New Zealand Trade and Enterprise Bill

I want to raise a particular concern with regard to clause 79. I want to tell the Committee about a matter that I do not have absolute confirmation of, but I would like the Minister in the chair, the Hon Lianne Dalziel, to comment on it. I am sure the Minister of Finance will also want to take an interest in it. It is an issue around no compensation for technical redundancies. That is fair enough, but in this Parliament we are aware that there is a redundancy, and it is not a technical one. An employee has been made redundant, and we understand that his redundancy payout is in the vicinity of $160,000—a golden handshake. The Minister would be well advised to take a call either to confirm that, or to put us straight. Now that it is on the public record, there will no doubt be some interest in the matter of whether a person who has retired—

💬 Rt Hon Winston Peters: That can’t be, because they were going to stop them.

That is the very point. Mr Winston Peters is exactly right. The Labour Government said there would be no more golden handshakes—

💬 Hon Tony Ryall: Read my lips!

Yes, read my lips.

💬 Rt Hon Winston Peters: It was 4 years ago.

Yes, 4 years ago it was stated that there would be no payouts at all. It might be that this rumour is a rumour. If it is, I genuinely ask the Minister to put us right, then we can move on to other parts of the bill. But this rumour started running rife about 2 minutes ago, and it will carry on running until it is corrected.

💬 Rt Hon Winston Peters: I bet she won’t. I bet the member any money he wants.

I am not sure I would take that bet.

💬 Rt Hon Winston Peters: I will!

The member might. If the rumour is incorrect, I ask the Minister to tell us, and we can move on to other parts. The public has a right to know whether it is correct. We are talking about hard-earned taxpayers’ dollars.

💬 Hon Member: How much was it?

It is rumoured to be $160,000 to walk away.

💬 Hon Ken Shirley: Who got that?

It is rumoured that the chief executive of Industry New Zealand got it.

💬 Rt Hon Winston Peters: Four years ago?

No, not 4 years ago, when the Government promised there would be none; not even 3 years ago—

💬 Hon Ken Shirley: Three months ago?

I am told that it was within the last month or two. It is not a redundancy; it is a golden handshake. I want the Minister to correct me if I am wrong. If I am wrong, I will accept that, and we can then move on. However, if I am not wrong, then the Minister needs to stand up to explain why the Government has gone back on its commitment to no more golden handshakes.

The CHAIRPERSON (Hon Clem Simich): Can the member explain to me how what he has said is relevant to the wording of this clause.

I am talking about technical redundancies.

💬 Hon Tony Ryall: The dissolution of former agencies.

Yes, absolutely. This is the whole matter of dissolution. It is all about continuity of employment, final reports and accounts.

💬 Clayton Cosgrove: Help him out, Tony!

That is why we have colleagues on this side of the House who are not too proud to help each other out; nor are we too proud to accept the advice of our colleagues. I am very grateful to the Hon Tony Ryall for pointing out the heading “Dissolution of former agencies”.

What I and the other members on this side of Chamber are worried about—and I know that New Zealand First and ACT members join with me—is whether this money is being properly spent.

💬 Hon Tony Ryall: Or is he going to get a job in the Prime Minister’s office?

Well, there we go! Is that possible? Perhaps the Minister could answer that. Maybe there will be an offer of a part-time job in the Prime Minister’s office, as well. [Interruption] Well, it has happened before. In fact, I can think of two or three occasions. So I say that we need to know that fact; otherwise, it could impinge on the whole of this bill and put a taint on this legislation. I say to the Minister in charge of this bill—not the Minister in the chair, Lianne Dalziel, but the Minister in charge of the bill, Mr Anderton: “Here we go again!” He is an absolute farce of a Minister, and he should not be here. He is spending $160,000 out of his $211 million. Judging by the way he gives money away, it is a wonder that he did not give the whole lot away. He has given out $160,000 with no accountability, and that situation needs to be fixed.

I am very pleased to be able to take part in this debate on Part 3, “Miscellaneous provisions”, which is headed “Dissolution of former agencies”. As a result of the passing of this legislation, there will no longer be an organisation called Industry New Zealand. What this part provides for is that those employees from Industry New Zealand who are becoming amalgamated with Trade New Zealand do not qualify for redundancy. But there is one exception, and it is our responsibility as members of Parliament and guardians of the taxpayers’ purse to ask this question of the Government: how much does Neil McKay get as a payout for termination of his contract? How much, I ask the Minister, Lianne Dalziel, will the chief executive get because this Government has curtailed his contract? There is a two-word term for what happens when one gives a chief executive a cheque and a wave. It is called a golden handshake, and this Minister—

The CHAIRPERSON (Hon Clem Simich): Is the member describing a technical redundancy?

What I am doing is asking why this clause does not cover the chief executive of Industry New Zealand. That means that he will have to be paid out of his contract. How much has the Government agreed to give him in a golden handshake for the closure of Industry New Zealand? That is the Minister who stood on platforms 4 years ago and said she would be part of a team that would stop those golden handshakes, and she has not.

Clause 76, “Transfer of employees”, clause 77, “Terms and conditions of employment for transferred employee”, and clause 78, “Continuity of employment”, do not appear to address the issue of the chief executive. Where is the money? How much is the money? We want to know. If this Government were honouring its commitment to no golden handshakes, surely clause 79, “No compensation for technical redundancy”, and clause 76, would cover the chief executive, but they do not. The reason we want to know is that there may be proceedings against Industry New Zealand. Is Mr McKay taking any legal action against Industry New Zealand? If he is, I draw members’ attention to clause 82, “Proceedings of former agency”. The new agency set up by this bill will inherit any Employment Court action taken by any officer of Industry New Zealand. Will the Minister take a call—

💬 Rt Hon Winston Peters: No, she won’t.

Mr Peters says she will not take a call. Will Margaret Wilson take a call? Will any of the Ministers, who promised that there would be no more golden handshakes, get up tell us how much cash the chief executive of Industry New Zealand is getting as he walks away as a result of this bill? Are there any Employment Court proceedings pending, or expected, or under way, that will be caught by clause 82 of this bill? This Parliament and the public have a right to know, because this Government set the benchmark. It said there would be no more golden handshakes.

We also want to know whether a job is being offered in the Prime Minister’s office, or any other Minister’s office, to give that former chief executive some sort of de facto golden handshake. When we look at the provision for proceedings in clause 82, and the fact that no employee of Industry New Zealand or Trade New Zealand can claim technical redundancy, and the fact that every employee has a right of transfer—

💬 Rt Hon Winston Peters: I raise a point of order, Mr Chairperson. During the last two speeches, but particularly during the speech being made by Mr Ryall, you have been at pains to point out by sign language that he should come within greater constraints in the debate. I understand that to mean that you think that maybe he has dealt at sufficient length with the issue he has raised. My real point is that there is a requirement for a Minister to be in the chair. In this case, the Minister has had her head around the Speaker’s podium for most of the time that Mr Ryall has been on his feet.

The second thing is that if a Minister refuses to address the questions being asked by members of Parliament—questions that go to the core of one significant part of this bill—then maybe you should allow a wider and longer extension of the debate.

The CHAIRPERSON (Hon Clem Simich): I thank the member for that. It is entirely up to the member, or the Minister, as to whether they wish to take a call.

I am much obliged to the member for Tauranga for his intervention. I think it is worth pointing out that this clause is all about the transfer of staff to the new organisation. It is perfectly legitimate for Parliament to ask how much the chief executive is getting as his payout, because he is not being transferred. How much cash has this Government given him?

I would like to pursue the issue that has been under debate, and for which we have not had answers. As I address Part 3, I refer the Committee, in particular, to clause 79, “No compensation for technical redundancy”. That clause states: “A transferred employee is not entitled to receive any payment or any other benefit solely on the ground that—(a) the position held by the person in a former agency”—that is, in either Trade New Zealand or Industry New Zealand—“has ceased to exist; or (b) the person has ceased (as a result of the transfer to NZTE) to be an employee of a former agency.” What is widely understood is that one of the key reasons that the Government is doing this great merger is that it was totally exasperated by Neil McKay’s running of Industry New Zealand.

ACT opposed the establishment of Industry New Zealand. Its role is not the role of Governments. It is philosophically wrong. It was the dreamchild of Jim Anderton.

💬 Hon Maurice Williamson: Who?

Jim Anderton. He rushed around the country with a chequebook, saying: “I’m from the Government. Boy, have I got a deal for you!”

💬 Rt Hon Winston Peters: What party?

The “JAPCO” party—the “Jim Anderton Progressive Coalition”. That is the name of the party, as I understand it. He rushed around the country promising all sorts of benevolence from the Government to industry, and all we got were things like Sovereign Yachts.

My point is this: Mr McKay, as I understood it, actually left in March. This bill has been on the Order Paper for some time, so the Government did a little deal with Mr McKay. To get round it, it had to restructure and take his job out of existence. That is what it did way back when, and what we have before the Committee tonight is just the aftermath of that.

💬 Rt Hon Winston Peters: How much?

That is the very question we should all be asking: how much was that golden handshake? The figure of $160,000 has been mentioned. I think the New Zealand public has a right to know. This Government campaigned on the principle that there would be no more golden handshakes.

It went up and down the country saying: “No more golden handshakes.” That lot is very sneaky. I doubt whether the Minister in the chair would know, but I would like to ask her why the Warehouse got $100,000.

💬 Rt Hon Winston Peters: They’re broke.

The battlers of New Zealand—those poor taxpayers—had to pay extra tax so that Jim Anderton and Industry New Zealand could roll up to the Warehouse and say: “Would you like a cheque for $100,000?”. We know that “everyone gets a bargain”, but it did not believe the bargain it was getting.

💬 John Carter: Except the taxpayers.

The member is right; the taxpayer missed out.

Who else got the big fat cheque? EDS (New Zealand) Ltd did—a multinational corporate, probably as big as the New Zealand economy. Jim Anderton and Industry New Zealand flew all around the country, pulled out the chequebook and wrote a cheque for $1.5 million of taxpayers’ money. The battlers of New Zealand—small businesses being overtaxed—pay tax—

The CHAIRPERSON (Hon Clem Simich): It would be helpful if the member could explain how what he is saying is relevant to Part 3.

Indeed, I am still on clause 79. I would like to have an opportunity later in this debate to address clause 82. However, clause 79 goes to the root of this issue. The bill deals with all the rest of the staff, and the key issue is what happened to Neil McKay. He is not covered by clause 79. He went prior to this legislation being passed. What was the little deal made in secret on the eighth or ninth floor of the Beehive? What did they sign up to? Was it $160,000? That is what is being rumoured around town, and I have heard it in the debating chamber tonight. It is alleged that Neil McKay was paid $160,000, essentially to go quietly. Under clause 79 of this bill, he would not have been entitled to that, because his position had been totally restructured, but it is alleged that prior to that the Government wanted a tidy wee number. It said that there would not be a job for him because it was putting the two organisations together, asked him to go, and paid $160,000 to buy him off.

I want to focus my contribution on clauses 76 and 77. It takes skill and experience to merge organisations. It is not something where one wakes up and thinks that today one is going to merge an organisation. What one needs to do is call on people with expertise and experience. If one is to determine which staff members will be transferred to the new entity, one will need to know on what basis one will be doing that. It occurs to me that if two small bureaucracies were thrown together we would get one big bureaucracy. When one is merging organisations, one needs to take the best parts of those organisations—the ones that have synergies—and merge those together.

I hear a couple of members yelling from the other side of the Chamber. I know that the tough part is when one says that some members of those organisations will not transfer to the new one, because they are just not needed. It is tough, because those people have families. But if one believes that what one is doing is the right thing, then that is the action one needs to take.

What should follow before people are transferred across is that one should look at what economies of scale will flow from the merged organisations. There should be less management, fewer staff, fewer compliance costs, and a better focus on core business. Before that determination is made, one needs to do some sort of cost-benefit analysis. I know that when members of the select committee sought answers about whether a cost-benefit analysis had been done they could not get cogent answers, so they asked the Minister whether he had done a cost-benefit analysis. He said something vague along the lines that that work is still being done, which implies that he had not done a cost-benefit analysis before he started to merge the two organisations.

How does one merge multimillion-dollar organisations and know that one is doing the best by the New Zealand public, if one has not done that type of basic work? In fact, the Minister said that the work was being done, and economies of scale would follow. My question is: how does he know? One actually has to have the experience in order to do that. Many of those employees are well paid. Surely, one has to be clear before one determines the terms and conditions as set out in clause 77 that employees must have a very clear understanding of what it is they will be doing. I picked up an article by a spokeswoman from Industry New Zealand that stated that Industry New Zealand was a type of dating agency that would put businesses together so that it could help them work their way through the bureaucracy of government.

💬 Hon Tony Ryall: Jim Anderton is a sort of earlier Charlotte Dawson or something, isn’t he?

Charlotte Dawson - Jim Anderton? Beggar the thought! She should be saying that Industry New Zealand will advise businesses how not to get engaged in bureaucracy, because its job is really to help business diminish bureaucracy, rather than engage in it. Someone needs to tell that spokeswoman that her job is to help business, not just build up compliance costs. The Manufacturers Federation does not want this. It was not consulted. When employer bodies were asked whether they had been consulted by Mr Anderton they said no, they did not know what was needed and they did not know what types of employees they needed. They would have expected that that sort of work would have been done first.

Our suspicion has been confirmed in Part 3. When I was debating the title in Part 1, we were speculating as to why the Labour Government wanted to do away with Industry New Zealand and Trade New Zealand in this bill—even though the National Party supports that. We believe in cutting down bureaucracy, so we support that. However, I think that Industry New Zealand was causing a lot of embarrassment for the Minister, the Hon Jim Anderton. So this is a big ploy. Instead of cutting down bureaucracy, I believe that the Government restructured the whole department to get rid of a chief executive. When I look at clause 78, “Continuity of Employment”, it looks like everybody else in Industry New Zealand and Trade New Zealand got employment, apart from one, Neil McKay. He did not get continuity of employment.

If we look at last year’s financial report of Industry New Zealand, we see that the top-paid employee in Industry New Zealand was getting $200,000 to $210,000 a year. That was Neil McKay. For Mr McKay to accept that he no longer had continuity of employment under clause 78, one would have to speculate how much—and I ask Maurice Williamson, how much he thinks he would have been paid out.

💬 Hon Maurice Williamson: $120,000.

The Hon Maurice Williamson is getting modest. I reckon that an employee who was earning $200,000 a year—

💬 John Carter: How much do you reckon?

I reckon he would probably get 2 years’ severance pay. We are talking about in the vicinity of $400,000. We want the Minister to take a call to put our minds at ease that this amount has not been paid out. How much did Mr McKay get for agreeing not to compete for the chief executive position in this new enterprise called New Zealand Trade and Enterprise? It is very unsatisfactory for the Minister Lianne Dalziel to sit there and not answer a very serious question that has been raised by members on this side of the Chamber. We want to know whether a massive restructuring exercise was carried out because the chief executive Mr McKay, previously of Industry New Zealand, had been giving away those grants that were embarrassing to the Hon Jim Anderton—to Sovereign Yachts, the Warehouse, etc.

💬 Opposition Member: EDS.

EDS, an international company, $1.5 million! Guess how many heart operations that could have funded! It could have helped people on the waiting lists, and helped the poor woman from Nelson who could not get cancer treatment. We want to know how much a former employee Mr McKay, who under clause 78 of this bill could not enjoy continuity of employment, was paid out. We speculate that it was 2 years’ annual salary, which is around $400,000, and I think the Minister should take a call to confirm or deny that statement.

Part 3 raises more questions. They said that nobody was going to suffer, and there would be no compensation for technical redundancies, yet we did not get any comfort, because nobody would tell us what happened to the chief executive of Industry New Zealand.

I move, That the question be now put.

I appreciate the opportunity to take a further call. I thank you for this call because I am getting more and more concerned about this issue. I am getting concerned because the Minister Lianne Dalziel sits in the chair. She has been discussing this matter with her officials for the last 30 to 35 minutes, taking advice from the officials as to whether Neil McKay got a golden handshake, and she will not take a call. Indeed, what is really concerning me and will be concerning the listeners and the taxpayers of this country, is that now she is sitting in the chair, laughing and joking as though it does not matter, as though it is not an issue of spending taxpayers’ money.

I say to the Minister in the chair that this is a serious issue. People in this country should not be able to walk away with a whole bundle of taxpayers’ money, just because the Government decides that they are not worth keeping in the job and the Government wants to get rid of them so it has to change the structure of the organisation and damn well pay them out. I say that that is not good enough. Indeed, let me bring this to the Committee’s attention. The information brought to the Committee’s attention by my colleague Pansy Wong said: “We understand”—and we want confirmation of this—“that the chief executive was on a salary of $200,000 to $210,000.”

💬 John Key: What?

Hang on a minute. The latest information that has come to hand, and we want the Minister in the chair to confirm this, or indeed Jim Anderton to come to the Chamber and confirm it, is that the salary the chief executive was on was not $200,000 or $210,000. It was somewhere between $230,000 and $240,000.

💬 Hon Tony Ryall: A quarter of a million.

Yes, a quarter of a million bucks! There are 2 years to run on the contract, so what happens? “Oh, no problem,” says Jim Anderton, “I’ll write you out a cheque for half a million dollars. See you later.” [Interruption] No, more than the Warehouse, and a third of what the Government gave to EDS! There are two things that really worry me. Firstly, the jolly Minister will not take a call and confirm or deny this. I want the Minister to stand up and deny it. I want to be able to tell the taxpayers of Northland: “Yep, the Minister did it right; he came down to the Chamber and said: ‘No, don’t worry about it, John. You can go back up north and tell the folks up there that it’s not an issue.’ ” But not this useless Minister! He is a disgrace. The second thing that worries me is, why is the Government bringing this bill into the House when this dude left the place 3 or 4 months ago? Why is there not something in the bill about him? [Interruption]

My colleague the Hon Tony Ryall raises a third matter. This is getting worse. It is like Sherlock Holmes. We are having to drag the thing out. We walk around the corner and there is another clue. I think if I looked over I would find something else that I want to raise. What was it that the Hon Tony Ryall raised?

💬 Hon Tony Ryall: A personal grievance.

Can the Minister take a call and answer this question? Has Mr McKay lodged a personal grievance? Have we written him out a cheque for $500,000 and he said that it is not enough, but rushed away to the bank and banked the cheque? The Government then decided to bring in this bill and it does not cover that, so he whacks in a personal grievance as well. How much will that cost taxpayers?

The CHAIRPERSON (H V Ross Robertson): I ask the member to come back to Part 3.

It is right in here—“Dissolution of former agencies”. There is a whole package—clause 82—it is very relevant. It should be covered under this bill. The Minister should be taking calls. The Government should be explaining it. It said there would be no golden handshakes. I can remember members on that side standing on platforms 4 years ago, during the election campaign, and saying: “Not us. We won’t let it happen under our regime.” Now, when those members are questioned, they are mute—absolutely silent. Surely one would think the Minister would want to take a call and say: “John Carter, you’ve got it wrong. You don’t know what you’re talking about. Nothing’s happened. You can go back to your people in Northland and say, ‘Don’t worry, we’ve got it under control.’ ” There has not been a sausage. I ask the Minister in the chair, Marian Hobbs, whether she has an answer to that question. Not on your nelly!

I move, That the question be now put.

I would like to address clause 82. I do so on the basis that it refers to the proceedings of former agencies. A number of Opposition members have already asked this question of the Minister in the chair: whether any known outstanding legal actions have been taken against either of those two constituent bodies that are being melded into this new trade and enterprise State agency, and in particular whether Neil McKay has lodged any legal action, as he is entitled to and provision is made for in clause 82.

Now we have Minister No. 16 in the chair. We never had any response from previous Ministers, but I would ask whether Minister No. 16, the Hon Marian Hobbs, could perhaps address that issue, because it is important, particularly in the context that it is alleged and rumoured around town that a substantial golden handshake was given to Mr Neil McKay for his job disappearing as part of the restructuring. His contract had some 2 years to run. Initially, Opposition members were given to understand that his salary was what we thought was the astronomical figure of $210,000 per year. We have now learnt that his salary bracket was actually in the $230,000 to $240,000 range. On that basis, with 2 years to run on that contract, it is alleged that his golden handshake may well have been in the order of half a million dollars.

These rumours are circulating around the country in business circles. We believe that the Minister has a responsibility to Parliament to come clean and, with the passage of this legislation, to answer two questions. I would ask that the Minister follow the questions. The first question is whether a golden handshake payment was made. The Minister may have different language and may not want to refer to it as a golden handshake, but the question is whether there was a settlement for Neil McKay with the restructuring away of his job. In other words, did the taxpayer not only have to fork out $240,000 a year for him, but when the Government decided he was not doing a very good job and wanted to do away with him, is it possible that there was another payment? That is question No. 1.

My second question is whether any legal action is being taken in terms of the provisions of clause 82 by any former employee of either of those organisations—that is, Trade New Zealand and Industry New Zealand—and, in particular, whether there is any veracity whatsoever in the rumour that is circulating, that Mr Neil McKay is also taking action. The public of New Zealand need to be satisfied about those issues. It is our responsibility as Opposition members to pursue them, and it is the Minister’s responsibility as Minister in the chair to answer them. She must answer them, because comment is already being made about the appalling track record of Industry New Zealand.

In a very short time it ran up extraordinary bills, walking around with the taxpayers’ chequebook, writing out a cheque for $1.5 million for EDS and another for a $100,000 grant to the Warehouse. This is corporate welfare in anyone’s language, and struggling New Zealanders will not be pleased to learn that their hard-earned taxes are being lavishly spent by the Crown in that manner. But more particularly, I know that the taxpayers of New Zealand would be outraged if they learnt that a public servant who was on a salary of $240,000 was not doing a good job, and the Government was totally dissatisfied with him—so dissatisfied that it used this bill to restructure that body out of existence and then, as part of his contract, paid him off with half a million dollars.

I move, That the question be now put.