Category: New Zealand Parliament – Hansard

Source: New Zealand Parliament – Hansard

TUESDAY, 1 AUGUST 2023

(continued on 2 August 2023)

COMPANIES (DIRECTORS’ DUTIES) AMENDMENT BILL

Third Reading

ASSISTANT SPEAKER (Hon Jenny Salesa): Mōrena, the House is resumed for the extended sitting.

CAMILLA BELICH (Labour): I move, that the Companies (Directors’ Duties) Amendment Bill be now read a third time.

It is a pleasure to take a call on this bill. This bill has had an unusual journey to this, its third reading. It started with a common misconception articulated in this House that directors have a duty at all costs to return a profit. These narrow views about the role of business in our society serve no one. Just like it is often said that no person is an island, it is also true that no company operates entirely on its own, without effect or regard to the environment or the community around them. Many businesses recognise this and act responsibly with consideration not just to the profitability of their company but also to the environmental impact, the true nature of their supply chain, and the people who live and work nearby or who are impacted by the business that they carry out. This is along the same lines of a lot of other work that has been done in this space. For example, the modern slavery announcement that was made by the Minister Carmel Sepuloni last week, looking at the integrity of our supply chains and how as businesses within New Zealand or operating in New Zealand they have the responsibility to do better and to make sure that there is no exploitation in the work that they do. This bill is along similar lines and looks to the future of conducting business responsibly. I commend the businesses who are already undertaking these kinds of assessments and conduct in their work.

What is achieved, then, by this bill, is to provide clarity and security to those directors who were, until the passage of this bill, unsure or unclear about the scope of their duties. It doesn’t require directors to consider environmental, social, and governance matters. It doesn’t increase compliance costs. It doesn’t create new duties, and I want to be clear about that. This simple but important bill clarifies a small but significant point that profit is not the only factor important to responsible businesses. This bill is so straightforward that I can outline again, for the benefit of the House, exactly what it does. It adds a new subsection into clause 131 of the Companies Act. After the passage of this bill, 131(5) will state “To avoid doubt, in considering the best interests of a company or holding company for the purposes of this section, a director may consider matters other than the maximisation of profit (for example, environmental, social, and governance matters).” That is the entirety of the change that this bill introduces. It clarifies the best interests of a company could or may be to consider other matters other than the maximisation of profit.

This bill was further strengthened by the Supplementary Order Paper (SOP) I introduced at the committee stage outlining that environmental, social, and governance—or ESG—matters could be considered. I felt that this clarification was needed in order to provide context for the type of considerations directors may take into account. ESG matters are mentioned in section 129 of the KiwiSaver Act 2006 when dealing with responsible investor statements. So this concept has precedence already in New Zealand law and it is my view that it will continue to be used by the business sector when looking at factors other than the maximisation of profit. Members will also be aware that the United Kingdom has also introduced a similar change to their Companies Act in section 172, all the way back in 2006.

Now, members opposite will no doubt say that this law isn’t needed, that companies can already act responsibly taking wider ESG factors into account. And while companies could do that, the law in this area was not as clear as it could be on this point. This law provides the clarity needed. Members opposite have also accused us of virtue signalling, and I want to unpack that a little bit. “Virtue signalling” is a derogatory phase that implies that the only reason one is undertaking an activity is to be seen to be good. This bill actually clarifies and affirms the right of directors to actually do good. It gives confidence to action, not just signals of good intentions, as alleged. It is good for companies to feel they can consider more than their financial bottom line if they want to. It is necessary to have clear law for it to be accessible and useful to the general population. This bill enables both these things to the benefit of our legislative regime.

On the other hand, some members and submitters to the select committee wish we had gone further and made these considerations mandatory. Although I have sympathy for this view, I think that because of the substantive policy work involved with this type of change it is best suited to a Government bill—if there was will to go ahead with this type of change—rather than a members bill. But I want to recognise those submitters who raised those concerns in the select committee process, and those across the House who engaged in this matter, especially my colleague Ricardo Menéndez March, who put an SOP up on that matter in the committee stage. So I thank them for their interest in the bill and their engagement with it, but I think that this bill, as it is written, strikes the most appropriate balance.

I want to thank Duncan Webb—who first put this bill in the biscuit tin—for this idea, for his support, and for his courage to improve and clarify the law in this area. I also want to thank Rachel Brooking for her leadership of this bill throughout the select committee stage. I also want to thank the Economic Development, Science and Innovation Committee; you may have crossed half this bill out, but I think the bill we have before us today, that is about to become part of our law, is better and stronger for your attention. I also want to thank the chair of the Economic Development, Science and Innovation Committee Naisi Chen.

To the submitters on this bill: you may not have supported this bill—some of you may have wanted it to go further—but I hope you know that we listened to your concerns and considered the feedback, and your submissions had an impact on the final bill that will be passed in the House today. I also want to thank Alana Belin from the Parliamentary Counsel Office for her assistance with the drafting of this bill.

Having good law, especially in relation to the conduct of business, will help New Zealand businesses to grow and will assist individual company directors to have the confidence to have a more holistic view of the impact of their activities in the world around them. I therefore commend this bill to the House.

ASSISTANT SPEAKER (Hon Jenny Salesa): Meitaki maata. The question is that the motion be agreed to.

Source: New Zealand Parliament – Hansard

TUESDAY, 1 AUGUST 2023

(continued on 2 August 2023)

COMPANIES (DIRECTORS’ DUTIES) AMENDMENT BILL

Third Reading

ASSISTANT SPEAKER (Hon Jenny Salesa): Mōrena, the House is resumed for the extended sitting.

CAMILLA BELICH (Labour): I move, that the Companies (Directors’ Duties) Amendment Bill be now read a third time.

It is a pleasure to take a call on this bill. This bill has had an unusual journey to this, its third reading. It started with a common misconception articulated in this House that directors have a duty at all costs to return a profit. These narrow views about the role of business in our society serve no one. Just like it is often said that no person is an island, it is also true that no company operates entirely on its own, without effect or regard to the environment or the community around them. Many businesses recognise this and act responsibly with consideration not just to the profitability of their company but also to the environmental impact, the true nature of their supply chain, and the people who live and work nearby or who are impacted by the business that they carry out. This is along the same lines of a lot of other work that has been done in this space. For example, the modern slavery announcement that was made by the Minister Carmel Sepuloni last week, looking at the integrity of our supply chains and how as businesses within New Zealand or operating in New Zealand they have the responsibility to do better and to make sure that there is no exploitation in the work that they do. This bill is along similar lines and looks to the future of conducting business responsibly. I commend the businesses who are already undertaking these kinds of assessments and conduct in their work.

What is achieved, then, by this bill, is to provide clarity and security to those directors who were, until the passage of this bill, unsure or unclear about the scope of their duties. It doesn’t require directors to consider environmental, social, and governance matters. It doesn’t increase compliance costs. It doesn’t create new duties, and I want to be clear about that. This simple but important bill clarifies a small but significant point that profit is not the only factor important to responsible businesses. This bill is so straightforward that I can outline again, for the benefit of the House, exactly what it does. It adds a new subsection into clause 131 of the Companies Act. After the passage of this bill, 131(5) will state “To avoid doubt, in considering the best interests of a company or holding company for the purposes of this section, a director may consider matters other than the maximisation of profit (for example, environmental, social, and governance matters).” That is the entirety of the change that this bill introduces. It clarifies the best interests of a company could or may be to consider other matters other than the maximisation of profit.

This bill was further strengthened by the Supplementary Order Paper (SOP) I introduced at the committee stage outlining that environmental, social, and governance—or ESG—matters could be considered. I felt that this clarification was needed in order to provide context for the type of considerations directors may take into account. ESG matters are mentioned in section 129 of the KiwiSaver Act 2006 when dealing with responsible investor statements. So this concept has precedence already in New Zealand law and it is my view that it will continue to be used by the business sector when looking at factors other than the maximisation of profit. Members will also be aware that the United Kingdom has also introduced a similar change to their Companies Act in section 172, all the way back in 2006.

Now, members opposite will no doubt say that this law isn’t needed, that companies can already act responsibly taking wider ESG factors into account. And while companies could do that, the law in this area was not as clear as it could be on this point. This law provides the clarity needed. Members opposite have also accused us of virtue signalling, and I want to unpack that a little bit. “Virtue signalling” is a derogatory phase that implies that the only reason one is undertaking an activity is to be seen to be good. This bill actually clarifies and affirms the right of directors to actually do good. It gives confidence to action, not just signals of good intentions, as alleged. It is good for companies to feel they can consider more than their financial bottom line if they want to. It is necessary to have clear law for it to be accessible and useful to the general population. This bill enables both these things to the benefit of our legislative regime.

On the other hand, some members and submitters to the select committee wish we had gone further and made these considerations mandatory. Although I have sympathy for this view, I think that because of the substantive policy work involved with this type of change it is best suited to a Government bill—if there was will to go ahead with this type of change—rather than a members bill. But I want to recognise those submitters who raised those concerns in the select committee process, and those across the House who engaged in this matter, especially my colleague Ricardo Menéndez March, who put an SOP up on that matter in the committee stage. So I thank them for their interest in the bill and their engagement with it, but I think that this bill, as it is written, strikes the most appropriate balance.

I want to thank Duncan Webb—who first put this bill in the biscuit tin—for this idea, for his support, and for his courage to improve and clarify the law in this area. I also want to thank Rachel Brooking for her leadership of this bill throughout the select committee stage. I also want to thank the Economic Development, Science and Innovation Committee; you may have crossed half this bill out, but I think the bill we have before us today, that is about to become part of our law, is better and stronger for your attention. I also want to thank the chair of the Economic Development, Science and Innovation Committee Naisi Chen.

To the submitters on this bill: you may not have supported this bill—some of you may have wanted it to go further—but I hope you know that we listened to your concerns and considered the feedback, and your submissions had an impact on the final bill that will be passed in the House today. I also want to thank Alana Belin from the Parliamentary Counsel Office for her assistance with the drafting of this bill.

Having good law, especially in relation to the conduct of business, will help New Zealand businesses to grow and will assist individual company directors to have the confidence to have a more holistic view of the impact of their activities in the world around them. I therefore commend this bill to the House.

ASSISTANT SPEAKER (Hon Jenny Salesa): Meitaki maata. The question is that the motion be agreed to.

Source: New Zealand Parliament – Hansard

Question No. 2—Prime Minister

2. DAVID SEYMOUR (Leader—ACT) to the Prime Minister: Does he stand by all his Government’s statements and policies?

Rt Hon CHRIS HIPKINS (Prime Minister): Yes, particularly the further $567 million we announced yesterday for immediate works on State highways in regions that are affected by the North Island weather events. That includes State highways in Tairāwhiti, Wairoa, Hawke’s Bay, Coromandel, and Northland. The funding for these roads is coming from the $6 billion National Resilience Plan that the Government allocated funding for in this year’s Budget. It’ll go to replacing or strengthening and rebuilding damaged bridges and improving road surfaces on major stretches of roads. This, of course, comes on top of the $525 million already provided for roading infrastructure to get those regions back on their feet after Cyclone Gabrielle and the Auckland floods.

David Seymour: Is the Prime Minister aware that Cyclone Gabrielle hit Hawke’s Bay and Tairāwhiti in February, and how is it possibly his go-to boast policy that he has managed, after six months, to announce they’re going to fund rebuilding the roads that were damaged?

Rt Hon CHRIS HIPKINS: I note the member clearly didn’t listen to the entirety of the answer. We’ve already given them $525 million for the road rebuilding; that was done within weeks of the events happening. We’re now adding another $567 million, because we don’t think they should have to put up with Bailey bridges indefinitely.

David Seymour: Does he stand by his statement that “we don’t have a … money tree in the backyard that means we can continue to indefinitely increase government spending”, and if that’s the case, how does he explain the last six Budgets, where his Government has increased expenditure by 70 percent for no measurable outcome improvements?

Rt Hon CHRIS HIPKINS: Well, yes, I do stand by my comments, in the first part of that question, and I utterly reject the second.

David Seymour: Can he, then, explain to New Zealanders in tangible, relatable terms, what actual outcomes have improved—not examples of where the Government spent more, but where the outcomes achieved have got better; 70 percent better?

Rt Hon CHRIS HIPKINS: In fact, I could go on and on about it, but I’ll give the member a few just to get him started. How about 77,000 fewer children living in poverty under this Government? How about an economy that’s grown 6.7 percent under this Government? How about the 12,000 additional public homes that have been put in place under this Government, after the number of public homes went down under the last National-ACT Government? We could talk about the share of renewable electricity being the highest in a very long time—in fact, possibly for ever. We could talk about the fact that we’ve increased paid parental leave entitlements—that is thousands more Kiwi families enjoying extra paid parental leave. And if the member thinks that that’s not leading to better outcomes for those babies, then perhaps he needs to think again about how he measures the value of things.

David Seymour: Does the Prime Minister understand that he just explained the economy grew at a smidgen over 1 percent a year and he built 2,000 houses a year for six years in return for a 70 percent increase in public expenditure—is that what this Government calls success, and is that what they’re taking into the election?

Rt Hon CHRIS HIPKINS: Of course, the population has grown and incomes have grown during that time as well.

David Seymour: Is the Prime Minister now claiming that the population has grown because Government expenditure’s increased, or is he really saying that he’d like to hide from the fact that after inflation and after population growth, the amount spent in real terms per capita is up 28 percent and he’s got nothing tangible to show for it?

Rt Hon CHRIS HIPKINS: No.

David Seymour: Does he stand by his various statements praising police, and will they receive a 14.5 percent increase in pay this year?

Rt Hon CHRIS HIPKINS: In answer the first part of the question, I believe the police do an exceptional job on behalf of New Zealanders. In answer to the second part of the question, I don’t intend to get into bargaining in question time—no Prime Minister or Minister would ever do that.

David Seymour: What does it say for this Government’s economic management that they have borrowed an additional $121 billion over the last six Budgets and are now struggling to meet the arbitration recommended offer to pay teachers more?

Rt Hon CHRIS HIPKINS: With regard to arbitration, of course, the teachers would not be asking for such big pay increases had they had pay increases during the time of the nine years that the National Party was in Government, when their salaries actually went backwards in real terms. But in terms of the Government’s overall level of borrowing, I would note that one of the big contributors to that was supporting New Zealanders through a once-in-a-generation economic shock caused by a global pandemic, and during that time the members opposite, including the member himself, were arguing we should’ve been spending more.

David Seymour: Does the Prime Minister also want to take the credit for spending $100,000 a day to store $531 million—that’s over half a billion bucks—of expired rapid antigen tests (RATs) after the Government, for months and months, in fact over a year, banned anyone else from importing them?

Rt Hon CHRIS HIPKINS: Well, the member can’t seem to get his story straight. He keeps complaining that we didn’t have enough RAT tests; now he’s complaining we’ve got too many of them.

Source: New Zealand Parliament – Hansard

Source: New Zealand Parliament – Hansard