Rich Katherine: Business Law Reform Bill — In Committee 
Rich Katherine: Business Law Reform Bill — In Committee 
[Volume:635;Page:6442] 
KATHERINE RICH (National) 
: 
 This is quite an important part of the bill because it seeks to streamline some of the concerns that many within the business sector have seen for quite a long time. During the submission process we had two powerful submissions one from GE Finance and Insurance and the other from Citigroup. Both those businesses starting with GE Finance and Insurance argued that the financial reporting requirements as they are are unduly onerous. GE Finance and Insurance made the point that it was operating in about 70 different countries and the requirement to file accounts in New Zealand as a stand-alone entity—that is as a separate entity from its parent company General Electric—required a lot of work for little benefit. Out of all the countries that it works within New Zealand was the only country that required it to do this. 
Likewise Citigroup argued that it worked in over 100 different countries and territories and that New Zealand was the only country in which Citigroup Inc. was required to file a set of stand-alone financial statements of this type in addition to its group financial statements. Producing those financial statements cost the business enormously. For example we were told that it cost its New York office something like the time of three professional people for 10 days each just to produce the stand-alone accounts for New Zealand. 
So there was an immense expense for little gain. Basically there were plenty of other audit processes in place. These companies argued that when they work in so many other countries that do not require this specific process to take place there was little reason for doing it in little old New Zealand. Both those companies argued that what was proposed here did not really go far enough. They argued that an exemption process was not as good as not being required to do the stand-alone accounts in the first place. So to a certain extent we have not solved all the problems that both those companies wanted us to solve. But I think we have gone some way towards making changes that will minimise the effects to those businesses when they seek exemptions. 
It was pretty interesting though if one looks at the process for getting those exemptions when the Accounting Standards Review Board comes along and says: “We don’t want this as a responsibility.” It showed I think a lack of consultation with the board to get it into a situation where it was happy with the changes. When one has a Crown-funded organisation come along and say: “We don’t want these new responsibilities given to us by the Crown.” and says so in a public forum that is pretty significant. 
So in terms of the changes that are being made here I think they do go some way to streamline some of the requirements on companies to report on their finances. I think there are probably some additional changes we could make to make it even easier. It is hard for New Zealand to argue that it needs totally different stand-alone requirements when these international businesses work in so many different markets under so many different scenarios and we ask them to put together additional accounts that are just totally unnecessary and go to that extent and cost them money without introducing any additional benefit. 
So in terms of financial reporting obviously it is a necessary part of the process. Governments need to know that organisations are working well and working honestly within a jurisdiction. But we need to make the process not as onerous as in other countries because if we continue to do that we actually put people off coming here and setting up businesses in New Zealand. I think we could have done more to make some changes within this part of the process but we have gone some way to include changes. 
The question was put that the amendments set out on Supplementary Order Paper 72 in the name of the Hon Lianne Dalziel to Part 3 be agreed to. 
Amendments agreed to. 
Part 3 as amended agreed to.