Public Finance (State Sector Management) Bill

Part 8 is obviously a very small part of this 500-page bill. However, the fact that Part 8 is small does not make it any less important.

💬 Simon Power: Belies its importance.

It belies its importance and, like a lot of small things in life, it is easy to take them for granted and to wonder whether they are as significant as big things.

💬 Lindsay Tisch: Like Mark Peck.

Well, Mark Peck—yes. For instance, in All Black terms, people might not have taken Grant Batty, who was a very small All Black, seriously.

💬 Simon Power: Dave Loveridge.

Dave Loveridge is another example of a small All Black who could be taken for granted.

💬 Simon Power: Gary Whetton.

Gary Whetton was not small.

💬 Hon Dr Michael Cullen: Lindsay Tisch.

Lindsay Tisch is small, but he is not an All Black. He could be. One never rules someone out from being an All Black.

💬 Hon Dr Michael Cullen: He used to be the ball in the game.

Oh, I do not think one could say that Lindsay Tisch was the ball; he was the pride of the game.

Part 8 is small but it has an interesting part to it, and that is clause 238. Part 8 amends the State-Owned Enterprises Act. New Zealanders will know there are—roughly off the top of my head—17 State-owned enterprises in New Zealand and they range from power generators such as Meridian Energy, Genesis, and Mighty River Power, those sorts of enterprises, to the coal operator, Solid Energy, and New Zealand Post. There are a number of entities that fall within the State-owned enterprises group.

Clause 238(2) is interesting in that it states: “Before entering into any collective agreement under the Employment Relations Act 2000, every State enterprise to which this subsection applies must consult with the State Services Commissioner over the conditions of employment to be included in the collective agreement.”

Firstly, my understanding is that that clause is new. In other words, we have a situation whereby our 17 State-owned enterprises—which are large organisations, many of which already have collective arrangements—are now being told that under clause 238 their power will somehow be diminished by the dead hand of Government in this Public Finance (State Sector Management Bill) that is being rushed through under urgency at 25 past 11 in the evening. So in this situation, before a State-owned enterprise agrees to its collective arrangement it will have to tell the State Services Commissioner that it is about to negotiate a collective arrangement and what the conditions are within that collective arrangement.

The first question that comes to mind is about what that will do to the process. What is it likely to do? Anyone who has been involved in collective arrangements will know that they can be quite slow and tedious to negotiate. They can be large, can involve quite a number of parties, and can certainly take a long, long time. So one can imagine situations whereby a collective arrangement is being negotiated on behalf of one of our 17 State-owned enterprises. That process could be dramatically reduced or slowed down because there could be a situation where the State Services Commissioner did not agree to the terms of the collective agreement.

We are now in the middle of an interesting little furore—if one likes—over Judy Bailey’s salary, which is of concern to some people but not necessarily to others.

💬 Darren Hughes: Small fry.

Small fry—yes. What is interesting about that scenario is that it is a debate over whether Judy Bailey should get $400,000, $500,000, $600,000—or whether the number should have been $800,000. But that absolutely is chicken feed compared to the numbers that will be paid through a highly negotiated collective arrangement. So that is the first issue.

The second interesting issue it raises is the question of what happens in the instance where there is a dispute between the State-owned enterprise and the State Services Commissioner. Maybe the Minister might want to clarify this, but I cannot see what will happen when a State-owned enterprise is wanting to negotiate its collective arrangement and cannot agree with the State Services Commissioner over the terms of that collective arrangement.

One could imagine a situation like the incident with Television New Zealand and Judy Bailey. The board—I have to say at this stage that I have some sympathy for the board—is arguing—[Interruption] A huge amount of its revenue may be gone, but a huge amount will come from a commercial activity. As I see it, on the one hand the directors are doing their job to preserve that income, but on the other hand they are trying to resolve a situation that clearly for political reasons may be uncomfortable or unfortunate. That situation is not impossible to imagine.

I will also pick up on clause 238 in Part 8 of this Public Finance (State Sector Management) Bill, because it has huge implications. As I am aware, for the first time the Government is proposing with this legislation that if our State-owned enterprises are to negotiate a collective agreement with their employees, they must consult with the State Services Commissioner.

Just to be on the safe side, clause 238(3) states: “The Governor-General may, by Order in Council, apply subsection (2)”—that is the clause I just read out—“to any State enterprise named in the Second Schedule.” That means the second schedule of the State-Owned Enterprises Act. I am looking now at the second schedule of the State-Owned Enterprises Act, because the Committee needs to be reminded of the scope of New Zealand’s activity, so to speak, that is covered by State-owned enterprises.

If we look at the second schedule of the State-Owned Enterprises Act, we see that we are talking about electricity generating companies and Transpower. Now, they are at the heart of New Zealand’s economic success, and we are talking about a whole range of them, especially those that have a huge impact on New Zealand such as those involved in our energy sector, not to mention the forestry sector. Landcorp farming is a large hunk of the agricultural sector. They are significant economic businesses, and energy companies and Transpower have a huge impact on New Zealand’s economic success.

The Government is suggesting here that in those major economic entities, in those State-owned enterprises that have that significant impact on our economy, the State Services Commissioner will be able to interfere in their employment arrangements. “State Services Commissioner” is just another term for “lackey of the Government”, I think it is fair to say; I do not want to be unkind to the current State Services Commissioner, but obviously the person in that role does the Government’s bidding.

It is important for Parliament to consider that the State-Owned Enterprise Act was passed back in the 1980s under the previous Labour Government. It set up those State-owned enterprises for one very good reason: to get such important business activities out of the clutches of politicians and Government. But what is this clause doing in this Public Finance (State Sector Management) Bill? It is bringing that crucially important function about employment arrangements back within the realms of political interference. That is a very backward step.

The Minister in the chair, the Hon Margaret Wilson, who I am told is to become the Speaker of the House—

💬 Simon Power: She is Speaker designate.

Dr the Hon LOCKWOOD SMITH: The Speaker designate—OK. The Minister in the chair ought to have a real interest in legislation if she is to become the Speaker of the House.

Why is the Government moving to bring back those important economic entities under political influence? A large chunk of the energy sector is owned by the Crown under schedule 2 of the State-Owned Enterprises Act. Why is the Government moving to bring back those important economic entities into a situation where the Government can meddle in their employment arrangements? One can only assume that it is because the Government wants to push its agenda, and we know from various parts of this bill what that agenda is: the Government wants to force those entities to employ certain people of certain racial backgrounds, and it wants to force the entities to address diverse interests in their employment arrangements.

Those may be things this Labour Government considers important, and matters of ethnic origin are important in some areas, but when it comes to employment, employers should be colour blind. Employers in those vitally important companies like Transpower New Zealand Ltd, Mighty River Power Ltd, Meridian Energy Ltd, Landcorp Farming Ltd, should be colour blind. They should be employing people on the basis of their skills and of what they can contribute to the organisation. People should be equal in terms of their employment opportunities in these hugely important economic entities. The Minister in the chair should get to her feet and explain what the Government is seeking to do with section 8(2) inserted by clause 238.

I would like to follow on from what Dr Lockwood Smith was saying on Part 8, because he is right. The implications of section 8(2) in clause 238 are important for the future in terms of what it does and what it drives. I would say that this is being driven by the unions. Dr Lockwood Smith failed to mention another really important State-owned enterprise, New Zealand Post Ltd. In 1986 the Lange-Douglas Government made a big mistake with State-owned enterprises, in that it did not sell them. They were only ever set up as a halfway house, as an interim measure to restructure old Government departments that were costing the taxpayers billions of dollars and turn them into successful commercial enterprises so they could be sold with maximum return to those taxpayers. Most of that money was used to reduce debt. We had crippling debt. We sold off those State-owned enterprises, privatising them and reducing masses of debt in the process. Unfortunately, we did not sell off enough of them. We did not sell off New Zealand Post or Television New Zealand.

Look at what has happened to Television New Zealand since the Government started meddling in its affairs and appointing its boards. In 1999-2000 Television New Zealand was still a successful company, returning a profit of $68 million, I think it was. Governments have used Crown entities as cash cows, sucking the money out of them to the extent now that the current Government is propping them up again with taxpayers’ money. What a crime it is that such a successful company, returning such a good profit, is now reduced to going to the Government, cap in hand, to grovel for more taxpayers’ money.

We will very soon again be amending the State-Owned Enterprises Act. When more legislation comes into force—when more labour and employment legislation that brings back de facto compulsory unionism gets the royal assent—we will see more amendments. This will be seen as being a way to boost unions like the Public Service Association, which has suffered hugely in terms of its members voting with their feet. So what do we do when we bring in State-owned enterprises like Meridian Energy Ltd, Solid Energy New Zealand Ltd, and New Zealand Post Ltd? We reduce hugely the ability of those commercial enterprises to compete in the market. They will be trying to compete, with their hands tied behind their backs, in terms of directives from the Government about what they can do regarding employment relations and collective agreements.

Let us face it, under this Government the only way employment agreements will be allowed to operate is as collective agreements. We will see the end of individual agreements, because under this Government employees are deemed insufficiently capable of negotiating their own agreements with their own employers. They have to go into a collective agreement, and because of the patronising attitude this Government has, they must have a union representative to negotiate that for them.

Lockwood Smith was quite right. The State Services Commission is a lackey of the Government. Under this Government, the State Services Commissioner will have to have his or her say on every collective agreement under the Employment Relations Act that any State-owned enterprise enters into. We have already seen the implications in terms of directives to public servants and employment opportunities for Māori. Pacific people are totally excluded. They do not matter, obviously, in the public service. I suppose they are generally included under ethnic minorities. This is the start of the slippery slope. Next will be the private sector.

I have recently been reading a study—the most recent one—of Queen Elizabeth I. One of the issues she had continually throughout her reign was the issue of religion, particularly the desire of her newly converted, in many cases, Protestant Ministers to delve deeply into the religious life of her subjects. Her comment to them was, and it is very relevant here: “I have no wish to peer into the conscience or the soul of my subjects.” Despite the best efforts of her Ministers, she managed not to do so.

Here we have a contrast. The bill before us, throughout its whole length—and we are now looking at Part 8—has a different philosophy entirely. That philosophy is an embracing desire by the State to peer down, and to peer into, every relevant section, as the Minister sees it, of the day-to-day life of State-owned enterprises. The last two speakers have been correct, because section 8(2) in clause 238 embodies again the strange industrial bargaining that we have seen in recent years in some segments of State operations, whereby there is never any proper negotiation between relevant parties—namely, employer and employee.

Instead, above and beyond, with a draconian hand at times, stands the hand of the State. The reason for that, particularly in the cases that I have been a party to, is not quite known. There is no discernible reason why there should be a third party between two operating groups, namely the employer, who is given full powers under this legislation to agree, and those who are employed. Here there is the clearly expressed desire that “every State enterprise to which this subsection applies must consult” with the Minister’s personal appointee in this regard, the State Services Commissioner.

My experience of the States Services Commission is not that it has an even-handed, proper approach to industrial matters. In actual fact, as we all know, it complicates what should be a reasonable 2 or 3-year undertaking to resolve the industrial conditions under which people work, day to day. Instead there is the unknown where there should be certainty, and at all times there is a greater or lesser degree of political interference. That has always been so, but these provisions propose a strengthening of that relationship. We in New Zealand First believe that is not sound industrial negotiation. It intrudes another imperative into what should be a proper discussion about the future conditions and salary or wages of workers; that is, what the Minister thinks, in the form of the State Services Commissioner. As I said, this clause embraces the total, controlling philosophy that the bill displays. New Zealand First will oppose it vigorously.

The CHAIRPERSON (H V Ross Robertson): Kia ora, mōrena, good morning honourable members. I call the honourable member Pansy Wong.

Good morning to you, too, Mr Chairman. We always appreciate you in the Chair, because you are very generous in ensuring that there is a thorough discussion during the Committee stage, which is very, very important. Even though Part 8, as my colleagues have said, may have only two pages, it refers to schedules and has huge significance in terms of the future financial well-being of State enterprises.

There are very delicate issues around collective employment agreements. Clause 238 introduces an additional party, in the form of the State Services Commissioner, between the State enterprise and the union in negotiating a collective agreement. I am pleased to see that the Minister in the chair is the Hon Margaret Wilson, who is the architect of the Employment Relations Act and who also has a law background to her credit. I want her to explain to the Committee what section 8(2), inserted by clause 238, really means when it states that a State enterprise, before it enters into any collective agreement, has to consult the State Services Commissioner. What is the extent of that consultation? Will it simply be someone at, say, Transpower picking up the phone and telling the State Services Commissioner that he or she might want to introduce a new offer or incentive to a group of staff in Transpower that might not be extended to another? If the State Services Commissioner said that was not acceptable, would that be the extent of the consultation? Or would the State Services Commissioner have the authority to turn down, say, the offer the State enterprise intended to make? What is the obligation for the State enterprise to reject or accept that particular advice?

I am quite concerned about how much intrusion and authority the bill intends to give to the State Services Commissioner, given that section 8(3) in clause 238 states: “The Governor-General may, by Order in Council, apply subsection (2) to any State enterprise named in the Second Schedule.” That is actually quite serious. Any organisation listed in schedule 2 may also be affected by that requirement. The fact that the Governor-General may extend the authority of the State Services Commissioner through Order in Council might actually mean that the Government today wants to give the State Services Commissioner a lot more authority in association with that word “consultation”.

I hope the Minister will take a call and tell us what the significance of the word “consult” is when it is preceded by the word “must”. What is the extent of the consultation? Is it just a chat, a written statement, a rejection, or a “take it or leave it” statement? Also, in what stages would the State Services Commissioner be involved in the actual negotiation of the collective agreement?

Throughout the course of the debate, I have been railing about the repetition and the absolute drivel we have been asked to support by way of this bill. I made the point, and I think it bears repeating, that the public complains day in and day out about the size and cost of bureaucracy in this country and the sheer amount of red tape. I say to members that this bill is just another example of how out of touch the Government is when it seeks to pass this type of legislation. By my estimation, the bill could have been about a third of its size. The fact it is not is an indictment on the Government, which intends to legislate for every conceivable consequence, whether or not it is relevant and whether or not an existing law is already in place.

So members will probably wonder why I do not support Part 8, given that it has only four clauses and that out of 500 pages it takes up only one and a half. The reason I do not support it is that it concerns amendments to the State-Owned Enterprises Act. I caution members that “small” does not mean “not significant”. A couple of speakers have taken calls and dealt with the issue. The reality is that we all have to deal with the issue, because it is the only pertinent clause in the part. It has huge implications for the productive sector and for the rest of New Zealand’s citizens, because we are now playing around with the economic powerhouse of our economy.

This section deals with huge businesses, which, in lots of cases, run our infrastructure. What will be the situation if we come to an impasse whereby the entity concerned is recommending to, or has negotiated with, its employers certain terms and conditions, and the Government’s lackey says that he or she has been told that the Government is not happy with that? This is the worst type of Government interference one could imagine. The Government is now legislating for huge levels of interference. Members of the Committee should think about that very carefully. That Part 8 has been truncated into one and a half pages does not make it insignificant. Why is this happening? The short answer is that this Government wants control. It craves control. It can do nothing without having control. It is trying to control and manipulate its own PC agenda.

💬 Craig McNair: It’s disgraceful.

It is disgraceful. If it were not for the fact that we are here at 11.50 on what is technically Tuesday morning but what the rest of New Zealand knows is Thursday morning, after being in this Chamber until midnight last night and starting here again at 9 o’clock this morning, under urgency, I might have more energy to argue this point more powerfully. The fact is that this part has significant implications for New Zealand. New Zealanders are being snowed by it. I have asked what will happen if we get an impasse. Who will tell the people of New Zealand they will be cold this winter—if we are talking about an entity that deals with some of our power generation—because the Government wants to interfere?

I move, That the question be now put.