10 May 2011

The State Sector Act prescribes that Public Service chief executives must ensure the management of their department is “efficient,  effective and economical…”- a requirement to achieve outputs (efficient) and intended outcomes (effective) from proper use of inputs (economical). Current Ministers expressed concern before coming into government which they have periodically repeated , that agencies are not delivering the expected returns on investment. They expect all agencies, whether departments, Crown entities or State Owned Enterprises, to “lift their game” with a focus on delivering more for less.

Ministers feel there can be better service provided with fewer resources, a commitment to results not advocacy, and a fundamental shift to providing value for money. Different approaches  are being developed across government to meet these expectations. The Minister of Finance has forecast that the Budget next week will be structured around achieving value in a time of economic restraint – essential with Christchurch earthquake effects dramatically aggravating difficulties the global financial crisis was already causing for New Zealand.

Last year the Government set up a Review of Expenditure on Policy Advice. The Minister of Finance and the Minister of State Services were looking to the committee chaired by Dr Graham Scott to identify where improvements could be made in what was suspected to be a bloated and inefficient policy advice sector.  Dr Scott, with ACT party credentials could be seen as an advocate for a reduced public sector, where Ministers exercise their discretion to purchase advice from preferred sources without reliance on officials schooled in the “free and frank” tradition. It seemed likely that he would recommend substantial change.

The review committee report and the Government’s response were published concurrently in late April..  The report found a range of concerns, but indicated that these could be “improved easily”. The Government response acknowledged the review committee’s observations that the policy sector struggled with exception demands,  inadequate resources and unhelpful leadership.  The response directs changes to be set out in a plan to be published by 30 June  that will be led by the Treasury, Department of Prime Minister and Cabinet, and State Services Commission.