Lessons for the future

One of the purposes of our performance audit was to identify and report the important lessons that have been learned about establishing a recovery agency after a natural disaster. New Zealand is prone to natural disasters such as earthquakes, volcanic eruptions, flooding, and severe weather events. It is possible that another recovery agency will be needed at some time in the future.

Although the Canterbury Earthquake Recovery Authority (CERA) achieved much, there were areas where improvements could have been made. Below we set out the main lessons we have identified from the establishment and management of CERA. We have two specific lessons for the Department of the Prime Minister and Cabinet and the State Services Commission to consider when planning for the response to, and recovery from, natural disasters.

The length of time taken for CERA to establish appropriate systems, functions, and controls led to an increased risk of misuse of public funds and created a difficult environment for staff. In our view:

• The State Services Commission needs to consider the most appropriate organisational type of any future recovery agency, the benefits and costs of each organisational type, the situations in which they should be used, and how long a recovery agency should remain in place.
• The Ministry of Civil Defence and Emergency Management and the State Services Commission need to prepare a response plan that will enable a future recovery agency to be established quickly and effectively. They need to update the plan regularly and include criteria for when an agency would be established. The response plan needs to include service-level agreements to prepare for the quick establishment of core corporate services.

Public entities need to give consideration to the following lessons when responding to or recovering from a natural disaster. In our view, these lessons need to be considered when planning for the recovery from the November 2016 earthquakes in Kaikōura and the surrounding regions. For convenience, we have grouped the lessons into two areas:

• governance, organisational structure, and functions; and
• managing operations and reporting performance.

Governance, organisational structure, and functions

The governance arrangements for CERA did not change to adapt to its changing functions and the different phases of the recovery. At times, CERA became a catch-all agency, which meant its role became less clear as the recovery progressed into the reconstruction phase. Any recovery agency needs to adapt to changing circumstances. In our view:

• There needs to be clarity about what a recovery agency should achieve by the end of its lifetime. This should be expressed in a performance framework with realistic targets, and be regularly reported on.
• Skills and capabilities need to be regularly assessed during the different phases of the recovery so that the recovery agency has the right skills for the tasks at hand. It is important that a recovery agency has strong programme management and commercial skills, particularly in the reconstruction and regeneration phases of recovery.
• Governance arrangements need to be reviewed for each phase of the recovery and when activities change. This will ensure that the governance arrangements are fit for purpose to deliver the recovery agency's outputs and outcomes in the most effective and efficient way. Particular attention needs be given to the clarity of role definition between the responsibilities of governance and management at both an organisational and project level.
• To ensure that these decisions are made at the right level, there needs to be an agreed process for making timely decisions about the recovery. For example, strategic decision-making should be separate from operational decision-making.
• During a recovery, central agencies need to regularly assess whether the recovery agency is the right vehicle for delivering particular outputs and outcomes. This would help to keep the recovery agency focused on its role and not be distracted by additional responsibilities.
• Agencies need good communication and engagement with the community. Communication needs to acknowledge delays as well as celebrate progress. This helps manage people's expectations and build trust and confidence in the recovery agency. Mechanisms need to be put in place that give the communities effective opportunities to participate in the recovery.
• Tensions need to be prepared for and managed. Establishing a clear and detailed funding agreement, outlining the roles and responsibilities of all parties, and ensuring open discussion at a governance level, will help to ease inter-agency and intra-governmental tensions to ensure that progress is effective and efficient.

Managing operations and reporting performance

The recovery environment is uncertain, so agencies need to be flexible and able to link their activities to the desired outcome. There is also pressure to get things done, which means there is a risk the agency will not take the necessary time to establish effective systems, staffing, and processes and adapt them to the different phases of recovery. Good performance reporting will help the agency adapt to the different phases of the recovery and will help build and maintain the trust of the community. In our view:

• To manage uncertainty in a disaster recovery, a recovery agency needs to have flexible arrangements for funding and staffing. For example, it might need to use multi-year and category appropriations, and a mixture of fixed-term and short-term staff.
• A recovery agency needs effective financial and management controls from the start. The early stage of the recovery is when there is the greatest risk and opportunity for fraudulent activities and inappropriate spending of public funds.
• A recovery agency needs to think ahead about the future phases of the recovery and plan for them at a strategic level. This will allow the agency to be more proactive in anticipating future issues and identifying its needs for the next phase.
• An effective performance framework needs to link recovery activities to the desired outcomes. Effective performance reporting gives recovery agencies the opportunity to adjust their processes to achieve the desired outcomes. The World Bank has identified that a performance framework (also called a results framework) needs to harmonise and integrate all the strategic pillars and areas of a given reconstruction programme. The framework would establish a streamlined results chain by focusing on key results, and measuring intermediate outcomes (contributions made to an outcome by a specific set of outputs) rather than outputs. Intermediate outcomes need to be carefully designed to capture and to track intended changes as they begin to unfold.