Key John: Public Finance (State Sector Management) Bill — Second Reading Instruction to Committee In Committee 
Text is incorporated into the Bound Volume 
Key John: Public Finance (State Sector Management) Bill — Second Reading Instruction to Committee In Committee 
[Sitting date: 14 December 2004. Volume:622;Page:17881. Text is incorporated into the Bound Volume.] 
JOHN KEY (National—Helensville) 
: 
 Part 3 which as members can see includes clause 46 “Purpose of Parts 3 to 7” refers to Crown entities. The real dilemma in this whole part and in the amendments that are to take place to the Crown entities has a quite simple context actually. The Government established Crown entities under independent Acts of Parliament and with independent boards so that those boards could be responsible for the management of those autonomous Crown companies essentially. The entities were able to be controlled if one likes by the Government through the changing of the boards. That was the fundamental process under which Crown entities were established. The risk of this legislation is really as simple as this I think: if this Government wants to go and start meddling in the Crown entities under its control what it risks doing through this legislation is going around the independent boards and independent autonomous companies that have been set up and starting to meddle in their activities. 
That creates two dilemmas. The first is that one starts to have Crown entities such as tertiary institutions all of a sudden feeling as though their position of autonomy and academic freedom is jeopardised. So one would have the universities rightfully saying that they are Crown entities—and as Dr Cullen correctly pointed out have been so since 1993—but that all of a sudden their independence under the Education Act which has been so cherished from an academic and a freedom point of view is being challenged through the alterations to the crown entities legislation. So the first dilemma is that the Crown entities and Crown companies could in some form or another be influenced through this crown entities legislation. The second dilemma is one of accountability and we saw a lot before about that in Part 2 of the bill which looked at the role of the State sector in terms of putting leadership and guidance in there. The risk for board members or for the management of Crown companies is simply a situation whereby the Minister goes around the boards and somehow influences Crown entities. Then when things go wrong—as they surely would—those boards would come back and say a particular action took place not because they wanted it to take place and not because it happened under their guidance but because the Minister dictated somehow that it was to take place. 
There are quite a number of categories of Crown entities—there are now five defined categories—and I want to take a second if I may just to talk about the different categories. One of the issues is clearly around the boards of trustees. Quite a lot of submissions were put forward to the Finance and Expenditure Committee around the definition of boards of trustees and one issue was that they somehow could be either overly responsible or indeed liable—it was the issue of liability as opposed to responsibility. Liability was one issue around their independence and their ability to do things. 
I want to also mention if I may for a second some of the other definitions in Part 3 because one definition is quite interesting. It is that of the fees framework and it is quite pertinent and relevant I think to what is taking place at the moment.If I can take a moment of the Committee’s time to read that definition it states quite simply that the “fees framework means the framework determined by the Government from time to time for the classification and remuneration of statutory and other bodies in which the Crown has an interest including statutory entities and their subsidiaries and tertiary education institutions”. What does that mean? Does it mean that when Judy Bailey’s salary is doubled from $400000 to $800000 in what is not actually technically speaking a Crown entity but is nevertheless a Government-related activity that is now at the discretion and under the framework of the Government? If I look at that in relation to tertiary education institutions and if I read the fees framework correctly—and the Minister may like to take a call to enlighten the Committee on whether I am correct—it looks to me as though the Government will be able to control the remuneration of people working within tertiary education institutions. If it is correct that that is what the fees framework as defined in clause 51 means I can understand why the vice-chancellors from eight universities in New Zealand including Raewyn Dalziel who is the acting vice-chancellor of Auckland University Derek McCormack at the Auckland University of Technology and Bryan Gould at the University of Waikato—