Part 2: The value of the long-term insights briefing

Commentary on He Tirohanga Mokopuna 2021.

2.1
In this Part, we consider how well the Treasury prepared the long-term insights briefing part of the 2021 Statement. We look at:

Guidance on long-term insights briefings and their preparation

2.2
The DPMC has prepared comprehensive guidance about what is needed to prepare a long-term insights briefing. This guidance supports chief executives and their departments in understanding good practice.

2.3
The guidance sets out practical actions that can be taken to develop and deliver a high-quality long-term insights briefing. Government departments are expected to tailor their approaches to meet their specific requirements and context. The guidance is not mandatory.

2.4
To help departments plan, the DPMC’s guidance includes an indicative time frame of two years to prepare and publish a long-term insights briefing. The guidance notes that the exact time frame for each step will vary depending on the department’s approach. Legislation requires the first round of long-term insights briefings to be published by August 2023.

2.5
According to the DPMC’s guidance:

… the value of the Briefings is the opportunity to identify and explore the issues that matter for the future wellbeing of the people of New Zealand.31

2.6
The long-term insights briefings also provide an opportunity for Māori, business, academia, not-for-profit organisations, and the wider public to join in a debate on long-term issues and contribute to decision-making.

2.7
The guidance sets out the principles underpinning long-term insights briefings. These include that the briefings should promote public debate, contribute to public value, and respect Māori and te Tiriti o Waitangi interests. They should also be:

  • open and transparent;
  • independent and impartial; and
  • achievable and sustainable.

2.8
The principle of independence comes from clause 8(1) of Schedule 6 of the Public Service Act 2020. According to the DPMC’s guidance, this means that neither the subject matter nor the contents of the long-term insights briefing should be influenced by the relevant Minister.

2.9
The DPMC’s guidance sets out the following eight-step process to support the preparation of long-term insights briefings:

  1. gather intelligence about the future;
  2. consider the subject matter and potential for joint briefings;
  3. carry out public consultation on the proposed subject matter;
  4. develop the content of the long-term insights briefing;
  5. carry out public consultation on the draft long-term insights briefing;
  6. provide a final long-term insights briefing to the appropriate Minister(s);
  7. present the briefing to the relevant select committee for examination; and
  8. review what worked well and what could be improved.

2.10
The DPMC’s guidance was not finalised when the Treasury started to prepare the 2021 Statement, but it was available in draft. The Treasury told us that, as a result, it worked with the DPMC to align its work with the DPMC’s general expectations for the process.

The rationale for an integrated approach to He Tirohanga Mokopuna 2021

2.11
The DPMC’s guidance allows for the long-term insights briefing to be integrated into another document an organisation may be required to produce.32

2.12
The Treasury told us that it made a considered and deliberate decision to combine the long-term fiscal statement and long-term insights briefing this year. It had three main reasons for this:

  • The requirements for the long-term insights briefing are similar to those of the long-term fiscal statement.
  • The insights obtained from long-term insights briefings and the associated consultation could usefully inform long-term analysis of the Government’s financial position.
  • The Treasury had resourcing constraints and competing priorities, which arose in part from Covid-19.

2.13
In our view, there are benefits to integrating the 2021 Briefing into the 2021 Statement. These include having more:

  • public understanding and engagement (through the 2021 Briefing’s consultation processes) about what is important for the Government’s long-term financial sustainability;
  • wide-ranging analysis of the long-term trends, risks, and opportunities that matter to the well-being of New Zealanders and the financial consequences that might arise;
  • thought and discussion about the different policy options that may be available for responding to those trends, risks, and opportunities;
  • relevant and comprehensive information for other public organisations thinking about their longer-term stewardship responsibilities; and
  • useful information to support and inform the Government’s strategic decision-making.

2.14
There are also potential drawbacks to integrating the two documents.

2.15
One of these is the possible tension between the more prescribed requirements and guidance of the long-term insights briefing and the broad discretion the Treasury has over the form and content of the long-term fiscal statement. For example, the Treasury is required to publicly consult on the proposed content of the long-term insights briefing as well as the draft briefing once it has been prepared. The issues identified through this consultation could conflict with the long-term financial or economic issues that the Treasury considers important for the long-term fiscal statement.

The Treasury’s process for preparing the 2021 long-term insights briefing

2.16
This is the first long-term insights briefing to be prepared under the Public Service Act 2020. We have used the eight steps that the DPMC’s guidance provides (see paragraph 2.9) to review how well the Treasury prepared the 2021 Briefing.

2.17
The Treasury’s decision to integrate the long-term insights briefing with the long-term fiscal statement and publish the 2021 Statement before the end of September 2021 meant that it had only about nine months for the first six steps of the eight-step process. The DPMC’s indicative time frame allocates 16 months for these six steps.

Step 1 – Gathering intelligence

2.18
The DPMC’s guidance for Step 1 recommends a wide exploration of information and assumptions to ensure that departments consider issues beyond the immediate when selecting the subject matter for the long-term insights briefing.

2.19
In December 2020, the Treasury announced its intention to incorporate the requirements of the 2021 Briefing into the 2021 Statement. The Treasury considered that it could draw on the work it had done in preparation for the 2020 long-term fiscal statement (which was postponed because of Covid-19), as well as additional policy work it had done since then.

2.20
This work included interviews that the Treasury carried out with five Māori and Pasifika leaders, researchers, and experts. These interviews discussed such topics as climate change, intergenerational well-being, issues and opportunities for Pacific communities, and current and future population dynamics.33

2.21
As a result, the Treasury did not believe that it needed a separate and wider exploration process for selecting the 2021 Briefing’s subject matter.

Step 2 – Considering potential subject matter and the potential for joint briefings

2.22
The DPMC’s guidance provides criteria to assist public organisations in selecting the subject matter for a briefing. These include:

  • The subject matter had not received adequate consideration in the past.
  • The subject matter would be likely to have significant implications for the long-term well-being of people in New Zealand.
  • The subject matter can be sufficiently distanced from current government policy when consulting the public.
  • The scope of the subject matter is manageable.
  • The subject matter is “particularly relevant” to the department’s functions.

2.23
Because of the short time frame, the Treasury decided to focus on the matters that it had considered as part of the postponed 2020 long-term fiscal statement. The 2021 Statement also considered the implications of Covid-19 and included work that had not featured in previous statements, particularly about climate change.

2.24
Given the short time frame the Treasury decided not to prepare a joint briefing with another organisation. However, it acknowledged that there could be opportunities to do so in the future. The Treasury did work closely with the Ministry for the Environment on the climate change content.

Step 3 – Consulting the public on the proposed subject matter

2.25
The DPMC guidance recommends that, when consulting on the proposed subject matter, chief executives consider whether to focus on specific population groups or stakeholder groups.

2.26
This includes considering whether engagement with any groups or the public should extend beyond the minimum consultation requirements of the Public Service Act 2020 or at more points in the process than the Act requires.

2.27
The Treasury launched its public consultation on the scope of the draft 2021 Statement through a media statement on the Treasury website, through social media, and the Public Service Commission’s website. The Treasury published its proposed topics for consultation in March 2021 and invited submissions over a four-week period, closing on 26 March 2021.

2.28
The proposed topics were:

  • New Zealand’s current financial position and the ongoing effects of Covid-19;
  • why a strong financial position supports living standards;
  • New Zealand’s long-term financial position;
  • demographic trends and the economic impacts of an ageing population;
  • the impact of unanticipated shocks on the financial position; and
  • other factors that will affect the financial position (such as climate change).

2.29
The Treasury received five written submissions and carried out eight interviews with subject experts and commentators, including think-tanks, academics, economists, government officials, and business leaders.

2.30
Not all submitters commented directly on the suitability of the topics, but those who did considered that they were appropriate areas to focus on. There was considerable feedback on the topics and possible directions that the Government could take. This feedback included the need to consider the overall purpose of the tax system, and what an appropriate role for the government is relative to individuals. Submitters also commented on housing, productivity, and global uncertainty.

2.31
In the Treasury’s view, some of the feedback was outside of the scope of what it could consider.

2.32
The Treasury told us that it decided to focus on superannuation and health spending because these are important areas that policy had not yet adequately addressed. The Treasury also expected that these would remain an important source of cost pressures in the future.

Step 4 – Developing the content of the long-term insights briefing

2.33
The DPMC’s guidance recommends that departments thoroughly explore the subject matter selected for the long-term insights briefing. It notes that different groups are likely to have different world-views and perspectives on the strengths and weaknesses of different policy options.

2.34
The DPMC’s guidance also says that long-term insights briefings offer an opportunity to reveal potential inequities or disparity of outcomes. It recommends that departments identify which policy options are more likely to improve or worsen outcomes for different groups over time.

2.35
In developing the 2021 Statement, the Treasury identified inequities for Māori, Pasifika, women, and young people. It considered where policy options may negatively affect some groups. For example, it noted that raising the age of eligibility for New Zealand Superannuation was likely to negatively affect Māori and Pasifika, whose life expectancy is lower than other population groups.

2.36
The 2021 Statement also refers to Māori concepts such as manaakitanga, kotahitanga, and tino rangatiratanga in the context of describing existing systems and their impact on Māori.34 However, it is not clear how the Treasury used these concepts in the 2021 Statement to analyse the policy options presented.

2.37
As part of its work on the postponed 2020 long-term fiscal statement, the Treasury conducted a series of “Conversations about our future” with Māori and Pasifika leaders and experts. The Treasury published articles based on those interviews on its website. In our view, these interviews provide insights that the Treasury could have developed further in He Tirohanga Mokopuna 2021. For example, interviewees spoke about housing challenges, infrastructure concerns, and the implications of te Tiriti o Waitangi settlements over the next 40 years.

Step 5 – Consulting the public on the draft 2021 long-term insights briefing

2.38
The DPMC’s guidance recommends that departments design and carry out public consultation in a way that is “inclusive of Māori, population groups and other stakeholder groups who may be potentially affected or have an interest in the subject matter”.

2.39
The Treasury published a draft of He Tirohanga Mokopuna on its website in early July 2021 and invited submissions over a four-week period. To support the consultation process, the Treasury also established an external reference group comprising five independent experts with different backgrounds and perspectives.

2.40
The Treasury told us that the short time frame limited the consultation process for the draft 2021 Briefing. However, the Treasury took advice from the DPMC on its process and considered that it met the general expectations of consulting with a range of stakeholders.

2.41
The Treasury told us that it consulted its existing networks and stakeholders, particularly Māori and Pasifika representatives, on the draft statement’s content.

2.42
During this phase, the Treasury also engaged with Business New Zealand, economists, the Chief Science Advisor, and the Retirement Commissioner. The Treasury also spoke with others it identified as having an interest in, or unique perspective on, the analysis and perspectives outlined, including experts in superannuation, climate change, and te ao Māori.

2.43
We were told that the DPMC encouraged the Treasury to engage with young people. The Treasury worked with third-year university students to seek their perspective on relevant policy issues. The Treasury did not engage specifically with Māori youth, but it told us that it is looking at options to do so over time.

2.44
The Treasury received 21 submissions on the draft. The Treasury summarised the feedback and published it online. The Treasury told us that it found the consultation process helpful and that it received a rich and diverse range of feedback that it was able to use to enhance the quality and depth of the draft 2021 Statement. We did see some additional discussion about wealth distribution, and inequality in the 2021 Statement that was not in the draft consultation version.

2.45
The Treasury said that it used the feedback to highlight some of the uncertainties and shocks the country could face. It also said that the feedback helped frame its internal thinking, deepened its analysis in some areas, and led to it presenting information in a more accessible format.

2.46
The Treasury also said that it would not have achieved this if it had not integrated the 2021 Briefing into the 2021 Statement.

2.47
As with its consultation in Step 3, the Treasury considered some of the feedback out of the scope of what it expected or what it could reasonably achieve within the time frame.

2.48
We expected the Treasury to have considered the feedback that was within scope in more depth. When we compared the consultation draft with the published 2021 Statement, we identified few changes to the content. Where there were changes, these did not appear to flow into the financial analysis, which remained largely the same. For example, during this stage the Treasury received several submissions on the implications of the current housing shortage. Although the Treasury discusses housing in the 2021 Statement, there is little analysis about housing shortages.

2.49
We accept that this could be included in insight briefings of other departments, but we consider the Treasury uniquely positioned to consider the implications of these types of issues on the Government’s long-term financial position.

2.50
The Treasury told us that, because of the feedback’s breadth, it was unable to reflect it all in the final document. However, the Treasury also said that the feedback would be useful in informing future policy advice and in developing other stewardship products such as the future well-being report.

2.51
We strongly encourage this and look forward to seeing how the feedback influences the well-being report when we review that in 2023.

Steps 6 and 7 – Providing a final long-term insights briefing to the appropriate Minister(s) and presenting the briefing to the select committee for examination

2.52
The Treasury published the final 2021 Statement online on 29 September 2021. This is the last step in the DPMC’s guidance for Step 6.

2.53
In accordance with Step 7, the final 2021 Statement was presented to the Finance and Expenditure Committee on 17 November 2021.

Step 8 – Reviewing the process

2.54
The Treasury told us that it conducted an internal review of the 2021 Statement to determine what lessons it could learn and what processes it could improve when preparing the next long-term fiscal statement or long-term insights briefing. The Treasury’s Leadership Team is considering the results of that review.

2.55
The Treasury has recently met with the DPMC to share its insights on how the 2021 Briefing went. The Treasury told us that, in due course, it will consider whether to continue to combine the long-term insights briefing with future long-term fiscal statements and what the most appropriate approach will be.

Our comments on the 2021 long-term insights briefing

2.56
Overall, we consider that the 2021 Statement broadly meets the requirements for long-term insights briefings under the Public Service Act 2020. However, the short time frame in which it was prepared is likely to have affected the 2021 Briefing’s value.

2.57
The 2021 Statement is similar in process and content to previous long-term fiscal statements. In our view, the 2021 Statement has not realised many of the potential benefits of integrating the 2021 Briefing that we listed in paragraph 2.13.

2.58
Long-term insights briefings are intended to consider subject matter that has not received adequate consideration in the past and that is likely to significantly affect the long-term well-being of New Zealanders.

2.59
The Treasury engaged widely, and the 2021 Briefing touches on a range of issues, and the social and economic impacts of demographic trends. However, the Treasury told us that much of the feedback that it received was out of scope or difficult to address in the available time.

2.60
The Treasury acknowledges that it needs to be clearer about the boundaries of what it intends to consult on in future. We support that, but we also encourage the Treasury to think carefully about the parameters it sets for future long-term fiscal statements or long-term insights briefings to ensure that it has enough scope to explore the issues that matter to the public and Parliament.

2.61
We acknowledge the challenging circumstances that the Treasury completed the 2021 Briefing in. We consider that building more time into its process in future would allow it to explore issues in more depth and more thoroughly consider the feedback it receives.

2.62
The Treasury has not yet decided whether to continue to combine the long-term insights briefing and long-term fiscal statements. We strongly recommend that the Treasury use its review of the 2021 Statement to help inform decisions about future long-term fiscal statements and long-term insights briefings.

2.63
In our view, more needs to be done if future integrated statements are to improve the quality and depth of public information and provide more support to the government’s strategic priorities and fiscal strategy.

2.64
We consider this in more detail in Part 4.

31: See “Long-term insights briefings” at dpmc.govt.nz.

32: The Policy Project (2021), Long-term Insights Briefing: High-level overview, dpmc.govt.nz.

33: The Treasury interviews are available at www.treasury.govt.nz.

34: Simply put, these three concepts could be understood as caring for people, togetherness, and self-determination. However, they may also be defined differently in different contexts.