New Zealand Institute of Chartered Accountants

Good afternoon and thank you for the invitation to speak today.

I warmly welcome new links between the NZ accountants’ professional body and it’s counterparts in Australia and the UK.

There was once a business owner who was interviewing people for a division manager position. He decided to select the individual who could answer the question “how much is 2+2?”

The engineer pulled out his slide rule and shuffled it back and forth and finally announced, “It lies between 3.98 and 4.02”.

The lawyer said “In the case of R vs Smith, 2+2 was found to be 4”
The social worker said “I don’t know the answer, but I am glad we discussed this important question”.

The accountant meanwhile looked at the business owner, then got out of his chair, went to see if anyone was listening at the door and pulled the blinds.

Then he returned to the business owner, leaned across the desk and said in a low voice, “What would you like it to be?”

Of course that would never happen here.

Accountants in the public service are far more than bean-counters – they advise on getting the best value from every tax dollar.

As New Zealand weathers the Christchurch earthquake losses and the global financial crisis, the best advice in the world is needed.

These new links will strengthen the already high level of expertise in New Zealand.

This event today acknowledges the collaboration of the New Zealand Institute of Chartered Accountants’ (NZICA) with The Institute of Chartered Accountants in Australia (ICAA) and the Chartered Institute of Public Finance and Accountancy (CIPFA).

CIPFA is the specialist public sector accounting membership body in the United Kingdom (with over 14,000 members).

This collaboration will broaden your Institute’s range of professional development and services especially for the public service.

This will benefit all New Zealanders as well as your members working in public finance here in the New Zealand.

The collaboration’s strong focus on capability development sits well with the Government’s drive for better public services and better value for money.

It is indeed timely for NZICA to take this lead on assisting the New Zealand public service to improve its financial management capability.

Change in the New Zealand public service continues apace.

Improving frontline services in the context of flat – and in some cases reducing – funding is the order of the day.

Professionals managing public finances will – more than ever – be at the centre of necessary planning and decision-making.

The tight financial times mean there’s a lot of pressure to make savings, reduce waste, and consider new ways of doing things.

Some very tough decisions will be made over the next few months and the years ahead.

Your 3-way collaboration is about helping New Zealand public finance professionals and their organisations gain further insight and skills needed to meet these challenges.

But this financial environment is not unique to New Zealand.

The global situation remains a major risk for the economy.

It is very fragile.

Around the globe, governments are making tough and often unpopular decisions to secure financial and economic sustainability.

The government in the UK - like us - has been confronted with massive deficits.

They're planning to cut billions and billions of pounds from the budget by freezing public sector wages for two years, freezing recruitment and losing up to half a million public sector jobs by 2015.

In Italy, the Government passed an austerity package to achieve around $50 billion of savings, which also includes a freeze on public sector wages.

The Irish have cut public service salaries by up to 15%, and plan to cut up to 30,000 state sector jobs by 2014.

France is shedding 100,000 public sector jobs by 2014 and cutting departmental budgets by 10% over three years.

Fortunately New Zealand's economy has weathered the storm better than most.

But we are still borrowing an average $300 million a week to protect and grow our important social services, including health.

This year alone the Government's cash borrowing is expected to be around $16 billion.

Now, just as the earthquakes have changed the landscape of Christchurch, they will also change the landscape of public finances.

The Treasury estimates that the total financial cost of damage from both Christchurch earthquakes to be around $20 billion; about $5 billion for the 4 September earthquake and $10 - $15 billion for the 22 February earthquake.

The total annual tax take is $70 billion.

These costs will be shared between central government, local government, insurance companies and the business community.

Add to that the challenge of slower-than-projected international and domestic economic growth.

It is also thought that our total tax revenue could also be down by $5 billion over the next five years.

In meeting these challenges the Government looks to the public service to play its part. And we look to public finance professionals in particular in three areas.

Strong and effective leadership in departments is pivotal.
The Government has made it clear that we expect public finance professionals to be key parts of departmental leadership teams.

We need a more cost conscious public service… because when finances are tight, every decision needs a sound financial basis.

And we need public finance professionals to step up with knowledge and skills to contribute to managing taxpayers money wisely throughout organisations.

Your collaboration is about all three of the above: developing future finance leaders, enhancing financial analysis, and improving organisational performance and management.

I commend the leadership shown by the New Zealand Institute of Chartered Accountants in collaborating with the Institute of Chartered Accountants in Australia and the Chartered Institute of Public Finance and Accountancy from the United Kingdom.