Fairbrother Russell: Third Readings 
Fairbrother Russell: Third Readings 
[Volume:635;Page:6540] 
RUSSELL FAIRBROTHER (Labour) 
: 
 It is regrettable in a third reading debate to hear National members taking pot-shots at process when this legislation which has been broken down into five separate bills brings efficiency and effectiveness to the law regarding the operation of business. The fact that this legislation has been broken down into five bills brings a dynamic sense to reporting requirements and to security requirements. 
Pansy Wong 
: Which part? 
RUSSELL FAIRBROTHER 
: I say to Ms Wong that I will deal specifically with the part that appears to have missed her scrutiny even though the rest of the Commerce Committee clearly had the chance to peruse it. I will take the member if I can to what is now known as the Companies Amendment Bill (No 2). In particular I ask Ms Wong to turn to clause 8. I will lead her to a provision that achieves precisely what the select committee recognised in the opening paragraph of its introduction in the commentary on the bill and what the Minister spoke about in essence in her third reading speech. I ask the member to flick over—and I hope she is doing so now—to clause 8. Is the member with me yet? 
Clause 8 inserts new section 209A. Ms Wong is a member of the Commerce Committee so I am surprised that she does not recall that the select committee unanimously had the wisdom to give some weight to clarity efficiency and effectiveness by looking at the requirement on shareholders to receive an annual report. Shareholders must receive the report within 15 working days if they communicate that wish to the company after receipt of notice of the AGM. Shareholders can receive the report in either hard copy or after the exciting introduction of this bill of course in electronic form. Many people now are quite rightly looking to electronic retrieval systems and storage so receiving annual reports in electronic form is really the way the business community is moving. 
But the sensible addition of the select committee—and I remind Ms Wong that this was a unanimous addition too—is that once shareholders have requested for a particular year an electronic copy of the annual report or also of the concise report if they wish to have that then the company must regard that as being an enduring request to be complied with each year. So it is not a situation where each year shareholders have to remember to contact their company at head office and ask for a full copy of the report to be sent—either electronically or the hard-copy version whichever has been indicated. Instead the communication given once is communication that remains as long as those people are shareholders or until they take the next step of telling the company that they do not want to receive such a copy. 
Of course the advantage of that system is that it enables shareholders if they want to be entirely passive and not bother themselves with reports thus saving a company the expense of producing unnecessary reports or of altering its database so that reports will be sent automatically. Once shareholders expresses the interest the self-selecting process is then signalled and they remain on the database as shareholders to receive the annual report or the concise annual report—or both if that is the request. Shareholders remain in that situation until they elect to remove themselves from the database in such a form. Although this amendment to the Companies Act is small—and I have chosen the brief time available today to concentrate on just this small amendment—it signals the whole tenor of the business law reform legislation. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
RUSSELL FAIRBROTHER 
: I turn now to the Financial Reporting Amendment Bill which illustrates really the Government’s commitment to improving the efficiency of business and compliance costs. As Minister Dalziel said in her third reading speech the changes to the Financial Reporting Act are generally aimed at improving the workability of the financial reporting system and reducing business compliance costs. I address this from the point of view of constitutional law issues because if we want to make a really determined effort to improve business efficiency and to make the Government responsive to the market then the Financial Reporting Amendment Bill is a very good illustration of how that can be achieved. 
The point I refer to also demonstrates the efficacy of the committee structure in this House and the importance of the Regulations Review Committee. That committee pointed out to the Commerce Committee that the proposals in clause 28 of the Financial Reporting Amendment Bill were in fact in breach of constitutional policy. New section 6A(2) inserted by clause 28 gives the Governor-General by Order in Council the power to make regulations that amend the maximum amount of assets maximum turnover and maximum number of fulltime-equivalent employees. It is relevant to raise this only because new section 6A(1) inserted by clause 28 sets the limits for the maximum amount of assets maximum turnover and maximum number of fulltime-equivalent employees. Regulations made by way of Order in Council will have the effect of changing what is contained in the Financial Reporting Act when this legislation is passed so will in fact change primary legislation. 
It is important that this House recognise that primary legislation should be changed only by primary legislation and not by the delegated legislation of which regulations are part. However the Regulations Review Committee will of course review every regulation made—that is the reason for its existence. Having been a member of that committee I can speak to its diligence in that respect. 
The Commerce Committee quite sensibly and quite properly whilst noting the apparent breach also drew the conclusion not to propose any amendment to rectify that breach because it noted quite correctly that the possible risks were minimal. I think it is quite proper that the Commerce Committee highlighted that point. It also adopted a sensible approach in terms of aiding business efficacy in this country by noting the minimal nature of the breach. But it is important to bear in mind the important principle that primary legislation should not be amended by way of delegated decision-making powers or decisions as will be part of this new Act. However businesses must work and be responsive to changing markets and it is very sensible that limits are set but can be changed from time to time subject to review by the very efficient Regulations Review Committee. 
I make that point because it is an important statement of principle and one we should bear in mind at all times. Having raised it I say that it also indicates the importance of the way in which the committees of this House work together to express their various areas of responsibility and concern. The report from the Commerce Committee quite properly summarises the Regulations Review Committee’s concern and its response to it. It is a good report and it recognises the importance of the amendments to the Financial Reporting Act. That is in line with the whole ethos of this business law reform legislation which is to make our business community our commercial community more responsive to the market and to the many changes ahead of us as we move into a very business-friendly and value-added economy as part of our policy of economic transformation.