Clark David: Financial Reporting Bill — Second ReadingText is incorporated into the Bound VolumeClark David: Financial Reporting Bill — Second Reading[Sitting date: 02 July 2013. Volume:691;Page:11509. Text is incorporated into the Bound Volume.]Dr DAVID CLARK (Labour—Dunedin North):I rise to support this Financial Reporting Bill. The Labour Party recognises that this is good and important legislation that is being progressed by the Government and we like to support good legislation. We support it because in principle we believe in reducing unnecessary compliance costs for businesses so that they can get on with the job that they have of growing the economy and creating jobs. It is sobering to remember that under this Government currently there are 2500 fewer businesses per year being created. That is very disappointing. We have an environment that is not particularly supportive of small business in New Zealand and our international rankings on competitiveness have dropped in a recent survey from 15th to 24th in the world. That speaks volumes about the priorities of this Government which sit at the big end of town. It is not terribly interested in looking after the little guy in business generally.However in this case there is an important exception and it is great to see the National Government actually stepping up and making some things simpler for small business. Before we get much further in it is important to remember the new Māori proverb: “Te ōhanga ripoata koretake rawa i ngā tau e 50”.Iain Lees-Galloway: What does that mean?Dr DAVID CLARK: It is a proverb important in Māori Language Week. It is a contemporary proverb. My colleague Mr Lees-Galloway asks what that means. “Te ōhanga ripoata koretake rawa i ngā tau e 50” means “The worst economic record in 50 years”. It speaks to the performance of this Government which has seen in real terms real wages the median wage drop fewer jobs in the economy and many New Zealanders struggling. Te ōhanga ripoata koretake rawa i ngā tau e 50. This Government can and must do better if it is to improve its record and not be regarded as the worst Government in the last 50 years. Certainly so far it has the worst economic record of any Government in New Zealand in the last 50 years.To return to some of the detail of this bill its overall effect is that most small to medium sized enterprises will no longer be required to prepare generally accepted accounting principles—GAAP—compliant accounts. That is a good thing. Such accounts are important for large international firms that are to be compared internationally but the requirements are burdensome onerous and in many cases completely unnecessary. There is a balance to be struck as previous speakers have mentioned between accountability which is important and must be found at an appropriate level and the ability of small firms charities and others to get on with the business that they are there to do without spending a huge portion of their revenue on preparing accounts. We can imagine that in the case of charities that is completely counter-productive. It is also counter-productive in the case of small business.The objective is to provide information for external users who have need for an entity’s financial statements but are unable to demand them. This bill sets out the appropriate circumstances for that information to be available. It is about public accountability and transparency where the public do have a vested interest—for example if an entity is effectively owned by taxpayers or ratepayers where it has sought funding through debt or equity instruments that are offered to the public where it takes deposits from the public or it holds assets in a fiduciary capacity or where it receives donations and bequests. In those circumstances of course publicaccountability is important and higher standards are required. Likewise size matters and there is in the bill a rule suggesting that larger entities must report because it is more significant to a national or regional economy if they fail.Finally there is an element of accountability in terms of separation to owners or members of an entity if they are likely to need financial statements. If they do not manage the entity this gives them the option of having those statements. In all those cases we can see it is important that there is a higher level of accountability and of transparency and that it is well worth having these statements available. Markets as we know make excellent servants but very poor masters. We need efficient and effective markets particularly where they are large and particularly where they have an impact in a broader national or regional community particularly where the board members are removed from the management on a day-to-day level and particularly where taxpayer interests are concerned.So for all of those reasons we think the Financial Reporting Bill is a good piece of legislation overall. It does actually reduce the compliance on small business in some small way. It is better to have a few small tentative steps from this Government in that respect than none at all. We want to see small business prosper. We want those hard-working New Zealanders who will put their mortgages on the line who borrow money or who try to scrimp to get by to have a successful enterprise in which to create jobs and opportunities for New Zealanders. We want them to get ahead. We want there to be an appropriate level of scrutiny—not too burdensome nor too light—and we think that this legislation moves New Zealand towards that end in some small way.Supplementary Order Paper 93 for the Part 2 reading of this bill makes some amendments that are primarily due to proper process and to the interaction between the Financial Markets Conduct Bill and this bill and therefore we think that broadly they seem to be in line with what should happen and again show good process on the part of the Government. That is in stark contrast I must say to some of the bills that were put forward under urgency last night particularly the Copyright (Parallel Importing of Films) Amendment Bill where we discussed Mr Faafoi’s interest inThe Smurfs and the Magic Fluteand Mr Mallard’s interest inNotting Hill . It was an entertaining session but arguably quite an unnecessary one and a sign of poor process on behalf of this Government. But Labour is happy to support a bill where there is good process where it reduces the compliance on business and charities so they can get on with their jobs and where there is an appropriate level of scrutiny. Therefore Labour will be supporting this bill. Thank you.