Coleman Jonathan: State Sector and Public Finance Reform Bill — Second ReadingText is incorporated into the Bound VolumeColeman Jonathan: State Sector and Public Finance Reform Bill — Second Reading[Sitting date: 25 June 2013. Volume:691;Page:11208. Text is incorporated into the Bound Volume.]Hon Dr JONATHAN COLEMAN (Minister of State Services):I moveThat the State Sector and Public Finance Reform Bill be now read a second time . I would like to begin by thanking the Finance and Expenditure Committee for its consideration of this important legislation and I acknowledge the contributions of all members on the bill. I would particularly like to thank the former committee chair the Hon Todd McClay for his extensive efforts and also the Hon David Cunliffe for his constructive approach. I am very pleased that this important reform has bipartisan support. That is important because this legislation determines the workings and architecture of the State sector and its ramifications will be felt for years to come.The State Sector and Public Finance Reform Bill is an omnibus bill and the intention is that during the Committee of the whole House it be divided into three separate bills: a State Sector Amendment Bill a Public Finance Amendment Bill and a Crown Entities Amendment Bill. The changes are designed to enable the delivery of Better Public Services and more effective and efficient achievement of results. I wish to acknowledge those who have made submissions to the bill. Their input led to important changes to many provisions and I also acknowledge the constructive approach of the Public Service Association when engaging with the Government and the committee.Better Public Services is one of the Government’s four priorities for this term. Better Public Services is all about delivering a Public Service and State sector that is achieving value for money is innovative provides high-quality services and manages change effectively. We have deliberately chosen 10 stretch targets that will make real tangible differences to New Zealanders and stimulate different ways of delivering services in the process. This legislation gives new tools to the State Services Commissioner to the Public Service and to Ministers to coordinate together as a system and deliver against those targets. It is the biggest reform of the State sector in a generation.Part 1 of the bill amends the State Sector Act. The changes will charge the State Services Commissioner with leadership and oversight of the State services and more targeted leadership development for the Public Service to improve leadership from the top and get more cohesive action across the public sector. They will also require chief executives to look and act beyond their own departments and beyond the short term. We want to see departments take this as an opportunity to achieve better results as a system such as the excellent savings we have made in property leasing costs by the Government Property Management Centre of Expertise by coordinating and directingdepartments in their leasing of office space. Such action is predicted to save 20 percent on costs and reduce floor space by 30 percent across five departments.The changes will expand the range of service delivery mechanisms giving chief executives broader powers to delegate and introducing a new organisational form called a departmental agency. The changes also place workforce and personnel matters on a more consistent and transparent footing. The majority of the changes received broad support or general acceptance during the submissions process.Four aspects of the bill were of particular interest to the committee: redundancy provisions workforce policy provisions the ability of chief executives to delegate functions or powers outside the Public Service and immunity from prosecution for public servants. I will now deal with each of these four areas in turn. The overriding aim of the redundancy provisions is fairness. There are clearly situations in which redundancy payments are the right thing to do by employees. However in circumstances where a public servant is able to move seamlessly from one job from which they are made redundant to a new job in the State services it would not be reasonable for them to receive a redundancy payout. This issue was worked through by the committee and in summary for there to be no redundancy payment the next job must start the next working day or even before the current employment period ends and it must be treated as continuous service with the State services. Furthermore it must be in substantially the same general locality or within a reasonable commuting distance and it must have comparable duties and responsibilities to the current job. It must also entail a collective package of terms and conditions that are no less favourable than apply to the current position. It is very important to note that not every single term or condition in the new job has to be the same. There will be multiple factors to take into account from job title and salary to location and compensation details like access to car parks. It is not the intention of the Government to make sure that every last detail be replicated or approved but the overall package must be no less favourable when considered by a reasonable person. These new redundancy provisions will not apply until 3 years after the new legislation comes into effect.The workforce policy provisions introduce a more transparent and consistent process for setting and applying Government policy on workforce matters. Submitters expressed concerns about the purpose and content of the proposed Government workforce policy orders and their perceived effect particularly on existing employment agreements and good faith obligations. In response to those concerns workforce policy will no longer be issued by Order in Council but as a Government policy statement. They will not be used to set expectations that determine pay or conditions and will not create alter or remove employment or other legal rights or obligations.Chief executives will be able to delegate functions such as management of any operational aspect or service to a person outside the Public Service. This is to provide effective and efficient decision-making and service delivery. A number of specific statutes already provide such powers to an individual chief executive. This bill extends this ability to all chief executives as a generic power under the State Sector Act while not overriding special controls in other Acts and extensive safeguards have been put in place. These safeguards include a requirement for ministerial consent for every case; a requirement that potential conflicts of interest will be avoided or managed and that delegates will be subject to the code of conduct and the Official Information Act; a requirement that there will be no sub-delegations; and a requirement that delegations have to be reported to Parliament.One provision in the bill that has not changed is the immunity from personal liability for prosecution of public servants who acting in good faith are carrying out their duties as employees of the Crown. Front-line staff working with the public in sensitivesituations need to have confidence that provided they act in good faith they cannot be personally sued in the course of their duties. Without that security there could be a chilling effect on the ability of front-line public servants to carry out their duties in the prescribed manner. There is no change to Crown liability. The public can still sue the Crown. This amendment makes sure that ordinary New Zealanders can still be compensated by taking legal action against the Crown directly clarifying the situation that was generally thought to already be in place. I acknowledge that the Law Commission is undertaking a comprehensive review in this area and a recommendation for further legislative change may follow. However legislation should not leave public servants unprotected in the meantime.Part 2 of the bill amends the Public Finance Act. These changes will make Public Service chief executives responsible for their departments’ financial sustainability not just current performance. Chief executives will need to look and act beyond their own departments through explicit responsibilities for the financial management and advice on those Crown assets liabilities revenue and appropriations that the department administers on behalf of the Crown. Those changes will also provide greater flexibility for resources to be allocated to where they will have the greatest effect through a new appropriation type called a multi-category appropriation and clarity that one department can utilise an appropriation administered by another when so committed by the responsible Minister or administering department.Changes in the bill also encourage a more strategic focus in the statements of intent a greater focus on what will be and what has been achieved with the appropriated resources and flexibility to package this information in more useful ways. Ultimately that will mean that the changes support more meaningful information being reported to Parliament.Finally the changes will strengthen the governance and reporting regime for companies currently on schedule 4 of the Public Finance Act by applying to them the same standards we have for Crown entity companies.Part 3 of the bill amends the Crown Entities Act to maximise the collective impact of the State sector. The collective duties of statutory board members are expanded to require entities to collaborate with other public entities where practicable. The bill also leverages the scale and expertise of Crown entities through enabling whole-of-Government directions to be issued to smaller groups of Crown entities and to meet a broader range of Government objectives.I believe that the amendments to these three Acts provide a package that will support the delivery of better services to the public now and in the future. Again I thank the select committee for its hard work in bringing back to the House this bill which includes important amendments that the House should support. I commend this bill to the House.