Accounting Infrastructure Reform Bill — Second ReadingText is incorporated into the Bound VolumeAccounting Infrastructure Reform Bill — Second Reading[Sitting date: 22 July 2014. Volume:700;Page:19281. Text is incorporated into the Bound Volume.]Accounting Infrastructure Reform BillSecond ReadingDebate resumed from 3 July.CLARE CURRAN (Labour—Dunedin South):To recap from my interrupted speech a couple of weeks ago discussing this issue the Accounting Infrastructure Reform Bill appeared before the Commerce Committee and on the face of it seemed to be a relatively straightforward bill. One issue though took up most of the committee’s time and that issue concerned a request for an exemption on the basis of religious grounds from the requirement to belong to the statutory authority the accounting body. A pair of submitters Mr Brian Prestidge and Mr Michael Powell came before the committee and brought before us a request about the changes in the bill that required auditors and qualified statutory accountants to belong to professional bodies. They claimed that that was a limitation on the right of freedom of association in the New Zealand Bill of Rights Act 1990. This pair of submitters were members of a religious organisation. That happened to be the Exclusive Brethren.What they were actually bringing before the committee was a fairly significant point of principle and I believe there will be quite a bit of discussion in the House around that because it did seriously exercise the committee in terms of how it would address that. Certainly from my own perspective the prospect of a precedent being created where members of a profession could undertake their profession and not have to belong to the statutory body that was managing that profession and holding everyone to account was a concern because it raised the prospect of how far you go and where you draw the line on these matters. The reason for this regulation of auditors is ultimately to protect consumers and it was important that the committee consider that because consumers those who rely on the conclusions of an audit are usually not in a position to assess its quality. We believe that the professional self-regulatory model under which this legislation is based is appropriate for this legislation but these submitters did not want to have to belong to the regulatory body that would actually be performing the regulation. That was the issue that taxed us.There were several reports provided to the committee on this and no doubt we are going to hear about how that process was undertaken. I look forward to discussing this further in the House.KANWALJIT SINGH BAKSHI (National):It is my pleasure to take a short call on the Accounting Infrastructure Reform Bill. National is focused on boosting growth and creating jobs. Only a strong economy can provide financial security for families and real opportunities for young people. Since National came into office it has been working hard to simplify and improve the integrity of our financial system. This bill which will enable the accounting and audit industry to be more efficient and effective is part of the Government’s Business Growth Agenda and helps achieve one of National’s key objectives which is to build a more competitive and productive economy. With these words I commend this bill to the House.Hon CLAYTON COSGROVE (Labour):The Labour Party as my colleague Clare Curran said will be supporting the Accounting Infrastructure Reform Bill. The aims of this bill are pretty straightforward. It builds on other pieces of legislation where other professions in New Zealand and Australia have grown closer together and amalgamated where we have similar rules of engagement in terms of commerce and banking and other regulations and legislation. It will enable the New Zealand Institute of Chartered Accountants to amalgamate with its Australian counterparts creating a new trans-Tasman institute subject to the approval of members. It allows competent auditors with the appropriate qualifications to offer audit services to New Zealand firms by altering restrictions on non-user audit work. It allows audit firms to incorporate as a company if they decide that is the most efficient way to conduct business for themselves. And of course the bill replaces references to a “chartered accountant” in various Acts with references to “qualified statutory accountants”.I just briefly want to pick up on the issues that Clare Curran raised in respect of a submission we received from the Exclusive Brethren. With due respect to them it did vex the Commerce Committee somewhat. I know that the National Party has of course a long and close relationship with that particular entity. It is a very long and close relationship dating back I think to 2005. The submission did raise a number of issues for us in that on the one hand groups are indeed entitled to express their moral and religious views their beliefs as it should be and no one argues with that. What the committee found itself attempting to do was trying to wade through on the one hand acknowledging and respecting those particular beliefs and on the other hand trying to ensure that a person could not if you like rock up to the authority and simply say they believe in X—I am not trivialising this; I am just using this as an example—and therefore they should be exempt from a number of the governance arrangements and strictures put in place by this amalgamation. It will be interesting in later stages to hear the Minister of Commerce’s view on that. Officials did recommend the course of action that was contained within the legislation.Some of us still feel some unease. Again I mean no disrespect to religious organisations but whenever as members will know you pass legislation you are not actually passing legislation for the 99.9 percent of the population that would not break the particular rule or law or moral code; you are passing it for those who would abrogate their responsibilities and offend. That is what we find ourselves doing in this place every day: passing legislation in some cases for the lowest common denominator acknowledging that that may or may not restrict the rights of those law-abiding citizens who would always regardless of legislation or law adhere to the basics of the moral and ethical code we observe in this country. So we listened to those submissions rather carefully.I must say personally I was not convinced by some of the submissions by the Brethren and the notions that they put forward. I do have reservations in respect of the safeguards around those notions as enshrined in this legislation. I say briefly that I would be very interested in the Minister’s view as we move this legislation forward in terms of assuring this House that in respect of people who apply for exemptions essentially based on personal belief there are safeguards in place to ensure that they are not deliberately attempting to walk around the legislation. We did put it to officials that we would not want them to take on some sort of quasi-religious role in terms of deciding—I see a chuckle from the Deputy Speaker in the Chair; I think he understands what I am saying—how to interpret scripture as to what was a legitimate religious or moral belief and what was not. That is not the role of officials. I suspect for many of us that would be hard to do. We would leave that to the deity and others in other places perhaps; maybe some in Rome if I go to my religious background.So it is an important point because there will be those who perhaps will try to use that corridor if you like to walk around this legislation. So as I say I will be interested as to whether the Minister can give us some assurance around that. I know there are in labour relations legislation and other legislation some longstanding precedents. But as I say I was not particularly convinced. I am not making a judgment on the beliefs of the Exclusive Brethren—I am sure that Mr Foss and others could give us a better view on that given the close association—but I was not impressed with some of their arguments in terms of the legitimacy if you will or the safeguards.We support this legislation. I think putting that matter aside I can say I believe it will benefit New Zealand. It will benefit our professional accounting institutes on both sides of the Tasman. It will make them more efficient. I think it will make them more robust. It will also provide easier access to both markets. One would hope then that that will enhance business opportunities not just for that profession but for other associated commercial entities around that. With those words I support the bill.Dr JIAN YANG (National):I rise to speak briefly to the Accounting Infrastructure Reform Bill. This bill achieves its main purpose of enabling the accounting and audit industry to be more efficient and effective with some key amendments to existing Acts. For example it amends the rules on who may perform statutory audits to enable more people who are competent to perform audits to do so. Such kinds of reforms will realign the structure of the audit and accounting industry so that participants are able to quickly adapt in an evolving environment.This bill is part of the Government’s Business Growth Agenda to improve regulation and promote healthy financial reporting frameworks. National has improved financial reporting requirements so that 90 percent of New Zealand businesses no longer need to produce full financial accounts. National has also strengthened the capital markets and created more opportunities through crowd funding. It has also tightened the regime for those providing financial advice. I commend this bill to the House. Thanks.Mr DEPUTY SPEAKER: I am advised this is not a split call.KRIS FAAFOI (Labour—Mana):Yes but it will be a shortish call. Thank you very much for the opportunity to talk to the second reading of the Accounting Infrastructure Reform Bill. As a number of my colleagues have already stated in their contributions to this debate this was one of the more interesting bills that we have seen traverse this Parliament for the reason of the exemption for a particular group which both Clare Curran and Clayton Cosgrove have mentioned.Before I get to that issue I do want to say that obviously this side of the House supports this bill. We understand that with the merging of the accounting body on this side of the Tasman with the one in Australia there will be some effectiveness and efficiencies gained and then hopefully some opportunities for businesses in our country on this side of the Tasman which we all want. If you believe the National Government this side of the House is not business friendly but that is absolutely not the case. Policies that we have already released such as our research and development tax credits and accelerated depreciation of I think the forestry and manufacturing sectors and some exciting policy that we are yet to see around apprenticeships will I think be greatly attractive to small to medium sized enterprise as we head into the decision-making period of the electoral cycle.Meka Whaitiri: $200 million.KRIS FAAFOI: That is right; $200 million—quite a big push for regional New Zealand.This brings me to a local story of a graduation I attended in Porirua on Friday where there were graduates from a money management and small business management course who are keen to see some real practical policies from the political parties that are advancing their causes at the election this year. I think that a number of the policies from our side of the House that I have already spoken of will certainly help them advance their cause to have profitable efficient and effective businesses which is what this bill does for accountancy systems.This is an interesting bill as I said before because of this exemption we have within it essentially for a particular religious group. It came and submitted to the select committee. Before I talk to that can I thank the officials who worked on this bill because it was one particular clause and one particular submission that took up quite a lot of time and debate within the very hard-working Commerce Committee. Essentially there is an amendment within the bill in clause 31 which inserts new section 36M which asks that a chartered accountancy body that would grant membership to its organisation exempt a person in a religious body from being a member because of their religious beliefs.It was a submission from—and I do not think they will mind me mentioning their names—Brian Prestidge and Michael Powell who are two people acting as auditors and accountants already and who are members of the Exclusive Brethren. I know there has been some controversy about that particular religion. That is not why I am bringing it up; I am bringing it up because it was a very interesting debate we had within the select committee as to whether or not that particular group making a submission or any group that holds particular religious beliefs should be exempted from membership of a body that we are asking all other people of a certain profession to be part of so they can be held to a code of ethics or particular standards or any disciplinary action that that body may put on any of its members.There was some concern from this side of the House as to who was going to be the arbiter of what we would consider to be the appropriate religious beliefs or the particular religious groups. Again as Clayton Cosgrove said we did not think that should be up to the officials. I think that during the Committee debate it will be an interesting part of the debate—if we do get to that stage of the debate before this House rises.In terms of granting that exemption to a particular religious group the accountancy organisation has to have an agreement with that religious group. It is apparent that the religious group has to abide by all the rules and regulations of the accountancy group. I believe personally that there was a case to maybe grant the exemption. I think we came to a relatively good position within the select committee that for particular religious reasons there should be an exemption because essentially the religious groups are practising accountancy now. They do not I believe hold memberships in a body now but this legislation compels them to do so. They agreed they would be accountable to such a body if there was to be disciplinary action for breaches of the code of ethics or particular things they had to adhere to in order to make sure that their standards were as good as others who had to become members. I know they are a relatively controversial group but I thought they made a relatively sound submission to the select committee. They did believe that under the New Zealand Bill of Rights Act they had the freedom to non-association. I think that this debate is not necessarily over as this bill is still traversing the House. I would like to again thank the officials because this was not an easy part.It certainly was not the main thrust of the bill. The main thrust of the bill was about those entities on this side of the Tasman and the other side of the Tasman coming together and ensuring that there could be effective and efficient business between our side of the Tasman and theirs but exemption was one issue that I think we need to thank the officials for their work on. It was a tricky one that I think as Clayton Cosgrove said has only one precedent in another piece of labour legislation.MARK MITCHELL (National—Rodney):I am very pleased to take a call on the Accounting Infrastructure Reform Bill. It is a very good bill and it is part of the wider Business Growth Agenda of this Government. Because I have got only a short time I would like to just focus on what I think are four pretty important points and they are that the reforms will realign the structure of the audit and accounting industry so that participants are able to quickly adapt to an evolving environment; this bill will enable the accounting and audit industry to be even more agile in an increasingly competitive environment; the bill is part of the Government’s Business Growth Agenda to improve regulation and promote healthy financial reporting frameworks; and the accounting and audit industry will be better supported to meet a broader range of business and community needs. So in effect it is going to provide for less red tape and compliance cost and it is going to make businesses more efficient which is fully in line with our Business Growth Agenda.Bill read a second time.