Opportunities and Challenges

External factors

A fundamental driver of the Treasury's operating environment is the need to ensure that it has the immediate capability and capacity to respond to the needs and priorities of the government of the day while maintaining its medium- and long-term capability to respond to the needs and priorities of the government of the future. Over the next two years the Government is demanding a shift in performance from the public service in delivering government priorities and results. The Treasury has a leadership role in supporting the Government to achieve this.

As the Government's lead economic advisor, the Treasury is impacted by the state of both the local and global economies. The world is in the midst of what will be a prolonged state of instability and risk. Existing global rules, standards and norms are under severe stress, and countries everywhere are trying to understand the new world and adapt to it. Economics is at the heart of this debate. People are re-examining economic assumptions that used to be taken for granted, or asking what the objective of economic policy should be, or even whether the economic growth that has occurred in the past 250 years was an historical anomaly that is now over. Factors such as these are putting new and significant pressure on policy advisors and on decision-makers.

As part of the Corporate Centre, the Treasury is impacted by the performance of the State sector at both a system and sector level. The performance of the system and government agencies has a direct impact on where the Treasury focuses its resources and what actions it takes. The Treasury needs to understand how the State sector is performing on the different dimensions of living standards and how New Zealanders value these different dimensions. It needs to understand any emerging social pressures and preferences and how they might impact on the performance of and expectations on the State sector. For example, technology is changing both how we work and how the public demands the State sector should work. However, it is not sufficient for the Treasury to simply understand how the State sector is performing. If the State sector or particular agencies within it are underperforming or not on track to deliver results then the Treasury needs to take action to address this.

Finally, with all the foresight in the world there will be external factors that cannot be foreseen but could have a significant impact on the Treasury as an organisation. The Treasury needs to ensure it has adequate flexibility and agility to be able to respond to these unknowns as and when they arise. How we manage in a changeable operating environment is outlined further in our Enabling and Supporting a Higher Performing Treasury and Managing Risk sections.

Strategic opportunities

Key strategic opportunities include:

• The Government is committed to transforming the State sector to deliver better public services for New Zealanders within tighter fiscal constraints. The Corporate Centre will lead and support this transformation.
• The Treasury is becoming more effective in its financial management role – as part of an influential Corporate Centre – so that it can more systematically and rigorously measure and advise on lifting performance across the State sector.
• The Treasury has begun to use the Living Standards Framework as a practical tool to assess the choices arising from its policy advice. The Treasury now needs to embed this tool throughout the organisation.
• The Treasury has defined a shared set of values that underpin the way it works. It strives to be bold and innovative, passionate and ambitious, collaborative and challenging, and adaptable and focused. The Treasury needs to ensure that its people’s behaviour is consistently aligned with these values.

In addition to these opportunities the Treasury also faces the challenge of reducing baselines and increasing costs. Its challenge is to improve efficiency and productivity so that it can live within baselines while improving its level of service.

How we ensure we are an organisation that is responding to these opportunities and challenges is outlined in the Enabling and Supporting a Higher Performing Treasury section of this document.