Part 1: Background

1.001
The Department of Work and Income (“the Department”) was established on 1 October 1998 to provide a better and more cost effective co-ordination of the delivery of services to people who are unemployed and/or in need of income support.

1.002
The Department combines the services previously offered by Income Support, New Zealand Employment Service, Community Employment Group and local employment co-ordinators. The integration of these organisations has required the management of the Department to establish a single departmental culture and a common skill base from the significantly different operations and cultures of the antecedent organisations.

1.003
The Department is the largest government department in New Zealand. It employs over 5,000 staff who are located in over 160 sites throughout New Zealand. In the 1998/99 financial year¹, the Department’s total expenditure was $414 million (GST-exclusive) and it administered $8,544 million (GST-inclusive) of benefits paid on behalf of the Crown.

Main Players

1.004
The following is a list of the persons and organisations that were involved in these events in some material way.

1.005
The diagram on page 11 sets out the formal reporting relationships between the staff of the Department named in the list above.

1.006
The reporting relationships in the diagram reflect the regime that applied in normal circumstances. However, staff of the Department gave different accounts about the reporting arrangements for the Course Organiser in relation to this course. The Chief Executive gave evidence that the Course Organiser reported to the General Manager, Human Resources. On the other hand, the General Manager, Human Resources, the Course Organiser and others gave evidence that, in relation to the arrangements for this course, the Course Organiser was understood to be working directly to the Chief Executive.

Department of Work and Income – Reporting Relationships

Change Management

1.007
The integration of a number of very different organisations into a single coordinated government department can only take place smoothly if the change processes are well managed. This requires good communication throughout all levels of the Department and a significant investment in training of staff.

1.008
Based on observations made in the course of our statutory audit work, we consider that the Department has generally managed the change process well. From evidence we obtained during this inquiry, we believe that the Chief Executive and her senior management team have acted to ensure that staff at all levels have been kept fully informed both of the reasons for changes and the Department’s expectations for the future.

1.009
The Department’s training budget for the 1998/99 year was $4,087,434. It was structured to provide (among other things) technical skills for staff, and to enable the development of a suitable culture for the Department. Training for technical skills was the responsibility of the National Commissioner. Developmental training was the responsibility of the General Manager, Human Resources. The breakdown of this budget was:

Workbrokers

1.010
A consequence of the Department’s new role and methods of working was a need to develop new staff positions. One of these new positions was that of workbroker.

1.011
The primary objective of workbroking is to place unemployed people into paid employment or, if not paid employment, then into community work or work experience that will assist them towards a placement into paid employment. Workbrokers undertake a pivotal role in the system. Their role is to identify opportunities for unemployed people and to match them to employers who are seeking staff.

Reach 2004

1.012
Because workbroking was a new role (and appointees had differing degrees of relevant experience), the Department identified the need to provide the appointees with training that would enable them to operate successfully. The programme developed for this purpose was known as Reach 2004.

1.013
Reach 2004 was designed to improve the workbrokers’ leadership skills and to provide the Department’s management with the opportunity to communicate to the workbrokers management’s expectations of how the role would contribute to the overall goals of the Department.

1.014
The Department has progressively put all its workbrokers through the Reach 2004 programme. Core training courses (known jocularly within the Department as “boot camps”) have been provided to groups of approximately 50 workbrokers and last for two days. Six such courses have been run at Okataina Lodge, near Rotorua and the programme has now been completed. Evaluations by the Department of those courses indicate that they have been successful in providing workbrokers with information and skills necessary to carry out their new roles.

1.015
When workbrokers who had completed the two earliest courses returned to their service centres, they attempted to put into practice the lessons learned. However, some reported to senior management that they were encountering difficulties that appeared to arise from a lack of understanding by their service centre managers about the nature of their role.

1.016
Senior management established that service centre managers and workbrokers often did not have a common understanding about how the workbroker role should operate. Since the workbroker role was seen as pivotal to the success of the new initiatives, senior management regarded this as a potentially serious problem that needed to be corrected as soon as possible. They decided that the best way to overcome the problem was to have all service centre managers attend a Reach 2004 course at the earliest opportunity, to make sure that they understood the Department’s expectations of the workbrokers’ role.

1.017
Accordingly, a course for approximately 140 service centre managers was arranged and held at the Wairakei Resort Hotel on 3 and 4 June 1999.³ Travel arrangements were made jointly by staff of the Department and a private sector provider, DestinatioNZ (see paragraph 1.004 and footnote 2 at page 9).

The course programme is included as an Appendix to this report at pages 30- 31.

1 Because the Department did not commence operations until 1 October 1998, its 1998/99 expenditure covers a period of 9 months rather than 12 months.

2 A feature of the commercial arrangement between Origin Pacific and DestinatioNZ was that, if Origin Pacific decided it could not supply transport services to a particular client, DestinatioNZ was at liberty to broker other transport services to that client. That arrangement is relevant in this context. Mr James was first approached by the Course Organiser as an agent of Origin Pacific. However, Origin Pacific decided not to supply the transport services required by the Department. Mr James, acting then on behalf of DestinatioNZ, sourced the services from other providers.

3 In the event, not all could attend. There were in fact 135 attendees.