Part 2: Four-year plans and the strategic-planning process

Medium-term planning in government departments: Four-year plans.

2.1
Four-year plans are designed to form part of a government department's broader strategic-planning process.

2.2
In this Part, we set out:

What four-year plans are expected to include

2.3
In 2011, four-year budget plans were focused on financial matters – for example, providing the Government with relevant financial information to prepare its annual Budget. In 2012, these were combined with a department's workforce strategy requirements to become the department's four-year plan.

2.4
Four-year plans have evolved since they were first introduced. They are now considered to be a department's primary medium-term planning document. Their main purpose is to provide a medium-term perspective of a department in the context of its longer-term vision, the outcomes it seeks, its strategic intentions, and how it will contribute to and achieve these.4

2.5
A four-year plan is expected to reflect the department's strategic objectives and intentions, who its customers are, the interventions the department plans to make to achieve its strategic objectives and intentions, and how the department will organise and manage its people and other resources to achieve those objectives and intentions.

2.6
The Treasury and the State Services Commission publish guidance each year on the matters that a four-year plan should contain. The plans should include:5

  • financial information – this should tell the department's four-year financial story in the most meaningful way for the department and should also include commentary on departmental and significant non-departmental expenditure;
  • strategic objectives and delivery – this should describe the department's strategic objectives and who its customers are;
  • strategic choices and trade-offs – this should discuss the strategic choices and trade-offs facing the department and when these choices need to be made;
  • workforce strategy – this should include discussion about how the department will position its workforce to meet its strategic objectives and include its workforce capacity, capability, and current and expected workforce costs;
  • asset management and investment intentions – this should discuss the existing state and performance of the department's asset base, the factors that are expected to affect the future use of assets the department manages, and how a department will manage its capital needs during the four-year period; and
  • Crown entities the department monitors – the department should outline the way in which Crown entities contribute to the department's strategic objectives and/or wider government objectives, how the department intends to manage its relationship with Crown entities, and the sustainability of Crown entities.

How four-year plans fit into a department's broader strategic-planning process

2.7
The purpose of four-year plans is to provide a medium-term perspective of departments in the context of their longer-term vision, the sector they work with or are responsible for, and set out how they will get there. The primary user of a four-year plan is the department itself – the plan will provide insight into what the department's strategic objectives are, the interventions the department plans to use in the next four years to achieve its strategic objectives, and how the department will organise and manage its people and other resources to achieve its objectives.

2.8
It is also intended that Ministers of the Crown will use four-year plans to:

  • confirm that departments are clear about their strategy;
  • understand how departments are planning to use their baseline funding to achieve their strategy and the Government's priorities; and
  • understand the priorities, performance, pressures (including cost pressures), and risks of departments.

2.9
The Treasury and the State Services Commission might use four-year plans to:

  • get insights into the quality of thinking and decision-making in a department's medium-term planning process;
  • understand what departments will do individually and collectively to achieve the Government's priorities and objectives; and
  • inform advice to Ministers at a departmental and whole-of-government level on strategic issues and choices, operational and capital sustainability, trade-offs, and priorities.6

How departments' four-year plans relate to their strategic intentions

2.10
A four-year plan is one of two medium-term planning documents that government departments are required to prepare and one element of a department's overall planning, management, and reporting activity.

2.11
The other medium-term planning document is the strategic intentions. The Public Finance Act 1989 requires a department to provide its Minister with, and subsequently make public, information on its "strategic intentions" for the forthcoming year and following three years. Strategic intentions (usually set out in a Statement of Intent) set out the strategic objectives that the department intends to achieve or contribute to and should also:

  • provide a medium- to long-term perspective of the department;
  • explain the nature and scope of the department's functions and intended operations;
  • explain how the department intends to manage its functions and operations to meet its strategic intentions;
  • set out the department's contribution to the Government's outcomes and specific priorities, reflecting the discussions between the department and its Minister(s) about priorities and desired results; and
  • be published on the department's website and presented by the responsible Minister to the House of Representatives.

2.12
Other documents that can form part of a government department's overall planning, management, and reporting activity include:

  • A department's annual plan. A department's annual plan provides a detailed plan of its short-term activities and intentions, and how these will contribute to the department achieving its strategic objectives.
  • Long-term investment plans. Changes to the investment-management system came into force on 1 July 2015. These changes require "investment-intensive" departments to prepare investment plans that have a minimum 10-year planning horizon. The focus of these plans is on capital expenditure and asset performance and disposal. The plan should set out the department's investment plan based on its current long-term vision and objectives, what it will invest in, and how investment will occur to support delivery of the department's or sector's long-term goals.7
  • A department's internal strategies and plans. A department will have internal strategies and plans that will inform the preparation of its four-year plan. For example, this will include its workforce, information technology, and financial and asset management plans.

2.13
Figure 1 sets out how four-year plans interact with a department's other planning documents.

Figure 1
Relationships between different strategic planning outputs

Figure 1 - Relationships between different strategic planning outputs.

Source: Adapted from the Treasury (2016), Guidance for Developing and Maintaining a Long Term Investment Plan, page 22.

4: See the 2016 edition of the published guidance – 2017 Four Year Plan Guide, available on the State Services Commission's website (www.ssc.govt.nz).

5: See the 2016 edition of the published guidance.

6: See pages 7-8 of the 2016 edition of the published guidance.

7: See page 10 of the 2016 edition of the published guidance.