State Sector and Public Finance Reform Bill — Second ReadingText is incorporated into the Bound VolumeState Sector and Public Finance Reform Bill — Second Reading[Sitting date: 25 June 2013. Volume:691;Page:11208. Text is incorporated into the Bound Volume.]State Sector and Public Finance Reform BillSecond ReadingHon Dr JONATHAN COLEMAN (Minister of State Services):I moveThat the State Sector and Public Finance Reform Bill be now read a second time . I would like to begin by thanking the Finance and Expenditure Committee for its consideration of this important legislation and I acknowledge the contributions of all members on the bill. I would particularly like to thank the former committee chair the Hon Todd McClay for his extensive efforts and also the Hon David Cunliffe for his constructive approach. I am very pleased that this important reform has bipartisan support. That is important because this legislation determines the workings and architecture of the State sector and its ramifications will be felt for years to come.The State Sector and Public Finance Reform Bill is an omnibus bill and the intention is that during the Committee of the whole House it be divided into three separate bills: a State Sector Amendment Bill a Public Finance Amendment Bill and a Crown Entities Amendment Bill. The changes are designed to enable the delivery of Better Public Services and more effective and efficient achievement of results. I wish to acknowledge those who have made submissions to the bill. Their input led to important changes to many provisions and I also acknowledge the constructive approach of the Public Service Association when engaging with the Government and the committee.Better Public Services is one of the Government’s four priorities for this term. Better Public Services is all about delivering a Public Service and State sector that is achieving value for money is innovative provides high-quality services and manages change effectively. We have deliberately chosen 10 stretch targets that will make real tangible differences to New Zealanders and stimulate different ways of delivering services in the process. This legislation gives new tools to the State Services Commissioner to the Public Service and to Ministers to coordinate together as a system and deliver against those targets. It is the biggest reform of the State sector in a generation.Part 1 of the bill amends the State Sector Act. The changes will charge the State Services Commissioner with leadership and oversight of the State services and more targeted leadership development for the Public Service to improve leadership from the top and get more cohesive action across the public sector. They will also require chief executives to look and act beyond their own departments and beyond the short term. We want to see departments take this as an opportunity to achieve better results as a system such as the excellent savings we have made in property leasing costs by the Government Property Management Centre of Expertise by coordinating and directingdepartments in their leasing of office space. Such action is predicted to save 20 percent on costs and reduce floor space by 30 percent across five departments.The changes will expand the range of service delivery mechanisms giving chief executives broader powers to delegate and introducing a new organisational form called a departmental agency. The changes also place workforce and personnel matters on a more consistent and transparent footing. The majority of the changes received broad support or general acceptance during the submissions process.Four aspects of the bill were of particular interest to the committee: redundancy provisions workforce policy provisions the ability of chief executives to delegate functions or powers outside the Public Service and immunity from prosecution for public servants. I will now deal with each of these four areas in turn. The overriding aim of the redundancy provisions is fairness. There are clearly situations in which redundancy payments are the right thing to do by employees. However in circumstances where a public servant is able to move seamlessly from one job from which they are made redundant to a new job in the State services it would not be reasonable for them to receive a redundancy payout. This issue was worked through by the committee and in summary for there to be no redundancy payment the next job must start the next working day or even before the current employment period ends and it must be treated as continuous service with the State services. Furthermore it must be in substantially the same general locality or within a reasonable commuting distance and it must have comparable duties and responsibilities to the current job. It must also entail a collective package of terms and conditions that are no less favourable than apply to the current position. It is very important to note that not every single term or condition in the new job has to be the same. There will be multiple factors to take into account from job title and salary to location and compensation details like access to car parks. It is not the intention of the Government to make sure that every last detail be replicated or approved but the overall package must be no less favourable when considered by a reasonable person. These new redundancy provisions will not apply until 3 years after the new legislation comes into effect.The workforce policy provisions introduce a more transparent and consistent process for setting and applying Government policy on workforce matters. Submitters expressed concerns about the purpose and content of the proposed Government workforce policy orders and their perceived effect particularly on existing employment agreements and good faith obligations. In response to those concerns workforce policy will no longer be issued by Order in Council but as a Government policy statement. They will not be used to set expectations that determine pay or conditions and will not create alter or remove employment or other legal rights or obligations.Chief executives will be able to delegate functions such as management of any operational aspect or service to a person outside the Public Service. This is to provide effective and efficient decision-making and service delivery. A number of specific statutes already provide such powers to an individual chief executive. This bill extends this ability to all chief executives as a generic power under the State Sector Act while not overriding special controls in other Acts and extensive safeguards have been put in place. These safeguards include a requirement for ministerial consent for every case; a requirement that potential conflicts of interest will be avoided or managed and that delegates will be subject to the code of conduct and the Official Information Act; a requirement that there will be no sub-delegations; and a requirement that delegations have to be reported to Parliament.One provision in the bill that has not changed is the immunity from personal liability for prosecution of public servants who acting in good faith are carrying out their duties as employees of the Crown. Front-line staff working with the public in sensitivesituations need to have confidence that provided they act in good faith they cannot be personally sued in the course of their duties. Without that security there could be a chilling effect on the ability of front-line public servants to carry out their duties in the prescribed manner. There is no change to Crown liability. The public can still sue the Crown. This amendment makes sure that ordinary New Zealanders can still be compensated by taking legal action against the Crown directly clarifying the situation that was generally thought to already be in place. I acknowledge that the Law Commission is undertaking a comprehensive review in this area and a recommendation for further legislative change may follow. However legislation should not leave public servants unprotected in the meantime.Part 2 of the bill amends the Public Finance Act. These changes will make Public Service chief executives responsible for their departments’ financial sustainability not just current performance. Chief executives will need to look and act beyond their own departments through explicit responsibilities for the financial management and advice on those Crown assets liabilities revenue and appropriations that the department administers on behalf of the Crown. Those changes will also provide greater flexibility for resources to be allocated to where they will have the greatest effect through a new appropriation type called a multi-category appropriation and clarity that one department can utilise an appropriation administered by another when so committed by the responsible Minister or administering department.Changes in the bill also encourage a more strategic focus in the statements of intent a greater focus on what will be and what has been achieved with the appropriated resources and flexibility to package this information in more useful ways. Ultimately that will mean that the changes support more meaningful information being reported to Parliament.Finally the changes will strengthen the governance and reporting regime for companies currently on schedule 4 of the Public Finance Act by applying to them the same standards we have for Crown entity companies.Part 3 of the bill amends the Crown Entities Act to maximise the collective impact of the State sector. The collective duties of statutory board members are expanded to require entities to collaborate with other public entities where practicable. The bill also leverages the scale and expertise of Crown entities through enabling whole-of-Government directions to be issued to smaller groups of Crown entities and to meet a broader range of Government objectives.I believe that the amendments to these three Acts provide a package that will support the delivery of better services to the public now and in the future. Again I thank the select committee for its hard work in bringing back to the House this bill which includes important amendments that the House should support. I commend this bill to the House.Hon DAVID CUNLIFFE (Labour—New Lynn):May I offer perhaps rare congratulations to the Minister of State Services on several points. The first is that by being willing to embrace changes from the Finance and Expenditure Committee I believe that the Minister and the chair of the committee Todd McClay—now the Hon Todd McClay—have assisted Parliament to get to the point where we have a piece of legislation the State Sector and Public Finance Reform Bill that is workable and does make useful amendments to our structure of Government and the Labour Opposition will now be able to support this bill. That is a change from our position in the first reading; we were opposing it at that stage. So this is a significant shift for the Labour Opposition. It reflects the amendments that have been made in the select committee process. I will comment now on the most major changes which have allowed us to switch our position.Secondarily I would like to compliment the Minister on choosing the right speech to read. It has not always been thus but we are very pleased that he—Hon Dr Jonathan Coleman: You know I wasn’t going to say anything nasty about you David.Hon DAVID CUNLIFFE: Well all in jest Minister. Come on have a thick skin; you have been here a couple of years.This bill is for the public one of those interesting pieces of legislation that might not seem particularly flashy but actually goes to the heart of how we run our institutions of Government: the rules under which Government departments and public entities are operated how they are accounted for and the rules by which they employ their staff. In the first version of this bill—the bill as introduced—which we opposed there were a number of provisions that would have violated the existing rights of public servants in the stampede to create more flexibility in the State sector. For example with regard to the redundancy rights of public servants new sections 61A and 61B in clause 49 as introduced would have removed provisions for the transfer of employees between public service departments and unduly restricted redundancy payments where State sector employees who have received a redundancy notice are offered and have accepted an alternative position prior to ceasing their employment. The effect of the provisions would have been to remove the existing rights contained in collective agreements and would have ignored the fact that the State Sector Act actually established Government agencies as separate employing organisations. The effect of that would be that State servants would have lost existing entitlements by being forced to transfer without access to redundancy payments where in fact there was a significant difference in their terms and conditions of employment.The change made by the select committee has been to enshrine the principle that for redundancy payments not to be paid the new job offer has to be “no less favourable” than the existing position. The select committee considered but rejected ultimately an alternative formulation proposed by the Government which was “no less favourable overall” and instead took advice that said it is already through the case law that courts can see the package of provisions and entitlements as they currently stand and can make judgments about equivalence. We did not need the word “overall” which would have been taken as an undue liberalisation. The Government compromised on that key point to the satisfaction of the public sector unions—the Public Service Association which led that debate and the New Zealand Council of Trade Unions—and on that basis the Labour Opposition is now willing to support that provision.The select committee’s amendments to the transition arrangements in new section 61AB in clause 49 included the insertion of a new 3-year sunset clause following the enactment of the bill which will ensure that collective and individual agreements are treated equally. That was really important to State sector employees and their representatives because otherwise individual agreements could have lasted longer than a collective agreement putting State sector employees who were on a collective agreement at a disadvantage relative to their colleagues on individual agreements. I am very pleased that the Government has seen sense on that matter and introduced a new 3-year sunset provision which means that everybody is treated equally as you might say people should have been from the start.The Labour Opposition was very concerned about the proposed Government workforce policy orders by which the Crown would have sought to tie the hands in a binding fashion of State entities involved for example in wage bargaining. The committee has amended those provisions so that they are now Government workforce policy statements not orders; that they are not binding at the level of detail; and to specifically reinforce the point that none of the existing bargaining rights of Stateservants will be trammelled by this—that is all of the existing legal rights of State sector employees to good-faith negotiation have been preserved.Other improvements made by the committee include tidying up the conflict of interest provisions. These have been strengthened where there are delegated powers and the application of the Ombudsmen Act has been clarified. Improvements have been made to the provisions for strategic intentions as embodied in the formal statements of intent. The original bill would have diluted the statement of intent process so that they were written for Ministers only once every 3 years often when Ministers were green as grass at the start of a triennium when you might say Sir Humphrey could be hard at work. The committee has prevented that from being diluted to once in 3 years—they are currently annual—to give Ministers the right to have a statement of intent update every year and it is mandatory for State servants to brief the Ministers that they have that right. New section 55B(2) in clause 42 has been amended to balance the efficiency objectives with a broader notion of effectiveness that includes fairness considerations of both a substantive and procedural notion.Those are some of the key changes and I acknowledge that they are significant changes for a Government to make and I really wish to commend the work of the committee chair Todd McClay and the Minister who has resumed his seat—the one without much of a sense of humour earlier—because they have been willing to make these changes in good faith such that the bill can now command the broad support of the House. For members of the public watching it is not actually every day that you see Parliament working in a cooperative fashion at select committee level that results in significant redrafting of bills like this.Andrew Little: Because they are so unreasonable on the other side.Hon DAVID CUNLIFFE: Sometimes they can be intransigent as my colleague Mr Little has said but in this case there was good cooperation across the committee—Hon Maurice Williamson: At least we don’t use the “f” word at the select committee.Hon DAVID CUNLIFFE: —and that has captured the imagination of the often slumbering Maurice Williamson who has come back to consciousness particularly to contribute to this debate and we are very honoured by the fact that he has woken up and tossed in a very small barb or two. No process is perfect but in general this one has been pretty good.Having said that may I in my final minute or 2 note some remaining reservations that the Labour Party has which are not significant enough in our eyes or those of the State sector unions to prevent support for the bill but upon which we will be giving close ongoing monitoring. They include these. In respect of the redundancy provisions there are still concerns that the protections relate only to the Public Service. There are concerns that someone who accepts another job during a notice period now has greater protection in maintaining continuity of service and that the position must start on before or immediately after the date upon which the current employment ends. We are also concerned that the delegation of powers from the core State sector to non-State partners and implementing agents is too broad and we will be watching very closely to see how that is used in practice and whether later amendment is required. We are concerned that immunity from suit rather than indemnity is being afforded. We think that that is a bit broad and we note the Law Commission’s concerns in that regard. The amendments to the Public Finance Act that will assist in removing barriers to greater cooperation between Public Service entities need to be balanced in practice with greater clarity of financial accountability documents. We did receive assurances from officials and the Minister that it would always be possible in the Budget documents to achievecomplete traceability of output classes even where there is a multi-category appropriation.To sum up the committee has made significant progress. We commend the Government for being able to listen to the Opposition and to the State sector unions and to actually forge bipartisan compromise on a structural piece of legislation that will most likely be around for a political generation or two.PAUL GOLDSMITH (National):It is my pleasure to speak on the State Sector and Public Finance Reform Bill. Indeed it was a positive experience working closely with our colleagues on the other side of the House in the Finance and Expenditure Committee process working our way through what were complicated issues and reaching an agreement. That is important with such structural legislation as this which is intended to guide the State sector over generations and continue that sense of bipartisanship we have had over these bills in the past.The key point of this legislation is delivering Better Public Services to New Zealanders as one of National’s main priorities. This omnibus bill amends the State Sector Act the Public Finance Act and the Crown Entities Act to provide the legislative grunt to deliver Better Public Services. Why is that important? Well for a start core Crown expenses represent about one-third of the economic activity of this country. Core Crown expenditure peaked at around 35 percent of GDP during the global financial crisis and thanks to prudent management by this Government we are back on track to get it down to about 30 percent in 2015. When we add in local government and capital spending total Government spending is around 43 percent of GDP. So when we are interested in New Zealand growing and becoming more prosperous we have to pay attention to that large part of the economy which is directly in the hands of the Government.How we ensure that the State sector itself is productive that it is increasing its productivity year in year out is a very significant question. I have spent much of my career to this point writing business histories and the striking thing when considering successful companies is that they are constantly innovating and rethinking every part of their business from ground zero every year. They have to do that because they know that if they do not they will go out of business because somebody else will have discovered a better way of doing things and they will eat their lunch. That basic discipline is sometimes muffled when it comes to the public sector funded by taxes which are ultimately funded by force.The amendments in this legislation create a range of public sector management tools to foster an innovative efficient public sector to deliver better-indicated results for New Zealanders. If we drill down to the specifics of this legislation we see that the changes to the State Sector Act in particular focus on strengthening the State Services Commissioner’s role in leading the State services and extending the chief executive’s responsibilities to consider the collective interests of the Government and longer-term sustainability rather than focusing on single departments or agencies. This legislation has been a result of detailed thinking over an extended period led by the Better Public Services Advisory Group which was set up to identify the issues that need addressing in order for the State sector to be more productive and more effective. That group identified the tendency of agencies to work in silos at the expense of the sector and system-wide performance. So this change which is getting Government agencies led by their chief executive officers to work more closely together and to organise themselves around results that make a difference to New Zealanders is I think a more effective way of doing things rather than carrying on the way things have always been done.So what is it that we are trying to achieve in child health or education outcomes and how is it best for all the relevant agencies to work together? That might sound simple and obvious but the structures of how the Government is organised and how the leaders of each department are incentivised makes a huge difference. This legislation by broadening the things that a chief executive in a particular department has to think about and broadening that into a wider public sector will I think make a difference over the long term.There are many other things that were handled during the select committee process. The Minister of State Services has covered the issues of redundancy and the ability of chief executive officers to delegate powers and create a mechanism. I will not go into that in further detail. I will leave that to other speakers but in all I commend this bill to the House. Thank you.Hon DAVID PARKER (Labour):I rise to take a call on behalf of the Labour Party. I want to deal with a couple of issues that I think are less than perfect in the State Sector and Public Finance Reform Bill as amended by the Finance and Expenditure Committee. The Labour Party given the changes that have been made and negotiated at the select committee will be supporting this legislation. We do so in part because in respect of legislation that is intended to endure beyond Governments and beyond the term of any one particular Parliament we think it is one of the roles of the main political parties in this House which at times sit on Government and Opposition benches to try to reach agreement on framework legislation so that there can be continuity and certainty around those settings in a way that means that we have consistently applied standards in the State sector and the wider public sector. With the changes that have been agreed at select committee we find ourselves on balance favouring this legislation and will be supporting it through subsequent stages.There are a couple of things that I do want to refer to that I thought were pretty poor in the original legislation. For a start there was a regulation-making power effectively that was conferred upon the Minister of State Services to give directions to chief executives. Those powers were so broad as to effectively enable the Minister by a directive that amounted to or was akin to a statutory regulation to impose a wage freeze throughout the State sector. As we said at the select committee that was akin to the regulation-making powers that National Governments used to vote themselves and exercise under the old Economic Stabilisation Act under which the then National Prime Minister Mr Muldoon inflicted upon New Zealand a wage and price freeze through statutory regulation.Hon Maurice Williamson: How did that go?Hon DAVID PARKER: That is right. “How did that go?” said Mr Williamson. It did not actually go very well Mr Williamson. Indeed it was as a consequence of the inept management of the economy by that particular National Government led by the Rt Hon Mr Muldoon that led to New Zealand having the highest Government debt that it has had since I was born. I think that at one stage one dollar in four of all taxes collected was being spent on interest as a consequence and debt was out of control. Of course subsequent Governments—firstly Labour and then National and then Labour again—reduced Government debt very substantially so that by the time the Government that Mr Goldsmith now forms part of came to power New Zealand had zero net debt and gross Government debt had gone from 38 percent of GDP down to 18 percent of GDP. So it was in fact the responsible fiscal management of the last Labour Government and the prior two Governments—the prior National and Labour Governments before that—that meant that New Zealand was in a position come the global financial crisis to actually see things through in a way that did not cause the downward spiral that has been experienced in other countries which have had decliningeconomic circumstances at the same time that they have had to pursue austerity on the Government books.There are a couple of other things. That regulation-making power has been severely narrowed in this version of the bill and as a consequence that particular detriment of the bill has been remedied. I want to go a little bit further into two things. One is that you have got to be very careful not to cause unintended consequences when you change foundation legislation. There are a number of occasions where this is happening at the moment in the law. The Government has modified its position in respect of whether people who move from one position to another in the wider Government service can be effectively pushed into a new job and lose their existing rights under their employment contract or their collective agreement. They often have redundancy provisions which they were going to lose under the version of the bill that went through the first reading and went to the select committee. The Government has agreed to change that so that now for people to lose their entitlements they have to accept a position that is no less favourable than their existing package. That is a fair enough outcome.There is another area where the Government is causing an unintended consequence at the moment and that is in the changes proposed to the Employment Relations Act. Under that Government legislation—and this is dawning upon the business community at the moment—which is so ideologically driven notwithstanding the fact that New Zealand has had very low rates of industrial disputes the number of strikes and lockouts will actually be increased. The reason for that which was explained to me recently by an employment lawyer is quite simple. Under the new employment relations legislation people will lose their right to strike or lock out once negotiations are deemed to have broken down. Once you reach the point of breakdown of negotiations and negotiations are deemed to have broken down you cannot strike or lock out. That means that if you are an employer who wants to lock out or an employee who wants to retain the right to strike you have to do that before you reach the point that negotiations are deemed have broken down under this new definition of a breakdown of employment relations.That logically must mean that as a consequence we are going to see more industrial disputes move to lockout or strike earlier—earlier. So this ridiculous piece of legislation the employment relations amendment legislation which the Government is bringing through in the context of very low rates of industrial disputes that turn into strikes or lockouts is going to make it worse—the Government’s own industrial relations legislation—because people will lose the right to strike or lock out once they pass a certain point. Therefore in the context of those negotiations which sometimes are protracted people will have to exercise their right to strike or lock out earlier in the process or they will lose the right to do so.Mr DEPUTY SPEAKER: Just come back to the bill.Hon DAVID PARKER: It shows how careful we have to be with legislation that we do not make things worse.Another area of this legislation that concerns me—and I do not think we have got it right yet—is new section 86 in clause 54 of the bill which protects Public Service chief executives and employees from litigation. I for one think that when someone who is acting on behalf of the Crown is going about their business in their job and makes a mistake then they ought not be the one who actually faces liability for the consequences of that mistake. The Crown stands behind them and it is the Crown that wears the loss in respect of a problem that is caused to a member of the public who has a right of action. I have no problem with members of the Public Service being protected from liability in civil proceedings for their mistakes.That is not what this debate is about. This debate is about whether they should be protected by way of having an indemnity from the Crown or whether they should havean immunity. This legislation according to the Law Commission and the Law Society goes too far by conferring immunity. The Law Commission said that we are effectively creating a faceless bureaucracy—and it used that phrase—that cannot be brought before court. You think: “What is the consequence of this?”. Well the consequence is that you could actually have someone who in good faith does something that is grossly negligent but because of the wording of this provision is given an immunity from civil proceedings so long as it was done in good faith. The act could be grossly negligent yet the injured party out there in society will have no right of suit. It is not just that the public servant will have a right of indemnity from the Crown; the injured person will have no right of suit. The injured person in society the powerless person who has suffered an act of gross negligence on the part of an arm of the State through a public servant is to be left without remedy. That is wrong. This is actually going a step too far. What we should be saying is that the employee who makes that mistake is indemnified against liability but we should not be giving immunity so that the person who is injured by an arm of the State has no remedy.At the select committee we tried to change that. Labour members said that was wrong. We thought the Law Commission had it right. There are occasions when the Crown will not be vicariously liable for a grossly negligent act of an employee because vicarious liability will not cover the action and the private citizen injured by an arm of the State through an act of gross negligence will be unprotected. That is wrong the Law Commission said it was wrong and the National Government refuses to fix that aspect of the law. This legislation is not perfect but overall it is important housekeeping legislation and we will be supporting it at this stage.DENISE ROCHE (Green):I rise to take the first call for the Greens on the State Sector and Public Finance Reform Bill. This is a complex piece of legislation. I do acknowledge that this bill makes changes to legislation that has been in place for about 25 years. Before I get into the detail of the bill I would like to thank the many submitters—and there were many—and particularly those members of the Public Service Association who came and submitted on this bill who came and provided a face to the Finance and Expenditure Committee the face of those people who will be affected by the changes in this bill. That helped to clarify some of the significant parts of the legislation. I want to acknowledge to those submitters that their actions were very brave. It is quite difficult to front up to a select committee of politicians when you work in the sector that is governed by those politicians.Too often people in the community think of public servants as faceless cardy-wearing bureaucrats or clerical staff. That could not be further from the truth. Public services and consequently implementation of the Government’s policies stand or fall on the skills and efforts of public servants. There are over 44000 individuals who work in the Public Service today. They work in Crown entities and they work in departments and ministries. They are frequently specialists in their fields. They are in hot demand and the Public Service is constantly facing the challenge of recruiting and keeping them in the Public Service.There are some parts of the bill that we think are very good. We certainly agree with providing more joined-up thinking and the ability to get departments and agencies to work together. To some extent that is happening now more and more. I think particularly of Gateway which combines wraparound services and assessments for young people based on their health needs their education needs and their social development needs—three different departments working together for the benefit of their clients. There is no doubt that reducing the silo mentality of departments is a good way to promote Better Public Services. The term “better public services” has been bandied around a lot actually co-opted by the Government to mean anything frombudget restrictions to the discontinuation of services and the removal of State housing. Although we can agree that we all do want better public services we do not really agree with the method that this Government is trialling here or the twisting of the term.There is little doubt that the State Sector Act particularly does need to be overhauled. I recently attended a public meeting addressed by the Rt Hon Sir Geoffrey Palmer and Stan Rodger. Stan Rodger talked about the original intention of the State Sector Act and Sir Geoffrey talked about the impact of the State Sector Act in shaping the way our public services have worked. I acknowledge that there are other members in the Chamber who attended that meeting. Sir Geoffrey’s points in particular highlighted a lot of the problems that we do see in the Public Service today. He included as problems the cult of management; the loss of institutional memory which is tied to talented staff migrating from the public sector; the lack of rewards for top staff; and the lack of training and professional development for staff. He talked about quality issues. He talked about the Crown’s legal risk being not adequately protected and he suggested that Crown Law often came in too late on legislation and issues. He talked about the fact that some public servants were no longer providing free and frank advice and he referred specifically to Ministers’ offices. Despite this quite damning criticism Sir Geoffrey also described this current bill the one we are talking about today as a dog’s breakfast. His advice for ensuring better public services in New Zealand was to stop this tinkering and have a royal commission of inquiry into how the Public Service could be improved.The week before last I was also present at the Government Administration Committee during the discussion on the vote where the Minister of State Services Jonathan Coleman and the State Services Commissioner Iain Rennie were present and were answering questions—some good questions too. I agree with the commissioner’s view that there does need to be the ability to deploy good people across the organisations and to utilise the best of them. Well we believe that this bill as it is currently written even with the amendment and the good work that has gone into it as it comes back to the House will hinder that.The purpose statement proposed by the bill includes promoting and upholding “a State sector system that … (e) is supported by effective workforce and personnel arrangements;” and there are amendments to introduce obligations of stewardship of the system and yet the bill actually removes the one provision in the current Act that gives Public Service chief executives the ability to actively manage skills and capability across the system. It removes the power to transport employees between agencies and to do the deployment work at the beginning of a process rather than at the end. It replaces this with a seemingly simple restriction on public servants’ right to redundancy compensation which does not have the same effect.We note that the bill takes a more sensible approach with Public Service chief executives. They get far more opportunity to be deployed and they have that in the bill. Notwithstanding the softening of some of the clauses from the original bill we believe that as it is now it will have a significant effect on public servants’ conditions of employment. It will remove some entitlements that have been freely contracted for for 25 years of the life of the original Act. To a large extent the provisions around redundancy technical redundancy and transferable functions and people seem to ignore the fact that Public Service employees are not employed by the Crown. They are not employed by just one agency. They are employed in many different agencies and yet they are treated like that.As has been the case throughout the 25 years since its passing the Act gives public servants none of the benefits that would come from working for a single Public Service provider. There is no redeployment process. Redundant public servants find work solelythrough their own efforts. This bill seeks to let the Government both have its cake and eat it too by withholding those same benefits and at the same time extracting what could be a cost of working for a single employer—a restriction on access to redundancy compensation. I know that the Labour Party members on the select committee worked very hard on that and it has been softened but there are still major changes to the working conditions that public servants have currently.On balance we believe that this bill leaves workers worse off. I will be introducing a Supplementary Order Paper which I hope will be supported about reintroducing relocation protection but in the meantime we will not be supporting this bill. We are not convinced that the changes in the bill in any parts about the Public Finance Act or the Crown Entities Act actually deliver better public services. I do not think that the process used to get the bill into its current state was either terribly transparent or democratic and I would welcome the opportunity to have a bigger discussion about that. That is why I would support what Sir Geoffrey Palmer said which was to have an inquiry that looks at the entire Public Service and stop tinkering with it because otherwise we will as he said be left with a dog’s breakfast.JOHN HAYES (National—Wairarapa):I support this bill the State Sector and Public Finance Reform Bill and want to thank colleagues across the Chamber for their support and for very sensibly contributing to the select committee process which sees the result here in this House today. I would say to the people of New Zealand who might have been listening to the last speaker Denise Roche this afternoon that if in the next election you are looking for a very left-wing Government you will have heard a speaker who alluded to the sort of New Zealand those members would construct if they ever were to get a chance at power in this country.I speak as a former public servant. We have had in this country for more than 100 years a very professional Public Service and the Government wants to strengthen the legislative framework so that all New Zealanders benefit from a public sector that is oriented to delivering results. It is very tempting—and I saw it in a meeting in my electorate this week—for a bunch of different Government agencies to all work in their own silos and they are not all that interested about coming and working together. So the purpose of this bill is to ensure that the benefits of wider changes to the public sector become apparent. We want to see more New Zealanders satisfied with our public services. We want them to be satisfied with the front-line public services that they receive and surveys are indicating that they are moving into that space.Another point that I would like to make in the wake of the last speaker is just to make sure that that speaker understands that we now have more women—significantly more women—in leadership roles in the public sector. At just over 42 percent we now have the highest percentage of women in senior leadership positions in the 13 years since the Human Resources Capability Survey of the Public Service departments began—42 percent the highest ever.Can I just very quickly touch on another point that came up from the last speaker which was around the question of provisions in this legislation for redundancy. I think that if you start from the point of asking yourself where the Government’s money comes from—out of people’s pockets—then how is it possible to look a taxpayer in the eye a taxpayer who contributes their taxes to the Government and say: “Look you’ve gone from this department and you were made redundant but you’re going to go to that department the next day and you should be entitled to redundancy.”? You cannot find one person paying taxes in this country who thinks that that is sensible and that is the arrangement that the Green Party would like to see.So it seems to me that a key provision of this bill is very important because it relates to civil servants who are made redundant but who have a new State sector job to go to.Those people will not be able to get a redundancy payout. The criteria for not getting a redundancy payment are if the civil servant starts working the next day or even before their current employment contract ends is treated as undertaking a continuation of service within the Public Service is substantially in the same general locality or within a reasonable commuting distance of the last job or has a collective package of terms and conditions that are no less favourable than those that apply to their current position. I think it is essential to note in this process that not every single term or condition in the new job has to be the same for that situation to arise.I think this is a very good bill. It has broad support across Parliament particularly in our Finance and Expenditure Committee and I commend it to the House.Rt Hon WINSTON PETERS (Leader—NZ First):One of the National Party’s major election promises was “better public services”. It was going to be a top priority and this is it—4½ years later this is the sum of all its effort. Apparently what is going wrong with the country economically and socially is all to do with New Zealand’s Civil Service. Here is 176 pages of technocratic jargon and bureaucratic speak with a few legalistic niceties thrown in for good measure and I was certain the MP for the Wairarapa with his experience would have picked this up because he is a man of the world. He has been around. He has heard this sort of mumbo-jumbo before. I thought that if there was one man in the National Party team who would pick this up it is Mr Hayes. Usually he is as sharp as a tack and he shows courage. There is nothing in this State Sector and Public Finance Reform Bill that would deliver any tangible benefit to the Kiwi mums and dads whom National claims to represent.What does the bill propose to do? Well it is going to establish departmental agencies within existing Government departments each with its own chief executive officer. It is all there in Part 1 clause 17 and new sections 27A and 27B amending the State Sector Act. Mr Hayes surely must have been alarmed when he saw that. The National Party’s approach to better public services is more Government departments and more chief executives. Oh yes it is. It is all here. There are already 35 Government departments and each has its own chief executive officer earning on average between $457000 and $470000 a year. Do you hear that? There are 35 Government departments already and each has its own chief executive officer earning between $457000 and $470000 a year or 10 times the average annual income. What is National doing? It is hiring more of them. That is what the State Sector and Public Finance Reform Bill means in practice and it is all here in black and white in Part 1 clause 28 amending section 35 of the principal Act. We have no idea how many new departmental agencies and departmental agency chief executives there will be but the intent is clear. New Zealand First firmly opposes the National Party’s attempts to hire more of its rich mates into cushy public sector jobs.David Bennett: Ha ha!Rt Hon WINSTON PETERS: Mr Bennett from Hamilton laughs but I will get to a quote shortly and he will not be laughing then. That is precisely what the National Party wants to do. The sad thing is that previously innocent but sometimes good people like Mr Bennett are being led by the nose being taken for a ride and having the wool pulled over their eyes.Here is the point. Section 2 allows for departments or departmental agencies to delegate Public Service functions or powers to contractors or individuals working in the private sector. It is all here in Part 1 clause 28 which amends section 35 of the State Sector Act. New Zealand First has serious reservations about the delegation of Public Service functions and powers to individuals working in the private sector. How does that work? Who is going to surveil them? Mr Bennett when he is at the select committee. Do you feel safe now? Do you feel safe that Mr Bennett is going to besurveilling these people making sure he keeps an eye on them—these private individuals with public contracts with the taxpayer? Amazing really. We question the efficacy and appropriateness of such outsourcing. We are yet to see any evidence that this will result in more savings and better public service outcomes.This bill threatens to overturn the longstanding constitutional convention of Civil Service impartiality by exempting public servants working in a Minister’s office. Any public servant in a Minister’s office now is exempt from the issue of Civil Service impartiality. They are not political appointments or they should not be from the requirement that selection must be based on merit. How do you like that? So now no longer do we have a constitutional convention of selection on merit. You get them exempt from these provisions of the old legislation. Such a provision leaves the door wide open to cronyism within the State sector and New Zealand First holds grave concerns about the politicisation of the Public Service.Here is the point Mr Bennett Mr Hayes Maggie Barry and all those people who so clearly are resigned to giving away their loyalty on such an important matter. It is with interest that we note a recent National Party strategy paper leaked to the media that called for “a pool of fiscal conservative bureaucrats who will work with politicians to implement policy.” It is all laid out: “a pool of fiscal conservative bureaucrats who will work with politicians to implement policy.” Crikey they have already got Treasury. They have already got Treasury but they are not happy with that. It is unbelievable.John Hayes: Could you table that report please. Table it.Rt Hon WINSTON PETERS: They go on further. Do you want me to table the National Party strategy? Look Mr Hayes go beyond the veil of your caucus and demand as a hard-working provincial MP who is about to be taken for a ride again to see the paper. They go on to say in the National Party strategy paper that reform is “necessary to ensure policy is implemented by bureaucrats rather than blocked by them.” It is unbelievable—naked plain clear as daylight. In other words they want to stack the Civil Service with their mates and these reforms will give them the capacity to do so. The rest of the bill of course totally sidesteps the real issues. New Zealand First remains firmly of the view that there is nothing in this bill that will result in any tangible benefit to ordinary New Zealanders. National wants to stack the Civil Service with its mates. These reforms give it the ability to do so. Removing the requirement for ministerial appointments to be impartial overturns centuries of Westminster tradition and must not be tolerated in a modern democratic nation. It is down to that.Mr Bennett and Mr Hayes here are some issues: Novopay fraud in the Canterbury rebuild Pike River theRena disaster Cave Creek the LAVIII 105 vehicle blowout from $170 million to a billion dollars and the INCIS computerisation scandal. Tell me. Those are just a few notable cases. What in this bill is going to stop that?Denis O’Rourke: Nothing.Rt Hon WINSTON PETERS: Nothing. So stop blaming everybody but yourselves for your economic incompetence for your inability to run a sound economy. Since 2007 the GDP per capita of this country has moved by 0.7 percent. It is standing still; utterly standing still. Since that time of course in the recovery we have had 1 percent of the population pick up about 120 percent of the recovery. The other 99 percent have gone down 0.04 percent; picked up nothing. It is unbelievable. Again of those disasters which one would be solved by this legislation? The answer is none. Mr Bennett is speaking next. I want him to tell the people of Hamilton why he will not do his duty by his country instead of acting as sycophantic cannon fodder for the National Party.DAVID BENNETT (National—Hamilton East):Just before we talk about the bill the State Sector and Public Finance Reform Bill I want to give a bit of a history lesson for those young people who may be watching this. They have just seen Winston Petersgive a speech in this House. Every speech he gives is the same. I was just going through that speech and I wrote down exactly what he said. He said the same thing 3 weeks ago and he said the same thing 3 years ago. He could not say it about something 5 years ago because he was not here. But he said the same thing 10 years ago and he said the same thing 20 years ago. His speeches are all the same—they are all the same. If you listen to his speeches they start off—the first 2 minutes of a Winston Peters speech has been prepared—Rt Hon Winston Peters: I raise a point of order Mr Speaker. I know that these rules are pretty broad and pretty loose and pretty lax but you are required to get up and at least within the first couple of minutes say that you understand which bill is before the House and that you might have some remote idea what the debate is about. [Interruption ] But he is inexperienced.The ASSISTANT SPEAKER (Lindsay Tisch): He has been going for only 48 seconds and I am sure he is on to it now.DAVID BENNETT: Yes and I am sure that the member will enjoy it when we talk about this bill. That member had to use a point of order because he knew he was in trouble. It is the oldest trick in the book by the oldest dog in the House. But it did not work did it?Let us go back to that speech. We heard words about this legislation about better public services and about no tangible benefit for mums and dads in New Zealand. All those lines we hear all the time—more Government departments more chief executive officers. He does not want contractors. He expects it all to be done—[Interruption ] What is that?Rt Hon Winston Peters: More snouts in the trough.DAVID BENNETT: More snouts in the trough—now you would know about that would you not? How long has your snout been in this trough?The ASSISTANT SPEAKER (Lindsay Tisch): Order! That is completely unnecessary.Hon Member: He’s accusing you now.The ASSISTANT SPEAKER (Lindsay Tisch): Yes and I do not—Rt Hon Winston Peters: Throw him out.The ASSISTANT SPEAKER (Lindsay Tisch): No we will just stop that. Be very careful what you say because you are bringing the Speaker into the debate.DAVID BENNETT: That is the first part of a Winston Peters speech. Then when he gets to minute 2 he waits for someone to interrupt him and Mr Hayes was the interruption this time. Then we get the personal attacks like saying that there is a hard-working provincial MP like Mr Hayes—you know personal attacks on Mr Hayes. That is the next step.But then there is the third part of a Winston Peters speech. This is the bit you are always waiting and listening for because there is no way that that member can get through 10 minutes without saying the words “cronyism” “leaked papers”—Hon Trevor Mallard: I raise a point of order Mr Speaker. I think we are well beyond 48 seconds now. It is clear the member has prepared some comments that do not relate to the bill. He should stop reading those and get back to the bill.The ASSISTANT SPEAKER (Lindsay Tisch): Sure that is a fair comment and I will ask the member now to get on to the bill and from now on in to concentrate on the bill before us.DAVID BENNETT: Well it is my pleasure to speak in regard to the bill—Hon Members: Which bill?DAVID BENNETT: The State Sector and Public Finance Reform Bill. But I just want to clarify some of those comments that were made by the previous speaker aswell. We got to 6 minutes of his speech. We got the “cronyism” and then we got words like “sticking with his mates” and such like—Hon Trevor Mallard: I raise a point of order Mr Speaker.The ASSISTANT SPEAKER (Lindsay Tisch): I know what the member will raise. Look I have warned the member. If he does not come back to the bill I will terminate this speech.DAVID BENNETT: So this bill is an important bill and it is good that the Labour Party actually agreed with it. In the Finance and Expenditure Committee it was good to see that agreement from the Labour Party members. They actually worked constructively in the committee to come to some plausible solutions I think. Mr David Cunliffe was leading the Labour Party in that role. He worked through the provisions of the bill to make sure that both National and Labour were confident that it retained the rights of State service employees but also worked together in the best interests of getting the bill through this Parliament. So I would like to commend this bill to the House. It is a shame that the Green Party cannot also be supportive of the bill but it is in the best interests of the New Zealand State sector going forward. Thank you.Hon CLAYTON COSGROVE (Labour):Well that was a lesson in how not to do it from that member David Bennett. No one actually knows what he said and it would be an indignity to the House to give that member more than a few seconds.The State Sector and Public Finance Reform Bill is an important piece of legislation. I have got to say that the Opposition’s role is to oppose but also to propose but we are getting a little tired on this side of the House of being the guys with the shovel behind the elephant cleaning up the mess made by this crew over here. First it was the car-park tax; they botched that. I am going to pay tribute as I did in the last speech to Mr Hayes who as I have said before showed a ton of guts at the Finance and Expenditure Committee in actually saying that the Government was wrong.Hon Trevor Mallard: I thought it was Maggie Barry.Hon CLAYTON COSGROVE: No. Old man’s beard? No. John Hayes showed a ton of guts at the select committee in reining in his members and actually speaking out—in the privacy of the select committee with no public present of course. But none the less he opposed that. And we cleaned that up. The iPad tax the car-park tax—we cleaned them up.Now we are cleaning this up because this bill was a mess from start to finish. It took away fundamental rights—fundamental rights of employers. I will say on record and I think it is a comment that most of us across the House would agree with that we have one of the top Civil Services in the world one of the best Public Services in the world a non-corrupt Public Service highly professional. But things go wrong. People are human; mistakes are made.I want to touch on the point that Mr Parker made around what I call the John Banks clause—the immunity clause—because there is a problem. If you actually track back what this does it provides immunity in respect of a gross act of negligence if it occurs. It may be something as simple as the boss saying to the junior public servant: “Don’t do it.”—whatever it may be—“Don’t do that.” The junior not out of any maliciousness simply does it gets it wrong and acts in legal terms—Ms Barry might want to work on this one—in a grossly negligent way. So you then have a victim you then have potential injury or loss but that public servant has immunity.What does that mean? That means that the victim of that grossly negligent act cannot—they have no right to—bring a suit against the Crown. They have virtually no right because the act in itself may carry no vicarious liability and they have no right potentially to bring suit against the individual the junior who in a non-malicious way acted grossly and negligently. That I think is a step too far. I say that simply not as aslur against the Public Service but because people are human and things go wrong. We in our offices every day have constituents and people who come to us where something has gone wrong in the machinery of government. It could be ACC. Mr Little and Mr Mallard have raised a whole series of examples over the last few years in respect of that. Many of those presumably I would argue are not malicious are not done in a malicious fashion. They are what you would commonly call in Kiwi parlance a stuff-up. But there are rights for victims and those who have experienced loss or injury to have and to seek remedy. In this case those rights it appears to us are taken away and we have the John Banks clause the immunity clause. Maybe Mr Banks would want this clause extended to him given his difficult and perilous circumstances at this point.Andrew Little: John Banks Judith Collins—you name them.Hon CLAYTON COSGROVE: Well John Banks Judith Collins and possibly even Peter Dunne. Who knows? The list of suspects goes on—Hon Trevor Mallard: Chris Finlayson.Hon CLAYTON COSGROVE: Chris Finlayson my colleague says. The list goes on and on and on—the rotten foundations that are propping up this crew.The other point I want to make is this. One of the issues that Mr Peters touched on was the infamous strategy report that was leaked by I think this chap Mr Lusk who basically said that the objective of the National Party was to politicise the Public Service to the point where it would just do what it was told. That is a very very dangerous thing. One of the great qualities—Hon Trevor Mallard: Michael Woodhouse agrees.Hon CLAYTON COSGROVE: Michael Woodhouse—well he is a Lusk acolyte I think—Hon Trevor Mallard: No no quite the opposite.Hon CLAYTON COSGROVE: Quite the opposite—OK. [Interruption ] He tried to clean Mr Lusk out. One of the great qualities of our Public Service is that it is an unbiased non-political Public Service that in my experience when I was a Minister gave free and frank advice and would say to you: “Minister I think you are wrong if you are going to do this.”Hon Trevor Mallard: Quite often to me.Hon CLAYTON COSGROVE: Quite often to Trevor Mallard. But if the Minister—where the buck stops—decided “No no I’m going to do it this way. I believe I’m right.” then the Public Service would row the boat in that direction. It would implement as it should constitutionally the wishes of its Minister and its Government which it serves. But the point is that they—the public servants I would deal with; I will not destroy their careers by naming them—would say to the Minister: “Look we are going to give you free and frank advice. We believe that this won’t work. We believe that it is the wrong course of action. Here is our recommendation.” That is what you want from a professional non-political Public Service.But I have talked to the odd public servant recently and they now say things like for instance how the staff-student ratios in education were a stuff-up par excellence by this crew. They were forced to back down by the weight and the pressure put on by parents. The Christchurch school closures—how they were done why they were done criteria being wrong and other issues. I believe and some public servants have said to me that they now do not have the ability or they do not feel confident in saying to the Minister: “We think this is heading for the rocks. We don’t think in the case of Hekia Parata you can convince parents. There is no logic or data that says that if you increase class sizes your kids will get a better education. We think you shouldn’t do this Minister.” I do not believe that that advice came. Likewise on the school closures: “You shouldn’t do it this way Minister. You should front the schools. You should adhere to your own criteriathat you set down for closures which you have departed from. That is not the way Minister to do this in Christchurch.” That advice I suspect if it came—I do not know whether it did; if it did it was not rigorous—was not listened to by the Minister.There is a feeling I believe in the Public Service that one there is no point in giving contrary advice and saying to a Minister “We don’t think this will work.” or two there is a bit of good old-fashioned intimidation where you know that you are going to get trodden on if you give contestable free and frank advice and say: “Minister this may not work.” Therefore we do not get the best possible advice from our public servants.That might suit that crew over there who now have a strategy paper leaked that shows that they do not want that; they just want public servants like robots who will do their bidding. They want a highly politicised Public Service simply to do their bidding. They want a Public Service that effectively is a political lackey for them to do their bidding regardless of the constitution—the lack of it—and regardless of the ethics. That is what is now in print in a strategy paper that Mr Peters alluded to. That is highly dangerous. That is grossly unethical. That is a hit and an attack on our constitution and on the good name of public servants.From time to time of course everyone likes to kick around the old public servant and from time to time bluntly they deserve it—some of them do. Some of them do deserve it and some of them do act from time to time a bit like the old Sir Humphrey where there is a battle between the Minister and the senior public servant because the Minister wants to do something and the senior public servant—one or two in my experience—is implacably opposed which goes beyond simply saying: “Hey we think you should go the other way but we’ll implement it.” So there is a need I think for some discipline around some of those public servants but I say that it is very very dangerous in our open little democracy where a Government openly overtly and bluntly is writing papers about politicising our professional Public Service. That is not on. That is wrong.We will support this legislation because we cleaned it up. It was a mess from start to finish. Some incredible Supplementary Order Papers were put up which broke the consensus as Mr Mallard has said. Ideas and clauses were put up that would have stripped basic working folks—public servants are entitled to get paid especially the odd teacher but these guys struggle with that concept—of basic rights. Not outlandish rights not luxuries not things that any other citizen would not expect if they were working in the private sector—basic rights. And we cleaned that bill up and the Council of Trade Unions and the Public Service Association which we should pay credit to put in robust submissions. I will give some credit to Mr Hayes and others whom we worked with to clean it up. But I have got to say that this is about the third time that the Opposition has had to act like the guy with the shovel behind the elephant and clean up their mess. The people deserve better and we are getting a bit tired of providing the answers to these geniuses over there.MAGGIE BARRY (National—North Shore):I rise to speak to the State Sector and Public Finance Reform Bill in its second reading. Basically this is a document that updates the old Public Finance Act 1989 which has stood us in pretty good stead actually for the past 25 or so years. It is a piece of legislation though that does need to be brought up to date and needs to be futureproofed. As our acting chair of the Finance and Expenditure Committee Paul Goldsmith said earlier this omnibus bill provides legislative grunt. That is pretty much what this bill does.The three new provisions which were outlined by the Minister of State Services earlier today are to formulate fiscal strategy to recognise its interaction with monetary policy—something of a mystery to the people on the opposing benches. It is also designed to formulate fiscal strategy recognising its likely impact on current and futuregenerations. And of course ultimately what we need to do with this is ensure that the Crown’s resources are managed effectively and efficiently which is something that the Opposition woefully was incapable of doing in its 9 long years on the Treasury benches.The select committee process is of course a robust one. Various parties and speakers before me have alluded to the fact that some changes were made. Overall with this piece of legislation we received four submissions and we heard two of them and there were a couple of changes that are worth mentioning. One of them is that of course as we know the relationship between fiscal policy and monetary policy is a two-way thing and the revised wording of the Act as a result of the discussions at the select committee will clarify that further. Keeping up with the times and this Government’s desire to see more services available online this bill has been futureproofed. The bill is now amended so that it is able to bring those fiscal responsibility provisions in line with modern technology which is where via the internet a lot of people read legislation like this and where they need to go to find out what is happening.I will clarify as well I think something that has come forward from some of the other speakers today—a misnomer a common sense of confusion—and put that right. Some people think that this is a bill that is a result of a confidence and supply agreement between this Government and the ACT Party. The Labour Party’s minority report for example alluded to that. That is of course not true. This is a bill that arose out of a Treasury-initiated review of the fiscal responsibility provisions of the Public Finance Act and I commend it to the House. Thank you.The ASSISTANT SPEAKER (Lindsay Tisch): I understand that the next call is a split call. I call Darien Fenton.DARIEN FENTON (Labour):I have been fascinated hearing about the select committee process on the State Sector and Public Finance Reform Bill particularly because David Bennett is a member of that committee the Finance and Expenditure Committee and I am hoping that he will learn quite a lot about how you can make changes that actually improve workers’ rights when we come to consider the draconian employment law legislation in front of the Transport and Industrial Relations Committee. In my first reading speech I said there were some good things in this bill and there were some things that we were concerned about. Some of them have been cleaned up. I am particularly pleased that we have got to a position with the redundancy provisions for State sector employees where the Public Service union is comfortable with it although it has commented that there is no doubt that there are more restraints being imposed on redundancy compensation but compared with the original proposal it has certainly made some ground.I noted also that Jonathan Coleman the Minister of State Services when he was in his second reading speech talked about redundancy being about fairness. I am quite confused about that actually. It seems that redundancy is about fairness when it comes to this bill but it is not about fairness when it comes to Sue Moroney’s bill the Employment Relations (Statutory Minimum Redundancy Entitlements) Amendment Bill which would provide redundancy fairness for private sector workers as well as public sector workers. Also it seems that this is about fairness when it comes to situations in the Public Service which of course I support where workers are being transferred from one position to another—and there are many rights that are being cleaned up in this bill and I totally support those—but when it comes to transferring low-paid cleaners or low-paid kitchen workers or low-paid orderlies or laundry workers who work in the private sector or even in hospitals or are employed as contractors under Part 6 of the Employment Relations Act fairness does not apply. Actually whatthe Government wants to do is take away rights of workers who are actually employed by small employers.The second thing that I wanted to mention is the issue of workplace orders and again this is something that I understand took a lot of negotiation and a lot of consideration and that perhaps is an exemplar about how select committees can reach agreement and make progress on a bill that is important to everyone. Originally the bill allowed for the Government to use Orders in Council to intervene in collective bargaining between the union and the employer for example to prevent the employer agreeing to a pay rise. It is really pleasing that the select committee has dropped that provision and instead the new bill allows the State Services Commissioner to issue workforce policy statements but these specifically exclude pay and conditions. But as my colleague David Parker warned earlier though there are consequences—there are knock-on effects. The Government’s Employment Relations Amendment Bill will have a knock-on effect in the State sector. Although the State Services Commission will not be able to interfere with collective bargaining the Government’s bill around collective bargaining will have an enormous impact on State sector workers and we will see how that goes. But under that bill employers will not have to negotiate a collective agreement. They can just say: “Well we don’t want to.” So it is going to be harder for them to negotiate a pay rise let alone protection for people who work in the State sector in the public sector who may be in a situation where they are trying to bargain for a pay rise or to keep their current terms and conditions as they have to do at the moment because this Government has been so mean.Also under those provisions new workers can be paid less. So having a collective agreement is one thing but being able to bring in new workers and pay them less under the Government’s other legislation will actually undermine the provisions in the bill around collective agreements. There are other provisions that I could talk about but I will not. What I would say is I find two things very interesting. One is that we have a select committee process where there seems to be agreement across the board albeit with some reservations on our side about the rights of workers to redundancy and collective bargaining but then on the other hand another select committee is about to completely undermine those provisions for all workers.KEVIN HAGUE (Green):The previous speaker in this debate Darien Fenton talked about her first reading speech in which she indicated that the State Sector and Public Finance Reform Bill was a mix of positive and negative. I agreed at that time and actually I still agree that that is a correct summary of the bill. For our colleagues in Labour the changes made by the Finance and Expenditure Committee which I agree have been positive have been enough for them to support the bill; for us they have not been. We believe that the bill is still an unsatisfactory mix of positive and negative. In particular we are frustrated I guess by the fact that these basic Acts that set up the machinery of the modern State sector deserved more scrutiny and a proper overhaul rather than this omnibus bill that tinkers around the fundamentals.The positive that I want allude to is around the silo effect of the State Sector Act which from the word go I guess was identified as a problem in that the Act rather than create a single public service created incentives and created levers that set up the siloisation of Government departments. I think we have witnessed in New Zealand some of the downside of that where Government departments have not been collaborating with each other in ways that the public expects and that any Government I am sure would wish to happen. So the modest improvements made by this bill in that area are ones that are welcome. It could have gone a lot further and certainly we would hope in the future to be able to try to make further progress in that area.However on the negative side and I alluded to some of this in the first reading speech and sadly it has not been really addressed by the Finance and Expenditure Committee the ministerial interference through ministerial observers in Government departments offends against the very basic idea in the State Sector Act around separation between the Minister and the chief executive. That has not been remedied by the select committee. The establishment of departmental agencies offends against the basic building block if you like of the Public Finance Act whereby one of these departmental agencies will receive funding from one source but be accountable to a different Minister. That basic alignment of funding and accountability that sits at the very heart of the Public Finance Act is lost in the changes made by this bill.Perhaps most important the delegation of Crown functions to someone outside the State sector makes the boundary around public services and the public sector a porous boundary and that is a retrograde and dangerous step. This Government has made a habit of changing the social contract that the State has with its citizens as we are seeing with the Government Communications Security Bureau bill before the House at the moment which is a basic change to that social contract. Indeed constraints on the liberty of citizens that they may tolerate accept and consent to from the State they may be unwilling to tolerate and consent to from an agency outside of the State. This bill in extending the ability of Government departments and State agencies to contract out services to agencies outside of the State sector is meddling with this very basic aspect of the social contract between the State and citizens. It is wrong. Sir Geoffrey Palmer was right: this bill is a dog’s breakfast and the Green Party at least will still oppose it.The question was put that the amendments recommended by the Finance and Expenditure Committee by majority be agreed to.A party vote was called for on the questionThat the question be agreed to.Ayes95New Zealand National 59; New Zealand Labour 33; ACT New Zealand 1; Independents: Dunne Horan.Noes25Green Party 14; New Zealand First 7; Māori Party 3; Mana 1.Question agreed to.A party vote was called for on the questionThat the State Sector and Public Finance Reform Bill be now read a second time.Ayes95New Zealand National 59; New Zealand Labour 33; ACT New Zealand 1; Independents: Dunne Horan.Noes25Green Party 14; New Zealand First 7; Māori Party 3; Mana 1.Bill read a second time.