Part 1: Introduction
1.1
In this Part, we set out:
- the background to this report;
- the role and activities of the Treasury; and
- how we carried out our audit.
Background
1.2
Public service departments need to be able to respond effectively to the Government’s goals for Māori, which are encompassed within its goals to improve social and economic outcomes for all New Zealanders.
1.3
In 1998, we published an article entitled "Delivering Effective Outputs for Māori” as part of our Third Report for 1998.1 In January 2004, we published a report looking at how well placed the State Services Commission was to recognise and address issues for Māori. In this report, we examine the Treasury’s capability to recognise and respond to issues for Māori.
1.4
The Treasury (Kaitohutohu Kaupapa Rawa) has significant influence over Ministers’ and Cabinet’s consideration of public service departments’ activities, and over plans to address issues for Māori where these have fiscal and economic implications.
1.5
We wanted to know if the Treasury’s internal arrangements prepare staff, and provide them with ongoing support, to confidently recognise and respond to issues for Māori.
Role and activities of the Treasury
1.6
The Treasury’s vision is to be a world-class treasury working for higher living standards for New Zealanders. Living standards result from a complex mix of economic, social, and environmental factors – the Treasury, as the Government’s lead advisor on economic and financial policy, focuses mainly on the economic dimension.
1.7
The Treasury prioritises its 3- to 5-year and day-to-day activities according to how activities contribute to achieving the following 5 outcomes:
- improved overall economic performance;
- a stable and sustainable macro-economic environment;
- effective and efficient use of state resources and regulatory powers;
- improved decision-making and performance management systems; and
- efficient management of Crown assets and liabilities.
1.8
The Treasury frequently provides economic and financial advice directly to public service departments that consult it about departmental activities and plans. This advice is known as second-opinion advice because it is the Treasury’s view on the advice given by departments. The Treasury assesses policy proposals before implementation and, after implementation, assesses the work done by departments to see whether proposals have delivered the outputs and/or outcomes intended. The assessments cover effectiveness, efficiency, output specification, output delivery, third-party charging, organisational form, investment, and financial reporting. Second-opinion advice is the core business of the Treasury’s Vote2 sections.
1.9
Public service departments usually incorporate the comments of the Treasury and other departments into reports that go to Ministers and Cabinet for information or decision. Should a department’s report not satisfactorily address the Treasury’s concerns, then the Treasury separately provides its own advice setting out the difference and recommending a course of action.
1.10
The extent of the Treasury’s second-opinion advice on any matter varies considerably depending on a number of factors, including the fiscal and economic effect of the matter under consideration, probity concerns, the capability of the department, the Treasury’s own capability including the time available to respond, Ministerial interest, and the priority of the matter relative to the Treasury’s 5 outcomes.
Organisational structure
1.11
The Treasury is led by the Secretary to the Treasury. Reporting to him are 5 Deputy Secretaries, who make up the Senior Management Group. Each Deputy Secretary manages one of the Treasury’s 5 branches – Asset and Liability Management , Budget and Macroeconomic, Regulatory and Tax Policy, Social Policy, and Corporate. The Executive Director of the Crown Company Monitoring and Advisory Unit also reports to the Secretary of the Treasury.
1.12
The branches are divided into units called sections. Within some of the branches are Vote teams, whose role includes providing second-opinion advice.
Approach to knowledge, risk, and capability management
1.13
To help it deliver its outcomes, the Treasury focuses on maintaining and enhancing the capability of its staff. The Treasury reviewed its strategic direction in 2004, identifying its 3- to 5-year management goals and strategies. It identified 4 themes that it believed summarised what it should focus on to give it the best chance of achieving its goals. The 4 themes were:
Taking the lead; Investing in our organisation; Managing for outcomes, and Engaging effectively – or T-I-M-E.
1.14
Some of the specific actions that emerged from these 4 themes include enhancing the capability of staff, harnessing collective capability, and enhancing the systems, structures, and processes required to become a more flexible and capable organisation.
1.15
T-I-M-E builds on progress made in implementing the Treasury’s 1999-2004 Strategic Plan and continues with an integrated approach to knowledge, risk, and capability management. This integrated approach has been used to address issues for Māori.
1.16
Initial aims of the Treasury’s knowledge management programme were to remedy poor document management practices and manage the risks associated with the high turnover of staff – at the same time, efforts were made to reduce the staff turnover rate.
1.17
Practical measures to change staff attitudes to recording and sharing information included keeping better records of internal meetings, interactions with departments, and lessons learned from projects. “State-of-play” notes document the status and tenor of the Treasury’s advice on issues. The Treasury’s current thinking is also contained in published documents such as Background Papers, Policy Perspectives, and Working Papers.
1.18
The creation of networks for staff who needed or wanted to know about particular issues are encouraged. The networks are designed to improve the overall quality and consistency of advice, increase the number of staff who are familiar with a given issue, and address the risk that staff movements will lead to loss of important knowledge.
How we carried out our audit
1.19
Our 1998 article set out the processes that public service departments should follow to be effective for Māori, in the areas of human resources, working environment, organisational structure, strategic planning, policy advice, and service delivery.
1.20
For this report, we audited the Treasury against all these areas except service delivery, as the Treasury does not deliver operational services. We excluded the Crown Company Monitoring and Advisory Unit from our audit.
1.21
We modified the expectations from the 1998 article to take account of the requirement for public service departments to manage for outcomes.
1.22
We examined the Treasury’s:
- processes to become aware of relevant stakeholder issues;
- processes to prepare policy and plans; and
- relationships with public service departments.
1.23
We interviewed more than 30 of the Treasury’s staff including analysts, deputy secretaries, principal advisors, team leaders, section managers, specialist corporate staff, and staff identifying as Māori, some of whom held business support positions. We interviewed staff with frequent involvement with issues for Māori, as well as little or no involvement with issues for Māori.
1.24
We interviewed Chief Executives, or their representatives, from the Department of Labour, the Ministries of Education, Health, Justice, and Social Development, and Te Puni Kōkiri.
1.25
We reviewed internal documents and published papers that were provided to us or that we obtained directly from the Treasury’s intranet and electronic document management system. We visited the Treasury’s wharenui.
1: Copies of our Third Report for 1998 (parliamentary paper B.29[98c]) can be obtained by contacting [email protected].
2: A Vote is the name given to a group of appropriations, which give permissive authority to incur (on the Crown’s behalf) expenses or liabilities and to repay debt in the day-to-day administration of government. Each Vote is the responsibility of a Minister of the Crown (called the Vote Minister) and is administered by a department.