2020 IPANZ Annual AddressFinance
Kia ora. Ngā mihi nui ki a koutou katoa. Nau mai haere mai ki te Whare Pāremata.
E ngā mana whenua ki tēnei rohe Taranaki Whānui, Te Upoko o Te Ika, Ngāti Toa Rangatira, Ngāti Raukawa – kei te mihi, kei te mihi, kei te mihi.
E ngā mana, e ngā reo, e ngā rangatira, tēnā koutou, tēnā koutou, tēnā koutou katoa.
Greetings, everybody. It's my absolute pleasure to be back with you today.
First, can I acknowledge IPANZ and the terrific work you do in promoting the importance of good public administration and of a strong public service ethos. It is vitally important to me that we uphold those values, that we keep talking about the role of public services in our society and we continually improve them.
I do want to start, just before I get into a few of the things we have done, are doing and plan to do in the broader public services space, to once again put on record my appreciation on behalf of the Government for the incredible job that our public service and our broader state sector does to support the Government of the day.
I spoke last year in February and the 15th of March had not happened by that point. I want to say that while the 15th of March was the very darkest of days for New Zealand and the very worst of times, the response by the New Zealand public service was of the highest quality.
As New Zealanders we can be immensely proud of the response of everybody, ranging from our emergency services, our first responders all the way through to the officials who set up in tents in Hagley Park to provide immigration, social development services, the Office of Ethnic Communities who were on the ground right away, in there with the families of those who had been killed and injured. It was an Herculean effort. That is the public service ethos and I am so proud to have seen it in action in and around the 15th of March - it was a sight to behold. You can be all very proud of the people who were involved there in Christchurch.
And very sadly for New Zealand, we had to repeat that with Whakāri White Island in December last year. Once again, the broader public service, the state sector stepped up be it the Defence Force, the incredible efforts of our health professionals. I think it's a cliché, but I think it’s a cliché because it is true - the ability of New Zealanders to quickly turn their hand to whatever happens.
In Whakatane, the staff of that hospital, a small hospital, did the most remarkable things on that day. Just before that happened they had just done a mass casualty exercise which involved a crash at Whakatane Airport. They thought that they would have to intubate maybe two people at the crash site, on that day they intubated about 20 people. They took on roles that most of us would never want to do. The person who does the maintenance at the hospital was doing the triaging of people coming off the helicopters.
So not only in those situations of crisis and emergency do we see the public service work at its best, but we see it every day. We see it in the people who are in this room and in the quality of advice that you give to ministers and to support that you do give to implement the programs that are agreed by Government and I want you to know it's appreciated.
I do want to say one caveat right at the beginning and that is that I understand that when you hear some of the lofty rhetoric that you hear from me when I'm talking about what I want to see change in the public sector.
You might say, ‘well, I'm not seeing all of that in the day to day work that we are doing’ and I do want to acknowledge that up front, because this is a long process. We're talking about changing the whole way that we've gone about delivering public services pretty much for the last 30 years. It's about keeping the good bits and it's about moving forward in a more joined up way, in a way that takes longer term perspective and thinks about our success in different ways
That's not going to happen all at once and I want to acknowledge that ministers have quite a critical role in making sure that that does happen. So we haven’t built Rome in a day or in two years but I think we are making good progress, and I hope that you will feel that in some areas too.
A big part of what we want to do is make sure that we deliver the Wellbeing Budget successfully and I believe that we did. The budget document genuinely for me represents a break from the past in the way that we put budgets together. Its physical appearance is actually I think a good metaphor for what we were trying to do. We were trying to tell the story of what the Government was about and what the budget was a contributor to, not to try to see it as some kind of endpoint that we could wrap up, put on the shelf and say we did that, but rather a narrative about where we are as a country, how the interventions that we are proposing work and where we want to go with the future.
What more did we learn as we went through? Well, we had goals like breaking down the silos of Government – of which we had some success. So if you look through this budget document, you'll see examples like Hāpaitia te Oranga Tangata - the programme that brings together Corrections, Police, Social Development and Whānau Ora, to start talking about how we do make sure we lower our prison rate, we reduce offending, we reduce recidivism, integrated projects between those agencies. This is terrific stuff.
The joint venture on the elimination of domestic and sexual violence, an incredible project in many ways, and it's just worth repeating, from a ministerial point of view, the ministers involved: Jan Logie, Justice Undersecretary, Andrew Little as Justice Minister, Carmel Sepuloni as Social Development, Tracy Martin as Children’s Minister, Nanaia Mahuta from Māori Development, Chris Hipkins from Education, Stuart Nash from Police, Kelvin Davis from Corrections, Iain Lees-Galloway with ACC and Jenny Salesa with associate Education. All of those ministers and their agencies together working on one set of outcomes, one set of accountabilities with a parallel body in the NGO sector working alongside us. Anyone who’s been involved with it knows it hasn’t been plain sailing.
It's being incredibly challenging to bring all of those things together but it’s a different way of working and it’s what the Wellbeing Approach is about. Breaking the silos down. The people who interact with sexual violence services don't want to know which government agency it is, they just want the help and assistance. We have to take that approach and we are very proud of the Joint Venture as a part of that.
One you might not have heard much about – Healthy Active Learning. This is that the distant daughter of a programme called Healthy Eating Health Action which was run by the former Labour Government. This brings together the Ministry of Health, the Ministry of Education and Sport New Zealand to deliver programmes in schools that integrate together nutrition, physical activity and understanding the importance of those to you. It's an amazing programme and we’re about to roll out the first aspects of it in a month or so. One of the most interesting things about it is that at no point in the history of Sport New Zealand or its predecessor the Hillary Commission were they ever invited in by the Ministry of Health and Ministry of Education to a budget process. We did that this year.
It is important to me that we’ve started to show that you can break those silos down even between the different parts of our broader public and state sector, not just within core government agencies and departments but out into the crown entities. Why not take that further why not start thinking about that with those that aren’t even part of the Government – NGOs, the possibilities are endless if you are prepared to break down those silos.
So we feel like we have made a good start and good progress. But it didn't happen everywhere. We still had bids that were coming in that clearly hadn’t been talked about between ministers. We tried to run a process to support that by involving cabinet committees in the creation of budget packages. I have to say that didn't quite work either, it was at the wrong point in the process. The cabinet committee process is quite formal, it meant that ministers tended to position themselves rather than think about the broader goal that we were trying to achieve. As most of you know, we set the budget priorities and we asked for ministers to contribute to those priorities. The five priorities didn't line up with our cabinet committees exactly so we had competing conversations taking place. So one of the lessons we learned and one of the changes we made for this year was we took it out of the cabinet committee process and we simply created ministerial groups built around the five priorities.
I’m right at the point of having to mesh them all together and I have to say that the ministers and their secretariats of officials who supported them did a great job. We've done much better at getting single packages from multiple ministers under those priority headings.
We by and large kept the same priorities. We had to do that as the kinds of issues that we're looking at for the Wellbeing Approach are not going to be solved in one budget. So again, we’ve renamed them a bit so they're a bit clearer. We’ve stuck to a just transition to a low carbon economy, how do we engage and involve people in the future of work, lifting Māori and Pasifika opportunities, child wellbeing and the health priority being our physical and mental health. They are by and large the same and we need the consistency of that so that we can sustain our investment in those critical areas.
In setting those priorities, in Budget 2019, we engaged the Government's network of science advisers in making sure that we got the right priorities. We are taking it another stage forward now in Budget 2020. We actually went out and got the whole network of science advisers to assess those priorities. That's how we decided to tweak some of them. We took it another step forward - we went out to a group of sector stakeholders - Council of Trade Unions, Business New Zealand, Maori Women’s Welfare League and others, and said do you think these priorities in your areas represent what we should be doing? And we tweaked them on the basis of that. We continue to use the Treasury's living standards framework as the core of looking for the evidence of what our priorities should be. So you are not going to see a lot of shift in the big indicators there but we did again tweak again on the basis of that.
So we're improving this as we go. We are making this, to my mind, a different way of doing budgets and I want to keep building on it. But we have made those changes in the budget 2020, and we are getting somewhere with it.
When you see the budget that comes out this year, hopefully once again, you'll see that wellbeing lens throughout it. We continue to analyse each budget bid on the basis of a wellbeing approach. I know people are getting used to writing wellbeing budget bids and they’re not just putting the word wellbeing into it and going ‘yes we’ve done it’ - people are actually now starting to really drive into what they're doing with it.
The other really important aspect of that is taking a different approach to baseline reviews. Rather than seeing it as an ad hoc approach, we've gone for a much more systematic approach to going deep dive into the baselines starting with big-spending areas. So we started with the baseline review of the Ministry of Social Development. That was a very interesting exercise, and it deeply influenced what we needed in the budget. We are now on a pathway for understanding of the cost drivers. It's one of the things that led us to put a huge investment into more case managers at MSD because we realised that because of how the work programme at MSD had evolved, that core role of supporting people into work was actually being diminished by the tasks at hand.
So that's what the baseline review can do. It's given us a pathway. We now have just completed the Defence one and that's too thrown up some really interesting issues for us, areas where things have not gone to plan, and we've had to ask ourselves why that is and start to correct the course.
We’re now going to up the ante on that, we’re going to run more than one at a time. So the next couple we are looking at will be MBIE and the Ministry of Justice. The Ministry of Justice has come forward to us and said if that's what they want. That's how I think this should work. A baseline review shouldn't be seen as a razor gang, it should be seen as a partnership between the Treasury and the agencies involved. So baseline reviews now become important, because whatever we do in the Wellbeing Budget, unless we're applying the same wellbeing approach to baseline as we are to the new spending then we aren’t going to make the big differences that we want. That requires all of those involved in the preparation of budgets to be to be on top of it.
In terms of where we want to take the public finance system from here. The Public Finance Act Wellbeing Amendment Bill this in the House at the moment. It is the piece of legislation that means that wellbeing must be reported on at budget time and it also obliges the Treasury to do a four yearly report on where the whole system is at on wellbeing.
The next stage that we want to go through is how we take the best of the public finance regime that we've got, which does give us a great deal of transparency and is one of the things that contributes to New Zealand being well regarded in terms our public finance system, but then take it forward to address the weaknesses that we know exist.
That includes many of the things that we’ve talked about - do we really have clear strategic intentions that are shared across the public service that they follow through on? How do we make sure we do get greater focus around baseline funding rather than just the new spending? How do we make sure that the annual cycle of budgeting and reporting and parliamentary scrutiny is actually useful to all of us? Are all of the reports we're writing about our spending actually helping add value to exercise? And how do we break down that fragmentation of funding both across and within portfolios to focus on delivering results? All of that work will be coming together over the coming months and I’m going to be releasing a discussion document shortly that will set out a series of proposals that go towards modernising our public finance system.
It is going to include determining how the Government sets its priorities, piloting some fundamentally different approaches to planning and we’re already starting to do that at the moment. Also how we report with a number of agencies, how do we do that across agencies and shifting over time to multi-year budgeting. One of the things that I've been really excited about is the multi-year capital allowance, which was an enormous shift for us in terms of rather than doing annualised capital bids. So if we made a decision as we did in Budget 19 to buy the new P8 planes, I had to account for every dollar of those at once and it wiped out most of an annualised capital allowance, even though we actually weren’t spending the money until 2022/23. Giving ourselves a multi-year capital allowance has allowed us to plan out four years ahead - potentially that could go longer as well.
It meant that we could give four years of funding to education capital, it provided certainty for the building industry, schools to parents and a two year investment in health care. We now want to think about how that would work for multi-year budgeting generally across the operational side into departments. More information and real time information on outcomes based information and a greater focus on the effectiveness and efficiency of our spending – all of it too, not just the new stuff.
I’ll just say a bit around the Public Service Bill because you know that's now been introduced. The critical element for us is establishing a piece of legislation that is actually called the Public Service Bill. Now no offence for those who were part of creating the state sector legislation, but even the loss of the name public service was something we struggled with and so we wanted to make sure we brought it back into the title. What the legislation does is establish the purpose, principles and values of an apolitical public service, as well as its role in government formation.
For the first time, we're going to be clear about the Crown's role and relationship with Māori in law in terms of the public service. The act was silent on that until now and it's time to deal with it. We do want the public service to be able to move between agencies more easily, to be able to be part of those more flexible arrangements like joint ventures like inter-departmental executive boards. That requires us to have some more common conditions, the ability to move leave with you if you are going to move from one place to another, and we want to strengthen our leadership across the public service.
I know there have been some criticisms of the legislation that it in some ways entrenches some of the things that people don't like about the State Sector Act. I think we actually are doing something quite different here that is about outcomes and about implementing the Wellbeing Approach. I think we've struck the balance between the organisational forms that we have now and the flexibility that I know that we all want to be able to deliver.
We are, as I said, looking at some changes around strategic planning documents and we're working with a number of ministers and agencies at the moment to pilot different approaches in Justice, Social Development and Transport. They are piloting different ways of working, multi-year pathways, different approaches for focusing on issues and planning documents.
So all of that amounts to a very big work programme in terms of where the public sector is at and I know that level of change can be somewhat frightening to people. I also know that there will be a fairly understandable cynicism about whether or not this amounts to the kinds of changes we’re talking about. What I want to reassure you of is that we remain committed to a public service that upholds the best principles and ethics that you do every day, but also gives you the flexibility to be part of achieving those outcomes and goals.
We think we’ve got the balance about right but we are always open to discussion on that. We keep driving that programme forward so that wellbeing is embedded, that our structure is supported and our public financing system supports that, and that ultimately you are supported to do your job on behalf of New Zealanders.
Nō reira, tēnā koutou, tēnā koutou, tēnā koutou katoa.