Parker David: State Sector Amendment Bill Public Finance Amendment Bill (No 2) Crown Entities Amendment Bill — Third ReadingsText is incorporated into the Bound VolumeParker David: State Sector Amendment Bill Public Finance Amendment Bill (No 2) Crown Entities Amendment Bill — Third Readings[Sitting date: 10 July 2013. Volume:692;Page:11940. Text is incorporated into the Bound Volume.]State Sector Amendment BillPublic Finance Amendment Bill (No 2)Hon DAVID PARKER (Labour):As David Cunliffe has already indicated to the House the Labour Party is supporting these three bills arising from the State Sector and Public Finance Reform Bill.Andrew Williams: Why?Hon DAVID PARKER: Because we think that it is important in respect of cornerstone legislation that governs the State sector and desirable that at least the two major parties can reach agreement. It is largely housekeeping legislation and it is important that we have stability in our State sector.Indeed I thought it was an appropriate time to have a bit of a reflection on history. One of the Acts that this legislation amends is a 1988 Act that was passed by the Lange Government under the ministerial direction of the Hon Stan Rodger. He lost his membership in the Public Service Association (PSA) for a while thereafter so it was not all roses for him. But it is somewhat interesting to reflect on the fact that only 30 years ago we had far less sophisticated public finances and a far less sophisticated State sector than we now have. Indeed it was not until that Government reformed the reporting of accounting information from Government departments that we moved to true accrual accounting across the Government. Until then there was dishonesty in the Government accounts of the day which could report things on a cash basis and shuffle things from year to year. That was one of the ways in which the Muldoon Government was able to hide the fact that New Zealand’s Government finances were in such a parlous state that Government debt was heading up towards 80 percent of GDP. An incredible one dollar in five of tax that was being collected was being spent on interest. It got close to one dollar in four before subsequent Governments be they National-led or Labour-led became fiscally responsible.Indeed I think it is fair to say that since that time—the 1980s—and the reforms that were around State sector performance and public finance reporting and management we have not had a fiscally irresponsible Government. We have not—it is true. The then Labour Government got the finances under control. The following National Government reduced Government debt. The following Labour Government led by Helen Clark with the Hon Michael Cullen—Sir Michael Cullen now—reduced gross Government debt from 38 percent of GDP to 18 percent of GDP and reduced net Government debt to zero.I am going to dwell on that point a little bit because it is relevant to the Public Finance Amendment Bill (No 2). We hear time and again the diatribe from members on the other side of the House asserting that they inherited a decade of deficits and that the prior Government was fiscally irresponsible. It is not true. Indeed the Budget surpluses that were run by the last Labour Government in one year was 6 percent of GDP and in another couple of years were 5 percent of GDP or thereabouts. We ran nine surpluses in a row and that enabled us to reduce debt in the way that I have previously described. Every one of those Budget surpluses was opposed by the National Party whether it was John Key as its finance spokesperson Don Brash in charge John Key in charge or Bill English in charge. Every one of them was opposed to those surpluses.I remember sitting in this House when the Opposition National Party members as they were then were shouting out that the Government was overtaxing and that it should have been refunding those taxes and having smaller surpluses. And of course if New Zealand had made that mistake if in the time of plenty we had not run surpluses and reduced Government debt the circumstance of New Zealand in the last 5 years since the recession and the global financial crisis would have been so much more difficult to cope with. The Government—and it is now a National Government—would have had to cope with not just declining revenues but high levels of Government debt relative to where it is. As a consequence it would have had far more difficult decisions as to whether it needed to be more austere in its Government spending than it has had to be in order to get Government debt under control.As it is New Zealand has been able to run one of the least austere responses in the Western World to the global financial crisis. As a consequence we have not forced oureconomy into the deflationary spiral that has been experienced in so many other countries around the world. [Interruption ] That is quite right. A major part of that has been the fact that the last Labour Government prudently managed the Government’s finances in a way that reduced Government debt despite the opposition of the then National Opposition.On that front it is interesting that the Public Finance Amendment Bill (No 2)—these things are important but leadership is more important. We again hear the Government accusing the previous Labour Government of financial mismanagement. This week the Minister of Finance had the audacity to allege in respect of mistakes in Budget reporting now alleged to have been made by National around the funding of the Solid Energy bailout that National was cleaning up the mess made by Labour. On questioning yesterday in the House he was forced to admit that at the time National took over that company had $15 million of debt or thereabouts—in the low tens of millions of dollars of debt—and by the time it was in the crap 3 or 4 years later it had close to $300 million of debt because of the ridiculous expansion plans into coal and lignite and other foolish measures that were promoted by the Government members including the Hon Gerry Brownlee at the same time that they told the State-owned enterprise to take on more debt and pay higher dividends. In the end of course it all turned to custard for them.I want to turn to a couple of particular measures in the legislation that have been changed in its course. I am talking now in respect of the State Sector Amendment Bill. As I understand it all parties agree across the House that where an employee in the State sector stops a job one day and gets an identical job the next day close to the same place and on the same pay and conditions then they should not be able to pick up redundancy from the old job and move into the new job because they have not effectively suffered a detriment that would justify that.This legislation when it came to the first reading in the House went a lot further than that. It effectively meant that people could have faced the risk that even though they had redundancy and other provisions in their employment agreement or employment contract whether it was a collective or an individual agreement those provisions would not kick in despite the fact that they would be forced to move to a job that they did not want that could have been distant physically and that could have been quite different from the job that they had previously had.We in the Labour Party thought that was wrong. We agreed with the PSA that that was just unfair. It was not the way in which a private sector employee would be dealt with in respect of similar provisions in their contracts if they were moving from one job to another and we did not think it should apply in the State sector either. So we advocated hard as did lots of other people behind the scenes and the Government moved on that and now we have got a provision in that respect that we can live with. That is one of the reasons why we are able to now support the bill.I want to say something about the directives that could originally have been given under the legislation as it came to the Finance and Expenditure Committee. They were said to be orders; they sounded like statutory regulations even though the jurisdiction of the Regulations Review Committee was ousted. The wording of the provision of the legislation was so broad that in our opinion the Government could have effectively imposed a wage freeze across the public sector through a piece of subsidiary legislation.Some of us are old enough to remember that it was a prior National Government that did that under Muldoon imposing a wage and price freeze on New Zealand that was unfair did not work and made worse the problems that there were then in the economy. So we again fought that and said that we would not support that. That has been changed. The wording has been changed. The breadth of the directives has been changed to makeit clear that they cannot ride across good-faith negotiations and therefore you cannot have a directive across Government that is tantamount to a wage freeze. That provision in its modified form finds our support too.One final point: these changes are all well and good but I do not accept the proposition that you cannot have whole-of-Government cooperation and get out of silos without these changes to the law. These changes to the law might make it a little easier but what you need is leadership. You need leadership at a ministerial level at a departmental level at a State services level. If you get that sort of leadership you can achieve change across the Public Service. It is not about—Rt Hon Winston Peters: What about foreign affairs?Hon DAVID PARKER: What about foreign affairs?Rt Hon Winston Peters: They’veemacerated foreign affairs.Hon DAVID PARKER: Oh well they macerated—eviscerated—[Interruption ] Well it was a mix of two words. I do not have time to talk about the Ministry of Foreign Affairs; perhaps the honourable member can take a call.