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Reorganisation of Appropriations for Policy Advice: Guide for Departments

3 Reorganisation of Appropriations for Policy Advice (continued)

3.3  Designing a New Structure for Your Appropriations for Policy Advice

Departments have three options for establishing the new output expense appropriations or output classes within an MCOA for policy advice. Each department should choose the option that most adequately reflects the size, structure and function of its policy advice outputs.

3.3.1  Option 1: Single Departmental Output Expense Appropriation for Policy Advice

Departments can allocate the cost of producing policy advice, as per the common definition, into one single departmental output expense appropriation. The scope statement of this appropriation should follow the standard scope statement for policy advice (see section 3.1).

Figure 1: Single departmental output expense appropriation for policy advice
Figure 1: Single departmental output expense appropriation for policy advice   .

This option is likely to be preferred by agencies with medium to high policy advice expenditure that focuses on one or two specific areas.

3.3.2  Option 2: MCOA for Policy Advice

Departments can allocate the cost of producing policy advice, within one Vote, into a MCOA that separates out the costs for different policy areas, eg, early childhood and schools, and/or types of policy activities, eg, policy advice and research. The scope statement of each output class of the MCOA should follow the standard scope statement for policy advice (see section 3.1) relating to the specific policy and/or type of policy activity.

Figure 2: Multi-class output appropriation for policy advice
Figure 2: Multi-class output appropriation for policy advice   .

This option is likely to be preferred by agencies with medium to high policy advice expenditure that focuses on a range of policy areas that the department would like to identify separately. One benefit of the MCOA approach is that it provides flexibility for departments regarding the funding across the different output classes.

3.3.3  Option 3: MCOA for policy advice and related outputs

Departments can combine their policy outputs with related outputs, such as ministerial servicing and Crown entity monitoring, in an MCOA for policy advice and related outputs. All outputs meeting the common definition of policy advice should be covered under one output class of the MCOA. The scope statement of this output class should follow the standard scope statement for policy advice (see section 3.1).

Figure 3: Combined multi-class output appropriation for policy advice and related outputs
Figure 3: Combined multi-class output appropriation for policy advice and related outputs   .

This option is likely to be preferred by agencies with low policy advice expenditure where policy advice outputs are generally produced by teams who have a wide range of other responsibilities. One benefit of this option is that it provides flexibility for departments regarding the funding across the different output classes.

Treasury has also developed suggested standard scope statements for output classes that are related to policy advice (eg, Crown entity monitoring and Ministerial servicing) which can be used by departments. These suggested standard scope statements are provided in Annex 4.

As a variation of option 3, departments can use different output classes for different policy areas (as in option 2) instead of using only one output class for policy advice. However, the scope statement of each policy output class must follow the standard scope statement (see section 3.1) relating to [the specific policy area].

3.4  Documenting the Rationale for Changes

In establishing the new policy advice appropriations or output classes and deciding on the appropriate costs to allocate to them, departments may need to apportion some of their activities, such as research and evaluation that feed into both policy advice and non-policy outputs. It is important that departments have a strong rationale as the basis for these decisions, and that it is clearly documented and understood.

3.5  Implementation of the Reorganisation

The reorganisation of appropriations for policy advice is to be implemented by way of Coredata changes and fiscally neutral adjustments (FNAs) as part of the baseline update in early 2012. The implementation will take place in two steps:

  1. Appropriation changes must be approved by joint Ministers (ie, MoF and responsible Minister(s)), so that necessary Coredata changes can be lodged with CFISnet by departments, prior to the baseline update in early 2012. Coredata changes are used to create, change, or disestablish appropriations or output classes within an MCOA and scope statements.
  2. Relevant fiscally neutral adjustments (FNAs) must be submitted as part of the baseline update in early 2012. FNAs are used to shift costs between different appropriations or output classes.

Detailed guidance as to how these changes are to be processed through CFISnet are provided in Annex 5.

3.6  Joint Ministers’ Approval to Appropriation Changes

The appropriation changes for the reorganisation of appropriations for policy advice require joint Ministers' approval (ie, approval by the Minister of Finance and the Minister(s) responsible for the appropriations). For that purpose, Ministers responsible for the appropriations need to write a letter to the Minister of Finance outlining the appropriation changes prior to the baseline update in early 2012.

A template letter to the Minister of Finance is provided in Annex 3. Departments should use this template and send a copy of the letter, signed by their Minister, to the Treasury Vote Analyst by 20 December 2011.

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