Burton Mark: Public Finance (State Sector Management) Bill — Second Reading Instruction to Committee In Committee 
Text is incorporated into the Bound Volume 
Burton Mark: Public Finance (State Sector Management) Bill — Second Reading Instruction to Committee In Committee 
[Sitting date: 14 December 2004. Volume:622;Page:17838. Text is incorporated into the Bound Volume.] 
Hon MARK BURTON (Deputy Leader of the House) 
 on behalf of the 
 Minister of Finance 
: I move  
That the Public Finance (State Sector Management) Bill be now read a second time 
. This bill is the culmination of significant work intended to strengthen and improve the accountability transparency and effectiveness of the public service and wider State sector. 
Sitting suspended from 6 p.m. to 7 p.m. 
Hon MARK BURTON 
: As I noted ever so briefly before the dinner break the Public Finance (State Sector Management) Bill is the culmination of significant work intended to strengthen and improve the accountability transparency and effectiveness of the public service and the wider State sector. The bill consists of eight parts covering three important areas of change: first changes to the Public Finance Act including integration of the Fiscal Responsibility Act; second amendments to the State Sector Act; third the creation of a new Crown Entities Act. At the end of the Committee stage the bill will be divided into its constitute parts as set out on Supplementary Order Paper 316. 
The Finance and Expenditure Committee has considered and addressed a range of issues raised in submissions—in particular the submission received from the Clerk of the House raised issues from a parliamentary perspective. I thank the committee and officials for working effectively through these to ensure that the primacy of Parliament has been upheld and to clarify the intent and application of the bill. 
The key amendments the committee has recommended to the Public Finance Act in Part 1 of the bill relate to the estimates and multiclass output appropriations. The committee has also recommended that the appropriations provisions precede the fiscal responsibility provisions in order to recognise the central importance of the appropriation process. The committee considered that the estimates provide important information and also wish to allow for future developments. The committee has therefore recommended that clause 8 be amended to provide for the retention of the estimates and to require the Minister of Finance to consult the House on significant changes to the format or content of Budget documents including the estimates. The Government agrees with these changes. 
The bill provides for output classes to be grouped within a single appropriation. Submitters expressed concern that this may reduce the level of information provided to Parliament thus reducing accountability and parliamentary scrutiny. That is certainly not the intent. Rather it is intended that output classes remain the basis for parliamentary reporting and accountability. The committee has therefore recommended amendments to clause 8: first to clarify that individual output class information is still required; and secondly to safeguard use of multiclass output appropriations by requiring approval from the Minister of Finance. These changes will ensure that accountability to Parliament is maintained while allowing greater flexibility for Ministers and departments to focus on delivering the best results for New Zealanders.That is always at the heart of this Government’s legislative intent. 
Part 2 amends the State Sector Act extending the mandate for the State Services Commissioner to the wider State sector and establishing the shared responsibility of the commissioner and chief executives for the development of senior leadership and management capability. The committee has recommended only minor changes to this important part of the bill. 
The proposed new Crown Entities Act in Parts 3 to 7 of the bill sets out a consistent governance and accountability framework for all Crown entities while recognising that different types of entities have different relationships with the Crown. I think the differentiation and the recognition of it are very important. 
The most significant changes recommended by the committee relate to the intent of and procedural matters around the proposed whole-of-Government direction of power. To address concerns—in particular those raised by the Regulations Review Committee—the select committee has recommended that clause 152 be replaced with new provisions that directly authorise the Minister of State Services and the Minister of Finance to issue jointly whole-of-Government directions rather than by Order in Council. The Government again agrees with these recommendations which will contribute to alignment across Crown entities. 
In addition the committee has made recommendations that clarify the application of the bill to two categories of Crown entities—namely school boards of trustees and tertiary education institutions. A number of submissions expressed concern that the bill would result in onerous burdens on school boards of trustees. To address this concern the committee has recommended a positive list approach—that is the inclusion of a new schedule detailing the provisions that apply to school boards of trustees. 
Submissions from tertiary education institutions argued that they should cease to be Crown entities. The committee and the Government consider that the separate category of “Crown entity” is appropriate and recognises their distinctive nature. The committee has recommended that a positive list approach also be applied to tertiary education institutions. I welcome the committee’s practical suggestion. 
Two Supplementary Order Papers were released on 7 December. Supplementary Order Paper 316 divides the bill into its constituent parts. Supplementary Order Paper 315 amends the bill as reported back and covers changes to commencement and transitional clauses simplifies the application to tertiary education institutions and contains technical amendments and consequential amendments to other legislation. This includes a correction to the commencement provisions of the Gas Amendment Act 2004. 
Finally I wish to thank the Finance and Expenditure Committee for working constructively and improving the bill. I am pleased as I know the Minister of Finance is to note that the committee unanimously recommended all the amendments. The Government supports these amendments. This legislation represents the most significant enhancement of public sector management for over a decade and will help set a new benchmark for Government transparency and accountability in New Zealand and indeed internationally.