Clark David: Companies and Limited Partnerships Amendment Bill — Second ReadingText is incorporated into the Bound VolumeClark David: Companies and Limited Partnerships Amendment Bill — Second Reading[Sitting date: 02 July 2013. Volume:691;Page:11428. Text is incorporated into the Bound Volume.]Dr DAVID CLARK (Labour—Dunedin North):The Companies and Limited Partnerships Amendment Bill is the daily bread of the House. It is the kind of work that needs to be done and needs to be progressed to ensure that the systems we have in place in this country are fair and are seen to be fair. It goes along with the good governance principles of transparency of information of lines of accountability and of clear sanctions and rewards—those things that make for good management practices.There is no doubt that we need this kind of legislation. New Zealand’s reputation has been at risk recently with increasing media attention around the issue of potential tax havens and around the way in which some of our company structures have been used—often by malicious overseas players—to hide things that should not be hidden. So at the heart of this bill is a desire I believe to progress issues of honesty transparency and fairness. From my perspective I would say that these are important things for New Zealand’s international reputation—the fact that we get these things right matters when New Zealand turns up at the international trade table and wants to argue that it should have a place there. New Zealand’s reputation as a good and proper place to do business matters in that international context.So what does this bill do? Well in terms of transparency it gives new powers to the Registrar of Companies to investigate and deal with non-compliance with the Companies Act. We ask ourselves: what is the alternative? The alternative is that the Registrar of Companies does not have powers to investigate and deal with non-compliance with the Companies Act—it does not make sense so of course we want to support this kind of measure. This measure includes the power to flag companies on the register that are under investigation currently thereby signalling the registrar’s intention and signalling that he or she has suspicions. We would hope that that power is used appropriately and we have got no reason to suspect at this stage that it might not be.In terms of consequences for breaches this legislation allows the removal of companies from the register if they provide inaccurate information or persistently fail to comply with the Act. There can be no disagreement with that across the House I do not think. Companies that fail to comply with the Act clearly ought to be facingconsequences. The registrar will also be able to ban the directors of such companies from taking part in the management of any company for up to 5 years.In order to avoid other unintended consequences—when one tightens up the law in one area suddenly an opportunity for someone who is mischievous might appear in another—the bill will make similar changes to the Limited Partnerships Act so that those misusing New Zealand companies cannot avoid the new regime by registering limited partnerships instead. Further in terms of transparency and in the interests of better information the bill will better align the Companies Act with the Takeovers Code to ensure shareholders understand the effects that changes in company control will have on the value of their shares. Again there is little to disagree with here.Then there is the further consequence of introducing criminal offences for directors who commit a serious breach of their duties to act in good faith and in the best interests of the company. I expect that there will be nobody in the House who will want to disagree with that either. When we see criminal offences by directors who commit serious breaches—they have a duty to act in good faith—nobody would want to see them getting away with that. Directors who commit offences of a serious nature will be liable for imprisonment of up to 5 years or for fines of up to $200000. These consequences this transparency and this provision for avoiding further unintended consequences is all something that the Labour Party wants to support so we will be supporting this bill from here as it stands.As Mr Foss has said New Zealand has always had a reputation an international reputation as a trusted place to do business. As I said in my opening statement this is something we need to defend heartily. The World Bank and the International Finance Corporation have ranked New Zealand the easiest of 183 countries in which to start a business. We in the Labour Party have concerns about this reputation being undermined. We note from the recent International Institute for Management Development competitiveness survey that New Zealand went down from 15th place in 2009 to 24th place today. So it appears that New Zealand’s competitiveness in the business sphere is dropping and interestingly—and in line with the policies put forward by this side of the House—research and development was recognised as a driver of that poorer ranking. That is a concern.There are things in the business environment that severely concern the Labour Party. We on this side of the House are concerned about small business and about the fact that it is getting harder and harder for those hard-working New Zealanders to get ahead. They put everything into a business often mortgaging against their house in order to start a new business and introduce their new idea. They take risks themselves and this Government is introducing additional compliance costs. It is making New Zealand a less competitive place to do business relatively. Recently it put on to businesses the cost of retrieving child support for overdue payments. It has put on additional compliance in respect of collecting information and in respect of cleaners and paper boys in the Budget before last.This is a Government that does not seem to be terribly interested in small business generally but at least in this piece of legislation it is trying to preserve our reputation as a trusted place to do business and that is why we on this side of the House will be supporting it. This international—and local—media attention so far has focused on overseas interests exploiting New Zealand’s incorporation process by using New Zealand - registered shell companies to undertake illegal activities. The Government has been aware of this issue for some time—how could it not be; it has been in the media—and this bill it seems is finally part of addressing this issue.It is unfortunate I have to say that the Minister of Commerce has been dragging his feet on this matter. Day by day our reputation is in jeopardy as further incidents come tolight over time. Former Minister of Commerce Simon Power was in fact the one who originally introduced this bill to Parliament and yet it has languished at the bottom of the Order Paper for its first reading for some time and only now is it proceeding through its second reading and through the House. So our concern from this side of the House is for the time it is taking for this bill to pass through the House.We will also know if I can take a minute in light of the fact that it is Māori Language Week to note te ōhanga—excuse my Te Reo; I am going to start that again—te ōhanga ripoata koretake rawa i ngā tau e 50 [the worst economic record in 50 years ]. This Government has the worst economic record of any Government in the last 50 years and so there are wider issues that we think need to be addressed. We think that issues such as pro-growth tax policy ought to be brought in. We think that universal savings ought to be brought in. We think that affordable housing is a necessity. John Key says that Kiwis are not paying too much for their power. He says that the power companies are on the right side of this argument.The ASSISTANT SPEAKER (Lindsay Tisch): Order! This is a second reading speech.Dr DAVID CLARK: These wider issues do affect New Zealand’s reputation as a place to do business and that cuts to the heart of this bill. We know that these policies and particularly the power policy if I may do introduce an element of competitiveness into business—a 5 to 7 percent reduction in costs for small business will make a serious impact on small business in New Zealand and that is Labour policy. Labour wishes to bring in New Zealand Power which will reduce the cost for small business.Jonathan Young: I raise a point of order Mr Speaker. The speaker’s time must be up. [Interruption ] Stick to the context.The ASSISTANT SPEAKER (Lindsay Tisch): That is not a point of order. I have indicated to the member that we are on a second reading speech and this is about a report back from a select committee. It is not about introducing new material. Dr David Clark 50 seconds remaining.Dr DAVID CLARK: Thank you Mr Speaker and I do need all of those 50 seconds because the issue of New Zealand’s reputation is what I am getting to—its reputation as a place to do business—and I am sure that speaker will get his chance to put the case for New Zealand having a good reputation. We will not argue that that is not important but he will struggle to defend the economic record of his Government which genuinely is the worst of any Government in the last 50 years in this country.So despite the damage being done—the Minister of Commerce has dragged his feet—we in the Labour Party are glad to see this bill going through the House. We will support this bill because we value New Zealand’s reputation as a place to do business as a good place to do business as a fair and trusted place to do business. It is important for our country going forward and so we thank the Minister for the efforts he is now making to progress this through the House.