McClay ToddHon TODD McCLAY (National—Rotorua): Yeah Mr Speaker thank you very much. National will be supporting this legislation in part because of the significant changes that were made during the select committee process to make sure that it wasn't an onerous or overbearing cost through bureaucracy on incorporated societies particularly the small ones. We had to strike a balance between making sure that incorporated societies were meeting their obligations to their members but at the same time the cost of meeting that obligation in some cases as the legislation was originally drafted might well have been greater than the income or expenditure of that incorporated society and that would defeat the purpose of this. We're all for accountability but reasonable accountability when one considers that there is a vast range of societies that have incorporated with different interests. An example of this is the rugby union with income of over $150 million a year. The New Zealand Rugby Union is an incorporated society right down to the Bank's Peninsula War Memorial Society that had an income in the 2016 year of around $5000. And without the changes that were pushed for by National and the committee that I must say took some persuading of the Government and the Minister but I'm very pleased that we were able to have a meeting of the minds to set these costs aside. In the case of the Banks Peninsula War Memorial Society much of that expenditure would have been eaten up or doubled in fact when it came to them having to account. The Minister when he spoke was talking about umbrella organisations and bodies and how they might have members all over the country and they might want to pay money out to them and this now is allowed. Of course to be very clear what he didn't say is he was talking about unions and the unions were given a carve-out in the original legislation. They came before the committee and they made the case to the committee and the Government decided to keep that in. Look if it is good enough for a union to have a carve-out when it comes to their responsibilities under the incorporated societies to be provided by the Labour Government it is probably likely to be OK for that carve-out to be given to other organisations as well. But sadly it doesn't appear if one reads the legislation that that's what's happened here. So I just want to be very very clear: in the Minister introducing this saying that the Government has done a good job in ensuring that you know where different bodies of people around the country that come together occasionally want to be able to pass money on to others are not caught by any income tax rules he was talking about unions the very unions that are affiliated to the Labour Party.Hon Andrew Little: The member's wrong about that.Hon TODD McCLAY: Well he says we're wrong but there goes the anger of a former union leader who in this case was reading from his notes but didn't read all of the bill as the committee went through. There are around 23000 incorporated societies in New Zealand not hundreds of thousands as the Minister suggested. Of those though around 10000 or slightly more are also charities. So there was a balancing act needed between the responsibilities and obligations of a society that is under the Charities Act but also falls under this Act. In fact the committee all members spent a lot of time considering this and I think we got the balance right. We got the balance right whereas we tried to line up responsibilities particularly around reporting but took the position that if an organisation is a charity they have the benefit of being completely tax-free whereas incorporated societies through their donations or other income are not and therefore for charities there is a greater necessity to report than some of the smaller incorporated societies under this Act. I think again that we got that balance right. The final point I'd make is as I alluded to earlier the need to make sure that this legislation wasn't overly bureaucratic or costly upon smaller societies and the legislation as drafted and agreed by Cabinet said that an incorporated society that in any one of any two years had more than $10000 worth of expenditure or held $30000 worth of assets would have to account to a higher standard than those below. Generally it means if you had below $10000 worth of expenditure or no assets above $30000 it was almost cash accounting. We're talking about some of the smaller societies in New Zealand. We took quite some time in committee to question officials on this. In fact the report back of the bill was pushed back at least the deliberation of the bill in committee was pushed back a number of times to get this right. National came forward to make the case that actually we thought the threshold could be higher and I would like to thank all members of the committee and the Minister for taking the time to work through this because we landed in a position where all members of the committee agreed. And in essence it is that if in a consecutive two years an incorporated society has more than $50000 worth of expenditure not income but expenditure they must report to a higher standard. And we got rid of the asset test and the reason for this is actually if you have a fixed asset a building actually the incorporated society itself or its executive has to go through many processes before it can make changes. If there was a society that owned its own war memorial hall with a value of over $30000 say as a capital value but it had that $5000 worth of expenditure each year they would have had to report to a higher standard which would have cost them $3000 or maybe $4000. So we refocused this and said Where is a capital asset not a liquid asset?" There is no threshold and $50000 worth of expenditure or liquid asset—i.e. if they had money in the bank—then they would have to report. I think that balance is about right. I'd like to thank all members of the committee for bearing with us because we did extend this week after week after week and sent the officials away to do more work and get more advice for us and finally to recognise the chair of the committee who worked very hard on the Minister and I think persuaded him—persuaded the Minister that Cabinet maybe had not received all of the information it should have or the officials had been overzealous in trying to capture every single problem that might be out there and in their desire or search to catch the one they were burdening you know maybe 15000 incorporated societies with greater costs but no greater accountability to its members. So to the chair Jamie Strange who worked very very hard on this and continued to badger the Minister—he did a good job. And what I would say to the Prime Minister if she's listening in Auckland on her private visit up there at the moment if the current Minister is destined for greater things Jamie Strange would be a great person to take his place as a Minister. Jamie I hope I haven't ruined your career there. Thank you."