Woodhouse MichaelHon MICHAEL WOODHOUSE (National): 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."