Parker David: State Sector and Public Finance Reform Bill — Second ReadingText is incorporated into the Bound VolumeParker David: State Sector and Public Finance Reform Bill — Second Reading[Sitting date: 25 June 2013. Volume:691;Page:11214. Text is incorporated into the Bound Volume.]Hon DAVID PARKER (Labour):I rise to take a call on behalf of the Labour Party. I want to deal with a couple of issues that I think are less than perfect in the State Sector and Public Finance Reform Bill as amended by the Finance and Expenditure Committee. The Labour Party given the changes that have been made and negotiated at the select committee will be supporting this legislation. We do so in part because in respect of legislation that is intended to endure beyond Governments and beyond the term of any one particular Parliament we think it is one of the roles of the main political parties in this House which at times sit on Government and Opposition benches to try to reach agreement on framework legislation so that there can be continuity and certainty around those settings in a way that means that we have consistently applied standards in the State sector and the wider public sector. With the changes that have been agreed at select committee we find ourselves on balance favouring this legislation and will be supporting it through subsequent stages.There are a couple of things that I do want to refer to that I thought were pretty poor in the original legislation. For a start there was a regulation-making power effectively that was conferred upon the Minister of State Services to give directions to chief executives. Those powers were so broad as to effectively enable the Minister by a directive that amounted to or was akin to a statutory regulation to impose a wage freeze throughout the State sector. As we said at the select committee that was akin to the regulation-making powers that National Governments used to vote themselves and exercise under the old Economic Stabilisation Act under which the then National Prime Minister Mr Muldoon inflicted upon New Zealand a wage and price freeze through statutory regulation.Hon Maurice Williamson: How did that go?Hon DAVID PARKER: That is right. “How did that go?” said Mr Williamson. It did not actually go very well Mr Williamson. Indeed it was as a consequence of the inept management of the economy by that particular National Government led by the Rt Hon Mr Muldoon that led to New Zealand having the highest Government debt that it has had since I was born. I think that at one stage one dollar in four of all taxes collected was being spent on interest as a consequence and debt was out of control. Of course subsequent Governments—firstly Labour and then National and then Labour again—reduced Government debt very substantially so that by the time the Government that Mr Goldsmith now forms part of came to power New Zealand had zero net debt and gross Government debt had gone from 38 percent of GDP down to 18 percent of GDP. So it was in fact the responsible fiscal management of the last Labour Government and the prior two Governments—the prior National and Labour Governments before that—that meant that New Zealand was in a position come the global financial crisis to actually see things through in a way that did not cause the downward spiral that has been experienced in other countries which have had decliningeconomic circumstances at the same time that they have had to pursue austerity on the Government books.There are a couple of other things. That regulation-making power has been severely narrowed in this version of the bill and as a consequence that particular detriment of the bill has been remedied. I want to go a little bit further into two things. One is that you have got to be very careful not to cause unintended consequences when you change foundation legislation. There are a number of occasions where this is happening at the moment in the law. The Government has modified its position in respect of whether people who move from one position to another in the wider Government service can be effectively pushed into a new job and lose their existing rights under their employment contract or their collective agreement. They often have redundancy provisions which they were going to lose under the version of the bill that went through the first reading and went to the select committee. The Government has agreed to change that so that now for people to lose their entitlements they have to accept a position that is no less favourable than their existing package. That is a fair enough outcome.There is another area where the Government is causing an unintended consequence at the moment and that is in the changes proposed to the Employment Relations Act. Under that Government legislation—and this is dawning upon the business community at the moment—which is so ideologically driven notwithstanding the fact that New Zealand has had very low rates of industrial disputes the number of strikes and lockouts will actually be increased. The reason for that which was explained to me recently by an employment lawyer is quite simple. Under the new employment relations legislation people will lose their right to strike or lock out once negotiations are deemed to have broken down. Once you reach the point of breakdown of negotiations and negotiations are deemed to have broken down you cannot strike or lock out. That means that if you are an employer who wants to lock out or an employee who wants to retain the right to strike you have to do that before you reach the point that negotiations are deemed have broken down under this new definition of a breakdown of employment relations.That logically must mean that as a consequence we are going to see more industrial disputes move to lockout or strike earlier—earlier. So this ridiculous piece of legislation the employment relations amendment legislation which the Government is bringing through in the context of very low rates of industrial disputes that turn into strikes or lockouts is going to make it worse—the Government’s own industrial relations legislation—because people will lose the right to strike or lock out once they pass a certain point. Therefore in the context of those negotiations which sometimes are protracted people will have to exercise their right to strike or lock out earlier in the process or they will lose the right to do so.Mr DEPUTY SPEAKER: Just come back to the bill.Hon DAVID PARKER: It shows how careful we have to be with legislation that we do not make things worse.Another area of this legislation that concerns me—and I do not think we have got it right yet—is new section 86 in clause 54 of the bill which protects Public Service chief executives and employees from litigation. I for one think that when someone who is acting on behalf of the Crown is going about their business in their job and makes a mistake then they ought not be the one who actually faces liability for the consequences of that mistake. The Crown stands behind them and it is the Crown that wears the loss in respect of a problem that is caused to a member of the public who has a right of action. I have no problem with members of the Public Service being protected from liability in civil proceedings for their mistakes.That is not what this debate is about. This debate is about whether they should be protected by way of having an indemnity from the Crown or whether they should havean immunity. This legislation according to the Law Commission and the Law Society goes too far by conferring immunity. The Law Commission said that we are effectively creating a faceless bureaucracy—and it used that phrase—that cannot be brought before court. You think: “What is the consequence of this?”. Well the consequence is that you could actually have someone who in good faith does something that is grossly negligent but because of the wording of this provision is given an immunity from civil proceedings so long as it was done in good faith. The act could be grossly negligent yet the injured party out there in society will have no right of suit. It is not just that the public servant will have a right of indemnity from the Crown; the injured person will have no right of suit. The injured person in society the powerless person who has suffered an act of gross negligence on the part of an arm of the State through a public servant is to be left without remedy. That is wrong. This is actually going a step too far. What we should be saying is that the employee who makes that mistake is indemnified against liability but we should not be giving immunity so that the person who is injured by an arm of the State has no remedy.At the select committee we tried to change that. Labour members said that was wrong. We thought the Law Commission had it right. There are occasions when the Crown will not be vicariously liable for a grossly negligent act of an employee because vicarious liability will not cover the action and the private citizen injured by an arm of the State through an act of gross negligence will be unprotected. That is wrong the Law Commission said it was wrong and the National Government refuses to fix that aspect of the law. This legislation is not perfect but overall it is important housekeeping legislation and we will be supporting it at this stage.