Andersen Ginny; Salesa JennyThird ReadingHon GINNY ANDERSEN (Minister for Small Business): I present a legislative statement on the Business Payment Practices Bill. DEPUTY SPEAKER: That legislative statement is published under the authority of the House and can be found on the Parliament website. Hon GINNY ANDERSEN: Thank you Mr Speaker. I move That the Business Payment Practices Bill be now read a third time. Timely payments for goods and services delivered is crucial for the financial health of any business and especially for New Zealand's small businesses. But since taking on the small-business portfolio I've heard from so many small-business owners that the long-payment terms that some large firms impose are hurting their cash flow increasing their stress and also stopping their business growth. Larger firms are often in a position to take it or leave it in terms of payment. This puts them at an advantage at the expense of some of their smaller suppliers and that's not fair. When this happens these small suppliers often feel unable to ask for more reasonable terms for fear of losing that income. The perception of a power imbalance is often too great for small-business owners to risk upsetting their large customer. If a small business relies on a large payer for a lot of their revenue they will indeed be anxious to not rock the boat as their livelihood may well be at stake. Poor payment practices by some large firms are preventing significant segments of our business community from realising their full potential. The effects can run throughout supply chains and have consequences for the far broader economy through for example a high cost of capital or unnecessary insolvencies and we know that in New Zealand the vast majority of our business activity—98 percent of our businesses—are small businesses. In its report in 2019 the Small Business Council reported that 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 with our current tools and that in fact a new approach was needed. The bill being debated here today and receiving its third reading will deliver that change. It will provide transparency so that people can see for themselves whether large firms are offering good payment terms or not. Small businesses will have better information to inform their decision making when engaging new customers. Large businesses who care about their reputation will want to ensure that their payment practices stand up to public scrutiny. The bill requires entities with more than $33 million in revenue and $10 million in third-party expenditure to disclose information about their payment practices twice a year. The Government needs to lead by example so the bill will apply to Government entities just as much as the private sector. Disclosed information will include information related to payment times and reporting entities' payment terms. This information will be publicly available on a searchable register administered by the Ministry of Business Innovation and Employment (MBIE). The register will be free for users and easy to access. This bill provides for the appointment of a registrar who will be responsible for establishing and maintaining the register and its associated compliance and also its enforcement function. The bill also provides for infringement penalties and criminal offences for contraventions of its obligations. The bill's penalties would of course only apply to the most wilful and problematic offending. The primary compliance lever will be reporting entities' desire to enhance their reputations as good business operators who offer fair payment terms. Reporting entities that offer good payment terms will want to make this known and the transparency this regime requires will enable them to do exactly that. Favourable comparisons will be made against reporting entities that don't offer good payment terms. They will now need to defend this approach in the face of full public scrutiny. The Economic Development Science and Innovation Committee carefully considered the bill and recommended some really good changes to make this bill more effective and I'll briefly go over some of those changes. I'd also like to thank members from both sides of the House for their work on the bill. The changes include having more clarity in what counts as payment information and also more specificity around which entities the new transparency regime will apply to measures to minimise compliance cost and a range of technical improvements. The select committee made two other changes to help ensure implementation runs smoothly. The first was to provide a six-month transitional period before reporting entities must start collecting information. The second was that initially only reporting entities with $100 million of annual revenue will need to report. Many of these companies will already be doing the same reporting requirements by the Australian requirements so they will be well placed to extend this transparency to their New Zealand operations. Parliament then made more changes to the bill at its committee of the whole House stage. These changes have no effect on the intent or the broad parameters but none the less they will help ensure that it operates effectively is clear and is internally consistent. Those changes include inserting a provision in the bill that allows regulations to define invoice" making it clear what fields public users of the register must be able to be searched upon making it clear that companies must be able to report separately on invoices in dispute only if and when they are required to report on late invoices making sure that the use of the term "working days" was consistent when talking about appeal and review periods throughout the bill and enabling the regulations to specify the kinds of transactions that need to be reported back on. The most notable change at the committee of the whole House stage was that to increase the bill's transitional period from six to 10 months. The bill's regulations won't be gazetted immediately after the bill passes and it is the regulations that spell out exactly what information must be disclosed. Adding more time to the bill's transitional period ensures that the reporting entities don't lose some of that transitional period while they wait for those regulations to be finalised. MBIE officials are developing draft regulations now and to this end they have consulted widely with stakeholders and subject matter experts in New Zealand and in Australia where a similar regime now operates. I am confident that the regulations will achieve the right balance of ensuring useful information is made available to small businesses and the wider public while minimising compliance cost for reporting entities and enabling the smoothest possible implementation. This bill has been long talked about and small businesses are eager to see this enacted. I'm proud and pleased to commend this bill to the House. ASSISTANT SPEAKER (Hon Jenny Salesa): The question is that the motion be agreed to."