Smith StuartSTUART SMITH (National—Kaikōura): Thank you Mr Assistant Speaker. Well it is a pleasure to speak on the State Sector and Crown Entities Reform Bill. I guess a couple of the things that have been highlighted as being reasonably controversial in this particular area is the fact that the 10 percent of the CEOs' salaries that was at risk has gone. I think that certainly as someone who has worked in this area—not in the State sector but certainly as a chair of a board hiring a CEO—nothing motivates people like a financial incentive. You often hear the claim that Well that will just lead to perverse behaviour to chase that particular reward." but all that means is that they don't have confidence in the criteria you put in there for those people to achieve that bonus. I think it's really important. It drives good behaviour and it drives good performance and I don't know why the other side in particular are afraid of performance. It's something I think we should all strive for.Under the bill one of the points of course is about the hiring of the chief executives. So the Government appoints the boards and the board then appoints the chief executive but then has to go through the State Services Commissioner before getting that approval. That's where for the employment conditions things could break down and go slowly because there's a back and forth in between the board and the commissioner and then back to the prospective employee. I think that does create some uncertainty.I know we've got it to this point so we're not against it completely but I think the criteria that's been put in replacement section 117(2AA) in clause 4 sets out in paragraphs (a) through (e) various criteria that must be considered in the terms and conditions of the chief executive—guidance if you like for the board. But it is having regard to Government's expectations. Where the fear comes is that we might have an Americanisation of the Public Service where chief executives come and go with various Governments of different colour and are appointed based on their political point of view and their political standing. That's something that we're very much against on this side of the House. I think that would be a very inappropriate place to go for the Public Service. So it behoves the Minister and the current Government to ensure that those criteria are very carefully applied and we will be keeping a very close eye on that.I note that the Institute of Directors submitted to the Governance and Administration Committee and I view this particular entity as a huge contributor to New Zealand's governance—and certainly not just because of having been a member myself. The appointment of a CEO—they talked at length about that to the select committee—is a vital role. It's the most important role for a board. In fact in some boards I know prior to the board meeting starting they have time without the chief executive and they ask themselves one question—a most important question: "Do we still have confidence in our chief executive?" If they don't then they'll have to deal with it either by getting an improvement in the performance of the chief executive or by getting rid of the chief executive and moving on. That is their most important role. The board can have all the policies it likes but if the chief executive is unable to carry out those policy directions from the board then they shouldn't be there. That is why it is such a vital role for a board.I want to turn now to a claim that was made earlier by the Hon Kris Faafoi about the increase in use of contractors by the previous Government. I would like to point out to the Minister and to the House that actually if they would care to look at the contractors that were hired a large amount of that is entities like Beca Group and Opus International Consultants with skills that are not held within the Public Service all around the earthquake issues that occurred from Christchurch. I think that it's a very silly and spurious argument to put up about the use of contractors. The one advantage with using contractors aside from that of course is that if they're not performing it's a very simple process to get rid of them and get another one. I think that drives performance. Fear of failure is certainly something that people should have in front of their mind."