PANSY WONG (National) : Part 1 of the Business Law Reform Bill deals with the Companies Act with regard to reporting changes. I would like to commend the Commerce Committee, because overall, although the Business Law Reform Bill is meant to make just technical changes and to streamline various legislation, it was interesting to see the select committee go through Part 1 with a fine-tooth comb and come up with further substantial amendments to the provisions to make sure that shareholders cannot give up their right automatically to receive financial statements, even though publicly available in electronic form, but should receive notice for receiving further financial reports or concise limited versions of reports.

So throughout this bill, and also through other legislation, the Commerce Committee, under the leadership of Katherine Rich, has taken great care to ensure that the changes—even though on the surface of it they are technical—are drafted properly. Half of the provisions were amended by the committee, thus making them much more concise, so I am slightly surprised to see Supplementary Order Paper 72 in the name of the Minister being introduced to this Committee, particularly in respect of Part 3, which deals with financial reporting standards. We will take up this procedural issue, because I am dismayed to see quite a large Supplementary Order Paper that proposes changes to the latter part of the bill after the select committee had gone through the bill and made a very good effort to clarify it. We will come back to that.

Part 1 also deals with the qualification of directors, whereby people who are convicted of certain offences in other countries will be barred from taking up a directorship in New Zealand. National supports that provision in terms of increasing globalisation, whereby companies and directors operate within international environments. It is important that our legislation catches up with these global business operations, so the provision is important in updating that..

National is supporting Part 1, because now that companies in particular can put their financial statements on websites, they can save in their printing and mailing-out costs of large sets of annual reports. Of course, one can also see the benefit to shareholders, because many of them probably receive the annual report and just file it away, without too much reference to it. So we believe that simplifying that procedure is a step in the right direction. One can see that the National Party does support sensible legislation, subject to it being brought in front of the House properly and going through the due process of select committee scrutiny. On the face of it the changes are welcome, although some of the drafting has been subject to heavy changes to make sure that when the legislation is being implemented no room is left for misunderstanding and confusion.

At this stage I register our appreciation for the support the officials gave us on this technical bill. At times debate on technical terms can be quite challenging, but the officials supported the select committee well, and we do welcome this very small step by the Government to streamline companies’ reporting procedures.

KATHERINE RICH (National) : As I rise to take part in the debate on Part 1 of the Business Law Reform Bill, I think it is worthwhile to go over a bit of the history of the bill. This bill was presented by the Minister Lianne Dalziel as a non-controversial bill. I recall her first reading speech as being very much along the lines of: “This is a technical bill, there is nothing to see here, move along quickly, these are all technical changes.”

But the Commerce Committee learnt, after it received some of the early submissions, that the reality was quite different. Submitter after submitter was really very concerned about what was in the bill before the select committee made amendments. The likes of the captive insurers industry said that if the bill went through in its present form, that industry would be wiped out in New Zealand. General Electric turned up and said that if the committee made some of the proposed changes relating to insurance, it would have to rebrand its entire company in New Zealand. One of the credit union representatives turned up and said that it appreciated what the Minister was trying to do but that the bill still did not give the clarity the unions needed to have in order to know they could work together. Then one of the banks turned up and said—

The CHAIRPERSON (Ann Hartley): The member needs to come to Part 1.

KATHERINE RICH:—it worked in 100 different countries and that New Zealand was the only one that required it to hire three people for 10 days, at a cost of well over $100,000, just to report here in New Zealand.

So we see that the changes—which have been quite major changes—made as a result of work done by the select committee have tidied up this part and made sure that it is at least in a state whereby the Committee can have a decent look at it.

I too thank the officials for giving us good advice and for walking us through the changes we needed to make. Some of the changes are common-sense ones. In 1993 not many firms used electronic means to publish their annual reports. Most firms, as many members will know, put together glossy documents at huge expense. Unfortunately, many of those documents were not read by some shareholders, but it is an important process that needs to be carried out in order to allow transparency and the free flow of information so that shareholders can be in a position to judge their investment and remain informed.

Of course, with the progress of modern technology it is quite important that we change some of our laws, so as to be able to deal with the use of electronic data. I think this is a good change to make, because it allows many of our companies to start to distribute electronic information, which is a lot less expensive for a company than the producing of annual reports. Companies still have to go through the reporting process, obviously, but they do not have to go through the expense of printing and producing glossy documents. Documents can be sent out to shareholders in a much easier manner; it is certainly easier, a lot of the time, to get things on one’s computer than it is to receive things through the mail.

So that is basically what Part 1 of the bill aims to do, and it is something that National is very supportive of. It is important to look at ways of streamlining processes for businesses in order to reduce costs. Unlike the Minister, we do not pay lip service to reducing red tape and costs. We are more than happy to support changes such as this that make it easier for businesses to transfer and distribute information and to do so in a way that is not too expensive.

It is important that nobody can opt out of receiving this information. I know we get annoyed sometimes with the amount of material coming to our in-boxes, but when it comes to information relating to a commercial firm—a firm we might have shares in—it is important that that information is transferred freely. We need to make sure that the information reaches shareholders so that they can make their minds up—hopefully, if they read it—and determine whether their investment is a good one. It is important to make sure that shareholders read the information. One can distribute all the information one likes, but that does not necessarily mean that shareholders will read it. Companies still need to go through the process to ensure that the information is distributed.

• The question was put that the amendments set out on Supplementary Order Paper 72 in the name of the Hon Lianne Dalziel to Part 1 be agreed to.
• Amendments agreed to.
• Part 1 as amended agreed to.

CRAIG FOSS (National—Tukituki) : As previous speakers have said, National is speaking and voting in support of the bill. I rise to speak to Part 3 of the Business Law Reform Bill. I enjoyed my time on the Commerce Committee. It is a good, solid committee, and I note that the National Party managed to keep the quorum together, in the spirit of good faith in Parliament. I will not speak for too long, because there is obviously a lot on the Government’s agenda. We may well get to the Conservation (Protection of Trout as a Non-commercial Species) Amendment Bill tonight—one never knows.

In previous speeches on this bill I have raised the issue—and I raise it again—of, in particular, the exemption power of the Accounting Standards Review Board. I have read the Minister, Lianne Dalziel’s, introductory speeches. I have read the committee’s explanation in the commentary. It is quite full and quite wholesome; that is fantastic. But I do see contradictions. For the life of me I cannot understand why that provision was included, particularly when we had a very good submission from the Accounting Standards Review Board, which pretty much pleaded to the committee—and had made, I believe, representations to the Minister and various other ministries—not to include this clause.

I read in the commentary that the committee, in relation to sections 24 to 27 of the principal Act, essentially rejected that submission—or, at least, the officials have written the report in that way. I will quote a small bit relating to the Financial Reporting Act. Basically, the committee justifies the inclusion of this provision because there is existing law and process allowing an exemption. The commentary states that the committee had concerns that not including this provision would lead to weak accountability because the “if the Board thinks fit” test does not make clear the criteria the board is using, etc.

Basically, the committee expressed very little faith in the Accounting Standards Review Board. That did worry me somewhat, because I believe that it is the Minister who appoints this board. People like New Zealand’s chief accounting officer, Mr Warren, and some very high-powered individuals are on that board. I will not list them all, but looking at the names of the members of the Accounting Standards Review Board, I would tend to put my money behind them, their views, and their opinions on matters affecting New Zealand’s accounting standards than on what the Minister has taken on board. I appreciate the commentary from the committee, and I look forward to the Minister expanding further as to why that submission from the board was excluded.

We will be speaking to other parts of the bill later. As Katherine Rich noted, when this bill was first launched it was described as an omnibus, technical bill. It has five different parts; I have just been speaking to Part 3. The National Party took the bill on board in the spirit of making existing law a little bit better. But we have politicisation—we even saw it today in question time—around the takeovers provisions of this bill. Yes, I am speaking to Part 3; I will get back to it later. I just make the point that National could go hard and politicise this bill a lot more than it is. We will not, in the spirit of the intent of this bill, but I think we require many more explanations, particularly since National members recently raised similar Supplementary Order Papers during, I think, the debate on the Securities Legislation Bill and were voted down. I would be interested in an answer to that.

As I said, I will speak briefly on this. I invite the Minister to explain further why she overruled that submission from the Accounting Standards Review Board, given the weight, intellectual grunt, and commercial nous that sits on it. It is the gatekeeper of good regulation in New Zealand.

Hon LIANNE DALZIEL (Minister of Commerce) : I am quite happy to respond to such invitations. I thank Craig Foss for raising the question of the Accounting Standards Review Board’s exemption-making power. I am well aware that the board itself did not seek this exemption-making power, as it believed that it already had this power in respect of its current arrangements.

I draw the member’s attention to Supplementary Order Paper 72, in my name, which addresses some of the concerns that the board has raised with me. I met with Warwick Hunt, the chair of the board, after he made his appearance at the Commerce Committee, and I thought we had a very constructive discussion. In the end we did not agree on the fundamental issue, which was whether to have legislative authority for the exemption-making power, but we did take on board some of the concerns he raised on the specifics. That is why we are removing the ability to make individual exemptions; the ability will only be for class exemptions. I felt that that was a very particular concern that Mr Hunt had raised.

We are replacing the exceptional-circumstances test with what I consider to be an even higher test, and that is whether the compliance with the relevant provision of the financial reporting standard would result in financial statements that are misleading or are likely to mislead. It is a very specific test that will now apply to the granting of an exemption. We are also, of course, removing the “fit and proper” test, which nobody, I think, considers to be necessary any more.

I know that this amendment has not gone the full way to meeting the concerns that the Accounting Standards Review Board raised. But I have had that conversation with the chair, and I feel that the amendment goes a considerable way towards addressing the concerns that the board raised.

PANSY WONG (National) : I thank the Minister, Lianne Dalziel, for providing further explanation of Supplementary Order Paper 72 in her name. National fully intends to cooperate on the Business Law Reform Bill as it was when introduced, but I want to raise a process issue about the exemption power of the Accounting Standards Review Board, which the Commerce Committee spent quite a bit of time tackling.

I commend some of the submitters for their discipline in not wanting the board to grant an exemption to certain companies or classes of companies from adherence to the standards. They wanted to ensure that when a standard is promulgated, every entity abides by it. That is, indeed, the ideal position, but the select committee, after vigorous debate, agreed to go along with the recommendation of the officials. We understand that the board has not been utilising the existing exemption power because that particular criterion is rather broad. The board can grant an exemption as it sees fit. I think the board has shown its integrity by not utilising that provision, because one can also see that for the board to grant an exemption for individual companies or groups of companies as it sees fit could result in a very subjective and non-transparent application of the law.

But in the process of debate, the select committee came up with more formalised written criteria under which that exemption power can be exercised. The Regulations Review Committee also indicated that there was a question as to whether the exemption power should be allowed at the regulation stage rather than in the primary legislation. We are, broadly, happy with the ultimate provision arrived at in the select committee.

But one is slightly concerned about the process when select committee members have agreed to, and believe they have arrived at, a position, and then—as we understand it—the Minister, Lianne Dalziel, has further conversations with the Accounting Standards Review Board and comes up with further agreements. In this case we are happy to support those agreements. But it makes one wonder about the robustness of the select committee process in general. If other submitters knew that they could suggest further amendments, they might have also wanted to do so. I want to compare that to a previous case. When we debated the Communications Legislation Bill, a class of non-profit broadcasters had an eleventh-hour negotiation with the Minister of Communications because a New Zealand First member had introduced an amendment at the Committee stage. We find that these particular behind-the-scenes negotiations completely override the select committee’s position.

I take this opportunity to raise and emphasise again that the National Party has been cooperating in terms of streamlined legislation, but we are still concerned about the procedure whereby a conclusion reached at the select committee can be overridden between a bill being reported back to the House at the second reading and the Committee stage. We hope that type of process will be minimised. Otherwise, it is not fair to the submitters, who see the select committee process as a way for them to clarify their position, and it is not fair to the select committee members, who have taken their task seriously and come to a certain conclusion, only to find that further amendments have been introduced in the Committee of the whole House stage. But as we expressed, in this particular instance we concur with the Supplementary Order Paper and we agree to support Part 3 with these amendments.

KATHERINE RICH (National) : This is quite an important part of the bill because it seeks to streamline some of the concerns that many within the business sector have seen for quite a long time. During the submission process we had two powerful submissions, one from GE Finance and Insurance and the other from Citigroup. Both those businesses, starting with GE Finance and Insurance, argued that the financial reporting requirements, as they are, are unduly onerous. GE Finance and Insurance made the point that it was operating in about 70 different countries, and the requirement to file accounts in New Zealand as a stand-alone entity—that is, as a separate entity from its parent company, General Electric—required a lot of work for little benefit. Out of all the countries that it works within, New Zealand was the only country that required it to do this.

Likewise, Citigroup argued that it worked in over 100 different countries and territories, and that New Zealand was the only country in which Citigroup Inc. was required to file a set of stand-alone financial statements of this type in addition to its group financial statements. Producing those financial statements cost the business enormously. For example, we were told that it cost its New York office something like the time of three professional people for 10 days each just to produce the stand-alone accounts for New Zealand.

So there was an immense expense for little gain. Basically, there were plenty of other audit processes in place. These companies argued that when they work in so many other countries that do not require this specific process to take place, there was little reason for doing it in little old New Zealand. Both those companies argued that what was proposed here did not really go far enough. They argued that an exemption process was not as good as not being required to do the stand-alone accounts in the first place. So, to a certain extent, we have not solved all the problems that both those companies wanted us to solve. But I think we have gone some way towards making changes that will minimise the effects to those businesses when they seek exemptions.

It was pretty interesting, though, if one looks at the process for getting those exemptions, when the Accounting Standards Review Board comes along and says: “We don’t want this as a responsibility.” It showed, I think, a lack of consultation with the board to get it into a situation where it was happy with the changes. When one has a Crown-funded organisation come along and say: “We don’t want these new responsibilities given to us by the Crown.”, and says so in a public forum, that is pretty significant.

So in terms of the changes that are being made here, I think they do go some way to streamline some of the requirements on companies to report on their finances. I think there are probably some additional changes we could make, to make it even easier. It is hard for New Zealand to argue that it needs totally different stand-alone requirements when these international businesses work in so many different markets under so many different scenarios, and we ask them to put together additional accounts that are just totally unnecessary and go to that extent and cost them money without introducing any additional benefit.

So in terms of financial reporting, obviously it is a necessary part of the process. Governments need to know that organisations are working well and working honestly within a jurisdiction. But we need to make the process not as onerous as in other countries, because if we continue to do that we actually put people off coming here and setting up businesses in New Zealand. I think we could have done more to make some changes within this part of the process, but we have gone some way to include changes.

• The question was put that the amendments set out on Supplementary Order Paper 72 in the name of the Hon Lianne Dalziel to Part 3 be agreed to.
• Amendments agreed to.
• Part 3 as amended agreed to.

CHRIS AUCHINVOLE (National) : I rise to speak to Part 4 of the Business Law Reform Bill, which refers particularly to the Friendly Societies and Credit Unions Act 1982. This bill allows these organisations to expand and increase their services. National is very supportive of this. Indeed, National’s record in commerce tends to support moves to increase, improve, and expand commercial activities. Whereas, I guess, it would be a fair observation to say that the present Labour Government has a penchant for introducing regulation at every possible opportunity. So it is with pleasure that I rise to support something that will actually ease regulation for one specific part of the organisation. I note the applause of the Minister, and I thank her for that. It must have been a difficult thing for her to do.

The changes that are incorporated into this bill are at the behest of Government officials, lawyers, and business people. I would like to note that there is not actually a shortage of suggestions from groups of business people for changes to legislation affecting business. Quite apart from the standard representative groups comprising chambers of commerce, export and import institutions, professional bodies, and others, this Government established the Small Business Advisory Group. I can remember that being initially established, and I thought: “Yay, what a good idea!”. However, the group took a while to establish. Its formation was plagued, and I am sure the Minister will agree with me, by frequent changes in portfolio. I think Minister Dalziel is the fourth Minister for Small Business in a relatively short space of time. Hopefully there will now be a period of maturity in the portfolio.

One of the frequent requests by the Small Business Advisory Group is for some relief from the ever increasing number of taxes, fees, and levies. I understand this Government has introduced, or increased, 40 different fees, taxes, and levies since taking office—40 of them—and a further four are proposed. It appears that the Minister has assiduously avoided selecting some of the group’s proposals judging from the 5.3 out of 10 score that the advisory body has given to the Labour Government’s performance. My colleagues earlier listed the 17 percent rise in the average cost to a firm of $43,200 in 2003 for compliance.

I guess this brings to mind a simple fact about the attitude of this Government towards small business that I have developed a feeling about. I acknowledge that very few of the present Labour Government members seem to have been exposed to the rigours and disciplines of running a small business. I acknowledge that many of the present members on the Government benches have backgrounds, and significant backgrounds, in trade unions, which are primarily involved in regulation. I understand the need for regulation, but why so much? The reality is that regulations—

Darren Hughes: I raise a point of order, Mr Chairperson. I am sorry to interrupt the speaker, I know he is not given many opportunities to speak in the Committee, but this is Part 4 and it sounds very much to me like a prepared third reading speech. I just wondered whether you could give some guidance to the member.

The CHAIRPERSON (H V Ross Robertson): I was listening to the member and I was actually at the stage of starting to wonder myself. Would the member speak to Part 4, clauses 43 to 53.

CHRIS AUCHINVOLE: I have no difficulty in doing that and will be very happy to oblige the member who raised that point of order. I just thought he would be interested in the debate and the circumstances behind my considerations. To continue with Part 4—

Craig Foss: You’ve only got 2 more years of speaking!

Darren Hughes: You watch it!

CHRIS AUCHINVOLE: Indeed, that member should never cut his fingernails; he is clinging to his electorate with them. In the case of Part 4 there are a number of specific amendments that favour credit unions such as the ability to set any qualification that can be objectively determined as their common bond. This takes away the subjective judgment of the registrar in friendly societies and credit unions. This will be helpful in the event of liquidation or suspensions.

• Part 4 agreed to.

CHRIS AUCHINVOLE (National) : Thank you, Mr Chairman. [Interruption] It is quite a delight to have such splendid support, not only from this side of the Committee but also from the other side, and I thank the members for it. When we look at Part 5 we are talking about the Insurance Companies’ Deposits Act. This is not necessarily an area that I have a great deal of expertise in, but from that point of view it does prevent foreign companies labelling themselves as New Zealand companies. I guess that is quite a significant thing, and it will be continued, no doubt, with other legislation that the Minister will bring about to facilitate the additional opportunity for New Zealand companies to be given true representation.

It comes back, though, to the purpose of commerce and legislation surrounding it. The question I would like to ask the Minister is—and I am sure she will be happy to respond—what, in fact, she sees as the true purpose of a commercial entity in New Zealand. Wealth creation, I have always believed, is what business is about and these regulations, for the sake of regulating, can inhibit a company’s opportunity to create wealth. I was always taught that the purpose of a commercial entity—be it insurance or otherwise—is to increase the wealth of the shareholders of that company. I would like to ask the Minister whether she responds to that and agrees with it. Far be it from me to anticipate the Minister’s response, but I think it is crucial to know so I again ask the Minister what she thinks is the commercial purpose of a limited liability company in New Zealand.

Hon LIANNE DALZIEL (Minister of Commerce) : As I said, I am always happy to respond to those who ask intelligent questions; I am going to make an exception to that rule and respond to that member, Chris Auchinvole. I am making the exception because I think there is a genuine misunderstanding, as there was with the captive insurers when they came to make submissions to the select committee about the purpose of this particular provision in the legislation. It is to prevent entities from representing that they are supervised under New Zealand’s insurance regulatory regime when, in fact, they are not even acting as insurance companies in New Zealand, and it is necessary to prevent damage to New Zealand’s reputation internationally. Tragically, we have companies that use the word “insurance” in their name, register in New Zealand, and are not acting as insurers. They are not subject to any regulatory framework in New Zealand at all, but are enabled to operate carte blanche in other jurisdictions, and that has great potential for impact on New Zealand’s reputation.

So this provision is to tidy that up for the captive insurers who made submissions on this. When they are carrying on an insurance business in New Zealand, for the purposes of these Acts, then essentially this bill is not designed to disrupt that process at all. They are able to continue to do that, and this amendment will not apply to them, so no action will be required on their part. There was some misunderstanding about that, which is what I think was the underlying issue that the member wanted me to respond to, and I am happy to do so.

• The question was put that the amendment set out on Supplementary Order Paper 72 in the name of the Hon Lianne Dalziel to Part 5 be agreed to.
• Amendment agreed to.
• Part 5 as amended agreed to.

PANSY WONG (National) : Xiexie. National will cooperate and has demonstrated throughout the process of this Business Law Reform Bill even tiny, minute steps that would improve and simplify compliance costs for the business sector. National will cooperate but will not compromise the select committee process by being a pushover or by being bullied into supporting any major changes that should have gone through a proper select committee process. No one should undermine the select committee process by using it as just a tool to push through legislation.

Recently the Minister of Commerce has made a lot of political capital about National not giving leave for her to introduce a Takeovers Panel’s recommendation through emergency lobbying to get the company amalgamation and scheme of arrangement combined under the Takeovers Panel’s jurisdiction. I would like to clarify our position. I also have concern about quite a few high-profile cases that seem to go through the company scheme arrangement rather than going through the Takeovers Panel. Because there does not seem to be any progress in addressing the issue, I decided to test the water and propose an amendment, knowing that it will be defeated, but none the less it will give me some guidance to see where the Minister is heading in addressing this issue during the debate on securities legislation.

I was duly delivered a lecture by the Minister, and it will be interesting to share that with the public and everyone. She assured me that when the Takeovers Panel had decided to go out to consult on that problem, its hearings were heard over only a 10-day period. The Minister said, even with her Small Business Advisory Group representation role, it is not long enough to actually qualify as the level of stakeholder input required to make the changes that need to be made.

She also suggested that during the Takeovers Panel’s hearings, the commercial sector’s opinion differed. There was no unanimous support: some felt it was too much to leave entirely within the jurisdiction of the Takeovers Panel, and some felt the Takeovers Panel’s recommendations should be heard by the High Court in the consideration of the scheme of arrangement, and that would solve the problem. The Minister assured us at that stage that the Government believed there was a wee way to go before the issue was resolved one way or the other. But she emphasised the importance of major changes like that going through a proper process.

In fact the very responsible and diligent chair of the Commerce Committee, my colleague Katherine Rich, made all allowances and heard the submission from the Takeovers Panel. She was prepared to cooperate if those amendments were introduced and we were allowed to invite submissions, because it is quite a defined sector that deals with takeover issues. National would have heard that rigorous debate, but we are not satisfied with the fact that on the one hand the Minister emphasised the importance of a proper process, and on the other hand we cannot hear those robust debates from the sector that have to deal with these takeovers.

I also say that the Minister might have lost a fan during this particular process because the ACT former member of Parliament, Stephen Franks, wrote an article praising the bravery of the Minister of Commerce, the Hon Lianne Dalziel, saying she had “yet to succumb to the Takeovers Panel’s emergency lobbying to get company amalgamation and the scheme of arrangement subordinated to the jurisdiction. The Minister still appears to be insisting that the proposal undergo normal legislative scrutiny”, so I think during this particular process Mr Franks might want to write another article to correct the impression.

Hon LIANNE DALZIEL (Minister of Commerce) : I think it is worthwhile to clarify the point that the member Pansy Wong has raised, because it would not be appropriate to leave it on the record that the amendment I was proposing by way of Supplementary Order Paper 72 was in any way, shape, or form the same as the amendment that the member moved during the course of the debate on the Securities Legislation Bill. My recollection of the member’s amendment at the time was that it was based on the Takeovers Panel’s recommendation that the panel itself become the predetermining body in terms of whether an issue should be identified as being covered by the code, and whether an amalgamation or a scheme of arrangement should proceed. So the provision that the member moved during the debate on the Securities Legislation Bill is one that I would still oppose, because it has not been through an appropriate process.

We explained the Supplementary Order Paper to the Opposition spokesperson—the chair of the Commerce Committee—and she agreed to the actual provision that we were putting up.

Katherine Rich: I did not. You’re telling fibs.

Hon LIANNE DALZIEL: If the member is making statements that are unparliamentary in this House, then obviously she will have a conversation on that with one of my staff members, because that is whom she had the conversation with. I received the advice that all parties in this House were questioned over whether a Supplementary Order Paper would be agreeable to them. The reason we consulted other parties is that the Supplementary Order Paper as proposed is outside the scope of the bill.

If the National Party had just said no, and that it was not interested in proceeding with this measure, we would not have taken it to the Business Committee. We were surprised when we were told at the Business Committee that the National Party was not going to allow it to proceed, but that is fine. That is in the nature of the way that things happen in this Chamber, and I just have to accept that, because the measure is outside the scope of the bill. So nobody is saying that this measure could have proceeded in the same shape as was proposed, or even in the shape that the member had submitted it on the Securities Legislation Bill. It could not have proceeded under that proposal either, because to do that, too, would have been outside the scope of that bill.

All the Government had proposed to do was to develop a regulation-making power that would enable more information to be provided to shareholders when confronted with a situation such as an amalgamation or a scheme of arrangement, and it would have enabled a set of criteria to be established. In consultation, through a proper process of regulatory impact analysis, with the key stakeholders, it could have established the criteria the court would have to take into account in determining whether such an arrangement would proceed.

So the mechanism of an amendment—a Supplementary Order Paper—to the bill that was before the House was a quick fix to something that everyone had agreed on. Let me just read from the Commerce Committee’s report: “Some submitters suggested various changes that are beyond the scope of this bill. For example, the Takeovers Panel recommended amending the Companies Act to remove a possible loophole regarding the application of the Takeovers Code. We would support additional measures being brought forward to address the Takeovers Panel’s concerns at least in part.” Well, that is what the Government did. I am sorry, but that was a unanimous report of the select committee, and I took it on its face value as meaning that members were prepared to proceed. All members had to do, which is ultimately what happened, was to say that they were not prepared to let it proceed, whether or not that was on procedural grounds or whatever other grounds.

We needed unanimity, essentially, in order to have something included in the bill that was outside its scope. We put our hands up; we say that we give up. We will refer the matter back to our officials and we will do some more work on it.

KATHERINE RICH (National) : After hearing that speech I think we are all sitting here thinking that that is the level of truth we have come to expect from that Minister. She is telling porkies again, or in this case—

The CHAIRPERSON (H V Ross Robertson): The member cannot use that word in this House. It has been ruled out by Speaker Hunt in 2003.

KATHERINE RICH: I withdraw.

The CHAIRPERSON (H V Ross Robertson): Thank you.

KATHERINE RICH: Let us just go through some of the exaggerations, the first one being my agreement to the Supplementary Order Paper. That is quite wrong; I certainly gave no agreement. In fact, when discussing the Supplementary Order Paper, I pointed out that this was outside the scope of the Business Law Reform Bill and, based on what went on in the Commerce Committee, it was unlikely to receive our support because of that.

Let us also remember that the Minister was given the opportunity by me to take back the issue to the select committee process, so that some consultation could be done—so that the business community could have some say—not just some eleventh hour, back-door amendment as the Minister has attempted to introduce in the Committee stage here today, but a proper process whereby people could have a say about the change. Let us remember that not one single submission was received on the issues raised by the Takeovers Panel, because no one had any idea that it was to be suggested.

The Minister gave her word that the Business Law Reform Bill would be compact and would contain a certain number of issues, and I recall her official telling me that there would be no introduction of any other non-negotiated clauses within the law. The Minister has gone back on her word, and that is why she is playing politics with this. She has gone back on her word to make sure that the Business Law Reform Bill had some collegiality and some mutual agreement.

This was an omnibus bill, and I think that this side of the House approached the bill with some collegiality. We worked hard on it in the select committee process, given that many of the submitters were quite gobsmacked at some of the changes suggested. Members will remember that Lianne Dalziel told the House that this was a technical bill, and that there was nothing to see here and that people should move along quickly, but, of course, submitters who came along to the select committee had a totally different view and they raised some very important concerns. So the issue here is that the Minister has gone back on her word. She attempted to introduce something at the eleventh hour that was not part of the initial bill.

The officials actually reminded us that it was outside the bill’s scope and, although the Minister wanted to pretend that there was a tsunami of businesses wanting to take advantage of the loophole, she obviously had not read some of her own officials’ advice. They said that in the 5 years since the code was introduced it appeared that schemes of arrangement and amalgamation had been used only three times to avoid the provisions of the code, and I quote: “Officials do not consider that the floodgates will open if no action is taken at this time.” So from the perspective of this side of the Committee, we think that it is important to have due process. I say to the Minister that if she is to make such a dramatic change that affects the business community, she should take the time to consult and not be so arrogant as to suggest that she can just introduce something in the Committee stage, when nobody has had any chance to have a say on it, and pretend that Armageddon is just around the corner if she does not have the opportunity to do that.

So let us just introduce a few facts into the debate. It is a shame that the Minister has tried to play politics with this change, because there was a lot of collegiality when it came to this Business Law Reform Bill. The Minister has thrown that out of the window by playing politics and by stretching the truth so far that it is barely recognisable. In terms of this Committee’s view, yes, we were sympathetic towards some of the concerns raised by the Takeovers Panel, but we have to have a proper process. We have to give New Zealanders and New Zealand businesses the opportunity to have their say, and not introduce back-door legislation that has not been consulted on at all. But that is what we have come to expect from this Minister. She wants to do things the easy way, without doing the hard yards. The Takeovers Panel had not done enough of its own consultation. In fact, it received only about 10 submissions on its ideas, and four of them said that they did not want it to do it. So there was hardly consensus before it got to the select committee stage. The Minister told me that there would be no additional issues introduced in the bill, and she went back on her word.

• Clause 1 agreed to.
• The question was put that the amendments set out on Supplementary Order Paper 72 in the name of the Hon Lianne Dalziel to clause 2 be agreed to.
• Amendments agreed to.
• Clause 2 as amended agreed to.
• The Committee divided the bill into the Companies Amendment Bill (No 2), the Dumping and Countervailing Duties Amendment Bill, the Financial Reporting Amendment Bill, the Friendly Societies and Credit Unions Amendment Bill, and the Insurance Companies’ Deposits Amendment Bill, divided into Companies Amendment Bill, Dumping and Countervailing Duties Amendment Bill, Financial Reporting Bill, Friendly Societies and Credit Unions Amendment Bill, Insurance Companies’ Deposits Amendment Bill, pursuant to Supplementary Order Paper73.
• Bill to be reported with amendment presently.
• House resumed.
• The Chairperson reported the Ngāti Mutunga Claims Settlement Bill without amendment; and the Business Law Reform Bill with amendment, and that the Committee had divided it into five bills.
• Report adopted.