Nash StuartBUSINESS PAYMENT PRACTICES BILLFirst ReadingHon STUART NASH (Minister for Small Business): I present a legislative statement on the Business Payment Practices Bill.ASSISTANT SPEAKER (Hon Jacqui Dean): That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon STUART NASH: I move That the Business Payment Practices Bill be now read a first time. I nominate the Economic Development Science and Innovation Committee to consider the bill and to report back by 27 April 2023.ASSISTANT SPEAKER (Hon Jacqui Dean): No. Can I just ask the Minister to—I hope he has got the appropriate words: At the appropriate time I intend to move".Hon STUART NASH: At the appropriate time I intend to move that the bill be reported back by 27 April 2023. The Government's intention in introducing this bill is to support our efforts in creating a fairer business environment. While many of us will take this for granted timely payment for goods and services delivered is crucial for the financial health of any business. The average time between a business issuing an invoice and receiving payment for that invoice has been gradually shortening over the last five years. This coincides with widespread adoption of technology solutions like cloud accounting and Government-led efforts to improve payment performance through initiatives like e-invoicing. But this movement while positive is marginal and slow. Poor payment practices persist and continue to affect many small New Zealand businesses. Small-business owners in New Zealand continue to report that delays receiving payment are hurting cash flow increasing stress levels and inhibiting their business growth. It is abundantly clear that this situation warrants intervention. As the New Zealand economy recovers from the impacts of the COVID-19 pandemic it is more important than ever to support small-business owners and operators who are the bedrock of our nation's economy and communities.Small businesses face challenges enforcing their payment terms because they have limited bargaining power and limited resources. We know that larger firms can exploit the power imbalance by setting payment terms that advantage themselves at the expense of their smaller suppliers. When this happens small suppliers often feel unable to ask for more reasonable terms for fear of damaging relationships. Furthermore when the bill payer doesn't meet the terms that they've agreed to the small business affected may not be able to do much about it—again the perception of power imbalance is often too great for the small-business owner to risk upsetting their large customer. If a small business relies on a large payer for a lot of their revenue they will be anxious not to rock the proverbial boat as their livelihood may be at stake—well that may well be the perception they have.This may be preventing a significant segment of our business ecosystem from realising its full potential and contribution to our economy and to our communities. The effects of poor payment behaviours can run throughout supply chains and have consequences for the broader economy—for example through a high cost of capital or unnecessary insolvencies. The Government set up the Small Business Council in 2018 and I asked this council to develop a small-business strategy for New Zealand. The Small Business Council reported back the next year and among all issues facing small businesses it considered timely payment a top priority. The council said that problems with payment practices are difficult to deal with effectively through our current tools and that a new approach was needed. The bill being debated today will deliver that change. The purpose of the Business Payment Practices Bill is to establish a disclosure regime that brings transparency to business-to-business payment terms and practices in New Zealand. This will lead to businesses having better information to inform their decision making when engaging new customers. It will also incentivise larger businesses who are increasingly conscious of their reputation to improve their business payment practices. A secondary benefit of the regime is that it will build an evidence base on business-to-business payment practices and enable the Government to assess over time whether any further regulatory intervention is needed. Under the regime entities with more than $33 million in revenue will be required to disclose information about their payment practices twice a year. The Government needs to lead by example so the bill will also apply to Government entities that exceed the revenue threshold. Disclosed information will include for example late payments made by reporting entities information related to payment times and reporting entities' payment terms and conditions and policies. This information will be submitted to and stored on a publicly available and searchable register administered by the Ministry of Business Innovation and Employment. The register will be free for users to access. Disclosed information will also be published on reporting entities' websites. The bill will provide for the appointment of a registrar who will be responsible for establishing and maintaining the register and the associated compliance and enforcement functions. It will also provide for infringements penalties and criminal offences for contraventions of its obligations. The more severe penalties would only apply to the most wilful and problematic offending. Education and information is a key lever to achieve compliance and compliance will be straightforward because the information firms need to disclose is readily available to them anyway.Important details of the bill will be determined through secondary legislation. The bill's regulations will for example specify the information to be disclosed by reporting entities prescribe the form of infringement notices and reminder notices and prescribe the quantum of infringement fees and maximum fines able to be imposed by the court for infringement offences. In addition the Minister for Small Business may exempt the class of reporting entities from all or any of its obligations under the bill via notice. Lastly the business payment practices registrar can set disclosure periods and deadlines for reporting entities via notice as well.I'm conscious that much of the success of the bill will depend on balancing technical aspects and many reporting entities and users of the business payment practices register will want a say on how the technical detail is determined and how this new regime will operate. I'm pleased therefore that they'll be able to participate in the select committee process of the bill in the coming months and I commend the bill to the House.ASSISTANT SPEAKER (Hon Jacqui Dean): The question is that the motion be agreed to."