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Annual Report of the Treasury for the Year Ended 30 June 2012

A More Effective and Efficient State Sector

The quality of expenditure, regulation and other interventions by State sector agencies has a significant impact on the living standards of New Zealanders. It impacts both directly and indirectly on New Zealand's stocks of financial and physical capital, human capital, social capital and natural capital. Given the significant impact it has, the State sector needs to do the right things in the right ways at the right time - and they must be affordable.

The size of the State sector has grown dramatically over the past decade, both in terms of expenditure and the size of the balance sheet. The Fiscal Strategy Report (FSR) specifies the Government's long-term objective is to reduce core Crown expenses to below 30% of GDP. Current forecasts show an improvement in the reduction in core Crown expenses as a proportion of GDP compared with the Budget Economic and Fiscal Update (BEFU) in 2011.

Core Crown expenses
Core Crown expenses.
OECDindicators of product market regulation
OECDindicators of product market regulation.

* Aggregate Energy Transport and Communication Regulation Indicators (ETCR)

Note: The product market regulation survey is untaken every five years with the last available data being for 2007.

The results achieved have not always matched this growth nor have increases in spending always been targeted to those most in need. The limited indicators of the impact of State sector activity that have been available to date have moved only in quite narrow bands in recent years, although there has been improvement in the broad indicator of quality (Kiwis Count), as set out in the graph and box below.

Percentage of State sector employees as a proportion of the working-age population
Percentage of State sector employees as a proportion of the working-age population.

Kiwis Count

Kiwis Count is a comprehensive survey that measures New Zealanders' satisfaction with 42 frequently used public services.

The overall service quality score for public services between February and June 2012 was 72, an increase over the 2009 score of 69.

The overall increase in service quality, from 69 to 72, is reflected at the service group level, with increases in the service quality scores for all 10 service groups. The largest improvements were in the service groups Border services and Taxation & business.

Twenty-seven services improved since Kiwis Count 2009. Twelve of these increases were statistically significant. Six services recorded decreases in service quality, although only one, Applying for or receiving a student loan or student allowance, was a statistically significant decrease.

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