Business Law Reform Bill — First Reading 
Business Law Reform Bill — First Reading 
[Volume:632;Page:4236] 
Business Law Reform Bill 
First Reading 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I move  
That the Business Law Reform Bill be now read a first time. 
 At the appropriate time I intend to move that the bill be referred to the Commerce Committee and that the committee present its final report on or before 19 October 2006. 
The Business Law Reform Bill is designed to give effect to the Government’s overall objectives to clarify and update the intended purpose of various statutory provisions remove unnecessary compliance costs and ensure consistency between different legislative requirements. I am pleased we have been able to effect such substantive change as well as introduce technical amendments through an omnibus Business Law Reform Bill. May I take the opportunity of thanking other parties in this House for the opportunity to introduce a Business Law Reform Bill. It is a good opportunity and one that I hope we will see expanded to allow for other subject areas to take similar advantage and also to allow for regulatory improvements to occur in a timely fashion. 
This bill represents a stage in the incremental improvement of existing business law to achieve the goals of clarity efficiency and effectiveness which I am sure all parties will agree with. This is the third Business Law Reform Bill to come before the House. The bill includes amendments to the Financial Reporting Act 1993 the Companies Act 1993 the Friendly Societies and Credit Unions Act 1982 the Insurance Companies’ Deposits Act 1953 and two technical changes to the Dumping and Countervailing Duties Act 1988. 
As the explanatory note to the bill states: “Most of the amendments contained in the bill are based on suggestions from business law practitioners enforcement agencies and the business community.” One of the key aims of the bill is to reduce compliance costs resulting from administrative procedures. In this regard the bill proposes to exempt some overseas companies from some of the reporting requirements imposed on those companies registered under the Companies Act. 
Another key aim of the bill is to improve the clarity of our existing commercial law statutes. The proposed changes to the Financial Reporting Act 1993 are aimed at generally improving the workability of the financial reporting system and reducing business compliance costs. In particular the bill will remove excessive compliance requirements on some small companies and many overseas companies. As the Minister for Small Business I am very pleased to see more compliance costs being reduced for small companies. 
The bill will also improve enforcement by introducing an infringement notice system for company directors who fail to file their company’s financial statements with the Registrar of Companies by the due date. Overseas it has been found that if directors themselves face the liability the financial statements get filed. 
It is important that the bill adds an exemption-making power to the Financial Reporting Act before international financial reporting standards come into force on 1 January 2007. The Accounting Standards Review Board will have the power to grant limited exemptions from specific requirements of the Act where compliance by overseas companies would be unduly onerous or burdensome. 
In addition the bill will make amendments to the Financial Reporting Act to deal with the problems of excessive filing requirements for subsidiaries of subsidiaries of overseas companies. The Financial Reporting Act currently requires financial statements for every individual company to be filed with the Registrar of Companies when all that is required are the statements for the parent company and consolidated statements for the group of New Zealand companies. The bill amends this problem. 
Changes are also proposed to the exempt companies regime. One change will be to increase the number of companies qualifying for the regime. Companies will have to meet a two out of three test meaning that the vast majority of small companies will be able to produce financial statements in a simple format therefore reducing compliance costs. Proposed changes to the Companies Act 1993 further improve enforcement by extending the management and director banning provisions to persons who have been banned in certain overseas jurisdictions. The exemption of some overseas companies from some of the filing requirements imposed on overseas companies registered under the Companies Act will further achieve a reduction in compliance costs. Both changes will improve the trans-Tasman business environment and promote single economic market objectives between New Zealand and Australia. 
In a similar regard the changes to the Insurance Companies’ Deposits Act 1953 will prohibit an entity incorporated in New Zealand where that entity does not offer insurance in New Zealand from using the word “insurance” or similar in its name or holding out that it is a New Zealand insurer. It will also increase the penalty for non-compliance with the Act from $100 per day to $1000 per day. This is to prevent entities from representing that they are supervised under New Zealand’s insurance regulatory regime when in fact they are not. This is necessary to prevent damage to New Zealand’s reputation internationally. 
The bill further seeks to improve the efficiency of the Friendly Societies and Credit Unions Act 1982 and give credit unions more room to grow their business without introducing unmanageable risks to their members. In addition the field of membership of a credit union will be broadened by extending membership to charities and incorporated societies affiliated with the common membership criteria of the union. The bill also gives credit unions and their associations more flexibility on administrative matters such as the ability to determine the minimum deposit holding of each member and removing compliance costs when seeking to broaden their service base. 
Changes to the Dumping and Countervailing Duties Act will allow the Minister of Commerce to specify the date from which new and reassessed rates of anti-dumping and countervailing or anti-subsidy duty will apply. The bill will also exclude the Christmas break period from the statutory time frame for the completion of dumping and subsidy investigations. This will bring the Act into line with other comparative New Zealand business statutes. 
There are cumulative costs of complying with legislation and difficulties in reconciling different legislative requirements. In aggregate the amendments will reduce some of these costs to promote the efficient use of economic resources and enterprise and innovation in the economy. The benefits provided by the bill are tangible because the business sector legal practitioners and enforcement agencies have put them on our list of things that they believe need to be changed. The introduction of this bill shows that this Labour-led Government is prepared to invest in the incremental improvement of the legal environment for business. This bill is very good for business. 
PANSY WONG (National) 
: 
 The National Party has agreed to support the Business Law Reform Bill in its first reading and in going to the select committee on the ground that as the Minister Lianne Dalziel has just reinforced it is about technical amendments. But I am a bit disappointed that the Minister did not take the opportunity to clarify an issue that has just been brought to our attention. 
The members of the New Zealand Captive Insurance Association are engaged in being what we commonly know as self-insurers—that is within a group of companies they pool their premiums and invest as a more cost-effective way to manage their risk. I understood that the Minister was very supportive of that industry which is a growing industry. They were told by a ministry official that the changes in this bill to the Insurance Companies’ Deposits Act 1953 would actually be interpreted as stopping any further non - New Zealand parent organisations from forming captives under the Act and that existing non - New Zealand owned captives would be struck off the Companies Register which seems to be a conflicting undertaking from the Minister and the officials. 
I hope the Minister or officials will take a very early opportunity at the briefing to the Commerce Committee to put those doubts to bed so that the industry does not think that quite a dramatic policy decision has been made. I have no idea whether that was actually what the Minister had in mind in stopping entities from using the words “insurance” or “assurance”; nonetheless it demonstrates that after a few years in Parliament one gets a bit cynical and sceptical about the phrase that a bill is “only an omnibus bill”—that is only for technical amendments—and that it will not cause drastic changes. I hope that very early on at the Commerce Committee consideration period officials can clarify that for members and I am sure the industry will be keen to make a submission on that part. 
The other interesting issue I would like to raise is the changes to the Friendly Societies and Credit Unions Act 1982. National welcomes and supports those changes but I learnt from that sector that the Hon Jim Anderton had promised those changes a few years back. Its members were expecting those changes a few years ago before the establishment of Kiwibank. Friendly societies and credit unions believed they were able to establish themselves ahead of Kiwibank and take advantage of expanding their businesses. So that is not exactly what I would call an omnibus bill being used to fast track the business community’s concerns or needs. 
In talking about the priority of the Government in terms of how it addresses some of the more urgent issues I hope the next speaker from Labour might enlighten us as to why the securities legislation that was reported back to the House last year and that has gone through its second reading which National supported is still sitting on the Order Paper without any urgency being paid to it because within the Securities Legislation Bill there is a provision for disclosure with regard to financial advisers. I want to take up that issue because the Minister of Commerce has assured Commerce Committee members that she will address urgent requests from the business community. We learnt recently that there has been turmoil within the finance sector. Indeed one of the finance companies Prudential Financial has gone into insolvency. It is alarming that after that finance company withdrew its prospectus some financial advisers advised that an additional $9 million be invested in it. It is quite outrageous that financial advisers had no idea that a prospector had been withdrawn and as a consequence $9 million was invested after the company had pulled its prospectus. The Securities Legislation Bill would have provided for additional disclosure of the qualifications and history of those financial advisers. 
So in talking about addressing some urgent issues I tell members that I am surprised the Securities Legislation Bill is still sitting on the Order Paper. I am sure my colleague Brian Connell when he takes a call might give us an explanation as to why that particular bill did not receive urgent attention. I understand that in the bill there is a tightening-up of the definition of an insider trader. Such a definition would have covered the situation when the Hon David Cunliffe when giving an interview to the Bloomberg News agency commented on Telecom’s future dividend policy being on a reduced scale. That would have got him into trouble if the Securities Legislation Bill had been passed. I wonder whether that was part of the reason why the Government is holding back on the passage of that particular bill. 
I also want to comment on the Minister’s statement that the Business Law Reform Bill is about the reduction of compliance costs to the business community. I will share with the public some of the statements made in this bill about the benefits of the changes. We are looking at statements about options to reduce Companies Office administration costs for example but the amount will not be able to be determined until some modelling has been done. The explanatory note of the bill states that option 6 will add to the Accounting Standards Review Board’s range of functions but it is unlikely to be used often. Then there are general statements like: “There will be costs in administering the infringement notice system. However that will be partially offset by the reduction in court enforcement.” There is also the general statement: “The business community is the major beneficiary of the proposed changes. Option 2 will reduce compliance costs …”. 
I remember the Minister of Commerce coming before the Commerce Committee during the estimates session and assuring the committee that we could look forward to some very robust tightening of the compliance cost statement and that members will be presented with a lot of details—that in fact it will be quantified; it will not consist of warm and fuzzy statements like those I have just shared with the public. So I think we are still light in the area of making sure that officials have indeed paid attention to ensuring that a robust cost and benefit analysis is being carried out. I cannot wait for the Minister to set up her so-called independent advisers attached to the select committee to help us scrutinise how robust those changes to the compliance cost statements are. 
National will be supporting this legislation going to the select committee but we had better have some good answers to the issues we have raised during this first reading. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I seek leave of the House that the motion at the end of the debate on this bill include the following words: “and that the committee have the authority to meet at any time while the House is sitting except during oral questions and during any evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders192 and195(1)(b) and (c).” 
Mr DEPUTY SPEAKER 
: Leave has been sought for that course to be followed. Is there any objection? There appears to be none. 
MARYAN STREET (Labour) 
: 
 It is my pleasure to speak in support of the Business Law Reform Bill. I just want to take a brief call on it and make a couple of points. The first is that it is an omnibus bill and although my experience in these matters is very slight it seems to me it is a very suitable and efficient use of Parliament’s time to use mechanisms such as an omnibus bill to deal with a number of related amendments to a series of individual Acts. Clearly under the Standing Orders the House is able to deal with all of these points at once and it is sensible to move in that way it seems to me when the changes are all of a piece. 
The Minister in her first reading speech mentioned five Acts that are involved in the application of this omnibus bill. I congratulate the Minister on being able to pull these amendments together in a bill like this rather than dealing with five separate pieces of legislation which would take up an inordinate amount of time and one could wish they would be collapsed into one bill. So I think this is a very good move and is a sensible and an efficient use of Parliament’s time. I hope that this House will move to practise this more often where it is relevant and useful to do so. 
There is no doubt that business law needs to be reformed. We hear constantly about compliance costs from small businesses which do comprise the majority of New Zealand’s businesses even though they do not employ the majority of New Zealand workers. This bill is this Labour-led Government’s response to some of the issues that we hear being raised by the business community particularly around compliance costs. Other mechanisms are also being used at the moment to address issues of compliance and to address other issues of reform in the business sector. The Minister has a number of activities under way at the moment that are well known to this House but probably the one that is most pertinent to the current bill under discussion is the review of financial products and providers. I believe it is undergoing a substantial consultation process and I look forward to the results of that process and to good constructive measures emerging from it that will benefit business in New Zealand. 
A number of the suggestions in this bill have come from business practitioners. Sometimes they have been from business law practitioners; sometimes they have been from enforcement agencies. But they have also been from the business community and that is a testament to the Minister’s work in getting out and talking to businesses around New Zealand. We have been attentive to business needs and have been responsive to the concerns that businesses have raised. 
The previous speaker my colleague Pansy Wong referred to some inherent cynicism that members of this House may have with regard to things that are called technical amendments. I look forward as a member of the Commerce Committee to scrutinising this bill and the submissions that come before the select committee as this bill progresses. The select committee is the place where that scrutiny is to occur and is the place to dispel any inherent or long-held cynicism about such things so we look forward to doing that. 
Amendments are also intended in this bill to clarify law statutes by removing conflicts within and between existing legislation and this bill could in fact be renamed the “Compliance Cost Reduction and Increased Flexibility Bill.” It could be a constructive suggestion arising from the select committee that the bill be renamed to reflect the true purpose and the actual achievement of the bill: compliance cost reduction and flexibility. 
We look forward as a Labour-led Government to implementing these amendments for the sake of better business in New Zealand. 
BRIAN CONNELL (National—Rakaia) 
: 
 Thank you Mr Assistant Speaker for the call on the Business Law Reform Bill 2006. I have to say that giving a speech after my esteemed colleague Pansy Wong has spoken is always a difficult experience but I will do my humble best to bring some further clarity to what is otherwise fairly light legislation. 
As we have heard this is an omnibus bill that makes a number of changes to commercial legislation suggested we are told by Government officials lawyers and business people. An omnibus bill is the preferred modus operandi by the current Minister of Commerce but of all the changes that have been suggested by the Quality Regulation Taskforce that this Minister has put in play not one of those recommendations has been captured by this legislation. 
I make it clear that National does support this bill and we do so for a number of reasons. The bill purports to reduce compliance costs and within reason any bill that purports to do that will get serious consideration from the National Party which is why we have said we will support it as far as select committee. It will boost law enforcement efforts we are told so we can tick that. It will protect New Zealand’s international commercial reputation—well that is a big claim so let me amend that by saying we believe that it might help. More important it provides the National Party with the opportunity to discuss the broader issues of compliance costs. 
Chris Auchinvole 
: The box tickers! 
BRIAN CONNELL 
: The box tickers as my colleague Mr Auchinvole tells the House. 
The explanatory note states: “The Bill addresses business community concerns with business law legislation as identified by consultation.” But wait there is more. We are told: “These are the cumulative costs of complying with legislation and the difficulties in reconciling different legislation requirements.” Well we can all rest much easier now knowing that we have a definition around compliance costs that tells us the costs are born from having too much legislation introduced into the House. I will come back to that point in a few minutes. 
 The bill actually tackles a very limited range of compliance costs despite the claims by the Government. We are told that the Companies Act 1993 will be amended to create filing exemptions—and one can think the Minister must have had one of her colleagues in mind when she wrote that exemption. 
Pansy Wong 
: Who? 
BRIAN CONNELL 
: Well I can leave it the House’s imagination I am sure. We are also told that filing exemptions to some classes of companies also provides the option of electronic accounts for shareholders. Well that is OK but is that really a big deal when huge numbers of businesses in this country are being choked by compliance costs? 
Let me pick up the issue that my colleague Pansy Wong was going to raise. In the past 2 years this Government has passed a whopping 312 new Acts and 875 new regulations. Labour proclaims that it is the party that is serious about reducing compliance costs. Yeah right! We are told by Business New Zealand that in the last 7 long years 2000 new Acts have been introduced by this Government yet the Minister has the temerity to stand up in this House and say: “Trust us we are reducing compliance costs.” Please forgive me for not being able to get the laughter out of my voice. 
In 2005 the average firm in New Zealand shouldered compliance costs of $53000. When my colleague Katherine Rich asked the Minister at question time today to explain the 17 percent increase from 2003 the Minister said the member had forgotten about 2004. The Minister did not attempt to answer the question because she simply could not explain away a 17 percent increase in compliance costs over 2 years and still argue cogently that Labour is all about reducing compliance costs. For small firms—and that is five employees or fewer—compliance costs have rounded out roughly at $3604 per employee. Those businesses simply cannot comply. It is not that they do not want to comply; they simply cannot afford to. 
The compliance costs targeted by this bill are merely the tip of the iceberg. The bill does nothing to address the underlying problem of the amount of legislation this Government passes every day in an insidious way. Government members get up and talk about compliance reduction but then they actually pass legislation that heaps more costs on to unsuspecting taxpayers. The problem is that the members of the Government have no business experience so they cannot intellectualise the problem of compliance costs. 
Chris Auchinvole 
: They don’t understand it. 
BRIAN CONNELL 
: No they do not. They can talk about it but they simply do not understand it. If they want to reduce compliance costs they simply have to stop doing things. 
Chris Auchinvole 
: They’ve got to reduce compliance. 
BRIAN CONNELL 
: As my colleague says they actually have to reduce compliance. 
Let me give the House an example; let me tell the story about my pieman. I went into a bakery in Ashburton about 2 weeks ago. I went up to the counter; I was buying a pie—quite unashamedly buying a pie because there are great pies in the Ashburton bakery. The owner of the business served me and I asked an innocuous question about how he was. Using language I cannot repeat here because it is not particularly parliamentary he said he was not happy. I asked why as a concerned constituent MP would. He told me to come into his office and he would show me. So I went into his office and it actually looked quite pristine. He asked what I thought and I said it looked clean. He said yes that was because he had just had the walls painted and that just before I came in the health inspector had walked in and threatened to close down his business which includes the 42 employees who work there because he did not have the 47 certificates on his wall because he was painting it. The owner asked me a very good question which was what difference it made to the quality of my pie that he did not have the certificates on his wall. He asked whether it was not enough that he had them. But no it was not because they were not on display. 
Bob Clarkson 
: He should have painted over them. 
BRIAN CONNELL 
: The suggestion is that he should have painted over them then they would still have been on the wall. I thank Mr Clarkson for that very good idea and I shall take that back to the bakery owner. 
Let us have a look at the Quality Regulation Task force that the Minister is the champion of. None of the recommendations in the bill actually come from the latest Quality Regulation Taskforce review so one has to ask what the purpose of the review was. I am struggling for an answer—I am not sure there was a purpose. But let us ask the question of what was wrong with all the other reviews that took place prior to the latest one—the first and second Small Business Advisory Group reports the McLeod Tax Review and the report on the Ministerial Panel on Business Compliance Costs which I want to come back to. Why were some of those recommendations not included in this bill? What was wrong with all the countless other reviews and reports that have been done in the last 7 years? The problem with what the Minister of Commerce is suggesting is that the issues of tax accident compensation the Resource Management Act and labour law are not included in this legislation. The Dunne report which was the report on the Ministerial Panel on Business Compliance Costs that was commissioned by this Government in 2000 stated that it recognised 162 compliance issues that needed urgent attention. Of those 142 came under tax accident compensation the Resource Management Act and labour law yet the Minister of Commerce has not addressed any of those issues at all. I have to ask why the Government is asking the same questions but expecting different answers. Members should think about that. Why keep asking the same questions but expecting different answers? It simply is not going to happen. 
I conclude by saying that National will support this bill going to a select committee but while compliance costs are being fiddled with like this I doubt that it will get our support to go past the select committee stage. 
R DOUG WOOLERTON (NZ First) 
: 
 New Zealand First is happy to support this bill. We are told by the Labour speakers that the bill is to simplify business transactions in New Zealand. We are told by the National Party that the Government has passed far too many regulations and Acts—I do not know how many laws Mr Connell was talking about. But there is one thing I have always noticed about regulation and I noticed it again a couple of weeks ago after the Eden Park rugby game when people in some quite select corporate boxes came down with the dreaded lurgy—in my language they got the guts ache after eating oysters imported from Korea. Oh my goodness gracious me! All of the business people who are calling for regulation to go out to business—[ 
Interruption 
] I am talking about regulations and Acts. All of these people who are opposed to regulation and import duties and who want free-trade barriers to open the whole world up were all calling for regulation. They were not only calling for regulation but they were calling for bans on oyster imports from Korea—and heaven only knows what. So it is different when it comes to other people. 
Mr Bob Clarkson is looking at me from across the other side of the House—and a horrifying sight it is too. But I have to say that Mr Clarkson is a man who is reputed to know how to turn a dollar. I applaud him for that I have to say. I know he is of a generous nature. I have not seen that myself but they tell me it is true. He is one who is opposed to regulation. He is one who thinks that Government should get out of business. He is one who thinks that local bodies should not involve themselves in his business in any way. There should be no borders or restrictions to town development. We should be able to buy up greenfield sites and put houses on them. We should be able to do all those things according to Mr Clarkson and in many cases I agree with him. But I tell the House one thing: when it comes to selling an amenity for top dollar to a council or to the Government Mr Clarkson is right there saying: “This is something that is needed for Tauranga. This is something that Tauranga must have. And I am the man to sell it to them.” Again we see an example of people who are intent on getting rid of regulation decreasing the size of the Government and getting the Government out of business until it suits them. 
New Zealand First supports this omnibus bill which attempts to lower compliance costs. I am not so sure that it will and sadly I will not be on the select committee but I hope that it does. I hope it simplifies doing business. I see in the explanatory note of the bill that it does away with the need for reports to shareholders and that sort of thing to be in full colour brochures with many pages. They are able to be done by electronic means—or by letter or pigeon or something else; I am not sure. But I have wondered about the cost of those very fancy reports. We are getting them—and Mr Williamson will be upset about this—from what used to be called State-owned enterprises and are now called Government agencies. We are getting pictures of the chief executives in various positions—swinging on a swing walking through a forest picking up leaves and those sorts of things—and we are seeing pictures of their families which of course has nothing to do with the business at hand. It is a practice that I deplore and New Zealand First deplores because it is wasteful self-aggrandisement. So we welcome the fact that at least the bill allows shareholders to get those reports by email. 
Hon Maurice Williamson 
: What’s that got to do with Korean oysters? 
R DOUG WOOLERTON 
: It is all about regulation and people wanting regulation as soon as they get the guts ache but not wanting it when they get better again. That is what the Korean oysters issue was all about. 
So with those inspiring few words to the select committee I will resume my seat. 
NANDOR TANCZOS (Green) 
: 
 I intend to take only a very short call simply to indicate that the Green Party is supporting the bill to the select committee and to draw attention to a couple of things we have an interest in and support. As a general comment I think the bill is useful. Perhaps it does not go as far as some members would like but it does make at least some attempt to reduce some of the unnecessary compliance costs for business. That is always a useful thing to do. I draw attention to Part 4 “Friendly Societies and Credit Unions Act 1982”. It makes some fairly modest changes but useful changes that will be of benefit to credit unions and friendly societies. That is good because those organisations have played quite an important part in the economic life of our communities. 
Part 4 amends various sections to enable charitable entities and incorporated societies to be members of credit unions and that seems to be a sensible thing. It talks about removing the current requirement for the registrar to be satisfied that a credit union has a common bond and replaces it with an objective test requiring that the credit unions’ rules specify a common bond. That is good because there has to be objectivity. In particular in terms of winding-up provisions it is important that those things can be measured objectively rather than depending on the subjective test of the registrar of the day. 
It provides that members need have no more than $10 in paid-up shares although a credit union’s rules may allow for a minimum deposit of more or less than $10. That introduces some flexibility and is helpful. It is a modest change but will probably be welcomed by those organisations. 
I draw attention to some changes made to the Companies Act which were referred to by Mr Woolerton and perhaps some other members as well. New section 209in clause 8 changes the reporting requirements particularly in relation to shareholders. It provides that the board of a company may instead of sending a full annual report send a notice that contains a statement that the shareholders have a right to request free of charge a copy of the annual report; that they may receive it by electronic means; and that they may receive a statement as to whether the board has prepared a concise annual report. 
Those of us who have been involved in business will know that not all shareholders are interested in reading the full annual report. They just want a bit of a summary to get a sense of how things are going. To me it is quite sensible that it should be available in that way—and providing it electronically is simply catching up with the times. And of course the Greens support that change because of the potential for waste minimisation; that is an obvious added benefit. 
New section 211Ain clause 10 provides that the obligations to prepare and make available annual reports and financial statements do not apply in relation to non-active companies under new section 10Aof the Financial Reporting Act 1993. I have been involved in companies that have been temporarily inactive and to not have to prepare those reports seems again to be quite sensible. It is obviously a good thing to reduce some of that unnecessary burden where there is no real benefit. 
Clause 6 amends section 151(2) in respect of qualifications of directors. It disqualifies a person who is prohibited from being a director or a promoter or taking part in the management of an overseas company under an order made or a notice given under a law of a prescribed overseas jurisdiction. It simply means that someone who is disqualified under a law of a prescribed overseas jurisdiction should be disqualified in New Zealand. Obviously that makes good sense. I cannot see that anyone would have any issue with that. If we compare it with clause 15 we see that the court can disqualify a person if the person has been prohibited in an overseas jurisdiction from carrying on activities that the court is satisfied are substantially similar to being a director or promoter of or being concerned or taking part in the management of a body corporate. I think that creating some synergy between New Zealand and overseas jurisdictions in those regards makes good sense. Without those kinds of provisions it seems clear that it is open to abuse so that seems to be quite a sensible measure. 
As I said at the beginning the bill is a fairly modest attempt to reduce compliance costs but I think it does that. I think it is useful and the Greens will be supporting it. 
Dr PITA SHARPLES (Co-Leader—Maori Party) 
: 
 It is a long trip from Taupo to Dubai but for Tuwharetoa fashion designer Peter Loughlin it is a trip he makes regularly in his determination to connect with home. Peter was honoured as Outstanding Maori Business Leader for 2005 by the University of Auckland business school. Peter dresses some of the world’s most influential and wealthy women through his House of Arushi. That fashion house is known for exclusive jewel-encrusted and fine-beaded dresses. It is considered to be one of the Gulf region’s most prestigious labels. Clientele include the royal families of Kuwait Qatar Saudi Arabia and Oman who are all happy to purchase a House of Arushi design for—if they are lucky—$200000. Every year through Peter’s foundation scholarships a young Maori designer is supported to travel to Dubai and work alongside Peter gaining experience with materials and techniques rarely used at home. 
Such is the nature of Maori business. The splendour of indigenous leadership entrepreneurship and innovation encapsulated in Maori enterprise has captured the world while back at home Maori business has become so mainstream that it is now offered as a major for the BCA degree at Victoria University. Maori business success has earned us an international reputation as entrepreneurs. A status of excellence has been acquired through the fruits of diligence perseverance and preparation. 
The Maori Party draws on that success in considering the proposals in the Business Law Reform Bill to reduce compliance costs particularly for small businesses without risking a business’s stability and potential for success. The key overriding factor in the bill is that the operation of business can be clear efficient and effective. How could we argue with that? The Maori Party is proud to celebrate Maori business as a major contributor to the New Zealand economy but we know that for far too many Maori enterprises a dream run is short-lived. Sadly the correlation of Maori business with longevity is not well established. We must do all we can to deliver on expectations and aspirations to create a climate of success—not a climate that is submerged under the flood of too many great ideas without the structure of a framework to pin them on but a climate in which we can actively manage our inspiration. 
The bill before the House today forms part of that climate of success. It is part of an incremental approach to improving existing business law by making small high-priority changes to reduce some of the costs of complying with legislation. The proposals in the bill demonstrate the importance of planning in order to create a culture of expectation whereby nothing but success will suffice. The strength of Maori businesses must be incorporated throughout the proposals to ensure that the downstream effects of the legislation are experienced by all. 
The Maori Party has raised the profile of Maori entrepreneurship many times before in this House. We have shared the results of the Global Entrepreneurship Monitor which confirmed that Maori are the third most entrepreneurial people in the world and that about one in three Maori in the35 to 44 years age range are business entrepreneurs. But the great sticking point has been that although Maori are great starters-up of business only 37 percent of Maori entrepreneurial start-ups survive for 3½ years compared with 62 percent in the general population. In February this year we put on public record our questions to the Government as to why these world-class entrepreneurs are lacking the sustainable support to make the risks worthwhile. We asked why the Government was seduced by big-talking big spenders with big budgets from offshore and neglecting our own indigenous entrepreneurs. So in this respect we welcome the initiatives presented in this bill to increase investment in coaching mentoring and networking projects in order to promote entrepreneurship. 
Such initiatives as that taken by Peter Loughlin in setting up his Arohanui Victoria Memorial Trust so as to spread his success with Maori designers from home enhance our capacity to extend manaakitanga through the sharing of wealth knowledge and resources. Indeed the Maori Party is pleased to endorse information sharing as the central aspect of this bill both to reduce business costs and administrative workload and for business security reasons. The Maori Party has always argued for the reduction of business compliance costs particularly for small businesses while at the same time wanted to ensure that there remain adequate frameworks for those businesses’ continued stability and success. We strongly support the proposals to amend the Financial Reporting Act by removing unnecessary or excessive preparation audit and filing requirements. 
The move to standardise financial reporting with international standards will also have spin-off benefits for international companies doing business in Aotearoa. Such changes move toward easier smoother and lower-cost operations. We are hopeful that such changes will support the development of indigenous vanguard companies a concept that business analyst Rod Oram raised at the recent Hui Taumata in terms of the originality born out of Maori roots that is nurtured through astute management and smart strategies for international markets. The House knows of the spiralling global interest in authentic indigenous experiences and products. The Maori Art Meets America event held in San Francisco last August was a classic example when the arrival at the Golden Gate bridge of the ceremonial waka at the coming of dawn inspired the interest of up to 9 million people who were then a potential client group to watch Maori artists in ta moko and weaving at work. 
Other Maori businesses such as Tohu Wines and Cultureflow have successfully capitalised on their indigenous edge drawing on unique Maori concepts and culture as defined by Maori to achieve a top-quality business reputation at home and overseas. The proposed amendments to the Companies Act outlined in this bill will we hope protect the quality of that reputation through also insisting on applying rigorous quality standards to any offshore investors. We welcome the fact that directors currently banned in Australia will now be unable to direct New Zealand companies. Similarly we commend the move towards information sharing which will mean that overseas-registered companies do not have to repeat file with the New Zealand registrar if they have already filed similar information elsewhere. 
Finally I will make some comments about the proposed changes to the Friendly Societies and Credit Unions Act that will enable credit unions a greater ability to grow their business without introducing unmanageable risks. Credit unions and building societies were created in low socio-economic or rural areas where their members were either socially or economically excluded from banking activities. Credit unions have a proud history amongst our people for helping to spearhead Maori businesses when other support was hard to find. Indeed the Maori Party contends that friendly societies and credit unions grew out of the expression of local rangatiratanga. The Nga Hau e Wha Credit Union in Pukekohe is believed to have been the first Maori credit union. The union established in 1962 offered low-interest loans and taught budgeting assisting Maori in ways that other lending institutions were unable to do. The initiative quickly spread to my own tribe Ngati Kahungunu. Wiremu Te Tau Huata established He Toa Takitini Credit Union. In Kawerau and Bay of Plenty Monita Eru Delamere promoted credit unions as embracing the philosophy of pooling resources and sharing with others which has always been the trademark of Maori business. Our success has derived from the skills and expertise we have acquired in whanau collaboration and networking. These initiatives are still with us today. Indeed just outside Opotiki the innovative enterprise of Ngai Tai iwi in establishing the Torere bank has provided a solid financial infrastructure to strengthen subsequent projects. 
The Maori Party sees the proposal for a common bond envisaged in this bill as building on the legacy of community self-sufficiency as led by tangata whenua activities. The potential development of new community relationships through new memberships could lead to new types of business relationships and collaborations that are the hallmark of our own Maori Party business development and community development policies. As a total package the Maori Party welcomes the initiatives proposed in the Business Law Reform Bill and we will look forward to the select committee deliberations to learn of even more models of indigenous enterprise and entrepreneurship that can help lead this nation forward and make “Made in Aotearoa” a prestige label across all markets. 
GORDON COPELAND (United Future) 
: 
 It is really quite a pleasure to follow in the House tonight Dr Pita Sharples of the Maori Party who has just made a very worthwhile contribution to this debate on the Business Law Reform Bill. I want to take this opportunity to compliment Dr Sharples on the tremendous leadership he has recently displayed over the Kahui twins disaster. I have not had a chance to pass these remarks on to him yet so I want to sincerely compliment him on the leadership he has shown in that regard. 
I also think it is quite exciting to think of the statistic of Maori being the third most entrepreneurial people on this planet. That is a tremendous sign of hope not only for Maori themselves but also for New Zealand society because of course Maori will make up an increasing proportion of our society as the years go by and our success as a nation will therefore increasingly depend on Maori themselves being successful. I wish them all the very best in that regard. 
I say to Dr Sharples that one United Future policy may interest his party and I suggest he might join us in promoting it. We have a policy of a tax holiday for new business start-ups. Dr Sharples mentioned the statistic for the number of Maori who start businesses and the number who do not quite make the grade. Analysis shows that one of the reasons for that is that a lot of businesses fall over in their second year. The reason they fall over is that in their first year they pay no tax—they do not have to—and in the second year they have to pay provisional tax for the first year plus tax for the second year. It is that combined— 
Hon Member 
: Terminal. 
GORDON COPELAND 
: That is right—terminal tax plus provisional tax. That combination of two tax bills in the second year means that a lot of small businesses run out of cash and go under. So we have a policy response that says we will give such businesses a conditional tax holiday for the first 2 years of their existence. I think the House should look at that—and indeed the Government should look at that if it wants to give a spurt to new business start-ups. When I say “conditional” I mean that the businesses will still have to file a tax return and— 
Hon Maurice Williamson 
: Which part of the bill is the member speaking to? 
GORDON COPELAND 
: I am speaking to business law reform in general at this point and I think that that is a very important part of it. 
Hon Maurice Williamson 
: That’s in general—which part of the bill? 
GORDON COPELAND 
: I see that the member’s colleague Pansy Wong is making agreeable noises. If there is a bit of cross-party support for such an initiative then maybe we should have a member’s bill and bring it to the House for debate. 
I just wanted to say those things about Maori business start-ups because I think it is important that they succeed. I want to mention also that since I entered Parliament in 2002 I have been something of a champion of friendly societies and credit unions. Representatives of those institutions have been to see me on a number of occasions and I have been very well aware of the fact that they have been working with the Government for some years now to see the changes made that this bill is at last actioning. I believe that friendly societies and credit unions have a very important role to play in relation to New Zealand business activity. Most of the time we think of them as a way in which people who cannot afford to buy their own house or borrow money actually get a chance to start buying their first house—and that itself is a very good outcome. 
It is important I think to broaden the scope of those institutions modernise their rules and allow them more flexibility in terms of membership because I believe that many New Zealanders will find belonging to a credit union very useful. It is a very good way of getting money for a new home or in fact to start up a business. So I think credit unions and friendly societies have an important role to play and I welcome the changes this bill makes in that regard. 
I also welcome the changes to the Financial Reporting Act 1993 and the Companies Act 1993 in terms of reducing compliance costs for companies. The survey of OECD nations already says that New Zealand is the easiest place on the globe—at least among OECD nations; I do not know about Third World countries—to start a company. To get a company going is a very positive thing. One of the defects noted was that businesses had to wait so long for their GST number but I understand that that has now been addressed by the Inland Revenue Department. 
I think that that is important because unless I am wrong it is possible that when we have the business tax review—which I know will be announced to New Zealanders through a discussion document in the very near future—we may see a bit of a rush to incorporate as companies. A lot of New Zealand businesses run at the moment as sole proprietorships. If we lower the company tax rate then they will have an incentive to incorporate as companies in order basically to defer taxation. I think that that will be a very good thing because such businesses will have a direct incentive to reinvest profits in the business and the reinvestment of profits back into the business is believe you me a critical success factor in having a small business grow into a medium-sized business and a medium-sized business grow into a larger business that can get involved in exports. It is very difficult for a small business to take on the world; one needs some critical mass to do that. So I think that those changes will be very good and that we should make it very easy indeed for businesses to incorporate as companies. 
With those few remarks I am pleased to signal United Future’s support for the bill. As members all know omnibus bills come into the House with a consensus across parties. That does not mean to say that they are not important. The matters this bill involves are certainly important to the New Zealand business community and United Future welcomes their introduction to the House. 
CHRIS AUCHINVOLE (National) 
: 
 Thank you Mr Speaker. National is supporting the introduction of this bill this omnibus bill which makes a number of changes to commercial legislation suggested by Government officials lawyers and some business people as we are told in the foreword. I have as a member of the Commerce Committee already had an opportunity to listen to Minister Dalziel speak of the bill’s intentions. I have had the opportunity to discuss the matter with my National Party colleagues and mentors—experienced people and people especially experienced in business matters. We have decided to support this bill on the basis that it will reduce some compliance costs boost law enforcement efforts and protect New Zealand’s name. I am rapt at the revelation just given—but alas the previous speaker has gone—by United Future that it now wishes to involve itself in some of the finer aspects of National’s tax reductions. We look forward to seeing that member at the Commerce Committee and getting from him a bit more detail. Having said that one then has to say that so much still remains to be done in this field of reducing compliance. 
Bob Clarkson 
: So little time! 
CHRIS AUCHINVOLE 
: So little time—but oh my goodness how fed up to the back teeth small business is of living with Labour’s lust for regulation! It is relentless. Labour lusts after the chance to impose regulation. It cannot wait for a chance to do so. Sadly it is apparent that Labour members have only a surface appreciation amongst them of what really constitutes day-to-day activities at small-business level. Members of the present Government seem to think that business owners and operators actually enjoy dealing with regulations. To those guys I say sorry—they have got it very wrong. 
Hon Member 
: They’ve lost the plot. 
CHRIS AUCHINVOLE 
: They never knew the plot because they have never been in business just as those on that side of the House get so many other things wrong. 
Last Friday I attended two meetings in Nelson related to Motueka and the top end of the West Coast - Tasman electorate. 
Brian Connell 
: Oh stop name-dropping! 
CHRIS AUCHINVOLE 
: Well I have to mention it. 
Tim Groser 
: Did you meet a pieman? 
CHRIS AUCHINVOLE 
: I did not meet a pieman but brought to my attention was the need for small businesses to meet the often pettifogging puerile and pathetic requirements of the sort of bureaucracy this Labour Government revels in. One small-business owner in particular who approached me personally was torn between being totally distressed by how much of her time was required in meeting endless obligations and being reduced to a fury by some of the disembodied communication that attended those requirements. She said that some of the letters she got added insult to injury. 
Tim Groser 
: What was she insulted with? 
CHRIS AUCHINVOLE 
: I will come to “consulted with” later because that is a wonderful phrase the Hon Jim Anderton uses—to death. “The industry was consulted”—but we will come to that. 
Tim Groser 
: Insulted. 
CHRIS AUCHINVOLE 
: I see—insulted. But “consulted” is what the Government keeps saying. Let me give an example. A small-business operator who writes to me frequently to keep me up to date with what is happening in the small business world wrote to me to say that he had “registered an RMP with the NZFSA.” For those who may not be quite familiar with that an RMP is a risk management programme. It is something whereby members on that side of the House make sure that a school etc. having a barbie offering sausages etc. has a programme to manage risk or the organisation is not allowed to do the activities. 
Pansy Wong 
: A mission statement. 
CHRIS AUCHINVOLE 
: That is an earlier piece. But then after filling in the form and registering the risk management programme with the New Zealand Food Safety Authority my correspondent was charged a further $80—wait for it—as he had omitted to include on the form the fact that he was the plant manager. The authority wrote to ask who the plant manager was. But his is a one-man business. He wrote back to say that he was the plant manager and—bang—$80 was charged to add that information to his application. Being a one-man operation of course he was the plant manager as well as everything else but we have a Government that does not really have too much sympathy for small business. 
I hear regularly from bee-keepers. They are not happy people either. 
Brian Connell 
: What’s the buzz? 
CHRIS AUCHINVOLE 
: They are not happy with the lack of action in the biosecurity field but they are also a heavily legislated group. Honey has been found in the pyramids and found to be quite edible. But more and more bee-keepers have to have risk management programmes to conserve the quality of their pure honey. The Ministry of Agriculture has started to add all sorts of costs. The Hon Jim Anderton wrote to bee-keepers saying that a levy on bees being exported would be imposed in 2003 after—and here is the kicker—consultation with the bee-keeping industry. Apparently when my correspondent checked with those in the bee-keeping industry who had been consulted he found they were all against it. They were consulted they said they were against it but the levy was imposed. 
Bob Clarkson 
: And then they were insulted. 
CHRIS AUCHINVOLE 
: And then they were insulted; Bob is quite right. So much for the value of the words “in consultation with”. Another of the limp legacies from Labour is not just over-regulation; its worst crime I think is to have rendered previously meaningful words meaningless. Consultation without mitigation is less than a waste of time; it is insulting. The Government slaps small-business owners in the face frequently in that sort of way. 
Brian Connell 
: But they’re reducing compliance costs. 
CHRIS AUCHINVOLE 
: Indeed they say they are reducing compliance costs. Does this bill do that? I do not know. There are so many compliance costs. Antique dealers are already required to be licensed in association with the sale of second-hand goods. That is sensible and fair enough. We do not want them to be an avenue for stolen goods. But now I understand and I was told the other day that they have to register their employees. It is an expensive exercise. One business owner queried the need for his wife to be registered as she only ever dropped into the shop to give him a short lunch break a couple of times a week. But no there are no exceptions under this Draconian Government and she has to be registered as well. 
The trick though is to set up all these regulations find they do not work—because regulations do not work; regulations beget regulations—and then tell small businesses that they should come up with wait for it the identified problems and also the solutions. Let me quote the Minister for Small Business Lianne Dalziel when she addressed the select committee. She said that small businesses are invited to identify the problems and to propose the solutions. The difficulty with that approach is that again this Government is placing itself in a remote position distancing itself from the realities of what it clearly regards as a humdrum existence for business owners whom they obviously think have little to do other than to offer solutions for the Government’s mistakes. 
It would be easy to detail a huge list of seemingly small issues that I have no doubt the present Minister would dismiss as insignificant as did the previous three Ministers for Small Business. They were on a lottery. Whoever got the job lost it and it was given to someone else. 
Brian Connell 
: They were dismissed as well. 
CHRIS AUCHINVOLE 
: They were dismissed as well. However seemingly small issues accumulate to become predatory activities consuming the wealth-creating time of small and medium-business owners. 
This bill is a tiny step forward so we commend it but it does not address the big issues of regulatory burden like the Resource Management Act the tax laws and the employment law. We have to wonder what it will take to make the present Government realise that clinging closely to ideological claptrap simply to placate unions will not work for business. Business works successfully with risk but it cannot work with uncertainty and that is all this Government provides for small business. 
LINDSAY TISCH (National—Piako) 
: 
 I am reminded of what Thomas Jefferson said in 1808. 
Hon Maurice Williamson 
: What did he say? 
LINDSAY TISCH 
: He said that a Government’s role is as an umpire not a participant. It was Adam Smith in 1776 who said: “Experience shows that once government undertakes an activity it is seldom terminated.” What this Government has been doing for a number of years is increasing compliance regimes for businesses. We have heard some figures—how the compliance cost figure has gone from $46000 to $53000. But if we go back even a year earlier the figure then was $26000. We are seeing a Government that by promulgating regulations for its own means is using regulations to be able to stifle initiative stifle business growth and put huge compliance costs—or regulatory creep as it has been referred to—on to business. 
Although this legislation goes a little way in the right direction—a very little way—it does not really address some of the problem areas or the issues and challenges that business face which have been identified through numerous reports. I have here the Small Business Advisory Group’s reports one and two; the McLeod Tax Review report; and the report of the Ministerial Panel on Business Compliance Costs; and of course there have been numerous other compliance cost reports. This bill does not address areas of taxation such as accident compensation the Resource Management Act or labour law. If we are to be serious about taking compliance costs out of businesses—it does not really matter whether they be small businesses or big businesses—at the end of the day we have to be far more proactive and have policies in place that will be able to achieve that. 
We do not get rid of regulation or paperwork by passing more laws. This is what this Government has a tendency to do. It passes laws as symbolic gestures of public action rather than find practical solutions to the real problems we are facing. The Government commonly acknowledges there are problems but in fact makes only minor adjustments which are not sufficient. 
I took it upon myself a couple of years ago to travel to Canada. Ontario has had huge compliance cost issues and it developed a regime called the Red Tape Commission. I was fortunate to spend time with the commission when it looked very closely at legislation. The commission was able to take much of the compliance out of legislation and of course reduce costs to business. In New Zealand regulations are promulgated by the various Government departments or the State sector and there is no accountability but in Ontario any regulation must go through what are known as gateways where there has to be a cost-benefit ratio analysis. There must have been some advantage in introducing that legislation because if there were not why would one have done it? But this Government is commonly just adding more regulation to try to solve problems. If we want enterprise to grow we must be far more proactive than we are. 
I spent time in Australia with the Australian Productivity Commission. 
Hon Maurice Williamson 
: This man has been everywhere. 
LINDSAY TISCH 
: I have also been to Germany and studied Agenda 2010 which again is a significant initiative on compliance costs. 
Paula Bennett 
: I’ve been to Matamata. 
LINDSAY TISCH 
: Well Matamata has the best restaurant in New Zealand—Workman’s Cafe Bar. I have a notice of motion about it on today’s Order Paper— 
Hon Maurice Williamson 
: You’re becoming the Ross Robertson of the National Party.  
LINDSAY TISCH 
: This is a serious topic. If we are to pass regulations we should get them right the first time. Although this bill tonight is a move in the right direction it certainly does not go far enough. We need a drive to maximise opportunities. We want to make sure that the regulating culture within New Zealand is removed and that there is an incentive for public servants and bureaucrats to reduce regulations rather than to produce more when trying to solve small problems. 
I said that I would speak briefly on this matter because I know what Henry VIII said to his many wives: “I won’t keep you long.” So in bringing this matter together to crystallise and articulate this very important subject I tell the House that National will support the first reading of this bill. We want to reverse regulatory creep and to ensure that significant incentives are in place to reduce it. Although this bill is a start unfortunately in our view it does not go anywhere near far enough to make a significant impact on those thousands and thousands of businesses that are the lifeblood of the New Zealand economy. We will be looking very closely at the select committee deliberation to see whether there are opportunities for us to add some value and reduce the real problem of regulatory creep and compliance costs. 
Bill read a first time. 
Hon DAVID BENSON-POPE (Minister for Social Development and Employment)  
on behalf of the Minister of Commerce 
: 
 I move  
That the Business Law Reform Bill be referred to the Commerce Committee 
 for consideration that the committee report the bill by 19 October 2006 and that the committee have the authority to meet at any time while the House is sitting except during oral questions during any evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 192 and 195(1)(b) and (c). 
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 73 
New Zealand Labour 50; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; ACT New Zealand 2; Progressive 1. 
Noes 48 
New Zealand National 48. 
Motion agreed to.