SUPPLEMENTARY NOTE: BETTER PUBLIC SERVICES LEGISLATIVE PROPOSALS

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1 Office of the Minister of State Services Chair Cabinet SUPPLEMENTARY NOTE: BETTER PUBLIC SERVICES LEGISLATIVE PROPOSALS Purpose Cabinet s State Sector Reform and Expenditure Control Committee (SEC) discussed the seven Better Public Services (BPS) legislative proposals on Tuesday, 8 May. This note summarises the context and substance of those papers. Context for the seven BPS papers One of the Government s four priorities for this term is delivering better public services to New Zealanders within tight financial constraints. The 10 Better Public Service results are the key focus for mobilising the State Services to deliver these better public services. Targets for all 10 results will be announced by 30 June. The Better Public Services programme also encompasses improving the quality, responsiveness and value-for-money of State Services; and strengthening leadership to drive these changes, including central agencies acting more collaboratively as a de facto corporate head office of the state services. These seven BPS papers detail the legislative and administrative changes needed in order for the state services to effectively deliver on the Better Public Services programme given tight financial constraints. These proposals cover amendments to the legislative cornerstones of the public sector management system: the State Sector Act, Public Finance Act and Crown Entities Act. Main elements of the proposals Strengthening the role of the State Services Commissioner in order that the State Services can be effectively led and delivered. Providing additional tools to support stronger collaboration between agencies to achieve results and manage expenditure. These tools include new organisation arrangements (Departmental Agencies and Specific Purpose Boards), a new purpose-based appropriation to support results, and greater flexibility in how whole-of-government directions can be applied to Crown entities (removing the current one-size fits-all approach) Making reporting to Parliament from departments and Crown entities more meaningful and streamlined. For example, permitting strategic intentions to be reported at least every 3 years (rather than annually) and greater flexibility in how to measure and where to report performance against an appropriation. 1

2 Updating department chief executives and Crown entity chair responsibilities to include working across agencies, where practicable, to achieve collective interests. A number of other technical proposals to remove obstacles to efficient application of the legislation and address lessons learnt since the legislation was last updated (the State Sector Act has not been significantly amended since 1988). Annex 1 illustrates how some of the proposals could be used. Legislative Boards: issues for Ministers to consider Following from the discussion at SEC, two key issues for Ministers to consider in relation to Specific Purpose Boards are: o o Whether to provide the ability to create Specific Purpose Boards in legislation (i.e., an option in reserve should it be needed). This would be in addition to creating these boards under Cabinet mandate. A chief executive s collective responsibilities under a legislative board would take precedence over their individual statutory responsibilities. Whether legislative boards should be able to have independent members with voting rights (again, an option in reserve). The paper proposes having independent board members who would be appointed by the State Services Commissioner following the same process as departmental chief executive appointments Details on Specific Purpose Boards, both Cabinet mandate and legislative, are provided in BPS Paper 4: Specific Purpose Boards. Annex 2 provides some scenarios to illustrate the implications for decision-rights between Cabinet mandate and legislative boards. Independent board members have the potential to strengthen a board through their specific expertise and skills. However, their expertise and skills could be provided in an advisory capacity and independent board members with voting rights may also be viewed as a step towards eroding the political neutrality of the public sector. Should Cabinet decide not to have independent board members, the recommendations in BPS Paper 4: Specific Purpose Boards should be amended as per Annex 3. Hon Dr Jonathan Coleman Minister of State Services Date: / / 2

3 Annex 1: Illustrative examples of how legislative innovations could be used in practice PROPOSALS POSSIBLE APPLICATION (ILLUSTRATIVE ONLY) POSSIBLE BENEFITS Specific Purpose Boards Functional Leadership Crown entities and functional leadership Justice Sector A Specific Purpose Board (Justice, Corrections, Police) could be made collectively responsible for policy, budget and investment strategies to reduce the rates of total crime, violent crime and youth crime (Result 7) and reduce reoffending (Result 8). Government Chief Information Officer (GCIO) Cabinet could require departments to get the agreement of the GCIO for all IT investments, which enable GCIO to influence nature and timing investments. Accommodation A functional leader for government accommodation could be applied to Crown entities and departments. Through proposed amendments to whole of government directions, the Ministers of Finance and State Services are able to direct subcategories of Crown entities to comply. Stronger pipeline integration focus on the justice sector result Better sector trade-offs sector view of funding and investment Delivery through individual departments Cost savings from whole of government IT procurement. Better information sharing through standardisation. Standardisation can allow re-engineering systems to improve citizen access Cost-savings through initiatives such as accommodation sharing and more uniform accommodation standards (e.g., square metres per employee) Treasury: v5 3

4 Annex 2: Cabinet-mandated Boards and Legislative Boards comparing scenarios Under a Cabinet-mandated board, where there is a tension between the collective objectives and the individual legislative responsibilities of the chief executive, the chief executive has a legal right to act independently. That is, individual responsibilities trump collective obligations. Under a legislative board, the legislation would provide that the collective responsibilities of the chief executive would trump their individual responsibilities under the State Sector Act and Public Finance Act. Cabinet, through setting the terms of reference for each board, will determine the extent that decision-rights shift from individual chief executives to a board. In doing so, Cabinet would also be signalling the shift in decisionrights from individual Ministers to the Minister or group of Ministers responsible for the Board. However, the legislative board proposal does not affect which decisions should be taken at Ministerial level or should be referred to Cabinet Committees and Cabinet. Cabinet mandated boards are more easily established (and dis-established) than legislative boards, while providing many of the incentives and tools to strengthen cross agency work. A legislative board is likely to be more visible and signal commitment to a longer-term arrangement, which offers potential for greater buy-in and investment from Ministers and departments to lock in cross-agency work. Scenarios Cabinet-mandate board Legislative board A. Department A proposes to reorganise its activities to improve services and value-for-money. The proposals relate to the operational activities of the department and are significant enough to require consultation with Minister A. The proposals would affect the approved objectives or strategy of the Board. B. Minister A proposes changes in policy or strategy for implementation by Department A The proposals would affect the approved objectives or strategy of the Board. C. Minister A and /or Department A propose changes that fall outside the scope of the Board s remit (or to apply the Board s approved strategy) Department A should, but is not required, to put the issue to the Board for consideration. Minister A should consult with other affected Ministers. Same as Scenario A above Board consideration is not required. The board may be informed. Depending on significance of changes, Minister A and/or Cabinet may be consulted. Department A is required to put the issue to the Board for consideration. The Board would need approval for any change to its strategy from its Ministers (who would likely include Minister A) Same as Scenario A above Same as Cabinet-mandated board Treasury: v5 4

5 Annex 3: Amendments to BPS Paper 4: Specific Purpose Boards recommendations - removing independent member and chair options Replace recommendation 4.2 with: 4.2 Provide more definitive leadership through a chair who can exercise a casting vote, than is possible with a Board established by Cabinet terms of reference; and Delete recommendations 14 and 15.2 Replace recommendation 15.3 with: 15.3 The respective roles and responsibilities of department chief executives and Board chair Delete recommendations 25 and 26 Replace recommendation 33 with: 33 agree that the State Sector Act will specify that each Board shall have a chair, designated by the State Services Commissioner, that chair being a chief executive of a department listed in the Schedule establishing the Board Replace recommendation 41.2 with: 41.2 Designated chair Treasury: v5 5