Yang Jian; Rurawhe AdrianDr JIAN YANG (National): I rise to speak on the third reading of the State Sector and Crown Entities Reform Bill. Obviously we support the bill. On the other hand we do have some reservations because we often say the devil is in the detail.Now this bill does help strengthen the integrity accountability and openness in the management of the public sector. Although many provisions already apply to much of the Public Service this bill expands the scope and covers a wider range of public service—particularly the Crown entities. So in that sense this bill would put more public service sectors particularly the Crown entities into the scope. For instance this bill requires boards of statutory Crown entities to obtain the State Services Commissioner's written consent to the terms and conditions of the employment of a chief executive.Now some Crown entities are already in the regime but this bill will expand and cover more Crown entities. On the other hand the Governance and Administration Committee made some contributions by making sure that the State Services Commissioner would be able to give reasons if he or she does not agree to the terms and conditions. This bill also specifies a term of employment for a specific executive. Now of course this mainly applies to Crown entities because a large number of Public Service chief executives have a term of five years. So this is again mainly related to the Crown entities.Now there are also two key changes to the State Sector Act. The number one is this bill enables the State Services Commissioner to apply codes of conduct to the board members of entities that are subject to a code of conduct—that is that are within the mandate of the State Services Commissioner. So this is number one. In that area the committee also made some contributions: basically to make sure that the State Services Commissioner is aware of some of the unique conditions of certain entities and therefore takes into consideration these various situations.Secondly of course is to update the commissioner's investigation powers by aligning them with the Inquiries Act 2013. This in a sense basically modernises the commissioner's power or you may also say it will further strengthen the commissioner's power. But on the other hand at the committee stage the committee made some suggestions to make sure that the commissioner's power is also somehow constrained. For example the commissioner would require a written submission or make it a formal inquiry instead of an informal inquiry—only under formal inquiries would this particular provision apply.So all this means is that this bill attempts to strengthen public trust and of course confidence particularly in the Crown entities. While the intention of the bill is good and we support the bill we do see some particular issues here. The issue of balance is a concern. So while we support the provisions in the bill at the same time we want to make sure that we maintain a good balance. There are three aspects of the balance issue which I might elaborate on. Now the first one of course is remuneration and the capability to attract top chief executives.So while some members have said that these chief executives take up the job not because of salary—well not solely because of salary—which might be true on the other hand we do need to face the reality. The reality is that we are competing with the private sector. So in the private sector we may see that these companies are able to pay top salaries to attract top executives while in the public sector some entities look after billions of dollars—and how do we attract top executives to manage the huge funds for example but at the same time be able to make sure that the remuneration is reasonable? So this is a kind of balance issue right?So as I said we do need to make sure we have a reasonable remuneration and we enhance the public trust and confidence in the Public Service; but on the other hand we need to make sure we are able to attract top executives.A good example is the New Zealand Superannuation Fund which is one of the entities which was singled out by Minister Chris Hipkins. The Superannuation Fund is a huge fund very successful in the past 15 years. Now I can see here that in the 15 years since it was set up the fund has made an annual return of 10 percent the fund has paid more than $6 billion in tax over the same period and it has grown to be over $38 billion in size. So this is a huge fund. How do we attract top people as guardians and as chief executives? That is a particularly important issue for the fund. By the way when we are talking about the bill we need to make sure that we are not doing a witch-hunt because we do not want single out one or two particular entities—although this bill actually does address some of the most important entities here.The second balance issue is between the five-year term and the necessity for long-term plans because for some funds it is important to have a long-term investment. How do we have the balance? On the one hand we want to limit the term to five years; on the other hand we want to make sure we have continuity so that we do maximise the profit or return. For instance under KiwiSaver you have different options: you have a growth fund you have a balanced fund you have a conservative fund and you have a cash fund—different categories.Normally the adviser will tell you that if you have many years to go they will suggest a growth fund a growth option which would generate more return in the long term. If you do need the money in the short term you will be advised to have a short-term cash or conservative option. So this is important. So we do need to make sure we are able to somehow make our CEOs more accountable by limiting their terms to five years. On the other hand we give them the freedom of continuity to invest long term. So this is another balance issue we need to consider. This is basically an issue which has been pointed out by many experts in this area.Another balance issue which I want to mention is the balance between independence and political interference. So how do we make sure we have independence of the boards? On the other hand we do have this control over the boards. So sometimes we are concerned that the Government might be able to interfere with the management of some particular entities by having political interference. So this is not what we want to see. We do not want to see interference from political parties; we want to see the independence of the boards. But on the other hand we do want to have some kind of control over the management. So how do we maintain this kind of balance: control over the board—over the entities—and on the other hand the entities' independence from political interference?So finally there is irony here. This bill is about openness transparency and integrity—this bill is really about this. But on the other hand we can see this Government itself is not really transparent open or with integrity. Thank you.ASSISTANT SPEAKER (Adrian Rurawhe): This is a split call—five minutes. I call Dr Liz Craig.