Clark David: State Sector and Public Finance Reform Bill — In CommitteeText is incorporated into the Bound VolumeClark David: State Sector and Public Finance Reform Bill — In Committee[Sitting date: 02 July 2013. Volume:691;Page:11658. Text is incorporated into the Bound Volume.]Dr DAVID CLARK (Labour—Dunedin North):Kia ora Mr Chair. Kia ora e te Whare. Kia ora koutou. And special greetings to the noisier members over the back there who seem to be enjoying the proceedings of the evening. I am sure I am not alone in looking forward to their particular contributions later in the debate.Andrew Little: You’ll be waiting a long time.Dr DAVID CLARK: I may be waiting a while says my colleague. They have been remarkably quiet when it comes to their turn to make a constructive contribution and are more focused on the interjections. I will not claim any high ground there myself but I would enjoy any contributions.To come to the substance of the State Sector and Public Finance Reform Bill lest I be hoisted on my own petard Mr Chair—The CHAIRPERSON (Lindsay Tisch): I am listening.Dr DAVID CLARK: —I wish to discuss the nature of these departmental agencies and the reporting mechanisms that will apply in future as we see right up front in Part 2. We come straight to the crux of the matter in clause 58A which says: “In section 1A(2)(d) after ‘departments’ insert ‘departmental agencies’.” Then we have a series of other changes that the bill proposes that will be about ensuring that these departmental agencies are more widely considered in the legislation that other pieces of legislation fall into line and that those agencies can incur expenses or capital expenditure under the Imprest Supply Act in the same way that a regular department would.My question I guess for the Minister in the chair the Minister for the Environment—and I know that this Minister is a capable Minister and will probably not shy away from such questions—is about this creation of a new organisational arrangement called a departmental agency as an option for providing public services. We are told that such an agency would sit legally within a host department which would administer the appropriations used by the departmental agency but the departmental agency would have its own chief executive directly responsible to a Minister for its specific activities. My question really is around how the lines of accountability would then run. It is interesting that these departmental agencies would presumably have a different type of accountability; otherwise there would be no need to create them. This entity is a new type of entity. Is there a hierarchical arrangement here? Is the departmental agency within the department now in some sense tacitly at least responsible to the chief executive of the original department? They report directly to a Minister so one can imagine that if conflicts occurred over the use of building space or the use of meeting rooms—you know if we pare it back to the basics of everyday departmental life—then solutions would need to be found.It is not immediately clear to me how this kind of conflict would be addressed or what the real purpose of introducing these new agencies is unless it is for some decreased level of scrutiny. This Government does have a track record for favouring a decreased level of scrutiny and the example that springs to mind immediately is the asset sales legislation—The CHAIRPERSON (Lindsay Tisch): Order!Dr DAVID CLARK: This is quite on point—The CHAIRPERSON (Lindsay Tisch): I am listening very carefully.Dr DAVID CLARK: —and I will bring it back directly. The public becomes concerned when there is a decreased level of scrutiny on public affairs.As I have stated earlier in Part 1 and what is set up in Part 1 is actually brought into practice in Part 2 we are striking a balance here in this Parliament with this legislation between accountability on behalf of the members of the public for the spending of money—and that is particularly relevant in the amendments to the Public Finance Act 1989 which we are discussing in Part 2—and the freedom of Ministers to achieve the goals that they wish to achieve which they have said they are going to achieve through the employment of those funds in a way that is flexible so that they are not bound by unnecessary constraints by constraints that are artificial in their nature for a reporting requirement that actually does not serve a public purpose. That is a reporting requirement for its own sake that spells something out in detail because that is the way it has always been spelt out not because someone has taken a fresh look at it and asked the question: “Is this something we need any more? Are we scrutinising things in a way that is in the public interest or are we scrutinising things in a way that is actually beyond the public interest and actually inhibits departments and their ability to carry things out without the offsetting public benefit of that wider public scrutiny in a way that is meaningful to the wider public?”. So we are trying to strike that balance here.That cuts to the issue that I was raising about these departmental agencies. I have not heard a convincing argument from that side of the Chamber as to why these departmental agencies should have this specific piece of legislation that separates them out. I expect Mr Hayes will leap to his feet shortly to articulate—John Hayes: If you’d come to the committee you’d have found out.Dr DAVID CLARK: —exactly why these departmental agencies—Mr Hayes says that if I had come to the committee I would have found out. Well I was not privileged to sit on the Finance and Expenditure Committee where this issue was discussed so I do invite Mr Hayes to share that if it is within his ken if he understood the issues at the time and is willing to share them with the wider members of this Committee. I invite him to take a call and explain why these departmental agencies should be created and what advantages they will create for the taxpayer because I am certain that at some level this Government will be very very clear that it does want to make sure that money is well spent for the taxpayer. The public at home may not have that impression from watching this because what they will observe is that members opposite have not really entered into the spirit of the debate. They seem to be content to sit and listen to many members on this side of the Chamber raise important issues.That said I must commend the previous Minister in the chair the Minister for Food Safety who did take a call and answered some of the questions that were raised. That is an important part of what we are doing here. We need to convince ourselves that this is weighing that balance—which I raised earlier—right between proper public scrutiny and not being entirely cumbersome on the Government of the day in a way that ties it up in red tape and makes it unable to achieve the purposes it sets out to achieve. We know that this is the right thing to be achieving and that is why Labour will be supporting this bill. I must reiterate that the balance that has been struck is one that we think is appropriate and is one that makes this bill one that will survive the test of times.I think as I mentioned earlier that the processes laid down here—the accountability mechanisms—although appropriate cannot inoculate the Government against bad policy. If the Government wants to implement bad policy this legislation enables it to do that in a more efficient and effective way. One of the earlier contributors to the debate made the very good point that bad Governments will do that anyway; they will implement bad policy come hell or high water. What this legislation really achieves is that it enables Governments that want to implement good policy and do it throughproper process to be able to do that in an efficient way. That cuts to the heart of the matter as to why Labour is choosing to support this bill.One of the other matters I wish to raise in respect of Part 2 is the standardising of the governance and performance reporting requirements for companies currently listed in schedule 4 of the Public Finance Act and proposed to be moved into the new schedule 4A by schedule 2 of the bill. The standardising of performance reporting requirements must on the surface appear to be a good thing. The standardisation of reporting requirements making them easier and less burdensome means that these agencies can continue to do their tasks with Crown entities and get on with the tasks that they exist to carry out.If we look at some of the earlier legislation that was passed here in this session this week there was the standardisation of the generally accepted accounting practice procedures so that fewer small to medium sized enterprises are required to undergo those onerous requirements—another good step. That is another good step and we need more of this kind of thing. We know that recently New Zealand slipped from 15th to 24th in the world business competitiveness stake according to the IMD World Competitiveness Center’s survey. We know that New Zealand business is facing tough times. This Government has skewed the playing field against small business. There is a lot of red tape it has introduced—The CHAIRPERSON (Lindsay Tisch): Order!Dr DAVID CLARK: —the child support legislation requirements—The CHAIRPERSON (Lindsay Tisch): That is not part of the bill.Dr DAVID CLARK: Mr Chair the point is that that contrasts as an example with this piece of legislation. Those areas in which the Government has put a further burden on small business—those businesses are struggling they are not being created. There are 2500 fewer a year than there were under Labour. This piece of legislation contrasts with that. This is an attempt to make sure that business can perform better.