Hipkins Chris: State Sector and Public Finance Reform Bill — In CommitteeText is incorporated into the Bound VolumeHipkins Chris: State Sector and Public Finance Reform Bill — In Committee[Sitting date: 02 July 2013. Volume:691;Page:11653. Text is incorporated into the Bound Volume.]CHRIS HIPKINS (Labour—Rimutaka):This is the first opportunity I have had to take a call on the State Sector and Public Finance Reform Bill. I am happy to make a few observations about these particular clauses in Part 2 of the bill that deal with financial reporting for Government agencies. There are a few points of clarification that I would like to seek on these matters as well not having been involved in the Finance and Expenditure Committee deliberations on this bill.It is clear that one of the things that the bill seeks to achieve is a more connected and joined-up Public Service to break down some of the silo mentality that exists within the Public Service at the moment. I think that is a worthy aim and it is something that we in the Labour Party are very very supportive of. But one of the tensions with that has always been that ultimately under the existing arrangements with public finance in particular the chief executive is going to be the person who is responsible for how public agency money public money taxpayer money is spent. Under this legislation that we are debating at the moment where we are talking about specifying the financial responsibilities of departmental chief executives to make it clear that they include financial stewardship for the long term—so that is what we are doing in one part—we are saying to the chief executives that we want them to take a long-term view of the financial stewardship of their departments. But then in another area we are making it clear that other departments as well as the one administering the appropriation can incur expenses against the appropriation. It sort of highlights the tension that we have.In order to get a more connected and joined-up Public Service and to get the agencies working more closely together to some extent we have to erode the autonomy of an individual chief executive over the way their department spends its money yet we arestill going to be holding that chief executive to account. They are still going to be the person who comes along to the financial review process at a select committee to explain how that agency or department has spent its money. There are going to need to be some pretty clear controls in place here because different chief executives and different agencies may also be getting slightly conflicting priorities or conflicting directives from the Ministers for whom they work. One of the things that I think we risk here—and it is certainly not an insurmountable problem and I am supportive of what the bill is trying to achieve—is just making sure that we make it clear that where one department incurring expenses against an appropriation of another department is doing that the accountability is quite clear the lines of decision making are clear and we can keep track of what is going on there. That flows right the way back up the system to Ministers as well.Certainly most large areas of Government expenditure involve several different departments and agencies. If we take education for example I can think of several issues that we would deal with in education that would involve the Tertiary Education Commission the New Zealand Qualifications Authority and the Ministry of Education and they would all be working on the same goal. They would all be working towards the same objective and outcome yet at the moment they are very much defined separately although there is I guess a coordinating role for the Ministry of Education in overseeing the work of the other agencies. [Interruption ] There are other agents and Megan Woods has just pointed out other agencies involved in transitions—Career Services and various agencies like that. We want those agencies working together towards a collective goal. We want the Government to be able to specify that this is the direction it wants to go in in these areas and that it wants to make sure that they are connected up and that the public finance requirements do not effectively act as a barrier to all the agencies working together. Potentially it is quite possible—well I certainly think that it is the intention—that the changes being made in this legislation will provide opportunities for that to happen.Turning back to the accountability issue and the way that accountability information is presented in annual reports I point out that it is the annual reports effectively that form the starting point for Parliament’s scrutiny of how money is spent. When we get together in our select committees and we go over departmental expenditure and we review departments we look first at the annual reports and then at a whole lot of supporting information that is supplied usually in relation to quite extensive questions that members of Parliament will ask through that select committee process.What the changes in this bill before us allow is for annual reports of more than one department to be presented together in one document where this will provide more meaningful information about the department’s performance and achievements and it will allow end-of-year reporting on appropriations that contribute to a common purpose but are administered by different departments to be presented in one document. In education for example unless I am incorrect this could mean that we end up with an annual report for education rather than an annual report for the New Zealand Qualifications Authority an annual report for the Tertiary Education Commission and an annual report for the Ministry of Education—unless I am mistaken; some clarification on that would be quite good.Then what we do is we get to the point where we start to ask whether you know at the other end of the process some of the documents specifying what we want departments to do should also be common. So rather than the Government specifying a statement of intent for all of the different agencies the Government can then start specifying “This is our statement of intent for education. This is what we are trying to achieve in education.” Then all of the other things that flow from that contribute to thatoverall directive and the annual reporting coming back again contributes to that. That is all positive in my view. I think that is what we want the Public Service—the public sector and all of the agencies—to be doing. We do not want to have them competing with each other and we do not want the silo mentality. But within that we have still got to make sure that ultimately at the end of the day someone is responsible and accountable back to the House.In our estimates we get the opportunity to grill Ministers on what it is they want money that is being spent to contribute towards—what are the outcomes that they are trying to seek. We get to grill them a little bit on their plans and on the decisions that they are making—not always successfully of course; that relies on them providing the answers. Megan Woods has just raised a very good point. In the scrutiny of all of the votes and all of the departments and agencies that we have through the financial review process we very much rely on there being timely information to the select committee. For example we start as I mentioned from the annual report. That is the starting point for our scrutiny of where departments are spending their money. But we then ask an extensive range of questions. Normally there will be around 100 or 150 standard questions that go to all departments and agencies and that is actually where we get the really useful information. Then from that there will probably be more supplementary questions that go backwards and forwards—in a small department not very many; in a controversial or big-spending area like education health or social development there will be a lot of questions.By getting that information we are able to give really good scrutiny to what these departments and agencies are doing. If that is not supplied because Ministers simply do not require their departments to supply that information the select committee cannot do its job. And too often in this year’s financial review process we are seeing that happen. We are seeing agencies not supplying information that is being requested by select committees and even more so in the most recent round of estimates that we have dealt with. Ministers have been asked for a whole lot of information and it has not been supplied to the select committee at the point where Ministers are showing up in order to answer questions about it. How can the Parliament do its job effectively if we are not actually being given the information before the hearings take place?One of the things that I am concerned about—and I just I guess seek some reassurance from the Government about how it is going to handle this—is that in making the information provision more multidepartmental and stretching the boundaries of that a little bit more we have still got to have a mechanism to ensure that there is accountability to ensure that the follow-up information that is requested is actually supplied and is actually provided. It certainly can be done. There is no reason why it cannot be done. We just need to have an assurance that processes will be put in place to allow that to happen.I am very concerned that we are departing from some pretty well-established processes—just in practice—around the House and around select committees at the moment and information is not being provided in the timely manner that select committees should reasonably be able to expect. That is of real concern. It is frustrating for us of course but it is actually very concerning for the public because they rely on us as members of Parliament to scrutinise Government decision-making and to scrutinise in a very robust manner where their money is being spent and we are not getting the information that we should get to allow us to do that effectively.