EMBARGO: Not for publication or broadcast before 1.15 pm, Thursday, 15 July 1999

Media statement
Hon Simon Upton

CROWN ENTITIES PACKAGE

The Government is to adopt sweeping new rules for Ministers, Boards, and Chief Executives of Crown entities, State Services Minister Simon Upton announced today.

Mr Upton said, "the package includes a number of specific changes designed to address specific problems, but at the broader level the government is seeking, for the first time, to set out clearly the expectations for all the players: for Ministers responsible for Crown entities, Boards, Chief Executives, monitoring Government Departments, and for the State Services Commission."

"Crown entities have grown up in an ad hoc fashion over many decades, with a diverse range of governance and accountability practices. In most cases they have worked well, but a few recent incidents have highlighted uncertainty in the governance of some entities.

This package will end that uncertainty.

The policies and guidelines that will put most of the initiatives in place will be delivered over the next few weeks. However, some changes will require legislative amendments. By September 30, Mr Upton will take to Cabinet a detailed legislative proposal which could result in amendments to thirty statutes.

Mr Upton said that key points in the initiatives were:

Remuneration

· The State Services Commission (SSC) will establish overall standards in chief executive employment contracts for Crown entities. All Crown entities (except companies) will be required to consult the SSC with regard to chief executive employment contracts and, where boards propose to sign contracts that concern the SSC, Ministers will be informed.

· The Government will adopt a policy that rules out severance payments to board members. The Government will also restate its policy that board members should not receive consultancy fees from the entity to which they have been appointed unless the responsible Minister recognises overriding reasons for such fees.

· Crown entities will be required to disclose total remuneration over $100,000 - including any severance payments - paid to senior staff in $10,000 bands. Remuneration paid to board members will also be disclosed.

Crown Entity Boards

· The Government will spell out its overall expectations of board members in running Crown entities on behalf of the Government and taxpayers.

· Government policy will be that departments are to run appointment processes for Crown entity boards on behalf of Ministers unless otherwise directed. Those processes will include identifying and managing potential or perceived conflicts of interest on the part of board members.

· The Government will amend existing legislation to clarify the powers of Ministers to dismiss board members where there is good cause to do so, and the powers of Ministers to direct boards in cases where that is required.

Clarifying Ministers' roles vis-à-vis Crown entities

· The Government will step-up monitoring of Crown entities by departments so that Ministers are better-equipped to head-off problems in entities.

· The Minister of State Services and the SSC will have a clear mandate to advise the Government on the overall Crown entity governance and accountability regime, although specific responsibility for individual Crown entities will rest with the Responsible Minister.

"A critical part of this exercise is to distinguish more clearly between different types of Crown entities.

"There are 160 Crown entities, excluding schools, subsidiaries and reserve boards. This package does not apply to the latter groups. The 160 range from one- and two-person organisations through to corporations of thousands of employees. Some deliver services to citizens on behalf of the Government, some manage Government assets, and some have quasi-judicial roles.

"What is appropriate for a Minister responsible for a Crown entity such as the Health Funding Authority, which gives effect to the policies of the government of the day, will differ considerably from what is appropriate for a Minister responsible for a Crown entity, such as the Police Complaints Authority, which is quasi-judicial and deliberately kept at arm's length."

· The Government will revise legislation to make it clear which Crown entities are required to give direct effect to Government policy and which should therefore be subject to closer Ministerial direction.

"There still remain a small number of bodies that fall outside the Crown entity category. These include statutory bodies such as the Carter Observatory Board. The Government's view is that the same standards and practices of good governance and accountability should apply. The Government will be reviewing the application of these standards to these organisations

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