State Sector and Crown Entities Reform Bill

State Sector and Crown Entities Reform Bill

Government Bill

20—1

Explanatory note

General policy statement

This Bill is an omnibus Bill introduced under Standing Order 263(a). That Standing Order states that an omnibus Bill to amend more than 1 Act may be introduced if the amendments deal with an interrelated topic that can be regarded as implementing a single broad policy. The single broad policy of the Bill is to provide for greater integrity and accountability in the management of the State services by providing for strengthened and more consistent regulation of conduct and remuneration of employees at the most senior level and a more consistent approach to the State Services Commissioner’s investigatory and inquiry powers when dealing with agencies in the State services outside the Public Service. The Bill provides for a single integrated approach in the State services across these dimensions.

To achieve that purpose, the Bill amends the Crown Entities Act 2004 and the State Sector Act 1998.

Crown Entities Act 2004

There are 5 categories of Crown entities under the Crown Entities Act 2004: statutory entities (subdivided into 3 types: Crown agents, autonomous Crown entities, and independent Crown entities), Crown entity companies, Crown entity subsidiaries, school boards of trustees, and tertiary education institutions.

The Bill amends section 117 of the Crown Entities Act 2004 to require the board of a statutory entity to obtain the written consent of the State Services Commissioner before finalising the terms and conditions of employment of a chief executive, or subsequent amendments to them. At present, most statutory entity boards are required to consult the Commissioner and have regard to the Commissioner’s recommendations. The amendment will align all statutory entities with the requirement that already applies to Crown agents in the health sector to obtain the Commissioner’s consent (District Health Boards, the Health Promotion Agency, the Health Quality and Safety Commission, the New Zealand Blood Service, and the Pharmaceutical Management Agency). Tertiary education institutions are also already required to obtain the Commissioner’s written concurrence.

The Bill also amends section 117 of the Crown Entities Act 2004 to introduce a fixed term of appointment of not more than 5 years, renewable, for the chief executive of a statutory entity. The provision will apply only to appointments and reappointments made after it comes into force. The amendment will align statutory entities with the regime that applies for the chief executive of a tertiary education institution and for chief executives of Public Service departments.

State Sector Act 1988

Under section 57 of the State Sector Act 1988, the State Services Commissioner has the mandate to set minimum standards of integrity and conduct by issuing a code of conduct and applying it to affected agencies: the Public Service, all Crown entities (except for tertiary education institutions and Crown Research Institutes and any of their subsidiaries), and a small range of other agencies. The Commissioner has discretion to vary the standards in a code in light of the relevant legal, commercial, or operational context. Once a code is applied to an agency, the agency (including its employees, contractors, and secondees) must comply.

However, under section 15 of the Crown Entities Act 2004 a statutory entity is a legal entity that is separate from its board and board members. The Bill makes explicit provision to enable the Commissioner to apply a code of conduct to an agency’s board and board members. The provision applies to the same range of agencies that are currently subject to the Commissioner’s mandate under section 57 of the State Sector Act 1988. The Commissioner’s related powers to carry out investigations will apply accordingly.

The State Services Commissioner currently has powers under the State Sector Act 1988 to conduct inspections and investigations, to obtain information, and to enter premises, and the same powers and authority to summon witnesses and receive evidence as are conferred on commissions of inquiry under the Commissions of Inquiry Act 1908. The Bill amends the State Sector Act 1988 to put in place a single investigation package aligned with the regime in the Inquiries Act 2013. This amendment will promote greater consistency in the manner in which inquiries and investigations are conducted across government.

Departmental disclosure statement

The State Services Commission is required to prepare a disclosure statement to assist with the scrutiny of this Bill. The disclosure statement provides access to information about the policy development of the Bill and identifies any significant or unusual legislative features of the Bill.

Clause by clause analysis

Clause 1 is the Title clause.

Clause 2 is the commencement clause, which provides that the Act will come into force on 31 October 2018.

Part 1Amendments to Crown Entities Act 2004

Clause 3 states that the principal Act amended by Part 1 is the Crown Entities Act 2004.

Clause 4 amends section 117 of the principal Act, which relates to the employment of a chief executive of a statutory entity. This clause replaces section 117(1) and (2) of the principal Act with new subsections (1) to (2B).

New subsection (1) provides that a chief executive is appointed for a term of not more than 5 years, but may be reappointed. This aligns those positions with comparable positions in tertiary education institutions and the Public Service. Currently, there is no maximum period of appointment for the statutory entity positions.

New subsection (2) provides that the terms and conditions of employment of a chief executive of a statutory entity appointed by its board must be determined by agreement between the board and the chief executive. This reflects the way section 117 currently operates, but states the matter expressly.

New subsection (2A) requires the board of a statutory entity to obtain the written consent of the State Services Commissioner before—

  • finalising the appointee’s terms and conditions; or

  • subsequently amending any or all of the terms and conditions.

The comparable provision in the current section 117(1) requires the entity to consult the Commissioner on those matters rather than obtain his or her consent, and requires the entity to consult the responsible Minister if it decides not to comply with any relevant guidance issued by the Commissioner.

New subsection (2B) expressly provides for the State Services Commissioner to provide the boards of statutory entities with advice and guidance on the terms and conditions of employment of chief executives of entities.

Clause 5 inserts into the principal Act a new Part 1 of Schedule 1AAA of the principal Act, which relates to transitional, savings, and related provisions. The transitional provisions inserted by this clause are set out in Schedule 1 of this Bill. Those provisions relate to the commencement of the changes to section 117 (in clause 4) and provide that existing appointments and actions taken before those changes commence are unaffected by the changes.

Part 2Amendments to State Sector Act 1988

Clause 6 states that the principal Act amended by Part 2 is the State Sector Act 1988.

Clause 7 inserts new section 2B, which provides for the transitional, savings, and related provisions set out in new Schedule 1AA to have effect. Those provisions relate to the commencement of the changes in new section 9A (in clause 8) and provide that any investigation or inquiry begun by the Commissioner under the principal Act or any other Act, but not completed, before new section 9A commences will be completed or otherwise dealt with under the existing law.

Clause 8 inserts new section 9A into the principal Act. New section 9A replaces sections 25(1) and 26 of the principal Act, which apply provisions of the Commissions of Inquiry Act 1908 when the Commissioner investigates or inquires into a matter. New section 9A provides for relevant provisions of the Inquiries Act 2013 to apply when the Commissioner investigates or inquires into a matter in the performance of his or her statutory functions or duties.

Subsection (1) of new section 9A relates to the application of the section and provides for the section to apply if the Commissioner exercises a power to investigate or inquire into any matter in the course of performing his or her functions and duties under this Act or any other Act (whether he or she is required to do so or is acting on his or her own initiative).

Subsection (2) of new section 9A lists the provisions of the Inquiries Act 2013 that apply.

Subsection (3) of new section 9A provides that the Inquiries Act 2013 provisions are to be read with the necessary modifications.

Subsection (4) of new section 9A qualifies the Commissioner’s powers under this section by providing that the Commissioner—

  • has no power to determine the civil, criminal, or disciplinary liability of any person:

  • can make findings of fault and findings or recommendations as to further steps that may be taken in relation to an individual or the wider State services:

  • can receive a report from any person, make a report to any person, or make any public report regarding the matters investigated.

Clause 9 replaces section 11 of the principal Act, which relates to functions and powers that can be performed and exercised in relation to other parts of the State services.

Subsection (1) of new section 11 requires the Commissioner to perform or exercise any of the Commissioner’s functions and powers under sections 6 to 10 of the principal Act in relation to any part of the State services that does not form part of the Public Service if so directed in writing by the Prime Minister. This carries over the effect of the current section 11(1).

Subsection (2) of new section 11 enables the Commissioner to exercise any of the powers in sections 7 to 10 of the principal Act when performing any function under section 6(h) or (i), 57(2) or (4), or 57A of that Act in relation to an agency in the State services.

Subsection (3) of new section 11 enables the Commissioner (if requested by the head of any part of the State services) and requires the Commissioner (if requested by the Minister in charge of, or responsible for, any part of the State services) to perform or exercise any of the functions and powers that the Commissioner has under sections 6 to 10 of the principal Act in relation to that part of the State services. This expands the current section 11(4) by including a reference to section 10 and new section 9A.

Subsection (4) of new section 11 enables the Commissioner (if requested by the head of any part of the State services that does not form part of the Public Service, or of any corporation listed in Schedule 1 of the State-Owned Enterprises Act 1986) to provide assistance in respect of the conditions of employment of its employees. This carries over the current section 11(6).

Subsection (5) of new section 11 provides for sections 6 to 10 of the principal Act to be read with the necessary modifications when applied under new section 11.

Subsection (6) of new section 11 carries over the current section 11(5), which provides that this section does not limit any other enactment or affect or prevent the performance or exercise by any part of the State services that does not form part of the Public Service of its functions or powers.

Clause 10 amends section 23 of the principal Act, which relates to the delegation of the Commissioner’s functions and powers. This clause inserts new subsection (1A), which enables the Commissioner to delegate his or her functions and powers in relation to investigations and inquiries. New subsection (1A) replaces the current section 25(2) of the principal Act, which enables the Commissioner to delegate the conducting of an investigation or inquiry. The effect of this amendment is to enable all delegations relating to investigations and inquiries to be made under section 23.

Clause 11 repeals sections 25 and 26 of the principal Act, which are replaced by new section 9A (inserted by clause 8) and new section 23(1A) (inserted by clause 10).

Clause 12 amends section 57 of the principal Act, which relates to minimum standards of integrity and conduct. Section 57(3) enables the Commissioner to apply his or her code of conduct to other specified agencies (which are listed in section 57(1) and include Crown entities). This clause amends section 57(3) by listing the different classes of persons within an entity or agency to whom a code of conduct can be applied. These include board members, office holders, chief executives, and employees.

Clause 13 amends section 57A of the principal Act, which relates to the agencies that must comply with minimum standards. This clause consequentially amends section 57A(1) so that it refers back to the new list of persons in new section 57(3) in clause 12.

Clause 14 repeals sections 57B and 57C of the principal Act, which also relate to minimum standards. These sections are no longer necessary in view of new sections 9A and 11 in clauses 8 and 9.

Clause 15 consequentially amends section 77ID of the principal Act, which relates to the conditions of employment of chief executives in the education service. The amendment aligns section 77ID with the changes in clause 4.

Clause 16 inserts into the principal Act new Schedule 1AA, which is described in the notes on clause 7.

Clause 17 provides that the Inquiries Act 2013 and the New Zealand Public Health and Disability Act 2000 are consequentially amended as set out in Schedule 3 of this Bill.

1 Title

This Act is the State Sector and Crown Entities Reform Act 2018.

2 Commencement

This Act comes into force on 31 October 2018.

Part 1 Amendments to Crown Entities Act 2004

3 Amendments to Crown Entities Act 2004

This Part amends the Crown Entities Act 2004.

4 Section 117 amended (Employment of chief executive)

Replace section 117(1) and (2) with:

(1)

A chief executive of a statutory entity is appointed for a term of not more than 5 years, but may be reappointed.

(2)

The terms and conditions of employment of a chief executive of a statutory entity appointed by its board must be determined by agreement between the board and the chief executive.

(2A)

However, the board must obtain the written consent of the State Services Commissioner before—

(a)

finalising the terms and conditions; or

(b)

amending any or all of the terms and conditions once they have been finalised.

(2B)

The State Services Commissioner must provide the boards of statutory entities with advice and guidance on the terms and conditions of employment of chief executives of entities.

5 Schedule 1AAA amended

(1)

In Schedule 1AAA, before clause 1, insert:

Part 1 Provisions relating to Crown Entities Amendment Act 2013

(2)

In Schedule 1AAA, after clause 4, insert the Part 2 set out in Schedule 1 of this Act.

Part 2 Amendments to State Sector Act 1988

6 Amendments to State Sector Act 1988

This Part amends the State Sector Act 1988.

7 New section 2B inserted (Transitional, savings, and related provisions)

After section 2A, insert:

2B Transitional, savings, and related provisions

The transitional, savings, and related provisions set out in Schedule 1AA have effect according to their terms.

8 New section 9A inserted (Application of Inquiries Act 2013)

After section 9, insert:

9A Application of Inquiries Act 2013

(1)

This section applies if the Commissioner exercises a power to investigate or inquire into any matter in the course of performing his or her functions and duties under this Act or any other Act, whether acting under a requirement imposed by or under the relevant enactment or on his or her own initiative.

(2)

The following provisions of the Inquiries Act 2013 apply in relation to an investigation or inquiry to which this section applies:

(a)

section 14 (which relates to the regulation of inquiry procedure):

(b)

section 15 (which relates to the power to impose restrictions on access to an inquiry):

(c)

section 16 (which relates to the power to postpone or temporarily suspend an inquiry):

(d)

sections 19 to 21 (which relate to evidential matters):

(e)

sections 23 to 27 (which relate to witnesses, immunities, and privileges):

(f)

section 29 (which relates to offences):

(g)

section 30 (which relates to penalties for offences):

(h)

section 31 (which relates to contempt proceedings):

(i)

sections 32 and 33 (which relate to the application of the Official Information Act 1982 and the Public Records Act 2005).

(3)

The provisions of the Inquiries Act 2013 applied by subsection (2) must be read—

(a)

as if the Commissioner were an inquiry established under that Act and the relevant Minister referred to in section 11 were the appointing Minister; and

(b)

as if the terms document, information, and officer of an inquiry had the same meanings as in section 4 of that Act; and

(c)

with the other necessary modifications.

(4)

In exercising any powers of the Inquiries Act 2013 under this section, the Commissioner—

(a)

has no power to determine the civil, criminal, or disciplinary liability of any person:

(b)

may make—

(i)

findings of fault:

(ii)

recommendations that further steps be taken to determine the civil, criminal, or disciplinary liability of any person:

(iii)

findings or recommendations for the improvement and benefits of the wider State services relevant to the findings of the investigation:

(c)

may receive a report from any person, make a report to any person, or make any public report regarding the matters investigated.

9 Section 11 replaced (Exercise of functions and powers in respect of other State services)

Replace section 11 with:

11 Functions and powers can be exercised in relation to other State services

(1)

The Commissioner must, if directed in writing by the Prime Minister, perform or exercise in relation to any part of the State services that does not form part of the Public Service any of the functions and powers specified in the direction that the Commissioner has under sections 6 to 10.

(2)

The Commissioner may, in performing any function under section 6(h) or (i), 57(2) or (4), or 57A, exercise any of the powers in sections 7 to 10 in relation to an agency in the State services as if it were a department.

(3)

The Commissioner may, if requested by the head of any part of the State services, and must, if requested by the Minister in charge of, or responsible for, any part of the State services, perform or exercise any of the functions and powers that the Commissioner has under sections 6 to 10.

(4)

The Commissioner may, if requested by the head of any part of the State services that does not form part of the Public Service, or of any corporation listed in Schedule 1 of the State-Owned Enterprises Act 1986, provide assistance in respect of the conditions of employment of its employees.

(5)

For the purpose of this section, sections 6 to 10 apply as if the relevant part of the State services or agency were a department and with the other necessary modifications.

(6)

Nothing in this section—

(a)

limits or affects any provision of this or any other Act; or

(b)

affects or prevents the performance or exercise by any part of the State services that does not form part of the Public Service, or by any officer or employee of that part of the State services, of any function or power conferred on or belonging to that part of the State services or officer or employee.

10 Section 23 amended (Delegation of functions or powers)

After section 23(1), insert:

(1A)

The power conferred by subsection (1) includes (without limitation) power to delegate to any person, either generally or particularly,—

(a)

the conduct of any investigation or inquiry that the Commissioner is required or empowered to conduct under this Act or any other Act:

(b)

all or any of the functions and powers that the Commissioner has under this Act or that other Act in relation to the investigation or inquiry.

11 Sections 25 and 26 repealed

Repeal sections 25 and 26.

12 Section 57 amended (Commissioner may set minimum standards of integrity and conduct)

(1)

In section 57(2), replace “to any agency referred to in subsection (1), by written notice to the agency” with “in accordance with subsection (3), by written notice to the agency or to those concerned”.

(2)

Replace section 57(3) with:

(3)

The Commissioner may apply a code, with any variations that the Commissioner thinks appropriate in light of the legal, commercial, or operational context, to—

(a)

any agency or agencies referred to in subsection (1); or

(b)

any particular persons or groups of persons in relation to an agency or agencies referred to in subsection (1) who—

(i)

are undertaking particular functions, duties, or powers:

(ii)

are the board:

(iii)

are board members:

(iv)

are office holders:

(v)

are chief executives:

(vi)

are employees:

(vii)

are individuals working as contractors or secondees.

13 Section 57A amended (Agencies must comply with minimum standards except in particular circumstances)

(1)

Replace section 57A(1) with:

(1)

Agencies, persons, and groups of persons must comply with any standards that apply to them under section 57(3).

(2)

In section 57A(3),—

(a)

replace “an agency” with “an agency or a person or a group”; and

(b)

delete “applied to the agency”.

14 Sections 57B and 57C repealed

Repeal sections 57B and 57C.

15 Section 77ID amended (Conditions of employment of chief executive)

In section 77ID(3), after “with the chief executive”, insert “or amending any or all of the conditions once they have been finalised”.

16 New Schedule 1AA inserted

Insert the Schedule 1AA set out in Schedule 2 of this Act as the first schedule to appear after the last section of the principal Act.

17 Amendments to other enactments

Amend the enactments specified in Schedule 3 as set out in that schedule.

Schedule 1 New Part 2 inserted into Schedule 1AAA of Crown Entities Act 2004

s 5(2)

Part 2 Provision relating to State Sector and Crown Entities Reform Act 2018

5 Transitional provision relating to amended section 117

(1)

Section 117(1) (as inserted by the amendment Act) applies only to the appointment or reappointment of a chief executive that is made after that subsection comes into force.

(2)

Subsections (2) and (2A) of section 117 (as inserted by the amendment Act) apply—

(a)

to the appointment or reappointment of any chief executive that is made after those subsections come into force; and

(b)

to the amendment of any terms and conditions of a chief executive (whether appointed or reappointed before or after those subsections come into force) that is made after those subsections come into force.

(3)

In this clause, amendment Act means the State Sector and Crown Entities Reform Act 2018.

Schedule 2 New Schedule 1AA inserted into State Sector Act 1988

s 16

Schedule 1AA Transitional, savings, and related provisions

s 2B

Part 1 Provision relating to State Sector and Crown Entities Reform Act 2018

1 Transitional provision relating to investigations or inquiries

(1)

This clause applies to any investigation or inquiry begun by the Commissioner under this Act or any other Act, but not completed, before section 9A (as inserted by the amendment Act) comes into force.

(2)

The investigation or inquiry must be completed or otherwise dealt with as if the amendment Act had not been enacted.

(3)

In this clause, amendment Act means the State Sector and Crown Entities Reform Act 2018.

Schedule 3 Consequential amendments to other enactments

s 17

Inquiries Act 2013 (2013 No 60)

In Schedule 1, repeal the item relating to the State Sector Act 1988.

New Zealand Public Health and Disability Act 2000 (2000 No 91)

In Schedule 3, replace clause 44(5) with:

(5)

This clause applies despite sections 25 and 117(2) to (3) of the Crown Entities Act 2004, but section 117(1) of that Act applies to a chief executive of a DHB.

In Schedule 6, replace clause 29(5) with:

(5)

This clause applies despite section 117(2) to (3) of the Crown Entities Act 2004, but section 117(1) of that Act applies to a chief executive of an organisation.