Chief Executive’s summary

I am pleased to present this Annual Report for the Treasury for the 2005/06 year.

Over the past 12 months, the Treasury has continued to concentrate on its primary role of providing quality economic and financial policy advice for the Government. Our efforts have been clearly focused on achieving the Government’s long-term goals, as well as providing an effective contribution to more immediate issues as they arise.

One particularly positive feature of the year has been the opportunity to demonstrate our leadership role as a central agency on a range of projects involving close collaboration with our colleagues across the public sector.

Our successes in this area have included:

• leading the coordination and development of legislation and further policy details for the KiwiSaver scheme, working closely with the Ministry of Economic Development and the Inland Revenue Department
• completing in-depth reviews of the justice, education, energy and health sectors, and providing advice to Ministers
• working in partnership with the State Services Commission and Department of Prime Minister and Cabinet to implement the new Crown Entities Act 2004
• completing, in conjunction with the Reserve Bank, a review of policy instruments that could be used to supplement monetary policy
• taking a coordination and leadership role for pandemic planning across the public sector.

Taking a long-term view

Another highlight of our year has been the opportunity to take a step back from the economic and fiscal issues of the day to consider the more long-term challenges and opportunities facing New Zealand’s economy. This work was reflected in our first Statement on the Long-Term Fiscal Position, published in June 2006. The future state of New Zealand’s finances is increasingly a factor that governments take into account when setting today’s policies. We hope that publication of the Statement will increase the public’s understanding of the long-term implications of any significant spending and revenue decisions.

Our focus on long-term economic and fiscal issues was further underlined with the establishment of the Treasury’s Strategy Unit. The Unit is charged with supporting me as Chief Executive on strategic policy issues such as new, “next generation” or emerging issues facing New Zealand. Already, the Strategy team has engaged with a range of stakeholders to help us identify the key, long-term economic and financial challenges facing New Zealand. The Treasury intends to develop further its understanding of these issues and their implications, in order to help us position New Zealand and our economy to take advantage of important opportunities and to mitigate significant risks.

It’s no surprise that this “forward thinking” has also been reflected in internal work that is underway on how the Treasury itself will meet the challenges ahead. This work follows wide-ranging senior management discussions on the role of the Treasury and the performance results we want to see over the next three to five years.

A full-time project team is now working closely with the Treasury’s senior management team and me to determine how we can improve the way we operate as an organisation in order to achieve our strategic goals while meeting the Government’s needs.

I am excited by the challenge this work offers us and look forward to providing more details in the next annual report.

Improving organisational capacity

In 2005/06 we have progressed a number of key initiatives that will make the Treasury a better place to work and a more effective organisation as a whole.

In mid-2005, the Treasury established the Development Centre to provide coordinated and responsive learning and development programmes for staff. The launch of the Centre followed a review of the Treasury’s staff capability to ensure we were well placed as an organisation to achieve our key outcomes. In 2005/06, the Development Centre has focused on providing learning and development programmes in three priority areas: management and leadership, relationship and communications, and technical capability.

Another important milestone has been the introduction of a comprehensive recycling scheme at No 1 The Terrace, as part of our commitment to incorporating sustainable business practices into our day-to-day work. The scheme, which has received positive feedback from staff, has resulted in an 80% reduction in the amount of waste we send to landfill each year.

The Treasury web site represents the key means by which we communicate with external audiences and the wider public. A comprehensive review of the Treasury’s internet presence is almost complete, with new-look Treasury web sites expected in 2007. Visitors to all three sites – The Treasury, New Zealand Debt Management Office and New Zealand Export Credit Office – can expect faster and easier navigation; more up-to-date and topical information on current Treasury work programmes; and greater consistency and clarity in design, content and language.

Crown Company Monitoring Advisory Unit (CCMAU)

CCMAU is a stand-alone unit within the Treasury that monitors Crown research institutes (CRIs), State-owned enterprises (SOEs) and Crown-owned companies and entities – organisations which together play a significant part in New Zealand’s economy.

During 2005/06, CCMAU has made good progress towards putting in place the foundations of its strategic plan. CCMAU has also continued its focus on implementing the Government’s long-term ownership policy for SOEs, with owners’ reviews being completed for seven SOEs and another four underway. In April, CCMAU staff returned to refurbished, open plan offices which provide an excellent environment for effective and open interactions among staff.

The year ahead

We enter the 2006/07 year with the aim of making further progress towards our vision of becoming a world-class Treasury working for higher living standards for New Zealanders.

The work that is underway to improve the way we operate as an organisation will enable us to make significant progress towards achieving our vision. A key challenge for us this year will be ensuring the successful implementation of this work, whilst continuing to fulfil the more immediate requirements of our role as the Government’s primary economic and fiscal advisor, and our central agency role in supporting the Government to achieve high levels of public sector performance.

I am confident of the Treasury’s ability to meet this challenge, due to the high level of professionalism and commitment displayed by Treasury staff on a daily basis. I would like to thank all staff for their positive contribution over the past 12 months.

John Whitehead Secretary to the Treasury