Letter to the Finance and Expenditure Committee

21 June 2024

Stuart Smith
Chairperson, Finance and Expenditure Select Committee
Parliament Buildings
Wellington

Tēnā koe Mr Smith

Improvements to strengthen the government response to Covid-19 and make New Zealand better prepared for future emergencies

As you may be aware, my Office carried out a wide range of work about the government response to Covid-19, and in relation to emergency management more generally. The purpose of this letter is to share our observations with the Finance and Expenditure Committee (the Committee) about this work, and what we have learned from recent follow-up work for one of our performance audits – Co-ordination of the all-of-government response to the Covid-19 pandemic in 2020.

I trust these observations will be useful to you in your ongoing scrutiny of the performance of public organisations.

Our work related to Covid-19 and emergency management

In recent years, my Office has carried out extensive work related to the government’s response to the Covid-19 pandemic. This work included:

examining government spending on the Covid-19 response and whether the public and Parliament could understand what was achieved with it through regular public reporting;
understanding how well certain critical response activities were managed (such as the Wage Subsidy Scheme, the nationwide roll-out of the Covid-19 vaccine, reprioritisation of the Provincial Growth Fund, and the Strategic Tourism Assets Protection Programme); and
assessing the management of the central co-ordination of the Covid-19 response, focusing on the first year of the pandemic.

We have also carried out work looking at emergency matters more generally:

Auckland Council’s emergency response preparedness,¹ where we reviewed the Council’s disaster resilience and readiness work.
A summary of observations and core principles for managing public funding and making purchasing decisions in an emergency response or recovery.²
Commentary on He Tirohanga Mokopuna 2021,³ Treasury’s Statement on the Long-term Fiscal Position, reinforcing the importance and challenges of anticipating and planning for the future.

A summary of the main themes is included below. A more detailed description is provided in Appendix 1.

Our observations

Emergency planning and overall preparedness needed to improve

Pandemic planning was not up-to-date or fit for purpose, and lessons from previous outbreaks and recommendations from training exercises and reviews had not been fully implemented.

Preparedness is important at both an organisational level and at a national level

All-of-government arrangements to understand and monitor the risks facing New Zealand need to be in place and working effectively.
The Government needs to consider how it will ensure that there is sufficient capability and capacity across the public sector to sustainably staff a significant or sustained national emergency.
Realistic scenarios need to be factored into the government’s long-term fiscal planning and economic strategies – for example, the likelihood of multiple emergency events over a relatively short period, as has occurred in recent years.

The pace and complexity of emergencies highlight the importance of getting the basics right

Organisations need to plan for emergencies in advance – identify critical roles and prepare contingency plans for them, test key financial and quality controls, and have plans in place to ensure that security settings remain fit for purpose in an emergency.

Maintaining transparency and accountability are critical to public trust and confidence

Public trust and confidence can be quickly undermined in an emergency – this underscores the importance of clear and frequent communication during an emergency, but also about how public organisations are improving preparedness over time.

The public needs assurance that lessons are being learned

Improved guidance and tools may be required to support organisations to continuously improve their emergency response plans.
There have already been a significant number of reviews carried out and recommendations made about the Covid-19 response. Consideration needs to be given to how best to monitor progress and provide assurance to the public that those improvements will be made.

Our follow-up work

In December 2022, my report Co-ordination of the all-of-government response to the Covid-19 pandemic in 2020 was presented to Parliament.

This performance audit looked at how the Department of Prime Minister and Cabinet (DPMC), the National Emergency Management Agency (NEMA), the Ministry of Health, and Te Kawa Mataaho Public Service Commission worked together to co-ordinate the response to the Covid-19 pandemic.

We sought to provide Parliament and the public with an independent account of how the all-of-government response was implemented and how it evolved during 2020. We looked at how the Government responded to the emergence of the Covid-19 pandemic and what it did to adapt and improve its response during 2020. Our work mainly focused on DPMC’s role in overseeing the all-of-government response.

We were also interested in insights from the Covid-19 response that could help the Government prepare for, and respond to, other emergencies and crises.

Overall, we concluded that the public sector worked extremely hard and delivered well for New Zealanders, in extraordinary circumstances and under intense professional and personal pressures. Internationally, New Zealand is generally considered to have done well in preventing the worst impacts of Covid-19 over the period.

However, we also consider that the public sector could have been better prepared. Our performance audit made six recommendations which aimed to help enhance both the response to Covid-19 and New Zealand’s wider readiness for emergencies.

In July 2023, my staff briefed the Finance and Expenditure Committee on our work and signalled my intention to follow up with the organisations⁴ in due course to understand what progress had been made to improve emergency preparedness. My Office has now sought and received updates from these organisations.

All four organisations responded, reporting that they have been working to progress our recommendations. The attached summary in Appendix 2 is based on the self-assessment provided by the organisations. We have not independently audited the information, or the underlying responses provided. Their full responses are published on our website.

Our observations on the organisations’ progress

The four organisations are progressing various works to improve central co-ordination and clarify roles and responsibilities. The all-of-government Covid-19 function now sits with the Ministry of Health, which is currently updating the Pandemic Plan. DPMC has disestablished the National Security Group and replaced it with two new groups to allow for an increased focus on risk and governance, and NEMA is leading catastrophic emergency management planning. There is also noticeable collaboration to develop and maintain workforce plans – Te Kawa Mataaho Public Service Commission continues to grow the Workforce Mobility Hub that was established during Covid-19. The Hub played a key role in supporting the response to severe weather in the North Island in early 2023, alongside NEMA.

However, the Ministry of Health have also reported that system-level vulnerabilities still exist in the health system and are compounded by the impact of the health reforms and under-resourced emergency management capability. Issues and gaps identified through past responses to emergency events were meant to be addressed through the Emergency Management Bill. I understand that the Bill has subsequently been discharged from the House. However, I am aware that the Minister for Emergency Management and Recovery intends to introduce a new Bill this term.

I note that organisations face challenges in progressing our recommendations and in addressing longer-term resourcing and capability needs. The Ministry of Health said that delays in progress was due to responding to recent emergency events such as the 2023 Auckland Anniversary floods. Although not included in their response, NEMA has publicly said in their 2022/23 Annual Review with the Governance and Administration Committee that they had not been carrying out their role to provide assurance that the emergency management system is fit for purpose, primarily due to insufficient resourcing.

Although these four organisations have worked to implement our recommendations, I expected that more progress would have been made. In my view, New Zealand is not yet prepared for the next major event, and it is still unclear when we will be.

Improvements to public sector emergency preparedness will continue to be an area of focus for my Office. This will include following up some of our other work, such as our 2023 report on Auckland Council’s emergency preparedness.

Concluding comments

New Zealand remains vulnerable to many hazards and risks, and it is inevitable that we will have to respond to more emergencies. In 2023 alone, there were 18 declared States of Emergency. The public needs to be assured that public organisations are prepared and able to respond, that they do so with integrity, and that they have learned from past events.

The World Health Organisation describes a typical response to emergencies as a cycle of “panic and then forget.” The public sector will often be distracted by urgent matters, and emergency preparedness can be deprioritised to address the imperatives of the day. Calls have also been made to set up dedicated structures or functions that have a long-term outlook and are generally independent of the government.⁵

I am concerned that without an enduring focus on holding government to account, we will not be prepared for the next major emergency. For this reason, I consider Parliament should play a key and continuing role in scrutinising the public sector’s readiness and response for future emergencies.

Recent changes to Standing Orders provide an opportunity for greater select committee scrutiny. I understand that the Governance and Administration Committee has identified Emergency Management Stewardship as one of their scrutiny priorities.

Oversight and scrutiny by Parliament of such a critical function of public sector management would, to my mind, address many of the concerns we have seen, ensure that we do not enter another cycle of “panic and then forget”, and help ensure that the public sector is better prepared for the next emergency.

I am happy to discuss any questions you may have about this letter or our broader work on Covid-19 matters. The Committee may also wish to invite one or more organisations to talk about the progress they have made in addressing our recommendations, or emergency preparedness more generally.

As my Office does with our other letters of public interest, we will publish this letter on our website in due course.

Nāku noa, nā

John Ryan
Controller and Auditor-General | Tumuaki o te Mana Arotake

Appendix 1: Observations from our work related to Covid-19 and emergency management

Emergency planning and preparedness needs to improve

Our work to examine the co-ordination of the all-of-government response to the Covid-19 pandemic highlighted several weaknesses in emergency preparedness.

Before the emergence of Covid-19, there were pandemic-related plans in place, but some documents were outdated and confusing, and many people told us that there was not enough practical guidance on how to implement the plans. No central mechanism ensured that agencies had developed, co-ordinated, or regularly updated pandemic plans. Recommendations from previous reviews of how prepared New Zealand was for a public health emergency (including pandemic simulation exercises) had not been fully implemented.

Our 2020 report about how the Ministry of Health managed the supply of personal protective equipment made similar observations. Despite clear requirements for the then district health boards (DHBs) to publish health emergency plans on their websites, this wasn’t happening consistently, and we found plans that were out of date. The Ministry did not regularly review DHBs’ plans to ensure that they were kept current or that they were well-aligned with national plans. The Ministry did not know what stock was held by DHBs in their national reserve throughout the country, leading to confusion about precisely how much personal protective equipment was available.

The importance of emergency planning was highlighted again in our 2023 report looking at Auckland Council’s emergency preparedness. Although that work was not specifically about the Covid-19 pandemic, many of the same issues were identified. We commented on a significantly outdated Civil Defence and Emergency Management Group Plan, a period when there was no coherent programme of emergency management readiness exercises and testing, and again we found that some recommendations from previous reviews had not been systematically implemented.

In our view, there needs to be more attention given to ensuring that good planning is in place and maintained. Organisations need to have identified critical roles and prepared contingency plans for them, tested key financial and quality controls, and have considered how to ensure that security settings remain fit for purpose in an emergency. They also need plans to ensure sufficient staff capability and capacity to respond to disruptive events.
Mechanisms for central oversight need strengthening

When we spoke to officials involved in the all-of-government response, we heard that although New Zealand’s Civil Defence and Emergency management system worked well for localised events, like fires and floods, it wasn’t well set up for the circumstances of Covid-19. Covid-19 was a nation-wide emergency of extended duration.

This highlights the importance of emergency preparedness at a national level. However, in our view, the central mechanisms to support this might need strengthening.

In our 2022 report on the Covid-19 response, we found that prior to 2020 the governance arrangements for overseeing national risks hadn’t been working as intended, and that organisations had limited capacity to contribute to system efforts to proactively manage hazards and risks. The Royal Commission of Inquiry into the terrorist attack on Christchurch mosques made similar findings. It found that organisations’ delivery against the intelligence priorities had not been monitored. It also found that threat assessments provided to Ministers were not always accompanied by advice on what to do about the risks.

A key challenge of the Covid-19 pandemic was sustaining the public sector workforce to manage all aspects of the response. The public sector needs to be able to draw on a deep and wide pool of people with adaptable general competencies, as well as specific technical expertise, to support all-of-government and whole-of-society responses to complex emergencies. This requires at least some staff in all public organisations to maintain a good understanding of all-of-government strategic crisis, hazard, and risk management frameworks, and be able to implement associated plans where required.

We think there is a need for a cross-sector plan to sustainably staff long-term emergency responses (including recruitment, redeployment, training, and supporting staff well-being). Consideration also needs to be given to how wider government services can continue to be delivered during extended disruption, when public sector capacity is significantly reduced because of redirection of work effort to an emergency.

Realistic scenarios based on recent history also need to be factored into financial and other planning. As we noted in our 2022 commentary on the Treasury’s report He Tirohanga Mokopuna 2021 (which incorporates the Long-term Fiscal Statement), New Zealanders will face a wide range of complex challenges and opportunities in the next 40 years. Understanding which challenges and opportunities could significantly affect the Government’s long-term financial sustainability is critical to supporting and informing strategic financial management and budget decisions.
Maintaining transparency and accountability supports public trust and confidence

In an emergency, critical decisions with far-reaching impacts often need to be made quickly. Without transparency and accountability for those decisions, public trust and confidence can be quickly undermined.

The importance of clear and transparent communications is an important lesson from the Covid-19 pandemic. Despite general acceptance that public communications have been an area of strength of the most intense part of the Covid-19 response, there were moments where communications were not as clear as they might have been, causing confusion.

In our 2021 report looking at the preparations for the nation-wide roll-out of the Covid-19 vaccine, we found that communication channels between the Ministry of Health (the Ministry), DHBs, and primary health care providers were not set up early enough. This meant that key stakeholders did not always feel well informed about their role in the programme.

Early on, the Ministry focused on targeted communications with the groups currently being vaccinated, such as border workers. However, this meant that opportunities might have been missed for Māori and Pasifika healthcare providers to be involved and communicate early with their communities. In addition, some groups in the wider health and disability sector were struggling to get information about their role in the immunisation programme. At the time of our audit, the Ministry had been working with Te Puni Kōkiri and the Ministry for Pacific Peoples to use their knowledge and networks, but decisions still needed to be made about the delivery of Māori and Pasifika communications.

At the time we carried out our work, we were concerned that not all aspects of the programme would fall into place quickly enough to reach the levels of vaccination needed for the Government to meet its goal to vaccinate as many people aged 16 years and over as possible by the end of 2021. We encouraged the Ministry to continue to strengthen transparency and manage public expectations appropriately.

Most of our other work related to the Covid-19 pandemic has focused on ensuring appropriate transparency of spending, and accountability for investment decisions.
The public needs assurance that lessons will be learned

The public also needs assurance the public sector has systems and processes in place for continuous learning and for improving emergency responses.

In our work looking at the co-ordination of the Covid-19 response, we saw evidence of a wide range of activities to review and enhance the response as it unfolded. However, much of this activity was not carried out in a structured way. Sometimes, it depended on individuals (such as team leaders) to decide if, how, and when to improve issues.

In our view, better guidance and tools are needed to help organisations set up independent real-time scrutiny to help support continual improvements during an extended emergency response. We encourage the Committee to consider what the role of central organisations with oversight responsibilities should be.

There are plenty of examples of good practice to draw from. Two rapid reviews were commissioned by the chairperson of the Officials Committee for Domestic and External Security Coordination in 2020. A Covid-19 Independent Continuous Review, Improvement and Advice Group was established, and the results of some of its work are publicly available.

About 50 major reviews (independent external reviews as well as internal reviews) were completed during March 2020 to June 2021, producing approximately 1200 recommendations. Consideration now needs to be given to how best to monitor progress and provide assurance to the public that those recommendations will be implemented, and improvements made.

Appendix 2: Summary of organisations’ follow-up responses (unaudited)

Recommendations covered in response	The Ministry of Health	DPMC and NEMA	Public Service Commission
Recommendation 1 Ensure that there is central co-ordination and clear roles and responsibilities for: government agencies to keep emergency management plans up to date and consistent with agreed standards, current guidance, and other best practice; implementing improvements from regular emergency management exercises and other evaluations of emergency readiness; and monitoring progress in implementing those improvements.	The Ministry now has the all-of- government Covid- 19 function. They have started updating the pandemic plan in a two-stage process. The Ministry established the Emergency Management Steering Committee as a governance mechanism to provide system-level guidance and direction for health emergency management.	DPMC are updating the National Security Systems handbook – they are due to complete this in the coming ﬁscal year. Other updates are also under way. DPMC has disestablished the National Security Group and replaced it with two new groups to allow for an increased focus on risk and governance. The Emergency Management Bill has been discharged from the House. A new bill is expected to replace this. NEMA has started scoping an assurance capability. However, they have indicated this is likely to require more resource to progress. NEMA is leading catastrophic emergency management planning. Also in 2024, NEMA will work with more than 50 organisations to deliver an all-of-government catastrophic planning handbook.	The Commission has been working with DPMC on machinery of government arrangements for the Emergency Management Bill.
Recommendation 2 Ensure that key staﬀ maintain a good understanding of all- of-government strategic crisis management, hazard risk management, and emergency management frameworks, including relevant legislation and guidance on lessons management.		NEMA and the Auckland Policy Oﬃce have established a network of delegated chief executives outside of Wellington to increase resilience during emergencies impacting Wellington. NEMA has provided training on the Coordinated Incident Management System “train the trainer” programmes, and ongoing specialised development for those in deployable teams.	PSC have engaged with NEMA on their work to establish a model for the Alternate National Crisis Management Centre in Auckland.
Recommendation 3 Develop and maintain workforce plans for sustainably staffing long-term emergency responses (which should include appropriate mechanisms for recruitment, redeployment, training, and supporting staff well-being).	The National Public Health Service, within Te Whatu Ora, now has a range of national and regional capabilities that can surge as required. The Ministry notes that public sector cost-saving decisions may impact previously planned investment in Emergency Management capability. Te Whatu Ora plans to implement a workforce framework to enhance its capability. The Ministry notes that system-level vulnerabilities remain which are compounded by many challenges.	Both DPMC and NEMA utilised PSC’s Workforce Mobility Hub to obtain specialist and/or additional resources during recent responses. Examples include the Ukraine/Russia conflict and the 2023 severe weather in the North Island in 2023. NEMA said their approach to well-being has been a focus in recent emergency responses, including the response the 2021 Covid-19 Delta resurgence and the severe weather in the North Island in 2023. NEMA has established a National Controllers Working Group to identify and develop people who have the skills and leadership to fulfil the National Controller role.	The Workforce Mobility Hub that was established during Covid-19 has grown. It now includes a network of Agency Workforce Leads. PSC have identified the need to undertake and support system- and agency-level long-term workforce planning.
Recommendation 4 Demonstrate how they are making improvements during an ongoing response by: systematically identifying lessons, taking action, and monitoring progress; seeking independent expertise and acting on that advice, as appropriate; and reporting the findings of reviews publicly in a timely and accessible way, including whether they have implemented recommendations.		Since 2021, NEMA has progressively developed a continuous improvement function to collect observations and identify lessons to support improvement during an emergency response. They monitor interventions and share the tools, processes, and techniques with other organisations. NEMA used this approach during the severe weather in the North Island in early 2023. NEMA continues to mature its lessons management capability. They have encouraged organisations to refer to the Australian Lessons Management Handbook until New Zealand guidance is created.
Recommendation 5 Improve the transparency of, and engagement with the public on, risk, readiness, and response arrangements to inform strategic policy, planning, investment, a		DPMC has conducted and published a public survey in 2023 exploring New Zealanders’ attitudes and opinions relating to risks and hazards. The same survey was conducted in 2022 and they plan to conduct another survey in 2024.
Recommendation 6 Provide regular assurance to Parliament about the public sector’s readiness for major disruptive events, including how they have implemented our recommendations.		DPMC and NEMA state actions on assurance are contained in their letter dated 2 February 2024, which will be published on our website. It is unclear how they are doing this other than through interactions in the annual review process when prompted by the Governance and Administration committee.

1: Auckland Council: Preparedness for responding to an emergency.

2: Managing public funding in an emergency response or recovery.

3: Commentary on He Tirohanga Mokopuna 2021.

4: The Department of the Prime Minister and Cabinet, the National Emergency Management Agency, the Ministry of Health, and Te Kawa Mataaho Public Service Commission.

5: We refer to these at paragraph 8.94, page 89 in Co-ordination of the all-of-government response to the Covid-19 pandemic in 2020 where we have included some suggestions.