Clendon David: Auditor Regulation Bill Financial Reporting Amendment Bill — Third Readings 
Text is incorporated into the Bound Volume 
Clendon David: Auditor Regulation Bill Financial Reporting Amendment Bill — Third Readings 
[Sitting date: 11 May 2011. Volume:672;Page:18628. Text is incorporated into the Bound Volume.] 
DAVID CLENDON (Green) 
: 
 Kia ora koutou. I am pleased to take just a short call in order to affirm the Green Party’s support for the Auditor Regulation Bill and the Financial Reporting Amendment Bill. This legislation has been some time in coming and there are reasons for that. But it certainly does meet a need. I am grateful to Lianne Dalziel the chair of the Commerce Committee who has led us through the sometimes tortuous path to get to this point. She has a phrase which brings us back to it. She asks: “What is the mischief? What are we actually trying to achieve here?”. These relatively complex bills do engage and address a range of related complex issues. It is very useful just to be centred in that way and to ask what the mischief is. We know there has been mischief largely emerging from the radical and excessive deregulation of the finance sector over a number of years—over several decades.  
The previous speaker Mr Parker very clearly outlined the danger of over-regulation. It is absolutely true that restricting the availability of capital of finance is a serious problem for some of our most innovative and potentially productive industries. We have some very smart people in business in this country who are able to come up with ideas and processes that can in time return significant value in all sorts of ways. We do not want to overly regulate or restrict the availability of venture capital of expansion money needed in order to allow those small businesses to grow and to make a really positive contribution for the benefit of all of us. Having said that I say the need for more regulation is undeniable and for that reason the Green Party supports this legislation.  
It was often remarked in the course of the select committee process that people have questioned why in the failures of the finance sector there was so much incompetence. There was a degree of incompetence undoubtedly. People simply got things wrong. This legislation will serve in part to shine a light on that level of incompetence and hopefully to drive it out of the sector. But much more than that I think there has been a failure of integrity. The deregulation combined with a prevailing attitude of “if you can get away with it you should” has led us to a situation where large numbers of people lost money. The problems in the sector did have very unfortunate consequences and this legislation will enable a tighter rein a closer eye to be kept on what is happening in the sector.  
We cannot legislate ultimately against dishonesty or foolishness; nor should we endeavour to. But what we can do is endeavour to ensure that people can have a reasonable expectation of integrity of competence and of adequate regulation and that the dealings of finance companies of the finance sector more generally and of financial transactions will be openly transparently and appropriately reported. Again this legislation takes us some way down that path.  
I heard earlier a reference to financial literacy. We know that New Zealanders perhaps not uniquely certainly do not have a high level of financial literacy. I suspect again that that is a hangover from an earlier time when there was a great deal more trust. People who found that they were in possession of a lump of capital for whatever reason could and would invest it with a trusted professional with a reasonable expectation that their trust would be rewarded and well founded. I think we have gone beyond that. I think we have entered a time when the industry did not in its entirety reflect such integrity. There were not good grounds for trust within that industry. We have in that situation needed to return to a regulatory response—a mechanism to ensure that there is more protection for investors and that people will have a much clearer view of what has been carried out and done in their name. 
In terms of financial reporting I have made the point before that we look forward to a time when not only is the monetary flow through a business reported on but auditors go beyond simply reporting on financial transactions. We look forward to a time when auditors and financial reports generally also engage with and report on the broader effect of business activities: the environmental effect the social effect the costs and benefits—not only economic matters but also environmental and social costs and benefits. That is not something we need to invent; it is becoming increasingly commonplace internationally. There are well-established and well-respected international bodies capable of modelling good reporting that engages social and environmental costs and benefits as well as the economic and financial aspects. Again in time we may see value in developing a light-handed regulatory framework to require that. But I think more and more that will come from the business and finance sector itself as people require a better clearer and more comprehensive picture of what is being done in their names with their money and of what the social and environmental impact is of business and finance transactions generally.  
To return to the general theme of the integrity and trustworthiness of our professionals whom we expect to perform on our behalf I think there is a returning or certainly an emerging sense in our education and training institutions that alongside competence we need also to teach ethical models. We need to challenge young professionals in particular—and indeed not-so-young professionals—who are responsible for both managing and reporting on financial activity. We need to challenge them to investigate their own value systems and their own belief systems in order that they will behave in ways that people can reasonably expect to return honest and open transparency to the sector.  
In summary as I said in some ways we regret the need for this regulation but that need is undeniable. We need to put in more reins and demand greater transparency and more authority within the sector. We are very happy to support that and we will continue to do so. Kia ora.