State Sector Amendment Bill, Public Finance Amendment Bill (No 2), Crown Entities Amendment Bill

I move, That the State Sector Amendment Bill, the Public Finance Amendment Bill (No 2), and the Crown Entities Amendment Bill be now read a third time. This legislation underpins what is the biggest transformation of the Public Service in a generation. These changes to the State Sector Act, the Public Finance Act, and the Crown Entities Act will support whole-of-system change, enabling the delivery of better public services and better outcomes for New Zealanders.

As the Minister of State Services I work with quality public servants who are committed to achieving results, as many colleagues on both sides of the House recognised during the Committee of the whole House stage. This Government wants to empower those public servants with the flexibility and the incentives to be responsive to the needs of the community. A high-performing public sector underpins our economic and social success as a country. In the year ended June 2012 core Crown expenditure represented one-third of New Zealand’s nominal gross domestic product. In addition to the expenses of Crown entities and State-owned enterprises, also during this period, the total Crown expenditure was $92.7 billion or 44.4 percent of our nominal GDP. With this level of financial responsibility, it is easy to see why Government agencies need to be allowed to develop new and different ways of working that deliver greater value and better results. Change is needed to bring out the best. As the Better Public Services Advisory Group said, the State agencies need to provide or fund services less as a collection of individual agencies in pursuit of their own singular objectives and more as a system that is focused on the results that will have the biggest positive impact on New Zealanders’ lives.

This Government has made it clear that the State sector needs to prove that it can perform better and represent value for money. We face challenges from the difficult international economic environment, changing public expectations of service design and delivery, and complex societal issues, many of which cannot be tackled by agencies working on their own. The key to doing more with less lies in innovation and agility. Public agencies need to be open to change, to developing new business models, and to harnessing new technologies in order to lift productivity and meet emerging challenges. If we continue to approach challenges in the same way, we will come up with the same old responses.

We can do better than that. This journey began in March last year, when this Government announced changes to focus on results that matter most while improving front-line services. There was a need for a set of results to get better traction on difficult issues like reducing crime, reducing long-term welfare dependency, and reducing educational underachievement. We lowered the cap on full-time staff in administration positions, and created a single dedicated department—the Ministry of Business, Innovation and Employment—from the resources of four existing Government agencies, in order to drive forward the Business Growth Agenda and make it easier for businesses to engage with the Government.

But just focusing on a number of results is not enough. From now on, enabled by these legislative amendments, we want to ensure that public services get the system working better as a whole to deliver on outcomes that matter. These amendments give agencies the tools to better break down silo behaviours. Responsiveness to the collective interests of Government will be an explicit responsibility of individual chief executives. This supports a greater responsiveness to New Zealanders’ needs and a commitment to continuous improvement. We want to ensure Government agencies work closer together, and also work with NGOs and the private sector. These legislative changes give agencies the ability to pool and use money and resources. It will enable agencies to develop, purchase, and share more common functions and services. Perhaps, most important, the changes strengthen leadership.

As head of State services in the corporate centre, the State Services Commissioner will have the explicit mandate for leadership and the ability to appoint leaders with the right skill set. The commissioner will also play a key role in making sure we have the right people in the right leadership positions across the system. This transformational approach needs to be spread and ingrained across the whole State sector. This is essential for achieving better results and for agencies to live within the tight fiscal restraints of the public purse. These changes also need to become business as usual for Government agencies. Delivering better services should be the normal way Government employees go about their jobs.

This Government has made it clear what a transformed and successful Public Service will look like. Within 5 years these changes will distinguish the New Zealand Public Service as functioning as a single system, rather than as a collection of individual agencies; as focusing effort, people, skills, and money on where it is most needed; and as being led by innovative chief executives and senior leadership adept at inspiring and getting the most out of staff, and achieving a collective impact across the public, private, and community sectors. Under this legislation, we will be proud of public agencies that design services with, and for, the people who use them; a public sector that uses technology expertly and safely to provide better services and increase efficiency; a Public Service that can transparently measure and report on its performance across the whole system to identify weaknesses and drive further improvement; and agencies that will use this data to help direct the resources and attention to where they are needed most, and that have the capability and resilience to meet not just the tasks of today, but also to meet the challenges of future change and grasp the opportunities.

The progress on the Government’s results shows that we are making good progress in achieving challenging targets. It demonstrates the significant cross-agency work under way to make headway in the most challenging areas in the lives of New Zealanders. This legislation provides the tools, the mandate, and the platform for the public sector to transform, to deliver, and to achieve the best possible outcomes—the ones that really make a difference to New Zealanders’ lives. I commend these bills to the House.

The theory of what the Minister of State Services has just outlined is all fine and good; the practice has been something totally different. As introduced, the legislation formerly part of the State Sector and Public Finance Reform Bill was actually opposed by the Labour Party. It was opposed because you cannot build a better Public Service by attacking the rights and devaluing the essential stakeholders in the Public Service, the people who work in it.

But, to give credit to the Finance and Expenditure Committee and then to the Minister, the problems that existed with the legislation as introduced were worked through by the select committee. Significant amendments were made, and the Minister agreed to accept those amendments. I am going to just outline those in a moment, but I do want to say that it does make a difference when a select committee is prepared to look independently at legislation and when a Minister is prepared to accept the results of its deliberation. That enables us to achieve much wider consensus within this House on pieces of legislation where we would hope there would be continuity between Governments, because we do need a strong, innovative, and creative Public Service, and we need the framework within which that can operate.

When this legislation was introduced there were real problems with it in terms of diminishing the rights of people who might be made redundant. When a person is made redundant that means they lose a job through no fault of their own. They should not be further punished by denying them the right to redundancy compensation. There should be a proper transition when changes are made, and we should not be disadvantaging those covered by a collective agreement as against those who are under individual contracts. We should not have a situation whereby the Government is able to make orders that unilaterally change the existing legal and bargaining rights that workers have.

The Labour Opposition raised each of those points in the select committee and, as a result, we have a change in the redundancy provisions of the State Sector Amendment Bill that protect the existing entitlements of people who are working within the Public Service. There will be one situation where workers will not be entitled to redundancy payments, and that is where they are provided with a job which is “no less favourable” than the existing one that they have. If a worker is in no way disadvantaged, if the work is as convenient, and if it provides the same rights and the same future prospects and opportunities, then, yes, we accept that that is not a redundancy situation. But where a genuine redundancy situation exists, workers should be appropriately compensated, and the change in the legislation enables that to happen.

There need to be proper transition provisions. This bill provides a sunset clause over agreements, both collective and individual, over the 3 years after the passage of this legislation. It puts people on collective agreements on the same footing as those under individual contracts. Finally, what were called Government Workforce Policy Orders have become “statements”. They will ensure that existing legal and bargaining rights are protected, and that is different from the legislation as introduced.

I said before that we support a framework that encourages an innovative, flexible, efficient Public Service, and we also support a framework that enables collaboration between the different agencies of the Government. Clause 5 of the State Sector Amendment Bill, which inserts a new section 1A, “Purpose”, is a commendable clause in terms of setting out the principles of the State sector: about the spirit of service to the community; about the collective interests of the Government; about appropriate standards of integrity and conduct; about political neutrality; about workforce and personnel matters being provided for properly; about good employer-employee obligations; as well as about a culture of excellence—

Debate interrupted.

The House adjourned at 10 p.m.