Cunliffe David: State Sector and Public Finance Reform Bill — In CommitteeText is incorporated into the Bound VolumeCunliffe David: State Sector and Public Finance Reform Bill — In Committee[Sitting date: 02 July 2013. Volume:691;Page:11609. Text is incorporated into the Bound Volume.]Hon DAVID CUNLIFFE (Labour—New Lynn):I thank the member John Hayes who has just resumed his seat for contextualising the State Sector and Public Finance Reform Bill in the Better Public Services programme. The Better Public Services Advisory Group has indeed been one of those groups that has fed into the early design of this bill seeking to establish a framework to support and encourage innovative flexible delivery of public services. Unfortunately for the Government the Better Public Services targets look like they are not going to be met in at least five out of the 10 key priority areas. So nervous was the Minister of Finance on that subject when he recently testified before the Finance and Expenditure Committee that he would not confirm how many targets were on track and how many were off track. We look forward with great interest to the release—we hope this very month—of the Government’s interim report on the achievement or otherwise of its Better Public Services goals.Strengthening the role of the State Services Commissioner is one of the core parts of the amendments to the State Sector Act that are contained in Part 1 of this bill. We share the Government’s aims to come up with a set of legislative amendments here that provide a framework that will endure across party lines and across terms of Government to ensure that the public sector will be flexible and will be responsive that Government agencies will work together to solve problems and that they will pool resources to create innovative approaches but that the use of those resources will remain trackable and accountable to the people through the parliamentary process.We think that having a State Services Commissioner as the lead manager of the managers who can ensure that Government agencies work collaboratively as a system for the first time is a good thing and we commend its inclusion in the bill. We commend broadening the commissioner’s functions to include the ability to transfer chief executives within the Public Service when a vacancy arises. One can think of—and I will not dwell on it now—a number of occasions either where underperforming chief executives might be transferred out of an agency as part of a rescue plan or where particularly able ones might be transferred in. Of course Peter Hughes currently the Secretary for Education springs to mind as an incredibly able public servant who has been deployed to assist an agency that is clearly having trouble with even the basics of pay and rations with the Novopay system.The bill also seeks to extend the responsibilities of chief executives to their Ministers which is a good thing to include matters relating to the collective interests of the Government not just the individual interests of the department. I think that that is a useful innovation. What it shows is that we are as a system becoming more focused on the outcomes and a little less silo-driven about how the outputs contribute to those outcomes to use the jargon of the State Sector Act. That is about putting the horse in front of the cart and that is sensible in anybody’s book.The risk of course is that if too much focus is taken off the output measures because we speak only in generalities about the aims and outcomes there will be a blurring of accountabilities. It is for that reason that when the Finance and Expenditure Committee wrestled with the detail of this bill we were very very concerned to maintain the trackability of expenditure and the rigour of accountability on an output class by output class programme by programme basis. And where the new innovation that is included in the bill of a multi-category expenditure class is employed the bill now following amendments made in the select committee makes it mandatory that in the budget reporting of that expenditure and in the estimates process it is fully trackable from the preceding years when things may have been individually accounted to how they fall into the multi-category appropriation or MCA. That is a very important discipline because otherwise one could imagine in certain circumstances a department trying to hide an underexpenditure or an overexpenditure might simply change the structure of the output classes so it was impossible to follow the money honey.It is important to give chief executives the power to delegate statutory functions and powers between agencies but the select committee also wrestled with the issue of whether the safeguards were sufficient. So the language in the bill has been tightened up to ensure that where power is delegated—not just an activity but a decision-making power—very clear responsibility and accountabilities follow that delegation so that the delegated decision maker remains accountable upwards through the chain to ultimately the Minister and to Parliament. So we agree with the objective. We thought the bill as introduced was a little loose in the way those accountabilities were written. As other speakers have said we think that the committee worked very well together and was well served by our highly capable professionals to improve that accountability.Part 1 also creates a new organisational arrangement called a departmental agency. This is not a Crown entity in terms of being a separate body. It is not a department. It is a separate stand-alone agency that operates within the overall structure of a department and it regularises what has been experimented on with mixed success. I think one example that has been largely successful is NZAID a semi-autonomous body within the Ministry of Foreign Affairs and Trade. That has brought a renewed focus on poverty alleviation and aid-driven principles of delivery. And another is the Crown Ownership Monitoring Unit which has existed with perhaps a little less success within Treasury—less success possibly because it has been one step removed from key Treasury decision-making possibly because it has been a little subscale relative to the heft of some of its State-owned enterprise and Crown entity clients.Hon David Parker: Solid Energy.Hon DAVID CUNLIFFE: Solid Energy as my colleague David Parker has said being the classic example where a runaway train developed. Solid Energy was investing like there was no tomorrow at precisely the same time that the bottom was falling out of the coal market. Common industry understanding is that when the market is in a down cycle you tighten your belt. Unfortunately that did not happen. And what is worse the monitoring unit appears to have had some lags in terms of getting on top of it. The structure of the entity that is provided for in this bill is not going to solve every problem of foresight or every problem of management but what it does do is it providesa coherent legislative framework within which best practice can be followed. So we hope that that makes a useful and positive contribution.The bill also increases the flexibility of provisions relating to the appointment of chief executives and senior leaders. Some flexibility is good; too much is bad. We want to put on record that we do not want to go to the extent of a Prime Minister ringing up an old school friend—David Bennett: Oh come on.Hon DAVID CUNLIFFE: —and overriding this. No do not laugh Mr Bennett. One day history will judge that as a low point for this administration. There can be no more important appointments to be politically neutral than for example the Commissioner of Police the head of the SIS and the head of the Government Communications Security Bureau. If those most sensitive positions are not only not politically neutral and independent but also are seen to be so then public trust in the institutions of the State will be fatally eroded.I do not think Mr Bennett that it is any laughing matter that a Prime Minister rejected all of the nominees shortlisted by the State Services Commission rang up his old mate invited him out for breakfast briefed him on the job got him the job and is now having done that playing catch up—as former religious studies lecturer Jim Veitch so appallingly said on the radio today—waiting for the law to catch up with practice. Actually ladies and gentlemen the rule of law is the other way round: practice is subject to the law. That applies to the intelligence community and to the Prime Minister in the same way it does to everyone else or the people whose memories are enshrined on the walls of this Chamber did not get remembered as they should have been.History will judge these matters as fundamental to the corrosion of public trust in John Key and the Government that he for now leads—for now leads because this Government is on a slippery slope to electoral defeat. It is on a slippery slope to electoral defeat because the public of New Zealand when they realise—The CHAIRPERSON (Lindsay Tisch): Order! Order!Hon DAVID CUNLIFFE: —what is being done to their hard-won freedoms will not tolerate it. Mr Chair you are right it is time to return to the substance of the bill. There is much in this bill that is good there is much in this bill that is better and we will be supporting it.