Goff Phil: State Sector and Public Finance Reform Bill — In CommitteeText is incorporated into the Bound VolumeGoff Phil: State Sector and Public Finance Reform Bill — In Committee[Sitting date: 02 July 2013. Volume:691;Page:11675. Text is incorporated into the Bound Volume.]Hon PHIL GOFF (Labour—Mt Roskill):It is always nice Mr Chairman to be addressed in such a formal manner. That is what my mother christened me. The Labour Party is supporting this bill the State Sector and Public Finance Reform Bill as awhole and in particular it is supporting the third part of the bill relating to Crown entities.The reason why we are supporting the bill and the section is that the Finance and Expenditure Committee was allowed to act in a more independent way to listen to evidence to respond to evidence and to correct basic flaws in the legislation. That meant improved legislation and to give credit to the Minister of State Services he went along with what the select committee recommended. As a result we have a bill that does achieve support from across the House. I think that is particularly important in terms of the State sector because we want to see continuity and we want to see the State sector working as effectively and as efficiently as possible and not subject to the whims of a changing Government and being a political football.There has been flexibility shown by the Government in responding to evidence on the ground but I have some questions for the Minister in the chair the Minister of Immigration about how this section will work in relation to the performance of Crown entities. I hope that the flexibility shown on this bill might be shown in regard to the Crown entities and the Government’s intention to dispose of Crown entities when all evidence suggests that that will not be in the public interest.Under Part 3 the amendments to the Crown Entities Act do a couple of things. In the first instance they support sectoral leadership by requiring the board of the statutory entity to ensure that the entity collaborates with other public entities where practicable. I think that is important because too often what happens in the public sector is that you have a silo mentality and each organisation goes its own way does not think about the wider picture what is in the interests of the country and what the Government wants across the board. I think that that is a very good principle that is set down in the bill. It also supports functional leadership by expanding the scope for the use of whole-of-Government directions and that really goes down the same track—it follows the same theme. I think those two aspects in this section of the bill are really important.What I want to ask the Minister is for him to perhaps give some practical ideas about how these new powers might operate. In particular I want him to address the Crown entities in the energy sector—Meridian Energy Genesis and Mighty River Power. These are three Crown entities—no I am sorry these are now 2½ Crown entities so I want to know how this bill deals with the other half that the Government has sold off. The Government has established in this bill the principle that it would be really good to get the Crown entities working together for the good of New Zealand and now it has sold off half of one of them. I wonder how that sale might undermine the principle that is set out very clearly in Part 3 of this bill.I want to ask the Minister how these principles will work in relation to the problems that we find in the areas that relate to these three Crown entities. It is about energy generation and it is about energy prices. The Minister is perhaps aware that since 1997 the prices for power to households have increased at double the rate of inflation. This must be a real worry to the Government and even more of a worry because in the last year I think power prices to households have gone up at five times the rate of inflation. We are debating this bill in the middle of winter and although those on ministerial salaries of a quarter of a million dollars probably do not even know what they are paying on their power bills people on this side of the Chamber represent electorates where households are really feeling the pinch. Old people are suffering we have the problems of hypothermia and we have young people children living in cold damp conditions. Those young people are being hospitalised they are missing out on school time and they are missing out on career opportunities.I want to bring this bill to bear on those particular problems that are worrying so many New Zealanders. We have got this problem that we have 2½ Crown entities inthis area of producing electricity yet the prices have run at double the price of inflation for about 16 years. They have been doing that since there was another change by Government in the way the Crown entities operated which was the Bradford reforms which were supposedly about competition. But the Minister will be aware that there was a formal report sought and commissioned by the last Labour Government called the Wolak report. The Wolak report found that the four power generators made super-profits over a 6-year period of $4.3 billion—Hon David Cunliffe: What?Hon PHIL GOFF: —$4.3 billion. The only upside of that was that that money went back to the taxpayer because the companies were Crown-owned. So it was a bit of a cycle. We paid more for our power but we got the dividends back to the Government. That is not going to happen with the sale of the assets. Those super-profits are going to go to those wealthy enough to invest in the shares and to the overseas investors indeed as they did with Contact Energy—you know $200 million a year flowing out of the country to the Aussies making them rich at the expense of the New Zealand taxpayers who paid for the dam on the Clyde.This bill is about getting collaboration. I wonder whether the Minister has considered using the provisions of this bill to set up a single buyer of wholesale electricity. That would seem to be really sensible if we wanted to tackle the problem that ought to be worrying the Government of escalating power prices. The gap between what the household consumer and the industrial consumer pays is one of the biggest—the second biggest—in the OECD. The cost of electricity is going up at a faster rate than in almost any other country notwithstanding the fact that we produce this electricity through water which is free in assets that we invested in 60 years ago.I agree with this bill that you actually need to have collaboration. You need to have the Crown entities working together but I am asking the Minister whether there is a fundamental contradiction between that very good objective in this bill and what the Government is doing in selling off the State assets so that that collaboration will no longer be possible. New Zealanders ought to be worried that the price of electricity has gone up five times faster than the overall rate of inflation in the last year. They ought to be worried that the super-profits from these companies are now going to private investors and to overseas investors. Here we have a bill that potentially has a solution to the problem of electricity prices but it is being undermined by another set of policies that the Government is pursuing.I go back to what I said about the select committee. It made sensible changes because we looked at the facts and the Government was in this instance prepared to respond to evidence on the ground. I wonder whether the Government will likewise respond to evidence on the ground about the failure of its Bradford reforms which will be exacerbated by the privatisation of half of the Crown entities in that regard.There is a second area set out as the objectives of the changes to the Crown Entities Act that occurs in Part 3. That is to formalise the role of the monitoring department and the ability of the Minister of State Services to request information and also to make provision for more meaningful performance information to Parliament. Those are absolutely appropriate goals but I wonder how those goals sit alongside the privatisation of the Crown entities which takes them out from the Official Information Act and takes them away from the role of the Ombudsman.We have in the bill good sound objectives about greater accountability. That is why we are supporting this bill. But at the same time the Government is doing exactly the opposite in privatising these companies so that they are no longer accountable to the New Zealand taxpayer who paid for their construction. We no longer get the information we need and there is no longer the protection of the Ombudsman and theother things that apply to Crown entities. We have in essence very sound provisions in Part 3 of this bill. We absolutely applaud the objectives of greater collaboration and greater openness but those goals are fundamentally undermined in regard to those objectives by what the Government is doing against the public opinion in privatisation.