Genter Julie Anne: Financial Reporting Bill Financial Reporting (Amendments to Other Enactments) Bill — Third ReadingsText is incorporated into the Bound VolumeGenter Julie Anne: Financial Reporting Bill Financial Reporting (Amendments to Other Enactments) Bill — Third Readings[Sitting date: 19 November 2013. Volume:695;Page:15006. Text is incorporated into the Bound Volume.]JULIE ANNE GENTER (Green): It is a pleasure to take a call in the last 15 minutes at a quarter to midnight during urgency. The Green Party will be supporting the Financial Reporting Bill and the Financial Reporting (Amendments to Other Enactments) Bill even though they are not perfect because we do not think that perfect should be the enemy of the good and this legislation on balance does quite a lot of good things. It has been widely canvassed and the details have been worked on for a very long time by the officials who I think have done quite a good job.The main purpose of this legislation as we have heard is to make all general-purpose financial reporting consistent with the primary objective of the financial reporting system which is to provide information to external users who require that information and cannot demand it. In other words the legislation should make the requirements to disclose and report more fit for purpose to the organisations that are required to report.The Green Party supports a much smarter approach to regulation. This legislation does that by easing some of the burden of financial reporting for non-large non-issuing entities. In other words it simplifies reporting requirements for small and medium companies charities churches and the like. It also tightens up some of the requirements for large entities to bring it in line with the Financial Markets Conduct Act which was passed recently.Financial reporting is important for a few reasons. Firstly it is especially important for public accountability. There is a public interest in organisations that are funded by taxpayers like Crown entities Government departments and State-owned enterprises. But it is also important for banks insurers mutual funds and any organisation that is a deposit taker or issuer of debt and charities and other organisations that receive public donations. Secondly it is important for large organisations that have significant economic significance. This would apply to organisations that are “too big to fail”.There is no such thing as a pure or perfect free market. If we examine the objective evidence and the historical record there is simply no evidence that there is perfect information and transparency and the ability of markets to self-correct for that reason. The whole theory of free markets and the invisible hand was based on the idea that there were much closer relationships between the people who were purchasing things and the people who were manufacturing or providing those services. Adam Smith wrote that at a time when the relationship between a producer and a consumer was much closer than it is today. It is very difficult today for consumers and investors to understand exactly all of the factors that are involved in the nature of the business that they are purchasing from.The complexity of our current global economy reduces accountability. It makes it harder for there to be accountability and that is why it is incredibly important for there to be robust public oversight and regulation. Financial institutions are central to the functioning of our economy. As the financial crisis showed it is important to have that rigorous public oversight because when there is not that oversight there is a tendency for organisations to get creative to do things that are quite unwise in the medium and long term and in the case of some of the investment banks and organisations particularly in the United States to actually do things that are completely illegal in order to make more money. Eventually when the reckoning comes it is not those organisations that suffer the consequences of their actions. Huge amounts of wealthhave been wiped off balance sheets all across the world and that has very real consequences for ordinary people—people who lost their jobs lost their houses and lost their livelihoods.It is so important to get the balance right. I am no fan of regulations that are not effective. I am a qualified planner who would be the first to criticise onerous regulations and city plans that have led to quite undesirable outcomes. I think that we can do things much smarter but it would be wrong to say that we need to get rid of all regulation that all regulation is bad and that all compliance costs are bad because what might cost us a little bit in the short term could save us quite a lot in the medium and long term.The Green Party supports the changes in these bills theFinancial Reporting Bill and the Financial Reporting (Amendments to Other Enactments) Bill because it seems that the general direction set by these bills is good. We have some concerns about whether or not enough organisations will be caught by the definition of “large” organisation and so it will remain to be seen. Certainly with this whole new framework for financial reporting it will be important for the Government and the Opposition—Parliament—to pay attention to what is happening see whether it is working and whether indeed external users are getting all of the information that they need. It seems to me that it is going to rely a lot on decisions made by the External Reporting Board about accounting and reporting standards and that process. So Parliament will have to monitor whether or not that is working and whether or not truly all of the information that needs to be available for the public interest is available.Finally I think there is one big missed opportunity in this whole restructure of the financial reporting framework that has been undertaken over the past few years and that is the lack of exploration of guidelines for environmental and social reporting in addition to financial reporting. That is known as triple bottom line accounting. There is increasing awareness around the world and particularly I think amongst younger generations that maximising short-term profit at the expense of people and the planet is not sustainable. Climate talks are happening right now in Warsaw and the situation is very very straightforward. The scientists have told us we have to transition to a low-carbon economy or we are going to impoverish the future of our children their children and their children. So it is important that we start paying attention to more than just the dollars and cents in the short term.It is a commonly understood principle I think in private business that one cares about what one measures. At the moment most organisations—including the Government; especially perhaps this Government—have a single-minded narrow focus on dollars although there are a number of other things that are important for human well-being. In order for New Zealanders to have good lives and in order for people all over the world to have good lives we have to pay attention to more than just the dollars; we have to pay attention to the cleanliness of the environment the air that we breathe the water and the stability of the climate. We want to make sure that other people are looked after because that has an impact on our well-being.I can go out work really hard start up a business and make lots of money but if I live in a society where other people do not have the opportunity to do that for a variety of reasons then that is going to impact on me because ultimately I will have to suffer the consequences of a society that has more crime or more injustice and is not well looked after.I would like to see at some point during my time in this House a move towards incorporating greater accountability in areas that are not just financial. I would like to see guidelines for environmental and social bottom lines so that we have an understanding of exactly what it is we are working towards and trading off. Thank you.