Auchinvole Chris: Insolvency Law Reform Bill — First Reading 
Auchinvole Chris: Insolvency Law Reform Bill — First Reading 
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CHRIS AUCHINVOLE (National) 
: 
 The National Party and myself as a member of it welcome the bill’s introduction but with some reservations. Mine are in two respects: simplicity and enforceability. In terms of simplicity I have regard in particular for small entrepreneurial businesses. Most small entrepreneurial businesses enjoy getting on with the job. Endless compliance and endless complications make their life untenable. 
My experience in business extends to working with the New Zealand Dairy Board a large corporate milking cows with my brothers and working as a small trader and a very proud member of the Export Institute based in Auckland. It is sobering to look up the figures today to find that only 4 percent of New Zealand businesses are engaged in exporting. 
Dr Jackie Blue 
: Only 4 percent? 
CHRIS AUCHINVOLE 
: Only 4 percent I say to Dr Blue. There is a desperate need to encourage more business growth and more export growth. One of the restraints on entrepreneurial activity surrounds credit and creditors and debt and debtors. 
I agree with the earlier speakers and particularly with the one who said that he had an ever-present eye on the financial state of his company. Being in an entrepreneurial business and dealing with a range of debtors who may or may not pay on time is a tightrope-walking exercise. Currently there is a drive in New Zealand to encourage exports to the South Pacific. It is a drive that I really welcome on a personal basis having spent perhaps two decades working in the countries of the South Pacific as an exporter from New Zealand. 
One of the key comments from the experienced traders when introduced to this new initiative was that people should take care of the credit situation when dealing with some of the client base in the South Pacific. My own experience as a manager of the New Zealand Dairy Board’s South Pacific sales and marketing operation and my subsequent decade as a sole trader exporting into the South Pacific provided a range of knowledge in this field. As a supplier to Auckland-based Pacific traders I was conscious that their problems could become mine. As a supplier to small trading businesses through Papua New Guinea Micronesia Melanesia and Polynesia we always had to be vigilant over the customers’ ability to make their payments. Members should please note that I did not say their ability to make their payments on time; I just said their ability to make their payments. That is no easy science in export trading given the difficulties in communication language differences cultural difficulties and the vagaries of small-business economies. 
The proposed Insolvency Law Reform Bill will in my view assist with that particularly in its definitions but it will not be a panacea for easy trading without vigilance. It will not in any shape or form alter the disciplines of trading. One of the concerns that I have on this side of the House is the obvious limit to business experience on the other side of the House and the seeming dependence that Labour has on regulation legislation political correctness and bureaucratic compliance as if those things change commercial realities—and they do not. Pirates exist today just as they did in the story books and regulation often makes them more inventive than honest. Vigilance on the part of those in business is ever important and must be one of the instruments of successful trading. 
To offer members a perhaps amusing incident I well recall a communication that we once received from Guam where a customer who was on limited credit demanded to know where his butter was as he had already sent his cheque. He followed that by sending us a faxed copy of the cheque he had sent. In a classic case of Kiwi nous one of the marketing lads whom I employed—he was a fair ripper—sent a fax back that read: “Here’s a photo of the butter you’ll get when we get the money you sent us a photo of.” Indeed many are the tales that can be told but particularly of the successful opportunities for business that exist within the Pacific Basin for trading with the many experienced and ethical businesses that exist there and that have been trading for decades. 
 The significance of the new opportunity offered by the Pacific Trade Expo—which should appeal to Mr Woolerton because I believe that he supports exporting—from the New Zealand Pacific Business Council needs to be accompanied though by an understanding of what constitutes business practice beyond just buying and selling. The Insolvency Law Reform Bill goes some way to acknowledge and recognise that risk is a major feature of trading and that overly stringent regulation can suffocate trade. 
I have just attended a series of A and P meetings throughout the West Coast and Tasman districts. I have just completed a short burst last week of branch annual general meetings. Increasingly without prompting the conversation falls to the reign of suffocating stringent regulation that people are currently trading with. People are sick of it. Risk is part of business development and it is something I as an exporter along with every other exporter engaged in all the time when in business. When we look at exporters and at their faces it is not just laugh lines we see. Nothing could be that funny. Having recourse to justice in the case of customer insolvency is never much of a consolation and at best the situation is a mess. 
However I think the Insolvency Law Reform Bill offers to make it less of a mess than it was. But at best it will always be like doing the dishes after the party is over and the definition of insolvency at least where it technically occurs has never been an exact science. I would have to say that in the case where customers are working on a continuous supply it is difficult for small traders to know exactly when they might reach an insolvency point because they are also dependent on the actions of others in paying them. I guess that the definition of insolvency though will improve and will assist in resolving some of the situations. 
There are also signs of insolvency stress—signs that are well known to all who have engaged in trading particularly international trading and exporting. Within the transaction we see on the other side of the House there seems to be increasing tension in the relationship between the parties concerned which is a sure sign of difficulties. The principals of the parties appear less often and say less another sign of difficulties emerging and there is a reluctance to engage in conversation or to answer questions. 
Having been a member only since September may I say that my exporting instincts repeatedly lead me to the conclusion that there are serious systemic problems in the parties on the opposite side of the House. Frankly if it were a commercial situation I do not think they could pay the bills. I do not think they will pay the bills. I think they will turn on their own and their associated parties when the bills come to a point of not being able to be met and work and programmes have to start being cut back. 
A further feature of the Insolvency Law Reform Bill that I applaud on first sight during this first reading debate is the section on phoenix companies—companies that rise from the ashes and continue trading with the same directors leaving behind them debts that were never to be paid out prior to the features of this bill. Basically there is a type of person in so-called business who uses bankruptcy and insolvency provisions as a device to avoid the true responsibility of his or her position. I will be pressing to see how the enforcement regime for this bill’s clauses will be instituted for the people we intend to assist and the people we intend to restrict. Once the bill has been referred to the Commerce Committee I do not doubt that it will emerge in a worthwhile form.