State Sector and Public Finance Reform Bill

Whilst I have a lot of sympathy with Penny Pepperell’s comments in the editorial of “The Capital Letter” of 4 September, that the State Sector and Public Finance Reform Bill “sets off the snooze button”, for those involved in the machinery of government, it makes a number of significant changes.

The Bill, which was introduced on 30 August and is now awaiting its first reading, is an omnibus Bill which will amend the State Sector Act 1988, the Public Finance Act 1989 and the Crown Entities Act 2004.  It is part of the Government’s “better public services for less” strategy and is aimed at ensuring that there is more “joined up” delivery of public services.  That is, through a combination of statutory amendments it aims to make it easier for departments and other agencies to work together.

In respect of the State Sector Act, it clarifies the role of the State Services Commissioner in leading the State services, introduces the concept of “stewardship”, adds a new organisational arrangement of “departmental agency” and generally seeks to improve the operation of the legislation.

It is proposed that chief executives of departments (or departmental agencies) will be responsible to the appropriate Minister for, amongst other things:

  • “The stewardship of the department or departmental agency, including of its medium and long-term sustainability, organisational health, capability, and capacity to offer free and frank advice to successive governments; and
  • the stewardship of assets and liabilities on behalf of the Crown that are used by … the departments or departmental agencies; and the legislation administered by the department or departmental agency”.

The departmental agency model was developed in the United Kingdom and the one set out in this Bill appears to be based on it.  It is proposed to be a unit within a (host) department which nonetheless has its own chief executive responsible to a Minister even though the host department administers the relevant appropriations.

Public servants will be pleased to see that a new section 86 has been inserted clarifying the immunity that public service chief executives and employees enjoy from civil proceedings for good-faith actions or omissions in pursuance or intended pursuance of their duties, functions or powers.  Clarification of the interrelationship between that section and the Crown Proceedings Act, necessary after the decision of the Supreme Court in Couch v Attorney-General [2010] NZSC 27, is also set out in this Bill.

Changes proposed to be made to the Public Finance Act are largely of a technical nature, but are designed to allow a more flexible regime in the use of appropriations, and the consequent reporting and accountability framework.  Further, a new category of Crown company is permitted – a schedule 4A company – distinguished from the mixed ownership model companies which may now be listed in schedule 5 of the Public Finance Act (as a result of the Public Finance (Mixed Ownership Model) Amendment Act 2012).

Lastly, the changes to be made to the Crown Entities Act relate to the applicable governance and monitoring regime.  Currently there are few explicit arrangements for monitoring the range of Crown Entities (which can be Crown agents, autonomous Crown entities or independent Crown entities) and Crown entity companies.  The Bill now introduces the concept of a “monitor” and sets out the monitor’s role in new sections 27A and 88A.  Further provisions requiring collaboration in the sector and expanding the scope for the use of whole-of-government directions are included.  Crown Entities are legally separate from the “Crown” and it remains to be seen how these changes will affect their perceived independence.


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