Russell Deborah; Leary Ingrid; Bayly AndrewHon Dr DEBORAH RUSSELL (Labour): Madam Chair thank you. Look I'm really appreciating the responses from the Minister for Small Business and Manufacturing. They are genuine responses to the questions and so I do think that's really useful. I'm hoping that we can have a little bit of the exchange that we were promised when we brought in the new way of doing committee of the whole House stages. I do have just a few questions for the Minister which I'm hoping he can answer fairly promptly so I'm not going to spin out the time I'll take; I am going to get to the question.It is to do with one of the seven measures that the Minister talked about in his first speech and again in his second speech. I took notes from both speeches and it was talked about again now. And that is the fact that small businesses can go to some credit ratings entities and get a report on a business for the sum of $35. I just wonder if the Minister—OK he asserted there's four or five of them readily available in New Zealand. Could he please name those agencies? It would be useful to know who they are.INGRID LEARY (Labour—Taieri): Thank you Madam Chair. I too wish to thank the Minister for Small Business and Manufacturing for his genuine engagement. I think over the last 98 days or so we haven't seen a great level of engagement at the committee of the whole House stage and for the Minister to listen to the speeches and then engaging meaningfully at this point is very useful. He has referred to a number of his speeches and some of his thinking around what he plans to do in this space as Dr Deborah Russell has said and so that does open up the conversation in our questions in a back and forth exchange I think to really get a sense of why he has brought those into the debate.So on that note the Minister has just mentioned in his previous answer about the public sector and requiring the public sector to be prompt with their payments. I couldn't agree more. I think leading from the front is a very good idea. Government procurement we know in the social enterprise space can make a huge difference to the NGO sector and to social equity. I'm wanting to know why the Minister wouldn't consider just including that requirement of the public sector in the existing framework that has been set up by the primary bill. Because as the Minister has quite rightly said the Ministry of Business Innovation and Employment is just about to start to create those regulations and therefore it wouldn't be that problematic in my view to simply tweak this current system to require that public sector requirement. That's my first thing.The second one picking up on what he said was about the fact that there wouldn't be a need to legislate because the Minister of Finance would be able to give a directive. I'm really keen to know what that entails because as has been pointed out we are doing this under urgency. There's been a lot of use of urgency from the Government and using a ministerial directive is quite a strong and unusual point of action that can be taken but in quite limited circumstances. I want to know if the Minister has considered whether there could be a judicial review of that ministerial directive what advice has he received about the use of the ministerial directive and can he assure us that there wouldn't be some kind of Henry VIII" element to it given that he is planning to put in some fundamental changes without going through the normal parliamentary process.My third question is to just pick up some new points on the voluntary code that were raised by the Hon Phil Twyford because voluntary codes—there is some cynicism from our side of the House in terms of thinking: is this just a PR exercise? The late payment practices that are currently being endured by small business have been around for ever and so we we're deeply cynical about the offer of big business to suddenly say that it wants to set in place a voluntary code. That could sound like a PR stunt. So I'm wanting to know what advice has he had from officials about the efficacy of a voluntary code. I'd like to know in that voluntary code which he himself has raised in the debate how many violations of the code would it take for there to be some kind of ramification? Would big business be able to violate it as a trend? Or would there be a capped number of how many times they would have late payment practices before that code would kick into effect? And what kind of consultation would go into that code? Because I'm sure that big business would have an opinion about that. Were small businesses consulted or will they be consulted in the formulation of that code to work out what those violations would be?The other question is sanctions. If there's a voluntary code what are the sanctions? Will there be sanctions and will it hinge on reputational risk? Because that is what the existing Act does. And Madam Chair before I come to the end of my time I'd just like to advise you I do have an amendment I'd like to put to the Minister before I have to leave which I think might actually help him out. So these are just my questions on the voluntary code. And also would the code be made in a public kind of forum? Would it be done behind closed doors? Again what official advice has he had?Turning now to my amendment that I think I'd really like the Minister to consider very seriously because when we look at what we're trying to do today and I think there is agreement across the House that paying bills late is bad practice—I think that's one thing we can agree on but we have very different views about it. So what could perhaps help the Minister is instead of under clause 3 repealing the Act to simply replace the purpose section 3(b) of the Business Payment Practices Act with a new subsection (b) "Require large entities to advise contractors on written notice of any late payment". This is an amendment under my name.Now of course we need the definition of "late payment". So I would insert in section 5 of the Act that "Late payment means any payment that falls outside a large entity's own payment terms and conditions." This speaks to the fact that we are not advocating a prescriptive regime that says a big business has to pay within 10 days or within one month. What we are saying is: by all means retain your self-governance retain your payment practices but make sure you stick to your own rules because then small business will be on notice of what the payment terms are will have the certainty it requires to be able to plan its cash flow and will know that if for example the payment terms are three weeks that the cash flow has to meet that. And there will be certainty that at the end of that three weeks payment will be made cash flow will be happening and it will be able to then pay its own contractors and suppliers.So the other element to this then is a new clause 5A. This is a part that technically would enable the legislation to do exactly what the new purpose would say. And if I dissect it—so I'll read it to you. It's new clause 60A "Large entities must advise contractors by written notice of any late payment as soon as is practicable once it is aware that such payment will be late." Now "large entities" we know that that is the entities that have the cap of $33 million of revenue or $10 million owing to third parties which I had thought the Minister was comfortable with when we had amended that in the primary legislation at select committee. So we know what large entities are. This is not going to affect smaller business. So all the talk from the other side of the House about compliance costs simply for most business in New Zealand does not apply.Then we've got "Advise contractors by written notice"—now this is really important. I'm not suggesting it be by letter but it could be by e-mail text or any form of evidence-based communication because if there are disputes obviously there needs to be a record of the communication—"of any late payments"—we've talked about that. That means late according to its own payment practices and then "as soon as practicable". That's a very reasonable kind of test. We see that in a lot of legislation. It's not requiring big business to go through hoops. It is saying that is what is reasonably practicable to do in the circumstances.The really interesting bit for me here is that this is once it is aware that such payment will be late. So I've even added a mens rea element to this that there needs to be awareness by the big business. Now that could be if the Minister was minded to and wanted to be really generous to big business—it could actually require evidence that there was true awareness by somebody—an employee a manager somebody who was part of that business or it could be deemed and that would be my preference Minister through you Madam Chair. I would like to see that deemed so that where there was some kind of trail of communication or perhaps there was an invoice in the system there would be a deemed awareness that that payment would be late if it was not made according to the practices of that business at the time.So Minister I'd really—through you Madam Chair—like you to consider my amendment because I think it's a nimble way to achieve all the things that you would like to achieve while making sure that we don't dismantle something that did go through a select committee that did have this voice of small business that can be tweaked to have the public sector element that the Minister would so like to see and that I support. So Minister I'm very keen for you to show the generosity in your answers that you have previously and to continue this back and forth because I know that my colleague Dr Deborah Russell has got a number of questions on the seven elements of the new regime. And given that you've brought them into the debate—through you Madam Chair—we would really like to interrogate your thinking on that. I look forward to your answers Minister.Hon ANDREW BAYLY (Minister for Small Business and Manufacturing): I'm sensing it's going to be a long Friday because the questions are—Hon Scott Simpson: Or Saturday maybe.Hon ANDREW BAYLY: Or Saturday because I'm sensing the questions are becoming not as direct and rather on a different tangent if I can put it that way. To be asked "Who are the four credit agencies?" well I think there's Centrix Equifax and illion and I can't remember the fourth but I'm sure if the member pulls out her phone she might be able to find the fourth.Now in terms of the issue around the issuing of a directive as I made clear in my opening speech—in my initial speech—I'll be working with the Minister of Finance and also in her capacity as Minister for the Public Service. There are three options actually for how we might bring about the changes in terms of payment times. In respect of Government agencies and after consultation with Government entities that could either be by way of a directive it could be by way of a Cabinet decision or it could actually be through the procurement rules but probably most likely by way of directive and the Minister can do that pretty easily.In terms of the amendments to the bill—and I note there's quite a few Amendment Papers being put up by members of the Opposition—one thing I'd say to them is that if we repeal the bill which is the Government's intent then obviously you cannot attach the amendments to a bill that no longer exists. And I would suggest that some of the suggestions from the last member who was obviously trying to be helpful those are the type of things I would expect to be taken up in the industry code which will be developed and hopefully in place by the end of this year which I would expect because that will pick up some of those elements. But in terms of the amendments that have been put forward unfortunately they cannot apply to a bill that no longer exists."