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Outcome: A High-performing State Sector that Supports New Zealand's International Competitiveness

The quality of expenditure, regulation and other interventions by State sector agencies has a significant impact, both good and bad, on the incomes, opportunities and general wellbeing of individuals. It impacts both directly and indirectly on New Zealand's economic performance, which is a critical dimension of New Zealanders' living standards, particularly through the way it affects individuals' and firms' productivity. Government interventions also have distributional implications; governments have an important role to play in protecting the most vulnerable in our society in ways that enhance overall economic performance.

The ultimate measure of a high-performing State sector is its success delivering on the economic, social and environmental objectives of the Government in a way that is effective, efficient and affordable.

How We Have Contributed to This Outcome

The Treasury provided advice to Ministers on potential mechanisms to strengthen the budget process and to improve incentives for chief executives of agencies to improve medium-term planning. The Treasury focused in 2010/11 on medium-term strategies for the justice and defence sectors. The Treasury provided secretariat support to the Policy Expenditure Review.

We also released the inaugural benchmarking of back office agency activities, which provided the impetus for Ministers to confidently pursue faster fiscal consolidation in the 2011 Budget. This benchmarking exercise has increased the appetite and capability across agencies for better management information regarding services, including services to the public, and the appetite also for the development of consistent measures for common functions across agencies.

In December 2010, the inaugural Investment Statement of the Government of New Zealand was published and this was followed with a Supplement published in May 2011. These enhanced stakeholder knowledge and insight into the Crown's investment portfolio and enabled the Treasury to give clear advice on changes to the structure of the balance sheet and the ways in which the balance sheet is managed.

COMU has published the first in a series of Annual Portfolio Reports, describing the financial performance of the Crown's commercial entities. An important priority in the commercial area has been to initiate preparatory work on commercial transactions to advance mixed ownership of some SOEs.

We have implemented the CAM framework across government which has been adopted by capital-intensive agencies in the public sector. This framework encourages strong CAM practices which enhance performance and effectively manage risk from Crown infrastructural assets.

In order to minimise debt costs within an appropriate risk profile, we have continued to emphasise marketing to domestic and international investors, which, along with other cross-Treasury policy efforts, have achieved an optimal credit rating for the New Zealand Government. In total, NZDMO issued $19.500 billion worth of bonds with an annual cost of new borrowing in 2010/11 at 4.31%, lower than the long-run average cost of just over 6%.

Central Agencies' shared objective: State sector performance is improved

The Central Agencies (SSC, DPMC and the Treasury) have a shared objective: State sector performance is improved. This recognises that the Central Agencies are jointly responsible for leading performance improvements in the State sector, albeit with distinctive roles and perspectives. The three Central Agencies are committed to ensuring that better services are delivered to New Zealanders, that the State sector's performance is improving and that State sector expenditure is more disciplined.

The Central Agencies work individually and collaboratively across agencies, sectors and the public management system. The Central Agencies' contributions and outputs to deliver on the shared objective are outlined below.

Central Agencies' contributions and outputs to deliver on the shared objective
Central Agencies' contributions and outputs to deliver on the shared objective.

In 2010/11, among a range of other activities, the Central Agencies had three critical areas they collaborated on:

Performance Improvement Framework

PIF is a joint initiative. Central Agency staff pool their knowledge of reviewed agencies and the context in which they are operating to assist lead reviewers to undertake reviews. Central Agencies work together with agency staff to develop responses and to support and review the implementation of those responses. Finally, staff work together to analyse the growing body of knowledge of agency performance to identify and promote best practice and areas where a whole of system response may be required to lift performance.

Better public services

The Central Agencies share a commitment to build better results from the public services that New Zealanders rely on. DPMC, the Treasury and SSC are working together to provide Ministers with advice on the further potential for State sector reform with a view to redefining New Zealand public services for the 21st century. This work was overseen by a Ministerial Group for State sector reform established in January 2011. It was referred to in the Prime Minister's statement at the opening of Parliament and in the Deputy Prime Minister's speech to the Institute of Public Administration (IPANZ) in March. This work has continued under the governance of the Better Public Services Advisory Group which met for the first time on 25 May 2011. This work can also be referenced on the Better Public Services website: www.dpmc.govt.nz/better_public_services

Review of Expenditure on Policy Advice

The efficiency and effectiveness of government interventions depends considerably on the design of those interventions. The expenses, management and quality of policy advice therefore matters for improving State sector performance. The Government commissioned the Review of Expenditure on Policy Advice in August 2010 to provide advice on the cost and quality of policy advice, as well as the alignment between policy expenditure and the Government's priorities. The Review's final report was provided to the Government in December 2010. On 28 April 2011 the Government announced a suite of actions in response to the Review's recommendations. The Treasury, SSC and DPMC led the development of an implementation plan and are responsible for delivering on a number of the recommendations. Most will be completed in the 2011/12 year.

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