Appendix 4: Memorandum of Understanding

MEMORANDUM OF UNDERSTANDING BETWEEN THE TREASURY AND THE MINISTRY OF BUSINESS INNOVATION AND EMPLOYMENT

DATED:  3 December 2012

AND:  Ministry of Business Innovation and Employment (MBIE)

CONCERNING: Performance Monitoring of Housing New Zealand Corporation (HNZC) and Tamaki Redevelopment Company (TRC).

Cabinet has decided to transfer the responsibility for monitoring the performance of HNZC and TRC from MBIE to Treasury, effective from 1 December 2012 (CAB Min (12) 33/4 refers).

Central to this arrangement is the adoption of a new approach for monitoring by Treasury that will establish strong, cooperative relationships between the different sections of Treasury and MBIE. Monitoring will be a more active function than just reporting on entity activity. It will also involve advice and support for problem solving.

MBIE and Treasury have entered into this Memorandum of Understanding (MoU) to ensure the effective co-ordination of policy and monitoring for HNZC and TRC. It is understood by both parties that TRC is a special type of entity, having two distinct owners (with the Crown as majority shareholder), as well as a different applicable legislative framework.

This MoU outlines each party's responsibilities for advising the Minister of Housing, as responsible Minister, and the Minister of Finance on the performance of HNZC and TRC. This MoU recognises and takes account of all aspects of the accountability, monitoring (both ownership and services delivery/operational) and the policy framework associated with housing.

This MoU acknowledges the primacy of statutory duties and roles of the Minister of Housing (as the responsible Minister for Housing) and the Minister of Finance under the Crown Entities Act 2004 and the Housing Corporation Act 1974.

Key principles underpinning this MoU and the performance monitoring arrangements are:

• The responsible Minister is accountable for overseeing the Crown's interest in the entity, and is supported in this role by delegated monitoring and policy advisory agencies.

• The Minister of Finance has responsibility for the overall Crown balance sheet, which HNZC has a significant impact on.

• The monitoring relationship is between the responsible Minister, the Minister of Finance, and the Treasury.

• In assisting the responsible Minister in carrying out their role, Treasury is the responsible Minister's agent and is accountable for providing advice on performance and in supporting Ministers in holding boards to account for service delivery and other statutory duties.

• Effective working relationships are established between the respective agencies, theBoard of HNZC, the Board of TRCand with the respective Ministerial offices.

• The Board is accountable for the conduct and performance of the entity.

• Treasury is responsible for all performance monitoring and Board relationships and appointments.

• MBIE is responsible for the housing policy framework.

• Roles of the respective agencies are understood and activities are not duplicated or missed between agencies.

• Reporting requirements are not duplicated for HNZC and compliance costs are minimised, in accordance with ‘Better Public Services' principles.

• Dealings between Treasury and MBIE will be collaborative and conducted in good faith. There should be ‘no surprises' between Treasury and MBIE (and HNZC and TRC where appropriate) regarding the nature of advice being provided. This applies to both lead advice and alternative or supporting advice (but excludes Budget Secret advice per the prevailing Budget Secret convention).

• As a general principle, each agency will willingly share information in a timely manner and ensure Ministers are kept fully informed of material matters. In respect of information sharing, Treasury and MBIE will have due regard to the needs of Ministers, and the interests, roles and responsibilities of the respective agencies, in keeping with the principles of good faith and ‘no surprises'.

The two parties to this MoU acknowledge that policy levers, service delivery and financial performance influence each other and so the agencies have shared and overlapping interests in performance monitoring and policy (albeit that they may lead on different matters).

The two parties to this MoU also acknowledge that, from time to time, it will be necessary to respond to issues that cannot be fully anticipated at the time of drafting. Both parties are committed to demonstrating goodwill and flexibility and recognise that this MoU provides a basis for collaboration rather than a prescriptive and exhaustive set of rules.

The parties will meet six-monthly to discuss the functioning of this agreement (this does not preclude ad hoc meetings if there are issues to resolve), and take into account the views of the State Services Commission (SSC) and HNZC.