Clark David: Financial Reporting Bill — In CommitteeText is incorporated into the Bound VolumeClark David: Financial Reporting Bill — In Committee[Sitting date: 19 November 2013. Volume:695;Page:14988. Text is incorporated into the Bound Volume.]Dr DAVID CLARK (Labour—Dunedin North): Kia ora Mr Chairman. I rise to speak to this bill the Financial Reporting Bill. We in the Labour Party will be supporting this bill because the principles that it is based upon are ones that we can agree with. It is delightful to stand in this Committee and to be supporting a bill that is actually incredibly important and might be likened to the oil that greases the wheels of commerce. It is so important to have transparency and clear concise and easily understood reporting requirements so that information can flow to stakeholders and so that good decision-making ensues and our country prospers.The bill itself really has three key components. One is increased public accountability. An entity needs to be accountable to the public if it is effectively owned by taxpayers and ratepayers. That includes Government departments Crown entities and local authorities. I guess there is some irony which will not be lost on those following the debate at home in that this bill is designed to increase accountability across Government departments Crown entities and local authorities. Not long ago we passed legislation about privatising our energy assets. There is a referendum coming up. The postal ballot is starting tomorrow I think on this same topic.That particular debate involved not only selling down New Zealand’s best revenue-generating assets—taking them away from taxpayer ownership and putting them into the hands of a few—but also reducing transparency. In that legislation the Official Information Act used to apply in respect of State-owned enterprises. Members of the public could request information about them. There was a level of transparency there that was required. They were required to appear before select committees to be scrutinised so that the taxpayer interest was being looked after. Now even though they are to be majority State-owned—only just; 51 percent—a lower level of scrutiny is to apply. So here in this bill we have the flip side of that. We say again that scrutiny is important. So there will be no irony lost there I am sure in the Government’s other actions which we know were done for politically expedient reasons and were based onan ideology of selling off privatising the gains and socialising the losses. That is something we have seen so often from this National Government.Returning to the bill the scrutiny that is going to apply will apply to the bigger end of town where there is a public interest. For example an entity that takes deposits from the public or that holds assets in a fiduciary capacity for broad groups of outsiders—like banks insurers mutual funds and those kinds of things—will be required to report transparently. That is a good thing. Those who receive donations and bequests from the public will be required to have increased transparency.There is a test in the bill about economic significance. I guess that boils down to the idea that size matters. There are some large entities that ought to report because their failure could have a regional economic impact. That does apply I guess to the cases raised by my colleagues just before. The failure of those entities could have a regional impact that could be quite negative. We think there of Christchurch and the lack of progress that is being made. There are other examples of course. Down my way there is a proposal to gut the Invermay Agricultural Centre take the scientists out of Otago and well just destroy it—Clare Curran: Somehow transplant it.Dr DAVID CLARK: —and somehow transplant a highly functional scientific organisation somewhere else when the staff do not want to transfer and have said they will not transfer. That is another example of a failure in the regions. That is despite Steven Joyce’s rhetoric about needing to have strong institutions in the regions to support business growth.So there is some deep deep irony in passing a bill that talks about the importance of economic entities to regions and the importance and economic significance of transparency when there are deals being done that are anything but transparent in terms of the business case for Invermay. That is a very very good example of where it has not been made public where information has been withheld and where it seems that an ideological position is driving something rather than something that is genuinely in the public interest.The third criterion in the bill is around separation. That separation principle requires that owners or members of an entity are likely to need financial statements if they do not manage the entity. So all of these things make sense at a fundamental level. It reduces compliance costs where they are not required—where they are small entities and where shareholders agree that they do not need comprehensive accounts to the extent that they are actually just simply about compliance. Then there is a clear requirement that where it does matter—where entities are public large or managing public funds—there is a higher level of compliance required. That is a very sensible step.We know that good markets make excellent servants and poorly regulated markets make bad masters. That is the basic principle that I think sits behind this kind of legislation—good regulation and making sure things flow well. We think of the global financial crisis. If there had been greater transparency there some of the worst edges of that and perhaps the whole financial crisis might have been avoided certainly in respect of the hedge funds involved.Simplification of reporting processes is something that creates efficiencies and that is good when our businesses and our country spend so much time on compliance. The Government opposite talks often about being business-friendly. Certainly we see that when it comes to one or two of its mates and in respect of Skycity and we think of the casino deal where Skycity is laughing all the way to the bank. It has got all the extra pokie machines is building a casino off the back of problem gambling and will have profits for years to come all because the Government had cornered itself throughputting itself in a non-transparent deal and committing to getting something through before negotiating the deal to its end.We think of Chorus and what is coming up there. It has all the hallmarks of another deal by the Government for the big end of town. We think of Rio Tinto where money was handed over but was not—Hon Clayton Cosgrove: Thrown at them.Dr DAVID CLARK: Thrown at them—money was thrown at them but no jobs guarantee was asked for so restructuring began the next day. That is the kind of shoddy deal that this Government does with big business.But all the while small business is suffering in New Zealand. This Government has passed so much compliance regulation legislation that has disadvantaged small business. We think of the child support payments that employers may now be required to enforce—handling private information about their employees which could lead to personal grievances in the worst possible situations; information that it was not previously thought to be appropriate for business owners to have to handle or to have responsibility for—and all the other compliance responsibilities. It has just been lumped upon them. There was no consultation. That went through in a rushed Budget process.Hon Clayton Cosgrove: No transparency.Dr DAVID CLARK: There was no transparency. Again we think of the paper boy tax. There are now compliance requirements that were not there before.This is a Government that keeps heaping compliance on small business but then it talks about tax simplification. The Minister of Revenue Todd McClay has talked about consulting on tax simplification. Well it has been done overseas. There are plenty of working examples. This Government is big on talk when it comes to things that would support small business but very very very poor on action. We simply just do not see it. This is a Government that is not a friend of small business and that is a shame.That perhaps goes some way towards explaining why 2500 fewer small businesses are being created every year under this Government. This is a Government that is failing—is failing—to create jobs is failing to create new businesses. It is no wonder that it has the worst economic record of any Government in New Zealand in the last 50 years. It has an appalling economic record. It has an appalling record on jobs. It is a Government that should hang its head in shame. I guess I am at least comforted that some helpful pieces of legislation some sensible pieces of legislation—no doubt pushed by officials—are sneaking their way through. This is one small step toward helping to make our economy a little bit more efficient and to take out some of the unnecessary compliance and that is why we are very pleased to support it on this side of the Chamber.Finally I would just say that we wish there could be more of this kind of thing—less of the deals done behind closed doors with big business and more of the cutting of compliance. That is what we in Labour would like to see. We are sick to death of the additional burden put on businesses. They say that something like 15 percent of the revenue for the smallest businesses in New Zealand—typically 15 percent—