Maintaining and developing capability
Over the past year, we’ve continued to focus on maintaining and developing the Treasury’s capability, so we can provide even better economic and financial advice to Ministers. The T-I-M-E management objectives outlined on the previous page provide us with a broad framework for doing this.
Taking the lead
Overview
The Treasury’s role requires it to work across a very broad range of areas. This in turn makes it a real challenge for us to cover the areas we need to cover, while still anticipating emerging issues and meeting changing ministerial needs.
A main focus for us has therefore been on how we can position ourselves to best help Ministers shape economic and fiscal strategy, whilst providing leadership as a central agency across the entire public sector.
Our management objectives
- Shape the economic agenda and proactively identify new areas of opportunity.
- Anticipate ministerial needs and issues for the future and position ourselves to improve advice on key Government priorities.
- Respond quickly and innovatively to changing demands and circumstances.
Our progress
During the year we undertook several initiatives that demonstrated our ability to provide leadership as an organisation.
In 2005/06 the Treasury established a Strategy Unit to support the Chief Executive on strategic policy issues such as new, “next generation” or emerging issues facing New Zealand. An early priority for the Unit has been the identification of strategic challenges facing the New Zealand economy over the next 20-25 years (see box on page 32).
We responded to the heightened threat of a worldwide influenza pandemic by commissioning a pandemic preparedness work programme. This involved an examination of the potential economic impact, taking a coordination and leadership role for government-wide preparedness and managing Vote issues.
The annual Budget process is an important component of the Treasury’s ongoing work to improve public sector performance, and provides an opportunity for Ministers to ensure departmental activities are closely aligned with the Government’s objectives. Budget 2006 was the first Budget to be organised in line with the Government’s key themes (Economic Transformation, Families – Young and Old and National Identity) rather than sector-based allocations. This resulted in better cross-department and cross-sectoral trade-offs. The Treasury also used the Budget process to focus more closely on what departments were delivering with additional funding.
Efforts to improve collaboration and alignment between the three central agencies – the Treasury, DPMC and SSC – have continued this year. To give further impetus to this work, the three departments proposed that the scope for improving their contribution to the work of the wider public service be considered specifically, as part of the Government’s Expenditure Reviews launched in March. This work is currently underway, led by a team of experienced external advisors, and a report to Ministers is expected in the first quarter of 2006/07.
Following the passage of the new Crown Entities Act (see box on page 25), there was significant interest from departments on how they could improve monitoring of Crown entities. The Treasury, together with SSC, established a departmental monitoring group which provides an opportunity for departments to share their experiences and learning with each other. It has also been a useful vehicle for central agencies to get a better understanding of the support that departments require.
The Treasury’s Legal group, with assistance from SSC and the Crown Law Office, was instrumental in setting up a shared workspace known as Public Sector Law NZ. Launched in November 2005, the workspace was established to provide access to legal advice and precedents across the public sector. It continues to grow with just over 200 members in core government sector legal teams. The Treasury’s Legal team is responsible for administration of the site.
- Mailena Rawiri and Jane Meares from the Treasury’s Legal group, who were instrumental in setting up a shared public sector legal workspace. In the background is the “Corporate Lawyer of the Year” trophy received by Jennifer Lynch (see page 36).
We continued to use invitations for external presentations and internal seminars to disseminate Treasury work more widely. Our guest lecture series enabled us to hear a variety of perspectives on relevant issues. In June 2006, the Treasury co-hosted a Macroeconomic Policy Forum with the Reserve Bank of New Zealand, bringing together domestic and international experts to evaluate the implications of macroeconomic imbalances that had emerged during the recent period of strong economic growth. The main purposes of the Forum were to test the robustness of New Zealand’s macroeconomic policy frameworks and to evaluate opportunities to improve these frameworks or the way policy is operated within them. An edited version of the Forum’s proceedings will be published and made available on the Treasury and Reserve Bank web sites.
Challenges ahead
This is an area where we need to keep improving our ability to show leadership and to work strategically and responsively. To do this, it is imperative that we try to find ways to avoid our day-to-day work crowding out our capacity to think longer-term and our responsiveness to ministerial demands.
An eye to the future
The Treasury’s overarching vision of higher living standards for New Zealanders means that part of our role is to scan the horizon for future developments which may affect New Zealand’s economic wellbeing – and to help governments ready the country for that future.
In order to inform and challenge the Treasury’s thinking on future issues and opportunities facing New Zealand, the Strategy Unit held a series of semi-structured interviews with representatives from across the public and private sectors, as well as community and voluntary organisations.
The insights gathered from the interviews were used to supplement material from reviews of relevant research and literature in order to identify challenging issues which are likely to have a profound and pervasive impact on New Zealand and its economy. These issues include population ageing and demographic change, and the impact of globalisation and climate change.
The Treasury intends to further develop its understanding of these issues and their implications. We will also work with Ministers and government agencies to shape how the issues unfold, to position New Zealand and our economy to take advantage of important opportunities and to mitigate significant risks.
Not every issue we identified is one for which the Treasury has primary responsibility. As a central agency, the Treasury has a strong interest in the quality and robustness of policy advice tendered by all public sector agencies. That’s why we have been actively working with other organisations — both public and private sector — who are engaged in futures scanning, sharing our work and learning from theirs.
What’s the point of speculating about the future? Isn’t it inherently unknowable?
Thinking about the future and exploring plausible possibilities have several potential benefits:
Preparedness
Thinking about and analysing possible futures can lead to better decisions later when there simply may not be enough time for full consideration of the policy options. Pandemic planning is an example of this.
Timely policy-making
Sometimes policy changes are needed today if we are to be prepared for the future. An example is managing the fiscal costs of population ageing and health technology.
Robustness
Good policy is robust under a range of possible futures. Sometimes the future operating environment turns out differently from expectations. So it is useful to consider a policy’s effectiveness under a range of plausible futures.
Anticipation
Thinking about potential future operating environments and the drivers of change can heighten awareness of signals in the current environment that may indicate how the future is unfolding – and therefore allow earlier action.
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- Scanning the future economic horizon – Anand Kochunny, Charles Tallack, Bryan Dunne, Brian McCulloch, Kirsty Hutchison, Rachel Grove, Tracy Mears and Struan Little.
