Bayly AndrewANDREW BAYLY (National—Port Waikato): Thank you Mr Speaker. It's a pleasure to be talking on the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill. I didn't sit on the Economic Development Science and Innovation Committee but I know enough from just reading what's going through on this bill to know that this bill really should be renamed. I think it should actually be named something along the lines of Passing on best wishes to James Shaw as he takes off to Glasgow and wants to re-enter and experience the managed isolation and quarantine (MIQ) facilities in New Zealand as he returns—maybe on his own; maybe leaving the other 14 or so members overseas." I think the process he's going to have to endure in those MIQ spaces will be his reward. So when he gets to Glasgow—DEPUTY SPEAKER: I'm just going to remind the member that we're debating the bill as agreed by the committee of the whole House. That is not part of this bill so he should move to the bill.ANDREW BAYLY: So as I say there's no doubt that Mr Shaw is going to be able to talk about this bill when he's in Glasgow. The issue with this bill is that we have no issue with an aspect of businesses moving towards meeting their climate change objectives and managing their investments well. The key issue is how that's achieved and making sure we do it in a practical manner and actually achieving the results we want to see in terms of businesses over time reducing their emissions and helping the country meet its climate change objectives. So there's no issue with that.The first thing I'd note about this bill is that of course it is a legislative solution to the issue. It's not one that's been led or allowed to be led by the industry. I know industry participants have been involved in the process. But in many cases there are many industries that willingly would do this but this is a legislative hard nut to achieve that outcome.So yes we support the bill but we do have certain issues with it. I think a lot of that we covered yesterday in the discussion with the Minister. I'm very grateful for the Minister acknowledging the discussion yesterday in the committee of the whole House. At least we found out and got final clarification as to the threshold after some time namely that the $60 million threshold at which if you're a debt issuer or an equity issuer if you breach that or you have a larger listed element of that then you will be caught under this provision if your valuation at the date of your balance sheet means that you exceed the $60 million.So one of the questions we raised yesterday obviously was what happens if during the course of the year you trigger the $60 million but then come back under the $60 million at balance date. It was made clear finally by the Minister that it's only at the balance date that the critical period is assessed.The second one is the area of whether unlisted securities were included in the calculation of the $60 million and again finally we got a result on that. It only relates to listed elements of debt and equity. Never got actually a clear definition of what equity is. Equity has many forms and I think there was perhaps a view that equity is a bit too difficult to define because you can have quasi - equity instruments and I don't know how this is catered for in the bill. That's the first thing.The second issue I think is the issue around standards and the Minister pointed this out before that the External Reporting Board will be the group tasked to actually determine the standards. Obviously they'll be working off the international task force that's been set to set those standards. Of course for industries or companies looking at how this might affect their reporting requirements we now wait to see what the standards are that will be put in place. I would only urge that the standards that are ultimately agreed are prudent and appropriate and do not overreach and certainly don't go beyond what is actually recommended by the task force. We do have a tendency to take what happens overseas and then actually end up making it more difficult.I think one of the greatest concerns is whilst we might start out with broad rules that will be helpful over time what happens is they become increasingly more complex. You just need to look at the Resource Management Act from when it was passed 25 years ago and what it looks like today. I just hope that there's a discipline around the standards that are actually agreed upon and implemented.Then there's the third issue around who are the assurance practitioners who are going to prepare these reports for the 200-odd entities that are going to be captured initially under this bill. It does come back to what the standards are because the standards will dictate what are the skill sets of those people how they're going to do their work—there's a short reporting period of that—and by what means will they be licensed. What requirements will they need to be licensed? I presume the Financial Markets Authority is going to do that. None of that of course has been set out yet. Of course both those elements have got to be done over the next 12 months.So there's quite a lot of work for this to be put in place quickly in order for the companies the reporting entities to actually meet their requirements which of course now under this bill will be required within 12 months. One of the Supplementary Order Papers that we debated yesterday was whether in fact they should be delayed but the Government saw fit to refuse to delay it.The other issue is this one about why only private businesses are captured by this bill and the reliance on Crown entities and State-owned entities to be basically captured under these requirements through ministerial letters of expectation. Again we just think that is a wrong approach. If it's good for the private sector it should be the same rules applied to Government sector organisations. In many cases they are even more well-resourced to do this type of thing. That lack of consistency is an issue for us.The other final aspect I just want to talk about is the issue of the comply-or-explain approach. What this bill did—and it got taken out during the bill's process through the committee—was the ability for companies to look at their arrangements and say "Look I don't think we're necessarily captured under these. We don't have significant climate change issues in our businesses." It might be a totally digital type of business that doesn't have a large footprint and the ability to be able to issue an explain notice would have been very helpful and I think a pragmatic option for some businesses—not for all businesses—but it would have been a pragmatic approach. But that was removed during the select committee stage which means that every single organisation must engage an assurance practitioner go through the process the costs involved in that and the reporting of that.Of course this all means quite significant things for investors because I think one of the issues that's going to arise from this is that these larger entities may look to divest themselves of anything that potentially gives rise to risk. I think the issue that the Hon James Shaw was referring to which was stranded assets—I think what we don't want to see is businesses deciding not to invest for instance in better processes to use coal in steelmaking as a way to reduce emissions over time as there's a transition to other technologies. What we'll see and could possibly see is there's a general reluctance to look at anything that is perceived to have a significant climate change risk. I think if that leads to that outcome then that will be disappointing because to migrate to new technologies takes time. I think if this bill cuts across that then that's a lost opportunity. But anyway National is supporting this bill and we look forward to seeing how it's put into place over time."