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Policy Advice - State Sector Performance

Scope of Appropriation

Policy advice on the effective and efficient use of State resources including improved decision-making and performance management systems and the efficient management of Crown assets.

Significant Work Completed During 2010/11

The Treasury has actively promoted better State sector performance through a series of system-wide initiatives, designed to improve performance information/signals, institutions and incentives and to lift agency capability in key areas (notably policy advice, project/programme management and benchmarking).

Improving performance information, signals, institutions and incentives

Better public services

  • The Treasury has substantially contributed to joint Central Agency work on "better public services" - which is a core component of improving the performance of the State sector. This work has included advice on institutional settings including clustering activity and Crown entities, contestability and creating incentives for continuous improvement. This work forms the overarching story behind and context for many of the other outputs produced.

Performance improvement framework

  • The Treasury has supported SSC in the implementation of PIF through funding, secondment of staff, direct input to review processes and analysis of systemic implications of review findings.

Review of performance management tools

  • Between October 2010 and May 2011, the Treasury and SSC jointly reviewed the effectiveness of the current suite of performance management tools in the State sector. The evidence collected through this project, and the conclusions drawn, are being used to inform ongoing work on State sector reform.

Joint Treasury/OAG work programme on improving the quality of non-financial performance information

  • In 2009/10 and 2010/11, the Treasury and OAG worked jointly to provide support to selected agencies during the preparation of their SOI and Information Supporting the Estimates. The purpose of this work programme is to help agencies improve the quality of their non-financial performance information, in advance of the revised audit standard for service performance information being applied. The final year of this work programme will be 2011/12.

Other initiatives to improve transparency

  • The Treasury provided advice to the Minister on the capital charge regime for departments and Crown entities. The Treasury developed and implemented new capital charge rules, more consistent than those in place earlier, and conducted a consultation process with all statutory Crown entities regarding these rules. As a result, the Crown Entities (Capital Charge Rules) Regulations 2011 were made. These regulations provide a proper legal basis for the collection of capital charges from Crown entities.

Improving agency capability

Policy expenditure review

  • The Treasury and SSC established and funded the Review of Expenditure on Policy Advice. 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 that respond to the Review's recommendations. The Treasury, SSC and DPMC developed a detailed implementation plan.
  • Ten projects arising from the Review of Expenditure on Policy Advice are being implemented by Central Agencies and/or departments. The Treasury continues to implement two of the projects, which will be completed during 2011/12: (i) Definition of policy advice/reorganisation of appropriations and (ii) Policy benchmarking. The Treasury commenced work on a third project with SSC: Designing and trialling Heads of Profession. The Heads of Profession project will run through to December 2011.

Project and programme management

  • The Treasury gained support for the adoption of an informal standard for project and programme management across the public sector.

State sector efficiency

  • The Treasury primarily focused on the following issues to shift resources to where they are most effective and services delivered efficiently:
    • supporting top-down expenditure management mechanisms
    • improving the effectiveness of State interventions (particularly in welfare and housing)
    • driving greater value for money in big sectors (notably health, justice, defence and ACC), and
    • managing big cost pressures (such as remuneration, property and back office functions).
  • These four considerations drive much of our routine Vote-related work.

Supporting better top-down expenditure management mechanisms

  • We completed a Treasury Paper on the size of government in New Zealand, and in particular the relationship between size and economic growth. This work has helped inform the next phase of our Better Aligning Expenditure and Priorities work - supporting a direction focused on medium-term expenditure choices and trade-offs to support top-down expenditure management. Empirical work on fiscal incidence was a core component of this advice.

Improving the effectiveness of State interventions


  • The Treasury provided a range of advice to support the Government's consideration of and response to the Housing Shareholders' Advisory Group report. This work contributes to the objectives of achieving more effective and efficient social housing services through better tenant management, better management of social housing assets and increased contestability in supply.
  • This included advice to support Cabinet Strategy Committee (STR) consideration of a new direction for social housing (September/October), specific proposals for reforms (November) and budget implications (March).
  • A particular focus for advice in the second half of the year was the establishment of the Social Housing Unit (April/May).
  • The Treasury has also played a key role in supporting the development of advice from lead departments (Department of Building and Housing [DBH] and MSD) on reforms of financial assistance and the integration of housing needs assessment with assessment for other forms of social support. These two streams of work will report during 2011/12.
  • The Treasury has played a role in supporting DBH and CERA's work on housing implications of the Canterbury earthquakes (such as the provision of temporary housing). In particular, the Treasury has provided second-opinion advice and assistance on the fiscal and economic consequences of proposals.
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