State Sector Amendment Bill Public Finance Amendment Bill (No 2) Crown Entities Amendment Bill — Third ReadingsText is incorporated into the Bound VolumeState Sector Amendment Bill Public Finance Amendment Bill (No 2) Crown Entities Amendment Bill — Third Readings[Sitting date: 10 July 2013. Volume:692;Page:11931. Text is incorporated into the Bound Volume.]Wednesday 10 July 2013(continued on Thursday 11 July 2013 )State Sector Amendment BillPublic Finance Amendment Bill (No 2)Crown Entities Amendment BillThird ReadingsDebate resumed.Hon PHIL GOFF (Labour—Mt Roskill):When we were last debating this legislation I made the point that the State Sector and Public Finance Reform Bill as introduced raised some serious concerns from the Labour Opposition. We opposed the first reading of the bill. What we were concerned about was how the bill as it was introduced would impact on employees. We are at a time of quite rapid change within the Public Service. That means that many people who had been loyal and devoted public servants have been at risk and have lost their jobs through no fault of their own and the bill as introduced had redundancy provisions that would have risked seriously disadvantaging people placed in that position. We raised concern too about the differential in terms of how people were treated if they were on a collective contract as opposed to an individual contract and we raised concerns about the Government’s proposal for workforce policy orders which would have had the impact of effectively being Orders in Council.I am pleased to report back to the House that as a result of the very good and very clear submissions made by stakeholders on this bill and the good work done in the Finance and Expenditure Committee—and I acknowledge the work done there by David Cunliffe—the committee actually listened to the Labour objections took those objections on board and altered the bill significantly. So we have a situation now where employees have retained their rights to redundancy payments when they are displaced from their employment other than when they are offered a job that is no less favourable than the one that they are currently in.We have a situation where with the sunset provisions those on collective contracts will have the same rights as those on individual contracts—they will not be disadvantaged—and we have a situation where the workforce policy statements as they are now known will allow existing legal and bargaining rights to be protected. I do welcome the flexibility of the select committee and in this case of the Minister in taking on board those points so that this legislation can receive wide support as it goes through the House. I only wish that that sort of flexibility and rationality was replicated on a lot of other bills that we have been considering.The principles set out in the legislation are fine but my question is given experience whether the principles set out in the legislation are actually just words on paper and the practice will be quite different. If you set out in the legislation very good provisions about how the Public Service will operate in future that is fine. We want a flexible innovative creative Public Service that is effective and efficient. The public servants themselves want that we want that and New Zealand wants that. We should acknowledge that we have a very good Public Service one that is politically neutral one that is effective and efficient and non-corrupt. But to maintain that you have to maintain the morale and you have to acknowledge the value that those public servants provide.It is all very well for the purpose clause to talk about a State sector system that meets its obligations on the part of the employer to the employees. But we have seen inpractice the exact opposite of that happening. Think back to the debacle of the reorganisation of the Ministry of Foreign Affairs and Trade probably the most effective ministry that in 15 years as a Minister I have worked with. That ministry was gutted people unilaterally had stripped from them their rights and their working conditions and that sense of disillusionment resulted in a 19 percent attrition rate the highest in the history of the Ministry of Foreign Affairs and Trade in the latest financial year.Think of the Defence Force where a thousand people have left the Defence Force—they have voted with their feet. Look at the way in which the civilianisation project was handled where people who had worked for the Defence Force for 25 years got these form letters saying: “We have measured you as having low potential.”—in capital letters. That is an absolute and gross insult to the people in the Defence Force and the cost we have paid is having the worst morale and the highest levels of attrition in the country. So let us put our principles into practice because that has not happened in the past.The other point that I would make is that this legislation talks about having the objective of clarifying the responsibilities of chief executives to their Ministers. I want to ask the question of the next Government speaker: what about the reciprocal responsibilities of the Minister to the chief executives? Why is it that Murray McCully can blame his chief executive who cannot argue back for the total botch-up in the reorganisation of the Ministry of Foreign Affairs and Trade? That was ordered by the Government and the chief executive was hung out to dry. What about the Ministry for Primary Industries where the export of meat to China was jeopardised because the restructuring was again botched? And what do we have Nathan Guy doing? Blaming his officials. Once upon a time there was a principle of ministerial responsibility in the House. Let us get back to that. Let this Government take some responsibility. Let it put the principles of this bill into practice.Hon JOHN BANKS (ACT—Epsom):What a sad and pathetic rant for so early in the morning from the ex-leader of the Labour Party Phil Goff. I remember that the late Bill Rowling when he was turfed out of the leadership of the Labour Party never carried on like that did he colleagues? He was a good man a statesman—not like we have heard from the member for Mt Roskill.I rise to support the third readings of the State Sector Amendment Bill and supporting legislation. These bills were formerly titled the State Sector and Public Finance Reform Bill. These bills make progress towards a more innovative efficient public sector that delivers better results for New Zealanders. That is crucial for improving the services provided by the Government. I want to pay credit to my bench mate the Hon Dr Jonathan Coleman for his work on these bills and the work of the Finance and Expenditure Committee.To illustrate the need for these bills I want to highlight just one of the changes made by this legislation relating to the responsibilities of departmental chief executives. This National Party - ACT coalition Government talks about responsibilities of chief executives quite a lot in this bill. In particular the bill will make explicit the stewardship responsibilities of chief executives on behalf of the Government representing the people of New Zealand. In ordinary use a steward is someone who is responsible for managing property on behalf of someone else. In a State sector context this means on behalf of the taxpayers and the citizens of New Zealand. Although chief executives have for a long time been responsible for managing the organisational health and capability of their departments this bill makes it clear that this requires proactive planning and management of the medium and long term interest. This is to ensure departmental maintenance and the ability to effectively serve successive Governments.So this is intergenerational legislation in the best interests of value for money on behalf of the taxpayers.As Minister for Regulatory Reform I am pleased to see that the bill also extends the duty of stewardship to legislation that departments administer. Although Ministers hold the key decision rights over legislation and legislative change they are not well placed to proactively monitor and manage the performance of legislation over time and to determine whether it remains fit for purpose.The ACT Party and the people of Epsom believe that for far too long Acts and regulations have been a result of undue haste poor-quality processes and inadequate scrutiny. Our statute book gets bigger and bigger every year. Hard-pressed taxpayers who produce the wealth of New Zealand face a thicket of rules. Businesses tell the Government and told the previous one that reducing the regulatory burden is what they want. The small businesses that I represent on Broadway Newmarket and around the Epsom electorate have said that for far too long they have had the Government on their backs and in their pockets too deeply. Well I have got good news for hard-pressed taxpayers and New Zealand businesses. These bills take a small step to improving the regulatory burden on New Zealanders. They create the obligation for ongoing stewardship of existing legislation and regulatory regime. Regulation should be an asset to New Zealand providing benefits that outweigh the costs to the users and the burdens that arise but unless a department is actively and systemically monitoring the performance of the regulatory regimes it administers then it will not know whether they are performing as assets or whether they have become liabilities.I agree with—and I respectfully disagree with his views onACT’s Regulatory Reform Bill and that is an argument for another day—the late George Tanner QC a former law commissioner and Chief Parliamentary Counsel. He said: “The lack of any systematic process for post-enactment scrutiny means that the routine maintenance of some very major pieces of legislation rarely happens.”—the routine maintenance of any legislation regularly does not happen. So we paint our houses and service our cars but we do not look after the laws that affect people’s lives—more important—and this legislation addresses some of that.The explicit stewardship role in these bills in relation to legislation is an important first step towards ensuring the scrutiny and maintenance takes place. Indeed the Government has already moved to outline its expectations for departments on their stewardship responsibilities for regulation. This is not exciting stuff. It does not get the House in raptures but it is important for the end-users who are the taxpayers who fund all the activities of this Government. The Government expects that departments—that is Government departments—will be actively monitoring the regimes they administer to ensure they are performing as expected. Where this is not the case departments should be advising the Government where changes could be made to improve regulatory reform and regulatory performance.Regulatory stewardship is about ensuring that the Government departments do not have a “set and forget” mind-set when it comes to regulation. Rather departments—that is Government departments—must be actively managing the regimes they are responsible for. The ACT Party would say that departments need to get better with the pruning and thinning of their regulatory forests. Removing the deadwood is good and necessary. When these bills are passed the Government will be monitoring departments’ progress on meeting its regulatory stewardship expectations and as Minister for Regulatory Reform I will have oversight for that and will be watching it very closely.Strong regulatory stewardship will ensure that New Zealand’s regulatory regimes are best placed to support growth in the economy. That is investment and growth in jobs and we will hear a lot more about that later today. Strong stewardship is crucial toimproving the performance of the State sector. So our aim should be clear in law and it starts here today this morning in this Parliament—clearly understood frequently checked for fitness for purpose and occasionally pruned. These bills are small but meaningful steps towards our objectives and this Government this coalition National Party - ACT Government says that taxpayers know all and that it is the taxpayers we are responsible to. We are servants of the taxpayers. We must make sure that any laws passed in this Parliament represent their best interests and value for money for them. That is why of course as Minister for Regulatory Reform I support these bills.Hon DAVID CUNLIFFE (Labour—New Lynn):I acknowledge the Minister who has just resumed his seat and acknowledge his role as the Minister for Regulatory Reform. His attitude to regulation is of course akin to the person with a chainsaw who cannot see the wood for the trees and chops down both. Our view of regulation is that it is a bit like a hedge. It needs to be kept pruned but it plays an important role in setting boundaries for conduct for the benefit of the whole community.Labour supports this legislation arising from the State Sector and Public Finance Reform Bill and in the third reading it is an important time for us to sum up the reasons why we do. It is worth recalling that this is an unusual process because at the first reading of the bill Labour quite strongly opposed it. We did so for good reasons and those reasons were echoed in submissions notably those of the Public Service Association—and I acknowledge the presence in the gallery of its secretary BrendaPilott—and of the Council of Trade Unions. The strength of submissions from both was notable.This is legislation where the Government and the Opposition have entered into good-faith negotiations and made major changes to the text leading to the recognised improvement of the final product. It is an example where Parliament is doing its job at both the select committee and House levels.I am going to briefly summarise some of the key issues that were amended in the Finance and Expenditure Committee. But before I do so let me recall first the overall objectives of the legislation upon which there is now near consensus in the House. It comes down to what kind of State we want to have. Do we want to have a State that has shrunk to the point where it cannot effectively serve its citizens? No we do not. Do we want to have a State that is intrusive and where civil liberties protections and civil rights are done away with as in the thread of bills currently before this House? No we do not. Do we want a monolithic State where bureaucratic action by individual agencies fails to deliver teamwork flexibility and cost-effectiveness? No we do not. We want a State that is able to operate leanly but not meanly a State that is effective and a State that fulfils New Zealanders’ aspirations for their communities. To do that we need Government agencies to be able to cooperate together and they need to be able to work in partnership with communities and thus to delegate functions and occasionally powers where appropriate and with appropriate accountability. This legislation sets the legislative framework that allows that balance to be sought and it has been much debated much argued and much amended so that both sides of Parliament have been able to contribute to the outcome.There were a number of provisions particularly in respect of the State Sector Act component of the legislation that were abhorrent at first reading. Redundancy provisions have been improved so that State sector employees retain their redundancy entitlements unless accepting a position that is “no less favourable” than the one they currently have—no less favourable. The protection of State servants’ rights upon redundancy situations has been a bottom line for the Opposition and we have benefited greatly from the work of submissions in that area.Transition arrangements have been improved so that collective agreements and individual agreements aresunsetted equally 3 years after the legislation takes effect. We have removed the possibility that individual contracts could outlive hard-fought well-negotiated collective agreements. The idea that Government Workforce Policy Orders could trammel the good-faith bargaining rights of State servants was abhorrent. I am pleased to report to the House that the select committee has rewritten those provisions so that the orders now specifically provide for the maintenance of all existing legal and good-faith bargaining rights by employees. The orders no longer exist; they are now statements that are not binding in relation to employment matters.Conflict of interest provisions enhanced governance for delegated powers and strengthened accountability requirements in State sector financial reporting have all also been amended. Labour still has some significant concerns about aspects of the legislation but we believe that the amendments secured in the select committee with the support of unions have brokered significant enough change to mean that Labour can now and will now support the passage of this legislation.I would like to take the opportunity to speak in a little more detail about some of the substantive provisions of the legislation turning first to the State Sector Amendment Bill and the amendments to the State Sector Act. The bill strengthens the role of the State Services Commission in leading the State Service and to ensure that agencies work collaboratively as a system. The amendments broaden the commissioner’s functions to include the ability to transfer chief executives within the Public Service as part of building a collaborative culture. They extend the responsibilities of chief executives to their Ministers and how they delegate statutory functions and powers between agencies subject to safeguards which have been strengthened. They create new organisational arrangements called a departmental agency as an option for providing public services in order to provide focused specific and accountable services within a broader department. I note in passing that that is in some ways opposite to the trend that we have seen with the formation of agencies like the Ministry of Business Innovation and Employment which has collectivised so many functions into one disparate group that we have grave fears for its effectiveness.The Public Finance Amendment Bill (No 2) contains amendments to the Public Finance Act. It establishes a new type of appropriation called a multi-category appropriation which is an important innovation. It means that when cooperation is mandated between several Government agencies comprising several different votes of expenditure that financing can be collectivised into a single pool thus hard-wiring the cooperation between those agencies for the project or programme. It is a good idea in principle but in order to be proper and effective it is essential that Parliament is able to trace the money going into and out of multi-category appropriations as part of a broader set of accountabilities to ensure that all funding can be appropriately traced. I am happy to report to the House that work is ongoing in the Finance and Expenditure Committee to ensure that those accountabilities are detailed and transparent right down to the sub-output level and we are working with officials to ensure that improvements are made to the structure of Crown accounts.Amendments to the Crown Entities Act 2004 in the Crown Entities Amendment Bill amongst other things require the boards of statutory entities to ensure that they collaborate where practical and broaden the grounds for the Minister of Finance and the Minister of State Services to issue whole-of-Government directions which can be issued to large or small groups of entities. The irony is that at a time when Mighty River Power—or half of it—has been flogged off the Government is taking large parts of the State sector out of the provisions of the State-Owned Enterprises Act which provides very similar powers of direction to those that we are now introducing in this bill. Wouldsomebody please establish what the Government really wants? It seems that it wants cash even when it overrides principle. This is a bill that does contain principle and so we support it. We absolutely abhor the dilution of the Crown’s asset portfolio and the loss of strategic control over New Zealand’s energy system and that is why we are going to be introducing soon after taking power next year NZ Power a system whereby consumer interests are protected and power companies are once again brought within the control of the community as a whole.We retain a number of reservations about the legislation and in closing let me just note that we have concerns which we will be monitoring closely around redundancy provisions and around payments and bargaining. We are also concerned about aspects of the implementation of Government Workforce Policy Statements to ensure that they do not in practice trammel the rights that are being protected in principle. We are going to be monitoring closely any delegation by chief executives of their powers to ensure that accountabilities to Parliament and to the public are not diluted. And we are going to be working very closely with officials to make sure that the accountability arrangements in financial reporting are tight and transparent so that the public can get the information it deserves and is entitled to in order to ensure the proper functioning of government.In process terms let me express a degree of concern about the extensive Supplementary Order Papers to the legislation which we feel should have been introduced earlier. This concern is not sufficient to cause us to vote against the legislation. It does have Labour’s support. We look forward to working to modernise and improve the functions of the State sector.DENISE ROCHE (Green):I rise to take a call for the Greens on the bills that were formerly part of the State Sector and Public Finance Reform Bill. When we vote on this legislation today we will be voting on three bills: the State Sector Amendment Bill the Public Finance Amendment Bill (No 2) and the Crown Entities Amendment Bill. The Greens will be opposing the State Sector Amendment Bill. However we will be voting in support of the Public Finance Amendment Bill (No 2) and the Crown Entities Amendment Bill.We maintain that the changes being made to the State Sector Act erode the current conditions of State sector workers. In my previous speeches on this bill I have acknowledged that the Labour Party has made substantial changes to the original bill that are improvements on what was on offer before. Even so under the State Sector Amendment Bill workers will not get the same access to redundancy as they had before because the provisions are more restrictive. More worrying is that Public Service workers will also lose their rights around transferring to a new job when the functions of their jobs and duties have shifted to another department.Given that there has been massive restructuring in the Public Service mergers of departments commissions like the Charities Commission suddenly becoming departments and the loss of over 5000 jobs in the State sector over the last 4 years taking away the possibility for staff to have some discussion and an opportunity to transfer when their jobs are transferred as of right is a retrograde step.The public sector workforce is facing ever-increasing workloads as the Government puts the squeeze on staffing levels but this has its costs. Yesterday in the Government Administration Committee we heard from the Chief Ombudsman Dame BeverleyWakem that the Office of the Ombudsman has had an increase in demand for advice and guidance from State sector agencies. When I asked why she explained that there had been a churn of people in the Public Service a huge turnover of staff and consequently a loss of institutional knowledge and a loss of experience. She explained that even though they were not strictly charged with the work it was a better use of resources for the Office of the Ombudsman to offer advice and training about theOfficial Information Act to try to reduce the number of complaints and requests coming through the Office of the Ombudsman. And there has been a sharp increase in complaints—a 30 percent increase over the last year and more Official Information Act requests than ever before.Some of this can be credited to the fact that the Public Service is finding it hard to attract and keep skilled and knowledgable workers especially since the private sector can offer better pay and conditions. In this type of environment one would think that enabling employees to transfer if their jobs shift to another department would make sense. I remind the House that this ability to transfer in this bill applies to chief executives but not to other staff. This is hardly fair—or even consistent—and it is the reason why we will not be supporting this bill.For the Public Finance Amendment Bill (No 2) we support the intent of the bill. We do believe that in the Public Service there should be ways for departments to work across appropriations and votes so that there is access to good public services. We do support the ability for there to be joined-up thinking and a joined-up Public Service and we support the provisions in this bill that will contribute to that. We do support efforts that promote innovation in the Public Service and the efficient use of public resources. We recognise that this is what has been the driver for this bill.Certainly for those who contract with multiple departments to provide services like some in the not-for-profit sector there have been ongoing concerns for years and years about the duplication and costliness of multiple reporting and monitoring systems when there is more than one Government department involved in their provision of services. Having said that we do acknowledge that the Public Service is not moribund and it can already be innovative in its approach to the provision of services. I think I have previously mentioned the gateway programmes for youth at risk where their educational health social and welfare needs are attended to across departments.There are other examples. Last week I heard a talk by Judge Tony Fitzgerald from Auckland’s New Beginnings Court. I was one of two MPs—the other was Jacinda Ardern from Labour—who slept outside for the night to raise money forLifewise an organisation that works to end homelessness in Auckland. There were over 80 participants sleeping rough for the night. We heard about this effective and innovative system within the justice system that screens out people with low-level and persistent offending—theft and nuisance-type stuff—because if a person is homeless it is likely that they will be conducting petty crimes to get by. So they are screened and they are assessed by the New Beginnings Court and then they work with the judge and a host of other agencies to address their underlying behaviour mental health or addiction issues and their housing problems as well. They report back regularly to the New Beginnings Court until they graduate—with due ceremony I might add. The results are very very heartening. They report a remarkably low level of reoffending within 6 months after graduation.The funding for this initiative comes from a range of Government departments and the provisions in the Public Finance Amendment Bill (No 2) will make it easier for these types of initiatives to access funding. That is desperately needed for the New Beginnings Court because although it has been in operation for 2 years ongoing funding is by no means secure and maybe it is even less secure given the reduction in funding that is happening in the justice sector at the moment. So although we agree with these intentions we will be closely monitoring how the multi-category appropriations in votes remain traceable and we share that concern with the Labour Party as outlined by Mr Cunliffe.We will also be supporting the Crown Entities Amendment Bill. We do have some reservations about the shifting of statements of intent to 3-yearly or more frequently ifrequired by the Minister. We note the changes in definitions of subsidiaries that will cover partially sold-off State-owned assets. However on balance we support this bill. The State services in New Zealand deserve more than mere tinkering. We echo Sir Geoffrey Palmer’s comments that the legislation needs to be examined in closer detail—he suggests through a royal commission. In the meantime the Greens will oppose any bill that leaves public servants worse off. Thank you.PAUL FOSTER-BELL (National):I rise to take a call on the third reading of the legislation arising from the State Sector and Public Finance Reform Bill—the State Sector Amendment Bill the Public Finance Amendment Bill (No 2) and the Crown Entities Amendment Bill. I would like to start by congratulating the Minister of State Services the Hon Dr Jonathan Coleman who introduced the State Sector and Public Finance Reform Bill to the House.I want to respond to some comments made by an earlier speaker. I have to agree actually with some of the things that Mr Goff said about New Zealand having a very good Public Service. In fact our Public Service I would argue is the envy of the world. It certainly would be the envy of those Middle Eastern countries that I have spent some time in.I want to congratulate the Opposition on changing its position on this legislation to one of support for it but I do want to reject some of Mr Goff’s characterisations particularly of the foreign affairs ministry. Mr Goff was a good Minister of Foreign Affairs and Trade for New Zealand but we have to remember that that was 8 years ago. Eight weeks ago I was serving in that ministry and I have to say that public servants are working very very hard in the Ministry of Foreign Affairs and Trade. They are delivering well on the Government’s priorities. We have seen just this week free-trade agreement negotiations with Chinese-Taipei concluded. Trade is up with the Gulf States. The Government is working on opening a new mission in Africa to support our UN Security Council bid and every week every month we are making progress in that campaign to win the seat that New Zealand deserves to hold on the UN Security Council. I would utterly reject the characterisation of a demoralised ministry that is not producing results because that is not correct.These proposed changes to the State Sector Act strengthen the State Services Commissioner’s role in leading the State sector. They also extend chief executives’ responsibilities to considering the collective interests of the entire Government and longer-term sustainability rather than focusing on single Government departments and agencies. This is a very positive measure as it will help I think reduce the degree of silo-isation that currently exists in the State sector and it will ensure that the State Sector Act is modern and generally fit for purpose.I also want to reject a suggestion made by the previous Green speaker Denise Roche that I think is utterly wrong and that is claiming that provisions for public servants are being eroded. A key provision of the State Sector Amendment Bill is ensuring that in cases of redundancy where the public servant moves on the next working day to a job that is comparable in its duties and responsibilities public servants do not receive redundancy. This is not actually a reduction in the terms and conditions of that public servant because they will transition into that new role and carry on with those terms and conditions.I have absolutely no hesitation in commending this legislation to the House.ANDREW WILLIAMS (NZ First):I take a call on behalf of New Zealand First on this split legislation the State Sector Amendment Bill which we are opposing; the Public Finance Amendment Bill (No 2) which we are supporting; and the Crown Entities Amendment Bill which we are also supporting.I will speak mainly on the State Sector Amendment Bill which New Zealand First is opposing. This very large complex omnibus bill purports to be about providing the legislative basis for Better Public Services and strengthening the legislative framework. Yes there are lots and lots of fine words and empty phrases of more collaboration among Government departments sharing functions and services sharing the purchasing of goods and services logistics more efficient and effective systems and greater financial and reporting flexibility. And on and on goes the rhetoric. These are the same old buzz words—“efficiency” “simplify” “collaborate” “logistics” “flexibility” “streamline” and “improved governance”—that we hear time and time again but actually where the rubber hits the road it really is not happening.What this bill does not acknowledge honestly is that the public services in this country will continue to shrink. The fabric of our public sector will continue to fray. Is it not interesting that at a time when this Government wants to decimate the Public Service on the other hand in Christchurch a mainstay of the rebuild of the central business district is based on moving public servants into the centre of Christchurch and rebuilding large buildings there to be taken up by Government departments. This Government says that the future of the Christchurch central business district is very much anchored on public servants and public services being based in the central business district. Yet here in Wellington where we have a Prime Minister who says that the capital of this country is a dying city the Government is all about decimating the Public Service and reducing it to a shadow of its former great self.This same thinking or should I say lack of thinking led to the likes of the Pike River coalmine disaster with the reduction in the number of mines inspectors. It led to theRena ship disaster where the work simply was not being done to ensure that the legislation was through to make sure that New Zealand was fully covered in a situation like that. It led to a situation where an emergency vessel that was suggested never came to be and because that was not carried out we did not have the resources here and the nearest resource to react to such a situation was in Singapore. It led to the situation of the leaky homes where again the Government took its eye off the ball and for many many years allowed this country to get into a situation of a decade of substandard building of homes schools hospitals and the like. Now this National Government having changed the rules back in the 1990s and having allowed leaky buildings to be built is having to spend the best part of $30 billion of New Zealanders’ money to fix up the problems that were created back in the 1990s under a National Government.It led also to biosecurity breaches like thePsa infestation of kiwifruit where again the Government dropped the ball and because there was insufficient oversight that occurred. It led to border control by our customs officers and immigration officers seeing some serious breaches. This is continually under threat and if the Public Service continues to be reduced our border security and our customs and immigration services will be severely curtailed. We have a situation now under this Government that visa-free access is being allowed for questionable people coming in on China Southern Airlines to fly in jump in the first available limo go straight to Skycity—which is part of the rest of its sleazy deals—and be there for a number of days virtually without any scrutiny.Again you would wonder whether this country is really being governed and really being taken care of. Is there a Government structure? Does the Government really want to ensure that we do have civil servants and a Public Service that can actually ensure the security and the well-being of this sovereign country?These issues are not going to be resolved by the State Sector Amendment Bill. The short-term ideologically based thinking that damaged New Zealand is not countered by this bill. This bill is not the solution for anything; rather it entrenches current problems.This bill will not stop the erosion and undermining of the public sector—a public sector that New Zealand has always been proud of; a public sector that has helped build the fabric and the spine of this country; a public sector that was responsible for creating our dams our energy companies our State-owned enterprises; a public sector that helped build the very infrastructure that keeps this country ticking over. I am talking about the roading the railways the airlines the military the defence forces and the Civil Service that keeps the basis and the integrity of this country ticking over.If it was all left to private enterprises—if it was all left to the Government’s mates to run as this National Government would like to see—we would indeed be in a very sad state in this country. This country has always had a very strong sound Public Service sector. We have been a welfare State for the best part of the last century. We have been revered around the world for what our State services have provided to a small country which when I was young was only 2 million people but is now 4.5 million people during which time for such a small population for a relatively small country we were able to punch heavily above our weight because we did have the State structure to support that for a very small population.This bill will not stop that erosion. Where is the evidence that this bill will bring more effective public services? Where is the evidence that this bill will lead to better-quality public services and innovative ideas in the Public Service? Why is it necessary to strengthen the State Services Commissioner’s role in leading the State Services Commission? Why do we need a new organisational arrangement called departmental agencies? Where is the justification for this increasing complexity?This bill creates an illusion of progress and improvement but the evidence to support it is sadly missing. There is no clear and compelling case that this bill takes us to better and more cost-effective public services. No we do not want a bloated Public Service and we do not want a bloated public sector but we do not want a hollowed-out one either and that is what this National Government would want to see—a hollowed-out public sector that can no longer deliver the requirements to New Zealand. New Zealand First will not be supporting the State Sector Amendment Bill.Dr PAUL HUTCHISON (National—Hunua):It is a pleasure to take a call on the legislation arising from the State Sector and Public Finance Reform Bill. What a dour sorry diatribe from Mr Williams in New Zealand First. How sad it is that they are not supporting this very enlightened legislation because after all it is 100 years of an excellent Public Service in New Zealand that we are celebrating. Indeed a country can be judged on the integrity efficiency and effectiveness of its Public Service and here the National Government in true leadership form is once again ensuring that we have a State sector that is modern flexible and generally fit for purpose.I was delighted to see in the amendments to the Crown Entities Act 2004 that collaboration—Rt Hon Winston Peters: Four hours to catch a guy fromŌpōtiki—how do you explain that?Dr PAUL HUTCHISON: I do not know what he is talking about. It seems utterly irrelevant like New Zealand First’s contribution to this debate. The last thing that I wanted to mention was the collaboration between the various public entities. Indeed that is vital as we see the various whole-of-Government approaches to matters such as the White Paper for Vulnerable Children. This is excellent legislation and I indeed support it.Hon DAVID PARKER (Labour):As David Cunliffe has already indicated to the House the Labour Party is supporting these three bills arising from the State Sector and Public Finance Reform Bill.Andrew Williams: Why?Hon DAVID PARKER: Because we think that it is important in respect of cornerstone legislation that governs the State sector and desirable that at least the two major parties can reach agreement. It is largely housekeeping legislation and it is important that we have stability in our State sector.Indeed I thought it was an appropriate time to have a bit of a reflection on history. One of the Acts that this legislation amends is a 1988 Act that was passed by the Lange Government under the ministerial direction of the Hon Stan Rodger. He lost his membership in the Public Service Association (PSA) for a while thereafter so it was not all roses for him. But it is somewhat interesting to reflect on the fact that only 30 years ago we had far less sophisticated public finances and a far less sophisticated State sector than we now have. Indeed it was not until that Government reformed the reporting of accounting information from Government departments that we moved to true accrual accounting across the Government. Until then there was dishonesty in the Government accounts of the day which could report things on a cash basis and shuffle things from year to year. That was one of the ways in which the Muldoon Government was able to hide the fact that New Zealand’s Government finances were in such a parlous state that Government debt was heading up towards 80 percent of GDP. An incredible one dollar in five of tax that was being collected was being spent on interest. It got close to one dollar in four before subsequent Governments be they National-led or Labour-led became fiscally responsible.Indeed I think it is fair to say that since that time—the 1980s—and the reforms that were around State sector performance and public finance reporting and management we have not had a fiscally irresponsible Government. We have not—it is true. The then Labour Government got the finances under control. The following National Government reduced Government debt. The following Labour Government led by Helen Clark with the Hon Michael Cullen—Sir Michael Cullen now—reduced gross Government debt from 38 percent of GDP to 18 percent of GDP and reduced net Government debt to zero.I am going to dwell on that point a little bit because it is relevant to the Public Finance Amendment Bill (No 2). We hear time and again the diatribe from members on the other side of the House asserting that they inherited a decade of deficits and that the prior Government was fiscally irresponsible. It is not true. Indeed the Budget surpluses that were run by the last Labour Government in one year was 6 percent of GDP and in another couple of years were 5 percent of GDP or thereabouts. We ran nine surpluses in a row and that enabled us to reduce debt in the way that I have previously described. Every one of those Budget surpluses was opposed by the National Party whether it was John Key as its finance spokesperson Don Brash in charge John Key in charge or Bill English in charge. Every one of them was opposed to those surpluses.I remember sitting in this House when the Opposition National Party members as they were then were shouting out that the Government was overtaxing and that it should have been refunding those taxes and having smaller surpluses. And of course if New Zealand had made that mistake if in the time of plenty we had not run surpluses and reduced Government debt the circumstance of New Zealand in the last 5 years since the recession and the global financial crisis would have been so much more difficult to cope with. The Government—and it is now a National Government—would have had to cope with not just declining revenues but high levels of Government debt relative to where it is. As a consequence it would have had far more difficult decisions as to whether it needed to be more austere in its Government spending than it has had to be in order to get Government debt under control.As it is New Zealand has been able to run one of the least austere responses in the Western World to the global financial crisis. As a consequence we have not forced oureconomy into the deflationary spiral that has been experienced in so many other countries around the world. [Interruption ] That is quite right. A major part of that has been the fact that the last Labour Government prudently managed the Government’s finances in a way that reduced Government debt despite the opposition of the then National Opposition.On that front it is interesting that the Public Finance Amendment Bill (No 2)—these things are important but leadership is more important. We again hear the Government accusing the previous Labour Government of financial mismanagement. This week the Minister of Finance had the audacity to allege in respect of mistakes in Budget reporting now alleged to have been made by National around the funding of the Solid Energy bailout that National was cleaning up the mess made by Labour. On questioning yesterday in the House he was forced to admit that at the time National took over that company had $15 million of debt or thereabouts—in the low tens of millions of dollars of debt—and by the time it was in the crap 3 or 4 years later it had close to $300 million of debt because of the ridiculous expansion plans into coal and lignite and other foolish measures that were promoted by the Government members including the Hon Gerry Brownlee at the same time that they told the State-owned enterprise to take on more debt and pay higher dividends. In the end of course it all turned to custard for them.I want to turn to a couple of particular measures in the legislation that have been changed in its course. I am talking now in respect of the State Sector Amendment Bill. As I understand it all parties agree across the House that where an employee in the State sector stops a job one day and gets an identical job the next day close to the same place and on the same pay and conditions then they should not be able to pick up redundancy from the old job and move into the new job because they have not effectively suffered a detriment that would justify that.This legislation when it came to the first reading in the House went a lot further than that. It effectively meant that people could have faced the risk that even though they had redundancy and other provisions in their employment agreement or employment contract whether it was a collective or an individual agreement those provisions would not kick in despite the fact that they would be forced to move to a job that they did not want that could have been distant physically and that could have been quite different from the job that they had previously had.We in the Labour Party thought that was wrong. We agreed with the PSA that that was just unfair. It was not the way in which a private sector employee would be dealt with in respect of similar provisions in their contracts if they were moving from one job to another and we did not think it should apply in the State sector either. So we advocated hard as did lots of other people behind the scenes and the Government moved on that and now we have got a provision in that respect that we can live with. That is one of the reasons why we are able to now support the bill.I want to say something about the directives that could originally have been given under the legislation as it came to the Finance and Expenditure Committee. They were said to be orders; they sounded like statutory regulations even though the jurisdiction of the Regulations Review Committee was ousted. The wording of the provision of the legislation was so broad that in our opinion the Government could have effectively imposed a wage freeze across the public sector through a piece of subsidiary legislation.Some of us are old enough to remember that it was a prior National Government that did that under Muldoon imposing a wage and price freeze on New Zealand that was unfair did not work and made worse the problems that there were then in the economy. So we again fought that and said that we would not support that. That has been changed. The wording has been changed. The breadth of the directives has been changed to makeit clear that they cannot ride across good-faith negotiations and therefore you cannot have a directive across Government that is tantamount to a wage freeze. That provision in its modified form finds our support too.One final point: these changes are all well and good but I do not accept the proposition that you cannot have whole-of-Government cooperation and get out of silos without these changes to the law. These changes to the law might make it a little easier but what you need is leadership. You need leadership at a ministerial level at a departmental level at a State services level. If you get that sort of leadership you can achieve change across the Public Service. It is not about—Rt Hon Winston Peters: What about foreign affairs?Hon DAVID PARKER: What about foreign affairs?Rt Hon Winston Peters: They’veemacerated foreign affairs.Hon DAVID PARKER: Oh well they macerated—eviscerated—[Interruption ] Well it was a mix of two words. I do not have time to talk about the Ministry of Foreign Affairs; perhaps the honourable member can take a call.JOHN HAYES (National—Wairarapa):This legislation arising from the State Sector and Public Finance Reform Bill is helping to improve the performance of the Government sector.Rt Hon Winston Peters: At foreign affairs?JOHN HAYES: And why is that important Mr Peters? Why is that important? I will tell you why it is important. It is because the public sector makes up about a quarter of the real economy. In the last Budget we set out on a track of improving Government finances and returning to surplus by 2014-15. This legislation is going to help us to do it because it will underpin a growing economy and a better-performing public sector. That is something that you would not know about Mr Peters because what you did was expand the size of the public sector without limit and you are putting the burden on people in my electorate to pay the tax to cover that.We need to get our economy in order. We need to get our public sector legislation in good order because we want a buffer to deal with the next financial crisis or natural disaster when it comes along. This legislation—to address the comments of the last speaker David Parker—will allow net public debt to peak at about 28.7 percent of GDP in 2014 before falling. It is very good legislation. It is the sort of legislation that enables wonderful services to be provided in our community and I support this legislation absolutely. Thank you.Dr DAVID CLARK (Labour—Dunedin North):I rise to support this legislation arising from the State Sector and Public Finance Reform Bill. The Labour Party will be supporting this legislation through the House. We do have some reservations. We certainly opposed the original bill at its first reading but changes forced at the Finance and Expenditure Committee by the State sector unions and by Labour have averted disaster for Government workers who were set to lose their redundancy entitlements and employment rights under the previous version of the bill. As I say Labour members and members of the Public Service Association (PSA) and the Council of Trade Unions are satisfied now with what has been achieved so we are now much more comfortable with this legislation.It was heavily amended in the select committee and the work of the committee is important. So I congratulate the members who worked on the legislation itself. Those negotiations have been fruitful and it is important that this kind of legislation is able to succeed Governments—go from one Government to another—and preserve stability in the sector so that people who work in the sector have some kind of surety around their employment provisions. That leads to a more settled sector and gives the people who work there the ability to focus on the job at hand rather than worrying about whethertheir conditions are going to be axed as was proposed by the Government in the first version of the bill. So my congratulations go particularly to the PSA and the Council of Trade Unions on their involvement and on what has been achieved through the select committee process.The previous Labour member who spoke David Parker drew attention to the issue of leadership and said that if you do not have good leadership by Ministers in policy terms unfortunately this legislation will achieve nothing. This legislation is there to support good policy and the implementation of good policy. Indeed that is the role of the State sector. It is there to challenge Ministers to provide free and frank advice and also to support the implementation of policy that is put forward by Ministers. We over this side of the House are not confident that this will lead to great policy by the current Government. If it has the wrong policies or no policy or no plan at all no amount of fine-tuning as to how departments deliver that absence of policy or that bad policy will help create a better New Zealand.This Government certainly has a poor record in that regard. John Key is on record as stating that he thinks that Kiwis are paying about the right amount for power. The current policy that is in place is being fine-tuned by this Government but if it is the wrong policy no amount of fine-tuning will fix it. Labour on the other hand has put forward a policy that would see the sector reformed and that would see the creation of an entity called NZ Power which would make sure that Kiwi power bills for the average family went down by around $300 a year and would put a lid on future price rises.This kind of policy could be implemented more effectively with this legislation which ensures that the agencies work together in a productive way. It strengthens the role of the State Services Commissioner in ensuring that Government agencies work collaboratively as a system. In fact for the first time the commissioner’s role is set out in legislation. In some ways it is a wonder that that has never happened before. Certainly across the sector it has been asked by many agencies what exactly the role of the State Services Commission is and this is now laying it out in a way that shows the kinds of levers that the commission has to ensure that there are clear lines of accountability within the sector that there is transparency in reporting that there are sanctions and rewards—and certainly the commissioner is responsible for making sure that the correct sanctions and rewards are in place for leaders of departments—that the appropriate policy-provider splits are in place and that other public sector management principles are observed. This legislation makes sure that the State Service is more effective that there are the right safeguards in place and that the chief executives have the power to delegate statutory functions as appropriate.The new organisational arrangement is also covered in the legislation. The departmental agency as a new organisation will be interesting to watch. We will see how that plays out and whether that delivers something more than what we currently have in place.But to return to the point there is no way that this legislation will create good policy. It cannot create good policy; that is for Governments to do. That is for them to campaign on. That is for them to put out in the open and to have tested. The public may be convinced that there are advantages in certain policies. They will elect a Government. This legislation will give the opportunity for that Government to then implement stuff effectively.The leadership of this Government has been ineffectual in for example getting the economy back on track. We know that this Government here present in the Chamber—and Mr Lotu-Iiga is concerned about it as much as I am I think going by the way he is shaking his head at the record of this Government—has the worst economic record ofany Government in the last 50 years and no amount of legislation like this can correct for that. We know that historically in the last 50 years the economy has grown much faster under Labour Governments than it has under National Governments. It has grown at a rate of 3.7 percent on average under Labour Governments and only 2.9 percent under National Governments in the last 50 years. So Labour Governments by nearly a percentage point more grow the economy faster than National Governments.But this particular National Government has the worst of any record. It is actually dragging those averages down and that is why I see those backbenchers there looking down shaking their heads. They are embarrassed and so they should be. I would be if I was in their position too. I guess that is why we see Mr Joyce and Ms Collins at the front there already jostling for position as to future leadership. Maybe they think they have a plan—certainly it could not be any less of a plan than is currently in place. This Government seems content to let things ride to let this situation continue and to see New Zealanders paying more than they ought to for power. It will not intervene.We know that housing for example is another area of policy where we see Kiwis no longer able to afford to own their own homes and that is affecting a great number of Kiwi families. Labour has said that it will implement an affordable housing policy calledKiwiBuild. This kind of legislation will enable us to implement such a policy more effectively when in Government but this Government which has no plan for housing and is content to see housing prices skyrocket out of control will not fix anything with this legislation here. This will not help it form a plan—no by no means—and we know that this Government has no plan for the economy.In the Finance and Expenditure Committee Minister Joyce was not across his portfolio when he came to speak to the select committee on economic development. He had not got his supplementary estimates questions in on time. He was a Minister who wanted to delay that. I asked that the committee postpone the hearing of evidence because Mr Joyce was not across his portfolios and the National members on the committee blocked that. That is on record. In fact I moved a resolution at that committee that said that we postpone the meeting until such time as the Minister is across his portfolios and so scared were the members of the committee that they agreed effectively—John Hayes: Not true.Dr DAVID CLARK: No no it is on record Mr Hayes and we will look forward to hearing what you have to say that would contradict this when it is down in black and white. The members of the committee for National were not prepared to postpone the meeting until such time as the Minister was across his portfolios. I think they did not believe he ever would be and that is the issue.This Government is filled with members who are not across their portfolios who do not have an effective plan for growing the economy and so ordinary New Zealanders are suffering as median wages go down. As costs go up as New Zealanders out of work cannot find a job those people who want to work hard to improve the lot of their families are faced with a Government that is interested in only the big end of town that is seeing small business suffer and that is seeing ordinary Kiwi families take home effectively less pay because the work is not there. The conditions are not right because jobs are not there. This economy is struggling with a Government that has no leadership no plan and no way of looking out for the little guy.It is a Government that is concerned about only the big end of town and this legislation will not help that. This legislation will not form a plan for the Government; it will only help to deliver on its promises a Government that actually has a plan. This Government will not be saved by this legislation.That said it is good legislation. We will be supporting it because it will enable future Governments that actually have a plan to make positive change in this House for the betterment of New Zealanders so that ordinary Kiwis can finally get a chance to get ahead in an economy that grows. That would be a Labour Government and hopefully it will come sooner rather than later.LOUISE UPSTON (National—Taupō):I commend this legislation to the House.A party vote was called for on the questionThat the State Sector Amendment Bill be now read a third time.Ayes95New Zealand National 59; New Zealand Labour 33; ACT New Zealand 1; Independents: Dunne Horan.Noes22Green Party 11; New Zealand First 7;Māori Party 3; Mana 1.Bill read a third time.Public Finance Amendment Bill (No 2) read a third time.Crown Entities Amendment Bill read a third time.