Hipkins ChrisSTATE SECTOR AND CROWN ENTITIES REFORM BILLFirst ReadingDebate resumed from 15 February.Hon CHRIS HIPKINS (Minister of State Services): The bill in question the State Sector and Crown Entities Reform Bill provides for greater integrity and accountability in the management of the wider State sector. It strengthens—it will I hope—the public's trust and confidence in Crown entities which are often the face of the Government and often deliver vital public services to New Zealanders every day. It will ensure that Crown entities remain aligned and connected with the State sector and it will bring more consistency to the regulation of conduct and remuneration of employees at the most senior levels of the wider Public Service. New Zealanders rightly expect Crown entities to act responsibly in the public interest and be good trustees of public resources. Crown entities are public organisations operating for the most part with public money for the public good.Part 1 of the bill makes two key changes to the Crown Entities Act. It requires boards of statutory Crown entities to obtain the State Service Commissioner's written consent to the terms and conditions of employment of a chief executive and it introduces terms of appointment for up to five years able to be renewed for future chief executives of statutory Crown entities. Currently Crown entities must consult with the commissioner of State services when they're establishing the remuneration of their chief executives. If they cannot reach agreement with the commissioner of State services they then must consult with their Minister. If they still don't like the advice they receive from the commissioner and then from the Minister they can basically set the salary at whatever they like and we have seen examples in recent times of Crown entities acting against the wishes of the State Services Commissioner and against the wishes of their Minister when they have been setting chief executive salaries. They've certainly been setting those salaries well out of step with the wider public sector and they have been setting them well out of step with what the public of New Zealand expect from public entities.This bill brings the Government through the State Services Commissioner a greater ability greater levers to deal with that issue. Ministers on both sides of the House and the commissioner have repeatedly expressed their concern around the way the law is currently operating and I'm very pleased to say that this Government's going to actually do something about it by bringing legislation through the House relatively quickly to deal with the matter.A more prescriptive regime already applies to some Crown entities. For example the 20 district health boards and 26 tertiary education institutions are already subject to greater control. This legislation extends out broader to an additional 22 Crown agents 14 autonomous Crown entities 10 independent Crown entities and four Crown entity subsidiaries which then means that they will also need to seek the agreement of the commissioner in setting the salary for their chief executive. That will allow us to ensure that there is greater consistency in these matters right the way across the Public Service.The second major change it does is specify a term of employment for a chief executive. Under the current Crown Entities Act there are no specific references to a term of employment for Crown entity chief executives. This is out of step with the 31 Public Service chief executives and 26 tertiary education institution chief executives whose legislation provides for five-year terms that are able to be renewed. It also changes the New Zealand Public Health and Disability Act so that this provision will apply to the chief executives of district health boards and other health sector Crown agents and this brings them into line with the public sector and tertiary education institutions.Boards: under the current rules boards are often responsible for chief executives that they did not appoint and whose terms and conditions of employment they did not agree to. By moving to a five-year term that is renewable it will give the boards greater decision-making power and ultimately make the chief executives more accountable to those boards who they report to. It enhances the accountabilities of chief executives and it's important to note that this will only apply to appointments or reappointments of a chief executive after the Act comes into force.The bill makes two key changes to the State Sector Act. It enables the State Services Commissioner to apply a code of conduct to the board members of the entities that are subject to a code of conduct and it modernises the commissioner's investigation powers by aligning them with the Inquiries Act 2013. A code of conduct issued by the commissioner cannot override or interfere with any statutory duties of board members or with the statutory independence of the independent Crown entities.The commissioner's main powers of investigation beyond core Public Service departments come from the Commissions of Inquiries Act 1908: the power to summons witnesses and receive evidence. The commissioner has other powers in relation to the Public Service departments—for example to inspect to investigate to obtain information to enter departmental premises to examine documents and to question staff. The Prime Minister can direct the commissioner to exercise those powers across any part of the State services. A Minister or the head of any part of the State services can request the commissioner to exercise some of these powers but not the power to enter premises. The commissioner has extensive powers to investigate but what powers are available in the wider State services depends on who asks the commissioner to act. Therefore it is becoming a very cumbersome and difficult web in order to navigate.The Parliament recently passed a new Inquiries Act. This bill brings the commissioner's power to investigate in line with the Inquiries Act and means that the commissioner's powers will be consistent regardless of who is asking for the inquiry to be undertaken. So it will ensure that the commissioner can better do their job to investigate any impropriety within the wider public sector including Crown entities. We've seen an example just recently where the commissioner was asked to undertake an investigation regarding a district health board for example—their powers derived from those conferred effectively by the Minister. What this will do is it will mean that the commissioner has a consistent set of powers that will allow them to ensure that public sector agencies whether they be Crown entities or core public sector departments are actually subject to all of the accountability that we would rightly expect them to be subject to.So the bill makes three changes. That is it replaces the use of the old Commissions of Inquiries Act 1908 which I've just mentioned with the substantially similar powers in the Inquiries Act of 2013. It provides a uniform trigger to enable the commissioner to use the full suite of investigatory powers in the wider State services. All of the commissioner's powers will be available irrespective of whether the commissioner is directed or requested to act by the Prime Minister or a Minister or the head of any part of the State services. It enables the commissioner to use the full suite of investigatory powers under the commissioner's own motion for investigations into matters of integrity and accountability. In other words it allows the commissioner to adequately do the job that the commissioner has been tasked by the Government and by the Parliament through the State Sector Act to do and to do it properly.Collectively the package of amendments that this bill proposes provides for a single integrated approach in the State services that is underpinned by integrity transparency and accountability all of which affect the public's trust and confidence in the Government. I commend the bill to the House.DEPUTY SPEAKER: Just before I call the next speaker can I make it clear that the Hon Chris Hipkins is the Minister in charge of the bill and therefore that is counted as the first speech even though the Hon Andrew Little had 20 seconds late one night.