State Sector and Public Finance Reform Bill — In CommitteeText is incorporated into the Bound VolumeState Sector and Public Finance Reform Bill — In Committee[Sitting date: 02 July 2013. Volume:691;Page:11597. Text is incorporated into the Bound Volume.]State Sector and Public Finance Reform BillIn CommitteePart 1 Amendments to State Sector Act 1988The CHAIRPERSON (Lindsay Tisch): This is debate on clauses 3 to 57C and schedule 1.Hon DAVID CUNLIFFE (Labour—New Lynn):I rise to take a large number of calls on this detailed and very important bill the State Sector and Public Finance Reform Bill and to confirm that Labour supports this bill with certain reservations and it will be supporting a number of the Supplementary Order Papers despite the late timing in which they have been brought to the Committee.It would be remiss of me to continue with this debate before adding a quick personal comment about the proceeding. May I enter into the record my deep deep concern about the removal of access to justice and the tightening of the legal aid provisions. That is a huge backward step for this country.Labour supports this bill with reservations. We were opposed to it at the first reading and it is not often that an Opposition that opposes a bill changes its vote to support the bill at the second reading and at the Committee stage. This for those watching is a rarity and it has occurred for the following reason. The bill as introduced had a fundamentally damaging effect on the rights of civil servants. It made it much much more difficult for them to transfer between agencies while retaining their existing rights to redundancy provisions. It trampled all over the negotiation rights in wage bargaining that civil servants have under the law. There were a number of other provisions that were at odds with the existing standing of public sector rights and good practice.I am very pleased to be able to offer compliments to the Minister of State Services the Hon Jonathan Coleman to officials who worked very hard on the bill and to members opposite who chaired by the Hon Todd McClay entered into a good-faith process of negotiation by which the core intent of the bill was preserved. Its good effects in terms of introducing more flexibility and teamwork across the public sector will be achieved but the offending provisions that had an undesirable effect on the rights of public sector workers have been changed. They have been changed so dramatically that I am able to enter into the record the support of the State sector unions not only for the changes but for the position that our party is taking in supporting the bill. That is a significant turn-round given the state of the bill as introduced.I would like to address some of the specific provisions in Part 1 of the bill which covers the amendments to the State Sector Act. We understand that the Government will move to split the bill into a number of bills that affect different underlying core legislation. Part 1 of the bill was in fact the most contentious. Mr Chairman I hope that you will allow the Minister to take a number of calls to underline the Government’s thinking on the bill as introduced and on the changes that it has made. Mr Chairman I hope that given the importance of this part of the bill that you will allow members on this side of the Chamber to debate its provisions in some detail. Several of the issues that we will wish to canvass in our comments today include firstly that the redundancy provisions have been improved so that State sector employees retain their entitlements unless accepting a position that is “no less favourable” than the position that they currently have in terms of terms and conditions.You know sometimes there is an argument in lawmaking about one word. I think it was Oscar Wilde the writer and poet who said a long time ago: “I spent all morning putting the comma in [to the sentence] and all afternoon taking it out again.” He might have said it with a slightly different accent of course. We spent the best part of a day arguing about whether we were going to put the word “overall” into clause 49 whichsays the terms and conditions had to be no less favourable and we ended up taking it out again. The reason that we were able to take it out by agreement—and we appreciate the work of officials on that matter—was that it was agreed common ground that the existing case law in fact allows a court to look at a package of terms and conditions and no change was needed. From this side of the Chamber we would want to underline the fact that the core principle that is being given effect to remains that the terms and conditions must be no less favourable and in seeking to address this as a package a court must not sell short the key provisions of the existing—[Bell rung ]Reminded by the bell let me move on to the transitional provisions in Part 1. These have been improved so that collective and individual agreements are sunsetted equally 3 years after the bill takes effect. There was a considerable debate about this issue too. It was of concern quite rightly to the Public Service Association to the Council of Trade Unions and to a number of individual submitters that the bill as introduced would have given individual employment agreements—individual contracts—longer life under the provisions of bills than some collective agreements which would have expired before the individual agreements. By a process of discussion and mutual agreement in the Finance and Expenditure Committee the 3-year sunset clause clause 49 was introduced to ensure that collective agreements did not expire before individual agreements and therefore that the results of collective bargaining by State sector employees were not undermined.I have to recognise members opposite who were members of the select committee. It was a good-faith discussion ably assisted by officials. As with a number of bills that Parliament has been debating today it was an example for the public of where Parliament can through select committees actually do its job of changing the detail of legislation to iron out in this case some pretty fundamental kinks and creases so that we have ended up with a bill that in our view does achieve the intent of the Government—the Government would be pleased about that—and also removes at least the most part of the issues that would have been at odds with worker rights and social justice.Another example of that was the Government Workforce Policy Orders as introduced. This would have been a problem legally because an order would have been potentially construed as legally binding upon the chief executives of Government agencies and Crown entities so that they could not enter into or sponsor employment discussions that for example might end up in a wage settlement at a higher level than the order prescribed. In so doing our advice was that that could undermine the existing rights to good-faith bargaining that State sector employees enjoy. It is therefore gratifying to be able to record in this Committee stage of the debate that by a process of good-faith discussion amendments have been made not only to change the word “order” to “statement” to better reflect its actual status as providing guidance rather than as a binding proclamation but also to ensure that clauses were introduced into the bill that actually enshrine in very specific terms the existing legal rights of State sector employees to good-faith bargaining.There are a number of other clauses that attracted the attention of the select committee which we will have the opportunity to go through as this Committee stage works through the different parts of the bill. I would like to mention just a few of them. The conflict of interest provisions have been strengthened there is enhanced governance for delegated powers and there are strengthened accountability requirements which we will detail later about public sector financial reporting.We have worked very hard to ensure and we will come on to this that the proper constitutional cascade—that line of moral authority—of the voice of the people vested in the balance of Parliament which is in turn vested in Ministers of the Crown and isthen reflected in the ability of Ministers to direct their departments is not lost in seeking to streamline the Public Service. Crucially the key accountability instruments such as the statement of intent which is a binding contract between the Minister of the day and the chief executive of the day—in seeking to make that more flexible and on a multi-year basis we have preserved the rights of Ministers to amend and update the “SOI” as the statement of intent is known each and every year and placed an obligation on their Civil Service advisers to inform the Minister of those rights.Speaking personally I would be very keen to ensure that the accountability contract between Ministers and civil servants remains effective and remains in place because ultimately that is the moral authority upon which departments of State must operate. In these days—[Bell rung ] Mr Chairman.The CHAIRPERSON (Lindsay Tisch): You can have only two consecutive calls unless some other member takes a call and I see Dr David Clark is anxious to take a call.Dr DAVID CLARK (Labour—Dunedin North):I am very very pleased to take a call Mr Chair and thank you for the opportunity. The State Sector and Public Finance Reform Bill is one the Labour Party will be supporting albeit with some reservations. We opposed the bill at its first reading and those present here in the debate will remember that but ultimately changes that were forced at the Finance and Expenditure Committee by Labour and the State sector unions have averted disaster for Government workers who were set to lose their redundancy entitlements and employment rights. I guess I want to thank the members opposite who engaged in those negotiations in good faith because it has become a better bill and one that hopefully will stand the test of time. These public sector bills are important for their longevity for the fact that they survive various Governments and provide some kind of certainty for future planning for the good of all New Zealand. So I do thank members opposite who were involved in that process as well as the unions—the Public Service Association and the Council of Trade Unions—and the Labour members of the committee who fought hard to ensure that that disaster was averted for Government workers who would otherwise have lost redundancy entitlements and employment rights.The bill as I said was heavily amended in the committee in response to the strong submissions from State sector employees themselves and from their representatives. Tough negotiations at the committee have produced this better bill and these employees’ rights are now better protected than they otherwise would have been. The redundancy provisions that were improved mean that employees retain their entitlements unless they are accepting a position that is “no less favourable” than their existing package.David Bennett: Put a bit of meaning into it. Give it a bit of feeling.Dr DAVID CLARK: Mr Bennett opposite I can see is bursting to make his contribution too but Mr Bennett I will look forward to your contribution in due course. In the meantime I am just outlaying the important provisions that are now in the bill. The transitional arrangements have been improved too in our view so that collective agreements and individual agreements are now sunsetted equally. That is important and that will take effect. The Government Workforce Policy Statements have been revised to ensure that all existing legal and bargaining rights have been protected and there are conflict of interest protections in there as well. Although Labour has some concerns with some aspects of the bill with the support of the unions significant change was brokered and that means that Labour will support this passage of the bill.Overall the bill is an omnibus bill that amends the three principal statutes governing the management of the State sector and the public finances in New Zealand so it is not be underestimated just how important this bill is to the future of our country. It will notbe one of the sexiest bills to be debated in this Parliament if I can put it that way but it is an extremely important bill. The powers that it will give to chief executives and to Ministers in terms of reporting requirements in terms of the way that happens and in terms of the way in which they can work with appropriations will have long-term effects. They will make some things more efficient and hopefully the right balance has been struck in terms of providing accountability to go with these measures.In Part 1 of the bill the main changes it makes involve strengthening the role of the State Services Commissioner—that is the first one that should be noted—to make sure that the role of the State Services Commissioner in leading the State services and ensuring that agencies work together collaboratively as a system is strengthened. It is set out for the first time ever in legislation—the commissioner’s role. That is a very significant step but an important step. The commissioner’s functions will be broadened to include the ability to transfer chief executives within the Public Service when a vacancy arises and to draft Government policy on workforce and employment matters from the perspective of the State sector system as a whole. This power would not extend of course to determining pay or conditions. Extending the responsibilities of chief executives to their Ministers to include matters relating to the collective interests of the Government and stewardship of the interests of the Crown and departments in the medium and long term is another significant change that is being proposed. Chief executives will have the power to delegate statutory functions and powers between agencies and subject to certain safeguards to non-government service providers.The proof will be in the pudding with these particular amendments. How these interests are played out the kinds of delegated statutory functions that we are asking—and I speak collectively—The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt the honourable member. The time has come for me to leave the chair for the dinner break.Sitting suspended from 6 p.m. to 7 p.m.Dr DAVID CLARK: When I was rudely interrupted by the dinner bell I was discussing the strengthened role of the State Services Commissioner and the effects of the changes to the amendments to the State Sector Act 1988. I was about to introduce a person as an example of why this is important policy. These new powers will give a formalisation to the role of the commissioner. It will also mean that he or she has the ability to transfer chief executives within the Public Service as a vacancy arises. It gives them the ability and responsibility for Ministers and chief executives to have a greater interest in the stewardship of the interests of the Crown and departments in the medium and long term.An example of this might be if a future Government for example had a priority to change the way in which the electricity system worked. As it happens currently the Prime Minister has said that he thinks that Kiwis are paying about the fair amount for power prices. Most New Zealanders—Hon Ruth Dyson: What? He didn’t say that!Dr DAVID CLARK: No he did say that. Most New Zealanders think that power prices are far too high but the Prime Minister thinks that they are about right. Labour sides with most New Zealanders in thinking we should have a fair price for power—The CHAIRPERSON (Lindsay Tisch): Order!Dr DAVID CLARK: I am coming to a point here—The CHAIRPERSON (Lindsay Tisch): Yes. Well you are meant to be.Dr DAVID CLARK: —which is that if we wish to change the policy it would very much involve implementation by the public sector by people who are tasked with implementing changes whether you agreed with the policy—not meaning you MrChair—if changes need to be made. This flows on to the responsibility of Ministers and agencies concerned and these additional powers should ease the ability to change policies. So where one party has decided that capitalising the value of free water is not the fair way to build a system where you think the cost of electricity should not rise at double the rate of inflation for the last 15 years and where you wish to implement a new policy that says instead of the long-run marginal cost you would look at a model that looked at a fair return on capital and paid only the marginal cost for new generation you could implement that—I do not mean you Mr Chair. But the Government of the day could implement that change through the powers of the State Services Commissioner filling a vacancy in a relevant department and/or having the sanctions and rewards necessary—Hon Ruth Dyson: As long as it wasn’t privatised.Dr DAVID CLARK: —as long as that department had not been privatised as my colleague alludes to. Subject to the normal powers there is a wider range of abilities or a strengthened range of abilities for the State Services Commissioner to effect change. That at least in theory is partly how this legislation could play out and we in Labour think that is a good thing and that is why we will be supporting this bill. The Government thinks it is a good thing also. It should enable the Government to achieve its objectives more easily if it has any that are clear and in the interests of New Zealand.There is no accounting for bad policy. If the Government has bad policy or no policy or no idea or no plan about how it is going to get ahead—and we have argued often on this side of the House that this Government seems to have no direction and no plan—then that cannot be accounted for by this legislation. This legislation really is about implementing the plan. If the Government does have a plan how will it be implemented? What is the role of the State Services Commissioner? That will be spelt out more clearly. How does that flow on to chief executives in the Public Service? What are the implications for their workloads and the way that their responsibilities are set up? That flows into the State sector system as a whole. So if as is done by members on this side of the House good policies are put forward and the party has the opportunity in Government to implement them this State Sector Act amendment bill will allow for those policies to actually take effect and actually make a difference for real New Zealanders.So that is why we will be supporting the bill. We are satisfied with what has been achieved in terms of protecting the arrangements for State sector workers the redundancy provisions that have been approved as opposed to what was originally proposed the transitional arrangements and the conflict of interests protections—all of those things that were negotiated in the select committee and fought for strongly by the Labour Party along with the New Zealand Public Service Association and the New Zealand Council of Trade Unions.PAUL GOLDSMITH (National):I rise to take a call on the State Sector and Public Finance Reform Bill. I just wanted to pick up on a couple of things. I want to pay tribute to the previous chair of the Finance and Expenditure Committee Todd McClay who shepherded this piece of legislation through the committee stage—Hon David Parker: Through the Committee stage? Through the select committee?PAUL GOLDSMITH: —through the select committee stage with the full cooperation and good work of the members on both sides of the House in particular David Cunliffe who was very thorough and detailed in his examination of the particular issues and in fact was indefatigable in the way that he worked through the issues.I think we have landed in a good space here looking at the amendments suggested here in Part 1 relating to the purpose of the State Sector Act and the definition ofministerial staff and the independence of chief executives. We have made some amendments concerning their ability to delegate functions of powers. There are amendments relating to the restriction of redundancy payments which has been discussed at length on the other side of the Chamber. Finally there is a part that makes further recommendations in relation to the protection from liability for Public Service chief executive employees. We had a lot of debate about that issue in relation to whether indemnity was a better approach. The Law Commission was strong in its views on that but I think that after due consideration we have come down on the right side of that argument. All in all this piece of legislation is part of the broader Government approach in terms of delivering better public services to New Zealanders.I do think we have to pay tribute to the Public Service generally in this country. We have had 5 years now where there have been relatively few increases in terms of resources. It has been tight. It has been a tough period when the Public Service in general has been asked to deliver productivity gains and less with more as every other business in the country has been dealing with. We do have to pay tribute to the work that aspects of the Public Service have done in many different parts. This bill is about trying to give better tools to the leaders in the public sector so that they can have some clarity around what they do and so that they can work together more effectively. On that basis I recommend this bill to the Committee.Hon DAVID PARKER (Labour):Can I begin by thanking the officials. We see a range of officials and they are generally very good at the select committee but it is refreshing when we see officials who are so on top of their understanding of complex issues that they are able to engage with the select committee and not just hold a line in defence of what is proposed but engage in discussions that both educate the committee and show some movement on the part of officials at times when perhaps the policy intent is clear but there are details that need to be addressed. We found the officials—or I found the officials—advising the Finance and Expenditure Committee and providing advice to be of the highest calibre so thank you.There are a couple of issues that I want to address in this contribution. The first relates to why it was necessary to change provisions relating to Government Workforce Policy Orders. That is the language that was used in the form of the State Sector and Public Finance Reform Bill when it came to select committee. The new provisions in Part 5 of the Act as inserted by clause 42 of the bill—to insert new section 55A into the Act more precisely—provide for Government Workforce Policy Statements. These workforce policy statements are very broad in their ambit. They were described as orders and the Governor-General could by Order in Council on the recommendation of the Minister approve a Government workforce policy as a Government Workforce Policy Order as if it were something akin to a Government regulation of some kind. But then it went on to say that those orders were not a regulation for the purposes of the Regulations (Disallowance) Act or the Acts and Regulations Publication Act 1989.Labour members of the select committee were concerned that the ambit of these regulations was so wide as to allow the Government to effectively issue a directive that was akin to an order by the executive which would have enormous power across the whole of the State services but it did not need to come to Parliament in respect of it and there was no ability for people to challenge it under the Regulations (Disallowance) Act 1989. That was wrong.On the Labour side we were aware of course that the Government that was the most egregious in its use of statutory regulations in the past was another National Government under Mr Muldoon who gave himself hugely broad regulation-making powers under the Economic Stabilisation Act which allowed him by Government regulation to impose a wage freeze and he did. Incredible though it now seems he didthat by way of statutory regulation. We on the Labour side thought that the subsequent Lange Government with Geoffrey Palmer’s assistance in this regard cleaned up a lot of that silly overly broad regulation-making power and tried to make sure that the big decisions for New Zealand were taken by Parliament and not by Ministers using executive powers.We were concerned that this proposed provision allowing Government Workforce Policy Orders to be made was so broad as to allow the Government to effectively say that there will be a wage freeze across the public sector. We asked officials whether that was the case and they said that was not the intention but it did appear to be that that was the effect of the words or at least that was a concern that I had. The select committee agreed across both party sides that that was inappropriate and that the power of the executive the power of the Government to make workforce policy orders should not be that broad. Indeed it would be absurd to be giving the executive powers that broad.So the select committee has recommended to the Committee that we amend the provisions in respect of Government Workforce Policy Orders and that we start to call them Government Workforce Policy Statements rather than orders. So already you can see that they are not sounding as legislation-like as the original language proposed. They still are a statement. They still are not a regulation for the purposes of the Regulations (Disallowance) Act but there is a statement at the proposed new section 55D that says that notwithstanding that “A department must give effect to a Government Workforce Policy Statement.” the policy statement cannot “create alter or remove employment or other legal rights or obligations;”. So if there is an existing employment right that cannot be taken away by a workplace order. If there are existing legal rights or obligations on the employer—for example to embark upon good-faith bargaining—then this provision could not be used to cut across those obligations and impose a wage freeze. The Labour Party is pleased that that was picked up by submitters and that this change has been made.I want to raise another issue which I have spoken of previously and which is raised in our minority view. The Labour Party is still not convinced that it is right in principle that the Public Service is immune from liability as opposed to being indemnified for the consequences of its actions. In the Labour Party we do believe that public servants who are acting in good faith no matter how negligent they are should be protected from the consequences of civil liability for their actions. But that does not mean to say in our view that they should be immune from prosecution—sorry immune from suit is a better way to put it or immune from prosecution of the suit if I was trying to cover my own language there which was rather loose.We had submissions from the Legislation Advisory Committee that said that it is wrong in principle that the Public Service is immune from liability in civil proceedings. The committee thought the Public Service should be indemnified in its duties rather than have an immunity from prosecution. There are a couple of reasons behind that. Firstly it says: “Do we really want to live in a society that a public servant who acts egregiously”—egregiously—“cannot be brought before a court and suffer the embarrassment in a civil proceeding of being involved in the proceeding?”. The Legislation Advisory Committee—or was it the Law Commission? I forget which. I might have that the wrong way round. One of those two august bodies—Hon David Cunliffe: Law Commission.Hon DAVID PARKER: The Law Commission. Thank you David Cunliffe. It was the Law Commission that came to us and said that what we risk doing is actually creating a faceless bureaucracy and that there should be some accountability for conduct. So if conduct is egregious why in the public sector would you not be requiredto appear in court in civil proceeding as a party and suffer the consequences of that process as opposed to the consequence of the award of damages that might flow from the end and why is it that indemnity is not enough? If you look at the comparison—and I know the comparison is not perfect but there is some truth in it—where someone was in the private sector and you were acting in the course of your employment for a private employer and you made a mistake then you could be sued in your own name probably in some situations. You certainly would not have immunity from prosecution. You would at most have a right of indemnity.And in the case of the injured party in society who has had harm caused to them by an arm of the State through this public servant doing something wrong—and it could have been deliberately wrong even if it was not maliciously wrong—why is it that there is some question as to whether the private citizen who suffers that injury has got a right of action against the individual? One of my concerns in this and it was something that we explored with the Law Commission is that there is a difference between the liabilities of the Crown which is vicariously liable for the actions of its employees which are sometimes not as broad as one might think. I can see I am running out of time here.DENISE ROCHE (Green):I want to start my contribution by thanking the staff who have been involved in the process during the Finance and Expenditure Committee examination of this bill to bring this State Sector and Public Finance Reform Bill to the Committee. I also want to acknowledge both the Labour Party and the National Party members who worked together very closely and very diligently to bring effectively a new bill to the Committee—a bill that has been softened from the original—and I particularly want to pay tribute to David Cunliffe for the work that he put into that. The Green Party position however is that at the end of the day workers in the State sector will be worse off as a result of this bill’s passing.I have checked with the Public Service Association tonight which also says that it does not give unqualified support to this bill. However it does acknowledge the work—particularly the work of the Labour Party and the members from that party—in softening and in making amendments to the bill and it says that that strategy has meant and will mean that the workers are not as badly off as they may have been when the original bill was before the House in the first reading.I acknowledge that the amendments that have been softened include the restrictions around redundancy. The redundancy provisions have been loosened since the first reading. However it is still a restriction.I have put forward Supplementary Order Paper 265 for discussion and consideration tonight. It talks about actually restoring one of the provisions that was lost from the original 1988 State Sector Act and that is the provision that relates to the transfer of employees to the transfer of functions and duties to new agencies and to giving the workers the right to apply for those jobs. This bill actually contains an amendment that gives chief executives that right but that right has been taken away from public servants.This is a really important amendment if you consider that last week the first reading of the Health and Safety (Pike River Implementation) Bill was before the House. One large part of that bill was about the provisions whereby workers and health inspectors who are currently employed by the Ministry of Business Innovation and Employment can transfer to a new agency that is being created through that legislation which is before the House. That has to go into legislation for every piece of new legislation that is developed that creates a new entity or a new agency and that is because it is being taken out of the State Sector Act. We will have to do that time and time again every time a new agency is formed and there may be times when they are.We will also not be supporting this bill because of the things that have been left out—not just the transferral arrangements but other things including in the purpose statement the equal employment opportunities mentioned in the first part of the Act which is around the purpose. Equal employment opportunities are not stated explicitly elsewhere in the bill and you can combine that with another change from the original Act which is again in the purpose statement for State sector employers to be good employers. It has been changed to “meets good-employer obligations;” which is a slight tweaking but also a weakening. So when you put the loss of the specific mention of equal employment opportunities together with that we are starting to look at some weakening of some of the overarching principles of the Act which works against workers. It does not work in their favour.I think we have to remember that we do need equal employment opportunities—we need equal employment opportunities—and that is because the State sector the Public Service is female-dominated a lot of the time. Yet for all that women in the State sector are still earning sometimes 8 percent sometimes 10 percent or sometimes 12 percent less than their male counterparts. Before 2009 this Government was actually exploring and investigating what was happening to pay rates between male and female employees in the public sector and that was an investigation that was being undertaken with the Government’s support. However the Government pulled that support in around February 2009 and the reason it gave at the time was that the Minister at the time Tony Ryall said that we could not afford to increase levels of remuneration.We have had equal pay legislation in this country for over 30 years and we still have an average weekly income for women that is 23 percent less than the average male weekly income. When you consider that the Public Service has been the bastion of good employment practices and it has been a leader in setting decent standards for workers—standards that the private sector frequently follows—then we must fight very strongly to maintain the provisions in the bill that will protect those workers.Again I do acknowledge the work that has happened particularly the Labour Party’s efforts to soften the bill and make a heck of a lot of amendments to it. However we will not be supporting the bill.MAGGIE BARRY (National—North Shore):I rise to speak in the Committee stage of the State Sector and Public Finance Reform Bill. It came through my select committee the Finance and Expenditure Committee so I sat through the submissions and the animated discussions that ensued within the committee ranks. It is a bill of course that was sponsored by the Minister of State Services the Hon Jonathan Coleman.This is as others have pointed out an omnibus bill. It amends the State Sector Act the Public Finance Act and the Crown Entities Act to provide the legislative grunt really to deliver Better Public Services. There have been some proposed changes which I will briefly outline to you tonight to the State Sector Act 1988. Effectively the bill is about strengthening extending and improving the management of the State sector and public finances.When it comes to the strengthening provisions it strengthens the State Services Commissioner’s role in leading the State services. It extends the chief executive’s responsibilities to consider the collective interests of the Government and the longer term sustainability rather than being focused on individual departments and a shorter-term view which has to be good. Also it improves governance across the system which is part of the overall thrust of this National John Key - led Government to improve the sector. When we look at some of the new provisions within the bill it does put in a new organisational arrangement called the departmental agencies. That is going to really provide more for the options available for delivering public services.Among the more contentious aspects that were considered by the Finance and Expenditure Committee and certainly exercised the attention of a lot of the submitters was around that issue of redundancy which other speakers have spoken of. As a result of the discussions some changes were made. But it is important to note that the key provision of the bill relates to civil servants who have been made redundant but have a new State sector job to go to and therefore they will not receive a redundancy. You are not going to receive a redundancy—and these are the provisions that were argued through—if for example you start your employment the next working day or indeed perhaps even before your term is up. You will also not be paid a redundancy if you are taking on a job that is treated as undertaking continuous service and that is within the body of the State Service itself.You also have to have had duties and responsibilities that are comparable to the current job. You cannot really have been someone who works here in Parliament and then suddenly be expected to go out and man the roads somewhere. There has to be a comparable set of skills and they have to be matched. Perhaps some might argue that there is a match of skills in that but there is not enough time in a debate of this kind to go into that. But having a collective package of terms and conditions that are no less favourable than those that apply to the current position has been spelt out. Also you cannot be expected to travel very long distances for the job that you are doing. These are the kinds of provisions that the submitters who came to us were very keen to have but I think really it is important to note that not every single aspect of every element of their conditions has to be exactly the same for the redundancy to not apply.I commend this bill to the Committee because it is part of what we are doing as a Government to reform the State sector to ensure it delivers better public services to New Zealanders. Thank you.Hon PHIL GOFF (Labour—Mt Roskill):It is my pleasure to support the State Sector and Public Finance Reform Bill and it is worth noting that it is not the initial position that the Labour Opposition adopted. I have to applaud the members of the Finance and Expenditure Committee on both sides but particularly the Government side for actually listening to what the Opposition was saying on this occasion. That is not a common occurrence regrettably but when it happens the select committee—John Hayes: Oh I don’t know.Hon PHIL GOFF: Mr Hayes on a good day will listen to what the Opposition spokespeople say at the Foreign Affairs Defence and Trade Committee as you well know Mr Chairman Hayes. It happens from time to time. But looking at this bill it was a rare occasion on which members on both sides of the select committee were prepared to listen to the evidence particularly the evidence from the stakeholders before the select committee and to act on the evidence. I have to also acknowledge that the Minister of State Services Jonathan Coleman was prepared to listen to the select committee.In a perfect democracy—and regrettably we fall well short of that—that would happen in a commonplace way. However we have seen with the Family Court legislation and the legal assistance legislation that we debated before this bill that this is unfortunately using tonight as an example a rare occasion. But it is good on this occasion because I think all sides of the House have a vested interest that the legislation that relates to the State sector should have as much continuity as possible between Governments rather than being used as a political football that goes one way and then the other way when there is inevitably a change of Government. So I want to welcome the role of the select committee and I want to welcome the readiness in this instance of the Minister to take on board the advice that the select committee gave him. As a result we end up with a better piece of legislation. That is most important but equallyimportant we end up with substantial support across the House for this legislation which therefore makes it stronger legislation.There were three changes that were made that I think were very positive changes and which allow Labour to support the legislation. The first was in relation to redundancies. It is a really important principle that when a person loses his or her job through no fault of their own they are protected with the compensation that a redundancy payment gives. They are not being sacked because of wrongful behaviour; they are losing a job because of structural change. What Labour was able to achieve on the select committee was a protection of those redundancy provisions. The one exception is that if a person goes to another job that is no less favourable than the existing one within the public sector—they are not losing anything and there are various provisions including you know that it needs to be reasonably convenient in terms of travel and so on—then that is fair enough. It is an equivalent job with no less favourable pay and conditions and we would not expect redundancy in that situation. But in other situations the redundancy provisions are protected and that is the right and proper thing to do. I am glad—again unusually from the National Party on industrial relations—that the Government was prepared to do the right and proper thing. The second change that was achieved was a better transition so that the existing agreements are covered for 3 years. There is a sunset provision for 3 years. It means that those on collective agreements will not be disadvantaged in relation to those on individual contracts of employment. The third change that was made was to change Government Workforce Policy Orders which in the original bill would have had the effect of being Orders in Council into statements so that when a policy was being pronounced it was a statement rather than having a legally binding effect. That ensures that existing legal and bargaining rights have been protected. Each one of those changes was important and those changes justify the decision by Labour to support this legislation rather than oppose it as it did on the first reading.There is a lot about this bill in terms of what its objectives are that I think all sides of the House could support. We support a framework that encourages an innovative flexible efficient Public Service. I think everybody should be in favour of those things. And we also support a joined-together Public Service where there is cross-sector collaboration and those are positive changes. When I look at the purpose clause new section 1A inserted by clause 5 the purposes of the bill are purposes that generally should get the support of the Committee. We want a State sector system that “(a) is imbued with the spirit of service to the community; and (b) operates in the collective interests of government; and (c) maintains appropriate standards of integrity and conduct; and (d) maintains political neutrality; and (e) is supported by effective workforce and personnel arrangements; and (f) meets good-employer obligations; and (g) is driven by a culture of excellence and efficiency; and (h) fosters a culture of stewardship.”I want to say a little bit about what those purpose statements mean because it is all very well having a purpose clause in the bill that talks about good-employer obligations on the State sector but regrettably we have seen in recent times a practice that is quite different from the theory that is being proposed here. I think for a start of the changes that were made in the Ministry of Foreign Affairs and Trade where people had their working conditions unilaterally stripped away from them and were given inferior conditions particularly security of employment where people lost pay—for example those people transferring overseas together with their partners. There is no point in having legislation before this House that states that there should be good-employer obligations if the Government is not going to carry that through in practice.I want to use another example of this and it is pertinent to the Minister of State Services because he is also Minister of Defence. You know I have talked before about the need for redundancy provisions but it is also about how you go about it and whether this bill will translate into a change of practice. I want to read this to the Committee. This is a standard letter from the Defence Force in this case to employees in the army: “You are in the New Zealand Army which is a rank from which the army was directed to release a number of military personnel.” That means that it was going to cut costs and people were going to be made redundant. “When considering you against the army business rules for future potential you were assessed as having Low Potential given that your future employability was limited to a small number of employment streams your medical grading is permanently downgraded you are unable to attempt the minimum required fitness standard.” This is a case of a letter—there were hundreds of them sent out to each of the services—that told people who were the victims of restructuring that they were to blame for the loss of their jobs. Everybody in this Committee knows that loyal members of the Defence Force who had served this country for 20 or 25 years were being made redundant. So why send out a letter that insults and degrades the personnel who were being made redundant? That was an absolute disgrace.Yes the Defence Force has now said that it is sorry and that it should not have happened but I want to know how it happened and I want a guarantee from the Minister in the chair the Minister for Courts that this legislation which sets good-employer obligations would not allow that sort of thing to happen again. What we saw through that process of civilianisation was a high level of attrition—21 percent. Every year one in five of the Defence Force was turning over. We saw the lowest morale in the history of the surveys and we saw a lower capability of the Defence Force. Hopefully this legislation in setting an important condition like good-employer obligations would not allow that to happen. Why did that happen? It happened because the Defence Force handled it badly but also because it was instructed by the Government to save $400 million a year and that meant laying off—you know the Defence Force is down a thousand people. So let us not waste our time debating legislation that is theoretical legislation unless we have a Government and a State sector that are prepared—JOHN HAYES (National—Wairarapa):The last speaker the Hon Phil Goff who was jumping up and down and thumping the table needs to realise a couple of things. First of all when you train a body of men to go and kill people and defend our country you are not training them to write letters—The CHAIRPERSON (Lindsay Tisch): No. Order! Whatever the member says must be related to the content of the bill. I will ask the member to come back to it. He can comment on what the previous speaker has said but it must be in relation to the State Sector Act amendments in Part 1 which we are talking about.JOHN HAYES: This bill is about delivering better public services to New Zealand and that is one of our priorities. If we were able to develop and ensure that better services were being delivered as this bill proposes then we would not find ourselves in the situation that we inherited from the last Government where we had a military that was trained to kill people not to write letters. The amendments in this bill create a range of public sector management tools to foster an innovative efficient public sector that will I think deliver far better identified results for New Zealanders. I think the last speaker would realise and understand and has been around this House for long enough to know that all the legislation in the world no matter how carefully constructed does not force management to write letters of a particular sort. So I think we have to have some latitude in these bills that we are considering here tonight.I particularly support those comments made by colleagues in the Labour Party and also in the Green Party who talked about our working together in the Finance and Expenditure Committee because certainly that was the case in preparing this legislation that is now before us this evening.One of the important things I think in the legislation is that it will strengthen the State Services Commissioner’s role in leading the State sector. That is really really important. I think it is also important in this legislation that it will extend chief executives’ responsibilities to consider the collective interest of Government and long-term sustainability rather than operating in silos as happened under Mr Goff’s tenure as a Minister of the Crown. What we are trying to do is rather than focus on a single department encourage much less of a silo mentality and a much more inclusive Public Service.We also want to provide for a new organisational arrangement—departmental agencies—so that options are available for delivering better public services. These operational agencies will be set up within a department to carry out specific functions and the chief executives of these organisational arrangements will report direct to the Minister—a much more inclusive system which I think will improve governance across the system. I feel that this is a good piece of legislation. I think it will ensure that the State sector is modern is flexible is fit for purpose and will deliver far better outcomes for all New Zealanders. Thank you.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.Hon DAVID PARKER (Labour):The State Sector Act which this State Sector and Public Finance Reform Bill amends is a 1988 Act.Hon Trevor Mallard: Yeah who sat on that select committee?Hon DAVID PARKER: Well the Minister who was in charge of that legislation before it became an Act was the Hon Stan Rodger.Hon Trevor Mallard: A good man for technical amendments.Hon DAVID PARKER: Exactly. That is the very point I was going to make. It is still famous within the Labour caucus some two decades later that the Hon Stan Rodger was said to have said in respect of the State Sector Act which made some very fundamental changes to the arrangements of the time that it was a minor technical amendment. It went through caucus and it was duly passed by this Parliament. I think Stan Rodger for a period was stripped of his life membership of the Public Service Association which was later to be reinstated.Hon Trevor Mallard: A part-of-life membership really.Hon DAVID PARKER: Yes that is right a part-of-life membership rather than a life membership as it proved to be. The Hon Stan Rodger is still alive and well. I met him again the other day actually. I think he can be proud that his legislation from 1988that minor technical amendment that slipped through the Labour caucus has really lasted close to three decades before being substantially amended.I want to make reference to an amendment made by clause 6 of the bill in respect of ministerial staff who are on time-limited contracts. This provision is intended to refer to the people who are largely in quite political roles within Ministers’ offices whose entitlements are not the same as those of normal long-term ministry appointments because they are very political in terms of their duties and their fortunes and services are tied to the Government of the day or the Minister of the day.To show that this legislation is intended to have effect across more than one administration the example that the Finance and Expenditure Committee or the officials inserted was of “The Hon Honour Able’s ministerial staff”—a description that probably applies more to Ministers of other administrations than this one. What the provision says is that “employees ... who are employed on events-based employment agreements—(a) by the department that is responsible for the employment of ministerial staff across all Ministers’ offices; and (b) to work directly for a Minister in a Minister’s office rather than in a department” are covered by these unusual provisions. That amendment was made at the select committee to make it clear that we are not talking about the secondees who come from a ministry work inside the Minister’s office and assist the Minister but remain a departmental official and are not party political and to defend the principles of the Public Service which are politically neutral.The problem with the prior legislation was that this distinction was not made. Despite the fact that some of the people who are under the old definitions “ministerial staff” and were theoretically covered by codes of conduct that require political neutrality some of these staff who were really very political and clear in their political agencies—and it is proper that they are—were caught up in the provisions of the Act that require political neutrality. That is fixed by the amendments we agreed at the select committee.Another issue that was raised by submitters which I do not think we have properly addressed in this bill—although it is not so serious a flaw as to mean that the Labour Party is going to vote against it—is that we have in a description sense weakened the provisions relating to equal opportunity. The provisions that are in the existing Act relating to equal opportunity are still there in some way in the replacement legislation but they are not as up there in lights as they were. Given that there remain substantial disparities in the remuneration of women there are also substantial income gaps—[Bell rung ] Mr—Paul Foster-Bell: Mr Chair I move that the question be now put.The CHAIRPERSON (Lindsay Tisch): No I had actually indicated to the Hon David Parker. And the member must call. You do not just state what you want to do; you must call “Mr Chairman” so that it gets my attention. All right? You must do that. I am giving the call to the Hon David Parker.Hon DAVID PARKER: It is a new point and it is notable in respect of the contribution of the last member the Hon David Cunliffe that there has been no repetition; we are actually all covering new points because there are many of them to make. The—now I have lost my train of thought.Hon Ruth Dyson: I’m sorry about that.Hon DAVID PARKER: That is all right. One of the other amendments made by this legislation to which we agree in principle is the broadening of objectives across the State sector. I do not want to give this too much elevation because what is now being given statutory effect to in terms of the way in which appropriations can be voted across departments should be able to be achieved through cooperation between departments now.It has always been the case that certain complex initiatives reach beyond one department. An instance that I personally was involved in was of course trying to get down New Zealand’s emissions growth rate in respect of climate change emissions. The ministries that touch the parts of the economy that interact with emitting industries include to name but some: the Ministry for Primary Industries; obviously the energy division of the former Ministry of Economic Development now part of the Ministry of Business Innovation and Employment; the Ministry of Transport; and the Ministry for the Environment.In respect of the need to change our direction across departmental efforts that was achieved under the existing legislation. Although the Government claims that the changes that are proposed by this legislation will ensure that you can get more cooperation across departments I think it is somewhat of a slight to the Government departments of the past to suggest that that cannot be achieved if there is a political will to do so. The key to that lies more often than not in the personnel the forcefulness of Ministers the clarity of direction from Cabinet and the capability of the different parts of the Public Service that need to cooperate in respect of achieving complex change.The area that I did not finish talking about in my previous contribution was this issue as to indemnity compared with immunity from prosecution. The area that I—and I am a lawyer—felt that we did not quite get to the bottom of was whether we are creating a lacuna or a gap in the rights of an injured party where the public servant acting in good faith but in a way that is against an express instruction of their employer because they have made a terrible mistake and they did not read the instructions or do whatever they were told by their employer might do something that causes harm to a citizen that might give rise to a right of civil action against the public servant but not against the Crown because the actions of the public servant are so wrong as to not fall within the vicarious responsibilities of the Crown as the employer.By granting immunity from civil suit we risk leaving the injured New Zealander without remedy. It is a very narrow set of circumstances but it is I think possible and I was not satisfied that through this legislation we are not—because we are taking the immunity route rather than the indemnity route. We are giving immunity from civil suit rather than indemnifying the public servant against the consequences of civil suit. I think there is a possibility that an injured party can have no right of civil redress because they have not got a right to include the public servant in a civil proceeding and they have got no right of claim against the Crown itself. So I thought the Law Commission advice in that regard was correct and that we should not be trying to fix it in this legislation. We should await the review that the Law Commission has under way into that serious point of law. The other point I was going to make will have to wait for a later contribution.Hon TREVOR MALLARD (Labour—Hutt South):I have had some experience working in this area as the Minister of State Services for 6 years and I was one of the lucky people who sat for many hours through the night in 1987-88 when the original legislation was passed. I think by way of introductory comment on Part 1 of the State Sector and Public Finance Reform Bill it became my concern as a Minister that in fact the original legislation set up silos to too great an extent. As a result of that there were a number of areas of whole-of-Government action that could not be implemented because the priorities of the chief executives were to their specific responsibilities rather than to the Government as a whole or New Zealand as a whole. So I certainly do support the policy intent behind Part 1 of the bill which is really around reducing or removing barriers to closer cooperation and alignment of agencies within the State sector. I think there has been a bit of loose talk in this debate especially from membersopposite and a little bit of a lesson about the Public Service and the State sector is something that is worth some focusing on as far as members are concerned.Members also need to understand the different position of Crown entities and the relationship of Ministers to them and the relationship of the State Services Commissioner to those different organisations. There are some areas where he has some quite direct responsibility including the appointment and the reporting function for the chief executives as far as their performance is concerned and there are others where he or she has an advisory role. It is important I think that we do not get that mixed up and there has been a tendency to do that. Again there cannot be much argument about the primary focus here—about the need to deliver value for money from taxpayers’ funds. To do that there needs to be properly coordinated leadership across the Public Service in particular and this bill especially in Part 1 does go towards that to some extent.I think there are questions though that need to be asked about the term—about whether we are talking about value for money in the short term whether we are talking about this year’s Budget or whether we are talking about value for money in investment over a period of time and the building up of a Public Service that works in the medium and longer term and the investment that is required to do that. It is more in the next part but there is some relationship here around the Public Finance Act and the multi-category appropriations which I am sure we will get back to.I do want to say having reviewed the bill when it was first introduced and when it came out of the Finance and Expenditure Committee that I think the select committee did a very good job. There are some significant improvements in the bill. What I am not sure of—and I am sure one of my colleagues will be able to by way of interjection let me know—is who was chairing the select committee at the time.Hon Phil Goff: Todd McClay.Hon TREVOR MALLARD: Was it Todd McClay? Oh well I was going to be complimentary but seeing that the man wants to line dogs up and kill them for drug dealers I will not be as complimentary as I would otherwise be. But maybe there are some talents—Hon Ruth Dyson: He wants to do what?Hon TREVOR MALLARD: Well it is only right at the edge of this but I think it is fair to say that it does go to the question of policy advice and the question of which Ministers are run by departments and which of them have their own opinions and the balance here. It is clear that Todd McClay showed some independence as the chair of the committee in order to get a bill around which if not full consensus then a large consensus could be built. But apparently now that he is a Minister he has fallen straight into the arms of the bureaucracy and he wants to kill dogs so that drug dealers can have bigger profits. Normally it takes 4 or 5 weeks for a Minister to fall into the arms of the department and to stop showing any independence—Hon Ruth Dyson: He ran.Hon TREVOR MALLARD: Well he ran and he jumped. He ran and he jumped straight into the arms of the department. It smothered him and any sensible opinion went with it. But I think we will be talking about that more as time goes on. The idea of sacrificing dogs so that drug dealers can have bigger profits is something that I just cannot believe. I just cannot believe any Minister would accept any such advice that came from a department that was set up under the legislation that we are currently amending.As I indicated there are some reservations that we are concerned about. Some areas have been strengthened. Conflict of interest provisions have been strengthened where the delegation of powers is proposed from any State sector entity and the application of the Ombudsmen Act has been clarified. That especially the clarification is useful. Ithink there are still some discussions to be had as we go on as to the question of the delegation of powers and the appropriateness of that.There is one area where I want to take issue with both the decision of the select committee and maybe even some of my own colleagues and that is around the statements of intent and their usefulness as actual planning documents. I have been around long enough to see a whole pile of different contractual arrangements between Ministers and their departments and I think there is some overrating of the statement of intent process as to whether or not they are actually useful. It does depend very much on the Minister and the department.As we look particularly at clause 49 which replaces sections 61A and 61B and areas around that part of the bill I think we will end up finding that in respect of redundancy and the advice in that area there will be different opinions and different approaches that are appropriate.I am certainly of the view—and I think I share it with my Labour colleagues—that the delegation of powers from the core State sector to non-State partners and implementing agencies is constructed too broadly. I think it is fair to say that we will be watching very carefully how these delegations occur and what use is made of them. In a funny way it does not matter whether they are used—if they are used not at all well then they are useless and if they are used too much then there is a problem. It might well be that there is an overlap between the two.My colleague David Parker has spoken on the question of immunity and indemnity. That is a technical legal area that I am sure pointy-head QCs will be—Hon Ruth Dyson: Probably Jonathan Hayes.Hon TREVOR MALLARD: No. Pointy-head QCs will be having some discussions about going forward. No doubt when David Parker is the Attorney-General he will be involved in some of that as well.It is my view that on balance this bill is something that is now worth supporting. [Interruption ] Sorry? Well actually Mr Bennett will never ever be in a position where he has any chance of being directly involved in the State Sector Act as a Minister. He is someone who has been leaped over by talented colleague after talented colleague. He has been left behind. The sort of inane interjections that we are hearing from David Bennett on this bill are just an indication—and even his colleagues are looking embarrassed. He is going red and his colleagues are rolling their eyes because they know that David Bennett just does not understand this area at all.Hon PHIL GOFF (Labour—Mt Roskill):As the Committee knows the purpose of the Committee stage—if David Bennett wants to cease his inane interjections across the Chamber I will continue—of a bill is to get the Minister in the chair to answer questions about what the bill will actually do. We had a series of very laid-back Ministers in the chair and this one the Minister for Courts is no exception. I would like to see the Minister take the call because I think there are a lot of serious questions about this bill that need answers.In particular Minister I want to ask you about the utility of this bill in achieving the objectives of Better Public Services. The Minister in the report-back stage of the bill the second reading said: “The changes are designed to enable the delivery of Better Public Services and more effective and efficient achievement of results.” He went on to say that the Better Public Services programme was one of the four key priorities of the Government. Well I have in my hand a document that I have received under the Official Information Act. It is the Ernst and Young report and it is entitled:FINAL DRAFT: Better Public Services Programme: Independent Quality Assurance . It is dated December last year. It is 6 months old. The summary of Ernst and Young—Hon Trevor Mallard: Is this another leak?Hon PHIL GOFF: Well it is officially leaked this one because the Government had to give it out when it was requested.This is a document that is designed to see whether the Public Service the State sector is delivering better public services and the Government is achieving the goal of its programme. What does it say? I want to quote this one sentence: “Our assessment is that the programme has yet to develop critical elements that are fundamental and necessary to achieve its aims …”. You know what that means: it means that the Better Public Services programme Minister—one of the flagships of the National Government—has so far failed. It gives the reasons for this. I want to summarise the reasons—there are three. It lacks ownership leadership formal accountability and prioritisation. Well that is a responsibility surely Minister of the Minister of State Services and his chief executive.Secondly it says: “The programme does not yet have an explicit and widely agreed model or strategy for achieving change.” You have got a key goal of a Government department and there is no strategy to achieve it. This is what the Government pays hundreds of thousands of dollars to Ernst and Young to tell it. Well Minister why is it that you do not have a strategy to achieve it and will this bill actually help to deliver that outcome?The third thing—the third thing is important too—is that it says that the programme does not have sufficient resources allocated. Well that is a budgetary function of Government. So we have an official analysis of the Better Public Services that the Minister said this bill is designed to achieve and the Government is committed to achieving and it is not achieving them because it lacks leadership it lacks strategy and it lacks resources.I would like the Minister to tell the Committee how this bill will turn that round. This is a key goal of the Government. It is not being achieved. That is what the report says. I am happy to give the Minister a copy. I will table it for you if you like Minister. I presume you have read it. It says that you are not succeeding on those goals. Firstly how are you going to turn round those factors? I do not believe that the legislation before us addresses any of those factors in terms of making sure that we achieve the Better Public Services goals that the Government uses rhetoric about but fails to deliver on in terms of leadership strategy or resources.I want to look at the amendments to the State Sector Act that we are examining right now. The first change says that it will strengthen the role of the State Services Commissioner in leading the State services. I would like to ask the Minister whether strengthening the role of the State Services Commissioner will help overcome what the ministerial inquiry into the Novopay debacle found. What did the inquiry find? It found first of all that it was a debacle that teachers were not getting their salaries paid correctly 6 months after it was introduced. It said that the cost of the programme had doubled—another $23 million. It said that all of this was avoidable and it said that the Government had ignored the lessons of the past. In 1996 the education payroll had similar difficulties. Here 16 years later we have got the same thing again.The INCIS experience which cost $100 million of money put into the police was a parallel case. Steven Joyce said that this was the result of failure of leadership of the State Services Commission. I would like to ask the Minister how the provisions put in this bill might have turned round the Novopay debacle. Could that have been prevented with the provisions in this bill; if not what is the Government doing to make sure that we do have an efficient Public Service and not one that results in a debacle such as we saw with Novopay? Secondly of the changes made the bill said “Broadening the Commissioner’s functions to include the ability to transfer chief executives”.Well Minister I want to stay with education and use another example and ask you how the Act would have applied in this case. Lesley Longstone left after a year in the job of chief executive officer at the expense of $425000 in costs to the taxpayer and she left essentially if you read between the lines because she could not get on with her Minister. So would that have been the case under this bill if this bill had been enacted before that event? Hekia Parata is apparently a very hard Minister to work for. Nobody was saying that Lesley Longstone was incompetent in the job. In fact the Minister of State Services refused to say that. Would you be able when you have an incompetent Minister who is hard to work with to transfer the chief executive to another department so that the taxpayer is not paying over $400000 to get rid of somebody whom you have just put in the job?Hon Trevor Mallard: We have done that in the past.Hon PHIL GOFF: Well it has been done in the past but this gives an explicit power to the chief executive to transfer.The next one is extending the responsibilities of chief executives to their Ministers. That is what the bill says. It is the third change. If there is a responsibility on the part of the chief executive to the Minister—I hope you are listening Minister—is there a counter-responsibility of the Minister to the chief executive? As long as I was a Minister there was always a strong convention that Ministers did not go out and bag their chief executives and yet we saw Murray McCully bag John Allen. We know that Murray McCully was behind the change programme. It got unpopular so he bagged John Allen and said “You got it wrong.” even though John Allen was carrying out all of his responsibilities.So if this bill creates a responsibility of the chief executive to the Minister what responsibility does it create of the Minister back to the chief executive? Is it permissible under this bill for a Minister to go out and bag his chief executive who cannot reply who is defenceless and who can be slandered by his Minister and forced to take the responsibility? If that was an isolated example I would feel more comfortable Minister but clearly it is not because Nathan Guy—the Committee will recall—did exactly the same thing. Nathan Guy was responsible for meat exports sitting on the wharves in China for 3 weeks at a loss of millions and millions of dollars because the Government got it wrong. The Government restructured the Ministry for Primary Industries it did away with the Food Safety Authority which worked very effectively and we jeopardised our trade in meat with China which has doubled in the last year.I want to know why it is that a Minister can go out again and bag his department but not take responsibility himself. So is this bill one-sided in creating a responsibility on the part of the chief executive to the Minister but taking away the responsibility of the Minister to the chief executive or in fact is it taking away the responsibility of the Minister to be responsible and to actually earn the quarter of a million dollars that he or she earns each year by actually doing their job and not sitting back and waiting for the Civil Service to do it and then blaming them when they do not? So that is the third question Minister and if you are having trouble following these they are all set out in the bill one by one—the changes that are being made.One of the other changes is about creating a new organisational arrangement called a departmental agency as a way of providing public services. This sits in a host department and would administer the appropriations used by the departmental agency but it would have its own chief executive. Can the Minister give the Committee—KRIS FAAFOI (Labour—Mana):Thank you very much Mr Chair I think for allowing me the call.Hon Trevor Mallard: The police spokesperson will be back on the beat.KRIS FAAFOI: Yes that is right. Oh well—numbers are dwindling. Thank you very much for the chance to speak to Part 1 of the State Sector and Public Finance Reform Bill. Every so often John Hayes says something in this Chamber that needs to have some kind of rebuttal and I was watching from my office the very brief contribution he gave to the bill where he did say that this bill is about Better Public Services and about the objective for the Government to try to make sure there are much more efficient and effective public services here in New Zealand. But as Mr Goff has pointed out there are many examples that show—and he also cited an Ernst and Young report that says this—that the Government has failed in that respect.I did want to point out another very apt example of where the Government has failed to deliver better public services which has been highlighted by the Police Association in its latestPolice News magazine in July. This is a Government that says it wants better public services and law and order is certainly one of those places where it trumpets its success. But in the latestPolice News magazine out from the Police Association this week it shows that what the Government is trying to achieve in terms of better public services with our police is failing dismally with the people who are trying to deliver that public service. A survey of nearly 4000 members of the Police Association just three shy of 4000 has shown that only 6 percent of our Police Association members—of 4000 members I will point out again—more likely our front-line police officers think there has been improved efficiency effectiveness or service to the public as part of the Government’s Better Public Services push within the police. So 6 percent of our front-line police staff think that the Government is doing a good job of restructuring and its push for Better Public Services—6 percent. Six out of 100 police staff think that this Government is doing a very good job of the services that they offer to the community to make sure that our communities are safer.In that respect Mr Hayes’ objective—this Government’s objective—in the State Sector and Public Finance Reform Bill is an absolute failure and that is not just in the eyes of the public but also in the eyes of the people who are delivering the service: our front-line police officers. There are concerns within the ranks in terms of the Government’s objective of making things much more efficient and effective. Of those staff members who were surveyed 61 percent said that staffing shortages were in the top three concerns that they had. That is 61 percent of those 4000 people surveyed who said that staffing shortages within police in our communities is a concern. That is hardly achieving that goal of better public services. Of the 4000 people surveyed in this Police Association survey 45 percent said that resourcing shortages were one of their top three concerns—hardly this Government delivering better public services to our communities.This is a very concerning message from our Police Association because we are talking about our public safety here which is something that this Government over there is full of rhetoric about. But it is clear from the people who are delivering the services that the Government’s claim that it is delivering better public services via our police is not the actual reality. That side of the Chamber is full of plenty of rhetoric but the reality and the message back from those people who are delivering the services is that this Government is doing a very bad job of delivering those better public services when it comes to police. As I said just 6 percent of those 4000 front-line police staff think this Government is doing a good job and is helping them deliver improved efficiency effectiveness and a good service to the public.We also had some reservations around some redundancy provisions within this bill. I must commend some members of the Finance and Expenditure Committee who are on this side of the Chamber who did manage to make some very big changes around the redundancy provisions. We did manage to make some amendments to the bill at the select committee consideration. Before we got to the select committee things wereawful but due to the hard work of the Labour members on the Finance and Expenditure Committee we managed to make some amendments to make sure things were much better for those within our public sector who were going to face redundancy.Redundancy is also a very important word in terms of the police restructuring. Last year the Government announced that because of the effect of budget cuts to the police somewhere between 150 and 170 back-office police staff were going to be made redundant. There was very little prospect of them being able to be shifted to different jobs within the police organisation because things were so tight because this Government cut the police budget.I did just want to point to clause 49 within Part 1 relating to a restriction of redundancy payments in certain situations where people might be able to be moved to an alternative position. I just did want to quickly go through each of these situations where someone could not have a redundancy payment offered to them because an alternative position was found. The select committee said on the insertion of sections 61A and 61B that someone who “begins before on or immediately after the date on which the employee’s current employment ends;” is not open to get any redundancy. Someone who is offered “a position with comparable duties and responsibilities to those of the employee’s”—Hon Ruth Dyson: Comparable.KRIS FAAFOI: —comparable or com-parable Ruth Dyson—“current position;” probably would not be able to get redundancy. Someone who “is in substantially the same general locality or a locality within reasonable commuting distance;” would not necessarily be able to get this redundancy. And someone who “is on terms and conditions of employment ... that are no less favourable;” would not be able to get a redundancy payment. I am wondering right now whether those 170-odd people who used to work for the police about a year ago and who no longer work for the police would quite like those provisions within their termination agreements that they have with the police.The changes that are made within this bill do certainly go to the heart of some of the changes that are happening in our police sector at the moment. It is clear from the Police Association survey that the police staff themselves are not happy because of those changes which really restrict their ability to be what the Government wants them to be—more efficient and more effective. And it is plain to see that they think the changes and the budget cuts that the Government is putting them through are not helping them deliver those better public services that Mr Hayes has pointed out. That is quite sad and it is also very risky in terms of our public safety because I think everyone in this House would agree that we do want to have in terms of our police better public services. But when the Government is putting our police force under extreme budget pressure which is leading to front-line staffing shortages and resourcing shortages that could have a very damaging or very dangerous effect in our community if our police are not able to respond to or prevent crime which we would like them to do.If this Government were to be true to what Mr Hayes has pointed out—wanting to be delivering better public services for the safety of all of our communities—maybe it should not act with its intentions to cut the police budget which as I have said has really damaged the confidence of our police staff through their ability to do their job and to be properly resourced for their job. I think subsequently when people read this they will be upset or concerned that our police force is out there trying to do a job trying to be effective and this Government has said it is delivering better public services but the reality and the rhetoric do not match up.We are supporting this bill but we are doing it with reservations and the reservation I pointed out in the police arena is certainly one where this Government should take heed.CAROL BEAUMONT (Labour):E ngā mana e ngā reo e ngā tangata o te wa.Tēnā koutou tēnā koutou tēnā koutou katoa. I rise to speak along with my colleagues in support of this bill the State Sector and Public Finance Reform Bill. We have however some reservations that we will be outlining throughout this.It is probably clear to people and I am sure the point has already been made that we did oppose this bill at its first reading. But I am very proud of the fact that my Labour colleagues on the Finance and Expenditure Committee along with the State sector unions have averted disaster for Government workers who were set to lose their redundancy entitlements and employment rights. Part 1 of the bill that we are talking about covers this quite comprehensively. The Labour members of the Finance and Expenditure Committee did fight long and hard to get some very important changes. I am aware that the unions that represent our public servants believe that those changes are sufficient.It is interesting to come into the Chamber to talk on this bill and this particular matter of the treatment of public servants as during the dinner break I was at a meeting with people from Transparency International New Zealand and they were talking about the Corruption Perceptions Index. One of the points they made was that the New Zealand public sector is perceived as the least corrupt in the world. That is pretty amazing. That is about the quality of our public servants and it really says to me that how we treat our public servants—the working conditions the rates of pay obviously but also the other conditions of employment—is actually very important. To maintain a corruption-free Public Service is critically important. It has a range of benefits and we are looked up to internationally still for that.I thought that that was quite amazing. Recognising the work of our public servants is something that often is not done. Quite often people make cheap political points about bureaucrats. They make cheap political points about there being too many of these people who are not doing front-office functions—that they are actually a drain on the taxpayer. Well actually they perform vitally important roles.We were concerned that the attempts in this bill that were around trying to have a more flexible innovative and efficient set of State services and the ability to move people and to restrict entitlements to redundancy and so on were actually going to undermine public servants and treat them in a way that was not fair and reasonable. I am glad that the redundancy provisions have been improved and that State sector employees—public servants—will retain their entitlements unless accepting a position that is no less favourable than their existing package. That was quite an important debate as I understand it because originally the wording had a qualifier—“overall” no less favourable. The interesting thing is that in law the debate about what that would look like certainly did not require the terms and conditions to be exactly the same. But we were satisfied with deleting the word “overall” because we felt that that actually was likely to maintain protections for employees. We do note though that we have some reservations about this. There is a risk that courts could be too liberal in their view of interpreting what “no less favourable” means.We are concerned also along with the Public Service Association that the right for Public Service workers to bargain their redundancy provisions has been removed and a proper redeployment scheme has not been reconsidered. It is important in times of high unemployment and when in fact there have been cuts throughout the Public Service that we do consider things like redeployment that we do consider people’s needs for job security. There are many public servants who have lost their jobs and who are now in the situation of being unemployed. I think it is a shame that there was not greater consideration around those redeployment provisions. The transitional arrangementshave also been approved so that collective agreements and individual agreements are “sunsetted” equally.One of the other things that I think is interesting in this part of the bill is around the Government Workforce Policy Statement. There has been some revision there to ensure that current legal and bargaining rights have been protected. That is really important. Originally there was a mechanism for a Government Workforce Policy Order and the select committee has recommended renaming the Government Workforce Policy Order as a Government Workforce Policy Statement—so a statement rather than an order—to clarify the provisions and to constrain them to their intended effect.The important thing here is that the orders indicate a broad Government policy intention around how the State services should approach employment relations and workforce capability to create a more transparent and consultative mechanism for developing formal workforce policy for the State services. These orders though were not intended to have legislative effect nor to override existing legal rights or obligations including negotiated terms for pay and conditions in existing bargaining rights. That is really important and certainly we on this side of the Chamber strongly support the rights of workers to negotiate their terms and conditions of employment and to ensure the right to bargain and the right to protection of those negotiated terms and conditions of employment. We are very pleased that the amendments to these provisions make it clear that these statements do not have legal force and do not undermine existing bargaining rights. But having said that we have ongoing reservations that notwithstanding the clarity of these provisions the Government may try to use these instruments as a binding force. So for the avoidance of doubt Labour would like to reiterate that we and the committee in its consideration of the bill do not consider these statements to be legally binding.It is worth noting I think as we are discussing these types of provisions that of course we are in a situation in this country where workers’ rights are under attack. Since National was elected in 2008 we have seen the undermining of a whole number of provisions that affect workers—things that would basically reduce wages. The Employment Relations Amendment Bill which is now before a select committee is certainly in that category. So you can understand why when looking at a bill like this we might be concerned and might along with the unions—the Public Service Association the Council of Trade Unions and others—be very concerned about these types of provisions around redundancy clauses and around workforce policy statements. This is a Government that does not respect workers’ rights to collectively bargain. It does not respect workers’ rights to be in unions and certainly it has done nothing to see us move to the kind of high-wage high-skill highly productive economy that this country so desperately needs. In fact wages have been flat-lining or reducing for many New Zealanders. We are a low-wage economy and that will continue to hamper our ability to move forward economically.So those are the sorts of I guess umbrella concerns that we had when we were looking at this legislation and I think anybody listening to this and anybody who is aware of the record of the Government and its current intentions around the Employment Relations Amendment Bill would think it made absolute sense that we were very concerned about those provisions.Again I reiterate the fact that I am very proud of the work that was done by the members of the Finance and Expenditure Committee particularly around the provisions of this part Part 1 which involves amendments to the State Sector Act to ensure that some of these concerns around redundancy and the possibility of these workforce policy statements undermining legal and bargaining rights have been significantly improved. Ihave outlined however that we retain some existing concerns so that is why we are supporting this bill with reservations. I think that it is not surprising to see—The CHAIRPERSON (H V Ross Robertson): I call the honourable member the Hon Trevor Mallard.Hon TREVOR MALLARD (Labour—Hutt South):Thank you Mr Chairperson. It is something I like to be called. I want to start off with not entirely agreeing with Carol Beaumont my colleague whom I am following because I had a period as Minister of State Services and it is fair to say that for a period of time it was relatively frustrating. One of the frustrating things was the “siloisation” of the Public Service. You would have people who were doing exactly the same job from department to department but their conditions were all different. They were all higgledy-piggledy. We used to especially in areas of shortage—in those days we were not firing public servants. We were looking for good policy people and people who wanted to work hard in the implementation areas and there was actually something of a shortage of skills. One of the problems that Dr Cullen used to complain about occasionally to me as the Minister of State Services was that there used to be interdepartmental bidding. You know one department would bid for someone and someone would bid more and they would go back. I think it is fair to say that over a period of time salaries moved in a way that Dr Cullen was uncomfortable with as Minister of Finance.The other point I would like to make to the member is that unfortunately because too many of the chief executives especially in our early days had been appointed in the times of Bill Birch and others they were of the group who were much keener on having individual contracts and much less likely to want to bargain. In fact we had this awful intransigence on the part of many employers some of whom—the chief executives—actively resisted putting salary or wage levels into agreements. The problem was that under the law as Ministers we did not have the power to work towards a set of policies that were enforceable and could properly be implemented.That is why I would say that I—and I am going to sort of maybe admit that if this detail was carefully discussed within our caucus I missed it. But I want to say to my colleagues that in fact actually having Governments that have policies rather than high-level statements and policies that can be enforced in the hands of a good Government is a good thing—in the hands of a good Government. But you then go to the question about whether Parliament should be designing legislation on the assumption that Governments that are going to be using it are always going to be bad. What I want to tell my colleague Carol Beaumont is that good Governments will do good stuff and bad Governments will do bad stuff no matter what the law is. Therefore my view is that even from Opposition what we should be doing is developing the law in the format that we can use properly from November next year or at some point earlier if John Key gets the pip and tosses in the towel.So if members opposite can see division in the ranks over here it is probably true. You know there is a bit of difference of opinion as to approach. I would like to see more multi-employer arrangements within the Public Service and in fact where there are employment categories or employment classes I would like to see common conditions.While we are at it I will really get the frustrations going in saying that I worked for about 18 months trying to get some common leave provisions across the Public Service.Carol Beaumont: How about in collective agreements?Hon TREVOR MALLARD: I wanted to get them into collective agreements yes. But you know some of the chief executives at the very thought that a Minister might have an opinion about having particular sets of leave arrangements that are common and that it would not matter if you were working in the Ministry of Social Development orin the Department of the Prime Minister and Cabinet—I will not mention Treasury because it basically did not have any common conditions. There were no collective agreements within Treasury at all. But even the organisations that had collective agreements shuddered at the very thought that someone might have the same set of leave or sick pay provisions that were the same in one agency and in the one next door where people were doing exactly the same work.There are a number of areas as a Minister I failed in and one of them that I failed miserably in was in my attempt to get a system going where common conditions could be developed for people who were doing very much the same work from agency to agency. The fiefdoms were absolute. The silos were not made of concrete; they were made of reinforced titanium and people could not move. People could not move from one to another.Actually if you are looking at areas like redundancy and things like that sometimes it is by far the best thing for the Public Service overall if a particular individual shifts from one agency to another—slightly better for them but sometimes because of the skills that are required it is better for the Public Service for the individual to shift. But when the conditions are so tight that in shifting from one agency to another the individual loses a whole pile of long service leave arrangements or sick pay or holidays or a number of areas it just does not happen and the Public Service becomes inflexible and staid as a result. So I say to my colleagues that the idea of having more than just common statements having policies that are actually implemented is something that I think is desirable.Carol Beaumont: Not instead of collective bargaining though.Hon TREVOR MALLARD: Well the member says not instead of collective bargaining. Actually it should be the employer’s position for the collective bargaining. My view is that the best advocate for common positions across the Public Service is in fact the Public Service Association. In fact it was the one with the most interest in having a Public Service that was relevant and flexible and people were employed.The problem with the approach that happened under Birch and is happening now—who is that cigar-smoking Minister? What is his name?Dr David Clark: Mr Coleman.Hon TREVOR MALLARD: Coleman.The CHAIRPERSON (H V Ross Robertson): Order! Jonathan.Hon TREVOR MALLARD: The Hon Dr Jonathan Coleman or Dr the Hon—which way? He is the one who gets on so well in the corporate boxes. The problem is that there are a number of departments where people are leaving and coming back as contractors. They are getting sometimes quite a handsome redundancy arrangement and coming back weeks later sometimes working only 3 days a week but for double the money. That is something that is outrageous and it is something that we have to work against. [Interruption ] Well this bill does not address it properly and it is a gap in the amendments that we are currently deliberating.The other question that I would like to ask the Minister of State Services—and I am not going to refer to the absence of the Minister but I will refer to the fact that the Minister of Labour who is in the chair might be familiar with the legislation and I am sure he is capable of reading the briefing notes that come up. What I would like to ask is what the implications of this bill are for the State Services Commissioner if in fact the State Services Commissioner is going to be used as the recruiting agent by the Prime Minister for the new Commissioner of Police. Are there any changes as a result?One of the early problems that we had when we were in Government was a man called Doone. There was a rapid appointment of a successor but that also highlighted for a number of Ministers that the recruitment process was just completely undefined. Itwas just up in the air; there was nothing. I would like to know whether there is something here because we have a very serious problem coming up. The heir presumptive for the position of the Commissioner of Police is someone who has very recently shown excessively bad judgment someone who has told the—TE URUROA FLAVELL (Māori Party—Waiariki):Tēnā koe te Tiamana.The CHAIRPERSON (H V Ross Robertson): Tēnā koe.TE URUROA FLAVELL: Tēnā koe. I te mea ko tēnei Te Wiki o Te Reo Māori me tuku au i taku kōrero i roto i te reo o ngā mātua o ngā tūpuna ki a tātau i tēnei pō kia whai wāhi au ki te kōrero ki taku kupu whakahōunga ka mutu kia taea ai te whakamārama ake i te āhuatanga o tāku kupu whakahōunga.Āpōpō e eke ai ki te tuawhā o tēnei marama i te tau 1868 i eke mai ngā mema Pāremata e whā ki roto i ngā pakitara o tēnei Whare. Nō reira me whakanui tātau i te ekenga mai o ngā Māori tuatahi ki roto i tēnei Whare āpōpō.He aha i haramai ai rātau ki konei? Te tikanga ia kia whai wāhi Te Reo Māori i roto i ngā nekeneke o te Whare Pāremata ka mutu e ai ki tā tētahi o aua mema e ai ki tā Tāreha Te Moananui te mema Pāremata me kī ki taku mōhio mō Te Tai Rāwhiti nāna tonu te Kāwanatanga i āki ki te hanga i ētahi ture pai mō te Māori me Te Ao Pākehā. Koinā tāna whakahōu i te wā i eke mai ia ki roto i te Whare Pāremata. Arā anō a Hone Paratene Tamanuiārangi mō Te Tai Tonga. A Takarangi Mete-Kīngi Te Rangipaetahi o Te Tai Hauāuru ka mutu ko Tāreha Te Moananui o Te Tai Rāwhiti ko Frederick Russell nō roto o Te Tai Tokerau. Koirā rātau ngā mema. Nā rātau te kī me hanga te Kāwanatanga i ētahi ture pai mō Te Ao Pākehā mō Te Ao Māori mō tātau katoa. Nō reira anei tātau e 145 tau i muri mai e pēnei anō te āhuatanga o ngā mahi kei mua i a tātau. Nō reira ā kāti.Koinei au e whakaara ake i taku kupu whakahōunga ki roto i te Whare Pāremata i te mea e kore te Pāti Māori e tautoko i tēnei pire i tōna hanga i tēnei wā. Nāku nā te Pāti Māori tonu i kōkiri tētahi kupu whakahōunga ki te whakaara ake i tētahi tikanga kua roa e kōreroia ana e mātau arā kia whai wāhi Te Tiriti o Waitangi i roto i ngā nekeneke o te Whare Pāremata. He aha te take kua huri atu ki Te Tiriti o Waitangi? I te mea nā Te Tiriti o Waitangi i whai wāhi te Kāwanatanga ki konei ki Aotearoa nei. Ka mutu i roto i Te Tiriti o Waitangi ā-Pākehā nei ko te kupu “Kāwanatanga”. He aha te tikanga o tērā ki tēnei pire? Ā ko ngā tari o te Kāwanatanga te whakatinanatanga o te kupu “Kāwanatanga”. Mā reira ka whai wāhi ahau ki te kōrero mō te whānuitanga o Te Tiriti o Waitangi i roto i tēnei pire.E te Tiamana nāku tonu tētahi kupu i whakatakoto ki mua i te Whare Pāremata me taku whakamārama ki a koe i tuhi reta mātau ki te Minita mō tēnei o ngā kaupapa ki te Hōnore Tākuta Jonathan Coleman ki te kī atu me whai wāhi tētahi kupu kōrero mō Te Tiriti o Waitangi ki roto i tēnei pire ēngari kāre i aro mai. Hāunga kei konei te Whare Pāremata. Ka riro mā tātau tērā e whakatika. Kia pēnei tonu taku kōrero ki a koe kāore tētahi kupu mō Te Tiriti o Waitangi i roto i tēnei pire. Ko tā mātau ko te kī atu kei te hē rawa atu tērā. Mēnā ka whai wāhi tētahi rārangi kōrero mō Te Tiriti o Waitangi i roto i tēnei pire ko te tino pūtake o tā mātau āki i tēnei take ko te kī atu ki ngā tumuaki ki ngā kaihautū o ngā tari Kāwanatanga kia tuhia ki roto i wā rātau kupu whāinga ngā tāhūhū kōrero o tēnā tari o tēnā tari o tēnā tari o te Kāwanatanga i ō rātau ake hiahia ō rātau tūmanako ka mutu wā rātau whakatau mō ngā painga ka pā mai ki te iwi Māori ka mutu ko te hunga manene ka eke mai ki Aotearoa nei. Mā reira pea ka kitea mai ai he painga.I ngā tau kua hipa ake kua rongo nei tātau i ngā rārangi kōrero e hia kē nei e mea ana kai raro Te Ao Māori e putu ana ā-mātauranga ā-hauora ā-whare karukaru nei. Kei reira tonu Te Ao Māori i ngā whare herehere nei. Mēnā ka taea e tātau te tuku i tētahi kupu kōrero mō Te Tiriti o Waitangi i roto i ngā kupu whāinga mēnā ka taea e tātau tekī atu ki ngā tumuaki o ngā tari o te Kāwanatanga me whakarite rātau i ētahi rārangi kōrero e hāngai tonu ana ki ngā hiahia o Te Ao Māori mā reira pea ka kitea mai ai he painga.Nō reira kei roto i tēnei pire ko tā mātau kua kī atu ko te State Sector Act Crown Entities Act Public Finance Act me whakarite i tētahi kupu ki a rātau ki te kī atu me whai i tēnei kaupapa. Mā reira ka taea e tātau te whakamātautau i a rātau ka tahi mēnā āe rānei i eke ki tā rātau i kōrero ai i whakatakoto ai i tuhi ai kāre rānei. Ki te kore a panaia panaia. Kāre wā rātau take. Ēngari i tēnei wā kāre tētahi paku whakaritenga e pērā ana i roto i ngā nekeneke o ngā tari o te Kāwanatanga. Nō reira ko tā mātau i roto i tēnei rārangi i tēnei wāhanga o te pire he kupu kōrero mō te rara e 5 e āki ana i ngā tari o te Kāwanatanga kia pēnei tonu kia āmine atu ki Te Tiriti o Waitangi ka tahi. Ka rua ka whai wāhi anō hoki i roto i wētahi atu o ngā wāhanga o te pire.Nō reira waiho ake tērā ki reira. Kotahi pea e rua pea ngā wā ka tū ake au ki te whakamārama i ngā hiahia o te Pāti Māori. Koinei te tino pūtake o tēnei pire ahakoa poto inā kē te nui o ōna toronga inā kē te nui o ōna whāinga inā kē te nui o ōna painga mēnā ka whakaaetia mai e tēnei Komiti tāku kupu whakahōunga. Kei reira tonu kei te rara e 162 he wāhi anō rā kai roto i tētahi wāhanga anō o te pire e kī ana anei tētahi huarahi. Me whakatuwhera i te kuaha o te Kāwanatanga kia whai wāhi ki te tohutohu anō hoki i ngā tari o te Kāwanatanga ki te whaiwhai haere i ētahi painga i tua atu o ngā mea e kitea nei e tātau i tēnei wā mō te iwi Māori ā ka mutu mō ngā momo iwi katoa e noho mai nei i Aotearoa nei. Nō reira me titiro tātau ki tērā 162. Ko tērā wāhanga tērā.Ka mutu ehara i te mea he nui ngā mea i tua atu o tērā ēngari mā tēnei kaupapa ka whai wāhi tētahi akiakinga o te Kāhui Tikanga Tangata. I roto i wāna kōrero i ngā tau kua hipa ake nānā tonu te kōrero ki te āta titiro ki te āhuatanga o te nohotahitanga o Te Ao Pākehā me Te Ao Māori ka mutu me āta rangahau me āta arotake i ngā ture o roto i ngā whiriwhiringa o tēnei motu kia whai wāhi ngā tikanga ngā ahurea o Te Ao Māori i roto i ēnei āhuatanga katoa ēngari mō tēnei pire kāre mātau te Pāti Māori i te tino kite i tērā. Koinei mātau e whakatakoto nei i tēnei kaupapa i tēnei kōrero ki mua i te aroaro o tēnei Whare Pāremata. Te tūmanako ia anā ka āmine mai ka tautoko mai tēnei Komiti i tēnei kupu whakahōunga ki mua ia i te Komiti anā mā reira pea ka eke ki te taumata e wawatatia ana e mātau o te Pāti Māori. Nō reira tēnā koe kia ora tātau.[Thank you. As this is Māori Language Week I will deliver my speech tonight in the language of my ancestors so that I can speak to my Supplementary Order Paper and furthermore explain aspects of it. Tomorrow reaches the fourth of this month when on this day in 1868 four members of Parliament entered the walls of this House. So we must celebrate the arrival of the first Māori members into this House tomorrow.Why did they come here? It was to ensure that the Māori language was involved in House procedures. Eventually and according to my understanding one of those members—namely Tāreha Te Moananui member for the East Coast—urged the Government to create appropriate legislation for Māori and non-Māori people. That was the change he advocated at the time he came into Parliament House. There was Hone Paratene Tamanuiārangi of the south Takarangi Mete-Kīngi Te Rangipaetahi of the west Tāreha Te Moananui of course of the East Coast and Frederick Russell of the north. Those were the members. They were the four who urged Government to make good legislation for Europeans Māori and all of us. And so here we are 145 years on and still addressing matters similar in nature in the business before us.Hence this Supplementary Order Paper of mine which I am raising in the House because the Māori Party will not support this bill as it stands at the moment. We the Māori Party drafted a Supplementary Order Paper to include the Treaty of Waitangi in Parliament procedures which we have advocated for a long time. Why turn to the Treaty of Waitangi? It was the Treaty of Waitangi that gave the Government a place here in New Zealand. Furthermore “Government” is referred to in the English versionof the Treaty of Waitangi. In terms of this bill what does that mean? Government departments are the manifestation of the word “Government”. That is the avenue that enables me to speak about the broad implications of the Treaty of Waitangi in this bill.Mr Chairman I raised a point of order before Parliament and explained to you that we wrote to the Minister the Hon Dr Jonathan Coleman to implore him to include a reference to the Treaty of Waitangi in this bill but he chose to ignore it. Nevertheless Parliament is here. We can rectify that. There is no reference at all to the Treaty of Waitangi in this bill. Our assertion is that it is a major oversight. If there was a statement about the Treaty of Waitangi in this bill then our main thrust in this matter would be to urge chief executives and general managers of Government departments to write their aspirations and hopes into the aims and mission statements for each Government department and furthermore their conclusions about the benefits that will accrue to the Māori people and subsequently migrants that settle here in New Zealand. Gains may be seen through that process.Over the past years we have repeatedly heard statements made that in terms of education health and housing Māori are in an abysmal state. As far as the rate of imprisonment for Māori is concerned the situation is the same there. If we can make a statement about the Treaty of Waitangi in the objectives say to the heads of the Government departments to consider making statements that relate specifically to the aspirations of the Māori people then gains may be seen.So in terms of this bill we advocate that in the State Sector Act the Crown Entities Act and the Public Finance Act we should consider a statement directing Government departments to follow this policy. In the first instance this would enable us to evaluate them and to determine whether they achieved what they stated set down and wrote or whether they did not. If they do not achieve then sack them get rid of them. They are no good. But at this point in time there is not a single mechanism like that in the workings of Government departments. So for this part of the bill our Supplementary Order Paper for clause 5 urges Government departments to follow this and agree to the Treaty of Waitangi in the first instance. Secondly we urge that it be included in other parts of the bill.So I leave that there. I will take another call or two later to explain what the Māori Party hopes to achieve. This is the real gist of this bill and although it is a short one the implications aims and benefits of my Supplementary Order Paper if agreed to by this Committee will be huge. There is another place that is still there in the bill in clause 162 which states that here is another way. We need to open the door of Government to find an opportunity to direct Government departments to follow up other benefits beyond those we see Māori getting at the moment and subsequently all kinds of people living here in New Zealand are getting. And so we should consider clause 162. So that is that part.Furthermore there is not much else but this Supplementary Order Paper will give traction to some of the urgings of the Human Rights Commission. In his addresses in past years he has stated that we must examine the situation relating to how Māori and Europeans live with each other and how laws of negotiations in this country need to be researched and evaluated thoroughly so that Māori customs and culture are taken into account in all these situations. But as far as this bill is concerned we the Māori Party do not really see that. This is why we are placing this Supplementary Order Paper and making this address before this Parliament. The fervent desire is that this Committee agree and support this Supplementary Order Paper before it. Perhaps it might reach the level of desire that the Māori Party is striving for. So thank you and salutations to us collectively .]The CHAIRPERSON (H V Ross Robertson): [Interruption ] Oh gee. What am I bid? I call the honourable member Jacinda Ardern. Sorry guys.JACINDA ARDERN (Labour):Thank you.Kris Faafoi: What a gentleman.JACINDA ARDERN: I smiled a lot. This is my first call on the State Sector and Public Finance Reform Bill. I am pleased to have—Hon Trevor Mallard: You only get four on this part.JACINDA ARDERN: —an opportunity to speak to Part 1. I am pleased also to know how many opportunities I have to speak on Part 1 because it is an extensive part and I think probably that the points I have to make will take some time.I want to start with some of the recommendations and comments that were made by the Finance and Expenditure Committee on Part 1 particularly around the purpose of the bill. From someone who obviously did not sit on this committee some clarification from the Minister in the chair Nikki Kaye on some issues would be beneficial to me and perhaps to other members of the Committee—in particular the recommendation around amending clause 5 new section 1A(e) of the bill. There was obviously some debate amongst members of the select committee around the wording in the objective. If I could flick to the purpose clause of the bill in new section 1A it says: “The purpose of this Act is to promote and uphold a State sector system” and then it goes on to list the things that are required by the bill that are upheld.An important question I think though is to what degree does upholding become defending? To what degree does upholding then transition into defending when there is potential for the erosion of certain objectives for the State sector? I say that because when we come down to paragraph (e) where the wording has been changed from “provides for” to “is supported by effective workforce and personnel arrangements;” there was obviously some debate by select committee members. As that currently stands on the face of it it sounds like it is almost a passive role for the State sector actors in that regard but obviously I come at it from looking at an area of the State sector like the Ministry of Social Development and like those who are working in Child Youth and Family as public sector servants. To what degree is this bill to defend the role that they have when they are no longer able to act as an effective workforce because of workplace issues for instance?What role is there for intervention in order to support that workforce? What do I mean by that? Well we know that the Government has pursued what at various times it has called capping it has called streamlining it has called efficiencies it has called various things. But let us cut to the chase of what that has meant. It has meant that in some of our departments despite demand and workforce demands increasing for those departments it has outstripped their ability as a workforce to grow and meet that demand. In the past several years alone for Child Youth and Family for instance there has been a 33 percent increase in substantiated notifications so notifications that require further action. Over that period we have had 16 new social workers per annum. One might be able to claim that it is very difficult for that workforce to be an effective workforce under those circumstances—to fulfil their requirement as public servants to act appropriately and according to their own Acts that they are required to fulfil and be governed by. So to what degree is this bill about just upholding a State Sector system and to what degree is it one that is able to defend it when that position becomes untenable for them?The second part that I want to speak to relates to chief executives’ ability to delegate functions or powers. This was obviously in clause 35 another area of contention and discussion for the select committee. In particular I see that they have distinguished between Public Service chief executives being able to delegate functions or powers from of course the separate ability to contract out the delivery of services. I would like to hear from the Minister in the chair though as to what examples she may have ofthose distinctions between the contracting out of services which happens daily within Government departments and other forms of delegation that might occur by a chief executive to just give a little flavour as to the kinds of circumstances we might be looking at. That would be important for us to consider because I think it is right that we be concerned when we are delegating any powers to ensure it is done properly.The reason I imagine the select committee said: “Look contracting is distinct.” is that we assume transparency. We assume that through the contracting system—because it is tendered and because to a certain degree of course the portals that the Government provides are meant to be a process that even the public who may not be engaging in those particular contract arrangements are at least able to see. My concern is that in recent times perhaps our trust even the select committee’s trust that we can treat the contracting out—that form of delegation by a chief executive—to be sacrosanct and fine is something that we may need to question whether or not we still actually have that layer of transparency within that tendering process.The reason I question that is because in recent times—very recently—for instance we discussed at the Social Services Committee the welfare reform bill where for the first time significant parts of the Social Security Act were being delegated to external agencies. For the first time we were seeing the administration of welfare payments particularly as they related to young people taken out of the Social Security Act and delegated to contractors. We are now seeing a second stage of that. We are now delegating the important role of support mechanisms for the transitioning into work of mental health patients and the like to contracted authorities.We have very little transparency about how that is working. We could not get it through the select committee process. I have requested tender documents and I have not seen them there. So in respect of the transparency in this bill that I think we assume through the delegation and contracting I question whether or not that necessarily exists particularly as I have said for this latest set of delegations because it is a very new delegated power in that regard. It is one given that it is such a core service that I think we would be right to ensure we do have that transparency. So as I say I would be very interested to hear from the Minister in the chair about the delegated functions and the decision-making powers—the kinds of examples that may have been considered by the select committee. I would be very interested to hear what it may have considered and what it considers to be carefully defined circumstances.I will throw up one other example. I query for instance the Work and Income board that the Ministry of Social Development has established recently under the leadership of the Minister. That Work and Income board is working directly with Treasury. In fact we have the bizarre circumstance now where the Ministry of Social Development is being asked to account directly to Treasury on whether or not it is decreasing the actuarial valuation that has been done on the Ministry of Social Development around the overall cost of benefits. It is also having to report to a Work and Income board which has delegated powers from the Minister not from the chief executive. This is an important point. This is where things get very murky. In fact there were questions on whether the chief executive departed from her role because those delegated powers came directly from the Minister and there were questions as to the hierarchy of who actually held seniority in this case. Is the chief executive reporting to the Work and Income board? Or is the chief executive reporting to the Minister for Social Development and vice versa? It became very murky.I would like some clarity because increasingly we are seeing roles like that emerging. That is a significant amount of power that the Work and Income board has now. Paula Rebstock by virtue of being appointed to this board basically could have delegated powers from almost every chief executive in the Public Service the way thatthings are currently running. She is the one individual who seems to be delegated the power of everything. So I would be interested to hear from the Minister on those situations because we lacked clarity for a very long period of time and we just cannot afford to have that for a ministry as significant as the Ministry of Social Development.I note that the bill expanded on the range of conditions and restrictions where they are using delegated powers. For instance after any delegation a chief executive would have to report on it in the annual report and comment on its effectiveness. That is an interesting point but again how far does that extend? Just a little more. I do completely acknowledge that I was not on the select committee for this so there actually may have been much more clarity on the select committee as to the circumstances where that would apply. I would love to see that kind of requirement exist for some of the delegated powers that we have seen in more recent times.The restriction of redundancy payments in certain situations is another area that I think is extraordinarily interesting and worth a degree of clarification. Obviously it is an area of much contention and we have seen many times in the past couple of years where redundancy payments have caused some distress—Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman):I will take the opportunity to speak on Part 1 of the State Sector and Public Finance Reform Bill on two particular areas. One follows on from my colleague Jacinda Ardern on the issue of delegation and the other one is on the protection of liability for Public Service chief executives.If I could just refer to a recent situation—and I am glad the Minister for Food Safety is in the chair because she can probably answer some of these questions—around meat getting into China. Clearly there were delegated responsibilities to a public servant in China who had the responsibility for clearing large consignments of meat. Yesterday in fact we had an announcement from the Minister for Primary Industries that the Government is going to increase resources into China. I think actually the truth is that they are going to go from one person to three people up there. The question is whether the delegation was a responsible delegation that put with it the resource to do the job properly. We had a bizarre situation where presumably the Minister delegated to the chief executive and then to an employee powers very important powers for certifying and clearing the meat. As it turned out the Minister criticised the chief executive and all the staff. So the question I have for the Minister in the chair is whether in that delegation the resources went with the delegation to ensure that the work was carried out properly and therefore the employee was responsible back through the chief executive or indeed whether the chief executive could have said that actually they did not have enough resource to be delegated the role and that is why the inadequacies and in fact the lack of performance occurred.The bill has got a whole lot of detail here and I acknowledge the Finance and Expenditure Committee which has clearly gone through and looked at this very very carefully and recommended that “… delegations must be in writing and that functions or powers delegated to a chief executive by a Minister ... may not be delegated further without their prior written approval.” So the question is when you have such an important market in meat such as China where you have hundreds of millions of dollars going through and we are told that there was one employee in China to deal with the certification for that huge meat trade whose responsibility was it for the delegation? And when something went wrong who should take responsibility for that problem? The Minister very quickly shunned it on to the ministry so we assume that it is the chief executive’s responsibility. He or she could say: “Well we didn’t have enough allocations through the Budget process so we had to have only one personthere.” In fact we have found a bit more money for two other people. It is pleasing to hear that for that particular incident.The issue of delegation that has been clarified as to how the chief executive should delegate the powers and how the Minister delegates them to the chief executive is all nice and dandy and all tidied up here in the bill. But the issue of accountability I suggest is something that also needs to be clarified. The age-old assumption—and my colleague Mr Mallard here would know this all too well—Hon Trevor Mallard: I’m not that old.Hon DAMIEN O’CONNOR: Sorry he has been around for a while.Hon Trevor Mallard: Unlike the member.Hon DAMIEN O’CONNOR: I have not been the State services Minister I have to say like he has.Hon Trevor Mallard: And the member never will be either.Hon DAMIEN O’CONNOR: No that is probably true and I do not want to be. Can I say that the issue of a Minister taking responsibility for the actions of his or her department is something that has been kind of accepted in politics for a while. But we had the very unusual situation with the Minister for Primary Industries dumping fairly and squarely on his ministry. That was a new situation. I am not sure whether that is perhaps an indication of the new approach that the Government is going to take under these changes here or whether it is the right approach or not. Did the select committee discuss it? That would be my question. Perhaps the Minister for Food Safety who is in the chair can answer that.If I can move on to the second issue which is in some way related to the incident I referred to and that is protection from liability for Public Service chief executives and employees. The Prime Minister who is also a Minister indicated through that whole meat debacle that there was a possibility of compensation being paid. I guess that what we have here of course is clarity of the status quo—that is that no single individual should be liable for such a mistake. Indeed the chief executive should not be. A Minister on behalf of the Government then carries the can for liability—in fact the taxpayer does. One of the questions that the taxpayer does raise quite often is whether bureaucrats should be made accountable and why it should be that a Minister or we as the taxpayers carry the can for any compensation from what they would call a stuff-up or a mistake or a major logistical problem or clearly inadequate performance. What this bill does is confirm that the public servant the civil servant should not be liable if they have done something in good faith. When a Minister then turns round as the Minister for Primary Industries did and criticises the ministry for its lack of performance then the question of liability being sheeted home in some way maybe not in a monetary way to an employee or more appropriately to the chief executive is a very fair question that each and every taxpayer should ask because it is their money that is paying compensation.In Part 1 here we have as has been the accepted norm removal from the chief executive or an individual employee any liability for mistakes. So the Prime Minister rides in on his white horse and says to the meat industry: “Well there may be compensation payable.” And then the Minister instead of saying: “My department got it wrong and therefore I should be liable.” muddies the water by saying: “No actually the ministry the department didn’t perform here. It was at fault.” So the taxpayer rightfully might say: “Well what then is the penalty that should be imposed upon the public servant or the individual who made the mistakes?”. In every other part of the law or I guess Government systems there is general accountability. People should be held to account for their mistakes but this bill is actually shifting it up the line effectively to the taxpayer. Is that the right thing? Maybe the Minister in the chair can take a call andanswer that because if the Government is going to change and alter these things then it should look at the situation that arose quite recently. I am not saying that the Minister for Food Safety was just as liable as the Minister for Primary Industries but I am not sure whether she would have dumped on her agency in the way the Minister for Primary Industries did.The hard-working New Zealander out there who pays their taxes to run these Government agencies to carry out these crucial roles expects performance all the way down the line and expects liability all the way down the line. So when as has happened in the past a Minister says: “I take full responsibility.” if it is a big enough mistake such as happened in Cave Creek or indeed at Pike River then the appropriate Minister resigns. I think people see accountability in that way. But when the Minister does not resign but turns round and dumps on the chief executive then the question should be whether this protection here provides adequate accountability for taxpayers’ money. So I leave it now to the Minister in the chair to maybe take a call and explain those things. It is a complex area of State sector accountability and responsibility. I can see her being really keen there.Hon Trevor Mallard: Not really. There’s a lot of common sense involved. What does Peter Dunne think about it?Hon DAMIEN O’CONNOR: Well there could be. I do not know actually. We are not allowed to talk about the absence of any Minister but I am sure that common sense could come into play here.Hon Trevor Mallard: Well he’s permanently absent as the Minister now.Hon DAMIEN O’CONNOR: Well I think the party is anyway. I am not sure about the member but the party certainly is.Hon Trevor Mallard: No no he’s not a Minister any more.Hon DAMIEN O’CONNOR: Look I must come back to the point here. I do not want to be distracted by my colleagues—Hon NIKKI KAYE (Minister for Food Safety):I am very pleased to take a call on this legislation. Can I start by acknowledging a previous speaker actually—Ms Ardern—because I want to address some comments that she made previously and just deal with that issue of delegations. As has already been canvassed there is nothing in the bill that will change the Crown’s power to contract. That has always been there. So I want to just address Ms Arden’s comments in regard to that.But what is really important is that the Finance and Expenditure Committee was quite clear—and I think it is a point that has been missed by Ms Ardern and Mr Damien O’Connor—that in terms of the extensive controls in this area it requires the responsible Minister’s prior written consent in every case. It prevents any sub-delegations it requires conflicts of interests to be avoided or managed it requires delegates to comply with the State services code of conduct it makes delegates subject to the Official Information Act and the Ombudsmen Act and it requires the delegation to be reported to Parliament. So what I will not accept is comments by speakers on that side of the Chamber trying to imply that this has not been thought through incredibly carefully in terms of delegations.The second point that was made by Ms Ardern in particular was around Government workforce policy. This bill will establish a new simple process for consulting on and distributing workforce policy to Public Service departments and Crown entities. That is very important and I think it is important as well for members opposite. I know that they are not listening now because they do not want to hear what is actually within the legislation which is that the bill ensures that the workforce policy statements will not be regulations and cannot override any legal rights or obligations including any relating to good-faith bargaining.So in terms of answering the final point that I just want to touch on which was raised by Mr O’Connor was around immunity in terms of public servants. Obviously I do not intend to comment on some of the substance. I do not agree with a number of assertions that he has just made in the Committee. There is a review under way in terms of the recent situation in terms of meat and he has made a number of assertions that I do not agree with. But what I would say is that what this bill does and it is incredibly important—and if there is one thing that I have learnt in the last 4 months as a Minister it is that we have some outstanding public servants in New Zealand. It is really important that this bill implements the original policy intent that public servants will have immunity from legal action for good-faith action taken in pursuit of their duties.I am not going to comment specifically on the issues that the member has raised regarding the subject of meat because he knows there is a review under way. But what I would say to him and what I would say in relation to this bill is that that member knows better than any other food producer in this country that when you are trading with 50 percent of your exports there will always be food issues.So what I would say to the member is that he knows that in this bill not only are there substantive provisions around the delegations—they are comprehensive—but also there is a clear immunity for public servants in this legislation. So I appreciate taking the call on this bill.The question was put that the amendments set out on Supplementary Order Paper 262 in the name of the Hon Dr Jonathan Coleman to Part 1 be agreed to.Amendments agreed to.The question was put that the amendments set out on Supplementary Order Paper 259 in the name of Te Ururoa Flavell to Part 1 be agreed to.A party vote was called for on the questionThat the amendments be agreed to.Ayes50New Zealand Labour 33; Green Party 13; Māori Party 2; Mana 1; Independent: Horan.Noes68New Zealand National 59; New Zealand First 7; ACT New Zealand 1; Independent: Dunne.Amendments not agreed to.The question was put that the amendments set out on Supplementary Order Paper 265 in the name of Denise Roche to Part 1 be agreed to.A party vote was called for on the questionThat the amendments be agreed to.Ayes55New Zealand Labour 33; Green Party 13; New Zealand First 7; Mana 1; Independent: Horan.Noes63New Zealand National 59; Māori Party 2; ACT New Zealand 1; Independent: Dunne.Amendments not agreed to.Part 1 as amended agreed to.Part 2 Amendments to Public Finance Act 1989The CHAIRPERSON (Lindsay Tisch): The debate on this part includes schedules 1A to 3A.Hon DAVID CUNLIFFE (Labour—New Lynn):I rise to convey Labour’s support for this part of the State Sector and Public Finance Reform Bill. In doing so I wish to tender an apology to you Mr Chair and to the Committee. In my initial remarks on Part 1 I made the misplaced comment that Part 1 was the most major part of the bill. I see on closer examination that Part 2 is equally substantive and important amending as it does very significantly the Public Finance Act.The bill proposes a number of amendments to the Public Finance Act and principally the following: firstly the establishment of a new appropriation type to be called a multi-category appropriation or MCA. The purpose of this is to allow different types of expenditure to be grouped into a single appropriation where they support a single policy objective or overarching purpose. This is one of the principal innovations in this Act in the way that the design of the Government’s machinery is carried out. It calls us to reflect on the nature of what we are doing here today. This is not just tinkering legislation; this is framework legislation—and that is why it is good that it is bipartisan across the House—that governs the major rules and regulations by which the organs of the State operate. So that is everything from the rules upon which they are structured principally delivered through the State Sector Act reforms in Part 1 and of course the rules by which their finances are governed which are dealt with in this part Part 2 as amendments to the Public Finance Act.Members of the public will recall—and members opposite will hopefully recall—that the Public Finance Act is a very extensive piece of legislation that contains the provisions for fiscal accountability and the ability for Parliament and the public to be able to trace subventions or appropriations from year to year to be able to track the movement of public funds and to give effect to that age-old tenet of our inherited constitution that there is no taxation without representation. This is where the rubber as it were meets the road because it is through the legal framework set out in the Public Finance Act as amended by this bill that we get the rules about accountability. The main point here is to allow a new form of accountability multi-category appropriations which allow policy purposes to be driven simultaneously through several different agencies or votes.In the past what has had to happen under the rules of public finance is that a lead agency has been designated and it has borne the financial responsibility but through that it has also maintained primary control through the Cabinet process. That has not I think it is fair to say—and both sides of the House that have sat on the Treasury benches over the years would agree—always favoured the highest levels of cooperation between the agencies of the State. So what we are doing here is we are plumbing a whole new beast into the financial reporting rules. It is a beast called a multi-category appropriation and it is based on the presumption that the behaviour will follow the money. And if the money is in a common pot where several different agencies have to draw from it then we are more likely to get truly unified behaviour. The Labour Opposition agrees with the Government that it is a good thing to have that type of provision available provided that there are sufficient controls around it. I am pleased to say that following the amendments put in place by the Finance and Expenditure Committee it is now our view that those controls do exist.As our colleagues have said in relation to Part 1 for the Labour Opposition this is a relatively unusual bill an unusual process. We quite strongly opposed the bill at its first reading. There were a number of provisions in it quite a lot of them in Part 1 that we very trenchantly opposed. We are very pleased that through the negotiation process inthe select committee there has been an extensive range of amendments and we can now support the bill. The amendments here have been around two principal aspects of multi-category appropriations—firstly requirements for full and complete traceability down to the sub-output class level. It is a very granular approach so that members of Parliament and the public can trace changes in public expenditure through the years and across categories.That is particularly important where a multi-category appropriation has the potential to blend appropriations from different departments from prior years. It is too easy to do smoke and mirrors without the amendments made to this Act. It follows that it is made clear in the amendments that other departments as well as the one administering an appropriation can incur expenses against that appropriation. It is a second principle if you like that follows from the multi-category appropriation principle. The idea there is that where there is a group of agencies cooperating towards a policy outcome they can incur expenses against a single appropriation if that is appropriate. That again plumbs into the operations the machinery of government cooperative behaviour at every level.The information required in the estimates and supporting information is being changed to focus more closely on the policy intent of what is being achieved within each organisation. We talked about this in Part 1 the shift from simple output monitoring to outcome monitoring—that is measuring the work that the State does against the questions of why we are here and what we are trying to achieve; how we are trying to achieve it follows. As we said in Part 1 the risk with that is that if we lose sight of the output measures completely sometimes outcome reporting can be a bit vague but a proper combination of the two has been shown to deliver the best balance in terms of strategic thinking and specific behaviour tracking.The provisions allow annual reports of more than one department to be presented together in one document where this would more meaningfully convey information. So there is a third significant change. As well as multi-category appropriations and multiple departments drawing upon a single appropriation now we can have multiple departments reporting through one accountability document that applies to a particular programme. Again we are designing into the machinery of government the ability to require cooperation of our agencies from the ground up. We are standardising the governance and performance reporting requirements for companies that are listed in schedule 4 of the Public Finance Act—that is companies where there is a substantial element of Crown ownership. As I look through the bill—and I will be picking this up in my next call—I will go clause by clause through some of these key changes because there are 60 pages of amendments.Let me draw the attention of the Committee to one particular matter that I think is pretty important which is around proposed new clause 59B amending section 3A of the Public Finance Act as represented on Supplementary Order Paper 262. That is where proposed new section 3AB(1)(a)(i) states: “Ministers of the Crown hold on behalf of the Crown more than 50% of the issued ordinary shares in the capital of the company;”. I do think it is necessary to put on record that this is not a provision that applies to the Government’s harebrained partial privatisation scheme; this is about the development of mixed-ownership entities other than those in the privatisation scheme for the energy companies which we have heard so much about in the media. The reason for making that clear is that there are a number of strategic disadvantages with the partial privatisation programme that the Government is currently engaged in which include the loss of strategic control for the portfolio; having to have regard in law to minority shareholders’ rights; the loss of the controls normally contained in the State-Owned Enterprises Act including the no-surprises policy and the power to direct; and the loss of dividend flows which means that the programme is often cash value - negative.I will come on to it in subsequent calls but there are a large number of schedules—schedule 1A schedule 2 schedule 3 and schedule 3A—that apply to the Public Finance Act and pertain to amendments in this part and we will be touching on some of them across the debate on this part. There are a number of Supplementary Order Papers that contain measures on Part 2 that we will want to touch on in this debate. So I think with your leave Mr Chair we will be here for quite a long time going through this. Supplementary Order Paper 168 from Minister Coleman bears upon the Public Finance Act. Supplementary Order Paper 262 from the Minister which is very extensive bears upon it. We have disposed already of Supplementary Order Papers 259 and 265. Supplementary Order Paper 261 also has some provisions.Let me note two things on the Supplementary Order Papers here as an introductory comment. The first is that it is somewhat disappointing—Dr DAVID CLARK (Labour—Dunedin North):As I begin my call I will just request that Mr Cunliffe give me my notes which are under there. I have prepared some quite extensive notes on this part of the State Sector and Public Finance Reform Bill Part 2. The bill itself does make some quite significant changes to a very significant Act. The Public Finance Act of course is one that as a former Treasury official I took quite a lot of interest in.I am very grateful to have this opportunity to speak in the debate. It is true that the changes to the Public Finance Act will I hope have some really positive impacts on the way the public sector is run. The establishment of a new appropriation type to be called a multi-category appropriation will allow different types of expenditure to be grouped into a single appropriation if they contribute to an overarching purpose. There are always debates around this kind of change because effectively what happens is that the nature of accountability changes. With the change in the nature of accountability is a commensurate concern for the impact that that will have on the accountability of Ministers through to the taxpayer and the public of New Zealand who want to see the investment they make through their taxes creating a better society.These changes which allow for a wider grouping of expenses will hopefully allow Ministers greater flexibility to achieve the ends they are wishing to achieve through various pieces of legislation or appropriations which is the money they vote towards specific purposes. But that comes with the risks of being in a bigger pool and of being shifted around without the same kind of attention it has had historically. We find ourselves here in Parliament debating that balance between providing Ministers with flexibility to achieve the outcomes they want to achieve on behalf of the public and on the other side of that balance the accountability proper to the taxpayers who have provided those funds.We in the Labour Party are supporting this legislation because we believe that roughly the right balance is being struck. It is important that this legislation is enduring that it survives the various administrations that the public know what they are looking at when they look at the votes and the appropriations and that when they look at where departmental spending is going they can understand what the purposes of that spending are how the money is being spent and so on—those members of the public who follow it that closely.It is of course relevant that these changes should be considered here in Parliament and debated fully because this is the place where we have the overview of that spending. We had our estimates debate earlier on. We have scrutinised here the Government’s spending and asked questions about moneys that have been moved around between different classes of output category. We have satisfied ourselves more or less that the Government has spent that money as it said it was going to spend it.Whether or not we think it has been spent wisely is a separate debate—that is a separate debate. It is related and it is often overlaid. Mr Chair you will have heard—I should not bring you into this debate. Members of the Committee will have heard me express political opinions views about how money should be spent whether it is being spent in the right way—and by that I mean on the right things. Here we are talking about whether it is being spent in the way that the Government says it is going to spend it—whether it is true to its word. That kind of accountability is important no matter which administration is in place because each administration will have its own view as to how money should be properly spent.This legislation changes the requirements for information about departments’ strategic intentions including the frequency of its provision. Again here I think this is about striking that same balance between accountability and how often departments have to outline their strategic intentions. Should they have to do it every year? Is that a good spend? Is it a good use of public moneys to update things when they may be entirely relevant from the previous year and the intentions may be the same? Just how much public servant time should be spent on judging whether or not the strategic intentions should be updated as opposed to delivering on the objectives of the Government of the day? This again is where a balance is being struck. We believe that in this legislation by and large that balance is being struck correctly.Specifying the financial responsibilities of departmental chief executives to make it clear that they include financial stewardship for the long term is another initiative found in this legislation that we think is good. The proof again will be in the pudding in this particular one we think. Just how we consider the long term—how any Government of the day considers long-term stewardship—is yet to be proven. There will need to be measures put in place to say whether we think that a measure is really in the long-term interests of the country or not. Governments will try to outline those measures. There will be political debate. There will be a political overlay to the particular debate on these matters and that is natural. It is the job of the elected representatives of the people to try to represent their concerns.For example on this side of the Chamber we might be concerned about rising power prices and we might take exception to Mr Key saying that Kiwis are paying about the right amount in power prices. We on this side of the Chamber simply do not think that is true so that is why we have launched our New Zealand power policy. We think that there should be a different way of organising the electricity market in New Zealand. Our objective will be different from that of the current Government which seems very satisfied with the rising power prices. Power prices do not bother it. It seems unconcerned that power prices in New Zealand keep going up and up and up so it will be concerned that the money being spent here is spent preserving the status quo whereas if the Labour Party was elected into Government it would be concerned that its policy of reducing power prices for ordinary New Zealanders—The CHAIRPERSON (Lindsay Tisch): Order!Dr DAVID CLARK: —would be put in place.That goes precisely to the point here in the legislation in which we are talking about financial stewardship for the longer term. In that particular policy example Labour thinks that stewardship of that resource in the long-term interests of the country is about delivering lower power prices to businesses so that they can develop and contribute to New Zealand whereas the Government may take a different view. That is its prerogative. That is the nature of Governments and of parties representing interests in this Parliament. But we will be having the debate and I think that is the important thing. We will be having the debate about whether the financial stewardship is in the long-term interests or not. I think that is a good thing.I congratulate the authors of this bill and those who served on the Finance and Expenditure Committee which managed to work this into the legislation. I join also in congratulating the officials. Although I did not sit on the particular committee for all of the consideration of this bill on its way through I know have met or have dealt with several of the officials before and regard them as being exceptionally good officials. I heard David Parker recount his experiences and congratulations and I want to echo those.This bill will survive administrations. It is a step forward for the public sector. It is a step forward for New Zealand. It is not going to address that fundamental question of whether or not the policies are right. The wrong policies cannot be helped. No amount of fine-tuning how departments deliver what they have been tasked with doing will address the fact that I think this Government has terrible policies on some things but it will fine-tune the Government’s ability to deliver on the policies it says it is going to deliver on. It will fine-tune the accountability measures for the Government so that it can be held to account by members of Parliament and by the general public to say whether or not it is delivering what it has said it is going to deliver. That will become obvious and then we can have the debate. I can stand up here as I am wont to do and say that this Government has the worst economic record of any Government in the last 50 years. It will be a political debate because Government members can be clear that they have done what they said they were going to do they have implemented the policies that they said they were going to implement—Hon David Parker: They didn’t say they were going to raise GST.Dr DAVID CLARK: —and have spent the money on the things they said they were going to spend it on. My colleague raises the issue of GST and says the Government never said it was going to raise GST and then it did. Unfortunately I do not think this legislation is going to solve that.Kris Faafoi: They said they wouldn’t.Dr DAVID CLARK: It said it would not raise it—quite right Mr Faafoi; you have corrected me. The Government said it would not raise GST and then it did. Well that shocked New Zealanders and it was I think the wrong thing to do.The CHAIRPERSON (Lindsay Tisch): Order! That is not part of this debate.Dr DAVID CLARK: Coming back to this particular debate this legislation will not I guess stop Governments doing the wrong thing but it will—SUE MORONEY (Labour):It is a pleasure for me to take a call on Part 2 of the State Sector and Public Finance Reform Bill. This is the part of course that amends the Public Finance Act and is therefore the part of the bill that I think does need a large amount of scrutiny. In amending the Public Finance Act this is the part where the way the Government’s Budget is structured is being altered. There are often very good reasons why the way in which Budgets are structured can be altered and I think that some of them are inherent in the changes that this bill brings about.But we do need to be cautious because changing the way Budgets are structured is often a way that Governments can actually create a bit of a smokescreen so that it is difficult to compare—John Hayes: As your Government did for 9 years.SUE MORONEY: —from year to year what is happening with the expenditure. So it is right and it is proper to give a lot of scrutiny and debate and discussion to this particular part of this bill. I know that Mr Hayes agrees with that because he obviously shares the concerns that I have raised.An example of that which I will give for anyone listening to this debate is in Vote ACC in the ACC area. Between 2008 and 2012 if we look at the way Budget documents are currently constructed we can see in the area of funding for injuryprevention in ACC that there has been something in the order of a 42 percent decline over those 4 years. [Interruption ] I know it is shocking. It is actually over a period of time in which workplace deaths have been increasing a time in which there has been real concern—The CHAIRPERSON (Lindsay Tisch): Order!SUE MORONEY: —around what has been happening in that area.I want to bring it back to the bill by using that as an example of why it is important that there is some consistency between the way the Budget is constructed from year to year. When it is constructed in a similar way we can actually track that through. We can see that the injury prevention funding has been cut by 42 percent over the course of 4 years. However when change in the way in which the Budget is constructed occurs as per the changes being proposed here in this part of the bill it does sometimes make it difficult to actually compare apples with apples—that is to say that the way the appropriation was brought down in 2008 for example is a direct comparison with the way in which it was constructed and brought down in 2012. So I guess the question that I would pose to the Minister would be to explain to the Committee how these changes will still be able to allow comparisons between years in terms of what is happening with those estimates so that we can be sure of how the money is being moved around.One of the changes that is being proposed in this part of the bill is a way in which the estimates can change so that it makes it clear that other departments as well as the one administering a particular appropriation can incur expenses against that appropriation. Again the example that I just used is I think really relevant to this part of the bill and this particular amendment because in the instance where there was a rapid decline in the appropriation for injury prevention spending from ACC there was a corresponding rise in spending on injury prevention in a different department under the Department of Labour or what has become known as “MoBIE”—the Ministry of Business Innovation and Employment. So this particular change would allow some transparency around the shifting of money which is how I read this particular amendment. It would therefore make it clear that even though there had been a huge decrease in funding of around 42 percent in injury prevention in one area and just I think about a 15 percent increase in the other area you would be able to put those together by using this amendment and see that overall there had still none the less been a substantial decrease across those two appropriations of funding in the injury prevention area. I think that this will create better transparency.Hon DAVID PARKER (Labour):I rise to take a call on Part 2 of the State Sector and Public Finance Reform Bill which involves the amendments to the Public Finance Act. I want to start with the change that is heralded at clause 63 of the bill which changes the way in which the annual financial statements of the Secretary to the Treasury are published. Currently annual financial statements have to be published on paper. This legislation and this is an example of why the Labour Party is supporting this legislation updates it so as to take advantage of information technologies that are now available to “ensure that the annual financial statements the audit report and the statement of responsibility”—of Treasury—“remain available on that Internet site for inspection by members of the public for at least 5 financial years after the financial year to which the annual financial statements relate.” If I read that correctly—and the Minister in the chair the Minister for Food Safety can tell me whether I have got that wrong—that effectively means that they are going to be available to the public for 6 years and people will be able to make comparisons.Using the example that my colleague Sue Moroney just gave where they are trying to track a change in expenditure—and I think the example you used was in respect ofACC—if there was a 42 percent decrease in funding over 4 years you would actually be able to track that year by year through the internet to see what was happening over time. Assuming I am reading this correctly I presume that that would extend to the likes of the ACC although it may be that because it is a separate corporation it is dealt with specifically in its separate legislation. Certainly in respect of Treasury the Secretary must ensure that those statements remain available on the internet site for inspection by members of the public for at least 5 financial years.The next issue I would like to briefly address because I am not sure I quite understand it properly is clause 75 of the bill which amends section 80. This amends the ability of Treasury to give instructions to departments. Before doing so I would note that elsewhere in the Act we make it clear that chief executives of departments are responsible for the financial management of their departments. If we look at new section 35 inserted by clause 85 of the bill where it says “Responsibilities of chief executives: financial management of non-departmental matters” it makes it clear that in addition to the other responsibilities of chief executives for the financial management of departmental matters which are referred to in the prior part of clause 85 which amends section 34—and new section 34 requires that the financial management of departmental matters be the responsibility of the chief executive. That is how it should be. New section 34 says that “The chief executive … is responsible to the responsible Minister for the financial management financial performance and financial sustainability of the department; and (b) must comply with any lawful … actions required by the Minister or the responsible Minister.” It is a very very important provision which states that the chief executive of a department must comply with any lawful financial actions required by the Minister or the responsible Minister.At times I have heard it said by some Ministers that they feel that the relationship of power goes the other way so it is quite good to see that this Parliament is emphasising in this piece of legislation that the chief executive of a department “must comply with any lawful financial actions required by the Minister or the responsible Minister.” I do not think that that is meant to imply that any Ministers are irresponsible so I am not quite sure what the difference is between “the Minister or the responsible Minister.” and perhaps the responsible Minister in the chair could take a call to clarify what the difference is in that clause between “the Minister and the responsible Minister.”What new section 34 says is that the chief executive of a department that administers an appropriation—and they all do—is “responsible to the appropriation Minister for what is achieved with the expenditure under that appropriation;”. So that is making the link through—not only do they have to comply with lawful financial actions required by the Minister but also they are responsible to the Minister for what is achieved with the expenditure under that appropriation. So they have got to comply with those financial directives and they have got to make sure that they are responsible for what is achieved. Then there are similar obligations in respect of non-departmental matters that I do not have the time to properly address.That then brings me to clause 75 of the bill which somewhat confuses me and the amendment of section 80 which relates to the instructions that Treasury can give to departments or departmental agencies. Clause 75 of the bill says: “Subject to the provisions of this Act and of any regulations made under this Act the Treasury may—(a) issue instructions to departments”—not chief executives—“or departmental agencies for the purposes specified in section 81(1)(a) …” of the principal Act. Of course the principal Act is the Public Finance Act 1989 unless I am confused as to which Act this particular clause is amending.I have got the Public Finance Act 1989 in front of me—[Interruption ] Yes thank you to my colleague Kris Faafoi who already had it out. Section 81(1)(a) of the Act talksabout “requiring information to be supplied to the Treasury by departments and any entities referred to in section 27(3)(a) to (f) to enable the Treasury to properly fulfil the functions imposed on it by the Government or any Act:”. I am not sure what the purposes are of the change to section 80 from the existing Act which currently provides: “Subject to the provisions of this Act and of any regulations made under this Act the Treasury may issue instructions to departments for all or any of the purposes specified in section 81(1)(a) (ab) (b) (bc) (bd) or (c) to (e).” So I am not sure what the import is of that change and I would invite the Minister in the chair to take a call and clarify that important point for me.The next point I would like the Minister to address if she is to take a call is what it is that she envisages in the provision that a “chief executive of a department that administers an appropriation [for which that chief executive] is responsible to the appropriation Minister for what is achieved”. The second part of this provision that I want the Minister to address is what happens given that clause 85 of the bill requires that chief executive to be “responsible for advising the appropriation Minister on the efficiency and effectiveness of departmental expenses and departmental capital expenditure under that appropriation.” This is getting to the nub of how you hold chief executives and the departments for which they are responsible to account for the objectives of the Government.For example when a Government sets as an election promise the fact that it is going to narrow the wage gap with Australia or eliminate it I think it was—it was going to eliminate the wage gap with Australia—where is it that we see in these various accountability documents that being devolved down to departments in a way that the Government can expect accountability from them and then be held accountable to the population for that promise?Hon David Cunliffe: What if the gap widens?Hon DAVID PARKER: Well Mr Cunliffe you are quite right. If we have those sorts of accountabilities I would expect it would be of importance to the electorate to understand that those targets were not being met but rather that the gap between the incomes of those working in New Zealand and Australia is widening.Dr MEGAN WOODS (Labour—Wigram):It is my pleasure to take my first call that I have on the State Sector and Public Finance Reform Bill in its Committee stage. I am in particular very happy to speak to Part 2 of this legislation the part of the bill that deals with the amendments to the Public Finance Act 1989 and to look at some of those. As my colleagues have canvassed at great length Labour has made a decision to support this bill with reservations. My colleague Sue Moroney pointed out that we have talked in some detail about our views on this bill but there is still plenty more that needs to be canvassed in the course of this debate on this piece of legislation.Although we opposed this bill at its first reading the changes that did eventuate at the select committee process that were worked through with Labour and the State sector unions by and large have really made this a better piece of legislation that has come back to the House at the Committee stage. We are very happy to be able to say that we can offer it our support but we do still have some of those lingering reservations. It was heavily amended at the Finance and Expenditure Committee consideration and I think that that as a process is something that this Committee should applaud. That select committee consideration was allowed to work fully and really fulfil its function in making legislation better.As I said in terms of Part 2 “Amendments to Public Finance Act 1989” which we are talking about one of the issues that I really want to pick up there is the information requirements for appropriations that come under this part of the legislation. The intent of the bill is that all appropriations should be traceable and accountable from year toyear: “Traceability must be explicit where an appropriation or categories within an appropriation have changed including where a multi-category appropriation is used.” My colleague Sue Moroney has touched on a very current example of where this has been brought into relief. This legislation has meaning for every member in this House. There is no member in this House who has an interest in a portfolio either on the Government benches or on the Opposition benches who does not have to deal with the issues that are covered by this bill. For those of us who have been covering appropriations that have been brought under the umbrella of the Ministry of Business Innovation and Employment the “Ministry of Everything” it actually has been a real challenge to follow those appropriations through.My colleague Sue Moroney talked about trying to follow through ACC budget lines from years before the Department of Labour was absorbed into the Ministry of Business Innovation and Employment. I myself in the area of research science and innovation have been trying to cover through budget lines and trying to track how it is that our funding of things like postdoctoral fellowships has gone from when we had an independent Ministry of Science and Innovation and how that has gone when it was absorbed into the much larger Ministry of Business Innovation and Employment. I think that any change to the legislation like we are seeing in this is to be applauded because I think that the purpose of the House the purpose of our select committees and the purpose of members of this House is to make sure that we are scrutinising those appropriations. Members of the public also need to be able to have clear and transparent ways of scrutinising what is happening with public money. That is what we are talking about. We are talking about the use of public money here and anything we can do to make that more accessible and more transparent is something that we can support.Other changes that we think are important under this part of the bill include making it clear that other departments as well as the one administering an appropriation can incur expenses against that appropriation. Increasingly we are seeing that in the way in which Governments are run. We are having the idea of issues and themes starting to cluster around and appropriations occurring in other departments and I think it is really important that the legislation that administers the way in which we follow through our public money in our State sector recognises the changes that are happening around governance and the way in which we govern our country. It is in changing the information required in the estimates and supporting information—it is a pleasure to conclude some of my statements around this—that the focus moves more closely on to what is intended to be and what has been achieved with each appropriation. It is increasingly and incredibly important that we do have that. It is important that we can make sure that we know what it is that a Minister sets out to do with a sum of public money what it is that they want to achieve and most important what has been achieved so that at the end of each financial year we can go back and we can have a look at whether or not the money that was set aside for something was actually used for what was intended. The bill is changing the requirements for information about departments’ strategic intentions including the frequency of the provision.My colleague David Parker touched very briefly on the idea around the departments’ statements of strategic intents. These are incredibly important documents for members of the public for parliamentarians and for society at large really to know what it is that a public organisation is wanting to achieve. Allowing the annual reports of more than one department to be presented together in one document again speaks to the much more clustered way we are thinking of doing Government the way in which we need to bring things together. This does provide much more meaningful information about the department’s performance and achievements and this is what we are all looking to achieve. We are all looking to see that we can have meaningful and real information thatcan be there to show how it is that a Government department has spent Government money.So we are very happy to be able to say that we can support the State Sector and Public Finance Reform Bill at this stage because of the incredibly good work that the Finance and Expenditure Committee did and I would like to congratulate members of the committee from all sides of the Chamber on the work that they have put in. I think that it shows what this Parliament in its committees and in its House can achieve when people put their minds to addressing a piece of legislation trying to make it the best piece of legislation that it can be and working with the submitters and listening to the submitters when they come to the committee to see how these changes can be made for the better. Thank you.Hon DAVID CUNLIFFE (Labour—New Lynn):Tēnā koe. Kia mahi toa. Let me just draw the Committee’s attention to the considerable size of Supplementary Order Paper 262 which contains a significant number of pages—60-odd pages’ worth—of amendments to this part. It is not ideal practice for us to have a Supplementary Order Paper brought to the Committee that is of this length and complexity because it has not had the same level of scrutiny—for example John Hayes’ minute scrutiny—in the Finance and Expenditure Committee that the rest of the bill has benefited from. It has not had the “Hayes effect”. It may still have a haze with a “z” but not the “Hayes effect”. It is true that officials have given us their word that these are purely minor technical and non-controversial amendments that are consequential upon date changes and other such things and of course therefore there can be no policy intent in them.I want to turn the Committee’s attention to the substantive amendments to Part 2 which start on page 60 of the Supplementary Order Paper. We have an updated purpose statement and we move through to the substantive provisions starting on page 64. Proposed clause 59B replaces section 3A “Power to amend Schedule 4”. This allows the Governor-General by Order in Council to add to schedule 4 of the bill the name of any body office officer trust or organisation; and apply or disapply to any organisation any provision of the Crown Entities Act. The Governor-General can change add or subtract the name by Order in Council. Section 3AB in clause 59B provides similar amendment proposals for schedule 4A of the bill. If we move through we see that clause 60A proposed by the Supplementary Order Paper inserts new section 7C which is “Responsibility for and administration and use of appropriations”.On this one I just want to make a couple of general points that are not really drafting points. It is to echo the words of my good colleague David Parker who I think really emphasised the need to have a clarity of legal appropriation authority from Parliament to the Minister to the chief executive down through the output classes to the sub-output classes. It is provisions such as the new section 7C on page 66 and their like that make clear that the Minister or the appropriation Minister is responsible for the appropriation. So it is through provisions such as this that we are really underlining that the ethical basis of the expenditure of the taxpayers’ money is through the parliamentary process as vested in the Minister. It clarifies as David Parker has said that the chain of command after advice has been listened to and understood does go from the Minister to the department because that is how we account for the use of public money and that is very very important.It makes the further point in new section 7C(3) that “the Speaker is responsible for any appropriation administered by the Office of the Clerk of the House of Representatives or the Parliamentary Service.” I would be remiss if I did not state publicly that our staff in Parliament have not had a decent pay rise for a good 5 years. So when the Speaker is next considering his or her powers under this innocuous little subsection (3) of section 7C on page 66 of the Supplementary Order Paper I ask him orher to please have a thought for our hard-working parliamentary staff whose pay and rations really have not kept up with either the private market or the inflation index. I understand that they may be facing yet another year of severe restraint and I do not think that any of us think that they should be in that situation.On page 68 we move to clause 61D. This amends the power of the secretary of the department to receive information and clause 62 amends the power of the Auditor-General to be the auditor of the Government reporting entity. That is an important power because it means that the Auditor-General has his or her full powers when dealing with a potentially sub-delegated entity body Crown entity or company in which the Crown holds a number of shares or some other organisational form. What this bill is really saying is that that concrete chain of accountability and command can apply—must apply—across a range of organisational forms for which the Crown is responsible. The bill is trying to get in short the right balance between clarity of delegation rigour of accountability and yet a new flexibility to devolve across a range of organisational forms.In these post - global financial crisis days of fiscal constraint and fiscal prudence writ large all of us—but actually particularly social democrats—know that we are going to have to do more if not with less then with not much more in terms of taxpayers’ funds. Therefore we need to be absolutely focused on getting the best value for the taxpayers’ dollar that we can. I am reminded of an example early in my time in Parliament where we were considering the cost of delivering social work into one of New Zealand’s remote regions—I think from memory it was the Gisborne - Poverty Bay area. The salary cost for the social workers in those days quite a while ago was in the $30000s a year but the total cost per social worker was around $120000 the other $90000 being departmental overheads. I have never forgotten the example. The actual salary of a social worker was only about a quarter of the total cost; the other three-quarters was overhead. That impressed upon me then that even social democrats have to have an awareness of the best and most cost-effective way of delivering services to our people. Sometimes that might be through an agency that is semi - at arm’s length from the Crown such as an NGO or a Crown entity. It may be something that is lean and adaptable to those communities.It is interesting now to come full circle and to see a piece of legislation that with a lot of good cross-party cooperation is trying to achieve a good balance between having the flexibility to deliver those services in a variety of ways as are most appropriate without compromising on the rigour of the accountability back to the taxpayer or the chain of command back to the Minister. That is a sweet spot if we can achieve it that will allow modern social democracy to be cost-effective and active and flexible and in tune with our communities and we are reasonably excited about that possibility.New section 34 proposed in clause 65B of the Supplementary Order Paper underlines the responsibilities of chief executives for financial management and for reporting both for departmental and non-departmental matters. In proposed clause 66A on page 71 of the Supplementary Order Paper it dives down. This is quite specific prescriptive language because Parliament is wanting to leave the departments in no doubt whatsoever as to the nature of their responsibilities and the clarity of their delegations. I think it is well written in that regard. Clause 66A states that departments must prepare annual reports. There is some detail about what must be in them and it is the same for departmental agencies—obligations to publish to put the information in the public domain whether it be in hard copy or on a website. There are time limits of no later than 15 working days after it is presented to Parliament. Again there is a lot of prescription a lot of rigour here to make sure that the public is as well informed.Earlier this evening I went to a presentation by Transparency International with a number of colleagues. That is an agency that rates the level of corruption in different countries around the world. Guess which is the least corrupt country on the planet? No. 1 on their rankings is New Zealand. We can be really proud of that fact and we score incredibly well for the integrity of our public sector. So today it might be hard graft. It might not be the sexiest bill in the world. It is rather a large bill and it contains the kinds of provisions that keep New Zealand safe. It keeps New Zealand safe from either graft or just inefficiency and ineffectiveness because the rules are not clear about how we account for public money. It is in the dense drafting of bills like this that we make good our promise to the taxpayer that we are going to deliver the very best services for them at the very least cost and we are going to do it in a way that is accountable rigorous clear and efficient. It is this kind of work that underlies the fact that we are the least corrupt the most transparent Government on the planet and every New Zealander should be proud of that.In closing can I just again start where I began in the last part and that is to compliment the Government our high-quality officials and colleagues across the Chamber for their work on the bill.Hon TREVOR MALLARD (Labour—Hutt South):I apologise to my colleague David Parker for the confusion but I think he might have had a crack already and no doubt he can be involved in a sandwich—I can be before and after him if he wishes.The first point I would like to make is to compliment the officials who have been involved in the State Sector and Public Finance Reform Bill and also the Office of the Clerk on what is for me a new approach and that is writing the Supplementary Order Papers into the bill in a substantive way. I know that we had some discussions about this process at some stage in the past. What it does do is make a bill much easier to understand for people like me who are interested in the changes that the committee has made which are not quite as well shown in the version of the bill now. More important when the Minister of State Services’ Supplementary Order Papers as proposed are incorporated in this way it makes it much easier to focus—rather than trying to work on two large pieces of paper and trying to integrate them and work out how they interrelate with each other. So I want to thank the officials and I thank the Office of the Clerk and I think the Parliamentary Counsel Office too for their suggestions and their work in the area. Having said that it may be that officials and the Minister regret the fact that it is now easier to understand because there are more questions that flow from a better understanding of it.The very first one that I have is on clause 78(3) and the definition of “departmental”. It really is a question of why we need to define “departmental”. Who does not know what departmental expenses are? For a very long time we have had departmental expenses and we have had departmental capital expenditure. Most of the stuff has been around ever since we divided out the accounts to have a profit and loss account as far as the Government is concerned and a balance sheet. That is at the point when operating expenses and capital expenditure were divided. My question is really why we need to get to the level of pedantry in having this level of definition. There might be a good reason.The next point I would like to ask is whether—oh they do not number the lines the way they used to; this is a bit shocking. Now we are going to have some criticism. What we used to have down the side in well-drafted bills about every—[Interruption ] Have we? Well I cannot see it.Hon David Parker: You are looking at the tracked version.Hon TREVOR MALLARD: I am looking at the tracked version. What is the point of having a tracked version if you do not have the lines on it? For people like me whowant to speak and focus it makes it a lot easier rather than having to count down all the lines—you know using our fingers and toes if we have to go too far—to have the lines numbered every 10 or so. If we want a suggestion for people who are doing tracked versions in the future put the lines in the way they are in the report-back version. Clearly they will be at different points and as long as we know what we are referring to it would be helpful.I want to refer to the definition of “lend money” paragraph (a). It is right below the bit about host department. To make it clear it is in Part 2 clause 59 “Section 2 amended” which is the interpretation part. I want to refer to “lend money” in section 2(1) amended by clause 59(3) in the Supplementary Order Paper and first of all to ask whether paragraph (a)(i) could be better referred to as the MediaWorks exemption clause. This is “deferring payment for any goods or services supplied or works constructed for any person organisation or government;”. The question is whether this deferred payment arrangement should be known as the “Steven Joyce previously owned companies” clause or some other approach like that. [Bell rung ] Mr Chairman.The CHAIRPERSON (H V Ross Robertson): The Hon Trevor Mallard.Hon TREVOR MALLARD: Is it 5 minutes already? That is hard to believe. I had hardly started Mr Chairman.The next question I have is that under “lend money” paragraph (a)(ii) it talks about where the department—or I assume it is the department—is “entering into hire purchase agreements or agreements that are of the same or a substantially similar nature;”. The question I have got is does it not depend on which end of the hire purchase agreement they are in? If they are buying something on hire purchase surely they are borrowing rather than lending. It is unlikely that a major Government department would enter into a hire purchase agreement. But under subparagraph (iii) which is the next section where they are entering into finance lease arrangements again the normal finance lease arrangements are those where they are in fact borrowing where they are getting goods and entering into some sort of finance leasing arrangement done I think often by Government departments and which involves those massive big printing photocopiers cars or some similar arrangements like that—what are effectively lease-type arrangements.I cannot conceive where it would be appropriate for a department or a Crown entity or a Crown agency to be the lender in such a circumstance. Do we really want the Ministry of Social Development to start getting into the car lease business—you know the hire purchase finance company for cars? Maybe it is a plan for the Minister in the chair in her area as Associate Minister of Education as far as technology is concerned and maybe it would be valid. It might well be valid if we are going to go into schools and have arrangements whereby there are computers iPads or iPhones given to families on some sort of arrangement. I do not want to characterise the Minister in the chair as one of the loan shark type people who enters into the high - interest rate arrangements because I think that would be unfair. But my question—and she could answer it with some of her other experience—is whether in fact this clause is designed for arrangements such as that. Frankly I cannot think of arrangements where it is appropriate for the Crown a Crown agency or a department to be the loan shark or finance company end of a hire purchase arrangement with the public or in a finance lease arrangement.I do want to ask questions in relation to “responsible Minister” as far as it relates to the Speaker and the Officers of Parliament. I do not want to go back over too much of the previous part of the bill but I want to ask—through you Mr Chair—the Minister who is currently the Minister in the chair about the interrelationship between the salary setting and the responsible Minister being the Speaker. It is something that I haveclearly got some interest in—making sure that the rules are right in this area. I want to ask how this interrelates for example with a policy decision to move within this complex towards a living wage over a period of time. Is it a policy decision that the Minister responsible can take under section 2(1) as amended by clause 59(5) in this particular area? Or is it something that can be done by only the chief executive whom I understand is called the General Manager in the case of the Parliamentary Service the Clerk in other cases and in other cases again the Ombudsman or a number of others? Can the Minister in charge make those policy decisions?Hon NIKKI KAYE (Minister for Food Safety):It is a pleasure to take a call on Part 2 of the State Sector and Public Finance Reform Bill. I have listened to several very technical speeches from the Opposition and I want to also just briefly remind us why we are here. It is great to see cross-party agreement in terms of public sector reform. It is also great to see as well that members are paying such attention to detail.I want to touch on a few speeches that have just come before us. Firstly I was surprised given David Parker’s extensive legal experience that he needed me to walk him through some definitions in the bill. He asked what a “responsible Minister” is and what the difference is between that term and “the Minister” so I am happy to walk him through that. “The Minister” refers to the Minister of Finance and “the responsible Minister” refers to the Minister responsible for a department. I am very pleased to correct that for Mr Parker.Hon David Parker: Clarify.Hon NIKKI KAYE: The second clause—the other clarification that Mr Parker asked for was around amendments to section 80 in clause 75 so I am as well very pleased to give him some clarification regarding that. That change is specifically to enable Treasury to also be able to issue instructions to new departmental agencies for the purposes of section 81(1)(a) so I am glad that I am able to clarify that as well. The other thing that Mr Mallard raised was around defining “departmental expenses” and whether we need to do that. There are a couple—Hon Trevor Mallard: “Departmental”.Hon NIKKI KAYE: That is right—“departmental expenses” and the reason that we need to do that. There are a couple of things. We want to be more explicit about chief executive responsibilities for departmental versus non-departmental expenses. That is the first reason. The second thing that I wanted to make clear is that “departmental” and “non-departmental” are mutually exclusive. The third point is that the terms are used throughout the bill and not everybody who is reading that bill will necessarily have the experience that that member has in terms of that difference between “non-departmental” and “departmental”. So I am very very pleased to be listening so intently to the Opposition speakers. But I want to make this point about why we are here. We are actually here to create greater flexibility in terms of our public sector so that we can focus on outcomes.I want to finish with one quote by a member opposite because I think it was the best quote that we heard tonight. It was a speech by David Cunliffe. It was a great quote. Compared with some of his colleagues who focused on very technical issues he said “We need to do more with possibly a little bit more but even less.” and I felt that that is a seismic shift in New Zealand politics. It is a seismic shift from the Opposition. I am delighted that members opposite have now supported our policy in terms of public sector reform.Hon DAVID PARKER (Labour):Well I am very glad that the Hon David Cunliffe made the earth move for the Minister. That brings me to capital expenditure incurred in emergencies some of which will be seismic.Clause 127 of the State Sector and Public Finance Reform Bill repeals section 23 of the Public Finance Act then the next clause amends section 24 and then we jump to inserting new section 25A after section 25. On that order it seems that we are not repealing the existing section 25; we are just inserting a new section 25A after section 25. I thought well why are we doing this? I thought that maybe this is arising out of the Canterbury earthquakes because now new section 25A says: “Capital injections may be made in emergencies … The Minister may approve a capital injection to meet an emergency or disaster described in section 25(1).” So I went and looked up section 25(1). It says: “This section applies if—(a) a state of emergency or state of civil defence emergency is declared under the Civil Defence Act 1983 or the Civil Defence Emergency Management Act 2002; or (b) a situation occurs that affects the public health or safety of New Zealand or any part of New Zealand that the Government declares to be an emergency.” So I thought yes I could see where those capital injections that can be made in emergencies could be authorised under new section 25A.But then I saw that under section 25(2) the Minister can already do something very similar. Under section 25(2) of the existing Public Finance Act which is not being repealed by this bill “The Minister may approve expenses or capital expenditure to be incurred to meet the emergency or disaster and whether or not there is an appropriation by Parliament available for the purpose and despite [some other sections] the … capital expenditure may be incurred accordingly.” Then section 25 goes on to say that if it has not been appropriated in advance then under subsection (5) that amount has to be included in the annual financial statements and in an Appropriation Bill for confirmation. So you can do it in the interim but eventually the appropriation has got to be confirmed by Parliament.That is already allowed for under section 25 and I would like some clarification. I am sure there is a proper reason as to why we need the new section 25A inserted by clause 129 in addition but it seems to me to be very close to the situation that is already covered by section 25 which already allows appropriations for capital expenditure in those emergency situations. So to the Minister in the chair the Minister for Food Safety I would ask her to explain why it is that the new section 25A extension to the sorts of capital injections in emergencies is necessary because it seems to me that it is pretty well covered already by section 25 in the existing Act.This is just following on the theme that the Hon Trevor Mallard has raised as to why it is that we sometimes overcomplicate legislation. I thought the point that he was making earlier was that if you have already defined “department” why do you have to define “departmental” because “departmental” obviously refers to a department. That was the point that he was making. Perhaps the Minister in the chair the Minister for the Environment could address that because I am not sure that the previous Minister in the chair the Minister for Food Safety quite got the essence of my colleague Trevor Mallard’s point in that regard.The other point I would like clarification on is in respect of strategic intentions. Sections 38 to 41 of the existing Public Finance Act are being replaced. They are being replaced in clause 136 with a new section 38 which refers to strategic intentions whereas previously the departments had to provide information on future operating intentions. I am not sure whether this is because the Government has formed the view that the information that departments have been providing on their future operating intentions has become so detailed or so general as to not be strategic and whether either because it is too detailed or it is too superficial the Government does not think the existing information being provided is strategic enough. But in the new wording the point of difference seems to be that instead of providing information on future operating intentions the departments have now got to provide information on strategic intentions.In terms of the timing of that information the Minister can at any time require the department responsible to that Minister to provide new information on strategic intentions. I can see a number of areas where that would be necessary in the current Government given its failure to meet election promises that were made to the electorate which it must be feeling at risk about in terms of future voting intentions.John Hayes: That’s not true.Hon DAVID PARKER: “That’s not true.” says John Hayes. Well I would like to list a few examples: “Wave Goodbye to Higher Taxes. Not Your Loved Ones.” Remember that one?David Bennett: Oh come on.Hon DAVID PARKER: “Come on.”—you do not like being held to account for your promises do you? That was one of your election promises. Mr Chairman sorry. I did not mean to—the member for Hamilton—David Bennett: Name one.Hon DAVID PARKER: I will name you more than one not just the promise to halt the people going to Australia. To halt the reason for them leaving National said it was going to overcome the wage gap. It was going to deal to the wage gap. What has happened since? It has grown—it has grown. So I would have thought that Ministers who were up to their game would be revising the strategic intentions for their department so that they do a bit better in that regard because until now it has been an abject failure. I mean this Government talks about introducing national standards for schools but maybe instead of strategic intentions being the topic here it should actually introduce some standards for itself including being held to account for its election promises.There was another area of strategic intention that Bill English used to talk about. He came to power saying he was going to rebalance the economy towards exports. Exports as a percentage of GDP are flat. They are flat and indeed this year they may go down as a percentage of GDP. Another strategic area of failure—and I can see how it might be more meaningful for members of the public. Instead of requiring more information on strategic intentions for the department it might be more useful for the public to have some report on whether the strategic objectives of the Government as promised prior to the election were being met by actual outcomes in New Zealand. So I wonder why it is that the Government has moved from information on future operating intentions to strategic intentions.It is interesting that once these strategic intentions are produced a department must as soon as practicable after providing the information to its responsible Minister publish the information on an internet site maintained by or on behalf of the department. That is provided in the new section 39 which is also inserted as part of this clause 136. So clause 136 does not just insert a new section 38; it also inserts a new section 39 which says that these things have to be put up on a website as soon as practicable except if there is a Budget coming up. Then if the Government wants to keep it secret during that period in the 3 months before the Minister delivers a Budget that department must not publish the information. When I say “information” that means the strategic intentions that the department is identifying perhaps after the Minister has asked it to change them.SUE MORONEY (Labour):I was very interested in the Minister for Food Safety’s contribution a short time ago on this part of the State Sector and Public Finance Reform Bill. She did say that she was going to address the questions that had been raised by the Opposition speakers but she declined to actually answer the fundamental question that I had posed earlier about seeking an absolute assurance from the Minister in the chair the Minister for the Environment that we would be able to compare estimates from year toyear by comparing apples with apples even though in this part of the bill we were changing the way that those estimates were going to be brought down. I still would like to hear an assurance from the Minister in the chair about that issue because I think that is fundamentally important.It is worrying to me and of some concern that we have members in the Chamber from the Government who are here and who sit on the Finance and Expenditure Committee but do not seem interested in taking a call in the debate around how we are amending the Public Finance Act. I really did expect that we would hear them getting up to defend these amendments and these changes but there has been nothing thus far. Hopefully that will change quite soon.The part that I want to address of the amendments in Part 2 of this bill where the Public Finance Act is being amended is the part that refers to the frequency of statements of intent from various departments coming forward. I happen to have here actually a copy of a statement of intent so that people can understand what sort of document we are talking about. This one is actually from the Accident Compensation Corporation. I happen to have it with me in the Chamber. I was just perusing it for the vote estimates that we will be looking at hopefully some time tomorrow in our select committee. Of course we are meeting outside the hours of urgency as is right and proper. They are documents that do actually inform the Government and therefore the public of what the department’s—in this case it is a corporation the Accident Compensation Corporation—priorities are for the forthcoming year. The amendment that this bill brings forward is actually to move that where there has been an annual requirement for it to just a 3-yearly requirement. I note that the select committee was concerned about that and quite rightly raised issues around moving to just a 3-yearly requirement of statements of intent and what that means for incoming Governments.I think we on this side of the Chamber have a particular interest in this because we do intend to be the next incoming Government. If statements of intent were there and were binding for 3 years then that may actually curtail the ability of an incoming Government and an incoming Minister to implement policy that they have been elected on. It might curtail their ability to actually make a quick amendment to things that they did not approve of that were in for example the Accident Compensation Corporation’s statement of intent or that of any of the other departments. So the select committee quite rightly raised that and did come to an amendment of the amendment if you like to give the Minister the right to require a statement of intent to be brought in between that 3-yearly requirement. I think that is right and proper. It might not even be a change in Government; it actually might be a change in Minister who comes forward from within the same Government. And we have seen that where Ministers have you know maybe slightly different priorities that they want to promote.Hon DAMIEN O’CONNOR (Labour—West Coast - Tasman):Again I will not take too much of your time but I will take the opportunity—The CHAIRPERSON (H V Ross Robertson): I am sure you will take 5 minutes Mr O’Connor.Hon DAMIEN O’CONNOR: No no. I will take the opportunity to speak on Part 2 of the State Sector and Public Finance Reform Bill. There are couple of issues here that I would like to refer to in particular and they are the presenting and publishing of departmental annual reports and the issue of responsibility of directors—responsibility for and administration and the use of appropriations. I must refer I guess to my portfolio area of responsibility of primary industries. I have been studying the reports of the Government in this area for 4 years now. I am assuming that the responsibility here as stated is that these must be accurate. I think it is: “We consider this desirable to allowwhole-sector or cross-agency reporting.” The Finance and Expenditure Committee has clearly said that it wants clear and accurate reporting.If I can take the Ministry of Agriculture and Forestry as an example—and I know that has now been merged into a new superministry—there was one particular issue there on rural proofing which was a policy introduced by the last Labour Government. It was to ensure that in every area of Government policy there was to be consideration of the effect on rural communities. In fact a template had been developed and the Ministry of Agriculture and Forestry and the rural affairs unit it was kind of assumed were responsible for ensuring the implementation of that. In fact the annual report stated that. But it was not happening—it was not happening. And of course only through the select committee process—a relatively brief period—did we have the ability to ask the Minister and officials why it was not happening. Indeed what often happened was that other issues overtook the investigation into this area. So what I am hoping that this bill will demand of Government agencies is not only reporting but accurate reporting. The issue I referred to in the debate on Part 1 is about I guess the accountability of the chief executive officer or the Minister and who should take what responsibility. So I raise that as one of the points.The second one—in fact I had referred to two before but there is one other one—is the authority to lend money. Can I refer to the current situation of the Ministry for Primary Industries which is that it has a grand scheme called the Primary Growth Partnership. The Minister has indicated that $600 million - plus will be allocated on a basically one-for-one system where the taxpayer will put up over $300 million and the industry will put up over $300 million. It will get on with projects that have no doubt—we have been told—been scrutinised. What we have not been told is how they are accountable.The question I ask is—and there is no authority to lend money in Part 2 here—if the money that was allocated to a project is deemed not to have delivered is there a requirement to repay and could that be considered loaned money? It is a technical question but the bill is technical. If an agency like the Ministry for Primary Industries does not have the authority to lend money and it allocates money—and we are talking tens if not hundreds of millions of dollars—to a project that has a joint-venture arrangement is that appropriation or allocation deemed a gift or is it a loan? Is there any requirement for the money to be repaid if there is no delivery on the key performance indicators or the projected outcomes? At this particular point there are a few projects that have been running half their lives and there is not one substantive narrative report on progress—Hon Trevor Mallard: “Narrah-tive”.Hon DAMIEN O’CONNOR: Narrative—sorry. Thank you for that Mr Mallard. There is not one substantive narrative report on the progress of the Primary Growth Partnership. So if indeed the select committee Audit New Zealand or anyone deems these projects to have been a failure will that money have to be repaid and will that therefore mean that the lend money or the requirements and provisions that are in this Part 2 for an authority to lend money should have taken account of that possible scenario?The next part I will go on to—and hopefully the Minister will answer a few of these questions—is the responsibility of directors. There is a good lesson in here. Although the directors of Crown entities are different from the directors of State-owned enterprises basically they have the same moral responsibility—that is to return to the taxpayers. But I am not quite sure whether these provisions here mirror those of the State-owned enterprises. We have had a classic example in Solid Energy which is a State-owned enterprise not a Crown entity but none the less is owned by the taxpayerand is returning to the taxpayer hopefully returns on their investment and efforts and dividends. There was a clear—in my view—failure of the directors of that company to keep it in order.What we have in the commentary regarding clause 92 is: “The intention of this clause is to allow directors of companies listed in Schedule 4A of the Act to act in certain circumstances in the best interests of shareholders rather than in the best interests of the company.” I guess a State-owned enterprise would act in the best interests of the company and this is saying I assume that directors should always act in the best interests of the shareholders. It is one and the same if the Crown owns the company although we appreciate that with the idiotic sell-down of State-owned enterprises by this Government it is determined to hand 49 percent of State-owned enterprises into the hands of wealthy New Zealanders who can afford to buy a whole lot of shares or worse still as we know into the hands of a whole lot of offshore investors. That is a difference of the State-owned enterprises. There are however some Crown entities—and I am not sure but I am told that AsureQuality is a State-owned enterprise and that is one that has done a deal with the Chinese. But I will not carry on as I know this will be slightly out of the scope of the bill. I will stay within it. So the responsibility here is clearly to the shareholders as it should be rather than to the company as an entity. Well that is the way I read it. Indeed it is refreshing and it is something we should perhaps apply to the State-owned enterprises as well. I think that there are some interpretation issues there and I guess that the select committee has gone through that.I do not have too much more to say on Part 2 of the bill other than to re-emphasise and repeat the questions that I have raised of course around the accuracy of reporting on the departmental annual reports. They are generally glossy. Most people do not read the detail often but indeed it could be said that too often the reports are inaccurate.The second point as I said was the authority to lend money. If money is appropriated or handed over or allocated to projects then is there a requirement for that money to be repaid? I am suggesting that with the Primary Growth Partnership there is probably not a requirement for it to be repaid. I am hoping that this particular clause or this part of the bill does not eliminate the possibility that money could be repaid as a loan would be if there are not the outcomes as laid down in the proposal that might have been accepted by officials. It is not terribly complex just a point about basic accountability. I have to say that with the Primary Growth Partnership there is a lot to be learnt and a lot to be explained and indeed there may be a lot of money to be repaid if in fact those projects have not delivered on what they said they would.Hon TREVOR MALLARD (Labour—Hutt South):I have got lots of dog-eared corners of this State Sector and Public Finance Reform Bill but there is a particular issue that I would like to start with and that is on page 69 of Supplementary Order Paper 262 about 10 lines from the bottom at new section 34(1)(b) clause 65B where it says “by the Minister or the responsible Minister.” The question I have got is whether the words “the Minister or” are in fact superfluous. Do we need to have “the Minister or the responsible Minister.”? If one goes back to page 63 of Supplementary Order Paper 262 at subclause 5 of clause 59 “responsible Minister” means in relation to the Office of the Clerk etc. or the Speaker; in relation to any other department the Minister for the time being responsible; in relation to a Schedule 4 organisation the Minister responsible for the financial performance; and in relation to a Schedule 4A organisation the Minister and the other shareholding Minister. The question I have got is who the Minister could be who is not the responsible Minister except if one goes further into Supplementary Order Paper 262 to page 127 where you might have a Minister other than the responsible Minister who is responsible for a big report and this part of the reporting requirements are part of a bigger report and therefore the Minister who is notthe responsible Minister is in fact the Minister responsible for the report that this particular segment is part of.I think that at least the officials know relatively well that Ministers act for other Ministers. That is part of the parliamentary process. Ministers can act for other Ministers and can act for responsible Ministers in fulfilling both their parliamentary and their statutory functions. The question I have is—and it might be a bit pedantic and there might be a very simple answer for it that is passing me by—going back to that original point: who might be the Minister who is not the responsible Minister who is being referred to in that particular clause? I cannot think of a circumstance and I have been going back and forth a bit. I have been worrying at it now for about 20 minutes. I cannot work it out. I do not want to call it a non-responsible Minister because I think having the words “the Minister” indicates that it is in fact the Minister who is responsible. But then why do we say “or the responsible Minister.”? Is it belt and braces or does it have a particular meaning that adds some value to it?I do want to say to the current Minister in the chair the Minister for the Environment that the previous Minister in the chair Nikki Kaye was most helpful with some of the explanations that she gave on these technical points.Hon David Cunliffe: That’s right.Hon TREVOR MALLARD: She was quite good at reading out the responses that were given to her by the officials behind her. She did not know the name of the actual bill but that did not matter that much. I would be interested in a response from the Minister on this. In fact I would be interested in a response from any Government member. I think we could have a bit of an exemption if Mr Ryall who used to be responsible for these areas is across the detail about the difference between “the Minister” and “the responsible Minister” and the added value. In fact I would be prepared to wager quite a lot that he would be more across it than the current Minister in charge of the bill or the Minister who is currently sitting in the chair. If anyone knew the difference between “the Minister” and “the responsible Minister” in this particular context I would say other than the officials it is likely to be Mr Ryall.The next question I would like to ask is whether anything should be read into the last couple of lines on page 117 of Supplementary Order Paper 262 where there appears to be an exclusion for “an intelligence and security department”. The question that goes with that is whether “an intelligence and security department” is defined within this legislation. I have been looking for it and I cannot find a definition of “an intelligence and security department”. I think the one thing we have learnt in recent weeks is that there has been a bit of bouncing around as to what these different agencies do and how they work and interrelate with each other.Is for example the Ministry of Defence an intelligence or security department for the purposes of this Act? Do we still have a Defence Force as opposed to a Ministry of Defence? Is the Defence Force a security or intelligence department? [Interruption ] Is it? Is the Police an intelligence or security department?John Hayes: It’s in the Act.Hon TREVOR MALLARD: It is in the Act? Sorry I did look for it in the Act. Mr Hayes says it is in the Act. Can you tell me which section of the Act Mr Hayes? Mr Hayes has grunted that it is in the Act but he appears not to be able to point out the particular section—Hon David Cunliffe: Which Act?Hon TREVOR MALLARD: Well I assume it is in the Public Finance Act. That is the Act to which we are currently referring. If it is that is good; if it is not or if there is something—just forgive me for being suspicious. I think there are a number of things that used to be above the radar and used to be pretty clearly legal or illegal and nowthey are being blurred. What appears to be the case here is that expenditure which should previously have been transparent is in fact becoming less transparent under the Act.The next question I would like to ask goes to page 80 of Supplementary Order Paper 262 and the replacement of section 65K of the existing Act. That is the very old one: “The Crown must not lend money except under statute.” I want to say that when I was Minister of Education one of the things that used to drive me spare was schools that got into trouble for either borrowing or lending when they did not have the authority to do it. It happened all over the place. They were borrowing and lending money. One of the questions I have got in fact is whether schools have actually had the legal authority to lend money from their boards of trustees’ operational funds to teachers who have not been paid by Novopay. I am just going to venture a guess unless there has been a change in the legislation—I think that in the time I was the Minister of Education they would not have been permitted to lend money in that way.What I would like to ask is which Acts are being referred to in new section 65K? Is there any intention of doing a list or a cross-reference? It is all very well to say unless “expressly authorised by any Act the Crown [shall] lend money to a person or an organisation.” Actually if some lending occurs it is pretty hard on a random basis to work out the authority for that lending if in fact there is not the sort of decent listing and cross-referencing that is normally the case.Something that I do very much support is clause 70AAG set out on Supplementary Order Paper 262 which is the Auditor-General directing “Ministers to report to House of Representatives in cases involving unlawful expenses etc”. I have some experience in this area. I had the unfortunate experience back when I was the member for Hamilton West of chairing the Māori Affairs Committee when we were doing “the supplementary estimates to the supplementary estimates to the supplement to the supplement to the supplement”—I think we had about seven levels of it. I get a slightly knowing nod from the officials’ bench as to the problems—CHRIS HIPKINS (Labour—Rimutaka):This is the first opportunity I have had to take a call on the State Sector and Public Finance Reform Bill. I am happy to make a few observations about these particular clauses in Part 2 of the bill that deal with financial reporting for Government agencies. There are a few points of clarification that I would like to seek on these matters as well not having been involved in the Finance and Expenditure Committee deliberations on this bill.It is clear that one of the things that the bill seeks to achieve is a more connected and joined-up Public Service to break down some of the silo mentality that exists within the Public Service at the moment. I think that is a worthy aim and it is something that we in the Labour Party are very very supportive of. But one of the tensions with that has always been that ultimately under the existing arrangements with public finance in particular the chief executive is going to be the person who is responsible for how public agency money public money taxpayer money is spent. Under this legislation that we are debating at the moment where we are talking about specifying the financial responsibilities of departmental chief executives to make it clear that they include financial stewardship for the long term—so that is what we are doing in one part—we are saying to the chief executives that we want them to take a long-term view of the financial stewardship of their departments. But then in another area we are making it clear that other departments as well as the one administering the appropriation can incur expenses against the appropriation. It sort of highlights the tension that we have.In order to get a more connected and joined-up Public Service and to get the agencies working more closely together to some extent we have to erode the autonomy of an individual chief executive over the way their department spends its money yet we arestill going to be holding that chief executive to account. They are still going to be the person who comes along to the financial review process at a select committee to explain how that agency or department has spent its money. There are going to need to be some pretty clear controls in place here because different chief executives and different agencies may also be getting slightly conflicting priorities or conflicting directives from the Ministers for whom they work. One of the things that I think we risk here—and it is certainly not an insurmountable problem and I am supportive of what the bill is trying to achieve—is just making sure that we make it clear that where one department incurring expenses against an appropriation of another department is doing that the accountability is quite clear the lines of decision making are clear and we can keep track of what is going on there. That flows right the way back up the system to Ministers as well.Certainly most large areas of Government expenditure involve several different departments and agencies. If we take education for example I can think of several issues that we would deal with in education that would involve the Tertiary Education Commission the New Zealand Qualifications Authority and the Ministry of Education and they would all be working on the same goal. They would all be working towards the same objective and outcome yet at the moment they are very much defined separately although there is I guess a coordinating role for the Ministry of Education in overseeing the work of the other agencies. [Interruption ] There are other agents and Megan Woods has just pointed out other agencies involved in transitions—Career Services and various agencies like that. We want those agencies working together towards a collective goal. We want the Government to be able to specify that this is the direction it wants to go in in these areas and that it wants to make sure that they are connected up and that the public finance requirements do not effectively act as a barrier to all the agencies working together. Potentially it is quite possible—well I certainly think that it is the intention—that the changes being made in this legislation will provide opportunities for that to happen.Turning back to the accountability issue and the way that accountability information is presented in annual reports I point out that it is the annual reports effectively that form the starting point for Parliament’s scrutiny of how money is spent. When we get together in our select committees and we go over departmental expenditure and we review departments we look first at the annual reports and then at a whole lot of supporting information that is supplied usually in relation to quite extensive questions that members of Parliament will ask through that select committee process.What the changes in this bill before us allow is for annual reports of more than one department to be presented together in one document where this will provide more meaningful information about the department’s performance and achievements and it will allow end-of-year reporting on appropriations that contribute to a common purpose but are administered by different departments to be presented in one document. In education for example unless I am incorrect this could mean that we end up with an annual report for education rather than an annual report for the New Zealand Qualifications Authority an annual report for the Tertiary Education Commission and an annual report for the Ministry of Education—unless I am mistaken; some clarification on that would be quite good.Then what we do is we get to the point where we start to ask whether you know at the other end of the process some of the documents specifying what we want departments to do should also be common. So rather than the Government specifying a statement of intent for all of the different agencies the Government can then start specifying “This is our statement of intent for education. This is what we are trying to achieve in education.” Then all of the other things that flow from that contribute to thatoverall directive and the annual reporting coming back again contributes to that. That is all positive in my view. I think that is what we want the Public Service—the public sector and all of the agencies—to be doing. We do not want to have them competing with each other and we do not want the silo mentality. But within that we have still got to make sure that ultimately at the end of the day someone is responsible and accountable back to the House.In our estimates we get the opportunity to grill Ministers on what it is they want money that is being spent to contribute towards—what are the outcomes that they are trying to seek. We get to grill them a little bit on their plans and on the decisions that they are making—not always successfully of course; that relies on them providing the answers. Megan Woods has just raised a very good point. In the scrutiny of all of the votes and all of the departments and agencies that we have through the financial review process we very much rely on there being timely information to the select committee. For example we start as I mentioned from the annual report. That is the starting point for our scrutiny of where departments are spending their money. But we then ask an extensive range of questions. Normally there will be around 100 or 150 standard questions that go to all departments and agencies and that is actually where we get the really useful information. Then from that there will probably be more supplementary questions that go backwards and forwards—in a small department not very many; in a controversial or big-spending area like education health or social development there will be a lot of questions.By getting that information we are able to give really good scrutiny to what these departments and agencies are doing. If that is not supplied because Ministers simply do not require their departments to supply that information the select committee cannot do its job. And too often in this year’s financial review process we are seeing that happen. We are seeing agencies not supplying information that is being requested by select committees and even more so in the most recent round of estimates that we have dealt with. Ministers have been asked for a whole lot of information and it has not been supplied to the select committee at the point where Ministers are showing up in order to answer questions about it. How can the Parliament do its job effectively if we are not actually being given the information before the hearings take place?One of the things that I am concerned about—and I just I guess seek some reassurance from the Government about how it is going to handle this—is that in making the information provision more multidepartmental and stretching the boundaries of that a little bit more we have still got to have a mechanism to ensure that there is accountability to ensure that the follow-up information that is requested is actually supplied and is actually provided. It certainly can be done. There is no reason why it cannot be done. We just need to have an assurance that processes will be put in place to allow that to happen.I am very concerned that we are departing from some pretty well-established processes—just in practice—around the House and around select committees at the moment and information is not being provided in the timely manner that select committees should reasonably be able to expect. That is of real concern. It is frustrating for us of course but it is actually very concerning for the public because they rely on us as members of Parliament to scrutinise Government decision-making and to scrutinise in a very robust manner where their money is being spent and we are not getting the information that we should get to allow us to do that effectively.Dr RAJEN PRASAD (Labour):At this late hour it is a pleasure to take a call on Part 2 of this particular bill the State Sector and Public Finance Reform Bill. The bit that I want to talk about—David Bennett: You are really getting to the bottom of the barrel Cunliffe.Dr RAJEN PRASAD: Will the chattering classes be quiet and listen. You might learn something. The risk exists—[Interruption ] Those three members there just be quiet. It is late now and I know you are tired. You are making noise for nothing. We know you are tired. We know you are tired. Just concentrate—concentrate. Those members sitting at the back have got no mortgage on financial thinking.I am particularly interested in the new category the multi-category appropriation the MCA and the notion of a single overarching purpose because I think there is something quite fundamentally radical about these proposals particularly as we apply them in the social development area as I will attempt to do. It is a commendable idea to bring those two things together. Indeed other members have spoken about—and the Opposition whip just spoke about—the accountability in this. When David Clark was speaking he raised a fundamental question and he said that it does change the fundamental nature of accountability—just these particular provisions. I agree with him; it does. I wonder how this will unpack itself as we go on.One reflection one can make is that over the years or over decades—and I am going to focus and apply this to the social development area—we have increased expenditure in social development and in every decade problems in social development have increased. We are talking about children we are talking about families and we are talking about that sector of our society that for some reason multiple generations get locked into. The interpretation that this Government has made is that that is all about welfare dependency and I do not agree with them of course.But here is an approach that could possibly signal that there is something different that the Government anticipates and if it does then certainly we support that. But it does present some major challenges to the Government and to those who are considered to run programmes and deliver services in different ministries and departments that contribute to this single overarching purpose—in this case social development or development of children. I wonder how the Government has conceptualised this because here we are in silos as others have said and here is an attempt to link the Public Service together and to join it up a little bit more. We have been trying for probably over a decade now to join the Public Service departments together. But here is something conceptually different.I wonder—and maybe the Minister in the chair the Minister for the Environment might want to give us some ideas as to what the thinking was here—whether it is anticipated that there will be a different type of conceptualisation of the overarching purpose that the Government wants to achieve and if it has anticipated that then what that might be. [Interruption ] They are still chattering in the back there. Obviously they are not following the argument. Those three are not following the argument the chattering classes up the back there.How would the Government conceptualise this? If we applied that to the welfare of children for example as a single overarching purpose—here the Government has decided that there is a single overarching purpose to increase the development if you like of children to remove risk etc. We know from all of the science that is available to us that there are multiple contributions to that development pathway the trajectory that children have whether it is in housing or in health or in income adequacy or actually in physical environments in which children live—the communities in which they live and the neighbourhoods in which they live. If there was here a single overarching purpose to improve the outcomes for those children then one can anticipate that indeed those ministries and those departments—the ones I have mentioned and a number of others—are actually going to be doing something quite different. All of the science that I know actually does reflect the fact that the conceptualisation of what contributes to those problems is at multiple levels is ecological and is holistic.So I wonder whether the Minister can tell us that the officials and others have conceptualised this in such a way that there actually will be a different way of doing business a different way of addressing the needs of children rather than leaving them in silos. At the moment it is just a rough schema stating that there will be multi-agency appropriations and there will be a single overarching purpose. But what will make that effective and this will be fascinating to see is the conceptualisation behind it: how the area that the single overarching purpose is designed to address has been thought through whether all of the ministries and departments that have contributed to it have actually done the work to design if you like this schema in which they contribute and then how those services will be delivered.This comes back to what I was saying earlier. We have poured money down these silos and in the end social exclusion has actually increased. The problems have not gone away. If this is a different way of doing it then clearly there has to be some fundamental change in our education system in our housing system in the child welfare system in the social development system and in our environmental design and how we design our environments in which our—Maggie Barry: His speech is as irrelevant as he is.Dr RAJEN PRASAD: Will Maggie Barry please listen for a moment because I doubt whether Maggie Barry is actually following the argument. We are not planting a shrub now at the moment; we are talking about something quite serious. I doubt whether those three members have actually understood at all what this is about. I know that it is late in the evening. Go back to sleep. You will probably be much better off tomorrow morning.If that thinking has taken place then I believe that this is indeed quite a radical change. Other speakers from this side have actually already indicated that there is a huge promise in what this model gives us but to actually deliver it is something quite different. Of course the other point and Chris Hipkins was talking about this earlier is that when the reports come back to the select committees and the reporting frameworks that are being used—and that is being changed as well under Part 2—then we actually have a whole different way in select committees of interrogating the performance of those Ministers and departments that contribute to the overarching purpose.So really this is a radical change. If it works and if it is well conceptualised then it will be effective. But if some of the light-minded people who have been interjecting are responsible for actually designing how these things work then I doubt very much Mr Bennett whether any contribution that that member might make is actually going to have any effect on this. God help us if that member becomes a Minister. Some of the others might. But the Ministers have got to be smart enough to demand the kind of conceptual thinking that this very simple change actually requires.David Bennett: What’s the name of the bill? Tell me the name of the bill.Dr RAJEN PRASAD: I beg your pardon?David Bennett: What’s the name of the bill?Dr RAJEN PRASAD: Oh come on. Does the member think that I am that stupid? Just take something seriously. Do not be an idiot all your life. I do not think that that member remembers the bill and if that was all that that member required me to understand about this bill then I think that member is in cuckoo-land. The fundamental clause I am addressing concerns the multi-category appropriations and the single overarching purpose. If that member has not understood that then I do not know whether that member has anything useful to say. I challenge those three members on the other side to take a call and explain their understanding of this particular provision in the bill.David Bennett: Are you voting for the bill?Dr RAJEN PRASAD: Come on go back to sleep—go back to sleep.There is something quite serious about these provisions which we support on this side of the Chamber. I think they could fundamentally change the silo thinking that prevails in many Government departments and agencies. The overarching purpose is a very important way of trying to bring it together. If that is the intent of these provisions then I think it is a very good bill and we support it. Thank you.Dr DAVID CLARK (Labour—Dunedin North):Kia ora Mr Chair. Kia ora e te Whare. Kia ora koutou. And special greetings to the noisier members over the back there who seem to be enjoying the proceedings of the evening. I am sure I am not alone in looking forward to their particular contributions later in the debate.Andrew Little: You’ll be waiting a long time.Dr DAVID CLARK: I may be waiting a while says my colleague. They have been remarkably quiet when it comes to their turn to make a constructive contribution and are more focused on the interjections. I will not claim any high ground there myself but I would enjoy any contributions.To come to the substance of the State Sector and Public Finance Reform Bill lest I be hoisted on my own petard Mr Chair—The CHAIRPERSON (Lindsay Tisch): I am listening.Dr DAVID CLARK: —I wish to discuss the nature of these departmental agencies and the reporting mechanisms that will apply in future as we see right up front in Part 2. We come straight to the crux of the matter in clause 58A which says: “In section 1A(2)(d) after ‘departments’ insert ‘departmental agencies’.” Then we have a series of other changes that the bill proposes that will be about ensuring that these departmental agencies are more widely considered in the legislation that other pieces of legislation fall into line and that those agencies can incur expenses or capital expenditure under the Imprest Supply Act in the same way that a regular department would.My question I guess for the Minister in the chair the Minister for the Environment—and I know that this Minister is a capable Minister and will probably not shy away from such questions—is about this creation of a new organisational arrangement called a departmental agency as an option for providing public services. We are told that such an agency would sit legally within a host department which would administer the appropriations used by the departmental agency but the departmental agency would have its own chief executive directly responsible to a Minister for its specific activities. My question really is around how the lines of accountability would then run. It is interesting that these departmental agencies would presumably have a different type of accountability; otherwise there would be no need to create them. This entity is a new type of entity. Is there a hierarchical arrangement here? Is the departmental agency within the department now in some sense tacitly at least responsible to the chief executive of the original department? They report directly to a Minister so one can imagine that if conflicts occurred over the use of building space or the use of meeting rooms—you know if we pare it back to the basics of everyday departmental life—then solutions would need to be found.It is not immediately clear to me how this kind of conflict would be addressed or what the real purpose of introducing these new agencies is unless it is for some decreased level of scrutiny. This Government does have a track record for favouring a decreased level of scrutiny and the example that springs to mind immediately is the asset sales legislation—The CHAIRPERSON (Lindsay Tisch): Order!Dr DAVID CLARK: This is quite on point—The CHAIRPERSON (Lindsay Tisch): I am listening very carefully.Dr DAVID CLARK: —and I will bring it back directly. The public becomes concerned when there is a decreased level of scrutiny on public affairs.As I have stated earlier in Part 1 and what is set up in Part 1 is actually brought into practice in Part 2 we are striking a balance here in this Parliament with this legislation between accountability on behalf of the members of the public for the spending of money—and that is particularly relevant in the amendments to the Public Finance Act 1989 which we are discussing in Part 2—and the freedom of Ministers to achieve the goals that they wish to achieve which they have said they are going to achieve through the employment of those funds in a way that is flexible so that they are not bound by unnecessary constraints by constraints that are artificial in their nature for a reporting requirement that actually does not serve a public purpose. That is a reporting requirement for its own sake that spells something out in detail because that is the way it has always been spelt out not because someone has taken a fresh look at it and asked the question: “Is this something we need any more? Are we scrutinising things in a way that is in the public interest or are we scrutinising things in a way that is actually beyond the public interest and actually inhibits departments and their ability to carry things out without the offsetting public benefit of that wider public scrutiny in a way that is meaningful to the wider public?”. So we are trying to strike that balance here.That cuts to the issue that I was raising about these departmental agencies. I have not heard a convincing argument from that side of the Chamber as to why these departmental agencies should have this specific piece of legislation that separates them out. I expect Mr Hayes will leap to his feet shortly to articulate—John Hayes: If you’d come to the committee you’d have found out.Dr DAVID CLARK: —exactly why these departmental agencies—Mr Hayes says that if I had come to the committee I would have found out. Well I was not privileged to sit on the Finance and Expenditure Committee where this issue was discussed so I do invite Mr Hayes to share that if it is within his ken if he understood the issues at the time and is willing to share them with the wider members of this Committee. I invite him to take a call and explain why these departmental agencies should be created and what advantages they will create for the taxpayer because I am certain that at some level this Government will be very very clear that it does want to make sure that money is well spent for the taxpayer. The public at home may not have that impression from watching this because what they will observe is that members opposite have not really entered into the spirit of the debate. They seem to be content to sit and listen to many members on this side of the Chamber raise important issues.That said I must commend the previous Minister in the chair the Minister for Food Safety who did take a call and answered some of the questions that were raised. That is an important part of what we are doing here. We need to convince ourselves that this is weighing that balance—which I raised earlier—right between proper public scrutiny and not being entirely cumbersome on the Government of the day in a way that ties it up in red tape and makes it unable to achieve the purposes it sets out to achieve. We know that this is the right thing to be achieving and that is why Labour will be supporting this bill. I must reiterate that the balance that has been struck is one that we think is appropriate and is one that makes this bill one that will survive the test of times.I think as I mentioned earlier that the processes laid down here—the accountability mechanisms—although appropriate cannot inoculate the Government against bad policy. If the Government wants to implement bad policy this legislation enables it to do that in a more efficient and effective way. One of the earlier contributors to the debate made the very good point that bad Governments will do that anyway; they will implement bad policy come hell or high water. What this legislation really achieves is that it enables Governments that want to implement good policy and do it throughproper process to be able to do that in an efficient way. That cuts to the heart of the matter as to why Labour is choosing to support this bill.One of the other matters I wish to raise in respect of Part 2 is the standardising of the governance and performance reporting requirements for companies currently listed in schedule 4 of the Public Finance Act and proposed to be moved into the new schedule 4A by schedule 2 of the bill. The standardising of performance reporting requirements must on the surface appear to be a good thing. The standardisation of reporting requirements making them easier and less burdensome means that these agencies can continue to do their tasks with Crown entities and get on with the tasks that they exist to carry out.If we look at some of the earlier legislation that was passed here in this session this week there was the standardisation of the generally accepted accounting practice procedures so that fewer small to medium sized enterprises are required to undergo those onerous requirements—another good step. That is another good step and we need more of this kind of thing. We know that recently New Zealand slipped from 15th to 24th in the world business competitiveness stake according to the IMD World Competitiveness Center’s survey. We know that New Zealand business is facing tough times. This Government has skewed the playing field against small business. There is a lot of red tape it has introduced—The CHAIRPERSON (Lindsay Tisch): Order!Dr DAVID CLARK: —the child support legislation requirements—The CHAIRPERSON (Lindsay Tisch): That is not part of the bill.Dr DAVID CLARK: Mr Chair the point is that that contrasts as an example with this piece of legislation. Those areas in which the Government has put a further burden on small business—those businesses are struggling they are not being created. There are 2500 fewer a year than there were under Labour. This piece of legislation contrasts with that. This is an attempt to make sure that business can perform better.LOUISA WALL (Labour—Manurewa):Kia ora. E ngā mana e ngā reo rau rangatira mā tēnā koutou tēnā koutou tēnā koutou katoa. Ngā mihi ki ngā kaimahi o te Whare Pāremata tēnā tātou.[Thank you. To the authorities languages and leaders of a hundredfold greetings salutations and acknowledgments to you all. Greetings to the workers of Parliament House and to us collectively. ]It is my pleasure to take a call on Part 2 of the State Sector and Public Finance Reform Bill. I particularly want to commend the Minister of State Services for trying I think to make a better Public Service which is the whole intention of this bill—trying to make a better Public Service that will achieve some objectives such as increasing participation in early childhood education increasing immunisation rates decreasing—The CHAIRPERSON (Lindsay Tisch): Order!LOUISA WALL: —rheumatic fever rates—The CHAIRPERSON (Lindsay Tisch): No. Order! That is not part of Part 2 and I will ask the member to concentrate on Part 2. It is about the Public Finance Act. It is not about these other things.LOUISA WALL: It is about the Public Finance Act but it is also about establishing a new appropriation type which is multi-category appropriation. As a member of the Health Committee I am particularly thrilled about this multi-category appropriation. The Health Committee has before it an inquiry that is looking at improving child health outcomes—The CHAIRPERSON (Lindsay Tisch): Order!LOUISA WALL: —and preventing child abuse—The CHAIRPERSON (Lindsay Tisch): I will say to the member that we are on the Public Finance Act—LOUISA WALL: We are on Part 2.The CHAIRPERSON (Lindsay Tisch): We are on the Public Finance Act Part 2. I ask the member to concentrate on Part 2.LOUISA WALL: Thank you Mr Chair. What this part of the legislation is creating is this new multi-category appropriation which will allow different types of expenditure to be grouped into a single appropriation if they contribute to a single overarching purpose. I think that was the point that I was trying to make—that in fact there are a number of inquiries and some work that this Parliament is currently engaged in that this particular multi-category appropriation is relevant to. Hopefully with your discretion Mr Chair I am able to elaborate on the relevance of that within the current context.The whole Better Public Services agenda has been driven because we are wanting to achieve more for less and so I do want to commend the Government for creating opportunities for Ministers to work together. I mean that is essentially what this new appropriation type is going to allow. It will in fact break down silos. It will in fact provide opportunities for Ministers to start working together to address issues such as housing which is a fundamental driver of rheumatic fever. I have made the connection of the relevance of this piece of legislation with the Better Public Services agenda and from my perspective that is one of the reasons that the Labour Party is supporting this piece of legislation. We want an efficient and effective Public Service that meets the needs of New Zealanders and that particularly and specifically meets the needs of the most vulnerable New Zealanders. In supporting this particular aspect of this piece of legislation I think it is fair to also highlight my expectations and the expectations as the member of Parliament for the electorate of Manurewa that this type of appropriation has the possibility to—and is in fact going to—improve and transform the lives of my constituents.I would also like to take the opportunity to highlight within Part 2 of the bill the changing of the requirements for information about departments’ strategic intentions which includes the frequency of that provision. Essentially we are talking about statements of intent. Those statements of intent currently are an annual requirement of Crown entities and the purpose of those statements of intent is I think relevant to the Committee to note because they very much set the strategic directions of the ministries. They are set by the Minister and are obviously set by the Government so within that they are very specific about how the Government the sector and the entity will achieve certain outcomes. That is very much about setting the expectations and priorities. I think it is fair that all New Zealanders know what the priorities of Ministers are and what the priorities of chief executives are within that context. So the reason I bring it up and the relevance of that to this part of the legislation is that that requirement is going to be discretionary so Ministers will choose whether they—Hon MARYAN STREET (Labour):It is a pleasure to take my first call—it will not be my last call—in the debate on this bill because it is of real significance. I am aware that we are on Part 2 and Part 2 is what I wish to direct my comments to but just before I go to that I do want to note the timeliness of this bill because of course there has been a number of celebrations during the course of this year of 100 years of quality public services. This is the same year that the Public Service Association is celebrating its own existence and we celebrate with it the delivery of quality public services. So when we come to looking at the State Sector and Public Finance Reform Bill and at this part which I am going to detail in a moment it seems to me to be a significant bill—and obviously a very substantial bill—to bring in this year. I hope that because of the nature of the accommodations that have been reached during the course of the selectcommittee process this bill will be durable and will contribute to the improved delivery of public services.To get to Part 2 I too want to follow my colleague Louisa Wall and talk about the multi-category appropriation type which is a new appropriation type to be provided for and enacted under Part 2 of the bill. I am aware that there are amendments to this part that have been agreed to across the House which include the full traceability of funds from year to year. I want to state my support for this by using an example where that has not been so apparent in recent times and I want to refer to the appropriation for Whānau Ora.The Whānau Ora appropriation was a health initiative—in fact the words say that. It was a health initiative and one might have thought it would come under the rubric of the Minister of Health and so might have been examinable through the estimates and appropriations that come before select committees for consideration. But no when the Minister of Health appeared before the Health Committee to justify health appropriations in the last few years he was unable—or unwilling really but had made himself deliberately unable—to offer transparency around the appropriation of Government moneys for the delivery of the Whānau Ora programme. So we were not able to examine the Minister who was best qualified to know whether this health initiative was achieving health outcomes.My concern is not that the appropriation was handed over by that Minister there the Minister of Health to Te Puni Kōkiri and the Minister of Māori Affairs to answer to but that it was taken away from the transparency that needed to be delivered to the purpose for which that appropriation was established. In the setting up of a new appropriation type to be called a multi-category appropriation I hope that this means together with the agreed amendment that will require full traceability of funds from year to year that if any appropriation—let us take the example—for health purposes is to be diverted out of the jurisdiction if you like the care or the oversight of the Minister of Health to somebody else then that is entirely traceable by cross-referencing by calling it a multi-category appropriation and by ensuring that the numbers of Ministers who are responsible for that appropriation are able to come before a select committee for examination and that the essential scrutiny can be applied.What has happened if I go back to my Whānau Ora appropriation example—which is an example of bad practice I think not best practice—is that nobody seems to be able to find what precisely has been done with the money that was appropriated. I would have thought that Mr Ryall as Minister of Health could easily come in before a select committee—a man of his ability—and said: “This is what has happened with the Whānau Ora money. We have done it jointly with Te Puni Kōkiri but it is a health initiative so it sits under my portfolio.”If such things are to happen and a health appropriation is to go somewhere else let us use this facility that this part of the bill now gives us and call it a multi-category appropriation so that it may go across departments across ministries and across purposes—not at cross purposes but across purposes—but at the same time the appropriation and the accountability for it remain entirely transparent and accountable. That is what a good Public Finance Act ought to deliver. That is the quality that our State servants despite their battering over the last 5 years wish to provide for the citizens of this country. If this bill can help us deliver that kind of accountability and transparency across increasingly complex areas of activity by the State then that is a good thing. But let us make sure that that is what happens to this provision.I absolutely respect the good intentions of the members opposite and I respect the fact that members on the Finance and Expenditure Committee have agreed on improvements to this bill. Having been very very involved—not as a member of Parliament but as a very interested citizen and activist—in the development of the firstState Sector Act in 1986 and in fact having written the Labour Party’s paper in opposition to it I have a real interest in how these kinds of services are delivered. The integrity of our Public Service structures are critically important to the quality of our Government the quality of our accountable apparatus the quality of the transparency of that apparatus and our reputation for governance and transparency. We have a very fine reputation for that. It is my hope that this new appropriation type the multi-category appropriation type can be used to ensure that this Public Finance Act now amended for modern times will deliver exactly the kind of transparency and accountability that a complex piece of legislation like this and the complex operation of the delivery of State services require in a modern society.I am very supportive of this. I have great optimism for this part of the bill and I hope that we can proceed with this in a way that in the end can make us all proud of the Public Finance Act and the delivery of State services under its jurisdiction. Thank you.RINO TIRIKATENE (Labour—Te Tai Tonga):Tēnā koe Mr Chair. It is a pleasure to speak at this Committee stage on Part 2 of the State Sector and Public Finance Reform Bill. I would like to start with a verse from a rap from Vincent Price: “Darkness falls across the land. The midnight hour is close at hand.” You might know the rest Mr Bennett. But maybe not; maybe he was not into Michael Jackson. Maybe he might know another one. But the midnight hour is close at hand. I shall make my contribution on Part 2 because this is a very important piece of legislation.The Public Finance Act is a key piece of legislation that governs the use of public financial resources. It provides the framework by which Parliament gives its authorisation and scrutiny of Government expenditure. It establishes the lines of responsibility for effective and efficient management of the use of public financial resources and it does many other things. It is a very core piece of legislation governing the use of public resources.I want to pick up from my colleague the Hon Maryan Street regarding her comments around multi-category appropriations. They are commendable because anyone who has spent a bit of time or worked within Government departments or agencies knows that they are very much patch protectors. They very much sort of keep to themselves. They very much like to spend their money or try to get the money spent by the end of the financial year and there are not necessarily those sorts of close relationships with other departments particularly when there is a common outcome that they should be working towards. So it is commendable that there are now provisions provided for in this bill that there be multi-category appropriations which are across multiple categories to allow different types of expenditure to be grouped into a single appropriation. That is a very laudable aim.The bill also makes it clear that other departments as well as the one administering an appropriation can incur expenses against the appropriation. We see that a lot in the Ministry of Māori Development appropriation. There are a multitude of different agencies and Government entities and all sorts that are involved in Māori affairs as my colleague touched on with the Whānau Ora situation. We could rattle off a whole host of other organisations that are involved with Te Puni Kōkiri Māori affairs or contracts between various agencies or Crown entities to provide outcomes. So there is a whole multitude of different relationships that they have and it is important that they get better structure and more financial discipline around the way that they conduct their affairs and that they also report on their outcomes. So those are very commendable aims in Part 2.The bill is also allowing the annual reports of Government to be presented together.Debate interrupted.