Smith Murray: Debate on Crown Entities Public Organisations and State Enterprises 
Text is incorporated into the Bound Volume 
Smith Murray: Debate on Crown Entities Public Organisations and State Enterprises 
[Sitting date: 10 June 2003. Volume:609;Page:6109. Text is incorporated into the Bound Volume.] 
MURRAY SMITH (United Future) 
: 
 As Crown entities State-owned enterprises and Crown research institutes play a valuable role in the governmental system that is often underestimated. In particular they provide parliamentary scrutiny of executive expenditure outside of ministerial departments. Through the select committee procedure—particularly in an MMP environment where the Government very often does not have a majority—they can be a powerful tool to investigate the executive’s expenditure. Select committees have been quite ready to heavily criticise underperforming insufficiently accountable or evasive Crown entities as well as board members chief executives and other senior staff who simply do not want to be accountable. 
In that respect select committees are valuably aided by the Audit Office. However that is not always the case. There are several areas of executive expenditure where there is substantial expenditure that is not scrutinised by any select committee. In such cases Parliament is left with the device of oral or written questions which is an unsatisfactory measure because they can often simply result in evasive or short answers that do not really satisfy Parliament or it is left with the inquiry procedure. Inquiries are difficult because they are irregular. They are certainly not annual events and therefore they do not provide sufficient accountability of State-owned enterprises and Crown research institutes. 
There is an important public interest criterion in ensuring that all executive expenditure is properly scrutinised by Parliament because we are dealing with large sums of public money and the public is entitled to expect that members of Parliament as elected representatives can investigate those. It is therefore disturbing that the executive is not effectively accountable to Parliament on a regular basis in a number of areas. One of those areas is Government shareholding in private companies. In particular we have seen the example of Air New Zealand and it looks as if we are about to see the example of Tranz Rail. 
We know that for disclosure purposes Air New Zealand is included as a Crown reporting entity as if it were a State-owned enterprise which means that it could be scrutinised as part of the Finance and Expenditure Committee’s examination of the Budget economic and fiscal update and then debated in the House. But given the incredibly broad nature of the committee’s task an examination of the Government’s role as shareholder would need to rely upon the interests of an individual member and it does not give the specific annual assessment that ought to be given to such a major investment. 
Very often as with Air New Zealand—and as we now see with Tranz Rail—the Government is involved in rescue packages where it puts money into an industry that is close to going down the drain in order to prop it up and that is an even greater reason for there to be parliamentary accountability. 
The second area is trusts. The Government often funds trusts but there is not adequate accountability to Parliament for that money. In the media recently we have seen an example of that with the Crown Forestry Rental Trust. Significant sums are tied up in the trust and the trustees have made expenditure decisions that do not stack up such as sending their chairman to the Privy Council at the expense of $25000 to sit at the back of the Privy Council to hear a matter dealing not with forestry but with fisheries. We know that the Maori Affairs Committee is currently undertaking an inquiry and we can look at the leaky homes situation as a way of questioning that expenditure. But what about next year? What will happen to the Crown Forestry Rental Trust next year? Will we embark on another inquiry? This one has been several years. There should be more accountability in that regard. 
In terms of shareholding I believe that effectively the shares should be held and managed by a Crown entity so that they are accountable to Parliament through the select committee process and so that there is Audit Office oversight. In terms of the trusts and also the Maori Television Service—which appears to be accountable only to the Maori television electoral college and not to parliamentary scrutiny—those should be made Crown entities so that in all those things we can see the benefit of independent select committee scrutiny. It provides accountability in a timely fashion; not after the event and very often after problems have arisen.