure whether this bill would’ve actually benefited you, because I’m assuming that the people that came along and paid probably—I don’t know whether any of them would’ve been people that would’ve been captured by this. Whether that would’ve picked up on that, I’m not too sure, mate. But this is targeted at business above $33 million.

I’ll just go back on a comment I heard from Naisi Chen, the third speaker today—

Naisi Chen: Naisi—it’s Naisi.

SAM UFFINDELL: —Naisi, sorry; it’s Uffindell as well, I’ll add that in there—saying that this side of the House doesn’t care for small businesses; we only care for big businesses. I would totally refute that, and I think that’s just another example of gaslighting by this Government. There’s a lot of wastage of gas. You know, you’ve closed the gas searching, but you’re using up a lot of it, and I think this is another example of it, because on this side of the House, we really do care about small businesses, because we understand and recognise that they are the engine of this country. As for saying we only care about the big end of town, I would like to mention that just last week you allocated $140 million to a very big Australian company.

DEPUTY SPEAKER: I didn’t allocate anything, Mr Uffindell.

SAM UFFINDELL: In going back to this bill, for a moment there, you know, we’ve heard the comments that this is not going to solve the problems that the Ministry of Business, Innovation and Employment (MBIE) has defined, and it is noted that it will add substantial compliance costs. That’s one of the reasons that companies out there, small businesses, are doing it so hard at the moment, that they have had an avalanche of costs put on to them.

There have been significant costs, and we could look at the cost of living crisis. People out there—you know, the retail, hospo, tourism businesses—they’re not getting the customers coming through. When I go out there and talk to people, and I do that every time I’m back in my electorate—I go around and visit the small businesses around the great electorate of Tauranga—they tell me that since about March this year, there’s been a real decline in people coming through their doors, and a lot of them are wondering whether it’s even worthwhile going on. That flows on: so they’re not getting the money to pay their suppliers, their suppliers aren’t getting the money to pay whoever it is or whatever their costs are, and it’s just an onward flow that we are seeing under this Government.

That’s before you take into account the significant pressures that small businesses are being placed under. They endured a significant amount of time in lockdown—for my colleagues in Auckland, where I am heading tonight. My mother spent a long time in lockdown—fortunately, she’s not a small-business owner, because if she was, she would’ve really felt the pinch, as a lot of them did. Then you add on to that the other costs they’ve faced around public holidays and additional sick leave, the minimum wage constantly rising, and looking at small businesses like they’re just people who have got endless pits of money and thinking that their job is to deny it from people. I totally refute that, because small-business owners aren’t rolling in cash. They don’t have an additional $2,000 or $3,000 a year to pay to meet the compliance under this.

And you look at what this compliance is going to do. Is it actually going to achieve what the intention of this is? I would significantly question that, I really would, because what you’re getting here is a snapshot. You’re getting two snapshots a year. People were looking at, what, accounts payable or receivable—and I think my colleague Andrew Bayly put it pretty well: are they going to go on to the MBIE website and look at a snapshot in time, which may have been 5½ months ago, and say, “Oh, that’s good. I’ve got a really good understanding of where my business is at and where my creditors are at, or the people that owe me money or whatever it may be—my suppliers.” I’m not sure that it will. In fact, I’d actually be pretty certain that it wouldn’t. An MBIE website that offers a snapshot in time from six months ago is probably not going to be the place that people will go to. In fact, I think Mr Bayly put it pretty well: there are other avenues out there that businesses can already exercise for $33 to get the information that they need, or they may just go and have a look at their own accounting software or, you know what? They might pick up the phone and just communicate to that supplier.

So I’m challenged to understand how this is actually going to improve the lot of small businesses. I’d actually say, as I already have, it’s going to make it a little bit harder for them, because they’ve got another regulatory regime that they need to comply with, several more thousand dollars a year. You know, you’ve got to allocate more time, more cost, and very little output at the end of it.

We note that Australia and the UK have recently implemented schemes like this. Australia did it with a higher threshold of $100 million—ours is $33 million—and Australia is now looking to walk that back, because they are finding out that it isn’t actually achieving what it intended to achieve. Actually, as Andrew Bayly said in his speech, on a lot of occasions it’s leading to slower payments. So, well-intended; worse outcomes. When you see that, you leave me with no option but to oppose this, and I’m glad all the rest of my colleagues have.

We also look at the operational issues around this. I mean, this doesn’t just spring up in a void; you’ve got to set up a new IT platform, you’ve got to hire staffers, you’ve got to keep the operational costs running. I think the initial start-up costs are about $3.5 million, and then you’ve got ongoing maintenance costs of this regime at anywhere between $1.4 million to $2 million a year—just more money dribbling out of this Government and more costs being piled on to businesses.

Glen Bennett: Who’s dribbling?

SAM UFFINDELL: Very good question. I didn’t bring a bib, but we could all get one soon. I will keep going, though. You’re not encouraging me to sit down when you make comments like that.

But we’re a nation of small businesses: 97 percent of our employees are hired by small businesses, and I think it’s really important that we enable small businesses to keep hiring these people. One way that you do that is that you don’t keep lumping them with additional costs. That’s, ultimately, what this bill is going to do, and it’s going to achieve very little to no positive benefits for speeding up the payments to these people. There are far better ways to do it. We have made our case pretty strong today. This reading will be passed through; we understand that, but the National Party will oppose it—so do I. Thank you.

Well, Mr Speaker, you’d have to be in a pretty dark place to oppose this bill, I think—especially if you believe in markets, because markets are about the provision of information. That’s exactly what this bill does. This bill provides transparency. It gives the market an understanding of who pays their bills on time and who does not. You’d have to be in favour of opacity and against the disinfectant of sunlight to oppose this bill, in my view.

We know, from the last speaker, in fact, that the UK and Australia have already done this; the sky did not fall in. I think it’s kind of embarrassing to be from a party that speaks about the market and economics and to be opposed to something that creates good information so that businesses can make good decisions about who they choose to partner with. On this side of the House, we support the bill, we support transparency, and we’re against the kind of opacity that is being argued from the other side. I’m very pleased to support this bill to the House.