Setting our Strategic Direction

Our changeable operating environment

The external environment is significantly more stable than this time last year. The global economy continues to face a higher level of uncertainty than was the case for several years leading up to the financial crisis. There is significant international debate about economic and fiscal management that directly affect the role of the Treasury and many private and public institutions. The Treasury is actively integrating the microeconomic and macroeconomic foundations of our thinking and advice. We aim to provide solutions for the Government to address New Zealand's macroeconomic vulnerabilities and improve the resilience of the economy.

The goals the Government has set for the Treasury are the most important factor in determining our priorities. As the immediate effects of the financial crisis recede, the Government has asked the Treasury to reinforce the economic recovery, improve long-term economic performance and lift the living standards of New Zealanders, through a focus on six drivers of economic growth. We will also support effective decision-making and management of significant or systemic cross-government issues with our Central Agency partners (DPMC and SSC).

The Treasury has undertaken significant internal restructuring to improve our ability to address these challenges, and we will be focusing on organisational health over the next few years to continue lifting our performance. These changes are discussed in more depth on pages 35 to 37.

The Treasury will continue adopting strategies that enable it to provide services to Ministers within the resources available. The anticipated reduction in our baseline over the next three years (primarily because fixed-term projects, such as the Retail Deposit Guarantee Scheme, wind down) and a flat baseline thereafter, will require tight financial management and a reduction in staff over the medium term. We will manage this change through natural attrition and careful planning to ensure that limited resources are directed to our highest priorities. The performance improvement actions set out on page 37 of this Statement of Intent support these changes.

The Treasury's short-term focus continues to be on prioritising operating expenditure and managing within baselines. Our long-term focus is on examining ways to meet increasing cost pressures within relatively fixed baselines, while minimising the impact on priorities.

Changing the way we work

We are making significant changes to the way we work, the way we are organised and how we exercise leadership to better manage and accommodate the changes in our environment.

Our functions continue to evolve. Since 2008 we have developed and implemented the Guarantee Schemes and a National Infrastructure Unit, and integrated the Crown Company Monitoring Advisory Unit's (CCMAU's) functions within the Treasury.

In 2009/10 we substantially reviewed and restructured the framework we use to understand and drive our business. The new framework integrates the functions and responsibilities of the Treasury into eight high-level results. The new framework integrates the focus of the four Strategic Result Areas (SRAs)[1] that were referred to in our previous Statements of Intent.

We have also reviewed our leadership structure and behaviours and how these could be adapted to maximise our efficacy as an organisation. This review led to the appointment of two Deputy Chief Executives to work with the Secretary to the Treasury to bring a fresh focus to our planning. This Executive Leadership Team is taking a strategic view of what the Treasury aims to achieve over the next five years, while a team at Deputy Secretary level will lead the Treasury's work to deliver on immediate and medium-term priorities. The impact of these changes in our leadership is already being felt within the organisation and we will continue developing the organisation, demonstrating the responsiveness and adaptability that we expect of all State sector agencies.