State Sector and Public Finance Reform Bill — First Reading 
Text is incorporated into the Bound Volume 
State Sector and Public Finance Reform Bill — First Reading 
[Sitting date: 28 November 2012. Volume:686;Page:6920. Text is incorporated into the Bound Volume.] 
State Sector and Public Finance Reform Bill 
First Reading 
Hon Dr JONATHAN COLEMAN (Minister of State Services) 
: 
 I move  
That the State Sector and Public Finance Reform Bill be now read a first time. 
 I nominate the Finance and Expenditure Committee to consider the bill. 
Delivering better public services to New Zealanders within tight financial constraints is one of the Government’s top priorities. In March this year the Prime Minister launched the Better Public Services programme which is designed to create State services that are more innovative efficient and focused on delivering on what New Zealanders want and expect. Although there is much that works well in our State sector we need to perform better in securing the outcomes that matter most to New Zealanders. To achieve this State services need to be reshaped so that they are fit for purpose not just for the present but for the next decade or more. 
One hundred years ago the Public Service Act 1912 became law. Wednesday 7 November marked the 100th anniversary of a politically neutral and professional Public Service in New Zealand. A century on we take another step forward and pursue the challenges of tomorrow’s State services. This legislation is a key part in ensuring the State services continue to support a robust economy and reflect our values as a society in the next chapter of this story. 
The State Sector and Public Finance Reform Bill is an omnibus bill that strengthens the management of the State sector and public finances in New Zealand. This bill has three parts: amendments to the State Sector Act 1988 amendments to the Public Finance Act 1989 and amendments to the Crown Entities Act 2004. These three Acts are the foundation of New Zealand’s public sector management system. The Government has consulted with political parties across the House on the proposals to amend these Acts. In my view these are pragmatic non-ideological changes and I would expect that all parties will support what we are trying to do regardless of the pressure that vested interests may try to apply. 
The amendments provide a wider range of public sector management tools. These tools support and encourage Government agencies working more closely together and organising themselves around results that make a difference to New Zealand; Government agencies sharing functions and services purchasing goods and services and developing systems together in order to leverage the scale and expertise of the State services; greater financial and reporting flexibility to support agencies working together and to provide more meaningful performance information to Parliament; and stronger leadership at the system sector and departmental level to achieve the desired change in the performance of the State services. 
The proposed changes to the State Sector Act 1988 will strengthen the State Services Commissioner’s role in leading the State services. It will extend chief executives’ responsibilities to consider the collective interest of the Government and make their stewardship role more explicitly focused on the Crown’s medium and long term interests. It will add a new organisational arrangement called a departmental agency to the options available for delivering public services. This is an alternative to creating a stand-alone department or Crown entity. A departmental agency will operate within the policy and funding framework of a host department but will have operational autonomy under its own chief executive who is directly responsible to a Minister who may or may not be the same as the host department’s Minister. The bill will also improve the clarity and operation of the legislation by way of technical changes. 
New Zealand’s public finance legislation has a strong reputation internationally for being robust and comprehensive. This bill will ensure that this continues to be the case into the future. The proposed changes to the Public Finance Act 1989 will provide more meaningful information to Parliament about what the Government is spending and achieving and will reduce the compliance costs involved in producing that information. This includes shifting the default for tabling strategic information to at least once every 3 years. The changes will improve financial flexibility to facilitate innovation and different ways of working within the executive branch of Government. They will clarify departmental chief executives’ responsibilities for financial management and financial stewardship and they will specify the governance regime for companies that are currently listed in schedule 4 of the Public Finance Act. The proposed changes to the Public Finance Act do not include amendments to the fiscal responsibility provisions in Part 2 of this Act which are the subject of a separate bill. 
The proposed changes to the Crown Entities Act 2004 will bring Crown entities within the influence of the proposed new leadership arrangements across the State sector improving their ability to align with Government priorities while retaining Crown entities’ self-governing autonomy. The proposed changes will support coordination and collaboration between Crown entities and other agencies by amending the collective duties of Crown entity boards so that board members ensure their entity collaborates with other entities where practicable. They will support functional leadership by expanding the scope for the use of whole-of-Government directions. They will simplify streamline and improve the planning and reporting provisions by providing greater flexibility to provide more meaningful performance information to Parliament and by making the default for tabling statements of intent 3-yearly. They will formalise the role of the monitoring department and the ability of the Minister of State Services to request information and they will improve the clarity and operation of the legislation by way of technical changes. 
It is intended that this bill be divided into the following separate bills at the end of the Committee of the whole House stage. Part 1 will become the State Sector Amendment Bill Part 2 will become the Public Finance Amendment Bill and Part 3 will become the Crown Entities Amendment Bill. 
Delivering better public services— 
Hon David Cunliffe 
: Better doesn’t know any different. 
Hon Dr JONATHAN COLEMAN 
: Do you want to shut up David for a second? Thanks. Delivering better public services involves a comprehensive and ongoing programme of work supporting the effort and commitment of public servants. The State Sector and Public Finance Reform Bill tackles an important component of this programme of work by strengthening the current legislative framework to support better-performing State services. I commend this bill to the House. 
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 About the only notable thing about the speech that was just made by Jonathan Coleman is that at least it was on the right bill for a change. But as for everything else it was possibly the most boring ministerial statement that we have heard in this House for quite some time coming from the architect of the Mt Albert disaster for the National Party. There is much in this bill the State Sector and Public Finance Reform Bill that the Labour Party supports. We do support moves to join up the public sector more to streamline public services more and to make the public sector more efficient. There are a lot of elements in this bill that we would be very happy to work with the Government on. However there are also elements in this bill that mean it is not possible for us to support it at its first reading. I am going to run through those in a moment but I am also going to make an offer to the Government. If Government members genuinely believe that improving public services requires some cooperation across the Parliament—and I believe that it does—then we are willing to work with them. But they are going to have to give up some of the things they are trying to put forward in this bill in order to get that cross-party support. 
There are three main areas of concern. I want to talk first of all about the ability of chief executives to delegate their powers outside of the Public Service. What we have at the moment is that a chief executive can delegate the powers they are given by law to someone else within the Public Service and this Parliament can hold those people to account for that. Ultimately every public servant one way or the other through the Public Service chain of command is accountable to Parliament. What this bill will do is allow the chief executive to delegate the statutory powers they hold outside of the Public Service to an entity a private entity that is not accountable to Parliament. That is something that we in the Labour Party will simply not support. We have already seen this happen in a particular piece of legislation that related to private prisons where statutory functions held by corrections staff can now be delegated to the private sector. We did not support that then and we will not the support the blanket application of that particular principle to the wider Public Service. 
The second thing that we are concerned about is the potential reduction in the scrutiny of the Public Service that comes into effect through this bill through the amalgamation of the estimates and financial review scrutiny processes. I should point out at this point that that is quite a significant change to the way this Parliament operates. Yet the Standing Orders Committee has not been consulted about that. At the moment in this Parliament we have two major financial processes that we engage with through select committees. We have the estimates where we look at the forward-looking Budgets of the Government and we hold Ministers to account for the decisions they have made about how taxpayer money should be generated and how it should be spent. And there is a clear accountability of Ministers to their parliamentary colleagues through the select committee process and through that to the public for the decisions they make about where money should be appropriated and where it should be spent. 
 The second process that we have is one that is retrospective and it is holding the Public Service to account for how that money has been spent and for the decisions that agencies have taken on how it is applied and how Government policy is delivered upon. The key accountability there is of the chief executive. The chief executive is responsible for their agency or their department delivering on what the Government has provided them funding to do. So there are two clear accountability processes here and we as a Parliament deal with them separately through the estimates process and through the financial review process. This bill combines those two processes together. That is a significant change to the way the Parliament operates yet the organisations in the Parliament that would normally deal with these sorts of changes—the Standing Orders Committee and so on—have not been consulted about that. 
Hon Clayton Cosgrove 
: You’re joking! 
CHRIS HIPKINS 
: They have not been consulted. This has not gone to the Standing Orders Committee yet it is a significant change to the way that the Parliament will function and it effectively halves parliamentary scrutiny of the Public Service. Let us be really clear about this: this bill halves parliamentary scrutiny of the appropriation of public funds and the expenditure of public funds. That is something that we in the Labour Party simply will not support and we certainly will not support it if the Government has not taken the steps to consult with other parties in Parliament to make sure that such a significant change is broadly supported. 
In New Zealand we do not have a written constitution. We do not have a law or a written document that allows other laws to be struck down as unconstitutional. This Parliament has the ultimate power. What we say goes. The laws we pass apply. What that means is that when the rules of this place are changed they should be changed only with broad bipartisan—or multipartisan—agreement. That has not been secured for this bill. This is a huge change to the way the Parliament operates and the National Government expects to pass this through I think with a one or two vote majority—or probably only a one vote majority or maybe a three vote majority depending on what the Maori Party does in this House. That is simply not good enough. It is halving parliamentary scrutiny of taxpayer financing. That is not good enough and it is not OK for the Government to pass that with a bare majority. It is simply unacceptable. I will extend to the Government again the offer that we are willing to work with it on the elements of this bill that we think are positive because there are many elements in the bill that we think are positive. But we will not allow it and we will not support it unilaterally overriding the rules of this Parliament and reducing the public scrutiny of its activities in the way that it intends to do. 
The final area where the Labour Party has major concerns with this bill is around the changes that relate to collective bargaining by those working in the Public Service. What this bill allows the Government to do is issue by Order in Council directives around the outcomes of collective bargaining before the bargaining has even started. So the Government can effectively say by law what the outcome of collective bargaining is going to be before anyone has sat down at a table to even put a claim on the table. That just cuts against all of the principles that underpin good-faith employment relationships. It means that the Government decides before bargaining has even started what the outcome of it is going to be and we will not support that either. That is the sort of policy that Rob Muldoon would have implemented. It would have given him the power—and he did have policies and legislation like this—to decree what settlements were going to be without any reference to any kind of bargaining process. That is effectively what this bill will do under the current provisions in it and there is simply no way that we in the Labour Party will support that. 
There are provisions in the bill as I mentioned that we will support. We do support moves to get Government departments working more closely together sharing services and making sure that the public sector offers I guess seamless career opportunities for those working within it. For younger people who move into the Public Service they want to know that they can move around quite seamlessly between different departments and agencies. It is not like the old sort of days that we might be familiar with from TV shows like  
Gliding On 
 where once you got a job in a Government department you were there for life. Younger people moving into the Public Service actually do not want that. What they do want to know is that when they move around within the Public Service their tenure within the Public Service is going to be recognised. So elements of this bill that move more towards a seamless Public Service and more towards career progression opportunities within the Public Service are things that we will certainly support. In fact we will actually go out there with the Government and champion them. Improving accountabilities of the Public Service and improving accountabilities of Crown entities—these are elements of this bill that we will support. 
But we will not support provisions in this bill that allow the Government effectively to contract out its statutory responsibilities. We will not support the provisions in this bill that allow the Government to decree by law the outcomes of a collective bargaining process before it has even started and we will certainly not support the elements of this bill that will halve parliamentary scrutiny—and through that public scrutiny—of decisions the Government makes around the appropriation and expenditure of taxpayer money. That is simply not democratic and it sets a very alarming precedent for this Parliament that the operating process of this Parliament can be changed by legislation rather than by a change to the Standing Orders supported by all of the Parliament. It is actually a very dangerous precedent for this Government to establish and to seek to establish through this legislation and I seriously ask it to reconsider that element of this bill. Changes to the way Parliament operates and changes to the provisions in our Standing Orders should be made through the parliamentary process and through changes to the Standing Orders not by legislation that is passed by a bare majority of the people in this Parliament. That is a change to our constitutional arrangements in New Zealand and the way the Government is going about doing it is simply wrong. 
TODD McCLAY (National—Rotorua) 
: 
 A more effective more efficient streamlined more focused and more professional Public Service is something that the National Party campaigned on in 2008 when we were elected to Government and it is something that we campaigned on again in 2011 when we were re-elected to Government. I want to say to the Minister of State Services Jonathan Coleman that I think this is a very important piece of legislation that continues the job we started in 2008 when we were elected by New Zealanders to bring reform to the public sector and to focus on public finances. So I fully support this legislation the State Sector and Public Finance Reform Bill and I want to quote something from the statement put out by Minister Jonathan Coleman when this bill was introduced to Parliament a short time ago. He said: “This is an omnibus bill which amends the State Sector Public Finance and Crown Entities Acts to provide the legislative grunt to deliver better public services”. 
I say to members opposite from the Labour Party that I accept that we will always have differences in some of these areas. But I would suggest to them that by supporting this legislation going to a select committee they are saying to New Zealanders that they are willing to consider changes. Indeed by not supporting it going to a select committee they are saying that they reject all of that legislation. It is interesting— 
Chris Hipkins 
: No. 
TODD McCLAY 
: Well it is because you say “We support a few things but we are not going to vote for it.” and when we finally look back and history decides what your position was on this we will find that you were against it. The last speaker in this debate Chris Hipkins has said that we should talk about it more and we should debate it more. But saying that a party in this House just opposes it outright suggests to the New Zealand public that Labour members do not want change to the public sector and do not think that our public finances need reforming—or if they do only on their terms. They are not willing to join us and to talk about it. 
There will be other parties in this debate that I am sure will say—as we heard from the Green Party on the last piece of legislation which makes important changes to reduce costs on New Zealand small and medium sized enterprises—that they will support it to the select committee stage but will not commit any further than that because they think the select committee needs to do some work. I implore the Opposition Labour Party to actually vote for this bill—to come to the select committee have a fair hearing hear from New Zealanders bring their thoughts to that committee and let us see where we can reach agreement. At that stage if they are still unhappy and they cannot support enough of it well then they will be able to come out and say: “At least we gave it a fair shot.” But as I said earlier by not supporting this bill going to a select committee they are actually saying to New Zealanders that they think that change is not needed. 
 I just want to make one point touch on one issue in the bill that I think is important before we move on. Under the last 5 years of the Labour Government the public sector grew by 30 percent. I accept we were in quite different times then. The country’s finances looked very different and there were surpluses but a 30 percent increase in the public sector without the same increase in productivity in the public sector is not something that should be done even in the best of economic times let alone the economic times that we as a country are forced—and much of the world is forced—to go through. 
I also want to note that since we came to Government the Labour Opposition has opposed every effort on behalf of the National Government to improve quality and efficiency in the Public Service. That does not suggest to me that Labour members do want change. It suggests to me that there is an old doctrine somewhere that says that this is not the type of change they want and it is not a priority for them. I hope this does not mean that some time in the future when we have a change of Government—the Labour Party and the Green Party together—again we are going to see a ramping up of the size and the cost of government. 
For two elections in a row New Zealanders have voted for change. They have voted for things to be streamlined. They have asked for a more effective a more efficient and a more focused and professional Public Service. Not so long ago—in fact it might have been just last week or the beginning of this week—a survey came out that shows New Zealanders’ thoughts on the way that the public sector is working. They are showing some of the greatest confidence at any time in almost every area. I think that is a vote of confidence in what the Government is doing: getting on with the things that are important and that New Zealanders have voted on. 
I want to make one point here before I finish because I am keen for this bill to get to the Finance and Expenditure Committee. Very much in two parts are we going to change the Public Finance Act to improve financial flexibility to support innovation and different ways of working with Government. The Opposition should be supporting that—improving financial flexibility to support innovation. Then as to the changes to the Crown Entities Act this bill will support sector-wide leadership by strengthening and aligning Crown entities. There is a great deal to be done around leadership. We need much more innovation. 
I look forward to this debate in the Finance and Expenditure Committee. Again I implore members opposite to support it. Come and have the discussion and then decide to cast it out afterwards if we cannot reach agreement but do not just say today that it is all over it is not worth it. Thank you. 
Hon CLAYTON COSGROVE (Labour) 
: 
 This bill the State Sector and Public Finance Reform Bill is a serious piece of legislation. I begin by referencing the last couple of sentences of the previous speaker Todd McClay where he talked about the need to improve financial flexibility by encouraging innovation. That of itself is a worthy principle until you look at the other parts of this bill. 
My colleague Chris Hipkins has talked about the truncation and contraction of parliamentary scrutiny. That is about financial flexibility all right. That is about innovation. That is about this Government trying to be innovative with the figures and flexible with the truth and to contract the right of Parliament and select committees to scrutinise how public funds are spent and the financial performance of departments and to cut it down. 
Chris Hipkins referenced a very interesting point that normally these changes—where you change how select committees operate—are made through the Standing Orders Committee. Why are they made through the Standing Orders Committee? Well I will just reference that eminent book by David McGee  
Parliamentary Practice in New Zealand 
. The reason you have a Standing Orders Committee unlike a Chamber process where we are partisan and we do divide is that “The committee”—that is the Standing Orders Committee—“operates by endeavouring to find a consensus on its proposals rather than these being merely the recommendations of a majority of the committee.” By that David McGee means that when proposals go to change the Standing Orders the processes of the Chamber and by definition its select committees there is buy-in generally by the overwhelming majority if not all the parties in this Parliament. We buy into it because it is an appropriate thing to do. 
I want to take the people of New Zealand who might be listening through a little bit of the parliamentary process because not many people are au fait with what we do on select committees. There are two opportunities to scrutinise a department and a Minister on how they appropriate and for what purpose they appropriate public funds and then through a financial review process to examine that department as to how it has utilised those funds and how it has performed and met outcomes and objectives. Normally a select committee—and members on this side of the House from all parties will know this—gets about an hour in the Budget process in the appropriations process. It is about an hour because the majority rules. Normally you get an hour to examine those appropriations when the Minister who is responsible for them is in the chair. You get an hour. That hour is normally made up of—and National Ministers are very professional at it—a good 10 or 15 minutes’ worth of presentation. Judith Collins I remember was fond of coming into the Law and Order Committee with guns and drugs—David Clendon will remember this—and all sorts of paraphernalia including pepper spray. I think she was going to use it on a couple of her colleagues. She would take up half an hour of the process with a sort of sound and light show. So you are left with 45 minutes. Of those 45 minutes the Government takes about a third of that and the Opposition whose day it is to actually scrutinise the appropriations gets about 20 to 30 minutes of the whole process. So for the people of New Zealand who are listening that is all your Opposition representatives get because you know damn well that the Government—apart from John Hayes who has become a specialist on the select committee in asking some very penetrating questions on behalf of the Opposition the few we feed to him and he brasses his chairman Todd McClay off a bit—will leave you with about 20 or 30 minutes to hold a Minister a department and the Government to account. 
Then later in the year around September or October a similar process happens with 1 hour—no Minister because it is the financial review process—to look at what the Government and the department have done with the dough. Again there are about 50 minutes—10 minutes of a presentation then the Government has a crack and there are about 30 minutes left to actually hold the Government to account. So that gives you about an hour in the whole 12-month financial year. What these guys want to do is combine both those processes. Are they saying there is going to be double time to actually examine the votes and combine them into one process not using the David McGee principle of going through the Standing Orders Committee where there is general consensus with a proper process to change the Standing Orders? Oh no they want to create to quote Todd McClay improved financial flexibility and to encourage innovation. Oh yes this is a huge innovation because it allows a Government and every Minister and through the Minister the chief executive and the department to abrogate their responsibility to front up so that this Parliament through its select committee process can examine them hold their feet to the fire ask questions that they must answer in front of journalists and the public and be accountable for the money they spend and appropriate. 
In respect of this Government if you look at say State-owned enterprises and the legislation that Tony Ryall championed we now have State-owned enterprises taken out of public scrutiny. No Official Information Act request is applicable to those State-owned enterprises that are on the block to be sold. There are no parliamentary questions no select committee process and no Ombudsman—a complete lack of parliamentary scrutiny even though at the very least the taxpayer may if they are lucky end up retaining 51 percent of those State-owned enterprises. 
We know also that this Government when it comes to Official Information Act requests has broken every protocol. We know there are a record number of complaints before the Ombudsman. You cannot get out of these geniuses even a list of the reports they have received even the titles. They will not offer those. They will not provide those. The best example is actually Hekia Parata who on the options paper for closing schools in Canterbury simply refused day after day and week after week to release that information because she said it was not germane to those schools. Well those schools and those communities believed absolutely that it was germane because they wanted to know the rationale—or lack of rationale—and logic behind Hekia Parata’s decision to put the axe through them. 
This is very very important legislation and we oppose it on those grounds. We do not as the last speaker said as he sort of sprayed across the House think that if we oppose this we are against efficiency in the Public Service. Rubbish! The way you get better productivity better professionalism and better accountability is through openness transparency and scrutiny and through asking the Ministers the chief executives and the boards of these entities the tough questions on what they did what they achieved why they messed up and how they executed the public funds that the taxpayer provided to them. You get about 2 hours a year to do it and a few questions which they bat around. This crew should stand up and justify why that is and why it wants to halve that process combine it and truncate it so there is less scrutiny. 
We are going to have the Minister for Canterbury Earthquake Recovery before a select committee—it is rather an important portfolio for people down my way and for people in New Zealand as a whole—to front up with the Canterbury Earthquake Recovery Authority for the financial review. Again we are going to get 1 hour to put him through his paces to try to get some questions answered in respect of what is happening and what is not happening down in Christchurch. If this legislation goes through next year when it receives the Royal assent the following year that process will be truncated and halved. That is not on— 
John Hayes 
: What about question time? 
Hon CLAYTON COSGROVE 
: What about question time? 
John Hayes 
: What about the Official Information Act? 
Hon CLAYTON COSGROVE 
: You see there you go. Mr Hayes says “What about the Official Information Act?” and “What about question time?”. Well here is what we have. At the moment Mr Hayes we have question time we have the Official Information Act and we have the added scrutiny of select committees which he may not value. Mr Hayes says: “Halve the select committee process. Halve the scrutiny. You guys should be satisfied as taxpayers. Taxpayers should be satisfied because there is question time and there is the Official Information Act.” Well the problem with the Official Information Act of course as we have said is that the Ombudsman is buried in Official Information Act complaints because Mr Hayes’ Ministers will not front up with information—will not front up— 
Iain Lees-Galloway 
: Or money. 
Hon CLAYTON COSGROVE 
: —or money—and Hekia Parata and her holding back of the options paper on the schools in Christchurch is an example of that. For Mr Hayes a few questions each day in Parliament and the odd Official Information Act request which his Ministers can bat around delay and refuse is enough scrutiny for him. That is enough scrutiny. This is the man of course who said of the Retail Deposit Guarantee Scheme when his Government lost about $500 million on behalf of the taxpayer “That’s loose change.” These guys have to stand up and we want to know why they want to truncate our right on behalf of the people to scrutinise this Government. 
Denise Roche 
: Mr Speaker— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I call the honourable member Holly Walker. 
Hon Trevor Mallard 
: We don’t. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Oh it is Denise. I am sorry—Denise Roche. I will get it right. 
DENISE ROCHE (Green) 
: 
 I rise to oppose this bill the State Sector and Public Finance Reform Bill. The Green Party will be opposing this bill because although as my colleagues on this side of the House have already explained there are some good parts in it on the whole we see this as part of the National Government’s “Better Public Services With Fewer Resources” agenda rather than just Better Public Services. 
The changes that this bill is promoting stem from the Better Public Services Advisory Group which reported back in March and it did report back some very good things which this bill does take up. Some of the provisions are around the whole-of-Government approach which should reduce duplication. For example chief executives of departments will have to think about the wider interests of Government in their work and Budget appropriations may be based around an overarching purpose rather than focused on particular departments or silos. 
But overall this bill represents a challenge to the employment rights of public servants and together with the changes that this Government plans to make to the Employment Relations Act and with the introduction of youth rates it forms part of an orchestrated attack on all workers. 
There is no fundamental change to the model that was put in place in 1988 and there are changes tucked into this bill that will undermine State sector workers’ employment rights and ease the path to privatisation. I think that is one of the serious consequences of this bill: that public-funded services and public money may go to the private sector without greater public benefit. 
If you look for example at the provisions around technical redundancies under this measure employees who receive a redundancy notice and are offered an alternative position within the State sector—and the State sector is very wide spanning from schools to hospitals to the Housing New Zealand Corporation and every other agency in between—if they get a job in one of those agencies then they are not entitled to redundancy compensation. The mere offer of a job anywhere would mean they are not entitled to redundancy. This measure is a reaction against a few very high-profile cases where senior executives got really big payouts. But this measure will lead to gaming of the system. It will push people into contracting. It will lead to more of that contracting culture that has become so prevalent in the Public Service where millions are spent on consultants. Anyway it also presumes there are jobs to go to. Like many parts of this bill this provision is using a sledgehammer to crack a nut. A better solution would be to ensure that if an employee is made redundant the employer makes every effort to find them alternative employment and if not then they are granted redundancy. 
The Government also wants to dictate to employers in the State sector through Orders in Council about what they can agree to before collective bargaining takes place. This point has already been made by some of the speakers on this side of the House. It gives the Government the right to set pay and condition expectations and it gives them a legal status that they do not currently have. By issuing the Government’s expectations for pay and employment conditions in the State sector as an Order in Council the Government will be able to set the bargaining landscape and undermine collective bargaining right across the State sector. In effect it is a wage freeze without actually calling it a wage freeze and it undermines the whole concept of bargaining in good faith. 
This bill also gives chief executives of departments the authority to delegate statutory functions to non-government providers. Chief executives will be able to delegate statutory functions and powers between agencies and even to non-governmental service providers. All that would be required is ministerial approval. This is a groundbreaking piece of legislation. It has never been done before. It removes the very clear boundaries between what is clearly the statutory role of the State and what can be delegated to not-for-profit organisations or non-governmental organisations. Privatisation of these functions will be easier. Privatisation will be easier. 
Some jobs in the State sector have special powers that must be used with great care. They might include for example the power to search private property or to detain members of the public. Those are some of the statutory powers that could be delegated to the private sector. Is that what we want—private police forces? In the district health board sector for example those statutory functions include people working in mental health who have the power to section people. 
Non-governmental organisations should be concerned about those fish-hooks those special powers because they do not necessarily come with more funding. Community sector providers may have to take on coercive responsibilities that could undermine their relationship and the trust that they currently have in their communities and with their clients. The public should be concerned about the dangers of devolving the powers of the State—for example enforcement coercion and child protection—and what sort of an effect that can have on vulnerable people. How will that impact on our communities? 
 This bill overall is not a good thing for New Zealand. We are currently seeing a drop in the amount of public services not better public services. We are talking fewer public services for the citizens of New Zealand. We are currently seeing a reduction in jobs. There have been over 7000 job losses—over 7000 job losses—according to the Public Service Association over the last 4 years and this was despite a promise by this Government that it would simply cap numbers. It has gone well beyond that now. In Napier for example over the last 4 years in a radius of 18 kilometres there was a loss of over 200 Public Service jobs. Think—what does that do to a local economy? 
The tragedy of Pike River was a terrible thing but it has unleashed a chorus of voices from across the political spectrum that are saying it is time for a rethink. It definitely is a time for a rethink about our public services. Rosemary McLeod said quite recently in one of her articles that Pike River shows what happens when you tear away at the fabric of our public services. She said it is an ugly indictment of an ugly time and like her I doubt that even now we have learnt our lesson. It is time we did learn that lesson. This bill tells me that the Government has not. 
It is time for a rethink. I encourage the Government to go back to the drawing board to listen to the experts—those people who deliver our public services to us every day and who know better than anyone else how to deliver better public services. 
PAUL GOLDSMITH (National) 
: 
 I think it is worth remembering the four main priorities of this Government as we embark on this important debate on this important bill the State Sector and Public Finance Reform Bill. It is about getting our books in order first and foremost; rebuilding Christchurch; growing and deepening the New Zealand economy such as through the Business Growth Agenda; and delivering better public services to New Zealanders. 
I suppose this bill is primarily focused on that last one—building better public services for New Zealanders—because we have to remember that during the last period of the Labour Government a lot of resources were poured into the public sector. There was a 50 percent increase in spending and a very large increase in the core Public Service over that period as well but there was precious little to show for it. This Government has taken a very different approach. It has been very focused on the results not the inputs and on getting as much quality out of the sector as we can. 
The most satisfying thing that I have seen recently is the Kiwis Count survey which has shown that New Zealanders are increasingly satisfied with the front-line public services they have received over the last few years notwithstanding the very tight fiscal parameters in which we have worked and the fact that there has not been much new money to put in. But still the results have been better and New Zealanders are more satisfied with those results so I think we have got something to build on here. 
We established the Better Public Services Advisory Group back in May 2011. A number of recommendations were brought forward as a result of that such as managing the State agencies to ensure that they function as a system that is focused on results that will have the greatest impact on New Zealanders’ lives rather than operating as individual agencies in pursuit of their own singular objectives. That has been a tradition for a long time and it is very difficult to change the culture of the Public Service. This is what this legislation is all about and it is also about clarifying and strengthening leadership and reducing the clutter of decision points. 
So this legislation here is an omnibus bill that is drawing together changes to the State Sector Act 1988 that will deal with some of those issues about governance across the whole system and ensure that the State Sector Act is a modern flexible and generally fit for purpose piece of legislation. Also there are a number of changes to the Public Finance Act 1989 which are about ensuring that we have more meaningful information given to Parliament about what the Government is spending and achieving and reducing the compliance costs involved in producing that information. It includes shifting the default for tabling strategic information to at least once every 3 years and improving the financial flexibility to facilitate innovation and different ways of working with the executive branch of the Government. So I think there is going to be a lot to discuss and debate at the select committee and I commend this bill to the House. Thank you. 
ANDREW WILLIAMS (NZ First) 
: 
 I take a call on behalf of New Zealand First on the State Sector and Public Finance Reform Bill. Can I also concur with some of the other members of this House and say how boring it was to hear the Hon Jonathan Coleman deliver his obviously written speech which was obviously prepared by somebody other than him. It was the equivalent of watching paint dry or watching the grass on the front lawn grow. It certainly was not riveting stuff in terms of reforming the State sector. 
In regards to that can I say firstly that although New Zealand First does appreciate the need to always find greater efficiencies in any part of Government whether it be central government or local government we do not however support the way the National Government is going about this in terms of these State sector reforms. This large very wide-ranging complex omnibus bill purports to provide the legislative basis for better public services and also strengthening the legislative framework. Yes there are lots and lots of fine words and empty phrases in this bill but they are just empty phrases. It talks about more collaboration among Government departments it talks about sharing functions and services it talks about sharing purchasing goods and services logistics more efficient and effective systems and greater financial and reporting flexibility and on and on it goes. But much of it is simply talk. Much of it is just lip service. Much of it is again window glossing by this National Government to move the deckchairs on the  
Titanic 
 so that it looks like it is doing something. In actual fact it is just window glossing over what is a tragic situation. It is a situation like the  
Mikhail Lermontov 
 about to hit the rocks in the Marlborough Sounds. The Government says that it is all fine it is all glossy we are all on the red carpet at Hobbitville down in Wellington today and everything is roses but in actual fact things are grim. And down in the engine room of the  
Mikhail Lermontov 
 and down in the engine room of the  
Titanic 
 things are looking pretty grim. 
The Government gives the same old buzzwords: “efficiency” “simplify” “collaborate” “logistics” “flexibility” “streamline” and “improved governance”. The rhetoric goes on and on and on and we hear it from every Minister. We hear it whether it is the education Minister whether it is the health Minister whether it is the State services Minister whether it is the building and construction Minister—they all give the same rhetoric. But at the end of the day things in New Zealand are not getting better. These cutbacks will continue across the Public Service from this Government. We will see that and the fabric of our public sector will continue to fray. The downgrading of our public sector will see the resulting degradation of society in New Zealand. 
That same thinking—or should we say lack of thinking—has seen the likes of the Pike River coalmine disaster where there was a reduction in mines inspectors. It has seen the  
Rena 
 ship disaster where again our agencies such as Maritime New Zealand were not up with the play did not have the resources did not have a response vessel available to react to it and did not have the processes in place to react to it. The same thinking—and the same lack of thinking—has seen leaky homes come from the National Government a former National Government of the 1990s carried on through to this National Government which similarly wants to reduce under the Building Act amendment legislation compliance in terms of building. In so doing we will have leaky homes revisited part 2 in the next 10 years. What the Government is doing under the Building Act amendment legislation similarly is downgrading the standards of building in this country so that as well as all the 1990s and 2000s homes that are currently leaking we will have the 2012-15 homes leaking in 10 years’ time. 
Fortunately most of those members over there will not be in Government by then; they will be well gone. In fact they will be gone back to the Wairarapa and wherever else they come from. They will be well gone. Some of us who are still of an age that can respond to the situation will have to pick up the pieces will have to pick up the pieces on behalf of good working Kiwi people—Kiwi husbands and wives families and hard-working Kiwis who will say once again: “How did the National Government invoke this on New Zealand and wind down the Public Service to a level where incompetent decisions were made?”. 
It is interesting when you start reading through this very lengthy bill—it is something like 121 pages—that there are some real hidden pitfalls in it. Although the Government says that it is going to be more efficient and it will cut down the Public Service and then do all this there are some real fish hooks in this bill. I would challenge some of the National Party people over there to refer to—they have probably never opened it; have you opened the bill any of you—new section 6 “Functions of Commissioner” in clause 11. It says: “For the purpose of carrying out the Commissioner’s role”—this is the State Services Commissioner—“the principal functions of the Commissioner are to” and then new paragraph (j) says “exercise such other functions with respect to the administration and management of the Public Service as the Prime Minister from time to time directs (not being functions conferred by this Act or any other Act on a chief executive other than the Commissioner).” 
In other words one little paragraph hidden right in amongst here gives the Prime Minister absolute ultimate power to turn to the State Services Commissioner and say: “Oi into my office. Up to the ninth floor. Get up here quick. I want you to do this.” And under new section 6(j) he says: “Forget all the Acts forget that we have got a Parliament forget that we have got a democracy forget that we are part of a Westminster democracy—one of the oldest democracies in the world. Forget that New Zealanders—and we see them around the walls of this Chamber—went off to battle to fight for democracy. Forget that.” Under this bill the Prime Minister says: “Oi I’ve got ultimate power over you and I think you should do this.” Not you Mr Speaker. You would never do that. I know that you would never do that but John Key as we all know him would do that because he runs a shonky John Key Government and under a shonky John Key Government shonky John Key would get the State Services Commissioner up to the ninth floor of the Beehive and he would say: “I’m going to exercise my right to tell you in respect of the administration and management of the Public Service that I think you should do this.” 
That is appalling and this is the sort of legislation that this Government is putting through. This bill is not a solution for anything; rather it entrenches current problems. This bill will not stop the erosion and undermining of the public sector. This bill creates an illusion of progress and improvement but the evidence to support it is missing. There is no clear and compelling case that this bill takes us to better and more cost-effective public services. No we do not want a bloated public sector—certainly we do not want a bloated public sector—but also we do not want a hollowed-out State services sector where we end up with more Pike Rivers where we end up with more  
Rena 
 disasters where we end up with more leaky homes and where we end up with the bureaucracy simply not controlling the functions of New Zealand. New Zealand First will not support this bill. 
JOHN HAYES (National—Wairarapa) 
: 
 Clearly that last speech from Andrew Williams was not delivered by anybody who could have been elected to this Chamber by the people of New Zealand—absolutely impossible. I have never in my life heard such a long string of meaningless clichés that meant nothing. 
 When I think about it I can understand also why the people down in the South Island got rid of that member who was speaking before Clayton Cosgrove and moved him from the electorate category to a list member of Parliament. What he had to say was absolutely meaningless in the context of the job of a member of Parliament which lasts for much much longer than 1 hour in a select committee when Mr Cosgrove or I or another member in the select committee might get some questions to ask. This is a much more comprehensive package of opportunities for members of Parliament to do their job to read their papers to ask questions and to release press statements. There are all sorts of ways of keeping the Government in a position to account and Clayton Cosgrove and the last speaker Andrew Williams were both way off beam. 
I would like for the benefit of these members of Parliament who do not have a sense of history or an understanding of our public sector to just go back to the end of the Second World War. What we saw happen as a feature of all OECD economies after the Second World War was that the public sectors grew from about 25 percent to about 45 percent of GDP. When they talk and wring their hands across the other side of the House and say “Oh but all these services are being cut.” actually they are paid for by taxpayers with the money coming out of their pockets. We are now in a situation here in New Zealand where our Public Service consumes about 39 percent of GDP. That money comes from people’s pockets and it is too much. 
We have not tried in any way to decrease the amount of money going out on welfare payments. What our reforms are about is improving the efficiency of the public sector. I see my colleague Mr Ryall sitting in front here and I would say to him and to this House that the health sector is the standout example of achievement of reforms and higher outcomes and they are the sorts of reforms that this legislation is endeavouring to provide. After the Labour Government got into the extensive privatisation and selling of State assets during Mr Cosgrove’s watch we got into a situation where privatisation was an attempt to instil market forces and also drop transaction costs across the Public Service. 
This legislation that we have in front of us now is an omnibus bill. It might be 120 pages but it is amending a range of legislation. Why are we wanting to do it? Because we are wanting to follow the example set by Mr Ryall and we want to deliver better services to New Zealanders. That was a very clear National Party priority at the last election. 
This bill amends the State Sector Act the Public Finance Act and the Crown Entities Act. What we are trying to do is to provide legislation in a way that will allow us to give more legislative grunt to deliver better public services. I think that the amendments will create a range of public sector management tools. Yes they will enable the Prime Minister to give direction to the chair of the State Services Commission because that will foster an innovative efficient public sector that will deliver better-identified results for New Zealanders. 
If we think about the last 5 years of Government the public sector increased under the Labour administration by 30 percent—by 30 percent. 
Hon David Cunliffe 
: How much did the economy grow by? 
JOHN HAYES 
: Well you can speak about this Mr Cunliffe but if you think about the expansion of the size of the foreign ministry and embassies created in all sorts of odd places the numbers increased exponentially. The aid programme increased exponentially. All of this is coming out of individual people’s pockets. Every time we have tried to improve the quality and efficiency of the public sector the Opposition parties have said: “No you can’t do it. We want to increase the size of the public sector we want to increase the cost to Government and we want to take more money out of people’s pockets.” That is what the Opposition is wanting to do. 
So as Mr Williams—I think his name is—said we are trying to strengthen the role of the State Services Commissioner and we are trying to give the Prime Minister for example direction to do it because the public sector must follow the Government’s direction—it must follow the Government’s direction. 
I believe that this is a very good bill. It is a very sensible bill and I thoroughly commend it to the House for further consideration. 
DARIEN FENTON (Labour) 
: 
 I rise to take a call in the first reading of the State Sector and Public Finance Reform Bill. I believe that my colleagues have laid out our differences with this bill very very clearly. I do want to emphasise that on this side of the House we have no problem with the idea of building Better Public Services or whatever slogan the National Party is using at the moment. There is no doubt about it there are some good things in this bill. It has a mixture of some good things and some deeply worrying measures. 
On the one hand there are the proposed provisions that will enhance whole-of-Government approaches which should lessen duplication and silo behaviour. We support Government agencies working more closely together. We agree with sharing some functions and services purchasing goods and services jointly and developing systems together in order to best leverage the resources of the State. So I want to repeat for the benefit of the National Government that Labour is in agreement with many of the provisions that are in this bill but we have some fundamental differences. As I said my colleagues have laid them out very clearly but I intend to repeat the three major concerns that we have with this bill and the reason we feel that we cannot vote for it tonight. 
The first concern that we have is the provision that enables the delegation of the functions or powers of chief executives to someone outside the public sector. This could include a contractor in the private sector and all that is required is the Minster’s approval—no other test just the Minister’s approval. We would like to know why this is being proposed. Why would the functions or powers of chief executives be taken outside the public sector other than to provide an opportunity for the Government to give jobs to its mates or have its mates get more of their mitts on Public Service decision-making and resources? 
This change will reduce the opportunity for parliamentary and public scrutiny and it will facilitate privatisation. The Government can deny it all it likes but we have seen it in the prison service. I think that is what this is really about because there is no doubt about it the change would make it easier to contract out statutory functions. It would fragment services and reduce oversight and public accountability. That is an extraordinary provision. If the agenda is not how I have described it I look forward to the Government refuting that in the select committee and meeting our concerns. 
The second area that I want to outline is the one that my colleagues have discussed at length which is the restriction on the scrutiny applied to Ministers and departments. I think we have had a very good description tonight from Clayton Cosgrove and Chris Hipkins about the role of parliamentarians in applying scrutiny to Ministers and departments for the money that they spend the money of taxpayers that they spend and the decisions that they make. But instead we are going to see that scrutiny halved from what I can tell from the bill. Instead of yearly strategic information we are going to get it 3-yearly. 
What worries me about these provisions is that they are not a move for better transparency or accountability. We are very concerned about the restriction on access that we are already experiencing. Others have mentioned the Official Information Act. We all know that process is fraught. Appealing to the Ombudsman is just really hard. It means an MP’s objections just join a very long queue as an under-resourced office tries to cope with the avoidance tactics of this Government. We need far more openness not greater restrictions on the provision of information and we are very concerned about the implications of this on the estimates and the financial review processes. The provisions are far from clear and I have heard nothing from the Government members that gives me any assurance about that. 
There seems to be a trend towards shutting down public debate. For example the minimum wage consultation was opened up last week. The Acting Minister of Labour was asked questions by me about the process and whether it was changing and he said it was under Cabinet consideration. That was like a week or two ago. The Council of Trade Unions and Business New Zealand have been advised that they are the only parties that are going to be consulted about the minimum wage review and there are only three criteria that will apply. They have been given until next week to get their submissions in. The Council of Trade Unions for example represents 350000 workers throughout New Zealand and it is supposed to get a submission in by next week. It has been given about a week and a half. I think that is outrageous and I think it is deliberately designed to make sure that consultation and people having a say are curtailed. 
I think the most objectionable part of this bill for me is the proposal to establish Government Workforce Policy Orders. These are policies drafted by the State Services Commission that can be made into Government Workforce Policy Orders by an Order in Council on the recommendation of the Minister. These can cover matters such as pay and conditions and they can apply to a single agency or to more than one agency which could be departments Crown agents or autonomous Crown entities. So the parameters of collective bargaining such as pay and conditions will have a level of interference that is in direct contradiction to our labour laws. It effectively lets the Government decree the outcome of bargaining before the process has even begun. I see this as a massive breach of the good-faith provisions of our collective bargaining laws and an assault on our international labour laws and human rights. 
Why would the Government do this? I have been puzzling over this. This Government may have been looking to Wisconsin in the United States and maybe this is New Zealand’s version of Wisconsin’s attack on collective bargaining rights in the public sector. Wisconsin mounted a politically motivated attack on its Public Service workers a couple of years ago removing from them the right to collectively bargain. The court has just reinstated those rights saying that the removal violated the workers’ right to free speech freedom of association and equal protection. 
We know this Government is hell-bent on reducing expenditure in the State sector come what may and we have seen the fallout from that with its stuff-ups in IT and its short-sighted cuts in front-line services but we also know that State sector workers are highly unionised. That means that they are a bit of an obvious target for implementing employment policies aimed at reducing the influence on the overall labour market and aimed at cutting wages. 
When you put this change together with the Government’s intentions to change collective bargaining rules for all workers the picture starts to come together. It goes hand in hand with the Government’s plan to gut collective bargaining to enable new staff to be employed on less pay and conditions to enable employers to walk away from collective bargaining and for multi-employer agreements to be ditched. 
We are very concerned about those three provisions in particular around the collective bargaining in the State sector. Wages are already too low in New Zealand. Take away collective bargaining in the State sector further weaken unions then the only thing that workers will have left to fall back on is the good old trickle-down theory. We know that did not work. I would ask why any State sector worker would put up with that. They have been demoralised overworked and restructured to death and they are undervalued by this Government. I think that these provisions are atrocious and that is why we cannot support this bill. 
Debate interrupted.