Part 1: Introduction

Effectiveness of governance arrangements in the arts, culture, and heritage sector.

In this Part, we describe:

  • the arts, culture, and heritage sector;
  • the purpose of our audit;
  • how we carried out our audit; and
  • the structure of this report.

The arts, culture, and heritage sector

The arts, culture, and heritage sector plays an important role in New Zealand's cultural, creative, social, and economic life. Entities in the sector create, present, conserve, and safeguard New Zealand's arts, culture, and heritage, and preserve many of New Zealand's natural treasures and cultural assets.

The sector has a large number of entities, which range in size and are based throughout the country. The Ministry for Culture and Heritage (the Ministry) estimates that the sector contains "tens of thousands" of organisations.

Collectively, the sector has a complex, diverse, and influential range of stakeholders, including artists, iwi, pacific community organisations, Ministers, funders, monitoring agencies, the public, philanthropists, and international audiences.

New Zealanders place great value on culture and engaging in cultural activities. The Ministry's report Cultural Indicators for New Zealand 20091 showed that almost three-quarters of New Zealanders considered culture and cultural activities to be very, extremely, or critically important to national identity. This ranked above sport and the economy.

The sector also has an important role in supporting and providing opportunities for the development of Māori art and cultural expression. This includes ensuring that all New Zealanders have access to, and benefit from, Māori culture.

The Government is providing about $500 million to the sector in 2014/15. This includes direct funding of Crown entities and non-government organisations, as well as spending by government departments such as the Ministry, Te Puni Kōkiri (the Ministry of Māori Development), and the Ministry for Business, Innovation and Employment. The Ministry for Culture and Heritage estimates that local government provides about $500 million annually to the sector, and that New Zealand Lottery Grants Board and non-casino gaming machines provide a further $100 million or more each year.

Cultural goods and services provide value to individuals, society, and the economy. They increase individual capacities, bind society, provide jobs, and foster innovation. A recent report about the economic effects of the music, book publishing, and film and television industries found that these industries contribute $1.6 billion to New Zealand's gross domestic product each year.2

The sector's challenges

Funding from central and local government has mostly been static for some years. The Ministry's 2014 briefing to the incoming Minister for Arts, Culture and Heritage states that:

While total revenue for the agencies in the Vote has increased by eight percent over the past five years to $328 million in 2013/14, real income (adjusted for inflation) has declined by 11 percent.
… agencies have struggled to maintain revenue over the past five years, despite their innovation in developing new lines of business and increasing sponsorship.3

Alongside these constraints, scrutiny of the sector and expectations of its accountability have increased. Government funding, corporate sponsorship, grants, and donations now often require greater levels of transparency and accountability. This requires more evidence and documentation of decisions, expenditure, and outcomes achieved, and higher levels of accountability for those outcomes.

Changes to the nature of demand also pose a challenge to the sector. The move to digital channels, social media, and the exposure to global arts and cultural products through those channels mean that the sector must meet different and higher expectations. This requires different capabilities, investment in new infrastructure, and changes to the traditional operating models of many agencies.

Entities in the sector are guardians of many of New Zealand's national treasures and cultural assets. Many cultural assets are irreplaceable and susceptible to specific risks, such as earthquakes, and need digital or physical preservation. Other cultural assets are intangible, such as traditional knowledge, language, performing arts, and oral history. Because these risks are so varied and the assets cannot be replaced if damaged or lost, guarding and conserving these assets presents a distinct challenge for the sector.

This means that risk management policies and practices are critical. Boards need to assure themselves that they have identified organisational risks, particularly for the assets they conserve and display, and that they have appropriate mitigation plans.

These factors mean that entities in the sector are increasingly looking to work together to understand issues, prepare strategies, share resources, and deliver shared outcomes. There is an increasing expectation from stakeholders, particularly funders, that entities will work together effectively to achieve outcomes either for particular communities (such as Auckland) or particular audiences (such as children and young people).

The purpose of our audit

The theme of our work programme in 2014/15 is Governance and accountability. We chose this theme because good governance is important to the performance and accountability of public entities.

We are carrying out several performance audits on how governance and accountability mechanisms in the public sector support effective spending and investment.

This audit focused on the governance arrangements of six entities in the arts, culture, and heritage sector. Good governance in this sector plays an important role in making sure that freedom of artistic expression is maintained and that the preservation of heritage (through the management of museum collections, archives and the funding of intangible heritage such as language, dance, and performance) is not unduly influenced by personal or political interests. We did not assess how effectively the monitoring departments, such as the Ministry, carry out their roles and responsibilities.

How we carried out our audit

We looked at the governance arrangements of six entities: Auckland Art Gallery, Creative New Zealand, Govett-Brewster Art Gallery, Te Māngai Pāho, Museum of New Zealand Te Papa Tongarewa (Te Papa), and Wellington Museums Trust.

We carried out our audit in four stages. The first stage involved reviewing a range of literature, including information about good practice in governance in the arts, culture, and heritage sector. We also looked at frameworks for assessing the maturity of governance arrangements to identify what good governance looks like.

We used this information to develop criteria for assessing five aspects of governance. Those five aspects are:

  • strategic direction;
  • leadership and culture;
  • monitoring and review;
  • risk management; and
  • internal controls.

The second stage involved collecting information about each entity's governance arrangements. We reviewed documents such as board charters, reports, and minutes. We then asked entities to complete a self-assessment survey. We used the survey responses and our document review to identify aspects of each entity's governance arrangements that we wished to explore further.

To explore these aspects further, we interviewed people involved in the entities' governance processes, including each entity's chairperson, longest-serving board member, shortest-serving board member, chief executive officer, member(s) of the senior management team (for example, the chief financial officer), and chairpersons of any subcommittees. In total, we carried out 35 interviews.

The third stage involved assessing each entity's governance arrangements against criteria for the five aspects governance (the Appendix summarises the criteria).

The fourth stage involved gathering further information about governance arrangements in New Zealand and overseas. We also discussed trends in governance arrangements with experienced governance practitioners to get their insights about our findings.

Structure of this report

In Part 2, we describe and discuss the governance arrangements of the six entities we looked at.

In Parts 4 to 7, we set out our observations about how the entities were performing against the five aspects of governance.

1: Available at

2: PricewaterhouseCoopers, Employment and national GDP impacts of music, book publishing and film and television in New Zealand. See

3: Ministry for Culture and Heritage (2014), Briefing for the Incoming Minister for Arts, Culture and Heritage: October 2014, page 34, available at

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