Part 2: How we determine our work programme

We draw on what we know from our work

As the auditor of every public organisation, we are in a unique position to consider performance and accountability matters for the entire public sector. We regularly assess the issues, risks, and opportunities we see from the information our auditors and other staff gather, information from our monitoring of risks, and our analysis of public sector performance.

We also draw on our previous work such as reports we have published (including inquiries, performance audits, research reports, and the results of recent financial audits) and our follow-up reports on how public organisations have implemented our recommendations.

We seek advice from those working in, or with, the public sector. Our central and local government advisory groups and rōpū Māori help us to better understand current themes and challenges. We also get important information and insights from our discussions with select committees and members of Parliament.

We consider the public sector operating environment and its risks and challenges

The public sector operates in a challenging and dynamic environment. When we plan our work, we consider the public sector’s operating environment and the risks and challenges that environment creates.

Below we describe the risks and challenges that have informed our 2024/25 annual plan. We have used icons to link these risks and challenges to the work in our plan.

Declining trust

Trust in governments is declining around the world. Although New Zealanders continue to have higher levels of trust in government and its institutions compared with many other countries, that is not the case for all parts of our society. We also know that, for many, trust is vulnerable and can rapidly erode. It is critical for the public sector to maintain trust to carry out its role.

A challenging economic environment

The economic environment, both nationally and internationally, is facing several challenges, including the high cost of living, limited economic growth, and increasing unemployment. Inflation is also affecting operating and capital costs for public organisations.

Although economic disruption from the Covid-19 pandemic has lessened, many communities, businesses, and public organisations continue to be affected (for example, through backlogs and continuing issues with sickness).

The Government has required central government organisations to find significant cost savings. These organisations will need to provide their services with fewer resources and increase their focus on the value they are getting from existing and future investments. Similarly, local government organisations are facing cost pressures – they need to carefully balance rates and borrowing with maintaining and investing in services and infrastructure.

To be able to provide their services, public organisations need to remain aware of and focused on their cost drivers. They also need to look at how to get greater value from existing or reduced spending.

Public sector change

The public sector continues to evolve.

A Ministry of Regulation has been established and a new Social Investment Agency will be established on 1 July 2024 (replacing the Social Wellbeing Agency). The Productivity Commission was disestablished in February 2024. Te Aka Whai Ora will be disestablished on 1 July 2024. The Government has also said that it plans to disestablish Te Pūkenga.

Reform of a range of key legislation has been signalled or is in progress. The Government has set targets for public organisations to work towards and be measured against.

Local government organisations continue to adapt to new legislative requirements. There are further proposed changes to the Resource Management Act 1991 and how water services² are delivered.

Climate change

In the last few years, we have seen the significant impact, disruption, and cost of severe weather events on New Zealand. Recent reports have highlighted the challenges New Zealand's emergency management system faces when responding to these events.

Central and local government organisations need to work together to effectively address the challenges of climate change. This will include determining how to mitigate and adapt to climate change and determining what level of resilience and adaptation can be achieved with the available resourcing.

New Zealand has committed to reducing greenhouse gas emissions and contributing to global efforts to slow climate change. Addressing climate change and meeting emissions targets could present a significant financial risk to public organisations and the Crown.

Infrastructure investment

Historical underinvestment in public infrastructure has created risks of services failing or experiencing significant disruptions. Public organisations in central and local government will need to invest in infrastructure to ensure that assets are resilient to medium- and long-term challenges and are able to provide services that meet the public's expectations.

Technological change

Increased use of artificial intelligence and other rapidly developing technologies present significant opportunities and risks to the quality of, and trust in, public services. The public sector has started using artificial intelligence for some services. Although technology can streamline and improve the quality of services, there are significant risks related to data security, bias, and privacy. Good governance will be needed to ensure that the benefits of new technology are realised and the risks are well managed.

Persistent inequity

Long-term disparities in outcomes (for example, by ethnicity, gender, or geography) continue in many areas such as housing, education, health, and justice. Improving equity of outcomes is a critical part of ensuring that all New Zealanders have trust in the public sector and government.

Security challenges

New Zealand has benefited from a rules-based international environment. Increasing geopolitical tensions and strengthening national interests create risks to our economic and social well-being.

We maintain capacity to focus on emerging issues

In recent years, we have carried out rapid work that responds to issues as they emerge. The findings and recommendations we make from this work allow the public sector to address issues quickly. For example, our work on the cost-of-living payment in 2022 prompted the government to tighten the eligibility criteria, and as a result there was a significant reduction in payments made to ineligible recipients.

In 2024, we looked at how effectively the Ministry for Primary Industries (MPI) was monitoring importers of foods that present a risk to public health. MPI is using the findings from our audit to strengthen oversight of this aspect of the food safety system.

In 2024/25, we aim to carry out four rapid performance audits (two by the end of 2024 and two more in the first half of 2025). Rapid performance audits are designed to be focused reviews that respond to emerging issues. Our ability to complete these reviews quickly relies on the co-operation of the organisation we are auditing. As we carry out detailed scoping of the performance audits in this annual plan, we expect to identify opportunities to apply our rapid audit approach to at least two of the topics we have already identified. We have also planned capacity to allow us to consider at least two topics of emerging interest throughout the year.

We will have a focus on where most public money is spent

In preparing this annual plan, we increased our focus on influencing change in the public organisations that spend the most public money and have the most impact on the public and public sector performance. This includes increased focus on seven of the largest central government organisations³ that, together, are responsible for more than 60% of central government spending. We will also focus on the central agencies that have influence across the public sector⁴ and on Auckland Council, the country's largest local government organisation.

We consider the views of the public

We survey members of the public on topics related to our strategy. For our 2023/24 survey, we asked what New Zealanders would like us to include in our work programme. Survey respondents were most interested in:

• health services, including mental health services;
• justice (law and order), including community safety;
• education; and
• housing and urban development.

Our annual plan remains flexible

Our annual plan reflects what we currently know and what we consider to be priorities. However, if new information, risks, or issues emerge, we may decide to change some of this work. We describe any changes to our annual plan in our subsequent annual report.

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2: These are drinking water, wastewater, and stormwater.

3: The seven larger-spending public organisations are Te Whatu Ora, the Ministry of Business, Innovation and
Employment, the Ministry for Primary Industries, the Ministry of Education, the Ministry of Social Development,
the Ministry of Justice, and Waka Kotahi New Zealand Transport Agency.

4: These central agencies are the Department of the Prime Minister and Cabinet, Te Kawa Mataaho Public Service
Commission, the Treasury, and the Ministry for Regulation. The new Social Investment Agency (which will be
established on 1 July 2024) will also be a central agency.