Norman Russel: Financial Reporting Bill — First Reading 
Text is incorporated into the Bound Volume 
Norman Russel: Financial Reporting Bill — First Reading 
[Sitting date: 28 November 2012. Volume:686;Page:6906. Text is incorporated into the Bound Volume.] 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I rise on behalf of the Green Party to speak to the first reading of the Financial Reporting Bill. The Green Party will be supporting this bill’s referral to the Commerce Committee. 
What I like about this bill is that it has an element of proportionality. I think that around financial reporting an element and a sense of proportionality is important. That means that this bill essentially is going to be relaxing some company reporting requirements which we think is the right thing to do in certain circumstances. So non-large non-issuing companies will no longer have to prepare general purpose financial reports as they are currently required to do under the Companies Act. We think that that is a sensible move but we do think that we want to have a closer look at this bill in the select committee before we commit to supporting it through the rest of its stages because we do need to look at the other side of the equation to make sure that there is sufficient regulatory oversight around financial reporting. 
I mean one of the lessons that came out of the global financial crisis was the need to make sure that there was sufficient regulatory oversight of companies and particularly finance companies in New Zealand. So the general trend if you like in financial reporting has been towards tightening the rules around financial reporting for companies and particularly financial companies and deposit takers. This bill goes against that trend in the sense that there will be a number of companies now that are non-large non-issuing companies that actually will have a weakening of their financial reporting requirements. However we think that that does make sense and is a proportionate response. Legislation and regulation need to be smart they need to be proportionate to the risks involved and they need to be proportionate to the size of the company and the economic significance of the company. We think that the way in which this bill attempts to do that makes a great deal of sense. 
I also agree with the comments of I think it was Michael Woodhouse earlier that it needs to be tied to some changes around the Income Tax Act. The Institute of Chartered Accountants has done some really good work in terms of looking at how we can simplify income tax for small and micro businesses in order to make it easier for them. I think that if we have some of these changes tied to some of the changes around the Income Tax Act to reduce compliance pressure particularly on small and micro businesses then together they actually make quite a positive outcome. We are yet to see where the Government will go with the Institute of Chartered Accountants’ proposals. The Green Party adopted those proposals at the last election they were part of our election platform and we think they go alongside the kinds of changes that are being proposed in the Financial Reporting Bill. 
But perhaps the dissonant note if I may kind of hit one in talking about this—and it is slightly outside the scope of the bill probably—is that I do think that in other jurisdictions we have also seen the rise of what we might call environmental reporting—that is reporting against a set of environmental indicators. The UK has produced a voluntary set of reporting indicators. They are reporting guidelines for UK business. The Department for Environment Food and Rural Affairs in the United Kingdom has produced this set of voluntary guidelines in an attempt to provide some consistency in reporting against environmental key performance indicators. It would be great to see in New Zealand that we have made some steps in this direction. The Greens are not suggesting that it be made compulsory at this point so it would not be going into a piece of legislation but even having some voluntary guidelines to provide consistency around reporting against environmental key performance indicators I think would be a step forward. The United Nations Environment Programme has likewise produced some guidelines for reporting against environmental key performance indicators. I think it would be tremendous to see that level of reporting in financial reporting where it is appropriate as well. So in the future it would be great to see that as well. 
But in terms of where this bill goes we think that it is a sensible bill we will be supporting its referral to a select committee and we will be very interested to get the submissions at the select committee to see whether we have got the balance right between reducing the requirements for financial reporting for those companies that are non-large non-issuing companies but also making sure we have got sufficient financial reporting requirements in place where there is significant risk and of course for deposit takers and issuers of capital instruments. For those reasons we will be supporting its referral to a select committee. Thank you.