INSPIRATIONAL SOLUTIONS

08.02.2113

'The Chartered and/or Accredited Accountant - the Disclaimer of the Learned;

The Statutory Framework for Financial Reporting

Background information to the Financial Reporting Bill.

After reviewing the present MED discussion document and its companion discussion document prepared by the ASRB. entitled Proposed Application of Accounting and Assurance Standards under the Proposed New Statutory Framework for Financial Reporting, together address some of the problems with the statutory framework for financial reporting and Accounting standards, but do not address the Assurance standards.

The Accounting and Assurance standards would be outcomes driven to rationalize the institutional arrangements, but the Assurance standards are not part of the institutions or professions culture hence the Disclaimer. the independence and the allocation of statutory responsibilities through the Assurance standards is a sovereignty safeguard.

These sovereignty safeguards are the core generics for a statutory process that determines the tiers of financial reporting and its qualifying criteria for each tier. Whether each class of entity should be required to prepare financial statements and audits would be subject to the relevant tax codes/laws and tax assessments which will safeguard/protect the integrity of the tax base.

Other issues pertaining to the financial reporting legal framework will need to be assessed against the fairness of the tax process and the issues MED addresses relating to the policy and law of financial reporting.

The ASRB discussion document and the nature of approved financial reporting standards as a minimum standard for the current and proposed Accounting standards for entities with GPFR obligations along with the application ofTiers and Accounting standards to PBE Sectors and in the For-Profit Sector all have one origin in common, they were created from the Westminster system (Sovereign). A minimum standard across all Class of Entities makes the nature of approved financial reporting standards accessible and attainable.

This minimum standard also makes the quality management of the financial reporting standards and the quality assurance of this management efficient and effective, the assurance outcomes once assessed through the auditing standards provides a seamless review system between the financial reporting standards and its quality assurance and the appropriate tax assessments.

These assurance requirements for each tier, makes provision for relevant cross-crediting between tiers where financial reporting, provides the evidence and quality reporting information as part of the Key performance indicators and its added value/fair market value.

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Objectives oftlris Review

The main objective of the review is to produce a financial reporting system that works effectively and efficiently for all categories of entities in New Zealand and that have the capacity to meet international standards. Produce a seamless financial reporting system;

• Financial reporting principle and the three indicators • Benefits of the minimum financial reporting standards and its core generic against the

associated compliance costs. The costs of the financial conversion cycle adds value/fair market value is as follows;

1. The costs of preparing annual GPFR is used for two purposes. first disclosure of information about the entity's financial performance and position and the second, is to provide information that is useful to a wide range of users in making economic decisions and these indicators. that an entity meets the primary principle; • Public accountability • Economic significance • The separation of ownership and management.

2. The costs of carrying out audits. where it is necessary to promote accountability by; • Public sector entities to taxpayers • Companies to shareholders. and • Charities to donors.

3. The costs associated with publishing financial statements and Public accountability indicator that arises when an entity receives money directly from the public. The entities that are publicly accountable are; • Non-profit public sector entities • Issuers • Charities

4. The cost of developing and promulgating accounting. auditing standards and quality assurance systems for Economic significance indicators; • The idea underpinning economic significance as an indicator is the economic or

social impact that a large entity is likely to have in national or a regional economy if it fails

• There is a broader stakeholder interest in the financial position and performance of large entities even if they do not have public accountability

• Groups other than equity investors and lenders provide resources as a consequence of their relationship with an entity, even though the contractual relationship is not that of a capital provider. but suppliers, customers, employees or other groups make decisions to provide resources to the entity in the form of credit (cross-crediting fund-raising), without cross-crediting they are providers of capital.

5. fs consistent with the Separation of management and ownership indicator. Entities with similar external user need characteristics, should have similar financial reporting obligations; • The concern that management may not manage other people's money as well as

the other people would themselves.

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This "principal-agent" problem explains the reason for corporate governance, which involves putting oversights systems and rules in place with the aim of modifying managerial behaviours and improving entity performance • At some point of separation, the principle need to be able to access the financial

performance, financial position and in some cases, the cash flow of the entity • The assessment of standards in the separation indicator, in relation to each of

the broad categories of entities are; For-profit entities, Public sector entities and Private non-profit entities.

6. The obligations that are imposed on each class of entities should be clearly defined. Clarity is needed both in terms of defining the tier of reporting an entity is included within and the resulting preparation. quality assurance and publication or distribution obligations that are imposed on it; • By drawing general conclusions about the application of the indicators and

whether entities should therefore be required to prepare GPFR, have an assurance engagement completed and distribute or publish the GPFR. These levels are conclusions then applied more specifically to each entity type.

7. To facilitate the ability of the New Zealand and Australia standards setters to produce harmonized financial reporting standards; • Some Acts, Regulations and other statutes require specified entities to keep

proper financial records and, in some cases, prepare, publish or distribute financial statements and have them audited. These statutes were enacted or made at various times and there are inconsistencies in the language used

• In some cases, the difference in language has led to substantive preparation inconsistencies. All out-of-date references to financial record keeping financial reporting should be replaced and the consolidated Acts, Regulations and Statutes using standardized modem terminology

• The preparation of financial statements/reports in accordance with generally accepted accounting practice. This language has the added advantage of flexibility because there will be no need to amend the legislation as GAAP changes over time and is integral to the Accounting culture as a profession.

The heritage and image o(Definition

There are five broad sets of issues with a financial reporting system.

Firstly, because the allocation of responsibilities under FRA is incoherent. incomplete and in many respects, opaque. There is no clear rationale for the way,

1. That functions are allocated between the Government and the ASRB. with some being performed by the Institute

• With the eventual fall of the Roman Empire by 300 A.D. (Roman numerals history and use through the growth of Mathematics. Money and Accounting) and the introduction of ancient Indian numerals they developed this ingenious system along with the invention of zero (nothing-Te Kore)

• And with the adoption of Arabic numerals. today we call them decimal numbers because they work consistently to a base of I 0. The ASRB does not have the power to approve standards for some entities with financial reporting obligations. Arabic- of, relating to, characteristic of, or constituting the language Arabic; expressed in or utilizing Arabic numerals that has numerous dialects and conforms to the classical standards of the Koran.

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• The ingenious method of expressing every possible number using a set of ten symbols (each symbol having a place value and an absolute value) emerged in India. Its simplicity lies in the way it facilitated calculation and placed arithmetic foremost amongst useful inventions. The FRA silences about the allocation of the responsibility between the ASRB and the Institute for making decisions about the strategic direction of the New Zealand financial reporting system, and

• Parts of the financial reporting system do not work in the way that would be expected based on a plain reading of the FRA. Indians ingenious method/system -Ingenium natural capacity. natural disposition/lore; showing or calling for intelligence: marked by originality, resourcefulness and cleverness in conception or execution.

NaTe Kune, Te Pupuke NaTe Pupuke. Te Hihiri NaTe Hihiri, Te Mahara Nate Mahara, Te Hinengaro Nate Hinengaro, Te Manako

Ka hua Te Wananga Ka noho i a Rikoriko Ka puta ki waho ka te Po Ko Te Ponui, Ko te Poroa Te Poituturi, Te Po i pepeke Te Pouriuri, Te Potangotango Te Powhawha. Te Po te kitea Te Po te whaia Te Poi oti atu kite mate Na te kore i ai Te Kore te whiwhia Te Kore te rawea Ko hotupu, ko Hauora Ka noho i te watea

Ka puta ki waho Te Rangi e tu nei Ko te Rangi e teretere ana I runga o te whenua ka noho Te Rangi e tu nei ka noho i aTe Werowero. ka puta ki waho ko Te Ra, kokiritia ana ki runga hei pukanohi mo te Rangi ka tau Te Rangi Te Atatuhi, Te Atarapa Te Ata ka mahina ka mahina te ata i Hikurangi

2. Secondly, there are inconsistencies in the financial reporting obligations that are imposed on different entity types whose users have the same information needs. This Cross crediting of the same information is to avoid the Duplication of Standards and this Cross-crediting principle underpins all financial reporting policy that is recognized and used in many parts of the financial reporting where they are consistently applied.

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The law prevents the standards setters from applying the Duplication of standards and the cost of sub-standards, but not applied, some classes of entities consequentially have inappropriate reporting outcomes. Tlze Concept of Reciprocity- the quality or state of being reciprocal; mutual dependence, action, or influence (Give & Take- tu atu tu mai); something that reciprocates or has a reciprocal relationship to something else; a reciprocal term, expression, or concept (freedom, the control of human behavior). Reciprocal insurance -light & time or Mana Maori Motuhake- space & time.

3. Thirdly, the Institute has a major role in making financial reporting standards and the quality assurance of its Institutional culture is independent of the accounting profession. This creates an image that the quality assurance of the Institutions culture, identity. education and brand as its image is promoted and maintained to a high standard of outcomes. If the profession has to maintain its accredited standard, so should the Institution maintain its Charter in the appropriate way. This New Zealand standard has its roots within tile Common-wealtlt; public welfare, wealth held in common; an association of self governing autonomous states united by a common allegiance to a mother country and forming by treaty (Treaty of Waitangi) and an agreement to a loose confederation (Ko te Wakaminenga o nga Hapu o Niu Tireni) having a somewhat common political and cultural background - British Commonwealth.

4. Fourthly, further Development issues in broad terms only as to the sort of accounting standards and quality assurance framework the Board might operate within the MED framework or the NZQA framework in conjunction with Standards NZ. New Zealand is not the only jurisdiction currently addressing GPFR reporting framework issues. A number of countries are in the process of their future of, their local financial reporting requirements and in many cases this has resulted from the recent issuance of the IFRS for SMEs. Developments in three jurisdictions with a similar standard setting heritage to New Zealand: the UK. Australia and Canada, but tltis legacy oftlze Common-wealth is incomplete, in relation to the consequential issues due and the need to make changes in response to the developmental issues, tltis is all academic if tlte relevant evidence is not Researched and applied in tlte correct order of origin; wealth held in common for the Common-wealth of Australia, a self-governing autonomous state, a former colony that is associated by treaty or agreement in a loose political federation with the mother country and constituted as such. This indifference with the New Zealand Constitution (and why it is an unwritten constitution) sets the Australian Standards apart from New Zealand, hence the separate quality assurance requirement and regulations. On the present Order of Origin if companies in NZ were no longer required to produce GPFR there would need to be a change to the solvency test in the Companies Act, which also refers to GPFR. In Australia following the form of differential reporting on the concept of a ·reporting entity' that is explained and defined in its Statement of Accounting Concepts, this along with other accounting/auditing requirements is the facilitation ability of the New Zealand and Australian standards setters to produce harmonised financial reporting standards. as they relate to the NZ Solvency Test and Australian Solvency Test as a minimum standard in our New Zealand-Australia Single Economic Market.

5. Finally, before New Zealand/Aotearoa can ratify its National and International Accounting/ Auditing Standards and quality assurances, there will be a requirement to prepare and exercise first the Dominion- the exercise of such supremacy or ascendancy, something that is subject to sovereignty or control, tlte special realm of activity or influence of a particular bra11cll of art or knowledge. One of the self-governing, autonomous states within the British Commonwealth and equal in status with the United Kingdom and with each other. Dominion status is tantamount to statehood.

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Dominion nationalism was promptly stimulated by tlte advances in autonomy and in turn further advances in our living New Zealand Constitution- the Absolute Ownership. Dominion day- July 1 observed in Canada as a legal holiday commemorating the anniversary of the proclaimation of dominion status in 1867; September 26t11 observed in New Zealand as a statutory bank lwliday celebrating the anniversary of the coming into dominion status in 1907. As part of the bank holiday celebration the Tohunga Suppression Act 1907 was imposed on the Maori Society/Tribes. The requirement to prepare parent company financial statements as they are retained, modified or removed are within the Dominion of the mother country. The Royal standards are based on along history of Royal charity work by the Monarch- The Statute of Elizabeth (otherwise known as the Charitable Uses Act 1601) was passed in England to address abuses oftrust and protect and prevent the misuse of charitable funds. Some users are able to demand the financial information they need, such as banks and other lending institutions impose financial information disclosure requirements. whether general or special purpose as a condition of lending money. Philanthropic and government entities do the same thing in relation to grants. However, most otlter users are unable to demand tlte information tltey need because tlrey ltave little or notlting- Te Kore to give in exchange - Kolra. Recently the Royals have had a change in culture and historically, have moved through Royal public relations into International Trade and Investment, this royal standard, review and assurance is a shift to sltow an image to the taxpayers (Commonwealth) as to the ongoing value and progress of Royal service.

Indicators to Maori asset governance entities

The application of Indicators for the purpose of considering the role that financial reporting has to contribute to the good governance of Maori asset-specific entities, through the description of the objectives and main features and the financial reporting requirements of each governance model, will not accommodate the minimum Maori standards or the Maori core generics for these and other Maori governance models;

• The Maori Trustee Act 1953 has a integral role to play in this Maori governance model, for the Maori Trustee is personally liable, this fact will influence the decision- making and the governance

• The Maori Development Corporation and Maori International have endured this liability, where the Queen of England has written this debt off, whether this is going to be common place within the Maori governance model and its indicators, we don't know how this will help with Royal public relations and the Maori taxpayers

• Resource Management Act 1991 and amendments in accordance with the principles ofthe Treaty ofWaitangi and the first Act ofParliament to recognize Tikanga Maori- Maori cultural values and practices through whanau, hapu and iwi governance models, all indicators will draw there local standards including financial reporting standard from this management regime

• Te Ture Whenua Maaori Act entities will also draw from the principle of TTWMA financial reporting requirements as they relate to the fee simple and the absolute owner in value for value or land for land consideration as these Maori assets apply to Tikanga Maori under this TTWM Act 1993 and its amendments, the Public Works Act is relative as these are the only two Acts that recognize Tikanga Maori within the legal framework

• E whakamaarama atu i ngaa mahi taake e haangai ana ki ngaa moni, koha raanei e tukuna ana i roto i te Ao Maaori. The tax payments or gifts made in the Maori community IR278 .

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These circumstances where any money, goods or services you give or receive may involve a liability to pay income tax or GST, or deduct PA YE. IR does not try to define the term .. koha", as they acknowledge that it is not their place to make decisions about Tikanga Maori

• An "unconditional gift" is a payment; made voluntarily (Mahi aroha), to any non-profit body or organization, which does not directly benefit the payer, their family or associates. Payments not made in money. is sometimes made by giving goods or providing services (Mahi aroha). The GST needs to be worked out on the market value of any goods or services received as payment, and include that amount in your GST return as an adjustment. Generally, Reimbursing payments to a person for actual expenses. this is not taxable and PA YE or withholding tax does not have to be deducted. However, if the reimbursement is more than the actual costs incurred, the excess is taxable.

Within the New Zealand Institute of Chartered Accountants are its Special Interest Groups one of which is Nga Kaitatau Maori o Aotearoa (National Maori Accountants Network), the first priority identified by all was to develop strong regional networks/SIGs to establish an infrastructure for a sustainable network and a solid foundation for a national entity which was formed in 2004.

Their vision- ·To contribute to the holistic well being of Maori'

The mission- 'To assist Maori to excel in commerce and contribute to the successful economic development of Maori'

Their goals o To provide meaningful opportunities that strengthen the development of Maori

accountants o To increase the number of Maori and the understanding ofkaupapa Maori in the

profession o To contribute to the growth and development of economic leaders and initiatives for

Maori o To develop strategic relationships that advance our mission with organizations o To develop and maintain an efficient organization that provides value to our members.

Inspirational Solutions Cooperative as a NGO has no objections to releasing any of the information contained in this submission.

Marcel P Wainohu Cooperator

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·rational Solutions

Submission; Maori Trustee and Maori Development Amendment Bill & the Financial Reporting Bill.

Introduction; 08.02.2013

This submission is on behalf of Inspirational Solutions Cooperative as a NGO. I/we wish to speak to some of the introduced changes arising out of the review of the Maori Trustee and Maori Trustee Office, by looking at the work and ways of bringing together functions supporting Maori business, undertaken byTe Puni Kokiri, the Maori Trustee, and Financial Reporting for NGOs undertaken by the External Reporting Board (XRB), DIA Charities and the ANGOA.

Specific comments 1/we wish to raise and background-Will be necessary in considering the Maori Trustee and Maori Development Amendment Bill as it is to amend the Maori Trustee Act 1953.The review has produced a substantial amount of work already, so that this Bill may address some of these concerns, that in essence, where dead or poorly used money could be better used to underpin Maori social and economic development within a range of agencies.

Also, of consideration is the Financial Reporting necessary to maintain the integrity of these Maori assets and potential.

The Office of the Maori Trustee was expected to provide fair, proper and prudent administration and management of clients' assets within the principles and obligations of trusteeship and agency, the Maori Trustee was set up to take over the role of the Public Trustee.

The Maori Trust Office currently administers more than 2200 properties and special trusts. It cares for more than 156,000 owners and manages some 115,000 owner accounts.

The transfer of liability;

l. With the Bill leading to some major changes as it relates to the nature and appointment of the Maori Trustee, the Maori Trustee will actually have its independence further recognised and given greater powers along with a range of monies. At the end of this process, the money under the control of the Maori Trustee will be sufficient to have a real leveraged effect in terms of Maori social and economic development.

In developing this policy, is this leverage sufficient enough to underwrite (indemnified or insured), the absolute Maori trusteeship? Financial Reporting provides the accountability that can underwrite Maori social and economic development!

2. The Maori Trustee needed to be reorganised, reformed to face the challenges of the future of trusteeship.

Poor governance can put organisations at risk of commercial failure, financial and legal problems for directors/trustees or allow an organisation to lose sight of its purpose and its responsibilities to its owners and people who benefit from its success. Although good governance principles and practices are universal, no two organisations are ever the same. There are also particular characteristics of Maori organisations which bring extra dimensions, to the practice of governance. The set up of a new independent statutory corporation to further Maori economic development; may not provide the legal impetus to substantiate absolute trusteeship?

3. The principles and obligations of the Maori trusteeship and/or agency will also require, power of modernisation that delivers a minimum national and international Maori standard. The Maori Lands Act 93 (Te Ture Whenua Maori Act 1993) sets a precedent, for Maori Trustees powers contained within the Trust Order made by the Maori Land Court and a further term's of reference is the Trustee Act 1956.

This Ownership is based on the intention of the Trustees Powers generally interpreted in Trust as;

In furtherance of the objects of the Trust and except as hereinafter may be limited to do all or any of the things which they would be entitled to do, as they were the absolute owners of the land provided however that the Trustees shall not alienate the whole or any part of the fee simple, by gift or sale other than by way of exchange on the basis of land for land, value for value and then effected by Court Order or in settlement of a proposed acquisition pursuant to the Public Works Act or similar statutory authority or by partition as hereinafter provided. Does this precedent provide for the settlement of a proposed acquisition pursuant to similar statutory authority?

New Zealand statute law needs overhaul says Law Commission ( 12 September 2007);

"New Zealand statute law is in a chaotic state", there are acts on the statute books that are totally obsolete much of this clutter should be re/moved. There is no obvious order or logic about statute books.

The law on one topic can be scattered over several acts.

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"Provisions on some subjects can be hidden in places where no one would ever think to look for them and it is hard to be certain when researching the content of the law that everything on a particular problem has been found" .

What is worse, there is no official index to our statute and there have been changes in drafting styles over the years.

Some of the older Acts still in force are very hard to understand and where these older Acts have been amended over the years the new amendments are likely to be in a different style. The old and new style together can make matters even more untidy.

Maori development as a Trustee and its related agencies will carry a huge public and private liability for Maori nationally and internationally that will require-

A. Trust territory; A non-self-governing territory placed under an administrative authority by the Trusteeship Council of the United Nations as being a former mandate under the League of Nations or a territory voluntarily placed under the international system by the state responsible for its administration.

B. Trustification; The process of forming, a trust or organising into a system of trusts.

C. Trust institution; A corporation engaged in the business of administering estates and trusts, the Trust department of a trust company or other banking institution.

D. Trusty; To give the devil his/her due (honourably). A sentiment that provides moral conditions for probity.

E. Trusteeship; The office or function of a trustee, authorised supervisory control by one or more countries as trustee of the administration of trust territory under the international system of the United Nations.

F. Trustee security; A security in which a trustee may properly invest and which is often described in the trust instrument or in an approved list established in accordance with law.

G. Trustee process; The process of attachment by garnishment or in the New England states by foreign attachment (Equitable garnishment).

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H. Trust agreement; An agreement establishing and setting forth the material terms of a trust.

I. Trust indenture; A document under which a trust (as a mutual investment fund) is conducted.

J. Trust certificate; A certificate issued and sold as one or a series by the trustee of designated trust property (as an investment trust, railroad equipment or business trust) legally held evidencing a specified fractional equitable or beneficial interest in the trust property existing in the holder or registered owner of the certificate, incorporating the particular trust agreement, setting forth the principal rights of the certificate owner to share in the income, profits, or gains realised from the trust property and in any current or future distributions of it, and prescribing the mode of the transfer of the certificate.

K. Charitable Trustees; Are the Trustees of a trust that has at least one purpose that is charitable and are responsible for managing that charity. Legally, the trustees are the 'trust' in that they 'own' the assets and are responsible for the management of the assets, including distribution.

L. Donee organisation; Means a special type of organisation that is seen by Inland Revenue to meet certain requirements in the Income Tax Act 2004. Certain individuals and companies may receive tax benefits by making gifts of money to a donee organisation. A charity can be a donee organisation.

M. Duty of care; Refers to the legal obligation of anyone who manages or governs a charity to take care when administering the charity's affairs.

N. Duty of Loyalty; Refers to the law that prohibits anyone within a charity from using their position for themselves or others at the charity's expense.

0. Stakeholders; Are the people or organisations who have an interest in the activities of a charity.

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P. Values; Refer to the set of principles that guide an organisation's day to day operations. A charity's values will be reflected in its mission and aims.

Q. The catchword for Trusts is 'Independence',· Trusts are a valuable instrument, but there is general misunderstanding about their benefit and how they should be used and managed. People need to get the right advice from the outset to ensure they don't unwittingly put themselves at risk. The way small businesses are structured and operate is constantly evolving, so there is a greater need for people to protect their personal wealth from potential risk.

"A trust is a complex and sophisticated legal structure that can provide substantial benefits, but this does come at a cost beyond the initial set up fees. As well as giving trustees the ability to hold assets out of harm's way, it also places legal duties on them and gives the beneficiaries rights.

A good adviser will be able to assist in not only drafting a trust deed that reflects a client's wishes and specific needs, and having an appropriate financial reporting programme that meets its financial requirements, but will also make sure the client understands exactly what they have created, why they have done so and what needs to be done to ensure that the arrangement is future proofed. "

All too often there are people who are trustees in their trusts, or have appointed advisers or trust companies set up by their advisers as their trustees, without having understood what role of the trustee is and what is expected of them, as appointed trustees they need to act independently.

They will look at your situation in depth, and will ensure that a trust is the best option for your intentions and that it will stand up to any legal scrutiny. Within the context of Maori development nationally and/or Internationally, Financial Reporting is critical and integral to Maori Trusteeship and future Maori Economic development.

Summary; //we support this clause because-The Maori Trustee may have a number of responsibilities to contend with as an independent corporation, but none more important than the payments and gifts in the Maori community from a Maori perspective on volunteering-mahi aroha, fmancial reporting-whakautu and cultural obligations-tikanga within the charity sector or business sector, as the benefit to the public is obvious (financial accountability).

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What we also felt is that privacy should be granted to organisations if they do not seek public money and specifically request confidentiality. "Maori charities that are run as private philanthropic trusts are not raising money, and therefore not risking money from the public, so there should be no concern about restricting public access to Maori Information.

An automatic privacy policy on some of the public registers could be restricted, and would not compromise public confidence as the various public registers will still obtain relevant records, financial reports for accountability and other required information for each charity or business i.e. External Reporting Board (XRB), DJA Charities, the NZ Accounting Standards Board (NZASB) etc.

If the Maori Trustee were unable to maintain privacy, Maori development would be focused on innovative structures in an effort to retain anonymity, the cost of which would probably reduce the amount dedicated to charity or they might stop giving altogether, which would definitely not be in the public interest or Maori interest.

These public registers would publicly divulge the names of voluntary trustees in a private philanthropic trust. "These are not professional trustees- they're people from the community/marae who dedicate their time to charitable cause/organisation and revealing their details puts them at risk of unwanted approaches about the funds they look after. If their privacy can't be protected, such people will be harder to find in the future.

//we support the intent o(this bill because-For Maori development to be most effective, it needs to be closely aligned with Maori world-views and Maori aspirations and progress in areas such as trusteeship, financial reporting and business, but these can not be accomplished without 'taking cognisance of Maori values and the realities of modern Maori experience.

Recommendations-Humanities Research has identified Non-Profit Institutions in New Zealand and mapped the size and nature of the non-profit sector to address the shortage of comprehensive and reliable data in composing that of the nation; ideas, people, histories, languages, cultures and economic. National identity is a strategic priority of the New Zealand government and a critical issue in the evolution of the nation-state in an era marked by globalisation, new ICTs, post-colonial revision of national histories, cultural and religious conflict, knowledge societies and creative economies.

To foreground the diversity of research into these issues being carried out in Aotearoa New Zealand;

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to explore the relation between this research and public policy formation on national identity; and showcase this research, build coalitions of interests, and identify new lines of enquiry, especially across disciplines, cultures and media.

The roles and identities of Translators and Interpreters in the 21st Century perils and still exist while working on the frontline as an intermediary between two parties. It can be argued that part of the difficulty arises from the lack of understanding, both inside and outside of the profession, in regard to the appropriate roles and identities of the Maori translator and/or Maori interpreter. The role of a "Maori provocateur" through discussion and dialog rather than to suggest solutions may provide a way forward, there are a number of examples where translators and interpreters go beyond their sphere of professional competence as a result of economic pressures, unrealistic client expectations and the issues of maintaining standards within the profession and in particular the highly contentious issue of re-accreditation.

The challenges facing the Maori translators in light of increasing globalisation, intemationalisation and the new buzzword of the profession, 'localisation'. Localisation stems from the translation and adaptation of Maori software and systems for target markets, has now developed a broader meaning, that of adapting texts while taking cultural, linguistic, social and legal norms into account are all values of trusteeship and business. With increased information exchange, and with the tools of the trade in the form of translation memory software becoming increasingly sophisticated and streamlined, there is a real risk that the translator will be pushed into the background in terms of the general public's perception of the translation process.

Professional translator's role will be to adapt to the new requirements as well as to be openly critical of them. Only through consensus among professionals on issues facing the profession can any affirmative action ensue, within specific sectors of society such as Maori society, the judiciary, maintaining standards within the profession, or increasing general levels of remuneration.

Such is the power of modernisation and the Maori developments the Maori Trustee and his agencies will have in future-proofing them, for their present and future Maori generations. With the necessary provisions, the Financial Reporting Bill can provide an accountability and reporting, that delivers financing that is more efficient and effective. It also sets out those reporting requirements, from that of Financial Advisors and/or Financial Providers.

Marcel P Wainohu Co-operator.

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KE¥ 17RUSJ FOUNDATION

CHARt STARTS HERE • AROt.fA MAl I

Market Consultation- Draft PPP Standard Contract

Overview

05.11.2010

By increasing productivity in the public sector- including through better procurement and management of major assets that is an important part of the economic plan, if it delivers better value for taxpayers, either through enhanced services or lower overall costs.

The term Public Private Partnerships (PPP) does refer to many different kinds of relationships and generally it refers to a long term contract for the delivery of a service, where the provision of the service requires the construction of a new asset, or the enhancement of an existing asset, that is financed from external sources on a non-recourse basis.

We believe in addition to PPPs where the structure offers superior value-for-money over traditional procurement approaches. Value-for-money may be defined as obtaining the maximum economic, social and environmental benefits possible from asset and service procurement for the lowest overall whole-of-life cost.

Where possible, with the development of a PPP 'Toolkit'. it would be useful to streamline and improve the consistency of PPP procurement processes across the public sector and provide our market (Non-for-profit, Mutuals, Charitable sectors) with some transparency and comfort around the practice implemented and messages issued during the procurement process.

A Mutual Idea?

Mutuality is an ancient way of getting things done. It means that an organization is run with the close co-operation or control of key stakeholders. On the history of citizens' participation, mutuality predates the modern public, private and charitable sectors in Britain by almost a thousand years.

The earliest records of mutual social enterprises date in Britain to the time of St. Augustine in the sixth century. He refers to the demise of the Rome Empire, which had left behind the legacy of mutual aid groups for artisans called collegia. Across Europe these formed the seeds of what in the eleventh century evolved into mutual craft guilds.

The craft guilds were the small companies of their time. Each guild was defined by common work and common trade. Work was strictly regulated and guilds in similar trades grouped themselves for networking and co-production. In tum. these guilds took responsibility for the development of their residential area through "neighbourhood guilds" and for volunteer policing on a rotation basis.

This maze of mutuality was unraveled by the Black Death and by the end ofthe fourteenth century the rise to ascendancy of the nation state. In this process the local regulation of commerce was lost and the long-distance merchant guilds gained the upper hand over the local craft guilds. Social service guilds either went into decline or were brought under 1601 Charity Law and from the sixteenth century the earliest of a second wave of mutuals -were the friendly societies.

These were the fore runners of the co-operative movement and shared in the socialist ideal -that of creating a mutual aid economy.

The achievements of 'new mutuality'

"New mutuality'' would be refined as a practical and distinctive approach to improving the quality of public services. Two things are needed -a licence and a stimulus for development.

A Participation Audit that draws out the lessons from existing community involvement and act as a focus for best practice in the future. also the development of a systematic policy framework to remove the barriers and to let mutuality work. Service guarantee fund- an insurance system to fund last-resort intervention, where all social enterprises and private contractors would contribute.

There is more scope for mutuality and participation where services are consumed individually (such as housing) as opposed to collectively. Tenant- owned or managed housing has the best record on service quality "'Mutual Service delivery".

So far of the emerging new mutuality is- in membership, representation. governance competence and community purpose. A more direct funding and greater freedom of financial management within a framework which sets standards on quality and equal opportunity, is a format that will lend itself to the National Strategy for Financial Literacy.

A Social enterprise that sets a Quality Mark and New Powers to fund raise and address the issue of local bonds that enable social investors beyond that of passive taxpayers.

Also there is a need for new professionalism for the public services that is based on empowerment and inclusion with the creation of a two-way relationship with users. This creates a role for a democratic guarantor, regulating and resourcing the new mutuals- Mutual Service Providers in 'Mutual Service delivery of Social investment'.

A One-off Mutual Specific project

Would be prepared on the basis of the following key assumptions

• The Principle of Mutuality- qualifying for an exemption or deduction (Taxes). Grants. Fund raising and Koha!Giving;

• The private party contracting with the public sector is a special purpose company/cooperative with sub-contractors providing services on its behalf;

• The project is financed by third party provided project finance (financial feasibilities);

• The project is "greenfields''- all assets will be developed by the special purpose company/cooperative; and

• The project does not involve the transfer of personal from the public sector to the private party.

As other Crown agencies follow through with this draft contract (Homeownership) it is envisaged that the land and facilities will be owned by the Crown for accounting and legal purposes at all times. Tax ownership of the facilities will however rest with the private party. The private party will be provided with a contractual licence to undertake both the working capital. construction works and the provision ofthe operational services.

Where change management is required by us this structure remains under consideration to make Provision, for the Ministers and remains subject to possible change or refinement.

Objects of Insurance

The theory of insurance is that the losses of the few are distributed among the many, and to quote the words of an Elizabethan Act of 1601;

"there followeth not the undoing of an'y man, but the loss lighteth easily upon many than upon few".

The practice of insurance has evolved from the very human desire to seek protection from loss by the formation of a protective community. Through this insurance fund such as this, must be controlled by skilled managers and this the business of Insurers or Underwriters. In return for performance of these duties, the Insurers are entitled to obtain from the fund their expenses and a reasonable margin of profit.

It is, therefore to the mutual advantage of the Insurer and the contributors for the fund to be increased and maintained on a sound financial basis.

The term "insurance fund" is something of a misnomer as in fact there is no central fund. The "fund" is held in the reserves of the many companies and organizations engaged in the business of insurance. In the event of a catastrophic loss falling to be borne initially by one Insurer, that Insurer may be entitled to contributions from the reserves of other Insurers. Thus the financial resources available to the individual Insurer are far greater than its own reserves.

Like all non-productive industries which have service to the community as their "stock-in-trade", insurance has become a necessity to all other industries. By providing a means for the sharing of losses. it makes possible the outlay of capital necessary to establish and expand industries without the risk of serious loss of that capital through misfortune.

Clause 55.4 Assumption of control would have to consider the cost of insurance protection against loss from all causes without restriction would be prohibitive;

Clause 55.5 Final judgment would not be possible for Insurers to assess appropriate premiums;

Clause 55.6 Continued use in practice, therefore Insurers make available a number of Classes of Protection, from which a person may select those classes most suited to his/her needs; Clause 238 Required Insurance (Schedule 9) Insurers usually keep separate records of their experience with each of these classes and the amounts of contributions charged contributors for each class of insurance are varied from time to time to reflect the experience of that class and maintain the appropriate ratio between income and payment.

Feedback on the draft Contract

• Concerns/issues with particular clauses of the draft Contract~

Of particular interest is clause 144- Confidentiality and Intellectual Property as it relates to a One- off Mutual Specific Project, for this is where/how our Social investment is to be developed as a working relationship with both Public and Private Partners, as a Mutual Partner.

For we will need to make appropriate provisions for the Respective Licensors and Respective Head Licensors in our Licensing and Intellectual Property Indemnity.

• Specific reasons why the draft Contract should be changed;

The Specifics' would only have to change if through our One-off Mutual specific project we were limited in our ability, upon the Discovery clause 22.1 in the Finds, Contamination or Maori Claims, Allocation of risk and Indemnity clause 22.

• Why the requested changes are relevant in a New Zealand context;

New Zealand society and industry are notorious for late payments for many reasons, none more so than that in the Charitable sector which the Charities Commission is overseeing and monitoring. This Cash Conversion Cycle is more often than not the reason requests for change is relevant and required in the New Zealand contexts. On average the Cash Conversion Cycle in New Zealand is 235 Days, in the US it is 65 Days. The Cash Conversion Cycle operates within the areas of Retail, Manufacturing, Trade and Service.

• Potential solutions to the perceived issues (to make the point that can best illustrate provision for the Principle of mutuality)

Is to add a new clause to the PPP Standard Contract for Mutuality as it will have an effect on most clauses of the PPP Standard Contract if not all clauses.

Once a position has been determined by the Crown and its Agencies, this will create a productive and innovative environment approach to Public and Private Partnerships. In the short term it will impact on Value Testing and Market Testing which will provide added value to the Service delivery and whole-of-life asset management.

PPPs are likely to offer better value-for-money where; • There are significant opportunities to innovate in asset design and to improve whole-of-life

asset management; • There are opportunities to innovate in terms of the services delivered from assets; • There are real opportunities for risk transfer; and • The PPP can act as a catalyst for change.

In addressing generic issues, rather than sector or project-specific matters during this market feedback phase, we believe the above feedback outlines our initial interests and concerns as they may relate to this PPP Standard Contract.

Please also consider the following as a way forward to streamlining the procurement process for PPP transactions and potentially reduce bid costs for interested parties and how the principle of mutuality can be applied. This opportunity may provide other options for us all to ensure that issues of general application are not raised for the first time in the context of a specific PPP transaction.

Mutualising The State- A Summary

The control of public services on one hand was the post war tradition of state-owned, state-run services. On the other was privatization, the idea that monopolizing public services should be subject to market forces. Mutuality can re-energise public services. It is an ancient way of getting things done. predating the modern public, private and charitable sectors in Britain by almost a thousand years.

It involves users in the delivery of public services to be more efficient and responsive. It also offers, at a time of political disengagement, the prospect of a wide-ranging and participatory civic renewal.

There are now many examples of successful mutuality, in health, housing, education, leisure, transport, social services and environmental work. The last two decades have seen a remarkable upsurge in social businesses. from credit unions and housing co-operatives to farmers ' markets, community shops, and time banks.

These businesses have grown, even though they focus on the most disadvantaged areas of the country. Social enterprises succeed because they build a long-term business with a clear focus on the good of their community. Their mutuality is about participation rather than a narrow model of cooperative or corporate ownership. They save money for the public sector because they are able to generate increased income and raise private finance, including grants and social investment.

Five key elements should form part ofthe "mutualisation"' of public services;

• A participation audit. This would look at the lessons from community involvement and draw up guidelines for the future. The audit could be managed by a community participation unit (Whanau ora) and/or the national infrastructure unit. The unit's role would be to improve the quality of relationships with users in public services.

• Decentralisation. Local authorities should be recast as smaller, strategic units, overseeing the co-ordination and accountability of local services. They would use their powers to ''build capacity" for public workers and citizens, enabling them to run services mutually. Public institutions should be given greater autonomy- more direct funding, greater freedom of financial management- within a framework which sets down standards of quality.

• A recognized status for mutuals. This would mean creating a clearer and stronger legal framework for ''social enterprise, including limits on demutualization and new powers to raise finance such as local bonds, and quality assurance, which sets out ways of involving stakeholders and ensuring accountability. In Italy, social enterprises of this form have grown since the new status was launched.

• Conversion of public services. Selected state services should "migrate" to the new mutual status through a recognized approval process. One important ingredient of this is a staff ballot.

• Re-branding and the image of the state. The state would act as guarantor, funding and regulating the mutual service providers. The National Audit Office role would shift from straightforward inspection to enabling- equipping stakeholders with the skills to '"self­audit". Tax funding for the new mutuals would be supplemented by social investment from citizens.

A practical programme of mutualisation could start with public services or institutions that form part of the wider PPP guidance material available for use by Crown agencies and local government authorities. The model terms it contains are a starting point in the development of the use of PPPs in New Zealand.

In the medium term, once the model terms have been tested in live market transactions, we can move to a set of mandatory model terms. PPPs will only be an appropriate form of procurement in a limited number of circumstances.

Action Key Trust Foundation Marcel P Wainohu- Chairman

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