3 Delivering better public services within tight financial constraints
The Government is committed to delivering high-quality public services. A more effective and efficient public sector is central to delivering on this objective, while achieving the fiscal strategy and lifting economic performance.
The operating allowances are used to fund additional net operating expenses, with the exception of finance costs and social entitlement payments. The operating allowances represent only a fraction of total core Crown expenses (see Figure 4), which totalled more than $70 billion in 2010/11 and are forecast to rise to $78 billion by 2015/16.
- Figure 4 - Core Crown expenses
- Source: The Treasury
Together health and education expenses are currently around $27 billion, just less than 40 per cent of total core Crown expenses. Social security and welfare expenses are around $23 billion or 30 per cent of the total. The demographic pressures of an ageing population mean that over time spending on New Zealand Superannuation will absorb an increasing share of total expenses.
The increase in expenses in 2010/11 and 2011/12 includes the effects of one-off items relating to the Canterbury Earthquake Recovery Fund and the weathertight homes package, as well as the introduction of new sectors into the Emissions Trading Scheme.
In delivering better public services in this challenging fiscal environment, the Government is committed to ensuring there is value for money across the total base of government expenditure and in the management of Crown assets. The past three Budgets identified savings of $9 billion over five years, which were used to fund higher priority spending and reduce the deficit. We are continuing to challenge government departments to operate within four-year budget plans by delivering efficiency savings and innovations in service delivery and to advise the Government on how to prioritise resources to have the largest impact on New Zealanders' living standards.
As well as giving departments and other agencies responsibility for adapting to medium-term fiscal constraints, we have been developing the tools and capability of agencies to respond to this challenge. For example, the annual benchmarking of administrative and support services provides valuable management information for agencies on the cost, efficiency and effectiveness of these services. This has led to opportunities for cross-agency improvement in a number of administrative and support functions. This exercise has now been extended to policy advice and service delivery performance.
In many parts of the state sector, initiatives are delivering greater efficiency and innovation through different ways of working. These include:
- District Health Boards (DHBs) focusing on productivity and smarter procurement. They are delivering on the Government's key health targets, including shorter waiting times for cancer treatment and elective surgery. At the same time, DHB deficits have been cut from $155 million in 2008/09 to $16 million in 2010/11
- agencies finding new ways to provide services to affected communities following the Canterbury earthquakes. This includes remote working for staff, using community facilities, sharing staff and resources and maximising flexible working. These were driven by necessity but in many cases showed that doing things differently can result in better services and is leading to new approaches nationwide by some of these agencies
- shifting ACC's focus toward early intervention and contracting private providers to manage clients. This has generated both significant improvements in rehabilitation outcomes and substantial cost savings
- the Defence Force reprioritising cumulative savings of $142 million by stopping non-essential activities, outsourcing others and changing the way it organises itself
- establishing the Social Housing Unit in the Department of Building and Housing to make more and better use of alternative providers to meet the housing needs of those who have difficulty accessing housing in the private market.
The challenge is to embed these sorts of practices across the state sector so the Government can deliver on its priorities. Before Budget 2012, the Government will announce the next steps for state sector reform, following the recommendations of the Better Public Services Advisory Group. This will be critical for helping the Government to deliver better public services within tight financial constraints.
The Government will also be putting a strong focus on welfare reform. Reducing long-term welfare dependency will contribute to fiscal, economic and social objectives. We intend to introduce changes that will create new benefit categories, with a greater proportion of beneficiaries required to make themselves available for work. At the same time, we will do more to help beneficiaries into work, through services such as childcare, training, workplace support and access to health and disability support.
