Connell Brian: Third Readings 
Connell Brian: Third Readings 
[Volume:616;Page:12424] 
BRIAN CONNELL (National—Rakaia) 
: 
 These bills amend 13 pieces of legislation and I think we have canvassed a fair debate on them over the course of the first and second readings and the Committee stage. I note that the legislation as it is now framed was sought and supported by the New Zealand Law Society and by the commercial sector generally. I believe it will make a positive impact on the business sector. Accordingly the National Party strongly supports it. 
As the Minister pointed out there are three broad aims and I will touch on those briefly. The first is to remove unnecessary compliance costs and I will come back to that. The second is to clarify ambiguities and uncertainties. I think the bill has gone a good way along the path to accomplish that. The third is to update law and remove conflict within and between legislation and I think that component has been dealt with rather well also. 
 The issue of compliance is what I want to discuss in a bit more detail. The Minister’s comments were commendable but I also have to say that he and his colleagues really struggle to get their heads around this issue of compliance. Under this Government compliance costs for the average sized business have soared to record highs. They are standing at $52000. I am sure members understand that for every dollar one spends one has to create about $7 worth of revenue to pay for it. That is the ratio that most businesses work on. It is a huge imposition to place on businesses. Whilst the Minister has said that he wants to see compliance costs reduced I do not see any evidence of that happening. New Zealand is drowning in red tape and compliance costs. That is OK when times are good. Most businesses can get thumped on the back shake their shoulders and deal with impositions of compliance costs when their revenue line is strong. However when times get tough as they are about to and when these costs have been institutionalised as they have been at record highs margins will get squeezed. I am not suggesting that many businesses will go belly-up but it will stop businesses from growing. That is the true cost of compliance—the havoc it is wreaking on New Zealand businesses. 
I also have to say that dealing with compliance is more than what this legislation purports to do. It is more than just amending this form or that form—playing around the margins as I call it. One has to stop doing things. The Employment Relations Law Reform Bill demonstrates that the Labour Party has a lack of empathy with New Zealand business when it starts to deal with these issues. In particular new subsection (2CD) of section 5 inserted by clause 90 of the Business Law Reform Bill which I addressed in the Committee stage is interesting. Whilst I am grateful to the Minister for taking a call and giving me some clarity around the definition and how it was arrived at as to who is wealthy in this country and who is not I think even he would say that his constituents in New Lynn would agree that people who earn $150000 a year and have net assets of $1.5 million are also wealthy. I wonder why there is a double standard in play and why those people who have in excess of $2 million of net assets those people who earn $200000 or more a year do not have the same protections as the people of New Lynn who have assets of $1.5 million. 
The other issue that I thought the Minister might have touched on—but I see he avoided it; he was very quick on his feet—was the inherent contradiction in the definition of what is wealth and what is not wealth when it comes to taxation. I am sure this is an issue that he has thought of. There is a contradiction in that earning $38000 means someone is wealthy. My constituents in Ashburton the many thousands of them who earn less than $38000 a year do not think they are very wealthy and those who earn $37000 $38000 $39000 or $40000 a year do not think they are particularly wealthy either. They want to know why on an income of $39000 they get taxed at the marginal tax rate but on $37000 they do not. They will be asking the question—and I think it is a very fair question—of the Minister as to why it is that someone who is wealthy when it comes to investor protection is not so wealthy when it comes to taxation. 
I am also concerned that many of the “landed gentry” as the Minister referred to some of my constituents might have farm values that have gone beyond the $2 million mark but I know that a lot of them have very poor cash flow and they really struggle. They are not necessarily financially wise. I cannot see why they cannot get some of the protections that those who have equally poor cash flows will now get under this legislation. I say to the Minister that double standards apply here. 
The other issue I want to touch on specifically is Supplementary Order Paper 152 which deals with void and voidable allotments. The Securities Commission has granted exemptions from the disclosure requirements of the Securities Act to Australian registered managed investment schemes and Great Britain collected investment schemes. It was discovered that a number of overseas issuers have breached conditions of the exemption notices under which they were operating. Most of these were minor breaches and more clerical in nature. The select committee moved rapidly and sensibly to deal with this. In most situations investors receive the required disclosure documents allowing them to make informed investment decisions yet some investors try to blame the poor performance of the funds that they invested in on the lack of disclosure or the clerical error that had not seen them registered. It is quite bizarre that some investors who were beneficiaries of funds that performed above the investment expectations were also caught in a situation where they were potentially being asked to repay some of those gains. The reality is that failure to file documents with the Registrar of Companies had no bearing on the performance of the fund and issuers found themselves in an impossible situation. 
As I have already noted the select committee moved to address this concern by introducing a procedure that grants relief to issuers similar to the Illegal Contracts Act but specifically designed for securities law. This will enable issuers to seek relief by going to the courts and will apply retrospectively. I have to say that generally I am strongly opposed to retrospective legislation but in this case it is sensible and it carries my support. As I said at the outset this legislation is sensible law. It is well supported by the commercial sector and the Law Society and accordingly it carries National’s support.