Part 2: Performance reporting about Auckland

Reporting on the public sector’s performance in Tāmaki Makaurau Auckland.

2.1
In this Part, we discuss:

2.2
The main way that public organisations explain how well they have used public money and delivered services to help improve outcomes for the public is by reporting their performance.13 Typically, public organisations do this in their annual report. However, public organisations are increasingly reporting more extensive performance information on their websites as well.

2.3
Public organisations typically report on two types of performance: financial performance and non-financial performance. Financial performance is generally focused on statutory financial reporting in their annual reports, and non-financial performance describes how well the organisation performed its role and its progress towards its desired impacts and outcomes.

2.4
Public organisations must comply with specific performance reporting requirements in their annual reports. These include legislative requirements and auditing standards (see Figure 3).

Figure 3
The main legislation that sets out performance reporting requirements for public organisations

The Public Finance Act 1989 requires government departments and departmental agencies to submit an annual report at the end of each financial year that reports on their progress against their strategic intentions. Section 45 of the Act states that the annual report “must provide the information that is necessary to enable an informed assessment to be made of the department’s performance during the financial year”. Sections 19A, 19B, and 19C also outline requirements for public organisations to report on what they have achieved with appropriations.*

The Crown Entities Act 2004 requires Crown entities to submit an annual report at the end of each financial year that reports on the entity’s performance against its strategic objectives, which are set in its statement of intent, and its annual performance objectives, which are set in its statement of performance expectations.

The Local Government Act 2002 requires local authorities to submit an annual report at the end of each financial year with an audited statement of service provision that, among other things, compares the level of service achieved for a group of activities with the performance target or targets for the group of activities. Section 98 of the Act states that one of the two purposes of an annual report is to “compare the actual activities and the actual performance of the local authority in the year with the intended activities and the intended level of performance as set out in respect of the year in the long-term plan and the annual plan”.

* Appropriations are how Parliament authorises the Government to incur expenses and capital expenditure.
For more information, see the Treasury, A guide to appropriations, at treasury.govt.nz.

2.5
All councils are required to report on their performance against the Non-Financial Performance Measures Rules 2013 set by the Secretary for Local Government.14

2.6
In general, public organisations with statutory reporting requirements must prepare financial reporting that complies with generally accepted accounting practice (GAAP). This is a common set of accounting rules, standards, and procedures that the External Reporting Board issues. Councils must also comply with GAAP when preparing their annual plans and long-term plans.

2.7
An important standard for reporting on service performance is PBE FRS 48, which applies to Tier 1 and Tier 2 public benefit entities.15 This standard requires public organisations to provide enhanced service performance information on why they exist, what they intend to achieve in broad terms, and what they did to further their broader aims and objectives during the reporting period.

2.8
PBE FRS 48 also provides principles-based requirements to ensure that service performance information is appropriate and meaningful to users. This standard applies to reporting periods beginning on or after 1 January 2022.

Reporting about performance in Auckland is incomplete

2.9
In our view, there is an incomplete picture of public sector performance at the local level throughout New Zealand, and Auckland is no exception. Public organisations in Auckland could provide the public with more detail on the specific investments they are making, the work they are carrying out, and what they are achieving.

2.10
Some public organisations provide Auckland-specific performance information in their annual reports, and other organisations report more generally at a national level. This makes it difficult to determine their performance at a local level.16

2.11
We suggest that, where possible, public organisations consider how they could support more place-based reporting by presenting, where relevant, their material performance measures by region.

2.12
Increasingly, public organisations publish regional performance information on their websites. This fills some gaps at the local level, and we support this. This information reveals important regional trends and identifies the challenges that public organisations face.

2.13
We provide an overview of different sources of place-based performance information in Appendix 2. For example, the Ministry of Social Development breaks down its monthly reporting on the emergency housing and public housing register by region.

2.14
Public organisations should also consider how any additional place-based information on their websites aligns to the overall performance story they provide to the public in their annual reports.17

2.15
We suggest that, when public organisations publish performance information outside of their formal accountability documents, they should still describe how this information is connected to their outcomes and how they are progressing towards achieving desired impacts and outcomes. Doing this would provide context and make the information more relevant to readers.

2.16
We discuss some examples of useful and accessible performance reporting in Part 3.

The public sector in Auckland has unique features

2.17
With the significant public sector presence in Auckland there are also bespoke governance structures that aim to support better decision-making and co-ordination of central and local government in the region.

2.18
Auckland Council is responsible for all local government decisions and duties in the region. The Council was set up as an amalgamated unitary authority in 2010. It replaced seven territorial authorities and the Auckland Regional Council.18

2.19
Auckland Council is the largest local authority in Oceania and provides a range of services and programmes to Aucklanders with its council-controlled organisations. The Council partners with central government organisations to provide critical infrastructure for the region (including funding for transport and water infrastructure).

2.20
The Government set up the Auckland Policy Office in 2005 to support central government’s policy focus in Auckland. The Auckland Policy Office co-locates a wide range of public organisations to provide joined-up policy advice and information on Auckland. It is the largest concentration of government policy capability outside of Wellington.

2.21
The Auckland Policy Office focuses on strategic and nationally significant issues. It states that it aims to:

  • provide an Auckland perspective in the development of central government policy;
  • identify and develop Auckland-specific policies that will promote Auckland and national economic growth;
  • promote the involvement of central government in major regional development projects; and
  • be a source of information about Auckland.19

2.22
The Auckland Policy Office is governed by a central government Chief Executive’s Governance Group. The Governance Group aims to lead and develop a system-wide approach to the government’s activities in Auckland (specifically in the infrastructure, environment, and economic sectors). The Governance Group consists of the chief executives of the seven main public organisations represented at the Policy Office.20

2.23
A lead officer (known as the Head of the APO) and an Auckland-based inter-agency leadership team provide the Auckland Policy Office’s day-to-day leadership. The Head of the APO works across multiple agencies represented at the Auckland Policy Office on behalf of the Governance Group.21

2.24
Although the Auckland Policy Office has successfully supported central government organisations in Auckland, collaboration between central and local government remains complex.

2.25
More recently, the Government has sought to develop and strengthen a system of regional leadership for the public service throughout the country.22 As part of reforming the public service system, Cabinet agreed to set up Regional Public Service Commissioners in 2019.23

2.26
The Regional Public Service Commissioner for Auckland provides a focus on the social sector and local community issues. This has not traditionally been the Auckland Policy Office’s focus.

2.27
The Regional Public Service Commissioners were given a mandate to convene Regional Leadership Groups to guide regional efforts by a wide range of organisations. Initially, the Regional Leadership Groups focused on the social and economic sectors.

2.28
In Auckland this focus was subsequently expanded to include the economic (skills and workforce) and environment sectors. They also support the Government to foster strong relationships with iwi/Māori in the regions.

2.29
In setting up the Regional Public Service Commissioners, the Government agreed to a work programme to improve how the public service can support enhanced regional well-being.24 A key aspect of this work programme was to develop regional priorities to help communicate the focus areas for the public service in each region.

2.30
The Regional Public Service Commissioner for Auckland convenes the Auckland Regional Leadership Group, which is made up of a wide range of social and economic organisations.25 Mana whenua and Auckland Council are also represented.

2.31
After initially focusing on response and recovery efforts for the Covid-19 pandemic, the Auckland Regional Leadership Group now focuses on a set of regional priorities it has agreed for Auckland. These are safe communities, education, housing, economic development, and community well-being.

2.32
Specific cross-agency working groups have now been set up to co-ordinate cross-agency collaboration and carry out work against each of the agreed priorities.

2.33
In contrast, the Regional Public Service Commissioner for Auckland focuses on sub-regional or regional activities that would benefit from central government co-ordination. The Auckland Policy Office focuses on national outcomes that impact on Auckland and large-scale regional activities that need significant central government input.

2.34
The Regional Public Service Commissioner for Auckland and the Auckland Policy Office have mandates to support more joined-up government in Auckland. They have local and national focuses respectively.

2.35
The Regional Public Service Commissioner for Auckland and the Auckland Policy Office provide the public sector with a greater ability to co-ordinate across central and local government to achieve positive outcomes for Auckland. They also provide an opportunity to improve performance reporting in the region.

2.36
Earlier this year, the Prime Minister appointed a new Minister for Auckland portfolio in recognition of the region’s importance to New Zealand. The portfolio was set up with the expectation that it would focus on advocacy and co-ordination, with an objective to ensure that central government remains responsive to the region’s issues.26

2.37
We expect that an understanding of the public sector’s performance in Auckland would be of interest to the Minister.

Public sector activities and programmes in Auckland

2.38
The public sector has a clear presence in, and focus on, Auckland. It covers a range of issues, from delivering services locally to strategic policy issues of national importance. However, it was difficult for us to get a complete picture of the major activities and programmes the public sector has been working on in the region.

2.39
Some public organisations have begun to take a more place-based approach to their responsibilities. These include the Social Wellbeing Agency’s place-based initiative in South Auckland and the Ministry of Housing and Urban Development’s place-based approaches and urban growth partnerships.27, 28

2.40
Other public organisations have set up cross-agency initiatives to address place-based issues (including the Tāmaki Makaurau Justice Sector Leadership Board and the Tāmaki Makaurau Regional Skills Leadership Group).29, 30

2.41
However, public reporting on these activities is generally limited to meeting current legal reporting requirements. It does not provide the level of detail that would provide insight to Aucklanders.

2.42
The Covid-19 pandemic also had a significant effect on the public sector’s activities in Auckland. The pandemic affected the public sector in several ways. It put pressure on resources, and ongoing effects include supply chain disruption and funding uncertainties. Many public organisations in the Auckland region had to prioritise response and recovery activities, which impacted their usual work.

2.43
Appendix 3 provides a snapshot of the variety of public sector activity carried out in Auckland during the past few years, despite these constraints. This snapshot illustrates the nature of the public sector’s Auckland-specific activities, in addition to the core services and programmes central and local government organisations provide in Auckland.

2.44
The scope of the activities in Auckland highlights why greater transparency of what the public sector is doing and what it is achieving in the region is important.

There is no readily available information on total public expenditure in Auckland

2.45
Despite Auckland’s size and significance to the country, no readily available information accurately reports on total public spending in Auckland.

2.46
The financial information that Auckland Council reports in its annual report clearly describes its spending in the region. For example, Auckland Council’s annual report for 2022/23 reported spending of around $8 billion.31 This is made up of operating expenditure of $5.3 billion and capital expenditure of $2.7 billion, which includes an element of government funding.32

2.47
However, most central government organisations report their spending at a national level. This means that we cannot use publicly available information to accurately determine the amount of central government spending in Auckland.

2.48
Previous studies have sought to quantify central government spending in each region in New Zealand based on various assumptions. The Ministry of Business, Innovation and Employment and the Treasury commissioned a study in 2013, which applied two conceptual approaches to determining how much public money was spent in a region. These were:

  • where the money is considered to be spent; and
  • where services are provided (based on population shares).

2.49
The result of this study was a range of estimated spending for a region that generally reflected the region’s share of the national population.33

2.50
The most recent financial statements of the government reported the total government expenditure for all of New Zealand in 2022/23 was about $184 billion, made up of operating expenditure of about $161.8 billion and capital expenditure of about $22.2 billion.34 This spending is not broken down by region, so it is unclear how much of this central government total was spent in Auckland.

2.51
In our view, better information on the nature of government spending in the regions should be available.

2.52
A good first step would be for public organisations to provide more detailed reporting of their actual spending in the regions. Providing this information will improve public organisations’ performance reporting and provide an enhanced understanding of how our taxes and rates are spent.

13: For more information, see the Office of the Auditor-General, Audit New Zealand, and the Treasury, Good practice in reporting about performance, at oag.parliament.nz.

14: For more information, see “Local government mandatory performance measures”, at dia.govt.nz.

15: Tier 1 entities have a total expenditure of more than $30 million, and Tier 2 entities have a total expenditure between $2 million and $30 million. For more information, see “PBE FRS 48: Service Performance Reporting”, at xrb.govt.nz.

16: We are not suggesting annual reports are not legally compliant, nor are we suggesting that public organisations simply provide more information in their annual reports.

17: For more information, see the Treasury, Annual reports and other end-of-year performance reporting, at treasury.govt.nz.

18: See “What is Auckland Council” in Auckland Council’s Governance Manual, at governance.aucklandcouncil.govt.nz.

19: See “Auckland Policy Office (APO)”, at govt.nz.

20: These include the Ministry of Business, Innovation and Employment (as the Chair), the Department of Internal Affairs, the Department of the Prime Minister and Cabinet, the Ministry of Housing and Urban Development, the Ministry for the Environment, the Ministry of Transport, and the Treasury.

21: In addition to the seven main public organisations, these include: Ministry for Women, Ministry of Education, Ministry of Health, Ministry of Justice, Ministry of Primary Industries, Ministry of Pacific Peoples, Ministry of Social Development, Te Puni Kōkiri, Statistics New Zealand, Electricity Commission, Inland Revenue, Waka Kotahi, Kainga Ora, and Te Waihanga.

22: The public service consists of government departments, departmental agencies and interdepartmental executive boards or ventures.

23: These were originally called “Regional Public Service Leads”. See publicservice.govt.nz for more information.

24: See Cabinet paper, “Joined up government in the regions report back: Strengthening a regional system leadership framework for the public service”, at publicservice.govt.nz.

25: These include the Ministry of Social Development, the Social Wellbeing Agency, the Ministry of Business, Innovation and Employment, Te Whatu Ora, Kāinga Ora, the Ministry of Education, the New Zealand Police, the Department of Corrections, the Ministry of Justice, the Ministry of Health, the Ministry for Pacific Peoples, Te Puni Kōkiri, and Oranga Tamariki.

26: Ministry of Business, Innovation and Employment (2023), Briefing for the Incoming Minister for Auckland.

27: See Social Wellbeing Agency (2018), Place-based initiatives: Fact sheet, at swa.govt.nz.

28: See Ministry of Housing and Urban Development, “Our place-based approach”, at hud.govt.nz.

29: See Ministry of Justice, “About the justice sector”, at justice.govt.nz.

30: See Ministry of Business, Innovation and Employment, “Tāmaki Makaurau Regional Skills Leadership Group”, at mbie.govt.nz.

31: Auckland Council (2023), Annual Report 2022/2023, at aucklandcouncil.govt.nz.

32: Capital expenditure involves purchasing, maintaining, or upgrading physical and intangible assets. Operating expenditure involves recurring expenses that public organisations must pay to keep their operations running – for example, employee wages, equipment rentals, and office supplies.

33: New Zealand Institute of Economic Research (2013), Regional government expenditure, report to MBIE and the Treasury, at interest.co.nz, or “Report shows Govt investing right across the regions” at beehive.govt.nz.

34: The Treasury (2023), Financial Statements of the Government of New Zealand for the year ended 30 June 2023, at treasury.govt.nz.