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Harawira - Insolvency Law Reform Bill

Insolvency Law Reform Bill

Hone Harawira Member of Parliament for Te Tai Tokerau

Tuesday 21 February 2006

Mr Speaker, it seems the current insolvency laws don't work properly, which means more costs for creditors and debtors, and more liquidations and bankruptcies, hence the need to change the law. While the business community and insolvency professionals have been positive to this Insolvency Law Reform Bill, I would like to mention a few points.

One is the concept of planning for failure, and recognising failure as an opportunity to improve on previous effort. Failure is not to be feared. Indeed, if Colin James is to be believed, failure is a characteristic of our current financial situation.

He said recently in a management magazine, "There is a growing anthology of Maori business, professional, artistic and sporting success. But it is swamped by failure". I'm not in the habit of agreeing with Colin James, but I do agree with him when he says that failure within the Maori Business community, is a failure of the nation, because he rightfully acknowledges the righteousness of the Maori Party philosophy - that what is good for Maori, is also good for the nation as a whole.

But its one thing to identify failure - its another thing to put in place processes that don't just penalise failure, but also create new opportunities for growth. And the Maori Party supports any initiative that does that. New Zealand's personal bankruptcy laws were last reviewed in the 1960s, and our corporate insolvency laws were last amended in the early 90s, but the business world today is very different to that of the 1960s or indeed over a decade ago. We know that Maori were really hurt by the removal of tariff protections, the restructuring of the state sector, and the sale of the forestries, the railways, and the telephone and electricity industries.

And it was also Maori workers in textile, clothing, footwear, car assembly and meat works that suffered, a crisis point in our business and economic growth. And Maori whanau continue to suffer through ongoing globalisation. And the legacy of that betrayal of the Maori workforce lingers. How do we know? Easy.

At the start of this year, unemployment for non-Maori was only 2.5%, compared to a shocking 7.6% for Maori.

Failure to provide, failure to encourage, and indeed the failure to support endeavour is very much part of our experience. But we also know that: * Maori perspectives are relevant to successful business start-up. * Maori business potential is under-recognised and under-developed. * Maori business would benefit from early intervention, and the opportunity for help to manage their way through difficulties; to stay afloat; or to limit the expense of bankruptcy.

And we note the latest research by the Global Entrepreneurship Monitor, which listed Maori as the third most entrepreneurial people in the world. The study also identified a remarkable optimism and readiness from Maori to start a business in the next three years, but unfortunately also noted a poor record in business survival. And again, the Maori Party is supportive of any efforts to enhance business survival and business growth.

We also recognise of course, that the most important thing is to try to prevent financial strife in the first place, and although it is a bit outside the scope of the Bill, the Maori Party believes we can't clearly identify business success or failure, without also looking at our tax laws.

Maori businessmen tell us that the company taxes for small businesses are too costly; and they also note with some sarcasm, that the government very own IRD always makes sure they are at the head of the creditors queue. The Maori Party believes the whole area of business tax needs urgent review to enable businesses to grow and develop wealth for the whole nation - and when we talk about wealth, we're talking about the right to full employment, higher wages, investment, research and development, and innovation.

We also note the changes to corporate insolvency proposed in the Bill, which would provide for rehabilitation of viable insolvent companies, and a better return for creditors.

The Maori Party supports any efforts to modernise and improve processes which are unwieldly, burdensome and costly for all parties. Finally, this House should know that "the biggest asset of Maori with untapped potential is the value of our human capital" and this is very much the case in the context of developing enterprises.

The largest increase in the number of Maori aged between 15 and 24 years will occur before 2011. The next six years will therefore be crucial in developing the skills of this workforce. It is never too late to get it right. And we must get it right for our young, and for our future.

ENDS

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