Government to act on policy advice spending review

  • Bill English
  • Tony Ryall
  • Rodney Hide
Finance Regulatory Reform State Services

The Government’s Review of Expenditure on Policy Advice identifies several significant issues with the cost, quality and management of policy advice and makes 36 recommendations to address them.

The review, announced last year, will help the Government’s wider programme to control growth in the costs of public sector back office functions and deliver better frontline public services, Finance Minister Bill English says.

However, it does not recommend specific cuts to policy advice spending.

"It is vital that the Government receives high quality and cost effective policy advice," he says. "Providing policy advice is a core part of what the public service does and it affects how public money is spent, how the Government operates and what future public services will look like.

"The review identified several issues, including the need to set clear policy priorities across agencies and other information sharing initiatives."

The Treasury, State Services Commission and Department of Prime Minister and Cabinet have been asked to produce a detailed plan by 30 June 2011 to pick up on the review’s recommendations and to ensure public agencies follow the plan.

In 2010/11, policy-related appropriations across government agencies amounted to more than $880 million – up from about $510 million in 2003. However, some of these appropriations were used for non-policy outputs, leaving actual policy spending at just over $520 million, according to the review.

"This is a significant amount of money and we owe it to taxpayers to ensure that government spending on policy advice is both effective and well targeted," State Services Minister Tony Ryall says.

"Although this spending on policy advice represents less than 1 per cent of the Government’s $70 billion in total annual spending, it critically shapes the Government’s wider policy programmes and strongly influences New Zealand’s wider economic performance and social outcomes."

Regulatory Reform Minister Rodney Hide welcomed the policy advice review, which fell within the ACT Party’s confidence and supply agreement with National to initiate a series of taskforces on government spending.

"ACT campaigned on the need for stricter disciplines in relation to public sector spending. Currently there is too much variation in the quality of policy advice and we believe the public deserves better," Mr Hide says.

"These changes will improve the value for money in the public sector and will lead to improvements in the quality of advice ministers receive."

The Review of Expenditure on Policy Advice was chaired by former Treasury secretary Graham Scott. Other members of the review team were former secretary of the Department of Human Services in Victoria Patricia Faulkner, and Commerce Commission member Pat Duignan.

The review cost about $80,000, excluding the cost of secretariat support, which was met by reallocating existing Treasury and State service Commission funding.

The review team’s report and the Government’s response are available at: