Treasury releases second annual benchmarking report

Today, the Treasury released the second annual administrative & support (A&S) services benchmarking report, which provides findings of the cost, efficiency, and effectiveness of A&S services across the State sector.

Findings are based on data from two reporting periods (Financial Years 2009/10 and 2010/11) and results cover six A&S service functions across 31 agencies: Human Resources (HR); Finance; Information and Communications Technology (ICT); Procurement; Property Management; and Corporate and Executive Services. 

This year's report shows the 31 agencies spent $1.722 billion on A&S services in 2010/11 - a reduction of $20.4 million in real terms, or 1.2%, from 2009/10.

The report responds to Government demands for better, smarter public services for less and stronger performance management across the State sector.  One part of delivering better public services is ensuring money is not unnecessarily spent on back office administration, when redirecting it to frontline services would yield better results. 

While some agencies reported significant savings, the report shows significant opportunities to reduce spending and improve the efficiency and effectiveness of services.  It finds that lifting agency performance to moderate efficiency targets would realise gross savings of over $250 million annually.

Andrew Kibblewhite, Treasury's Deputy Chief Executive, said that "fragmentation is a systemic obstacle to efficiency that can be overcome with cross-agency collaboration.  Key opportunities to realise efficiency gains include leveraging knowledge and scale across agencies; streamlining, automating, and standardising processes; and having more common systems." 

There are a number of agency-specific and all-of-government initiatives that are acting on opportunities for collaboration, and the Treasury expects to see improvements in future reports as a result of this activity.  Mr. Kibblewhite said "we need to recognise that improvement activities take investment and time to yield results.  We are using this report to track results of programmes across government to see if these investments are making a difference and to learn from what works and what doesn't."

Chief executives face increasing public expectation and fiscal constraint, and delivering 'better for less' requires high quality advice from A&S services.  "The pursuit of efficiencies and savings cannot undermine A&S service quality.  Having a low cost, low performing Finance, Procurement, ICT or Human Resources function is a false economy.  This year's report shows that the maturity of A&S service functions has improved across most functions, and that some functions are getting more strategic, for example, more agencies reported having long-term workforce plans." Mr Kibblewhite said.

The Treasury will continue to benchmark A&S services annually to have valuable trend information and track improvement.  Mr. Kibblewhite said "by tracking and releasing this information, we allow New Zealanders to see if agencies are effectively responding to Ministers' demands for efficient back office services."