Hipkins ChrisHon CHRIS HIPKINS (Minister of State Services): Thank you Madam Chair. I'm happy to respond to a few of the issues that have been raised so far. I want to thank the Opposition for their constructive work through the Governance and Administration Committee to improve this bill and for their support for it. They've raised a number of issues and I start with the ones raised by the Hon Dr Nick Smith around how far Governments should go. I think that that is a very reasonable question to ask and to have answered. I welcome the work of the committee to add in the criteria that the State Services Commissioner should consider in deciding how far to go in agreeing or not agreeing to a proposed remuneration package put forward by a Crown entity board. I think that they've done a good job of doing that. Market conditions are still a factor that they need to consider and that's specifically listed as one of the criteria that the State Services Commissioner will need to consider.The Government's expectation certainly is that they should be paid a fair market package but they shouldn't be at the top of the market. This was a view that was expressed not just by this Government but by the previous Government as well. We all know of a notorious situation not long before the election where the then Minister of Finance and the then Prime Minister both agreed with the State Services Commissioner that a remuneration package was too much and the board of that particular Crown entity chose to offer it anyway—much to the frustration of the then Government of the day in a sentiment supported by the then Opposition of the day that that was out of kilter with what was a reasonable expectation even on a market salary. So I think that addresses that particular factor. Public service is a factor in taking on these roles and that's something that we need to consider. One of the tests that the State Services Commissioner would reasonably apply is: would a lower salary package affect the ability to recruit the best person for the job—you know the most competent person to be the chief executive? And if the answer to that question is yes then I think that would have a significant bearing on any recommendation that they might make or any decision that they might make.The other main issue that's really been raised—well there are the issues raised by the Institute of Directors around what this means for the overall autonomy of the board. The issue there is the board will still make the appointment and they'll still make that appointment independently. They will still recommend the salary package. So they'll still determine the salary package. It simply will require now the agreement of the State Services Commissioner. Now that comes to the final question that I think Nick Smith asked which was: is this about extending the status quo—i.e. widening the status quo—or going deeper? The answer is and I think it will be to his comfort that it is about widening the status quo because there are already Crown entities where agreement is required. This extends it to a larger group of Crown entities. We think that system works quite well.Brett Hudson raised an issue a very legitimate one around the must have regard" clause. I think that's something that this Parliament has learnt a little bit about in recent years. The closest analogy that I can think of off the top of my head is the remuneration of members of Parliament because it's an issue that we're grappling with. Where previously the Remuneration Authority were responsible for making judgments about that based on a set of criteria the Parliament didn't like what was happening. We felt our salaries were growing too fast. So we changed that from criteria that they should consider or must have regard to to a set formula. So we were much more prescriptive. The result of which is that we then ended up in a situation where we were getting even bigger pay rises and the Remuneration Authority were saying to members of Parliament "This is the pay rise that we are required to give you though we do not think you deserve that much money."So the flip side to a "must have regard to" criterion is that you go to the other extent where you end up with a very specific criterion and you remove all the subjective judgment from the exercise and then you end up in a situation where you can have the completely opposite effect—both ways; either too little or too much—to what you had intended. So there is always going to be a degree of subjectivity when it comes to determining what an appropriate remuneration package is.The ultimate test and the ultimate safeguard from the abuse of power there is really with the board of the Crown entity because the board of the Crown entity still needs to recommend the ultimate salary package. The State Services Commissioner can agree or disagree to that. If the State Services Commissioner disagrees and the board continues to have concerns about that then they do have I guess the ultimate course of action which is to resign their positions and force the issue back on to the Government."