Hipkins ChrisTUESDAY 11 SEPTEMBER 2018(continued on Wednesday 12 September 2018)STATE SECTOR AND CROWN ENTITIES REFORM BILLSecond ReadingHon CHRIS HIPKINS (Minister of State Services): I move That the State Sector and Crown Entities Reform Bill be now read a second time.I'd like to acknowledge the members of the Governance and Administration Committee for their work on the bill the very constructive recommendations they have made for amendment—which I will speak about in a few moments—and for the collegial way that they have approached the debates on this particular matter.First of all let me say that there's much about the New Zealand State sector and State services that works very well. Crown entities are an integral part of our system of public services and for citizens they're often the public face of Government—the agencies that they interact with most often. Collectively they carry out a very wide range of functions from running public hospitals and schools to performing a broad range of other services and regulatory activities. Given the wide variety and the individual autonomy of the Crown entities it's important that they remain connected to the core values and unifying spirit of service that the Public Service is required to have.There are discrete areas where better alignment with other aspects of the Public Service can help to maintain confidence and build trust in the Crown entities as public agencies without affecting the autonomy of Crown entities' statutory functions. The changes proposed in this bill support greater integrity and accountability in the management of State services. The amendments cover four interrelated dimensions primarily in the Crown entities sector with each amendment bringing a part of the State sector into better alignment and consistency with the arrangements that already exist across the Public Service.So to recap Part 1 of the bill addresses the Crown Entities Act 2004. The changes focus on two key things: they will require boards of statutory Crown entities to obtain the written consent from the State Services Commissioner to the terms and conditions of a chief executive's employment and they will introduce a term of up to five years—which can be renewed—for future chief executives of statutory Crown entities. This basically brings the terms and conditions of Crown entity chief executives into line with the terms and conditions of chief executives in the core Public Service.Part 2 of the bill addresses the State Sector Act 1988. Again the changes in this part of the bill focus on two key areas. They provide explicitly for the State Services Commissioner to set standards of integrity and conduct by applying a code of conduct to boards of Crown entities and the second is that they improve the investigation powers of the State Services Commissioner by modernising them under the provisions of the Inquiries Act 2013 and providing a more uniform trigger to the exercise of the commissioner's powers.The bill was first introduced in February and it has been considered by the Governance and Administration Committee. I want to again thank them for their work. I understand that seven submissions were made on the bill. It is clearly not one of the more controversial pieces of legislation that has been before the House but I do acknowledge the committee has made some helpful recommendations to improve the bill as a result of those submissions.In relation to Part 1 the most significant amendment that the committee has made—which the Government certainly endorses—is an amendment that would insert new criteria that the State Services Commissioner would need to have regard to in consenting to chief executive terms and conditions. Those criteria include the legal commercial and operational context of the entity and any information provided by the board the public nature of the entity and the related public interest and prudent stewardship of public resources relevant market information Government expectations and other relevant factors. I think this is a very sensible amendment and it is one that the Government endorses.With regard to Part 2 of the bill—these are the changes relating to the State Sector Act—the committee has recommended six amendments mainly to provide greater clarity and consistency between the new provisions in the State Sector Act and related legislation. The first four amendments deal with replacing the State Services Commissioner's powers of inquiry and investigations. These powers I was interested to know when we started discussing this bill at the very beginning—or started discussing the concept of the bill—are still rooted in the Commissions of Inquiry Act from 1908. In fact the Parliament has subsequently passed in 2013 the Inquiries Act which provides a much more modern context for inquiries and a much more I think streamlined set of inquiry powers and grades of inquiry that are much more sensible and fit for purpose in the modern context. Therefore bringing the State Services Commissioner's inquiry powers into line with those new powers in the Inquiries Act of 2013 is very sensible.So the bill as introduced could be described as somewhat conservative in the range of provisions from the Inquiries Act that were proposed to be included in the State Sector Act. I'm told that the New Zealand Law Society commented that detailed safeguards introduced by the Inquiries Act should also apply and the bill as reported back includes additional provisions from the Inquiries Act relating to the duty of the inquiry to act independently impartially and fairly the ability of an inquiry to designate core participants and the ability of an inquiry to refer questions of law to the High Court. These are all very sound amendments that the Government endorses. Another useful amendment ensures that a delegation under the Inquiries Act must be carried out in accordance with the relevant section of the State Sector Act. Consistency between the operation of those Acts is clearly desirable.The bill reported back from select committee clarifies that inquiries by the commissioner have the same exemption as inquiries under the Inquiries Act in relation to Privacy Act principles. This is very important and it is one that has been recently highlighted where an inquiry can only really be effective if people are free and frank with the inquiry. If they're sharing evidence with the inquiry that is of a sensitive nature which they then know is going to be passed on it may inhibit the inquiry from being able to get hold of that evidence in the first place. So there is a real tension here between the Privacy Act and the ability to carry out an inquiry. The Inquiries Act strikes the right balance and the intention here is ensure that that balance is also carried through into the State Services Commissioner's powers.So I'm not going to speak in great detail about that but I think that the amendments that have been put forward by the committee around the powers of the commissioner to conduct inquiries are sensible ones and provide further safeguards on the use of that power in line with the powers that would be conferred under the Inquiries Act. So I want to again thank the committee for their work in bringing this bill back to the House making judicious amendments to the bill and bringing it back I hope in a position—I note that the committee's report was unanimous and I hope that the bill has been reported back in a way that the House can also have unanimous support for it. Thank you.