Public Finance (State Sector Management) Bill — In Committee 
Public Finance (State Sector Management) Bill — In Committee 
[Volume:622;Page:17901] 
Tuesday 14 December 2004 
( 
continued on Thursday 16 December 2004 
) 
Public Finance (State Sector Management) Bill 
In Committee 
Debate resumed. 
Part 5 Operation of Crown entities ( 
continued 
)  
BRIAN CONNELL (National—Rakaia) 
: 
 Good morning! It is nice to be back here in the Chamber digging in for another 3 or 4 days of hard yacker until Monday at least—and that is exactly what the conservatives intend to do. Last night when I was taking a call I talked about clause 157 “Crown entity to be good employer”. I looked at subclause (2)(g) which provides for “recognition of the employment requirements of women;” and I had to think of Judy Bailey. Now there is a Crown entity that is an outstanding employer for women—Television New Zealand. 
ROD DONALD (Co-Leader—Green) 
: 
 It is also a pleasure for me to be back after a spirited night last night. I would like to offer Mr Connell some even more PC amendments to this part and in particular to clause 157 because I do not think that the Crown is being a good employer. It is falling down particularly in relation to pay equity and I intend on behalf of the Green Party to put forward an amendment to fix that particular problem. If members care to look at clause 157(2) they will see that it currently states that: “… a good employer … operates a personnel policy … including provisions requiring— … (b) an equal employment opportunities programme;”. In our view that does not go far enough. We want the Government to have a pay and employment equity programme and in case members are in any doubt about what that means our proposed amendment to clause 157 provides for “a programme that is aimed at the identification and elimination of all aspects of policies procedures and other institutional barriers that cause or perpetuate or tend to cause or perpetuate inequality in respect of the employment and remuneration of any persons or group of persons.” That is something that should be incorporated into this bill because the public service should be a leader in pay equity for a start. 
Unfortunately to the embarrassment of the Government not only does the public service fail to be a leader but the gender pay gap is wider in the public sector than in the private sector. One reason for that is that the public sector employs comparatively more women than the private sector but that is not an excuse. It is time that this Government faced up to the need for a proper pay equity programme and it is time that it put some money where its mouth is. Senior people in the Government often talk about the need for pay equity—the need for women to earn the same as men for either work that is the same or work that is different but of equal value. I say to members on the Government benches—particularly to those members of the Government with a union background such as Lynne Pillay and others— that this is their opportunity to show that they are committed to pay equity and that they do recognise that women still earn only 80c for every dollar that men earn despite improving their educational attainment. So let us deal with the structural discrimination that exists in the labour market. 
The Government of course acknowledges that we have a problem. It is not even as though we have to convince the Government that there is a problem. It has been doing something about it. Its usual strategy is of course to set up a task force so it did that. The Government had one of those in 2003 and since then it has established a unit within the Department of Labour to look at the pay equity issue and to find ways forward. Well let us actually implement some changes. Yes pay equity is a complex issue but there has been sufficient work done for the Government to proceed to put pen to paper and to legislate for pay equity. It should take the first step today by supporting the Green Party amendment to clause 157 so that a pay and employment equity programme becomes part of what is expected of a good employer. It is all there in the task force’s report; it stated what needs to be done. 
Let us face a few facts and look at why pay equity needs to happen. At the moment there is the classic example of nurses and sworn police officers. A nurse’s starting salary is approximately $30000 a year while police start at approximately $40000. At the top of the scale nurses are paid just over $40000 while police earn $60000. That is simply unacceptable. The Government knows that and it should be doing something about it. But pay equity is not just about men and women. There are significant differences in pay between different ethnic groups. The average hourly earnings for Pakeha men was $19.88 in the year to June 2003 while for European women it was $16.96 for Maori men it was $16.29 for Maori women it was $14.53 for Pacific Island men it was $13.90 and Pacific Island women earned the lowest hourly rate of $13.79. That is unacceptable for a Labour-led Government—one that claims it is committed to helping people who are poor or disadvantaged in the community. 
The Government has the opportunity today to fix that problem. It can become a leader and fix the problem in the public service where the average salary was $43163 for women and $52436 for men. 
DEBORAH CODDINGTON (ACT) 
: 
 I would like to carry on with what Rod Donald was speaking about and with what Lockwood Smith was speaking about just before midnight last night when we adjourned for the evening. That was clause 157(2). We will not be voting for the amendment that Mr Donald has put forward. He may take another call and explain it further but he has not satisfactorily given a good reason to justify pay equity. 
Rod Donald 
: Cut your salary by 20 percent! 
DEBORAH CODDINGTON 
: That is the point. People who advocate equality for all— 
Rod Donald 
: Equity! 
DEBORAH CODDINGTON 
: —equity for all want to drag the top people down to the bottom. They do not want to encourage people at the bottom of the heap to aspire to get to the top; they just want to drag everyone down to the bottom. Pay equity to someone who argues like that would mean taking Judy Bailey’s salary down to the lowest salary level paid at TVNZ. That is what pay equity means. 
Hon Member 
: Bollocks! 
DEBORAH CODDINGTON 
: Well that was a very intelligent reaction from someone who probably should know better than that. However Rod Donald talked about the value of those people but I ask to whom they are of value. How can one person say that the value of a nurse is exactly the same as the value of a police officer? I absolutely totally agree that nurses need to be paid more but it is nothing to do with the inequity of the pay scales that leads to there being low-paid nurses. It is to do with unionisation and the one-size-fits-all approach of the union and it is the same with the teachers’ pay scale. 
There are other issues in clause 157(2). It starts off OK. It provides that: “ … a good employer is an employer who operates a personnel policy containing provisions generally accepted as necessary for the fair and proper treatment of employees in all aspects of their employment”. But it then goes further and directs the public service in various areas. That always starts in the public service but then it moves into the private sector and the private sector is required to follow those requirements too. Clause 157(2) provides that there is to be: “(d) recognition of—(i) the aims and aspirations of Maori; and (ii) the employment requirements of Maori; and (iii) the need for involvement of Maori as employees of the entity;”. Apart from being race-based legislation that provision is totally meaningless. What on earth is in the heads and hearts of Maori that is different from the aims and aspirations the employment requirements and the need for involvement of any person of a different culture or different ethnic background from Maori? That is insulting to Maori. It sets them out as being not quite as good as everybody else; therefore they need to be targeted for special assistance. 
But even more insulting is clause 157(2)(g) which provides for “recognition of the employment requirements of women;”. What are the employment requirements of women? Which women does the provision refer to? Is it all women individual women large women small women white women or brown women? We cannot collectivise a group of people like that without it being an “-ist”. This is sexist and racist legislation. It insults women Maori and ethnic minority groups which are also mentioned in the clause. This legislation is being promoted and driven by the Minister who is meant to be ferreting out all that sort of drivel in legislation—the whole ethnic filter that is creeping into legislation. This is an example of the Government paying lip service only to that. After the Orewa speech the Government came out grandly and said there would be no more race-based legislation yet here it is written large in clause 157(2). 
I go back to the pay equity issue and the issue that people should be paid the same amount for work that is the same or for work that is different but of equal value. 
LYNNE PILLAY (Labour—Waitakere) 
: 
 I move  
That the question be now put 
. 
Hon DAVID CARTER (National) 
: 
 I also want to talk about clause 157 in the Public Finance (State Sector Management) Bill. I am astounded to come into the Chamber today to find that a clause such as this is even in legislation: a Crown entity is to be a good employer. That sort of legislation would not have been required until this Labour Government came to power. I want the Committee to remember the treatment that Helen Clark gave to one State employee Kit Richards. Kit Richards was a valuable member of Timberlands but because he disagreed with the Prime Minister she drove him out of his job. She hounded that man. Now that incident has been quietly forgotten and into the legislation we are putting this sort of politically correct clause requiring a Crown entity to be a good employer. I just hope Helen Clark herself takes note of this clause. In future when another person like Kit Richards has the audacity to disagree with the Prime Minister we will see what sort of treatment he or she gets. 
It reminds me of the debate that is going on in the newspapers now about one Judy Bailey; it is on the front page of the  
Dominion Post  
for the second day in a row. Here is a person who is negotiating with her employers and now Helen Clark has decided that that salary is something that she has the right to set as well. 
If I refer back to clause 157 I want particularly to look at subclause (2). The subclause states that for the purposes of this section a good employer is one who “operates a personnel policy” moving down to paragraph (d) that requires: “recognition of—(i) the aims and aspirations of Maori; and (ii) the employment requirements of Maori; and (iii) the need for involvement of Maori as employees of the entity;”. Are not Mr Mallard and the Prime Minister on record as saying they have engaged in a process to get rid of race-based legislation and to base Government policy on need? That is what they say they will do yet today what we see in the detail of this bill is absolutely the opposite. I do not recall any legislation that is as specifically race-based as clause 157(2) which states categorically that for a Crown entity to be a good employer it must develop a policy recognising the aims and the aspirations of Maori. 
How can that not be race-based legislation? I want the next Labour speaker to deny that that is the case. No Labour member will be able to do that. The Prime Minister is so busy spinning the message about the need for equal citizenship yet her Government is quietly back in Parliament and under urgency forcing through a huge bill that specifically requires a Crown entity to establish race-based employment policy. 
I say to Phillip Field that that is absolutely wrong. That is wrong on two counts. First it is condescending to and demeaning of Maori. Why do they need a clause such as this? They can get on in this world like the rest of us. 
Dr the Hon Lockwood Smith 
: Labour thinks Maori are inferior. 
Hon DAVID CARTER 
: Labour feels that they are inferior so it punches through legislation such as this that just demeans Maori. I ask Phillip Field who is going to take the next call and make an attempt to answer this to explain to the Committee today why we have to put this sort of wording into legislation. The answer is we do not have to. The answer is we should not have to. 
JILL PETTIS (Senior Whip—Labour) 
: 
 I move  
That the question be now put 
. 
JIM PETERS (NZ First) 
: 
 I listened with interest last night as I left the Chamber just before midnight and heard quite an impassioned comment about the very subclauses that have just been referred to by the last speaker—namely those in clause 157. I went home after midnight somewhat confused by the trend and the tone of Dr the Hon Lockwood Smith’s comments. 
I am even more confused by the Hon David Carter. As an employer in the State service as a school principal who employed many teachers and other staff throughout the late 1990s I recall such aspirations as these being quite clearly set out in the then Government’s requirements. I also can recall a very impassioned debate with an education consultant about why the Treaty of Waitangi obligations were being fostered upon the education service by the National administration of the 1990s. All that I can say very briefly is that what I see here is a watered-down version of what I saw the last Government enshrine in day-to-day requirements of employers in the State service throughout the 1990s. 
Dr the Hon Lockwood Smith 
: Rubbish! 
JIM PETERS 
: The call of “Rubbish!” could be answered by documentary evidence of exactly that. This measure to me personally is demeaning. It need not be there. But all that I see in that clause is a watered-down version of a far stronger obligation that was imposed by the last Government upon the State services throughout the 1990s. So let it rest where it belongs. Dr the Hon Lockwood Smith knows exactly what I am talking about. As a Minister of Education he set in train such obligations and burdens and he knows that. It was because of his impassioned call last night that I decided reluctantly to get up and say that National was not only the godfather the grandfather and the grandmother of these clauses but enshrined them bill by bill Act by Act throughout the 1990s. For those members to attempt now to come to the Committee with very pure and clean white hands is just not on. 
Hon TAITO PHILLIP FIELD (Minister of State) 
: 
 I move  
That the question be now put 
. 
GERRY BROWNLEE (Deputy Leader—National) 
: 
 We are debating Part 5 of the Public Finance (State Sector Management) Bill and I want to draw the Committee’s attention to clause 148 “Power to direct Crown agents to give effect to government policy”. This is where Helen Clark picks up the phone rings Bill Ralston and says: “I think Judy Bailey should be getting $800000 a year.” And what happens? It is in the headlines the day after. 
This is an interesting clause. I do not know whether the Minister is able to tell us whether it is new or whether it has been in legislation for some time. If it has been in legislation for some time then electricity consumers in this country would have to wonder why their power bills over this past winter were so big. The State still owns 85 percent of the electricity industry. The State returns enormous profits to the Government coffers—all those electricity bills helping to build up the almost $7 billion surplus that the Government currently says is so small it is unable to give any relief to taxpayers. That surplus comes from things like big electricity bills. 
Then of course is the issue we have seen in the last couple of days where the Government has decided to apply a new tax to oil and other fossil fuels so we can have a guaranteed supply. I would have thought that the Minister when he was alerted in October 2002 that New Zealand was facing a crisis in its oil supply—in other words our 90-day stocks were well below that level at that time and continued to be all of that time—might have said to the bodies responsible: “Let’s get ourselves involved here.” and the ministry could have been directed to ensure that that level of supply was available to the country. 
But this Government is absolutely terrified of the bureaucracy. It knows that the last remaining strong union in this country is to be found in the State sector. So a clause like this one clause 148 is put into the legislation and we know it will have absolutely no effect whatsoever. The Labour Government enacting this legislation will not pick up the phone to tell Mr Ralston to cut the pay rate afforded the country’s most highly paid newsreader. It will not say to electricity companies: “Calm it down fellas calm it down. The people out there who actually own you would like to have a better deal during the winter months.” And they will not go to the Ministry of Energy and say: “Get us a 90-day supply and make sure it’s maintained.” 
I want to know from the Minister whether this is new and whether we can expect a lot more Government direction on these matters in the future. I say quickly that the National Party would not operate in that way. We would not want to see taxpayers sold the idea that a television company was of such importance that it had to operate under a charter but then had to maintain its commercial position to such an extent that it had to lead the market in the salaries it pays to its people. We would also want to ask what the point is of the Government having such a huge stake in the electricity industry if New Zealanders have to go cold because they do not have deep enough pockets to pay the bills electricity companies render. 
This bill is very very interesting and Part 5 seems to be the most important part of it. In fact I believe that after this we will begin the debate on the schedules or are the schedules being taken as we go through? 
Simon Power 
: There’s Part 6. 
GERRY BROWNLEE 
: I am sorry. We will be back on Monday for Part 6 and I hope I can take call on that part. I know that this legislation is so important that we are having to do it under the cloak of urgency. By the way the Government has had this bill on the Order Paper for—how long? 
Jim Peters 
: 11 months. 
GERRY BROWNLEE 
: This bill has been on the Order Paper for 11 months. 
SIMON POWER (National—Rangitikei) 
: 
 Two questions leap to mind while we are discussing Part 5. The first unanswered question is what does the United Future party think of Part 5? The reason I ask that question is that that party supported the urgency motion that had us here until midnight last night will have us here till midnight tonight tomorrow night until midnight Saturday night and we will be back on Tuesday— 
Rod Donald 
: Monday. 
SIMON POWER 
: We will be back on Monday as well. I probably will not leave. Senior whips do not leave. I will not leave. United Future has a responsibility to have its representative in this Parliament rise to his feet to explain to this Chamber why it is—at least Rod Donald has the decency to rise to his feet to make a contribution during the course of this debate. We may not agree with him. He supports urgency. We certainly do not agree with that. However United Future sits there dumbstruck is trampled over and refuses to make a contribution on Part 5 and more particularly on the crucial clause 148. 
I tell members who are present in the House this morning that I cannot wait—and I know that Clayton Cosgrove cannot either—to get on the platform with United Future candidates before the general election later this year. National members will have great fun with them. That party which proclaims a principled and reasonable approach to politics puts up an amendment to reduce tax paid by New Zealanders and then votes for a bill that does exactly the opposite. It could have pulled the Civil Union Bill from the clutches of the Government but sat on its hands and did nothing. 
This morning a bill comes before the Committee whereby a clause is included to give the Government direct power over Crown agencies to affect Government policy and what does the United Future party do? It sits on its hands and makes no contribution to this debate at all. If a party supports the Labour Government on matters of confidence and supply Mr Copeland should rise to his feet to justify to this Parliament and to New Zealand why the United Future party supports this House sitting under urgency and is supporting legislation particularly Part 5 that will do nothing more than centre in Helen Clark’s hands even more power to direct the bureaucracy. 
David Cunliffe who let us face it is very disappointed about Monday’s announcement sits there and says nothing. He does not take any calls. He could end up with the customs portfolio but it is unlikely. He should get on his feet to answer some of those questions. As a graduate of the John F Kennedy School of Government at Harvard he should reassure the Parliament and the country that this will not affect the way in which neutral independent democracy works. We know what will happen if one becomes a close personal friend of the Prime Minister when one is in the bureaucracy. Just ask Ross Armstrong what happens if the Prime Minister’s directions are not followed when one is in the bureaucracy. What happens is that one is hung out to dry. 
Members should wait until later this morning when the TVNZ board—this is my prediction—will be hung out to dry over the Judy Bailey fiasco. This is what happens and officials in this Parliament should be worried. When one gets too close to the Government as one will under clause 148 bureaucrats officials members on boards of Crown agencies and State-owned enterprises will be hung out to dry with whatever political expediency Helen Clark believes is necessary to pursue her own narrow-minded agenda. 
That should be worrying for what historically has been a proud and independent public service in New Zealand. That should be worrying for those who have been independently appointed to boards of State-owned enterprises and Crown agencies throughout New Zealand. The Tertiary Education Commission is a classic example. The Government cannot help but get its fingers on every little board agency and now deep into the bureaucracy of New Zealand because it simply is a group of people who are total and complete control freaks. That is the only way to describe it. What happened? United Future let it happen week after week after week in this Parliament and with important legislation like this refused to take a call. 
CLAYTON COSGROVE (Labour—Waimakariri) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Motion agreed to. 
The question was put that the following amendment in the name of Rod Donald to clause 157 be agreed to: 
to omit paragraph (b) of subclause (2) and substitute the following new paragraph: 
(b)A pay and employment equity programme. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 9 
Green Party 9. 
Noes 110 
New Zealand Labour 51; New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2. 
Amendment not agreed to. 
The question was put that the following amendment in the name of Rod Donald to clause 157 be agreed to: 
to omit subclause (3) and substitute the following new subclause: 
(3)For the purpose of this section a pay and employment equity programme means a programme that is aimed at the identification and elimination of all aspects of policies procedures and other institutional barriers that cause or perpetuate or tend to cause or perpetuate inequality in respect of the employment and remuneration of any persons or group of persons. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 9 
Green Party 9. 
Noes 110 
New Zealand Labour 51; New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2. 
Amendment not agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 315 in the name of the Hon Dr Michael Cullen to Part 5 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 71 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2; Maori Party 1. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 5 as amended be agreed to. 
Ayes 71 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2; Maori Party 1. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Part 5 as amended agreed to. 
Part 6 Crown entity reporting and financial obligations 
JOHN KEY (National—Helensville) 
: 
 Part 6 reflects exactly what is wrong with this legislation. It is full of weasel words and drivel and a whole lot of stuff that has been jammed into a very long document in the hope that no one will actually read it. I will start by making that quite clear in a number of interesting facts that have come forward. First I draw the Committee’s attention to clause 192 “Disclosure of payments in respect of members committee members and employees”. This is the clause that essentially states that remuneration must be declared in bands and there is the ability for people who pick up a set of accounts from a Crown entity to understand exactly where there is remuneration and how confidentiality arrangements work. 
I raise that because on page 1 of this morning’s  
Dominion Post  
is quite an interesting article about Judy Bailey’s $800000 pay deal but more important about Ian Fraser’s appearance before the Commerce Committee in which he said there was only one confidentiality arrangement in relation to Paul Holmes. In fact that is not correct. It now turns out that there was another confidentiality arrangement in relation to Judy Bailey. No doubt that will be part of the discussions held this morning with the board of TVNZ. I point out that that is exactly the situation in clause 192 where the law will not be being followed and where there are plenty of out clauses. 
I also want to raise the issue around the ministerial involvements in the statements of intent. The reason this is very important is that Crown entities have really prided themselves in being part of the overall Government process but being autonomous and independent and set up with the view that the boards can control what is happening in the—[ 
Interruption 
] That is right. That was the theory. Back in the good old days when National led the Government the Crown entities were able to operate in the way they should. They were responsible to the boards and if the Government did not like what was happening in the Crown entities it knew what action to take—get in there and sack the boards change them do something about the matter. That is a very simple example and we will see the Government in action no doubt when the board of TVNZ gets the flick. But and this is the point— 
Gerry Brownlee 
: But they won’t. 
JOHN KEY 
: They will not because there will be a U-turn or an out clause or something else. 
Gerry Brownlee 
: Another flip-flop. 
JOHN KEY 
: Helen Clark will find another reason to flip-flop. But let us look at clause 185 which is extremely interesting. Despite a Crown entity being independent reporting to a board having its own autonomy and all the rest of it paragraph (a) states that a Minister can actually put into the statement of intent whatever he or she wants—“a responsible Minister may agree with the Crown entity that information additional to that required by sections 181 and 182 be included in the statement of intent:”. It gets a little bit better. Paragraph (c) states that the Minister can just chip whenever he or she wants: “a responsible Minister may make comments on a draft statement of intent …”. It is a matter of “Here we go we’ve got the board. We’ve set it up. Away you go. Go and run this autonomous Crown entity but by the way we can put in the statement of intent anything we want any time we like—and by the way while you are putting out your statement of intent we can sit like the Muppets on the sidelines and chip along.” 
Then the real doozey comes in paragraph (d) because although the Crown entity has been able to put in what it wants with the responsible Minister chipping in along the way the Minister can actually change what was put in anyway—and we are somehow meant to believe in this Parliament that the integrity of Crown entities established under their own Acts of Parliament will somehow be OK! Well that just does not make sense. 
I also want to draw the Committee’s attention to clause 181 “Content of statement of intent” which sets out what statements of intent can contain. I wonder whether the Hon David Cunliffe might like to pop to his feet in a moment and explain to me paragraph (e) which states: “how the entity proposes to manage the organisational health …”. What on earth is the organisational health? I understand that on Monday a book is coming out containing new weasel words and that the library has bought it because it needs to understand what is going into legislation in this Parliament. Steve Maharey the third-wayer has been in there with his whole range of weasel words that are now drifting in through the Parliamentary Counsel Office into our legislation. What on earth is the organisational health of a Crown entity? 
Jim Peters 
: He lectures in sociology. 
JOHN KEY 
: That is right. It gets slightly more interesting as well. There is clause 188 “Amendments to statement of intent by Crown entity”. First the good news is that a Crown entity can change its statement of intent any time it likes. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 I will carry on from where my good colleague John Key left off. I ask the Minister in the chair David Cunliffe whether he is hell-bent on bringing Parliament into derision. Some of the clauses in Part 6 are simply derisory. I will give members an example of what I mean. The Labour Government now finds it necessary under clause 186 to put into our law the process for providing the statement of intent to a responsible Minister. The Labour Ministers are so incompetent hopeless and useless that the law has to spell out how a statement of intent is to be provided to them by a Crown entity they are responsible for. 
Is this serious stuff? Here we are debating this under urgency just before Christmas. If it were April Fool’s Day I would say “OK you caught us out. Fair enough we were fools to think you were serious about this.” But it is not April Fool’s Day and clause 186 is bizarre garbage. How hopeless useless and incompetent are Labour Ministers that they have to put that into legislation? It is not simply a set of recommendations. It is the law of New Zealand. We pass the law of the land in this Parliament and Labour finds it necessary to spell out how a statement of intent is meant to be provided to a Minister. For goodness’ sake a Minister worth half a pinch of salt can pick up the phone and say that he or she wants the statement of intent tomorrow and it had damn well better be delivered. Oh no Labour is so useless that its legislation spends great paragraphs spelling it all out. 
But there is worse. That is just the farcical bit. Let us look at some of the serious stuff. Clause 180 “Statement of intent for new established Crown entities” states in subclause (3): “The responsible Minister may give directions to the Crown entity on any matters referred to in section 181(1)(b) to (d) (g) and (ga)”. I have no problem with the Minister being able to give directions as provided in clause 181(1)(b) over the “scope of the entity’s functions and intended operations”. Clearly there is a responsibility to make sure a Crown entity is proposing to carry out functions consistent with overall Government policy. But paragraph (d) states that the Minister can also give directions on “how the entity intends to perform its functions and conduct its operations”. So under that paragraph the Minister can give direction to a new Crown entity as to how it is to perform its functions. He or she can meddle absolutely in the management of a Crown entity. 
That is totally contrary to what Crown entities are meant to be all about. They are meant to be at arm’s length from the Government with a board of directors able to perform independently of Government political interference. Clause 181(1)(d) gives the Labour Government the chance to meddle absolutely in the management—how it intends to perform its functions—of a Crown entity. That is not just farcical but bad legislation. 
While I am talking about statements of intent I want to come to clause 185 which puts in the law of New Zealand under paragraph (c) that a “responsible Minister may make comments on a draft statement of intent”. What on earth does the law need to state that for? I just cannot believe this stuff. I spent 9 years as a Minister and promoted a lot of legislation. If a department had come along to me with a bill with that sort of junk in it I would have told it to take that garbage away and get rid of it. 
Why does the law of the land of New Zealand need to state that the “responsible Minister may make comments on a draft statement of intent”? What dopey dopey dopey stuff! How much more does the Government want to denigrate the laws of New Zealand? It is demeaning our laws. To have this junk in the law simply demeans it. 
DEBORAH CODDINGTON (ACT) 
: 
 I want to comment on clause 210 “Offences” too. Tertiary institutions were deeply concerned about these provisions. If we take that clause and clause 211 “Penalties for offences” put them alongside some of the other clauses relating to statements of intent—whereby a responsible Minister can direct a supposedly stand-alone Crown entity as to what can be in the statement of intent and can amend it—then relate them to clauses that have been debated in earlier parts we can see a pattern emerge. That pattern leads to the final nail in the coffin for Crown entities being stand-alone and at arm’s length from the executive. 
The definition of what now comes under the control of the executive includes not just universities but also the Symphony Orchestra the Historic Places Trust and all those stand-alone entities. Sure they have always been Crown entities but this legislation gives far more power to the responsible Minister in terms of interfering with those entities. 
An example of how that is manifest today is the Government’s huge embarrassment over what is happening at TVNZ. First of all the Government appointed Ross Armstrong as chairman of TVNZ. That turned to custard. It appointed Craig Boyce as chairman. Do we have an effective board? No we do not. Another Government appointee Ann Hercus who is also on the financial committee signed off on Judy Bailey’s salary rise. Those negotiations have dragged on for so long and have been so ineptly handled. There was no poaching of Judy Bailey by any other company. It was simply the ineptness of the board that led to the situation whereby her salary was doubled. 
So what happened? The board signed off on it. Then one of the board members rushed to the Minister of Broadcasting to tell him what had happened and what did the Government try to do? It tried to manage the situation and pre-empt it with damage control by leaking the story to the media. Well has that not backfired hugely? We have only to look at the letters to the editor in the  
Dominion Post  
today to see how it has backfired for the Government—a Government that campaigned on ending the culture of extravagance. The same Prime Minister who said the public was revolted at Paul Holmes’ salary will now say that heads will roll at the board but it is a bit too late for that. 
What will happen when a vice-chancellor or the council of a university does something that gets up the nose of the Government of the day—any Government—under this legislation? Will the Government come out swinging have a little hissy fit and say that heads will roll at that university because it has not followed the responsible Minister’s interference and meddling in the statement of intent? What will happen if the Symphony Orchestra—which as I said yesterday is under the Associate Minister for Arts Culture and Heritage Judith Tizard—plays the music of what she calls “dead white men”. Beethoven and Bach she said have had their day and should not be played. 
Hon Member 
: Extraordinary! 
DEBORAH CODDINGTON 
: Absolutely. 
Hon Member 
: Who said that? 
DEBORAH CODDINGTON 
: The Minister with responsibility for Auckland Issues and Associate Minister for Arts Culture and Heritage. 
Craig McNair 
: She didn’t! 
DEBORAH CODDINGTON 
: She did. The member should go back through  
Hansard 
. The point is that the Government should not have the power to meddle in day-to-day affairs. 
Of course it suits the Government very well not to provide information about what goes on when it does not want to. If for instance one submits a written parliamentary question about the policy of TVNZ in checking the background of senior employees in charge of hundreds of millions of dollars the Government does not want to know. 
JIM PETERS (NZ First) 
: 
 In the debate on the previous part I mentioned to the Minister of Education that he was obviously waiting to put into practice those provisions relating to the actions of the present Teachers Council—a council that has reached an all-time low. But in clause 192 in this part I detect something else. 
I recently read a number of Education Review Office reports and I saw a trend developing in those reports that is completely contrary to the Education Act but allowable under clause 192—that is that a member of a board of trustees apart from the principal or staff trustee may be an employee of the board. As I understand it the Education Act expressly states one cannot. 
Recent Education Review Office reports on schools have outlined where a ministry direction has arisen surreptitiously by virtue of a board member. In one particular report express mention was made that that board member was being paid. When I searched through the Education Act and its relevant amendments I did not quite see how that could be and I am composing a letter to the Minister of Education on the very issue at the moment but now I see a sudden light in relation to clause 192. 
The provision says contrary to the fundamental Act regarding boards of trustees that such employment is possible. Not only is it possible but so long as the total value of the remuneration is disclosed and the employee is known payment is also possible under this clause. For boards of trustees that marks a significant departure and gives some legality to what was said not to be possible under the previous Act people worked with—so much so that the Ministry of Education has given advice to its advisers that they should not be on boards of trustees. 
This legislation goes far beyond that. It allows expressly for State control in the old-fashioned Labour sense. That is the problem with this Labour Government: new Labour and old Labour are all mixed up. That goes right back to the ministry having pernicious influence—almost by stealth as it were—over individual boards which now gives legality to those actions. Subclauses (1)(a) (c) and (d) in particular give that ability which is a significant departure. 
If that is so for boards of trustees and groups I know of in the education sector it will also be so for others. When we combine the trends in this legislation for State direction and control that we hitherto had not seen but that are now being compressed legally provision by provision and when we have the ability to pay in a way that before was not legally possible we really start to see—although I am not a believer in conspiracy theory at all—why this bill marks quite a departure from the past despite its ordinary everyday mundane provisions. New Zealand First will be opposing the legislation on that ground. 
GERRY BROWNLEE (Deputy Leader—National) 
: 
 This part of the Public Finance (State Sector Management) Bill deals with Crown entity reporting and financial obligations. I will pick up on the theme established by Mr Key and Dr the Hon Lockwood Smith in their contributions earlier. It seems to me that they were fundamentally asking why we need to have 100 pages of legislation that set out how a Crown entity must report when it has always been implicit that that agency must report anyway. 
What does that suggest? Does it suggest that somehow this Government is stacked full of incompetent Ministers who do not know how to go through the reports of the various departments and entities they are responsible for and find the information they need? I do not believe that. I think they are capable of doing that. I think most people in this Chamber are capable of doing that. But this 100-odd pages of legislation is about the philosophy of the Labour Party and the Labour Government in trying to make the State bigger and in having greater control over it so that it can meddle much more directly in the everyday lives of New Zealanders. 
United Future members might sit over there grin and say that that is a ridiculous and preposterous suggestion but they have not yet bothered to make a contribution to this debate. They have been good enough to put us into urgency until some time next week so that we can get this legislation passed but they have no opinion on it whatsoever. As far as United Future is concerned whatever Helen Clark says is the rule. That is it—one just goes by it. One just takes on board whatever Michael Cullen says too and runs with it. I think I am right in suggesting that the Labour Party is about growing the bureaucracy in this country and gaining greater control of it so that it can meddle more directly in individual New Zealanders’ lives. 
I refer the Committee to clause 190. 
Gordon Copeland 
: Are you for or against? 
GERRY BROWNLEE 
: The United Future member wants to know if National members are for or against. We are against the bill; we are opposed to it. 
I refer the Committee to clause 190(4): “A Crown entity must publish its annual report”—it is a preposterous suggestion that it may not anyway—“as soon as practicable after it has been presented to the House …” etc. The clause then states that the Minister may have some effect on how that information is reported under clause 213. If we look at clause 213 we see that the Minister will receive the information from the Crown entity or department and can then determine just what part of it will be reported to the public. If that is not about trying to control the information flow to prevent New Zealanders from knowing what is going on in the entities they own then I do not know what is. 
Clause 213(1) states that the Minister may: “(a) prescribe minimum requirements concerning the publication of information …”. He can tell the entities how much to publish what not to publish and when to publish. As other colleagues in the Committee have pointed out the clause also gives the capacity for the Minister to ignore official information requests and to obfuscate any expectation that an answer to a parliamentary question may be given correctly. Overall the clause is consistent with my view that it is about saying to New Zealanders: “We are the Government; we know best; listen to us and we will do what we think is right for you. You New Zealanders do not need to have a say in this.” 
Just to point out how ridiculous petty and pathetic this entire part is we need look only at the tiny little clause that deals with the issue of gifting. Clause 206A states: “(1) Any money or property that is gifted to a Crown entity may be accepted or disclaimed by a Crown entity.” What on earth do we need to put that in the law for? Entities may accept a gift or bequest or they may not. If that were not in the law what would be different? 
I raise a point of order Madam Chairperson. Noting that neither the Minister in the chair David Cunliffe nor the chairperson of the Finance and Expenditure Committee seem particularly interested in participating in this debate I seek the leave of the Committee to ask questions about this important part of Mr John Key who has done an enormous amount of work on the select committee and knows a terrific amount about the bill. 
The CHAIRPERSON (Ann Hartley) 
: Leave is sought for that purpose. Is there any objection? There is. 
GORDON COPELAND (United Future) 
: 
 I must say that that speech from Gerry Brownlee the deputy leader of the National Party was a bit more constructive than the one we had from Simon Power a few minutes ago. Simon Power spent three-quarters of his 5-minute speech criticising United Future and the other quarter slamming the Minister in the chair David Cunliffe. I have never heard such a lot of bluster with such a lack of content in any speech on any occasion in my 2½ years in this Parliament. At no time did National member Simon Power tell this Committee why his party is opposing this bill. It was a novel way to discuss a 500-page bill—never once to refer to the bill’s contents but just to huff and puff to see whether the hot air generated might eventually ignite the bill so that it went up in smoke. It was hardly credible. 
Let us take clause 190 for example which was just spoken on by Gerry Brownlee. Does National really think that Crown entities should not publish their annual accounts? Because I think they should. Let us take clause 192. Does National believe that Crown entities should not tell the New Zealand public what they are paying their staff? Because I think they should. Maybe we should look at clause 196 and ask whether National believes that Crown entities should not have their accounts audited. Is that the proposition that the National Party has brought to this debate today—that Crown entities should not have their accounts audited? Because I think they should. Let us take new clause 199. Does National believe that Crown entities should not have a bank account—that we should operate the agencies of this Government without bank accounts—and that because bank accounts are mentioned in this bill we should oppose that provision? I actually think that bank accounts might prove to be quite useful for most Crown entities and most organisations to operate. 
Here is a really good one: clause 208 in Part 6. The National Party believes that Crown entities should not pay tax. It believes that they should operate make a profit and simply keep the money whereas other entities in this country those in the private sector should pay tax. Well I think that Crown entities should pay tax and that this is a good bill. The provisions in it are constructive. They move things forward. If National members disagree with that then for goodness’ sake they should get up and tell the Committee for once why they are opposing the bill because all we have heard is hot air and bluster. 
It is a sad thing that the once-proud and constructive National Party now bereft of policy and unable to make a reasoned contribution to this Parliament is simply resorting to bluster and hot air. Mind you there may be a secret behind all of that. We have heard recently on a number of occasions to do with a number of policy initiatives that the National Party will keep them secret until nearer the election. I think that when Simon Power goes out next time on the hustings in Rangitikei to campaign for re-election in 2005 he will tell his electors why his party members voted against this bill. Then perhaps at last this Parliament and the New Zealand public will find out why they are opposing the bill. I have listened very carefully to this debate and I have not yet heard one decent reason why those guys are opposing it. But they should keep trying because I have an open mind and maybe they can convince me if they really work hard. 
CRAIG McNAIR (NZ First) 
: 
 In speaking to Part 6 I want to alert the Committee to clause 212 “Regulations under this Part”. I will read it out very carefully because there is something very very important in it that I think most politicians have overlooked up to this point. I believe that there are many important parts but this is an extremely important part: it has the possibility of being very very dangerous. Clause 212(1) states: “The Governor-General may by Order in Council make regulations for all or any of the following purposes:”. Members should listen to this: “(a) requiring Crown entities to include information in a statement of intent or annual report that is”—and they should listen to this—“additional …”. So after they have done everything after they have complied with everything that this Minister and this Government have wanted them to comply with after all of that the provision states they may be required to include information “that is additional to the information required by this Act:”. 
Brian Connell 
: It’s an outrage. 
CRAIG McNAIR 
: That is right. I say it is a constitutional outrage of gigantic proportions. That is what it is. It is the epitome of State control. It is what Gerry Brownlee was talking about—nanny State coming in and taking control of our lives. That is what the Government wants to do. It does not just want people to have to comply with certain requirements and so on to a certain degree; it wants to go one step further. The Government wants the authority to send the KGB in with its guns and regalia in order to have a look into every nook and cranny of our lives. That is what this bill is about. 
Jim Peters 
: Draconian socialist legislation. 
CRAIG McNAIR 
: Draconian socialist legislation of the worst type! That is what it is. I have members over on this side of the Chamber agreeing with me on that—because they know that it is true. The members over on that side know that it is true as well. It is a fact and they know it. I want to talk to the Committee regarding clause 212 because despite all the guidance this bill is supposed to provide to State entities the Government had to add an additional clause to it. The Government threw it in when it thought nobody was looking. 
Brian Connell 
: They hide it in a huge bill. 
CRAIG McNAIR 
: The Government hid it in a huge bill when it thought no one was looking. It was hidden in a bill that is 400— 
Brian Connell 
: 500 pages. 
CRAIG McNAIR 
:—exactly 500 pages long. 
Hon Maurice Williamson 
: How does the member know that? 
CRAIG McNAIR 
: Because I just read the page numbers. I read the bill unlike some members on the Opposition benches who have not even read the bill but who are supporting this draconian legislation. It is an outrage and it will provide more power to this Government to have more impact on our personal and social lives. 
ROD DONALD (Co-Leader—Green) 
: 
 The amount of hot air that comes out of the mouths of those members opposing this bill is extraordinary. I wish they would shed a little more light and a little less heat on the subject. I am still waiting for the National Party the New Zealand First Party and the ACT party to put forward any amendments to this bill. If the bill were so terrible one would think they would want to try to fix it. But has there been a single initiative on the part of those parties to improve this bill? No there has not been whereas the Green Party has engaged constructively in this debate. I would like to thank Simon Power for acknowledging that in his last speech. 
My last constructive contribution is to Part 6 because the Greens have another amendment that we would like to put on the Table. I am pleased to advise the rest of the Committee that the Minister of Finance has decided to support our amendment. It is an amendment to clause 199(1)(a) which will insert after the words “registered bank” the words “or registered building society”. It is an extraordinarily positive step forward for the Government to acknowledge that building societies play a crucial role in the New Zealand financial sector and that they are appropriate institutions for Crown entities to deposit their funds in. If members read the commentary on this bill they will see that the bill was amended in the select committee to accommodate the Taranaki savings bank TSB Bank Ltd in which I declare an interest. It is a fantastic institution where not only I do my personal banking but the Green Futures Superannuation Fund does its banking. So the bill has been amended to ensure there is no discrimination against the Taranaki savings bank. I would like to say that now as a result of the Government agreeing with my amendment this bill will no longer discriminate against building societies. 
That is an important step for building societies. At the moment there are numerous bank preference clauses in many pieces of legislation that stop Government departments tertiary institutions hospitals and schools from investing their hard-earned savings in building societies. So adding building societies to clause 199 is a significant step forward in recognising that building societies not only play a crucial role in our society but should not be discriminated against. Indeed we have had the reverse situation up until now. By only banks being referred to there is an implied Government endorsement which I think is unfortunate and unfair. 
So I am pleased to propose amendments to clause 199 and clause 177 to fix this anomaly and in proposing those amendments I acknowledge what an important role building societies play in New Zealand. I do declare an interest. I have a $10 account with the Southland Building Society and I am currently studying that society as part of the Business and Parliament Trust which is an excellent exchange for members of Parliament to learn more about businesses. I can tell members that there are 10 building societies in New Zealand. They have 150000 members. They have assets of $2.7 billion. The oldest was established in 1862. The Southland Building Society which I am studying had a record year this year. I was pleased to be at its AGM. Its assets were up by 12.7 percent to $1.5 billion which is roughly half the assets of all building societies. Its equity was up 14.6 percent. Its advances were up 19 percent. Its pre-tax operating surplus was up 11.5 percent to $18 million. 
Thank goodness it still exists and thank goodness Stephen Franks did not get his way when he was acting as an adviser to the old board and advised it to sell the building society to Westpac! Chapman Tripp which he worked for at the time was paid $290000 for its advice and thank goodness the parochial Southlanders ignored that advice and decided to keep their building society in local ownership instead of selling out to yet another foreign-owned bank. We need our building societies and Kiwis recognise that. They do not like foreign-owned banks. They do not like profits going offshore. They want to support local financial institutions such as building societies and the TSB Bank Ltd. The Minister in the chair Harry Duynhoven comes from Taranaki and I know that he has been a strong advocate of that bank. 
I am pleased that the Government has agreed to support my amendment to enable Crown entities also to save with their local building society. 
Hon DAVID CARTER (National) 
: 
 I also want to speak to Rod Donald’s amendment to clause 199. I just imagine now in Auckland Judy Bailey pulling up to TVNZ’s office in her Audi convertible thinking that the first item on the news tonight will be that Rod Donald has successfully moved this dramatic amendment in Parliament today—this dramatic amendment whereby we are going to add the words “or registered building society”. What an achievement for a man who has been here for 6 years! Six long years! 
Simon Power 
: Eight! 
Hon DAVID CARTER 
: Eight long years! Rod Donald has been here in this Parliament for 8 long years and he comes up with this dramatic amendment that can justify his— 
Hon Maurice Williamson 
: He’s been working on it. 
Hon DAVID CARTER 
: Yes he has. It must have taken him a long time. Not only does he achieve this monumental step in his parliamentary career but he takes the opportunity of revealing to Parliament today that he may have a vested interest because he has an account with a credit of $10 at the Southland Building Society. I say to Barry Coleman that as he is preparing the next NBR Rich List he needs to check out this man. He needs to check out Rod Donald and show what a remarkable capitalist that man has become and the progress he has made with this huge amendment in Parliament today. 
I also want to comment on the incredible contribution I heard from Gordon Copeland. He said he is supporting this legislation because it empowers a Crown entity to open a bank account. What are we doing rushing a bill of this size through Parliament today? Gordon Copeland says his party United Future is supporting it on the basis that he has found a clause in here that states that Crown entities must establish a bank account. 
I am more worried by the level of Government interference in Crown entities that can occur if this legislation is passed today. There are clauses like clause 213 “Minister of Finance instructions”. Subclause (1) states: “The Minister of Finance may issue instructions to Crown entities that—(a) prescribe minimum requirements … (b) prescribe the non-financial reporting standards …” etc. What we have seen over many years is the establishment of Crown enterprises as a means of getting politics out of their operations so that they can operate to the best economic performance and deliver to the shareholders—in other words the New Zealand taxpayers. But what this Government does with this legislation is put its ever-increasing political manipulation into the operation of State-owned enterprises and Crown entities. I say that is fundamentally wrong. We will see issues like the performance pay of Judy Bailey become something that is decreed by the degree of political embarrassment that the Prime Minister feels. She appointed every one of the board members of Television New Zealand. They are all well and truly recognised as Labour Party lackeys. 
Russell Fairbrother 
: Did the Lyttelton voters appoint you? 
Hon DAVID CARTER 
: No. The Lyttelton voters do not exist. The electorate I tell that member is actually Banks Peninsula. It is a Labour electorate and I am proud to represent the people who have the sense to vote for me every time we have a general election. 
Rod Donald 
: And you lost that seat. 
Hon DAVID CARTER 
: Rod Donald has stood in that electorate on four occasions and he hardly gets his deposit back so he can chip in all he likes. I will make one guarantee to Rod Donald: he will never win the Banks Peninsula electorate as long as— 
Brian Connell 
: He’ll never win an electorate. 
Hon DAVID CARTER 
: That is true—but he may now because of this remarkable development today. He has done a deal with Labour. He has said the Greens will support the urgency motion and will let Labour rush this huge bill through Parliament provided that he can have the audacity to include the words “or registered building society” in clause 199. I say to the Committee that it should take note of this monumental achievement from the Green member Rod Donald. He has been here a long time and has achieved very very little but today he has his first significant win and the words “or registered building society” will now be included in the legislation. 
RUSSELL FAIRBROTHER (Labour—Napier) 
: 
 I move  
That the question be now put 
. 
PANSY WONG (National) 
: 
 I cannot help reflecting on the fact that Judy Bailey was attacked by the Prime Minister for getting paid $800000 a year for 4½ minutes’ work on 5½ days a week but Rod Donald a co-leader of the Green Party just demonstrated to us that he has earned his whole year’s parliamentary salary of over $100000 by producing an amendment containing two little words—“building society”! I thought that was very interesting: if one aims low one gets to where one wants to be. That member has proposed a lot more amendments during this debate that were totally ignored. Those two little words are his Christmas gift from Dr Michael Cullen. At least he got something but the Minister would not give any tax reduction not even a small one to the hard-working New Zealanders. 
I would also like to take up the challenge posed by the United Future member Gordon Copeland. I suddenly realised that he is a sensitive new-age man. He was offended because the National Party whip Simon Power asked United Future to answer the question why United Future supported this part of the Public Finance (State Sector Management) Bill. I am feeling a bit sensitive too. Gordon Copeland and I are both members of the very prestigious Institute of Chartered Accountants. I thought that we as chartered accountants understood statements of intent and financial statements. And of course Gordon Copeland and I happen to be fellow committee members on the Finance and Expenditure Committee. Even Air New Zealand a publicly listed company has come before that select committee to present its financial review and we certainly have done financial reviews of Meridian Energy and numerous Crown entities for as long as the chairman has allowed us to. So what makes Gordon Copeland think those Crown entities would not supply Parliament with their financial statements and statements of corporate intent without this 500-page legislation? 
I want to raise an issue of concern and that is the overkill in this legislation. First of all clause 195 spells out what a statement of responsibility which a Crown entity has to provide should comprise. One would have thought that what it provided would be enough for the responsible Minister to get all the information he or she wanted. Further on this provision also allows him or her to interfere by directing additional responsibility. But after all those stringent requirements we then find clause 209 “Power to require output agreement”. On top of all those provisions requiring Crown entities to say what they want to produce—what sort of outcome—and how they intend to achieve it and to report whether they fail or succeed in achieving it a Minister can have the authority to “require a Crown entity to have in place an output agreement for any or all outputs that the Crown entity intends to provide that do not qualify for an exemption …”. I wonder why the Minister does not just put in a clause to say that the Minister can request whatever he or she wants! 
BRIAN CONNELL (National—Rakaia) 
: 
 It is really good to see the young guns of New Zealand First start to hit their straps. It is good to see a bit of energy and a bit of passion in stark contrast with the drivel we heard from Gordon Copeland and Rod Donald. 
Hon David Carter 
: Did they win? 
BRIAN CONNELL 
: Rod Donald has put $10 into the Southland banking society. My advice to him is to get his money out before he goes broke because that will be his last $10. It is very good of him to invest everything he has in it but we suggest he should get his money out now before it is too late. Gordon Copeland was really upset because Simon Power suggested we did not need to legislate for Crown entities to open bank accounts. 
Hon David Carter 
: I don’t think we do. 
BRIAN CONNELL 
: I do not think we do either. I think Gordon Copeland was very right to say with such gusto passion and determination that he was really upset. Let me say this to Mr Copeland. Producers in the productive sector of this country are fed up to the back teeth with red tape and bureaucracy. This bill is a classic example of it. This bill is 500 pages long and most of it is repetitive. I think I could reduce this bill to at least one-third of its size by cutting out some of the nonsense that we see in it. The United Future members get to their feet and want to legislate for more of that sort of nonsense. 
I will tell Mr Copeland this for nothing: National is voting against the bill. Gordon Copeland and the United Future party purport to support the productive sector and small business in this country in particular. But he stands in the Chamber and wants to legislate for this type of nonsense. Let us look at some of the stuff that I am talking about. The statement of intent starts on page 229 and goes right through to page 236. There are seven pages in the statement of intent. In anybody else’s language it is just a forecast. Any board member worth his or her salt would look at that and wonder why he or she should bother. The Minister in the chair Mr Duynhoven knows what I am talking about. He is a man who has been around a little. He knows that we do not need to legislate to tell people how to do up their shoelaces before they go outside. That is exactly what this bill does. 
Let me look at clause 181. Someone has already mentioned subclause (1)(e) which states: “how the entity proposes to manage the organisational health and the capability of the entity:”. Will a Government member stand and take a call—maybe Mr Copeland will stand and take a call—and explain exactly what that means? Maybe Mr Donald will stand and take a call because he is very keen on supporting this legislation. Then subclause (1)(g) states: “the matters on which the Crown entity will consult or notify its responsible Minister before making a decision …”. That is like having a dog and barking too. Why would any self-respecting board member want to get involved in a Crown entity that gave the Minister that type of power—that type of interference? What we get is boards of inferior quality because their members are the only types of people who would take the job on. It is no wonder that Judy Bailey was able to snow the board of Television New Zealand. Because of the quality of that board which is made up of Government appointees—ex-Labour hacks—she was able to snow them by convincing them that she would go somewhere else. All the competing organisations said they were not talking to her and did not want her. 
Hon DAMIEN O'CONNOR (Minister for Racing) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Motion agreed to. 
The question was put that the following amendment in the name of Rod Donald to clause 177 be agreed to: 
to insert after the definition of  
registered bank 
 the following new definition: 
registered building society 
 means a building society within the meaning of the Building Societies Act 1965 that is registered on the register of building societies kept under that Act. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Amendment agreed to. 
SIMON POWER (Senior Whip—National) 
: 
 I raise a point of order Mr Chairperson. I missed the vote from United Future and I ask that it be repeated. I apologise. 
GORDON COPELAND (Whip—United Future) 
: 
 Eight opposed. 
The CHAIRPERSON (Hon Clem Simich) 
: I ask the member from the Green Party whether there is a vote from the Maori Party. 
ROD DONALD (Musterer—Green) 
: 
 I apologise Mr Chairperson. I was just trying to clarify for the benefit of Mr Copeland that having voted to incorporate building societies he is now voting against the definition of building societies. I apologise for interrupting the vote. 
SIMON POWER (Senior Whip—National) 
: 
 I raise a point of order Mr Chairperson. I accept the member’s explanation in his point of clarification but the Committee needs to be assured that United Future is not being persuaded to vote in a certain way by other political parties in the Chamber. 
ROD DONALD (Musterer—Green) 
: 
 I give an assurance that I was not trying to persuade United Future; I was just concerned about how inconsistent it would look when its votes were examined. 
The question was put that the following amendment in the name of Rod Donald to clause 199 be agreed to: 
to insert in subclause (1)(a) after the words “registered bank” the words “or registered building society”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 62 
New Zealand Labour 51; Green Party 9; Progressive 2. 
Noes 57 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8. 
Amendment agreed to. 
The question was put that the following amendment in the name of Rod Donald to clause 199 be agreed to: 
to insert in subclause (1)(b) after the words “registered bank” the words “or registered building society”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 62 
New Zealand Labour 51; Green Party 9; Progressive 2. 
Noes 57 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8. 
Amendment agreed to. 
The question was put that the following amendment in the name of Rod Donald to clause 199 be agreed to: 
to insert in subclause (5) after the words “registered bank” the words “or registered building society”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 62 
New Zealand Labour 51; Green Party 9; Progressive 2. 
Noes 57 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8. 
Amendment agreed to. 
The question was put that the following amendment in the name of the Hon Dr Michael Cullen to clause 188 and the amendments set out on Supplementary Order Paper 315 in his name to Part 6 be agreed to: 
to omit from subclause (2)(b)(i) the words”given by the Governor-General by Order in Council”. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 71 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2; Maori Party 1. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 6 as amended be agreed to. 
Ayes 71 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2; Maori Party 1. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Part 6 as amended agreed to. 
Part 7 Miscellaneous provisions 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 I raise a point of order Mr Chairperson. I seek your guidance in respect of Part 7. You will note that the clauses go up to and include clause 236 “Amendments to other enactments”. The enactments referred to in clause 236 are set out in schedule 8. Schedule 8 amends a large number of Acts. The guidance I seek from you is whether it is intended that the debate on Part 7 will cover the contents of schedule 8 as well because the schedule contains a very large set of amendments to a very large number of Acts. I seek your advice. 
The CHAIRPERSON (Hon Clem Simich) 
: Indeed it absolutely does cover that schedule. I was just about to give that explanation. Part 7 clauses 217 to 236 includes debate on schedule 8. 
PANSY WONG (National) 
: 
 The Minister in the chair the Hon Harry Duynhoven really must take a call on this part. I am very worried about clause 222 “Existing members exempt from qualification requirements” as it has very serious implications. It states: “Every member of a statutory entity or Crown entity company or a Crown entity subsidiary in office at the commencement of this section may continue in office for the remainder of his or her current term of office …” and be exempted from the requirements specified in clauses 72 and 132 which are very obvious reasons for disqualification. Under clause 72 a person cannot be appointed to a board if he or she is an undischarged bankrupt “a person who is prohibited from being a director or promoter of or being concerned or taking part in the management of a company …” “a person who is subject to a property order …” “a person in respect of whom a personal order has been made … that reflects adversely on the person’s—(i) competence to manage his or her own affairs …” “a person who has been convicted of an offence punishable by imprisonment for a term of 2 years or more” or—I am not sure for what reason—a member of Parliament. Clause 132 “Criteria for appointments by shareholding Minister” states that a shareholding Minister may appoint a person who in the Minister’s opinion: “has the appropriate knowledge skills and experience to ensure the sound management of the Crown entity company …” will be carried out. 
I think the Minister should take a call on this. Why should the existing board members under this provision continue their terms and be exempt from these very basic and obvious requirements? Is the Minister trying to tell the public that some existing members of the boards of these statutory entities and Crown entities etc. would be barred from holding that office because they have had a prison sentence of 2 years or are not competent to manage their affairs? I hope that the Minister instead of laughing smiling and talking away will take a call and state categorically that this provision is totally unnecessary in terms of exempting those members from clauses 72 and 132. All it does is send a message to the public that some existing board members may be incompetent or bankrupts or alternatively that the Minister is trying to protect some existing board members who should be disqualified. It is quite a concern to us on this side of the Chamber that such people may be appointed to a board. We have questioned the appointment of the Labour Party president Mike Williams to eight Crown entities but we hope he has not infringed any of those obvious requirements that exclude people from being board members. 
The other thing I want to draw to members’ attention is clause 226 “Continuation of existing board committees”. I wonder whether the Minister is lamenting that the Government is missing an opportunity to remove this clause—to support National’s call for it not to proceed. Changing this clause to say that the Minister may choose to discontinue existing board committees may help the Minister of Broadcasting out of a very tight situation. The Minister once again finds himself helpless under the current requirements. He told Parliament that he could not do anything to the TVNZ board even though the Government was not very happy with the continuation of the culture of extravagance in that entity. I think the Minister should take a call and answer my two questions. 
JOHN KEY (National—Helensville) 
: 
 I want to draw members’ attention to clause 229 which looks at the liability provisions. I think liability is an issue that is worth at least exploring today. It is a well-known fact that indemnity is provided for directors of Crown entities—and in fact for employees of Crown entities in certain instances; there have been quite a number of cases. I note from an earlier part of the legislation that it has been decided that the liability indemnity and insurance should be registered and made clear in the statement of intent. In a situation where a board member is covered under a liability indemnity or by indemnity insurance the process is that if a board member say contracts with a Crown entity and there is some form of liability or there is an action taken against that Crown entity the action is against the entity itself. Therefore the compensation payable by the Crown entity will be paid by the Crown entity or by its insurers and not by the individual directors. 
I raise that point because we are increasingly moving to a litigious world where people are likely to take legal action. So I think that in the first instance those who look to be appointed to Crown entities will be relieved that—and it is pretty standard business practice—indemnity insurance will be provided for them. But I wonder whether listing in the statement the extent of that liability insurance is a wise thing. I say that because if one looks at a number of large institutions overseas one sees that that is not in fact the case there. It is well understood that the directors will have liability insurance and it is well understood that they act as agents for the company—or in this case the Crown entity. But I do think there is an issue about specifically stating what the extent of that insurance is. 
This is why. When I was engaged by a former US investment bank that had a number of lawsuits undertaken against it the feeling of internal counsel was always that when it was known how large the indemnity insurance was the bank was likely to become a target for legal action. So the Minister might want to think about the provisions under clause 229 and the way they relate to the statements of intent for Crown entities. He might want to consider whether it is actually sensible to spell out the full level of liability insurance or whether it would be better just to say that there is a presumptive condition that liability insurance will be provided. As a director of a number of companies myself I have obviously made it clear that those entities have liability insurance but I do not think spelling it out specifically in black and white is always necessary. 
I also want to make reference to another aspect of clause 229. Again the Minister might want to look at this and proffer a view on it. The clause seems to me to be saying that liability insurance or indemnity may be provided for an action taken by a person before he or she was engaged by a Crown entity. I just need to understand that completely. One can imagine a number of scenarios where someone may be engaged by a Crown entity and thereby come within the ambit of its liability insurance. This clause seems to me to be saying that in some circumstances—and I cannot see in the legislation exactly what those circumstances may or may not be—indemnity for a past action may in fact be provided. 
It would be quite a remarkable situation if someone who is invited to join a Crown entity board and for some reason—whatever unusual scenario could possibly be dreamt up—has an action taken against him or her might be covered by the Crown entity’s liability insurance. 
I want to make reference to schedule 8 which as you commented earlier Mr Chairperson will be included in Part 7 of this legislation that we are debating under urgency and will be debating for quite some hours to come. I make reference to the huge number of Crown entities that will be affected by this legislation. It is a hugely broad range of entities ranging from arts councils to alcohol advisory boards. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 The debate we are now having on Part 7 of the Public Finance (State Sector Management) Bill is possibly one of the most important debates with regard to this bill. I believe the Committee should look at and spend some time on the complexity of what we are debating right now. Clause 236 brings in schedule 8 which as my colleague John Key has just said amends a whole plethora of Acts. Of greatest significance to New Zealand are the amendments to the Education Act 1989. In order for these matters to be in a schedule they should be purely consequential amendments I would have thought and should not make major changes that are not purely consequential. 
I would like the Minister in the chair to give some thought to this. The particular part of schedule 8 that I am concerned about amends the Education Act 1989. The particular sections in the Education Act 1989 that are being amended that I would like the Minister to focus on are those relating to section 203 which is repealed and substituted in schedule 8. That schedule lays out how this bill affects our tertiary institutions because section 203 refers to the institutions being Crown entities. That is covered in section 48 of the Public Finance (State Sector Management) Act 2003. 
The bits that I wanted to look at particularly are the new unanimous sections 203(2) and 203(3) to the Education Act. Section 203(3) states: “The provisions of that Act set out in Schedule 6B of that Act”—which refers to this bill that we are now debating. I would like to focus on schedule 6B which is obviously part of this debate too because schedule 8 brings in schedule 6B. Schedule 6B which relates specifically to the tertiary education institutions sets out the number of sections derived from this bill that will apply to tertiary education institutions. One that is included is section 51. 
I will trouble the Minister to look at clause 51 of this bill—through that convoluted process we are now back to clause 51 of this bill—because it sets out a number of interpretations including the interpretation of “direction”. What troubles me about this and I think where our tertiary institutions will be getting pretty concerned is that through this convoluted pathway—schedule 8 which amends the Education Act 1989 which brings in schedule 6B of this bill which relates to the various clauses that affect tertiary institutions—we get back to this issue of direction where a Minister can direct an entity under this legislation. 
Hon Dr Michael Cullen 
: The interpretation clause does not give the power of direction. It defines what “direction” means if it has got the power and it has not. 
Dr the Hon LOCKWOOD SMITH 
: But the interpretation clause spells out the kinds of directions a Minister can give. If it was not intended to apply to tertiary institutions why does schedule 6B specifically mention section 51? The Minister could assist here by showing us where in schedule 6B the tertiary institutions are specifically excluded from ministerial direction. It would certainly ease concerns if the Minister in the chair could point out which of the sections that apply to tertiary institutions in schedule 6B specifically exclude ministerial direction for a tertiary institution. Clause 51 shows the breadth of a direction that the Minister can give and it can be right down to employee level. We are talking about the potential possibility for the Minister to give a direction to a tertiary institution that could breach the issue of academic freedom. I see the Minister shaking his head. I would be pleased if he would take a call—because I imagine that tertiary institutions are very concerned by this—and point out where schedule 6B specifically excludes such direction. 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I would hope that tertiary institutions do not come up with that argument because I would hope they would use their law faculties before they did that. Schedule 6B includes those things that do apply. If it is not in schedule 6B it does not apply and the power of direction is not in schedule 6B. In other words the power of direction is not in the schedule that applies to tertiary institutions. The power to direct is outside this schedule and therefore does not apply to tertiary institutions so the Minister has no power to direct tertiary institutions. 
Dr the Hon Lockwood Smith 
: Why is there not an exclusion? 
Hon Dr MICHAEL CULLEN 
: It does not need an exclusion. Schedule 6B is an inclusive clause of what the powers are. It does not include the part of the bill that gives the power to direct. The fact that the interpretation clause is included is irrelevant. The interpretation clause does not relate to the power to direct; it only defines what direction means should the power be in there. But the power is not in there. One would not go through the interpretation clause and take out every little word that is not included in the rest. This is an inclusive statement in schedule 6B not an exclusive statement. If it is not in there it does not exist. The power of direction is not included in schedule 6B. It is absolutely clear. 
BRIAN CONNELL (National—Rakaia) 
: 
 I will start by making a point of clarification. In a previous speech I spoke about the Southland Building Society and on reflection I regret having made some statements about it. I want the record to reflect that I have every confidence in that organisation. It is a very well-run organisation with a very fine balance sheet and I want the record to reflect that. Under this part I will talk about clause 222. I raise this issue now that we have Mr Cullen back in the chair because it is an area that needs some clarification I think. It concerns me. I am not sure that what is written here can really be the Minister’s intention. 
At the moment the heading of clause 222 states: “Existing members exempt from qualification requirements”. That is the issue that my colleague Pansy Wong raised and I think it needs to be re-canvassed. If I am reading the legislation correctly the new qualification requirements state that no one who has had a 2-year prison conviction or is an undischarged bankrupt can be a member of a board. My interpretation of clause 222 is that current board members who have that type of history can continue. If that is what the Minister intends then I seek for him to take a call and clarify that because I think it is a confidence issue. It worries me and I am sure that others who read this clause and give it close scrutiny will also be concerned about it. We are really saying in essence that some board members at the moment who have had prison convictions of 2 years or more or who are undischarged bankrupts can be board members of Crown entities. I do not for a moment believe that that is the Minister’s intention but if it is I would like that to be clarified. 
The next point I will raise is about clause 227 “Continuation of existing employment”. I have criticised this bill throughout the course of this debate for putting into legislation things that seem to be repetitious and unnecessary. I think this clause is another example of that. It states: “A person who is at the commencement of this section an employee of a statutory entity does not cease to be an employee because of the coming into force of this Act.” Surely current employment law provides those protections now and this is just more unnecessary drivel and repetition. 
The next clause I will talk to is clause 230 “Existing insurance cover”. Mr Key also raised that clause as being an issue of some importance. I am in two minds on this issue. Yes I think on the one hand that board members should be indemnified. On the other hand they have a fiduciary responsibility to conduct the business with which they are charged in an appropriate manner. If they do that according to the charter of their entity then indemnity insurance is fair. But I am reluctant to advocate that they should be indemnified if they make poor decisions or decisions that are quite clearly contrary to the charter of the entity. Why should we provide indemnity for board members who do things that are illegal for example? That relates back to the first point I raised about clause 222 concerning people with criminal convictions. Let us be clear that a criminal conviction of 2 years’ imprisonment is a very significant conviction. Someone on a board at the moment could under clause 230 potentially be indemnified for conducting an illegal act while serving as a member. When I go on to clause 230(3) I am a little confused with regard to what is intended. Subclause (2) provides that existing insurance cover for members applies but then subclause (3) provides: “However if the insurance cover expires or the member office holder or employee is reappointed or re-employed …” the measure does not apply. That also needs to be clarified. 
DEBORAH CODDINGTON (ACT) 
: 
 I ask the Minister of Finance whether he could please clarify how clause 218 in Part 7 relates to schedule 6B. I would also like him to clarify whether schedule 6B refers to clauses that apply to tertiary institutions—whether that is the situation. I ask the Minister whether those clauses do not apply to tertiary institutions. 
Hon Dr Michael Cullen 
: It’s an inclusive list of those that do apply. 
DEBORAH CODDINGTON 
: They do apply. Then I take it that the Archives Act 1957 does apply to tertiary institutions under this Part 7. I ask the Minister whether that is correct— 
Hon Dr Michael Cullen 
: Yes. 
DEBORAH CODDINGTON 
: —because it is included in schedule 6B. 
Hon Dr Michael Cullen 
: Well that’s being replaced of course very soon. 
DEBORAH CODDINGTON 
: If it does apply then there is something that Professor Stuart McCutcheon has brought to my attention. 
Hon Dr Michael Cullen 
: Is that who you’re speaking on behalf of? 
DEBORAH CODDINGTON 
: Well yesterday the Minister of Education interjected and called the Vice-Chancellor’s Committee a bunch of fairies but that is typical of the sort of language that the Minister of Education uses to dismiss those who disagree with him. However as Stuart McCutcheon said an early impact of the change in this legislation will be to bring all tertiary education institutions under the Archives Act and the Public Records Bill which means that potentially all teaching and research drafts will become public records. As he said that would be a nonsense if it were strictly enforced. 
None the less it does bring those bodies under the Archives Act. I have the Archives Act here and I would just like to remind the Committee that section 2 of that Act provides that: “ ‘Public archives’ means all public records that have ceased to be in current use in the Government office in which they were originally made or received or in the Government office in whose custody they have been placed or that have been deposited in the National Archives.” and “ ‘Public records’ means all papers documents or records of any kind whatsoever officially made or received by any Government office in the conduct of its affairs or by any employee of the Crown in the course of his official duties;”. There are penalties under the Archives Act for destroying those public records without the permission of the Chief Archivist. 
There are two implications from that. One is the nonsense one where—as has been noted—all teaching and research drafts etc. could be required to be held unless permission was given. The Minister is shaking his head so I would like him to clarify that is not the case. The other implication is for intellectual copyright which many universities potentially gain remuneration and financial benefit from and individuals’ copyright on research that is conducted while individuals are at a university. It is a grey area because public funding goes into it. But if we want to reduce pressure on the public purse and on taxpayers then we should have a balance that does not damage the involvement of private investment in tertiary research and the development of intellectual property. It is not limited to universities; it extends to institutions like the Auckland University of Technology and Unitec. 
As an aside it is an interesting situation that under this legislation universities polytechs and tertiary institutions are all classified as being the same yet simultaneously the Government is pushing through this House a bill that will ban Unitec from being a university. On the one hand those bodies are allowed to be and have to be all the same under this bill while on the other hand the Government is pushing through another bill in a last-minute attempt to stop Unitec—having crossed every hurdle placed in its path—from becoming a university. 
However I would like the Minister to take a call and explain why the Archives Act should apply. 
ROD DONALD (Co-Leader—Green) 
: 
 Spurred on by David Carter I would like to offer the Committee another amendment. I found David Carter’s words of encouragement—and his enthusiasm for my $10 deposit in the Southland Building Society in particular—after I had put forward my last amendment in relation to building societies so gratifying that I checked with officials to see whether there was anywhere else I could insert building societies into this legislation. I was delighted to find that there is an opportunity in schedule 8 which is covered by clause 236 in Part 8 which members are currently debating. 
The reason we need to insert an item relating to building societies into schedule 8 is that the Government has graciously agreed with its Supplementary Order Paper 315 to remove from schedule 6B the item section 199 relating to bank accounts from the requirements put on tertiary educational institutions. The unintended consequence of that is that the addition just made in the last part which enables Crown entities to have a bank account with a building society does not apply to tertiary educational institutions. I am not requiring tertiary educational institutions to have a bank account with a building society but they should have the opportunity to open one if they so wish. I know in particular that the Southern Institute of Technology would love to have an account with the Southland Building Society. I see the local member Mark Peck is nodding vigorously. I know that he is a strong advocate of both the building society in Southland and the institute of technology; they are two superb local institutions that I am sure every member in this Chamber supports. 
So I am pleased to advise the Committee that the Government has generously agreed to my further amendment to insert in clause 201(1) after the words “registered bank” the words “ or any registered building society with which a Crown entity may establish maintain or operate a bank account under section 199 of the Public Finance (State Sector Management) Act 2004.” That would give all tertiary educational institutions in New Zealand both universities and polytechnics the opportunity to open a bank account with their local building societies. I am sure there will be crowds in the streets applauding that initiative. I know that it will become a widely known initiative once David Carter takes a call to congratulate me yet again on providing a major step forward for the building society movement in New Zealand. I am sure that the building societies’ $2.7 billion in deposits will grow rapidly as a result of this change. 
Hon DAVID CARTER (National) 
: 
 I do rise to thank Rod Donald for his amazing amendment. I have to say “Well done!” to him for having been here for so long— 
Rod Donald 
: Eight long years. 
Hon DAVID CARTER 
: I know. He has had 8 long years here in Parliament and to have achieved two such significant milestones in a parliamentary career is something that the member must remember when he gives his valedictory speech in the not too distant future. 
I want to take the opportunity of asking the Minister of Finance to clarify two clauses for me. One is clause 216 which concerns gifts and was deleted by the select committee. Clause 216(1) stated that any gift or property that is gifted to a Crown entity may be accepted or disclaimed by the Crown entity. The reason I raise this as an issue is that I have discussed this with my colleague John Key who was on the select committee and I have looked at some of the material that John Key received from officials at the select committee. There appears to have been no discussion at all as to why clause 216 was ever included in the legislation and even more revealing there seems to have been no discussion or paper trail as to why it was subsequently excluded by the select committee process. 
The reason I raise this is that this deliberation by the select committee occurred at the same time that the honourable John Tamihere was embroiled in an absolute scandal regarding his receipt of gifts. I think at one stage he attempted to justify one of them to the New Zealand Parliament by saying it was not a gift but koha—a couple of hundred thousand dollars of koha as I remember. I just want the Minister—I know that he will be embarrassed by this and I do not mean to embarrass him too greatly right on the eve of Christmas—to take the opportunity to explain why clause 216 was ever included and why subsequently it came out during the select committee process. I want to know whether there was any paper trail to suggest that the reason was that the Government did not want any further embarrassment associated with John Tamihere and his rather inventive approach towards the gifts that seem to come his way even though he is inclined to say when he is a not a member of Parliament— 
Pansy Wong 
: What clause is it? 
Hon DAVID CARTER 
: Clause 216. My point is that the honourable John Tamihere said that in no circumstances would he accept the koha then subsequently once the papers had revealed that he was too fine and upstanding a gentleman to accept the koha lo and behold we find that the koha had been paid to him. 
My second question for the Minister refers to clause 220 “Local Authorities (Members’ Interests) Act 1968 does not apply to Crown entities”. Again I have no idea why that particular clause is included. I am led to believe that it may be associated with the register of interests that Ministers are required to fill out which Michael Cullen is proposing that members of Parliament be required to fill out and which local government members are now also required to fill out. Again there appears to be one rule for most of the executive and one rule for John Tamihere as a member of the executive. Mark Peck is shaking his head but if I have been reading the newspapers correctly—and I congratulate the  
National Business Review 
 on running the story very well—members of the executive are required to file an annual register of interests. Mark Peck might not have realised that although he has been here for a long period of time and is shortly to leave this place having never been a member of the executive. However I do not wish to knock Mark too much because he is not a bad guy. My point is that everybody in the executive fills out the ministerial register of interests but John Tamihere did not. He defied the law. He did not want to reveal all his koha. Maybe we have found out about only one of them. Maybe there is a lot more to come when Mr White presents his report in the next day or two. But why was John Tamihere the only member of the executive who was exempt? 
MARK PECK (Labour—Invercargill) 
: 
 I move  
That the question be now put 
. 
JOHN KEY (National—Helensville) 
: 
 I cannot say how thrilled I am to have a second opportunity to speak to Part 7 of the Public Finance (State Sector Management) Bill under urgency and I am absolutely delighted that I have been given another opportunity to speak after my first contribution. This contribution will be even more revealing than the first. I want to thank you Mr Chairperson from the bottom of my heart.  
 I want to draw the Committee’s attention to a very interesting clause in Part 7—clause 235 “Existing investments borrowing guarantees indemnities and derivatives”. I see the Minister of Finance’s ears have perked up. He is looking very engaged and for those who cannot see him he is flicking through the bill to make sure he has not missed anything. 
Hon Dover Samuels 
: He looks very happy. 
JOHN KEY 
: He looks happy and contented—he will be sitting on $1.5 billion of additional cash next year over and above all his operating and capital expenditure. Members should be happy. I hope that as he sits in the chair and has a moment to reflect he will consider taking up my suggestion for the New Zealand people this year which is that he gives every New Zealander $75 so that they can put a turkey on the table and a present under the tree and we can all go to Christmas and be very happy. That would cost only— 
Darren Hughes 
: A turkey on the Table of the House would be very nice. 
JOHN KEY 
: Mr Hughes should not talk about the members on his side of the Chamber in that way because they are not turkeys. He should not call them turkeys. If he is going to call them turkeys he should do it in his Christmas card to me so it can remain private and confidential. 
Darren Hughes 
: It’s on its way! 
JOHN KEY 
: Oh it’s on its way. I go back to clause 235. What is interesting about clause 235 is that it states that the terms of investments borrowing guarantees indemnities and derivatives may be amended and will be taken up when the Crown entity comes into place or when this bill passes. The clause states further that those terms may be amended by the Minister of Finance after this bill goes through. So let us think about that scenario. The Crown entity undertakes a derivative transaction—let us say an interest rate swap where it has some borrowings and decides that it is going to swap from a fixed rate liability to a floating rate liability. Then all of a sudden after passing Part 7 and clause 235 of the Public Finance (State Sector Management) Bill the Minister of Finance looks at that transaction and decides he wants to alter it as he may under Part 3. 
Now altering financial obligations does not come for free and the Minister of Finance himself will know that depending on interest rate movements and the various issues there could be a significant cost in altering that transaction. If that were the case and it may happen under this part then I would question that if a financial liability is incurred by the Crown entity that changes or amends its derivative transaction and it is then not taken up or the alteration is made by the Minister of Finance who is going to pay for the liability? Who will go to the Crown entity and say: “Well OK you’ve amended this derivative transaction and there’s a lot of money at stake here.”? There may be hundreds of thousands or millions of dollars. Who will pay that liability? It is not at all clear from clause 235. 
Now I am not suggesting that the Minister of Finance is likely to alter the range of investments borrowings guarantees indemnities or derivatives that will be in existence when this law takes place but it is possible. If it is possible I think the Minister should rise to his feet as we are sitting under urgency at about 20 past 11 on what is technically Tuesday but most New Zealanders would know it is Thursday to debate the Public Finance (State Sector Management) Bill and tell the Committee who will pay the price of that alteration if he does amend a guarantee a liability a derivative or anything in relation to a Crown entity. 
When the Minister is on his feet I think it would be interesting if he could share with us whether he is likely to cast his eye over all these borrowings investments guarantees indemnities and derivative transactions and whether he is likely to ask Treasury to provide him with a list of those. The transactions will be stated in the new statement of intent as we saw earlier on in the bill. But I wonder whether the Minister will—over his Christmas holiday possibly—ask Treasury to deliver to him a listing of all those transactions so he can cast his eye over them. It is possible that during his Christmas break he will have a look and see that there are some transactions he would like. I can see the Minister is eager to get to his feet and answer those questions and I look forward to that. 
HELEN DUNCAN (Labour) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Motion agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 315 in the name of the Hon Dr Michael Cullen to Part 7 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 7 as amended be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Part 7 as amended agreed to. 
Part 8 Amendments to State-Owned Enterprises Act 1986 
JOHN KEY (National—Helensville) 
: 
 Part 8 is obviously a very small part of this 500-page bill. However the fact that Part 8 is small does not make it any less important. 
Simon Power 
: Belies its importance. 
JOHN KEY 
: It belies its importance and like a lot of small things in life it is easy to take them for granted and to wonder whether they are as significant as big things. 
Lindsay Tisch 
: Like Mark Peck. 
JOHN KEY 
: Well Mark Peck—yes. For instance in All Black terms people might not have taken Grant Batty who was a very small All Black seriously. 
Simon Power 
: Dave Loveridge. 
JOHN KEY 
: Dave Loveridge is another example of a small All Black who could be taken for granted. 
Simon Power 
: Gary Whetton. 
JOHN KEY 
: Gary Whetton was not small. 
Hon Dr Michael Cullen 
: Lindsay Tisch. 
JOHN KEY 
: Lindsay Tisch is small but he is not an All Black. He could be. One never rules someone out from being an All Black. 
Hon Dr Michael Cullen 
: He used to be the ball in the game. 
JOHN KEY 
: Oh I do not think one could say that Lindsay Tisch was the ball; he was the pride of the game. 
Part 8 is small but it has an interesting part to it and that is clause 238. Part 8 amends the State-Owned Enterprises Act. New Zealanders will know there are—roughly off the top of my head—17 State-owned enterprises in New Zealand and they range from power generators such as Meridian Energy Genesis and Mighty River Power those sorts of enterprises to the coal operator Solid Energy and New Zealand Post. There are a number of entities that fall within the State-owned enterprises group. 
Clause 238(2) is interesting in that it states: “Before entering into any collective agreement under the Employment Relations Act 2000 every State enterprise to which this subsection applies must consult with the State Services Commissioner over the conditions of employment to be included in the collective agreement.” 
Firstly my understanding is that that clause is new. In other words we have a situation whereby our 17 State-owned enterprises—which are large organisations many of which already have collective arrangements—are now being told that under clause 238 their power will somehow be diminished by the dead hand of Government in this Public Finance (State Sector Management Bill) that is being rushed through under urgency at 25 past 11 in the evening. So in this situation before a State-owned enterprise agrees to its collective arrangement it will have to tell the State Services Commissioner that it is about to negotiate a collective arrangement and what the conditions are within that collective arrangement. 
The first question that comes to mind is about what that will do to the process. What is it likely to do? Anyone who has been involved in collective arrangements will know that they can be quite slow and tedious to negotiate. They can be large can involve quite a number of parties and can certainly take a long long time. So one can imagine situations whereby a collective arrangement is being negotiated on behalf of one of our 17 State-owned enterprises. That process could be dramatically reduced or slowed down because there could be a situation where the State Services Commissioner did not agree to the terms of the collective agreement. 
We are now in the middle of an interesting little furore—if one likes—over Judy Bailey’s salary which is of concern to some people but not necessarily to others. 
Darren Hughes 
: Small fry. 
JOHN KEY 
: Small fry—yes. What is interesting about that scenario is that it is a debate over whether Judy Bailey should get $400000 $500000 $600000—or whether the number should have been $800000. But that absolutely is chicken feed compared to the numbers that will be paid through a highly negotiated collective arrangement. So that is the first issue. 
The second interesting issue it raises is the question of what happens in the instance where there is a dispute between the State-owned enterprise and the State Services Commissioner. Maybe the Minister might want to clarify this but I cannot see what will happen when a State-owned enterprise is wanting to negotiate its collective arrangement and cannot agree with the State Services Commissioner over the terms of that collective arrangement. 
One could imagine a situation like the incident with Television New Zealand and Judy Bailey. The board—I have to say at this stage that I have some sympathy for the board—is arguing—[ 
Interruption 
] A huge amount of its revenue may be gone but a huge amount will come from a commercial activity. As I see it on the one hand the directors are doing their job to preserve that income but on the other hand they are trying to resolve a situation that clearly for political reasons may be uncomfortable or unfortunate. That situation is not impossible to imagine. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 I will also pick up on clause 238 in Part 8 of this Public Finance (State Sector Management) Bill because it has huge implications. As I am aware for the first time the Government is proposing with this legislation that if our State-owned enterprises are to negotiate a collective agreement with their employees they must consult with the State Services Commissioner. 
Just to be on the safe side clause 238(3) states: “The Governor-General may by Order in Council apply subsection (2)”—that is the clause I just read out—“to any State enterprise named in the Second Schedule.” That means the second schedule of the State-Owned Enterprises Act. I am looking now at the second schedule of the State-Owned Enterprises Act because the Committee needs to be reminded of the scope of New Zealand’s activity so to speak that is covered by State-owned enterprises. 
If we look at the second schedule of the State-Owned Enterprises Act we see that we are talking about electricity generating companies and Transpower. Now they are at the heart of New Zealand’s economic success and we are talking about a whole range of them especially those that have a huge impact on New Zealand such as those involved in our energy sector not to mention the forestry sector. Landcorp farming is a large hunk of the agricultural sector. They are significant economic businesses and energy companies and Transpower have a huge impact on New Zealand’s economic success. 
The Government is suggesting here that in those major economic entities in those State-owned enterprises that have that significant impact on our economy the State Services Commissioner will be able to interfere in their employment arrangements. “State Services Commissioner” is just another term for “lackey of the Government” I think it is fair to say; I do not want to be unkind to the current State Services Commissioner but obviously the person in that role does the Government’s bidding. 
It is important for Parliament to consider that the State-Owned Enterprise Act was passed back in the 1980s under the previous Labour Government. It set up those State-owned enterprises for one very good reason: to get such important business activities out of the clutches of politicians and Government. But what is this clause doing in this Public Finance (State Sector Management) Bill? It is bringing that crucially important function about employment arrangements back within the realms of political interference. That is a very backward step. 
The Minister in the chair the Hon Margaret Wilson who I am told is to become the Speaker of the House— 
Simon Power 
: She is Speaker designate. 
Dr the Hon LOCKWOOD SMITH 
: The Speaker designate—OK. The Minister in the chair ought to have a real interest in legislation if she is to become the Speaker of the House. 
Why is the Government moving to bring back those important economic entities under political influence? A large chunk of the energy sector is owned by the Crown under schedule 2 of the State-Owned Enterprises Act. Why is the Government moving to bring back those important economic entities into a situation where the Government can meddle in their employment arrangements? One can only assume that it is because the Government wants to push its agenda and we know from various parts of this bill what that agenda is: the Government wants to force those entities to employ certain people of certain racial backgrounds and it wants to force the entities to address diverse interests in their employment arrangements. 
Those may be things this Labour Government considers important and matters of ethnic origin are important in some areas but when it comes to employment employers should be colour blind. Employers in those vitally important companies like Transpower New Zealand Ltd Mighty River Power Ltd Meridian Energy Ltd Landcorp Farming Ltd should be colour blind. They should be employing people on the basis of their skills and of what they can contribute to the organisation. People should be equal in terms of their employment opportunities in these hugely important economic entities. The Minister in the chair should get to her feet and explain what the Government is seeking to do with section 8(2) inserted by clause 238. 
DEBORAH CODDINGTON (ACT) 
: 
 I would like to follow on from what Dr Lockwood Smith was saying on Part 8 because he is right. The implications of section 8(2) in clause 238 are important for the future in terms of what it does and what it drives. I would say that this is being driven by the unions. Dr Lockwood Smith failed to mention another really important State-owned enterprise New Zealand Post Ltd. In 1986 the Lange-Douglas Government made a big mistake with State-owned enterprises in that it did not sell them. They were only ever set up as a halfway house as an interim measure to restructure old Government departments that were costing the taxpayers billions of dollars and turn them into successful commercial enterprises so they could be sold with maximum return to those taxpayers. Most of that money was used to reduce debt. We had crippling debt. We sold off those State-owned enterprises privatising them and reducing masses of debt in the process. Unfortunately we did not sell off enough of them. We did not sell off New Zealand Post or Television New Zealand. 
Look at what has happened to Television New Zealand since the Government started meddling in its affairs and appointing its boards. In 1999-2000 Television New Zealand was still a successful company returning a profit of $68 million I think it was. Governments have used Crown entities as cash cows sucking the money out of them to the extent now that the current Government is propping them up again with taxpayers’ money. What a crime it is that such a successful company returning such a good profit is now reduced to going to the Government cap in hand to grovel for more taxpayers’ money. 
We will very soon again be amending the State-Owned Enterprises Act. When more legislation comes into force—when more labour and employment legislation that brings back de facto compulsory unionism gets the royal assent—we will see more amendments. This will be seen as being a way to boost unions like the Public Service Association which has suffered hugely in terms of its members voting with their feet. So what do we do when we bring in State-owned enterprises like Meridian Energy Ltd Solid Energy New Zealand Ltd and New Zealand Post Ltd? We reduce hugely the ability of those commercial enterprises to compete in the market. They will be trying to compete with their hands tied behind their backs in terms of directives from the Government about what they can do regarding employment relations and collective agreements. 
Let us face it under this Government the only way employment agreements will be allowed to operate is as collective agreements. We will see the end of individual agreements because under this Government employees are deemed insufficiently capable of negotiating their own agreements with their own employers. They have to go into a collective agreement and because of the patronising attitude this Government has they must have a union representative to negotiate that for them. 
Lockwood Smith was quite right. The State Services Commission is a lackey of the Government. Under this Government the State Services Commissioner will have to have his or her say on every collective agreement under the Employment Relations Act that any State-owned enterprise enters into. We have already seen the implications in terms of directives to public servants and employment opportunities for Maori. Pacific people are totally excluded. They do not matter obviously in the public service. I suppose they are generally included under ethnic minorities. This is the start of the slippery slope. Next will be the private sector. 
JIM PETERS (NZ First) 
: 
 I have recently been reading a study—the most recent one—of Queen Elizabeth I. One of the issues she had continually throughout her reign was the issue of religion particularly the desire of her newly converted in many cases Protestant Ministers to delve deeply into the religious life of her subjects. Her comment to them was and it is very relevant here: “I have no wish to peer into the conscience or the soul of my subjects.” Despite the best efforts of her Ministers she managed not to do so. 
Here we have a contrast. The bill before us throughout its whole length—and we are now looking at Part 8—has a different philosophy entirely. That philosophy is an embracing desire by the State to peer down and to peer into every relevant section as the Minister sees it of the day-to-day life of State-owned enterprises. The last two speakers have been correct because section 8(2) in clause 238 embodies again the strange industrial bargaining that we have seen in recent years in some segments of State operations whereby there is never any proper negotiation between relevant parties—namely employer and employee. 
Instead above and beyond with a draconian hand at times stands the hand of the State. The reason for that particularly in the cases that I have been a party to is not quite known. There is no discernible reason why there should be a third party between two operating groups namely the employer who is given full powers under this legislation to agree and those who are employed. Here there is the clearly expressed desire that “every State enterprise to which this subsection applies must consult” with the Minister’s personal appointee in this regard the State Services Commissioner. 
My experience of the States Services Commission is not that it has an even-handed proper approach to industrial matters. In actual fact as we all know it complicates what should be a reasonable 2 or 3-year undertaking to resolve the industrial conditions under which people work day to day. Instead there is the unknown where there should be certainty and at all times there is a greater or lesser degree of political interference. That has always been so but these provisions propose a strengthening of that relationship. We in New Zealand First believe that is not sound industrial negotiation. It intrudes another imperative into what should be a proper discussion about the future conditions and salary or wages of workers; that is what the Minister thinks in the form of the State Services Commissioner. As I said this clause embraces the total controlling philosophy that the bill displays. New Zealand First will oppose it vigorously. 
The CHAIRPERSON (H V Ross Robertson) 
: Kia ora morena good morning honourable members. I call the honourable member Pansy Wong. 
PANSY WONG (National) 
: 
 Good morning to you too Mr Chairman. We always appreciate you in the Chair because you are very generous in ensuring that there is a thorough discussion during the Committee stage which is very very important. Even though Part 8 as my colleagues have said may have only two pages it refers to schedules and has huge significance in terms of the future financial well-being of State enterprises. 
There are very delicate issues around collective employment agreements. Clause 238 introduces an additional party in the form of the State Services Commissioner between the State enterprise and the union in negotiating a collective agreement. I am pleased to see that the Minister in the chair is the Hon Margaret Wilson who is the architect of the Employment Relations Act and who also has a law background to her credit. I want her to explain to the Committee what section 8(2) inserted by clause 238 really means when it states that a State enterprise before it enters into any collective agreement has to consult the State Services Commissioner. What is the extent of that consultation? Will it simply be someone at say Transpower picking up the phone and telling the State Services Commissioner that he or she might want to introduce a new offer or incentive to a group of staff in Transpower that might not be extended to another? If the State Services Commissioner said that was not acceptable would that be the extent of the consultation? Or would the State Services Commissioner have the authority to turn down say the offer the State enterprise intended to make? What is the obligation for the State enterprise to reject or accept that particular advice? 
I am quite concerned about how much intrusion and authority the bill intends to give to the State Services Commissioner given that section 8(3) in clause 238 states: “The Governor-General may by Order in Council apply subsection (2) to any State enterprise named in the Second Schedule.” That is actually quite serious. Any organisation listed in schedule 2 may also be affected by that requirement. The fact that the Governor-General may extend the authority of the State Services Commissioner through Order in Council might actually mean that the Government today wants to give the State Services Commissioner a lot more authority in association with that word “consultation”. 
I hope the Minister will take a call and tell us what the significance of the word “consult” is when it is preceded by the word “must”. What is the extent of the consultation? Is it just a chat a written statement a rejection or a “take it or leave it” statement? Also in what stages would the State Services Commissioner be involved in the actual negotiation of the collective agreement? 
BRIAN CONNELL (National—Rakaia) 
: 
 Throughout the course of the debate I have been railing about the repetition and the absolute drivel we have been asked to support by way of this bill. I made the point and I think it bears repeating that the public complains day in and day out about the size and cost of bureaucracy in this country and the sheer amount of red tape. I say to members that this bill is just another example of how out of touch the Government is when it seeks to pass this type of legislation. By my estimation the bill could have been about a third of its size. The fact it is not is an indictment on the Government which intends to legislate for every conceivable consequence whether or not it is relevant and whether or not an existing law is already in place. 
So members will probably wonder why I do not support Part 8 given that it has only four clauses and that out of 500 pages it takes up only one and a half. The reason I do not support it is that it concerns amendments to the State-Owned Enterprises Act. I caution members that “small” does not mean “not significant”. A couple of speakers have taken calls and dealt with the issue. The reality is that we all have to deal with the issue because it is the only pertinent clause in the part. It has huge implications for the productive sector and for the rest of New Zealand’s citizens because we are now playing around with the economic powerhouse of our economy. 
This section deals with huge businesses which in lots of cases run our infrastructure. What will be the situation if we come to an impasse whereby the entity concerned is recommending to or has negotiated with its employers certain terms and conditions and the Government’s lackey says that he or she has been told that the Government is not happy with that? This is the worst type of Government interference one could imagine. The Government is now legislating for huge levels of interference. Members of the Committee should think about that very carefully. That Part 8 has been truncated into one and a half pages does not make it insignificant. Why is this happening? The short answer is that this Government wants control. It craves control. It can do nothing without having control. It is trying to control and manipulate its own PC agenda. 
Craig McNair 
: It’s disgraceful. 
BRIAN CONNELL 
: It is disgraceful. If it were not for the fact that we are here at 11.50 on what is technically Tuesday morning but what the rest of New Zealand knows is Thursday morning after being in this Chamber until midnight last night and starting here again at 9 o’clock this morning under urgency I might have more energy to argue this point more powerfully. The fact is that this part has significant implications for New Zealand. New Zealanders are being snowed by it. I have asked what will happen if we get an impasse. Who will tell the people of New Zealand they will be cold this winter—if we are talking about an entity that deals with some of our power generation—because the Government wants to interfere? 
HELEN DUNCAN (Labour) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Motion agreed to. 
A party vote was called for on the question  
That Part 8 be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Part 8 agreed to. 
Schedules  
The question was put that the amendments set out on Supplementary Order Paper 315 in the name of the Hon Dr Michael Cullen to schedule 1 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Amendments agreed to. 
A party vote was called for on the question  
That schedule 1 as amended be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Schedule 1 as amended agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 315 in the name of the Hon Dr Michael Cullen to schedule 2 and the following amendments in his name to Part 1 of schedule 2 be agreed to: 
to omit the item relating to section 195B(5) of the Education Act 1989; 
to omit the item relating to the Police Complaints Authority Act 1988; and 
to omit from the item relating to section 39A(3) of the Reserves Act 1977 the expression “section 44” and substitute the expression “section 45O”. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Amendments agreed to. 
A party vote was called for on the question  
That schedule 2 as amended be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Schedule 2 as amended agreed to. 
A party vote was called for on the question  
That schedule 3 be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Schedule 3 agreed to. 
A party vote was called for on the question  
That schedule 4 be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Schedule 4 agreed to. 
The question was put that the following amendment in the name of Rod Donald to Part 1 of schedule 5 be agreed to: 
to insert “Guardians of New Zealand Superannuation” in the list of Crown agents. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 9 
Green Party 9. 
Noes 110 
New Zealand Labour 51; New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2. 
Amendment not agreed to. 
The question was put that the following amendment in the name of Rod Donald to Part 2 of schedule 5 be agreed to: 
to omit “Guardians of New Zealand Superannuation” from the list of Autonomous Crown entities. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 9 
Green Party 9. 
Noes 110 
New Zealand Labour 51; New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8; Progressive 2. 
Amendment not agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 315 in the name of the Hon Dr Michael Cullen to schedule 5 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Amendments agreed to. 
The CHAIRPERSON (H V Ross Robertson) 
: I remind members that there is to be no comment at all during the taking of the vote. I refer members to Speaker’s ruling 61/2. 
A party vote was called for on the question  
That schedule 5 as amended be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Schedule 5 as amended agreed to. 
The question was put that the amendment set out on Supplementary Order Paper 315 in the name of the Hon Dr Michael Cullen to schedule 6 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Amendment agreed to. 
A party vote was called for on the question  
That schedule 6 as amended be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Schedule 6 as amended agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 315 in the name of the Hon Dr Michael Cullen to schedule 6A be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Amendments agreed to. 
A party vote was called for on the question  
That schedule 6A as amended be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Schedule 6A as amended agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 315 in the name of the Hon Dr Michael Cullen to schedule 6B be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Amendments agreed to. 
A party vote was called for on the question  
That schedule 6B as amended be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Schedule 6B as amended agreed to. 
A party vote was called for on the question  
That schedule 7 be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Schedule 7 agreed to. 
The question was put that the following amendment in the name of Rod Donald to schedule 8 be agreed to: 
to insert after the item relating to section 195B(5) of the Education Act 1989 the following item: 
insert in section 200(1) after the words “registered bank” the words “ or any registered building society with which a Crown entity may establish maintain or operate a bank account under section 199 of the Public Finance (State Sector Management) Act 2003. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 62 
New Zealand Labour 51; Green Party 9; Progressive 2. 
Noes 57 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; United Future 8. 
Amendment agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 315 in the name of the Hon Dr Michael Cullen to schedule 8 and the following amendment in his name to schedule 8 be agreed to: 
to omit subsection (7) from the item relating to section 19 of the Hazardous Substances and New Organisms Act 1996. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Amendments agreed to. 
A party vote was called for on the question  
That schedule 8 as amended be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Schedule 8 as amended agreed to. 
The question was put that the amendment set out on Supplementary Order Paper 315 in the name of the Hon Dr Michael Cullen to schedule 9 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
Amendment agreed to. 
A party vote was called for on the question  
That schedule 9 as amended be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Schedule 9 as amended agreed to. 
Clauses 1 and 2 
JOHN KEY (National—Helensville) 
: 
 We are engaging in the title debate on the Public Finance (State Sector Management) Bill. There are a number of parts of this bill that I think New Zealanders when they reflect on them during their Christmas holidays will have major concerns about. The first concern will be around the Fiscal Responsibility Act which is now to be embedded in the Public Finance Act. We should take just a moment to reflect on our history and on why the Fiscal Responsibility Act played such an important part in the backdrop of New Zealand’s financial management. Let us remember that in 1990 when National came into office the then Minister of Finance Ruth Richardson was delivered a set of books by a Government that frankly had cooked them. Those books were full of lies and deceit. They were not accurate not correct and not a reflection of the financial health of our country. They were quite the opposite of that and they were delivered by a Labour Government that was very happy to have a set of books— 
Hon David Carter 
: Dr Cullen had his fingers all over them. 
JOHN KEY 
: That is right. Dr Cullen’s fingerprints were all over those books and they were a disgrace. 
Ruth Richardson stood tall and she said that books like that would never be presented to the public of New Zealand again. She said a future Government should never have to come in and inherit a situation that was so badly portrayed to the people of New Zealand and an incoming Government should not be cheated and deceived by a set of accounts that it should be able to rely on. That was the history of the Fiscal Responsibility Act which was a tremendously important piece of legislation. That legislation went on to set out a whole number of conditions that are met today on everything including the Fiscal Strategy Report. There is some transparency about the way the Government is to spend money and more important about its debt levels and its intentions as it goes forward in managing the Crown accounts. 
What this Government is going to do if it passes this legislation is to surrender the position that the Fiscal Responsibility Act had as a pre-eminent piece of legislation by burying it deep in a 500-page document so that it does not see the light of day. It was embarrassed by the fact that the Fiscal Responsibility Act was brought in by a National Government because of the actions of a Labour Government in years gone by. It does not like the fact that it presented a cooked set of books to an incoming National Government and now it is going to render the Fiscal Responsibility Act not into stand-alone legislation not into something that stands proud and tall to guide our country but into something that is buried within a 500-page document that is being rushed though in urgency. When New Zealanders think about the implications of that they will be not only alarmed but concerned and very disappointed indeed. 
I think that New Zealand is taking a retrograde step with this move. The Government should reflect on that and leave the Fiscal Responsibility Act as independent legislation so that it can do its job and do it properly. The Government of New Zealand has a huge responsibility to get this stuff right. Every day the Government is out there taxing New Zealanders. It has $46 billion of taxation revenue coming in. Every day the Government is out there stripping New Zealanders of the incentive to work hard and be paid a fair day’s pay for doing a fair day’s work. This Government is an overtaxing Government. That is what it is and it is not proud to have the Fiscal Responsibility Act show exactly that. 
There are some other elements of the Public Finance Act that I want to make particular reference to in terms of the aggregation of output classes. When the Public Finance Act came in in 1989 it was landmark legislation. It set out best practice for the New Zealand State sector to follow. That Act played a significant part in the transformation of the economy. We reap many of the benefits of having a stronger economy today because we have managed to get a very important part of our economy the State sector working properly and firing correctly. What is to happen is that under the new legislation we are to abandon the specific output classes and we are to start moving towards a measurement term known as outcomes. We all know that those outcomes will be woolly and grandiose. They will sound fantastic but when the day of accountability comes— 
Hon David Carter 
: All spin. 
JOHN KEY 
: It is all spin. This is a Government that likes spin. That is why I know for a fact that yesterday the library bought a new book on weasel words. Steve Maharey is putting out a grandiose document on what he has done over the last 5 years and the library needs to detox it and understand it. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 In speaking to the title of the Public Finance (State Sector Management) Bill I think we have to reflect back over the history of this legislation. I was one of the few who was in this Parliament in 1990 prior to the passing of the Fiscal Responsibility Act. I was one of the Ministers who faced the consequences of the dishonesty of the outgoing Labour Government. That Government presented a Budget and Dr Cullen was one of the finance Ministers involved. It was Mr Caygill who presented the Budget but Dr Cullen was his Associate Minister. They presented a Budget to this Parliament that claimed from memory a $79 million surplus. When the books were opened after the election far from a $79 million surplus this country faced a deficit climbing to $5 billion. Back in those days that was a large chunk of our GDP because it was a smaller GDP in those days. The consequences of that were just colossal. 
The incoming National Government determined that that should never happen again that it should not be possible for a Government to deceive the taxpayers of this country the public of this country the way the outgoing Labour Government did in the late 1980s. That is why National introduced the Fiscal Responsibility Bill and that Act has served this country well. It has provided the opportunity for everyone involved in the process of Government for taxpayers and citizens of this country to see the Government’s books opened regularly to see how the financial affairs of their country are going. 
What we see with this bill is a moving of that iconic legislation and the burying of it within the Public Finance (State Sector Management) Bill. We have to ask ourselves: what is Labour trying to do here? We know that Labour does not like scrutiny and transparency. We know that Labour likes to be able to fudge things. We know that Labour likes to be able to interfere. If we look at this bill we see it coming through. The Minister will be able to give more directions than has been possible in the past. Our State sector reforms in this country during the 1980s and 1990s were recognised worldwide as being at the cutting edge of good government. What we are seeing now is this Labour Government saying: “Oh we want to have more opportunity to meddle here.” 
It seems that the Labour Party loves getting its political tentacles into these things and this legislation provides for much more ministerial direction. It will enable the Government to fudge things much more because the output classes can be aggregated with this legislation. There will be less transparency. We know that Labour likes handing out money. Look at its Community Employment Group handouts that have embarrassed it so much with the hip-hop tours and so on. We know that Jim Anderton’s handouts his corporate welfare have had the Audit Office saying there are some real problems around the handing out of this money. We know that Labour loves doing it and wants a legislative framework that fudges all of this much more. 
National is saying that it is bad for this Government to be making our financial affairs in the State sector less transparent to be providing for greater political interference. It is sad for this country that we are dealing to iconic legislation like the Fiscal Responsibility Act. I suppose when we think about it Dr Cullen hates the fact that the Hon Ruth Richardson was the author of the Fiscal Responsibility Act. Dr Cullen hates to have an iconic piece of legislation with the name of a Minister like the Hon Ruth Richardson on it. The best way to change that is to repeal the legislation and bury it in this Public Finance (State Sector Management) Bill that will bear his name. That kind of pettiness does not serve this country well. The Fiscal Responsibility Act was serving this country well. It could have been amended slightly perhaps to sharpen up some of the procedures but the transparency was hugely important. Its iconic status was hugely important. I suspect what we are going to get from Labour if it ever wins another election is something like a “Social Responsibility Bill” that will have all the soft woolly wonderful stuff that these left-wing Labour politicians want to have. 
Brian Connell 
: The PC Act. 
Dr the Hon LOCKWOOD SMITH 
: My colleague Brian Connell says it will be the PC Act. It will be politically correct diatribe. National is opposed to this legislation not because of some of the ideas being sought but because the detail is bad. 
JIM PETERS (NZ First) 
: 
 I rise on behalf of New Zealand First to speak to the title Public Finance (State Sector Management) Bill. New Zealand First sees this legislation as an all-embracing controlling inquisitive framework developed under the present group of Ministers. This could take effect from 25 January 2005 and indeed is an important Act in the innate traditions of the controlling Labour Party. To a degree many of the organisations that were created by the Labour Government in the late 1980s and that continued through the 1990s will not find a great deal of change in some sections. But there is one group in this country that does believe earnestly that there is change—the tertiary education institutions. I want to take the Committee back to why that might be so. 
The Education Act of 1989 very clearly expressed the intention under that Act of giving as much independence and freedom to make academic operational and management decisions as needed. Section 161 states: “(1) It is declared to be the intention of Parliament in enacting the provisions of this Act relating to institutions that academic freedom and the autonomy of institutions are to be preserved and enhanced.” Section 161(4) states: “In the performance of their functions the Councils and chief executives of institutions Ministers and authorities and agencies of the Crown shall act in all respects so as to give effect to the intention of Parliament as expressed in this section.” The question is: where is the statutory duty to preserve and enhance institutional autonomy and academic freedom? 
I quote Professor McCutcheon who was reported in the  
New Zealand Herald  
this week as stating: “In a democratic society we cannot allow state control of our free-thinking institutions.” When the Minister in the chair last night was queried as to the intention of Part 3 “Preliminary provisions relating to Crown entity reform” and the actual impact of that provision there was no answer. There was no answer to the questions about clause 46 in that part which talks about reforming the law. The questions: “What law what intentions and when?” were not answered at all. Again I turn to the comments made by Professor McCutcheon. His answer to that question was this: “No nation in the Western world has universities under state control. The pillars on which New Zealand academia is built are being eroded by creeping Government control.” That was his answer. 
We know that this move is but part one of a two-phase action on the part of the Government. It is proper that universities should be very very concerned as to where part two will take them. Advice has been given to Ministers and changes have been proposed that are not revealed in this bill and that is the unanswered part of the preliminary provisions in Part 3. That will be revealed in time—probably a year from now should the Government unworthy as it is be returned to where it is now. The conflict that those proposals would cause in our community and our academic society will take place for the first time then. That intention in this bill is dishonest in regard to academic institutions. Personally I cannot conceive as to why that should be so. 
It was so strange to hear Mr Mallard one of the three Ministers involved say that most taxpayers would think that the spending of taxpayers’ money should be transparent and there should be accountability. We have been in the House week after week and have heard those very issues raised here. It has been shown that under the present provisions the accountability of some institutions has not been at all clarified and it has not been an issue for Ministers. The Hon Bill English who sits to my right has said over and over again in regard to the case in Christchurch that that is not so. This deserves further attention. 
DEBORAH CODDINGTON (ACT) 
: 
 I rise to speak on clause 1 of the Public Finance (State Sector Management) Bill which should rightly be called the “Public Finance (State Sector Control) Bill”. The Government thinks that control and management are synonymous. The honourable member Jim Peters was absolutely right when he argued on behalf of academic freedom. This legislation breaches the spirit of the Education Act 1989. No good reason has been put forward as to why sections 160 and 161of the Education Act 1989 should be overridden by this legislation. 
The Vice-Chancellors Committee has met with the Government on innumerable occasions on this matter but it has not been listened to and yesterday in the Chamber the Minister of Education dismissed that committee as a bunch of fairies. That is how the Minister of Education who has had the privilege of a tertiary education treats academic freedom. It is an absolute disgrace. The Minister argued that the status quo is preserved. If the status quo is preserved why do we have page after page of amendments to the Education Act 1989 in this legislation? If the status quo is being preserved why do we have those amendments? Why are we bringing tertiary institutions under the same executive control as other Crown entities for which academic freedom and autonomy are not an issue? They are an issue with tertiary institutions. 
Adequate measures are already in place for accountability and transparency in the spending of taxpayers’ money it is just that this Government has not bothered to ensure that that accountability is put in place. For example Christchurch Polytechnic The Open Polytechnic and various wananga are under investigation in relation to conflicts of interest. Nothing ever happens unless an Opposition member brings it to the attention of the public and the media and then the Government steps in with the appropriate audits that should have been conducted properly in the first place. That is one major issue in this legislation. 
The other major issue is that no good reason has been put forward for the Fiscal Responsibility Act not remaining as a stand-alone law. The bill as it is now is considerably better than the bill that went to the Finance and Expenditure Committee and New Zealand taxpayers have the Clerk of the House to thank for that. He made a very strong submission because under the bill that this Government sent to the select committee it wanted to be able to spend public money without the authorisation of Parliament. Because of the Clerk’s strong submission and his arguments we have at least got back to the situation where money should be spent only with the authorisation of Parliament. 
However the executive has not been restricted enough. It still has the unfettered power to spend money. No measures have been brought in to prevent that. We could have built on the Fiscal Responsibility Act. We could now be debating a taxpayers’ Bill of Rights under which every bit of Government spending of public money is subject to a value-for-money test and where there are constitutional restraints on the spending of public money like targeting it to not increasing the rate of inflation or population growth and ensuring that to go above that there has to be a referendum with more than two-thirds of the population in favour. We could be debating those issues but instead we are passing legislation that considerably waters down the Fiscal Responsibility Act. Yesterday the Minister of Education and Minister of Finance blathered on about the need for transparency and accountability in the spending of public money. 
Hon DAVID CARTER (National) 
: 
 As we debate the title and commencement of the Public Finance (State Sector Management) Bill I want to say at the outset that this bill will deliver less transparency to the spending of taxpayer money. This bill delivers less transparency because this Government has been embarrassed so many times by the rorts and rip-offs that have occurred under its policy. The Committee needs to realise that what we are talking about here today is really the “Fiscal Responsibility (Abolition) Bill”. I feel very strongly about that because I was the member who came in at a by-election after Ruth Richardson had shepherded through this House the Fiscal Responsibility Act of 1994. I know the history of that legislation. 
National won the general election in 1990 and Ruth Richardson was appointed the Minister of Finance. When the National Government got to see the country’s books it found that the New Zealand people had been hoodwinked. What had been declared by the Associate Minister of Finance Dr Michael Cullen to be a Budget surplus of some $79 million was in fact a massive Budget deficit of around $5 billion. Without doubt those facts had been kept from the New Zealand public. When Ruth Richardson saw them she was determined to ensure that the people of New Zealand would never be hoodwinked in that way again. So the last piece of legislation that she wanted to see passed in this House was the Fiscal Responsibility Act which I think finally passed in July 1994. 
That legislation was iconic. Not only has it served New Zealand exceptionally well for a decade but also Ruth Richardson was then invited to countries all around the world—to other democracies that saw the benefit of being honest with people and showing them the true facts as to the health and robustness of the economy. 
Ruth Richardson took that legislation to a number of other countries which have followed us and enacted similar fiscal responsibility legislation. 
We see now after 5 long years of a Labour Government that the Government does not want transparency. It is totally embarrassed by the rip-off that has occurred at the Christchurch Polytechnic with $6.5 million going to a company of which one Vicki Buck the well-known former mayor and large Labour Party supporter was a significant shareholder. More recently we saw this headline in the  
Dominion Post 
 only a week ago: “Jobs machine out of control”. That headline was referring to the way Jim Anderton has absolutely wasted around $50 million of taxpayers’ hard-earned money on corporate welfare. Audit New Zealand asked Jim Anderton’s “jobs machine” what study had been done to evaluate the success of the $50 million that Mr Anderton splashed around the country earning himself photo opportunities in our newspapers. It was staggering to learn that no evaluation has been carried out. The major reason for that admission is that Jim Anderton and his officials do not even have a list of the people who have received the money. That is just a staggering admission that his Government has no respect for the spending of public money. 
I say to members today that history will repeat itself. After the next election when the new National Government resumes the Treasury benches we will see—as happened in 1989 and 1990—that the legislation we are debating has been largely designed to make sure that the public of New Zealand do not know the truth. The Fiscal Responsibility Act has worked well and it should remain. 
GORDON COPELAND (United Future) 
: 
 I would like to cover a few points that the member Deborah Coddington mentioned during her contribution on the title clause of the Public Finance (State Sector Management) Bill. Firstly I think there are a number of different issues in relation to tertiary education. We need to face the reality that unless a tertiary education facility is privately owned then the only other option is that it be publicly owned. If it is publicly owned then obviously the Crown accounts which capture on a consolidated basis all assets and liabilities of the Crown must record the assets and liabilities of our various universities and tertiary institutions. One of the submissions the Finance and Expenditure Committee received from the tertiary sector basically suggested that that should not happen. But the select committee explored that suggestion in some depth and found that it has no factual basis. Therefore the assets and liabilities of tertiary institutions obviously must go into the Crown accounts. There is no doubt about that at all. 
To link that to the question of academic freedom is therefore purely a nonsense. Just because the Crown incorporates in its accounts the assets and liabilities of those institutions it does not ipso facto follow that the Crown is interfering with academic freedom. [ 
Interruption 
] I have read the whole bill and I was also at the select committee when we heard the submissions. 
Deborah Coddington 
: Read the Education Act. 
GORDON COPELAND 
: The member suggests that I read the Education Act. I was just about to say that the relationship between the institutions and the Government is of course set out in that Act. As far as I am aware—and members may correct me if I am wrong—nothing in that Act suggests in any way that the Government has the ability to interfere with the academic freedom of our universities. That is the very point I was making. 
The third point concerns accountability. Here I find myself in strong agreement with Deborah Coddington and Bill English. It is a major concern that when taxpayers’ funds are paid across to tertiary education institutions—Christchurch Polytechnic included—there ought to be proper accountability. Looking at outcomes really goes to the very heart of what this legislation is about. What outcome at the end of the day has the taxpayer received from Christchurch Polytechnic for the money that has been put in? The answer is: a lemon. That was a rotten deal for taxpayers. Therefore they are quite legitimately saying that the legislation is in place but the next step is to make sure that we implement it properly and use a bit of common sense in terms of not putting money into dopey ideas for programmes that are run by dopey people and have dopey outcomes. That is really an absolute no-brainer. 
The other issue Deborah Coddington touched on that I thought was quite interesting is whether this legislation should make reference to certain other things. One of those things is what should happen when the Crown collects more revenue from taxpayers than it needs for its budgeted expenditure. In the state of Colorado in the United States the equivalent legislation has a clause stating—I have not actually read it but it goes something like this—that if the state collects more tax revenue than it had budgeted at the beginning of the Budget cycle to spend it can use that revenue in only one way: to compensate for shortfalls from prior years. The law then states that once that condition is satisfied any surplus must be given back to taxpayers by way of a tax cut. 
Would that not be a great idea for New Zealand? The ACT party should fully support that proposition because it is a low-tax party. How would we ever get there? In Colorado they got there through a citizens initiated referendum. That is a cause some party might like to take up: a citizens initiated referendum in this country about legally stipulating—and this would go way beyond even Ruth Richardson’s legacy—that the Crown should set its Budget at the beginning of the year and live within it; that the Crown has the right to collect the revenue necessary to satisfy the Budget but that if there is something over as has been the case in previous years it should give it back to the hard-working taxpayer. 
GEORGINA BEYER (Labour—Wairarapa) 
: 
 I move  
That the question be now put 
. 
BRIAN CONNELL (National—Rakaia) 
: 
 I start by saying that I believe that the correct title of this bill is the “National Party Envy Bill”. That is the only explanation I can offer as to why the Government is repealing the Fiscal Responsibility Act. That Act as we have heard from other speakers is seen as iconic. It puts the brakes on Government expenditure provides some control and provides some confidence to the general public that the Government is spending money in accordance with some conditions and restraints. That it is being repealed now is an absolute travesty. Let me make it clear to the Committee that the Fiscal Responsibility Act is outstanding legislation and the reason it is being repealed is simply envy. 
We are told by the proponents of what is taking place that we should not concern ourselves because parts of the Fiscal Responsibility Act are being incorporated into this Public Finance (State Sector Management) Bill. I say to those people that perception is reality and that if we repeal this Act we will do a lot of damage to investor confidence. I think that is something New Zealand simply cannot afford to have happen. Our international reputation as a place where people can invest with confidence is intact at the moment but unless people continue to have confidence that reputation will be damaged. 
We should be in no doubt that Michael Cullen and his cohort are enthusiastic spenders. Some members of this Chamber will recall the fact that the books in 1990 were cooked by the outgoing Labour Government. The person at the heart of that was none other than Dr Michael Cullen. [ 
Interruption 
] It is right. Now he is asking this Committee to accept that the Fiscal Responsibility Act is no longer needed. He is asking this Committee to condone it being repealed. That is why the National Party will vote against this legislation. 
The other point I raise is the arrant PC nonsense around leadership and management capability in the public sector. We are now being asked to legislate for standard human resource management practice. Any organisation worth its salt would engage in succession planning career planning equal opportunities and minimum ethics standards but this Government says that we now have to legislate for that. That is the major reason why this bill is 500 pages in length. The amount of repetition and arrant nonsense that I find when I look at this bill leads me to believe that an alternative title could simply be the “PC Act”. This Government is pushing its own political agenda and PC nonsense through this bill and the rest of the country is being asked to swallow it. I can tell members that the National Party certainly does not accept that. 
Hon MARK GOSCHE (Labour—Maungakiekie) 
: 
 I move  
That the question be now put 
. 
PANSY WONG (National) 
: 
 The title of this bill is the Public Finance (State Sector Management) Bill. [ 
Interruption 
] If the member of the Labour Party wants to make a constructive contribution he should stand up and do more than move the end of the debate. 
The title of the bill is the Public Finance (State Sector Management) Bill yet I think the Government or the Minister in charge of this bill has forgotten the meaning of public finance. It means taxing the public and accounting for spending. 
I will raise two points about Part 1 that have become quite obvious during the Committee stage although we have not received answers from the Minister. We found out that the Clerk of the House had saved the day for the supremacy of Parliament by forcing a raft of changes to Part 1 in the first draft of the bill. As it stood the bill would have given the executive unbridled power to spend without accountability. 
The second point that National felt equally strongly about was the collapse of the independent legislation the Fiscal Responsibility Act. We learnt from the Hon Lockwood Smith a former Associate Minister of Finance that the real reason why the Hon Michael Cullen is so hell-bent on collapsing the Fiscal Responsibility Act is it was introduced under the name of the Hon Ruth Richardson. That bill has served New Zealand well for the last 10 years by keeping various Governments accountable for how they have spent the public’s money. Although we are grateful to the Clerk of the House for forcing a substantial rewrite of Part 1 we are still not very happy with the fact that the Fiscal Responsibility Act is losing its independent status. 
Part 2 of the bill which amends the State Sector Act raises serious concerns because of the use of the phrase “whole-of-Government approach”. When the Labour Government talks about a whole-of-Government approach it sends a very strong message about interference in the independence of the public service. The public service is supposed to be apolitical and supposed to be accountable for achieving outcomes that can be expressed and translated into outputs that are meaningful and that can also be assessed as to whether they are successful. The phrase “whole-of-Government approach” should lead to major concern. It has the connotation of mega-ministries being created or of the State Services Commissioner together with Treasury simply overriding the independence of various Government departments as they carry out obligations and responsibilities under their charge. 
We are not convinced by a Labour Government whose policies have in the first instance caused some of the worst scandals we have seen. They were unravelled by two hard-working National MPs. The Hon Bill English unravelled the Christchurch Polytechnic Institute of Technology case concerning community education and Katherine Rich looked into all those hip-hop tours. 
A party vote was called for on the question  
That clause 1 be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Clause 1 agreed to. 
New clause 2 Commencement 
The question was put that the amendment set out on Supplementary Order Paper 315 in the name of the Hon Dr Michael Cullen to insert new clause 2 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 49 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9. 
New clause 2 agreed to. 
Hon TREVOR MALLARD (Associate Minister of Finance) 
: 
 I move  
That the Committee divide the bill into the Public Finance Amendment Bill the State Sector Amendment Bill (No 4) the Crown Entities Bill and the State-Owned Enterprises Amendment Bill 
 divided into Public Finance Amendment Bill State Sector Amendment Bill (No 4) Crown Entities Bill State-Owned Enterprises Amendment Bill  
pursuant to Supplementary Order Paper 316 
. 
A party vote was called for on the question that the motion be agreed to. 
LINDSAY TISCH (Junior Whip—National) 
: 
 I raise a point of order Mr Chairperson. I note that there was a hesitation on the part of the junior whip in casting two votes on behalf of the Progressives. He was unsure whether he was casting or had the authority to cast votes in favour so I seek clarification with regard to that. There was a hesitation and I see that he is on the phone at the moment. Maybe that matter can be clarified. 
The CHAIRPERSON (H V Ross Robertson) 
: I say to the honourable member that it is entirely up to the members themselves as to how they cast the vote. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 I raise a point of order Mr Chairperson. I seek your clarification on how members can vote. I am unaware of whether members in casting votes can cast a vote for the time being or for now. Votes are cast on the vote but the Labour member in casting the votes for the Progressive party said: “Two votes at least for now.” or words to that effect. I do not believe that one can record votes that are not actually made definitively with regard to the question at hand. 
The CHAIRPERSON (H V Ross Robertson) 
: I say that a member must just cast the vote. So if the member did say that I would ask him to desist in future and to make sure votes are cast correctly. 
LINDSAY TISCH (Junior Whip—National) 
: 
 I raise a point of order Mr Chairperson. The point I brought up earlier which my colleague Dr Smith has reiterated is whether the junior whip had authority considering the hesitation he showed at the time to cast that vote when he said: “I hope in the meantime.” Did that mean that he had authority to cast it and that the vote was in order? 
DARREN HUGHES (Junior Whip—Labour) 
: 
 I am happy to clear it up for the Committee. I have the authority to cast two Progressive votes in favour of the motion. We were slightly distracted at the time by the late arrival of another member and that may have been why the members thought I was hesitating on the Progressive vote. There are two Progressive votes in favour. 
The CHAIRPERSON (H V Ross Robertson) 
: I thank the honourable member for clarifying the situation. It is much appreciated. 
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 50 
New Zealand National 27; New Zealand First 13; ACT New Zealand 9; Maori Party 1. 
Motion agreed to.