Education (Disestablishment of Early Childhood Development Board) Amendment Bill

Part 2 deals with the disestablishment of the board and associated matters. I think it is worthwhile to look again at what the board’s function is. That is to promote and encourage the development and provision of high-quality, accessible, and culturally appropriate educational and development facilities and services for the benefit of children who have not yet enrolled in a primary school. What is wrong with that? What is more important than ensuring there is a distinct entity for the children of New Zealand to be given the opportunity to achieve their full potential, and that, of course, is with regard to the hugely important area of early childhood education. Yet this bill is removing that distinct entity. It is removing that distinct focus on the incredibly important function of having an independent board that focuses on early childhood education for the children of New Zealand.

It is really important to look at what the Minister said about the Early Childhood Development Board. The Hon Trevor Mallard is a man of complex contradiction. On the one hand he is disestablishing the board helter-skelter, and on the other hand he wants to make it clear that the decision in no way reflects badly on the work the board had done to promote and develop quality early childhood education. The Minister of Education wants it both ways. In the introduction debate he said the board had done a great job, but he is disestablishing it. He wants to have it both ways.

The Minister probably had quite a good education. He went to Onslow College. Maybe his early childhood education was the problem; I am not too sure. Maybe it would have been much worse if he had not had early childhood education. Whatever the case, the Minister is a man of contradiction. On the one hand he said that the Early Childhood Development Board was a worthy institution and had carried out its functions very well, yet he wants to disestablish it. We heard about the process, but in actual fact he disestablished the board about a year ago. That is a constitutional outrage, yet we are debating the bill 1 year later. Furthermore, he is wanting to absorb the board into the Ministry of Education. The education sector is absolutely fatigued as a result of restructuring done by the Labour Government. The Government has done it with the health sector and the science sector. Once again, it is restructuring the education sector, particularly in the area of early childhood education, which is so vitally important.

In the introduction debate the Minister said the board had a particular focus on Māori and Pasifika communities and that the work had been very greatly appreciated by those communities. So why is he disestablishing the board, given that he said it had done such a good job? It seems remarkable that, for the sake of his ideological bias against independent education, he will restructure and absorb that very important distinct entity into that ever-burgeoning bureaucracy—the Ministry of Education. The ministry just gets bigger and bigger with every breath under this Labour Government.

The Minister said that even in the past 12 months, the board, knowing that this change was about to occur, had kept its eye on the ball and licensed more non-registered services than the objectives in its annual plan required. He said the board is to be commended for that. Now, is that not great? The Minister is sitting there grinning away, thinking: “Yes, the board’s done a great job, but I’ll axe it.” That is the kind of contradiction shown by the Minister of Education.

Comment has been made about this legislation removing the previous rights the Early Childhood Development Board had to distribute grants to the Ministry of Education. I point out that the legislation is very specific that the rights are purely and simply those that under present legislation relate to the Early Childhood Development Board, it being the only entity that legitimately has the right to grant that money. It really relates to licence-exempt groups—basically, play groups. The Minister will tell me whether I am right, but I think it is about $1 per hour per child. It may be slightly more now, I do not know; certainly, it is not in the vicinity of $1,000 per bounty head—as it were—that Mr Hide was talking about.

💬 Hon Trevor Mallard: I can answer the question very quickly. It’s not $1; it’s $1.01.

I got it wrong—the Minister has increased the amount dramatically since he got into power, when it was $1.

We need to reflect back to the reforms that created the Early Childhood Development Board, which went across the early childhood sector and the compulsory sector. In the compulsory sector that involved getting rid of the education boards. The comment has been made that the ministry would be putting out grants that were previously put out by Early Childhood Development. People seem to forget that the money came from the ministry first. It then went to the Early Childhood Development Board and was distributed from there—just as in previous days the money went from central government to the education boards that had been established in 1877. They were the old provinces. Education could not be administered under the 1877 Act without the old provincial structures. Therefore, the situation was that funding went from central government to territorial authorities, then was distributed.

The whole idea behind Picot and Tomorrow’s Schools was to cut out one part of the bureaucratic loop. In fact, that is what this legislation is also doing. It is taking out one part of the bureaucratic loop. More money will be released to go directly to the providers. Therefore, it is inexplicable that parties like ACT are trying to defend the continuation of this particular bureaucratic loop. It is almost like their arguing that we should bring back the old education boards. The purpose behind this legislation is to take exactly the same step as Tomorrow’s Schools took when it came to primary education—that is, to take out one bureaucratic step and be able to make sure the funding is moved from the central provider to the providers of the services themselves, with no encumbrances in-between.

I also find it extremely difficult to understand why both National and ACT are critical of the Minister for not consulting fully with the New Zealand Educational Institute—in other words, for not consulting fully with the union of workers in only a part of the sector we are talking about. The great protectors of unionism—ACT and National—are critical of the Government, because it did not consult fully with the New Zealand Educational Institute! In fact, there was a lot of consultation, and this particular move had been flagged in the sector long before it came to the select committee. It was a little bit unfortunate, however, that the timing was such that quite genuine criticisms can now be made of the Minister and the Government.

Once again, we will be supporting this legislation, because, as I said—and the Minister can explain it—it will allow funding to go directly from the ministry to the providers without a duplication of service. That exists in the present system, and it existed all through the 1990s when the National Government was in power.

Very briefly, I thank the last member who spoke for his explanation. I reiterate that when I became Minister I found there were a number of occasions when funding for early childhood services went from the Ministry of Education to a Crown entity—the Early Childhood Development Unit—and then to another—the Special Education Service—and then to community providers. The transaction costs and legal costs of all of that were enormous. This legislation involves something that is much more straightforward—

💬 Stephen Franks: Quantify it.

I cannot give the member exact numbers. However, from memory something between 30 and 40 percent was going out in transaction and contractual costs. That was a total waste of money and just not acceptable.

Part 2 of this bill has the operative parts. It has a number of what the Minister has just explained as rationalisations—cutting the delivery chain short. He says 30 or 40 percent was getting consumed in transaction costs. It really must have more explanation than that. New sections 311A and 311B, inserted by clause 6, allow grants to licence-exempt centres. These exempt centres can be created by the Minister simply gazetting that a centre does not have to have a licence. When it does not have to have a licence, it appears to me that it does not necessarily comply with the stipulations that go around grants.

Ordinarily, this might be seen as something that was to give flexibility that did not matter, but we have had experience of the ministry’s very poor performance in dealing with flexibility. My colleague Rodney Hide has mentioned the rort that has been associated with chasing up and enrolling Māori and Pacific Island children. Perhaps a million dollars has gone west through failure to specify contracts properly in the first place, failure to supervise them, and failure to check that the children are actually registered and attending, or that they even exist.

Section 311 of the principal Act stipulates the administrative requirements for early childhood centres—that is, they must keep a register, keep the date of birth, keep the attendance, keep a record of all fees and charges paid, and keep evidence that the parents have regularly examined the attendance record. I wager that virtually none of those requirements is being observed by some early childhood centres, and I would be very surprised if some of the exempt centres the Minister wants to be able to favour with his ministry’s direct grants are any better administered than the contractors the Minister’s servants engage to chase down unregistered children.

When the Ministry and the Minister come forward with a proposal to replace an independent organisation—an organisation that has a board of directors who supervise, knowing that they could be personally liable for malfeasance or misfeasance—with people in a ministry that does not even know whether it will chase the fraudsters with the police; that 10 days after the story broke still does not know whether—

💬 Hon Trevor Mallard: The story broke in 2002!

Well, why did the Minister not know more about the background and the facts? If that is 2002, why is the Minister sitting on the Official Information Act material—the file.

💬 Hon Trevor Mallard: Because I am re-reading the old material.

If it is that hard, why has the Minister not handed it over to someone who can read it? He has had 2 years to do it.

💬 Hon Trevor Mallard: There are four boxes of the rubbish.

The Minister has 1,890 civil servants to read it for him.

💬 Hon Trevor Mallard: No, no—

The CHAIRPERSON (Ann Hartley): Order! The Minister will take a call. He is not to interject like that—

💬 Hon Trevor Mallard: It’s an exchange of questions.

The CHAIRPERSON (Ann Hartley): The exchange of questions will be handled during a call.

The Minister has just told us it was 2002, which brings us to another point in this bill. The effective date is the date the bill is passed. We understand that the legal dissolution might not have occurred, but the functions have already transferred. Can the Minister tell us just how many reporting requirements and grants to licence-exempt centres have already been made, and how many the ministry intends to make? Can he give the Committee an idea of just how significant this is going to be—what kinds of conditions does he envisage for licence-exempt early childhood centres? Is this provision to get around requirements that are onerous and imposed on the private sector to advantage State-sponsored organisations that could not hack it? Just exactly what is proposed by new sections 311A and 311B? Surely that is a matter the Minister can give us clarification on, when he must know that we would have to come to this bill very suspicious of the ministry indeed.

I will focus on clause 11 in Part 2, because it deals with the final report and accounts. There will be a number of unanswered questions in the minds of a lot of folk, and even in this debate today, which deserve further scrutiny. I note that neither in the explanatory note to the bill, nor in the Education and Science Committee, was there any mention of the costs of this merger. It was raised as a question, but nobody seems to know how much this will all cost—despite, we were told, the reasonable assumption of one-off expenditure associated with the integration. Unless this merger achieves some economies in the long term, there seems to be little point in it. That is the point we are questioning.

Much of the operational detail is contained in the organisational plan, which, as far as I am aware, is still secret information. Clause 11 provides that when the bill is passed, we will get a full accounting of what happened in the transfer of assets and money. We have been told that the integration is expected to be financially neutral. I have been able to look into that a little and was able to establish that the cost of transitions associated with managing the change and redundancies was expected to be somewhere in the region of $1 million to $2 million. But the Early Childhood Development Board had cash reserves of about $1.4 million to $1.7 million, which I imagine will be used in the transition costs of early childhood education delivery.

However, it is expected that overlaying the work of the two agencies will mean that some efficiency in service delivery cost may be achieved down the track. Unfortunately, this House and the public of New Zealand will have to wait until clause 11 takes effect—that is, when the bill is passed and becomes an Act. So we are still left up in the air as to the efficiencies, and whether this will be a neutral fiscal arrangement. That is the point I wish to highlight.

Part 2 of the Education (Disestablishment of Early Childhood Development Board) Amendment Bill, of course, is the part that deals with the disestablishment of the board and associated matters like funding unlicensed centres.

I was fascinated by the contribution of the New Zealand First member, the Hon Brian Donnelly. It is fascinating that New Zealand First seeks to cuddle up to the Labour Government. The poll fortunes of New Zealand First are reflecting those of the Labour Government. I say: “Good luck to New Zealand First.”

This issue is serious. Mr Donnelly said—[Interruption] The Minister should not really interject when there is a live microphone in front of his mouth. He has a big enough mouth, without needing that.

💬 Hon Trevor Mallard: But not a smile like yours.

Dr the Hon LOCKWOOD SMITH: That is true. The Minister could well do with a bit more of a smile, as he seeks to undo the mess he has created in the school sector with his mergers.

Mr Donnelly said there was advantage in removing the Early Childhood Development Board from the system because it was a funding conduit, and there was a cost associated with Government money going via the board to early childhood units. Because of the snuggling up between New Zealand First and the Labour Government, the Minister got to his feet instantly and thanked Mr Donnelly for helping explain this rather strange measure in the bill.

What is fascinating is that if that is correct and true, and that is the prime purpose of this legation—

💬 Hon Trevor Mallard: It’s not the prime purpose.

Dr the Hon LOCKWOOD SMITH: So efficiency and saving are not the prime purpose? The Minister claimed that 34 percent of the money for early childhood funding was chewed up in the bureaucracy of the Early Childhood Development Board. Now he is saying it is not the prime purpose, and Mr Donnelly is saying it is the prime purpose. If they are snuggling up as much as they are, they should at least agree on what the prime purpose of this legislation is.

The point I want to make is that if that is a serious purpose for this legislation, why on the one hand is the Government getting rid of the Early Childhood Development Board, and on the other hand establishing a Tertiary Education Commission? In the tertiary sector the funding used to go straight from the Ministry of Education to the tertiary education providers; now it is going via a Tertiary Education Commission, which is itself a burgeoning bureaucracy.

Whereas there used to be a very small team in the Ministry of Education involved in funding the tertiary sector, there is now a rapidly growing bureaucracy in the Tertiary Education Commission that will chew up a far greater proportion of tertiary funding than the Early Childhood Development Board ever chewed up. I can see from Mr Donnelly’s and the Minister’s expressions that I am not totally wrong in that assertion. If this legislation is designed to create greater efficiency, it is hard to reconcile those two positions of this Labour Government.

What troubles me about Part 2, which disestablishes the Early Childhood Development Board, is that the real motive is more sinister. When the funding for the tertiary sector used to be done by the Ministry of Education, it was very transparent and clear-cut. The equivalent full-time student funding system did not lend itself to political manipulation. Basically, the institutions knew that the funding they would get depended on the enrolments they achieved. Maybe some of the auditing was not as good as it should have been in some cases, but it was a clear, transparent system.

What troubles people in the early childhood sector is this: with the Early Childhood Development Board there was a powerful voice for those beyond just the “State sector”, because everyone knows that the kindergarten sector is sort of a surrogate State sector. The real worry about this legislation is that with the ministry now controlling the entire early childhood sector, there is far more room for political manipulation in the funding of the system. What makes the sector nervous, in my view, is that it has already seen that. Prior to Trevor Mallard and this Labour-led Government coming into power, the early childhood sector was funded in a pretty transparent and consistent way across the private and the quasi-public, or kindergarten, sector. Trevor Mallard became Minister when the Labour Government came to power and the kindergartens—the quasi-State sector—suddenly got more funding relative to the private sector. Once the whole lot becomes part of the Ministry of Education, there is concern that it will be more vulnerable to political manipulation, and that is the worry.

I move, That the question be now put.

I would like to carry on from my colleague Stephen Franks in talking about Part 2, “Disestablishment of Board and associated matters”. While Stephen Franks was talking to Part 2, he referred back to the principal Act, and the Minister interjected and corrected my colleague. When Stephen Franks said that $1 million might have gone astray, the Minister interjected and said: “No, it was $6 million that might have gone astray.”

💬 Hon Trevor Mallard: I raise a point of order, Madam Chairperson. I want to make it very clear that I said $60,000, not $6 million. The member is quite wrong.

The CHAIRPERSON (Ann Hartley): Yes, all right, but that is a debating point.

I hope that does not come off my time.

The CHAIRPERSON (Ann Hartley): No, it does not.

The Minister said that he had known about this. It was not news and it had not just broken; he had known about it since 2002. Under the principal Act it says the management shall ensure in those early childhood centres that where a grant has been paid subject to conditions, the conditions are complied with, and the money is used specifically for the purposes for which it was provided. If the Minister has known since 2002, why have the police not been called in?

The Minister has never, ever given members a valid reason for this legislation at all. All members have had is press releases and announcements by the Education and Science Committee that the Early Childhood Development Board would be incorporated into the Ministry of Education. Early Childhood Development was given a glowing annual report in 2002. I say to the Minister: “If it was not broken, why fix it?”. Was there someone on the board who offended him? Was this the International Rugby Board form of disestablishment, or revenge for something? There has been no consultation at all.

I just remind this Committee what happened when this Minister announced that the Early Childhood Development Board would be disestablished and drawn back into the Ministry of Education. Sue Thorne, from the Early Childhood Council, voiced her concern that the board was performing very well, there was no need to integrate it, and disestablishment would take away involvement at community level. Jill Pettis raised questions at the select committee. She asked the Early Childhood Development management, who appeared before the committee, whether programmes that were meant to increase participation in early childhood among Māori and iwi organisations were working, and Ms Robinson said she could not confirm that was the case. That was at the announcement of the disestablishment of the board.

The only reason the Minister has given for this legislation is that it would increase participation in early childhood. That is the only nebulous reason he has given, apart from the fact that he favours centralisation. It was not increasing iwi and Māori participation at that stage. Why then did this Minister rush ahead before we had even passed this legislation, and have increased participation schemes and grants that turned into, as we have heard, money being used to enrol phantom children? Why did he persevere down that path?

One of the other matters raised at the select committee when this legislation was announced was that Donna Awatere-Huata asked whether there had been any research done on that participation.

Dr the Hon Lockwood Smith: I raise a point of order, Madam Chairperson. I ask the member on her feet to forgive me for interrupting her speech, but it is a longstanding tradition in this Chamber that the Minister in the chair does not interject. If he wishes to say something, he should take a call, because there is an open microphone next to him, and it is unacceptable for the Minister to interject. If he wishes to say something in response to speeches being made, he should stand and seek a call.

💬 Hon Trevor Mallard: Although I have not been in Parliament quite as long as the member, it is my experience that during the Committee stage of the debate, there is generally an ability for a free flow between the Minister in the chair and the person who is taking a call. It is much less formal than when the House is sitting, and that is the tradition. There have been a number of rulings to that effect. I do not have them at my fingertips, but I have certainly been in the Chamber for them. I think members have to take care, because members are aware that there is an open microphone, but when members are being controversial and basically want some interjection to liven their speeches up, I am willing to help them.

The CHAIRPERSON (Ann Hartley): I agree with the member Dr Lockwood Smith. The Minister cannot use the live microphone to facilitate more interjections than he would somewhere else. It has to be in moderation. There are times when it is reasonable to answer a question, but there should not be an ongoing dialogue, and I would say that to the Minister.

I conclude by talking about this so-called research that was part of the participation rates. I remind the Chair that the reason I am bringing it up in this Part 2 debate is that it is about the disestablishment of the board and associated matters. The Minister’s main reason for getting rid of the Early Childhood Development Board is to increase participation rates. These bounty hunters had to get parents to fill in a massive number of questionnaires as to why they had not participated before, what their reasons were, and why they had not enrolled their children, and nothing has been done with those questionnaires—absolutely nothing. We do not even know how to fine-tune this policy. We do not have any information about whether it is working. We do not have any assurance that this Minister will do something by bringing in this legislation to make these sorts of grants comply with the funding section of the Act, where the money is paid over for one purpose only.

I move, That the question be now put.

By way of an aside, I am intrigued at how lightly the Minister took the issue over the disestablishment of the Early Childhood Development Board happening 12 months ago, and being legislated for only today. Clause 7, “Consequential amendments to other enactments”, relates to this disestablishment affecting the Official Information Act, which has to be amended. The first schedule of the Ombudsmen Act, the fourth, fifth, sixth, and seventh schedules of the Public Finance Act, and the Education (Change of Name of Education Entities) Order have to be amended. Not only does the original 1989 Education Act, which was the statute allowing the set-up of the Early Childhood Development Board, have to be amended, but these Acts—and they are important Acts—have to be amended, as well. All that is happening 12 months after the fact.

That is concern enough, but we move to clause 8, “Consequential changes to other references”. Gee, I am struggling with words today, but I am willing to acknowledge it. I notice that “Dazza” Hughes, who probably left kindergarten most recently, has not taken a call on this at all, and perhaps he should. “Dazza” might interject, but perhaps he should. [Interruption] I did not realise. We learn every day.

💬 Hon Trevor Mallard: I raise a point of order, Madam Chair. The junior whip may not object, but I think we have to have some decorum in the House, and members should be called either by their name, or by the name of their electorate—in this case I understand it is Otaki, where the member cleaned up Roger Sowry twice.

The CHAIRPERSON (Ann Hartley): The member knows that he must address members by their correct name.

I was interested by clause 8, which states: “If any other enactment or other thing refers to the Board and that reference is no longer appropriate because the Board has been disestablished, the reference must be read as a reference to the Ministry.” Given that this has been on the Order Paper for some time now—it was at the Education and Science Committee some time ago—officials would have been able to identify where this board was referred to in statute. I find it quite unacceptable that we will take some sort of blasé attitude to its reference in statute, and not identify where it does occur, and where it should be amended. I wonder why that is the case, and whether it is usual to take that approach.

I did want to point that out, but I move on to more important issues about the cost of the merger. That was raised by United Future. National members found it quite amusing that United Future members are willing to support this legislation, yet put so many questions to the Minister, were quite challenging towards the Minister’s approach to it, and questioned the costs. In other words, United Future acknowledges that it does not have all this information about the cost of the merger, and whether it will do any good, but it still supports the bill. United Future raised issues around clause 11 about the cost of the merger, the final report, and the accounting structure.

I was disturbed to hear that United Future thought there would not be a full period of accounts to be scrutinised by those in the position to do that. It has been a year since Early Childhood Development was disestablished in practice. I would have thought that over that period, we would have good insight into the costs of the merger, and into how the new system is working, so that we could compare. I would have hoped that the Minister might have brought that to the House to justify his actions all that time ago. I am disappointed that he has not. Perhaps the Minister will take a call to tell us how it is going financially, and how it is operating. It was also stated that the Early Childhood Development Board was just a conduit of funding to early childhood centres. That is not the case.

I move, That the question be now put.