1 August 2011

The role of State sector agencies is to support executive government.  Their function is to implement law and policy for government.  Perversely in some cases, supporting executive government means ensuring that activities are carried out independently of Ministers or are explicitly supportive of the Legislature rather than Ministers.

Independent Crown entities (there are 17 of them) are an illustration.   Agencies like the Commerce Commission carry out their role as part of executive government. A Minister is responsible for them, seeks an appropriation to fund them and accounts to Parliament for their activities.   But often what they do is an irritant to the Ministers.  They serve the Minister by exercising their decision-making independently of the wishes of Ministers except when statute provides otherwise.  Some ICEs like the Privacy Commission serve their Minister with functions that can include advocating against the preference of  Ministers.

State owned enterprises (there are 16) are required to operate in a commercial manner, but in doing so they must have regard to the Ministers interests as their owner/shareholder. Wherever agencies fit in the scheme of the State sector, their employees must give effect to the Cabinet Manual directive to be fair, impartial, responsible and trustworthy.

Recent developments regarding  Securency International, the Australian Reserve Bank trading subsidiary, illustrate the harm to government that arises when business imperatives take precedence over the obligations to be trustworthy. The chickens are coming home to roost relating to a pattern of corrupt payments made in several markets where Securency sought bank note printing contracts.  Australian Federal Police have charged seven senior managers with multimillion dollar bribes. A major contract to print the Bank of England five pound note has been scrapped, and further enforcement actions may encompass prominent personalities who were directors of the Reserve Bank. Central banks are supposed to epitomise integrity. The way part of the Australian Reserve Bank has been operating will undermine public confidence in government.

Australians will be influenced by media reports. Perceptions will become their reality.  That is why the way agencies and their staff are seen to behave is always important. The obligation on all New Zealand State servants is to do nothing that will harm the reputation of their agency or the State Services. Acting unlawfully to enhance the position of an agency is as unacceptable as acting unlawfully for personal gain.  Integrity is the essence of public service; it is what being business-like means for everyone who works for government.