NEW ZEALAND

The core executive in New Zealand is shaped according to new public management approaches and methods. Most importantly, contracts are negotiated between ministers and chief executives in a large number of departments and ministries. With 35 government departments and ministries, taking a whole government approach to policy development can be complex and time-consuming. After 1999, the Labour-led governments reacted to concerns about fragmentation and silos by recentralizing the steering capacity of the core executive. The most important government departments involved in strategic planning and policy formation are the central agencies of Department of the Prime Minister and Cabinet (DPMC), the State Services Commission (SSC) and the Treasury. All contracts (performance agreements, departmental statements of intent) support a cooperative and whole government policy approach, though evaluation of the performance assessment of chief executives has a strong focus on departmental achievements. The new National-led government in the period under review decided to seek substantial efficiency reforms without a major reorganization of public sector departments and ministries. This has led to various initiatives, such as greater rationalization and coordination with respect to back-office functions (such as IT, payroll and procurement) with a view to achieving savings which can be shifted to delivering front-line services. Since chief executives are on contract and employ the staff, these changes can only occur with their support and cannot be imposed on individual departments.
Developing strategies to enhance public sector performance management has been progressing for some time. At the end of 2008, DPMC, SSC and the Treasury released “The Capability Toolkit,” “a tool to promote and inform capability management” and strengthen the management and efficiency of government departments. A “Performance Improvement Framework” was published in late 2009 and is now being used for both self-assessment and external review of the performance of government departments and ministries. Since the government has imposed a cap on the size of the state sector, these measures are aimed at securing greater efficiency, effectiveness and performance across the state sector.
There is only a moderate strategic planning capacity that the prime minister can make use of (policy advisory group) vis-à-vis the ministers and increasingly, more ad hoc groups, often including some outside expertise, are complementing the policy advisory work of government agencies. For example, the design of the government’s tax reform package was aided by the work of an independent tax policy working group outside of government that had brought together experts to debate issues and provide advice to the government. The National-led government has found this approach attractive in that it connects the government to expertise while also allowing ideas to be debated by the public prior to decision-making. As pressures on government spending grow in areas such as social security benefits, police, justice and corrections, health and education services, and so on, the government is seeking public-private partnerships and more practical and low-cost solutions which involve greater self- or community-help. One notable initiative is the Whanau Ora program, a policy developed by a minister from the Maori Party, which has pooled funding from government agencies to develop and deliver service to Maori and their families/tribes which are more holistic, tailored and effective in achieving better outcomes.

The relevance, in terms of frequency and intensity of policy advice, of external academic experts on governmental policymaking depends on the subject area. Non-governmental academics with technical expertise can have a significant role in policy areas such as health, energy and tertiary education. In general, the importance of scholarly advice has increased.

The policy advisory group in the Department of Prime Minister and Cabinet (DPMC) currently consists of 14 staff who cover a broad spectrum of policy expertise. They concentrate on important bills, necessitating interagency coordination. Recent examples have been the prime minister’s summit on employment and projects for at-risk youth. In addition, special units and task forces are established in the DPMC that provide advice on a particular policy issue over a period of time.

The key policy adviser in the Department of Prime Minister and Cabinet (DPMC) plays a very influential role in policy processes and regularly intervenes to “pull” cabinet papers that are deemed to be inadequate in some way.

If line ministries prepare a policy proposal, they are obliged to consult other ministries affected as well as the coordinating units, the Department of Prime Minister and Cabinet (DPMC), the Treasury, and the State Services Commission. There are clear guidelines which not only de jure but also de facto govern the coordination of policy formulation in the core executive.

There are clear guidelines for policy formulation in the New Zealand core executive. All policy proposals are reviewed in cabinet committees. Full cabinet meetings therefore can focus on strategic policy debates and policy conflicts between coalition partners or between the government and its legislative support parties in the House of Representatives. In quantitative terms, from July 1, 2008 to June 30, 2009, the full cabinet met 45 times with on average 14 items for discussion while cabinet committees met 158 times with on average eight items on their agenda per meeting.

The cabinet process is overseen by the cabinet office on the basis of clear guidelines. Departmental chief executives typically meet with ministers prior to cabinet meetings to discuss the agenda and clarify matters. In addition, from 2009 new senior officials’ committees have been established to support cabinet committee chairs.

The amount and effectiveness of policy proposal coordination varies a great deal depending on the policy field. However, there is clearly coordination in the preparation of cabinet papers and quite demanding processes specified in cabinet office circulars. That, beginning from 2009, new senior officials’ committees have been established to support cabinet committee chairs points to earlier weaknesses that need to be overcome with a new instrument for coordination.

In addition to formal coordination, there are a number of informal channels between coalition partners, government and legislative support parties, and ministers and their parliamentary parties. However, the cabinet manual seeks to at least formally clarify which procedures should be used as a guideline in case of informal coordination. For instance, Cabinet Office Circular CO (09) 07 “National-led Administration: Consultation and Operating Arrangements” defines the relationship between government ministers and ministers from parties that are officially not part of the government: “Support-party Ministers are not members of Cabinet. From time to time, support party Ministers and other Ministers outside Cabinet may seek the Prime Minister’s agreement to attend Cabinet when significant matters within their portfolios are being addressed.”

Following its restrictive policy regarding regulation, the National-led government has introduced a guideline in late 2009 with the effect that RIAs are systematically undertaken for any policy activity involving options that may result in a paper being submitted to cabinet and, accordingly, may lead to draft legislation. This aims at restricting new regulations to those that the government sees as necessary, sensible and robust and to avoid regulations which are ineffective and costly.

Regulatory impact assessments are very detailed, according to a prescribed schedule. They have to be made public.

According to a prescribed schedule, regulatory impact assessments have to include options and calculations of costs and benefits. Government agencies producing regulatory impact statements (RIS) are not required to recommend a preferred policy option.

New Zealand has a strong tradition of broad consultation with interest groups and its citizens. The need for consultation has been enhanced more recently by two developments. One is the change to a multiparty system and the formation of minority governments, which require the support of smaller parties to be able to pass legislation. The other relates to a greater diversity and sophistication of voters, with political views that are more difficult to predict and no longer fit in a simple “left” and “right” mold. While it may be the case that the ideologies of some parties may make them more compatible than others, under a mixed-member proportional (MMP) system it is not always easy to predict where a minor party will sit on a particular issue. Local governments in particular have a tradition of consulting with their citizens and communities and consultation is mandated in many cases under the Local Government Act 2002. Consultation is also commonly used by central government agencies with respect to new policy initiatives. When a consultation has taken place, the details of consultations, internal and external, need to be set out in regulatory impact statements. Select committees commonly hold hearings on proposed legislation once it has been introduced in Parliament, giving individuals and organizations the opportunity to provide comment on legislative proposals.

The coherence of government communication strongly depends on the topic. All recent governments have been of the coalition-minority type, which has increased the potential for contradictory statements. Labour-led minority governments as well as the National-led government in power during the period under review have accepted that there will be some tensions on sensitive issues which can lead to policy whereby coalition partners “agree to disagree” to maintain their parliamentary power base.

In the period under review both Labour-led and National-led governments held minority status throughout. This implies that the government has to anticipate the policy preferences of other parties in Parliament and has to seek legislative support on an issue-by-issue basis.
Nevertheless, minority-coalition governments have been relatively successful in implementing their agenda. The National Party started their term with a “100-day action plan” on areas such as the economy, law and order, education, health and electoral law. As stated in the annual report of the Department of Prime Minister and Cabinet, this plan was implemented on time.

There is a strong tradition of collective responsibility of the cabinet in New Zealand. Ministers are allowed to disagree about policy initiatives, even in public, but once a decision has been made in cabinet they have to follow the collective will. The cabinet manual is very explicit about this. The prime minister has the power to appoint and dismiss ministers (formally it is the governor-general who does this on the advice of the prime minister). Naturally, in coalition governments the prime minister’s power over the personnel of another party is restricted. Collective responsibility is strengthened by an extensive list of coalition management instruments based on a comprehensive coalition agreement with regard to the legislative agenda but also procedures to ensure coalition discipline. The current National-led minority government can build on the experiences of earlier minority governments of how to ensure ministerial compliance. In its Cabinet Office Circular CO (09) 07, the current government has specified the nature of its agreements with other parties and support to party ministers. These may disagree on policy other than what is outlined in the ministerial portfolio. On issues in their portfolio, they are bound by collective responsibility.

Following from the experience of fragmented policy-making in vertically integrated networks and coordination problems, the Labour-led governments after 1999 re-centralized the steering capacity of the core executive. All contracts between cabinet and line ministries and ministers and chief executives have since to be based on a whole government policy approach. This has been continued after the change of government in 2008. The new government has introduced a performance improvement framework which is intended to strengthen a central-agency approach to assessing, supporting, informing and focusing performance across state services.

Monitoring of executive agencies is based on the same procedures as with regard to line ministries.

New Zealand is highly centralized, and local government structures are lean and generally uniform. Local government raises only about 5% of total government tax revenues. However, local autonomy in setting tax rates and bases is greater than in any other OECD country. The main source of local tax revenues is the so-called rates, which are taxes on the holding of real estate. Local governments have currently full discretion to set rates, subject to a general balanced budget requirement. Other revenue sources include user charges and fees. There are no block grants from central to local government, but the central government contributes funding to specific local government functions, in particular transportation as well as road construction and maintenance. The minister of local government from the ACT New Zealand Party, and a coalition member of the National-led government, has wanted to impose greater controls on local governments and to reform the local government act, which provides general competencies to local bodies to do achieve the economic, social, environmental, and cultural outcomes of their communities. The outcomes of the reform proposals are at the select committee stage and their precise form has yet to be decided. It does seem likely that the more aspirational view of local government, in facilitating strategic planning in governance on behalf of communities may be reduced and result in a return to viewing local governments largely in their service delivery role. The changes are likely to impose further monitoring and a benchmarking exercise on the sector. What is interesting to observe is that local governments behave quite conservatively and particularly so with respect to borrowing. While borrowing rates have tended to rise, sometimes above the rate of inflation, the key driver for this has been the need to upgrade infrastructure rather than the result of local government taking on new functions or being irresponsible in their spending behaviors.

There is a clear legal framework for local government autonomy, consisting of the Local Government Act 2002, the Local Electoral Act 2001, and the Local Government (Rating) Act 2002. There is no de facto infringement of this scope. A reform of the Local Government Act 2002 is currently under way. Local governments do not enjoy constitutional status, as they are creatures of statute. Though the Local Government Act 2002 gave them a general power of competencies, it did not confer additional taxing powers. As noted already, local governments in New Zealand are unusual in terms of their relatively narrow task profile and their inability to tap into other commonly used sources of subnational revenue such as sales and/or income taxes. Local governments therefore raise a relatively large proportion of revenues from rates and charges and given concerns about rating levels, they are fiscally constrained from expanding their roles and functions.

It is not central government as such but a dense network of agencies that are involved with the development and monitoring of local government: the Minister of Local Government, the Department of Internal Affairs, the Local Government Commission, the Office of the Controller and Auditor-General, the Office of the Ombudsmen, and the Parliamentary Commissioner for the Environment. Their roles range from strategic development and policy, regulation and monitoring, to handling complaints about the activities and operation of local government. One illustration is the current measures to ensure environmental protection standards in Canterbury and the Far North District. Following from independent reports about water management problems central government has intervened. There are real issues surrounding water quality, for example, because central government is keen to have high standards for water quality in areas frequented by tourists; however, local residents do not feel they should be required to fund these high standards from taxes on property.

New Zealand is experienced in drastically restructuring the public sector and reforming policy-making to adapt to new challenges. Major reforms were accomplished from the mid-1980s to the mid-1990s. However, this was done under a majoritarian regime based on a first-past-the-post electoral system. Part of the reform package was the change to a mixed-member proportional (MMP) electoral system. Today, given a multiparty system and minority coalition governments, radical reform is much more difficult to achieve. In retrospect, the institutional reforms delivered somewhat less than was anticipated and are disruptive. The current government is concerned with driving efficiency and performance improvements into the system and has decided to do this with relatively limited emphasis on major restructuring of government agencies.

Given the isolated geopolitical position of New Zealand, the country participates proactively in many international organizations and in the international coordination of joint reform initiatives. Major areas include the Antarctic Region, disarmament and proliferation, environmental protection, and human rights. New Zealand is a member of the Asia-Pacific Economic Cooperation (APEC), the Commonwealth, OECD, the United Nations and the World Trade Organization. Free trade is a central preoccupation in foreign relations. Two free trade agreements have been recently signed (the ASEAN-Australia-New Zealand Agreement and a bilateral agreement with Malaysia), others are in the making, inter alia with Korea, India and Hong Kong/China. At the U.N. Conference on Climate Change in Copenhagen 2009, the New Zealand delegation was particularly active.

Following from the change to a mixed-member proportional (MMP) representation system in the 1990s, institutional arrangements in the core executive as well as executive-legislative relations and democratic decision-making have been regularly and effectively monitored. One area of particular interest is the performance of the reformed electoral system. The government plans to hold a referendum on whether to keep the MMP electoral system currently in place. In case voters opt for a change, there will be a second referendum parallel to the general election in 2014.

Major adaptations to the new system of multiparty system and coalition government occurred in the late 1990s. An effective framework is currently in place with the cabinet manual. Cabinet office circulars are used for minor changes. Particularly after the government change of 2008, a number of such modifications were made.

The most recent comparative data set which includes New Zealand is the International Social Survey Program. In the 2004 edition, New Zealand respondents overwhelmingly (69%) felt that they had a good or very good understanding of important political issues. Only about 13% of the respondents said that most people are better informed about government and politics. The 2007 edition did not include this question. However, regarding the question “How interested would you say you personally are in politics?” there was a slight decline of political interest in New Zealand between 2004 and 2007.

The cabinet manual defines the right of committees to ask for government documents. All documents have to be delivered in full and within an appropriate time. There are limitations with regard to classified documents.

It is common practice that ministers follow invitations to visit select committee meetings, but occasionally they refuse to do so. This follows a guideline that committees can request but not require that a minister appear before them. Only the House of Representatives itself can compel members to attend a committee if they do not do so voluntarily.

Select committees may summon experts. The only restriction is with regard to public servants who need the approval of their minister to attend committee meetings.

The New Zealand House of Representatives is too small to establish as many select committees as would be necessary to fully correspond to the number of ministries. At the moment there are 21 select committees which have to face 57 portfolios, led by 20 cabinet ministers, three ministers outside cabinet and five support party ministers.

The controller and auditor-general is appointed by the governor-general on the advice of Parliament and fully accountable to it. The Office of the Auditor-General consists of the following departments: Accounting and Auditing Policy, Legal Group, Local Government, Parliamentary Group, Performance Audit Group and Research and Development. Its scope of functions relates not only to central government but also local government. The legal basis is the Public Audit Act 2001.

New Zealand was the fourth country in the world to establish an Office of the Ombudsmen (in 1962). The office is highly effective in terms of formally or informally resolving complaints. Organizational reform is under discussion because of an ever-increasing caseload. In addition, there is an even older tradition of dealing with petitions in Parliament.

Not all TV and radio stations produce high-quality information programs, but TV One and Radio New Zealand provide excellent and regular evaluation of government decisions. TV One has four news programs per day, each lasting between 30 minutes to one hour. TVNZ 7, a station established in March 2008, supports programming with about 30% news programs.

There are currently only two political parties supported by more than 10% of voters in the last general election, the Labour Party and the National Party. Both political parties regularly produce detailed election programs with plausible and coherent policies. These are complemented by more specific policy papers.

There are few well-organized and well-staffed interest groups in New Zealand. The only large ones are the New Zealand Council of Trade Unions and Business New Zealand. Both generally propose reasonable policies. However, there is an underlying asymmetry. Business New Zealand additionally relies on the work of the New Zealand Business Roundtable, an organization of chief executives of major business firms.

There is a rich tradition of consulting societal groups. The amount of consultation of groups and individuals and the way their proposals have been dealt with is reported in regulatory impact statements. In several cases, recent regulatory impact statements claim that consultation has had a substantive impact. An ongoing initiative (since 2001) tries to establish a better relationship between the community sector and government agencies. The reference group to the office of the community and voluntary sector in the Ministry of Social Development has published a discussion paper (“More than talk”) in December 2008. Another document (“From talk to action”) was published in July 2009. Still, size and shortage of resources prevents some interest associations to develop specialist policy know-how that would have a lasting impact in consultations.