State Sector and Public Finance Reform Bill

I advise members that the debate on this part also includes the schedules 3B through to 4.

Tēnā koe, Mr Chairman. It is delightful to see you at this hour of the morning, which I think is still technically part of Tuesday, but you are looking in pretty good shape. I am so pleased that you have mentioned the schedules, because I am sure that they are going to excite a lot of attention from members on our side of the Chamber. Part 3 is a very important part of the State Sector and Public Finance Reform Bill, and I hope that with your good grace, Mr Chairperson, we will have ample time to scrutinise its clauses, because this is fundamental legislation. This might sound like housekeeping, but, believe me, it is not. This is some of the core legislation that amends the Public Finance Act, the State Sector Act, the State-Owned Enterprises Act, and other core Acts that actually determine the machinery of government so that when the Ministers of the day, the Cabinet of the day, pull the levers of power, something happens and we can tell what happened. For that to occur, we need to make sure that the rules of delegation, of financial probity, of accountability, all are tight as a drum and work as they should.

In the past, one of the things that has happened is that in an effort to make sure that the Public Service and the public sector operate efficiently and accountably, there has been a tendency for departments to work on an individual basis and for their differing views to ultimately be brought together around the Cabinet table, if they have not been harmonised prior in a Cabinet committee. For many, many years Governments of both sides have viewed that as an imperfect state of affairs. We look forward to hearing the Minister in the chair, the Minister of Immigration, with his long experience, give the Committee the benefit of his views as to how this could be made to work better. But for members opposite, the objectives set out in Part 3 of the bill are incontrovertible. That is, that the Government should be able to issue whole-of-Government directions and employ a range of new legislative powers set out in this part of the bill to require, if persuasion has not already done it, Government agencies to work together for a common cause.

It might be, for example—let us think of a random example—border security requiring immigration and customs to cooperate by data sharing to pool their information to better identify risks coming across the border. A lot of that happens anyway. I do not wish to create any false impression. There is excellent cooperation between those two agencies, but at the level of detail, if necessary, this part of this bill will give the Crown the authority to legally require cooperation between departments, which is particularly important for enforcement agencies.

Of course, this is an interesting week to be discussing this bill, because outside the Chamber in media-land, public attention has been focused on cooperation between a number of other agencies, some of which have been decidedly outside the law, where some of our security agencies have been subcontracting to others without legal authority. There is now a desperate scramble by the Government to legalise activities that have hitherto, by its own admission, been outside the law in some 88 known cases. That is certainly something that neither side of the House could countenance. The question is whether the solution to that is actually to rein in some of those behaviours or otherwise to adjust the law to catch up with reality. The Labour Opposition believes that the rule of law should be paramount and that at no time should there be any actions outside the law, but that is a debate for another day.

The amendments to Part 3 are crucial. They are just aspects of the Crown Entities Act 2004, and they bring that alignment to bear not only on Government departments but on entities that are one step removed from departments—Crown entities. This is also an extremely interesting avenue for debate, because there is a well-known and very visible oxymoron going on on the part of the National Government here. On the one hand, it is passing this legislation, which we heartily agree with, that there should be ways of improving cooperation between core Crown agencies and Crown entities and getting Crown entities to work together, and, on the other hand, it has embarked on a partial privatisation programme for the State-owned entities, which will make it harder for the Crown to govern those State-owned enterprises as a portfolio, and puts them further away from cooperative effort.

The key example is the electricity system. We are an energy-dependent country. Right around the country, New Zealanders are either shivering through the winter or facing bigger power bills, and the Prime Minister thinks that that is just fine and dandy, and that power prices are not too high. He thinks they are “about right”, but New Zealanders know they are not about right at all. Power prices have been going up faster than wages, faster than incomes, and they are putting huge pressure on our families. Last weekend I was doorknocking in Upper Hutt and I had the privilege of meeting some families who are doing it tough in flats that looked more like dog kennels that leak, that had mould growing up the walls, that had children growing up in them with respiratory disease. Every time I go out doorknocking in areas of high deprivation, I am shocked all over again by the way some people live. Why do I mention that? Because energy poverty is part of the bigger picture. Privatising our energy system, as the Government is trying to do, is going to be putting more pressure on family budgets because power prices are going to rise.

What is the relevance to this bill? The relevance is very clear. In this bill the Government is trying to draw Crown entities into closer cooperation by requiring that cooperation through whole-of-Government directions. At the same time it is removing the existing power to direct State-owned enterprises, the power companies, currently residing in the State-Owned Enterprises Act, and scrubbing that out because they will just be publicly listed companies like any other in which the Crown happens to hold 51 percent. But there is no power to direct, no no-surprises rule, no portfolio synergies, no sense of strategy—that will be the oxymoron at play. The Government is probably doing the right thing in this bill, but it sure as heck is doing the wrong thing with the privatisation of State-owned enterprises.

Broadening the grounds, as this part does, on which the Minister of Finance and the Minister of State Services can issue whole-of-Government directions, and allowing those directions to be issued either to all departments or to a smaller group of entities, including Crown entities, presupposes a more important point, a prior point: does the Government have a strategy upon which to direct? We have a Government here, which, at best, resembles parts of the Holyoake Government of the 1960s—steady as she goes, don’t fiddle with it, she’ll be right. I have never seen four less effective, more boring Budgets than the last four that Bill English has brought down. The bits that were not boring and meaningless were positively downright awful, like giving huge, fiscally negative tax breaks to rich people and putting GST up on everybody else. What has this Government actually done in the way of economic strategy other than making New Zealand’s incomes more unequal through the tax system and putting off paying for superannuation so our children face higher taxes?

The Government wants to issue whole-of-Government directions. This part of this bill gives it the power to do so. We think that is a good thing. But in order to issue whole-of-Government directions, it has got to have a direction to travel in in the first place, and the problem with this good-for-nothing, lackadaisical, lazy, useless National Government is that it would not know a direction if it tripped over it. Government members would not know a strategy if it bit them on the behind. They would not know an economic plan if it fell off the top of Steven Joyce’s glossy head. I have seen so many glossies out of “MoBIE Dick”, the Ministry of Business, Innovation and Employment, that I am so sick of public relations spin, rebranding and reissuing things that have been done since Adam was a cowboy. What I am still waiting for is a real plan that will grow jobs and incomes and employment and well-being. It is all very well in this part of this bill—Part 3 of the innocuous, boring State Sector and Public Finance Reform Bill—to give themselves the power to issue whole-of-Government directions, but there is no direction to issue, because they have no idea what direction the country should be heading in.

It is a pleasure to rise to talk on Part 3 of this legislation, the State Sector and Public Finance Reform Bill. [Interruption]

The CHAIRPERSON (H V Ross Robertson): Order! Order! I know it is Thursday morning—

💬 Hon Member: It’s not Thursday.

The CHAIRPERSON (H V Ross Robertson): Well, Tuesday morning, then. I know that everyone is in jovial spirits, but the reality is that we have one speaker addressing Parliament, and when members who do not have the floor interject on each other, it is not permitted. All of you may have a call or take one shortly.

I raise a point of order, Mr Chairperson. I wonder whether you could clarify for the member opposite which part—[Interruption]

The CHAIRPERSON (H V Ross Robertson): Order! There is a point of order on the floor. The member is a long, long experienced member and he knows.

💬 Rt Hon Winston Peters: Point of order.

The CHAIRPERSON (H V Ross Robertson): I already have a point of order from the Hon Maryan Street. [Interruption]

I think he has just recognised my point of order.

The CHAIRPERSON (H V Ross Robertson): I cannot take two.

Thank you very much, Mr Chair. I wonder whether you could clarify for the members opposite which part of the bill we are discussing. Is it Part 3?

The CHAIRPERSON (H V Ross Robertson): It is Part 3.

💬 Rt Hon Winston Peters: I raise a point of order, Mr Chairperson. I hate to interrupt my colleague, but that was, in part, what my point of order was, because I was actually shocked to find out that across the Chamber someone thought it was Part 2. But, then again, that is the person who would have things not happen over her dead body.

The CHAIRPERSON (H V Ross Robertson): Thank you. As I said, it is Thursday morning, but we are still in Tuesday.

Thank you very much, Mr Chairperson. In case some of the members opposite who were also here in the Chamber late last night when I spoke on Part 2 of the bill, which we have just passed, were asleep at that time, I would like to repeat the importance of this legislation and the timeliness of it. I glossed over the fact that it is 100 years this year of good-quality public service in New Zealand. That is being celebrated by Transparency International New Zealand as it moves to do its audit on our processes and the apparatus that keep us at the top of the indices on transparency and on the perception of a lack of corruption. Those are parts of our reputation that I personally—and I know my colleagues also—hold very dear. That reputation is absolutely predicated on the transparency and the quality of the Public Service.

So it is 100 years of public service and, simultaneously, 100 years since the formation and of the work of the Public Service Association. In case people were not up at midnight last night when I said that, I would like to draw that to people’s attention again. I would also like to invite people to come to the opening of the exhibition of 100 years of the Public Service Association’s banners at the Nelson Provincial Museum in a couple of weeks’ time. If people wish to have a weekend in Nelson—which, of course, is a lovely place to be—come on the Friday night and come to the opening of that banner exhibition, which is part of the history of the Public Service Association, an organisation that has always prided itself on defending the quality and the independence of our Public Service.

In accordance with this bill, that is apposite, because amendments that have been made to this legislation have been done with agreement across the House and have also been taken to the Public Service Association and the Council of Trade Unions as appropriate stakeholders in this legislation. That is important, and it is one of the things that allows us to have a robust Public Service—that it also has union representation that not only protects the terms and conditions of the people who work in the Public Service but also works to ensure the highest level of integrity of that service. So I would like to pay my particular tribute to the Public Service Association in its centennial year.

But one of the things I want to focus on especially in Part 3 is the point that my colleague David Cunliffe has been talking about just now in a slightly different context. It is the requirement that boards of statutory Crown entities—and this is the relevant part, because we are talking about amendments to the Crown Entities Act—ensure that those entities collaborate with other public entities where appropriate.

Again, I would like to give an example that may highlight the importance of this. That example is that for the moment in time—the moment in history—when I was the Minister for ACC, a portfolio that I really loved, one of the things I enjoyed about it was the fact that I chaired a cross-government working group. In those days we had an Injury Prevention Strategy. We no longer have an Injury Prevention Strategy under this Government, which is a tragedy. But when we did, there were six work streams in that Injury Prevention Strategy and they covered a huge array of Crown entities and ministries and departments, so they covered all kinds of interests.

When that committee met to consider the Injury Prevention Strategy and its success or otherwise in each of those streams, it meant that the people in the room were from the Ministry of Justice, they were from the Ministry of Transport, they were from the police, they were from Water Safety New Zealand, they were from the Ministry of Health, and they were from mental health organisations, in particular. They were from a whole range of interests. If this is one way of getting the Government to work more horizontally than vertically, then I welcome it. That committee I am using as the example worked horizontally because it needed to look at suicide prevention, it needed to look at deaths and injuries caused by water, and it needed to look at road transport accidents. It needed to look at six areas where injuries could be prevented. It had a work stream on falls. Well, it is unfortunate that this Government has now taken away the funding for the National Falls Prevention Strategy that was in place. It really enabled lots of elderly people to prevent themselves from falling and having those injuries that we know are so tragic and difficult in older age.

So the point is that in this committee room—and, yes, it was almost bigger than Ben-Hur—to have all these people talking to each other was critically important. The prime example I give, which will be of interest to my colleague Iain Lees-Galloway, is that across each of those work streams, 28 to 35 percent of the accidents, if I remember correctly, were caused by alcohol. In seeing that synergy across six different work streams of injury prevention, it was patently obvious that an area that the Government needed to focus on was harm caused by alcohol. That, I have to say, is another lost opportunity that this Government has committed in recent months—that it did not take the opportunity to reduce the harm caused by alcohol in the way that it could have.

When I as a Minister was sitting there with all of those departments there, they could all listen to each other. In transport, we could talk about road transport accidents. We could talk about deaths by boating, injuries from boating, or water-related accidents, and so on. Then it became clear that there was an underpinning commonality amongst all of those that should become a priority for Government action, and so it did with our Government, with the inquiry and the report on alcohol reform from the Law Commission.

I use that as an example in order to point out why this legislation is important. It is so that we can ensure that requiring the boards of statutory Crown entities, not even departments or ministries but just Crown entities, to talk to each other—like requiring Housing New Zealand, for example, to talk to other parts of Government apparatus—would be an advantageous thing for the people of New Zealand. I welcome this provision, in particular, and I welcome it as a little step. I do not see it as a huge, cataclysmic step or an improvement in Government administration, but I do see it as an important small step to learning how we might govern horizontally across portfolios and Government departments and Crown entities, rather than vertically in the silos that we have been accustomed to administering in the past. I think this is a useful harbinger, I hope, of change—

I am very pleased to take a quick call on Part 3 of this bill, the State Sector and Public Finance Reform Bill. We have had a very long and thorough debate on this legislation so far, and—

💬 Hon David Cunliffe: More to come.

I am looking forward to further comments from the honourable member Mr Cunliffe. I was just interested to see that the main point of Part 3 is to create a range of public sector management tools to foster an innovative, effective public sector to deliver better-identified results for New Zealanders. What we mean by that is that all these public entities, these Crown entities, have grown like Topsy over the years. Some of them are doing their own thing, and it is not unreasonable—indeed, it is a perfectly reasonable idea that we would—

💬 Hon David Cunliffe: I raise a point of order, Mr Chairperson. The Standing Orders provide that in instances where a member is reading from an official document, there is an opportunity for that document to be tabled so that the Committee might have access to the underlying information. If the member is reading from an official document, I seek leave for it to be tabled.

The CHAIRPERSON (H V Ross Robertson): I thank the honourable member for that. The member should know that normally a request like that is done at the end of the member’s speech.

Given the fact that we have heard many lengthy comments from that member, perhaps he might have the courtesy of listening to the short and succinct comments that I prepared to make on this bill. As I was saying, the member did ask and question—

💬 Hon David Cunliffe: You write books.

Well, yes, but I write about successful people; that is the difference there. I want to remind the Chamber that we are talking about—

💬 Hon David Cunliffe: John Banks.

That was one of the earlier ones. I want to remind the Chamber that the member was talking about the lack of overall direction by this Government, so I thought I should just remind him that there is no lack of direction. It is very clear that we are focused on those four things: getting the books in order, creating a competitive economy, building better public services, and rebuilding Christchurch. That direction is very well articulated, and it is consistently prepared and consistently driven forward by this Government.

This legislation is one piece of the jigsaw, one piece in that delicate lattice structure that is the arrangements of the Government in order to enable the Government of the day, where it has worked out what its priorities are, to effect those priorities through the work not just of Government departments but also of Crown entities, so that we working together and pulling in the same direction.

One of the details is around the area of statements of intent, and one of the proposals in this bill is to enable a Crown entity’s responsible Minister to require the entity to prepare a new statement of intent at any time. Again, this is just another mechanism by which we can call the parties to account and make sure that everybody is singing from the same song sheet at the same time. So on that basis I am very keen to have continued with this detailed discussion of Part 3 of this bill this morning. Thank you.

💬 Dr Rajen Prasad: Mr Chair.

💬 Jacinda Ardern: Mr Chair.

💬 Dr Rajen Prasad: Oh, a difficult decision.

Front bench.

💬 Dr Rajen Prasad: I was first.

The CHAIRPERSON (H V Ross Robertson): It is not a race. I call the honourable member Jacinda Ardern.

Thank you, Mr Chair. It is a gamble every time, but I appreciate the opportunity. And I know that this only gives Mr Prasad more time—

💬 Hon David Cunliffe: Dr Prasad.

—Dr Prasad; what an outrage of me—to prepare further queries for the Minister in the chair. I certainly have some of my own. I think, though, just for the purposes of those who may be watching this crucial debate and may be seeking a summary, perhaps, of what we are debating here—Part 3 of the State Sector and Public Finance Reform Bill—obviously, my colleague the Hon David Cunliffe has already talked about the ability for the Government to set whole-of-Government directions. There is some debate around whether or not that is, indeed, possible. He has set that out. I will have a little bit more of a discussion about that, but other elements of this part include requiring the boards of statutory Crown entities to ensure that the entities collaborate with other public entities where practicable. I wonder whether or not the Minister in the chair could talk us through some examples that may have been canvassed at Finance and Expenditure Committee level of what that collaboration may look like, and some situations where we could have benefited from that previously, but, without having that set out clearly in the Crown Entities Act, which is what that amendment amends, we were not able to. I think it would be beneficial to the Committee if we had some tangible examples there to work from.

Equally, Part 3 enables the broadening of the grounds for which the Minister of Finance and the Minister of State Services, as I have already said, can issue whole-of-Government directions, and allow directions to be issued to smaller groups of entities. I do have some questions at that point around the degree to which that then hands over, I guess, the discretion or the power of the primary Minister who oversees a particular department, by broadening the role of the Minister of Finance. For instance, clause 162 amends section 107, and that is about the whole-of-Government directions, which, of course, have been changed to directions to support the whole-of-Government approach. It sets out there that “The Minister of State Services and the Minister of Finance may jointly direct Crown entities to support a whole of government approach by complying with specified requirements for any of the following purposes: (a) to improve (directly or indirectly) public services: (b) to secure economies or efficiencies: (c) to develop expertise and capability: (d) to ensure business continuity: (e) to manage risks to the government’s financial position.” That is quite a broad set of criteria that would allow that specific intervention.

I raise this because I have seen, particularly in recent times with the management of the Ministry of Social Development, that recently the Minister undertook a process where a company by the name of Taylor Fry carried out an actuarial evaluation of the future liability of welfare, essentially, in New Zealand. It put a figure on it, and the reason that the Government claimed that it wanted to do that was to put requirements, set directions, for the Ministry of Social Development by Treasury as to what it then had to achieve to bring that future liability down. Potentially, the Ministry of Social Development could lose future funding, baseline funding, almost putting it on a whole-of-Government performance pay. That whole ministry could lose future funding if it did not reduce its future liability. You can raise significant questions over that. As soon as you hit financial trouble or you hit a recession and you have an increase in the number of people placing demands on the welfare State, and then suddenly you have a department unable to meet its requirements as set out by Treasury, its baseline drops, as does its ability to then do its work and reduce its future liability, and it becomes a self-fulfilling prophecy, if you will.

But my concern is that all of this actually has been governed, has been driven, by the Minister of State Services and the Minister of Finance. In fact, Cabinet papers that I have read on this particular issue have all been signed off by the Minister of State Services and the Minister of Finance. They are the ones driving an agenda within the Ministry of Social Development to the degree that now their departments have significant oversight, significant power—which has always existed, but this is much more explicit now—over the operations of the Ministry of Social Development, to the degree that it almost feels like the chief executive is secondary in their own department to the Secretary to the Treasury. That is almost how the hierarchy now seems within the Ministry of Social Development. I have concerns about that in itself. That has already happened. Now, with these directions to support the whole-of-Government approach, I guess my concern is to what degree our own ministries are able to manage internally their own statements of intent, and to what extent this is actually now being overseen by the Minister of State Services and the Minister of Finance. And, as I say, it is already happening to a degree, so it is hard to necessarily know whether or not this changes that that much or actually just sets out the legislative framework for that.

I did want to also point out that we do have some changes to the statement of intent. It looks like there was some select committee debate around the issuing of statements of intent. Obviously, a statement of intent sets out not just the priorities for a Government department but how it will get there. In the summary of the Finance and Expenditure Committee discussion on the changes to the issuing of statements of intent there have been changes, it appears, to ensure that there is transparency if there is ever any recommendation by a Minister to extend the amount of time available to issue a statement of intent, or, indeed, issue a waiver for an issuing of a statement of intent. I applaud the attempts to ensure that there is transparency when those decisions are made. I will just cover off where that is covered in the bill. New section 139A, “Minister may grant extension of time for, or waive, requirement to provide statement of intent”, states: “If a Crown entity is likely to have a significant change in the nature or scope of its functions, the responsible Minister may grant the Crown entity an extension, of up to 1 year, of the period specified …”.

I thought it would be useful for the Committee to hear, perhaps, the process that was undertaken for “Mobie”—we do not call it that any more. What are we meant to call it now? Is it “M-bie”? What process did the Ministry of Business, Innovation and Employment, the new giant entity, go through for its reissuing of a statement of intent? I think it would be useful to know how it managed that process, and what kind of time period was required, because that was a significant change. I would assume that there would not be much beyond that scale, so if it was able to complete that within a specified time frame, I wonder whether a year is perhaps too generous a time frame to be issued. I would be interested in the view of the Minister in the chair on that.

But the legislation also states that “the responsible Minister must not grant an extension unless he or she is satisfied that the extension will enable the entity to improve the quality of the statement of intent that it provides.” That seems to me to be quite a broad provision because surely any Minister could create justification that in just looking at a statement of intent they need extra time because they think it can be better than this. You do not really need much beyond just the opinion of the Minister to decide under that quite broad set of criteria.

But I am satisfied that, even though that is broad, there is the transparency around when they are making that decision that it must be published, and I think probably the balance there is about right. My question, though, is this: if it does seem clear that there is some kind of stalling tactic at play around a statement of intent, what right of redress to keep in check the use of the Minister’s power and discretion in that regard is appropriate? It is a genuine question. It may well, indeed, be contained in the legislation that, for instance, an appeal could be made to the State Services Commission or the Minister of State Services to check that the discretion had been used appropriately around that extension of time. But is that, indeed, intended to be the way that you would seek redress if an extension or a waiver was granted and there was concern that that power had not been used appropriately? How is that redress sought, particularly when one assumes that to improve the quality of the statement of intent one would be able to access a draft?

There you go. Thank you very much. You cannot pull rank all the time. That is great, Mr Chairman.

I am pleased to take a call on Part 3 of the State Sector and Public Finance Reform Bill. I want to refer to a number of the provisions here. I will put them in the context of the independent Crown entities and the autonomous ones in the advocacy area, if you like: the Human Rights Commission, the Privacy Commissioner, the Children’s Commissioner, and the Families Commission. That is the context in which I want to make my comments.

Clearly, these provisions in Part 3 around Crown entities begin to codify a number of the aspects of Crown entities’ practice, and particularly in relationship to their purchasing ministry and the Minister. It is codifying. A lot of this is happening already, and here it is now translating into legislation. Many of these changes started, my recollection is, around 2004, and it is now that we are seeing them coming through in legislation. Some of them are tried and true.

But along the same lines as my colleague Jacinda Ardern, who just sat down, I will talk about clause 162. These are the directions to support a whole-of-Government approach that is possible. My colleague took the line that two Ministers now have the ability to direct in any number of different ways. I agree with those kinds of comments. But in section 107(1), as amended by clause 162(1), paragraphs (a) to (e) in themselves are actually quite broad. We do not have an idea as to what the limits are of some of these directions. Look at the first one in clause 162(1), section 107(1)(a). We can direct independent Crown entities, for example, “to improve (directly or indirectly) public services:”. That could be anything. There are no limits to what is being suggested here. Indeed, Crown entities generally, in terms of the delivery of public services, cannot be directed as such, and many Crown entities actually do not offer a public service in terms of the traditional sense. I wondered what the limitations there were.

The second purpose is “to secure economies or efficiencies:”. That also is so broad. Will the two Ministers be able to take under this provision very specific directions on how an independent Crown entity might want to use its resources for structuring itself? I see some difficulties and some dangers here.

Some of the others are so self-evident, it is difficult to understand why they are being included here. The third purpose is “to develop expertise and capability”. It is self-evident that Crown entities, Government departments, and ministries will develop expertise and capability. In fact, that is why they are appointed, but here is the ability to give another direction. Does the Minister have some other ideas in mind about these directions?

Without any qualifications from paragraphs (a) to (e) on those kinds of provisions, I see some difficulties, some dangers probably, and some difficulties in the future if these provisions were going to be relied upon by a Minister to instruct a Crown entity to do or not to do certain things. Therefore, I see some difficulties in that particular area.

Moving on to the provisions of clause 164, here we have again codified procedures for ministerial directions on Government policy. Ministers under the present Crown Entities Act have the ability to direct. Indeed, there is quite a well set out series of steps in the Crown Entities Act on what the procedures are if the Minister intends to direct, and then how it is to be reported to the House or gazetted. Some of that is being restated here again.

I can see how officials have worked on this as a provision, but there is another parallel track that operates, and this is the very subtle, almost surreptitious way in which currently Ministers direct Crown entities. If we take, for example, the Families Commission, here over a period of the last 4½ or almost 5 years the Minister has been directing that commission and reshaping it in a very different way. Much of that is by way of “direction”—in quotes. Yet nothing has been gazetted about what those directions are. There is a bill before the House at the moment where all of that comes together. But the Minister has shaped it by the appointment of the chief commissioner. The Minister has shaped it by the appointment of other commissioners, and putting in the kinds of commissioners who have been put in there, in probably not so subtle ways, has begun to shape that particular Crown entity and, indeed, others.

So although the provisions here are clear and precise and I support them, I would expect the Minister to actually follow this and not go along the parallel track that currently is in vogue, which is the surreptitious and subtle shaping of the role and activities of Crown entities. I hope the Crown entities will rely upon this much more than the Ministers might, to say: “Well, if you’re going to direct me, there are particular ways in which you might need to do certain things.”, according to the provisions of section 115(3A), amended by clause 164.

Then section 115 and subsequent sections begin to talk about the review of those directions. Quite interestingly, the Crown entities I have been talking about in the advocacy area, in the rights area, have rarely received a direction from the Minister, and the subtle ones have never been reviewed. I know that for a fact. What is the Government contemplating here? What is being signalled here? How can you review something that, in a sense, you have rarely, if ever, used on these particular entities that I am talking about?

Then, under section 115A(3)(b), in clause 165, if there is to be a review, the expectation here is that there will be consultation with key people outside. I hope that the Government intends to follow those, because in many of the changes it has made to Crown entities, particularly to the Families Commission, there has been no consultation with the stakeholders outside, and yet they have been restructured and reorientated in quite significant ways, and they will be a shadow of what they were before if the bill currently before the House is passed.

So both the codification of the opportunity to direct and the review of those directions, and the time-limited nature of those directions, are very good provisions. They are now here, they are now codified, and I encourage Crown entities to actually utilise them and Ministers to utilise them. I rather suspect that Ministers and heads of Crown entities in the human rights area and the rights and advocacy area will find this a very, very useful and transparent process, which is what is being talked about here, rather than the underhand, secretive, almost surreptitious way in which some of those Crown entities have currently been shaped.

I want to talk a little bit now about the provisions of clauses 168 and 169, about office holders in Crown entities. I am glad to see this, particularly clause 168, because it was just a month or two ago that the Social Services Committee was doing the financial review of the Retirement Commissioner. It amazed me that this was actually there—that in answer to questions for written answer the Retirement Commissioner had refused to give information to the select committee, saying that this was the privacy of contractors. It took a couple of goes, going backwards and forwards, to say: “Well, hang on, they are still working as public servants.”, which is what is clarified in section 135(1A), inserted by clause 169. Those provisions are particularly useful, and now make it very clear as to the kind of information that select committees can have on these Crown entities.

I want to talk a little bit now about the obligations to prepare and report statements of intent. Again, this is simply—

I call the Hon Philip Goff.

It is always nice, Mr Chairman, to be addressed in such a formal manner. That is what my mother christened me. The Labour Party is supporting this bill, the State Sector and Public Finance Reform Bill, as a whole, and in particular it is supporting the third part of the bill, relating to Crown entities.

The reason why we are supporting the bill and the section is that the Finance and Expenditure Committee was allowed to act in a more independent way to listen to evidence, to respond to evidence, and to correct basic flaws in the legislation. That meant improved legislation, and, to give credit to the Minister of State Services, he went along with what the select committee recommended. As a result, we have a bill that does achieve support from across the House. I think that is particularly important in terms of the State sector because we want to see continuity and we want to see the State sector working as effectively and as efficiently as possible, and not subject to the whims of a changing Government and being a political football.

There has been flexibility shown by the Government in responding to evidence on the ground, but I have some questions for the Minister in the chair, the Minister of Immigration, about how this section will work in relation to the performance of Crown entities. I hope that the flexibility shown on this bill might be shown in regard to the Crown entities and the Government’s intention to dispose of Crown entities, when all evidence suggests that that will not be in the public interest.

Under Part 3 the amendments to the Crown Entities Act do a couple of things. In the first instance they support sectoral leadership, by requiring the board of the statutory entity to ensure that the entity collaborates with other public entities, where practicable. I think that is important because too often what happens in the public sector is that you have a silo mentality and each organisation goes its own way, does not think about the wider picture, what is in the interests of the country, and what the Government wants across the board. I think that that is a very good principle that is set down in the bill. It also supports functional leadership by expanding the scope for the use of whole-of-Government directions, and that really goes down the same track—it follows the same theme. I think those two aspects in this section of the bill are really important.

What I want to ask the Minister is for him to perhaps give some practical ideas about how these new powers might operate. In particular, I want him to address the Crown entities in the energy sector—Meridian Energy, Genesis, and Mighty River Power. These are three Crown entities—no, I am sorry, these are now 2½ Crown entities, so I want to know how this bill deals with the other half that the Government has sold off. The Government has established, in this bill, the principle that it would be really good to get the Crown entities working together for the good of New Zealand, and now it has sold off half of one of them. I wonder how that sale might undermine the principle that is set out very clearly in Part 3 of this bill.

I want to ask the Minister how these principles will work in relation to the problems that we find in the areas that relate to these three Crown entities. It is about energy generation and it is about energy prices. The Minister is perhaps aware that since 1997 the prices for power to households have increased at double the rate of inflation. This must be a real worry to the Government, and even more of a worry because in the last year, I think, power prices to households have gone up at five times the rate of inflation. We are debating this bill in the middle of winter, and although those on ministerial salaries of a quarter of a million dollars probably do not even know what they are paying on their power bills, people on this side of the Chamber represent electorates where households are really feeling the pinch. Old people are suffering, we have the problems of hypothermia, and we have young people, children, living in cold, damp conditions. Those young people are being hospitalised, they are missing out on school time, and they are missing out on career opportunities.

I want to bring this bill to bear on those particular problems that are worrying so many New Zealanders. We have got this problem that we have 2½ Crown entities in this area of producing electricity, yet the prices have run at double the price of inflation for about 16 years. They have been doing that since there was another change by Government in the way the Crown entities operated, which was the Bradford reforms, which were supposedly about competition. But the Minister will be aware that there was a formal report sought and commissioned by the last Labour Government, called the Wolak report. The Wolak report found that the four power generators made super-profits over a 6-year period of $4.3 billion—

💬 Hon David Cunliffe: What?

—$4.3 billion. The only upside of that was that that money went back to the taxpayer because the companies were Crown-owned. So it was a bit of a cycle. We paid more for our power, but we got the dividends back to the Government. That is not going to happen with the sale of the assets. Those super-profits are going to go to those wealthy enough to invest in the shares and to the overseas investors, indeed as they did with Contact Energy—you know, $200 million a year flowing out of the country to the Aussies, making them rich at the expense of the New Zealand taxpayers, who paid for the dam on the Clyde.

This bill is about getting collaboration. I wonder whether the Minister has considered using the provisions of this bill to set up a single buyer of wholesale electricity. That would seem to be really sensible, if we wanted to tackle the problem that ought to be worrying the Government of escalating power prices. The gap between what the household consumer and the industrial consumer pays is one of the biggest—the second biggest—in the OECD. The cost of electricity is going up at a faster rate than in almost any other country, notwithstanding the fact that we produce this electricity through water, which is free, in assets that we invested in 60 years ago.

I agree with this bill that you actually need to have collaboration. You need to have the Crown entities working together, but I am asking the Minister whether there is a fundamental contradiction between that very good objective in this bill and what the Government is doing in selling off the State assets, so that that collaboration will no longer be possible. New Zealanders ought to be worried that the price of electricity has gone up five times faster than the overall rate of inflation in the last year. They ought to be worried that the super-profits from these companies are now going to private investors and to overseas investors. Here we have a bill that potentially has a solution to the problem of electricity prices, but it is being undermined by another set of policies that the Government is pursuing.

I go back to what I said about the select committee. It made sensible changes, because we looked at the facts, and the Government was in this instance prepared to respond to evidence on the ground. I wonder whether the Government will likewise respond to evidence on the ground about the failure of its Bradford reforms, which will be exacerbated by the privatisation of half of the Crown entities, in that regard.

There is a second area set out as the objectives of the changes to the Crown Entities Act that occurs in Part 3. That is to formalise the role of the monitoring department and the ability of the Minister of State Services to request information, and also to make provision for more meaningful performance information to Parliament. Those are absolutely appropriate goals, but I wonder how those goals sit alongside the privatisation of the Crown entities, which takes them out from the Official Information Act and takes them away from the role of the Ombudsman.

We have in the bill good, sound objectives about greater accountability. That is why we are supporting this bill. But at the same time the Government is doing exactly the opposite in privatising these companies so that they are no longer accountable to the New Zealand taxpayer, who paid for their construction. We no longer get the information we need, and there is no longer the protection of the Ombudsman and the other things that apply to Crown entities. We have, in essence, very sound provisions in Part 3 of this bill. We absolutely applaud the objectives of greater collaboration and greater openness, but those goals are fundamentally undermined in regard to those objectives by what the Government is doing, against the public opinion, in privatisation.

I appreciate the wisdom of my colleague Mr Goff, but I have to say that on reading through some of the provisions of Part 3 of the State Sector and Public Finance Reform Bill, I am starting to wonder whether the Opposition should indeed support the bill. Following on from his statements and our belief, of course, that this might bring better accountability, I went to section 139 in clause 179, “Obligation to prepare statement of intent”. This goes right to the heart of what the Government is trying to do here, and that is to privatise every single thing it can get its hands on. It is good to see the “Minister for Private Prisons and Prison Riots” in the chair, and I am sure that she can get up and answer this question.

What this effectively does is move away from the current obligation of Crown entities to provide a statement of intent every year, where every single taxpayer, who is a part-owner of these entities, can ask the question: “What is this organisation, this entity, doing?”. As a former Minister I can appreciate the oversight of a Minister through this process. The ability to check the statements of intent for Crown entities and be assured that they are heading in the right direction has now been shifted to a 3-year, and possibly a 4-year, statement of intent process, because the Minister—

💬 Hon David Cunliffe: Three.

Three, and if you go to section 139A, the Minister may grant an extension of time of up to a year. So what we have is potentially one statement of intent for—

💬 Hon David Cunliffe: Two parliamentary terms.

That is right. Or, indeed, the question is whether the National Government has an intent to shift to a 4-year parliamentary term. That is maybe something the Minister can come back to, because if we are shifting from an annual statement of intent to a 3-yearly one, with the possibility of a 4-yearly one, then is that what the Government is intending to do? Is it intending, firstly, to reduce the accountability for agencies that it intends to partly privatise, as the obligation to have a yearly statement of intent might be a little onerous for some of the wealthy shareholders who come in to buy these entities? They may see it as a bit too much taxpayer scrutiny.

I say that without the ongoing oversight of a Labour Government—that is, a Government that is here for the good of all taxpayers—then, in Part 3, the objectives and the statements of intent of these partly privatised Crown-owned entities might be different from those of the fully taxpayer-owned ones; in fact, we know that. We know that the partly privatised State-owned enterprises and Crown entities will, in fact, be there to maximise profits, end of story—end of story. The statement of intent—that is, the focus on providing services, providing reliable electricity supply, and providing sound infrastructure, which has always been a core part of Governments’ intent, or certainly of a Labour Government’s intent, anyway—may, in fact, be diluted.

I am concerned that the provisions in sections 139 and 139A shift from a clear annual statement of intent of what this organisation is about to one possibly every 4 years. That is a huge change in the way that any entity can account back to its core shareholders. I guess in a modern dynamic economic, which we have, where we have markets that change in milliseconds, and trading that occurs at the push of a button, then I would have thought that we should move to a more direct accountable system and one of maybe on an annual basis, as has been the case.

Although I applaud strategic planning, long-term planning, this may be a step backwards. I accept the wisdom of the Finance and Expenditure Committee, which has made a lot of very sound changes, and maybe a Government member over there might want to get up and explain why these changes have occurred and how this can—

💬 David Bennett: Get in there, Hayes.

And I welcome that opportunity from Mr Hayes, because, as I say, the Opposition is supporting the general intent of this bill on the basis that it does provide a better accountability regime. But from my reading of sections 139 and 139A in Part 3, we are stepping back from the intent of this, and certainly from the reason that the Labour Party is supporting this bill. So if Mr Hayes wants to get up and answer that question, that is great. It is clause 179 and it is replacing section 139.

The other issue in here, which should not be overlooked, is section 139(2)(b): “no member of the Crown entity group other than the parent Crown entity needs to prepare a statement of intent”. This may seem like an innocuous little clause here that does not mean a hell of a lot. It means that if a Crown entity or Crown-owned enterprise can set up a subsidiary company, there is no obligation whatsoever on that company to provide a statement of intent. I see that as a serious step back, and maybe it is a question the Minister can answer—maybe it is the one that Mr Hayes is going to answer. But that specific section 139(2)(b), in clause 179, says “no member … needs to prepare a statement of intent.”

So how many subsidiaries can a Crown entity set up? I guess that under the new partial privatisation arrangements that the Government is going to put in place for many of the Crown entities, it can get on and roll out a number of companies, none of which has an obligation to tell us what they are about or what they are intending to do. Even if it is just for the 4-year period that this bill can now extend them out to, there is no obligation for that subsidiary to provide a statement of intent. What shareholder would buy into a company or be part of a company that does not have to tell them what it is going to do? So maybe Mr Hayes can get up and answer that very clear question—in my view. I think I will leave it at that.

I come back to the point that Labour is supporting this bill, on the basis that we believed we were getting better accountability regimes. But from my reading of clause 179, it says that in section 139—actually, section 139 of the principal Act is replaced in clause 179. I should clarify that; sorry if I got a little confused. Under clause 179 of this bill—that is, the replacement of section 139 of the old Act—we are indeed stepping back because of the extended time lines of statements of intent and the removal of the requirement of any subsidiary to provide a statement of intent. I think that is a retrograde step for Crown accountability, and taxpayers should have a clear explanation as to why that has gone ahead.

Maybe I can help the member Damien O’Connor. One would have thought that a man of his experience, with many years as a Minister in our system of Government, would actually understand the day to day mechanics of how the Government’s finances work. Every one of the public servants whom you will find in this country knows that when you have a 12-month budget, May and June are spent furiously trying to get rid of all the unspent money because if it is not spent by 30 June, you lose it. This is an incredibly inefficient and stupid process, because the world operates on a much longer time frame.

If you think about the problem—let us take, for example, the aid programme, where you are spending $600 million - plus a year on aid projects—it is really difficult to spend that sort of amount of money annually on an annual budget. You have got to have a longer time frame, because you will get much more sensible spending of taxpayer money. That is why you and I are in this Chamber. That is why we are held accountable as electorate MPs, because our communities expect us to be here doing the right thing, making sure that their taxes are being spent wisely. That is what the changes in this bill are going to provide for. They provide for a much more rational time frame, and they get rid of the irrational, huge expenditure that is very often on wasted items because you are trying to get rid of the money within 12 months, when the real world does not work in 12-month segments.

💬 Hon David Cunliffe: I raise a point of order, Mr Chairperson. The member who is addressing the Committee is a new member, but he should know not to bring you into debates.

The CHAIRPERSON (Lindsay Tisch): Look, I am listening very carefully, and that point of order was just an interruption of the member’s speech. I will take note if I am offended by the speech. I call John Hayes.

Thank you, Mr Chair. One would have thought that the interrupter, as an ex - public servant himself, would know that what I am saying is absolutely straightforward, is absolutely straight up and down, and is in the taxpayer’s interest. So my only conclusion is that the comments that are coming from these very experienced people are simply filibustering. Thank you.

Firstly, I would like to pay a compliment to several previous speakers—not the one who has just immediately resumed his seat, John Hayes, so much as the Hon Damien O’Connor and the Hon Phil Goff. Both, I thought, gave absolutely outstanding contributions, which really nailed two key points. Mr Goff said—and I think it is a hugely important point—that there is a huge irony in this State Sector and Public Finance Reform Bill quite rightly conferring the power on the Crown to issue whole-of-Government directions, but at the same time removing Mighty River Power from the State-Owned Enterprises Act by its partial privatisation, and thus removing a core ability of the Crown to issue directions across the energy sector. If that partial privatisation programme continues, that will be a terribly risky thing for our energy sector, and flies completely contrary to the intent of this bill, which we strongly support.

However, the Hon Damien O’Connor has raised a very important point, which I would like to turn the Committee’s attention to further. This is in relation to the statement of intent provisions, which are vested in clauses 178 and 179, and so forth, of the bill. This was a matter of some debate at the Finance and Expenditure Committee. It was, indeed, a matter that we sought additional advice for and have made amendments on.

Can I introduce listeners to the issue by telling a very brief war story from a time when I was one of the then economic development Minister’s team. There was a habit for draft statements of intent to arrive in Ministers’ offices for signature the day before the deadline. It may be that civil servants were watching Yes Minister, the TV series, which the public thinks is a comedy, members of Parliament think is a documentary, and the Public Service thinks is a training video. Yes Minister behaviour is not unknown. The statement of intent is absolutely crucial, but “Oh, Minister, this is just a routine piece of correspondence. Sign here.” is too often being heard in the Beehive.

I can tell you that when it was my turn, having watched Yes Minister, I rang the chief executive of a department and said: “Why don’t you pop over for a cup of tea and a chat”—this was about 6 weeks before the deadline—“because I would like to co-draft the statement of intent with you in person.” This caused a long silence on the other end of the phone. When the chief executive was departing my office after the first 3-hour session, he was heard to mutter to one of his colleagues—fortunately in the hearing of one of my staff: “We’ve got a real problem with this one.” So we invited him back—[Interruption] Yes. He would not be the only one to have reached that conclusion. But I intend to continue to be a problem for as long as I have the privilege of being in this House.

💬 Hon Lianne Dalziel: What took him so long?

My colleague asks what took him 3 hours to work that out. So we had a couple more sessions. I see that the Minister in the chair, the Minister of Police, is smiling benignly, because I think all politicians of whatever stripe have shared some of these experiences. There is always a little bit of a polite and constitutional arm wrestle in Wellington between the political layer and the professional Civil Service. We are very well served. Again, I would like to record the select committee as being excellently served by our highly skilled civil servants and advisers on this bill, so there are no complaints there.

But it is not just National versus Labour, left versus right, thoughtful versus shallow, or whatever you would like to—

💬 David Bennett: Oh, communist versus capitalist.

Sorry that you reacted to that one, Mr Bennett. It was not intended for you. But the other aspect of this is always the political layer versus the Civil Service layer, and it is in that context that these provisions of this bill are actually really, really important.

What the Civil Service has recommended is that there really is no need to have a compulsory, formal contractual statement of intent, updated every year. Unfortunately, John Hayes, who has never been a Minister, swallowed that line and thought it was about just reducing paperwork. But, actually, there is a real risk, as the Hon Damien O’Connor has pointed out. He has been a Minister, and he understands that unless there are required contractual processes to nail people’s feet to the ground with hard-wired key performance indicators, things can slip, and that is why the statement of intent provisions were so hotly debated at the select committee.

We reached a compromise, which was that Ministers will have the ability to require a new, or an updated, statement of intent, a renewed contract, at any time, at least annually, or more frequently should they require it, and that there be an obligation on the part of their Civil Service advisers to advise Ministers of that right. Although flexibility is being introduced here, the obligations on the system to have clear and binding performance agreements have not been gainsaid.

The incoming Labour Government will, in a year or so’s time, be watching this extremely carefully. If it is our experience that these clauses have weakened the contracting process with the professional Civil Service, they will be reviewed. But, for now, we are happy to give this compromise a good chance to work. We believe it is being entered into across the Parliament in good faith, and we think that there is the potential for it to be streamlined and effective. But we are not blind to the possibility of slippage, as the Hon Damien O’Connor, from experience, has pointed out to the Committee.

I think it is helpful that in new section 141 in clause 181 the content of the statement of intent is well set out. If I could direct members’ attention to that, new section 141(1) places a big emphasis on strategic objectives. What we are trying to do here, through this law, is lift the gaze of the system from the trees to the wood, from the minute to the fundamental, from the operational to the strategic. We are writing here, in quite clear language, that Ministers and their advisers must be focused on the strategic goals. The rest of the design of this bill supports that, with its interagency cooperation, its multi-category appropriations, its enhanced reporting requirements, and its full traceability of appropriations. All of those things come together here to try to hit a sweet spot. It is a sweet spot that combines flexibility and acuity. That is our shared goal—shared between National and Labour, shared between politicians and officials. That is where we are trying to aim: a modern, streamlined, flexible, delegate-able, interactive, and community-integrated Civil Service that achieves more with not much more money, that achieves better outcomes for the public, and yet is parsimonious—there is a good word for a morning session—with the taxpayer’s dollars. In so doing, if we can cut some red tape, that would be nice too—if we can cut some red tape, that would be nice too.

We look forward to the Minister of Police, who is an experienced Minister—I note that as this debate has hotted up, the Government has put a more experienced Minister in the chair, and we look forward to her sharing her experience with the Committee on the intent of this bill and how she believes it is going to work. I am sure members on this side would love the Minister to take a quick call and respond to the points that the Hon Damien O’Connor has made, and, if she is feeling really brave, she could respond to the points that the Hon Phil Goff has made.

The CHAIRPERSON (Lindsay Tisch): Order! You cannot say that.

I cannot say “the Hon Phil Goff”?

The CHAIRPERSON (Lindsay Tisch): No, the word you said before.

Brave?

The CHAIRPERSON (Lindsay Tisch): Yes. That is a reflection on the member.

I was emphasising her courage.

The CHAIRPERSON (Lindsay Tisch): No.

But I take your guidance, Mr Chairperson.

💬 Hon Member: You were being snide.

Never.

💬 Maggie Barry: And devious.

Never. Would members opposite like to add any other adjectives to their morning pot-pourri? “We love you too, Mr Lange.” Ah, yes.

New section 141(1) sets out the strategic objectives of the statement of intent. The Committee has debated at some length its provisions. New section 146(2) in clause 184 indicates the process that must be followed. What is really interesting about clause 184 is its degree of prescription; for example, clause 184(2)(a) says: “the Crown entity must provide a draft statement of intent to its responsible Minister (i) no later than 2 months before the start of the first financial year to which the statement of intent relates;”, and it even provides sub-subclauses for the cases of newly established Crown entities. That is how careful we are all trying to be to ensure that no delegated instrument of the Crown can escape the chain of accountability, either for good outcomes or for the wise use of public money. The reason that this is so prescriptive about Crown entities—

When we look at Part 3 of the State Sector and Public Finance Reform Bill, it falls, really, into three main areas. This includes subsidiary reporting, where the reporting regime focuses on a group reporting and auditing with the Minister of Finance. That group will have the power to require reporting from any member of the group, so that is a tightening up of those procedures. The group reporting change does not apply, however, when you have school boards of trustees or tertiary education institutions that have an investor or a multi-parent subsidiary—enough said, really, on that aspect of it.

Another aspect is greater reporting flexibility, which is going to provide more meaningful information. This is an area that my colleague John Hayes dealt with a little bit earlier—the reporting changes at the start of and at the end of each year. Those are not dissimilar to other provisions in other Acts.

But it is the first aspect of Part 3 and the amendments to the Crown Entities Act 2004 that I wish to concentrate on in my call, and that is the collaboration with other public entities. The thing about this bill is that it amends the collective duty of statutory Crown entity boards, relating to how the board is to perform its functions. Under these changes, boards will be required to ensure that the entity collaborates with other public entities where practicable. That is a very important measure that comes up in these amendments, because it really helps break down the silo approach to providing services, which this Government has identified as being part of the problem with public services. So we have a situation where we need to have these entities working much more in combination with other agencies. The limitation of the phrase “where practicable” really gives the board the ability to determine the efficiency and the effectiveness of collaboration with other agencies in any given situation.

That, once again, is in keeping with the overall policy of our Government that there are directions to support a whole-of-Government approach. This whole-of-Government approach is very much at the heart of this piece of legislation and at the heart of Part 3. In particular, there will be two smaller groups of Crown entities than currently. There is also going to be a broader range of objectives, including to secure economies or efficiencies, which is something we commend; to develop expertise and capability, and who amongst us would argue with that; to ensure business continuity; or to manage risks to the Government’s financial position. These are all very sound policies and philosophies that underpin the legislation and that are spelt out in this amendment.

The amendments will also make the use of Government directions more useful and more selective, but in a way that respects the entities’ legal separation and arm’s-length relationship. These directions to entities will not come, as they have in the past, from public servants in part, but will come, much more appropriately, from the Minister of Finance and the Minister of State Services.

Those are the three main elements of Part 3—the amendments to the Crown Entities Act 2004. I am not going to dip into the petty politics, as have others in the Chamber before me. I will leave my call at that. Thank you.

It is fantastic to be present in the Chamber and for Maggie Barry to break the habit of a lifetime and not go into petty politics. It is a moment that I will truly remember for many, many years.

💬 Hon Member: It’ll only be a oncer, I’m sure.

It will never happen again, that is right, so I am delighted to have made my way to the Chamber to hear that beautiful moment.

It is a pleasure to take a call on Part 3 of the State Sector and Public Finance Reform Bill. As somebody who has been a public servant here in Wellington and who represents public servants, as the MP for Wellington Central, and also as a former spokesperson on State services, I want to say there is a lot in this bill to be very happy about. This is a bill over which, I know, some concerns have been raised. They have been worked through in the Finance and Expenditure Committee. The idea, the principles that lie behind this bill, of trying to create a more responsive and more integrated State sector that can be more flexible and responsive to the needs of our communities is a goal that I do think is shared across the Parliament, and I want to say, from this side of the Chamber, that there things in this bill that we genuinely believe will be very helpful to those overall principles.

If we refer specifically to Part 3 of the State Sector and Public Finance Reform Bill, I want to make a couple of comments. The first of those is around the question of whole-of-Government directions. This is what is covered by clause 162 of the bill, and in this case we are talking specifically about Crown entities and the ability of the Minister of State Services and the Minister of Finance to jointly direct Crown entities to support a whole-of-Government approach. This is a very good clause, in my view, because one of the things that anybody working both inside Government and also with Government agencies and Crown entities hears—the criticism that is so often directed at them—is that there is a silo mentality. All of us will have, in our lives, interacted with a Government agency that says, quite simply, “I cannot help you because that is not my responsibility.” That is something that members of the public struggle to understand. Members of the public do not wake up in the morning and think: “Today I am going to deal with the Ministry of Social Development, followed by Inland Revenue Department, followed by another.”; they think about the Government. They think about the Government acting as a single entity. People who use the services of the Government, and who interact and have to come up against those silos, are frustrated. We need to be able to create a public sector and a wider State sector that actually meets the needs of those individuals and communities.

But for politicians and as public servants, there is a whole other level of frustration that is created. I can remember as a staff member in the Prime Minister’s office having to come up with creative ways of trying to get the public sector to work together. Anyone who was in the public sector in the first decade of the 2000s will quake with fear at the phrases “economic transformation”, “families young and old”, and “national identity”. I had three little boxes on my desk in the Prime Minister’s office with information on each of those, and we did actually sit down and say: “How are we going to get the Public Service to work together on the priorities of the Government?”. It does not matter whether it is a National-led Government or a Labour-led Government. Whatever the Government’s priorities are, how do we shift the ship of State to support the things that the Government wants to do?

💬 Hon Lianne Dalziel: By turbocharging the economy.

For instance, that may well be one of the phrases: turbocharging and finding a brighter future.

💬 Hon Lianne Dalziel: They haven’t switched on the engine yet.

Well, unfortunately, I think that at this very moment, the ship has run aground, so that is not even a concern. But if we generalise it, enabling the Government agencies to get out of the silos—we took that approach with those three themes—was what we chose to do. And we actually went as far as saying the Budget bids had to come through one of those three themes, and they were consolidated. That actually cuts against the Public Finance Act, and some of the amendments in this bill start to deal with the problem that was underlying that. The problem was that each Public Service chief executive, through their statement of intent, had set themselves up in an agreement with the Minister, and that was it. They were the apex of everything. The amount of money that they could share between agencies was severely restricted, severely limited, and, in many ways, actively discouraged. So the fact that this bill is putting in place some mechanisms that will break up some of those silos is a very good thing.

Dr Richard Norman, who is an academic at Victoria University, talks about the fact that the State Sector Act and the Public Finance Act, written as they were in the late 1980s, are products of a time that, he says, was the time of the spreadsheet. In other words, it was all about rows and columns, and, if you added it all up, at the end of the day you would come up with the answer that you needed. We now live, as Richard Norman would say, in the age of Google when it is actually all about the networks and the connections between issues, rather than setting up artificial barriers. At the moment the structure of our State sector lives in the age of the spreadsheet, and we do need to move it into the age of Google where we focus on the networks and we focus on the connections between the issues that face our communities. This bill—and, in fact, Part 3, in terms of Crown entities—does go some way towards doing that. The idea of whole-of-Government directions is a useful way of going about that, but I would venture to suggest that, actually, we could go much further. We could go much further by saying what the problems are that we want the public sector and the State sector to address, what the structures are that best address those problems, and then work on them that way. At the moment form is still leading function. If the State sector is going to deliver to the needs of New Zealanders, function needs to get out in front. At the moment we still struggle with that inside the State sector. This bill does good things to move us in the direction of breaking down those silos, but it fails, in my view, to go as far as it might.

I want just in the time remaining to me to briefly talk a little bit about the question of statements of intent. I know that my colleague David Cunliffe was speaking about this at some length earlier on. All of us—former Ministers, current Ministers, and people who have been public servants—are aware that there is a danger in the statement of intent process that it simply becomes a box-ticking, form-filling - type exercise. Again, there are good things in this part—

💬 John Hayes: You’d certainly know about that—box-ticking and form-filling.

John Hayes and I both worked for the Ministry of Foreign Affairs and Trade, and we know a good deal about form-filling and box-ticking. Actually, Mr Hayes, to his credit, was never very interested in form-filling or box-ticking at the Ministry of Foreign Affairs and Trade. As somebody who occasionally had to go around the Pacific in the wake of Mr Hayes, I can say that he was much more focused on function than form—

💬 John Hayes: Outcome.

—and outcomes at that point, and that is to his credit. [Interruption] That is right—no, the wake was sometimes quite large, and I am not referring to size at all here; I am just referring to the impact of Mr Hayes arriving in a community. But he was focused on the outcomes, and I think the statement of intent does run the risk of being less about the outcomes and more about the process. I think there are some things in this part that do go to that. The note of caution that has already been raised is the fact that what the statement of intent process usefully does is open up to the rest of us what is going on and what the priorities are. If we can get that process—the development of those statements of intent—right, then I think we will go a long way towards actually having a meaningful document.

Again, a big part of that is ensuring that the statement of intent, when it is drafted and created, takes into account the views of other relevant entities and agencies. We have all had that feedback about the 10 cars in the driveway. When you have got the family with the complex, messy, and difficult problems, you arrive along and there are the 10 cars in the driveway from the 10 Government agencies. Does Child, Youth and Family know what the police have done? Does the Ministry of Education know what Work and Income is doing?

💬 Hon Member: Or what the school’s doing.

Or what the school is doing, indeed. We all know that those are difficult problems, but, if we take that all the way back to the statements of intent of those agencies, when the agencies are talking to one another on the creation of those documents, and they are creating those documents on the basis of the issues and the outcomes that we want, that is what will get us there. If we start at that point, we will get a good outcome. If we start at the point of “Here is our formulaic statement of intent that we must produce on our own and we must look good about.”, then we will not get anywhere.

What I am saying here is that Part 3 of this bill, I believe, does offer us some positive ways forward for creating a more integrated and more responsive State sector. I believe we could go significantly further in that. I encourage the Government to adopt a cross-party approach, to find a way in which we can focus on the outcomes of the State sector and the way in which it serves our communities, and break down the silos. If we do that, I believe that we will be proud of our efforts. But I do believe that in Part 3 there are some good measures that we can and should all support.

I could not agree more with my colleague Grant Robertson when he says that the need to focus on breaking down those silos is fundamentally important, which is why I am pleased that this part of the State Sector and Public Finance Reform Bill deals with the whole-of-Government approach that we so need.

If there is one place in New Zealand that needs a whole-of-Government approach, it is Christchurch. What we have had established there, I think, was a mistake in terms of the nature of the organisation. I think there have been a few comments lately about my views around the recovery effort, and I want to place it clearly on the record that the Government has to be involved in Christchurch. It is so big, and that whole-of-Government focus that is dealt with in this part of the legislation is fundamental to getting it right. But the model chosen for the Canterbury Earthquake Recovery Authority, which sounds like it is an independent Crown entity or an autonomous Crown entity—in fact, it is not; it is a Government department. It has a direct line of reporting to the Minister for Canterbury Earthquake Recovery. It has a statement of intent, as set out in this part of the legislation as well, but not as a Crown entity; it is as a Government department. It should have been a Crown entity. Everyone in Christchurch who has any understanding of the need for good governance in a recovery situation agrees that there needed to be a layer of governance between the Minister and the Chief Executive of the Canterbury Earthquake Recovery Authority.

But the real problem lies in the fact that there is not the joined-up approach that we have been looking for. I was speaking to an engineer recently, a geotechnical engineer, when I was up in Auckland and I said to him: “I have discovered the problem. I have discovered why things are not working in Christchurch and why we have not got the joined-up approach.” I said it was here in the report of the Controller and Auditor-General: Roles, responsibilities, and funding of public entities after the Canterbury earthquakes, which is of course extremely relevant to Part 3 of this bill, because it is precisely the issue that is concerned. I said it was all on one page. He actually could not believe me, that I could have found the solution for the problem—the statement of the problem—in such graphic terms, until I opened the report like this. This diagram shows what the Canterbury earthquake recovery looks like.

I think that everyone on that side of the Chamber should take a very careful look at this document—a very careful look at it. What it identifies is the whole range of public sector entities, private companies, Ngāi Tahu, and Canterbury earthquake recovery tasks as they are undertaken by regional or local public entities, and whether they are part of the central government entity. So we have got Treasury, the State Services Commission, the Ministry of Social Development, the New Zealand Transport Agency, the Tertiary Education Commission, the Ministry of Education, schools and tertiary providers, Housing New Zealand Corporation, the Ministry of Business, Innovation and Employment, Southern Response, Waimakariri District Council, the Earthquake Commission, the Ministry of Business, Innovation and Employment—it appears again because one represents when it was formerly the Ministry of Economic Development and one when it was formerly the Department of Building and Housing—Selwyn District Council, the Department of Internal Affairs, Te Rūnanga o Ngāi Tahu, Christchurch City Council, Canterbury District Health Board, the Ministry of Health, the Department of the Prime Minister and Cabinet, and Environment Canterbury.

You know, if anything is screaming out for a joined-up approach, for a whole-of-Government direction, it is the Canterbury earthquake recovery. In fact, when the Canterbury earthquake recovery legislation was passed in this House its intention was clear. It was to facilitate, to coordinate, and to direct the recovery—anything that supported the recovery. And yet we have not got anyone in charge. Still, there is no authority; nobody stands in charge. So you have got the Minister for Canterbury Earthquake Recovery not knowing what is happening under the Minister of Building and Construction’s watch. We have ended up with a situation where the Christchurch City Council loses its accreditation on Monday next week, and it is losing it because of a report that was prepared for International Accreditation New Zealand back in September last year. It was sent to the city council in October and it was copied to the Ministry of Business, Innovation and Employment.

I cannot for the life of me understand why there has been no connection made, no joining of the dots. Yes, there are lots of dotted lines, lots of squiggles, but guess what is completely missing from all of this? What is completely missing from all of this is people, the community, the people who live in Christchurch.

The CHAIRPERSON (Lindsay Tisch): The member must relate this back to Part 3. To use Canterbury as an example is fine, but you must bring it back to the content of Part 3.

In clause 162, amended section 107 states: “(1) The Minister of State Services and the Minister of Finance may jointly direct Crown entities to support a whole of government approach by complying with specified requirements for any of the following purposes: (a) to improve (directly or indirectly) public services: (b) to secure economies or efficiencies: (c) to develop expertise and capability: (d) to ensure business continuity: (e) to manage risks to the government’s financial position.”

I would say that a direction to the Canterbury Earthquake Recovery Authority—which, OK, is not a Crown entity, it is a Government department, but it should have been a Crown entity—could actually have brought this whole thing together. But, given that it is not, there are many Crown entities that are operating in the Canterbury region, but they are not joined up. They have not received a direction around the whole of Government, or, if they have, it is not obvious to anyone. People who ring the Earthquake Commission, EQC, for example, are told to ring Fletcher’s—Fletcher EQR. Then they are told by Fletcher EQR: “No, it’s really still an EQC matter.” So they ring back EQC and it says: “Well, ring the Christchurch City Council.” So there is this lack of a joined-up approach.

The ministry—formerly the Department of Building and Housing—issued new guidelines part-way through the process of the rebuild and that has led to people having to go to the Ministry of Business, Innovation and Employment, as it is now. That is the problem. We do not have this whole-of-Government direction approach. So it is important that we have this, not just within Government departments, because Government departments themselves are operating in silos, but within Government entities and where they connect in.

So another Crown entity that could really benefit from a whole-of-Government direction is International Accreditation New Zealand. That is New Zealand’s accreditation body, which enables an organisation to have confidence in its processes and provide assurance to customers and clients. It is part of Telarc, the Testing Laboratory Registration Council, which is an autonomous Crown entity that was established way back in 1972. It has a really important role around accreditation. But now we have got a huge question mark over what buildings are safe and what buildings are not safe in Christchurch. It should be in there, as part of a whole-of-Government response to the issue, leading the issue alongside the Christchurch City Council and the Canterbury Earthquake Recovery Authority, and, obviously, the Minister of Local Government will now be in there today, with a Crown manager.

I presume that that will have a similar role or maybe even a more extensive role than the monitor’s role, which is also provided for in Part 3 of the State Sector and Public Finance Reform Bill, and what it is allowing itself to do is to assist the responsible Minister to carry out his or her role. The trouble is that sometimes there is not a responsible Minister, when there are many Ministers who cut across, and I think we heard that from the Speaker the other day when I tried to get a snap debate on the issues that were occurring in Christchurch. We could not get that responsible Minister, and the failure to take any action was not regarded as a matter of recent occurrence because the failure to take action did not form a ground for a snap debate.

That is the problem that we have got. I hope that this legislation has been designed with addressing problems like we have in Christchurch in mind. I hope that it does and I am really looking forward to seeing how it works in practice. But it really cannot come soon enough for Christchurch. We have had enough of the silo thinking and the inability to bring everything together for the sake of Christchurch.

The question was put that the amendments set out on Supplementary Order Paper 262 in the name of the Hon Dr Jonathan Coleman to Part 3 be agreed to.

Amendments agreed to.

The question was put that the amendments set out on Supplementary Order Paper 259 in the name of Te Ururoa Flavell to Part 3 be agreed to.

Amendments not agreed to.

Part 3 as amended agreed to.

Schedule 1

The question was put that the amendments set out on Supplementary Order Paper 262 in the name of the Hon Dr Jonathan Coleman to schedule 1 be agreed to.

Amendments agreed to.

Schedule 1 as amended agreed to.

Schedule 1A

The question was put that the amendments set out on Supplementary Order Paper 262 in the name of the Hon Dr Jonathan Coleman to schedule 1A be agreed to.

Amendments agreed to.

Schedule 1A as amended agreed to.

Schedule 2

The question was put that the amendments set out on Supplementary Order Paper 262 in the name of the Hon Dr Jonathan Coleman to schedule 2 be agreed to.

Amendments agreed to.

Schedule 2 as amended agreed to.

Schedule 3

The question was put that the amendments set out on Supplementary Order Paper 262 in the name of the Hon Dr Jonathan Coleman to schedule 3 be agreed to.

Amendments agreed to.

Schedule 3 as amended agreed to.

Schedule 3A

The question was put that the amendments set out on Supplementary Order Paper 262 in the name of the Hon Dr Jonathan Coleman to schedule 3A be agreed to.

Amendments agreed to.

Schedule 3A as amended agreed to.

Schedule 3B

The question was put that the amendments set out on Supplementary Order Paper 262 in the name of the Hon Dr Jonathan Coleman to schedule 3B be agreed to.

Amendments agreed to.

Schedule 3B as amended agreed to.

Schedule 3C

The question was put that the amendments set out on Supplementary Order Paper 262 in the name of the Hon Dr Jonathan Coleman to schedule 3C be agreed to.

Amendments agreed to.

Schedule 3C as amended agreed to.

Schedule 4

The question was put that the amendments set out on Supplementary Order Paper 262 in the name of the Hon Dr Jonathan Coleman to schedule 4 be agreed to.

Amendments agreed to.

Schedule 4 as amended agreed to.

Clauses 1 and 2