Effective and efficient use of State resources and regulatory powers, including improved decision-making and performance management systems

Overview

The extent to which the Government uses State resources and regulatory powers effectively and efficiently determines the extent to which the Government is able to achieve its desired economic, social and environmental outcomes.

The Treasury’s role in relation to encouraging the effective and efficient use of State resources and regulatory powers is both from a central agency perspective – we have a responsibility to ensure the public sector is performing well – and from a financial perspective as the Government’s chief economic and financial advisor.

The Treasury fulfils this role by:

• assessing departmental votes (baselines and additional spending)
• providing second opinion policy advice, enhancing the quality of advice Ministers receive from government agencies
• advising Ministers directly on how to maximise value for money from public sector investment
• providing advice to both Ministers and government agencies that cuts across agency “silos” and sectors
• working with the State Services Commission to design systems that encourage and maintain public sector effectiveness and accountability.

Our outcome contribution

Ensuring greater clarity about goals/desired results:

• engage more effectively with key Ministers
• help Ministers make well informed choices about relative priorities
• engage more at a sectoral level.

Getting the system to focus on performance:

• advise on changes to the Budget process
• use a range of other methods to strengthen the performance of government departments
• refocus our Vote analysts’ work to emphasise sectors where significant problems and opportunities are emerging
• pay greater attention to regulatory effectiveness, the adequacy of the regulatory framework and the quality of regulatory interventions.

Building capability so that the public sector delivers better results:

• encourage government departments to adopt a more strategic approach to capability issues
• identify areas where we can intervene directly to raise capability in the public sector.

Our progress

Ensuring greater clarity about goals/desired results

Work has included:

• providing advice on the Kyoto Protocol and the Government’s other climate change commitments, particularly through the secondment of senior Treasury officials who contributed to the Ministry for the Environment’s Review of Climate Change Policies
• working with the Ministry of Economic Development and the Inland Revenue Department on the Government’s proposed KiwiSaver scheme
• working jointly with education agencies on approaches for improved long-term fiscal sustainability and predictability in tertiary education funding
• supporting the “themes” approach of Ministers in the Budget 2006 process, including the development of balanced theme packages.

Getting the system to focus on performance

Work has included:

• undertaking five in-depth reviews of the electricity, health, innovation, justice and tertiary education sectors
• progressing trans-Tasman coordination and financial sector regulation, and working on a review of domestic institutional arrangements
• providing support and analysis for the Ministerial Expenditure group review process in November/December 2005 on performance and productivity issues in the public sector
• supporting the 2006 Ministerial Expenditure group reviews
• working with the Ministry of Health and District Health Boards New Zealand to improve health sector performance measures
• developing proposals for changes to the Budget 2007 process to better focus on performance and leverage off the themes approach.

Building capability so that the public sector delivers better results

Work has included:

• building awareness of changes to the Crown Entities Act, providing guidance to departments on Crown entity monitoring and providing guidance to Crown entities on Statements of Intent and managing for outcomes
• developing, alongside other central agencies, a framework for identifying early warning signs of a government organisation at risk.

Challenges ahead

During 2006/07 two of the Treasury’s outcomes – the effective and efficient use of State resources and regulatory powers, and the efficient management of Crown assets and liabilities – will be grouped together under one outcome: Improving Public Sector Performance.

The Treasury’s overarching objective is to lift the quality and consistency of our advice on public sector performance. Public sector performance is increasingly a matter of public and ministerial interest, with Ministers concerned to identify and evaluate the returns from public sector investment.

The Government is currently seeking to improve performance and value for money in 2006/07 via a series of Ministerial Expenditure group reviews. Specific sectors that will be targeted include capital expenditure, transport, central agencies and health. The Treasury will join the State Services Commission, the Department of Prime Minister and Cabinet and other lead agencies to progress these reviews.

At an organisational level, we have identified a need to increase our analytical focus on value for money. This means advising Ministers as to what should be expected from public sector spending and assessing what is delivered. We intend to focus on providing advice on how the Government can improve performance management processes. A further organisational challenge for the Treasury is to continually reflect on what past experience implies for future investment. In moving our analytical capability towards better analysis of these concerns, the Treasury needs to retain an appropriate focus on effective fiscal management.

The themed Budget process (National Identity, Economic Transformation and Families – Young and Old) presents opportunities for the Treasury’s objectives in relation to improving public sector performance. The theme-based approach offers an opportunity to review the extent of policy consistency and coordination in support of the Government’s objectives. We have a role in helping Ministers make well-informed choices about relative priorities.

The Treasury has a continued role to play in supporting the public sector’s focus on managing for outcomes. This requires that we work with other agencies

to develop effective evaluation techniques and help disseminate evidence on best practice.