New Zealand Productivity Commission Act Repeal Bill

Members, the House is in committee on the New Zealand Productivity Commission Act Repeal Bill. Members, we now come to Part 1. Part 1 is the debate on clauses 3 to 7, “Preliminary provisions”, and Schedule 1. The question is that Part 1 stand part.

I won’t trouble the Minister too much, but I’m just interested in Schedule 1. In particular, it does seem to me that in Schedule 1, we’ve got this new ministry assuming the obligations. Members of the public will have entered into contracts with the Productivity Commission on the basis that they’re entering into a contract with the Productivity Commission. It appears that no one’s entitled to cancel their contractual arrangements on the basis that they’ve got a new entity, even though they don’t want to contract with the ministry—whatever ministry that might be. How does that gel with freedom of contract and the ACT Party’s approach to freedom of contract?

Well, it’s very simple: the schedule provides that contracts will be honoured. The identity of the counterparty will change, but what they get will be delivered as if the Productivity Commission was still the counterparty.

Well, thank you.

Hon Grant Robertson: You’re on your own now, Scott.

Hon SCOTT SIMPSON: Oh, I don’t know about that, the Hon Grant Robertson. I think that we are in good company as we debate Part 1 of the New Zealand Productivity Commission Act Repeal Bill.

I know that the Minister in the chair will be keen to explain—in some detail, I hope—what the purposes listed in clause 3 of Part 1 are actually intended to do. Because we’ve heard during the debate on the first and second readings of this legislation a whole range of good reasons from this side of the House about the ineffectiveness of the Productivity Commission. So I’m wondering if the Minister in the chair can please enlighten the committee of the whole House as to why, in his view, he thinks it’s important that the purposes of the bill listed in paragraphs (a), (b), (c), and (d) are important—and maybe for the benefit and the enlightenment of members opposite.

Thank you, Madam Chair. I thank the member for his question, but, sorry, I didn’t quite hear the exact clause he was referring to. I wonder if he could just repeat himself.

As I understand it, we’re on Part 1, and it’s clause 3, the purposes. And particularly I’m interested in paragraphs (a), (b), (c), and (d). For the benefit of the Minister in the chair, paragraph (a) reads: “repeal the New Zealand Productivity Commission Act 2010;”; (b) says, “disestablish the New Zealand Productivity Commission;”; and (c) says, “provide for the consequences of that disestablishment;”; and (d) says, “make consequential amendments to other Acts.” So this is a wide-ranging poise of questions there for the Minister in the chair.

Well, thank you very much, Madam Chair. And I thank the member for his question. Now, fully clarified, it actually sounded better and clearer the second time. Clause 3 sets out the purposes of the bill. And it says that the purposes of the Act are actually four—I think he asked about three, but I may give him a bonus—are to repeal the New Zealand Productivity Commission Act. And that is a piece of legislation that brought into force the Productivity Commission—a Crown entity which must be established by legislation, as the year would suggest, back in 2010. And that piece of legislation would remain on the statute book even as the Productivity Commission was shut down. So we want to remove what would otherwise be, I guess, a kind of zombie piece of legislation without a purpose. So that, for the member’s benefit, is the purpose of clause 3(a).

Clause 3(b) says, “disestablish the New Zealand Productivity Commission;”. Well, that is certainly the core objective of this legislation tonight. In turn, that will have, I guess, a kind of win-win in that we preserve all of the great works that have been done by the Productivity Commission—even though, as members have noted, they haven’t always been followed as well as they might—and yet also free up around $6 million per year of funding that can be used for better—ironically—more productive purposes.

Clause 3(c) describes how the legislation has a purpose of providing for some of the consequences of the disestablishment. No doubt we will get to some fulsome discussion of some of those consequences.

Hon Grant Robertson: Oh, I hope!

Hon DAVID SEYMOUR: I hear Grant Robertson saying that he hopes that will happen. For example, the Crown Entities Act and the Ombudsman Act both have references to the Productivity Commission for the purpose of scrutiny under the Official Information Act and so on. That, obviously, would be a nonsense if the commission was to no longer exist and yet the Ombudsman and the Official Information Act were to be charged with scrutinising something non-existent. So that would be an example—and there are others—of consequences of the disestablishment of the commission which must be dealt with.

And paragraph (d), to “make consequential amendments to other Acts.” So you can see that this is quite a carefully drafted bill that carries out the many details that need to be attended to in order that something like the Productivity Commission can be ended.

Hon Grant Robertson: Waste of time.

Hon DAVID SEYMOUR: I hope that there’ll be more searching questions about the details of this legislation, for Mr Robertson’s benefit, exactly as the committee of the whole House stage is supposed to be used.

Well, Madam Chair, thank you for this call. As we all know, the committee of the whole House stage is probably the most important stage of the passage of a bill. If we remember our first-year law classes from Otago University, it is the stage where you get to interrogate a bill, clause by clause, line by line, comma by comma, to make sure that what comes out of this House is the most high-quality, clean, clearest, unambiguous legislation that this House can produce. So it’s a real pleasure to be speaking in the committee stage with all of my colleagues across the House, and I look forward to everyone’s contributions to this debate.

Now, I have a few questions for the Minister for Regulation—about 31 minutes’ worth of questions, I reckon. The first question is around the interpretation clause, because it’s interesting to put an interpretation clause into what is, essentially, a repeal bill. I think that’s possibly because the Minister is a very intelligent, clever, experienced Minister, and he knows that what you want out of legislation is to avoid as much ambiguity and uncertainty as possible. So when we see things like the interpretation clause defining what “assets” are, it’s very important to define these terms to make sure that bills like this aren’t open to costly, lengthy judicial reviews tied up in the courts if Ministers are making decisions, or officials are interpreting the bill, in a way which isn’t in line with the interpretation. I’m very, very interested to know: what was the thinking and the process behind having this interpretation clause?

Then, of course, we’ve got things such as “employee”, which is quite an important interpretive section in this clause. It reads: “employee has the same meaning as in section 10(1) of the Crown Entities Act 2004”. Now, I haven’t had the chance or the opportunity this evening to look up the Crown Entities Act 2004, but that’s an indication, to me, that we might not be talking about your bog-standard, sort of run-of-the-mill definition of “employee” that you might run into in Black’s Law Dictionary or some sort of legal dictionaries you use, but you have to actually go to the Crown Entities Act 2004 to determine what an “employee” means in this instance.

Perhaps the Minister can elucidate—which is a word I’ve recently learnt in the Regulations Review Committee—on why this particular definition was put into this Act. Perhaps it has something to do with the nature of the employees at the Productivity Commission. Perhaps it has something to do with the fact that there’s going to be a transitional period and we need to understand whether we’re treating employees in the Productivity Commission differently or providing them any extra benefits or protections than what we are to employees in other Acts. For example, I can imagine that the Employment Contracts Act or other types of employment regulation and legislation may well interpret “employee” in a different way. So I’m very, very interested as to why the Minister has put this particular part into the interpretation clause.

Finally, possibly the most interesting one in this interpretation clause is the end one: “Ministry”. Now, we’d all sit there and we’d all think that it’s obvious what a ministry is. The Hon Duncan Webb has been to a ministry. The Hon Ayesha Verrall—many, many members opposite have seen ministries, been in ministries, or they’ve, in fact, run ministries. So it’s interesting that we have an interpretation clause which is asking us to actually define what a “Ministry” is. So I’d be very interested to know: what was the thought process behind that? Why did the Minister decide to put this interpretation clause in there?

Then, just before I end, I will be seeking another call because I’m really interested in the self-repealing part of the Act too. So I’ll touch on that later.

Well, I can inform the member that interpretation sections are normal. They are in every piece of legislation that I’ve ever seen and probably every piece of legislation that he will ever see. Why, for instance, was “employee” defined as having “the same meaning as in … the Crown Entities Act”? Well, that would be because the Productivity Commission is a Crown entity, and so, therefore, the employees are employees of a Crown entity.

Why do we have a definition of “Ministry”? Well, I think the concept that the member is—I mean, this is the problem with going to Otago: you’ve got to really spell it out for them. But it’s what we’d call shorthand, so it’s so that we can just use one word to refer to a more complex concept elsewhere in the legislation. It saves paper, and that’s something that James Shaw, no doubt, will be enthusiastic about, just as much as the member is.

Well, thank you, Madam Chair—that was a tough choice! But thank you—thankfully, I won that one. I would like to turn the Minister’s attention to Schedule 1, Part 1, “Registers” clause 2(1), which says, “The Registrar-General of Land or any other person charged with keeping books or registers is not required to change the name of the Commission to the Ministry in those books or registers, or in a document, solely because of the provisions of this Act.” I’d really like to know some detail around how the Minister came to the decision to word that clause in such a way. Was there widespread consultation with the register of land or other entities—are they the right entity to actually be charged with this entity? The Minister might like to take some advice—perhaps the officials might like to give him some advice on that. But I think it’s a really important point because this is an important bill and the technicalities are the meat of this, and if we get this wrong, well, we won’t be very productive and that would not be the whole point of it. I think the “commission” to the “Ministry”—the name—what is the implication of getting that right or wrong; and the registry. So if the Minister could address that, I’d really appreciate it.

Thank you very much, Madam Chair. Minister, I just want to ask you another question on Schedule 1, just in terms of clause 1(1), where it says “All proceedings or any other matters involving the Commission that are yet to be determined or completed at the commencement of this clause are to be determined or completed by the Ministry as if the Ministry were the Commission.” Now, my understanding is that this is the Ministry of Regulation, and—no? Well, I stand to be corrected on that. But if I could have that clarified, that would be useful.

I would just say, related to that, Minister, just the purpose which was touched on a little bit earlier in some detail by the Minister, but just in terms of how that relates to the intention behind repealing this bill. I say this from the perspective of small businesses—the majority of businesses in this country are small businesses—and someone who comes from a background of small business, before I became a lawyer. Actually, that’s what got me into studying law, because I was one of those people who was building businesses, employing people, working until 2 o’clock in the morning, and then trying to figure out how to comply with legislation. So I know from lived experience the reality of how important regulation is and how that can actually constrain the activity, the mental capacity, and the ability for business owners to actually develop something that can employ people, help them put food on the table, provide something useful to this country, and give people a chance to get ahead.

In fact, most small-business owners, as I was, spend most of their time being largely unpaid, effectively, for much of the work that they do, so that they can actually employ their staff and give them that opportunity in the hope that they can build something eventually for themselves and their families that will last the test of time and, effectively, give them an opportunity going forwards.

But the experience I had from that is that, effectively, good regulation, good law is the DNA of our society, so if we have good regulation and good law, that creates a good body politic, a good society, and if we don’t have it particularly effective, then it doesn’t. So the question here is: how is this going to ensure that we help address the productivity problems that have been identified for decades in this country? The Productivity Commission was initially set up to try to identify them, but here we are in 2024 with more regulation, more challenges.

I represent the great area of Southland where we have heard at length for the last three years about unworkable regulation. I have talked to hundreds, probably thousands of people in the farming sector who have spent a huge amount of their time trying to figure out how to actually run their farms but, at the same time, comply with regulations that are changing at such a rapid pace and with such complexity that their sector bodies can’t keep up, let alone the mum and dad farmers who are taking care of their land, taking care of their animals, and taking care of the environment. But, again, the many, many, many small businesses in New Zealand that form the backbone of our country, provide a huge amount of employment for New Zealanders, those small-business owners are spending so much of their time trying to deal with this regulation.

So just the intention of this bill—how is that going to ensure these people we’re talking about, these small-business owners around the country are going to see some relief at the light at the end of the tunnel?

Thank you, Madam Chair. Look, I’ve heard a lot, in this discussion, about an entity which has, in some cases, been seen to have run its course. There are others, on the opposite side of the Chamber, who are saying they’re very concerned about its loss, which I find slightly ironic. But I’m really interested to ask the question to the Minister. In clause 3(c), we have, “provide for the consequences of the disestablishment;”, and we’ve got a lot of administrative consequences which are written into the bill, but, I think, really, the important thing—we just heard that comment being made by my colleague behind me—is that we’ve all been focused very much on productivity. We know the need to improve productivity in this country, because, if we don’t do that, we can’t afford all the things we that we want to do, all the great public services we want, we can’t afford to pay ourselves the sort of wages that we want to pay, and we are all the worse for it. But I’m really interested in the Minister’s responses to what are the strategic consequences of the disestablishment of the Productivity Commission, because my understanding is that, by in large, the Productivity Commission has produced a lot of great work, but not a lot has been done with that work. So I’m really interested in the Minister’s response as to the impact of the disestablishment, and how that great kind of work will be carried on elsewhere.

Thank you, Madam Chair. I just wanted to build on the point raised by Andy Foster just there, which is that one of the central arguments for the disestablishment of the Productivity Commission is that successive Governments have ignored some of its more important findings and recommendations, and still acknowledging that some Governments have picked up some elements of some recommendations of some of the work that the Productivity Commission has done, but, on balance, that that has been ignored. I just wanted to build on this point because you can make the argument that New Zealanders continue to get sick and therefore we should disestablish the health service because we haven’t healed everybody yet, and, actually, that argument doesn’t follow that just because Governments are too self-interested or captured by vested interests to act on recommendations isn’t a good reason to get rid of the people who thought of the recommendations. It is a reason to try and ensure that Governments are actually accountable for doing something with that work.

So my question to the Minister for Regulation, which he did appeal to us in the second reading debate, to come back to some of the policy decisions, which is not easy to do within Standing Orders, clause by clause here, which maybe is why he suggested it, in order to ensure that we had as little debate as possible about the substance of the bill. Then, given that Mr Foster raised this point about the consequences of repealing the Productivity Commission, can I ask the Minister whether he considered other options, given that the central argument for its disestablishment—other than to use the money somewhere else in Government—so far that’s been outlined tonight has been that Governments don’t listen to it. I would argue, and I have argued in previous readings, that that is not an argument for getting rid of the Productivity Commission; it’s an argument for improving the framework within which it sits. If he did consider those options, what were they, and, if he did not consider those options, why not?

Just in response to a few questions and points raised, we had a question from Stuart Smith in relation to—I think it was Part 1 of Schedule 1, and specifically clause 2 about registers. It considers the possibility that if a keeper of, say, property titles had a reference to the Productivity Commission, they would not be required to update their register to, say, the Treasury, being the ministry that will now take on the roles and duties—or at least the obligations—of the Productivity Commission commercially. So it’s simply to remove a potential small administrative obligation on to people that have little to do with this. And I was asked about what my thought process was for including that. I’d love to tell you that I thought of it, but, actually, that is a job of the Parliamentary Counsel Office, who are absolutely brilliant—and I think some of them are here—in the work that they do to anticipate the impacts of legislation on other pieces of legislation across the Government statute book.

Then there is a question—well, it wasn’t really a question—from Joseph Mooney. It sort of started off autobiographical, then his speech sort of got into the pseudo-philosophical, and then he made the point that red tape and regulation are bad for business when it’s done badly and when it’s excessive. I agree with that, and we’re going to be doing a lot to ensure that that is less and less the case over this term of Government. But, as James Shaw has rightly pointed out, this is a debate about the Productivity Commission, rather than the new ministry for regulation.

Then I had a question from Andy Foster about clause 3(c) of Part 1 and, in particular, the purpose of the bill being to “provide for the consequences of that disestablishment;”. The consequences being provided to, that are referred to in this bill, are not the wider policy consequences that both he and James Shaw have tried to refer to—for example, were there other ways to achieve a policy objective? As I’ve said earlier in a speech, it’s very simply to deal with the knock-on consequences in legislation. For example, with any contracts that the Productivity Commission may have entered into to ensure those persons’ interests are served, they still can expect the ministry, the Treasury, to take over the obligations of the Productivity Commission to make good on those obligations. So potentially there’s a bit of confusion about what that word “consequences” means in the context of this bill.

Minister Seymour, I’m interested in what is the fate of some of the assets that the Productivity Commission may be generating, even as they proceed to the end of their agency. I note, in clause 4, “Interpretation”, under “assets”, it “includes real or personal property of any description whether tangible or intangible (for example, intellectual property), money, rights, or interests”. I note, with interest, that the commission is working on a report on improving economic resilience, which is due to be finalised in February 2024.

In terms of work that the commission was asked to do and where there may be some value to it, such as this report—an inquiry into the resilience of New Zealand’s economy to supply chain disruptions might be quite useful. Now, the people of New Zealand issued their own opinion on economic resilience, supply chain disruptions, and all the negative effects on that, on 14 October, 2023, when they indicated to the previous Government that the way they managed the supply chain—all the red tape they imposed on the economy, or costs on employers, or raising the minimum wage without increasing productivity at all—were unacceptable to New Zealanders, who voted to remove the last Government. However, the work the Productivity Commission was doing to improve economic resilience, to understand how the New Zealand economy can be made more resilient to supply chain disruptions, is, no doubt, one of those assets that, if it is published, may yet become another taonga of the commission and their body of work. So, Minister, I’m interested in terms of Part 1, clause 5, “Transitional, savings, and related provisions”.

When we look at Schedule 1, in terms of its Part 1, clause 1(1), it says that “All proceedings and other matters involving the Commission [that are] yet to be determined or completed at the commencement of this clause are to be determined or completed by the Ministry as if the Ministry were the Commission.” So, Minister, I’m interested in respective work that the Productivity Commission has yet to table or finalise. Would the Minister expect that that work—this particular report improving economic resilience, I mean, sounds laudable. That sounds like something that may well be of value and may well turn out to be one of the taonga that the Productivity Commission is leaving for us in perpetuity. Is it your view, Minister, that that report would be completed by the ministry? And which ministry is that, just to be clear, Minister?

I think I’ve created a monster! In answer to the member’s questions, first of all, the commission will be wound down at the end of February—interestingly, 29 February; can’t do that every year.

Second of all, the final report the member’s referred to, I’m advised, will be reported back around mid-February. So that report will be added to the set of assets that New Zealand will always have from the great work that has been done by the Productivity Commission to date.

Thank you, Madam Chair. I did have a number of other questions that I thought I would ask. One of my questions perhaps is more a global question about the bill generally, and that is the budget implications, because, obviously, as has been made clear throughout the debates tonight, this is related to, and the funds will be used for, a new ministry. I’m interested to know exactly what the savings are, but not just what the savings are, because that’s just a budget line, but also when that will occur, because, obviously, there is the disestablishment process. I’m also aware, as in my original question it was pointed out, there are a number of liabilities of the commission, and it may well be that given this change in the affairs of the commission, those liabilities may be greater or lesser, in the sense that if the employment arrangements, for example, are terminated and they’re one-year or two-year contracts, then that will have salary implications, because I’m assuming that the Crown won’t renege on its promise to pay people under an employment arrangement. So I’m interested in the degree of certainty, and the Minister for Regulation may or may not want to comment on whether the budget savings made by this will all be used for his new endeavour or whether it will be less, or whether, indeed, he will be going and asking for more than that.

I’m also just curious, and I still can’t quite understand, why we need to repeal repeal Acts. I mean, the repeal Act has done its job—many Acts do do their job—but to repeal a repeal Act seems to be fundamentally an unnecessary legislative step and a little confusing. Of course, the ultimate question is this: we’re assuming that the Productivity Commission won’t rise from the ashes, but I’m just not clear where we get that from. So if the Minister could clarify what the effect of a repeal of a repeal is, that would be really useful, because if a repeal of a repeal then restores what we had before, we’re going to be in all kinds of trouble on 30 June 2025.

I am still curious as to why it is that the bill intervenes in contractual relationships even when the relationship might be a personal one. So you might have a consultant who the chair of the commission has arranged to give advice—it’s a personal relationship of trust, it’s one that’s quite personal; might even be a solicitor-client relationship, and yet that relationship can’t be terminated because of Part 1 of Schedule 1, clause 1(2)(b). I won’t do a Scott Simpson and read it out word for word, but it does seem odd to me that this legislation intervenes into contractual relationships regardless of what it says. It’s actually very, very heavy-handed, and I can see why people could be quite upset if they’re saying, “Well, hang on, I contracted with the Productivity Commission. I contracted with the current chair on the basis that it was a relationship of trust and he valued my advice; I valued our relationship. Now I’ve got some boffin in Treasury who I report to who I don’t have that relationship to.” It does seem to me that there are relationships like that, particularly those advisory relationships, which are quite likely to exist in the Productivity Commission. So there’s a series of questions there.

I won’t go through all of the interpretation clauses like Mr Meager did, because I don’t think they’re actually there, but the liabilities one is important, because, once again, in terms of those liabilities, there’s a real interventionism here, and I’m curious as to how the Minister can, essentially, require all of those transfers quite apart from the contractual relationships we’re in—it totally contravenes what I understand his party’s kaupapa to be. So I’m very interested in his responses to those questions.

Look, just for the benefit of the children watching up and down New Zealand tonight, I think we’ve just seen that anyone can grow up to be a law professor. What will the savings be? Very simply, the commission has some cash reserves. It will be able to apply those to any liabilities it may have. If there are liabilities exceeding those cash reserves, they will become, as the bill says, a liability of the Treasury. I’m advised that the cash reserves will be adequate for its liabilities.

What sort of funding will the new regulation ministry have? That is a matter that is currently being worked through in the Budget process. Duncan Webb asked, as a law professor, why repeal this Act. Well, actually, the law that’s being passed tonight will self-repeal, and the reason for that is that in a years’ time, when all of the transitions and savings have been done, the business has been wound up, there is no longer a need to have this Act. Would that lead to the Productivity Commission somehow coming back into life? A law professor should know: no, it wouldn’t. The act of repeal has been done. The non-existence of this Act does not change the other legislation that will no longer give rise to a Productivity Commission.

Other than that, we had a question of what about personal relationships? The Productivity Commission—I mean, it’s not a place that has personal relationships; it’s a Crown entity. The Crown is going to honour its commitments made through the Productivity Commission through another entity—in this case, the Treasury. From the point of view of those counterparties to contract, nothing changes.

I move, That the committee report progress.

Motion agreed to.

Progress to be reported.

House resumed.

Madam Speaker, the committee has considered the New Zealand Productivity Commission Act Repeal Bill and reports progress. I move, That the report be adopted.

Motion agreed to.

Report adopted.

Members, the Government has indicated that it no longer wishes to continue with urgency. Accordingly, the House stands adjourned until 2 p.m. tomorrow.

The House adjourned at 9.58 p.m.