Clark DavidINCORPORATED SOCIETIES BILLFirst ReadingHon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): I present a legislative statement on the Incorporated Societies Bill.DEPUTY SPEAKER: That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon Dr DAVID CLARK: I move That the Incorporated Societies Bill be now read a first time. I nominate the Economic Development Science and Innovation Committee to consider the bill. I'd like to start with just a little bit of context for the bill. The bill speaks to about 24000 incorporated societies in New Zealand. What we're proposing to do right here is to replace an Act the Incorporated Societies Act that was passed in 1908. As they say good things take time. Incorporated societies are governed through a democratic process. They tend to be hands-on organisations and you could contrast them say with trusts which are typically not so democratic. The trustees of a trust are obliged to work in the names of the beneficiaries whereas an incorporated society has a democratic process typically committees and the like. If you put a different cut on it and look at registered charities around 6000 to 7000 of these are incorporated societies in New Zealand. In fact over 55 percent I'm advised are trusts; only around 30 percent of the registered charities in New Zealand are incorporated societies. Broadly there are two types of incorporated societies. There are those which are focused on the interests of the members and that's things like sports clubs cultural clubs recreation clubs—some marae are incorporated societies—and they're looking out for the interests of the members of that incorporated society. So that's about 45 percent I'm told of incorporated societies. The other lot about 55 percent are there for the wellbeing of the greater good broadly spoken. So they could be environmental protection societies. They could be animal welfare groups. They could be industry associations political parties trade unions. There are a lot of different kinds of incorporated societies. The bill that we're putting in place does retain the best of the 1908 Act. It codifies case law to make it more accessible and it fills in some gaps where the 1908 Act and indeed the case law that followed were underdeveloped. A lot of it's modelled on the Companies Act so it's brought up really in parallel with the Companies Act—for example conflict of interest declarations. Directors' duties in this bill are called officers' duties" but they look a lot like the ones in the Companies Act. There are some major thrusts in there. The first is that we're reducing the minimum number of society members from 15 to 10. We are introducing formal officers' duties. As I said they are very similar to the ones in the Companies Act and with that comes of course responsibilities. Another one which members of this House will recognise I am sure is we are requiring that societies include procedures in their constitutions for resolving disputes. I hazard to say that many members of this House here today will have had constituents come to them with disputes from incorporated societies within their own electorate areas or broader interest areas because where there are not dispute resolution processes within incorporated societies this quickly escalates. They come and seek advice from MPs. Often they get legal advice from wherever they can get it and often these things end up in the courts. So we are requiring that there must be procedures in their constitutions for resolving disputes. The other major thing that this does is with the exception of some smaller incorporated societies require that they keep financial statements in accordance with accounting standards that are issued by the External Reporting Board the XRB. That is I think a prudent thing to do particularly for bigger incorporated societies. So as I said at the outset the 24000 incorporated societies in New Zealand are commonly known as clubs associations or federations and they operate for no financial gain for their members. They arrange the sporting events for our kids the coaches in our clubs the environmental petitions that they bring and the enriching of marae with Māori cultural values around the country—so lots of things that we could recognise as very good for our society. It's important to have up-to-date legislation in this area. To illustrate if I may how out of date this legislation has become—I mean I can tell you it's 1908 but to pick an example the maximum penalty for the late filing of financial reports as recorded in the bill is indeed a shilling a day. That speaks I think to a different time. There's also in the Act a fine of up to £100 for those seeking pecuniary gain from society members. So those kinds of things can be brought into the modern era. I think where these issues though really touch us most as members of Parliament is around the disputes aspect. A requirement to have a disputes resolution process rules which meet national justice standards will help keep disputes away from the courts and that's I think a good thing. Incorporated societies like Grey Power and Citizens Advice Bureau have shown support already for having such dispute resolution processes and for keeping things out of the courts. I've spoken already briefly about the duties for officers that parallel those in the Companies Act sensible moves to have financial statements that reflect the XRB and so on. All of these things have developed in a process. There was a Law Commission report written in 2013 which covered off a whole lot of these issues and I want to acknowledge the work that's been done by Ministers since then. Most recently of course Minister Faafoi has pushed this issue along and I do want to acknowledge his stewardship of this bill up until this point making sure that it lands in a good place and a place where I hope it will gather widespread support across the House. In the time remaining I do want to also acknowledge and thank the various incorporated societies across New Zealand. I asked my office to pull together a list of some incorporated societies just to give a flavour of the kinds of organisations in our community and so I'll just mention a couple of these: the Otago University Debating Society Inc. the Otago Boating Club Inc. the Otago Badminton Association Inc. the Otago Deaf Society Inc. the Otago Rowing Club Inc. the Otago Country Music Club Inc. the Otago Electric Vehicles Society Inc. and the Otago Medical Research Foundation Inc.Hon Member: Anything further north?Hon Dr DAVID CLARK: I could go on. There are many. In this random sample obviously a few of them are close to home for me. I could go on to the Dunedin Kindergartens Inc. and the Dunedin School of Judo and so on. But you get the picture: across New Zealand there are organisations clubs associations societies that are contributing to the good in their society. The Hokitika Potters Society Inc. will be of interest to my good friend the Minister over there. The Gore Musical Theatre Inc. I'm sure will be of interest to some across the House right there. The Christchurch Irish Society Christchurch Women's Refuge—I mean many of these organisations are organisations that we know and deal with as MPs that support citizens across our society.Kieran McAnulty: What about Masterton?Hon Dr DAVID CLARK: I don't actually have an example from Masterton in front of me but I invite the member to suggest a few—Kieran McAnulty: There's heaps.Hon Dr DAVID CLARK: —because there's bound to be heaps of good local folk contributing there through those things. Bowls clubs rugby clubs across New Zealand bridge clubs—the Levin Bridge Club Tennis Otago Inc. Nelson Netball Centre Inc.—all of these people are contributing to our society and it's appropriate that they have modern legislation to support them in their efforts to make sure that the dispute resolution processes that they need are in place to make sure that their financial statements meet certain standards. I should mention that for smaller outfits they will not have the same requirements on them. But we do expect of course transparent reporting none the less. The decision was taken not to include all societies because we recognise that some smaller ones will not necessarily have the ability to produce those high-level accounting standards and I think that's a reasonable way to approach this. Of course all these things can get hashed out in select committee and I do commend the select committee to this work because I think it's very important work. As I say 1908 it's taken a while to mature into this new legislation but I think it has been well worth waiting for. Thank you Mr Speaker; I commend this bill to the House. DEPUTY SPEAKER: The question is that the motion be agreed to."