New Zealand Trade and Enterprise Bill

The National Party in Opposition is rising to draw the Committee’s attention to the amendments in the name of my colleague the MP for Clevedon, Judith Collins. The amendments seek to streamline part of the schedules. One of the criticisms we have of the schedules, and indeed of the bill, is how overly prescriptive those clauses are. Not only does the bill set out how various subsidiaries will act but it also lists what one would have thought would be inherent in the appointment of anybody as a member of the board of the new authority. There is a requirement that each member must act in accordance with the Act; that members must act with honesty and integrity; that there is a duty of reasonable care, diligence, and skill; and that there is a duty of confidence. These are the very basics for anyone serving on any authority in this country, and it seems ridiculous that they have to be spelt out in a schedule to a piece of legislation. I find that quite, quite ridiculous.

National members have moved amendments to make it clear that we do expect the board to act in a commercially prudent way, because although this schedule talks about the board operating in a responsible financial manner, it does not actually give a very clear point of direction as to the way the authority should operate. We believe it is quite ridiculous to have such detailed requirements within a schedule of the Act, and we think it shows a real lack of confidence in those people who will be appointed as members of the authority. We can understand, however, that this is a Government that has had an unhappy relationship with Industry New Zealand, because Industry New Zealand and its Minister dobbed it in with Sovereign Yachts, dobbed it in with New Zealand Yachts, and dobbed it in with a huge cheque to one of the richest companies in the country—the Warehouse. I can understand that the Government would be worried about that.

💬 John Key: Maybe they are working on becoming a little less controversial.

As my colleague says, maybe they are working on becoming a little less controversial.

When we look at the detail in those clauses, we see that it is quite ridiculous. For example, the third schedule talks about the procedures of the board, and goes to the extent of declaring that notices of meeting must be in writing, must be given by postal delivery or electronic communication, and must be sent to the members’ or special advisers’ last known addresses in New Zealand. That is the minutiae of administrative detail, and any halfway competent organisation deals with it without its being spelt out in legislation. The problem with spelling those things out in legislation is that when there is an omission by accident, a whole lot of stuff—stuff that might have flowed otherwise—is invalidated. It is quite ridiculous. What will happen to the resolutions and the actions of this new authority if a notice of meeting is not written and a meeting has to be called urgently? There are many situations when meetings of directors have to be called urgently, without unnecessary written notice. What happens to the board’s decision-making process if there is an emergency meeting of the board of the new authority and the meeting notice has not been circulated? This is the sort of thing that happens, but the Government is trying to over-prescribe how an entity should operate.

Members should look at schedule 3. Who presides at meetings will be set out in legislation. The Government is setting out in legislation how one votes on the new board that will run New Zealand Trade and Enterprise. Issues like disclosure of interest—the various methods for directors not disclosing things—are being talked about. Those are the very basics that one would expect from any halfway decent group of people running an organisation, and it is a lack of confidence that sees this Government promoting those sorts of overly prescriptive schedules. So I commend to the Committee the amendments in the name of my colleague Judith Collins.

I have been having a quick read through the schedules while I was listening to my colleague the Hon Tony Ryall, and I have to say that the more I read them the more I started to disbelieve what I was reading. Can members believe that that sort of wording is put into legislation? Members should have a look at clause 6 of schedule 1, “Duty to act with honesty and integrity”, which states: “A member must, when acting as a member, act with honesty and integrity.” Goodness gracious me! Why would anybody be appointed if it were thought that they would act otherwise?

💬 Hon Tony Ryall: And what is the penalty if they don’t?

Well, hang on; we will come to that in a minute. The first thing I want to do is ask this question: is this Government saying that there are other places where they appoint people who do not act with honesty and integrity?

💬 Hon Tony Ryall: Te Māngai Pāho.

OK, I did not want to refer to Te Māngai Pāho. However, I say it is incredible that the Government would have to set all that out in legislation. For goodness’ sake! What sort of people do they expect they will be appointing to this jolly board if they think they have to spell all that out for them?

💬 Hon Ken Shirley: Failed Labour candidates.

That is the worry, really, is it not? The member Ken Shirley is absolutely right. He interjects and says: “Failed Labour candidates”. That is probably why this sort of thing has to be written. I cannot believe this. It is just incredible that the Government has to write down the fact that someone has to act, on behalf of the taxpayers of this country, with honesty and integrity. I would have thought that any Government that selects anybody to be on a board would just assume they would act in that way. Why would one spell it out? The next thing is that if we go to clause 7, we see that it is headed: “Duty to act in good faith and not at expense of entity’s interests”. Why would one appoint anybody who was not going to act in the interests of the entity to which they had been appointed? Can members believe that? I have to say that it would make one’s hair stand on end. It is quite amazing. I mean, look at what it is doing to mine! It is quite incredible, and I cannot believe it. I move on, and ask what the penalties are. I have read the penalties somewhere—no; there are not any penalties.

💬 Hon Tony Ryall: The penalty is you have to have dinner with the Prime Minister.

It would not surprise me if that were written in this schedule, but I cannot find it. Let me bring members to clause 10(2). I ask them to listen to this: “If a board does not comply with any of its collective duties, all or any of the members may be removed from office.” One might ask: “OK, what is wrong with that?” Nothing—but why does it not apply to Cabinet? If the Government is going to write this sort of thing into the provisions of a board—that it is representing the taxpayers of New Zealand—I would have thought that it should apply to the members of the “board of New Zealand”, the Cabinet. I say that if it is good enough to have it in this bill, then it is should apply consistently. If we are going to ask members of this board to comply—and they can be removed if they do not comply—with all the collective duties, then the provision should apply consistently. I say that this Parliament spends a lot of time dealing with people who do not deal collectively and act as a collective. If this sort of law is to be written, then it has to apply consistently. With regard to these schedules, I say that if this is the sort of law we are starting to write, then we have to wonder what sort of country we are becoming. It really worries me. Earlier on, we talked about other measures associated with the bill. We talked about payouts for people—golden handshakes—when promises had been made that there would not be any. We then see that the Government has to write in the fact that people have to be honest and act with integrity. It also has to write in the fact that people have to act in good faith and not at the expense of the entity’s interest.

💬 Hon Paul Swain: What research was done on this speech?

Goodness gracious me! How can Minister Swain possibly be in a Cabinet that writes this sort of legislation? Is it for some of the people he plays rugby with, or something? If that is the sort of team that those members are going to put up, it makes me wonder what we have to be worried about.

In speaking to the schedules, I take up the point just made by Mr Carter, who has just resumed his seat. I think that what we have in this legislation really is a clear weathervane of the culture of that organisation. It will be a State-controlled agency, with ministerial control to do the bidding of Government. That is where the basic philosophical problem is with the legislation. We have seen reference to that in clauses that have already been referred to. But I would like to refer members to clause 11 of schedule 1: “Accountability for individual duties”. I totally take on board the comments that have already been made. It is quite inappropriate to spell out all those basic performance standards, which anyone who is a director of a company, or who is on a board, knows are part of their fundamental duties. One does not spell them out unless one is, indeed, engaging imbeciles to undertake that role. The suggestion was made that the boards will be stacked with failed Labour candidates, and perhaps on that point I would concede that they might need to have everything spelt out for them, but, even then, it would not be spelt out in big and bold enough language for them. Be that as it may, what really disturbs me—

💬 David Benson-Pope: Where’s Donna?

The member from Dunedin, Mr Benson-Pope, is chirping. I ask him what his point is. Does the member have a point to make? No, it appears not. He is just chirping away. I turn to clause 11: “Accountability for individual duties”. Clause 11(1) states: “The duties of members under clauses 5 to 9 … are duties owed to the Minister …”. Members should think about that. What that says is that one owes the duties to the Minister. Clause 11(2) states: “If a member does not comply with his or her individual duties”—that is, the duty to the Minister—“that member may be removed from office.”

Let us just think where else we have seen that. Members of the Committee will remember that when the Government set up the district health boards, it invoked gagging clauses. There are scores of men and women up and down this country on the district health boards who are absolutely fed up to here with the goings on—and they have a gagging clause. That is what we have in clause 11 of schedule 1. In other words, a person cannot speak out against the Minister’s wishes, because he or she will be kicked off the board. That is an exact parallel to the provisions in the district health boards legislation. Once again, this Government, in establishing this new Crown agency, is putting in the condition that a member owes his or her duties to the Minister and if a member does not comply with that, then he or she will be removed from office. That is used as a gagging clause. It has been used as such in the district health boards legislation, and I put to the Committee that that is what this clause is intended to do.

I will go through those collective duties of members, which is schedule 1, keeping in mind that clause 5 of the bill states that a member means a member of the board; that is, of the board of New Zealand Trade and Enterprise. The way we are spelling out the basic functions of any responsible board member is puerile. It does not need to be spelt out in special legislation—it is covered by existing legislation, up and down and all over the place. We have legislation to cover the responsibility for directors of any such agency, and to spell it out in this manner is rather foolish. Could the Minister in the chair, Marian Hobbs, please take a call? We have been asking her to take a call and respond to our questions. We have not had a peep out of Bo Peep, and it would be nice—

The CHAIRPERSON (H V Ross Robertson): That is out of order. Speaker’s ruling 6/1 (Supplement) states that one must refer to a member by full title, name, or portfolio.

We have not had a peep out of Minister No. 16, the Hon Marian Hobbs, and we would like to have a response. That is why we have Ministers in the chair during the Committee stage. They are there to actually respond and enter into the debate, and if this Government cannot put in the chair a Minister who can actually take a call, it is a pretty poor show.

I am really wondering who is responsible for writing these schedules. Let me share this with the public: we are getting very worried about the types of thoughts that are going into the schedules. Just now my colleague Mr John Carter raised the question of clause 10, “Accountability for collective board duties”, in schedule 1. He raised a valid point. Clause 10(2) states: “If a board does not comply with any of its collective duties, all or any of the members may be removed from office.” But the next subclause, subclause (3), states that a member may not have to be removed if: “(a) he or she did not know and could not reasonably be expected to know that the duty was to be or was being breached;”.

That all sounds very generous, except for the provisions relating to the members of the board in clause 8, “Duty to act with reasonable care, diligence, and skill”, in the same schedule. The public was led to believe that some of the brightest members of the public with commercial skills and qualifications, etc., will be appointed to the board. Apparently, they can be excused if they breach one of the duties of collective responsibility, implying that some of the board members may not actually know what the requirements and duties may be. The Minister in the chair, Marian Hobbs, should take a call to explain to us what sorts of members the Labour Party will appoint, apart from failed Labour candidates. Any competent professionals appointed to the board should be expected to know what lies within the collective responsibility.

I get really confused and concerned to see in clause 12, “Court actions requiring or restraining board or members”, of schedule 1 how prescriptive the Labour Government has become. Subclause (1) states: “The Minister or a member may apply to a court for an order—”, but the thing that really concerns me is that the Government is starting to dictate to the court what it can do. Subclause (2) states: “The court may make an order on the application, subject to the following rules: (a) an order may be made only if the court is satisfied that it is just and equitable to do so;”. The Minister in the chair should take a call. When has a judge of a court made an order when it is not just and equitable to do so? I get very concerned that the Government is writing into the schedules of the New Zealand Trade and Enterprise Bill that a judge may not make an order unless the court is satisfied that it is just and equitable. It is quite tarnishing to the reputation of our judges and courts that, in effect, this Labour Government finds it necessary to dictate to them that they should not make any order on application unless that is equitable and just. That is a very serious issue.

The Minister really needs to take a call and explain to us whether a judge or a court has earned her distrust, or what the special reasons are that exist that this Government finds it necessary to dictate to the judge or the court that they not make any order unless it is just and equitable. In New Zealand, the public—and myself—are led to have belief and confidence that our judges and courts always act in a manner that is just and equitable. It is very strange that the schedules of the New Zealand Trade and Enterprise Bill should have to spell that out in detail. It seems that the culture and language that is flowing through this whole schedule is spelling out, chapter and verse, how members of the board should behave, how they should share. It leads one to wonder what happened to confidence.

I move, That the question be now put.

Thank you for the opportunity to make another contribution to this debate. I want to focus the Committee’s attention on schedule 1. In particular, I want to look at clause 2, “Functions must be performed efficiently, effectively, and consistently with spirit of service to public”. I was wondering whether the Minister in the chair, Marian Hobbs, could take a call and enlighten me as to what that means, because I have no idea what “spirit of service to public” actually means. How will one measure it?

💬 Pansy Wong: Giving money to the Warehouse.

That might be the measure? What does success look like? The Minister could take a call and tell me that. More important, who determines it? Who determines whether someone is acting in the spirit of service to the public, and how is it evaluated? Who writes this stuff? It is overly prescriptive.

Let us look at clause 3 of schedule 1, “Operation must be in financially responsible manner”, which states: “The board must ensure that NZTE operates in a financially responsible manner and, for this purpose, that it prudently manages its assets and liabilities.” I say to members of this Committee, and to the Minister, that we have not really made a good start. I want to know what other contingent liabilities are on the books. What other Mr McKays are hiding in the balance sheet? Already we have paid out half a million dollars to Mr McKay.

💬 Edwin Perry: How much?

Half a million dollars.

💬 Hon Tony Ryall: Or somewhat less than that.

Somewhat less than that, was it? I will take bids. How will the others be disclosed? Maybe the Minister could take a call and explain that, as well.

When one reads the schedules, it is clear that they are overly prescriptive. Members of the Committee might have heard the expression, there is no point in having a dog and barking, too, which is why I support my colleague Judith Collins’ amendments, which have now been put by my colleague the Hon Tony Ryall. Surely we could have something that simply said: “Members of the board should act commercially, in accordance with their judicial responsibilities.” That would streamline the process, and, in my view, it would make this type of legislation efficient and enforceable.

I will now look at clause 6, “Duty to act with honesty and integrity”, and clause 7, “Duty to act in good faith and not at expense of entity’s interests”. Who else would one employ? Would one employ people who were not going to do that? Why would one have to write that type of garbage into legislation? Why not simply employ people who will act within their judicial responsibilities? Again, I ask how is that to be enforced? If they do not act with honesty and integrity, would one employ them in the first place? How do other companies deal with people who do not act with honesty and integrity? It is certainly not enshrined in law.

The other clause in schedule 1 that I will look at is clause 10, “Accountability for collective board duties”, and, in particular, subclause (2), which reads: “If a board does not comply with any of its collective duties, all or any of the members may be removed from office.” What a sham. Is this entity going to be managed at the Minister’s whim? When one thinks about it, it is hardly independent. Members are too scared to say to the Minister: “We think you’ve got it wrong; you’re giving us poor direction.”, because if they do collectively say that, they will be out of a job. How are we going to attract board members to Crown entities who have integrity, the courage of their convictions, and the experience the boards desperately need? They would simply say to the Minister: “Take a hike!”.

I move, That the question be now put.

You may recall that I am seeking leave to alter the vote of New Zealand First on the last vote in the House. I ask for the number in the vote to be increased from 12 to 13. I apologise for the oversight.

💬 Madam DEPUTY SPEAKER: Leave is sought for that purpose. Is there any objection? There is not. Leave is granted. The Ayes are now 71 and the Noes are 47.

I raise a point of order, Madam Speaker. I did not want to deny the member leave as I thought that would be inappropriate. However, it is my observation that New Zealand First has had to change its voting three times in the last hour. Although the Standing Orders do not preclude that, I would have thought it was a rather peculiar practice. At one stage, we had a member calling the vote, then the New Zealand First whip coming in and contradicting it. Here we have had the numbers changed, and I think it reflects badly on that party. We need some comment from the Chair as to what the expectation is in calling the vote.

💬 Madam DEPUTY SPEAKER: It is not a point of order. I thank the member for his contribution; I am sure it has been noted.