Dalziel Lianne: Financial Reporting Bill — First Reading 
Text is incorporated into the Bound Volume 
Dalziel Lianne: Financial Reporting Bill — First Reading 
[Sitting date: 28 November 2012. Volume:686;Page:6916. Text is incorporated into the Bound Volume.] 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 The regulatory impact statement was written so long ago it was prepared by the Ministry of Economic Development. The Ministry of Economic Development has not actually been around for a little while. It is now “MoBIE”—the Ministry of Business Innovation and Employment—which has replaced the Ministry of Economic Development. 
When I looked at the fact that the regulatory impact statement was actually prepared by the Ministry of Economic Development I thought I had better have a look at the timetable for implementation that the regulatory impact statement contained. This bill the Financial Reporting Bill was introduced into the House on 31 July this year. Today of course is 28 November and already this bill has failed to meet the targets that were set by this regulatory impact statement. Let me read paragraph 42 the implementation section which establishes that “A bill will need to be passed by Parliament to give effect to the changes. The aim is to introduce legislation in early 2012 with a view to enactment in late 2012 or early 2013.” So the Government is already way behind the eight ball. Although we have already heard from the former deputy chair of the Commerce Committee which used to be a very very good select committee— 
Hon Clayton Cosgrove 
: Not the Minister for Small Business? 
Hon LIANNE DALZIEL 
: —not the Minister for Small Business—what we have actually seen is that those members have failed to meet the very standard that they have set for themselves. I want to talk about this particular piece of legislation because I think financial reporting is very important for a whole range of reasons. 
Hon Clayton Cosgrove 
: It’s usually donations. 
Hon LIANNE DALZIEL 
: Well yes. I am hearing from my colleague who is interjecting on me from in front—and I will share this with the House because I think what he is trying to do is to encourage the Minister for Small Business to take a call on the Financial Reporting Bill. 
Hon Member 
: Associate Minister of Commerce. 
Hon LIANNE DALZIEL 
: The Associate Minister of Commerce should take a call. He is the Minister responsible for regulatory reform. He is responsible for these kinds of areas and the impacts on small businesses. 
Peseta Sam Lotu-Iiga 
: Talk about the bill. Come on! 
Hon LIANNE DALZIEL 
: We have had every single member of the National Party stand in this House and talk about small business and yet the Minister for Small Business is sitting there and has not yet taken a call. That is the point that my colleague has made more than once. He has suggested to me that I need to reference brown bags but I am not sure why brown bags have to be mentioned in this particular debate. I do not know that it is relevant to financial reporting because any finances that come in brown bags do not get reported. So I do not think that it is relevant to the particular issue that we have in front of us on this occasion. 
It is very interesting that the National Party is more than happy to sit there and suggest that I am wide of the mark in terms of this particular bill when I have the regulatory impact statement in front of me and am quoting from it and when every single one of its members has stood up and argued about the impact of this legislation on small business. We have the Minister for Small Business in the House and he should be getting up and speaking on this particular matter—the Associate Minister of Commerce with his responsibility for regulatory reform. This is a regulatory matter and the Minister for Regulatory Reform should be standing in the House and reporting on it. 
There are three significant constraints in identifying the costs and benefits of the changes proposed in the regulatory impact statement and I believe that the House should take note of each one of them. The first one that I want to mention is that the External Reporting Board is responsible for deciding which set of standards each class of reporting entity will need to comply with. This is incredibly relevant to how this bill progresses because I am not persuaded that this bill has got it absolutely right. 
Secondly although there are some very useful statistics about the numbers of entities in some classes or subclasses there is very limited information for others. I again believe that this is very relevant. As one of my colleagues said the amount of consultation that the Government has undertaken on this legislation is not of a high standard and that does need to be addressed by the select committee. 
Thirdly some of the costs and benefits are very difficult to quantify. It is all very well for Government members to stand in this House and say that we need to reduce compliance costs when we all see regulatory failure and the costs that are imposed on the taxpayers of New Zealand. You need only look at the question of the leaky building crisis which my colleague has been raising on behalf of New Zealanders who have seen themselves in a difficult position. The truth is that costs and benefits— 
Raymond Huo 
: I raise a point of order Mr Speaker. I apologise to my colleague. The level of the noise from the National members is very unreasonable. It is not a good example for the good kids in the public gallery. I wish the Speaker would caution the National MPs. 
Mr DEPUTY SPEAKER 
: I think the—[ 
Interruption 
] Order! I think the misbehaviour is about equally shared across the House. 
Hon LIANNE DALZIEL 
: The point that I am making is that some of the costs and benefits are very difficult to quantify and part of the reason for that is that the Government has not done a very good job of consulting on this particular piece of legislation. 
The regulatory impact statement talks about the benefits and the costs of financial reporting. It talks about the need for economic decision-making and the benefit arising when users rely on general purpose financial reports to decide whether to transact with the reporting entity. So the member who spoke before me Peseta Sam Lotu-Iiga does not even know what he is talking about when he says that it is limited to the shareholders and to— 
Peseta Sam Lotu-Iiga 
: I said stakeholders. 
Hon LIANNE DALZIEL 
: —and to the stakeholders. No he said the shareholders; that was what he was talking about. The point that I am making is that people actually need to know whether they should be transacting with a reporting entity and that is what financial statements are for. They are used to contribute to decisions about whether to buy sell or hold shares but—all together—whether to transact with an entity or not. The second is to promote accountability by the entity. This benefit arises when users rely on the general purpose financial reports to determine whether the reporting entity has been using or managing the user’s money effectively and efficiently. The report actually— 
Mr DEPUTY SPEAKER 
: Order! [ 
Interruption 
] Order! I am sorry to interrupt the member. The cross-flow of interjections and comments that are not related to what is being spoken has gotten out of order. I am going to ask members to restrain themselves. The debate has been in pretty good nature but it has been rowdy. It has been too rowdy and I just ask for a bit of consideration. 
Hon Simon Bridges 
: I raise a point of order Mr Speaker. The member seems to be talking to her— 
Mr DEPUTY SPEAKER 
: Order! [ 
Interruption 
] Order! That is not a point of order and it is not helpful. 
Hon LIANNE DALZIEL 
: The costs comprise some or all of the following depending on the extent of the reporting obligations. They talk about preparation they talk about assurance they talk about distribution and they talk about publication. All of these elements of financial reporting are important and each one of them does have to be taken into account. When one looks at the degree of the cost involved in each one of them we should be looking to see whether those costs can in fact be minimised while the benefits of financial reporting are enhanced. I believe that we can do that. That is what the regulatory impact statement is designed to do. It actually goes through each one of the entity types and works through each one of those specific issues to look at the questions of the issue the status quo the proposal costs and benefits and other options considered. That is what a regulatory impact analysis does require us to do. 
What the regulatory impact statement actually described in the conclusion was that “The main aim of financial reporting is to find an appropriate balance between the benefits of transparency and accountability to users and the compliance costs associated with financial reporting.” What it concluded was that “this balance is achieved most of the time by applying the three indicators of financial reporting. The indicators have been departed from in a minority of cases”. It looks at the main examples such as “the proportionately high fixed costs of financial reporting for small registered charities;”. These are the issues the Commerce Committee actually has to have a look at. If the select committee is not prepared to look at these then that is fine but I actually think this is a serious matter and if the Government actually did care about these issues it would agree. It would look at “the proportionately high fixed costs of financial reporting for small registered charities; the need to fit financial reporting with the broader regulatory objectives in relation to gaming machine societies and retirement villages; and the proportionately high reporting-related costs arising from the dispersed beneficial ownership of small Maori asset governance entities.” Those are the issues the select committee is going to have to look at. We take it seriously on this side of the House even though the Government does not.