Promoting value for money in major sectors

Health sector

• Given the very significant public expenditure on health, its future cost pressures and the importance of health services to living standards, the Treasury's priority objective is to maximise health benefits while managing current and future health spending within the Government's fiscal strategy.
• We played a key role in ensuring that the Ministry of Health's (MOH) Four-year Budget Plan provided options to operate within the Vote Health budget allocation and securing a fiscally prudent capital allocation, and in pushing forward advice on key elements of the system that drive costs and performance.
• We provided advice and support to MOH on the restructure of its policy function, which took place in late 2010. There has been more limited policy change during 2010/11 compared with the changes to the structure of the health system made in 2009/10. As a result, we have focused on investigating longer-term options for supporting better system performance and lower expenditure growth. We expect the value of this work to be realised in joint work with MOH in 2011/12, including on primary care policy and evaluation of the new health system structures.
• The Treasury engaged with the sector directly in a number of ways, including presenting an economic and fiscal overview to DHB chairs, board members and chief executives. The purpose of this was to support them in understanding and managing the sector's response to the fiscal challenge, and in ensuring future health system cost-effectiveness and sustainability.
• Capital Assessment Guidelines were issued to DHBs to assist the development of capital projects - these are based on the whole-of-government Better Business Case guidance. However, requests for capital approval that are not supported by adequate information and analysis continue to be provided to Ministers. DHBs and MOH rarely consider alternative procurement methods and there is little evidence that regional solutions are being properly considered. We expect this to improve over time.
• Owing to resourcing pressures, some deliverables that the Treasury expected to close late in 2010/11 will be completed in 2011/12 - this includes advice on overall institutional settings for the public health system and future directions for primary healthcare.

Justice sector

• We worked with justice sector agencies on a range of initiatives to enhance public safety, reduce crime, lower the number of offenders entering the criminal justice system and improve outcomes such as recidivism rates. We have paid particular attention to the sector's ability to deliver improved outcomes within the context of the Government's fiscal strategy.
• We provided advice on prison capacity planning and the justice sector asset base, which represent significant investments for government.

Supporting the Defence review

• We supported the development of the Defence White Paper which sets the direction of Defence policy for the next 25 years. The Treasury also focused on the related Value for Money review of the New Zealand Defence Force, which sought to balance capability within the Government's fiscal strategy. On the basis of this work, Ministers agreed an ambitious savings target. The Treasury has since closely engaged with the New Zealand Defence Force to monitor the implementation of the savings plan and to ensure the savings are realised.

ACC

• The policy reform agenda and resources have focused on introducing competition to the Work Accountand options to expand the Accredited Employer Programme. We have provided advice on other options for improving performance across the Scheme and how the turnaround can be sustained.
• ACC continues to improve performance ($3.600 billion surplus projected at 30 June; Non-Earners Account appropriations reduced by $638 million across the forecast period); significant reductions for earners (17%) and employers (22%) are expected in 2011/12.

Education

• Advice on performance and productivity improvements proposed by the Early Childhood Education Taskforce and subsequent policy development. We stepped up our focus in the early childhood education (ECE) sector developments area in order to address emerging issues. The Treasury will be using the four-year budget planning process, ECE taskforce and Welfare Working Group processes to influence future direction and spending.
• The weathertightness of school property has also been a focus of advice, with MOE progressing work around its future funding needs and approach to weathertightness.