Public Service Legislation Bill

Colleagues, that brings us to Part 6, debate on clauses 107 to 112 and Schedules 10 and 11. This is amendments to enactments, repeals, and revocations.

My first question on Part 6 of this bill is in respect of the amendments to the Clerk of the House of Representatives Act 1988. These are significantly different to what was in the bill and amended by the Minister’s Supplementary Order Paper (SOP) 549. My question for the Minister in the chair is: what is the practical effect of the new provisions that he has added? Just to be really clear about my question—we became familiar with what Part 6 of the bill did, in amending the Clerk of the House Act, in respect of the bill as introduced. Those provisions have now changed. What I’d like is a practical explanation of the SOP and how it changes the Clerk of the House of Representatives Act 1988 with these amendments that we’ve only had for 24 hours.

It has the same effect as the ones that we debated earlier, which is to remove the Officers of Parliament and the Parliamentary Service and the Office of the Clerk from any coverage of the Public Service legislation.

My question is that if indeed that were correct, that this amended Act would make absolutely no change to the Clerk of the House of Representatives Act, then we would be making no amendments to the Clerk—that was, that we’d completely do that. Now, I accept we need to amend the original bill, but the key provision I want an answer to is: what changes are we making to the Clerk of the House, because it’s quite clear from this part of the bill that we are still making some changes to the Clerk of the House Act, and could he clarify that?

The reason for that is under the State Sector Act, there are some provisions currently that the Clerk has to follow—that the Office of the Clerk are covered by in the State Sector Act. As we remove those, we can’t leave a void. So the insertion into the legislation covering the Clerk of the House of Representatives is to ensure that we’re not creating a legislative hole where there are no provisions. So it’s as we remove the Office of the Clerk from being covered by what was the State Sector Act, soon to be the Public Service Act, we’re not creating a hole. So we’re inserting an equivalent provision so that they’re covered into the legislation that affects them.

It basically means that the commission is no longer involved, that the Clerk themselves conducts—this clause specifically relates to negotiations with unions. The public commissioner no longer has any involvement in that. It’s very clear that that’s conducted completely independently by the Clerk.

So, again, just to get clarity from the Minister, when the staff of the Clerk of the House of Representatives sit down to negotiate their terms of employment, what changes as a consequence of the passage of this law? We knew that under the original bill as introduced there was an inappropriate intrusion through this Public Service Legislation Bill. We’ve pulled that back, and National members welcome that, but I still just ask the practical question, and that is: as a consequence—and, again, we have only seen these changes 24 hours ago. I just simply want the clarity as to what’s the practical effect for the Clerk of the House of these amendments. If there was no impact at all, we would see there being no amendments at all to the Clerk of the House. What is the practical effect of these four clauses that amend the Clerk of the House Act?

Well, I just answered that for the member, if he’d listened to my answer. By removing the Clerk from having any coverage by the Public Service Commissioner, it creates a legislative hole that needs to be filled. So that legislative hole is filled by inserting these provisions into the legislation that covers the Clerk.

Well, I’m sorry, Minister, that is not what we have before us. What we have is that these provisions are repealed. So what we have in the provision of new clauses 106B, 106C, and 106C(2) is the addition of the words “after consultation with the State Services Commission”. But the Minister’s explanation that we’re adding a new function to the role of the Clerk of the House of Representatives cannot be correct, because there is no new function added. All we are doing is repealing particular sections. So can the Minister clarify, when he says that there are additional functions for the Clerk of the House, where are those in the bill? I cannot see them.

So the issue is that at the moment, under current law, the Clerk of the House has to consult with the commissioner. We have that, so that is what clause 106B does—it removes the obligation on the Clerk to consult with the commissioner. But that, of course, then creates a bit of a gap, which is what clause 106D fills. It means that it is the Clerk of the House of Representatives who has the overall responsibilities here. So it is literally—these are significant wording changes, and I do understand that. But they all have the same effect, which is to mean that the Office of the Clerk will operate completely independently.

I thank the Minister of State Services for that explanation that no new function is being added, but what we’re doing is simply separating the Clerk of the House from some of the overview, currently, of the State Services Commissioner. Now, the amendments that the Minister is making to the Crown Organisations (Criminal Liability) Act are actually pretty important. If we look at tragedies that have occurred where the Public Service has failed and if we look at the commissions of inquiry that occurred with Cave Creek—which was an example where the Crown failed in its obligations, with the Department of Conservation conducting negligible actions, and there was some argument as to whether they were criminal.

My question for the Minister is that with those amendments to the Crown Organisations (Criminal Liability) Act—and it may feel pedantic, but I have to tell you that when you get a tragedy like Pike River or a tragedy like the CTV Building or the likes of Cave Creek, there are very important questions that the public ask about accountability and liability. The key question I have, particularly in respect of the specification that the Minister is amending with his Supplementary Order Paper (SOP) around the departmental agencies—so the debate here, Minister, is in respect of the criminal liability of Crown organisations. When they really screw up, which are the agencies that get covered by that Act for that criminal liability, and how is that being changed with the SOP and the specific provisions of Government agencies? In other words, what I’m interested in is how are we changing the criminal liability of Government departments when they screw up really badly, and, from a practical effect, which Government agencies are being included and excluded from the parameters of the Crown Organisations (Criminal Liability) Act?

Again, I say it may sound a bit nerdish and a bit technical, but I have to tell you that when you have a tragedy like Cave Creek and you have the loss of life and there is a question of manslaughter or criminal negligence, the coverage of the Crown organisation is a very, very real issue, and what the Parliament needs to be clear about is when that criminal liability is being changed. The reason we need to be a bit cautious is that I’m one of those that says that the liabilities of the Crown or of Government departments should be no greater or any less than a private organisation, and sometimes, because we write the law, we exempt those issues from liability. So I’d appreciate a Minister’s answer around the questions of criminal liability.

There is no change to criminal liability here. All this does is insert an interdepartmental venture or a departmental agency into the coverage of the Crown Organisations (Criminal Liability) Act. As these are a new type of Government entity, it ensures that they would be covered. If we didn’t make these amendments, then we’d potentially end up with some parts of the broader Public Service not being covered by this legislation, so the effect of these amendments is to ensure that they are covered.

My question to the Minister is that as a consequence of these new Crown agencies, including interdepartmental ventures and departmental agencies, being brought out of the general law and into the specific law around Crown organisations, does that increase or decrease their liability? In other words, if you didn’t put this in the law—if the Minister is correct—that means that these organisations, both Crown agencies and interdepartmental ventures, would not be covered by the Crown Organisations (Criminal Liability) Act 2002. Does that, as a consequence, increase or reduce their liability?

It means, effectively, that they’ll be treated the same as if they were a Government department. So if a function, for example, is taken from a Government department and put into either an interdepartmental venture or a departmental agency, it would be treated exactly the same as if it had stayed in the department in so far as the Crown Organisations (Criminal Liability) Act 2002 applies. These organisations don’t currently exist, so it doesn’t increase or decrease their liability, because they don’t currently exist. It means that if they are created, the provisions that would apply if they were a department will stay exactly the same.

Minister, I’m sorry, but it’s not quite there. The bit I totally understand is that with regard to the level of liability, these Crown agencies and these interdepartmental agencies, through the Minister’s amendment, are going to be treated the same as a core Government department. I get that bit, but it doesn’t answer the question as to whether, if you didn’t include them and they were a generic organisation, the likes of a community organisation, a private company, or a private individual—are we increasing or decreasing the level of liability that they have currently?

My understanding—and I’d love clarity—is that the Crown Organisations (Criminal Liability) Act actually has the effect of reducing the level of liability as compared with an incorporated society, a private company, or a private individual. In other words, what we are doing through this provision—yes, I get it that it makes it the same. But if you didn’t do it, wouldn’t those organisations have a greater liability?

This is relevant for this reason, and I will explain it to the Minister. All the time, the Public Service is making decisions about what stuff is done in-house and what stuff is contracted out. The Government extensively contracts out social services, building roads, and all sorts of activities, and there are different levels of criminal liability that apply.

In other words, if an agency, for instance, in health contracts out to an organisation like IHC, the criminal liability of IHC is different to that of a DHB or the Ministry of Health. So it is absolutely relevant to know that for these interdepartmental ventures and departmental agencies, will their liabilities be greater or less than an IHC or a drug foundation, or any of those types of organisations. Is the impact of this bill to increase or to reduce their liability as a consequence of extending the jurisdiction of the Crown Organisations (Criminal Liability) Act?

The member’s asking for a legal opinion regarding the difference between those covered by the Crown Organisations (Criminal Liability) Act 2002 and those that aren’t. That’s a debate that’s well wide of the scope of this bill.

I move, That the question be now put.

Motion agreed to.

The question was put that the amendments set out on Supplementary Order Paper 549 and 558 in the name of the Hon Chris Hipkins to Part 6 be agreed to.

National has concerns that, with respect to Part 7—the core issue for us is ensuring effective and wise spending of public money, and we should be in no question of the importance of this part. The Government spends $80 billion, $90 billion, now heading towards $100 billion a year of public money, and National would want included—there’s all sorts of nice values in this bill about the Public Service being neutral, and we support that, and those things. But, equally, in the Public Finance Act we think there should just be a very explicit overriding obligation on the Public Service to spend public money wisely and effectively, and I’d be interested in the Minister’s view of amendments that would require that obligation on every Public Service agency, whether it be department, Ministry, or the like.

By happy coincidence, I find myself in the chair at the moment that the member asks that question. The first thing that I would point out is that Part 7 itself is a relatively technical part in terms of the changes, in the sense that what it does is facilitate—through the Public Finance Act—what is happening in the rest of this bill, as opposed to I think what the member is suggesting, which is a wider sweep of reform of the Public Finance Act. We are, in fact, as the member will be aware, going through a Public Finance Act modernisation process, the first element of which this House has already passed, which is the wellbeing amendment bill that went through a few weeks back. We’re now looking at what further modernisation is required, and, just to draw him back to this part of the bill, what it is doing is allowing for the more flexible arrangements created by the rest of the bill to be able to be reflected in the obligations on Public Service agencies through the Public Finance Act. I think that is both an important technical thing to do and very supportive of these arrangements.

By way of explanation of Part 7, I would point to one of the things which is mentioned here, which is the concept of a joint venture. We have one of those in operation at the moment around domestic and sexual violence, and it’s a fantastic piece of work, bringing together—I think—between eight and 10 different Government and State sector agencies all under one heading and working towards one set of accountabilities, one set of outcomes, in terms of eliminating the scourge of domestic and sexual violence from New Zealand. It’s been a very successful programme and we’ve funded it significantly, but if you go looking for it in the Government’s accounts, you won’t find it, and the reason for that is that each of the eight agencies have a small portion of it reflected under their appropriation. So, actually, this will help make what all parties, I think, in Parliament want to have happen: the breaking down of silos within Government more clear and obvious in a public finance sense. You’ll actually be able to see all of that in one place, rather than having to go through and find eight different versions of it.

So that’s what Part 7 is about. I understand the points that the member’s making about the importance of the efficiency and the effectiveness of spending. I think that’s better dealt with through a direct Public Finance Act amendment rather than Part 7 of the bill.

Minister, I understand totally what Part 7 is all about. National members were very disappointed when we set out in the earlier debate that the principles of the Public Service should include spending money wisely and effectively, and so the purpose of my question was, having not put it into the Public Service Legislation, let’s at least put it into the Public Finance Act, and I’d like the Minister to respond to that question.

The more detailed second question I have for the Minister is that our whole system of Government is around parliamentary accountability for public money, and a very important—and if you walk through into the Parliament, the signing of the New Zealand Bill of Rights Act was that the Government was not allowed to spend money without the authority of Parliament, and we have a whole set of trying to codify that in the Public Finance Act that we’re amending with this bill. The really important part of the accountability in the Public Finance Act is that for every Vote there’s a Minister. That Minister needs to account for that expenditure, and that accountability process is really important.

Now, I want to make absolutely plain—the Minister has made the point about the Government’s response to family and sexual violence, and National is strongly supportive of the provisions in the wider bill and in this part that get our Government agencies out of their silos and working across sectors to try and get better outcomes. A number of those initiatives were taken during our period of Government, and your Government has also taken initiatives in that area, and no problem.

The bit that we need to sort in the Public Finance Act is in ensuring where you have multiple agencies, multiple Ministers, and multiple chief executives, and you have the appropriation of money, that you—in achieving a very proper public objective: getting better cooperation and coordination—don’t lose that fundamental responsibility of someone’s responsible for the money. So my question—particularly where there are 36 changes in this part to the bill that went before the select committee. The fundamental question that I want the Minister to answer is which Minister, when Parliament goes through its annual appropriations—and let’s say you take an example, whether it be in the health, whether it be in the justice or other sectors, where you establish a cross-interdepartmental executive board and agency. Who’s responsible to the Parliament? How is that link maintained?

Yeah, I thank the member for his question, and I think this does cut to the heart of how we get the balance right between making sure that we are having Government function in the way that the outside world functions and still meeting those requirements that the member has alluded to. So at a very practical level, there will always be a specified agency and there will always be somebody who has to account and report. Actually, what Part 7 does is make sure that someone still is doing that—that’s the point. So by changing around the requirements or the contents of an annual report, as we do here, and the various other reporting and strategic documents, that is about making sure that there is a specified agency who does that.

What I do want to put on the record and actually agree with the member on is that this has to be watched and monitored closely, and I think he’s right about that, because what we don’t want is no one to be responsible. So I believe that the bill actually fulfils that. What we will see as these evolve over time, I suspect, are further changes down the track, particularly around appropriations, because we’re already doing that. The member himself was part of a Cabinet where they moved more towards multi-category appropriations and multi-year appropriations, both of which are very useful tools of flexibility in the system. We have managed, as those have been implemented, to continue proper parliamentary scrutiny.

So, actually, what this part of the bill is doing is the very thing that the member wants it to do. It would be fair to say that as these practices evolve, we may choose to see the Public Finance Act (PFA) evolve alongside them, and, you know, it is certainly my intention, if I have the privilege of being in the position of administering the PFA again, to continue to work on how we can both make it flexible but also maintain those accountabilities. But that is actually the very thing that Part 7 does.

I want to specifically ask the Minister about the Supplementary Order Paper (SOP) that has been tabled, SOP 549. I want to say to the Minister in the chair that we’ve only had these 200 pages of amendments for 24 hours, and so I make no apologies for wanting to scrutinise it. But what surprised me is the amendment that says that the agency that is administering the appropriation can, in fact, be different to the Vote. Can he explain that?

I’m just going to get some advice for the member on the first part of that, but yes, that is because—it’s the very point I’m making. So let’s take the current joint venture that we have in operation now. So that is, effectively, managed through the Ministry of Justice—that’s, effectively, how it’s managed, and it would be continue to be the lead agency. Now, as it happens, a number of other agencies are contributing to that. There is actually no great value for the Parliament in digging into, for example, Oranga Tamariki and their role within that, because it actually is an incoherent way of assessing whether or not the Government’s expenditure is effective in that area, because what you’re then doing is saying, well, yes, that money has come through Oranga Tamariki, but actually their responsibility is part of the wider joint venture—you lose the impact of what they’re doing.

A very specific example within that is a partnership between the police and Oranga Tamariki as part of the domestic and sexual violence joint venture. Being able to disentangle whether or not who’s got which dollars within it and are they being used you will still be able to do, but under this process you’ll actually see it as part of its coherent whole.

Madam Chair, I know you’re cautious of me getting into detail, but sometimes, actually, a practical example is a way to interrogate the amendments that are being made to the way in which this Parliament deals with Estimates. What concerns me with the provision in clause 116 is Parliament’s going to be faced with the situation where it’s dealing with Estimates at a select committee and the person and agency responsible for the Vote is different to that which is administering the Vote. That’s specifically what is provided for in the SOP. So my question for me: how do we expect this to practically work?

So let’s say you’ve got the Ministry of Justice appearing before the Justice Committee and it’s on an issue where it’s responsible for the Vote but the administration is going on in some other Government agency. A member of the select committee says, “Hey, look, you’ve made a mess of spending that 2 million bucks.” And they say, “Oh, nothing to do with us. That’s administered by someone different.” Are you confident, and how can it be that in the SOP, clause 116A, inserting section 14(1)(ca), where it specifically says that the agency that’s been authorised with the Vote from Parliament can be different to the agency that’s actually administering the fund—aren’t we really breaking up the parliamentary accountability?

No. Yeah, no, we’re not, and the point that I want to make very clear to the member, and I think this is how this will need to evolve—my personal view is that where there is a clear—and it will be—specified agency, they will have to front up and they will have to be accountable to Parliament. What I think we need to evolve to, though, as we have more of these cross-departmental entities, is providing for that cross-departmental entity, which will have, as the joint venture does, somebody who leads it, a chief executive—that they can be brought in front of a select committee. But the member is arguing here that just because there is an administering agency and a specified agency, somehow or other that means he won’t be able to question them. He will. The specified agency simply needs to be prepared to be able to answer questions for things to which they are responsible to Parliament for.

To further that discussion, Minister, is that currently we do not have the situation where the Vote is different to who administers the Vote, and what the Minister’s SOP does is actually say that for the first time in Parliament, the Vote could actually be administered by another agency.

But I also want to ask the Minister the question about his amendment in respect of assets and liabilities, because in the Supplementary Order Paper—which I again say is being rushed through and we’ve only had 24 hours to look at—the Government is amending the way in which those assets and liabilities are going to be managed. So what my question is is: what is the practical impact of the amendments—how those assets and liabilities will be dealt with in the Public Finance Act?

Just to clarify with the member, he’s not referring to changes in Part 7 with respect of assets and liabilities?

Yes I am. Part 7, clause 124(4) specifically says in the amendment, “Subsection (1)(a) applies to a specified agency only to the extent that the specified agency manages assets or liabilities.” So what I want an explanation of is what—this is the first we’ve seen it. We’ve only seen it for 24 hours. It’s reasonable for me to ask: what does that change in dealing with assets and liabilities under the Public Finance Act? What’s the practical effect of clause 124 and the changes in the Minister’s Supplementary Order Paper?

On that specific section, it is around the responsibilities, as the member will be aware, of chief executives. So this is making sure that we are clear in the Public Finance Act what a chief executive is responsible for. It refers back, as pretty much everything in Part 7 does, to earlier changes that have been made. So it’s simply about making sure the Public Finance Act reflects the changes here.

To come back to the member’s earlier point, yes, we are moving into different territory here—that’s the whole point of doing a bill, is to actually create an environment where we’re not sitting here to just reinforce the status quo. We are trying to facilitate the very thing that he has acknowledged both his own party and the current Government have done. It will mean that things feel different from time to time in a committee, but the whole point of changing the law and changing the Public Finance Act through Part 7 is chief executives, in this case, remain responsible. So it’s actually making sure that we keep the integrity of the Public Finance Act while we amend or create new legislation for the public sector.

Well, let me be very specific, because these issues are big. The Public Finance Act was introduced—when I first came into Parliament, a huge issue was that there were massive liabilities that had been hidden by a previous Government, and we came into Government and suddenly we had huge liabilities. So part of the Public Finance Act was making sure there was transparency about liabilities—that Government can’t hide nasty, big legal action or other liabilities on the books.

Now, the question I’m asking is around how we deal with both assets and liabilities for these new agencies. I’ve indicated to the Minister, and we’re in agreement—we want to have the capacity for these interdepartmental agencies that are able to do things. But the question is this: at the moment, in the Public Finance Act, if you’re the Secretary for Justice and you’ve got a big liability on your books because you’ve screwed something up and you’re being sued, or you’ve incurred some large debt, the Secretary for Justice is in the gun, as the chief executive of that agency, for that.

My question is that what we’re saying here in the law is that the specified agency is only responsible to a limited extent. So where I want to know there’s accountability is if there is a liability incurred by one of these new agencies we’ve created and they don’t declare a significant liability or they don’t declare a substantial amount or legal action or debt, who’s in the gun?

I move, That the question be now put.

Motion agreed to.

The question was put that the amendments set out on Supplementary Order Paper 549 in the name of the Hon Chris Hipkins to Part 7 be agreed to.