The Commerce Committee has examined the New Zealand Business Number Bill and recommends that it be passed with the amendments shown.

This bill aims to reduce the time and money eligible entities spend on interacting with government. To achieve this, the bill would allow eligible New Zealand entities to obtain or be allocated a New Zealand Business Number (NZBN)—a unique identifier to be used for all interactions with government.

Eligible entities would also be registered on a New Zealand Business Number register that contains data on all registered entities. The bill would define the categories of data held on the register, and create rules for collecting, accessing, and sharing that data. These rules would include protections for personal and commercially confidential information.

We recommend amending the bill’s commencement date in clause 2 to 28 days after Royal assent. This would provide more public notice about when the new regime would come into force and greater certainty for those implementing it.

We also recommend delaying commencement for unincorporated entities, to allow the Registrar of NZBNs time to prepare for allocating numbers to these entities.

The bill focuses on improving the efficiency of interactions between government and eligible entities. However, the NZBN would also benefit eligible entities when they interact with each other. We recommend inserting an additional purpose to this effect in clause 3.

We recommend removing the definition of “business” from clause 5 (the general interpretation clause) and defining it more fully in new clause 9(2). Because the definition of “business” in clause 5 only relates to its use in clauses 3, 9, and 35, including it in the general interpretation clause could cause confusion.

We have thought carefully about the bill’s privacy implications. Under an NZBN system, entities would be assigned a unique identifier and have their primary business data included on a centralised register. This raises privacy sensitivities with the bill’s proposed application to unincorporated entities, many of whom are individuals (such as sole traders).

We are pleased that, in developing the bill, officials from the Ministry of Business, Innovation and Employment sought the views of the Privacy Commissioner to identify and control potential privacy intrusions. In addition, the Privacy Commissioner made a submission on the bill. We also invited the Government Chief Privacy Officer to make a submission on the bill’s privacy provisions. As a result, we are satisfied that the bill’s privacy safeguards are adequate.

The bill would divide primary business data held on the NZBN register into “public primary business data” (Schedule 3), which would automatically be publicly accessible, and “other primary business data” (new Schedule 3A), to which access would be restricted because of the potentially private information it contained. We recommend inserting new subclauses 20(4) and (5) to comprehensively set out what the register may contain, including consent requirements for certain types of primary business data.

We recommend inserting new clause 27(1) for clarification purposes. As introduced, clause 27(1) states that government agencies could only access primary business data if another enactment authorises them to collect such information. On its own, this might unintentionally imply that government agencies could not automatically access and use public primary business data, despite this presenting no privacy concerns.

We also recommend inserting new clause 27(1A)(b) to allow a government agency to access and use an NZBN entity’s private primary business data with consent. This amendment would offer more flexibility without affecting privacy protection.

Similarly, we recommend amending clause 27(2) so that only unincorporated entities would need to consent to a government agency providing their primary business data to the Registrar. Requiring government agencies to acquire consent to update the register each time a corporate or public entity updates their business information would create inefficiencies without any privacy gains.

Because entities are often known publicly by their trading name, rather than their legal entity name, we recommend amending Part 1 of Schedule 3 to add “trading name or names” to the list of public primary business data for corporate and public entities. We do not recommend extending this amendment to unincorporated entities because such information might identify individuals.

We wrote to the Regulations Review Committee seeking their view on some provisions in the bill that appeared to contain Henry VIII clauses (clauses that delegate powers to alter an Act, which is a power that ordinarily only Parliament holds). In response to the advice received, we propose the following changes.

Schedule 1, clause 3 would allow the Inland Revenue Department (IRD) to transfer any primary business data it holds on eligible entities to the NZBN Registrar during a temporary transitional period. This would temporarily waive the requirement, under clause 27(2)(b), that a government agency acquire an unincorporated entity’s consent before transferring its data. New clause 3(c) would make clear that the data transferred would form part of the contents of the register and continue to do so after the transitional period ends, as if consent had been granted.

Information Privacy Principle 2 (IPP 2) in the Privacy Act 1993 (which is linked to IPP 11) states that an agency shall collect personal information directly from the individual concerned unless that individual authorises collection of the information from someone else. Clause 27(2)(b) is consistent with this exception, but clause 3 of Schedule 1 is not.

We acknowledge that clause 3 of Schedule 1 would create an apparent disparity between the treatment of an unincorporated entity’s data when transferred during the transitional period, and after. However we consider that the bill should be consistent with the principles of the Privacy Act to the extent that this is practicable. This test is met in relation to clause 27(2)(b). However, it is not met in relation to the transitional provision allowing the one-off transfer of bulk data by the IRD to the Registrar under clause 3 of Schedule 1. We agree, therefore, that the different treatment is appropriate.

Overall, we support this bill. We agree that creating efficiencies in transactions between entities and between entities and government is worthwhile. We also believe that an NZBN register would be useful if it is user-friendly in a similar way to the Companies Register.

We note that the bill’s efficacy will depend on government agencies’ widespread adoption of the NZBN. Without this, the NZBN would be in danger of becoming “just another number”, merely increasing businesses’ overheads rather than minimising them.

We understand that forthcoming Government directives will address expectations about agency uptake of the NZBN. We expect this to happen in practice. We also urge the formulation of a clear timeline that details when each government service should adopt the NZBN.

Despite agreeing with the Government’s stated desire to make businesses and other eligible entities’ interaction with Government easier and cheaper, Labour does not believe the Government has put itself in a position to deliver on this promise. We are therefore only able to offer qualified support for the NZBN bill.

Labour is concerned that the Government has not outlined a clear plan for how this bill’s stated purposes will be achieved, namely subclauses 3(a) and (b) “enable eligible entities in New Zealand to interact more easily with government” and “reduce transaction costs in New Zealand”.

The committee was provided with no convincing reason why the existing IRD number should not be adopted as a universal number for interaction with government. Instead, a new and additional number is proposed.

The Labour Party shares the concern expressed by Federated Farmers that the initial list of government departments does not include agencies such as Worksafe NZ and Immigration NZ. They helpfully suggest swift extension of the number to local government, acknowledging that many businesses have more interaction with local government than central government.

We share the Chartered Accountants Australia and New Zealand’s concern that “the benefits for business may be overstated” without prompt and broad integration by government agencies. They expressed concern that the mandate for recognition of the business number contained in the original section 34 had been removed, and note that the departmental Regulatory Impact Statement states that “without significant uptake there is a risk that the identifier is not integrated and utilised widely, and just becomes another number, rather than a replacement for the many current identifiers—as it intended”.

Only a limited number of government departments have committed to the initial roll-out of the NZBN. Consequently in the only part of the plan outlined in detail to date, it is clear that businesses that deal with those departments will be required to obtain another number—without achieving the benefits that would accrue from having one number for all of their central government interactions.

The addition of “yet another number” for businesses and other eligible entities’ dealings with public agencies stands in direct opposition to the stated purpose of the bill. Rather than making interactions with government more efficient, a greater cost is incurred in the short term. This could be tolerated by businesses if a long-term plan was in place to gather the benefits that should accrue from a well-implemented single number system. Unfortunately, although promised in general terms, the detail of such a plan has not been forthcoming.

Without a credible timeline in place for whole-of-government adoption of the NZBN, and a tangible accompanying commitment from Government to fund necessary IT infrastructure upgrades, the attempt is unlikely to succeed.

The failure of planning for the NZBN roll-out and an apparent reluctance to properly resource this central government programme will carry a cost—even if the NZBN is introduced over time. Slow implementation of the NZBN across government will carry a cost for businesses and other eligible entities forced to comply with multiple systems. Better to incur a little additional cost for government in order to release businesses from unnecessary compliance, and free them up for more productive activity.