Lotu-Iiga Sam: Financial Reporting Bill — First Reading 
Text is incorporated into the Bound Volume 
Lotu-Iiga Sam: Financial Reporting Bill — First Reading 
[Sitting date: 28 November 2012. Volume:686;Page:6915. Text is incorporated into the Bound Volume.] 
Peseta SAM LOTU-IIGA (National—Maungakiekie) 
: 
 It is a pleasure for me to speak on the first reading of the Financial Reporting Bill. I also want to thank the Minister of Commerce the Hon Craig Foss who is bringing this bill to the House. The bill is commendable because it focuses on the issues that matter to New Zealanders. That has been a great focus of this Government—on boosting economic growth creating jobs and reducing compliance costs. 
I find it quite ironic that the last speaker Dr David Clark talked about being born into a family of business people. He did not say what they did or who they were but he said he was born into a family. That is about the closest that that speaker has got to a business person. With the exception of Clayton Cosgrove who stood up this evening I cannot see many Labour members over there who have actually run businesses who have actually been inside businesses and created jobs. They have been academics union officials and parliamentary secretaries. That is not going to cut it with the New Zealand public. They spend most of their lives tearing down businesses tearing down jobs and tearing down opportunities for New Zealanders and their record has been quite clear. They are against mining—they are against mining. They do not want mining—an industry that creates jobs. They have been against the movie industry. And tonight  
The Hobbit 
 premiere is on but they are against that too. They are against convention centres as well I have heard. I will tell you what: if it met the interests of the unions they would be against the All Blacks. 
Hon Members 
: Oh! 
Peseta SAM LOTU-IIGA 
: That is right—you would be against the All Blacks. 
This bill is about maintaining a strong economy that can provide financial security for families real opportunities for our young people and safer communities because that is what a strong economy does. For the past 4 years this Government has been working hard to simplify and improve the integrity of our financial system. How have we done that? We have actually worked across this House working on financial service providers legislation working on the financial markets legislation and working on the Financial Markets Conduct Bill and securities trustees legislation. We have done a lot of work in this area and we continue to do it with this bill. 
So this bill is a once-in-a-generation opportunity to update financial reporting law in this country. And what does the bill do? Well the main purpose of the Financial Reporting Bill is to improve our financial reporting system. That is right. It will do this by making all general purpose financial reporting consistent with the primary objective of that system. Do members opposite know what that system is? Do they know what it stands for? Not one person across the aisle has actually talked about it. Well the objective is to provide information to external users who have a need for an entity’s financial statements but are unable to demand them. That is right. How does this bill do it? Again I have not heard one statement from across the aisle here about how this bill will do it. 
What does the bill do? It continues the External Reporting Board and defines its functions and powers. That is right. It also provides for the issue of financial reporting standards and auditing and assurance standards. That is right. Just like in education and just like in the building industry we believe in standards. 
Thirdly it provides for auditor qualifications and other standard provisions relating to financial reporting duties under other enactments. So this bill cuts compliance costs. It cuts red tape that is faced by many of New Zealand’s small and medium sized companies. When I talk to the businesses in Maungakiekie—I used to run a business in Maungakiekie—that is what they say to me: “The number one priority please is to reduce compliance costs reduce red tape and let us get on with business.” That is right. These companies in particular will gain the benefit of much more simplified financial statements which will help build productive and efficient businesses as well as a productive economy. 
So the main purpose of the company’s annual report—and Mr Cosgrove knows this; his colleagues might not know but he certainly does—is to provide accountability by senior management to shareholders. But it is not just shareholders. They should provide that accountability to creditors as well as to other stakeholders out there. But the great majority of our New Zealand companies are small and medium sized enterprises and the managers of those companies are also some of the shareholders so there is unlikely to be financial reporting accountability in practice. We know that. 
So the small to medium enterprise changes in the bill mean that the Inland Revenue Department will need to beef up its company tax filing requirements and we know that the separate empowering legislation will be introduced by the Hon Peter Dunne later on at a later date. The bill also includes a new power that allows the External Reporting Board to issue accounting standards for registered charities. We know that it is a $1.2 billion industry. We know the great work that our charities do out there. The effect that this will have is it will benefit many of the preparers of those accounts for these charities who have limited accounting or bookkeeping skills because it will reduce the uncertainty of what is expected of them. 
A Supplementary Order Paper will be released when the bill is introduced which will transfer financial reporting obligations to issuers banks and insurers from the Financial Reporting Act to the Financial Markets Conduct Act. This change will mean that the financial markets conduct enforcement liability regime will now apply. 
This is a good and sensible bill. We have clearly laid out the case for that on this side of the House. It will bring down costs. It will streamline compliance to our small and medium sized enterprise sector which can be only beneficial to our economy. We on this side of the House are 100 percent focused on allowing businesses to get on with the job of creating jobs and I commend this bill to the House.