Chief Executive’s Summary

The 2006/07 year has been an important one for the Treasury.

It has been characterised by a period of significant internal change, as we first designed and then began implementation of a strategic programme aimed at improving the way we operate as an organisation.

At the same time, we have continued to concentrate on our primary role of providing high-quality economic and financial policy advice for the Government. I am pleased to report that not only has the quality of this work remained high during a period of considerable pressure for staff, but it is also evident that our new strategic focus on results and customer need is making a positive impact.

In particular, it has been encouraging to see a number of projects carried out in conjunction or close collaboration with other government agencies, demonstrating our important leadership role as a central agency.

Highlights

The Treasury’s advice and services over the past year covered our wide-ranging contribution to the Government’s longer-term economic and fiscal goals, as well as more immediate responses to topical issues as they arose.

While this contribution was of high quality overall, a number of achievements stand out.

Budget 2007 was one such achievement. The Budget - the mechanism by which the government determines its spending, and which incorporates fiscal strategy and forecasts - is always a major Treasury output involving significant resource. In 2007, however, a number of different streams of Treasury work in the savings and tax areas were also drawn into the Budget process as the Government moved to implement the Business Tax Reform and make significant enhancements to KiwiSaver. In addition, Budget 2007 was the first to be produced using New Zealand equivalents to International Financial Reporting Standards. Despite these extra demands and complexities, the end result was of an extremely high standard.

Similarly well received was the development and publication ofThe Treasury’s Position on New Zealand’s Savings Performance, which drew together the many different elements of our savings-related work. This work provided a clear articulation of the Treasury’s view on this issue of critical significance to the New Zealand economy.

Our work with other government agencies continued to grow, one notable example over 2006/07 being climate change - an issue with significant implications for the economy as well as the environment. The Treasury has a leading role, together with the Ministry for the Environment, in the Government’s Emissions Trading Group, developing policy for an economy-wide emissions trading scheme. We are also proud to be one of six government agencies leading the way in meeting public sector carbon neutrality goals.

The Treasury role as a central agency, together with the State Services Commission (SSC) and the Department of Prime Minister and Cabinet (DPMC), gathered momentum over 2006/07. This was reflected in the decision to create a distinct Central Agencies Group as part of our organisational restructuring early in the year. Much traction has been (and continues to be) gained in supporting the Government to achieve high levels of public sector performance, particularly in the areas of sustainability, youth development, housing affordability and State sector reprioritisation.

A welcome recognition of the New Zealand Debt Management Office’s (NZDMO’s) work came with the news in February that it was named Sovereign Risk Manager of the Year in Risk magazine’s 2007 Risk Awards. NZDMO is a separate unit within the Treasury responsible for managing the Government’s debt portfolio, net cash flows and certain other financial assets within an appropriate risk management framework.

Organisational developments

In September last year the Treasury launched a strategic programme, Stepping Up, designed to improve the way we worked as an organisation and to better contribute to the Government’s goals.

The main elements of the change involved clearly identifying the results we were aiming to achieve as an organisation over the short to medium term, requiring a stronger focus on the needs of Ministers and ensuring more consistent quality in our advice and operations.

That programme moved from launch to action and implementation in the second half of the year. Implementation began with a physical organisational restructuring in February followed by an intensive and ongoing internal programme around creating a stronger ‘results’ and ‘customer’ focus.

This strategic organisational work remains underway as we enter the 2007/08 year.

I have been very pleased by the positive and enthusiastic response of Treasury staff to the objectives of Stepping Up and am encouraged by the tangible progress made so far. We are now actively focused on putting effort and resources into areas where most impact can be made and to deliver the best results possible.

The year ahead

It is still our vision to be a world-class Treasury working for higher living standards for New Zealanders – and I believe we have made considerable progress towards that goal over the past year.

I’d like to thank Treasury staff for their professionalism and commitment throughout the past 12 months and I look forward to meeting the challenges of the year ahead.

John Whitehead
Secretary to the Treasury