Public Finance (State Sector Management) Bill

Part 3, which, as members can see includes clause 46, “Purpose of Parts 3 to 7”, refers to Crown entities. The real dilemma in this whole part and in the amendments that are to take place to the Crown entities has a quite simple context, actually. The Government established Crown entities under independent Acts of Parliament and with independent boards, so that those boards could be responsible for the management of those autonomous Crown companies, essentially. The entities were able to be controlled, if one likes, by the Government through the changing of the boards. That was the fundamental process under which Crown entities were established. The risk of this legislation is really as simple as this, I think: if this Government wants to go and start meddling in the Crown entities under its control, what it risks doing through this legislation is going around the independent boards and independent autonomous companies that have been set up, and starting to meddle in their activities.

That creates two dilemmas. The first is that one starts to have Crown entities such as tertiary institutions all of a sudden feeling as though their position of autonomy and academic freedom is jeopardised. So one would have the universities rightfully saying that they are Crown entities—and, as Dr Cullen correctly pointed out, have been so since 1993—but that all of a sudden their independence under the Education Act, which has been so cherished from an academic and a freedom point of view, is being challenged through the alterations to the crown entities legislation. So the first dilemma is that the Crown entities and Crown companies could, in some form or another, be influenced through this crown entities legislation. The second dilemma is one of accountability, and we saw a lot before about that in Part 2 of the bill, which looked at the role of the State sector, in terms of putting leadership and guidance in there. The risk for board members or for the management of Crown companies is simply a situation whereby the Minister goes around the boards and somehow influences Crown entities. Then, when things go wrong—as they surely would—those boards would come back and say a particular action took place not because they wanted it to take place, and not because it happened under their guidance, but because the Minister dictated somehow that it was to take place.

There are quite a number of categories of Crown entities—there are now five defined categories—and I want to take a second, if I may, just to talk about the different categories. One of the issues is clearly around the boards of trustees. Quite a lot of submissions were put forward to the Finance and Expenditure Committee around the definition of boards of trustees, and one issue was that they somehow could be either overly responsible or, indeed, liable—it was the issue of liability, as opposed to responsibility. Liability was one issue around their independence and their ability to do things.

I want to also mention, if I may, for a second, some of the other definitions in Part 3, because one definition is quite interesting. It is that of the fees framework, and it is quite pertinent and relevant, I think, to what is taking place at the moment.If I can take a moment of the Committee’s time to read that definition, it states quite simply that the “fees framework means the framework determined by the Government from time to time for the classification and remuneration of statutory and other bodies in which the Crown has an interest, including statutory entities and their subsidiaries and tertiary education institutions”. What does that mean? Does it mean that when Judy Bailey’s salary is doubled from $400,000 to $800,000 in what is not actually technically speaking a Crown entity but is nevertheless a Government-related activity, that is now at the discretion and under the framework of the Government? If I look at that in relation to tertiary education institutions, and if I read the fees framework correctly—and the Minister may like to take a call to enlighten the Committee on whether I am correct—it looks to me as though the Government will be able to control the remuneration of people working within tertiary education institutions. If it is correct that that is what the fees framework as defined in clause 51 means, I can understand why the vice-chancellors from eight universities in New Zealand, including Raewyn Dalziel who is the acting vice-chancellor of Auckland University, Derek McCormack at the Auckland University of Technology, and Bryan Gould at the University of Waikato—

I shall take a brief call on this part, because I think it is appropriate at some stage to remind members of the history of this legislation and to place on the record of the Committee my thanks to the Hon Simon Upton for the work he did in the preparation, organisation, and initial policy work that led to this legislation. It is a way to introduce consistency—

💬 Sandra Goudie: Bound to be deserted by this current Government.

The member should not refer to Simon Upton in that way. I think it is most inappropriate. Mr Upton—

💬 Brian Connell: I raise a point of order, Mr Chairperson. You may not have heard, but I heard my colleague very clearly. She did not comment on Simon Upton at all. She said—

The CHAIRPERSON (Hon Clem Simich): No, that is not a point of order.

The brief point I shall make is that Mr Upton left a legacy of quite a lot of policy work in this area. We held a debriefing, as good Ministers do. I had an excellent debriefing with Mr Upton; I could not say quite the same about Dr Smith “junior”. However, I had a very good debriefing and Mr Upton indicated to me that one of the ways in which he would measure the performance of this Government would be to see whether we had progressed this legislation in roughly the same form. It has been slightly improved. The review of the central part has been helpful, and I am sure that when Mr Upton makes it back to the country and looks at the legislation he will be well pleased.

I thought that when the Minister stood to give us an explanation, he might have given us an explanation about the very section in Part 3 that relates particularly to tertiary education institutions and their understanding of past history. Instead, he went right back to the dim, distant past, as far as I could see.

I believe that the Minister should also have taken more time and relayed to us why tertiary education institution representatives, particularly members of the Vice-Chancellors Committee, are so upset about what they see as the understandings of the working party that that Minister helped to develop but that they feel in the actual development of Part 3 seem to have been so misconstrued. I take that point, because the title of Part 3 and the suggested amendments begin with the words “Preliminary provisions”. I would like the Minister to take a call to tell the Committee exactly what that means.

I have been informed, and I know that the select committee was informed, that not only are tertiary institutions concerned about the actual language of these provisions in Part 3 but they are also very concerned about the implications of these provisions being passed in this Parliament, put into practice, and having implications for them following that. As I said earlier, they really feel that there is a shift from the known administrative matters under which universities are working. Instead, this is about a movement to a completely new framework where, in the language here, there is consistency in the way Crown entities operate, in the Government’s operation of Crown entities, and in accountability—all of which, by the way, are matters tertiary institutions feel they do rather well right now.

Does the Minister really want to have responsibility in the comprehensive sense for every tertiary institution? I know that we have heard some discussion here about polytechnics. One can think of the major tertiary institution in this country, the University of Auckland, and the size of the university as it is today, with almost 4,000 staff coping with 33,000 students, and with approximately only 36 percent of its funding coming directly from the Government. Its accountability is in the public domain with regard to what the Government seeks from the university. In relation to research, the work that is done by a leading university such as Auckland University, and others, in all cases has sponsors who demand accountability. Students themselves, increasingly and wisely so, demand accountability today, as well. Donors to universities demand accountability. Why then does the Minister, in the course of his or her year, seek to have the overriding power that is implied in the part before us?

Again, I would like the Minister to tell us what “Preliminary” really means. If that had been explained, along with the explanations we have had from the select committee about submissions made by the universities, there may have been another path on the part of the Vice-Chancellors Committee. But at this very point in time and as I speak, the Vice-Chancellors Committee, and in particular representatives of Auckland University, have expressed their extreme concern publicly in the last few days about what Ministers really desire with regard to the autonomy and academic freedom of tertiary institutions.

I think it is time to shed a little light and a little less heat on Part 3, and in particular on schedule 6B. I look forward to Deborah Coddington taking a call on this part, her having spoken on it when we were debating a previous part.

I, too, listened very carefully to the concerns of the tertiary educational institutions—as expressed by Mr Stuart McCutcheon in particular, and also by Mr Robin Mann, whom I see quite often—and I have really struggled to understand what it is that they are concerned about, which is not to say that I am indifferent to their wish to maintain the autonomy and academic freedom of tertiary educational institutions. The Green Party strongly backs the vital role of those institutions as critics and as the conscience of our society. But after some considerable examination we simply cannot see how this bill undermines the autonomy and freedom that those institutions have. Balanced against their desires is the need for the Government to exercise a degree of accountability for any organisation that receives taxpayer funding, and to ensure that there is a degree of transparency as to how that funding is applied.

I find it intriguing to hear John Key from the National Party wax lyrical about the constraints that tertiary educational institutions are under, given that they became Crown entities in June 1993. I am sure that the Minister can confirm for me that in June 1993 the National Party was in Government, and, therefore, it was National that added tertiary educational institutions to the fourth schedule of the Public Finance Act, and, therefore, it was National that would have done any undermining that Mr Key is now complaining about. It is quite a contradiction on his part to claim that this bill is undermining tertiary educational institutions, when in fact, at the end of the day, particularly because of Supplementary Order Paper 315, this bill maintains the legislative status quo for tertiary educational institutions. Indeed, in schedule 6B they are given a separate category of Crown entity in recognition of their distinctive character and relationship with the Crown. So I will be interested to see whether National members take any more calls to criticise their own behaviour in 1993, because in effect that is what they are doing. They are now admitting they made a mistake back then, and they want to reverse it—or perhaps they are just grandstanding.

We have before us a bill that has been significantly amended from when it was first introduced. In relation to tertiary educational institutions, particularly because of representations made by the Vice-Chancellors Committee, Supplementary Order Paper 315 makes a significant number of concessions to the tertiary sector by removing from schedule 6B the application of sections 174, 175, 199, 210, and 212. That really does put the situation on a par with the status quo. I know—because the select committee was told—that one of the outstanding matters, the issue of consolidation, is being addressed by the Financial Reporting Standards Board. The tertiary educational institutions agree with that.

I accept the tertiary sector’s concern, and I am sure I will be lobbied further on this matter, but I believe that, on balance, the status quo is maintained—a status quo that was introduced by the previous National Government. We believe that the Education Act 1989 provides tertiary educational institutions with sufficient protection from Government interference, and that this bill provides the degree of accountability and transparency that Parliament and the Government require.

Part 3 separates the various entities into five categories. In clause 48(1)(a), under “statutory entities” we have types of entities that are known as autonomous Crown entities versus independent Crown entities. Autonomous Crown entities must have regard to Government policy when directed by the responsible Minister, whereas independent Crown entities are generally independent of Government policy. I looked at schedule 5 to see what type of entity came under the autonomous category and what type came under the independent category, and I had some questions I want answered.

I invite the Minister to take a call and explain why the Families Commission is classified under autonomous Crown entities, whereas the Children’s Commissioner is classified under independent Crown entities. I was very relieved to read that the Children’s Commissioner is classified as an independent Crown entity, because that means it is independent of this Labour Government’s direction in policy matters, but it is quite frightening that the Families Commission is classified as an autonomous Crown entity, which means that it has to pay regard to Government policy. We all know what the Labour Government’s definitions of “family” can mean. We were told at one stage, and I am not sure whether it has changed, that gang members can be classified as “family”, or people who are perceived to have an attachment. So the definition of “family”, according to the Labour Government’s vocabulary, is a very strange concept that is nowhere near what the average New Zealander would consider a family to be.

The Minister should take a call and demonstrate to us that robust analysis has been applied to classifying those various entities into the right category. How can the Families Commission be categorised differently from the Children’s Commissioner? I think that only the Labour Government does not consider that “family” and “children” logically belong in the same category. If it is good enough for the Children’s Commissioner to become an independent Crown entity, but not the Families Commission, does that mean the Government does not have confidence in the Families Commission? On second thoughts, maybe the Labour Government has no confidence that the Families Commission will follow Government policy, in light of the fact that the creation of the Families Commission was a condition of its securing the support of United Future. Maybe my colleagues in United Future will take a call and explain whether they are comfortable that the Families Commission is having to pay respect to the Labour Government’s policy on families. I wonder what type of family it has in mind.

I point out that the school boards of trustees came before the Finance and Expenditure Committee and said they were very worried about the level of reporting requirement that might be imposed on these volunteers—on members of school boards of trustees. The officials reassured them that they would not be subject to very onerous requirements in terms of reporting. But then I turn to schedule 6A and 6B—

Dr the Hon LOCKWOOD SMITH (National—Rodney): In speaking to Part 3, I want to pick up on a contribution the Minister made a short while ago when he alleged that these reforms were originally the work of the Hon Simon Upton. That is a classic example, I suspect, of political licence—to be kind. Mr Upton may well have been involved in the initial concepts around reform of State sector management, but he surely would not have approved of some of the detailed, prescriptive measures in the bill.

I am particularly interested in asking the Minister what he seeks to do. Again, I think the Minister owes the Committee an explanation about some of the provisions. In particular, I draw the Minister’s attention to clause 51, “Interpretation”, where the definition of “direction” states: “direction means a direction given by a Minister under this Act”—the Minister should know what this means, because it refers to him—“or the entity’s Act to an entity”—that is fair enough; OK it might be possible for the Minister to give an entity a direction—“or to a member or employee or office holder of an entity”.

I think the Minister should explain what he seeks to do with this provision. Why would the Minister want to be able to direct an employee of an entity to do something? What is it that the Minister is seeking to achieve there? Because the whole idea of Crown entities is to have them governed by a board, to have them separate from political interference. That is the whole idea. Our tertiary institutions are Crown entities. Are we going to see this Minister able to give an employee of a university a direction to do something? Because it would seem on the face of this bill that that is possible. What is it the Minister wants to do with that definition? Why does it include an employee or office holder? What is it? What is the intent? I think the Committee is owed an explanation about that.

If the Minister in the chair, Trevor Mallard, wants to give a general direction to a Crown entity, that is one thing. It makes me a bit nervous, because the whole idea of Crown entities having their own boards is that it makes them a bit more separate from political interference. But when the definition of “direction” goes right down to “employee”, what is it the Minister is seeking to do? Why have that wording? Why have that in the bill? I think we are owed an explanation. What is intended with that? It is not unreasonable to request the Minister to explain that.

While I am on clause 51, I will go to the “fees framework” definition, which states: “fees framework means the framework determined by the Government from time to time for the classification and remuneration of statutory and other bodies in which the Crown has an interest, including statutory entities and their subsidiaries and tertiary education institutions”. What is it the Minister is seeking to do with that provision? Are we going back to the pre-1990 provision that the Minister’s colleague the Hon Phil Goff would be familiar with, where the Government set fees for tertiary institutions? Why is “tertiary education institution” specifically included in the definition of “fees framework”? Are we talking here about going back to the Crown being able to tell tertiary institutions what their fees will be? That went out in the law in the early 1990s, and the tertiary institutions appreciated getting—

💬 Hon Trevor Mallard: No, the upper limits were set under your legislation.

Dr the Hon LOCKWOOD SMITH: There were no upper limits under National’s legislation. The tertiary institutions were free to charge fees. Now, what is it? The Minister should take a call and explain exactly what the Government is trying to do here. It may be OK, but it is not clear. There are two issues under clause 51. One is the issue of directions by the Minister to an employee of a Crown entity, including tertiary institutions, it would appear. That is dangerous. The whole issue of academic freedom is at question here. I think we are owed an explanation.

I move, That the question be now put.

I was grateful, in a funny kind of way, to Pansy Wong for waking us up at this hour of the night to talk a little bit about the reference she managed to find in the Public Finance (State Sector Management) Bill to the Families Commission. Then she went on to talk about the fact that she could not quite remember how the family was defined in the Families Commission Act, so I thought I would take a call to refresh her memory of that definition, because it just so happens that I have the definition with me. For Pansy Wong’s information, this is the definition of “family”: “family includes a group of people related by marriage, blood, or adoption, an extended family, 2 or more persons living together as a family, and a whānau or other culturally recognised family group.” So I hope the member might find some time to write down the definition, because she has brought it up several times in the Chamber and she manages to get it completely wrong every time. I thought it would be a good idea to get it on the record once and for all.

I find it interesting that United Future thinks it has a monopoly on morals and on what defines a family, and that if two people are living together and are not married—well, it actually makes one want to rush out and sin when one hears speeches like that. Chance would be a fine thing! I want to draw the Committee’s attention to some anomalies in this legislation that Lockwood Smith has already highlighted—that is, the definition of “direction”, and the direction given by a Minister to an employee of a Crown entity. If one looks at the definition of Crown entities, one finds under “Autonomous Crown entities” that the New Zealand Symphony Orchestra is included in the schedules. The New Zealand Symphony Orchestra actually comes under the definition of Part 2 of schedule 5, which means that it “must have regard to government policy when directed by the responsible Minister”. We have two responsible Ministers here: the Prime Minister and the Hon Judith Tizard. What does this mean when the first violinist, who is an employee of the New Zealand Symphony Orchestra, is playing “dead white man’s music”, which the Associate Minister for Arts, Culture and Heritage has publicly said is not Government policy. She said that it is not Government policy that we should be playing “dead white man’s music”. The New Zealand Symphony Orchestra should be playing the music of people like Gareth Farr—

💬 Rod Donald: Fantastic music.

I do not deny that Gareth Farr and some of our New Zealand composers, such as Jack Body, are very good composers, but we have a very dangerous situation when any Government or any Minister can direct what sort of music a symphony orchestra can play, just because we have State funding of the arts. I would like a situation of having a free society where there is totally private funding of the arts. I know that that is not a reality at the moment, so I will not advocate that there should be no State funding of the arts. But there should be a strictly hands-off State funding.

This is one of the issues this legislation raises. When we have a definition of “direction” meaning “a direction given by a Minister under this Act” to a member—or to an employee, as the Hon Lockwood Smith pointed out—of what can be an autonomous Crown entity that has to have regard to Government policy when directed by the responsible Minister, then we start treading in quicksand. We get into swampy ground.

These are the sorts of things that this legislation should not be concerned with. It brings me back to what the Vice-chancellors Committee is concerned about. It is the principle of the Government’s clammy hands encroaching on all areas of life. Now, I am very sorry that I am keeping the Minister up, but it was his Government’s choice to go into urgency, so he has to endure another hour—

💬 Hon Trevor Mallard: I haven’t been so bored for a very long time.

Well, as I said, it is his Government’s choice to do this. I object to Ministers responsible, like the Prime Minister and Judith Tizard, directing a symphony orchestra, but the Minister should think of the principle. He might enjoy the music that the Prime Minister and the Associate Minister direct that the employees of the Symphony Orchestra should play. He should think about what the implications would be if I were the Minister for Arts, Culture and Heritage and directed that the New Zealand Symphony Orchestra should play the music of, say, Diana Krall.

I move, That the question be now put.

I am happy to rise to speak to Part 4 of the Public Finance (State Sector Management) Bill. If ever this bill was living evidence of some of the drivel that has been written into our legislation, we do not need to go any further than Part 4. If we have a bit of a look through it, we will see some of the absolute nonsense that has been written into legislation and, in particular, into this bill. I draw the Committee’s attention to some of the quite startling findings I made as I flicked through Part 4 earlier.

Here is an example. Clause 70, “Method of appointment of members”, lists a long and convoluted series of things that happen when either the responsible Minister or the Governor-General appoints someone. For instance, when the notice is sent out to the responsible member, it has to state the date when the appointment will take place. The member cannot start before he or she gets the letter. The letter has to state how long the person will be a member. That is pretty basic stuff. It is not exactly mind-blowing stuff that needs to be—

💬 Hon David Carter: Do they have to be current members of the Labour Party?

No, they cannot be a member of Parliament, funnily enough.

💬 Simon Power: Where’s the Minister in the chair?

That is right. It is nice of the Government to pay attention as we debate this stuff. Then we get to the good bit. Clause 72, “Qualifications of members”, states what it takes to be disqualified from being a member. The Minister in the chair, Trevor Mallard, will be delighted to know that he is disqualified under subclause (2)(e), because he is a member of Parliament—

💬 Hon David Carter: Under paragraph (a)!

Subclause (2)(a) refers to a person who is an undischarged bankrupt. I do not want to go into his personal business! My point is that under subclause (2)(e) he is discharged because he is a member of Parliament—at least until the next election. I want to go through these points. We are not intimidated by them. These are the interesting bits. There are all sorts of reasons under clause 72 why one can be disqualified from being a member of a statutory entity. [Interruption] He may fail on a number of instances. A disqualified person is, for instance, an undischarged bankrupt, a person who is prohibited from being a director or promoter of, or who is concerned with, a company under section 382 of the Companies Act—that subclause goes on and on—a person who is subject to a property rights order, a person who has been convicted of an offence punishable by imprisonment for a term of 2 years or more, or a member of Parliament.

💬 Hon David Carter: What about heterosexual males from Wainuiōmata?

A heterosexual male from Wainuiōmata?

💬 Hon Member: Are there any?

Some are and some are not. [Interruption] That is right.

💬 Simon Power: Roaming the savannah of Wainuiōmata.

They roam the savannah of Wainuiōmata! But that is not the interesting bit. [Interruption] The Serengeti of the Wainuiōmata! I have not been there for a while, but I am sure it is a great spot at which to holiday at Christmas. That is not the interesting bit. The interesting bit is that those are the qualifications and the things for which one can be discharged.

Clause 76, “Validity of members’ acts”, and clause 77, “Validity of appointments”, are really quite interesting. Clause 76 states: “The acts of a person as a member, chairperson, or deputy chairperson of a statutory entity are valid even though—(a) a defect existed in the appointment of the person; or (b) the person is or was disqualified from being a member; or (c) the occasion for the person acting, or for his or her appointment, had not arisen or had ended.” In other words, there is a long list of reasons why a person may not be eligible. [Interruption] Mike Williams gets there anyway. Even if one is ineligible and then all of a sudden one wanders along and does something, under clause 76 that is all valid.

But the real classic comes when one reads clause 77. The Minister is looking around. I know it is late in the night but he really should pay attention to this stuff, because it really is outstanding legislation and I have absolutely no doubt that it is worth the Committee’s time being here in urgency! This is the best bit. Clause 77(1) states: “The appointment of a person as a member, chairperson, or deputy chairperson of a statutory entity is not invalid only because a defect existed in the appointment of the person.” In other words—

💬 Jim Peters: Nobody’s perfect.

Yes, that is right, who is perfect, anyway? People can have all the defects, and can totally contradict clause 72, and it does not matter what they do, that will not stop them from getting the job. Everything will be OK anyway. We are here, in urgency, writing down on bits of paper that people cannot become members until they have received the letter and cannot be removed until the notice has been in the Gazette. People cannot be members if they do not comply with all those different things, but if they do become members, they need not worry, because it is all absolutely OK, fine, and hunky-dory. Under this Government they can lie in unison and lie straight in bed at night with absolutely no problem.

I appreciate the opportunity to speak, and will just comment that I was disappointed in the previous Chair for taking a closure on Part 3 as quickly as he did, because he did not give some of us the opportunity to contribute a second time to that debate. Although Part 3 is short, it is a significant part, and I will briefly take this opportunity to promote my amendment to Part 3; it relates to the list of Crown agents in schedule 5.

The Government Superannuation Fund Authority took the unusual move of making a submission to the Finance and Expenditure Committee asking to be reclassified as an autonomous Crown entity. I guess it wants the same status as the Guardians of New Zealand Superannuation. My amendment certainly gives it the same status, but through the process of shifting the Guardians of New Zealand Superannuation from being an autonomous Crown entity to being a Crown agent. In the Green Party’s strong view, if that fund is to continue, then it needs to give effect to Government policy, rather than to have regard for it, as it does now. We have real concerns that the Guardians of New Zealand Superannuation will rush off and make investments in public-private partnerships that it sees potential profit in but that do not deliver the whole-of-Government outcomes that we believe our taxes should be invested in. That is why it would be preferable for it to become a Crown agent.

The other matter that should have been traversed to a much greater degree, given the concern of the tertiary education institutions, is the very clear clause 47B(2), which states categorically that, with the exception of the provisions set out in schedule 6B, “… Parts 3 to 7 of this Act do not apply to tertiary education institutions and their Crown entity subsidiaries.” I found it extraordinary that Opposition members from National and ACT, having waxed lyrical about how bad this bill is for the autonomy of tertiary education institutions, then proceeded to vote against Supplementary Order Paper 315, which actually removed some of the constraints that the Government was originally going to place on those institutions in the bill. They actually voted against the very thing they were calling for. But, then again, we cannot expect intelligent input from some members on the Opposition side, especially on a night like this when it is the press gallery party and some members are clearly “tired and”—what is the phrase?

💬 Hon Trevor Mallard: Spirited.

I think “tired and emotional” is actually the point. I move to Part 4 quickly, and say that we offer a very constructive—[Interruption] Some members would like to go to the press gallery party. Well, in approximately 49 minutes they will be able to get back to that party. My colleague Nandor Tanczos has been monitoring the party, and apparently it is still flowing very well—indeed it is.

Turning to Part 4, I invite members of the Committee to look at my very constructive amendment to clause 71(2)(b), which is simply to insert the words “and employee representation” after the words “promoting diversity”. If Mr Key is concerned about Part 4 being terribly politically correct, we can make it even more so for him, if he likes, by saying that we think it is in everyone’s interest, but particularly in the interests of those people who work for Crown entities, for there to be an employee representative on the boards of those entities. We are not requiring it; we are making the suggestion in the spirit of clause 71(2)(b), which would then state that “… in appointing or recommending an appointment, must take into account the desirability of promoting diversity and employee representation …”. That would be a step toward a more cooperative model of governance, which is something the Green Party has long stood for, because we are strong advocates of workers’ cooperatives. In fact, many of us have a business background in workers’ cooperatives, and we believe that those same excellent governance principles that work effectively in the private sector could be adopted in the Crown entities of the public sector.

I wish to speak very briefly with regard to Part 4. I see that the Minister is smiling, and the only reason I can think of for that is because he is thinking of the Teachers Council, one of the autonomous Crown entities, which at the present time—and, unfortunately, on the very day that most primary schools in the country close for the year—has huge problems. No doubt the Minister is thinking quietly to himself about clause 82, which refers to how the Minister, with as little formality and technicality as possible, is permitted by natural justice and a proper consideration of the matter to bring appointments to the Teachers Council board to an end. If ever a council needed that thorough listing of issues of concern, such as accountability and delivery of service, it is the Teachers Council. The Minister ought to look at that very, very closely, because so many people in front of classrooms in the last term had no training, were not qualified or registered, or were people with limited authority to teach who had not been verified or checked.

The situation in a number of schools that I can mention is such that the Teachers Council has no ability whatsoever, on behalf of the Minister and the ministry, to monitor the work of those schools, at all. Secondly, the council does not seem to be able to keep chief executive officers. They have come and gone, so I suggest to the Minister very strongly that the provisions of section 82 need to be put into practice as soon as possible. When this bill is passed, the Teachers Council should be the very first body to be addressed by this clause, and the actions the Minister ought to have taken should be taken under this bill as soon as it becomes law with the Queen’s assent.

This bill goes from bad, to worse, to the bizarre. As we look at Part 4, we see that it is bizarre. I draw members’ attention to clause 57, which sets out the core things that statutory entities can do. What does it state? It states: “A statutory entity may do anything authorised by this Act or the entity’s Act.” What a stupid clause to put in. Obviously statutory entities cannot do things they are not authorised to do. Clause 58 is: “Other things statutory entities can do”. They can do anything “a natural person” can do.

This is typical of this Labour Government. The legislation it is passing through this Parliament is just junk law. If we look at clause 65, “Interpretation”, we see that the word “do” is interpreted, and that its meaning includes: “(a) to do an act;”. I know that one should not bring the Speaker into the debate, but just in passing may I suggest that Mr Speaker Hunt would be horrified at the grammar in this bill. What on earth do we mean by: “to do an act”? For example, clause 59, “Acts must be for purpose of functions”, states: “A statutory entity may do an act …”. For goodness’ sake! What are we coming to in this Parliament when we pass legislation that includes language that is not even English? I do not know what language it is, but “to do an act” is surely not English.

It gets even worse than that. I draw to members’ attention clauses 67 and 69. Clause 67 spells out the accountability of members of entities to the responsible Minister. It states that members of entities—I presume that includes individuals and can even include employees—are accountable to the Minister for any directions given to an entity. They are accountable to the Minister, yet if we look at the original clause 69, struck out by the Finance and Expenditure Committee, we find that now the Minister is not accountable to this House. Members of Crown entities are accountable to the Minister, but the Minister, in relation to this bill, does not appear to be accountable to this House. I think the Minister should explain to Parliament why that provision was in this part, and why there is no clause requiring him to be accountable to this House when statutory entities or their members have to be accountable to him.

I come back in particular to the provisions of clauses 59 and 65, where we get down in law to interpreting the word “do”. I imagine that in court we will have problems with that. In courts of law there will be problems because “do” has a general meaning in the English language, and if legislation like this one seeks to redefine what “do” means, I suspect there will be problems with the law. I think the Minister should explain why on earth it is necessary to interpret what the word “do” means in legislation, and why on earth this bill includes the language “to do an act”.

💬 John Key: It sounds sordid, actually.

Dr the Hon LOCKWOOD SMITH: I do not want to put that kind of unsavoury interpretation on it, but I think that if the Minister expects this Parliament to treat his legislation seriously, he should explain why on earth he is coming along to this Committee with that kind of language in a bill. Clause 59 states: “A statutory entity may do an act …” under various sections “… only for the purpose of performing its functions.” What on earth is that kind of language in our law for? I think the Minister should explain that. As for spelling out in clause 65, “Interpretation”, what “do” includes—it includes, firstly, “to do an act”—that is just bizarre lawmaking.

Here we have in clause 71 another example of pointless legislation. If we read the heading of clause 71, it gives us the impression that there are some criteria for appointments or recommendations made by the responsible Minister.

💬 John Key: What are they?

Well, there are not any. When we read through the clause, we see that it states: “(2) A responsible Minister—(a) may only appoint … a person who, in the responsible Minister’s opinion, has the appropriate knowledge, skills, and experience …”. That has not prevented the president of the Labour Party from being appointed to eight different Crown entities with a rumoured salary of about half that of Television One’s favourite newsreader.

💬 Deborah Coddington: How much?

Well, it is just rumour. I would not want to represent it to the Committee as fact.

So that part of clause 71 means that there are actually no criteria. I ask the Minister in the chair, Trevor Mallard, to ask his officials what the criteria are, so that he can advise the Committee. “Criteria” means exclusion. “Criteria” has no meaning unless it excludes some things. I guess that is a matter of the philosophy of logic or something, but, in this clause, it includes everything. So the Minister can get up and tell us who could be excluded from being appointed to any Crown entity by clause 71, which is headed: “Criteria for appointments or recommendations by responsible Minister”. Of course, there is a set of unofficial criteria.

Then the Minister can tell me what clause 71(2)(b) means. Talk about weasel words! Clause 71(2)(b) provides that a responsible Minister: “(b) subject to subsection (1),”—which means he must appoint the people consistent with the criteria, which do not exist—“in appointing or recommending an appointment, must”—there is strong language—“take into account the desirability of promoting diversity in the membership of Crown entities.” So it does not state that he must ensure diversity. If it were to do so, at least that particular clause would then have some integrity, because it would be a directive to the Minister, or a requirement in the law, that he must ensure diversity—but it does not say that.

So one could breach that clause. It could actually mean something because one might not do it, but the clause states that the Minister must take into account the desirability of promoting diversity. So it is not even the desirability of diversity itself; it is the desirability of promoting diversity. It actually means nothing. How could one ever show that a Minister has not taken into account the desirability of promoting diversity? I desire to promote diversity—absolutely! Who would not? It does not mean that I am compelled to appoint anyone in particular for any reason at all.

So clause 71 is a complete waste of time. It has no legal effect. I would welcome it if the Minister could get up and tell us. He has four officials here at half past 11 at night. He should go and ask them some questions. What is the legal effect of clause 71? Who does it exclude, and who cannot be appointed? What behaviour of a Minister would amount to a breach of clause 71, and, if there is a breach of that clause, what would happen then? Who will take action against the Minister over the provision that mentions the desirability of promoting diversity?

The old Labour Party used to be just for diversity. It used to ensure it and it used to make one do it.

💬 John Key: This is the third way!

It is the fourth way, actually. The third way was to promote diversity, and the fourth way is to ensure the desirability of promoting diversity.

Of course, what Labour members do when they get up in front of diverse audiences is say something quite different. If they stood up in front of the Māori community and said: “This is the section that guarantees you are going to get appointed to Crown entities.”, the audience would laugh, because they would know it means nothing. What Labour members get up and say is: “We will make sure absolutely that you are going to get there.”

I have been somewhat stunned by joining this debate and picking up on the points that have already been made. I am particularly alarmed by clause 71(2). I will carry on with the point made by the Hon Bill English, who touched on the issue—I do not think he made the point firmly enough—that the president of the Labour Party, Mike Williams, is involved in eight State agencies.

💬 John Key: So far!

So far. I understand they are: rail; historic places, I think; health; Genesis Power, as I recall; and geological and nuclear science—this is an extraordinary man! Who can honestly believe that that fulfils the criteria of clause 71(2)? That clause states that the Minister “(a) may only appoint or recommend a person who, in the responsible Minister’s opinion, has the appropriate knowledge, skills, and experience to assist the statutory entity to achieve its objective and perform its functions.” Is this man, Mike Williams, the president of the Labour Party, an expert on rail? He may have had a train set as a boy but does that make him an expert on rail? What does he know about historic places? What does he know about health, energy, or geological surveys and nuclear science? The Labour members will be telling us he is a nuclear physicist next!

This is extraordinary. What it stinks of—because there is a very, very bad odour associated with this—is that the Labour Party wants its full-time president travelling the country, selecting candidates, and always having an excuse to be in Oamaru tonight or Te Awamutu next week, because if one has eight State agencies, one can virtually be anywhere, anytime, sucking into the public purse. That is what it is about.

💬 Rod Donald: Like Ross Armstrong.

It does smell a bit like Ross Armstrong, a great friend of the Prime Minister, Helen Clark, as the member from Christchurch Mr Donald will remember. That is what this smells of.

I recall when we made the major State sector reforms in the late 1980s. In the honourable Labour Government that I was a proud member of, we made a point of transparency. We made a point of not appointing party hacks; we appointed people on merit. I believe that the National Party in Government throughout the 1980s maintained to a lesser standard that same principle. But what we are seeing now is an overt appointment of party hacks and party cronies to high-paid public agencies. We hear in this debate—and I hope that people in New Zealand listening to this debate will appreciate this—that the president of the Labour Party has been appointed by this Labour Government to eight boards! He is chair of some, but he does not have, and no one can sensibly believe that he has, the competence and the abilities that are outlined in clause 71. That is an outrage.

The Minister sits there like a maturing cheese. He has not said boo all night. He will not get off his chuff. He will not get up on his hind trotters and explain this appalling legislation. I say to the Minister in the chair that he should wake up, take a call, and answer these serious questions that are being put to him tonight. It is an outrage; this Parliament is offended; the New Zealand public are offended. It is a gross, gross arrogance, and it is just an appalling situation.

I ask the Minister in the chair, Mr Mallard, to please take a call. He needs to respond to these serious questions. How is it that the president of the Labour Party so far has had eight appointments to those high-paying public bodies? There have been eight appointments, including some of chairman. He could not do justice to them all. I put it to the Minister that it is just a guise and way for this Labour Government to abuse its executive powers in order to pay its party hack, its president, to travel the country.

I move, That the question be now put.

I have been waiting very patiently to make a contribution on this part. I want to start by commenting on clauses 57, 58, and 59. My colleague Lockwood Smith touched on this territory, as well. Clause 57, “Core things statutory entities can do”, refers to the fact that an entity may do anything authorised by this legislation or by the entity’s Act. That is fine. I wanted to check to see what that meant, so I turned to clause 58, which tells me the other things that statutory entities can do: “A statutory entity may do anything that a natural person of full age and capacity may do.” That was not terribly clear, so I thought I would take a call and ask the Minister in the chair, Mr Mallard, to get to his feet and explain to the Committee exactly what it means. But I thought that before I did that, I would read on, so I looked at clause 59, “Acts must be for purpose of functions”, which states: “A statutory entity may do an act …”.

That is the issue that my colleague Lockwood Smith raised. A natural person is someone who does an act.

💬 Hon Ken Shirley: What is an unnatural person?

That was the question I was going to pose of the Minister, so let me do that. I ask the Minister what an unnatural person is, and what acts he or she does. [Interruption] That is the natural conclusion, is it not?

💬 Hon Ken Shirley: Ask the Minister of Police.

Well, OK, I will ask the Minister of Police. What is an unnatural person, and what does such a person do? The Minister in the chair does not want to rise to his feet and take a call. But the question remains. A natural person does an act—and we are meant to take this legislation seriously! I turned over the page to look at some of the other clauses, and saw that clauses 61, 62, 63, and 64 go on to deal with natural acts. I am none the wiser as to what those clauses relate to. I ask the Minister to take a call, if he dares—if he can, and if he will—to explain to us exactly what is meant by those clauses.

I now turn to clause 73, “Requirements before appointment”. Mr Key and Mr English talked about that, and Mr Key used the word “drivel”. I can only concur with his analysis. The clause states: “Before a person is appointed as a member of a statutory entity, the person must—(a) consent in writing to being a member;”—I think that is fair enough—“ and (b) certify that he or she is not disqualified from being a member;”. I wonder whether we have got the order wrong. Surely when this legislation was being drafted, the first question that should have been asked was whether a person was qualified or disqualified, before we got the person to write, stating that he or she consented to being a member. The clause goes on to state: “(c) disclose to the responsible Minister the nature and extent (including monetary value, if quantifiable)”—and I am sure Mr Williams would like to tell us what is quantifiable, in terms of his money—“of all interests that the person has at that time, or is likely to have, in matters relating to the statutory entity.” I thought that was reasonable. Then I read on to subclause (2), which states: “The board of the entity must notify the responsible Minister of a failure to comply with subsection (1)(c) …”.

So what we have is a member of a board who may be disqualified, but we find that out only after he or she has consented in writing to becoming a member of the board, and then we find out that once appointed, if a member has not disclosed the fact that he or she has some conflicts of interest, then he or she can no longer be a member of the board. I have been around a bit, but I would have thought that sensible, reasonable practice would have applied, and it would have been ascertained in the first instance whether someone did not qualify to be a member of a board because of some clear disqualification.

I move, That the question be now put.