Annual Reporting and Audit Time Frames Extensions Legislation Bill

Members, when we suspended last night, we were debating Part 2, clauses 5 to 7, the amendments to the Local Government Act 2002. The question is that Part 2 stand part.

Thank you, Madam Speaker. Lovely to see us all back here this morning. I was complimenting Mr Robertson before on his dress attire. At least he didn’t have the issue of having to worry about a tie. But it’s nice to see you again.

The issue we’ve got is obviously about the local government component of this bill. I have a tabled amendment, as you’re probably aware, about the timing and the two-month period that is being set aside. In fact, what my tabled amendment deals with is the issue of the second part of the bill, in terms of the requirements to delay the audit of local authorities. Given that we’ve had a break in the proceedings from last night, it might be worthwhile just repeating this. This is to do with, in clause 6, new part 5(b): “in relation to the financial year ending with 30 June 2022, the report referred to in that subsection must be delivered in accordance with subsection (1)(b), and made available in accordance with [that] subsection … no later than the close of 30 November 2022.”, and section 7 actually relates to 30 December rather than the 30 November date.

So, basically, in both respects for both councils, there’s an issue of the second year of delay. And the question we were talking about last night is, why was the need to have a further delay, particularly for local authorities, for the second year? My question I’d like to put to the Minister—and I hope this is going to be interactive—is, what advice did he get from local government about both seeking a delay on the audit for local authorities both for this coming financial year and, obviously, the subsequent year, which is what I’ve been referring to in my tabled amendment? Did he talk to anyone from local government, and, if so, who, and what was their response? Because that’d be an interesting—or whether, in fact, he decided in his own right.

Ata mārie, good morning. In terms of that, I did not specifically, and I’m sure the member will understand that I’m not the Minister of Local Government. I would need to check as to who the Minister of Local Government spoke with. I do know that in the course of putting the Cabinet paper together, that then led to this legislation. There was consultation through the Department of Internal Affairs, as you would normally expect.

What I do know for certain is that the local government sector want there to be robust and accurate audits. They want to know that what they paid for—the fees they pay—will get them the service that they need. And, obviously, that brings us back to the premise of the legislation, which is that the Auditor-General has asked us, as a Government and now as a Parliament, to grant this extra couple of months in order to make sure that robust audits can be completed. They will still be completed in a timely manner.

Just to pick up on the member’s point in the middle of his contribution, I think it’s worthwhile, in this section, just to note that there are different deadlines for council-controlled organisations and local authorities, and that’s represented by the two different clauses in Part 2. The normal deadline for council-controlled organisations is 30 September; and for local authorities, 31 October. So each of those goes out by two months. As I say, from my perspective, this will ensure a robust audit that means that local government and council-controlled organisations will be able to stand by their audited accounts, and I’m sure that’s what matters the most.

I want to speak to a number of points that are covered in amendments that have been introduced by the Opposition, recognising that, while the Minister in the chair continues to say this is a simple, technical change to the bill, a simple moving of dates in order that things might be done more properly, that doesn’t of itself in any way diminish the importance of a bill that changes the way an Officer of Parliament is required to operate. While I heard a number of people yesterday from the Government’s side saying, “Oh, but it’s COVID-19”, COVID-19 has become code for “Don’t look at anything we’re doing; just look at COVID-19 and feel fear.” I think it’s, in this case, a little unreasonable given that we have had a full 12 months of activity, where there has been no nationwide lockdown, and there has been an economy growing, as the Minister in the chair likes to so often tell us, at a huge rate. That doesn’t tend to support the view that there is somehow a pressure being brought on the Auditor’s Office that was not foreseen. Clearly, the Auditor looks at stats, the Auditor looks at trends, and the Auditor should have known that his staffing situation might have led to a situation like this. I can’t, in all honesty, believe that there was no notification from the Officer of Parliament to the Officers of Parliament Committee or to the Speaker, who is, effectively, the Audit Office’s Minister. So there are a number of things here that are a little concerning in that regard.

If all of that were to be set aside, the bill itself is a blanket bill: the progress that’s made with any particular audit is at the choice of the Office of the Auditor-General. I don’t think that’s particularly acceptable. If the bill had come along and there’d been some negotiation and some better understanding across the House of why the Audit Office has failed in its duties to appoint, where they’ve had to come to Parliament to ask for this particular provision, it may well have been that there could have been a negotiation about which entities that would normally have to be audited in the two financial years inside the prescribed dates of the existing legislation could be extended on a case-by-case basis. And that hasn’t happened. Instead, we’ve got a situation where the Auditor himself, and his office, will choose who gets put to the back of the queue, and I know that there was, at one point, a list floating round that looked like a priority, but what if there is some sort of a blip in that sort of arrangement? It would have been far better to ensure that the bigger organisations are definitely reported inside the current statutory reporting period, and perhaps some of the smaller ones or those that are not of such significant financial impact to our economy might have been put into this category with the extra two months.

This part sees an amendment in my name that would amend section 5(a) to add the words “however subsection (5) does not apply to the Christchurch City Council and its council-controlled organisations”. What does that mean? It means that, inside the statutory period, the Christchurch City Council should be audited. And the question will come from some, “Well, why?” Well, it goes back to that point about priorities. This is a council that has inflicted runaway levels of rates on its citizens and has a large portfolio of entities that are not easily seen as adding value to the city. Now, I can see some people over there sort of smiling, because they don’t mind that sort of thing. They think it’s OK to go to electorates with substantially fixed-income families and say, “Here’s another 8 or 9 percent on your rates.” That’s if you include the regional council stuff as well. Here’s some extra charges going on entities’ costs. That’s unreasonable, and it should be reported inside the statutory period.

Thank you, Madam Chair. I’ll take the opportunity to respond to a number of the points that Mr Brownlee has raised in his most recent intervention, firstly to repeat what we talked about a number of times in Part 1, of the justification for this. So Mr Brownlee points to the fact that we haven’t had lockdowns, and he’s obviously correct about that in recent times; however, as he pointed out in one of his speeches in Part 1, we do continue to have border restrictions, and they are one—but only one—of the factors that the Auditor-General drew to our attention in asking for this extension. The other of those is the global shortage of auditors, and indeed the Australasian shortage, which we talked about last night, which includes over a thousand vacancies in Australia and over 200 vacancies for auditors in New Zealand. Then the third reason being the staff turnover issue within the Audit Office.

I do have further information about that for members, including the fact that the Audit Office has, I am advised, advertised for audit roles 11 times since 1 January, has recruited eight staff from that advertising—that since the beginning of March, they have lost 41 audit staff. In 2020, if you want to compare, 18 left at the same period; 41 since the beginning of March. And they have recruited 14 in that period. Forty-one gone, 14 recruited in that period of time. So that’s the third of the reasons that have been put forward.

💬 Hon Gerry Brownlee: What’s that percentage of staff?

Their operational staff of 235—sorry, there were 235 in February 2021, and there are now 208. There were 235 in February; there are now 208. So that is the third of the reasons that the Auditor-General put forward as his reasoning for wanting us to undertake this work. So that’s to respond to that point of Mr Brownlee intervention.

In terms of his intervention about whether or not this was known about, as I said again last night, the information I have is that the Auditor-General appeared before the Officers of Parliament Committee on 11 March and indicated at that time that audit fees, which is what, essentially, pays for the staff that we’re talking about, would need to increase to maintain the competitive pay structure within the office. I’m not a member of that committee, so I’m not in a position to be able to judge what happened or what response came from the Officers of Parliament Committee. What I do know is that, as the Minister of Finance, I have been asked by the Auditor-General, and Cabinet has agreed, to put this legislation up to make a modest and small change to allow all audits to be completed in a robust fashion by the end of the year.

My final point in response to Mr Brownlee was his urging for a cross-party way of dealing with this, and indeed that is precisely the process that we went through. It’s what led the Auditor-General to write on 2 July to myself and Mr Bayly, beginning his letter with “Thank you for indicating your support for legislative change to address the current shortage of auditors.” So that’s a letter to me and Mr Bayly thanking us for the indication of our support; obviously things changed along the way. In that same letter, the Auditor-General runs through the prioritisation process that he intends, and we covered this last night as well but I’ll mention it again. He has said that, within the normal statutory deadlines, he expects all essential Government entities to be completed with their audits, including the New Zealand Superannuation Fund and other large organisations, all of the financial markets conduct reporting entities—and, for the benefit of Mr Brownlee, larger councils; for example, Christchurch City, Tauranga City, Wellington City, Dunedin City, and others. So the Auditor-General has given an assurance that those entities are the ones that he will be prioritising.

Again, to recap last night’s discussion, I simply do not believe it is appropriate for Parliament to be at that level of detail, deciding which entities get audited and don’t, and I again put to Mr Brownlee and others the counterfactual that, given the majority that the Government holds in this House, if we were to start deciding which entity we wanted audited or not, there would be a considerable reaction to that. We should have trust and faith in the Officers of Parliament. This piece of legislation should have been able to go through the House reasonably rapidly last night, but instead we have had an extended debate, which I think members may choose to reflect on in the future about how they are talking about and how they are treating an Officer of Parliament. This has come to this Parliament because the Auditor-General has asked us to do that. There are questions that rightly the Officers of Parliament Committee may well ask, but actually this debate is a relatively simple one to extend the time frames.

Thank you, Madam Chair. I was actually going to give the Minister credit for the thoughtful way in which he’d engaged in this debate, but I find myself having to criticise him for those last comments. Actually, democracy is messy, it takes time, and, frankly, when we are under urgency, this House is actually owed more respect than the comments that the Minister has just given. Because the legislative statement, the disclosure statement, and the information that we have about the degree to which this is necessary and appropriate is anaemic, and so I simply reject the fact that the National Party is somehow filibustering or drawing out this debate. This is a very important debate to have.

I want to, firstly, acknowledge that at least some science is being brought to the debate—for the first time, actually, since this started—about the case for change, because we now know how many staff, what the Minister says is operational—I find that quite interesting, and I’ll elaborate—have gone and how many have come back. We now know what that 27 represents—they’re having 41 resignations and 14 recruited, of what he called 235 operational staff.

There are, actually, according to the annual report of the Office of the Auditor-General—I think it was the 2019 report was the last one I could find online—420 staff that work in the Audit Office; how many of those are actually qualified auditors, or, at least, capable because they have accounting technician qualifications, or other skills that may assist chartered accountants in performing their audit duties, I’m not sure. But let’s take 235 as the denominator and the 27 net staff that have been reduced in the last period of time. That constitutes 11.4 percent of what the Minister calls the operational workforce. So that’s fine—it’s probably not that different from the percentage of registered nurses at Waitematā or Southern DHB or Canterbury District Health Board; it’s probably about the same as the staff the New Zealand Transport Agency have reduced. It’s probably a challenge not only across the Government sector but across the private sector that every single organisation has to deal with. But not every single organisation can come to this place and ask for a statutory extension of time to fulfil their duties.

And to suggest that the amendments that we are putting up are somehow interfering with the discretion that the Auditor-General has in the carrying out of his work is quite wrong. It’s not something the Auditor-General has discretion over; he has a legal obligation to do that, and we’re being asked to change the law. If that means that we have to have a bit of a debate and it’s a bit messy and it interrupts the Minister’s appointment diary, too bad, because that’s what we’re here to do.

Now, I also want to re-ask the two questions I asked at the end of Part 1, which the Minister perhaps didn’t have time to answer, and add another one. Those two questions last night related to Crown entities’ readiness for audit, and it extends, I think, to local government entities ready for audit, so it’s just as relevant to Part 2, because the letter from Mr Ryan to Messrs Bayly and Robertson talked about that. So my question is: has he received advice from the Crown entities and local government entities that the Ministers responsible for these pieces of legislation—have they heard from those entities to say that they are not ready for audit? Secondly, has the Office of the Auditor-General actually had a formal approach from those organisations to say they will struggle with readiness for audit? That’s the first question.

The second question is: has he had a discussion, or will he approach, the Leader of the House to ask him to consider extensions of time for the legislature to fulfil its obligations under the Standing Orders to review the financial reports and the annual reports of these entities? Because like this year, because of COVID and the general election we had precious little time to do that very important function. I’m quite sure that this delay is going to result in the same scenario in early 2022.

And the third question I want to put to the Minister is in relation to consultation. Mr Brownlee talked about consultation with Local Government New Zealand. I would add to that: any consultation about this with Chartered Accountants Australia and New Zealand and the actual firms, the large firms, that provide audit services to Crown entities on behalf of the Office of the Auditor-General—and, actually, let’s hear a little bit more about the science of why an 11.4 percent reduction in the staffing level, even if it’s as high as that, actually results in what’s a much larger proportion of the work being delayed.

I thank the member for his questions. In answer to the first of them, the letter of 2 July—the member just needs to read the sentence carefully. It begins with “as always”. So what the Auditor-General is suggesting is that within his normal prioritisation that he has to undertake, final priorities depend on the extent of entity readiness for auditing, as always. So I don’t think there is anything whatsoever in that matter.

Secondly, the effect on select committees: I am advised that given that these audits will be completed by 31 December, financial reviews would be the next moment for us, and I’m advised they will be—

💬 Hon Michael Woodhouse: They can’t start in November and December.

—unaffected—

💬 Hon Michael Woodhouse: Select committees can’t do their work in November and December.

No, that’s not true, Mr Woodhouse, whatsoever—it’s not true: the advice I have is that this will not affect the work. And bear in mind, once again, the beginning of that letter indicates that the priority for the Auditor-General is the financial statements of Government and all key components, including all Government departments. So the Auditor-General is telling Mr Bayly and myself in that letter that that work will be completed in the normal statutory time frame, not the extended statutory time frame. So the member has nothing to worry about in that regard.

In terms of his third point, my understanding is that there is constant communication between the Office of the Auditor-General, Audit New Zealand, and the large companies whom they use to undertake work. That’s just a regular part of what they do. The reason we know that there is a 200 auditor shortage in New Zealand is as a result of a survey undertaken by the chartered accountants association of Australia and New Zealand. So this, as I’ve already mentioned multiple times, is a result of a number of factors, one of which is that global shortage and indeed the shortage here in New Zealand.

In terms of wider matters, I am repeating myself, Madam Chair, but that’s because the questions are covering the same ground, and that is to say that the Officers of Parliament Committee may well have a number of questions that arise out of this legislation. I’ve said that in my first reading speech, I said it in my second reading speech, and I’ve said it during this committee stage. And they can, at any time, take these matters up. That is the appropriate place to take these matters up. We’ve had material provided from the Office of the Auditor-General today on those staff movements. Questions about those are best directed through the Officers of Parliament Committee. The job in front of the House today is how to deal with that and other factors that have led to the Auditor-General asking us for this delay.

Thank you, Madam Chair. I really want to talk to my tabled amendment, and, in particular, it’s really asking that we actually exempt Tauranga City Council, Dunedin City Council, Hamilton City Council, Palmerston North City Council, Hutt City Council, Greater Wellington Regional Council, Waikato Regional Council, Otago Regional Council, and the Bay of Plenty Regional Council.

It’s really important, because, fundamentally, I think the Minister would have to agree that local government is feeling very overwhelmed. It’s facing some of the biggest challenges it’s had in the last 30 years. It’s actually got an unprecedented set of challenges when you actually start to look at it. You’ve got challenges around poor strategic planning, low capacity, big complex projects, poor customer experience, big projects coming through like three waters reform, etc. I think, fundamentally, we all know that if local government’s going to be successful—and that’s why these councils need to be on the statutory time frame, not coming in later. They need to be able to understand: are they fundamentally delivering real value to their community? That is the primary job of local government; to make sure they’re delivering real value to their taxpayers and to their ratepayers. A big part of that is to know whether you’re actually benchmarking your performance—and they’re having great transparency around that—and knowing whether you are or are not hitting the mark and doing the right thing with those taxpayers’ funds and getting a good return on that investment.

So there are things like CouncilMARK audits that you can do, but it’s all hit and miss. It’s not compulsory; it’s not mandatory. But these audits, I can tell you, are really important. We know they’re important, because local government, actually, has disengaged a whole bunch of people in the community. There’s only 25 percent trust in local government, there’s about 40 percent voter turnout. So, fundamentally, performance matters and audits like this really matter, particularly to smaller councils like the ones I’ve just talked through.

So I think we know efficient operations of local government all around the world are really, really important. The elimination of wasteful spending; making sure there’s not duplication of effort; making sure there’s really good governance and oversight; making sure that when you’re doing outsourcing agreements, cost-efficient IT—the realm of what a good local council has to deliver upon is really very huge.

So I think, fundamentally, I’ve got a comment around this and a question, fundamentally, around why do we think these governance issues aren’t that important, when these are the small councils that desperately need these services to illuminate what they’re doing well, what they’re not doing well.

The second comment I want to make, and my second question, is that I know the Minister is now sort of a de facto CEO of Air New Zealand, given his recent letter exchange, and it’s wonderful. But I used to be the CEO of Air New Zealand for seven or eight years, and it was a great company. I mean, we went from $4.3 billion to $6 billion, gave the Government fantastic 10 percent return year in, year out. It was wonderful. But if I sat there and I said, “Look, the dog ate my homework, ran over the kid’s bike in the driveway, couldn’t quite the auditors together, missed the deadline for the financial year end.”—not acceptable. Unacceptable. So why do you get another go at it, and everyone else doesn’t get a go at it? Because there’s this so-called global shortage. Scott Morrison’s not dealing with this today, is he? Is he delaying everything statutorily with all this?

💬 Hon Grant Robertson: Yeah, they have.

Yeah, right. So the question is, Air New Zealand goes and spends a million dollars doing its own internal audit with Deloitte, and then the Office of the Auditor-General comes in over the top of it—right?—and does a bit of a scan of it all, which is great. But Air New Zealand gets the job done with the proper spending the money, getting it done, getting it sorted. So my question for you is, sort of, why don’t we take Air New Zealand off the mandatory list for the statutory bit and actually put these councils on? Because they much more desperately need the support of these audits, rather than Air New Zealand and these big guys. But I just think it’s amazing that you can actually sit there and just come up with a whole bunch of excuses, push it all out—didn’t quite get my homework in on time, didn’t get done—not just for two years going forward, but you did it last year and we’re doing it for two years. We’ve got a systemic problem. In three years, we can’t sort that problem out. You sort that problem out by going, buying the services, raising wages, doing what you need, bringing in the talent, and we haven’t got it.

So I’ve got two questions. One is: why do you think the governance issues of these local councils—which are so desperate for great illumination about what they’re doing well, what they’re not doing right, so they don’t waste people’s money, so they don’t erode public trust in those institutions. The second thing is, why would you prioritise Air New Zealand as an example of those big organisations that you said you’d do under the statutory time frame over these small councils? Because they need it much more than those big organisations. You can be reassured Air New Zealand will do its job properly; a million dollars with Deloitte gets the job done. And what the Office of the Auditor-General—you could sacrifice that one, I’d say, rather than doing that. So thank you.

I am repeating myself, but in light of the fact that the member’s raised the specific matter of Air New Zealand, I’ll repeat for his benefit that the letter that was sent to his colleague Mr Bayly and myself on 2 July indicates that the councils—the exact ones that he’s naming—are going to have their audits completed in the normal statutory time frame. So he can rest assured about that. There’s no competition there between Air New Zealand and those councils. I, of course, will be forensically studying the Air New Zealand accounts, perhaps going back over a number of years, to take a very, very close look at the accounts of—

💬 Hon Gerry Brownlee: Here comes the bully.

—Air New Zealand and make sure that we have a good—

💬 Hon Member: I’d expect nothing more from a CEO of Air New Zealand, like you.

Exactly. Mr Luxon’s very comfortable with that, even if Mr Brownlee isn’t, so that’s good.

So this is the same answer that I’ve given for this question on a number of occasions. The Auditor-General has indicated that he will ensure that those councils will have their audits done inside the time frame.

I move, That the question be now put.

Thank you, Madam Chair. Delighted to be able to speak. I wanted to talk a little bit, and with my experience, a little bit like my colleague Christopher Luxon, having been audited by Audit New Zealand for the past 23 years, I don’t actually recall a year when they didn’t say they were short-staffed. When my colleague Simon Watts said that there were four vacancies on the Audit New Zealand website last night, I suspect that’s somewhere around 9,996 less vacancies than in the rural sector being advertised at the moment.

But I do want to ask the Minister to just elaborate on how he feels this isn’t going to impact on those who have their 31 December end of financial year date, because I’m quite sure that the actions of this Government—for those entities that had a 31 December end of financial year last year—impacted on the issues we’re seeing now. Because the Minister’s colleague Minister Hipkins actually created another 17 audits that were required to be undertaken by the Auditor-General last year, when he put in place, on 1 April, the new entity Te Pūkenga, because that required all the Institutes of Technology and Polytechnics of New Zealand to have two audits last year. They had to have an audit for the first three months of January to 31 March, then they had to have a second audit—March to December—and then Te Pūkenga had to have an audit. So how did the Minister not foresee this unintended consequence of Minister Hipkins bringing in 17 more audits?

Now, I was there when we had to do the extra audits at the Southern Institute of Technology, and I think it probably took about two of our staff an extra six weeks of work internally. So I’m thinking it probably took another maybe three or four Audit New Zealand personnel extra time there. So surely—surely—you would see the unintended consequences of bringing in an entity. Interestingly, Minister Hipkins was warned not to bring in Te Pūkenga on 1 April during a period of such unprecedented upset in the sector with COVID and everything else, but he went ahead with it. It does make me think that if you lack business knowledge, if you lack business experience, if you lack business acumen, you make a decision and then there’s unintended consequences like 17 more audits, and you say, “Oh my goodness. Look what that’s done.”

I would have thought that before 1 April last year, the Minister of Education should have been saying to the Minister of Finance, “There will be more work for the auditors having to carry out these audits twice, and the new Te Pūkenga audit.” So I feel that the Minister needs to explain to us how he thinks that those audits didn’t impact on the situation we’re seeing now, and given that I know pre-audits for the 31 December end of financial year will have to be undertaken in December, how we’re not going to see a similar flow-on impact. This is just going to keep compounding through for the Audit Office, and how he thinks this is somehow going to be solved by giving a two-month extension when all it will do is run into the audits that have to occur for those that have their end of financial year on 31 December. I’d like to know what advice Minister Hipkins gave to him about, “Oh, by the way, there’s going to be 17 more audits having to be undertaken, and this might put a bit of pressure on the office of the auditor.” So perhaps he could just illuminate us a little in how that thinking didn’t occur earlier, and how he thinks it’s not going to carry on and give knock-on effect to those other entities having their end of financial year on 31 December.

To cover the material we covered last night again, this is not about those entities. This is about dealing with the hump that occurs when you have a large number of entities—much, much larger than 17—who all require their audits at a similar time. That is why a two-month extension is required for that. The advice we have is that audits for those entities with a 31 December date will not be affected, and I did cover that material last night.

I wish to speak to my tabled amendment, which seeks to exempt Wellington City Council and its council-controlled organisations from this bill. I note that this is actually completely in concurrence with what the Auditor-General has said should happen here. The Auditor-General’s letter to the Minister of Finance stated that larger councils would have their annual reports completed within the current statutory reporting deadlines. But as the bill is on the Table before us as the legislation current stands, those councils continue to have their audit and annual report time frames extended by two months even though the Auditor-General has said that is not necessary.

I think this is an important principle, because we need to remember and the Minister of Finance needs to remember, that extending these statutory reporting time lines is a very significant step, and so we should be minimising to the absolute extent possible the entities that are captured by the remit of this bill. I want to talk about why it is so important. Let’s remember the state that Wellington City Council is in now in relation to its accounts, and the Minister of Finance, who is resident in Wellington Central, should be very aware of these issues. Certainly, constituents in Wellington make me very aware of their concern about the fact that Audit New Zealand has issued a qualified report about the state of Wellington City Council’s accounts, its 10-year budget. They have raised particular concerns around the approach that Wellington City Council is taking to the renewal of key assets. Now, why would that be? Could that be because we have had several instances of raw sewage on the streets of Wellington? Could that be because actually we have had literally millions of litres of sewerage sludge dumped in our harbour? And could that be because the service levels in terms of water repairs have declined rapidly? So in that context, Audit New Zealand has concerns that the asset renewal programme that the council has put forward, basically says, “Look, we’ll do as much as we can within this cap.”, and will not actually get significantly outdated water assets up to standard, and this is of significant concern. I do not think it is sensible to allow in the law a delay in the law a delay in the audit for Wellington City Council when there are such stark issues at play.

Of course, that’s not the only issue at play with Wellington City Council’s accounts. The other issue is around the capital programme. Audit New Zealand has said, “Well, it’s all very well and good that you’re going to go and build cycleways and do all of those things, but have you actually looked carefully at the constraints in the construction market and done some sort of prioritisation framework should you come up against those constraints? Do you have a delivery plan?” Again, I would say that I think it is in the interests of Wellingtonians as ratepayers, as taxpayers, as citizens, to know that Audit New Zealand will be auditing these accounts thoroughly and on time because of the nature of concerns that have been raised in recent times.

Finally, I want to highlight the situation with Wellington City Council’s social housing portfolio. City Housing owns almost 2,000 properties that are home to more than 3,500 Wellingtonians, so it should be a particular concern to the Minister of Finance that City Housing is forecast to be insolvent by June 2023.

💬 Hon Members: Really?

Correct, and the reason for that is that despite signing a deed of grant with Helen Clark back in 2007, and saying, “Don’t worry, we’re going to keep the houses upgraded and do the capital works. We’re going to manage them well.”, the Wellington City Council has failed to do the upgrades that would be expected and is not running those assets in a way that allows them to be solvent. These are significant issues. We must exempt Wellington City Council from any expectation of delays.

I move, That the question be now put.

Madam Chair, thank you very much for the opportunity. Look, I want to talk about Part 2 of the bill, which obviously extends the deadlines for the council-controlled organisations and the local authorities by two months.

Last evening I asked a number of what I thought were pretty reasonable questions around the degree of vacancies within Audit New Zealand. I haven’t seen them tabled, but I think the Minister’s indicating that he’s going to articulate to me by month what those vacancies were, because the point I wanted to make is in relation to the departmental disclosure statement, which states, as I quote, “mitigate the impacts of a severe shortage of auditors”. And the Minister has articulated a number of times in the House over the last day or so the number of 200. Well, 200 is not the number of vacancies at Audit New Zealand. The number that has been articulated this morning is actually 27. Now, 27 in the context of 235 is just over 10 percent. So when you look at the conversation around why we are here today in urgency, why are we here going through a bill and looking at the departmental disclosure statement, which states we are looking and trying to mitigate the impact of a severe—severe—shortage, 10 percent is not a severe shortage. So 25 percent of nursing vacancies is severe, hospitality vacancies well over the late teens is severe, but 11 percent of vacancies of auditors here is not severe. So I would challenge the departmental disclosure statement in terms of the accuracy of that statement, because, in the context of what we’re looking at, the numbers we’ve been given don’t add up.

The other aspect is I referred last evening to the fact, again related to the departmental disclosure statement, around this severe shortage of vacancies. I have got the four—four—vacancies on the Audit New Zealand website as at this morning. I thought they maybe just hadn’t updated it. For those at home looking: www.auditnz.parliament.nz/careers/vacancies. Four vacancies: senior advisor capability and culture, communications adviser, senior management accountant—and I thought, OK, maybe that might be an auditor; no, it’s actually to do budgets and forecasts for the chief financial officer—and a programme coordinator. So I am sorry, but this statement in this departmental disclosure statement around mitigating the impacts of severe shortages cannot be substantiated by even Audit New Zealand’s vacancy page that they’ve got online right now today, so why are we here?

Well, I’ll tell you why we’re here. We are here because this Government has failed to plan. They came up, and the Minister said to us on 16 June, this was raised as a major issue, again linking back to the departmental disclosure statement. Well, I’m sorry, these issues don’t just appear like that, and what we’re articulating is the evidence that we can see out there doesn’t correlate with the statements. And I am looking for a comprehensive explanation from this Minister around what is really going on here, because we have articulated the challenges around workforce in this country: primary sector, hospitality, nursing, medical, aged care. They are in crisis, but we are here because this Government can make the rules up. They can change the rules to suit themselves, and that is exactly what we’re going through this morning, under the urgency of this Parliament, which should only be used in exceptional circumstances.

I also want to talk about two new areas that I haven’t raised already, and I think these are critically important as part of putting context around this two-month extension that is being asked for under Part 2 of this bill. The aspect is around immigration. So what I want to understand from the Minister—and I’m conscious I might need to go a little bit further on this, because these are quite comprehensive in terms of the areas I want to get into. What I want to ask the Minister, in terms of the fact around immigration, is what steps or what consideration has been given to giving critical worker status to auditors? Because if we are dealing, as the departmental disclosure statement states, with an impact of a severe shortage, then surely—surely—the conversations would have been had around looking at how do we mitigate this risk through other means before putting this House into urgency. Surely you’d do your homework before using the biggest house in this land to try and solve the problem. So what consideration has been given—[Time expired]

I move, That the question be now put.

Thank you, Madam Chair. It’s nice that you called me, but I think my colleague here had some very valid points that he wished to continue, which is a bit of a disappointment, but I’ll take this opportunity.

There’s four things I want to try and cover, and I was hoping this was going to be interactive but obviously the way things are working it can’t be, so I’m going to have to take my time. I know that Minister Robertson gleefully pounces on the letter of 2 July, as though it’s some sort of support, but I think it should be recognised that the Minister was made aware of this issue back in mid-June. It obviously went through consideration by him before being taken to Cabinet, and legislation being prepared and made available to us on 2 July. So obviously it had been a long gestation period, and obviously the Minister had an opportunity to consider all the facets of it, which just makes me wonder about a couple of things.

One is the purposes letter, when I was made aware of this issue—and I am grateful that the Minister did speak to me, so I do want to acknowledge him about it—but there were twofold concerns that I raised with him at that stage. I don’t think they’d been adequately addressed, either by himself or the Cabinet, and that’s why we sought the letter. One is around prioritisation of the work and to what extent we could be assured that there would be no need for prioritisation, but if there was to what extent there could be, and therefore—I raise that because the legislation that was presented the day after I was made aware of this issue didn’t contemplate any prioritisation.

The second part of this letter was clearly one which was about addressing the capacity and capability constraints of Audit New Zealand, and that’s covered in the last paragraph. This is a central issue about Audit New Zealand being able to undertake its task. Now, we’ve heard today that Audit New Zealand lost 27 staff and, as my colleague just noted, that’s about 10 percent, which compared to most organisations a very modest issue around personnel. Virtually every business—and I know he’s been around the country talking to businesses, but I imagine if you walked into any manufacturing or horticultural business or whatever, the first thing they’d say is a shortage of staff. So the big issue, if it is 27 staff that Audit New Zealand are missing, my experience of auditors is that there’s normally probably at least one senior to three or four juniors. So if it is a shortfall of 27 staff, we’re probably talking in terms of the graduate auditors that are required to work on this project—which, by the way, are basically accountants or people in the process of completing their finals for accountancy, often the first job they have is an audit job. There are many accountants being trained, and one of the things we’ve heard from the Government—waxing lyrically in this House on many occasions—is undertaking further training.

Getting first-year graduates into organisations such as Audit New Zealand shouldn’t be such a big issue, and there are many, many more available than perhaps the senior staff, which is probably where it’s more critical. So the issue is why Audit New Zealand hasn’t been able to get these people, and of course it comes back to the terms of their remuneration and their working conditions. That’s why a repeated thing about this is what has the Government done about this to make sure this doesn’t turn into a systemic issue? Because, as we know with being able to complete local government audits, it is a major issue, and we’ve heard nothing from the Minister in terms of making sure that—

CHAIRPERSON (Hon Jenny Salesa): Order! We’ve covered this issue quite repetitively now. Can I ask the member, if he’s putting a question, can he put the question through about Part 2?

OK. So on that question, I just want to understand from the Minister what is the actual shortfall in the breakdown of the staffing requirements to stop them from being able to complete the audits for local governments? So, the split between senior and junior staff.

The second thing is that I’m surprised in the response to my question earlier that he hadn’t got proper representations from local government. The member Nicola Willis noted before that Wellington City Council’s got some major issues, and we want to make sure that behind this—

I move, That the question be now put.

The question is that Andrew Bayly’s tabled amendments to clauses 6 and 7 to delete sections 67(5)(b) and 98(7)(b) be agreed to.

The question is that Christopher Luxon’s tabled amendment to clauses 6 and 7 to exempt a number of councils be agreed to.

The question is that the Hon Gerry Brownlee’s tabled amendment to clauses 6 and 7 to exempt Christchurch City Council be agreed to.

The question is that Simon Watts’ tabled amendment to clauses 6 and 7 to exempt Auckland City Council be agreed to.

The question is that Nicola Willis’ tabled amendment to clauses 6 and 7 to exempt Wellington City Council be agreed to.

Barbara Kuriger’s tabled amendment introducing new clause 8 to extend the apple picking season is out of order as it’s outside the scope of this bill.