Part 2:. Improving how the government reports on its performance

Observations from our central government work in 2022/23.

In this Part, we set out our observations about performance reporting across central government.

Performance reporting is about showing what has been achieved with public money. It is about how a government explains the difference it has made for New Zealanders, when using their taxes.

Members of Parliament play a critical role in holding a government to account and scrutinising information about what is being achieved with public money.

As we have noted in previous reports, the way governments currently report on their performance is not good enough to enable Parliament and the public to hold a government to account. It is often too hard to tell what value New Zealanders are receiving from about $160 billion of central government spending each year.

Our concerns have been reinforced by recent reports from the Parliamentary Commissioner for the Environment and the Productivity Commission.

With the introduction of the new accounting standard PBE FRS 48, which sets out requirements and principles for public organisations to report on their performance, we have seen some improvements and examples of good practice in how the government reports on its performance as part of our audit work.

However, we continue to find reporting that does not adequately explain what value New Zealanders are receiving from government spending, including in areas that are vitally important to New Zealanders and New Zealand's future.

We welcome the report of the Standing Orders Committee recommending the establishment of a special select committee to conduct an inquiry into performance reporting. In our view, fundamental changes are needed to how the government is required to report on its performance to ensure that public sector reporting meets the accountability requirements for New Zealand in the 21st century. This is an important and urgent matter.

Over 2022/23, our work has examined how the government reports on its performance at the multiple levels at which it operates, from all-of-government through to cross-agency arrangements and individual agencies.

Reporting at an all-of-government level

The objectives of a government are often at an all-of-government level (for example, reducing child poverty, addressing climate change, and reducing inequities for disadvantaged groups).

At any level, it is vital that a government is clear about what it is seeking to achieve, how it will measure progress, what its plans are, and what progress is being made.

In 2020, the Government of the day amended the Public Finance Act 1989 to introduce a new requirement for the Government to set out the well-being objectives that will guide its Budget decisions. This amendment provides an important opportunity for the Government to clearly set out its objectives at an all-of-government level and explain how they will be assessed.

Since 2020, however, these well-being objectives have tended to be broad (such as equipping New Zealanders with and enabling New Zealand businesses to benefit from new technologies and lift productivity and wages through innovation), without any specification of how progress against these objectives will be measured and reported on.

Furthermore, as we have previously noted, governments are not required to, and do not, report on what is being achieved at an all-of-government level.

In our view, fundamental changes are needed to the public accountability system to ensure that the Government, at an all-of-government level, clearly sets out what it intends to achieve and how progress will be assessed and provides information on what has been achieved.

The 2020 amendments to the Public Finance Act also introduced a new requirement for the Treasury to periodically report on the state and future of well-being in New Zealand, as part of its stewardship responsibilities.

This new requirement provides an important opportunity for the Treasury to inform the wider public sector, the Government, and the public on the state of current and longer-term issues that matter to New Zealanders.

In late 2022, the Treasury published its first report on the state of New Zealand's well-being, Te Tai Waiora: Wellbeing in Aotearoa New Zealand (Te Tai Waiora).

In our view, future well-being reports provide an important opportunity to support a richer and wider understanding of the issues that matter to New Zealanders and to inform government decision-making, including how successive governments set out their all-of-government objectives.

In previous reports, we have also highlighted the need for the Government to improve its reporting on significant policy and funding initiatives across all of government (such as the Provincial Growth Fund).

We previously found that, for initiatives such as the Provincial Growth Fund, the reporting is fragmented between multiple public organisations and it is difficult for the public and Parliament to track spending and assess progress across the fund.

The Treasury has put in place new ways to track major policy programmes. These apply to initiatives funded through the Covid-19 Response and Recovery Fund and the Climate Emergency Response Fund, as well initiatives that respond to the recent severe weather events in the North Island.

These new mechanisms are a useful innovation, but they are not without limitations. The Treasury simply consolidates information supplied by public organisations. We will be looking at whether the reporting will present meaningful information on the value being achieved by the spending.

As part of our 2022/23 audit work, we have continued to find significant issues in reporting on major policy programmes and policy issues that span multiple public organisations and one or more sectors.

We have recently audited the performance of the New Zealand Upgrade Programme. Although there is some useful publicly reported information on the progress of funded transport projects, it is not clear to us how the previous Government intended to determine whether the overall objectives of the programme have been met, or how effective investments have been in improving the overall state of our infrastructure.

Successive governments have invested in initiatives to improve socio-economic outcomes for Māori. In the most recent budget (Budget 2023), $825 million was allocated for this purpose. It remains difficult to track such spending from its announcement in the Budget, through the public organisations developing and delivering the funded initiatives, through to the actual impact it has for Māori communities. Māori – and other members of the public – need to be provided with a clearer view of what has been achieved, so that they can discuss results, understand when and why things have not gone to plan, and ultimately hold the Government to account for its performance.

Reporting across major cross-agency arrangements

As noted in Part 1, there are some major cross-agency arrangements that are broadly designed to enable public organisations to work together towards outcomes and issues that matter to New Zealanders (such as whether New Zealanders are better educated and healthier).

The changes to the Public Service Act in 2020 enable governments to establish, among other mechanisms, interdepartmental executive boards to address specific cross-agency issues (such as eliminating family violence and sexual violence).

In our view, the reporting of these interdepartmental executive boards provides an opportunity to bring together key performance information across different areas and different public organisations.

There are currently five interdepartmental executive boards, which are at different levels of maturity in their reporting.

For the recently established interdepartmental executive boards, it is understandable that their reporting is less developed when it comes to providing meaningful information on how they are making a difference for New Zealanders. For boards that have been operating for many years, we expected, but are not yet seeing, meaningful information on how they are having a positive impact:

  • Border Executive Board (established in January 2021): Performance measures/indicators of success were being prepared in 2023/24. Information on the Board's strategic intentions has previously been provided by the New Zealand Customs Service. The Border Executive Board will begin work on its first standalone strategic intentions document during 2023/24.
  • Spatial Planning Board (originally established in April 2021, as Strategic Planning Reform Board): Reporting focuses on how well it is supporting reform of the environmental management system through repeal and replacement of the Resource Management Act 1991.
  • Executive Board for the Elimination of Family Violence and Sexual Violence (established in March 2022 replacing the previous joint venture which had been operating since September 2018): Current reporting focuses on the appropriation it directly administers. An Outcomes and Measurement Framework was recently published, which includes plans to prepare measures over two phases and significant timeframes. Reporting against the framework will be every second year.
  • Climate Change Chief Executives Board (established in July 2022): Six-monthly progress reporting from the Board to the Prime Minister and relevant Ministers on the Government's progress in implementing actions and meeting the objectives contained in the Emissions Reduction Plan and the National Adaptation Plan. Two reports have been produced to date (February 2023 and August 2023), with reporting evolving over time. These reports (with some redactions as necessary in accordance with the Official Information Act) have also been published on the Board's website (alongside a summary slide deck of the second report).  In our view, the scope of the reporting by the Climate Change Chief Executives Board is a useful innovation and represents a model worth exploring in other areas.
  • Digital Executive Board (established in September 2022): Reporting is at an early stage and focuses on setting up and establishing processes to fulfil its strategic intentions.

We will continue to monitor and engage with the relevant select committees on the performance and reporting of each interdepartmental executive board on how they are collectively making a difference for New Zealanders.

Reporting at a sector level

In 2022/23, we published a case study examining performance reporting at a sector-level focusing on the transport sector.3 The case study focused on examining how well public reporting by the transport sector enables an integrated view of how well the public organisations in the transport sector are collectively making a difference for New Zealanders.

We found examples of good practice reporting on performance, which other sectors can learn from. For example, the transport sector has a clearly defined set of outcomes that are meaningful to the public as well as a comprehensive set of indicators for measuring progress.

We also found that the reporting on Road to Zero and the Rail Network Investment Programme illustrates how a sector can provide rich, integrated, and consolidated reporting on outcomes and major cross-agency initiatives.

We are encouraging other parts of the public sector to look at and learn from the case study and this reporting.

Reporting at an agency level

Most performance reporting by the public sector is at the agency level. In previous reports, we have noted the need to see considerable improvements in how public organisations are reporting on major initiatives, using meaningful performance measures, and presenting performance information that explains how well they are serving and making a difference for New Zealanders.

Over the past year, the Treasury has issued expectations and requirements for public organisations to improve their reporting on major initiatives, particularly those that have been introduced through recent Budgets.

It is too early to see whether these expectations and requirements will translate into more meaningful reporting.

Accounting Standard PBE FRS 48 focuses on enabling public organisations to provide meaningful and appropriate information for users on their service performance. Given the introduction of PBE FRS 48, our work this year included a closer examination of the performance information in the Estimates in this year's Budget.4

We focused on spending by public organisations in six Votes (totalling over $101 billion in annual spending), given their scale and their importance in delivering critical services and outcomes for New Zealanders:

  • Vote Health;
  • Vote Business, Science and Innovation;
  • Vote Social Development;
  • Vote Education;
  • Vote Transport; and
  • Vote Agriculture, Biosecurity, Fisheries and Food Safety.

In our examination of the performance information across these Votes,5 we found some improvements to the performance information, with some examples of good practice. However, we also found three weaknesses that urgently need addressing:

  • Measures, either quantitative or qualitative, that are not meaningful or comprehensive (for example, the percentage of contracts monitored against their milestones).
  • Gaps in measuring what difference is being made (for example, how funding and activities are resulting in improvements in regional productivity, quality of education, or resilience of the roading network).
  • Poor measures for assessing the stewardship, oversight, and monitoring functions of departments.

The need for reform of the public accountability system

There are examples of good reporting and there have been some improvements to how the public sector reports on its performance. But many of the improvements and the examples of good practice that we have found rely on public organisations doing more than what they are legislatively required to report on. For example, the annual reporting on Road to Zero is outside of what the transport sector is required to report on.

New Zealand faces a number of significant complex and long-term challenges (such as climate change, child poverty, and inequity) that will require a greater focus on the long-term and public organisations working together to achieve better outcomes.

In our view, legislative and system reform is needed to put in place a system of public accountability and reporting that is fit for purpose and can respond to the challenges facing New Zealand.

This system must have a focus on what matters to New Zealanders instead of what is important to public organisations. The reporting needs to shift away from a focus on inputs, activities, and outputs to a focus on reporting on how the government is serving and making a difference for New Zealanders.

From all-of-government through to individual public organisations, the accountability requirements should support meaningful and accessible reporting that clearly sets out:

  • what the Government is seeking to achieve and how progress will be assessed;
  • how the Government is intending to achieve its objectives through its initiatives, services, activities, and spending; and
  • what progress is being made.

The recent changes to Standing Orders represent an opportunity to improve scrutiny and for select committees to demand more meaningful information from the government on the issues that matter to New Zealanders.

Changes to parliamentary practice will not be enough. As the Standing Orders Committee recognises, it is equally important to tackle issues in how the government reports on its performance, as well as issues in how the reporting is scrutinised.

The Committee's recommendation that there be an inquiry into performance reporting presents a unique opportunity to examine and recommend changes to legislation.

Legislative reform would be an important step to help ensure the public sector meets the expectations of the public and Parliament in how it reports on its performance. This would not be a small task, but given the importance of public trust in government it is both a critical and urgent one.

3: See Transport sector: A case study of sector-level performance at

4: See "Do your measures measure up?" at

5: Our examination of the performance information across these Votes focused on the performance information in the Estimates, but also took into account relevant performance information that public organisations may set out elsewhere (such as in strategic intentions documents).