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Policy coherence and a long-term view

Aligning direction and delivery with government priorities

A well-performing system will ensure that the direction of agencies continuously adjusts to align with government priorities. Strategies across government are articulated in a number of ways, but they are often not well aligned or prioritised. As a result, it can be difficult for Ministers to shift resources between different activities to ensure alignment with government objectives. Policies and resources need to be better aligned with government priorities.

Some ways this could be addressed would include central agencies:

  • supporting Cabinet and senior Ministers to undertake strategic audits and identify policies to be progressed in priority areas
  • playing a greater role in providing for better coordination, strategy development, and implementation of government priorities across sectors and agencies, and
  • improving the quality of papers considered by Cabinet.

Strengthening sector and cross-government leadership

Multiple agencies need to work together to achieve government’s high-level objectives. We suggest a stronger sectoral focus to make it easier for Ministers and agencies to identify relative priorities within the sector, compare relative effectiveness of different interventions, coordinate policy and service delivery, and shift resources within the sector to best achieve results.

New Zealand has a relatively fragmented system with many departments and Crown entities. Most information and formal mechanisms, for example parliamentary accountability, focus at an agency, rather than a sector or whole-of-government, level.

Currently, ministerial sector leadership occurs predominantly through the budget allocation process and does not extend to policy and resource allocation decisions outside the budgetary process. There are a number of key success factors for a sectoral approach, such as common objectives, role clarity and good relationships. The Prime Minister and Minister of Finance are important in setting and changing expectations.

Ministers may wish to consider using:

  • ministerial groups to assess relative priorities across all spending (not just new spending in the budget) in a sector or policy area. This could involve extending the terms of reference of ministerial groups and using these groups outside the Budget process, and
  • the new flexibility enabled by the amended Public Finance Act to group appropriations into fewer and larger Votes with more than one Minister. There is scope to consolidate a number of Votes.

Recommendations

  • Align direction and delivery with Government goals
  • Strengthen sector leadership through expanded use of ministerial groups and consolidation of Votes

Improve the availability and use of performance information

In many respects the New Zealand public management system is data rich but information poor. Information is available in accountability documents such as the Estimates, statements of intent, output plans and annual reports. Agencies also have information for internal management purposes. Often this information is hard to access, compare or aggregate across a sector and as a result it is hard to draw conclusions on performance.

The case of health

Since 2001/02 government spending on health has increased by an average of 7.7% a year.

There will continue to be pressures to increase health spending, for example from new technologies, an ageing population and rising expectations, as well as the cost of labour in a global marketplace. Moderating health spending will be a tricky task. It may require getting district health boards (DHBs) and the Ministry of Health to make more difficult prioritisation decisions. A health sustainability review, which will report by December 2005, has been set up to consider how to achieve this. Success will require focused leadership from the centre, backed up with detailed design and analysis work.

Getting better value from money spent on health will be a core element of any solution. Information on what health services do (quantity and quality) is limited. One of the few output measures is the volume of hospital patient discharges. In the three years up to 2003/04 these rose by about 5%, compared with a 21% growth in hospital spending. It is difficult to tell what improvements in health outcomes or services have been achieved for the additional expenditure on health, and whether New Zealanders are getting value for money. However, comparisons between DHBs on indicators of effectiveness and efficiency show significant unexplained variation and suggest that there is considerable opportunity for improvement.

The limited information on health service performance makes it very difficult for members of the public to form a view on how well their DHB is performing. Having better information publicly available would help clarify what the public can reasonably expect and what the public is getting for the expenditure.

Improvements have been made with a greater focus on outcomes and results. However, there remains scope to significantly improve such information, using a range of tools such as the non-financial information requirements in the amended Public Finance Act.

Information can be packaged in a number of ways to provide Ministers with better information on performance:

  • Looking at value for money and productivity trends over time. Information and analysis, which involves measuring the productivity of a department, sector, or part thereof, can provide insights regarding base spending and services and can provide an information base to engage with departments and sectors.
  • Using benchmarking and international comparisons to indicate whether major policy settings are working or need reviewing. Benchmarking of service provision across delivery units and regions or across alternative services and interventions can indicate where greater efficiency or effectiveness can be achieved and transparent information can inform the public.
  • In-depth organisational, policy, sector or spending reviews carried out on a targeted basis. These need to be driven by ministerial interest and used to inform policy and resource allocation decisions.

Recommendation

  • Demand better performance information and make greater use of this information to inform policy and resource allocation decisions
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