Education (Disestablishment of Early Childhood Development Board) Amendment Bill

I turn to clause 2, the commencement provision, in particular. In the second reading, I alluded to why this was constitutionally inappropriate. The reason is that it is a fundamental principle that the legislature should not act or expend money without parliamentary authority. That was certainly confirmed in the well-known case Fitzgerald v Muldoon, which went through the High Court—which, at that stage, was the Supreme Court of New Zealand. It is a fundamental constitutional principle, deeply entrenched within our system. And, of course, a former Labour Party Prime Minister, Sir Geoffrey Palmer, made something of a career on constitutional behaviour. His first book was Unbridled Power. It was a very direct reference to the practice of Governments in New Zealand to act without legislative authority. He co-authored a book with his son some years later called Bridled Power, and the reason was that he considered that basic constitutional principles were being observed by New Zealand Governments. If only that were true.

We had the extraordinary spectacle earlier this morning of the senior Government whip making a virtue of breaching constitutional propriety. She was basically saying that the board had already been established, or disestablished more accurately, so what was our beef? It is as though the means justifies the ends—that as long as the action was done, that was all that was required and all that Parliament would be doing was acting as some sort of craven rubber-stamping body. That might be the view of the Government, and I heard an interjection that the senior Government whip would vote for Parliament acting as some sort of craven rubber-stamping body. I guess that tells us a great deal about the sort of thinking that resides within the Government—a certain contemptuousness about parliamentary procedure. So the extraordinary spectacle we see today—

💬 Jill Pettis: Is that why that member voted for market rents?

I would like to hear from the Minister rather than the less than knowledgable senior Government whip as to why the Government thinks it is justifiable to pass legislation after the fact. Why could it not simply have waited? After all, this is not one of the Government’s more important bills. One would have thought that the proper practice would be to simply leave the entity in existence, then pass legislation, then disestablish. What would have been the harm in that? But this is a Government that is now starting to get the sin of arrogance. It thinks it can do as it pleases, when it pleases, contemptuous of public opinion. This bill, small though it is, is merely a manifestation of that. I now draw back directly to clause 2—because this is what this is all related to—which refers to the implementation date of the bill, 1 April 2004. The reality is that we are asked in this Parliament to vote for something retrospective. The Government—

💬 Jill Pettis: Oh, goodness!

Again the senior Government whip says “Oh goodness!” Again she is showing that arrogance that we have come to associate with this Government. I ask the Minister to stand and justify why it is that it is appropriate to pass legislation like this.

New Zealand First, when it comes to bills like this, believes a pragmatic approach has to be taken. We believe that taxpayers work too hard for the money they have taken off them by the Government not to see that there is duplication in expenditure of that funding, and that is why we are voting for this bill. We think it is necessary. But we also believe in due process, and if there is a criticism of this particular bill, it is of the process—and particularly the timing—through which it has gone. To this extent we agree with the comments made by the previous speaker.

The Government’s intention to disestablish the Early Childhood Development Board and integrate its business into the Ministry of Education was approved by Cabinet on 10 March 2003. The integration date was set for 1 October 2003, but the legislation did not get to the House until 26 August 2003, so it was impossible for it to achieve the intention that Cabinet had set out. Cabinet had said: “Here is the work programme. Here is how we will do it. We will get it all sorted out by 1 October.” It did not even put the legislation in front of the select committee until 10 September, and the closing date for submissions was 31 October 2003. The commencement date for the legislation is 1 October 2003.

I think the public listening would have to raise some very serious questions about the inconsistencies within those dates. Obviously, members of the Opposition parties will say that this is a breach of the Fitzgerald principle, but I believe it is more purely and simply mismanagement. It is simple mismanagement by a Government that sets up a programme and then cannot commit itself to the programme because it is so poll-driven that it is jumping all over the place responding to different issues. So here we have it, and I guess in some respects it tells us all about the history of this particular Government in this Parliament.

Everything was running so smoothly when the bill went to Cabinet on 10 March 2003. There were no obstacles in front of it. The Government thought it would be able to get this through, but guess what? All those things started to go awry and what we now see is a record of things going awry with the Government. So if New Zealand First has a criticism of this bill, it is that it has been so poorly managed, and the times are so inconsistent that there are some constitutional niceties being overridden in this particular case. The question was asked: why we are bailing the Government out? We are not bailing it out; we purely and simply believe that what is inherent in this legislation is a necessity. Therefore, rather than just play political games, we will stick to our principles of doing what we believe is right under all circumstances.

I would like the Minister of Education to take a call to tell us why it has taken 1 year for this bill to get to this stage, and why he disestablished the Early Childhood Development Board and put it into the Ministry of Education a year ago. The chief Government whip sits over there and in her dulcet tones calls out that everybody supports the legislation, and that is why there was only one submission. But what is the point in wasting one’s own time—and taxpayers’ time—by putting in a submission on legislation when what it provides for has already happened anyway? These people out there are not stupid. The Minister knows that the Early Childhood Council opposes this legislation. He did not consult it—

💬 Hon Trevor Mallard: Who?

The Minister asks “Who?”. That demonstrates exactly—he has done it himself—his contempt for early childhood education. The Early Childhood Council is the biggest representative of private providers of early childhood education. But this Minister is ideologically opposed to private ownership of any form of education at all.

He is not content with just using legislation to get the board off the playing field; he rams it through first—he does it in practice. It is a case of “Let’s suck it and see if it works, then pass the legislation.” This Committee is owed an explanation from the Minister today. He should stand and tell us why this legislation has taken so long to get through.

But we oppose this legislation on more than those grounds. I turn to clause 3(b), which says that the new organisation will still be able to behave as a funding mechanism for certain early childhood centres, to enable grants to be paid by the ministry. In other words, the same grants will come out of the ministry as came out of the Early Childhood Development Board. But there is nothing in the bill about the monitoring of those grants—whether we will still see the rort, which I brought up in the second reading, of the payment of those grants. The ministry is desperately trying to backtrack on it and is putting in place some issues to try to rectify it. I raised this issue last year. The Minister, in reply, said he was very proud of what was going on with the grants from the Early Childhood Development Board. But there is nothing being done, for instance, on the potential conflict of interest. Kōhanga reo have received over $1 million in grants under the early participation scheme. The Minister has done nothing, in terms of conflict of interest. What is there to stop a provider from acting as a bounty hunter and rounding up kids, collecting grants for those children, then saying: “Look here, there’s no competition. You will have to come to my centre.”? The provider collects all along the way. The ministry is very uncomfortable about that situation. The Minister should stand now and tell us why he will not put into place something to monitor that potential conflict of interest.

So those are just two of the reasons why ACT opposes this bill. It is a very small bill, but that does not mean to say it is not important legislation in terms of the sector. We are owed an explanation as to why this bill is coming in, under urgency, a year after it was first enacted in practice. Why have legislation if what it provides for is just going to be done anyway? Furthermore, what is this Minister doing to ensure that taxpayers’ money for this participation scheme, which is race-based no matter what he tries to say about it—

💬 Hon Trevor Mallard: Where’s the participation scheme in the bill? Which clause?

I am talking about clause 3(b), which provides for the ministry to pay these grants. The Minister knows what I am talking about.

💬 Hon Trevor Mallard: But the ministry pays the grants. It doesn’t need this to do it. What a foolish member.

The Minister can take a call if he wants. He sits there interjecting, as he loves to do, but there is nothing to stop him from taking a call when I have finished speaking and telling us what he means by accountability and by the monitoring of these organisations. This Minister is unable to do that.

In speaking to Part 1 of the Education (Disestablishment of Early Childhood Development Board) Amendment Bill, I want to argue that the purpose as spelt out in clause 3 hides the real purpose of the bill. What is stated in this bill is not the real purpose, at all. The real purpose of the bill is the building of the Ministry of Education bureaucratic empire. There is absolutely no question as to what has been going on in the Ministry of Education, and in education, since the Labour Government took office. I did a little bit of research. I was Minister of Education for 6 years and put a lot of effort into—

💬 Hon Trevor Mallard: 6 years or 5 years?

Dr the Hon LOCKWOOD SMITH: It was almost 6 years. I put a lot of effort into taking money out of the central bureaucracy of education to enable it to be put into the actual providers—the early childhood centres, the schools, the tertiary institutions. I want to share with the Committee what has happened since. In 1996, after I had been Minister of Education for almost 6 years, there were 482 employees in the Ministry of Education. My colleagues, my successors, the Hon Wyatt Creech and the Hon Nick Smith, might have been kinder than me, because when National left office in 1999 the numbers had climbed from 482 to 581. So there were 100 more employees in the Ministry of Education by the end of the 1990s. As of last year, there were 1,849 employees. When I was last Minister of Education there were 482 employees in the ministry, and the number has risen to 1,849 employees. That is damn near a fourfold increase in the number of employees in the Ministry of Education. If that is not empire building, I do not know what is. If the Hon Trevor Mallard can sit there and say the Ministry of Education is not building a huge bureaucratic empire, how come the number of employees has risen from 482 in 1996 to 1,849 last year?

💬 Hon Trevor Mallard: Because Specialist Education Services has come into it.

Dr the Hon LOCKWOOD SMITH: Admittedly, Specialist Education Services has come into it, but it is all part of the expansion of the empire. If we look at what has happened in education over the years, which sectors do we find have been successful? The early childhood sector has been hugely successful. We have expanded the number of children in early childhood centres. We have seen an explosion in opportunity in that area. And tens of thousands more New Zealanders now benefit from a tertiary education. Those two sectors were not under the control of the Ministry of Education bureaucracy. There was a freedom in those sectors. The least successful sector, the schooling sector, was more tightly under the control of the Ministry of Education. It has been the least successful in adapting to the modern world. In the last 10 years we have seen far more innovation in the early childhood sector and the tertiary sector. It is the schooling sector that has lagged behind.

Part 1, which states that the purpose of the bill is to disestablish the Early Childhood Development Board, just adds to the empire of the Ministry of Education. Those figures are staggering. In 1996 there were 482 employees in the Ministry of Education, and in 2003 there were 1,849 employees. No wonder there is less unemployment in New Zealand right at the moment! I suspect that the Government bureaucracy has had by far the biggest percentage increase in employment in the last 4 years in New Zealand—a far bigger percentage than the private sector. I think the purpose of the bill should be spelt out more honestly. The purpose, quite clearly, is to build the Ministry of Education bureaucratic empire so that this Labour Government can have more control over the entire education sector, and particularly the early childhood education sector, because it does not like private providers. This Labour Government does not like private tertiary providers. It does not like private early childhood education providers. It has already given more funding to kindergartens. There is absolutely no justification for it. It is pure prejudice. This Government has already advantaged the Government sector through extra funding of kindergartens. We will see more of that, as the ministry will control the whole lot.

I think we have heard quite a lot of drivel. All that the change that the member is getting so upset about does is give to the Ministry of Education the ability to give grants to small groups around the country. It currently does not have the ability to give grants to non-licensed centres. [Interruption] The Early Childhood Development Board has always had the power to make grants to non-licensed centres. There are, obviously, a lot of playgroups around that we would like to continue to get money. Sometimes they become licensed centres; sometimes they do not. I think the member protests too much.

I would like to take a call on this part of the Education (Disestablishment of Early Childhood Development Board) Amendment Bill. During the second reading United Future pointed out that we supported this bill, and we still do support it. But one of the things we had to overcome was clause 2—that is, the commencement criteria. Like others on the Education and Science Committee, we have been concerned about the timing of this bill and how it got into place. It seems to me—and the Minister of Education might be able to correct me on this—that, as I recall, the intended change was to be incorporated in a State Sector Amendment Bill, but the Clerk ruled that it was outside the scope of that bill at that time, and, therefore, it has been dealt with as this separate bill. Nevertheless, the actual disestablishment occurred way before the enactment of this legislation, which was intended to take place on 1 October 2003—the initial commencement date in Part 1.

As the select committee pointed out, that raises constitutional issues about the ability of the executive to implement policy requiring legislation, before actually passing that legislation. We in this Committee are aware that in certain circumstances, or even in the same circumstances, with a more contentious bill, that practice could attract some legal action to halt its progress. This is not the first time we have heard of that practice, but it is certainly a surprise to me that this matter has taken place in the way that it has.

As United Future has said, we are happy to see this bill passed into legislation. It is a very practical bill, and requires passing in order to inaugurate what has already taken place. So, with that proviso on Part 1, we are happy for this bill to continue.

I move, That the question be now put.

I have sat here quite intrigued while listening to the arguments surrounding Part 1, and in particular the commencement date and constitutional issues, which, as far as I can understand, this Minister and this ministry have ridden roughshod over. We heard from Brian Donnelly, the chair of the Education and Science Committee, that this bill was presented in September, which is some time ago, and was expected to be reported back in late October. Having sent out information about submissions, the committee received, I suspect—or, at least, I hope—oral submissions in a period of only 6 to 8 weeks. That is quite appalling when one can argue that this disestablishment of the longstanding Early Childhood Development Board is very important to those involved in the early childhood development sector.

But that is not enough; I then hear that the board has been disestablished for a full 12 months, and we are passing the legislation only now. I thought there was an out for the Government. Members may recall that I asked why the Early Childhood Development Board needs legislation to be disestablished. Why do we have to pass a statute for it to be disestablished? The answer came back, and it is a fairly obvious and fair answer. The reason is that it was established under statute. It was established under statute, and it should be disestablished under statute. Interestingly enough, it was actually established under a Labour Government, and now it is being disestablished under a Labour Government.

I thought that the Government might have an out—that this disestablishment by statute might just be window dressing. I thought that the board had not been established by statute, but, through window dressing, the Government would disestablish it through statue, and in that way avoid the accusation that it was riding roughshod over Parliament by disestablishing the board in practice then, 12 months later, on the tail of that, actually providing the mechanism to do so. But, no, I discover in the purpose clause that this bill provides for the Early Childhood Development Board, “… a Crown entity continued under Part V of the principal Act,”—that is, the Education Act 1989—“to be disestablished and for its functions, assets, liabilities, and rights to be transferred to the Ministry of Education;”. In other words, the Early Childhood Development Board was established under statute. Its functions, its assets, its liabilities, and its rights were established under that principal Act. We then saw in practice out there, 12 months ago, its rights taken away without statute, its assets taken away without statute, its functions taken away without statute, and its liabilities taken away without statute. In fact, 12 months later the House got the bill that provides the mechanism for that to happen.

That is appalling constitutional mismanagement. I would like the Minister to take a call and to challenge that: to tell us why something set up under statute has to be disestablished under statute, and why that would happen 12 months after the fact—that is, retrospectively. It is appalling that that happened. The Minister may think it is a minor matter to do with a minor sector of not much interest to New Zealand, but it simply points to an arrogance that this Government is reflecting to us here in this Committee, and to the general public.

I am also interested in the other purpose of this bill—that is, to provide a “funding mechanism for certain early childhood centres to enable grants to be paid by the Ministry rather than through the Early Childhood Development Board.” The board had the power to make grants to non-registered services.

I am pleased that Dr Wayne Mapp pointed out the constitutional issues over which the Minister has got himself into difficulties. However, I want to talk about the purpose clause and paragraph (b) in particular. Clause 3 states: “Purpose—the purpose of the Act is—(b) to provide for other matters related to the reorganisation, such as a new funding mechanism for certain early childhood centres to enable grants to be paid by the Ministry rather than through the Early Childhood Development Board.” This is what worries the ACT party, because we have discovered that Trevor Mallard has spent some $5 million on bounties. We heard the Hon Taito Phillip Field say that Pacific Island and Māori participation had increased.

💬 Hon Trevor Mallard: I raise a point of order, Madam Chairperson. Fairly early on in the member’s speech I would like you to rule on whether the subject of grants that have been made legally by the Ministry of Education and are not affected by this bill—and certainly not grants to licence-exempt centres, which are outlined in Part 2—are appropriate matters to be raised. This is a very narrow debate in the Committee stage and I ask you to rule on whether it is appropriate for the member to continue to highlight issues that have nothing to do with this bill.

Speaking to the point of order, I point out that we are discussing Part 1, and I think the Minister will agree with that. We are discussing clause 3(b), and ministry funding, and early childhood education. The Hon Taito Phillip Field has already discussed this matter. This is one of our concerns. ACT is trying to explain what is wrong with this bill. If you rule out debate on the funding and the way the early childhood system is being run, then what would we talk about?

💬 Hon Trevor Mallard: Rodney Hide’s comments reflect the point I was making. Phillip Field spoke in the second reading, where his points might just have been appropriate, but certainly those matters are not appropriate in the Committee stage.

The CHAIRPERSON (Ann Hartley): I certainly understood the member was talking to clause 3(b), but there has been quite a bit of straying during this coverage on Part 1. It does contain the purpose clause, and such provisions allow members some latitude in the discussion of the issues across the bill. I would remind members to keep to the bill. The member was talking to clause 3(b).

Thank you. That was a very wise ruling, and I support the Chairperson in that. We do have concerns about this bill, and we have concerns about this Minister and the way he has gone about the business of early childhood education, particularly as it relates to the purposes set out in this bill. This is a Minister who has blown $5 million.

💬 Hon Trevor Mallard: No, no.

I know he does not want that discussed in Parliament. I know he does not answer Official Information Act requests. I know he likes sitting beside the Chairperson and trying to shout down Opposition members who are raising issues. I am highlighting a problem with the Ministry of Education and with centralisation. That is the purpose of this bill, is it not?

The ministry had these contracts that involved phantom children. It also involved children who were pre-enrolled. Taxpayers’ money was used to the extent of $600 to $1,000 a person. The ministry was paying these contractors, who were ringing up pre-schools and asking for the names of the kids who were enrolled. Then the contractors were using those names to get money out of the ministry under this Minister’s contracts. He knows that. That was $1 million worth of fraud, and that Minister is guilty of a cover-up.

💬 Hon Trevor Mallard: I raise a point of order, Madam Chairperson. I am going to have another attempt. Some activities that happened in the 2002-03 year have been misrepresented by the member. They have nothing to do with this legislation. They have nothing to do with the issues of the transfer of the Early Childhood Development Board across to the Ministry of Education. I submit again that this is a narrow, technical bill, and it is not appropriate for the member to raise matters that happened under an entirely different function of the Ministry of Education, over 18 months ago.

Dr the Hon Lockwood Smith: The disestablishment of a very significant part of this country’s education sector is not a narrow, technical matter. The purpose that is intended invites wide debate because there can be serious questions as to the wording of the purpose of this bill. The disestablishment of a very significant sector of our education system is a very big matter.

💬 Stephen Franks: The effective date is in Part 1. We are told that the changes will create an effective date that is after this change was made. It is relevant, in that an institution that was functioning properly, as far as we know, is being transferred to a ministry that appears not to be under proper control.

Although the Minister may not like to have the performance of the ministry appraised in connection with this bill, what else should parliamentarians do when they have a bill that takes an existing organisation and merges it into another one? It is a natural debating point. These are natural questions that would occur to anyone—such as, which one is working, which one is defective, which one is under proper control, which one has a Minister who knows what it is doing? The organisation was independent before. There is no hint that it was operating with fraud or colluding in contracts that were fraudulent. We have a ministry that is tarred with that reputation, and it is perfectly proper for us to debate it on those terms.

The CHAIRPERSON (Ann Hartley): The member on his feet can raise reasonable, relevant matters. However, he needs to stick to the purpose of the bill. The performance of the ministry in previous years is not absolutely relevant, but the member can certainly discuss the ministry’s future role in carrying out its functions under this bill.

Again, can I say that is a very wise ruling in support of Parliament. I thank the Chair for that.

The CHAIRPERSON (Ann Hartley): The member knows he must not comment on rulings that are given.

What we have in clause 3(a) is that the Early Childhood Development Board is to be disestablished, and that all the functions, assets, liabilities, and rights are sent across to the Ministry of Education. That is where our concern lies. The Ministry of Education has shown itself in this area to be incompetent, incapable, and the object of fraudsters. That is what has happened. The Minister knows it, and has done nothing. That is why we like the independent board. That is why we are opposing this legislation. Four companies, and the same people applying for the money, got away with $1 million, and the silly old Ministry of Education and the Minister did not know.

If the Minister wants Opposition parties to support this bill, why does he not honour his obligations and deliver on my Official Information Act requests, instead of denying them, instead of playing games, instead of fighting the Ombudsman every step of the way? Indeed, why has he had his own officials go into the file to reorganise it to try to sanitise what has gone on? What has happened here is fraud of the highest order. We oppose this bill.

I move, That the question be now put.