Coates BarryBARRY COATES (Green): Tēnā koe e Te Māngai o Te Whare. I am rising to take a call on three bills on regulatory systems and I want to concentrate on the Regulatory Systems (Commercial Matters) Amendment Bill. This bill is comprised of amendments to 16 Acts and as the preface says one of the reasons to amend these 16 Acts is to fix the mistakes and inconsistencies from previous bills. It does seem to me as a new member of Parliament that we spend an inordinate amount of time fixing mistakes from previous bills.The Green Party broadly supports this bill. We support it because there are elements in the bill that we believe will reduce compliance costs for small business. The Green Party supports smart regulation that reduces compliance costs especially on small to medium sized enterprises. We support regulation that is relevant and accurate fit for purpose and effective in promoting the public interest above all.In the consideration of this bill I want to focus on a couple of clauses in particular. The first clauses are clauses 93 and 94—that is the clauses that relate to the Financial Service Providers (Registration and Dispute Resolution) Act of 2008. The Minister for Economic Development has stated that these provisions these clauses are about ensuring the integrity of the Financial Service Providers Register. I do not think for a minute that the amendments in this bill will do that. The amendments in the bill will basically allow the disqualification of companies that do not have a disputes settlement process.However there are far deeper and more pervasive problems with the Financial Service Providers Register. The Financial Markets Authority has received 340 complaints in the form of misconduct reports emanating from 83 different countries about companies—financial service providers—that are registered under the New Zealand scheme. The pattern is this: dodgy companies overseas are able to lend credibility to their dodgy operations by saying: It's OK. We're a member of the New Zealand register of financial service providers." What does registration mean under that provision? Absolutely nothing. What kind of compliance measures are there for companies that would want to continue their membership of this register? Absolutely nothing.So what we have is companies around the world that are undertaking dodgy practices using lent credibility from New Zealand's reputation. We have had far too much of that in our financial sector. We have had the Panama Papers and the widespread perception that New Zealand has been a tax haven. We have had the delay in implementing anti - money-laundering provisions which are only today likely to come to the House despite calls for that to happen a very long time ago. And by the way there is the removal of New Zealand from the EU's white list of approved countries in terms of financial probity.So we have a pattern here. We have a pattern that liberalisation of our financial services sector has allowed a credibility to be given to dodgy companies that act in the name of being a New Zealand financial service provider on the New Zealand register. So we think that including just the power to deregister a financial service provider where it is not a member of a disputes settlement panel as provided under this bill is grossly inadequate to the task of actually restoring our integrity and our reputation internationally.It also gets worse. The Ministry of Business Innovation and Employment (MBIE) has put out a consultation paper on this very issue—belatedly—but unfortunately MBIE is not proposing in its consultation paper to put the disclosure requirements and transparency into legislation. It is proposing to have the power of that through regulation and from our perspective that is insufficient. There are deep concerns about the integrity of our financial service provision and that needs to be enacted in the form of legislation. It will not build confidence including in the issue of commissions for financial advisers and insurance advisers in particular over the sale of insurance.We do support this bill. We have concerns that the register of financial service providers does not go nearly far enough. However there are other things that we support in this bill. We broadly support a number of the provisions that will help small companies. We support the flexibility around financial statements and the alignment of small branches of overseas companies with small subsidiaries that have revenues of under NZ$10 million so that they no longer would require an audit to be undertaken for their New Zealand operations. They will however still have to prepare financial statements. We also applaud the flexibility for friendly societies and credit unions. In particular we support amending the New Zealand Superannuation and Retirement Income Act to provide education to the public about financial decisions to help build financial capability. We think that is a really important role of the commission. There are also levies under the Commerce Act that will support the work of the Commerce Commission.So there are a number of these changes that we do support. There is one other that I would like to name in particular which is the provisions to allow netting which has to do with keeping up with international best practice—particularly the reforms of derivative markets.If I could just conclude with a note on one other important part of this legislation it is the amendment to the Construction Contracts Amendment Act 2015. We support implementation of the amendment to this Act which as previous speakers have said protects the bonds of subcontractors. We recognise that the implementation of this provision which the Green Party has supported all the way along to protect subcontractors from people running off with their bond money—we applaud the fact that there is flexibility in the form in which that bond can be held. We pressed in the Commerce Committee for that to be an absolutely credible form of financial instrument that has integrity and is not subject to high risk and we are pleased that the bonds can be held in only a narrow class of highly regulated financial instrument which should provide that integrity while improving the flexibility and also allowing subcontractors recourse to a third party.So these changes are welcome. We support the overall legislation. We look forward to the Government taking forward many of the provisions that are not in this legislation particularly those that relate to restoring the integrity of New Zealand's reputation for financial services and our reputation for being a country that does not tolerate corruption. We have been lucky enough on one measure to be ranked highly in the world in terms of integrity and anti-corruption measures. Looking at the methodology of the study I am not sure that we deserve it but we need to not take this lightly and we need to ensure that our reputation is maintained. Thank you."