Minister’s Foreword

The Government’s long-term vision for New Zealand is to build a fair society and a strong and prosperous economy.

This vision is behind our efforts to increase savings, improve export performance and invest in the wellbeing of New Zealanders. It is also behind the Government’s drive to ensure a solid foundation for economic growth through continued prudent management of public finances.

The Treasury has a critical role to play in ensuring all elements of this vision are achieved.

As the Government’s lead economic and fiscal advisor, the Treasury contributes work critical to achieving better economic performance for New Zealand, as well as to improved State sector performance and responsible macroeconomic objectives.

The Treasury has recently refreshed its own strategic direction, positioning itself to better respond to current and future challenges and identifying ways in which it can produce more effective results.

This Statement of Intent sets out the ways the Treasury will contribute to the Government’s goals over the coming year and into the medium term. It identifies key areas of work as well as performance and financial management information which will enable progress to be monitored.

As the responsible Minister, I am satisfied that the Statement of Intent 2007-2010 is consistent with the policies and performance expectations of the Government.

I look forward to the Treasury’s continued high-quality advice and policy contribution over the coming year, as the Government works towards achieving its social and economic vision for New Zealand.

Hon Dr Michael Cullen Minister of Finance

Chief Executive’s Foreword

This Statement of Intent is a particularly significant publication for the Treasury.

Over the last year, we undertook a comprehensive strategic and organisational internal review, Stepping Up, which assessed how we could have a greater impact on issues important to New Zealand both now and into the future.

The results of this work are currently being put into action and are reflected in the clear priorities in this document.

The priorities fall across the Treasury’s three outcomes – improved economic performance, a stable and sustainable macroeconomic environment and improved State sector performance. They are driven by our role not only as the Government’s lead economic and financial advisor, but also as one of three central public sector agencies.

The priorities range from exploring ways economic tools such as the Budget can be used to deliver better State sector performance and support a more sustainable and stable macroeconomic environment, to in-depth performance analysis of key public sectors such as health. They also include a focus on core issues such as (but not exclusively) educational achievement at schools, climate change, savings and financial markets, and competition and regulatory frameworks.

We will play a lead role in some of this work, while in many areas we will also be working in partnership with our colleagues in other central agencies and across the public sector.

As Chief Executive, I am excited by the opportunities of the Treasury’s new approach.

My goal is to ensure the Treasury is a highly engaged, relevant and respected economic and financial policy advisor for the Government, making a real difference to the lives of New Zealanders. By being clear on the results we want to achieve, and focusing on the needs of the Ministers and the quality of our policy advice and operations, we will be a step closer to this goal.

During 2007/08, and over the next three to five years, this means seeing measurable headway made on the priorities outlined in this Statement of Intent.

I am confident that the Treasury, with the continued commitment and professionalism of its staff, will achieve this.

John Whitehead Secretary to the Treasury

Introduction

The Statement of Intent 2007-2010 illustrates how the Treasury will contribute, through our outcomes, to the Government’s goal of a strongly growing, sustainable economy.

Over the next three years, we plan to have a greater impact on the issues that are important to New Zealand’s overall economic performance – working as a highly engaged, relevant and respected economic and financial advisor and central agency, better meeting the needs of the Minister, now and into the future.

The Stepping Up change programme

Throughout this Statement of Intent you will see reference to the Stepping Up change programme. This programme began in the 2006/07 year and is being implemented at the time of printing. It has involved a fundamental look at the Treasury’s strategic direction – including how we organise ourselves, how we operate, and the systems and processes we need to deliver on that strategic direction.

It has been driven by a desire to move from being an organisation focused at varying levels of intensity on a full range of economic and fiscal issues to one which focuses its resources more intensely – and on issues of the highest priority to the living standards of New Zealanders.

We have also been motivated by the need to position ourselves to respond to significant upcoming challenges. These challenges are both external, in terms of the economic environment and the policy agenda, and internal, in terms of the challenges of remaining a highly attractive place to work for current and future staff.

Some of these specific challenges are:

• stronger demands for the public sector to improve performance and continuously deliver higher-quality services
• related to this, a desire for stronger Treasury leader-ship, both separately and as one of three central public sector agencies
• a tightening fiscal position for the Government, which requires starker choices and an increased premium on high-quality advice on those choices
• an increasingly complex public sector environment in which the Treasury works. This is partly related to the evolution of MMP, but extends to ongoing changes in the way the public service operates
• a competitive labour market, which means that the people employed by the Treasury to deliver high-quality advice enjoy many career options. While they are motivated by being able to make a difference to the future of New Zealand, they also want to be part of a high-performing organisation.

A new approach

Through Stepping Up, we are seeking a change in emphasis in the Treasury’s roles over the medium term. We have clarified these roles, as follows:

• Our economic role – focusing on issues that have regulatory or policy implications that may have a significant and therefore pervasive impact on the performance of the economy as a whole, rather than providing second opinion advice on all issues with economic implications.
• Our financial role – focusing on issues with a significant fiscal focus – expensive policies and long-term trends and financial management and standards (including financial probity issues), rather than all issues with fiscal implications.
• Our central agency role – placing more emphasis on helping the Government develop its overall strategy and manage significant issues that emerge.

Looking forward, the Treasury will focus more on the performance elements of our economic and financial roles, and more overall on the central agency role. In particular, the Treasury will be working more in conjunction with other central agencies on priority economic or performance issues for Ministers.

We have also refocused our strategic agenda on the three outcomes where we can have most influence (with others) to help the Government achieve its goals. These outcomes are:

• Improving New Zealand’s economic performance.
• Improving State sector performance.
• A stable and sustainable macroeconomic environment.

The results we are looking to achieve within each of the outcomes over both the medium term and in 2007/08 are outlined in the outcome contribution section that follows.

The Treasury’s organisational structure has also changed to help facilitate our change in focus. Policy work, for example, has been reorganised around the three outcomes, resulting in three policy groups, and in some areas functions and teams have been combined and reorganised to provide closer strategic links and improve the quality of advice. We have also created a stronger organisational “centre”, run from the Organisational Performance Group, with one team specifically responsible for measuring the Treasury’s performance and identifying future priorities for the organisation.

A platform for the future

To deliver on our outcomes in the three-to-five-year horizon, the Treasury will need to be flexible and able to respond quickly to changing priorities and external factors.

Our new structure, clarity of roles and focus on results will provide the platform for us to do so. The Statement of Intent 2007-2010 sets out how we intend to get there.