New expectations set for statutory Crown entities

A new “Enduring Letter of Expectations”, recently delivered to the chairs of statutory Crown entities[1], envisages a much broader leadership role in relation to the Treaty relationship, community wellbeing and future generations.

We look at the nature and scope of the changes, and how they might affect statutory Crown entity planning and reporting requirements.

The Enduring Letter of Expectations sets out what the Minister of Finance and the Minister of State Services expect of statutory Crown entities. These letters are occasional publications, in the sense that they are updated when there is a change in approach rather than according to a set timetable.

The last one – from then Finance Minister Bill English and State Services Minister Jonathan Coleman – dates back to July 2012. It emphasised the ‘no surprises’ policy requiring that Ministers are given advance warning of any problematic issues likely to spill into the public arena, and had a strong emphasis on delivering value for money.

In particular, statutory Crown entity Boards were expected to:

  • maintain a thorough understanding of the business and cost drivers on the entity and look for service improvement within tight fiscal constraints
  • take opportunities to work with other agencies on joint procurement, shared services and delivering key results to maximise system-wide efficiency and effectiveness, and
  • share their ideas on how the State Services can operate more effectively and efficiently.

A larger role

The new Enduring Letter has replaced the 2012 version. It covers the matters set out in the English/Coleman 2012 letter, but also expects statutory Crown entity boards to actively progress the Government’s social and environmental objectives.

Workplace outcomes

Along with the expectation that Boards will ensure their workplaces are safe are expectations that they will also:

  • ensure workplaces are diverse and inclusive
  • make substantive progress to close any ethnic or gender pay gaps and narrow the gap between the highest and lowest earners in the workplace, and
  • ensure that employees have a voice, including through effective and productive relationships with any relevant unions.

These expectations follow on from and extend (for statutory Crown entities) the “Government Expectations on Employment Relations in the State Sector”.

Māori

Further, statutory Crown entities are expected to “embody the Government’s good faith and collaborative approach to Māori Crown relationships” by:

  • engaging appropriately and often with Māori on relevant issues
  • pursuing further opportunities for partnership with Māori entities and businesses
  • building staff Māori cultural capability, including knowledge of tikanga Māori, te ao Māori, New Zealand history and how to address institutional racism
  • improving the Treaty-consistency of policy and practices (for example, considering where whanau-centred policies can be used), and
  • promoting and supporting the revitalisation of te reo Māori.
Wellbeing

This is defined as “people having the capabilities to live lives of purpose, balance and meaning to them”. Three elements are identified:

  • taking a whole of government approach
  • looking at intergenerational outcomes, and
  • moving beyond narrow measures of success to consider impacts, both positive and negative, across a broader set of areas.

An example of this wider ambit is “the recognition that the current and future wellbeing of New Zealanders is reliant on a stable climate and living within ecological limits”. This would involve “taking active steps to reduce greenhouse gas emissions, improve energy efficiency and reduce waste outputs”.

Practical implications for Boards

The Enduring Letter of Expectations sits alongside a set of other key documents underpinning a statutory Crown entity’s planning and reporting. These include:

  • the Annual Letter of Expectations issued by the entity’s responsible Minister
  • the Statement of Intent (SOI)
  • the Statement of Performance Expectations (SOPE)
  • the Annual Report, and
  • any other planning and reporting requirements under the entity’s own legislation.

Along with the Annual Letter of Expectations, the new Enduring Letter will now:

  • be a cornerstone in any discussion on an entity’s role, responsibilities and accountability, and
  • influence the content of the entity’s SOI and SOPE in future production cycles of these planning documents. Reporting under future Annual Reports will in turn be affected.

There may also be a case for an amendment to an existing SOI or SOPE. This could arise for example, where the Board considers that:

  • this new Enduring Letter has changed the entity’s operating environment, and
  • the intentions of the existing SOI or SOPE are significantly affected by that change.

Review of new Enduring Letter of Expectations

The Ministers have signalled that the new Letter will not endure for the lifespan of the last one. Their plan is to review the Enduring Letter of Expectations following the passage of new Public Service legislation. These legislative reforms are part of the current modernisation of the public service, including the public finance system.

 

[1] Statutory Crown entities are those entities named in Schedule 1 of the Crown Entities Act 2004. They include:

  • Crown agents (such as the Accident Compensation Corporation, District Health Boards and the New Zealand Transport Agency)
  • Autonomous Crown entities (such as the Guardians of New Zealand Superannuation and the New Zealand Film Commission), and
  • Independent Crown entities (such as the Commerce Commission and the Law Commission). ​

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