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Speech: Judith Collins - Address To Trans-tasman Business Circle

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Fuseworks Media

Address to Trans-Tasman Business Circle

Heritage Hotel, Auckland

19 February, 12pm

Good afternoon. Thank you for inviting me to join you today.

Before I get under way I would like to congratulate the Trans-Tasman Business Circle on the great work it does in building closer business relationships between our two countries.

As the world emerges from recession in the months and years ahead, your role will be increasingly important if both countries are to take advantage of the incredible opportunities available.

Close co-operation between businesses in both countries will increase our competitiveness, deliver economic growth and build a more enterprising and prosperous future for both New Zealanders and Australians.

The importance of Australia to New Zealand was signalled by the Prime Minister in his Statement to Parliament last week.

The Government intends to push hard for progress on a single economic market with Australia, which remains New Zealand's biggest trading partner.

Australia is often the first stop for New Zealand businesses looking to expand into an overseas market, but adapting to different federal and state regulations can sometimes be a challenge.

The Single Economic Market will be about aligning the regulatory environment in New Zealand and Australia, so that New Zealand companies can seamlessly manage operations in both countries.

The scope for sharing of expertise, ideas and investment is enormous.

Today, I'd like to speak about the work we're doing in law and order that will present new opportunities for private enterprise, and enhance New Zealand's reputation as a good place to invest and do business.

Our Corrections sector does a great job of managing the country's most difficult and dangerous people.

But this government believes it could benefit from a stiff breeze of private sector innovation, so we're planning to boost business involvement in the building and running of our prisons.

Last year I visited Victoria and Queensland to learn first hand about their experiences with private management of prisons.

Changing the Corrections Act to allow private management of prisons in New Zealand was one of this government's key election promises.

The Auckland Central Remand Prison was under private management between 1999 and 2004.

I had visited prisons during my 20-plus years as a lawyer, and ACRP under private management was the first prison I had been where I felt there was some hope and that prisoners might come out better off than when they went in.

ACRP was the only prison in New Zealand to employ a full-time psychiatric nurse to co-ordinate the assessment, identification and management of "at-risk" prisoners. Two full-time psychologists were also employed at the prison.

It had a prisoner education programme which involved skill-based training, cultural education, and reintegration programmes.

It was the only New Zealand prison to offer reintegration courses at that time.

Only 5.5 per cent of inmates returned positive drug tests, compared with over 20 per cent in the public sector.

Clearly, this was a solution that really did work, yet the Labour government changed the legislation to prohibit private management.

This was done on purely ideological grounds, and it's a position they still maintain.

They do not believe private enterprise has any place in our prison system, despite overwhelming evidence that ACRP had benefited significantly from private sector ideas and expertise.

This Government believes that Corrections, and other parts of the public sector can reap significant benefits from partnerships with private enterprise.

Private management has been a part of the corrections landscape in Australia for decades.

State governments know the upside and the potential pitfalls of such relationships. Their advice will be invaluable as New Zealand goes down this route in the years ahead.

While in Australia I visited three privately managed prisons.

The prisons were run like businesses, with a focus on accountability, delivering value, using innovative ways to save time and money, and meeting the high standards of prisoner management demanded in their contracts.

They were great examples of how private sector providers can inject new thinking, help raise standards and deliver a better corrections service.

In many ways they were the sort of prisons we aspire to have here in New Zealand with their strong focus on rehabilitation.

At one of the prisons I visited, 75 - 80% of prisoners were involved in rehabilitation and employment programmes.

Not only did this better prepare prisoners for leading a law abiding life once released, it kept the prisoners busy - and busy hands are less likely to cause trouble.

There was a strong emphasis on discipline, but those that followed the rules were rewarded with fewer lock down hours, more contact with visitors, access to the gym and other privileges.

The privately managed prisons offered niche services, such as special units for intellectually disabled prisoners and programmes for indigenous people.

Some initiatives introduced by the private sectors, such as peer prisoner programmes, have been so successful that they have been adopted by the state-run institutions.

It's this kind of innovation we could do with more of.

Exploring partnerships with the private sector that is not about ideology - it's about delivering greater performance across the public sector and delivering better value to taxpayers.

Corrections is likely to be the first government agency to benefit from greater private sector involvement in developing infrastructure.

Privatising management of some prisons will be just the start.

Full public-private partnerships are also a possibility for creating additional capacity.

Justice Ministry forecasts released earlier this month predict that the New Zealand prison population will grow by around 700 by 2017.

Under current forecasts we will start to run out of baseline beds in March or April this year.

In addition, around 1700 obsolete beds need to be replaced. These are in our older prisons and are increasingly presenting health and safety issues for our staff.

In some cases they no longer meet building code requirements.

Taken together, the growth prediction and obsolete capacity will result in the need to create an additional 2,500 beds before 2019.

Short term capacity needs are being addressed by expanding the use of double bunking at our existing prisons, and looking at alternative construction methods, such as container cells, to create capacity quickly and cost-effectively.

Longer term, it will be necessary to build a completely new prison - most likely at Wiri in South Auckland.

The new prison at Wiri will enable us to explore a range of other ways in which the private sector can participate in this process, including designing, financing, building, operating and maintaining prison facilities.

The weight of international evidence shows PPPs can produce real economic gains.

PPPs are not radical. They are simply another form of procurement. Engaging in PPPs where they make sense is simply about making sure we are using all the tools in the tool box.

Most government departments and Crown entities already operate from privately owned premises which they rent or lease - an example is most of the public service in Wellington.

In the UK no new prison has been built by the public sector since 1992.

In Australia every state has utilised PPPs. As a result Australia has a deep and well performing infrastructure sector and we would like to see some of that replicated in New Zealand.

The prisons I visited are just a couple of examples.

Even countries with a long track record with PPPs recognise they are not suitable for all projects and are usually a small part of the public-private sector mix. I'm sure this will also be the case in New Zealand.

As I mentioned earlier, Corrections is likely to be the first government agency to benefit from greater private sector involvement in developing infrastructure.

The Ministry of Education is also assessing the suitability of PPPs for the building and maintaining of new school property.

The Ministry of Education spends approximately $500 million per annum on school property.

Should the project proceed to a pilot school or schools being procured under a PPP, this would only represent a portion of the Ministry's new school programme and an even smaller portion of the Government's overall spend on school property.

Subject to a successful pilot project, the Ministry of Education will review the applicability of PPPs for other new school property projects.

As with Corrections, the goals will be to inject new thinking, free up resources so staff can concentrate on delivering high quality services, and to deliver better value to the taxpayers.

I believe we at least owe it to the public of New Zealand to carefully explore these options.

As Minister responsible for the Serious Fraud Office, I'd now like to talk about the role the SFO will play in strengthening enforcement of business regulations and maintaining New Zealand's reputation as a clean, corruption-free and safe place to do business.

Last year New Zealand was named by Transparency International as the least corrupt country in the world.

It's a reputation of which we are very proud, because it signals to the world that this is a trustworthy place to invest and do business.

But it's not a reputation we can take for granted.

The experiences of investors in finance companies have recently shown that our oversight and enforcement of rules designed to protect investor interests are perhaps not as robust as they could be.

Just last week Transparency International said many of New Zealand's top listed companies lacked policies on preventing bribery and corruption.

It noted that while New Zealand is relatively free from bribery and corruption, complacency about that position had the potential to damage our reputation.

This week a report by KPMG showed a significant rise in fraud during the second half of last year.

Fraud cases before the courts between July and December totalled $76.1 million - up from the $21.9 million uncovered between January and June.

The report predicted the number of fraud prosecutions would continue to rise as more offences committed during the recession came to light.

The SFO was set up 20 years ago partly as a response to some of the Wild West business practices of the mid-to-late 1980s.

Sadly, what was initially promoted as New Zealand's premier white collar crime fighting agency has since fallen victim to years of political neglect.

At a time when there was a pressing need to boost oversight of the financial services industry, the Clark Government signalled its intentions to disband the SFO.

With such an uncertain future, morale at the SFO went downhill, good staff resigned and the agency lost critical momentum.

When National was elected to Government, Labour had a Bill in the House to shut it down for good.

I can't help but think how many investors might still have their life savings today if business regulations had been more robust and the SFO had been well supported, well resourced and backed politically over the past decade.

In his Statement to Parliament, the Prime Minister said that the focus of the Government was to lift the long-term performance of the economy, and to raise the standard of living for all New Zealanders.

As the generator of wealth, business will be one of the main drivers of that growth.

It will be crucial in the years ahead that we ensure the conditions are in place for local businesses to grow and thrive, and for overseas businesses to want to invest.

There will need to be vibrant capital markets, an environment that encourages enterprise and innovation, and a regulatory framework that ensures competitiveness and fairness.

I believe this is where the SFO will have an important role to play.

The recommendations of the Capital Markets Development Taskforce highlight a number of law enforcement issues.

The SFO's ability to respond to them will depend on it having strong backing from the Government.

That is now what it's got.

Late last year rebuilding the SFO began with the appointment of Adam Feeley as the new chief executive officer.

Adam was formerly the chief executive of the Eden Park Redevelopment Board, and has extensive regulatory and enforcement experience, including work in the corporate and securities sector as National Manager of the Companies Office.

One of his key challenges will be to detect and catch crime before it happens, rather than long after investors' money has dissipated and cannot be recovered.

I will be expecting the SFO to work closely with receivers, the business community, professional organisations and others who have an interest in a corruption free New Zealand.

It will also be crucial that the SFO works more effectively with other regulators to ensure a speedier, united response to cases of suspected fraud.

Perhaps most importantly, it will be expected to set clear priorities based around their impact on the public and the New Zealand economy.

This Government recognises that New Zealand's future growth will rely on good access to capital for young businesses to get started and for established businesses to expand.

New Zealand investors must have the confidence that their money will be safe in the productive sector.

Make no mistake - those who have broken the law, maybe those who have defrauded New Zealanders out of their retirement savings are going to know that the Serious Fraud Office will be here, fully backed by the Government, to investigate them.

The past year has seen a busy legislative programme as the Government puts in place the reforms promised during the election campaign

The pace will not slacken as we work to boost the performance of the economy and deliver the jobs, increased incomes and better living standards New Zealanders aspire to.

As Minister of Police and Corrections, my priority will be to find new ways to increase the safety and security of the public.

People need to feel safe in their homes and on their streets. Unlike the last Government, I'm not too proud to admit the public sector doesn't have the answer for everything.

The taxpayers of New Zealand deserve a world-class corrections system. By exposing our Corrections sector to private sector ideas and know-how, we can cost-effectively raise standards across the board.

People also need to feel safe in their dealings with the financial services sector.

There is no place for cowboys when it comes to people's life savings, New Zealand's international reputation or its future prosperity.

Thank you. It's been a pleasure speaking to you today.

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