Bayly AndrewBUSINESS PAYMENT PRACTICES ACT REPEAL BILLFirst ReadingHon ANDREW BAYLY (Minister for Small Business and Manufacturing): I present a legislative statement on the Business Payment Practices Act Repeal Bill.ASSISTANT SPEAKER (Greg O'Connor): That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon ANDREW BAYLY: I move That the Business Payment Practices Act Repeal Bill be now read a first time.The Business Payment Practices Act Repeal Bill repeals the Business Payment Practices Act 2023 associated regulations and amendments in other Acts and revokes all associated regulations. The Business Payment Practices Act is not yet in force. It comes into force at the end of May. However the Act is not a solution to the very real problem with late payments and long payment terms by large market players. The Government is repealing this Act because we opposed it when it was debated in Parliament and because we believe it will impose unnecessary compliance costs on 3000-plus businesses without speeding up payment times.The reason we are repealing this Act under urgency is that the Ministry of Business Innovation and Employment (MBIE) is about to commit between $2 million to $3 million to develop an IT system to meet the requirements of the Act. If it was just $2 million to $3 million that may have been some concern but many in the industry suggest that the amount that MBIE will have to incur to put in place the system will be at a much higher cost. In addition there are many thousands of firms also poised to make IT spending to amend their systems to be able to record when invoices are received and when payment occurs. Of course that is a huge cost when you think about many large companies who have significant enterprise resource planning systems which are not easily modified quickly.The Act relies on small businesses also using data on an MBIE website. However many small businesses particularly when you think about ones in Porirua or West Auckland or in parts of Tauranga won't even know who MBIE is. And the thought that they would go and search on an MBIE website—would know where to look on that MBIE website—to find the specific data is something that is not actually a very strong argument. This undermines the utility of the Act as the information disclosed is highly unlikely to be used by small businesses in their decision making as to who they should do business with.The other aspect with the proposal in the Act was that the businesses the large businesses would be required to submit a return every six months but they would then have four months after that to file their return. In essence the information could at different periods of time be up to 10 months old when the small-business owner was actually trying to find out what is the current state of payment cycle for the large business. In essence it's an out-of-date information system that comes at high cost.The other thing which we argued strongly with the Government at the time as they railroaded this through the select committee was that anyone any small business even an individual and some of the members from across the way if they so chose could get on their phone dial into a website and go to one of the credit agencies—and there are four but just to name one such as Centrix—and they would be able to get that information on payment times in real time not 10 months' old in real time and actually much more comprehensively and on the payment cycles of a particular firm for a mere sum of $35. That is one of the main reasons why we want to repeal this legislation. Small businesses won't be impacted by this repeal because the Act hasn't come into effect yet. However they will get real benefit from other avenues that I am pursuing including firstly working with the ministry of finance to reinforce the requirement that Government agencies are to pay ordinary creditors within 10 working days. This should have been the start point for the last Government's response.Katie Nimon: That's right; lead from the top.Hon ANDREW BAYLY: Start leading from the top—start leading from where Government sits rather than imposing costs on businesses which is always the approach of the Labour Government when they thought about solutions. However if the Government wants to show leadership in this process we need to sort this out and that's what we will be doing.Secondly we are very keen—and personally in my responsibility as Minister for small business—to encourage e-invoicing. So we will be asking Government agencies to make sure that they prioritise e-invoicing and faster payments. That means the first emphasis for Government agencies is that they need to be send/receive capable—and I just note that e-invoicing is not doing an invoice and PDF'ing it and then sending it by e-mail. What that means is setting your systems up so you can transfer the data; there is no need to create invoices as such. That's the second requirement.The third thing is that we want to incentivise small to medium sized enterprises to also adopt e-invoicing when they are interacting with the Government. And I would remind the House that the Government spends about $51 billion a year on services and by incentivising businesses and small businesses that adopt e-invoicing—we will achieve this by reducing the payment time by Government agencies down to a five working-day time line thereby increasing the cash flow of small businesses.The fourth thing is we will be proactively publishing the Government payment times and making sure the Government adheres to its rules. And the next thing is we'll be expanding these arrangements to other Crown entities. We need to go through a period of consultation with them but we do not see or envisage any reasons why they cannot also meet the same requirements.The sixth element of the reforms is that I have announced alongside Kirk Hope from Business New Zealand that we will be working with it on an industry-led voluntary code similar to the Business Council of Australia's to put in place a supplier payment code to make sure large businesses across New Zealand are paying small businesses on a much more timely basis. And finally through my role as commerce Minister we will be raising awareness of existing redress options under the Fair Trading Act 1986 which is administered by the Commerce Commission who do a relatively good job. I would note that the Australian Government implemented a similar piece of legislation in 2020. There's been a recent review of that. It's found to be actually not working and in some cases has led to even worse outcomes for small businesses. There's a number of reasons why that has taken place. First of all there's an unrealistic assumption that small businesses can choose their customers based on payment performance information. The complexity and burden of reporting requirements of large businesses poor quality and utility of reported data the low awareness and usage of the register which was my earlier point and the dashboard by small businesses and other stakeholders and the lack of enforcement and compliance culture of the regulator—which is why we're going to address it by publishing the results of Government agencies.There is widespread support for making this change. People regard it as a practical approach to an issue that does need to be addressed. We don't want small businesses being burdened with slow-paying large companies. That's why we're putting in a much more comprehensive package around it. We want to see this go through. We want to make sure that we remove some of the unnecessary regulations. The economy is being strangled by a spaghetti of regulations requirements that are tying businesses in knots. We're committed to reducing regulation and repealing this unnecessary Act is a good first start in this. On that basis I commend the bill to the House.ASSISTANT SPEAKER (Greg O'Connor): The question is that the motion be agreed to.