Impact: We are an Exemplar of a Well-managed State Sector Organisation Focused on Continuous Improvement

During 2010/11 we focused on clearly articulating the Treasury's finance strategy; planning for the integration of corporate services across the three Central Agencies; initiation of in-house cost-effectiveness measurement and participation in public sector benchmarking; and the rollout of a risk management framework across the Treasury.

We also improved a number of the internal processes and procedures to manage corporate functions. This improved the Treasury's Departmental Internal Control Evaluation (DICE) rating from 4.39 to 4.5. DICE assessments are performed by each government department's auditors as a way to provide reassurance about the operation of governance and financial activities across all Crown activities. The Treasury's auditors reviewed 27 aspects applicable to the Treasury, with 12 assessed as "excellent" (and five of those had improved from "good" to "excellent" since last year). All other areas were rated as "good".

Financial strategy

A financial strategy was completed in 2010/11 and was used as the basis for completing the Four-year Budget Plan submitted to Ministers for approval. Work has progressed to address the fiscal challenges outlined in the financial strategy. This work aims to manage the Treasury's work programme within constrained resources. Understanding the shape of the Treasury and the staff profile we require is critical to the next iteration of the financial strategy.

Cost effectiveness

The Treasury is committed to improving measurement of its performance, including the cost effectiveness of the services we deliver. The Treasury has taken a lead in developing guidance on measuring the cost effectiveness of policy advice and we are involved in a policy advice benchmarking pilot. In April, we commissioned an external review to assess the quality of the Treasury's policy briefings, so we had an independent diagnosis of the strengths and weaknesses of our policy advice. The Treasury was also part of the pilot group for the Better Administrative and Support Services (BASS) programme. The BASS programme found that the Treasury's administrative and support services were 17.3% of total operating costs, which compares relatively well to the median.

The Treasury increased its engagement with business leaders and academics who can share valuable insights on growth and the levers for growth. This engagement involved a series of meetings with business leaders and academics and presentations to a wide range of interest groups across New Zealand, those with insights across the economy (such as professional services firms) and innovative thinkers who can bring new perspectives to the Treasury.

Risk management

The Treasury's ability to manage in an uncertain and changeable operating environment is enhanced by the quality of our risk management.[4]

A risk advisor was appointed during the year, with responsibility for further developing and maintaining an appropriate enterprise-wide risk management approach, including further refinement of risk assessment, monitoring and reporting. In addition, the Treasury has recently appointed Deloitte to support our audit work.

We have improved our enterprise risk management approach to ensure there is systematic and regular assessment and monitoring of key strategic and operational risks facing the Treasury. Our senior leaders regularly identify and assess the Treasury's biggest strategic and emerging risks, and ensure that we take appropriate actions to manage them. The Treasury has also introduced regular operational risk assessments. We manage risks relating to our various change initiatives and projects to ensure that we anticipate and deal with uncertainty as effectively as we can.

The Treasury's risk management practices use an approach modelled on the Joint Australian/New Zealand International Risk Management Standard. As well as the specific regular risk assessments described above, risk management at the Treasury is implemented through business processes such as strategic and operational planning and project management. Risk management functions, roles and frameworks also exist in specific operational areas, including NZDMO and NZECO.

Our overall set of risks is overseen by a Risk and Audit Committee, which includes three experienced external members to provide independent perspectives.