Reports of Select Committees on the 2017/18 Annual Reviews Of

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Reports of select committees on the 2017/18 annual reviews of Government departments, Offices of Parliament, Crown entities, public organisations, and State enterprises

Volume 2

Health Sector Justice Sector Māori, Other Populations and Cultural Sector Primary Sector Social Development and Housing Sector

Fifty-second Parliament April 2019

Presented to the House of Representatives I.20D

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Contents

Crown entity/public Select Committee Date presented Page organisation/State enterprise

Financial Statements of the Finance and Expenditure 22 Feb 2019 Government of New Zealand for the year ended 30 June 2018

Economic Development and Infrastructure Sector

Accident Compensation Education and Workforce 5 Apr 2019 14 Corporation

Accreditation Council Economic Development, 5 Apr 2019 23 Science and Innovation AgResearch Limited Economic Development, 5 Apr 2019 24 Science and Innovation Air New Zealand Limited Transport and Infrastructure 5 Apr 2019 29

Airways Corporation of New Transport and Infrastructure 5 Apr 2019 29 Zealand Limited

Callaghan Innovation Economic Development, 5 Apr 2019 30 Science and Innovation City Rail Link Limited Transport and Infrastructure 5 Apr 2019 36

Civil Aviation Authority of New Transport and Infrastructure 5 Apr 2019 39 Zealand

Commerce Commission Economic Development, 5 Apr 2019 42 Science and Innovation

Crown Infrastructure Partners Transport and Infrastructure 5 Apr 2019 48 Limited (previously called Crown Fibre Holdings Limited)

Earthquake Commission Governance and 26 Mar 2019 53 Administration

Electricity Authority Transport and Infrastructure 5 Apr 2019 61

Electricity Corporation of New Transport and Infrastructure 5 Apr 2019 29 Zealand Limited

Genesis Energy Limited Transport and Infrastructure 5 Apr 2019 69 I.20D

Crown entity/public Select Committee Date presented Page organisation/State enterprise

KiwiRail Holdings Limited Transport and Infrastructure 5 Apr 2019 75

Kordia Group Limited Economic Development, 5 Apr 2019 81 Science and Innovation

Maritime New Zealand Transport and Infrastructure 5 Apr 2019 29

Mercury NZ Limited Transport and Infrastructure 5 Apr 2019 29

Meridian Energy Limited Transport and Infrastructure 5 Apr 2019 86

Meteorological Service of New Economic Development, 5 Apr 2019 93 Zealand Limited Science and Innovation

Ministry of Business, Innovation Economic Development, 5 Apr 2019 98 and Employment Science and Innovation

Ministry of Transport Transport and Infrastructure 5 Apr 2019 106

New Zealand Post Limited Economic Development, 5 Apr 2019 112 Science and Innovation New Zealand Productivity Economic Development, 5 Apr 2019 120 Commission Science and Innovation New Zealand Railways Corporation Transport and Infrastructure 5 Apr 2019 75 New Zealand Tourism Board Economic Development, 5 Apr 2019 127 Science and Innovation New Zealand Trade and Enterprise Economic Development, 5 Apr 2019 132 Science and Innovation New Zealand Transport Agency Transport and Infrastructure 5 Apr 2019 137 New Zealand Venture Investment Economic Development, 5 Apr 2019 145 Fund Limited Science and Innovation Takeovers Panel Economic Development, 5 Apr 2019 151 Science and Innovation Te Kāhui Whakamana Rua Tekau Finance and Expenditure 4 Apr 2019 152 mā Iwa — Pike River Recovery Agency Transport Accident Investigation Transport and Infrastructure 5 Apr 2019 29 Commission Transpower New Zealand Limited Transport and Infrastructure 5 Apr 2019 158 WorkSafe New Zealand Education and Workforce 5 Apr 2019 165

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Education Sector Education New Zealand Education and Workforce 5 Apr 2019 172 Education Payroll Limited Education and Workforce 5 Apr 2019 179 Education Review Office Education and Workforce 5 Apr 2019 183 Institute of Environmental Science Economic Development, 5 Apr 2019 190 and Research Limited Science and Innovation Institute of Geological and Nuclear Economic Development, 5 Apr 2019 191 Sciences Limited Science and Innovation Landcare Research New Zealand Economic Development, 5 Apr 2019 192 Limited Science and Innovation Ministry of Education Education and Workforce 5 Apr 2019 198 National Institute of Water and Economic Development, 5 Apr 2019 208 Atmospheric Research Limited Science and Innovation Network for Learning Limited Education and Workforce 5 Apr 2019 213 New Zealand Forest Research Economic Development, 5 Apr 2019 218 Institute Limited Science and Innovation New Zealand Institute for Plant and Economic Development, 5 Apr 2019 222 Food Research Limited Science and Innovation New Zealand Qualifications Education and Workforce 5 Apr 2019 226 Authority Research and Education Advanced Economic Development, 5 Apr 2019 232 Network New Zealand Limited Science and Innovation Tertiary Education Commission Education and Workforce 5 Apr 2019 237

Environment Sector Department of Conservation Environment 5 Apr 2019 243 Energy Efficiency and Environment 5 Apr 2019 249 Conservation Authority Environmental Protection Authority Environment 5 Apr 2019 256 Ministry for the Environment Environment 5 Apr 2019 262 New Zealand Walking Access Environment 5 Apr 2019 268 Commission Parliamentary Commissioner for Environment 5 Apr 2019 269 the Environment Predator Free 2050 Limited Environment 5 Apr 2019 275

External Sector Ministry of Defence Foreign Affairs, Defence and 18 Dec 2018 283 Trade Ministry of Foreign Affairs and Foreign Affairs, Defence and 20 Mar 2019 293 Trade Trade New Zealand Customs Service Foreign Affairs, Defence and 18 Feb 2019 305 Trade I.20D

New Zealand Defence Force Foreign Affairs, Defence and 18 Dec 2018 283 Trade New Zealand Antarctic Institute Foreign Affairs, Defence and 11 Mar 2019 313 Trade

Finance and Government Administration Sector Crown Asset Management Limited Finance and Expenditure 8 Mar 2019 320 Department of the Prime Minister Governance and 18 Mar 2019 321 and Cabinet Administration Department of Internal Affairs Governance and 4 Apr 2019 327 Administration External Reporting Board Economic Development, 5 Apr 2019 333 Science and Innovation

Financial Markets Authority Economic Development, 5 Apr 2019 334 Science and Innovation

Fire and Emergency New Zealand Governance and 4 April 2019 340 Administration

Government Communications Intelligence and Security Feb 2019 345 Security Bureau Committee Government Superannuation Fund Finance and Expenditure 5 Apr 2019 320 Authority Guardians of New Zealand Finance and Expenditure 4 Apr 2019 346 Superannuation Inland Revenue Department Finance and Expenditure 5 Apr 2019 354 New Zealand Security Intelligence Intelligence and Security Feb 2019 361 Service Committee Office of the Clerk of the House of Governance and 18 Mar 2019 362 Representatives Administration Office of the Controller and Auditor- Finance and Expenditure 5 Apr 2019 320 General Office of the Ombudsman Governance and 4 Apr 2019 367 Administration Parliamentary Service Governance and 26 Mar 2019 373 Administration Reserve Bank of New Zealand Finance and Expenditure 22 Feb 2019 379 Retirement Commissioner Finance and Expenditure 5 Apr 2019 320 Southern Response Earthquake Governance and 4 Apr 2019 386 Services Limited Administration State Services Commission Governance and 26 Mar 2019 392 Administration Statistics New Zealand Governance and 4 Apr 2019 398 Administration The Treasury Finance and Expenditure 22 Feb 2019 1

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Health Sector Auckland District Health Board Health 4 Apr 2019 402 Bay of Plenty District Health Board Health 28 Mar 2019 404 Canterbury District Health Board Health 28 Mar 2019 414 Capital and Coast District Health Health 5 Apr 2019 402 Board Counties Manukau District Health Health 28 Mar 2019 424 Board Hawkes Bay District Health Board Health 5 Apr 2019 402 Health and Disability Commissioner Health 4 Apr 2019 432 Health Promotion Agency Health 5 Apr 2019 432 Health Quality and Safety Health 5 Apr 2019 432 Commission Health Research Council of New Health 5 Apr 2019 434 Zealand Hutt Valley District Health Board Health 5 Apr 2019 402 Lakes District Health Board Health 28 Mar 2019 446 MidCentral District Health Board Health 5 Apr 2019 402 Ministry of Health Health 12 Mar 2019 452 Nelson Marlborough District Health Health 5 Apr 2019 402 Board Northland District Health Board Health 15 Mar 2019 460 New Zealand Blood Service Health 5 Apr 2019 432 Pharmaceutical Management Health 28 Mar 2019 468 Agency (Pharmac) South Canterbury District Health Health 5 Apr 2019 402 Board Southern District Health Board Health 5 Apr 2019 474 Tairawhiti District Health Board Health 28 Mar 2019 480 Taranaki District Health Board Health 7 Mar 2019 486 Waikato District Health Board Health 5 Apr 2019 404 Wairarapa District Health Board Health 6 Mar 2019 492 Waitemata District Health Board Health 5 Apr 2019 402 West Coast District Health Board Health 5 Apr 2019 402 Whanganui District Health Board Health 5 Apr 2019 402

Justice Sector Abortion Supervisory Committee Justice 19 Mar 2019 498 Crown Law Office Justice 25 Feb 2019 502 Department of Corrections Justice 19 Mar 2019 508 Electoral Commission Justice 18 Mar 2019 516 Human Rights Commission Justice 19 Mar 2019 522 Independent Police Conduct Justice 18 Mar 2019 528 Authority I.20D

Law Commission Justice 25 Feb 2019 534 Ministry of Justice Justice 21 Mar 2019 540 New Zealand Police Justice 5 Apr 2019 546 Parliamentary Counsel Office Justice 5 Apr 2019 554 Privacy Commissioner Justice 25 Feb 2019 556 Public Trust Economic Development, 5 Apr 2019 562 Science and Innovation Real Estate Agents Authority Economic Development, 5 Apr 2019 564 Science and Innovation Serious Fraud Office Justice 25 Feb 2019 566

Māori, Other Populations and Cultural Sector Arts Council of New Zealand Toi Social Services and 20 Mar 2019 572 Aotearoa Community Broadcasting Commission Economic Development, 5 Apr 2019 580 Science and Innovation Broadcasting Standards Authority Economic Development, 5 Apr 2019 586 Science and Innovation Drug Free Sport New Zealand Social Services and 4 Apr 2019 588 Community Heritage New Zealand (Pouhere Social Services and 20 Mar 2019 596 Taonga) Community Ministry for Culture and Heritage Social Services and 5 Apr 2019 602 Community Ministry of Māori Development (Te Māori Affairs 5 Apr 2019 604 Puni Kōkiri) Ministry for Pacific Peoples Social Services and 11 Mar 2019 616 Community Ministry for Women Social Services and 5 Apr 2019 602 Community Museum of New Zealand Te Papa Social Services and 11 Mar 2019 622 Tongarewa Board Community New Zealand Film Commission Social Services and 5 Apr 2019 602 Community New Zealand Lotteries Commission Social Services and 11 Mar 2019 628 Community New Zealand Symphony Orchestra Social Services and 4 Apr 2019 636 Community Office of Film and Literature Social Services and 4 Apr 2019 638 Classification Community Radio New Zealand Limited Economic Development, 5 Apr 2019 644 Science and Innovation Sport and Recreation New Zealand Social Services and 4 Apr 2019 588 Community Television New Zealand Limited Economic Development, 5 Apr 2019 650 Science and Innovation I.20D

Te Reo Whakapuaki Irirangi (Māori Māori Affairs 5 Apr 2019 656 Broadcasting Funding Agency, also known as Te Māngai Paho) Te Taura Whiri I Te Reo Māori Māori Affairs 5 Apr 2019 672 (Māori Language Commission)

Primary Sector Animal Control Products Limited Primary Production 20 Mar 2019 682 AsureQuality Limited Primary Production 20 Mar 2019 684 Crown Irrigation Investments Primary Production 20 Mar 2019 690 Limited Land Information New Zealand Primary Production 20 Mar 2019 694 Landcorp Farming Limited Primary Production 4 Apr 2019 702 Ministry for Primary Industries Primary Production 4 Apr 2019 712 Quotable Value Limited Primary Production 20 Mar 2019 724

Social Development and Housing Sector Children’s Commissioner Social Services and 5 Apr 2019 732 Community Families Commission Social Services and 5 Apr 2019 732 Community Housing New Zealand Corporation Social Services and 20 Mar 2019 734 Community Ministry of Social Development Social Services and 11 Mar 2019 740 Community Oranga Tamariki – Ministry for Social Services and 11 Mar 2019 748 Children Community New Zealand Artificial Limb Service Social Services and 5 Apr 2019 732 Community Ōtākaro Limited Governance and 18 Mar 2019 756 Administration Committee Social Investment Agency Social Services and 4 Apr 2019 760 Community Social Workers Registration Board Social Services and 4 Apr 2019 766 Community Tāmaki Redevelopment Company Social Services and 4 Apr 2019 772 Limited Community

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Introduction

This is a compendium of all the select committee reports on the 2017/18 annual reviews of Government departments, Offices of Parliament, Crown entities, public organisations, and State enterprises. About this compendium The compendium has been structured to reflect the organisation of the Estimates of appropriations into 10 sector groupings.

Reports on the annual reviews of security agencies, conducted by the Intelligence and Security Committee, are included in the compendium for ease of reference (under the Finance and Government Administration Sector).

The Finance and Expenditure Committee’s report on the annual financial statements of the Government for the year ended 30 June 2018 is debated separately and so is listed separately from the sector groupings. Consideration of reports by the House The annual review reports are considered in the House during the committee stage of the Appropriation (2017/18 Confirmation and Validation) Bill. The debate also provides an opportunity for debate on the Government’s financial position.

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Introduction

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2017/18 Annual review of the Auckland District Health Board, the Capital and Coast District Health Board, the Hawkes Bay District Health Board, the Hutt Valley District Health Board, the MidCentral District Health Board, the Nelson Marlborough District Health Board, the South Canterbury District Health Board, the Waitemata District Health Board, the West Coast District Health Board, and the Whanganui District Health Board

Report of the Health Committee

April 2019

The Health Committee has conducted the annual reviews of the Auckland District Health Board, the Capital and Coast District Health Board, the Hawkes Bay District Health Board, the Hutt Valley District Health Board, the MidCentral District Health Board, the Nelson Marlborough District Health Board, the South Canterbury District Health Board, the Waitemata District Health Board, the West Coast District Health Board, and the Whanganui District Health Board for 2017/18, and has no matters to bring to the attention of the House. The committee recommends that the House take note of its report.

Louisa Wall Chairperson

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2017/18 Annual review of the Bay of Plenty District Health Board and the Waikato District Health Board

Report of the Health Committee

March 2019

Contents Recommendation ...... 2 Joint hearing on these two DHBs ...... 2 About Bay of Plenty District Health Board ...... 2 Financial overview and audit opinion ...... 2 Strategic health services plan ...... 3 More people rejecting immunisation ...... 3 Population growth ...... 3 Dental health enrolment ...... 4 Clinical Campus achievement ...... 4 Challenges shared by both DHBs ...... 4 About Waikato District Health Board ...... 5 Financial overview and audit opinion ...... 6 Service performance challenges ...... 7 A new Health System Plan ...... 7 HealthTap challenges ...... 8 Waikeria prison development ...... 8 Women’s health accreditation ...... 8 Appendix ...... 9

Louisa Wall Chairperson

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2017/18 ANNUAL REVIEW OF THE BAY OF PLENTY DHB AND WAIKATO DHB

Bay of Plenty District Health Board and Waikato District Health Board

Recommendation The Health Committee has conducted the annual reviews of the Bay of Plenty District Health Board and the Waikato District Health Board for 2017/18, and recommends that the House take note of its report.

Joint hearing on these two DHBs The Bay of Plenty District Health Board (DHB) and the Waikato DHB serve the needs of people in the central North Island, and are both part of the Midland region group. We chose to hear from the two DHBs together because of their close proximity and relationships. They share some issues, and in 2017/18 they shared a chairperson, Sally Webb.

About Bay of Plenty District Health Board The Bay of Plenty District Health Board services a population of 234,350 residents in the major population centres of Tauranga, Katikati, Te Puke, Whakatāne, Kawerau, and Opotiki. As of 30 June 2018 the DHB employed 3,434 people.

The DHB is part of the Midland region group, together with the Waikato, Taranaki, Lakes, and Tairāwhiti DHBs. Its chief executive is Helen Mason.

Bay of Plenty DHB has a higher proportion of Māori than the national average, at around 25 percent of the population. It has a Māori health rūnanga, chaired by Pouroto Ngaropo, which focuses on reducing disparity in health outcomes between Māori and non-Māori.

The DHB has a relatively high proportion of people in the most deprived sector of the population compared with the national average. Its population ranks high on most risk factors, with obesity and smoking rates higher than the national average.

Financial overview and audit opinion In 2017/18 Bay of Plenty DHB’s revenue was $796.113 million, and it spent $806.007 million. The DHB recorded a deficit of $9.856 million compared with a surplus of $374,000 in 2016/17. The deficit was primarily due to greater than anticipated growth in activity across the health system, including increased demand for emergency care, acute volume growth in provider and additional growth in demand for primary care.

The Auditor-General continues to rate Bay of Plenty DHB’s management control environment “very good”. The DHB’s financial information systems and controls, and performance information and associated systems and controls, were both rated “good” in 2017/18. This result is the same as in 2016/17, and some deficiencies identified in that year have been partially resolved.

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2017/18 ANNUAL REVIEW OF THE BAY OF PLENTY DHB AND WAIKATO DHB

Strategic health services plan Bay of Plenty DHB’s Strategic Health Services Plan aims to create communities that live well, stay well, and get well. With the needs of patients, families, and whānau at its core it is setting the focus of the DHB for the next ten years. In 2017/18, Bay of Plenty DHB actioned a number of significant projects under this plan, including the Māori Health Strategy, “Good to Great”.

Good to Great–Te Toi Ahorangi: a new Māori strategic plan In May 2018, the DHB’s Rūnanga gifted the name Te Toi Ahorangi to encapsulate in te reo Māori the strategic intent of Good to Great. The strategy focuses on the improvement of key Māori health indicators that aim to have a high impact on the health and wellbeing of Māori in the Bay of Plenty.

In 2017/18 the DHB established a new position of General Manager of Māori Health Gains and Development. The position is intended to provide leadership and direction to the Bay of Plenty DHB on all matters affecting Māori in the district, and is expected to work across the entire Bay of Plenty health system.

More people rejecting immunisation Bay of Plenty DHB achieved all of the National Health Targets in 2017/18 except Increased Immunisation. The DHB’s results for this measure have declined over the past four years, despite improvements to its processes for following up on children who might otherwise be missed.

We were concerned to hear that more people declined immunisation in 2017/18. The Health Board reports that a new model of service introduced in 2017/18 had helped to reduce the number of children missed from the immunisation programme, but this was offset by a substantial increase in people declining vaccines. The decline rate exceeded 10 percent in one quarter of 2017/18. We were pleased to hear that it has been working with other DHBs to find new ways of addressing the issues. Sally Webb, the board chair for both Bay of Plenty and Waikato DHBs, emphasised that the response to the negative effects of the anti- vaxx campaign needs to be addressed on a national level.

Population growth We heard that one of the main concerns of Bay of Plenty DHB at the moment is the dramatic population growth it has experienced in recent years. It described as “huge” the increased demand driven by this population increase.

We asked the DHB how it is placed to manage its population increase. We were pleased to hear that infrastructure is not a current concern for the DHB. It said that the new hospital in Whakatāne and the Tauranga campus were built to be future-proof. However, the major challenge with population growth is primary care.

After-hours care in Papamoa Given the substantial population growth experienced by the region, we asked about the provision of after-hours care in Papamoa. Bay of Plenty DHB told us that while there is no

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2017/18 ANNUAL REVIEW OF THE BAY OF PLENTY DHB AND WAIKATO DHB immediate solution it would be supporting extended GP hours and clinics on more days of the week. We heard that it is challenging to provide extended-hours facilities in the community in a financially viable way.

Dental health enrolment We were pleased to hear that Bay of Plenty DHB had a major improvement in the percentage of Māori preschool-aged children enrolled in dental services in 2017/18. It increased from 59 percent 18 months ago to 71 percent.

We heard that improvements were driven by a preschool enrolment initiative, where parents of non-enrolled Māori children were identified and called. The improvements made during 2017/18 have continued, with reporting indicating Māori preschool dental enrolment is now above 84 percent.

Clinical Campus achievement In 2017/18 the Bay of Plenty DHB received official Clinical Campus status from the University of Auckland’s Faculty of Medical and Health Sciences. The DHB is only the fifth campus in New Zealand and second outside Auckland to receive this level of recognition.

Challenges shared by both DHBs In 2017/18 Bay of Plenty and Waikato DHBs shared a number of challenges.

Holidays Act 2003 Over the past few years it has become clear that there have been widespread compliance issues with the Holidays Act 2003, in both the public and private sectors. The issues arise when payroll systems are not configured to correctly calculate total holiday pay owing to staff who work additional hours, overtime, or rostered shifts that attract penal rate payments.

As DHBs are 24/7 operations, the probability that they will have underpaid staff is high. The period covered by the potential underpayments extends back six years, and this issue could result in significant financial liabilities for Bay of Plenty and Waikato DHBs.

A national approach to mediate these issues is being led by Central Region’s Technical Advisory Services Limited (TAS) on behalf of all DHBs. At this point TAS is still working on methodology. We heard that there is a lack of certainty in determining the level of any underpayment, and that there is an estimated liability of $283,000 for Bay of Plenty DHB and an unqualified potential liability for Waikato DHB. We hope to see progress on this issue by next year’s review.

Nurses’ multi-employer collective agreement On 4 August 2018, the DHBs reached an agreement with the New Zealand Nurses Organisation on the multi-employer collective agreement for DHB-employed nurses. The agreement included back pay to 4 June 2018 and a lump sum of $2,000 per nurse. Bay of Plenty and Waikato DHBs decided to accrue these payments in their 2017/18 financial results, at a total cost of $2.76 million for Bay of Plenty and $5.8 million for Waikato. These payments contributed to both DHBs’ deficits for the 2017/18 year. 4

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National Oracle Solution The National Oracle Solution (NOS) is a programme led by NZ Health Partnerships to develop a shared-services finance and procurement system. The programme was paused by Cabinet in June 2018. Ministers requested further information before considering the approval of additional funding by DHBs to NZ Health Partnerships to implement a re-plan of the programme.

Given the uncertain future of NOS, Bay of Plenty and Waikato DHBs have had to record an impairment in 2017/18 against their investment in the system. The recorded impairments were $260,000 for Bay of Plenty DHB, and $587,000 for Waikato DHB. This recognises the fact that the carrying value of the asset does not reflect the (reduced) future expected benefits. The total value of the asset to all DHBs was impaired by $5.8 million in 2017/18.

Some of us raised concern that the National Oracle Solution is not a good investment for the DHBs, given their expected deficits for the coming year. Waikato DHB said that the system has worked well for them, and that it feels the system is a success in the context of the complexity of the challenge. Waikato DHB shared with us that it could have got the system it currently has at a better price, but that would have been short-sighted. It believes that a common system across all DHBs would be extremely valuable, and that if the full system is rolled out then it will see significant procurement benefits.

Increase in ambulatory sensitive hospitalisation Ambulatory sensitive hospitalisation (ASH) measures admissions that might have been prevented by appropriate intervention or care. It can be useful for understanding the effectiveness of primary and community care in keeping the population well. In 2017/18 both Bay of Plenty and Waikato DHB had an increasing ASH rate for Māori compared to previous years.

The Bay of Plenty DHB has lower ASH rates than the national average for both Māori and non-Māori. In 2017/18 results for Māori showed a significant deterioration from previous years and a widening of the gap between Māori and the total population. In 2017/18 Waikato DHB’s ASH rates for Māori deteriorated by 21 percent compared to the baseline result from 2014/15, and was 171 percent higher than the result for other populations.

Waikato DHB has outlined actions it will take to improve these results. They include increasing the proportion of Māori males aged 34 to 44 having a cardio-vascular disease risk assessment.

We are concerned with this trend and hope to see improvement in ASH rates in the coming year.

About Waikato District Health Board Waikato DHB is the 5th largest DHB in terms of population, serving almost 8 percent of New Zealand’s population in a widespread geographic area covering 21,220 square kilometres. Its area ranges from Coromandel in the north to close to Mt Ruapehu in the south, and from Raglan on the west coast to Waihi on the east.

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The DHB had 7,138 employees as at 30 May 2018. It operates hospitals in five locations, the largest being Waikato Hospital, which is a tertiary teaching hospital located in Hamilton.

The DHB provides tertiary services such as complex surgery to the Midland regional population of more than 854,000. Other DHBs in the Midland region are Bay of Plenty, Lakes, Tairāwhiti, and Taranaki.

In 2017/18 Waikato DHB’s population was approximately 417,000. It has a larger proportion of Māori: 23 percent of the population, compared with 15 percent nationally. The DHB also has a greater proportion of people living in areas of high deprivation than in areas of low deprivation. Its population is getting proportionately older, with the 65-plus age group projected to increase by 40 percent between 2017/18 and 2028.

In September 2017 Waikato DHB opened a new 27-bed ward catering for geriatric, medical, and orthopaedic rehabilitation patients at Waikato Hospital.

The 2017/18 financial year was challenging for Waikato DHB, with a huge increase in demand for many of its services, and the departure of its chief executive and board chair.

Financial overview and audit opinion In 2017/18 the DHB reported expenditure of $1.48 billion and a deficit of $37.15 million against a budgeted deficit of $10 million.

The Auditor-General rated its management control environment and its financial information systems and controls “good”, an improvement on the previous year’s rating of “needs improvement”. Deficiencies identified by the auditor in 2016/17 have been resolved in part.

Waikato DHB’s performance information and associated systems and controls were rated “good” in 2017/18 by the Auditor-General. This was a deterioration from the previous year’s rating. The Auditor-General recommends that Waikato DHB implement appropriate processes and procedures to ensure that patient data for smoking is recorded correctly in the patient management system. They noted that some patients had been incorrectly recorded in the system as smokers.

Financial pressure and forecast deficits We are concerned by the deficit in 2017/18, as it was larger than budgeted, and note that a deficit is also projected for 2018/19. Waikato DHB said that its financial pressure is due to continued increase in demand for services in the region, associated with faster than expected population growth and an ageing population.

In 2017/18 Waikato DHB received a “letter of comfort” from the Ministers of Health and Finance to support the use of the going concern assumption in preparing its financial statements. The Ministry of Health is aware of the challenges that Waikato DHB faces, and a Crown Monitor was appointed in August 2018 to provide the board with support to improve governance and leadership at the DHB.

Central Business District building refurbishment project In June 2016 Waikato DHB decided to lease a building in the Hamilton CBD. This was seen as an opportunity to relocate staff and services to a central location. 6

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Refurbishment was needed before occupying the premises, and a capital expenditure budget of $14.7 million was approved by the board in July 2017. However, the cost estimate obtained from the request-for-tender process was significantly more than originally estimated. As a result, the scope of the refurbishment project was changed in August 2018 to come within budget.

The Auditor-General found that the information used to prepare the initial business plans was not detailed and was based on unrealistic assumptions about costs. The Auditor- General has made recommendations on how to improve the preparation of business cases in future. He has also recommended an assessment against the original objective of the project to determine whether value for money can still be achieved.

Service performance challenges In 2017/18 Waikato DHB achieved or exceeded the National Health Targets for three measures: Improved access to elective surgery, Faster cancer treatment, and Raising healthy kids. The last two measures were achieved for the first time in 2017/18.

The target for Shorter stays in Emergency Departments was missed in 2017/18 by a significant margin. Waikato DHB’s results for this measure have deteriorated over the last three years, both from its own earlier results and relative to the national average. We hope to see improvements in the future.

A new Health System Plan In 2017/18 Waikato DHB began work on a 10-year Health System Plan (HSP) to help implement its number one priority, the radical improvement in Māori health outcomes by eliminating health inequities for Māori. Waikato DHB acknowledges the need for input from the community and other healthcare providers to develop the plan. In 2017/18 it has increased collaboration, with the establishment of the Consumer Council and a memorandum of understanding with the Iwi Māori Council.

Consumer council and community relations In 2017/18 Waikato DHB set up a new consumer council for the DHB, to enable Waikato people to have more of a say in how their health service is run. The council will represent the consumer voice to the board and senior management. We look forward to hearing more about this in the future.

Memorandum of understanding with the Iwi Māori Council A memorandum of understanding between Waikato DHB and the Iwi Māori Council was signed in September. It is based on the principles of partnership, participation, and protection.

Waikato DHB felt that this was a historic moment, representing a symbol of strong relationships with its iwi as it moves to improve the status of Māori health. The DHB hopes this will lead the way for radical change in the delivery of health and disability services in the Waikato for Māori.

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2017/18 ANNUAL REVIEW OF THE BAY OF PLENTY DHB AND WAIKATO DHB

HealthTap challenges As well as the issues discussed above with the National Oracle System, Waikato DHB faced challenges with its HealthTap system.

In 2017/18 Waikato DHB ended its SmartHealth Online health service. The service was delivered on mobile phones and smart devices, using the application HealthTap. The service was aimed at providing healthcare to those in the community who have poor access to health service and suffer worse health as a result. Waikato DHB remains committed to reaching its rural communities, but had to end the HealthTap service as not enough people signed up to the service for it to represent value for money.

In December 2017 the Deputy Auditor-General decided to start an inquiry, under section 18 of the Public Audit Act 2001, into the procurement of HealthTap. The inquiry is ongoing.

Waikeria prison development In 2017/18 the Government announced a plan to put a 100-bed mental health unit in Waikeria prison, described as the first of its kind in New Zealand. Waikato DHB was pleased to share with us that consultation on the development of this unit has been good. It has been involved with the planning and examining how the unit should be staffed. We hope to hear more about this collaboration in the future.

Women’s health accreditation In December 2015 Waikato DHB lost its accreditation from the Royal Australian and New Zealand College of Obstetricians and Gynaecologists (RANZCOG) for registrar training in Women’s Health services. The DHB had its accreditation withdrawn in December 2015 because of the lack of collaborative team structure, poor workplace culture, and variable consultant support for trainees. A taskforce led by Commissioner Tanya Maloney was appointed early in 2016 to transform the DHB’s obstetric and gynaecological services with the aim of regaining the accreditation. We were pleased to hear that the DHB has regained its accreditation for another four years and that it was able to significantly improve its performance in a short period.

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Appendix

Committee procedure We met on 6 and 20 March 2019 to consider the annual reviews of the Bay of Plenty and Waikato District Health Boards. We heard evidence from the DHBs and received advice from the Office of the Auditor-General.

Committee members Louisa Wall (Chairperson) Dr Liz Craig Matt Doocey Jenny Marcroft Dr Shane Reti Hon Nicky Wagner Angie Warren-Clark Hon Michael Woodhouse

Advice and evidence received We received the following documents as advice and evidence for these annual reviews. They are available on the Parliament website, www.parliament.nz, along with a transcript of our hearing.

Office of the Auditor-General, briefing paper (Bay of Plenty District Health Board), dated 6 March 2019.

Bay of Plenty District Health Board, responses to written questions (with appendices).

Office of the Auditor-General, briefing paper (Waikato District Health Board), dated 6 March 2019.

Waikato District Health Board, responses to written questions.

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2017/18 Annual review of the Canterbury District Health Board

Report of the Health Committee

March 2019

Contents Recommendation ...... 2 About the Canterbury District Health Board ...... 2 Financial overview and audit opinion ...... 2 Service performance ...... 3 Relationship with the ministry ...... 3 Improving health outcomes for Māori ...... 3 Innovations in approach to healthcare ...... 3 Mental health needs post-earthquakes ...... 4 Infrastructure ...... 5 Post-earthquake population challenges ...... 6 Financial sustainability ...... 6 Holidays Act compliance challenges ...... 7 National Oracle Solution ...... 7 Appendix ...... 9

Louisa Wall Chairperson

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2017/18 ANNUAL REVIEW OF THE CANTERBURY DISTRICT HEALTH BOARD

Canterbury District Health Board

Recommendation The Health Committee has conducted the annual review of the Canterbury District Health Board for 2017/18, and recommends that the House take note of its report.

About the Canterbury District Health Board Canterbury District Health Board (DHB) is the second-largest district health board in the country, both by geographic area and population size, and is the South Island’s largest employer.

It serves more than 567,000 people, 11.5 percent of New Zealand’s population, and covers 26,881 square kilometres. As well as serving Canterbury from Kaikōura in the north to Ashburton in the south, the DHB also provides services to the Chatham Islands.

It serves a population that is predominantly New Zealand European, with the share of Māori and Pasifika people lower than the national average. Canterbury has the largest population of people aged over 65 in New Zealand, with Statistics New Zealand predicting that by 2026 one in every five people in Canterbury will be aged over 65.

Canterbury DHB owns or operates six hospital facilities: Christchurch, Christchurch Women’s, Burwood, Hillmorton, Princess Margaret, and Ashburton. The DHB also runs many smaller rural facilities including those in the Chatham Islands.

Canterbury DHB is New Zealand’s largest trauma centre, and provides tertiary services to the South Island region. It is one of two DHBs able to provide specialist paediatric oncology, spinal cord impairment surgery and rehabilitation, hyperbaric oxygen therapy, and specialised burns treatment.

According to the Ministry of Health, Canterbury DHB has a relatively high proportion of people in the least deprived sections of the population and few in the most deprived. Canterbury DHB does not agree with this assessment and the negative effect it has on its funding.

Financial overview and audit opinion In 2017/18 Canterbury DHB had total revenue of $1.736 billion and a deficit of $63.959 million. This was more than the budgeted deficit of $53.644 million. We heard that the DHB is expecting a deficit in 2018/19.

As in the previous year, the DHB received ratings from the Auditor-General of “very good” for its service performance information and associated systems and controls, and “good” for its management control environment, and financial information systems and controls. Although Canterbury DHB has resolved some of the deficiencies identified in 2016/17, the audit opinion remains unchanged.

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Service performance In 2017/18, the DHB maintained or improved its results for all six national health targets. When compared with 2016/17, results for faster cancer treatment and raising healthy kids both showed significant improvement in 2017/18. While it did not meet the target in the final quarter for shorter stays in ED, the overall results for 2017/18 were an improvement from 2016/17.

Relationship with the ministry In May 2018 the Ministry of Health acknowledged the exemplary response of Canterbury’s health system to New Zealand’s natural disaster and the extreme nature of the challenges it has faced.

We were pleased to hear that Canterbury DHB and the ministry are working together to collaboratively and positively address the issues that need to be resolved. The DHB told us it is working with the ministry to find a shared view of the unique and unprecedented challenges that have faced and continue to face the region. Based on its improved relationship with the ministry, Canterbury DHB has agreed a process that will see the completion of business cases to address the significant facility constraints.

Improving health outcomes for Māori Canterbury DHB has been working hard to address inequities in health outcomes for Māori. We were pleased to hear that life expectancy for Māori in Canterbury is better than the national rate. It is 2.4 years lower than for non-Māori in Canterbury, whereas nationally life expectancy for Māori is 6.3 years lower than for non-Māori.

Canterbury DHB is working to close the gap for health outcomes between Māori and non- Māori. We were pleased to hear that inequities in outcomes have decreased by 46 percent in Canterbury compared with 17 percent nationally between 2005–07 and 2012–14.

In 2017/18 Canterbury Māori had a higher rate of infant immunisation, and a lower rate of avoidable hospital admission for children aged 0 to 4 than the national rates for Māori. Although progress in these areas has been good, the DHB recognises that there is more to be done, and remains committed to improving equity in health outcomes.

Innovations in approach to healthcare Canterbury DHB is recognised globally as an innovator in healthcare, with a number of its innovations used in other countries.

Mana Ake – Stronger for Tomorrow The programme Mana Ake – Stronger for Tomorrow provides support for children aged 5 to 12 years old across Canterbury. It works with schools to support teachers, families, and whānau when children are experiencing ongoing issues that affect their wellbeing such as anxiety, social isolation, parental separation, grief and loss, and managing emotions.

The service can support individual children and groups of children and provide advice, guidance, and support for teachers, parents, and whānau. The programme is a collaboration

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Canterbury DHB told us it wants its approach to issues to come from a wellness context, not just a mental health one. The DHB also wants to eliminate the siloes and referrals common in regular practice that result in people waiting for treatment. We were pleased to hear that there has been a 41 percent increase in students engaging successfully with peers and adults as a result of this programme.

We were pleased to hear that, as well as providing specialist interventions, the programme gives information, training, and resources to teachers. This empowers them to manage children’s needs at school, and reduce the need for individual intervention.

By April 2019 all primary and intermediate schools across Canterbury will be connected with the programme. We look forward to hearing about its progress in future reviews.

Children’s teams Children’s teams bring together practitioners and professionals from iwi, health, justice, education, and social services to create a single plan to help and support children who are at risk of abuse or neglect.

Canterbury DHB was one of the pilots for children’s teams, and has had the biggest implementation of them. We were pleased to hear that, as well as empowering frontline staff to make changes to improve outcomes for families, the DHB is also providing funding. This gives staff access to all the support they need to make a difference. We are interested to hear more about this programme in the future.

Mental health needs post-earthquakes Canterbury DHB has experienced a dramatic increase in the number of people seeking mental health support since the earthquakes. The earthquakes were not a single event, but multiple events over years, and never allowed the population to settle. The DHB believes this cumulative impact is significant. In 2017/18, 32,341 people received mental health support from Canterbury DHB, with almost half (16,300 people) requiring specialist mental health services.

Increase in demand Canterbury DHB acknowledged that its specialist mental health services have been challenged by the volume and complexity of cases. We heard that current volumes are not sustainable as Canterbury’s ageing facilities do not have enough space and are no longer fit for purpose. This has created ongoing issues for patients, staff, and those managing the service. Canterbury DHB hopes that the new acute services building will address some of these issues.

We heard that the number of mental health crisis assessments carried out in the emergency department has increased from 700 a month before the earthquakes to 1,500 a month in 2017/18. The increase in demand following the earthquakes has remained high and Canterbury DHB thinks it will remain part of its landscape for the foreseeable future.

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Decrease in waiting time We were pleased to hear that the waiting time for child and adolescent mental health assessments has reduced, from 60 days in 2012/13, to 23 to 25 days in 2017/18. We hope that this trend continues.

Safety of staff In December 2018 there were reports of assaults on staff at the specialist mental health facility at the Hillmorton campus. Canterbury DHB has since increased the number of security staff at Hillmorton and installed two security team members working 24/7 in the acute adult mental health unit.

The DHB highlighted that overflowing facilities and a greater emphasis on reducing the use of restraints gives less scope to de-escalate potentially violent situations. We heard that inappropriate environments do not help in challenging situations, so the improvement of these facilities is a priority for the DHB.

Infrastructure The earthquakes in 2010 and 2011 caused significant damage to many of Canterbury DHB’s buildings and assets. Damage was sustained to more than 200 buildings, and more than 14,000 rooms required some level of repair. As well as repairing earthquake damage, the DHB also has to manage ageing facilities that are no longer fit for purpose. Hospital capacity is under significant pressure and it will be several years before the redevelopment, repair, and remediation of the DHB’s facilities are complete.

New building projects The Christchurch Outpatients building is scheduled to open later this year. The building will house more than 400 staff, and will include 27 services including general consulting, dental, eyes, diabetes, endocrine, allied health, and a blood test centre. Canterbury DHB hopes that the co-location of services will promote more efficient care and improve the environment for both patients and staff.

The building project was undertaken by the Ministry of Health and handover to the DHB was completed on 1 November 2018. The transfer price is expected to be less than the budgeted $72 million. This will be recognised as an equity injection in the 2018/19 financial statements.

The Acute Services building has taken longer than expected to construct. Once completed it will house 12 new operating theatres and procedure rooms, an expanded intensive care unit, radiology department, acute medical assessment, expanded emergency department, and a rooftop helipad. Canterbury DHB expects it to provide about 400 beds and allow it to perform an additional 6,000 surgeries a year.

The Acute Services building project is being managed by the Ministry of Health, with handover expected in July or August 2019. Once the handover is complete the costs of the project will be transferred to the DHB and will affect its future financial performance.

We look forward to hearing about the transition to the new facilities.

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Post-earthquake population challenges Since the earthquakes the DHB has been dealing with the effects of the country’s largest natural disaster while its population has continued to grow. Population-based funding determines the share of funding allocated to DHBs, based on the population living in each district, based on census data.

Canterbury DHB shared with us its belief that the tools used to calculate population-based funding have not accurately reflected the actual population of the DHB’s catchment. As the most recent census data available is for 2013, Canterbury believes that population estimates are failing to identify a large number of Canterbury residents from the most deprived sections of the population, because poorer populations were disproportionately dispersed following the earthquakes and were less visible because of this.

Although this is not independently verified, we hope that this conflict in population estimates is resolved as soon as possible.

Financial sustainability Canterbury DHB has had significant operating deficits for a number of years but 2017/18 was the first year the Auditor-General has concluded that Canterbury DHB faced a significant “going concern” risk. This DHB is not alone in the health sector in experiencing growing financial pressure from increasing demand, and rising costs for treatment and wages.

Causes of 2017/18 deficit increase In 2017/18 Canterbury DHB had a larger deficit than budgeted: $63.959 million instead of $53.644 million. We heard that the increase was caused by:

 additional personnel costs from collective agreement negotiations and multi-employer collective agreement settlements  increased demand for mental health services  unpredicted growth in aged residential care  increased outsourcing due to delays in the completion of the Acute Services building.

Outsourcing Noting that increased outsourcing costs contributed to Canterbury DHB’s deficit, we asked about the cost of outsourcing surgeries. The DHB highlighted that although it uses eight operating theatres a day outside its system, the majority of cases outsourced involve simple procedures.

Canterbury DHB outsources simpler cases so that it can deliver services for complex cases where patients have higher co-morbidity. We heard that the number of complex cases has been increasing and when demand increases, simple cases are the first to be outsourced. It said that outsourcing is the most efficient and cost-effective way to deliver health outcomes in some cases.

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Projected future deficits We are concerned that Canterbury DHB has a projected deficit for 2018/19 of $98.4 million. The DHB assured us that this has been discussed with the Minister on a number of occasions. We heard that a major contributor to the dramatic increase in the projected deficit was the cost of building projects.

The Acute Services building and Outpatients building will be recognised in Canterbury DHB’s financial statements and expenses over the next three years. This has contributed significantly to the increase in forecast deficits.

Letter of comfort In 2017/18 Canterbury DHB received a letter of comfort from the Ministers of Health and Finance to support the use of the going concern assumption in preparing its financial statements. The DHB’s financial situation had created a going concern risk, which made it reliant on a commitment from Ministers.

Nurses’ multi-employer collective agreement On 4 August 2018, an agreement was reached with the New Zealand Nurses Organisation for the multi-employer collective agreement negotiation. This agreement included back-pay to 4 June 2018 and a lump sum of $2,000 per nurse. The cost of this agreement was $9.2 million, which has been included as part of Canterbury DHB’s 2017/18 financial results, contributing to the deficit for the year.

Holidays Act compliance challenges Over the past few years it has become clear that there have been widespread compliance issues with the Holidays Act 2003, in both the public and private sectors. The issues arise when payroll systems are not configured to correctly calculate total holiday pay owing to staff who work additional hours, overtime, or rostered shifts that attract penal rate payments.

As DHBs are 24/7 operations the probability that they will have underpaid staff is high. The period covered by the potential underpayments extends back six years, and this issue could result in significant financial liabilities for Canterbury DHB.

A national approach to mediate these issues is being led by Central Region’s Technical Advisory Services Limited (TAS) on behalf of all DHBs. At this point TAS is still working on methodology. We heard that there is a lack of certainty in determining the level of any underpayment, and that there is an unqualified potential liability for Canterbury. We hope to see progress on this issue by next year’s review.

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Given the uncertain future of NOS, Canterbury DHB has had to record an impairment of $749,000 for 2017/18 against its investment in the system. This recognises the fact that the carrying value of the asset does not reflect the (reduced) future expected benefits. The total value of the asset to all DHBs was impaired by $5.8 million in 2017/18.

Some of us raised concern that the National Oracle Solution is not a good investment for the DHB, given its expected deficit for the coming year. Canterbury DHB said that the finance system it has in place as a result of the first wave of Oracle is working well and providing the mechanisms it needs.

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Appendix

Committee procedure We met on 20 February and 20 March 2019 to consider the annual review of the Canterbury District Health Board. We heard evidence from Canterbury DHB and received advice from the Office of the Auditor-General.

Committee members Louisa Wall (Chairperson) Dr Liz Craig Matt Doocey Jenny Marcroft Dr Shane Reti Hon Nicky Wagner Angie Warren-Clark Hon Michael Woodhouse

Advice and evidence received We received the following documents as advice and evidence for this annual review. They are available on the Parliament website, www.parliament.nz, along with a transcript of our hearing.

Office of the Auditor-General, briefing paper (Canterbury District Health Board), 20 February 2019.

Canterbury DHB, responses to written questions 1-353 (including appendices), 20 February 2019.

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2017/18 Annual review of the Counties Manukau District Health Board

Report of the Health Committee

March 2019

Contents Recommendation ...... 2 Introduction ...... 2 Financial performance and audit results ...... 2 Approach to decreasing the smoking population ...... 3 Patients presenting with family violence related issues ...... 3 The Beattie Varley review ...... 4 Acute demand on healthcare resources ...... 4 Projected deficits ...... 5 Multi-employer collective agreement with nurses ...... 6 Ring-fenced funding for mental health ...... 6 Child and adolescent mental health services ...... 6 Services to rural communities ...... 6 Appendix ...... 7

Louisa Wall Chairperson

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Counties Manukau District Health Board

Recommendation The Health Committee has conducted the annual review of the Counties Manukau District Health Board for 2017/18, and recommends that the House take note of its report.

Introduction The Counties Manukau District Health Board (DHB) provides services to about 546,000 people who reside in the local authorities of Auckland, Waikato, and Hauraki District. Its population is growing rapidly and is projected to increase to about 615,000 by 2025.

The population of Counties Manukau is much younger than the national average, although the elderly population, over the age of 65, is increasing rapidly, by about 4 percent a year. Asian people make up 25 percent of its population (higher than the national average); Pasifika 21 percent (much higher than the national average); while Māori are about the average at 16 percent. Almost half of the district’s children live in areas of high deprivation, with 36 percent of its total population in the most deprived quintile.

Counties Manukau operates seven inpatient facilities and numerous leased or owned outpatient and community health facilities. The DHB employs about 7,000 people. The chair is Vui Mark Gosche and the chief executive is Fepulea’i Margie Apa, who was appointed to this role in September 2018.

Financial performance and audit results In 2017/18 Counties Manukau received total revenue of $1.675 billion and spent $1.695 billion, for a deficit of $19.803 million. This compares with a budgeted deficit of $20.013 million. This is its second deficit in a row: in 2016/17 the DHB reported a deficit of $12.94 million. Of the three Auckland Metro DHBs, Counties Manukau is forecasting the most significant deficits.

Audit results The Auditor-General issued a non-standard audit report for Counties Manukau. It included an “emphasis of matter” paragraph noting that, like other DHBs, Counties Manukau DHB has been investigating issues associated with the calculation of employee entitlements under the Holidays Act 2003. A national approach is being taken to remediate these issues, but this will be complex and time-consuming due to the nature of DHBs’ employment arrangements. The matter might result in significant liabilities for some DHBs.

In 2017/18 Counties Manukau DHB received a “letter of comfort” from the Ministers of Health and Finance to support the use of the going concern assumption in preparing its financial statements.

The Auditor-General rated the DHB’s management control environment, its financial information systems and controls, and its performance information and associated systems 2

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Approach to decreasing the smoking population We heard that the number of smokers in Counties Manukau has decreased from 65,000 in 2012 to 59,500 currently, according to primary care data. Counties Manukau deploys multiple strategies to encourage people to go smokefree. It has a smoking in pregnancy programme which was initially launched in Manurewa. The programme had a positive effect and has now been introduced in Māngere. The smoking in pregnancy programme uses incentives to encourage women to quit smoking and also provides replacement therapies. Counties Manukau DHB is concerned about the numbers of 20- to 24-year olds who are starting to smoke. It has launched a social media campaign to help this group access Quit Smoking.

The DHB also supports Healthy Families New Zealand. This is a joint venture with the Auckland City Council that aims to improve people’s health through prevention. One of its key areas of focus is to get more people smokefree.

Vaping Counties Manukau DHB told us it is not opposed to vaping as a therapy alternative for those who want to quit smoking. It would not prevent any practitioner from encouraging vaping as an alternative to smoking. There is less harm compared to smoking as there is less nicotine in vaping. The DHB would be supportive of more work on the safety and regulation of devices.

Patients presenting with family violence related issues We were interested in the DHB’s intervention process for situations that involve family violence, and asked what training staff receive in this area. The DHB said it has delivered the Ministry of Health’s Violence Intervention Programme since 2010. This includes an eight- hour training programme for nurses and other medical professionals. The DHB has a strong programme for nurses as they are the first point of contact. They are trained to recognise and give appropriate support to victims of family violence. Some staff act as “champions” in this area as they are more knowledgeable and experienced. The DHB tries to screen all its patients.

Hospital registrars also receive training. However, due to a high turnover in this role there is a shorter, more intense programme for this group. Training is needed because domestic violence is often not obvious as the cause of injury when people arrive in the emergency department.

The DHB has a social worker present who supports staff to help anyone staff have concerns about. Patients can stay overnight to ensure they can speak with social workers in the morning. The DHB also has access to victim support through the Police. Depending on what the family needs, they may be referred to providers or be seen by DHB staff. We heard that this is a hard area to work in as ultimately patients can decline assistance and leave without any support.

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Whāngaia Nga Pa Harakeke programme Counties Manukau DHB is an active partner of the Whāngaia Nga Pa Harakeke programme. This programme is a co-ordinated response between multiple agencies to family violence. All the agencies come together to discuss and agree on the best steps to take with a family in an effort to prevent future occurrences.

The Beattie Varley review After concerns were raised by DHB board members, the Ministry of Health commissioned Beattie Varley Limited in 2017 to carry out a forensic review of governance and management decisions by Counties Manukau DHB prior to 2017. The report was released in September 2018.

We noted that the board has referred the Beattie Varley Review report to the Serious Fraud Office (SFO) and asked how much the DHB has engaged with the SFO. We were told that there has been no contact after an initial period of interaction to ensure the SFO had access to the materials needed. The DHB has been advised by its legal team not to expect ongoing communication from the SFO. The DHB did not know when the SFO might report back but believes it will be a lengthy process.

We asked whether Counties Manukau DHB is confident that it has internal controls in place to ensure financial probity and prevent a recurrence of the management and governance concerns identified in the review. We heard that the DHB implemented immediate changes after the change to the executive. It is committed to transparency from its executive leadership team, which meets each week. Most decisions are made collectively in these meetings.

Acute demand on healthcare resources We heard that Counties Manukau DHB is facing increased pressure due to high demand for its acute services. Within its district 67,000 people live with two or more long-term conditions, and almost half its population under the age of 15 lives in an area of high deprivation. We asked what demand management strategies the DHB has to manage pressure on its services where patients could be managed within the community.

Community education Counties Manukau DHB told us it focuses on education. It goes into the community to discuss the options for health care. It highlights that the best option may be a local health practitioner rather than the emergency department (ED). The DHB is also looking at a range of technology-enabled options as a way to provide more information for patients and families to access care before deciding to go to the ED. This information would also be available for GPs as a large portion of referrals to hospitals come from GPs.

Community health practitioners Counties Manukau DHB runs programmes to offer assistance to health practitioners in communities, such as the Primary Options for Acute Care (POAC). POAC provides assistance to practitioners for patients who can be safely managed within the community.

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POAC facilitates access to existing infrastructure and resources in the community to provide a range of services. This aims to lower the number of acute hospital admissions or shorten the length of hospital stay for patients.

Preventative programmes Counties Manukau DHB is working on population health programmes as a preventative measure. As well as programmes to support people to quit smoking, it is looking at alcohol screening initiatives. The DHB has heard from clinicians that it is not getting the outcomes from its preventative programmes that were expected. It is looking closely at its contracts to ensure funding in this area is being used as efficiently as possible. There is also a co-design process with community members and providers to try to find a more effective prevention method. The DHB has assessed what it has available in its discretionary budget for prevention, but it only has a small amount of funds to work with. The DHB believes its ability to provide sufficient preventative programmes is being hindered by the overwhelming number of people coming into the hospital system.

Building resilience in healthcare An important focus for Counties Manukau DHB is building resilience into its healthcare system so it can reliably deliver services to its community. This requires investing in ambulatory and elective care at Manukau Health Park and acute demand at Middlemore Hospital.

Causes for the surge in acute demand We asked what had led to the surge in acute demand, and whether there had been any strategic planning for this eventuality. The DHB explained that it had initially planned to invest in community hubs in areas of high demand like Papakura, Manukau, and Māngere Otara. If patients could go to a community hub in the first instance it would decrease pressure on the hospital. The DHB delayed investing in an additional acute ward because it assumed the community hubs would be developed, but they were not. The DHB believes this is partly because it has been overwhelmed by the population growth.

It also noted that for the past five to six years it has been improving its in-patient flow and looking at ways of decreasing the time patients spend in hospital. Faster access to care means patients can be discharged sooner, increasing the number of people who can be treated at the hospital. While this has worked so far and the DHB’s workforce has been able to absorb a lot of the pressure, it believes that this will no longer be sufficient to cope with the demand.

Projected deficits We noted that for 2018/19 Counties Manukau DHB has a projected deficit of $53.5 million. We heard that the DHB has revised this and is now forecasting a deficit of $45 million. The projected deficit has been caused by costs in response to the capacity demand in its system. The pressure on particular services such as neonatal care is also a contributing factor. The DHB has had to send babies to facilities around the country because it had no space.

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Multi-employer collective agreement with nurses In August 2018 Counties Manukau DHB was part of a Multi-Employer Collective Agreement (MECA) with the New Zealand Nurses Organisation for DHB-employed nurses. We asked whether the DHB is satisfied that the appropriation and any additional funding is sufficient to cover the cost of the two pay increases agreed for the current financial year, together with the cost of the Safer Staffing Accord.

The DHB said that the relief funding it has received will almost cover the cost of the two pay increases. Any remaining cost will come out of the DHB’s baseline, as is standard procedure. The DHB is satisfied it has sufficient funding to cover the cost associated with the Safer Staffing Accord.

Ring-fenced funding for mental health We asked about the ring-fenced funding for mental health services provided to the DHB in 2017/18. It provided two figures: a “population view” of $152.88 million and a “provider view” of $147.87 million. We heard that the variance in these two figures was due to inter-district flows. Counties Manukau DHB sends more patients to other districts for care than it receives. It pays for that care out of its population view, causing the difference in figures. For instance, Waitemata DHB provides alcohol and drug, and forensic mental health, services for Counties Manukau’s population. This is paid for from the population view.

Child and adolescent mental health services We noted a reduction from previous years in the numbers of patients being seen within three weeks and within eight weeks for child and adolescent mental health services. In 2016/17, 73.4 percent were seen within three weeks and 95 percent were seen within eight weeks. In 2017/18, 70.2 percent were seen within three weeks and 94.2 percent were seen within eight weeks. We asked what caused this decrease. The DHB said that this was caused by a combination of factors. Outpatient facilities have had an increase in demand, placing pressure on their services. There has also been a decrease in workforce for mental health services. The DHB is working to increase the providers in this area but is struggling to find professionals who work specifically in youth mental health. It is having difficulty meeting the three-week target as it must provide for increased numbers with reduced staff. Most patients who were missed within three weeks were picked up within eight weeks.

Services to rural communities We asked about the services provided by Counties Manukau DHB in its rural areas. It has a rural population of about 6,990, mainly made up of mana whenua Māori and the elderly. We heard that the DHB works with Pukekohe Hospital and invests to try to provide the specialist care needed within the community. It also supports the primary care sector to service those populations closer to home. The DHB has community-based mental health facilities available to these communities located in Papakura.

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Appendix

Committee procedure We met on 13 February and 20 March 2019 to consider the annual review of the Counties Manukau District Health Board. We heard evidence from the Counties Manukau District Health Board and received advice from the Office of the Auditor-General.

Committee members Louisa Wall (Chairperson) Dr Liz Craig Matt Doocey Jenny Marcroft Dr Shane Reti Hon Nicky Wagner Angie Warren-Clark Hon Michael Woodhouse

Advice and evidence received We received the following documents as advice and evidence for this annual review. They are available on the Parliament website, www.parliament.nz

Office of the Auditor-General, Briefing on Counties Manukau District Health Board, dated 13 February 2018.

Counties Manukau District Health Board, responses to written questions (and appendices), dated 13 February 2018.

Counties Manukau DHB responses to additional written questions, dated 20 March 2019.

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2017/18 Annual review of the Health and Disability Commissioner, the Health Promotion Agency, the Health Quality and Safety Commission, and the New Zealand Blood Service

Report of the Health Committee

April 2019

The Health Committee has conducted the annual reviews of the Health and Disability Commissioner, the Health Promotion Agency, the Health Quality and Safety Commission, and the New Zealand Blood Service for 2017/18, and has no matters to bring to the attention of the House. The committee recommends that the House take note of its report.

Louisa Wall Chairperson

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2017/18 Annual review of the Health Research Council of New Zealand

Report of the Health Committee

March 2019

Contents Recommendation ...... 2 Introduction ...... 2 Financial performance and audit results ...... 2 The New Zealand Health Research Strategy ...... 2 Connecting with international research organisations...... 3 Clinician-led research ...... 3 Implementing changes to the delivery of health care ...... 3 Development of a Pacific Health Research Strategy ...... 4 Appendix A ...... 5 Appendix B ...... 6

Louisa Wall Chairperson

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2017/18 ANNUAL REVIEW OF THE HEALTH RESEARCH COUNCIL OF NEW ZEALAND

Health Research Council of New Zealand

Recommendation The Health Committee has conducted the annual review of the Health Research Council of New Zealand for 2017/18, and recommends that the House take note of its report.

Introduction The Health Research Council of New Zealand (HRC) is a Crown agent that was established in 1990. The HRC has primary responsibility for facilitating the Government’s investment in health research and supporting health research in New Zealand to achieve better health outcomes for New Zealanders.

The HRC is governed by a 10-member board appointed by the Minister of Health in consultation with the Minister of Research, Science and Innovation. The membership of the board must be split equally between experienced health researchers and others. The chief executive is Professor Kathryn McPherson and the chair is Dr Lester Levy.

Financial performance and audit results In 2017/18, the HRC had total revenue of $102.499 million and total spending of $106.094 million. This resulted in a deficit of $3.595 million, compared with the budgeted deficit of $3.438 million. Most ($100.958 million) of the HRC’s spending was on research grants.

Auditor’s assessment The Auditor-General rated the HRC’s management control environment as “very good”. Its financial information systems and controls, and performance information and associated systems and controls were graded as “good”. The Auditor-General noted that deficiencies identified in 2017 have been resolved in part, but made further recommendations for improvement in these areas.

The New Zealand Health Research Strategy In June 2017, the New Zealand Health Research Strategy was launched. When the Health Committee of the previous Parliament last heard from the HRC, the strategy was in the early stages of development. The strategy is being led by the Ministry of Health with support from the HRC and the Ministry of Business, Innovation and Employment (MBIE). The strategy is a 10-year plan that focuses on four strategic priorities. The HRC is leading the strategic priority focused on investing in health research that addresses the needs of New Zealanders. This involves:

 prioritising investments  investing in research for healthy futures for Māori  investing in research that results in equitable outcomes for Pacific peoples

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 developing and sustaining a strong health research workforce. We heard that the HRC has focused on its prioritisation work. Once this work has been completed it will move onto the next focus of investing in research for healthy futures for Māori.

Connecting with international research organisations We were interested in how the HRC is improving its international health research networks. The HRC is currently connected with multiple international research organisations including the Global Alliance for Chronic Diseases, the Australian New Zealand Clinical Trials Registry, and the Human Frontier Science Program. While it has not been very successful in receiving international funding from these organisations, a number of people from the New Zealand research community have been involved in studies funded by international organisations.

The HRC is promoting New Zealand health researchers as leaders of such studies and its relationship with international research communities is still developing. The HRC will release an impact report about some international research it has supported.

Clinician-led research The HRC estimated that 60 percent of its funding goes to clinician-led research teams. There have been positive outcomes from clinician-led studies. We heard that a study into intensive care found that normal saline was equally as effective as a sophisticated bio- engineered fluid-replacement product. These findings challenged the idea that expensive solutions contribute to better health outcomes and led to cost savings in the health system.

The same team also found that elderly patients having cardio-thoracic surgery required a smaller volume of blood transfusion than what they had been receiving. This is important because blood transfusions carry a risk which is more prominent in the elderly.

These findings are changing practice and improving health outcomes.

Implementing changes to the delivery of health care Research findings sometimes show current practice can be improved or is detrimental to good health outcomes and requires change. For example, the findings about saline in intensive care changed medical practice in New Zealand and internationally. We were interested in how the HRC can ensure that recommended changes are implemented by practitioners.

The HRC agreed on the importance of translating research findings into policy and practice. Alone, it said, it would struggle to implement change.

One of the four strategic priorities in the health research strategy is to create a system where research findings can be translated and implemented. The HRC emphasised the value of working with the ministry, and also with MBIE, to implement beneficial changes.

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Development of a Pacific Health Research Strategy We discussed the possibility of developing a health research strategy for Pacific countries. The New Zealand strategy includes working with Māori to identify key issues for them. That work will also extend to Pacific peoples in New Zealand.

We were pleased to hear that the HRC is open to discussions about developing a Pacific strategy as part of New Zealand’s aid and development in the region.

Health researchers are now more connected and more able to make a difference than they used to be. The HRC is interested in developing the role of health researchers further to include aid and development initiatives, particularly in the Pacific.

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Appendix A

Committee procedure We met on 15 February and 20 March 2019 to consider the annual review of the Health Research Council of New Zealand. We heard evidence from the Health Research Council of New Zealand and received advice from the Office of the Auditor-General.

Committee members Louisa Wall (Chairperson) Dr Liz Craig Matt Doocey Jenny Marcroft Dr Shane Reti Hon Nicky Wagner Angie Warren-Clark Hon Michael Woodhouse

Office of the Auditor-General, briefing paper (Health Research Council), dated 11 February 2019.

Health Research Council of New Zealand, responses to written questions (and appendices), dated 11 February 2019.

Health Research Council of New Zealand, responses to additional questions.

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Appendix B

Details of research and clinical trials by District Health Boards The information supplied in this appendix was provided by the District Health Boards in the DHBs’ responses to written questions for the 2017/18 annual reviews.

Auckland District Health Board The Auckland District Health Board has 279 active clinical trials. Of these, 129 are investigator-led non-commercial studies and 150 are sponsor-led commercial studies.

Types of research  Sponsored clinical trials involving devices and pharmaceuticals.  Phase 1 first-man-in clinical trials and phase 2a/b safety and efficacy trials, phase 3 broader efficacy trials and phase 4 post-marketing surveillance. These trials may be investigator-initiated or industry-sponsored commercially contracted trials.  Investigator-initiated studies of non-therapeutic interventions, e.g. new diagnostics or new applications of existing diagnostics.  Investigator-initiated observational studies including epidemiologic studies.  Quantitative and qualitative research methodologies are employed including Kaupapa Māori methodologies.

Bay of Plenty District Health Board The Bay of Plenty District Health Board has 31 pharma-sponsored clinical trials.

Types of research  Investigator initiated best practice research.  Safety and efficacy of pharmaceuticals, medical devices and evaluation of diagnostics tests.  Range from low risk observational to interventional.

Canterbury District Health Board The Canterbury District Health Board did not provide information on the number of its research projects that are clinical trials.

Types of research  Best practice  Devices  Large pharma  Evaluation

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 Academic  Phase 1-4  Clinical trial  Clinical validation and more

Capital and Coast District Health Board Of the Capital and Coast District Health Board’s research, 60 percent are clinical trials.

Types of research  Best practice  Efficacy of medical devices or pharmaceuticals  Observational studies  Population studies  Registries

Counties Manukau District Health Board Middlemore Clinical Trials is a charitable trust established in 2001, which administers commercial clinical trials and major grant-funded research studies on behalf of CM Health. As at November 2018, Middlemore Clinical Trials currently have 70 active commercial clinical trials.

Types of research Counties Manukau District Health Board, responses to questions 1–352, pages 355–360, includes a research registry listing its research projects for 2017/18.

Hawke’s Bay District Health Board The Hawke’s Bay District Health Board has 21 clinical trials. Of these trials, 14 are investigator-led (independent of pharmas), two are managed by contract research organisations, and 4 are pharma trials.

Types of research  Simple audits of current practice against best practice guidelines  Comparisons of different standard therapies  Expanded roles for current therapies  Phase 3 randomised controlled trials of new pharmaceutical agents

Hutt Valley District Health Board At Hutt Valley District Health Board around 10 percent of the clinical research undertaken are pharmaceutical projects. The remaining 90 percent of research is conducted as part of collaborative groups or collaboration with external research agencies.

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Types of research Most of the research projects at Hutt Valley District Health Board are conducted to improve standards of care or to provide access to the best treatment options, available globally.

Lakes District Health Board The Lakes District Health Board did not specify the number of clinical trials.

Types of research  Phase III pharmaceutical trial looking at a new medication which may lessen cardiovascular events in high-risk patients with particular genotype by raising HDL cholesterol (recruiting)  Phase III pharmaceutical trial looking at an existing medication which may give benefit to improving stroke outcomes (recruiting)  Best practice

MidCentral District Health Board The MidCentral District Health Board has 41 clinical trials registered with various pharmaceutical companies.

Types of research  Best practice studies  Efficacy of pharmaceuticals and medical devices  Observational Studies o Complication rates o Patient experience o Health care setting o Consumer engagement  Cross-sectional studies  National and international registries – disease  Collaborations with universities  Evaluation of quality improvement initiatives  Outcomes analysis  Workplace improvement  Community care review  Case – control studies  Retrospective data analysis – for specific conditions

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Nelson Marlborough District Health Board No clinical trials with pharmaceutical companies were undertaken in the 2017/18 financial year at Nelson Marlborough District Health Board.

Types of research Occasionally Nelson Marlborough DHB participates in various clinical research trials for new processes to determine improved practice, medical devices and pharmaceuticals. These are usually undertaken in conjunction with a larger tertiary DHB.

Northland District Health Board The Northland District Health Board has one clinical trial.

Type of research  Evaluation  Best practice  Efficacy of medical devices  Pharmaceuticals

South Canterbury District Health Board The South Canterbury District Health Board do not have any clinical trials with pharmaceutical companies.

Types of research  Use of Dextrose Gel in Paediatric Patients – Hypoglycaemia  Health & Wellbeing of the Alcohol & Other Drug (AOD) Addictions Workforce  Reducing Ethnic and Geographic Inequity to Optimise NZ Stroke Care  The New Zealand Deafness Notification Database – Children Notified in 2010, what have we learned?  Modular Head Clinical Study  Exploring the impact of a new device that measures glucose levels in young people with diabetes  Use of Generic Direct Acting Antiviral Medication to treat Hepatitis C  A retro-prospective post-market study of Total Hip Arthroplasty with the Birmingham Hip Modular Head/Modular Femoral Head System  Bridges Stroke Self-Management Programme into SCDHB stroke services: a case study  Ageing Well National Science Challenge

Southern District Health Board In 2017, Health Research South approved 97 studies, of which 20 were commercial trials. In 2018, Health Research South approved 80 studies, of which 19 were commercial trials.

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Types of research Health Research South authorises approximately 100+ research projects each year. Southern DHB and the Dunedin School of Medicine (DSM) operate a “shared research environment” with investigators ranging from DSM students to DHB consultants and external researchers. Studies range from short retrospective audits, to Investigator-led observational and interventional studies, to long term commercial trials running over a number of years trialling pharmaceutical products and medical devices. The studies cover a wide range of inquiry.

Tairāwhiti District Health Board Hauora Tairāwhiti does not participate in pharmaceutical company clinical trials.

Types of research Most often research projects are local application of research occurring in other parts of the country. For Tairāwhiti DHB these are most often on clinical practice or the investigation of best approaches to a particular problem. Local researchers look for efficacy of treatment approaches that are peculiar to the dynamics of our population.

Taranaki District Health Board The Taranaki District Health Board has four clinical trials registered with pharmaceuticals companies.

Types of research  Observational study  Audit and survey  Survey and interviews  Randomised controlled trials  Clinical trials  Audit and others

Waikato District Health Board For the period 1 July 2017 to 30 June 2018 the Waikato District Health Board had 47 clinical trials involving companies such as Merck Sharpe Dohme (MSD), Abbvie, Gilead, Astra Zeneca, Bayer, Boeringer Ingleheim, Bristol Myers Squibb, Celgene, Eli Lilly, F&P Healthcare, Gilead, GlaxoSmithKline, Novartis, Pfizer, and Sanofi-Aventis.

Types of research For the period noted above the Waikato District Health Board had 169 research projects registered under the following categorisation:

 Audit or Evaluation: 36  Clinical/interventional/drug/device: 47  Observational/Qualitative/Epidemiological: 70

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 Other: 16

Wairarapa District Health Board This DHB provided the response “Nil”.

Waitemata District Health Board In the 2017/18 year there were 18 new industry-sponsored clinical trials registered (applied for locality authorisation at Waitemata DHB).

Types of research The term “research” at Waitemata DHB refers to a wide umbrella of activity that includes interventional and observational clinical and innovative practice research (industry sponsored or investigator initiated), clinical audit, quality and service innovation and improvement, programme evaluation and patient related outcome measures (PROMs) conducted by Waitemata DHB staff and/or in collaboration with external groups.

In 2017/18, 250 research projects sought Waitemata DHB locality approval, of which 51 were interventional research and 80 were observational research.

Whanganui District Health Board The Whanganui District Health Board did not conduct any clinical trials with pharmaceutical companies.

Types of research  Evaluation of the MORSim programme: A multidisciplinary simulated team training initiative for all operating room staff in New Zealand. Researcher: Auckland University Peter Beaver.  A discursive study of New Zealand women’s accounts of smoking during pregnancy. Researcher: Massey University Delia Snell.  Australia and New Zealand Hip Fracture Registry Researcher: Dr Roger Harris (Geriatrician Auckland City Hospital).  Performing routine family violence screening in the paediatric inpatient setting: Establishing nurses’ perceptions of barriers, enablers and responding by Lisa Stewart through University of Auckland.  Pilot study evaluating the introduction of the FLACC pain scale and faces pain scale revised: nursing perspective by Megan O’Connor through Massey University.  Women’s experience of breast reconstruction after mastectomy, Maryanne Lille WDHB, Health Research Council.  Health and Wellbeing of the addiction workforce by Klare Braye Flinders University.  Introducing restorative health practices to give voice, accountability and healing value for Aboriginal and Torres Strait Islander families/communities by Holly Northam of University of Canberra.

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 Effective education on footcare practices to aid prevention of Diabetic foot ulcers in New Zealand by Sarah Pathak from University of Auckland.  Date, Decision-making and Development: Using Data to Improve Health Outcomes by Dr Amohia Boulton.

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Report of the Health Committee

March 2019

Contents Recommendation ...... 2 Introduction ...... 2 Success of Te Aka Mauri – Rotorua Children’s Health Hub...... 3 Technology ...... 3 Efforts to reduce smoking in the DHB’s jurisdiction ...... 4 Staffing issues...... 4 Methamphetamine use – Tū Taua programme...... 5 Increasing number of immunisation decliners ...... 5 Appendix ...... 6

Louisa Wall Chairperson

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Lakes District Health Board

Recommendation The Health Committee has conducted the annual review of the Lakes District Health Board for 2017/18, and recommends that the House take note of its report.

Introduction Lakes District Health Board (DHB) serves a population of about 108,000 people living in the Rotorua, Taupō, Mangakino, and Turangi districts. It operates two general hospitals—in Rotorua and Taupō—which are supported by community-based services. The DHB serves a high proportion of people in the most deprived section of the population, compared with the national average: 35 percent are in the most deprived quintile.

We acknowledge the 50-year contribution of Lakes DHB’s outgoing chief executive, Ron Dunham, to the health sector, and wish him well in his retirement.

Financial performance of the district health board In 2017/18, the DHB’s total revenue was $378.069 million, and its total expenditure was $383.292 million. After including $53,000 for the DHB’s share of the surplus from associates and joint ventures, this resulted in a deficit of $5.17 million. It had budgeted for a deficit of $3.75 million. The key reasons for the deficit were the high cost of locums used to cover staff vacancies, leave, and sabbaticals, and higher than expected demand for hospital services— particularly for acute cases.

Results of the 2017/18 audit The Auditor-General issued a non-standard audit report. He noted that, like other DHBs, the Lakes DHB has been investigating issues associated with the calculation of employee entitlements under the Holidays Act 2003. A national approach is being taken to remediate these issues, but it will be complex and time-consuming due to the nature of DHBs’ employment arrangements. The matter might result in significant liabilities for some DHBs.

The auditor also noted Lakes DHB’s failure to comply with section 149C of the Crown Entities Act 2004, which requires it to complete its statement of performance expectations before the start of the financial year.

The audit report notes that the auditor discussed the approach being taken to return Lakes DHB to a break-even position, or to make surpluses in future years. It states that the DHB is working to identify areas where savings could be made, and then to take action to achieve those savings. The Auditor-General is satisfied that the board and management are aware of Lakes DHB’s financial position and are taking appropriate action to return to a break-even position, although this will be difficult.

The National Oracle Solution (NOS) is a programme to develop a shared-services finance and procurement system between the DHBs in New Zealand. It is led by NZ Health

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Partnerships Limited, which is a subsidiary owned by all the DHBs. The programme has been “paused” by Cabinet, as it seeks further information before deciding whether to approve additional funding to re-plan the programme. Given the uncertainty about the future of the programme, NZ Health Partnerships Limited has concluded that NOS is impaired by $5.8 million as a result of the decision not to complete some functionality that was part of the original intended benefits. Given its own investment in the programme, Lakes DHB provided for impairment of $231,590, which the auditor concludes is reasonable.

Success of Te Aka Mauri – Rotorua Children’s Health Hub In 2018, Rotorua Lakes Council and Lakes DHB opened Te Aka Mauri, which incorporates the Rotorua Children’s Health Hub and the Rotorua Library. The health hub provides a range of child health and maternity services, including paediatric outpatient clinics, a child development team, vision and hearing screening, breastfeeding support, and infant, child, and adolescent mental health services. The council funded the refurbishment of its pre- existing library space, while the DHB acts as a long-term paying tenant in the building and funded the fit-out of its dedicated space within the building.

The DHB told us that the hub receives support from the Police, education groups, social services, and the library. The library makes information on health matters relevant to the hub available to families, and provides a space for families of those being treated to spend time while they wait. As a positive example of this inter-sectoral approach to services, the DHB pointed to the fact that the health hub has been able to start opening during weekends and evenings when the library is open, to provide greater access for families. The DHB noted that the rates of attendance for its child services were very low when the clinics were based within the hospital. However, now that the hub is located within the Rotorua library building, virtually everyone now turns up to appointments. The DHB attributed the rise in attendance rates to the fact that the library is a space that children already enjoy coming to, and very different from the clinical environment of the hospital.

We heard that the relationship between the council and the DHB is strong and “very, very positive”, but there are challenges arising from different kaupapa and legislated accountabilities between the two groups. We commend the DHB and the council on the early success of this initiative, and will follow Te Aka Mauri’s progress with interest.

Technology National Oracle Solution We heard that the DHB is disappointed with the pause of the NOS programme. Although the DHB said it can afford to wait longer than some DHBs, its current system, Technology One, is reaching the end of its intended life. The DHB believes that the NOS programme’s integrated financial and procurement systems would provide many long-term benefits. We heard that the DHB believes the pause could still be constructive if it can make positive changes to the system. It said that a public health system for New Zealand should be an integrated system, so that people all over the country can receive the same level of service, and all DHBs can receive the same benefits, particularly in procurement.

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Cybersecurity improvements We noted that Lakes DHB reports preventing an average of 45 potential cyber-intrusions per week. This is a vast improvement on previous years, when it has reported up to 2 million hits on its external firewall per week. We heard that the DHB has set up a security oversight group to collect data on intrusion attempts and strengthen its firewalls.

The DHB told us that it gets many “phishing” emails, which pretend to make legitimate requests in an attempt to steal money or login details. Lakes DHB has a training programme to help its staff identity phishing emails. We also heard that the DHB has made efforts to counter ransom attacks to its system.

We commend Lakes DHB on the vast improvements to its IST security system.

Efforts to reduce smoking in the DHB’s jurisdiction We noted that many of the health targets regarding smoking cessation relate to advice and support offered to patients. The DHB told us that staff have a responsibility to provide advice on cessation to patients, to record the fact that they provide the advice, and to attempt to find alternatives to smoking for the patient. The DHB offers nicotine replacement patches, counselling, and post-hospital support in a patient’s general practice.

The annual report for Lakes DHB states that the DHB has fallen short of most of its smoking targets, other than the combined percentage of Māori and non-Māori pregnant smokers offered support. Only 88.9 percent of pregnant Māori smokers were offered advice, against the Ministry of Health’s target of 90 percent and a rate of 100 percent achieved in 2016/17. Improving this statistic is a “priority area” for the DHB. Lakes DHB told us that it struggles to reach pregnant Māori women, many of whom do not appear to have adequate support networks. We encourage the DHB to continue its efforts to engage pregnant Māori smokers.

Staffing issues Funding for nurses’ pay increase In 2018, the DHBs reached a multi-employer collective agreement with the New Zealand Nurses Organisation for nurses employed by DHBs. The agreement included back pay to 4 June 2018, and a lump sum of $2,000 per nurse. Lakes DHB included these payments in its 2017/18 financial results, at a total cost of $1,202,210.

We heard that the pay increase is much higher than what the DHB had budgeted for in its annual plan. The Ministry of Health has assured the DHB it will cover the shortfall. However, we heard that the DHB is nervous about the consequences of the settlement in the aged care sector and non-governmental organisations that the DHB commissions and funds, for example when hospital nurses are paid more than nurses working in rest homes.

Availability of specialists We heard that Lakes DHB has a shortfall of specialist expertise, which it attempts to cover by sharing specialists with the Waikato DHB. However, the DHB told us that Waikato also has a shortage, and some types of specialist are simply not easily available in New Zealand.

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The DHB has several regional plans for paediatrics, trauma, and cancer units across the five Midland DHBs (Lakes, Waikato, Bay of Plenty, Taranaki, and Tairāwhiti). We heard that there are also plans to implement a mental health network with the ability to specialise in certain areas—for example, eating disorders.

Methamphetamine use – Tū Taua programme The DHB discussed its Tū Taua programme for dealing with methamphetamine use in the district. It is a “by Māori, for Māori” programme, providing support and counselling, and helping to facilitate whānau support. We heard that the DHB does not have a good sense of who is struggling with methamphetamine issues in the community. It can collect data on patients who present to the emergency department with methamphetamine issues, but does not have an easy way to track its use within the district. The DHB cannot access data on police interventions involving the drug. We heard that the DHB would like to see more consistent and accurate collection of drug health data across the country.

Increasing number of immunisation decliners We note that Lakes DHB, like many other district health boards, has seen a decline in immunisation rates. The DHB said that that more people actively decline vaccines than before. However, it largely attributes the lower immunisation rate to its difficulty in keeping current addresses for children with high mobility, who regularly shift out of and around the district. We heard that the DHB encourages children’s dentists to check for immunisations and administer them if they have not been done already.

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Appendix

Committee procedure We met on 12 December 2018 and 20 March 2019 to consider the annual review of the Lakes District Health Board. We heard evidence from the Lakes District Health Board and received advice from the Office of the Auditor-General.

Committee members Louisa Wall (Chairperson) Dr Liz Craig Matt Doocey Jenny Marcroft Dr Shane Reti Hon Nicky Wagner Angie Warren-Clark Hon Michael Woodhouse

Office of the Auditor-General, Briefing on Lakes District Health Board, dated 12 December 2018.

Lakes District Health Board, responses to written questions 2017/18, dated 10 December 2018.

Lakes District Health Board, responses to post-hearing questions, dated 11 February 2019.

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Report of the Health Committee

March 2019

Contents Recommendation ...... 2 About the Ministry of Health ...... 2 Audit results ...... 2 Meningitis in Northland ...... 3 Publication of health sector results ...... 4 Nurses’ pay rise ...... 5 New hospitals ...... 5 Asset management ...... 5 Health equity ...... 6 Disability support ...... 6 Mental health ...... 6 Smokefree 2025 ...... 7 Appendix ...... 8

Louisa Wall Chairperson

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Ministry of Health

Recommendation The Health Committee has conducted the annual review of the Ministry of Health for 2017/18, and recommends that the House take note of its report.

About the Ministry of Health The Ministry of Health is a government department that seeks to “lead and shape the New Zealand health and disability system to deliver a healthy and independent future for all”.1 Its five strategic priorities in 2017/18 were to:

 improve health outcomes for population groups, with a focus on Māori, older people, and children  improve access to, and the efficiency of, health services for New Zealanders, with a focus on disability support services, mental health and addictions, primary care, and bowel cancer  improve outcomes for New Zealanders with long-term conditions, with a focus on obesity and diabetes  improve the ministry’s understanding of system performance  implement the ministry’s investment approach.2 The ministry’s revenue in 2017/18 was $202.7 million and its expenses were $205.9 million. The resulting deficit was $3.2 million. This compares with a deficit of $656,000 in 2016/17.

The ministry administered non-departmental appropriations of $16.3 billion, of which about $13 billion was funding for the 20 district health boards (DHBs).3 The other $3 billion purchased other services from DHBs and organisations that do not report directly to Parliament, including national disability support services, public health services, and national mental health services.4

At 30 June 2018, the ministry employed 1,011 full-time-equivalent staff. This compares with 969 in June 2017. The staff are based in Wellington, Auckland, Hamilton, Whanganui, Christchurch, and Dunedin.

Audit results The Auditor-General issued an “unqualified” opinion on the ministry’s financial statements and performance reporting. This means that he was satisfied that the information audited

1 Ministry of Health, Annual Report for the year ended 30 June 2018, p 11. 2 Ibid, p 10. 3 Ibid, p 95. 4 See Ministry of Health, 2018, Vote Health: Report in relation to selected non-departmental appropriations for the year ended 30 June 2018. 2

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The Auditor-General rated the ministry’s management control environment as “needs improvement”, compared with a rating of “good” in 2016/17. The auditor noted that little progress has been made in strengthening procurement and contract management. Recommendations about the management control environment included:

 better planning for both the negotiation and contract management stages of the procurement cycle  more detail on contract management in the ministry’s procurement policy  implementation of the procurement policy as intended  better record-keeping for procurement and contracts  continued improvement of the governance arrangements for hospital rebuild projects. The Auditor-General rated both the ministry’s financial information systems and controls, and its performance information and associated systems and controls, as “good”. He recommended several improvements in those areas.

Meningitis in Northland We asked about the ministry’s role in the recent meningococcal W cases in Northland. We noted that the following signs, evident in the first half of 2018, could have indicated the approaching community outbreak:

 an increasing number of cases of meningococcal disease from the start of 2018 (30 cases to 4 May 2018, compared with 18 in the same period in 2017, the ministry describing the increase in its May 2018 Immunisation Update as “due largely to meningococcal W cases”)  in April 2018, meningococcal W accounted for 50 percent of new meningococcal cases, but in May it was 100 percent  every month from April 2018, meningococcal disease featured as a key trend on the front page of the public health monthly surveillance data  in May 2018, a Northland DHB clinician advised his staff of his concerns about meningococcal disease  in May, the Northland DHB asked the ministry for a vaccination campaign  in May, a presenter at a GP conference in Russell expressed his concern that people could die of meningococcal W that winter  the ministry’s May immunisation update listed meningococcal disease under the heading “outbreaks”. The ministry told us that, later in 2018, in discussion with the Northland DHB, it convened a technical advisory group to provide specific advice about the disease. The group first met on 8 November 2018. The group recommended that the ministry initiate a meningococcal W vaccination campaign in Northland.

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Some of us do not consider that the technical advisory group was convened in a timely fashion, particularly as the Northland DHB asked for a vaccination campaign in May.

The ministry told us that “there was action under way from May” and earlier. It said it was monitoring the epidemiology. It also responded to each case of meningococcal W (as well as meningococcal B) by finding cases, giving antibiotic treatment to patients, and providing vaccinations to people who had come into contact with patients.

The ministry said that its process is to monitor the epidemiology of diseases and talk with specialists such as communicable disease epidemiologists, public health units, and the national immunisation centre before deciding to form an advisory group to consider an outbreak and the appropriate action for dealing with it.

A vaccination campaign is initiated when there are three or more cases in three months, and an age-specific incidence, or incidence in a specific community, of approximately 10 unlinked cases per 100,000 people.5

Vaccination campaign The ministry wants to immunise Northlanders in two age groups: pre-schoolers aged between 9 months and 5 years, and teenagers. This totals approximately 22,000 patients.

Because the meningococcal W outbreak is worldwide, there is a very limited supply of the vaccine. New Zealand’s existing supplies were being used to immunise people who had come into contact with those with meningococcal W. We were told that the ministry had secured 25,000 vaccines from overseas, which would be available by the middle of December 2018. The 3,000 surplus vaccines would be used to immunise New Zealanders who had been in contact with new cases of meningococcal W.

The immunisations started on the day of our hearing, 5 December 2018, and would continue over the summer. The ministry aims to immunise 80 to 100 percent of each target group, with a particular focus on teenagers, who tend to be carriers of meningococcal W.

We heard that Northland DHB has a plan for both cohorts, including providing immunisation in places such as schools and primary care facilities. The ministry noted that there had been a lot of publicity about the outbreak. It had sent staff to Northland to support the campaign, and, if necessary, it would arrange for further support from the Auckland DHBs.

We will be interested to learn what proportion of Northlanders in each cohort are immunised against meningococcal W.

Publication of health sector results We asked why the monthly DHB financial reports, published on the ministry’s website until June 2018, had stopped. We were told that the reports stopped being published because the DHBs’ annual plans for 2018/19 had not been finalised.

5 Ministry of Health, Neisseria meningitidis invasive disease, definitions of “outbreak” and “community outbreak”. 4

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The ministry informed us that, by the end of 2018, it would provide a final report to the Minister of Health on DHB year-to-date results. It intended to publish this information on its website early in 2019.

We heard that the ministry has final drafts of all DHB annual plans. It expected the drafts to be viewed soon by the Minister of Health and the Minister of Finance.

We heard that the ministry and the Minister are making good progress in developing a new set of national health targets. In the meantime, results against the existing national health targets are not published in the same format as they were previously. We pointed out our frustration at the lack of data. The ministry made a commitment to improve this, and we look forward to soon being able to find the information more easily on its website.

Nurses’ pay rise A multi-employer collective agreement with the New Zealand Nurses Organisation was settled after budgets for 2018/19 were finalised. We heard that DHBs had budgeted for an extra 2.3 percent for the nurses’ settlement, with the balance to be provided by the Government.

New hospitals In a recent restructuring, the role of Critical Projects Director was disestablished. A key aspect of the role was to oversee major hospital redevelopments, including those in Christchurch, Greymouth, and Dunedin. That function has been incorporated into a new directorate, DHB Performance, Support and Infrastructure. Dunedin Hospital progress The Capital Investment Committee advises the Minister of Health and the Minister of Finance about prioritising and allocating funding for capital investment and health infrastructure. To help DHBs plan, it has set out its indicative priorities for the next two years. We heard that the Dunedin Hospital project was not on the indicative list because it is being considered separately via a bespoke, stand-alone, parallel process for decision-making and consideration of capital. The ministry also said that the project will be considered by the Capital Investment Committee when it reaches the appropriate decision-making points. We note also that the existing Dunedin Hospital needs significant capital work over the next 10 years while the new hospital is being built. This work is also not on the priority list for 2019 and 2020.

Asset management The Capital Investment Committee is tasked with delivering a National Asset Management Plan. We heard that that work is “well under way” and the ministry aims to give the plan to the Minister between September and December 2019. The ministry mentioned three pressures that had contributed to under-investment in basic maintenance and assets. It said that the “quite challenging and constrained operating environment” had resulted in deferred maintenance; several buildings were getting too old; and seismic assessments on buildings since the Canterbury earthquakes had recommended strengthening of several buildings.

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Health equity We commend the ministry’s activity in supporting and contributing to a Waitangi Tribunal kaupapa inquiry on health services and outcomes. The inquiry, known as Wai 2575, is currently under way. We heard that one proposal before the tribunal is for separate commissioning for Māori primary healthcare services.

The ministry acknowledged the views of Dr Lance O’Sullivan, who advocates a major redesign of the New Zealand health system. While it does not agree with the view that the health system has been “broken for decades”, the ministry recognises that the system would benefit from change. It should be “much more responsive” to Māori, improving their access to healthcare, experience of care, and health outcomes. We heard that, whether or not a separate commissioning function is set up for Māori primary care, the rest of the health sector still needs to be improved for Māori.

In May 2018, the Minister announced a review of health and disability services. The ministry said the review provides an opportunity to consider some of the models that have been proposed for improving services for Māori and other population groups. The ministry pointed out three “critical enablers” that it wishes to progress quickly. They are workforce, digital and data investment, and physical infrastructure. The National Asset Management Plan (discussed above) will help in the area of physical infrastructure. The ministry intends to produce national plans for the other two areas. We heard that all three plans should be driven by, and linked to, an overall strategic direction. We look forward to examining these documents when they are available.

Disability support The “Enabling Good Lives” programme is a partnership between the disability sector and government agencies. It seeks to change the way that disability services are delivered and give people with disabilities more choice and control over their lives. The programme was launched in the MidCentral DHB district in October 2018. The ministry is pleased with feedback so far. We look forward to hearing about the success of the programme and plans for expanding it.

We were surprised to learn that less than 5 percent of ministry staff have declared having a disability. The ministry said it aspires to increase the number of staff identifying as disabled. We suggest that the ministry could use the Ministry of Social Development’s model for employing disabled people.

Mental health Mental health and addiction is one of the Government’s key priority areas. We discussed the mental health inquiry, a free youth counselling initiative, and the mental health budget.

Mental health inquiry The report on the Government’s mental health inquiry was released on 4 December 2018. The ministry is responsible for leading the Government’s response to the inquiry’s recommendations.

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Earlier in 2018, the ministry had set up a steering group to help its engagement with DHBs around the Government’s key priorities (which include mental health). We pointed out that the steering group does not represent people with lived experience of mental health issues. We were assured that key stakeholders, including people with lived experience and service users, are very important to shaping the response to the inquiry report, and that the Government response will be informed by these key stakeholders. We look forward to receiving more information about the inquiry’s recommendations. Counselling for children and young people The ministry is in the final stages of arranging an integrated therapies pilot, which aims to provide free counselling for 18- to 25-year-olds. We learnt that the counselling will be available to all youth in the pilot’s geographical area who experience mild to moderate mental distress. The ministry said that the pilot will start small and will expand across its location as service capability develops. The pilot will run for 2 years, and the ministry will evaluate the pilot and review the amount of available counselling as needed. We also heard about Mana Ake, an initiative to support 5- to 12-year-olds in Canterbury’s earthquake-affected communities. By June 2019, the ministry intends Mana Ake to be available to all primary and intermediate school children in Christchurch, Hurunui, and Kaikōura. Expectations from DHBs’ mental health budgets Each year, the Minister writes to the DHBs to outline his expectations from them. The letter in 2018 included his high-level expectations on mental health. We heard that the ministry also provides DHBs with detailed planning guidance. Budget 2018 allocated $50 million to DHBs for mental health funding. The ministry told us that the extra $50 million was expected to address demographic, cost, and workforce pressures in mental health services, both in DHB facilities and in the community.

Smokefree 2025 We heard that the ministry is progressing its work on vaping as a tool to help people quit smoking. It commented that smoking is continuing to reduce, including among Māori women. It assured us that regulations about vaping are on their way.

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Appendix

Committee procedure We met on 5 December 2018 and 6 March 2019 to consider the annual review of the Ministry of Health. We heard evidence from the ministry and received advice from the Office of the Auditor-General.

Committee members Louisa Wall (Chairperson) Dr Liz Craig Matt Doocey Jenny Marcroft Dr Shane Reti Hon Nicky Wagner Angie Warren-Clark Hon Michael Woodhouse

Office of the Auditor-General, Briefing on the Ministry of Health, dated 5 December 2018.

Ministry of Health, Responses to written questions, received 30 November 2018.

Ministry of Health, Responses to post-hearing questions, received 10 December 2018 and 11 January 2019.

Ministry of Health, Further responses to post-hearing questions, received 25 January 2019.

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2017/18 Annual review of the Northland District Health Board

Report of the Health Committee

March 2019

Contents Recommendation ...... 2 Background ...... 2 Financial results ...... 2 Adequacy of Northland DHB’s funding ...... 2 National Oracle Solution ...... 3 Meningitis W in Northland ...... 3 Families who decline vaccinations ...... 4 Methamphetamine treatment programme ...... 5 Access to services ...... 5 Māori services ...... 5 Appendix ...... 7

Louisa Wall Chairperson

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Northland District Health Board

Recommendation The Health Committee has conducted the annual review of the Northland District Health Board for 2017/18, and recommends that the House take note of its report.

Background The Northland District Health Board (DHB) provides for the health of people living in a large area from Te Hana northwards. The DHB looks after about 175,000 people. It provides hospitals in Whangarei, Dargaville, Kawakawa, and Kaitaia.

Māori make up 35 percent of the DHB’s population—more than double the national average. The proportion of Pasifika people—2 percent—is less than a third of the national average. About 26 percent of the population are aged 60 or older, compared with the national average of 21 percent. More of Northland DHB’s people are in lower socio-economic groups compared with the national average.

Financial results In 2017/18, Northland DHB’s total revenue was $643.91 million. Its total expenses were $655.1 million, resulting in a deficit of $11.17 million. This compares with a budgeted deficit of $8.77 million. It was a larger deficit than expected for the second year in a row: the DHB reported a 2016/17 deficit of $2.6 million, compared with a budgeted surplus of $2 million. In the previous 8 years, Northland DHB had reported surplus or break-even results.

Audit results The Auditor-General issued a non-standard audit report that included an unmodified opinion on Northland DHB’s financial statements and performance reporting. It also included an “emphasis of matter” paragraph noting that, like other DHBs, the Northland DHB has been investigating issues associated with the calculation of employee entitlements under the Holidays Act 2003. A national approach is being taken to remediate these issues, but this will be complex and time-consuming due to the nature of DHBs’ employment arrangements. The matter might result in significant liabilities for some DHBs.

The Auditor-General rated the DHB’s management control environment, its financial information systems and controls, and its performance information and associated systems and controls as “good”. He made several recommendations for improvement.

Adequacy of Northland DHB’s funding Northland DHB sees health services as an investment with a two-to-one return. It said that health directly affects economic outcomes such as employment.

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The DHB mentioned that its funding had been capped for three years before 2017/18. It is pleased that the cap was lifted. However, we heard that the challenge now is to “cope with the $30 million that we didn’t receive for the previous three years”.

National Oracle Solution The 20 DHBs together are developing the National Oracle Solution (NOS), a project to develop a system for finance and procurement. It is intended to be used by all the DHBs. However, the project has had problems. Cabinet decided in June 2018 to pause the NOS development programme while considering more funding for a revised plan of it. By then, the DHBs had spent $95 million on the project.

It was decided not to complete some supply chain and change management functions that were part of the original plan. This decision means that the NOS asset is impaired because its carrying value does not reflect the (reduced) future expected benefits. The total value of the asset to all DHBs was impaired by $5.8 million in 2017/18. Northland DHB has reported its portion of the impairment at $355,000.

Along with the three Auckland DHBs, the Northern DHB is part of the Northern Region DHBs. They currently share an Oracle system. By the end of 2018, the four DHBs will have contributed to a business case recommending whether to continue to pause or to move ahead with the NOS programme. The business case will go to Cabinet for approval.

We look forward to hearing about the future of the NOS programme.

Meningitis W in Northland We discussed the Meningitis W outbreak in Northland. A vaccination campaign started there on the day of our hearing, 5 December 2018, targeting 22,500 children and young people in two age groups.

Northland DHB has had more experience of outbreaks than anywhere else in New Zealand. It dealt with meningococcal B in the 1990s and 2000s and meningococcal C in 2011.

We understand that the Ministry of Health initiates population vaccination programmes if a “community outbreak” is established. We heard that this is also the procedure overseas. A “community outbreak” is three or more cases in three months, and an age-specific incidence, or incidence in a specific community, of approximately 10 unlinked cases per 100,000 people.1

In May, the DHB recorded two unrelated meningococcal W cases in adults. At that point, it asked the ministry for a vaccination campaign, but “we were waiting also ’til we got to that community outbreak definition”. It believed the only way to prevent a community outbreak was to vaccinate. This was because diagnosis is hard when symptoms mimic those of other diseases, and treatment errors are more likely to occur when the disease has been diagnosed late.

1 Ministry of Health, Neisseria meningitidis invasive disease, definitions of “outbreak” and “community outbreak”.

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The DHB told us that in May it could not predict the location of future cases. At that time, it believed a national campaign would be necessary. We heard that the ministry’s response to the DHB’s concern was “clear from the start: we have to wait until community outbreak status”.

The DHB told us it was satisfied with the process of decision-making and the ministry’s responses to the community outbreak. Although it had asked the ministry for population vaccinations in May, it said it often makes requests to the ministry as part of its role to advocate for Northlanders. Getting a “no” response was “understandable”.

At the date of our hearing, seven unlinked cases of meningococcal W had been confirmed in Northland, the last confirmed case being in October.2 At the end of October 2018, the DHB considered that it had reached community outbreak status.

Current vaccination programme We heard that the meningococcal W vaccination programme will be funded out of the DHB’s budget.

The DHB is confident it will have enough vaccinations for the 22,500 Northlanders in the two age groups that are eligible to receive the vaccinations: pre-schoolers (between 9 months and 5 years old) and teenagers (13 to 19 years). The vaccination is against meningococcal strains A, C, W, and Y.

We were told that pre-schoolers are the most vulnerable group because the disease is very difficult to diagnose, young children are less capable of expressing themselves, and they can very quickly get sick. Teenagers are often carriers and transmitters. Vaccinating teenagers will generate a level of herd immunity and protection for the rest of the population who have not been vaccinated.

The DHB commented that the 5- to 12-year age group is at “much lower risk” than the two target groups. However, it also said that, if more vaccine becomes available and people continue to contract meningococcal W, then 5- to 12-year-olds would be targeted.

We note that December is a difficult time of year to start a vaccination campaign. We heard that the programme would run for three weeks: in week 1, it would cover vaccinations in main centres; in week 2, small and rural communities; and in week 3, any other areas. It was decided not to involve general practices because that would mean dividing up limited doses of vaccine between general practices. It was also because general practices’ workloads are already very full.

Summer holiday-makers to Northland were not being offered vaccines.

Families who decline vaccinations We note that the number of families declining consent for their children to receive vaccinations on the national vaccination schedule is unusually high in Northland. This is due

2 We heard that it usually takes two weeks to identify the meningococcal strain accurately. The October case mentioned above, the DHB said, was confirmed in November. Also, at the time of our hearing, one more case was awaiting confirmation. 4

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2017/18 ANNUAL REVIEW OF THE NORTHLAND DISTRICT HEALTH BOARD to a strong anti-vaccination presence. The number of people declining increased from 9.2 percent in 2016/17 to 12.3 percent in 2017/18. The national average is less than 5 percent.3 The DHB said that the number of “declines” increased when Northland was targeted with the “Vaxxed” movie and associated campaign meetings.

The DHB suspects that many of these families will seek the meningococcal W vaccination despite their doubts about vaccinations. It also suggested that this might be the opportunity for those families to think again about other vaccinations.

Methamphetamine treatment programme We commend the DHB on Te Ara Oranga, a programme run by the DHB and the Police to reduce methamphetamine use. The programme aims to direct treatment resources to methamphetamine users, and police resources to significant drug offenders such as dealers. We heard that the programme’s first year was funded through the Criminal Proceeds (Recovery) Act 2009. The health portion of Te Ara Oranga was funded by the Ministry of Health for the 9 months after that. Future funding is unclear, but the DHB said that the ministry will probably continue to fund the programme. We heard that, if the ministry does not fund Te Ara Oranga, the DHB will. The DHB also expects a new bid to be made in May for funding under the Criminal Proceeds (Recovery) Act.

Access to services Getting to health services can be difficult for some. We heard that Northland DHB has a number of health vans and trucks to help with the challenge of providing services in all areas. The DHB also runs mobile nursing services from its four hospitals and from the Hokianga. Mobile nursing services are also provided by 14 Māori health non-governmental organisations (NGOs). In addition, we learnt that several general practices run clinics in rural communities.

We were interested to hear that Kaitāia Hospital now provides some chemotherapy treatment, joint replacements, and specialist care.

Māori services Northland DHB said that its 14 Māori health NGOs are critical in improving access to services. The DHB is working with the NGOs to clarify the boundaries of each NGO’s area.

The DHB has just engaged in community consultation with Māori in the north of Northland. It heard about people’s views on racism and their experiences using hospital and community services. Some people have spoken about a lack of services such as podiatry and physiotherapy in their communities. Other issues included mental health and methamphetamine use.

The DHB also heard that some people find it confusing and tiring to engage with many different providers. It is exploring how to gather information and share it appropriately, perhaps through a single navigation point similar to the Whānau Ora model.

3 Northland District Health Board, Annual Report 2018, p 18.

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We heard that iwi and whānau expect a Treaty-based response from the DHB. In addition, whānau expect “a response that’s for us”.

The DHB expects to return to the community in 2019 to consult on its proposed action plan.

We were interested to learn that Northland DHB contributed recently to a Waitangi Tribunal kaupapa inquiry on health services and outcomes. The inquiry, known as Wai 2575, is currently under way.

We look forward to learning about any future plans, including workforce planning, that aim to improve Māori health outcomes.

Recent criticism of the health system We asked for the DHB’s view on recent criticism of the health system by Dr Lance O’Sullivan. Dr O’Sullivan advocates a major redesign of New Zealand’s health system. The DHB said it is supportive of what he says, but also supports the view that “we just get on and do it”. We heard that it is keen for a pathway that supports Dr O’Sullivan’s aspirations, the community’s aspirations, and is within the funding envelope.

The DHB noted that it is fine to criticise the system, but not the individuals working in it, because they are an “unbelievably dedicated group of people”.

Tohunga and rongoā Māori We discussed the use of rongoā Māori (traditional Māori medicine) and tohunga (expert healers). Northland DHB told us that in 2019 it plans to have some kōrero (discussion) about creating a framework for Māori wellness. The framework would include funding and performance monitoring.

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Appendix

Committee procedure We met on 5 December 2018 and 13 March 2019 to consider the annual review of the Northland District Health Board. We heard evidence from the DHB and received advice from the Office of the Auditor-General.

Committee members Louisa Wall (Chairperson) Dr Liz Craig Matt Doocey Jenny Marcroft Dr Shane Reti Hon Nicky Wagner Angie Warren-Clark Hon Michael Woodhouse Matt King participated in some of this review.

Office of the Auditor-General, Briefing on the Northland District Health Board, dated 5 December 2018.

Northland District Health Board, Responses to written questions, received 1 February 2019.

Northland District Health Board, Responses to post-hearing questions, received 17 January 2019.

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2017/18 Annual review of the Pharmaceutical Management Agency (Pharmac)

Report of the Health Committee

March 2019

Contents Recommendation ...... 2 Introduction ...... 2 Financial position and audit opinion ...... 2 Pharmac’s expanding role ...... 3 Vaccine management ...... 3 Approval of new medicines to be funded ...... 4 Rare disorders ...... 4 Engagement with consumers ...... 4 Appendix ...... 5

Louisa Wall Chairperson

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Pharmaceutical Management Agency (Pharmac)

Recommendation The Health Committee has conducted the annual review of the Pharmaceutical Management Agency (Pharmac) for 2017/18, and recommends that the House take note of its report.

Introduction The Pharmaceutical Management Agency (Pharmac) is a Crown agent that decides which pharmaceuticals are publicly funded in New Zealand. Its work includes:

 managing and maintaining the Pharmaceutical Schedule—the list of prescription medicines and therapeutic products subsidised by the Government  managing the Combined Pharmaceutical Budget—the funding decided by the Minister of Health for pharmaceuticals  managing the medicines and related products used in public hospitals  considering funding applications for people with exceptional clinical circumstances  promoting the responsible use of pharmaceuticals  engaging in relevant research.

Financial position and audit opinion In the 2017/18 financial year, Pharmac’s total revenue was $24.446 million, which was $8.3 million (25 percent) less than in 2016/17.1 Pharmac’s total expenditure for 2017/18 was $28.637 million, an increase of 19 percent from 2016/17. This resulted in a deficit of $4.191 million, compared with a surplus of $8.756 million the previous year. The agency spent about $2 million less than budgeted in its Statement of Performance Expectations.

The auditors provided an unmodified opinion on Pharmac’s financial statements and performance information. They graded Pharmac’s management control environment and its financial information systems and controls as “very good”. Pharmac’s performance information and associated systems and controls were rated “good”. The Auditor-General recommended further improvement to Pharmac’s performance reporting, particularly relating to its expanding role in the health sector.

Procurement is a significant part of Pharmac’s operations. The auditors reviewed Pharmac’s procurement practices, and reported that they are satisfied that its policy and procurement practices continue to be consistent with good practice.

1 This decrease was due to $8.3 million of one-off funding in 2016/17 to the Combined Pharmaceutical Budget Discretionary Pharmaceutical Fund. The purpose of this fund is to manage unexpected expenditure and enable Pharmac to take advantage of investment opportunities that might not otherwise be funded in a given year. 2

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Pharmac’s expanding role Since July 2018, Pharmac has managed all public spending on medicines, expanding its role in the public health sector. It is expected that savings of $200 million will be made over four years by extending the Pharmac model to cover spending on medicines that was previously managed by district health boards (DHBs).

We expressed concern about the perception of Pharmac “making savings”, which could give the impression that people are missing out on medicines. Some of us believe that these savings could have been spent on purchasing a wider range of medicines. We heard that Pharmac will return any savings to Vote Health, so the money saved will be spent in the health sector.

Procurement of hospital medical devices Over time, Pharmac has been playing a wider role in health sector procurement. We heard that the advantages of the Pharmac procurement model for medicines include standardisation and economies of scale. The agency aims to replicate these efficiencies, and has been expanding its catalogue of hospital medical devices available for DHB procurement.

We heard that Pharmac is working towards having full budget management of medical devices, with the aim of saving $1 billion on spending by 2025. It reports that it has already returned $55.41 million over five years in savings to Vote Health from its current medical devices contracts.

We heard that Pharmac worked closely with DHBs to manage the transition to full budget management of medicines. There were some problems with accessing data on DHB hospital medicine expenditure, and so some expenditure was accounted for in the Combined Pharmaceutical Budget as estimates.

In moving to full budget management of medicines, we heard that Pharmac learned the importance of having high-quality, detailed data on what DHBs have been spending. It intends to consider these lessons learned as it moves towards full budget management of hospital medical devices.

Vaccine management We were interested in how Pharmac manages its vaccines, in light of the meningococcal W outbreak in Northland in late 2018. The outbreak was declared on 8 November, and Pharmac was fortunately able to procure 20,000 vaccines immediately, despite an international shortage.

Pharmac said it usually funds 2,000 doses of the vaccine a year for those at high risk of contracting meningococcal W. We are aware that demand for the vaccine on the private market had been increasing throughout the year until the outbreak. However, we heard that Pharmac only has access to information about demand in the publicly funded market, and so could not have predicted the outbreak based on this increased demand for the vaccine.

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Approval of new medicines to be funded We are currently considering a petition asking that two breast cancer medicines be funded by Pharmac. We heard that the medicines in question are currently funded for people who have not already received another hormonal treatment for metastatic breast cancer.

We asked Pharmac about the particular medicines, and we were pleased to hear that it was proceeding with the funding assessment as quickly as it could. We heard that Pharmac considers several factors when deciding whether to approve a medicine for funding, including whether there is evidence that the medicine will deliver clinically meaningful benefits for patients.

We would like to see Pharmac improve the transparency of its process for deciding which medicines to fund. We were pleased to hear that it intends to improve how it handles the process.

We heard that Pharmac is involved in a wide-ranging review of its internal operations, in response to a direction from the Government to “refresh” the organisation. We heard that it intends to focus on the speed and transparency of the approval of medicines for funding, and its work on rare diseases. Pharmac will report on its progress to the Minister of Health. We look forward to hearing the outcome of the review.

Rare disorders We heard that the Pharmac model is less effective for funding medicines for rare disorders. Because there are so few people needing treatments, Pharmac is unable to procure medicines at the lower prices it usually achieves when it can buy on a bigger scale.

We heard that there is ongoing work towards better international cooperation in the treatment of rare disorders, particularly relating to the sharing of information and clinical trial results.

Pharmac said it is aware that people with rare disorders sometimes travel overseas to buy medicines that are not funded by Pharmac, and bring them back to New Zealand.

Engagement with consumers We heard that Pharmac is reviewing the way it seeks and incorporates consumers’ voices in its work. The chair told us that the board hopes to play a more public, educational role in future. He plans to attend several events in the coming year to raise awareness of what Pharmac does and how it works. We were pleased to hear that Pharmac intends to work on ways to engage better with Māori communities.

We will follow with interest the progress of the board’s activities.

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Appendix

Committee procedure We met on 5 December 2018 and 20 March 2019 to consider the annual review of Pharmac. We heard evidence from the chief executive and chair of Pharmac and received advice from the Office of the Auditor-General.

Committee members Louisa Wall (Chairperson) Dr Liz Craig Matt Doocey Jenny Marcroft Dr Shane Reti Hon Nicky Wagner Angie Warren-Clark Hon Michael Woodhouse

Office of the Auditor-General, Briefing on the Pharmaceutical Management Agency, dated 5 December 2018.

Pharmac, Response to written questions, dated 29 November 2018.

Pharmac, Response to post-hearing questions, dated 10 February 2019.

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2017/18 Annual review of the Southern District Health Board

Report of the Health Committee

April 2019

Contents Recommendation ...... 2 Introduction ...... 2 Results of the 2017/18 audit...... 2 Financial performance and fiscal challenges ...... 3 Lumsden and Wānaka maternal and child hubs ...... 3 Performance measures and accountability ...... 4 Mental health and addiction within the Southern district ...... 5 Māori health, wellbeing, and outcomes ...... 5 Appendix ...... 6

Louisa Wall Chairperson

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Southern District Health Board

Recommendation The Health Committee has conducted the annual review of the Southern District Health Board for 2017/18, and recommends that the House take note of its report.

Introduction Southern District Health Board (DHB) was established in 2010 when the former Otago and Southland DHBs merged. It is responsible for the area of the South Island south of the Waitaki River, including Waitaki, Dunedin, Clutha, Central Otago, Queenstown Lakes, Gore, Southland, and Invercargill. Southern DHB has the largest geographical area of any DHB in New Zealand, at 62,356 square kilometres.

At 30 June 2018, Southern DHB employed over 4,650 staff. There are nine hospitals with inpatient beds across the Southern district, five of which are owned and run by rural communities. There are two principal hospitals in the district: Southland Hospital and Dunedin Hospital.

Results of the 2017/18 audit The Auditor-General issued a non-standard audit report with an unmodified opinion for Southern DHB’s financial and performance information.

The auditor noted that the assumption that the DHB is a going concern is reliant on a letter of support received from the Minister of Finance and the Minister of Health.

The auditor noted that, like other DHBs, the Southern DHB has been investigating issues associated with the calculation of employee entitlements under the Holidays Act 2003. A national approach is being taken to remediate these issues, but it will be complex and time- consuming due to the nature of DHBs’ employment arrangements. The matter might result in significant liabilities for some DHBs.

Auditor General’s comments The auditor assessed and graded Southern DHB’s management control environment as “needs improvement”. Its financial information systems and controls and its performance information and associated systems and controls were assessed as “good”. These are unchanged from 2016/17.

The grades relating to the DHB’s management control environment are based on the accountability documents for 2017/18, rather than an assessment of overall management performance. The auditor’s recommendations include:

 improving the DHB’s budgetary control and monitoring processes  implementing asset management planning that is integrated into the DHB’s daily practice 2

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 improving the DHB’s IT control environment  implementing a more automated contract management system  ensuring all policies and procedures are up to date  implementing independent reviews and checks to ensure conflicts of interest are captured. The auditor recommended that major improvements to these matters be made at the earliest reasonable opportunity.

Financial performance and fiscal challenges In 2017/18, Southern DHB’s total expenditure was $1.001 billion, and it recorded a deficit of $21.4 million against a budgeted deficit of $14 million.

The auditor noted three main reasons for the unfavourable variance:

 Pharmaceutical costs increased, as more effective but more expensive drugs (particularly for cancer) are used to treat patients. We heard that this is the single largest reason for the deficit.  The use of other clinical supplies was higher than expected because of the increase in patient numbers.  Costs were incurred to outsource medical personnel and clinical services to cover internal vacancies and meet the increased demand in acute services. We heard from the DHB that industrial action also negatively influenced the deficit. In terms of current operations, we noted that the DHB had already exceeded its projected total year deficit by $3.5 million in the first half of 2018/19. We heard that January and February 2019 had been “on plan” for the DHB, but that it is “very challenged” by its budget. We heard that in December 2018, the DHB was behind on its elective surgery targets, but has now “over-provided” on its targets, which has led to a financial benefit. We heard that the DHB now expects its year-end deficit to be in the millions: “somewhere in the late 20s, early 30s”. National members expressed concern that Southern DHB is being asked to submit an annual plan with financial targets that it knows at the time the plan is approved cannot be achieved. We heard that, although the high costs to cover vacancies and recruit staff were unbudgeted, the DHB was pleased and surprised by how quickly it was able to recruit junior medical staff from the United Kingdom.

Lumsden and Wānaka maternal and child hubs With its planned “integrated primary maternity system of care”, the Southern DHB aims to foster greater sustainability in its lead maternity carer (LMC) midwifery workforce. The plan involves developing “maternal and child hubs” in Wānaka, Te Anau, Lumsden, Tuatapere, and Ranfurly. These hubs would provide antenatal and postnatal services, but would not be birthing units, except in an emergency.

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We are currently considering two petitions related to maternity services in the Southern region. Both petitions request that the planned maternal and child hubs in the petitioners’ areas (Lumsden and Wānaka) be upgraded to primary birthing units.

We heard that there are a number of challenges and issues with the LMC funding model and the resourcing of the maternity sector. Southern DHB covers the largest health district by area, and encompasses a number of rural and remote populations that are far from a secondary maternity unit. The DHB told us that resourcing has not been well managed across the district, and many LMCs in rural areas have been forced to perform additional duties without additional funding. The new system of care aims to address these issues. We heard that the “downgrade” of Lumsden’s primary maternity centre to a maternal and child hub was a tough decision for the DHB. It was designed to use the DHB’s resources to provide “as balanced and equitable” services as possible across the district.

We heard that Wānaka and Te Anau have had no maternity centres, and LMCs have been working out of their homes and cars. The maternal and child hubs in those towns will provide LMCs with some degree of infrastructure and support. The DHB has created an interim hub within the Wānaka Medical Centre, which provides free resources and consumable items for LMCs. It indicated that it would be announcing new premises within 10 days of our hearing. As at 3 April 2019, we had not received confirmation of new premises, but we look forward to an announcement.

We raised concerns that Wānaka is so far from a base hospital, and that the vast majority of women in Wānaka are giving birth in Dunedin, which is three and a half hours’ drive away. We heard that two primary birthing units are within one hour’s drive of Wānaka, in Alexandra and at Lakes District Hospital. Southern DHB gave us a commitment that a primary birthing unit in Wānaka will be one of the issues that the Central Lakes Locality Network will consider.

Performance measures and accountability We asked how Southern DHB is monitoring performance and service delivery, now that the previous Government’s Better Public Services targets are no longer being reported.

The DHB told us that it still collects data on its performance and reports it to the Ministry of Health. We also heard that the performance measures that the DHB was previously required to report on are still being measured and published on its website.

We asked how the public can have confidence in the DHB when it no longer publishes National Health Target data relating to performance and service delivery in daily newspapers. The DHB told us that its commissioners run quarterly sessions that are open to the public, where it reports on these matters. It noted that these sessions allow for a two-way dialogue, so the public can also ask questions and raise issues with the DHB.

Southern DHB has recruited a new member to its executive team, whose role is to focus on governance and to develop systems to understand quality of care and reporting of adverse events. . The DHB considers that it has had a problem with poor levels of data for a long time, and it is now making significant progress in collecting information.

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Mental health and addiction within the Southern district We are concerned to see that the percentage of people discharged from specialist mental health services with a transition plan has fallen from 85 percent in 2016/17 to 30 percent in 2017/18. We were told during our hearing that the DHB did not have a specific reason for the decrease, and it agreed to provide a written response.

The DHB indicated in its response that this result is “disappointing”. It stated that the DHB is transitioning from “wellness, recovery, and relapse prevention plans in place to a more aligned ‘Wellness Transition Plan’”. The DHB noted that naming changes to the plans have resulted in confusion for staff, which has led to staff failing to acknowledge in the DHB’s electronic system that a discharge plan has been developed and completed.

The DHB also notes that its mental health service is under pressure, with increasing demand for specialist mental health services. Referral numbers are higher, and the DHB told us that staff frequently raise this as a barrier to achieving this result.

The DHB stated that it has high confidence that some form of plan—whether for wellness, recovery, or relapse prevention—is in place for patients who have used the DHB’s mental health services over the long term.

Māori health, wellbeing, and outcomes We noted that other DHBs we have heard from have programmes to work with local iwi. Given that Southern DHB has a population that is only 10 percent Māori, we asked how it is engaging with Māori to provide the best level of care. The DHB told us that it has been particularly challenged in its engagement with Māori. An external review in late 2017 led to a significant restructure and reorganisation of the DHB’s Māori health leadership.

The DHB told us that its chief Māori health strategy improvement officer works with the DHB and the primary health organisation, to ensure the organisations are taking the same approach. The chief Māori health officer is working to establish a kaupapa Māori provider forum to ensure that the DHB and primary health organisation have direct engagement with iwi. We heard that the DHB is working on refreshing its principles and relationship agreement with the local rūnaka (governing council).

Southern DHB told us it has tried to increase iwi representation across different levels of governance and planning, including on the Community Health Council, the locality network, and the DHB’s “valuing patient time programme”.

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Appendix

Committee procedure We met on 6 March and 4 April 2019 to consider the annual review of the Southern District Health Board. We heard evidence from the Southern District Health Board and received advice from the Office of the Auditor-General.

Committee members Louisa Wall (Chairperson) Dr Liz Craig Matt Doocey Jenny Marcroft Dr Shane Reti Hon Nicky Wagner Angie Warren-Clark Hon Michael Woodhouse

Office of the Auditor-General, Briefing on Southern District Health Board, dated 20 February 2019.

Southern DHB, responses to written questions 1–353 (and appendices).

Southern DHB, responses to additional written questions.

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Report of the Health Committee

March 2019

Contents Recommendation ...... 2 About Hauora Tairāwhiti ...... 2 Financial performance ...... 2 Results of the 2017/18 audit...... 2 Manaaki Tairāwhiti ...... 3 National Oracle Solution review and financial impairment ...... 3 Alcohol and drug prevention and treatment services ...... 4 Efforts to reduce smoking rates ...... 4 Palliative care services ...... 4 Nurses’ pay settlement ...... 4 Holidays Act compliance ...... 5 Immunisation rates and meningococcal concerns ...... 5 Appendix ...... 6

Louisa Wall Chairperson

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Tairāwhiti District Health Board

Recommendation The Health Committee has conducted the annual review of the Tairāwhiti District Health Board for 2017/18, and recommends that the House take note of its report.

About Hauora Tairāwhiti Tairāwhiti District Health Board (DHB) is based in Gisborne and covers the area north of Hawke’s Bay to the East Cape—an area of 8,351 square kilometres. The DHB serves a population of about 49,050 people. The population of the region is much younger than the national average: 31.3 percent are aged 19 or younger, compared with 26.3 percent for the national average. The DHB contains the highest proportion of Māori, who make up 50.2 percent of the population.

A very high proportion of Tairāwhiti’s population live in high levels of deprivation, with 48 percent in the most deprived quintile. In 2015, the DHB rebranded itself as Hauora Tairāwhiti to reflect a new direction for providing health services in the district. This approach involves a focus on hauora (wellbeing) and providing more integrated health services for the district.

Hauora Tairāwhiti is chaired by David Scott and its chief executive is Jim Green.

Financial performance Hauora Tairāwhiti’s total revenue for 2017/18 was $189.882 million and its expenditure was $196.235 million. This compares with total revenue of $175.811 million in 2016/17—an increase of just under 7.7 percent. The DHB reported a deficit of $5.671 million for the 2017/18 financial year, after a $682,000 surplus from its share of subsidiaries and associates.1

The Auditor-General’s report noted that six out of the last eight years’ financial results recorded a budget deficit, raising concerns about the ongoing financial sustainability of the DHB. The report acknowledged a letter of support provided by the Ministers of Finance and Health to avoid insolvency in 2018/19. We understand that the Ministry of Health has acknowledged that the DHB’s funding did not meet realistic budget expectations for the DHB to provide the required health services to the region, and the DHB is discussing its concerns with the ministry.

Results of the 2017/18 audit The Auditor-General issued a “non-standard audit report” with an unmodified opinion on the DHB’s financial statements and performance information. The report included emphasis on matters relating to:

1 The Tairāwhiti District Health Group includes part or full shares in Tairāwhiti Laundry Services Limited, Gisborne Laundry Services, Health Share Limited (the Midland Region DHBs’ shared services agency), and TLab Limited (a 50/50 joint venture with MedLab Central Ltd, which provides laboratory services). 2

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 the DHB’s reliance on a letter of support from the Ministers of Finance and Health to confirm the Crown will provide it with financial support  the DHB’s failure to complete a statement of performance expectations before the start of the financial year, as required under the Crown Entities Act 2004  issues across the DHB sector relating to non-compliance with the Holidays Act 2003. The auditor assessed Hauora Tairāwhiti’s management control environment, financial information systems and controls, and service performance information and associated systems and controls as “good”—a status which is unchanged since the 2016/17 audit.

The Auditor-General has recommended that Hauora Tairāwhiti continue to update and review its asset management plan, which was completed in 2014, and long term investment plan developed in 2016. The auditor also recommended the DHB improve its budget setting and monitoring to maintain its financial viability.

Manaaki Tairāwhiti Manaaki Tairāwhiti is an initiative launched in September 2016 to bring together iwi, Government, and community leaders into a single governance group with the goal of improving health and social outcomes for whānau in the Tairāwhiti region. The DHB identified the development of Manaaki Tairāwhiti as one of its most significant accomplishments since the last annual review.

We heard that the initiative was formed in collaboration with the Director-General of Health and Minister of Health, in part because of concerns about a lack of improvement in health outcomes for Māori in the region. The DHB identified three approaches of Manaaki Tairāwhiti, the first of which is to review the processes around meetings and reduce the number of unnecessary forums community leaders undertake. The second approach examines how systems of compliance can be improved for families. The third approach, called the 50 families project, involves surveying 50 families to identify potential improvements to existing services.

National Oracle Solution review and financial impairment The National Oracle Solution programme is an IT system for financial management and procurement designed to put all DHBs on the same system for ordering, tracking, and paying for supplies. The system operates through NZ Health Partnerships and is intended to replace DHBs’ ageing IT systems. Cabinet paused the programme in June 2018 in order to carry out an independent review after NZ Health Partnerships sought more funding for the project. Hauora Tairāwhiti recognised an impairment of $71,000 in 2017/18 as a result of this pause on the development of new shared financial management systems.

We asked whether the costs of pausing the programme would be written off. Hauora Tairāwhiti explained that it expects to recoup the value of its investment when the National Oracle Solution programme is restarted. It informed us that its current financial management system is stable and so it has time to work on setting up the national system in the future.

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Alcohol and drug prevention and treatment services We were concerned to hear that the region does not host its own drug and alcohol prevention and treatment programme, particularly for methamphetamine abuse. This contrasts with programmes such as Tū Taua in Lakes DHB and Te Ara Oranga in Northland. The DHB explained that it has completed a review of alcohol and other addiction services which included recommendations to consider a rehabilitation facility for drug and alcohol addictions. It acknowledged that the district’s drug and alcohol services are non-residential. This is because it currently lacks the financial capacity to provide on-site drug and alcohol care to those suffering from addiction.

Efforts to reduce smoking rates We were concerned to learn that the Tairāwhiti region has the highest rate of daily smokers among DHBs, at over 25 percent of the population. We asked what steps the DHB is taking to reduce addiction in the community. The DHB informed us that the high rate of smoking is partly caused by high levels of deprivation in the Tairāwhiti region. The DHB explained it has taken several steps already to reduce smoking rates, including working with iwi and hapū to make marae smoke-free. It said that, although smoking rates are high, the number of young people who have never smoked has increased over the last decade, from 22.63 percent in 2002 to 69 percent in 2015.

Palliative care services Hospice Tairāwhiti provides community-based hospice care for people in the Tairāwhiti region. We asked how many palliative care beds are provided by the DHB. It said there are currently two beds within the hospital for palliative care and the DHB is working with Hospice Tairāwhiti to provide community palliative care. The chief executive informed us that Hospice Tairāwhiti is about to build a new palliative care building on the hospital site.

We were pleased to hear that there has been a transition away from hospital care to at- home care for patients undergoing palliation in recent years. The DHB explained that Hospice Tairāwhiti is working to provide patients who prefer at-home palliative care services with the support they need.

We asked whether the DHB has a plan to manage patients smoking loose-leaf cannabis in palliative care now that the Misuse of Drugs Act 1975 has been amended.2 The DHB explained that it would work with people in the palliative care setting to manage the changes.

Nurses’ pay settlement On 4 August 2018, DHBs finalised a pay settlement agreement with the New Zealand Nurses Organisation under their multi-employer collective agreement. We raised concerns that Hauora Tairāwhiti’s financial plan might not meet all of the obligations set out in the pay settlement. The DHB explained that, although it has not factored the nurses’ pay settlement into its financial plan, this increase in expenditure has been offset by additional revenue which was not budgeted for in the 2018/19 financial plan.

2 The Misuse of Drugs (Medicinal Cannabis) Amendment Bill received the Royal assent on 17 December 2018. 4

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Holidays Act compliance In 2015, issues first came to light about payroll systems not correctly calculating holiday pay owed to staff who accrued penalty rate payments in line with the Holidays Act 2003. This has led to ongoing investigations by DHBs, companies, and other government agencies to remediate the problems.

The DHB explained that it has been difficult to calculate these backdated holiday pay entitlements due to the DHB’s complicated shift-work arrangements. It is working alongside unions to come to a resolution but could not currently quantify the costs of future remediation.

Immunisation rates and meningococcal concerns We are concerned that immunisation rates in the Tairāwhiti region have declined to 85 percent in 2017/18, against a target of 95 percent. We acknowledged that this decline has been seen across many DHBs in recent years. We heard that it partly resulted from recent incidents in Samoa, where health authorities ceased all children’s vaccinations after the deaths of two toddlers. Misinformation on social media has also contributed to the decline. The DHB explained that it is providing additional resources to combat the spread of misinformation and the declining rate of immunisation.

The DHB told us that Well Child/Tamariki Ora providers have given effective immunisation services to families and communities. We were pleased to hear that in recent years there have been no outbreaks of meningococcal W or any upward trend in rates of meningococcal B in the region. The DHB explained that there is a strong working relationship between local GPs and paediatricians to address a potential meningococcal outbreak in the region.

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Appendix

Committee procedure We met on 12 December 2018 and 20 March 2019 to consider the annual review of the Tairāwhiti District Health Board. We heard evidence from Tairāwhiti DHB and received advice from the Office of the Auditor-General.

Committee members Louisa Wall (Chairperson) Dr Liz Craig Matt Doocey Jenny Marcroft Dr Shane Reti Hon Nicky Wagner Angie Warren-Clark Hon Michael Woodhouse

Advice and evidence received We received the following documents as advice and evidence for this annual review. They are available on the Parliament website, www.parliament.nz.

Office of the Auditor-General, Briefing on Tairāwhiti District Health Board Hauora Tairāwhiti, dated 12 December 2018.

Tairāwhiti District Health Board, responses to written questions, dated 11 March 2019.

Tairāwhiti District Health Board, responses to additional written questions, dated 20 March 2019.

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2017/18 Annual review of the Taranaki District Health Board

Report of the Health Committee

March 2019

Contents Recommendation ...... 2 Introduction ...... 2 Financial performance and audit opinion ...... 2 Financial problems ...... 3 Inpatient numbers ...... 3 Māori health outcomes ...... 3 Cervical screening ...... 3 National Oracle Solution ...... 4 Drug addiction ...... 4 Shortage of general practitioners ...... 4 Immunisation ...... 5 Emergency departments ...... 5 Appendix ...... 6

Louisa Wall Chairperson

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Taranaki District Health Board

Recommendation The Health Committee has conducted the annual review of the Taranaki District Health Board for 2017/18, and recommends that the House take note of its report.

Introduction The Taranaki District Health Board (DHB) serves the health needs of about 119,000 people in the Taranaki region. It has a small number of densely populated centres in New Plymouth, Hawera, and Stratford. The rest of the population is scattered in and around small rural centres.

The population is ageing and slightly older than the New Zealand average. Māori in the Taranaki district have shorter life expectancies than non-Māori, and make up a higher proportion of people living in the most deprived areas. 32 percent of Māori live in the most deprived 20 percent of areas, compared with 13 percent of non-Māori.

Financial performance and audit opinion Taranaki DHB’s total revenue for 2017/18 was $380.379 million and its total expenditure was $389.863 million. It reported a deficit of $8.289 million, more than four times the budgeted deficit of $2 million. However, both management and the board are confident that the DHB will continue to operate as a going concern, and will not require a letter of support from the Minister of Health in the next year.

The Auditor-General graded the DHB’s management control environment, performance information and associated systems and controls, and financial information systems and controls as “good”, but recommended a number of improvements to each. The auditors recommended that the DHB strengthen its IT controls, in particular password security.

Assets Taranaki DHB’s land and buildings were revalued in 2017/18 and increased in value by $49 million (over five years) to $179.8 million. The Auditor-General did not find any deficiencies with the DHB’s asset management.

Potential liability under the Holidays Act Many DHBs are dealing with issues associated with the calculation of employee entitlements under the Holidays Act 2003. These issues have arisen when payroll systems are not configured correctly to calculate total holiday pay owing to staff who work additional hours, overtime, or rostered shifts that attract penal rate payments.

We heard from the auditors that DHBs are highly likely to have underpaid staff, given that their hospitals operate around the clock. We heard that there could be significant financial risks and liabilities for DHBs resulting from this.

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Because of this matter, the Auditor-General issued a non-standard audit report in respect of the DHB’s financial and performance information. It included an “emphasis of matter” paragraph explaining the potential liability.

Financial problems We heard that the DHB has had financial problems for a number of years which became worse in 2017/18. To add to this, the DHB recently had buildings at the Taranaki Base Hospital assessed, which revealed the need for strengthening against the damage that could be caused by earthquakes. We heard that several of the buildings most in need of strengthening house important services like the emergency department and the intensive care unit.

We note that the DHB has reported a deficit for the last several years. We heard that its management is looking into ways to be in a more even financial position, and we hope to see improvement in the coming years.

Inpatient numbers We heard that the DHB is dealing with a rise in inpatient admissions. People are also presenting with multiple illnesses more often. The DHB has seen an increase in the number of surgeries it carries out. We are interested in following how the DHB will manage these trends, and how they will affect the region’s health outcomes.

Māori health outcomes We heard that the DHB has an iwi governance board, whose chair is a member of the regular board. The DHB has recently restructured and expanded its Māori Health team. It also has a programme called WhyOra, which helps Māori to develop health career pathways. Young Māori can enter WhyOra when they are still at school, and we heard that there are currently nine professionals at different stages of the programme.

Māori in Taranaki currently have a life expectancy of five to six years less than non-Māori. The Māori population in Taranaki is projected to increase from 17.1 percent to 22.6 percent of the population by 20281.

We are concerned that, if the disparity in health outcomes between Māori and non-Māori is not reduced, the issue of Māori health will become a much bigger problem for the DHB as Māori become a bigger proportion of the population.

Cervical screening We heard that the DHB has used after-hours and weekend clinics to make cervical screenings more accessible, and has given much higher priority to smears over the last three years. The DHB has collaborated with community groups, and we were pleased to hear that Māori, Pacific and Asian women were given more opportunities to be screened for free.

1 Taranaki District Health Board Annual Report 2017–2018, p. 7.

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We heard that the DHB has received praise nationally for its cervical screening programme, and that other DHBs have adapted their own programmes in response to Taranaki’s success. We congratulate the DHB for being a national leader with its innovative programme.

National Oracle Solution The National Oracle Solution is a financial management and procurement IT system that was developed to be used by all 20 DHBs. Development of the system was suspended in June 2018 following the release of a report which found that the system was “not well set up to deliver the sector outcomes and benefits”, by which time the DHBs had spent $95 million on the project.

We heard that the DHB has reported an impairment of $224,000 against the National Oracle System. The carrying value of the asset does not reflect the (reduced) future expected benefits, and the total value of the asset to all DHBs was impaired by $5.8 million in 2017/18.

Drug addiction We heard that drug use in the Taranaki region is increasing, and that the DHB acknowledges that its drug addiction programmes are lagging behind those in other regions. We heard that the increase in drug use may be linked to the increased gang presence in the region. Taranaki DHB said it will look to other DHBs to learn how best to manage those dealing with drug addiction. We will follow with interest the DHB’s progress in dealing with these matters.

Shortage of general practitioners Pātea is the third largest town in South Taranaki, and at the time of our review, it did not have a resident GP, after its last permanent GP left in July 2017. The DHB had taken various steps to provide for the healthcare of the Pātea community, including a temporary GP and video technology so that patients could be seen by remote doctors.

We are aware of some concern that the DHB has not been sufficiently supportive of the Pātea community after their GP left. We heard that members of the board travelled to Pātea to hold a meeting with members of the community. The practice in Pātea has been purchased by Ngāti Ruanui, who have engaged satellite GPs. We heard that it is unlikely that Pātea with its current population will ever have a full-time on-site doctor. Moreover, having an isolated practitioner is not ideal.

We heard that certain models of care are suited to small towns like Pātea, with satellite doctors and nurse practitioners being used to provide high-quality healthcare to communities. We heard that Taranaki DHB is looking to increase the number of nurse practitioners it employs.

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Immunisation In recent years, Taranaki DHB has had an increase in hospital admissions of children with vaccine-preventable illnesses. We were pleased to hear that the number of these admissions is gradually decreasing.

We heard that the DHB’s targets for immunisation are not being met. We share the DHB’s concern about the anti-vaccine movement in New Zealand, which has grown in popularity, possibly due to increased publicity on social media. We were pleased to hear that the DHB is taking a similar approach to its cervical screening programme to try to make it as easy as possible for people to receive immunisations.

Emergency departments We heard that people both in Taranaki and nationally are presenting at hospital emergency departments rather than making an appointment with their GP. We understand that a number of factors cause this, such as difficulty arranging appointments (for either financial or availability reasons). We heard that many young males, and young people in general, are not registered with a GP.

To combat this issue, Taranaki DHB has proposed hosting GPs at hospital sites. The GP would not be employed directly by the DHB, but a framework is yet to be decided on. We heard that the DHB believes this strategy will reduce the number of people with non-urgent needs presenting at emergency departments.

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Appendix

Committee procedure We met on 28 November 2018 and 6 March 2019 to consider the annual review of the Taranaki District Health Board. We heard evidence from the chief executive and the chair of the Taranaki District Health Board and received advice from the Office of the Auditor- General.

Committee members Louisa Wall (Chairperson) Dr Liz Craig Matt Doocey Jenny Marcroft Dr Shane Reti Hon Nicky Wagner Angie Warren-Clark Hon Michael Woodhouse

Jonathan Young replaced Hon Michael Woodhouse for some of this review. Tutehounuku (Nuk) Korako replaced Matt Doocey for some of this review.

Office of the Auditor-General, Briefing on Taranaki District Health Board, dated 28 November 2018.

Taranaki District Health Board, Responses to written questions, received on 15 February 2019.

Taranaki District Health Board, Responses to post-hearing questions, received on 15 February 2019.

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Report of the Health Committee

March 2019

Contents Recommendation ...... 2 Background ...... 2 Financial overview ...... 2 Audit results ...... 2 Financial management information system no longer supported ...... 3 Shared services ...... 4 Mental health ...... 4 Virtual consultations in primary care ...... 4 Child health assessment tool ...... 5 Earthquake strengthening needed ...... 5 Workforce planning ...... 5 Appendix ...... 6

Louisa Wall Chairperson

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Wairarapa District Health Board

Recommendation The Health Committee has conducted the annual review of the Wairarapa District Health Board for 2017/18, and recommends that the House take note of its report.

Background Wairarapa District Health Board (DHB) provides for the health of people living in the southeast of the North Island, including Masterton, Carterton, Greytown, Martinborough, and Featherston. The DHB looks after about 44,000 people. It pointed out that, by population and funding, it is the second-smallest DHB after the West Coast.

The proportion of Māori covered by the DHB—18 percent—is similar to the national average, while the proportion of Pasifika—2 percent—is lower than the national average. Compared with the national average, the DHB covers relatively more people in lower socio-economic groups.

The DHB said the Wairarapa’s population is growing rapidly. In the last five years, it has grown 6 percent. The population of older people has grown by 7 percent in the last 18 months.

The DHB said that it has the “oldest population in the country on a per capita basis”. About 28 percent of the Wairarapa’s people are aged 60 or older. This compares with the national average of 21 percent. The DHB said that older people in the Wairarapa visit GPs about 11 times a year—twice as often as the national average for over-60s.

The DHB employs about 486 full-time-equivalent staff. It operates one hospital: Wairarapa Hospital in Masterton.

Financial overview The DHB’s total revenue in 2017/18 was $158.4 million, about 5 percent more than in 2016/17. Its total expenditure was $167.4 million, 9 percent more than in 2016/17. The resulting deficit of $9 million is almost three times more than the budgeted deficit of $3.2 million.1

We note that the DHB has a letter of support from the Ministers of Health and Finance, confirming that the Crown will provide the DHB with financial support if necessary to maintain its viability.

Audit results The Auditor-General’s opinion was qualified by the fact that he could not determine whether the carrying value of the hospital buildings was materially different to its fair value on 30

1 Wairarapa Ora—Hauora pai mo te katoa, Wairarapa District Health Board Annual Report 2018, p 65. 2

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June 2018. In 2018, the DHB revalued the property. After that, it discovered that the main building needs seismic strengthening. It does not know how much the strengthening will cost. It decided to leave the buildings’ value the same as in the 2017/18 financial statements. We note that this value does not reflect the required strengthening work or other movements in fair value since the prior valuation on 30 June 2013.

The Auditor-General issued a non-standard audit report. It included an “emphasis of matter” paragraph noting that, like other DHBs, the Wairarapa DHB has been investigating issues associated with the calculation of employee entitlements under the Holidays Act 2003. A national approach is being taken to remediate these issues, but it will be complex and time- consuming due to the nature of DHBs’ employment arrangements. The matter might result in significant liabilities for some DHBs.

The auditor recommended major improvements to Wairarapa DHB’s financial information systems and controls. He noted that the DHB’s financial management information system is no longer supported by a supplier. We discuss this issue below. He also identified deficiencies in internal controls and processes.

The auditor rated the DHB’s management control environment as “good”, while recommending that improvements be made in two areas. He recommended a DHB-wide asset management plan, and that the DHB make its processes for dealing with conflicts of interest during procurements clear and consistent.

The DHB’s performance information and associated systems and controls were rated “good”. Recommendations included improving and adequately documenting the quality assurance systems and processes for clinical coding (classifying clinical information for statistical and research purposes).

The auditor also noted that several issues remain unresolved from the 2016/17 audit.

We hope that the DHB will act on these matters in the current financial year.

Financial management information system no longer supported Support is no longer available for the computer system used to manage the Wairarapa DHB’s finances. If the system breaks, it will not get repaired. The DHB told us that it has decided to go onto the Hutt Valley DHB’s Oracle system, starting in March or April 2019. Later on, it would then be straightforward to move to the National Oracle Solution (NOS), which is intended to be used by all 20 DHBs.

Meanwhile, the NOS has had problems. Cabinet decided in June 2018 to pause the NOS development while considering more funding for a re-plan of the NOS programme. At that point, the DHBs had spent $95 million on the project.

It was decided not to complete some supply chain and change management functions that were part of the original plan.

This means that the NOS asset is impaired because its carrying value does not reflect the (reduced) future expected benefits. The total value of the asset to all DHBs was impaired by

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$5.8 million in 2017/18. Wairarapa DHB has decided to provide for an impairment of $668,000.

Shared services The DHB works closely with other DHBs. Its patients use specialist services provided by Hutt Valley, Capital and Coast, and MidCentral DHBs. Wairarapa DHB shares 67 services with Capital and Coast and Hutt Valley DHBs. These include mental health and addiction services and information technology.

Wairarapa DHB and Capital and Coast DHB share the provision of a chemotherapy service in the Wairarapa. Although it is expensive, Wairarapa DHB said it saves on transporting and accommodating patients in Wellington.

The DHB said that it used to have a chief executive from Hutt Valley who commuted to the Wairarapa one day a week. It believes it achieves better outcomes for its population by having a fully local management team and local delivery of services.

Inter-district flows (IDFs)—that is, patients travelling to other districts for certain services— account for about a quarter of the DHB’s total budget. However, with the DHB’s ageing population, this cost has been going up. Over the past three years, the cost of IDFs has increased from about $30 million to $40 million. The DHB’s strategies to keep IDF costs down involve long-term investments in primary care.

Mental health Wairarapa DHB shares mental health and addiction services with Hutt Valley DHB and Capital and Coast DHB.

The DHB told us that, the previous year, it had the highest suicide rate in New Zealand. It reviewed its mental health and addiction services and created a suicide action plan. Called “Too many, Wairarapa”, it focuses on males, Māori, and youth, and included community forums, promotional activities, and working with groups in the community.

We were pleased to hear that Wairarapa’s suicide rate in 2017/18 was half the previous year’s. We hope that the DHB continues to monitor the results of “Too Many, Wairarapa”, and considers sharing the action plan with other DHBs.

Virtual consultations in primary care We were interested to learn that the DHB is trialling iMoko, an initiative that aims to help children with minor symptoms such as sore throats, sore ears, school sores, and nits. With parental consent, teacher aides at school can facilitate virtual consultations with an off-site doctor. The aim is to prevent mild conditions from becoming serious. Prescriptions can be sent to parents via an app.

The programme is evaluated every six months. We look forward to hearing about its effectiveness.

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Child health assessment tool To improve interventions for children, Wairarapa DHB is considering implementing an assessment process called ACE. ACE is an American child health assessment tool based on research about social factors that affect health. If a child faces a number of social issues, their health or wellbeing may be at risk. The programme would be run as a pilot with Otago University. It would involve a variety of agencies, including Tamariki Ora and regional public health organisations.

The DHB is exploring what steps should be taken to mitigate social effects on a child’s health, and what services the DHB would need to develop if it used the tool.

Earthquake strengthening needed Wairarapa Hospital is based in a single-storey building built in 2006. After it was revalued in 2018, the DHB discovered that the building needs seismic strengthening. The Auditor- General noted that the hospital’s value will be affected by this finding.

At the time of our hearing in November 2018, the DHB was working to partially remedy the problem. It expected this work to be completed in January or February 2019.

The DHB does not know what the final bill will be for bringing the building up to standard. However, because of the high standard set for hospitals under the Building Code, it will be significant.

Workforce planning According to the DHB’s workforce data, only 5 percent of its employees are Māori. Its workforce is also ageing—about 38 percent of its staff are over 55 years old. The DHB believes the actual number of Māori staff could be higher, as some staff may not have disclosed their whakapapa. Also, 25 percent of the DHB’s workforce’s ethnicity is unknown or unspecified.2

We heard about Kia Ora Hauroa, a programme run by Wairarapa DHB on behalf of the six DHBs in the central region. Wairarapa DHB works with educators and schools to encourage Māori students to consider careers in the health services. Scholarships are also available in areas including midwifery and dentistry.

2 Ibid, pp 17–18.

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Appendix

Committee procedure We met on 28 November 2018 and 6 March 2019 to consider the annual review of the Wairarapa District Health Board. We heard evidence from the Wairarapa District Health Board and received advice from the Office of the Auditor-General.

Committee members Louisa Wall (Chairperson) Dr Liz Craig Angie Warren-Clark Jenny Marcroft Dr Shane Reti Hon Michael Woodhouse Hon Nicky Wagner Matt Doocey Hon Ruth Dyson, Harete Hipango, and Alastair Scott participated in some of this review.

Office of the Auditor-General, Briefing on the Wairarapa District Health Board, dated 28 November 2018.

Wairarapa District Health Board, Responses to written questions, received 14 February 2019.

Wairarapa District Health Board, Responses to post-hearing questions, received 10 February 2019.

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2017/18 Annual review of the Abortion Supervisory Committee

Report of the Justice Committee

March 2019

Contents Recommendation ...... 2 About the Abortion Supervisory Committee ...... 2 Abortion law reform ...... 2 Variation in the number of abortions ...... 3 Demographic breakdown of women receiving abortions ...... 3 Appendix ...... 4

Raymond Huo Chairperson

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Abortion Supervisory Committee

Recommendation The Justice Committee has conducted the annual review of the Abortion Supervisory Committee for 2017/18, and recommends that the House take note of its report.

About the Abortion Supervisory Committee The Abortion Supervisory Committee (ASC) is constituted under the Contraception, Sterilisation, and Abortion Act 1977. It is an independent supervisory body that oversees and governs the provision of abortion services in New Zealand.

The ASC’s functions include:

 licensing institutions where abortions may be performed  appointing certifying consultants with whom women must consult when considering an abortion  setting standards for facilities that provide abortion services  gathering statistics about abortion in New Zealand. The current members of the ASC are Professor Dame Linda Holloway (chair), Carolyn McIlraith, and Dr Tangimoana Habib.

The ASC is required to report annually to Parliament on the discharge of its functions and the effectiveness and effect of the Act. It is deemed by the House to be a public organisation subject to Parliament’s annual review process. It is funded through Vote Justice and supported by the Ministry of Justice.

In the year leading up to December 2017, 13,285 abortions were performed on New Zealand women. Of these, 10,504 were surgical, and 2,732 were medical. The vast majority (13,197) had no complications.

Abortion law reform In previous annual review hearings the ASC has told us about its concerns with sections of the Contraception, Sterilisation, and Abortion Act 1977. The Act has not been reviewed or updated in 40 years and, in the ASC’s view, it no longer aligns with modern healthcare practices.

In February 2018 the Minister of Justice wrote to the Law Commission requesting that it review the current abortion law and provide the Government with advice on how the law could be changed to align with a health approach. Specifically, the Law Commission was asked to review the criminal aspects of abortion law, the grounds for abortion, and the process around receiving abortion services.

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The ASC met with the Law Commission in April 2018 to discuss its views on the current abortion legislation and how it is applied to abortion services in its current form.

We discussed ways in which the law could be changed to align with a health-based approach. The ASC believes that an abortion is an aspect of healthcare that is best conducted in the health system and that it should be removed from the Crimes Act 1961. The ASC noted that it is a small group made up of a general practitioner, a counsellor, and a pathologist. It felt that it would be wrong to provide further opinions beyond these areas of expertise. It acknowledged that there needs to be considerable discussion in the areas of bioethics, obstetrics and gynaecology, genetics, and epidemiology as the legislation is developed.

We will follow the review of the current Act with interest.

Variation in the number of abortions In the last 10 years there has been a steady decrease in abortion rates in New Zealand, from 18,382 performed in 2007 to 12,823 in 2016, although with a slight increase to 13,285 in 2017. We asked for an explanation of the overall decline in the number of abortions, and of the number of abortions relative to the number of pregnancies over the last decade. We were told that an improvement in available sexual health information, and a concerted effort in making long-acting contraceptives such as copper IUDs available have contributed to this decline.

Demographic breakdown of women receiving abortions We also discussed the breakdown of ethnicities receiving abortions. While European women are the largest ethnic group to obtain abortion services, and have seen the greatest drop in the number of abortions, there has also been a significant fall in the number of Asian, Pasifika, and Māori women.

We asked whether more work is needed in Māori and Asian communities. The ASC told us that being able to provide culturally appropriate healthcare is very important, and has an influence. Research into these demographics in more detail may show that the socio- economic determinants of health may vary from one ethnic community to another. Socio- economic determinants have an effect on the health of women’s reproduction in the same way as they do for general health.

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Appendix

Committee procedure We met on 13 December 2018 and 14 March 2019 to consider the annual review of the Abortion Supervisory Committee. We heard evidence from the ASC.

Committee members Raymond Huo (Chairperson) Ginny Andersen Hon Maggie Barry Chris Bishop Hon Mark Mitchell Greg O’Connor Hon Dr Nick Smith Dr Duncan Webb

Abortion Supervisory Committee, Responses to annual review questions (1–109 and Appendix 1 to Q51), received 27 November 2018.

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2017/18 Annual review of the Crown Law Office

Report of the Justice Committee

February 2019

Contents Recommendation ...... 2 Introduction ...... 2 Organisational performance ...... 2 Questions about specific cases ...... 3 Witness availability and the administration of justice ...... 4 Appendix ...... 6

Raymond Huo Chairperson

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2017/18 ANNUAL REVIEW OF THE CROWN LAW OFFICE

Crown Law Office

Recommendation The Justice Committee has conducted the annual review of the Crown Law Office for 2017/18, and recommends that the House take note of its report.

Introduction The Crown Law Office (Crown Law) has two main functions: to provide legal advice and representation to Ministers and government departments, and to provide support to the principal law officers of the Crown—the Attorney-General and the Solicitor-General.

The Solicitor-General and Chief Executive is Una Jagose QC. As at 30 June 2018, Crown Law had 172 full-time employees.

Financial position and audit opinion Crown Law is funded through Vote Attorney-General. In 2017/18 the office’s total income was $68.383 million (comprising $47.949 million in Crown revenue and $20.434 million of other revenue). This compares to total income in 2016/17 of $66.559 million ($47.359 million Crown revenue and $19.2 million other revenue). Total expenses were $68.229 million ($66.383 million in 2016/17).

The Auditor-General graded Crown Law’s management control environment and its financial information systems and controls as “very good”. No recommendations were made for improvement in these fields. The auditor graded Crown Law’s performance information and associated systems and controls as “good”—as in 2016/17—and made a number of recommendations to Crown Law regarding areas for improvement. We hope to see progress in these areas and will be interested in following up on Crown Law’s response to the auditor’s recommendations.

Organisational performance Capacity to respond to greater demand for services Crown Law has recently been trying to improve its leadership of the Government’s legal network by encouraging government lawyers to engage with it at an earlier stage for legal advice. This has the potential to reduce legal costs and improve the management of legal risk to the Crown. At the same time, Crown Law has to manage the demand for its services, and ensure it can consistently deliver high-quality services to all its customers.

We sought Crown Law’s view on whether it has the capacity to step up its engagement with the wider Government legal sector.

The Solicitor-General agreed that Crown Law has set itself a “demanding ambition” regarding earlier engagement. She explained that the Government Legal Network (GLN) initiative is a key part of delivering on that ambition, noting that “it can’t just be my own

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2017/18 ANNUAL REVIEW OF THE CROWN LAW OFFICE employed lawyers’ eyes that we need to have on things earlier…If we can effectively deploy 850 lawyers employed [across] Government, we’re much better set for thinking about…the big issues”. She also noted that Crown Law should focus on the areas of law it is expert in— such as constitutional law, criminal law, and the Treaty of Waitangi—and use the private sector to help ensure that government legal resources are used effectively.

The Solicitor-General also told us that Crown Law’s leadership of the GLN does not include the auditing of legal work, but rather is focused on assisting Government lawyers to “grow their own capacity”.

Staff retention and salary competitiveness We noted that Crown Law appears to pay its lawyers less than they would earn in comparable roles in the private sector. We acknowledged that Crown Law is a prestigious organisation but wanted to know whether it has trouble retaining staff over sustained periods of time due to a lack of salary competitiveness.

The Solicitor-General said that Crown Law does not “have a particular problem with retention for income reasons”, and that “people come to work for the Crown for a number of reasons, and money is not usually one of them”. While the organisation does see a fair amount of turnover among intermediate-level lawyers, there is no discernible pattern of lawyers moving to the private sector. However, she added that Crown Law has been saying for the past four years that it is carrying cost pressures, and that these pressures limit its ability to pay higher salaries. It is keeping a close eye on the situation.

Questions about specific cases Costs in Mariya Taylor case In a recent court case, Mariya Taylor sought damages from the Royal New Zealand Air Force (RNZAF) in relation to a claim of historic sexual abuse. Ms Taylor claimed that Robert Roper, a Sergeant at the time, “bullied, verbally abused, sexually harassed, inappropriately touched, and falsely imprisoned” her between 1985 and 1988. She said that she complained about his conduct, but “the RNZAF failed to do anything about it”. She sought damages in relation to the mental harm Mr Roper’s acts caused her, and for the failure of the RNZAF to act on her complaints.1 Crown Law represented the Crown in the case.

Justice Edwards’ judgment for the High Court found that it was “more likely than not that Mr Roper did most, but not all, of the acts alleged by [Ms Taylor], but he did not do them as frequently as she suggested”. However, Ms Taylor’s claim for damages was dismissed on the grounds that it was “out of time” under the statute of limitations, the Limitation Act 1950.2

Following the judgment’s delivery, it was reported that the New Zealand Defence Force (NZDF)—of which the RNZAF is a part—would be seeking legal costs from Ms Taylor. Subsequently, the NZDF reversed its position and issued a media statement that it would not be seeking costs.

1 Quotes in this paragraph are from M v Roper (2018) NZHC 2330 at 3 per Edwards J. 2 Quotes in this paragraph are from M v Roper (2018) NZHC 2330 at 46-7 per Edwards J.

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We asked who made the decision not to pursue costs. The Solicitor-General confirmed that Crown Law made the decision following comments from the Prime Minister. We asked whether it is usual practice for a Minister to indicate how such decisions should be made. The Solicitor-General told us that Crown Law has a policy about how it approaches costs in civil matters, and that “sometimes delicate or sensitive matters are being litigated in the courts, and even when the Crown succeeds and is entitled to costs, there is a question about is that the right stance for the Crown, to pursue the costs”. She also said that Crown Law represents the Crown as a client, and it will take into account what its client thinks where it is appropriate to do so. However, the Solicitor-General emphasised it would be “quite improper” for there to be any political intervention in prosecution decisions.

Crown liability in Psa disease case The High Court recently delivered a judgment concerning the outbreak of a dangerous bacterial disease known as Psa in kiwifruit orchards in 2010. The judgment found that the Ministry of Agriculture and Forestry (as it was known then) breached its duty of care toward the plaintiff, a kiwifruit growing company, by granting an import licence to a company importing kiwifruit plant anthers—the part of the flower that contains pollen—from China.3

We expressed concern about the potential liability for the Crown, and asked what the liability may be, acknowledging that the Crown has appealed the High Court’s decision. We heard that the Psa disease case was organised into two stages, the first determining whether there was any legal liability, and the second determining the size of the financial loss incurred by the plaintiff. Only the first stage has been completed at this point. The Solicitor-General said that while the liability could be “big”, “we just don’t know how big” and that she would not want to venture a guess “because it hasn’t been tested”.

The Crown’s appeal is due to be heard by the Court of Appeal in March 2019, and a judgment can be expected approximately six months after the hearing is completed. We will follow the case with interest.

Witness availability and the administration of justice We were interested to know from Crown Law whether any work is being done on how to improve the administration of justice in cases where key witnesses leave New Zealand and refuse to co-operate with the relevant New Zealand authorities. We raised an example in which a coroner’s work was frustrated by a witness going to Australia and refusing to co- operate with the coroner.

Crown Law told us that it had not done any work on this matter. We heard that New Zealand does have some arrangements for summonses to be issued to witnesses in Australia, and for them to appear in courts in Australia and give their evidence via audio-visual link. Alternatively, evidence can be taken overseas and then admitted to courts here. Crown Law said the matter was not within the remit of extradition agreements, and that it “would be very unusual, even internationally” for witnesses to be included in extradition agreements.

3 Strathboss Kiwifruit Limited v The Attorney-General (2018) NZHC 1559 at 7 per Mallon J. 4

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Crown Law also told us that cases in which witnesses are in legal jeopardy themselves—that is, where the issue of self-incrimination arises—are often “the more difficult cases in terms of getting witnesses”. The privilege against self-incrimination can be claimed in both Australia and New Zealand.

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Appendix

Committee procedure We met on 6 December 2018 and 21 February 2019 to consider the annual review of the Crown Law Office. We heard evidence from the Crown Law Office and received advice from the Office of the Auditor-General.

Committee members Raymond Huo (Chairperson) Ginny Andersen Hon Maggie Barry Chris Bishop Hon Mark Mitchell Greg O’Connor Hon Dr Nick Smith Dr Duncan Webb

Chris Penk replaced Hon Maggie Barry for some of this review.

Office of the Auditor-General, Briefing on Crown Law Office, dated 6 December 2018.

Crown Law Office, Responses to annual review questions (1–109, and appendix).

Crown Law Office, Responses to post-hearing questions.

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2017/18 Annual review of the Department of Corrections

Report of the Justice Committee

March 2019

Contents Recommendation ...... 2 About the Department of Corrections ...... 2 Financial overview and audit results ...... 2 Significant achievements in 2017/18 ...... 2 Reducing prisoner numbers ...... 3 The role of bail assessors ...... 3 Recidivism rates ...... 4 Housing released prisoners...... 5 Improving outcomes for Māori ...... 5 This Way to Work programme ...... 5 Increase in international travel costs ...... 6 Prisoner assaults ...... 6 Appendix ...... 7

Raymond Huo Chairperson

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2017/18 ANNUAL REVIEW OF THE DEPARTMENT OF CORRECTIONS

Department of Corrections

Recommendation The Justice Committee has conducted the annual review of the Department of Corrections for 2017/18, and recommends that the House take note of its report.

About the Department of Corrections The Department of Corrections works to ensure that criminal reoffending is reduced and that public safety is improved. Its core responsibilities include:

 maintaining safe and secure custodial facilities for over 9,000 prisoners  electronically monitoring defendants and high-risk offenders in the community  providing rehabilitation and reintegration services to offenders  running community work parties  providing support to registered victims  providing administrative services to the New Zealand Parole Board Corrections employs about 9,300 people.

Financial overview and audit results The Department of Corrections’ total revenue in 2017/18 was $1.474 billion, about 11 percent more than in 2016/17. The department’s expenditure also totalled about $1.474 billion, with a surplus of $0.4 million.

Audit results and performance against targets The Auditor-General assessed the department’s management control environment as “very good”. The department’s financial information systems and controls were also rated as “very good”, with no recommendations for improvement.

For its performance information and associated systems and controls, the Auditor-General gave the department a rating of “good”. The Auditor-General noted that deficiencies identified in 2016/17 had been resolved in part, but recommended further improvements to ensure that the department captures verifiable information for its performance measures relating to the working prisons framework and prisoner engagement. The Auditor-General reported that the department is scheduled to review the framework and related performance measures in the upcoming year. We will monitor this review with interest.

Significant achievements in 2017/18 In its opening statements to the committee, the department outlined some of its significant achievements in 2017/18, including the following:

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 Prisoners have completed about 1.5 million hours of community work, including maintenance at schools and marae, working on projects with the Department of Conservation, working with local authorities on wetlands, beaches and community tracks, and assisting community agencies and foodbanks.  About 1,100 prisoners have completed an intensive drug and alcohol treatment programme.  Nearly 8,000 prisoners undertook rehabilitation programmes in prison, with a near 90 percent completion rate.  Prisoners achieved more than 3,000 qualifications.  The department’s This Way to Work programme, which connects offenders with employers, placed 922 prisoners and ex-prisoners into employment.  No prisoners escaped.  The department’s staff managed a record number of prisoners. We thanked the department and its staff on behalf of the House, for the great work that it does in a difficult environment.

Reducing prisoner numbers Since reaching an all-time high of 10,820 in March 2018, the number of prisoners had decreased to 9,661 at the time of our hearing. We heard that the department is taking steps to reduce the prisoner population through its High Impact Innovation Programme (HIIP). The programme includes helping prisoners achieve sentences or conditions that do not require incarceration. For example, the programme helps prisoners to better understand the requirements for electronically-monitored bail and parole, or to explore suitable accommodation options so that the prisoner may apply for home detention resentencing.

The role of bail assessors As part of the HIIP, the department has created a new role, generally called “bail assessors”, to help defendants apply for electronically monitored bail. A pilot was trialled in several prisons and has now been rolled out in Christchurch and Manukau. There are about 15 bail assessors, usually staff employed from the department, the New Zealand Police, or the Ministry of Justice.

The bail assessor’s role is to help defendants better understand the requirements for bail and overcome any practical barriers to applying for bail, such as exploring safe and suitable accommodation options with the prisoner. The assessors may also provide support with written applications where a prisoner has low literacy or numeracy skills, or put them in contact with appropriate family and community support. We heard that this service has contributed to a significant drop in remand prisoners as more defendants are achieving bail where previously they considered themselves ineligible.

National members expressed concern that providing advice to defendants so that they are better able to achieve bail could mean they are “coached” into meeting bail conditions. This

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The department said its assistance to prisoners is purely practical. For example, a bail assessor had been able to retrieve the phone number for a community support contact from a defendant’s phone, which had been confiscated on their remand into custody. There are also checks and balances to ensure bail is awarded fairly. The decision to award bail is made by a judicial officer, and the New Zealand Police continue to do due diligence. Additionally, it is in the department’s best interests for the outcome to be robust, true, and achievable to ensure that the defendant is not reprocessed and the public is safe.

We agreed that the role of bail assessors is a useful one, but urged the department to remain cautious in its approach. The department invited us to observe the bail assessors in action at one of its facilities so that we could see their practices first-hand.

Recidivism rates We observed that about 47 percent of prisoners released from prison in 2016/17 were reconvicted of an offence within 12 months. The department told us that recidivism rates have remained relatively stable over the last 10 years.

We were interested to hear that the lowest rate of recidivism relates to those on home detention. Only about 17 percent of offenders sentenced to home detention reoffend. Prisoners with short-term sentences, of two years or less, reoffend at almost double that rate. The department told us that it is difficult to get a short-sentence offender to complete a rehabilitation programme, and that usually the offender’s release conditions provide little opportunity for any other rehabilitative intervention.

HIIP and recidivism The High Impact Innovation Programme has successfully reduced the prisoner population by increasing the number of electronically-monitored bail applications, parole grants, and alternative sentences, such as home detention. However, National members voiced concern that the department’s approach, placing a larger number of prisoners in the community, increases the potential for recidivism and the risk to public safety.

The department reiterated that the HIIP programme involved practical help for offenders in their applications and that, ultimately, the decision to release a prisoner was made by a judicial officer or by the New Zealand Parole Board. The department added that it is working hard to reduce recidivism and improve public safety through the rehabilitation programmes it runs and by managing community-based offenders through its experienced Community Corrections teams.

Recidivism rates for gang-affiliated offenders The department told us that gang members reoffend at higher rates. Although the department works to reduce the links that offenders have with gangs or any other anti-social or criminal network, gang affiliation can entail multi-generational and entrenched behaviour. It remains a difficult task to break these connections, especially as gang members have experienced very little pro-social role-modelling or pathways.

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Community-based rehabilitation We noted that the department’s community-based rehabilitation programmes had a 66 percent completion rate, compared with an 89 percent completion rate for prison-based rehabilitation programmes.

The department told us that it is difficult to get community-based offenders to complete programmes, as the programmes compete with the prisoner’s other work and life commitments. Non-completion of the programme can be a breach of the offender’s release conditions. However, often the offender’s sentence has been served by the time the programme ends.

Housing released prisoners Currently, the department has capacity to rehouse 1,100 prisoners a year, for an expected stay of about three months. We heard that the department works to help prisoners find their own accommodation on release but is also trying to source further accommodation through other providers as well.

The department has strict policies about engaging with communities where prisoners are accommodated upon release, particularly with child sex offenders. It works closely with schools, local authorities, the Ministry of Education, and the immediate neighbours of the property. The department told us that in the past its practice has been to place the offender and then notify, but it is changing its policy to canvass the community’s views first.

Improving outcomes for Māori The department told us that it is developing a new strategy to address offending by and improve outcomes for Māori. Currently, over half of the prison population identify as Māori.

The new strategy has not been finalised, but core to its co-design are the partnerships that the department has with iwi and Māori communities. We heard that the strategy is planned for release in early to mid-2019. It will implement a number of new initiatives, including helping prisoners identify their genealogy and connecting them to iwi support for them and their tamariki.

This Way to Work programme The department’s This Way to Work programme connects offenders with employers. The department has memoranda of understanding with 165 employers. Through such partnerships, it has placed more than 1,500 prisoners into employment since 2016. Of the 60 offenders that the department finds work for each month on average, two-thirds retain their employment for longer than three months.

We heard that securing employment for a prisoner is a highly effective factor in guarding against further reoffending. The department is working hard to cultivate more employment opportunities. It continues to develop partnerships by hosting showcase breakfasts, where potential employers can hear from prisoners and people who have employed prisoners about just how life-changing a job opportunity can be.

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Increase in international travel costs We observed that the department’s international travel costs had increased by nearly 66 percent, from $208,731 in 2016/17 to $345,846 in 2017/18. The department said that it continues to investigate corrections services in various international jurisdictions as part of its commitment to improving its services. It has also been invited to several international conferences to showcase the work it has been doing.

Prisoner assaults Prisoner-on-staff We were pleased to see that the rate of serious assaults on prison staff had dropped from 0.25 per 100 prisoners in 2016/17 to 0.11 in 2017/18. The department told us that a factor contributing to the decrease is that senior and responding officers now carry pepper spray. Although we heard that the pepper spray is only used in about half of all incidents, even the presentation of pepper spray can de-escalate a situation and prevent physical confrontations between staff and prisoners.

Prisoner-on-prisoner It is concerning to us that serious prisoner-on-prisoner assaults have almost doubled, from 0.22 per 100 prisoners in 2016/17 to 0.40 in 2017/18. The department said it aims to reduce the number of these assaults by understanding gang tensions, increasing its ability to search for drugs and weapons, and separating vulnerable prisoners from the general population. It also analyses the functioning of prison units with its prison tension assessment tool, and through its Reducing Violence working group.

The department said it works to secure convictions against prisoners who have committed these assaults. However, in the prison context, victims are reluctant to speak and witness testimony is difficult to secure. Nevertheless, all assaults are reported to the New Zealand Police who investigate and prosecute.

We learnt that the 49 serious assault incidents in 2017/18 resulted in 42 prisoner victims and 12 staff victims. As at 24 January 2019, the Police had laid 50 charges in response to the 49 incidents. Some assaults may still be under investigation. Of the 50 charges, 26 ended in conviction, 4 were withdrawn or not progressed by the Crown, and 20 were still active on 24 January 2019. Some of us consider that the rate of convictions could be a good performance indicator for whether the department is adequately addressing prisoner-on-prisoner assaults. A strong conviction rate could also act as a deterrent against further assaults. The department told us that a conviction rate would not necessarily demonstrate the seriousness with which it takes these assaults. Rather, it is more likely to demonstrate the effectiveness of the judicial process and reflect the difficulty of securing statements and evidence in a prison context.

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Appendix

Committee procedure We met on 13 December 2018 and 14 March 2019 to consider the annual review of the Department of Corrections. We heard evidence from the Department of Corrections and received advice from the Office of the Auditor-General.

Committee members Raymond Huo (Chairperson) Ginny Andersen Hon Maggie Barry Chris Bishop Hon Mark Mitchell Greg O’Connor Hon Dr Nick Smith Dr Duncan Webb Hon David Bennett participated in some of this review.

Office of the Auditor-General, Briefing on the Department of Corrections, dated 13 December 2018.

Department of Corrections, Responses to annual review questions 1–147, received on 11 December 2018.

Department of Corrections, Responses to post-hearing questions 1–33, received on 12 February 2019.

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2017/18 Annual review of the Electoral Commission

Report of the Justice Committee

March 2019

Contents Recommendation ...... 2 Introduction ...... 2 Financial and service performance ...... 2 Elections in 2017 and 2018 ...... 2 Planning for referendums ...... 3 Financial sustainability ...... 3 Engaging with communities ...... 4 Results from the 2018 Census ...... 4 Prohibition on voting places ...... 4 Appendix ...... 6

Raymond Huo Chairperson

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2017/18 ANNUAL REVIEW OF THE ELECTORAL COMMISSION

Electoral Commission

Recommendation The Justice Committee has conducted the annual review of the Electoral Commission for 2017/18, and recommends that the House take note of its report.

Introduction The role of the Electoral Commission, an independent Crown entity, is to administer all aspects of parliamentary elections, by-elections, and referenda and to encourage participation in parliamentary democracy.

The Electoral Commission has 100 staff.1 The chair of the Commission is Hon Sir Hugh Williams QC and the chief executive is Alicia Wright.

Financial and service performance In 2017/18, the Commission reported total revenue of $65.315 million compared with $35.351 million in 2016/17. Total expenditure was $65.865 million ($33.470 million in 2016/17). The Commission reported a deficit of $550,000, compared with a surplus of $2.181 million in 2016/17.2

The Auditor-General assessed the Electoral Commission’s management control environment and its financial information systems and controls as “very good”, with no recommendations for improvement.

The Auditor-General assessed the Electoral Commission’s performance information and associated systems and control as “good”. The auditor has recommended that the Commission further develop its strategic performance reporting framework so that it best reflects the Commission’s overarching strategic objectives and the impacts its activities have on those outcomes in both election and non-election years.

Elections in 2017 and 2018 The Electoral Commission managed three areas of election activity in 2017/18: the Māori electoral option, the Northcote by-election, and the 2017 general election.

The Northcote by-election, conducted on 9 June 2018, went smoothly and to time. The writ for the by-election was returned on schedule on Tuesday 26 June and the new member of Parliament for Northcote was sworn in on Wednesday 27 June. From April to August 2018 the Commission conducted a four-month public information and community engagement campaign for the 2018 Māori electoral option. Research during the campaign showed that

1 Electoral Commission Annual Report 2017/18, p. 12. 2 Electoral Commission Annual Report 2017/18, p. 23. 2

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2017/18 ANNUAL REVIEW OF THE ELECTORAL COMMISSION the Commission was successful in raising both awareness that the option was taking place and understanding of how to take part.

The 2017 general election The main focus of the Commission in 2017/18 was the 2017 general election. The Commission has provided Parliament with a report on the 2017 general election which includes its recommendations for future general elections. We are considering these recommendations under our ongoing Inquiry into the 2017 General Election.

Planning for referendums The Electoral Commission initiated a Referendum Development Project in the last quarter of 2018 in view of the increased likelihood that it will be required to deliver one or more referendums prior to or concurrently with the 2020 general election. It told us that early planning is essential to ensure that the conduct of the 2020 general election is not affected.

We discussed the cost of a referendum and how this would differ should it be conducted on the same date as the general election, or if were to be done at a separate time. We were told the cost would be roughly the same either way. The Commission estimates that it would be about $17 million for one referendum, and could rise to $20 million if there is more than one.

We asked whether the Commission considered that including a referendum at the time of a general election detracts or enhances overall levels of participation. We heard that voter participation in New Zealand parliamentary referendums has been highest when held at the same time as a general election. However, the degree to which a referendum at a general election affects general election turnout is difficult to determine and results have been mixed.

We noted that in 2011 there was significant frustration from media and the general public about the lower priority that the Commission gave to the counting of votes for the voting system referendum. Results were announced well after those for the general election. We asked whether any refinement of the law is needed to provide guidance in the event of a simultaneous general election and referendum. Some direction in statute around the relative priority of counting of votes could avoid the criticism of the Commission that occurred in 2011. The Commission proposed that the electorate and party votes could be counted and announced first, with the public informed well in advance that the referendum results would follow some time afterwards. It said the actual referendum results might only be available following the completion of the official election count.

Financial sustainability At the start of each electoral cycle, the Commission prepares a budget bid detailing the funding it assesses it will need to prepare for the next general election and other work. In Budget 2018, the Commission received funding for the 2018/19 year only. We are aware that there is currently no certainty over the Commission’s funding for 2019/20 and 2020/21.

We discussed the Commission’s reserves, which are relatively high. (As at 30 June 2018, the Commission had a net asset balance of $6.862 million.) We were told that the main problem the Commission faces fiscally is the lack of certainty of funding for years two and three in the electoral cycle. Alongside this is planning for referendums, and the

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Representation Commission.3 There is a lot of work to be done which will absorb this money. At present the Commission says it is living off its reserves, which is always the case in the first year of the electoral cycle.

Engaging with communities The Commission has been targeting what it terms “hard to reach” groups. They include youth, Māori, Pacific peoples, and culturally and linguistically diverse communities.

Māori voters In the 2017 general election, 66.7 percent of those enrolled in Māori electorates voted. This was the highest turnout since 2005 (when 67.1 percent voted). In 2018 the Commission met with Māori across the country to discuss their perceptions or experience of the last general election, and possible future improvements. The feedback had been generally positive. However, the Commission has identified ways in which it needs to improve services at voting places. One relates to the use of te reo Māori; another is increasing community engagement throughout the election period and ensuring that the messages about enrolling and voting are clear within the community. There also needs to be more people from the community working in voting places, and more community input into the location of voting places themselves.

Young voters The Commission told us that it is an ongoing challenge to engage and motivate young people to enrol and vote. In the 2017 general election, the percentage of 18–24 year olds enrolled was 72.3 percent, which was less than in 2014 (76.5 percent). However, the number of 18–24 year olds who enrolled and actually cast their votes increased by 6.5 percent.

Results from the 2018 Census We discussed the review of electorate boundaries, scheduled to be undertaken by the Representation Commission in 2019. We asked how the delay of the 2018 Census data would affect this. The Commission told us that, at this stage, the delay in the release of census results will mean the boundary review will be delayed by up to two months but will still be completed in 2019. A further delay in the census results would create difficulties in meeting the 2019 date.

Prohibition on voting places The Electoral Commission plans to increase the number of advanced voting places from 485 in 2017 to 700 for the 2020 election. It plans to extend its nationwide trial of having advanced voting places in supermarkets and malls, which was highly successful in 2017.

3 The Representation Commission is convened every five years to review electorate boundaries. The review uses statistics drawn from the five-yearly population census and the Māori electoral option. The next boundary review is due to take place in 2019 and the new boundaries will apply to the 2020 and 2023 general elections. 4

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We asked whether it was a problem that section 155(3) of the Electoral Act 1993 prohibits designating licensed premises as polling places, and whether that prohibition extends to supermarkets. The Commission said that, to clarify this point, it could be helpful to amend the Act. This could entail either removing section 155(3) or restricting it to a prohibition on designating a voting place where alcohol is being consumed. In 2017, the trial of voting places in supermarkets in Auckland was very successful. The Commission would like to expand this to suitable sites across the country.

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Appendix

Committee procedure We met on 13 December 2018 and 14 March 2019 to consider the annual review of the Electoral Commission. We heard evidence from the Commission and received advice from the Office of the Auditor-General.

Committee members Raymond Huo (Chairperson) Ginny Andersen Hon Maggie Barry Chris Bishop Hon Dr Nick Smith Hon Mark Mitchell Greg O’Connor Dr Duncan Webb

Office of the Auditor-General, Briefing on the Electoral Commission, dated 13 December 2018.

Electoral Commission, Responses to annual review questions 1–109.

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2017/18 Annual review of the Human Rights Commission

Report of the Justice Committee

March 2019

Contents Recommendation ...... 2 Introduction ...... 2 Recommendations of the Shaw review into sexual harassment ...... 2 Staff morale and turnover ...... 3 Organisational structure and governance ...... 3 Effects of baseline funding freeze ...... 4 Functions of the commission include intervening in court proceedings ...... 4 Appendix ...... 5

Raymond Huo Chairperson

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Human Rights Commission

Recommendation The Justice Committee has conducted the annual review of the Human Rights Commission for 2017/18, and recommends that the House take note of its report.

Introduction The Human Rights Commission is an independent Crown entity responsible for promoting and encouraging the protection of human rights in New Zealand. The commission is governed by a board consisting of all the commissioners, and is chaired by the Chief Commissioner. It is funded through Vote Justice.

There can be up to five human rights commissioners. At the time of our review there were three: the Chief Commissioner, Equal Employment Opportunities Commissioner, and Disability Rights Commissioner. In May 2018, the Disability Rights Commissioner, Paula Tesoriero, took over as acting Chief Human Rights Commissioner. The new Chief Commissioner, Paul Hunt, took up the role in January 2019. The chief executive, Cynthia Brophy, retired at the end of 2018.

Financial overview The Human Rights Commission’s revenue for 2017/18 was $10.085 million, about 1.4 percent less than the previous year. Its total expenses were $10.136 million, about 8.9 percent below the previous year’s. This resulted in a deficit of $51,000, compared with a deficit of $897,000 in 2016/17. The commission also forecasts a deficit, of $307,000, for 2018/19.

Recommendations from the 2017/18 audit The Auditor-General assessed the Human Rights Commission’s management control environment, financial information systems and controls, and performance information and associated systems and controls as “good”, and recommended a number of improvements. We were pleased to hear the commission has work under way to address the auditor’s recommendations, and look forward to seeing the results at future reviews.

Recommendations of the Shaw review into sexual harassment Following concerns about a sexual harassment complaint made against a commission employee, Judge Coral Shaw (retired) undertook a ministerial review of the commission in 2018. The review reported in May 2018 and identified shortcomings in the commission’s systems and processes for investigating and resolving internal sexual harassment complaints. It also identified deficiencies in the commission’s organisational culture. The review made 31 recommendations, particularly relating to governance and management structures.

We asked the commission what steps it is taking to address the shortcomings identified in the Shaw review, and what progress it has made so far. 2

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The commission told us that, following the release of the review, it scoped the work required to act on the findings and appointed a senior manager to lead its response. The commission has already completed work on 12 of the 31 recommendations, and work is under way for the remaining 19. This includes a review of all its workplace policies and the board’s operating procedures. The commission has also appointed outside consultants to oversee the implementation of the recommendations and ensure they are satisfactorily addressed. It hopes the successful adoption of these recommendations will mitigate some of the reputational damage it suffered.

The commission set aside $200,000 in 2017/18 to implement the recommendations, which will be completed in June 2019. We will follow up on the commission’s progress with the remaining recommendations at our next annual review.

Staff morale and turnover We were concerned to hear that staff turnover at the commission has increased from 17 percent in 2016/17 to 35 percent in 2017/18. We asked how it is managing any effects on staff morale and turnover resulting from the Shaw review.

The commission explained that its high staff turnover this financial year includes several commissioners reaching the end of their statutory appointments, and a number of staff reaching the end of their contracts. We understand that no departing staff members specifically cited the Shaw review as a reason for leaving. We were pleased to hear that the commission is managing staff morale by involving staff in the development of its responses to the Shaw recommendations. It is also training managers to deal with workplace conflict more effectively, establishing an anonymous channel for raising issues and questions, and seeking improvements to staff induction processes.

Organisational structure and governance The Shaw review identified that some commissioners did not properly understand their governance role within the organisation, and recommended induction training for commissioners in governance principles. We were interested to learn what progress the commission has made in addressing these recommendations. We also asked whether the organisational structure of the commission could be improved through changes to the Human Rights Act 1993.

The commission told us that it is developing induction packs for commissioners and is in the process of understanding what additional training each commissioner needs. It has also established an external policy advisory group, and is working with the Ministry of Justice to update the commissioners’ position descriptions and the appointment process. We understand the commission’s board will meet early in 2019 to evaluate what more needs to be done.

The commission indicated that its organisational structure works effectively but does have “inherent challenges”. It said the decision of whether to change the structure through legislative intervention is a matter for Parliament.

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Effects of baseline funding freeze Baseline funding for the Human Rights Commission has remained the same since 2007. Despite this, the volume of new human rights enquiries and complaints received by the commission has increased in recent years, including a 21 percent increase since 2016/17. The commission is therefore undertaking a review of its baseline funding and its long-term financial sustainability, which it expects to complete in December 2018. We asked the commission what tensions the funding freeze created within the organisation, and what resulting risks it identified.

The commission explained that the majority of its funding goes to staff salaries and it has “very little” discretionary budget to undertake inquiries. We heard that this can create tension between commissioners, who want to undertake inquiries within their own separate portfolio areas. Additionally, funding pressures have meant a decrease in the number of full-time- equivalent roles in the commission, from 72 in 2015 to 43.6 in 2018. The reduction comprised mostly support and advisory staff. Staffing costs have also progressively increased. Consequently, the commission has undertaken some restructuring to downsize the organisation.

The commission identified several risks resulting from the funding freeze. They include being unable to continue to meet all the commission’s statutory and regulatory obligations as a Crown entity. It also may not be able to meet its international obligations as a National Human Rights Institution, which may jeopardise its international accreditation. Further, it risks losing public confidence in the commission’s ability to effect change.

We are interested in the upcoming results of the commission’s review of baseline funding, and will monitor how the commission manages the risks it has identified.

Functions of the commission include intervening in court proceedings Among the commission’s functions, the Human Rights Act expects it to try to intervene in court proceedings where it believes this will help it to carry out its primary function as an advocate for human rights in New Zealand.1 We understand that the commission is seeking to participate in legal proceedings commenced by the Free Speech Coalition against Auckland Council. The proceedings relate to the cancellation of a speaking event at an Auckland venue for Canadian speakers Stefan Molyneux and Lauren Southern.

The commission told us that the court hearings have not yet taken place, and it would be inappropriate for it to comment on what submissions it would make. It said that the High Court accepted its application to intervene, and the application was not opposed by the parties. It will provide written submissions limited to human rights-related matters for the court, in accordance with its functions set out in the Human Rights Act.

1 Section 5(2)(j) of the Human Rights Act 1993. 4

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Appendix

Committee procedure We met on 29 November 2018 and 14 March 2019 to consider the annual review of the Human Rights Commission. We heard evidence from the Human Rights Commission and received advice from the Office of the Auditor-General.

Committee members Raymond Huo (Chairperson) Ginny Andersen Hon Maggie Barry Chris Bishop Hon Mark Mitchell Greg O’Connor Hon Dr Nick Smith Dr Duncan Webb

Office of the Auditor-General, Briefing on the Human Rights Commission, dated 29 November 2018.

Human Rights Commission, responses to questions 1 to 109, received 28 January 2019.

Human Rights Commission, responses to post-hearing questions 110 to 119, received 20 December 2018.

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528

2017/18 Annual review of the Independent Police Conduct Authority

Report of the Justice Committee

March 2019

Contents Recommendation ...... 2 Introduction ...... 2 Financial and service performance ...... 2 The authority’s engagement with communities ...... 3 Increase in police numbers ...... 4 Implementation of a new case management system ...... 4 The IPCA’s monitoring of police practices ...... 4 Use of tasers ...... 5 Appendix ...... 6

Raymond Huo Chairperson

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2017/18 ANNUAL REVIEW OF THE INDEPENDENT POLICE CONDUCT AUTHORITY

Independent Police Conduct Authority

Recommendation The Justice Committee has conducted the annual review of the Independent Police Conduct Authority for 2017/18, and recommends that the House take note of its report.

Introduction The Independent Police Conduct Authority (IPCA) is an independent Crown entity under Part 3 of Schedule 1 of the Crown Entities Act 2004. It was established under the Independent Police Conduct Authority Act 1988.

The authority’s role is to receive and act on complaints that allege misconduct or neglect of duty by any Police employee, or concerning any Police practice, policy, or procedure. The authority also investigates incidents involving death or serious harm caused, or apparently caused, by a Police employee acting in the course of their duty, where the authority is satisfied it is in the public interest to do so.

The authority has a memorandum of understanding with the Police. This means that the Police can refer matters to the IPCA where they may present a reputational risk to the Police.

The authority is governed by a board, which reports to the Minister of Justice. The chair is Judge Colin Doherty, who took over from Judge Sir David Carruthers in August 2017.

Financial and service performance In 2017/18, the authority reported total revenue of $4.318 million (about 4 percent more than in 2016/17). Total expenditure was $4.306 million (about 9 percent more than the previous year).

The IPCA received 2,592 complaints in 2017/18, compared with 2,614 in 2016/17. It completed 72 investigations in 2017/18 and had 79 open investigations as at 30 June 2018. Of these, 85 percent were defined as high or medium complexity, compared with 63 percent the previous year.

Auditor’s assessment The Auditor-General rated the authority’s management control environment and its financial information systems and controls as “very good”, with no recommendations for improvement. Its performance information and associated systems and controls were rated “good”.

The auditor noted that deficiencies identified in 2016/17 were partly addressed and recommended further improvements to the measures used by the authority to gauge its impact. They include:

 developing a more enduring and longer-term impact measure

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 raising the level of impact measures so they are not as output focussed, and apply for a longer period of time  using trend information and longer-term targets to show the effect the IPCA is trying to achieve and showing its progress in achieving these outcomes and effects over a longer period of time.

The authority’s engagement with communities We were interested in the region-by-region analysis of complaints received by the authority. For instance, compared with the Tasman and Canterbury districts, the number of complaints in Counties Manukau was low. We asked whether these numbers highlighted a need for the IPCA to work on increasing its public profile and ensuring its services are accessible to different ethnic communities.

The IPCA said such a policy is still being developed, but it has already taken steps to improve its communication and make information about its services more available. It has made changes to its website to improve access to its services and the visibility of its work, and has included multilingual options. Visits to the website have increased by 36 percent. The authority has also created a Facebook page and plans to expand its use of social media to connect with the public and promote its services.

The IPCA informed us that its Community Engagement Plan was delayed because it wanted to ensure that the policy was developed in line with the direction its incoming chair wanted the IPCA to take. It was formally adopted in March 2018. Part of the plan includes discussing with communities how to improve the authority’s visibility and accessibility.

We hope to see progress in the IPCA’s engagement with communities and an increase in public awareness of the authority and its services.

Mixed success in meeting performance targets We noted that the authority’s performance against its targets was mixed. For example, the target of categorising a complaint within 56 days was met in only 66 percent of cases, well below the goal of 90 percent. For Category 1 investigations, only 69 percent were completed within 12 months, against a target of 84 percent. We heard that these results were due to an increase in the complexity of complaints. Further information was needed from the Police or the complainant, which was outside the IPCA’s control.

The IPCA has also changed its process for resolving complaints. Under a new triaging process, it places increased engagement with complainants and the Police earlier in the process. It tries to settle as many complaints as possible by way of facilitated resolution, which does not require an investigation. This involves a lot of discussion between the parties, affecting the time it takes to categorise and resolve a case.

The IPCA informed us that 84 percent of independent investigations were closed within 12 months and 100 percent of cases were closed within 24 months in 2017/18.

The authority noted that occasionally cases remain open for longer than 24 months. This can be because the investigation is highly complex or something else occurs, such as court

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2017/18 ANNUAL REVIEW OF THE INDEPENDENT POLICE CONDUCT AUTHORITY proceedings. There is currently a case open where the IPCA is waiting on the outcome of civil court proceedings before reporting on it.

We note that the IPCA plans to replace its current case management system. This may improve performance against timeliness measures.

Increase in police numbers We note that the authority is forecasting an increase in the number of complaints it receives. We discussed how the projected increase in case numbers could be affected by the planned introduction of 1,800 police officers, and how the authority has accounted for the effect this will have on its services.

The authority acknowledged a correlation between police numbers and the number of complaints received. It noted that it had received an additional $781,000 in funding in Budget 2018. It said that this extra appropriation factored in the effect of increased police numbers.

The authority explained that, when preparing its budget bid, it had gone through each of the types of complaint it receives and analysed whether it was likely to have a high, medium, low, or no correlation with increased police numbers. For example, complaints relating to a failure to investigate would be likely to decrease, whereas complaints about the use of excessive force are likely to increase.

Implementation of a new case management system The IPCA is in the process of choosing and implementing a new case management system. The new system will make it easier to efficiently manage cases and will provide improved data reporting and analytics. This data will provide the basis for the IPCA’s key strategies for the next 10 years.

This system will be partly funded by the increased appropriation in Budget 2018 and the remainder will be covered by the authority’s reserves. The system will be a pre-established programme that will be customized to the authority’s needs. It is expected to be fully operational by 1 July 2019.

The IPCA’s monitoring of police practices We discussed whether the IPCA actively monitors police conduct to identify potential and current areas of concern.

The IPCA said it identifies issues that require a review from complaints it receives. In the past few years it has conducted thematic reviews into policing in small communities, a review of Police administration and enforcement of firearms licensing, Police vetting procedures, Police handling of property and exhibits, and “fleeing drivers”.

Some of these reviews are still ongoing, such as the handling of exhibits and property. As a result of the authority’s work on this review so far, the Police have agreed to introduce an electronic tracking system. They are also working on improving training about statutory requirements. The IPCA will continue to work with the Police on this issue.

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The review into fleeing drivers is being jointly conducted with the Police. We discussed whether this collaboration could affect the authority’s independence. We were reassured by the IPCA that the collaboration is around the collection and analysis of data, allowing the authority access to a wider dataset. The terms of reference ensure that the IPCA can give its own views and recommendations where these differ from the Police’s. The report is expected to be completed in February 2019.

The IPCA is satisfied that its past reviews about fleeing drivers have resulted in the Police taking action to improve skills and processes, and speaking with the officers involved about what happened and how their response could be improved.

The authority also has a memorandum of understanding allowing the Police to refer matters to the IPCA even if a complaint has not been made. This includes instances of serious offending by a police officer, any police actions that may have an element of corruption, or any other occurrences that may have a reputational risk to the Police.

Reviews into potential changes in policing We were interested in whether the authority does any work on how trends in criminal activity could affect police practices, and whether it provides advice on how the Police could change to adapt to these trends. The chair of the authority said he hopes it would be able to conduct this kind of work in the future, but it is constrained by the legislation it works under. The authority’s ability to carry out this work is also dependent on funding.

Use of tasers We asked whether the authority is satisfied with the use of tasers as a non-lethal method to apprehend offenders. We noted that the authority has completed multiple inquiries into the use of tasers by police officers since their introduction. The authority’s chair said that the Police had improved their risk-analysis training. This helps police officers to assess the appropriate level of response to a situation. The authority acknowledged that police have to make these decisions in high-stress situations and it is difficult to determine whether there would have been less harm had lethal force, rather than tasers, been used. However, overall it is satisfied with the approach being used by police officers with tasers.

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Appendix

Committee procedure We met on 21 November 2018 and 14 March 2019 to consider the annual review of the Independent Police Conduct Authority. We heard evidence from the IPCA and received advice from the Office of the Auditor-General.

Committee members Raymond Huo (Chairperson) Ginny Anderson Hon Maggie Barry Chris Bishop Hon Mark Mitchell Greg O’Connor Hon Dr Nick Smith Dr Duncan Webb

Advice and evidence received We received the following documents as advice and evidence for this annual review. They are available on the Parliament website, www.parliament.nz

Office of the Auditor-General, Briefing on Independent Police Conduct Authority, dated 21 November 2018.

Independent Police Conduct Authority, responses to annual review questions, received on 19 November 2018.

Independent Police Conduct Authority, responses to post-hearing questions, received on 10 December 2018.

534

2017/18 Annual review of the Law Commission

Report of the Justice Committee

February 2019

Contents Recommendation ...... 2 Introduction ...... 2 Financial and service performance ...... 2 The Law Commission’s work programme and resources ...... 2 The Law Commission’s engagement with the public ...... 3 Progressing law reform ...... 4 Remuneration of Law Commissioners ...... 4 Appendix ...... 5

Raymond Huo Chairperson

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2017/18 ANNUAL REVIEW OF THE LAW COMMISSION

Law Commission

Recommendation The Justice Committee has conducted the annual review of the Law Commission for 2017/18, and recommends that the House take note of its report.

Introduction The Law Commission is an independent Crown entity established under the Law Commission Act 1985. It is also subject to the Crown Entities Act 2004. Its purpose is to systematically review, reform, and develop New Zealand law, producing reports with independent recommendations. The commission also provides advice on the implementation of its law reform recommendations. The reports produced by the commission are tabled in Parliament.

The commission is a small organisation, with just 26.6 full-time-equivalent employees. The President of the Law Commission (Hon Sir Douglas White QC) is the chairperson and chief executive. He works with three other commissioners.

Financial and service performance In 2017/18, total income for the Law Commission was $4.23 million, which was 2.5 percent more than the $4.128 million in 2016/17. Total expenditure was $4.378 million, 10.8 percent more than the $3.95 million in 2016/17. The resulting deficit of $148,000 in 2017/18 compared to a surplus of $178,000 in 2016/17.

Net assets of the Law Commission were $1.952 million as at 30 June 2018 (compared to $2.1 million as at 30 June 2017).

Auditor’s assessment The Auditor-General rated the commission’s management control environment and its financial information systems and controls as “very good”. However, the commission’s performance information and associated systems and controls were rated as “needing improvement”.

The auditor recommends that major improvements be made in the way the commission presents information about its financial and service performance in the annual report. It should present information more clearly, and over a longer period of time, so that a reader can readily understand how the commission measures the impact of what it does.

We note that some deficiencies also remain outstanding from 2016/17, and hope to see the commission act on the Auditor-General’s recommendations as soon as possible.

The Law Commission’s work programme and resources The commission’s work plan includes three active reviews and three inactive projects. The three active reviews are of the Property (Relationships) Act 1976, the Criminal Investigations

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(Bodily Samples) Act 1995, and the second statutorily-required review of the Evidence Act 2006. All three reviews are expected to be completed in 2019.

Its three inactive projects include a review of the Declaratory Judgements Act 1908, which has been on hold for some time. The others are reviews of the law relating to class actions and litigation funding, and of trust law relating to statutory incorporations and trustees. These two were put on hold as the commission reallocated staff to complete the priority request from the Minister about abortion law reform, which we discuss later in this report.

The commission expects that one of these projects will be reactivated once the Evidence Act review is completed. If its Budget bid for 2019/20 is successful, a second project could commence.

The commission is seeking more funding in Budget 2019 to continue its law reform programme. The commission told us it will “face real challenges in meeting its deliverables” with its current funding. It has made changes to reduce spending, including moving to less expensive premises and not replacing several permanent staff members. The commission has not had an increase in funding in the past nine years, having unsuccessfully applied for an increase in the last two years.

The Law Commission’s engagement with the public We asked about the commission’s level of engagement and consultation with the public when it carries out reviews for possible law reforms. We noted differences between its review of the Property (Relationships) Act 1976 (PRA) and a recent review of abortion law.

For the PRA review, the commission created a “consultation website” to make the review accessible to the public. It highlighted key issues and explained possible reforms in an easy- to-read format. The public were able to respond to consultation questions on the website. There was also a “tell us your story” option where people could talk about their personal experiences involving the PRA. The commission received over 300 submissions and held 19 public meetings across the country to engage with New Zealanders. The review was referred to the commission in late 2015 and its final report is expected in June 2019.

The review into abortion law was much quicker. It was referred to the commission on 27 February 2018 and it sent its briefing paper to the Minister in October 2018. There was a public consultation process on abortion law reform during this time.

When asked about the difference, the President of the Law Commission explained that the level of public consultation depends on the Minister’s direction. The Minister requested a review into the law relating to relationship property, which is complex and has many legal issues the commission is qualified to advise on. It also affects the majority of New Zealanders so the commission launched a full review and actively engaged with the public.

For abortion law, the Minister made a priority request for a ministerial briefing paper on alternative approaches to abortion law. This was not a full review and was limited to legal advice on alternative legislative frameworks should Parliament decide to remove abortion from the criminal law and treat it wholly as a health issue. The commission was not asked to look at the wider policy issues, because these would ultimately be a matter for Parliament as a conscience issue, which is not within the purview of the commission. However, recognising

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2017/18 ANNUAL REVIEW OF THE LAW COMMISSION that there is high public interest in the subject, the Minister required that there be an opportunity for public input. The commission created a dedicated website and received over 3,500 submissions.

We were told that it is not uncommon for a Minister to request this type of shortened report, referred to as a ministerial briefing paper. They are provided for under section 7(3) of the Law Commission Act 1985. The commission has so far provided five ministerial briefing papers.

Progressing law reform We discussed whether the commission keeps a record of how many of its past recommendations have been implemented, in part or in full. The commission said it does not have a full record of all reports produced since its establishment, but it does monitor action on its recommendations. It estimates that about 70 percent are taken up, which it considers a reasonable success rate.

The commission said it also keeps a record of possible future law reforms as part of its role in keeping New Zealand law systematically under review. This also assists the Minister to determine future reviews.

Remuneration of Law Commissioners We noted significant differences in remuneration between the commissioners. We were informed that remuneration is set by the Remuneration Authority. Some differences are due to whether a commissioner worked part-time or for only part of the year.

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Appendix

Committee procedure We met on 21 November 2018 and 21 February 2019 to consider the annual review of the Law Commission. We heard evidence from the Law Commission and received advice from the Office of the Auditor-General.

Committee members Raymond Huo (Chairperson) Ginny Anderson Hon Maggie Barry Chris Bishop Hon Mark Mitchell Greg O’Connor Hon Dr Nick Smith Dr Duncan Webb

Advice and evidence received We received the following documents as advice and evidence for this annual review. They are available on the Parliament website, www.parliament.nz

Office of the Auditor-General, Briefing on the Law Commission, dated 21 November 2018.

Law Commission, Responses to written questions, received 16 November 2018.

Law Commission, Responses to post-hearing questions, received 27 November and 4 December 2018.

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2017/18 Annual review of the Ministry of Justice

Report of the Justice Committee

March 2019

Contents Recommendation ...... 2 Introduction ...... 2 Financial position and audit opinion ...... 2 Criminal justice summit ...... 3 Modernising and improving the court system ...... 3 Increase in staff numbers ...... 4 Name suppression orders ...... 4 Family and sexual violence ...... 4 New Crown–Māori relations portfolio ...... 4 Bill of Rights compliance advice ...... 5 Appendix ...... 6

Raymond Huo Chairperson

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2017/18 ANNUAL REVIEW OF THE MINISTRY OF JUSTICE

Ministry of Justice

Recommendation The Justice Committee has conducted the annual review of the Ministry of Justice for 2017/18, and recommends that the House take note of its report.

Introduction The Ministry of Justice provides a wide range of justice services to New Zealand. Its core functions include administering the court and tribunal systems, negotiating Treaty of Waitangi settlements, collecting court-ordered fines and reparations, providing policy advice, and administering Vote Justice.

The ministry has four strategic goals:

 modernising courts and tribunals to improve access to the justice system  delivering improved justice outcomes for Māori  reducing crime, victimisation, and harm  providing great service to the public every day. The ministry employs 3,968 people and administers around $1 billion in government expenditure.

The ministry’s chief executive is the Secretary of Justice. In the year under review, this role was filled by Andrew Bridgman. In July 2019 he was due to move to head the Ministry of Defence, and to be replaced by Andrew Kibblewhite, the previous head of the Department of the Prime Minister and Cabinet. We thank Mr Bridgman for his service, and wish him well in his new role.

Financial position and audit opinion The ministry’s total revenue in 2017/18 was $603.236 million, a 2 percent increase from the previous year’s revenue, which was $591.368 million. Total expenses were $605.363 million, a 4 percent increase from the previous year’s expenses of $582.357 million. The ministry reported a net deficit of $2.127 million in 2017/18.

The Auditor-General graded the ministry’s management control environment, financial information systems and controls, and performance information and associated systems and controls as “good” for 2017/18. We hope to see the ministry act on the auditors’ recommendations for improvement in all three areas.

We note that the ministry reported unappropriated expenditure of $898,000 resulting from the Northcote by-election that was held in June 2018.

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Compliance with the Holidays Act The Auditor-General noted that the ministry has not been meeting the requirements of the Holidays Act 2003, which provides employees with minimum entitlements to annual holidays, public holidays, sick leave, and bereavement leave. Unpaid holiday pay is a significant financial liability. We note that other government departments and public entities are also facing this issue. We were pleased to hear that the ministry has engaged a specialist payroll consultant to calculate the extent of remediation costs.

Criminal justice summit The Ministry of Justice hosted a criminal justice summit in 2018 as part of a programme called Hāpaitia Te Oranga Tangata, Safe and Effective Justice. We understand that $1.6 million was spent on the two-day event. National members of the committee were concerned that the value added by the summit did not warrant this level of expenditure. We heard that the ministry believes that the costs of the event were properly managed and proportionate. Labour members believe it was an important and valuable event, particularly before the launch of the Safe and Effective Justice Advisory Group.

We heard that the event was held to consult and collaborate with people involved in the criminal justice system, such as victims, judges, members of Parliament, and community advocates. The outcomes of the summit will be used in the ministry’s policy work.

We heard that the summit was an opportunity for the ministry to engage at a high level with people and groups that it had not previously consulted in this way. We heard that while there are ongoing conversations between the ministry and these groups, the summit was intended to be an opportunity for wide-ranging discussions about improving the justice system.

The ministry is particularly interested in engaging effectively with Māori. We heard that, following the summit, Māori rōpū have arranged a separate Māori summit. We heard that the ministry’s Chief Victims Advisor has organised a workshop on strengthening the criminal justice system for victims, which will take place in March 2019.

Modernising and improving the court system One of the ministry’s focuses in 2017/18 was improving the timeliness of the New Zealand court system. This is based on the understanding that “justice delayed is justice denied”. Some of us expressed concern that members of the judiciary may struggle to balance timeliness with fairness, given the pressure to deliver an outcome quickly.

We heard that the ministry is working with the judiciary to ensure that initiatives to modernise the system do not negatively affect the quality of the outcomes achieved.

Using data We heard that the ministry has been using data about court proceedings to inform its policy work and understand where the system can be improved. This data can be shared with other organisations in the justice sector, such as the Law Society, the judiciary, the Police, and the Department of Corrections. We were told that the data is particularly useful in improving timeliness and quality, and is specific enough to identify individual cases at particular courts.

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Increase in staff numbers We are aware that, from 2016/17 to 2017/18, the number of staff employed by the ministry has increased by 400. We heard that these staff are spread over different parts of the ministry. There are 100 more court security officers employed.

We heard that the ministry received extra funding in Budget 2017 to address backlogs of work in the district courts, where timeliness has been a problem. Another factor in the staff increase is that the ministry has been successful in reducing the number of vacancies within the organisation.

Name suppression orders We understand that if a court refuses to grant a defendant name suppression, the defendant can apply for the decision to be reviewed within 20 days. If a judge is made aware that a defendant will appeal the decision, interim name suppression will be granted until the appeal is decided. Some of us expressed concern that the appeal process may be used to minimise publicity, where there may potentially be no legitimate grounds for an appeal.

We were also concerned about international news media not complying with name suppression orders. A recent example was the case of the murder of Grace Millane, where the accused was named in international media reports, which can be accessed in New Zealand.

We heard that the ministry is not currently doing any work on reviewing suppression orders.

Family and sexual violence In 2017/18 the ministry provided advice to the Government on an integrated family violence system. We heard that in September 2018 the Government decided that the ministry should lead the joint venture, which will involve other public agencies in the justice sector.

We understand that New Zealand has been improving its reporting about family violence, the data on which has traditionally been poor, both domestically and internationally. We heard that the Family and Whānau Violence Legislation Bill would specify a statutory definition of family violence and create several new offences. This draft legislation was developed after consultation with victims and the justice sector. If the bill is passed, the Police will be able to charge people with new offences that are more appropriate to their situation.

We heard that the ministry has conducted a survey of 8,000 people to measure family and sexual violence, the results of which will be available in March 2019. We were pleased to hear that the results of the survey can be broken down by age, given that elder abuse issues have traditionally been under-reported. We heard that the joint venture recognises that seniors have “intersecting forms of disadvantage and unique needs” that need to be considered in order to create a strong integrated response across government.

New Crown–Māori relations portfolio In 2017/18, the Government created a new portfolio, called Māori Crown Relations: Te Arawhiti. We heard that the portfolio will “focus on the opportunities that exist for Māori in a

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2017/18 ANNUAL REVIEW OF THE MINISTRY OF JUSTICE post-Treaty-settlement environment”. The ministry organised 30 public hui around the country to engage New Zealanders on what they thought the scope and priorities of the portfolio should be.

We heard that the new Office for Māori Crown Relations will have between 150 and 190 staff, including existing staff currently working in the Office of Treaty Settlements and other parts of the ministry.

Bill of Rights compliance advice Some of us were concerned about the consistency of the advice the ministry provides to Parliament on whether proposed laws are consistent with the New Zealand Bill of Rights Act 1990. The Bill of Rights Act affirms that everyone aged 16 or over has the right to freedom from discrimination on the basis of age.

We understand that the ministry has advised that the provision in the End of Life Choice Bill that would require a person to be 18 or over to be eligible for assisted dying is inconsistent with the Bill of Rights Act. The ministry also advised that the provision in the Minors (Court Consent to Relationships) Act 2018 that allows a person aged 16 or 17 to get married only with the consent of a parent or guardian is consistent with the Bill of Rights Act.

We were told that the ministry has internal mechanisms to test its advice. We heard that often an example might seem on the face of it to be a breach of the Bill of Rights Act, yet after analysis it is considered a justifiable limitation in a free and democratic society.

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Appendix

Committee procedure We met on 13 December 2018 and 14 March 2019 to consider the annual review of the Ministry of Justice. We heard evidence from the Ministry of Justice and received advice from the Office of the Auditor-General.

Committee members Raymond Huo (Chairperson) Ginny Andersen Hon Maggie Barry Chris Bishop Hon Mark Mitchell Greg O’Connor Hon Dr Nick Smith Dr Duncan Webb Chris Penk replaced Hon Mark Mitchell and Chris Bishop for some of our consideration.

Office of the Auditor-General, Briefing on the Ministry of Justice, dated 13 December 2018.

Ministry of Justice, response to annual review questions, dated 10 December 2018.

Ministry of Justice, response to post-hearing questions, dated 12 February 2019.

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2017/18 Annual review of the New Zealand Police and Report of the Controller and Auditor-General, Response of the New Zealand Police to the Commission of Inquiry into Police Conduct: Final monitoring report

Report of the Justice Committee

April 2019

Contents Recommendation ...... 2 Introduction ...... 2 Financial and service performance ...... 2 Response to the Commission of Inquiry into Police Conduct ...... 2 Recruitment and diversity ...... 4 Organised crime ...... 5 Reducing Māori offending ...... 5 111 calls and non-emergency number ...... 6 Burglary attendance ...... 6 Emergency services ...... 6 Road safety ...... 6 Mental health incidents ...... 7 Appendix ...... 8

Raymond Huo Chairperson

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New Zealand Police

Recommendation The Justice Committee has conducted the annual review of the New Zealand Police for 2017/18 and considered the Report of the Controller and Auditor-General titled Response of the New Zealand Police to the Commission of Inquiry into Police Conduct: Final monitoring report, and recommends that the House take note of its report.

Introduction The role of the New Zealand Police is to provide services to the public, including keeping the peace, maintaining public safety, law enforcement, crime prevention, community support and reassurance, national security, participating in policing activities outside of New Zealand, and emergency management.

The Police have 12,467 employees located in 400 communities across New Zealand.

Financial and service performance In 2017/18, the Police reported total revenue of $1.686 billion, compared with $1.606 billion in 2016/17. Total expenditure was $1.687 billion ($1.603 billion in 2016/17).

The Auditor-General assessed the Police’s management control environment as “very good”. The financial information systems and controls were rated as “good”, with some recommendations for improvement.

The Auditor-General assessed the Police’s performance information and associated systems and controls as “needs improvement”. The auditor has recommended that major improvements be made to performance information and associated systems and controls at the earliest reasonable opportunity. The auditor says that the organisation continues to make progress in the development of its performance framework. However, it should continue to develop relevant measures to report the quality, timeliness, effectiveness, and cost effectiveness of its outputs. It should also continue to enhance its performance reporting.

Response to the Commission of Inquiry into Police Conduct In 2007, the Commission of Inquiry into Police Conduct criticised the historical conduct, including sexual conduct, of some police officers and their associates. The commission recommended comprehensive changes to the way the New Zealand Police worked. Progress in implementing these recommendations has been monitored by the Office of the Auditor-General (OAG) for the past 10 years.

In the fifth and final monitoring report, the Office of the Auditor-General concluded that the Police have acted on all the commission’s recommendations, and are now a “fundamentally better organisation” than they were in 2007. The report noted that in order to improve further the Police would need to focus on employing and retaining more women and people from

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2017/18 ANNUAL REVIEW OF NZ POLICE AND FINAL MONITORING REPORT ON POLICE CONDUCT minority groups, improving the consistency of service for victims of sexual assault, and reducing inappropriate behaviour by Police staff.

The Police told us they are committed to leading and driving an ethical, diverse, high- performing, and inclusive culture which puts victims at the heart of everything they do. This is reflected in their recently-refreshed organisational values which now include empathy and valuing diversity.

We asked about the appointment of Deputy Commissioner Haumaha. Comments previously made by Mr Haumaha in the Operation Austin inquiry have resulted in concerns that some of the progress made by the Police would be put at risk by his appointment.

We asked whether Commissioner Bush was aware of these comments when Mr Haumaha was promoted from assistant commissioner to deputy commissioner. At the time of our hearing, a Government inquiry into the appointment process for a Deputy Commissioner of Police was under way. The Police informed us that the concerns were being addressed through the inquiry and they would not comment on them until the inquiry report was released.

The committee had intended to invite the Commissioner back, but the events of the 15 March 2019 Christchurch terrorist attacks meant that this was no longer practical in the timeframe for the committee to report to the House.

In response to the 2007 commission of inquiry report, the Police are in the process of implementing a new performance management framework called the Police High Performance Framework. The framework aims to create a principles-based culture. We asked about the steps the Police are taking to maintain progress in improving, and how they will measure and report on police conduct.

The Police told us that this high performance framework focuses on challenges highlighted by the commission of inquiry report in three key areas:

 Adult Sexual Assault (ASA). The Police are investing in dedicated ASA investigators. Numbers currently sit at 110 investigators in 2018, with funding announced in Budget 2018 for a further 187 investigators focused on current and historic complex cases, including ASA. The Police’s executive leadership team receives regular performance reports about ASA cases.  Recruitment and retention of women and minority groups. The Police have continued to invest in initiatives designed to attract and keep staff who are representative of the community they serve. The success of these initiatives is shown in the diversity profile of Police’s workforce.1 A highlight is that more women are now in leadership roles.  Complaints management. A series of steps have been taken to boost the capability and resilience of the Police’s Professional Conduct Group. They include appointing a dedicated Professional Conduct Manager to provide coverage and support for the police college, and boosting work with the specialist database to log, track, and manage complaints. Investments have also been made in capability and resilience to support the Police’s Early Intervention Programme. The Police continue to have a strong focus on

1 New Zealand Police Annual Report 2017/18, Appendix 3.

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conduct and integrity, as part of a wider focus on living up to the Police’s values, including a continuing commitment to raise awareness and build confidence in managing risk areas like potential conflicts of interest.

Recruitment and diversity Additional police officers and support staff The 2018 Budget included funding for the recruitment of an additional 1,800 police officers and 485 support staff. We asked for an update on recruitment and were informed that, between 1 July 2017 and 31 October 2018, the number of full-time-equivalent constabulary employees has increased by 393.2 At the time of our hearing there were 320 recruits at the Royal New Zealand Police College (RNZPC), with the majority due to graduate between November 2018 and February 2019. The Police expect about 650 constabulary employees to graduate from the RNZPC between 1 July 2018 and 30 June 2019.

Of the planned 485 additional support staff, the Police have so far appointed 293. A large proportion have been allocated to operational roles in Police Service Delivery (for example, at the new Kapiti Digital and Communication Centre), the Police Prosecution Service, and police districts to help deal with family and youth harm. Several have also been used to increase capacity in the Constabulary Recruitment Team and at the RNZPC. We asked about timing, and were told that current funding will allow the Police to achieve the 1,800 new officers by June 2023. To reach this target, the final recruits will need to start at the RNZPC by February 2023.

We asked about the key challenges in recruiting 1,800 additional police officers and how the Police are responding. We were told that challenges include attracting, selecting, and training sufficient recruits; and training staff into supervision and specialist roles. The Police have increased activities like online and broadcast media campaigns, and their presence at public events, to attract more applicants for constabulary roles. They have also trialled a Year 13 course in police studies at two high schools in Rotorua during 2018. The success of these courses has meant they will be introduced in several additional schools in 2019.

As well, the Police are streamlining selection and training activities. For example, they are moving to a model at the RNZPC where a wing of up to 80 recruits starts every four weeks, and are trialling non-residential wings in Auckland. Additional investment in the RNZPC also allows more courses for existing police staff. For example, more Sergeant courses will provide front-line supervisors for new staff, and more Detective courses will enable the Police to meet increased investment in countering serious and organised crime.3

Increasing diversity The Police told us they are committed to ensuring their workforce reflects the diversity of New Zealand’s communities. They are setting ambitious recruitment targets both demographically and by gender, including a target for women to make up 50 percent of all recruits. They are specifically targeting women and ethnic minorities in their recruiting

2 New Zealand Police, Responses to post hearing question 7. 3 New Zealand Police, Responses to post hearing question 8. 4

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2017/18 ANNUAL REVIEW OF NZ POLICE AND FINAL MONITORING REPORT ON POLICE CONDUCT campaigns, which led to them graduating the most ethnically diverse recruit wing in New Zealand Police history in February 2018. In March that year they graduated a wing where women outnumbered men, and in October they saw a near even split of men and women joining the front line.

A number of important diversity and inclusiveness initiatives have been spearheaded by the Women’s Advocacy Network (WAN) groups, which exist throughout the policing districts and centres. By actively advocating the recruitment, retention, development, and promotion of women, the community of WANs supports women in the Police to be successful.

Over the last five years the number of female senior sergeants, inspectors, and senior managers has increased by 20 percent, 49 percent, and 250 percent respectively. Three women now have the rank of Assistant Commissioner. We asked about progress in recruiting women officers. We heard that it had taken considerable time to recruit the first 1,000 constabulary women, but progress had ramped up towards the end of 2007. They will have 3,000 women sworn in within 3 to 4 years, and expect this growth to continue.

Standards We asked about the Police’s recruitment standards relating to confidence in the water and the ability to swim. The Police said they had relaxed their swimming standards, ending the need for a pre-entry 50-metre swimming certificate. Their reasoning was that the pre-entry requirement disadvantaged some groups for whom swimming is not a traditional priority. The commissioner explained that water skills and physical fitness remain paramount, but the way they are assessed has evolved. We expressed concern about having no swimming standard that is maintained throughout an officer’s career. Living in a coastal nation with police officers as first responders, New Zealanders expect police officers to be able to save someone from drowning if they were the first to arrive on the scene.

Organised crime We discussed the Police’s efforts to disrupt the illegal drugs trade and combat organised crime, both in New Zealand and offshore. Between January 2017 and June 2018, its National Organised Crime Group undertook 45 operations and took action against 17 transnational organised crime groups, seizing millions of dollars in cash and assets. These targeted enforcement activities have prevented hundreds of millions of dollars in social harm. However, methamphetamine and organised crime are still serious problems, which the Police will continue to target.

Reducing Māori offending One of the Police’s values is to demonstrate a commitment to Māori and the Treaty. In 2017/18 the reoffending rate by Māori was 59 percent. The Police have set a target of reducing Māori reoffending by 25 percent by 2021. We asked about its strategies to meet this target and how Te Pai Oranga (iwi panels) contribute to a reduction in reoffending by Māori. The Police explained that the values of manaakitanga (support) and whanaungatanga (kinship), which are evident in Te Pae Oranga, play a critical part in its effectiveness. These values result in a process that is emotionally confronting and powerful, which participants report is “harder than going to court”. The process also instils a sense of accountability and

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111 calls and non-emergency number We asked about calls to the 111 emergency line, noting that the number of calls answered within 10 seconds had decreased in 2017/18. The Police informed us that they are putting more resources into this area and ensuring emergency calls are taken. They are also providing other avenues for people to contact the Police.

The Police are working on a “police connect” programme and new digital services, including online reporting, and a single non-emergency number. Their new non-emergency communications and digital centre is about to open in Kāpiti, which will increase their capacity to meet demand.

Burglary attendance We asked whether the Police are confident of meeting their operational target of attending 98 percent of burglaries within 48 hours. Police told us that they are striving for 98 percent, but it is difficult and sometimes not physically possible in some areas. An example of this is with holiday homes, where a break-in may not be discovered for some time.

Emergency services We asked about Police buildings that are not up to code for emergency preparedness, and an update about what is planned to make them safe. We learned that, following a seismic assessment of the Police property portfolio initiated in 2013, the subsequent June 2014 report showed Police did not have any buildings below the minimum threshold. Police continue to work with authorities in relation to the Building (Earthquake-prone Buildings) Amendment Act 2016, which came into force on 1 July 2017.

Road safety We asked about road safety, an issue of concern to all New Zealanders. We commended the Police on their work so far, but asked what more will be done to get serious road accident fatalities down. We were told that people driving with attention, without distraction, and driving properly and lawfully will make the biggest difference. The Commissioner believes the critical change needed is in the mind-set of New Zealanders: getting people to understand that the reason they need to drive properly is to save the lives of themselves and others.

We noted from road toll records that more deaths in recent years have been caused by drugged drivers (79) than by drunk drivers (70). We asked whether the Police are considering adopting roadside drug-testing. The Police said they are committed to reducing road deaths from any cause, including impairment from drinking and drugs. A working group has been established to examine practices in different jurisdictions regarding drug-driving testing and their success in reducing fatalities.

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Mental health incidents We asked about the time spent by police attending mental health incidents, and how this affects the resources available for other police work. We were told it was significant: there are about 23,000 mental health incidents a year, and police involvement is needed more than 10,000 times a year. The Commissioner said there is definitely a need for police involvement in mental health crises, but there are people better qualified, who they work with closely. The Police are ensuring that staff get more training in the area of mental health, and they have increased police officers’ training in dealing with such situations.

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Appendix

Committee procedure We met on 18 October and 8 November 2018, and 4 April 2019 to consider the annual review of the New Zealand Police and the Report of the Controller and Auditor-General, Response of the New Zealand Police to the Commission of Inquiry into Police Conduct: Final monitoring report. On the annual review we heard evidence from the New Zealand Police and received advice from the Office of the Auditor-General. On the Auditor-General’s report we heard evidence from the New Zealand Police and the Office of the Auditor-General.

Committee members Raymond Huo (Chairperson) Ginny Andersen Hon Maggie Barry Chris Bishop Hon Mark Mitchell Greg O’Connor Hon Dr Nick Smith Dr Duncan Webb

Office of the Auditor-General, Briefing on New Zealand Police dated 8 November 2018.

New Zealand Police, Responses to annual review questions (1–125).

New Zealand Police, Responses to annual review questions (Appendix C - Q63 - contractors and consultants).

New Zealand Police, Responses to post hearing questions (1–24).

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2017/18 Annual review of the Parliamentary Counsel Office

Report of the Justice Committee

April 2019

The Justice Committee has conducted the annual review of the Parliamentary Counsel Office for 2017/18, and has no matters to bring to the attention of the House. The committee recommends that the House take note of its report.

Raymond Huo Chairperson

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2017/18 Annual review of the Privacy Commissioner

Report of the Justice Committee

February 2019

Contents Recommendation ...... 2 Introduction ...... 2 Financial position and audit opinion ...... 2 Staff turnover ...... 2 Complainant satisfaction ...... 3 Funding ...... 3 Privacy Trust Mark ...... 4 International law and privacy ...... 4 Appendix ...... 5

Raymond Huo Chairperson

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Privacy Commissioner

Recommendation The Justice Committee has conducted the annual review of the Privacy Commissioner for 2017/18, and recommends that the House take note of its report.

Introduction The Office of the Privacy Commissioner is an independent Crown entity which supports the Privacy Commissioner. The incumbent Commissioner is John Edwards, who was appointed in February 2014 for a five year term.

The office investigates complaints about breaches of privacy, monitors the impact technology has on privacy, examines new legislation, and generally works to promote and protect individual privacy.

Financial position and audit opinion The Office of the Privacy Commissioner is funded mostly through an operating grant, which is received as an appropriation under Vote Justice.

In the 2017/18 financial year, the office’s total income was $5.262 million, 1.8 percent more than the previous year’s income of $5.169 million. The office’s total expenditure was $5.201 million, an increase of $108,000 (2.1 percent) from the previous year’s expenditure of $5.093 million. The office reported an operating surplus of $61,000, about 20 percent less than the previous year.

The office’s reported surplus mainly resulted from a decrease in staff expenses, due to a number of vacancies. Several staff left the office during the year, and the office struggled to fill the vacancies created.

The auditors graded the office’s management control environment and financial information systems and controls as “very good”. We were pleased to hear that the office updated its credit card policy to include internet purchases, as recommended by the auditors. The auditors graded the office’s performance information and associated systems and controls as “good”, with no recommendations for improvement.

Staff turnover We heard that the office has a high level of staff turnover, so it has been forced to spend more time and resources on recruitment and training staff than its public sector counterparts. The Commissioner attributes this to a number of factors, discussed below.

Remuneration We heard from the Commissioner that the office hires legally trained people who are curious, and have an interest in human rights. The office has no problem attracting new employees,

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2017/18 ANNUAL REVIEW OF THE PRIVACY COMMISSIONER but it struggles to retain them as it is unable to offer competitive remuneration packages, and has limited scope for pay increases.

Work environment The Commissioner told us that in the past the office has been “uneven in its presentation of a safe working environment”. The office has acknowledged that its staff who directly interact with complainants were not getting the support they needed to perform well in these roles. We were pleased to hear that the office has recently taken action to create a more supportive and safe working environment for its staff.

Engagement surveys We heard that the office has introduced weekly engagement surveys to have a better understanding of its staff. Previously surveys were conducted every two years. Office staff reported a higher level of engagement after the introduction of more frequent surveys.

Complainant satisfaction We were concerned about the low level of satisfaction reported by complainants in surveys conducted by the office. The office’s target for 2017/18 was to achieve 60 percent of respondents rating the complaints process as “satisfactory” or better. This target was not achieved, with only 35 percent of complainants rating the process at this level.

The Commissioner told us he believes that there is a problem with the survey process, and not with the office’s service delivery. He said that independent internal audits show the office performing much better, with 80 percent of complaint files scoring over 3.5, a minimum internal standard.

The office has reported a low rate of response to its surveys of complainants in recent years. The office said that this may be caused by the fact that some anti-virus software could block the survey emails sent to complainants after their case has been resolved. Another reason for a low response rate could be the length of time after a complainant’s case has been closed that the invitation to complete a survey is sent.

We were pleased to hear that the office is taking steps to improve its complainant surveys. They include aligning the timing of surveys more closely with the date of closure of the complaint. The office also plans to trial the use of postal surveys as well as email surveys to achieve a higher response rate.

Funding We heard from the Commissioner that if the Privacy Bill is passed, he believes the office will face challenges in implementing the legislation with the current level of funding it receives. The Commissioner told us that he plans to request extra capital funding from the Government in the next Budget.

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Privacy Trust Mark In consultation with the industry, the office developed the Privacy Trust Mark, an initiative to recognise products or services that the Commissioner considers to be outstanding in the way they manage personal information.

We heard that the office held a competition for the design of a logo for the mark, and used this as an awareness-raising exercise for the initiative, and for privacy in general. We commend the office for its efforts to encourage organisations to design products and services with New Zealanders’ privacy in mind.

International law and privacy We were pleased to hear that the Commissioner has good relationships with his international counterparts. It is encouraging that he will continue to work with them to ensure that the privacy of New Zealanders is protected in the international economy.

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Appendix

Committee procedure We met on 21 November 2018 and 21 February 2019 to consider the annual review of the Privacy Commissioner. We heard evidence from the Privacy Commissioner and his staff, and received advice from the Office of the Auditor-General.

Committee members Raymond Huo (Chairperson) Ginny Andersen Hon Maggie Barry Chris Bishop Hon Mark Mitchell Greg O’Connor Hon Dr Nick Smith Dr Duncan Webb

Chris Penk replaced Hon Maggie Barry for some of this review.

Office of the Auditor-General, Briefing on the Privacy Commissioner, dated 21 November 2018.

Privacy Commissioner, Responses to annual review questions (with appendices), received on 19 November 2018.

Privacy Commissioner, Response to post-hearing questions, received on 14 February 2019.

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Report of the Economic Development, Science and Innovation Committee

April 2019

The Economic Development, Science and Innovation Committee has conducted the annual review of the Public Trust for 2017/18, and has no matters to bring to the attention of the House. The committee recommends that the House take note of its report.

Jonathan Young Chairperson

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2017/18 Annual review of the Real Estate Agents Authority

Report of the Economic Development, Science and Innovation Committee

April 2019

The Economic Development, Science and Innovation Committee has conducted the annual review of the Real Estate Agents Authority for 2017/18, and has no matters to bring to the attention of the House. The committee recommends that the House take note of its report.

Jonathan Young Chairperson

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2017/18 Annual review of the Serious Fraud Office

Report of the Justice Committee

February 2019

Contents Recommendation ...... 2 About the Serious Fraud Office ...... 2 Financial performance over the past year ...... 2 Prosecutions undertaken by the SFO ...... 2 The role of the SFO in fighting cyber-crime ...... 3 Anti-corruption work programme ...... 4 Appendix ...... 5

Raymond Huo Chairperson

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Serious Fraud Office

Recommendation The Justice Committee has conducted the annual review of the Serious Fraud Office for 2017/18, and recommends that the House take note of its report.

About the Serious Fraud Office The Serious Fraud Office (SFO) is the lead law enforcement agency that detects, investigates, and prosecutes New Zealand’s most serious or complex financial crimes.

As of 30 June 2018, the SFO had 53 employees, led by Chief Executive and Director Julie Read and a senior leadership team of three general managers and a general counsel.

Financial performance over the past year The SFO’s total revenue for 2017/18 was $10.4 million, compared with $9.7 million the previous year. Its total expenditure for the year was $10.1 million, compared with $9.4 million the previous year. This resulted in a surplus of $325,000 for the year, roughly the same as in 2016/17.

The SFO’s management and control environment, and its financial information systems and controls, were both rated “very good” by the Auditor-General. The office’s performance information and associated systems and controls were rated “good”, with some recommendations for improvement. These ratings were the same as the previous year.

Prosecutions undertaken by the SFO Number of prosecutions initiated

We were concerned about the relatively low number of prosecutions undertaken by the SFO in recent years, averaging below 10 a year, and asked if this was a fair criticism. The SFO said that very few matters it takes on are not prosecuted. The number of prosecutions depends on the size and complexity of the cases. It assured us that, while it needs to be selective, it does not reject many matters.

Sometimes the SFO initially declines to prosecute but later, when more evidence comes forward, it pursues the matter. This happened with the Fuji Xerox case. The director said she was proud of the SFO’s ability to properly scope its investigations so that the work undertaken is focused and feasible.

Complaints not taken up by the SFO are referred to the most appropriate agency. Most often this is to the New Zealand Police, but the Financial Markets Authority, the Commerce Commission, and the Department of Internal Affairs all have some jurisdiction over financial matters. The SFO is currently working on an information-sharing agreement with the Inland Revenue Department, and has also referred cases to the Ombudsman and the Privacy Commissioner. Sometimes the SFO picks up matters begun by private investigators, but it

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2017/18 ANNUAL REVIEW OF THE SERIOUS FRAUD OFFICE does not use private investigators itself. It does not work closely with the Reserve Bank since the bank’s focus is prudential regulation, rather than business regulation. Resourcing for prosecutions

We asked whether the small number of prosecutions was due to a lack of resources. The SFO said it does not dismiss investigations where staff believe there is a reasonable prospect of a successful prosecution. However, it acknowledged that sometimes delays occur due to the urgency or size of other cases.

We noted that the number of complaints has increased by 20 percent to more than 1,000 a year. Given this trend, we asked whether the office has enough resources to give all complaints the proper attention. The SFO said that many of the complaints do not relate to its mandate of investigating serious or complex fraud. A large number are referred to other agencies as they do not meet the threshold, or do not involve fraud at all. Threshold for SFO involvement in cases

We were interested in the current threshold for SFO involvement, given its mandate and resourcing levels. The director told us that when corruption is involved—especially in relation to public money—there is almost no threshold. It issues warnings even for $1,000.

With fraud, the threshold is around $1–2 million, although that can change as a prosecution moves forward.

The role of the SFO in fighting cyber-crime The SFO noted that most powers to fight cyber-crime lie with the New Zealand Police. We asked whether the SFO believes it has the necessary legislative powers to fight ever- evolving cyber-crime. It said this subject is under active consideration, both within the SFO and internationally. Some of the challenging legal complexities relate to issues such as storage of information in the cloud and accessing such information while respecting national sovereignty. International cooperation and the IACCC

We asked whether international cooperation could be strengthened. The SFO believes there could be more cooperation over prosecutions, but a lot of international legal barriers prevent it from doing so unilaterally.

With investigations, we heard that there is quite a lot of cooperation amongst agencies. This is highlighted by the International Anti-Corruption Coordination Centre (IACCC), where Interpol and countries including the United States, the United Kingdom, Singapore, Australia, and Canada exchange information about alleged financial wrongdoing.

The SFO has a part-time employee currently working at the IACCC in London. We were interested to learn what value that assignment brings to New Zealand.

When countries with few resources are the victims of “grand corruption” (that is, very significant amounts of a country’s money being stolen) the IACCC coordinates in assisting the regional investigation. A common type of case could involve an African country, and New

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Zealand lends assistance and any relevant information it has. The SFO said it learns a lot from being part of this process. Victims of international cyber-crime

We raised concerns about whether enough is being done to help the victims of cyber- criminal groups and schemes overseas. The SFO believes there is good international cooperation, noting as an example its participation in an international association of prosecutors. However, it said that even with the Police having jurisdiction to investigate cyber-crime, it is “extraordinarily difficult” to catch people perpetrating this sort of crime.

Anti-corruption work programme The SFO said that historically it has been “the ambulance at the bottom of the cliff”, taking action only after harm has occurred, and when it is difficult to recover any money. It hopes to focus more on prevention, in line with international best practice.

To that end, earlier this year the SFO began working with the Ministry of Justice on a new anti-corruption work programme aimed at fighting financial crime in New Zealand by creating a system-wide, strategic partnership approach. It is also a member of an international public sector fraud forum, run through the Cabinet Office in the United Kingdom.

Preventing fraud and corruption could save substantial amounts for spending on public programmes. We were told that losses internationally are conservatively estimated at between 0.2 and 0.4 percent of government money.

The SFO noted that New Zealand maintains a good reputation, but even so, fraud and corruption happen here, and are not just a third world issue. Some of the issues New Zealand faces include conflicts of interest, patronage, cronyism, and nepotism, as well as issues involving procurement, overpayment to suppliers, and fraudulent claims for benefits and applications for public grants.

We look forward to progress updates from the SFO about its new anti-corruption programme.

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Appendix

Committee procedure We met on 21 November 2018 and 21 February 2019 to consider the annual review of the Serious Fraud Office. We heard evidence from the Serious Fraud Office and received advice from the Office of the Auditor-General.

Committee members Raymond Huo (Chairperson) Ginny Anderson Hon Maggie Barry Chris Bishop Mark Mitchell Greg O’Connor Hon Dr Nick Smith Dr Duncan Webb

Office of the Auditor-General, Briefing on the Serious Fraud Office, dated 21 November 2018.

Serious Fraud Office, Responses to written questions, received November 2018.

Serious Fraud Office, Responses to post-hearing questions, received on 21 December 2018.

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2017/18 Annual review of the Arts Council of New Zealand Toi Aotearoa (known as Creative New Zealand)

Report of the Social Services and Community Committee

March 2019

Contents Recommendation ...... 2 Creative New Zealand’s purpose ...... 2 Financial position considerably stronger than budgeted ...... 2 Auditor-General gives positive overall assessment ...... 3 A new investment approach ...... 3 Customer satisfaction falls slightly...... 3 New operating model ...... 4 Teens and boys have lower engagement with the arts ...... 4 Plans for Māori and Pasifika...... 4 Reliance on the Lottery Grants Board ...... 5 Increased participation in the arts...... 5 More artworks created than anticipated ...... 6 Appendix ...... 7

Gareth Hughes Chairperson

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Arts Council of New Zealand Toi Aotearoa (known as Creative New Zealand)

Recommendation The Social Services and Community Committee has conducted the annual review of the Arts Council of New Zealand Toi Aotearoa (known as Creative New Zealand) for 2017/18, and recommends that the House take note of its report.

Creative New Zealand’s purpose The Arts Council of New Zealand Toi Aotearoa (Creative New Zealand) aims to promote and support the arts in New Zealand. It funds arts activity by artists, arts practitioners, and arts organisations within New Zealand and internationally.

Its main commitments are:

 developing high-quality New Zealand art  helping the New Zealand arts sector gain international success  encouraging participation in the arts in New Zealand  making sure New Zealanders experience high-quality art. Creative New Zealand’s governing body is the Arts Council, and it has 52.8 full-time staff. The chair is Michael Moynahan and Stephen Wainwright is the chief executive.

Financial position considerably stronger than budgeted Creative New Zealand received $58.1 million in revenue in 2017/18, more than the $50.3 million it had budgeted for. This compared to revenue of $57.4 million in 2016/17.

Its revenue comprised $15.7 million in Crown funding, the same amount as the previous year, and $41.3 million in New Zealand Lottery Grants Board funding, compared to $40.5 million in the previous year. It also received $1.1 million in interest and other revenue, compared to the previous year’s $1.2 million.

Creative New Zealand spent $50.2 million, compared to the previous year’s $47.5 million. The bulk was either invested in the arts, or spent on developing or advocating for the arts. Its operating costs represented $7.7 million of the total expenditure. It forecasts that operating costs will increase to $9.1 million by 2020.

Creative New Zealand ended 2017/18 with a surplus of $7.9 million, which differed by $8.4 million from the deficit of $519,000 it had budgeted for the year. A surplus of $9.9 million had been reported in 2016/17.

The Auditor-General explained that the difference between the budgeted deficit and the eventual surplus was due to changes in New Zealand Lottery Grants Board (NZLGB) funding. He noted that the variability in this funding creates challenges for budgeting and 2

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2017/18 ANNUAL REVIEW OF CREATIVE NEW ZEALAND funding within the arts sector. Revenue from the NZLGB was $41.3 million for the year compared to budgeted revenue from that source of $33.8 million. We discuss this matter in more detail later in our report.

Auditor-General gives positive overall assessment The Auditor-General graded Creative New Zealand’s management control environment and its financial information systems and controls as “very good”.

Its performance information and associated systems and controls were rated “good”.

No improvements were recommended this year, but the Auditor-General said Creative New Zealand could make its strategies clearer in its accountability documents (annual reports and statements of intent).

We were pleased with this assessment and think the organisation is looking tidy.

A new investment approach Creative New Zealand’s strategy for investing in the arts, named “The Investment Strategy: Te Ara Whakamua”, was initiated in April 2018. It has a five-year timeline and responds to New Zealand’s changing demographics and diverse population, while recognising the role of Māori.

The organisation outlined seven main principles to guide investment decisions. A proposal for funding should:

 have a clear and relevant value proposition  deliver long-term cultural, economic, and social value  recognise the role of Māori as tangata whenua (people of the land) and advance ngā toi Māori (Māori arts)  recognise and advance Pacific people in the arts in New Zealand  reflect the demographics of New Zealand  maintain and develop important arts infrastructure with support from local and central government, and the private sector  grow investment through partnerships and co-investment with arts and community funders nationally and internationally. We will monitor the effectiveness of the strategy with interest.

Customer satisfaction falls slightly Based on a survey of 140 customers, satisfaction with Creative New Zealand’s overall services fell from 67.9 percent in 2016/17 to 64.2 percent in 2017/18. This result is lower than its goal of 70 percent customer satisfaction.

Creative New Zealand told us the decrease was only a small percentage and unsurprising during a time of change. We are satisfied with this response, but hope to see an increase in future.

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The survey showed clear areas for improvement, and Creative New Zealand said it is working them into its operating model. The chairperson told us he expects to see a different result this year.

New operating model Creative New Zealand has rolled out a new operating model over the past year to better advise and support artists and arts organisations. An arts development services group has been created as part of this move. It has teams specialising in each area of funding, assessment, capability-building, international development, and multi-year investment.

It also established a team of arts practice directors with expertise in different art forms. This is to provide advice to individuals and organisations in the arts on how they can enrich their practice.

Creative New Zealand’s annual report says work will continue on the new model. A cohesive learning and development framework will be developed in 2018/19.

Teens and boys have lower engagement with the arts Young people have a strong interest in the arts, yet we note a lower participation rate among boys and young teenagers.

When questioned, the chairperson said he was not sure why this is the case. He said trial work is happening in the youth space and that Creative New Zealand needs to consult with young people as much as it can.

We are pleased to see that Creative New Zealand has launched a five-year, $5 million initiative to support young people in the arts. It will include:

 a fund to increase activity for young people from under-served communities  a series of partnership programmes with other agencies interested in using the arts to improve the wellbeing of young people  an arts strategy for young New Zealanders that will be developed in partnership with other government agencies. Creative New Zealand also established a youth arts role with responsibility for maintaining an overview of arts activity for young New Zealanders. The person in the role will also support policy development, programme development, investment decisions, and advocacy.

Plans for Māori and Pasifika Ngā Toi Māori Creative New Zealand launched its “by Māori for Aotearoa” strategy in 2018. It aims to recognise the role of Māori as tangata whenua in the arts (as its investment strategy mentions, above). It will also explore where Creative New Zealand can use its resources to make the biggest difference.

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The organisation held a roadshow in 2018 involving 24 regional hui across the country. The purpose was to better understand how the landscape for regional Māori arts affects social, cultural, economic, and environmental wellbeing for Māori.

Pacific arts Creative New Zealand’s Pacific Arts Strategy 2018–2023 outlines how it will prioritise investment in Pacific arts over the next four years. The strategy is based on four pou (pillars):

 Tangata: the people and heart of the strategy.  Vaka: the vessel for Creative New Zealand’s journey.  Va: the space between tangible and intangible spaces (to be filled with artists, communities and partners).  Moana: the ocean homeland of Pasifika and the digital moana of new technology. We support these strategies and look forward to seeing their development.

Reliance on the Lottery Grants Board Some of us were concerned about Creative New Zealand’s reliance on the New Zealand Lottery Grants Board.

The NZLGB gives 15 percent of its available funding to Creative New Zealand. It provided $41.3 million in 2017/18. The Auditor-General said this model creates a degree of risk and unpredictability in revenue and affects medium- to long-term investment decisions.

The Auditor-General said Creative New Zealand manages the risk well, however, and that it is satisfied with how it is addressing it. A new equity policy and a policy on operating costs were approved during 2017/18, providing the sector with funding certainty and helping manage any risk with NZLGB funding.

We asked whether Creative New Zealand knew which demographics were purchasing lottery tickets and whether it funnels money back to these demographics. Its chairperson said it does not, as its legislation says it will support the arts for all New Zealanders.1 He said its funding reflects this idea, but also focuses on how it can grow Māori and Pasifika in the arts.

Increased participation in the arts Every three years Creative New Zealand commissions a survey on the arts sector. We were pleased to note that participation in the arts has increased to 52 percent compared with 36 percent in 2011.

1 Under section 7 of the Arts Council of New Zealand Toi Aotearoa Act 2014, the principal functions of the Arts Council are to encourage, promote, and support the arts in New Zealand for the benefit of all New Zealanders.

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The most recent survey showed 80 percent of New Zealanders attended an arts event or participated in the arts during the year before the survey. This percentage has remained relatively stable (between 75–80 percent) since 2005.

More artworks created than anticipated In 2017/18 1,507 artworks were created using grants and special opportunities funding. This is significantly higher than the 319 new works in 2016/17, and better than Creative New Zealand’s target of 360.

Its annual report states that results from previous years were understated as one grant can contribute to the development of several pieces of new work. Creative New Zealand said it has improved how it captures its data across all the organisation’s programmes.

Creative New Zealand funded 1,318 international arts activities and events. It also supported 161 artists and arts organisations to present internationally in 17 countries.

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Appendix

Committee procedure We met on 13 February and 13 March 2019 to consider the annual review of the Arts Council of New Zealand Toi Aotearoa (known as Creative New Zealand). We heard evidence from Creative New Zealand and received advice from the Office of the Auditor- General.

Committee members Gareth Hughes (Chairperson) Darroch Ball Anahila Kanongata’a-Suisuiki Agnes Loheni Hon Alfred Ngaro Greg O’Connor Maureen Pugh Priyanca Radhakrishnan Hon Louise Upston

Arts Council of New Zealand Toi Aotearoa, Responses to written questions 1 to 124.

Arts Council of New Zealand Toi Aotearoa, Responses to post-hearing questions 125 to 133.

Office of the Auditor-General, Briefing on the Arts Council of New Zealand Toi Aotearoa (Creative New Zealand), dated 13 February 2019.

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580

2017/18 Annual review of the Broadcasting Commission

Report of the Economic Development, Science and Innovation Committee

April 2019

Contents Recommendation ...... 2 Overview of the Broadcasting Commission ...... 2 Financial performance and audit results ...... 2 Diversity of output ...... 2 Engagement with the ministerial advisory group ...... 3 Single point of access for NZOA content ...... 4 Financial scrutiny ...... 4 NZOA and the news media ...... 5 Appendix ...... 6

Jonathan Young Chairperson

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2017/18 ANNUAL REVIEW OF THE BROADCASTING COMMISSION

Broadcasting Commission

Recommendation The Economic Development, Science and Innovation Committee has conducted the annual review of the Broadcasting Commission for 2017/18, and recommends that the House take note of its report.

Overview of the Broadcasting Commission The Broadcasting Commission, known better as New Zealand On Air (NZOA), is an autonomous Crown entity which is responsible for funding the production of local media content. It distributes public funds to private content producers who produce content for broadcast on multiple platforms (such as radio, television, or online), in order to reflect New Zealand through high quality and diverse content.

Its chief executive is Jane Wrightson and the board chair is Dr Ruth Harley.

Financial performance and audit results NZOA received revenue of $134.8 million in 2017/18, of which 98 percent was Crown funding. Expenditure was $135.7 million, of which 2.6 percent was operational, with the rest going into content funding. This resulted in an overall deficit of $934,000, which compares with a $1.1 million surplus in 2016/17.

Auditor-General’s comments The Auditor-General rated NZOA’s management control environment, financial information systems and controls, and performance information and associated systems and controls as “very good”. This is the same grade that NZOA achieved last year. The auditor made no recommendations for improvement. We commend NZOA for this excellent result with only a small staff of 20.

Diversity of output Part of NZOA’s purpose is the promotion of Māori culture and language, and the provision of broadcast content for ethnic minorities. We asked NZOA what figures it has about diversity in its audience and content producers, and how it ensures it reflects New Zealand communities. NZOA could not provide us with detailed figures on how different communities are reflected in all of its content. It measures who is creating the content, and who content is created for, but not how often diverse audiences are reflected generally.

Reflecting the Asian community NZOA told us that although it tracks and lists content specifically for Māori and Pasifika audiences in its annual report, it does not yet do the same for Asian audiences. We expressed concern that Asian New Zealanders are underrepresented in NZOA content and measures. 2

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NZOA accepted that it can do better for Asian New Zealanders, but said it has made progress. We heard about specific funding for Asian and Pasifika drama projects as part of NZOA’s Sunday Theatre programme, and four projects that NZOA is currently producing to allow Asian producers to tell their own stories.

Supporting Māori content We also asked NZOA how it is supporting regional content from a specifically Māori perspective. It told us that it is facing difficulty producing enough regional content of any type, and is not focusing on specifically Māori focused regional content. NZOA believes that this is the responsibility of Te Māngai Pāho (TMP), as the funding agency specifically for Māori content.

Work with Te Māngai Pāho NZOA reports that while it does not work much with TMP on regional content specifically, in general there is a close relationship. NZOA is part of a group called Te Pai Tawhiti with TMP and leading Māori media professionals, and maintains a good working relationship with TMP. We heard that the two agencies work collaboratively on content that meets both their goals where possible.

NZOA assured us that it sees Māori as treaty partners, and that this relationship with Māori is reflected in the structure of the wider broadcast funding sector. TMP is a separate organisation focused on Māori language and culture, while NZOA funds both general and Māori focused content. Both organisations work together in good faith.

We asked whether NZOA is concerned that TMP might be going outside its mandate in producing more mainstream content, and possibly directing money away from Māori focused productions. NZOA had no view on TMP’s decision-making process, but commended it for the quality of content it had produced for wider audiences.

Provision for the hearing- and vision-impaired We also asked what progress NZOA is making with captioning and audio description, to increase accessibility to its content. NZOA noted that it has had very limited funding increases for several years, and has been unable to do as much work in this area as it would like. Its limited funds are mainly used for captioning, which is the accessibility improvement for which there is most demand. Its broadcast television captioning programme is complete, and it is now starting to caption OnDemand online content.

Engagement with the ministerial advisory group NZOA reported that it has had significant dealings with the new ministerial advisory group on the public media. We asked what benefit NZOA has had from this engagement, and whether it believes the group is necessary. NZOA responded that it has enjoyed working with the group, which has encouraged it to think in new ways. It also said that the future of the public media is not clear, so it is hard to tell whether the group will be necessary or not.

Possible public media funding commission We heard that NZOA believes it, along with TMP, should be kept distinct from any future public media funding commission. NZOA noted that it and TMP were previously a single

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2017/18 ANNUAL REVIEW OF THE BROADCASTING COMMISSION body, and it believes Māori are better served by a distinct funding agency. It thinks it unlikely that the two agencies will be joined again, and believes that NZOA is already working effectively in its current incarnation.

Single point of access for NZOA content We asked NZOA whether there is a single point of access or “one-stop shop” where all NZOA-funded content can be accessed. NZOA’s New Zealand On Screen website provides access to some of the older NZOA content, and promotional material for new content. HeiHei, the new online platform for children’s content, also collates a large amount of NZOA content in one place. However, NZOA’s general position is that its content should go to where audiences are, rather than expecting audiences to come to the content where NZOA hosts it.

Instead, NZOA is focusing on working with producers and broadcasters to keep content online for longer. It noted that almost all on-demand viewing happens in the first four weeks after broadcast, so this provides most viewers with access to most content when they most want it.

We also heard that NZOA is expanding the New Zealand On Screen platform to host older content that is no longer available elsewhere. Whole series and documentaries from as early as the 1960s are available there, and NZOA has projects dedicated to increasing the amount of older New Zealand content available.

Financial scrutiny We noted that NZOA has reduced its reserves this year, and plans to reduce them further in the future. NZOA is clear that this will not adversely affect its future performance or solvency. It wants to ensure that as much of its capital as possible is spent on content, without holding any more in reserve than necessary.

NZOA has also frozen applications for smaller radio stations to access funding. We asked about this, and heard that there are no plans to reopen applications in future. Funding issues and reprioritisation have meant that some older platforms are no longer supported in the same way they once were.

Value for money We asked whether the new joint media innovation fund administered by Radio New Zealand (RNZ) and NZOA is providing value for taxpayers. NZOA noted that the fund is new, and most content has yet to be commissioned, so there will be much more content coming out of the fund. We also heard that NZOA and RNZ are both benefitting from working more closely together and sharing their specialist knowledge.

Members also asked about specific programmes, and whether some of the content funded by NZOA is appropriate for public funding. NZOA was clear that its role is only to provide funds, not to comment on the way platforms promote their content, nor to censor what is broadcast.

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NZOA and the news media Members noted their concerns about the fragmentation of New Zealand’s news media sector. This fragmentation may reduce the public’s ability to scrutinise decision makers and effectively perform their function as informed members of a democracy. We asked whether NZOA thinks it has a role in protecting news and democracy.

NZOA accepts it may have a role, but exactly what that role is will be determined by funding and Government policy. It is not in a position to lead on this issue, and is only able to react to changes in the sector. NZOA reiterated its dedication to in-depth and accurate news and factual content, and the importance of effective journalism for democracy.

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Appendix

Committee procedure We met on 21 February and 4 April 2019 to consider the annual review of the Broadcasting Commission. We heard evidence from the Broadcasting Commission and received advice from the Office of the Auditor-General.

Committee members Jonathan Young (Chairperson) Tamati Coffey Andrew Falloon Hon Paul Goldsmith Gareth Hughes Melissa Lee Jo Luxton Clayton Mitchell Poto Williams Lawrence Yule

Office of the Auditor-General, Briefing on the Broadcasting Commission, dated February 2019.

Broadcasting Commission, responses to written questions 1–121.

Broadcasting Commission, responses to additional written questions 122–136.

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2017/18 Annual review of the Broadcasting Standards Authority

Report of the Economic Development, Science and Innovation Committee

April 2019

The Economic Development, Science and Innovation Committee has conducted the annual review of the Broadcasting Standards Authority for 2017/18, and has no matters to bring to the attention of the House. The committee recommends that the House take note of its report.

Jonathan Young Chairperson

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588

2017/18 Annual review of Sport and Recreation New Zealand, and Drug Free Sport New Zealand

Report of the Social Services and Community

Committee

April 2019

Contents Recommendation ...... 2 About Sport and Recreation New Zealand ...... 2 Financial performance ...... 2 About Drug Free Sport New Zealand ...... 3 Financial performance ...... 3 Advocacy for sportspeople and national sports organisations ...... 3 Assessing the demographic of sporting participants ...... 5 Achieving gender equity in Sport NZ ...... 5 Cultural capability programme ...... 5 Use of prohibited drugs and supplements ...... 5 Appendix ...... 7

Gareth Hughes Chairperson

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2017/18 ANNUAL REVIEWS OF SPORT NZ AND DRUG FREE SPORT NZ

Sport and Recreation New Zealand, and Drug Free Sport New Zealand

Recommendation The Social Services and Community Committee has conducted the annual reviews for 2017/18 of Sport and Recreation New Zealand, and Drug Free Sport New Zealand, and recommends that the House take note of its report.

About Sport and Recreation New Zealand Sport and Recreation New Zealand (Sport NZ) is a Crown agent under the Crown Entities Act 2004. Its role is to promote, encourage, and support physical recreation and sport in New Zealand.

Sport NZ is responsible for setting the direction of, and providing investment and resources to, its partners who deliver sport in their communities. This includes national sports organisations, regional sports trusts, and local councils. A subsidiary of Sport NZ, High Performance Sport New Zealand, is responsible for managing the country’s high performance programme. Together, the two agencies form the Sport NZ Group.

Sport NZ is accountable to the Government through the Minister for Sport and Recreation. The Ministry for Culture and Heritage monitors the performance of the Sport NZ Group, as agent for the Minister for Sport and Recreation.

Bill Moran chairs the board of directors, which has eight members. The chief executive is Peter Miskimmin who leads the senior leadership team.

Financial performance In 2017/18, total revenue for Sport NZ was $147.74 million, a slight decrease from the previous year. Total expenditure in 2017/18 was $138.59 million, about 2 percent higher than the previous year.

Sport NZ realised a surplus of $9.15 million in 2017/18. The main reason for the surplus was an additional unbudgeted $10 million in revenue from the New Zealand Lottery Grants Board.

Audit results and performance against targets The Auditor-General rated Sport NZ’s financial information systems and controls as “very good”. Its management control environment and performance information and associated systems and controls were rated “good”. The Auditor-General made a number of recommendations for better controls on sensitive expenditure. It also made recommendations for developing better and more robust performance measures.

We hope to see Sport NZ act on the auditor’s recommendations for improvements.

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About Drug Free Sport New Zealand Drug Free Sport New Zealand (DFSNZ) is an independent Crown entity established under the New Zealand Sports and Drug Agency Act 1994. DFSNZ is responsible for implementing and applying the World Anti-Doping Code in New Zealand and encouraging and educating athletes to reject cheating through using prohibited drugs. It conducts a drug testing programme, investigates reports of doping, and provides resources and education to better inform New Zealand athletes about the consequences of doping.

DFSNZ employs 13 full- and part-time staff, and uses independent contractors to collect drug samples and deliver education programmes. The chief executive is Nick Paterson, and the board chair is Hon J Warwick Gendall.

Financial performance DFSNZ’s total revenue in 2017/18 was $3.55 million and total expenditure was $3.75 million. Both were slightly more than in 2016/17.

DFSNZ reported a deficit of $205,602. In the annual report, DFSNZ explains that this deficit was due to unforeseen costs. The costs related to an appeal to the Court of Arbitration in Sport about a matter concerning a single athlete, and the pursuit of the Clenbuterol NZ cases.

We note that, in the 2015/16 annual review hearing for DFSNZ, it assured the Government Administration Committee that it expected future budgets to be cashflow positive. We also note that, in 2016/17, DFSNZ had a deficit of $247,577. However, the Auditor-General is satisfied that this matter is adequately addressed in DFSNZ’s revised budgets, which anticipate a break-even position for 2018/19. We look forward to this.

Audit results and performance against targets The Auditor-General rated DFSNZ’s financial information systems and controls and performance information and associated systems as “good”, and its management control environment as “very good”. These are the same ratings as in the previous audit. The Auditor-General made a couple of recommendations for improvement:

 DFSNZ should further restrict users’ ability to make changes in the financial information system, to reduce the risk of inappropriate or unauthorised system changes.  DFSNZ should work with sports people and sports bodies to improve their engagement with the survey process. We hope to see DFSNZ act on the auditor’s recommendations for improvements.

Advocacy for sportspeople and national sports organisations A key part of Sport NZ’s role is to advocate for athletes and the national sports organisations. This entails ensuring that athletes’ wellbeing is looked after and that appropriate funding is provided for sports.

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Ensuring athletes’ welfare and integrity in management In the last year there have been several allegations of inappropriate behaviour in some of New Zealand’s national sporting organisations (NSOs). They include accusations of bullying, inappropriate personal relationships, a drinking culture, lack of accountability, and lack of follow-up when a complaint was made.

These allegations led to a number of reviews into sporting culture, including the Heron Report on Cycling New Zealand’s high performance programme, the Dew Review on the culture in the Black Sticks Women’s hockey team, and the Cottrell report on elite sports culture. We asked Sport NZ whether it was planning to implement any of the reports’ recommendations, how it could better support the welfare and rights of athletes, and how it could direct its funding to better support the welfare of athletes.

Sport NZ told us that it is working to clarify the responsibilities of the various governing bodies in sport, including the roles of the chief executives and boards. By confirming these areas of responsibility, Sport NZ said that there would be no confusion as to who was responsible for issues of athletes’ welfare. It would also clarify how those responsibilities intersected with High Performance Sport New Zealand, and give athletes confidence in complaint and reporting procedures.

Sport NZ said it is working to change these “no longer acceptable” behaviours and attitudes that were often part of the sports culture. It is also committed to ensuring that staff welfare is protected, along with athletes’ welfare.

Sport NZ is implementing both short-term and long-term changes. In the short term, it is supporting the work of the current reviews. Its long-term strategy focuses on co-designing strategies to support athletes’ welfare in the sporting sector.

We heard that Sport NZ is reviewing where it invests its funding, in order to help the NSOs respond to the reports’ recommendations. We also heard that Sport NZ is considering providing shared human resources support to assist the NSOs. We are concerned about the issues raised about sporting culture. We want to be kept updated on the implementation of recommendations from the reviews.

National sporting organisations’ funding In August 2018, a review of the New Zealand racing industry was completed by John Messara. The Messara report was commissioned by the Minister for Racing to look into the New Zealand racing industry.1 The Minister has since established a Racing Ministerial Advisory Committee to oversee future development of the sport. Sport NZ told us that it has appeared before this advisory committee to give a submission.

Some NSOs are concerned that they could lose access to some of their funding as a result of this review. We heard that Sport NZ wants to protect the funding that currently goes into sport and has been advocating for that. Between 10 and 12 NSOs are major recipients of this funding and could be affected by this review. Sport NZ said that it “championed the growth of sports betting and that sport should actually take a dividend from that”. Overall, we heard that it was still too early to tell if the review would negatively or positively affect

1 The report can be found here. 4

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2017/18 ANNUAL REVIEWS OF SPORT NZ AND DRUG FREE SPORT NZ funding. National members are concerned about the potential uncertainty created for NSOs. National members believe there should be no net loss to any NSOs as a result of this review.

Assessing the demographic of sporting participants We asked whether Sport NZ assesses the socio-economic status of people who participate in high-performance and everyday sport, and whether that affects where it invests funding.

For high-performance sport, Sport NZ said that it is interested in the pipeline of where talent comes from, but does not analyse the socio-economic demographics of its participants. However, to ensure that all New Zealanders have the ability to be active in everyday sport, it is working to determine whether any particular demographics face barriers to participation. It has found that low socio-economic status, gender, and ethnicity can all be barriers to participation.

We were pleased to hear that NSOs are looking at how they can ensure that their sporting environments attract as many people as possible from the whole community and that Sport NZ is supporting them in this.

Achieving gender equity in Sport NZ We are concerned that, among Sport NZ’s employees, the proportion of women to men is very low in the highest pay brackets. For example, 33 women compared to 78 men earn over $100,000, and in the highest two salary bands there are 3 women and 20 men. Sport NZ has an overall gender pay gap of 21.8 percent, which further highlights gender inequity.

The chief executive told us that Sport NZ had started by addressing this issue at a governance level. This has resulted in gender parity across its board and the senior leadership team. Sport NZ is also working on other initiatives including women’s leadership programmes, blind CVs, unconscious bias training, and developing its people. It hopes that in a couple of years these statistics will change.

We look forward to seeing progress in this area.

Cultural capability programme We asked Sport NZ how it applies the principles of the Treaty of Waitangi in its leadership team. Sport NZ told us that it is running a cultural capability programme across the entire organisation. The programme aims to lift knowledge and confidence in the principles of the Treaty and the use of te reo Māori.

Use of prohibited drugs and supplements DFSNZ exists to protect clean athletes. It does this by promoting clean sport through education and prosecuting breaches of the anti-doping code.

Impact on sport and DFSNZ if cannabis is legalised The World Anti-Doping Agency (WADA) currently has cannabis on the list of prohibited drugs, which New Zealand is bound to. This means that, even if cannabis were to become

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2017/18 ANNUAL REVIEWS OF SPORT NZ AND DRUG FREE SPORT NZ decriminalised or legalised in New Zealand, it would still be a prohibited drug for sportspeople. DFSNZ told us it had previously recommended to WADA that it remove cannabis from the prohibited list, without success. Its approach was based on its belief that, although cannabis can have an effect on sporting performance, it does not enhance performance.

National members were concerned about whether the potential legalisation or decriminalisation of cannabis would mean that DFSNZ would require more funding to test and educate sportspeople. DFSNZ said that it educated about 8,500 people in the 2017/18 year about prohibited drugs. It would not expect to need additional funding to expand its education programmes, but would simply update its messaging about cannabis.

National members believe that DFSNZ needs to do a lot more work as we move closer to the referendum on the potential impacts that legalisation or decriminalisation of cannabis could have on sport.

Use of prohibited supplements We are concerned about the widespread availability of supplements, such as at supermarkets. DFSNZ said that over the last 5 to 10 years, supplement use has become a major issue. We heard that about 95 percent of young people perceive that other youth are using supplements and therefore they must too.

DFSNZ does not support the use of supplements at all, which is the official position of WADA. However, it is aware that some sports support personnel encourage the use of supplements for athletes.

DFSNZ is developing an online database to help athletes assess whether a medication is prohibited or not. We will follow this project with interest.

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Appendix

Committee procedure We met on 6 March and 3 April 2019 to consider the annual reviews of Sport and Recreation New Zealand and Drug Free Sport New Zealand. We heard evidence from the two organisations, and received advice from the Office of the Auditor-General.

Committee members Gareth Hughes (Chairperson) Darroch Ball Anahila Kanongata’a-Suisuiki Agnes Loheni Hon Alfred Ngaro Greg O’Connor Maureen Pugh Priyanca Radhakrishnan Hon Louise Upston

Office of the Auditor-General, Briefing on Sport and Recreation New Zealand and Drug Free Sport New Zealand, dated 6 March 2019.

Drug Free Sport New Zealand, Responses to written questions 1 to 116.

Drug Free Sport New Zealand, Responses to post-hearing questions 117 to 130.

Sport and Recreation New Zealand, Responses to written questions 1 to 116.

Sport and Recreation New Zealand, Responses to post-hearing questions 117 to 124.

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Report of the Social Services and Community Committee

March 2019

Contents Recommendation ...... 2 About Heritage New Zealand ...... 2 Financial overview and audit results ...... 2 Heritage NZ: a year in review ...... 3 Funding capital works ...... 3 Developing alternative revenue streams ...... 3 Development of the Ihumātao Stonefields site ...... 4 Acknowledging the 250th anniversary of Cook’s landing ...... 4 Identifying places of significance ...... 4 Seismic strengthening of Turnbull House ...... 5 Building partnerships in education ...... 5 Appendix ...... 6

Gareth Hughes Chairperson

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Heritage New Zealand

Recommendation The Social Services and Community Committee has conducted the annual review of Heritage New Zealand for 2017/18, and recommends that the House take note of its report.

About Heritage New Zealand Heritage New Zealand works to ensure that present and future generations of New Zealanders appreciate their sense of place, identity, and nationhood. It achieves this goal by working toward three outcomes:

 Knowledge (Mātauranga): places that contribute to New Zealand’s culture and heritage are recognised and their stories recorded.  Conservation (Pena Pena Taonga): places that are significant to New Zealand’s culture and heritage are conserved.  Engagement (Hononga): New Zealanders engage with those places that contribute to New Zealand’s culture and heritage. Heritage NZ is governed by a board of eight members appointed by the Minister for Arts, Culture and Heritage. Heritage NZ has a Māori Heritage Council, which assists it in developing and reflecting a bicultural view of its powers and functions.

The chair of Heritage NZ is the Rt Hon Wyatt Creech. Sir John Clarke is the chair of the Māori Heritage Council. The chief executive is Andrew Coleman. As at 30 June 2018, Heritage New Zealand employed 117 full-time-equivalent staff.

Financial overview and audit results Heritage NZ’s total revenue in 2017/18 was $20.31 million, a 20.3 percent increase from 2016/17. Total operating expenditure in 2017/18 was $17.79 million, 13.7 percent more than in 2016/17. After accounting for loss on the transfer and revaluation of property, plant, and equipment, Heritage NZ realised a surplus of $548,000.

Audit results and performance against targets For its management control environment and financial information systems and controls, Heritage NZ received a rating of “very good” from the Auditor-General, who made no recommendations for improvement to these areas.

Heritage NZ received a rating of “good” for its performance information and associated systems and controls. The Auditor-General recommended that it improve its document management processes and the documentation relating to its partnerships and work programmes.

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Heritage NZ: a year in review In its opening statements, Heritage NZ outlined some of this year’s key achievements. It has recently restored several heritage sites, including the Melanesian Mission in Mission Bay, Auckland, which had been operating as restaurant. It has also rebuilt the Timeball Tower in Lyttleton, which was destroyed by the 2011 Christchurch earthquake.

We heard that several heritage buildings were transferred from the care of the Department of Conservation to Heritage NZ. These include the Old Government Buildings and Turnbull House in Wellington. Heritage NZ has begun work to strengthen, repair, and preserve these buildings.

In 2017 Heritage NZ released “Tapuwae”, a document that articulates its vision for Māori heritage in New Zealand. As well as progressing the core work of Tapuwae, Heritage NZ has been focussing on three specific programmes to preserve Māori heritage:

 It is capitalising on the development of Rangiriri Pā, the site of a significant battle in 1863 during the New Zealand Land Wars. Heritage NZ reported that it had worked with the NZ Transport Agency and iwi to develop the site, and had been given the Te Puni Kōkiri Award for Excellence in Crown–Māori relationships, as well as an Outstanding Award from the International Landscaping Architects World Congress.  It is installing fire protection into marae buildings throughout New Zealand.  It is contributing to education about heritage through work with the Ministry of Education and other departments.

Funding capital works The Auditor-General reported that Heritage NZ’s financial planning assumption is that major capital works will be funded from grants and donations. If maintenance cannot be met from baseline funding and grants or donations, properties may be left to deteriorate or be divested.

Heritage NZ said that it works hard to avoid properties being left to deteriorate or be divested and encourages people to conserve buildings of value. It has introduced a new category of protection, “National Landmark” status, which will mean properties qualify for more protection. Currently, five buildings are going through the process of being approved for National Landmark status, including the historic precinct of Ōāmaru.

Developing alternative revenue streams In 2018 Heritage NZ surpassed its target of generating at least 20 percent of its revenue from non-Crown sources. These revenue streams are critical for funding the preservation of the many heritage buildings and sites in its care.

Heritage NZ told us that it has been working to develop these income streams further. For example, its Tohu Whenua programme showcases New Zealand’s heritage sites to visitors. The programme allows visitors to journey between the sites and compellingly presents their stories. The programme is well established in Northland, Otago, and the West Coast, and

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Heritage NZ hopes to expand and develop it, such as by offering virtual reality tours of the sites.

Working in partnership with other organisations is another important way for Heritage NZ to make its revenue go further. For example, it noted that its restoration of the Melanesian Mission was able to be completed because of its support from the Melanesian Mission Trust Board. Heritage NZ is also able to restore and then lease buildings. The Old Government Buildings are leased to the Law Faculty of Victoria University.

We heard that about 75 percent of the visitors to its sites are New Zealanders, with the rest being tourists. In a recent customer survey, 96 percent of visitors reported that they were very satisfied with their visit.

Development of the Ihumātao Stonefields site Fletcher Building is planning to build 480 homes on a site on the Ihumātao Peninsula that borders the Ōtuataua Stonefields Historic Reserve in Auckland. Fletcher Building reports that it has been engaging with local iwi to protect the historic stonefields. However, an advocacy group argues that consultation with iwi was limited and the land’s cultural, heritage, historical, geological, and spiritual values are now at risk of permanent destruction. Heritage NZ has given the green light for the building project.

Heritage NZ acknowledged that its decision was controversial. However, it is working on acquiring a heritage status listing for the stonefield site, to help further protect and maintain it. It also told us that its decision had recently been tested and upheld in court, which has allowed Fletcher to undertake some conditional preliminary work.

Heritage NZ offered to provide us with a briefing to detail its decision-making process.

Acknowledging the 250th anniversary of Cook’s landing We asked Heritage NZ how it plans to leverage greater understanding and appreciation of New Zealand’s history, given that next year marks the 250th anniversary of Captain Cook’s landing.

Heritage NZ said that it participates on a committee of various government agencies that have an interest in marking the anniversary. Part of its contribution is helping develop and acknowledge historic sites associated with this event, such as Meretoto/Ship Cove, where Captain Cook made five visits and spent more time than anywhere else in New Zealand.

Identifying places of significance Last year, two slates found under the floorboards of Kemp House in Kerikeri during restoration work were included on the UNESCO “Memory of the World” documentary heritage register. Both slates have words in te reo Māori etched into them and date back to the 1830s. They are significant because they are the first known examples of Māori writing and because they illustrate the cultural shift of te reo from verbal to written expression. The certification of inclusion was presented by the Prime Minister to kaumātua Owen Kīngi of Pupuke, representing Ngā Uri o Hongi, in a ceremony in February 2019. Heritage NZ prepared the submission to UNESCO and cares for the slates. 4

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One of our members attended the ceremony and observed that the acknowledgement of the slates’ heritage was an emotional moment for the attendees. We asked Heritage NZ how it will continue to identify and honour places of significance for New Zealanders and for Māori.

Heritage NZ’s Māori Heritage Council is working to build relationships with hapū and iwi. The council also encourages Māori to participate in and use heritage protection systems. We were pleased to hear that interest in identifying Māori heritage sites is growing.

Heritage NZ told us that any person can nominate a property for heritage purposes. The board and Māori Heritage Council review the proposal to determine whether heritage classification should be awarded. We were interested to hear that heritage classification does not provide any particular protection for a property—that can only happen through the Resource Management Act and scheduling by district councils. Heritage NZ works with district councils to encourage them to schedule sites of importance.

Seismic strengthening of Turnbull House Heritage NZ told us that it has assessed the work that needs to be done to complete seismic strengthening on Turnbull House. It estimates that this work will cost about $5–6 million. It is petitioning for this funding in the next Budget round.

Once the building is restored, Heritage NZ said that it would like to see the house used in a way that commemorates its original purpose. However, if Heritage NZ raises funds for the seismic strengthening through a commercial arrangement, it may need to lease the space to recover those costs.

Building partnerships in education We were pleased to see that school education visits to Heritage NZ properties rose by 18 percent during the last financial year. Heritage NZ said it has worked to build a relationship between each of its 48 properties and local schools. It has also been working with the Ministry of Education to introduce heritage education into the curriculum more broadly.

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Appendix

Committee procedure We met on 20 February and 13 March 2019 to consider the annual review of Heritage New Zealand. We heard evidence from Heritage New Zealand and received advice from the Office of the Auditor-General.

Committee members Gareth Hughes (Chairperson) Darroch Ball Anahila Kanongata’a-Suisuiki Agnes Loheni Hon Alfred Ngaro Greg O’Connor Maureen Pugh Priyanca Radhakrishnan Hon Louise Upston

Office of the Auditor-General, Briefing on Heritage New Zealand, dated 20 February 2019.

Heritage New Zealand, Responses to annual review questions 1–116.

Heritage New Zealand, Responses to post-hearing questions 117–132.

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Report of the Social Services and Community Committee

March 2019

The Social Services and Community Committee has conducted the annual reviews of the Children’s Commissioner, the Families Commission, the Ministry for Culture and Heritage, the Ministry for Women, the New Zealand Artificial Limb Service, and the New Zealand Film Commission for 2017/18, and has no matters to bring to the attention of the House. The committee recommends that the House take note of its report.

Gareth Hughes Chairperson

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Pūrongo a te Komiti Whiriwhiri Take Māori

Paengawhāwhā 2019

Ngā kōrero Tūtohutanga ...... 2 Mō Te Puni Kōkiri ...... 2 Whanonga pūtea ...... 2 Pikinga otinga arotake pūtea ...... 2 Whānau Ora ...... 3 Te rangahau kaupapa Māori ...... 4 Kaikirimana ...... 4 Tā TPK aronga i roto i te rāngai kāwanatanga ...... 4 Te wāhi ki a TPK i te whanaketanga ōhanga ā-rohe ...... 5 Te Hōtaka Whenua Māori ...... 5 Tāpiritanga ...... 6 English version...... 7

Rino Tirikatene Heamana

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Te Puni Kōkiri

Tūtohutanga Kua oti i te Komiti Whiriwhiri Take Māori te arotake ā-tau i Te Puni Kōkiri mō te tau 2017/18, ā, e tūtohu ana kia mataara Te Whare ki tana pūrongo.

Mō Te Puni Kōkiri Ko Te Puni Kōkiri (TPK) te kaiwhakamāherehere matua ki te Karauna mō ngā hononga Karauna-Māori kia whaitake ai ngā ratonga ki te Māori, mō te Māori. Ka tukuna e ia ngā whakamāherehere rautaki mō ngā take e pā ana ki ngā kaupapa here Māori. Waihoki ka whakahaeretia ngā whakangaonga me ngā kaupapa kia puta ai ngā painga pai kē mō te Māori.

E 342 ngā kaimahi tūmau o te manatū, 17 ōna tari i roto i ngā rohe, me te tari matua hoki. Ko Michelle Hippolite te tumuaki.

Whanonga pūtea Nā te Pōti Whanaketanga Māori te nuinga o ngā pūtea a te manatū. I te tau 2017/18, e $73.204 miriona te moni puta (tōna 11 ōrau nui atu i tā 2016/17). E $63.277 miriona te whakapaunga utu, ā, e $5.198 miriona te hua i muri mai o te tāke. E kite ana mātau koinei te whā o ngā tau mōmona i noho mai ai he hua ki te manatū. I kīia mai he pūtea tēnei mō ētahi kaupapa e kawea ake ana ki te tau pūtea hou, me te tautoko hoki a te Minita o Te Puni Kōkiri me te Minita Pūtea.

I te tau 2017/18, ko te manatū te tari whakahaere i te whakapaunga moni kāore i herea ki tētahi tari, e $271.676 miriona te nui. He pikinga tēnei o te 5.5 ōrau mai i te $257.409 i te tau 2016/17. E 57 ōrau te pikinga o ngā pūtea e whakahaeretia ana e te manatū mai anō i te tau 2013/14 nā te kaha kē o te arotahi ki te whakangaonga me te whakahaerenga hōtaka.

Pikinga otinga arotake pūtea I roto i tana arotake i te tau kua hipa (2016/17), e rua rawa ngā take nunui i tohua e te Mana Arotake: whakawhāititanga mōreareatanga, me te whakahaerenga kirimana. E koa ana mātau i te kōkiritanga a TPK i ngā tūtohutanga i puta, me te “tino pai” tonu o ngā pūnaha kōrero me ngā whakamatua.

Kua tūtohutia e te Mana Arotake ētahi whakapainga i tō TPK ritenga whakahaere whakamatua, me ngā kōrero mō te whanonga. Hei tauira kia mārama ake te tautuhinga o ngā putanga e whakapaetia ana, me ngā tohu angitu mō ngā whakaaetanga uara-nui. Ka taea hoki e TPK te whakapai atu i te ine me te whakamahuki i te pānga o āna mahi. E rikarika ana te ngākau ki te kite i te whakapakaritanga o aua āhuatanga.

I rapu māramatanga mātau ki te hononga o ngā whakaputanga (ngā mahi) me ngā putanga (tāna e wawata nei) a te manatū. I whakamārama a TPK e arotahi ana ia ki te hāpai i te

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2017/18 AROTAKE Ā-TAU O TE PUNI KŌKIRI ekenga o ngā putanga, kaua ko ngā whakaputanga i hokona. E whakaaro ana a TPK ki te whakawhānui i tēnei āhuatanga ki āna whakangaonga katoa, me te mōhio hoki kāore e pēnei te arotahi a ōna hoamahi katoa ki ngā putanga.

Whānau Ora He kaupapa a Whānau Ora e hāngai ana ki ngā whānau, ā, ko te whāinga ko te whakamana i te whānau kia eke ai te oranga, te mātauranga, te noho whare, te whanaketanga pūkenga, me ngā putanga ōhanga. Ko te manatū te tari whakahaere i a Whānau Ora.

E kaingākau ana mātau ki ngā mahi hei akiaki i ētahi atu tari ki te whai i te tauira o Whānau Ora. I rongo mātau i tīmata te manatū ki Tamariki Ora, he hāngai hoki nō taua hōtaka ki ngā pūtake me ngā mahi a Whānau Ora. I kī mai te manatū e mihi ana rātau ki ngā mahi kokoi a Ngā Pirihimana o Aotearoa me ā rātau pānga ki ngā whānau.

I ako mātau kua tohaina e te manatū ngā rauemi mō te whanaketanga o tana tūranga hei kaiaroturuki o Whānau Ora, hei hoa mō āna mahi whakawhanake kaupapa here. Ko te tautuhi i ētahi tari hei whakahuataki i te kaupapa, me te whiriwhiri hoki me rātau, i roto i ngā whaitua e pā tonu atu ana ki te Māori.

I pātai mātau me ko TPK te kāinga pai mō Whānau Ora, me noho motuhake rānei. I kīia mai kei a TPK ētahi māramatanga kāore hoki i ētahi atu tari katoa. Tērā ko te māramatanga ki ngā mahi a ngā hapori, ina rā ko ngā hapori Māori; ko te huinga mōhiotanga i ngā rohe, i te tari matua hoki; me te roroa hoki o ngā kāwai tūhonohono tētahi ki tētahi. E tautokona ana tērā e ngā kōrero a ētahi atu tari. Heoi, e mōhio ana te manatū kei ōna Minita te mana o aua whakatau.

Ngā rōpū whakapūtea E toru ngā rōpū whakapūtea e kirimanatia ana e Whānau Ora—ko Te Pou Matakana, ko Pasifika Futures, me Te Pūtahitanga o Te Waipounamu—hei kawe i ngā kaupapa a Whānau Ora. I te tau 2017/18, e $71.297 miriona i whakangaongia ki aua rōpū, he pikinga mai i te $71.237 miriona i te tau 2016/17.

E mārama ana ki a mātau, ia koata, ia koata pūrongo ai ngā rōpū whakapūtea i ā rātau putanga. Ia tau, ia tau arotakea ai rātau me ngā kirimana katoa e pā ana ki ngā āhuatanga i whakaaetia e te manatū me tēnā rōpū, me tēnā rōpū.

I whakapuaki mātau i te āmaimai i te tuaritanga a tētahi rōpū whakapūtea i āna hua moni ki ngā kaipupurihea, kāore i whakahokia ki a Whānau Ora. I kīia mai he utunga akiaki ērā e whai ana i ngā tikanga o te tauira whakatau, tērā nā te Rūnanga o te Kāwanatanga i whakaae i te tau 2013. Ko te pūtake ko te akiaki me te mihi ki ngā whanonga pai rawa. He rite te tauira nei ki ā ētahi atu tari.

I rongo mātau, katoa aua rōpū kaipupurihea e toru he rōpū ohaoha e tuku ratonga ana, e tautoko ana hoki i ngā hapori o Aotearoa, ā, e herea ana ki ngā ritenga pūrongo pūtea e whakaturetia ana, me te herenga kia noho papa hoki.

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Te rangahau kaupapa Māori I kōrero mātau i te kaha o ngā tari kāwanatanga me TPK ki te whai i ngā kaupapa Māori hei arahi i ā rātau rangahau. I kī te manatū i āta uru ia ki tētahi kaupapa e kīia nei ko Ngā Tūtohu Aotearoa. Ko tana whāinga ko te whanaketanga o tētahi huinga tohu o te hauora o Aotearoa e whaiwāhi ai ngā take nunui mō Ngāi Māori. Kua whakatūria e te kaitatau mataamua tētahi rōpū hei tautoko i a ia i roto i āna mahi, tae atu ki ngā Māori e tino mātau ana ki te ao Māori.

Ko tēnei mea te kohinga raraunga wharenoho he kokenga kia rite ki ngā raraunga e hāngai pū ana ki te whānau, me te whānau kei waenga pū. Arā kāore i te arotahi ki ngā raraunga e pā ana ki te tangata takitahi me ngā pakihi. I whakawanatia tēnei momo kaupapa e ngā mahi pēnei me te whakaurunga o Ngāti Porou Hauora me te Whare Wānanga o Ōtākou.

Kaikirimana E mātau ana mātau kua whakawhāititia e TPK tana whakapaunga utu ki ngā kaikirimana mā te 11 ōrau, ki te $9.859 miriona i te $11.108 miriona i te tau 2016/17. Heoi kua nuku atu i te 90 ōrau ki tua o te mahere pūtea. Waihoki rā e 71 ōrau te pikinga o te whakapaunga utu ki ngā utu mātanga, e $4.735 miriona te nui, i tā te tau 2016/17 ($2.679 miriona), ā, e 37 ōrau ki tua o te mahere pūtea. Tērā ētahi wāhi o aua utu kaikirimana, mātanga hoki i ahu mai i ngā utu e pā ana ki te Ratonga Whenua Māori hou e marohitia nei.

I whakamōhio mai te manatū e whakamahia tonutia ana ngā kaikirimana ki te mahi i ētahi mahi motuhake, ā, kei te tahuri kē ki te whakapūmau i ngā kaimahi, he pikinga nō te tokomaha o ngā kaimahi e whakaaetia ana. 17 ngā tūranga i whakakīngia nā ngā whakatairanga, engari he huhua tonu ngā tūranga wātea, inā hoki i roto i te tīma kaupapa here. I whāki mai a TPK me whakapakari ngā pūkenga o ngā kaimahi, ka tika.

Tā TPK aronga i roto i te rāngai kāwanatanga I kimi pitopito kōrero mātau mō te aronga o ā TPK mahere e pā ana ki āna mahi akiaki i te rāngai tūmatanui whānui tonu. E ai ki a TPK, whiriwhiria ai aua momo hōtaka me te Minita. E rua rawa ngā aronga. Kei te taumata pūnaha, ka ngana te manatū ki te mirimiri i te āhua o ngā mahi a ngā pūnaha kāwanatanga kia puta ai ngā putanga pai mō Ngāi Māori, me te whakatairanga hoki i ngā kaupapa e hāngai ana ki ngā putanga. Kei te taumata whāiti nei, mahi ai a TPK me ngā whānau, ā, ka takea mai te āhua o āna mahi i te Tiriti o Waitangi me te ao Māori. Ka uaua kē āna mahi nā te mea e tika ana kia toro atu te whanaketanga Māori ki ngā mahi kāwanatanga katoa. Nō reira he rite tonu tā te manatū herenga ki te āta hāpai i tētahi kaupapa ki runga ake i tētahi. Me te aha whakaawetia ai ngā arotau rautaki me ngā hōtaka mahi ia rā, ia rā.

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Te wāhi ki a TPK i te whanaketanga ōhanga ā-rohe I kī mātau kāore e mārama te kitea o te wāhi ki a TPK i roto i ētahi whanaketanga ōhanga e haere ana i roto i ngā rohe, ā, i pātai mātau ko te aha te wāhi ki a ia, hei tāna. I whāki mai a TPK he uaua hoki te āta tīpako i tētahi o ngā mahi huhua hei tautoko. Hei tā TPK, kua kaha tonu tana kimi huarahi e pai ai tā ngā rōpū pā tonu atu ki te Tahua Whakawhanake Rohe. I whāki mai ko te hua o tana tūranga tautoko ko te uaua pea o te kitea o āna mahi, ko te korenga pea o ētahi hunga ki te whāki i te wāhi ki a TPK rānei. I whakapuaki hoki a TPK i tana horokukū ki te taupā i ā ētahi atu rōpū mahi, inā hoki ko ngā mahi a ngā rōpū whakahaere kaupapa i muri i ngā whakataunga me te Karauna, he whaikoha nōna ki tō rātau mana ki ā rātau ake mahi.

Te Hōtaka Whenua Māori Ka tautoko te Hōtaka Whenua Māori i ngā kaipupuri whenua Māori ki te toro i ngā whakamahinga huhua o te whenua, me te whakawhānui i āna hua. Ko te āhua o tana mahi he whirikoka i ngā tari huhua, ā, ka hāngai ki ētahi atu mahi kāwanatanga e pā ana ki te whenua.

I ako mātau ko te whakapae a te rangahau i te tau 2011 a te Manatū Ahuwhenua, Ahungahere hoki, he koretake te mahinga o tōna 80 ōrau o ngā whenua Māori, kāore i te whakamahia katoatia rānei. I tautokona taua whakapae e ētahi atu rangahau ōnaianei, nā te Manatū Ahumatua, te rāngai tūmataiti, me TPK.

E whakawhanake ana te hōtaka i tētahi poutarāwaho pakari mō te aromātai, e takea mai ana i te ao Māori. Ko te pūtake ko te aruaru me te aromatawai i tana whanonga i a ia e tupu nei, ā, ka whakamahia ngā mātauranga ā-rohe, ngā whakapapa, me ngā rerekētanga i tēnā rohe, i tēnā rohe. Ka takea mai te aromātaitanga o te hōtaka i ngā “pū” e whā o tā Te Kaitohutohu Kaupapa Rawa Poutarāwaho Pae Oranga (ngā rawa tangata, hapori, taiao, pūtea, kikokiko hoki).

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Tāpiritanga

Hātepe komiti I hui mātau i te 5 Hakihea 2018 me te 3 Paengawhāwhā 2019 hei whiriwhiri i te arotake ā- tau o Te Puni Kōkiri. I rongo mātau i ngā kōrero taunaki a te manatū, ā, i whiwhi i a mātau ngā whakamāherehere i Te Tari o te Mana Arotake.

Ngā mema o te komiti Rino Tirikatene (Heamana) Dan Bidois Marama Davidson Joanne Hayes Harete Hipango (ki te 6 Poutūterangi 2019) Tutehounuku Korako Adrian Rurawhe Hon Nicky Wagner (i te 6 Poutūterangi 2019) Hon Meka Whaitiri

Whakamāherehere me ngā kōrero taunaki i whiwhi I whiwhi i a mātau ngā tuhinga i raro nei hei whakamāherehere, hei kōrero taunaki hoki mō tēnei arotake ā-tau. Kei te paetukutuku o Te Whare Pāremata, www.parliament.nz.

Tari o te Mana Arotake, Whakamōhiotanga ki Te Puni Kōkiri, i te 5 Hakihea 2018.

Te Puni Kōkiri, Whakautu ki ngā pātai arotake ā-tau 1 ki te 112.

Te Puni Kōkiri, Whakautu ki ngā pātai ō muri mai i te hui 113 ki te 119.

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2017/18 Annual review of the Ministry of Māori Development (known as Te Puni Kōkiri)

Report of the Māori Affairs Committee

April 2019

Contents Recommendation ...... 8 About the ministry ...... 8 Financial performance ...... 8 Improvement in audit results ...... 8 Whānau Ora ...... 9 Kaupapa Māori research ...... 10 Contractors ...... 10 TPK’s focus within the government sector ...... 10 TPK’s role in regional economic development ...... 10 Whenua Māori Programme ...... 11 Appendix ...... 12

Rino Tirikatene Chairperson

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Ministry of Māori Development (Te Puni Kōkiri)

Recommendation The Māori Affairs Committee has conducted the annual review of the Ministry of Māori Development (Te Puni Kōkiri) for 2017/18, and recommends that the House take note of its report.

About the ministry The Ministry of Māori Development, also known as Te Puni Kōkiri (TPK), is the principal adviser to the Crown on Crown–Māori relationships for the purpose of ensuring the adequacy of services provided to or for Māori. It provides strategic advice on Māori policy issues, and facilitates investments and initiatives to promote better results for Māori.

The ministry has 342 permanent staff, with 17 regional and local offices as well as the national office. Michelle Hippolite is the chief executive.

Financial performance The ministry is funded mainly through Vote Māori Development. In 2017/18, its revenue was $73.204 million (about 11 percent more than in 2016/17). Expenditure was $68.006 million, resulting in a net surplus of $5.198 million. We note that this was the fourth year that the ministry had a surplus. We were told that it constitutes funding for particular commitments that will be carried forward into the new financial year, with the support of the Minister for Māori Development and the Minister of Finance.

In 2017/18, the ministry was the administering department for $271.676 million of non- departmental expenditure, an increase of 5.5 percent from $257.409 million in 2016/17. Funding administered by the ministry has increased by 57 percent since 2013/14 as its work has focused increasingly on investment and programme management.

Improvement in audit results In the previous year’s audit (2016/17), the Auditor-General had highlighted two significant issues: risk management and contract management. We are pleased that the ministry has addressed the recommendations made, and with the continued rating of “very good” for its financial information systems and controls.

The Auditor-General has recommended some improvements in the ministry’s management control environment and performance information. For example, it could better define the expected outcomes and success measures for high-value agreements. It could also do better at measuring and explaining the impact of the ministry’s work. We look forward to seeing improvement in these areas.

We sought clarification of the link between the ministry’s outputs (what it does) and its outcomes (what it hopes to achieve). TPK explained that it focuses on championing the

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2017/18 ANNUAL REVIEW OF THE MINISTRY OF MĀORI DEVELOPMENT (TE PUNI KŌKIRI) achievement of outcomes, not outputs commissioned. It plans to extend this approach to all its investments, and acknowledges that those it works with do not all focus on outcomes in the same way.

Whānau Ora Whānau Ora is a whānau-centred initiative that aims to empower whānau to achieve better health, education, housing, skills development, and economic outcomes. The ministry is the administering agency for Whānau Ora.

We were interested in work being done to encourage other agencies to adopt the Whānau Ora approach. We heard that the ministry began with Tamariki Ora as this programme is already quite well aligned with the purposes and practices of Whānau Ora. The ministry said it also appreciates innovations by the New Zealand Police in their interactions with whānau.

We learnt that the ministry has allocated resources to the development of its role as monitor of Whānau Ora, to complement its work in policy development. This includes the identification of, and negotiation with, some potential pilot agencies in areas that have a direct impact on Māori.

We asked whether Whānau Ora is best placed with TPK, or as an independent agency. We were told that TPK can offer insights that no other agency can. These include an understanding of how communities work, particularly Māori communities; collective intelligence both regionally and centrally; and a legacy and heritage of deep connections. This is supported by feedback from other agencies. However, the ministry acknowledges that any decision about TPK is the purview of its Ministers.

Commissioning agencies Whānau Ora contracts three commissioning agencies—Te Pou Matakana, Pasifika Futures, and Te Pūtahitanga o Te Waipounamu—to deliver Whānau Ora initiatives. In 2017/18, $71.297 million was invested through these agencies, an increase from $71.237 million in 2016/17.

We understand that the commissioning agencies report quarterly on their outcomes. They are audited annually on all of their contracts in relation to the measures agreed between the ministry and each agency.

We expressed some concern that one of the commissioning agencies distributed its surplus funds to shareholders rather than reinvesting them in Whānau Ora. We were told that incentive payments were made in line with the decision-making model agreed by Cabinet in 2013, to encourage and recognise excellent performance. This model is similar to that used by other agencies.

We heard that all three of the shareholder organisations are charitable organisations that provide social services and support to New Zealand communities, and are subject to legislative financial accountability and reporting requirements.

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Kaupapa Māori research We discussed the extent to which government agencies and TPK follow kaupapa Māori methodologies to guide their research. The ministry said it has actively participated in an initiative called Indicators Aotearoa New Zealand. The aim is to develop a set of measures of wellbeing in Aotearoa that recognise what matters for Māori. The lead statistician has established a group to support her in this work, including Māori with deep insights about te ao Māori.

The collection of household data is a step towards having whānau-centred and whānau- centric data, rather than simply being focussed on data related to individuals and businesses. This type of research methodology was enhanced by initiatives such as a partnership between Ngāti Porou Hauora and Otago University.

Contractors We acknowledge that TPK has reduced its expenditure on contract workers by 11 percent, to $9.859 million from $11.108 million in 2016/17. However, this is still 90 percent more than budgeted. Furthermore, expenditure on consultancy fees was 71 percent higher, at $4.735 million, than in 2016/17 ($2.679 million), and 37 percent higher than budgeted. To some extent the additional expenditure on contractors and consultants was due to extra costs associated with the proposed new Māori Land Service.

The ministry informed us that it continues to bring in contractors to do specific work, and it is shifting towards having more people on staff as its employee cap has been lifted. It filled 17 vacancies following a recruitment drive, yet numerous vacancies remain, particularly in its policy team. TPK admitted that it needs to strengthen capability among its staff.

TPK’s focus within the government sector We sought details about how TPK plans where to focus its efforts in seeking to influence the wider public sector. It said that such programmes are negotiated with the Minister. It has two points of focus. At the system level, it attempts to influence the way in which government systems operate so it can produce positive outcomes for Māori, and promote an outcomes- focussed approach. At the micro level, TPK deals with whānau, and bases its approach on the Treaty of Waitangi and te ao Māori (traditional Māori philosophies). Its work is complicated by the fact that Māori development has to be present across all government endeavours, so the ministry constantly faces the need to prioritise one project over another. This in turn influences strategic priorities as well as work programmes on a daily level.

TPK’s role in regional economic development We commented that the ministry did not appear to be involved in the various economic developments under way across the regions, and asked whether it saw a role for itself. TPK admitted to finding difficulty in singling out which of the many opportunities to engage with.

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TPK said it has been actively working on a way for organisations to directly access the Provincial Growth Fund. It noted that its background role could mean that its contribution was difficult to discern, or it could be that people it works with simply fail to mention TPK’s involvement. TPK stressed that it is reluctant to get in the way of other groups’ business, particularly the work that post-settlement entities have with the Crown, as it respects their mana in their own ventures.

Whenua Māori Programme The Whenua Māori Programme supports Māori land owners to explore different uses of land and ways of boosting its productivity. The programme adopts a multi-agency approach, and aligns with other government initiatives for whenua (land).

We learnt that research in 2011 by the then Ministry of Agriculture and Forestry estimated that nearly 80 percent of Māori land was either underperforming or underutilised. More current research and analysis by the Ministry for Primary Industries, the private sector, and TPK supported this estimate.

The programme is developing a robust evaluation framework based on te ao Māori to track and assess its performance as it matures, using local mātauranga (knowledge) and whakapapa (history and genealogy), and regional variations. Evaluation of the programme will reflect the four “capitals” of the Treasury’s Living Standards Framework (human, social, natural, and financial and physical capital).

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Appendix

Committee procedure We met on 5 December 2018 and 3 April 2019 to consider the annual review of the Ministry of Māori Development (Te Puni Kōkiri). We heard evidence from the ministry and received advice from the Office of the Auditor-General.

Committee members Rino Tirikatene (Chairperson) Dan Bidois Marama Davidson Hon Christopher Finlayson Joanne Hayes Harete Hipango (until 6 March 2019) Tutehounuku Korako Adrian Rurawhe Hon Nicky Wagner (from 6 March 2019) Hon Meka Whaitiri

Advice and evidence received We received the following documents as advice and evidence for this annual review. They are available on the Parliament website, www.parliament.nz.

Office of the Auditor-General, Briefing on Ministry of Māori Development (Te Puni Kōkiri), dated 5 December 2018.

Ministry of Māori Development (Te Puni Kōkiri), Responses to annual review questions 1 to 112.

Ministry of Māori Development (Te Puni Kōkiri), Responses to post-hearing questions 113 to 119.

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2017/18 Annual review of the Ministry for Pacific Peoples

Report of the Social Services and Community Committee

March 2019

Contents Recommendation ...... 2 About the Ministry for Pacific Peoples ...... 2 Financial performance ...... 2 2017/18 audit results ...... 2 Pacific Aotearoa Lalanga Fou report ...... 3 Languages, cultures, and identities ...... 3 Pacific home ownership and community housing providers ...... 3 Report on the Pacific Economy ...... 4 Pasifika Education Centre performance ...... 4 Pacific Employment Support Services ...... 5 Appendix ...... 6

Gareth Hughes Chairperson

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Ministry for Pacific Peoples

Recommendation The Social Services and Community Committee has conducted the annual review of the Ministry for Pacific Peoples for 2017/18, and recommends that the House take note of its report.

About the Ministry for Pacific Peoples The Ministry for Pacific Peoples is the Crown’s principal adviser on policies and interventions that improve outcomes for Pacific peoples. The ministry brings a Pacific voice, perspective, and understanding to policy. New Zealand’s Pacific community is fast-growing and comparatively young. Pacific New Zealanders make up 7.4 percent of the population, according to the 2013 census, and 62 percent of the community are now born in New Zealand.

As well as providing policy advice, the ministry’s functions include developing and delivering programmes for Pacific communities. It also partners with public and private sector organisations to promote Pacific leaders and Pacific success. Laulu Mac Leauanae was appointed chief executive of the ministry in July 2017.

Financial performance The ministry’s total revenue in 2017/18 was $7.656 million, about 7.8 percent more than in 2016/17. Its expenditure in 2017/18 included $2.312 million in non-departmental expenditure, which included $1.697 million in grants to third parties and $341,000 in social assistance benefits.

2017/18 audit results The Auditor-General’s 2017/18 audit of the ministry found no significant issues. An unmodified audit opinion was issued on the ministry’s financial and non-financial performance reporting. The management control environment, financial information systems and controls, and performance information and associated systems and controls were all rated as “good”.

The rating for the management control environment compared with “needs improvement” in 2016/17. This improvement arose from the ministry performing a full fraud risk assessment, finalised in May 2018, and completing a survey of its legislative compliance. Recommendations for further improvements by the ministry include reviewing its performance measures to ensure that it has appropriate measures covering its main activities. It should also engage with Te Puni Kōkiri to put in place a signed lease agreement for office accommodation that the two organisations share in Auckland and Porirua.

We hope to see the ministry act on the Auditor-General’s recommendations.

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Pacific Aotearoa Lalanga Fou report The ministry launched a report called Lalanga Fou1 at the Pacific Aotearoa Summit on 13 November 2018. It explores how Pacific communities describe success and examines Pacific values and beliefs to determine a shared vision for Pacific peoples in Aotearoa. The ministry developed the report in consultation with Pacific communities across the country.

The chief executive told us that over 2,500 people engaged with the consultation process and, through this, four goals were identified for the ministry. These goals are: (1) thriving Pacific languages, cultures and identities; (2) prosperous Pacific communities; (3) resilient and healthy Pacific peoples; and (4) confident, thriving, and resilient Pacific young people.

Areas of focus for the ministry We note that the ministry operates on a relative shoestring budget. Given this, we asked how it decides to prioritise its funding to increase its scope and influence. We heard that the report is informing future areas of focus for the ministry. As well as a strong focus on language, the report highlights that the ministry needs to focus on Pacific youth and technologies to enable young people to earn more. The ministry is working with key ministries such as the Ministry of Health and Ministry of Education to achieve its goals in these areas.

Languages, cultures, and identities The chief executive told us that, of the four goals identified in the Lalanga Fou report, culture, language, and identity are the primary focus for the ministry. We were told that the Cook Island, Niuean, and Tokelauan languages are all considered endangered languages by UNESCO. The ministry noted that younger generations are not picking up the languages and it believes the ministry must act to ensure the survival of Pacific languages.

We asked how the ministry promotes Pacific languages and culture. It said its main focus on languages is through the Pacific language weeks. The ministry noted that MPs reciting Parliament’s prayer in languages such as Cook Islands Māori and Tongan helped in embracing Pacific languages and making them more mainstream. It provided us with evidence that a stronger understanding of Pacific languages or learning multiple languages leads to greater academic achievement.

Pacific home ownership and community housing providers We discussed housing affordability and home ownership by Pacific peoples, as we believe these are important indicators of economic well-being. We raised concerns about disparities in home ownership, noting that only 18 percent of Pacific people own their own home, compared with 50 percent for the general population. We were informed that housing is a critical component of both the Lalanga Fou and Pacific Economy reports.

The ministry explained that it is working with the Ministry of Housing and Urban Development and Housing New Zealand to support Pacific communities with housing issues.

1 You can read the full report here.

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We were told about a partnership between Tongan churches in Māngere and Housing New Zealand to provide 25 homes for Pacific individuals.

We asked whether the ministry is moving away from working with community housing providers to address housing issues in the Pacific community. We were assured that the ministry is still active in supporting social housing providers. The chief executive noted that Penina Health Trust had successfully completed its accreditation in 2017 and that the ministry is currently supporting other social housing providers to attain accreditation.

Report on the Pacific Economy The term “Pacific economy” refers to the significant contribution that the Pacific community makes to the New Zealand economy. The Treasury released the New Zealand Pacific Economy report on 13 November 2018.2 The research project was funded by the Treasury and the Pacific Business Trust, with the additional support and guidance of the Ministry for Pacific Peoples and the Ministry of Business, Innovation and Employment. The report used the Treasury’s 2017 Living Standards Framework to identify the economic footprint of the Pacific community within New Zealand’s economy.

The report is divided into quantitative and qualitative findings. Among the quantitative findings, it notes that New Zealand has a Pacific population of approximately 310,000, with a total asset base of $8.3 billion, 160,000 employees, and an average household income of $119,000. The qualitative findings involved interviews with Pacific business owners, community leaders, church leaders, and families. They outlined Pacific definitions of wealth and prosperity which included safety, happiness, health, jobs, education, housing, and entrepreneurship.

We noted that the ministry, in its annual report, raised concerns about the small sample size used for the Pacific Economy report and therefore about the integrity of the report’s findings. The ministry told us that, at the time of drafting the annual report, the sample size for the qualitative part of the report was 115, so this element of the report was not as strong as the ministry would have liked it to be. We heard that the Pacific Economy report was issued at the same time as the Lalanga Fou report, which drew on the contributions of a much larger sample. We heard that the ministry aims to work with the Pacific Business Trust to build a broader, stronger report in the future.

Pasifika Education Centre performance The Pasifika Education Centre (PEC) is New Zealand’s oldest Pacific community education provider. It advocates on behalf of Pacific peoples to deliver better educational outcomes and programmes that reflect Pacific languages and cultures. We raised concerns about previous reports that indicated there were issues with the management and delivery of the organisation’s fiscal responsibilities. We questioned the allocation of $480,000 to the centre over two years.

The ministry told us about changes to the organisation at the governance level, which included appointing a new chief executive. We were assured that the changes in the centre’s

2 You can read the full report here. 4

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governance structure have strengthened the relationship between the ministry and PEC, and an Education Review Office report showed that PEC has been performing well.

The ministry explained that it works with the Pasifika Education Centre to ensure it continues to play a prominent role in promoting Pacific language education.

Pacific Employment Support Services Pacific Employment Support Services (PESS) is a programme funded by the ministry to increase the number of Pacific young people in employment, education, and training. PESS works with young Pacific people in Auckland and Hamilton to find sustainable employment, education, or training opportunities.

We noted that more than 2,000 Pacific young people have completed the programme and more than 1,000 have gone on to find placements in employment. We raised the prospect of broadening the scope of the programme.

We heard that an evaluation of the programme was completed in May 2017. It found that, in the last two years, every dollar spent on the programme achieved a return on investment of $10.53 in combined tertiary and employment savings. We heard that the ministry plans to strengthen the scheme in Auckland and Hamilton, where it currently exists, and is in the process of expanding the initiative throughout the country.

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Appendix

Committee procedure We met on 12 December 2018 and 6 March 2019 to consider the annual review of the Ministry for Pacific Peoples. We heard evidence from the Ministry for Pacific Peoples and received advice from the Office of the Auditor-General.

Committee members Gareth Hughes (Chairperson) Darroch Ball Anahila Kanongata’a-Suisuiki Agnes Loheni Hon Alfred Ngaro Greg O’Connor Maureen Pugh Priyanca Radhakrishnan Hon Louise Upston

Advice and evidence received We received the following documents as advice and evidence for this annual review. They are available on the Parliament website, www.parliament.nz.

Ministry for Pacific Peoples, Responses to written questions 1 to 137.

Ministry for Pacific Peoples, Responses to post-hearing questions 138 to 155.

Office of the Auditor-General, Briefing on the Ministry for Pacific Peoples, 12 December 2018.

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2017/18 Annual review of the Museum of New Zealand Te Papa Tongarewa Board

Report of the Social Services and Community

Committee

March 2019

Contents Recommendation ...... 2 About the Museum of New Zealand Te Papa Tongarewa Board ...... 2 Financial overview and audit results ...... 2 Te Papa: a year in review ...... 3 Addressing ongoing operating and capital expenditure ...... 3 Repairing and building additional facilities ...... 4 “Get it to Te Papa” ...... 4 Driving achievement through cultural engagement ...... 4 Debating an entry fee ...... 5 Reflections from the outgoing chairperson ...... 5 Appendix ...... 6

Gareth Hughes Chairperson

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Museum of New Zealand Te Papa Tongarewa Board

Recommendation The Social Services and Community Committee has conducted the annual review of the Museum of New Zealand Te Papa Tongarewa Board for 2017/18, and recommends that the House take note of its report.

About the Museum of New Zealand Te Papa Tongarewa Board Te Papa is an autonomous Crown entity, and was established by the Museum of New Zealand Te Papa Tongarewa Act 1992.

Te Papa preserves, protects, acquires, researches, and provides access to collections that are part of New Zealand’s artistic, cultural, and national heritage. Te Papa also provides a leadership role in co-ordinating and providing assistance to other organisations with shared goals. In 2017/18 Te Papa was visited by 1.52 million people, slightly less than the 1.58 million in the previous year.

The chief executive of Te Papa is Geraint Martin. Arapata Hakiwai is the Kaihautu (Māori co- leader). The chair of Te Papa’s eight-person board is Evan Williams. Te Papa employs 358 full-time staff.

Financial overview and audit results Te Papa’s total revenue in 2017/18 was $61.64 million, about 6.6 percent more than in 2016/17. This includes $29.57 million of Crown revenue, $18.31 of commercial revenue, and $1.14 million of donations.

Te Papa’s total operating expenditure in 2017/18 was $55.3 million. However, after including depreciation and amortisation expenses of $16.54 million, its expenditure totalled $71.9 million. This resulted in a net loss of $10.24 million, compared with a loss of $6.41 million in 2016/17.

Audit results and performance against targets The Auditor-General assessed Te Papa’s management control environment as “good”. To address the deficiencies it identified, the Auditor-General recommended that Te Papa strengthen its procurement process by ensuring that conflict of interest declarations are completed and updated throughout the process. It also encouraged Te Papa to bring its sourcing process in line with the Government Rules of Sourcing. Finally, the Auditor-General recommended that Te Papa continue to develop its capital asset management plan.

For its financial information systems and controls, the Auditor-General gave Te Papa a rating of “very good” and made no recommendations for improvement.

A rating of “good” was given to Te Papa’s performance information and associated systems and controls. The Auditor-General recommended that Te Papa develop measures to assess

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2017/18 ANNUAL REVIEW OF THE MUSEUM OF NEW ZEALAND TE PAPA TONGAREWA BOARD its progress against the strategic priorities outlined in its Statement of Intent. It should also develop further measures that demonstrate it is effectively caring for and managing its collections.

Te Papa: a year in review In their opening statements to the committee, Te Papa’s chief executive and board chair described some of Te Papa’s significant achievements for the last financial year. We were pleased to hear of the success of the new science exhibitions and the new Toi Art Gallery which has doubled the museum’s patronage. We heard that the Gallipoli exhibition continued to attract large crowds, and that the Terracotta Warriors exhibition was on track to be one of Te Papa’s most successful ever.

The last financial year also saw Te Papa continue to respond to some ongoing challenges. For the first 15 years of its existence, Te Papa received no funding for capital maintenance or depreciation, resulting in a significant backlog of capital projects. We were told that the museum has just completed its third year of a four-year programme to restore extensive disrepair to its building, which has included fixing the roof and electrical systems.

Te Papa continues to modernise the way it looks after its collections as it responds to scientific developments in collection care. It has now digitised about 40 percent of the collections, so that these items are accessible to the global science community. Te Papa is currently reviewing and restructuring its collections management system. Te Papa has said that it no longer necessarily needs to employ its own in-house expertise and researchers but can make use of expertise in the broader scientific community.

Addressing ongoing operating and capital expenditure We observed that Te Papa’s revenue had increased by about 6.6 percent since last year, but that it continues to face significant financial challenges, including ongoing maintenance issues and the cost of completing the digitisation of its collections. We asked Te Papa how it plans to sustainably manage its expenditure.

Te Papa told us that it actually achieves an operating surplus, generating additional revenue from a mixture of exhibition entry fees, philanthropy, and commercial activity. Some of its successful commercial revenue streams come from its car parks, its function centre and catering services, and retail operations.

Although the museum “makes money”, Te Papa’s large pool of property and equipment assets means that its accounts record significant expenses for depreciation, which results in an operating deficit. Te Papa is not funded for the depreciation of its property and assets. Where it receives capital injections from the Government, Te Papa ensures that these funds are used solely on capital items and not to prop up its operations. We heard that it is currently in discussions with the Government about its funding and the structure of the split between its operating and capital expenditure.

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Repairing and building additional facilities Te Papa’s Tory Street facility houses several of its collections. Although it was not damaged during the Kaikōura earthquake in November 2016, seismic checks of the building determined that it did not meet the safety standard required for buildings that house national collections. Te Papa told us that it is planning to retain and repair the facility. It will begin strengthening the building in July this year, at a cost of about $2 million.

We also heard that Te Papa has put in a budget bid to fund the development of a business case for building another facility in Manukau.

Te Papa said that housing its collections in a variety of locations is important for mitigating risk, such as earthquakes, and for bringing the cultural benefits of its displays to other parts of New Zealand. It has been in discussions with Tainui, Auckland iwi, Ngāi Tahu, Christchurch City Council, and Auckland City Council to find ways to store and display its collections.

“Get it to Te Papa” We recalled that, in October 2016, Spark’s Lightbox service premiered a show presented by The Spinoff. The show, entitled “Get it to Te Papa”, was a comedic attempt by Spinoff journalist Hayden Donnell to get a contemporary set of New Zealand cultural artefacts into Te Papa. We asked why Te Papa had raised a legal case against the show.

Te Papa told us it felt that the programme’s content was a flippant take on the role of museums and the respectful and careful way museums build their collections. During the show’s development, Te Papa had spent about $6,000 on legal costs to try to get its name and brand removed from the show.

Some media had reported that Te Papa dropped its legal case against The Spinoff on the condition that The Spinoff withdraw its Official Information Act request seeking all of Te Papa’s internal communications concerning the show and a summary of its legal costs. However, Te Papa told us that it had dropped its legal case in order to de-escalate the debate and reach a sensible outcome.

Driving achievement through cultural engagement During the last financial year Te Papa launched “Raranga Matihiko”, an educational programme that uses museums as places where students from low-decile schools can re- engage with their culture and further develop their education. The programme connects the students’ cultural heritage with their school topics. For example, a student’s interest in trigonometry may be enhanced if they can explore how their ancestors used it to navigate.

In order to secure $3 million of Ministry of Education funding for its next phase, the programme was rigorously evaluated by Otago University. Its review found that students who have been through the programme have had significantly improved educational attainment compared to other students from similar backgrounds.

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We note that the programme is currently being run in the Auckland, Northland, Hawke’s Bay, and Wellington regions. Te Papa is in discussions with the Ministry of Education about extending the programme to further regions.

Mahuki programme Te Papa offers a Mahuki programme to help develop digital businesses for the culture and heritage sector. The teams of technology entrepreneurs who are selected to take part in the programme make use of Te Papa’s experts, resources, visitors, and wider cultural and business expertise. They work on digital solutions to challenges faced by cultural organisations in New Zealand and internationally.

We heard that Mahuki technologies have helped students in the Raranga Matihiko programme meaningfully connect with their culture. For example, students can explore cultural objects in virtual reality and create them with 3-D printing, or develop their own collections and stories by creating their own virtual museum.

Debating an entry fee We asked the chair of Te Papa’s board what he thought about potentially charging for entry to the museum. The chair said he encourages the debate, but firmly believes that the assets and experiences the museum holds are important enough that they should be freely accessible to everybody.

However, the chair told us that the museum has developed “back-of-house” guided tours which it successfully markets on its website, in local advertising, and to tourist ventures such as cruise-ship operators. In their first year, these guided tours generated over half a million dollars of revenue. The chair said that the museum is developing other profitable experiences to create additional revenue.

Reflections from the outgoing chairperson The chair of Te Papa’s board, Evan Williams, noted that his term expires on 30 June 2019, and he is excited to see the fresh energy and vision that a new chair will provide to the museum. We thanked Mr. Williams for his service and asked him which of his accomplishments he is most proud of.

The Chair said that over the last eight years he has made it a priority to tie down Te Papa’s collections to prevent damage from earthquakes. About $3 million has been spent on this project. Following the Kaikōura earthquake in November 2016, Te Papa sustained damage to only nine of its items, where it might have lost huge amounts of its collections if they had not been tied down.

The chair said that he was also proud of working with Richard Taylor to create the Gallipoli exhibition. He told us that 92 percent of people who visited the exhibition reported that they had fundamentally changed their view on war and conflict. Because of the exhibition’s relevance and popularity it is being kept open for the indefinite future.

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Appendix

Committee procedure We met on 13 February and 6 March 2019 to consider the annual review of the Museum of New Zealand Te Papa Tongarewa Board. We heard evidence from Te Papa and received advice from the Office of the Auditor-General.

Committee members Gareth Hughes (Chairperson) Darroch Ball Anahila Kanongata’a-Suisuiki Agnes Loheni Hon Alfred Ngaro Greg O’Connor Maureen Pugh Priyanca Radhakrishnan Hon Louise Upston

Office of the Auditor-General, Briefing on the Museum of New Zealand Te Papa Tongarewa, dated 13 February 2019.

Museum of New Zealand Te Papa Tongarewa, Responses to written questions 1 to 125.

Museum of New Zealand Te Papa Tongarewa, Responses to post-hearing questions, 126 to 137.

628

2017/18 Annual review of the New Zealand Lotteries Commission

Report of the Social Services and Community

Committee

March 2019

Contents Recommendation ...... 2 About the New Zealand Lotteries Commission ...... 2 Financial performance ...... 2 Demographic information about Lotto players ...... 2 Sales at retail outlets ...... 3 Employee benefits ...... 3 Digital platforms ...... 5 Cyber security ...... 5 Appendix ...... 7

Gareth Hughes Chairperson

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2017/18 ANNUAL REVIEW OF THE NEW ZEALAND LOTTERIES COMMISSION

New Zealand Lotteries Commission

Recommendation The Social Services and Community Committee has conducted the annual review of the New Zealand Lotteries Commission for 2017/18, and recommends that the House take note of its report.

About the New Zealand Lotteries Commission The New Zealand Lotteries Commission, known as Lotto New Zealand, was established in 1987. It operates as a Crown entity under the Gambling Act 2003. Lotto NZ’s main purpose is to provide safe gaming that allows New Zealanders to play and win while contributing money back to New Zealand communities. While doing so, Lotto NZ aims to minimise the risk of underage and problem gambling associated with its products.

Profits from Lotto sales are transferred to the New Zealand Lottery Grants Board which funds Sport New Zealand, Creative New Zealand, and the New Zealand Film Commission. It also funds a range of social, community, arts, heritage, sports, recreation, health, and research activities around New Zealand. In 2017, the grants board funded more than 3,000 organisations and projects from Lotto proceeds.

Financial performance In 2017/18, total revenue for Lotto NZ was $1.18 billion. This compares with $1.15 billion in 2016/17. When GST is included, total sales were $1.25 billion, a 3 percent increase from the previous year. In 2017/18, Lotto NZ transferred profits of $275 million to the grants board. This was its highest transfer to date.

The Auditor-General assessed Lotto NZ’s management control environment as “very good”. It assessed its financial information systems and controls and performance information and associated systems and controls as “good”, with some improvements recommended. We discuss the Auditor-General’s concerns about Lotto NZ’s sensitive expenditure in more detail later in our report.

Demographic information about Lotto players We note that Lotto NZ is forecast to distribute similar levels of profits to the grants board ($274.7 million) in 2018/19. We are interested in why the profits distributed have increased, and asked whether more people are playing or players are spending more.

The chief executive explained that the business relies heavily on the size of the Powerball jackpot to drive its sales, making the business highly volatile. He told us that although the average amount spent does not change much, more people buy the product when the jackpot increases. The chief executive said that Lotto had some “good jackpot runs” last year, which brought new players to the game.

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Lotto NZ provided the following demographic information about its customers:

 On average, 79 percent of adult New Zealanders play Lotto games at least once a year, spending an average of $14.25 per transaction.  An average of 1.5 million New Zealanders buy a Lotto ticket each week.  It has about 1,500 retail outlets across New Zealand, which employ about 5,000 people. The outlets earn 80 percent of its revenue, with online sales earning nearly 20 percent.  The geographical spread of outlets is slightly higher in the South Island than the North Island.  The participation rates in Auckland are slightly lower (about 2 to 3 percent) but they start to even up when jackpots increase.  Slightly more females participate than males (52 percent compared with 48 percent). Some of us expressed concern about gambling-like features which are increasingly used in games played by pre-teenagers. We asked whether more people will be receptive to gambling in the future because they are exposed to it earlier in life. Lotto NZ told us that lotteries around the world generally consider the products appeal to a specific stage of life— that is, people who are married, mature, and mortgaged. Lotto NZ said that it expects this trend to continue, with its player base being primarily in the 35 to 55 age bracket.

Targeting players by demographics The chief executive told us that Lotto NZ does very little targeting of players by demographics. He said that Lotto is a product that relies on mass appeal, and to be successful it needs 1.5 million adult New Zealanders playing. We heard that television is still Lotto NZ’s primary method of promoting its messages.

The chief executive emphasised that Lotto NZ’s messages are consistent and do not change based on age or geography. This is because it is trying to capture as big an audience as it possibly can. He told us that the only exception is when Lotto NZ is promoting a winning store in a specific region.

Sales at retail outlets Lotto NZ noted that the sales at its retail outlets are spread across New Zealand, with no “massive skews” anywhere. It said that a lot of factors can affect the revenue of a store, such as being well established with a loyal customer base. However, we heard that as with any good retail outlet it is the owner, the staff, and their commitment to the store that encourages people to play.

Employee benefits We are pleased to hear that Lotto NZ is committed to being a good employer. However, we have some concerns about several of its employment practices.

Staff remuneration Lotto NZ has 133 employees, with 50 of them paid $100,000 or more. The chief executive told us that Lotto NZ uses external providers to help benchmark salaries. He said that it pays

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2017/18 ANNUAL REVIEW OF THE NEW ZEALAND LOTTERIES COMMISSION in the mid to 75 percent quartile, and never in the top quartile. The chief executive also noted that a subcommittee of the Lotto NZ board oversees remuneration, particularly at senior and executive level.

We heard that Lotto NZ cannot compete with the salaries of other commercial business. Instead, it promotes itself as a great place to work and emphasises the benefits of working for an organisation like Lotto NZ.

The chair stressed that exceptional people work for Lotto NZ and they are sought after by other organisations. However, he said that those individuals appreciate that they work for an organisation where all of the profits go to the community.

Sensitive expenditure During the 2017/18 audit, the Auditor-General identified several cases of spending that, when viewed collectively, might give the perception that Lotto NZ’s sensitive expenditure exceeds that of comparable public sector organisations. For example, daily food allowances for staff when travelling for business increased over the year from $60 to $90 per day, or $80 when breakfast is included in the room rate.

Further, Lotto NZ’s entertainment policy recognises that there are times when it is appropriate to provide hospitality to staff. Its policy allows a budget of $25 per person for breakfast, morning or afternoon tea, $35 for lunch, and $80 for dinner. Although the chief executive is required to sign off expenditure above these levels, the Auditor-General found several instances where costs were exceeded without approval.

The chief financial officer explained that Lotto NZ regularly reviews its policies and procedures, including one about accommodation allowances. That policy has been updated in the past five years to align with living costs.

We heard that the board considers any changes to allowances. They are also reviewed by Audit New Zealand, which provides an opinion on whether the allowances are appropriate. The chief financial officer told us that Audit New Zealand bases its view on benchmarking against the public sector. When asked whether Lotto NZ considers that opinion, the chief executive responded “absolutely”.

Following our hearing, the Office of the Auditor-General noted that Lotto NZ may have given the impression that Audit New Zealand had reviewed and was comfortable with the sensitive expenditure policy. We were told that while Audit New Zealand has reviewed the policy, it still has concerns as to whether some aspects of the adopted policy are appropriate in a public sector context. Audit New Zealand will continue to work with Lotto NZ on its approach to sensitive expenditure. We will keep an eye on this matter in future reviews.

Severance payments In 2017/18, 10 employees left Lotto NZ due to a restructuring during the year. They were collectively paid $357,327. The Auditor-General observed that the severance payments have been appropriately disclosed in the annual report. However, the audit noted some cases of insufficient documentation to understand why an ex gratia payment was needed or the rationale for the settlement amount.

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We asked how Lotto NZ determines what is appropriate for exit payments and to what extent it makes them publicly available. The chief executive told us that it receives advice from employment lawyers, and honours whatever is in an individual’s contract. He said that these are “totally aligned” to the public sector.

In responses to post-hearing questions, Lotto NZ told us that its exit payments are contractually set. For redundancy, this equates to the equivalent of four weeks’ salary for service up to two years, or two months’ salary for service beyond two years. It said that any discretionary payments are considered alongside the Office of the Auditor-General’s guidance on severance payments for the public sector.

Gender pay gap We heard that an external provider independently reviewed Lotto NZ’s pay by gender. The provider produced a report, which the board also received. The gender pay gap is about 2 percent. Lotto NZ said that while it is not perfect, it is not far from where it needs to be.

Digital platforms Rather than distributing all of its net profit to the Lottery Grants Board, Lotto NZ retained $8 million of its 2017/18 profit to use in future years. Lotto NZ told us that its internet platform is ageing, having been established in 2008. It plans to use the money to upgrade its core gaming system and replace its digital platform. The chief executive said that this system will be more robust and provide greater flexibility and new tools and features, particularly for harm minimisation. Lotto NZ expects the project to be concluded and the new platform operating in April or May 2020.

In 2017/18, total online sales through MyLotto and the Lotto NZ mobile app were $201.1 million—an increase of 26 percent compared with the previous year. We asked whether the shift to digital platforms will result in younger customers and whether it will be more difficult to measure and monitor who is purchasing Lotto tickets. The chief executive told us that he does not believe Lotto’s player base will have a generational shift. He said that the majority of people now have some form of device, regardless of their age.

LottoNZ explained that MyLotto also has much stricter controls, including spend limits, because it is harder to enforce than in stores. The spending limits, set in consultation with the Ministry of Health, are $150 weekly and $500 monthly. Players can also set their own spending limits within these amounts.

Further, we heard that players must register to play online, with some products requiring age verification, using a passport or driver licence. This means that Lotto NZ knows more about individuals, which it considers beneficial, particularly for harm minimisation.

Cyber security We asked how Lotto NZ ensures cyber security in the Lotto game given that its machines around New Zealand are connected by the internet. The chief financial officer explained that Lotto NZ funds a secure service for all its retailers. This provides a dedicated line for its terminals to talk to its gaming system. Lotto NZ told us that it has independent checks on cyber security, which is particularly important for MyLotto.

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Lotto NZ acknowledged that it could not definitively say that its terminals could not be hacked. It said that Lotto NZ has been subjected to a distributed denial-of-service (DDoS) attack, which is where multiple sources from overseas attempt to flood its traffic channels. However, Lotto NZ told us it has controls so that a DDoS attack has never caused a problem.

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Appendix

Committee procedure We met on 13 February and 6 March 2019 to consider the annual review of the New Zealand Lotteries Commission. We heard evidence from the New Zealand Lotteries Commission and received advice from the Office of the Auditor-General.

Committee members Gareth Hughes (Chairperson) Darroch Ball Anahila Kanongata’a-Suisuiki Agnes Loheni Hon Alfred Ngaro Greg O’Connor Maureen Pugh Priyanca Radhakrishnan Hon Louise Upston

New Zealand Lotteries Commission, February 2019 update.

New Zealand Lotteries Commission, Responses to written questions 1 to 116.

New Zealand Lotteries Commission, Responses to post-hearing questions 117 to 126.

Office of the Auditor-General, Briefing on the New Zealand Lotteries Commission, dated 13 February 2019.

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2017/18 Annual review of the New Zealand Symphony Orchestra

Report of the Social Services and Community Committee

April 2019

The Social Services and Community Committee has conducted the annual review of the New Zealand Symphony Orchestra (NZSO) for 2017/18. We note that the NZSO has a balance date of 31 December, compared with 30 June for most other entities. We are very concerned that the NZSO’s timeline reduces our ability to scrutinise its performance at the same time as other entities and look forward to a change so that the NZSO aligns with every other entity that Parliament reviews.

We have no further matters to bring to the attention of the House. We recommend that the House take note of our report.

Gareth Hughes Chairperson

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2017/18 Annual review of the Office of Film and Literature Classification

Report of the Social Services and Community

Committee

April 2019

Contents Recommendation ...... 2 About the Classification Office ...... 2 Worsening financial position ...... 2 The modern digital environment creates regulatory challenges ...... 3 Survey reveals useful insights ...... 4 Possibility of “porno filter” and loot-box controls ...... 4 Some classification decisions disputed by the review board ...... 4 Appendix ...... 5

Gareth Hughes Chairperson

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2017/18 ANNUAL REVIEW OF THE OFFICE OF FILM AND LITERATURE CLASSIFICATION

Office of Film and Literature Classification

Recommendation The Social Services and Community Committee has conducted the annual review of the Office of Film and Literature Classification for 2017/18, and recommends that the House take note of its report.

About the Classification Office The Office of Film and Literature Classification is an independent Crown entity, governed by the Films, Videos, and Publications Classification Act 1993. The Office’s functions include:

 classifying films, videos, and publications for commercial applicants and members of the public, and for the courts and enforcement agencies  conducting research to inform the classification decisions  providing information to the public about the classification system  responding to complaints and inquiries about classification decisions. The Chief Censor is David Shanks and the Deputy Chief Censor is Jared Mullen.

Facebook live streaming of the Christchurch shooting The act of terrorism in Christchurch took place after our hearing with the Chief Censor. In our view, the manifesto and video released by the shooter clearly illustrate the difficulty of the modern digital environment that the Chief Censor must negotiate. We believe a review of the current regulatory framework could be of value.

Worsening financial position For the third consecutive year, the Office incurred a deficit in 2017/18. It is forecasting deficits into the foreseeable future.

The Office incurred a deficit of $892,000 for the year ended 30 June 2018 after budgeting for a deficit of $543,000. Total revenue was $2.609 million; this comprised $1.96 million from the Crown and $616,000 from labelling revenue. Actual expenditure was $3.501 million, which was $404,000 above budgeted expenditure. The Office said the deficit was higher than forecast due to severance costs of $520,000 from a restructuring.

Significant matters noted during the audit The Auditor-General issued a non-standard report because of the Office’s recent financial performance, continued forecast deficits, and uncertain future revenue and expenses. Because of these matters, there is doubt about the Office’s ability to continue as a going concern.

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In terms of the Office’s operations, the Auditor-General assessed as “very good” the management control environment, financial information systems and controls, and performance information and associated systems and controls.

Addressing the forecast deficits We are concerned that this is the third year in a row the Office has had an operational deficit and that the deficits are expected to continue. We acknowledge that the business model of the Office may not be sustainable, and the business model or funding model may need to be altered. The Office explained that the current model is not working because income from the Crown is static while revenue from classification of physical media is decreasing as DVD sales decline. DVD submissions for classification decreased by 17 percent over the past year. The Office noted that, after discussions with industry, it has substantially reduced its fees for classifying DVDs. While this has also affected its revenue stream, it is a way of ensuring that its fees do not act as a barrier to providing legal access to imported content.

The Office explained what it has done to mitigate deficits. It undertook an extensive restructuring in 2017 to reduce costs, and has its Minister’s support for a budget bid to increase the baseline funding for 2019/20. While the redundancy costs from the restructuring were high and led to an increased deficit for 2017/18, this should relieve some pressure on the baseline.

The modern digital environment creates regulatory challenges The current regulatory landscape dates from 1993 and was designed around physical media. The Office must now deal with digital content that is readily available in people’s homes and on smartphones. With children now acquiring a smartphone by age 11 on average, the regulatory framework does not reasonably enable the Office to prevent harm from digital media in the same way it can for physical media.

We asked what can be done to regulate digital media and the harm it is doing to youth. The Chief Censor believes there is scope to improve regulation. He would like to see this done as a full rethink of media regulation from first principles, rather than a piecemeal approach. Apart from regulation, the Office is also working to provide education and tools so that frontline agencies, parents, guardians, and young people themselves can manage access to digital media.

The Censor explained that the Office had undertaken a research project surveying how and why young people view online pornography. The findings from this NZ Youth and Porn survey indicated that 70 percent of young people believe there should be regulation protecting them from harm through restriction or management of dangerous content. While respondents indicated they are trying to self-manage to minimise harm, they struggle to do so because content is often lacking sufficient warnings. Better regulation would complement the Office’s education programmes.

The Office also noted that part of its role involves working with other Crown agencies like the Police, Customs, and Internal Affairs’ digital safety unit on the bottom-line material where possession entails a jail sentence. It commented that, in a digital world, “stuff that people think they can access without issue is straying very close to that legal boundary limit”. This

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2017/18 ANNUAL REVIEW OF THE OFFICE OF FILM AND LITERATURE CLASSIFICATION makes its education role all the more important to confirm where the boundaries are and ensure people play by the rules.

Survey reveals useful insights We heard that the Office’s NZ Youth and Porn survey was very wide-reaching.1 There were responses from nearly 1 percent of all 14–17 year olds in New Zealand. This quantitative survey is providing invaluable insights to inform the work of the Office in protecting young people from digital harm. We are pleased that the Office is also using the survey to look at how different demographics such as those of different genders, sexualities, and ethnicities can be affected in different ways by harmful media.

A theme that emerged is that young people are trying to self-manage how they access potentially harmful media, but lack the tools to do so. This highlights the need to help educate young people, their parents, and guardians to ensure they understand their rights and responsibilities when consuming and sharing digital content. The Office is using information from the survey and integrating it into its education and information programmes.

A planned second phase of the survey will build off the key themes from the first. The second phase will be mainly qualitative and better inform the work of the Office.

Possibility of “porno filter” and loot-box controls We were pleased to learn that the Office is exploring new ways of minimising harm to young people from pornography and gambling-like features in mobile games. The Office is collaborating with its counterparts in the United Kingdom who are trialling an age-verification scheme, referred to as a “porno filter”, to limit young people’s access to pornography. The Office said it is a significant move, and not without challenges. It hopes that tracking the UK’s progress will help it to develop policy advice quickly as to whether this should be implemented in New Zealand.

The Office is also considering a possible regulatory change to require mobile games with gambling-like features (“loot-box functionality”) to be labelled to minimise young people’s exposure to gambling features.

Some classification decisions disputed by the review board We note that the Office did not meet two of its performance targets. In particular, the indicator “classification decisions are appropriately classified” received a score of 41.3 percent against a target of 95 percent. This was because some of its decisions were overturned by the independent board of review. The Office said this result is not an accurate marker of its performance, as one or two reversals can affect the statistics. It said it has a healthy relationship with the independent board, and it is useful to have robust debates and occasional disagreement about the modern problems from digital media. It suggested the indicator could be reviewed and changed in the future, as it does not take into account the challenges from novel digital content.

1 You can read the Office’s findings from the survey here. 4

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Appendix

Committee procedure We met on 20 February and 3 April 2019 to consider the annual review of the Office of Film and Literature Classification. We heard evidence from the Office and received advice from the Office of the Auditor-General.

Committee members Gareth Hughes (Chairperson) Darroch Ball Anahila Kanongata’a-Suisuiki Agnes Loheni Hon Alfred Ngaro Greg O’Connor Maureen Pugh Priyanca Radhakrishnan Hon Louise Upston

Office of the Auditor-General, Briefing on Office of Film and Literature Classification, dated 20 February 2019.

Office of Film and Literature Classification, Responses to annual review questions 1-116.

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2017/18 Annual review of Radio New Zealand Limited

Report of the Economic Development, Science and Innovation Committee

April 2019

Contents Recommendation ...... 2 About Radio New Zealand Limited ...... 2 Financial performance and audit results ...... 2 Workplace culture and morale ...... 3 Serving the regions ...... 3 Joint innovation fund with New Zealand On Air ...... 4 Reflecting diverse communities ...... 4 Appendix ...... 5

Jonathan Young Chairperson

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Radio New Zealand Limited

Recommendation The Economic Development, Science and Innovation Committee has conducted the annual review of Radio New Zealand Limited for 2017/18, and recommends that the House take note of its report.

About Radio New Zealand Limited Radio New Zealand (RNZ) is a Crown entity established under the Radio New Zealand Act 1995. It broadcasts in New Zealand over three networks: RNZ National, RNZ Concert, and an AM network that broadcasts parliamentary proceedings. It also broadcasts internationally via RNZ Pacific.

The chief executive is Paul Thompson, and the board chair is Dr Jim Mather.

Financial performance and audit results RNZ’s total revenue for 2017/18 was $41.3 million, the majority of which was Government funding provided through New Zealand On Air. Expenditure was $41.7 million. The result was a deficit of $352,000, against a budgeted surplus of $69,000. This deficit was attributed to $392,000 of redundancy costs incurred during the year.

RNZ has received additional funding for the 2018/19 year, but remains fiscally constrained, and projects small surpluses until at least 2021.

The Auditor-General’s comments The Auditor-General rated RNZ’s management control environment, financial information systems and controls, and performance information and associated systems and controls as “good”. These grades match those given at the 2016/17 audit. The Auditor-General noted that recommendations from 2016/17 have been addressed only in part, and has made further recommendations.

These further recommendations are that RNZ:

 update its organisational policies  improve the operation of its centralised contract management register  review its policy on out-of-court employment settlements  consider implementing an asset management plan  perform a fair value assessment of its land and buildings  independently review payroll masterfile changes  improve IT policy, and review user access and password settings  review its performance framework and measures.

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We hope to see that these recommendations have been addressed at our next annual review.

Workplace culture and morale We noted that RNZ has been through a period of intense scrutiny and change over the last year, and that the organisation has had some high profile changes to staff at a senior level. We asked RNZ what it is doing to retain staff through a difficult period. RNZ told us that it is aware of the importance of keeping staff engaged on such a major project of change. RNZ said that it has no trouble attracting quality staff, and its somewhat lower rate of retention is down to high demand at other organisations for the skills of RNZ employees.

RNZ also denied that morale was low in the organisation, noting that there was no formal evidence of low morale. It suggested that its strong performance would not be possible if staff were not engaged and morale was low.

Cost of staff changes We are aware of controversies involving senior RNZ staff over the year since the last annual review. We heard that some of the redundancy costs that prevented RNZ’s budgeted surplus this year were for staff who worked for the former RNZ head of news, but were told that these redundancies were not related to her departure.

We also asked if the large number of casual staff hired this year was a further sign of issues in the workplace. RNZ reported that casual staff are part of the operating model for many media businesses, and are necessary to support regular staff for major or breaking events. However, RNZ does not have enough work to give them full-time roles.

High spending on travel We noted that RNZ’s total spending on travel and accommodation increased by 48 percent in 2017/18, and asked why this happened. RNZ responded that much of the increase was due to the election in 2017, since elections require more reporters, coverage, and travel. It also noted that its staff are split between Auckland and Wellington as part of its planning for organisational resilience, which increases travel necessary for day-to-day business.

Some members noted that the previous head of news had particularly high travel expenses, and asked why this was. RNZ noted that she was based in Auckland, but was required to travel to Wellington weekly. The current head of news is Wellington-based, so is unlikely to have similarly high expenses.

Serving the regions RNZ said that part of its purpose is to connect the country together. To that end, we asked how RNZ serves regional communities and journalism. We heard that RNZ has seven regional offices, and is making a funding bid to open more, to cover more of the country with local staff. RNZ believes that commercial media is unable to provide adequate coverage of regional issues, and that, as a non-commercial broadcaster, it is better positioned to work in the regions.

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Local staff are supported by national staff during major events, like the recent fires in Nelson, as they are not equipped to report on ongoing significant events on their own.

Joint innovation fund with New Zealand On Air In 2018, the Minister of Broadcasting, Communications and Digital Media announced a $6 million fund to encourage the development of innovative content. RNZ and New Zealand On Air (NZOA) will administer the fund. We commended RNZ on the quality of the content produced from the fund so far, and asked whether this work will be ongoing. RNZ said it is happy with its work with the fund so far, as it allows RNZ to tap into a more diverse independent production sector.

RNZ has been able to create content for more diverse platforms and audiences using this fund. It has focused on multimedia content, and content for Māori, Pasifika, and young audiences. RNZ gave us the example of an upcoming project using gaming technology to tell a story in a way that appeals more to younger audiences.

Reflecting diverse communities We heard that RNZ intends to reflect the diversity of New Zealand in its output, audience, and staff. We noted that at least one ethnic diversity content producer has recently left RNZ, and asked what is being done to cater for more diverse audiences.

RNZ referred to its Voices programme, which focuses on stories about immigrants to New Zealand, as an example of its provision for wider audiences. It also noted that it is hiring more people to work on ethnically diverse content. RNZ provided examples of other programmes like RNZ Pacific that serve diverse audiences, but accepted it has more work to do.

Māori voices on RNZ The joint innovation fund aims to produce more content targeted at Māori, and RNZ referred to Māori as a critical part of its mission to reflect New Zealand’s diversity. RNZ said that this is reflected in its partnerships with Māori Television, and Te Whakaruruhau o Ngā Reo Irirangi Māori, which make it easier for RNZ to put more Māori content on air.

We asked specifically about hearing more Māori presenters and te reo Māori on the air. RNZ told us about its efforts to incorporate knowledge of te reo Māori and tikanga Māori into the organisation at all levels. It has also employed a dedicated Māori strategy manager. Competency in tikanga and te reo Māori is also now considered during the appointment process for all senior roles within the organisation. Māori on-air talent is also being fostered.

RNZ told us that the increase in the use of te reo Māori on the platform can be divisive, and some members of the public have objected to its proliferation. However, it said that attitudes are changing, te reo is becoming more accepted, and listeners are more curious about what is being said than they have been in the past.

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Appendix

Committee procedure We met on 21 February and 4 April 2019 to consider the annual review of Radio New Zealand Limited. We heard evidence from RNZ and received advice from the Office of the Auditor-General.

Committee members Jonathan Young (Chairperson) Tamati Coffey Andrew Falloon Hon Paul Goldsmith Gareth Hughes Melissa Lee Jo Luxton Clayton Mitchell Poto Williams Lawrence Yule

Office of the Auditor-General, Briefing on Radio New Zealand Limited, dated 21 February 2019.

Radio New Zealand Limited, responses to written questions 1–122.

Radio New Zealand Limited, responses to additional written questions 123–134.

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2017/18 Annual review of Television New Zealand Limited

Report of the Economic Development, Science and Innovation Committee

April 2019

Contents Recommendation ...... 2 About Television New Zealand Limited ...... 2 Financial performance and audit results ...... 2 Viability of the free-to-air model ...... 2 Public funding for media ...... 4 Content accessibility ...... 4 Support for te reo Māori ...... 4 Effects of market fragmentation and 5G on broadcasting ...... 5 Appendix ...... 6

Jonathan Young Chairperson

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2017/18 ANNUAL REVIEW OF TELEVISION NEW ZEALAND LIMITED

Television New Zealand Limited

Recommendation The Economic Development, Science and Innovation Committee has conducted the annual review of Television New Zealand Limited for 2017/18, and recommends that the House take note of its report.

About Television New Zealand Limited Television New Zealand Limited (TVNZ) is a Crown entity company. It is fully government- owned, but operates commercially as a national television broadcaster and digital media company. Most of its funding comes from advertising revenue. It operates television channels, the online video streaming service TVNZ OnDemand, and the news website 1 News Now.

TVNZ’s operations are governed by the Television New Zealand Act 2003. Kevin Kenrick is the chief executive, and Dame Therese Walsh is the board chair.

Financial performance and audit results TVNZ achieved a net profit after tax of $5.1 million in 2017/18, up from $1.4 million in 2016/17. Revenue was $318.5 million, higher than forecast, and up $2 million on the previous year. Spending was also lower than forecast, at $293.9 million, and lower than 2016/17, when it was $301 million. TVNZ paid a dividend to the Crown of $3.7 million.

TVNZ also noted that profits would have been higher had it not written off $9.4 million as expected future losses arising from a licensing contract with Disney. It said these losses were due to the decreasing value of the agreement for it, because of changes in the content provided and the dilution of exclusive broadcast rights by piracy and streaming services.

Audit report The Auditor-General rated both TVNZ’s management control environment and financial information systems and controls as “very good”. It had no recommendations to make on how TVNZ’s systems could be improved. We commend TVNZ for these ratings.

Viability of the free-to-air model We questioned TVNZ at length about the ongoing viability of the free-to-air television model, and the model’s performance and sustainability. TVNZ noted that the market for free-to-air television is weakening, and both viewer numbers and advertising revenues are falling. However, they are not falling as rapidly as predicted, and declines are not even across all demographics.

TVNZ said that free-to-air television reaches 2 million New Zealanders each day, and 3.5 million at some point every month. It notes that even with viewer figures slowly declining or

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2017/18 ANNUAL REVIEW OF TELEVISION NEW ZEALAND LIMITED plateauing, free-to-air still has a substantial audience. It also said that viewer numbers are remaining steady in older age brackets, while declining mainly amongst younger people.

We asked what TVNZ is doing to retain these customers. It said that the fact that some viewers can only access TV, and none of the other platforms TVNZ operates on, means that they are effectively locked in to free-to-air. It also noted that the quality of content is a key driver in maintaining viewer numbers, since there will always be a market for a high quality product that comes at no cost to the consumer. Despite this, it is aware that while the free- to-air model is viable in the medium term, the future for TVNZ is elsewhere.

Alternative platforms TVNZ has invested heavily in online platforms, particularly its TVNZ OnDemand streaming service, and its HeiHei child-focused service. OnDemand is growing rapidly, with its growth rate doubling in the last six months. However, the revenue from these services remains significantly lower than from free-to-air advertising. TVNZ is using revenue from free-to-air to invest in and experiment with a variety of alternative platforms to ensure it can remain economically sustainable.

Traditional models of media licensing create some barriers to this innovation. TVNZ noted that most of the international content it has access to is only licensed for use in New Zealand. This prevents access to TVNZ content by New Zealanders overseas. TVNZ says that while this does limit access to its content, geographic licence restrictions are becoming less common in the industry over time.

Change in focus of content We asked what kind of content TVNZ is creating to ensure that viewers are kept interested. TVNZ recognises that its largest competition is from international news and streaming websites, rather than its domestic competitors. It is unable to compete with the breadth of entertainment and news content that larger producers can create, so is focusing on producing more local content, and hosting more live events.

News as cornerstone of local content We asked what TVNZ is doing to protect the integrity of the news in a fragmenting market. TVNZ said that news and current affairs remains its most viewed programming. It is highly commercially successful, and will remain the cornerstone of its local programming. It maintains reporters around the country, while technology allows it to keep its broadcasting staff centralised in its studios. Coverage of the recent fires in the Nelson area was an example of the impact of this local reporting. Members of the committee congratulated TVNZ for its reporting in their local communities.

Live and local sport content We asked TVNZ what it is doing for sport in New Zealand in light of declining viewer numbers for free-to-air sport. TVNZ noted that sport is still an important part of its offering, as much sporting content is both live and local. Different sports and different events will be assessed on their merits when TVNZ decides what it will host. Shorter or one-off events of high intensity will be more profitable than longer or slower ones, which are often uneconomic on free-to-air TV.

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TVNZ also reported an increase in competition for the rights to events due to market fragmentation, making them less commercially attractive. It has been exploring alternative ways of bringing live sports coverage to free-to-air, including a partnership with Spark for the rights to Rugby World Cup 2019. It also suggested that some of the responsibility lies with the organisers of the events, who would benefit from the exposure that large free-to-air audiences can provide.

Public funding for media We asked TVNZ how it maintains editorial independence despite receiving government funding through New Zealand On Air. TVNZ pointed out that the Television New Zealand Act clearly delineates the separation between TVNZ’s board and the Government, and it fiercely guards its editorial independence. TVNZ also reported that One News is the public’s most trusted news source, which suggests that the public trusts that independence.

TVNZ also noted that its only government funding comes via New Zealand On Air, for specific content. This funding goes to production companies and content creators that TVNZ supports, not to TVNZ itself. TVNZ reported that its share of this funding is decreasing due to the fragmentation of the media industry.

Impact of ministerial advisory group We questioned TVNZ about any benefit it had received from the ministerial advisory group on public media, which was set up in February 2018. TVNZ did not refer to a specific benefit to itself, but said that the New Zealand media industry as a whole had benefited. It suggested that the advisory group encouraged better communication among industry leaders who had previously not worked together well. This was creating a stronger media sector, to the benefit of consumers.

Content accessibility We asked what the future looks like for TVNZ customers who have difficulties accessing content due to vision or hearing impairments. TVNZ reported that all of its primetime content on TVNZ 1 and TVNZ 2 is now available with captions, and that its OnDemand platform also now supports captions. This has been achieved in part through a partnership with the National Foundation for the Deaf. Audio description is available for a limited amount of content as well, although it is progressing slowly due to a lack of resources available for the project. We look forward to seeing further progress on content accessibility at our next review.

Support for te reo Māori We asked TVNZ about its programme of te reo Māori classes for staff. It reported that it has an organisation-wide training programme, which is oversubscribed and welcomed by staff. TVNZ said it recognises its obligation as a broadcaster to promote and protect te reo Māori, as well as to normalise it in accessible greetings and short phrases. It also sees an opportunity to broaden te reo’s appeal to different consumer demographics.

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Effects of market fragmentation and 5G on broadcasting We asked TVNZ about its responses to written questions indicating that 5G wireless technology and increased competition could reduce the quality of broadcasting, or cause TVNZ to reduce its offering of international sport content. TVNZ explained that there is a limited spectrum of frequencies used for broadcasting, and that as more technologies and broadcasters compete for space on this spectrum, each receives less space. This can result in interference from other broadcasts, and a decrease in the quality of content. TVNZ said that if it does not feel it can offer content at a sufficient quality because of this interference, it may prefer not to offer it at all.

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Appendix

Committee procedure We met on 14 February and 4 April 2019 to consider the annual review of Television New Zealand Limited. We heard evidence from TVNZ and received advice from the Office of the Auditor-General.

Committee members Jonathan Young (Chairperson) Tamati Coffey Andrew Falloon Hon Paul Goldsmith Gareth Hughes Melissa Lee Jo Luxton Clayton Mitchell Poto Williams Lawrence Yule

Office of the Auditor-General, Briefing on Television New Zealand Limited, dated 14 February 2019.

Television New Zealand, responses to written questions 1–120.

Television New Zealand, responses to additional written questions 121–126.

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2017/18 Arotake ā-Tau o Te Reo Whakapuaki Irirangi e kīia nei ko Te Māngai Pāho

Pūrongo a te Komiti Whiriwhiri Take Māori

Paengawhāwhā 2019

Ngā kōrero Tūtohutanga ...... 2 Kupu whakataki ...... 2 Whakarāpopoto pūtea me ngā putanga arotake ...... 2 Te Whare o te Reo Mauriora ...... 3 He Mahere Whakapuaki Reo ...... 3 Te arotake kaupapa here “Māori Media Sector Shift” ...... 3 Ngā whaiaro ki te reo Māori ...... 4 Te mahi tahi me ngā tari pāpāho ...... 4 Rōpū whakamāhere mō ngā pāhotanga tūmatanui ...... 4 Pūtea ...... 5 Reo irirangi ā-iwi ...... 6 Te ine i ngā putanga ...... 6 Tāpiritanga ...... 8 English version...... 9

Rino Tirikatene Heamana

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Te Reo Whakapuaki Irirangi, e kīia nei ko Te Māngai Pāho

Tūtohutanga Kua oti i te Komiti Whiriwhiri Take Māori te arotake ā-tau o Te Reo Whakapuaki Irirangi 2017/18, e kīia nei ko Te Māngai Pāho, ā, e tūtohu ana kia mataara Te Whare ki tana pūrongo.

Kupu whakataki I whakatūria Te Māngai Pāho i te tau 1993 i raro i te Whakatikanga Ture Whakapāho. He Rōpū Karauna tēnei e whakapūteatia ana e te Pōti Whanaketanga Māori. Ko te mahi matua a Te Māngai Pāho ko te whakatairanga i te reo Māori me ngā tikanga, arā ko te whakawātea i ngā pūtea mō te pāhotanga, te whakaputa whakaaturanga hei whakapāho, te whakapāho hōtaka (tae atu ki te tuku whakaaturanga ā te minanga), me te rokiroki.

E haepapa ana a Te Māngai Pāho mō:

 te whakapūteatanga ki a Whakaata Māori tonu  ngā pūtea tātāwhāinga mō ngā whakaaturanga pouaka whakaata, ngā hōtaka reo irirangi, ngā waiata, tae atu ki ngā kaupapa matihiko  te pūtea mahi mō ngā reo irirangi ā-iwi  te rokiroki. Ko Tākuta Eruera Tarena te Heamana o te Poari, ā, ko Larry Parr te tumuaki.

Whakarāpopoto pūtea me ngā putanga arotake I te tau 2017/18, e $59.553 miriona te moni puta a Te Māngai Pāho, he $2.57 miriona nui atu i tā tērā tau. E $59.183 miriona te tapeke whakapaunga utu, he $1.98 miriona nui atu i tā te tau 2016/17.

I te tau 2017/18, e $39.86 miriona te pūtea i tohaina e Te Māngai Pāho mō ngā kaupapa whakaata Māori, $13.31 miriona mō te reo irirangi Māori, e $2.38 miriona mō ngā kaupapa hou me te matihiko, ā, $1.007 miriona mō ētahi atu whakatairangatanga o te reo Māori me ngā tikanga. E $2.63 miriona o ngā utu whakahaere, arā e 4.4 ōrau te pikinga o tā Te Māngai Pāho tapake whakapaunga utu.

Ko te “tino pai” te kōrero a Te Mana Arotake e pā ana ki tō Te Māngai Pāho taiao tiaki whakahaerenga, ngā pūnaha mōhiohio pūtea me ngā whakamatua. Ko te “pai” te kōrero mō ngā kōrero whanonga, me ngā pūnaha me ngā whakamatua e hāngai ana. E rikarika ana mātau ki te mātai i tā Te Māngai Pāho whakatutuki i ā Te Mana Arotake tūtohutanga.

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Te Whare o te Reo Mauriora Ko Te Whare o te Reo Mauriora te tauira mō te mahi tahi a te Māori me te Karauna hei whakapiki i ngā putanga reo Māori mō ngā whānau, ngā hapū, ngā iwi, ngā hapori Māori, tae atu ki te motu whānui.

I rongo mātau he hua te angitu o te āhua o te whakamahinga pūkenga o te Māori, ngā iwi, me te Karauna kia eke ai te whāinga whakarauora reo kotahi. I whāki mai Te Māngai Pāho he wero ukauka te whakarauoranga reo, ā, me mahi tahi, me atamai hoki.

I kī a Te Māngai Pāho kei te uara a te motu me Ngāi Māori mō te reo Māori te angitu mō Te Whare o te Reo Mauriora. I rongo mātau ko te pū o te mahi nei ko tō te rāngai pāpāho Māori āheinga ki te whakatahuri mai i te ngākau kōhatu.

He Mahere Whakapuaki Reo Ko He Mahere Whakapuaki Reo Māori (2018–2021) te rautaki kotahi mō te rāngai pāpāho Māori. I rongo mātau ko te whakatinana i te rautaki kotahi nei te tohu o te whakahirahira o te mahi tahi a ngā tari katoa kia eke ai te pāpāhotanga Māori.

Ko ngā whāinga o He Mahere Whakapuaki Reo Māori (2018-2021):

 ko te whakawhānui i te hunga mātakitaki me te ranea o te kainga o ngā whakaaturanga Māori  ko te whakapiki i ngā rauemi e wātea ana ki te rāngai  ko te whakaū i te pānga o ngā whakaaturanga Māori ki te ao hurihuri. Ko He Mahere Whakapuaki Reo Māori te hua o ētahi hui i kōrerohia ai e te rāngai pāpāho Māori tana āpōpō. Hei tā Te Māngai Pāho, e tārewa ana ngā kaupapa paheko a ngā tari kia oti rā anō te arotake kaupapa here, e kīia nei ko te Māori Media Sector Shift. E kaingākau ana mātau ki te mātai i te pā o te arotake ki He Mahere Whakapuaki Reo Māori.

Te ine putanga Ko te whāinga o He Mahere Whakapuaki Reo Māori ko te whakarite i te poutarāwaho putanga hei ine i te angitu puta noa i te rāngai pāpāho Māori. I rongo mātau he māmā ake ō ētahi tari poutarāwaho i ō ētahi, ā, he wero hoki te whakahāngai kia rite. I whakamārama mai Te Māngai Pāho he whakahirahira hoki te kohikohi tatauranga mō te whakarite i te poutarāwaho putanga kotahi.

Te arotake kaupapa here “Māori Media Sector Shift” I te Whiringa-ā-Nuku 2018, i riro mā Te Puni Kōkiri e arotake ngā kaupapa here a te rāngai pāpāho Māori. Ka arotakea ko Te Māngai Pāho, ko Whakaata Māori, me Te Whakaruruhau o Ngā Reo Irirangi Māori. Ko tā te arotake mahi he marohi panonitanga kia pai ai tā ngā rōpū pāpāho Māori urupare ki te ao pāpāho matihiko e huri nei, e huri nei.

E rarata ana Te Māngai Pāho ki te arotake nei, arā kia pai ai te mahi tahi a te rāngai reo Māori ki te hanga i tētahi pūnaha pāhekoheko o ngā pāhotanga Māori, māna nei e whakatupu te reo Māori me te ao Māori. E manako ana Te Māngai Pāho kia arotahi te

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2017/18 AROTAKE Ā-TAU O TE REO WHAKAPUAKI IRIRANGI arotake ki ngā pāhotanga, te mahi tahi, me te whakawhanake āheinga, kaua ki ngā hanganga, ngā tūāpapa, me ngā whakataetae.

Ngā whaiaro ki te reo Māori I whāki Te Māngai Pāho koia te haepapa ki te whakahuri mai i te tangata ki te reo Māori me te ao Māori, arā ki ngā pūtea kei ōna ringaringa. I kī Te Māngai Pāho, e tukuna iho ai te reo Māori ki ngā whakatupuranga e haere ake nei, me mātau ōna kaikōrero e whakamaimoatia ana, e whakapuiakitia ana e te motu whānui.

Whakamahi ai Te Māngai Pāho i te tauira ZePA hei ine i ngā waiaro ki te reo Māori. He poutama ako te tauira ZePA, e toru rawa ōna wāhanga

 kore: kāore e whakamahia, ngākaukore hoki ki te reo Māori  torohū: e rata ana ki te reo Māori  kakama: e whakapau kaha ana ki te te hāpai i te reo Māori E whakamahi ana Te Māngai Pāho i taua poutama hei ine i te ekenga o tana tahuri mai i te waiaro kia kakama ai, e kīia nei e ia ko te “nuku whaka-te-katau”. I rongo mātau ko te painga o te tauira ZePA o te inenga o ngā wāhanga katoa o te haerenga reo a te tangata. I rongo mātau e noho ana te nuinga o ngā tāngata o Aotearoa i runga i te pae “kore, e koke ana ki te torohū” o te poutama.

Te mahi tahi me ngā tari pāpāho I whāki mai Te Māngai Pāho i āwhinatia te whakaratanga waiaro o te motu ki te reo Māori me te ao Māori e ngā mahi me Te Reo Tataki, e whakapāho nei i ngā pāhotanga Māori ki runga pouaka whakaata auraki.

I rongo mātau i whakapūteatia e Te Māngai Pāho ko ngā pāhotanga pouaka whakaata a Breakfast i te Wiki o te Reo Māori i ngā tau tuatahi o aua whakanuitanga. Inaianei e whakapūtea ana Te Reo Tataki anō rā i aua pāhotanga. I kīia mai ko Moving Out With Tamati tētahi atu tauira o te mahi tahi a Te Reo Tataki me Te Māngai Pāho hei whakapāho i ngā pāhotanga Māori ki te pouaka whakaata auraki.

I taukī Te Māngai Pāho kāore ia e hiahia ki te whakataetae “nō wai” te reo Māori. Ko tana whāinga ko te mahi tahi me ētahi atu kaipāpāho o Aotearoa kia whānui te toro o ngā pāhotanga Māori. I rongo mātau ka wherahia e te arotake kaupapa here o te rāngai pāpāho Māori ko te āhua o tā Te Māngai Pāho mahi me ētahi atu kaipāpāho kia eke ngā whāinga.

I pātai mātau me ka riro he painga ā-tauhoko rānei i Te Māngai Pāho ina eke ngā pāhotanga e whakapūteatia ana e ia ki te ao whānui. I kī Te Māngai Pāho karekau. Arotahi ai tana whakaaetanga raihana ki te tuku tonu atu i ngā pāhotanga puta i Aotearoa, ā, ko te hua o taua whakaaetanga ko te rironga o te mana hoko pāhotanga ki tāwāhi i te kaihanga ōna.

Rōpū whakamāhere mō ngā pāhotanga tūmatanui I te Huitanguru 2018 i whakatūria tētahi rōpū whakamāhere pāhotanga hei rangahau i te whakatūranga o tētahi Kōmihana Whakapūtea Pāhotanga Tūmatanui. I ui mātau me ka

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2017/18 AROTAKE Ā-TAU O TE REO WHAKAPUAKI REO IRIRANGI whakapae Te Māngai Pāho ka whakakotahitia ia ki te Kōmihana Whakapūtea Pāhotanga Tūmatanui, me ka whakatūria rānei.

I kī mai Te Māngai Pāho kāore ia i te mōhio ki te putanga o tā te rōpū whakamāhere pūrongo. I whākina mai, hei tāna koia tētahi tari reo Māori e mahi ana i te ao pāpāho, kaua ko te tari pāpāho. I rongo mātau, nā konei i rerekē ai Te Māngai Pāho i ētahi atu kaipāpāho tūmatanui, he takenga nō ngā whakatau katoa i ngā pānga ki te reo Māori.

Pūtea I kī mai Te Māngai Pāho kua kore e whakawhānuitia tana pūtea mō ētahi tau huhua nei. I rongo mātau ki te rāweketia ngā whika mō te tāmi ahumoni, he iti kē tana pūtea mā te 15 ōrau tēnā i tā te tau 2004. I kī mai Te Māngai Pāho ahakoa ka noho tonu te pūtea ki tana taumata, kua piki kē atu te hiahia ki te pūtea me ngā hiahia mō ngā pāhotanga Māori. Hei tā Te Māngai Pāho, e kore e ora tonu atu te mauri i tēnei hanga.

Kua oti i Te Māngai Pāho he marohitanga tahua mō te Pūtea 2019.

Pūtea mō te pouaka whakaata I rongo mātau kua panoni Te Māngai Pāho i te auau o tana tohatoha pūtea i tana tahua tātāwhāinga mō te hanganga pāhotanga pouaka whakaata. I te tau pūtea 2018/19 e rua kē, kaua ko te toru, ngā tukunga pūtea mō ngā pāhotanga pouaka whakaata. I tīni Te Māngai Pāho i kia pai ai tana pare atu i te pūtea ki ētahi pāhotanga hou, tērā e kaha atu nei te hiahiatia. E ai ki Te Māngai Pāho ko te panonitanga nei te tohu o ngā taumahatanga e utaina ana ki te tahua pūtea whāiti tonu.

I pātai mātau me ka whakapūteatia e Te Māngai Pāho ngā pāhotanga whakaari. I rongo mātau kua oti kē i a ia tētahi whakaari iti, ko Ahikāroa, e kaha nei te mātakina e te rangatahi. I whākina mai me he nui atu āna moni, ka whakaaro ake ki te whakapūtea i ētahi atu whakaari.

Pūtea mō te matihiko me ngā tūāpapa pāpāho hou I rongo mātau e tahuri atu ana te rāngai pāpāho Māori i ngā tūāpapa taketake pēnei me te reo irirangi me te pouaka whakaata, ka huri kē ki te matihiko me ngā tūāpapa hou. E ai ki Te Māngai Pāho e tāria ana te huringa atu o te aro i te tūāpapa ki te kai ō roto, ā, me whakahou hoki ia i a ia anō kia ea ai te panonitanga nei.

I pātai mātau he aha i nui atu ai ā Te Māngai Pāho moni i pau i ngā whakahaerenga ($2.6 miriona) tēnā i te matihiko me ngā tūāpapa hou ($2.3 miriona) ina e tahuri kē ana ia ki te whakamahi i te matihiko me ngā tūāpapa hou. I kīia mai kāore e taea e Te Māngai Pāho te pare pūtea ki te matihiko me ngā tūāpapa hou. I rongo mātau i whakanōhia Te Māngai Pāho hei papa mō te tuari pūtea ki te matihiko me ngā tūāpapa hou i te tau 2008, ā, kāore i riro i a ia he pūtea atu kia ea ai taua haepapa.

Ētahi atu pūtea I te whakamanatanga o Te Ture mō Te Reo Māori i te tau 2016, i whakamanahia Te Māngai Pāho hei whakahaere pūtea tātāwhāinga mō “ētahi atu mahi hei hāpai i te reo Māori”. I te tau 2017/18, he $1.007 miriona i pau i aua mahi. I kīia mai kei roto i taua pūtea ko te rokiroki.

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I rongo mātau ko tōna $575,000 i pau i te rokiroki, ā, i pau ngā mahuetanga i ngā mahi atamai.

Te hunga mātaki e whāia ana I te tau 2017/18, e 502 hāora i whakapūteatia e Te Māngai Pāho mō te pouaka whakaata mā ngā wahapū o te reo, ā, e 249 hāora mō te hunga ako i te reo me te hunga torohū. I pātai mātau he aha Te Māngai Pāho e pare atu ai i āna moni ki ngā pāhotanga mō te hunga matatau. I rongo mātau e tauwhirotia ana te reo Māori e te akunga whāiti, he matatau, ā, e tika ana kia arotahi atu Te Māngai Pāho ki ngā hiahia o taua hunga kia ora tonu ai te reo.

Te whakahaere tukinga pānga I pātai mātau e whakapono ana rānei Te Māngai Pāho e mahea ana, e pūata ana āna whakatau pūtea. Hei tāna nō waho o te tari nei ngā tāngata o tana ohu nāna nei ngā whakatau pūtea kia kaua e Tukituki ngā pānga.

Reo irirangi ā-iwi E koa ana mātau i te rongonga i tupu te hunga whakarongo reo irirangi ā-iwi mā te 5 ōrau i te tau 2017/18. He pikinga nunui tēnei mai anō i te tau 2016/17, arā e 9 ōrau kē te hekenga. Hei tā Te Māngai Pāho he hua taua tupuranga i ngā panonitanga a ngā reo irirangi ā-iwi ki ngā pāhotanga hei whakarongo mā te tangata, me te āhua o te tuku i aua pāhotanga.

E arotakea ana hoki te reo irirangi ā-iwi i roto i te arotake kaupapa here i te rāngai pāpāho Māori. E ai ki Te Māngai Pāho e kore e raweketia e ia te reo irirangi ā-iwi kia oti rā anō te arotake. I kī taurangi mai Te Māngai Pāho kāore ia i te whakaaro ki te whakamoe i ētahi o ngā reo irirangi ā-iwi e 21. E tūmanako ana Te Māngai Pāho ka tautoko tonu te arotake i ngā reo irirangi ā-iwi kia tupu tonu atu. Ka āta aroturuki mātau i ngā panonitanga ki ngā reo irirangi ā-iwi.

I pātai mātau he aha e rite ai te pūtea, e $500,000 te nui, e riro nei i tēnā me tēnā o ngā reo irirangi ā-iwi. I kī Te Māngai Pāho he whakapapa kē te take, ā, e manako ana kia wherahia te āhua o te tuari pūtea e te arotake. I whakaae hoki ia kāore i te tika kia rite te pūtea o ngā teihana o Tāmaki Makaurau, he tokomaha rawa ngā Māori i roto i te rohe pāpāho, ki tā ngā teihana i roto i ngā rohe.

Te ine i ngā putanga I kī mai Te Māngai Pāho e tahuri atu ana ia i te pūrongo i āna mahi (whakaputanga) ki te pūrongo i tāna i whai nei (putanga). I kaingākau mātau ki ngā kōrero mō te āhua o tā Te Māngai Pāho ine i āna putanga.

I rongo mātau e whai ana ia ki te whakatau i te rahi o tā Te Māngai Pāho tauira ZePA. Ko te whāinga o aua mahi ko te ine i te rarata mai o ngā whaiaro o te motu ki te reo Māori, ā, e arotakea ana e Tatauranga Aotearoa i tēnei wā. I kī hoki Te Māngai Pāho, whakamahia ai e ia ngā tatauranga a Te Kupenga (tā Tatauranga Aotearoa tirohanga whānui ki te hauora o te Māori) me te kautetanga hoki hei ine i ngā whāinga.

Hei tā Te Māngai Pāho he mahi pai te ine i te ū a te hunga mātaki hei tātari i te eke o ana putanga. I rongo mātau ka hora mai ngā kōrero whakahirahira mō te uara o āna pāhotanga 6

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2017/18 AROTAKE Ā-TAU O TE REO WHAKAPUAKI REO IRIRANGI ki te hapori, i te ine i ngā kōrero mō te whaiwāhi mai ō rātau. Tērā ko te tokomaha me te auau o te mātaki mai, me te wāhi e mātaki mai ai rātau.

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Tāpiritanga

Hātepe komiti I hui mātau i te 13 Poutūterangi me te 3 Paengawhāwhā 2019 hei whiriwhiri i te arotake ā- tau o Te Reo Whakapuaki Irirangi, e kīia nei ko Te Māngai Pāho. I rongo mātau i ngā kōrero taunaki a Te Māngai Pāho, ā, i whiwhi i a mātau he kupu whakamāherehere i te Tari o te Mana Arotake.

Ngā mema o te komiti Rino Tirikatene (Heamana) Marama Davidson Dan Bidois Joanne Hayes Tutehounuku (Nuk) Korako Adrian Rurawhe Nicky Wagner Meka Whaitiri

I whai wāhi a Melissa Lee ki ētahi wāhi o tēnei arotake.

Ngā whakamāherehere me ngā kōrero taunaki i whiwhi I whiwhi i a mātau i ngā tuhinga i raro iho nei hei whakamāherehere, hei kōrero taunaki hoki mō te arotake ā-tau. Kei te paetukutuku o Te Whare Pāremata, www.parliament.nz, me ngā tuhinga o ā mātau kōrero.

Tari o te Mana Arotake, Whakamōhiotanga ki Te Reo Whakapuaki Irirangi, e kīia nei ko Te Māngai Pāho, i te 13 Poutūterangi 2019.

Te Māngai Pāho, Whakautu ki ngā pātai (me ngā tāpiritanga) 2017/18, i te 13 Poutūterangi 2019.

Te Māngai Pāho, Whakautu ki ngā āpititanga pātai tuhi (me ngā tāpiritanga), i te 29 Poutūterangi 2019.

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2017/18 Annual review of Te Reo Whakapuaki Irirangi (Māori Broadcasting Funding Agency), also known as Te Māngai Pāho

Report of the Māori Affairs Committee

April 2019

Contents Recommendation ...... 10 Introduction ...... 10 Financial overview and audit results ...... 10 Te Whare o te Reo Mauriora ...... 11 He Mahere Whakapuaki Reo ...... 11 “Māori Media Sector Shift” policy review ...... 11 Attitudes towards te reo Māori ...... 12 Collaboration with media outlets ...... 12 Public media advisory group ...... 12 Funding ...... 13 Iwi radio ...... 14 Measuring outcomes ...... 14 Appendix ...... 16

Rino Tirikatene Chairperson

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Te Reo Whakapuaki Irirangi (Māori Broadcasting Funding Agency), also known as Te Māngai Pāho

Recommendation The Māori Affairs Committee has conducted the annual review for 2017/18 of Te Reo Whakapuaki Irirangi (Māori Broadcasting Funding Agency), which is also known as Te Māngai Pāho, and recommends that the House take note of its report.

Introduction Te Māngai Pāho was established in 1993 under the Broadcasting Amendment Act. It is an autonomous Crown Entity and is funded through Vote Māori Development. Te Māngai Pāho’s primary function is to promote Māori language and culture by making funds available for the production, broadcasting, and transmission of programmes (including on-demand programmes), and for archiving.

Te Māngai Pāho is responsible for:

 direct funding of Māori Television  contestable funding of television programmes, radio programmes and music, and digital media initiatives  operational funding for iwi radio  archiving. Dr Euera Tarena is the chairperson of the board and Larry Parr is the chief executive.

Financial overview and audit results In 2017/18 Te Māngai Pāho’s total revenue was $59.553 million, $2.57 million more than the previous year. Its total expenditure was $59.183 million, $1.98 million more than in 2016/17.

In 2017/18 Te Māngai Pāho distributed $39.86 million in funding for Māori television programmes, $13.31 million for Māori radio, $2.38 million for digital and new media, and $1.007 million for other activities that promote Māori language and culture. Administration costs were $2.63 million, which was 4.4 percent of Te Māngai Pāho’s total expenditure.

The Auditor-General assessed Te Māngai Pāho’s management control environment and financial information systems and controls as “very good”. Its performance information and associated systems and controls were assessed as “good.” We hope to see Te Māngai Pāho act on the Auditor-General’s recommendations in this area.

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Te Whare o te Reo Mauriora Te Whare o te Reo Mauriora is a model for how Māori and the Crown will work in partnership to improve Māori language outcomes for whānau, hapū, iwi, Māori communities, and wider society.

We heard that the programme’s success comes from how it utilises the strengths of Māori, iwi, and the Crown to achieve the shared goal language revitalisation. Te Māngai Pāho said that language revitalisation is an ongoing challenge which will require innovation and collaboration.

Te Māngai Pāho said the success of Te Whare o te Reo Mauriora depends on the value wider society and Māori place on te reo Māori. We heard Māori broadcasting’s ability to change attitudes is integral to this work.

He Mahere Whakapuaki Reo He Mahere Whakapuaki Reo (2018–2021) is the combined strategy for the Māori media sector. We heard that implementing a combined strategy shows that collaboration between agencies is integral to the success of Māori media.

The objectives of He Mahere Whakapuaki Reo Māori (2018–2021) are:

 to grow audience numbers and increase the consumption of Māori content  to improve the resources available to the sector  to increase the relevance of Māori content. He Mahere Whakapuaki Reo Māori was the outcome of a series of hui (meetings) where the Māori broadcasting sector discussed its future. Te Māngai Pāho said that cross-agency initiatives have been put on hold while the policy review called the Māori Media Sector Shift takes place. We are interested to see how He Mahere Whakapuaki Reo Māori is influenced by the review.

Measuring outcomes He Mahere Whakapuaki Reo Māori aims to establish an outcomes framework which will measure success across the Māori media sector. We heard that agencies’ outcomes frameworks are at varying levels of sophistication, so aligning them will be a challenge. Te Māngai Pāho explained that collecting statistics will be an important part of developing a joint outcomes framework.

“Māori Media Sector Shift” policy review In October 2018 Te Puni Kōkiri (the Ministry of Māori Development) was tasked with undertaking a policy review of the Māori broadcasting sector. Te Māngai Pāho, the Māori Television Service, and Te Whakaruruhau o Ngā Reo Irirangi Māori will be assessed in the review. The review will recommend changes to ensure that Māori broadcasting entities are responsive to the changing digital media environment.

Te Māngai Pāho said it welcomed the review as an opportunity for the Māori language sector to work together to create an integrated Māori media ecosystem, which grows both te

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Attitudes towards te reo Māori Te Māngai Pāho said it has a responsibility to improve people’s attitudes towards te reo Māori and te ao Māori through the funding it administers. Te Māngai Pāho said that for te reo Māori to be passed on to future generations, speakers need to see that it is cherished and valued in wider society.

Te Māngai Pāho uses the ZePA model to measure people’s attitudes towards te reo Māori. The ZePA model is a learning continuum which has three zones:

 zero: no use and no receptivity towards Māori language  passive: accommodating of Māori language  active: striving to advance the Māori language. Te Māngai Pāho uses this continuum to measure its success at shifting people’s attitudes towards active, which it calls “right shift.” We heard that the advantage of the ZePA model is that it measures every stage of a person’s reo journey. We heard that the majority of New Zealanders fall within the “zero, moving towards passive” part of the continuum.

Collaboration with media outlets Te Māngai Pāho said work with TVNZ to broadcast Māori media on mainstream television has helped to improve society’s attitudes towards te reo Māori and te ao Māori.

We heard that Te Māngai Pāho funded Māori Language Week segments on the television show Breakfast for the first few years of Māori Language Week celebrations. Now TVNZ funds these segments itself. We were told that Moving Out With Tamati was another example of TVNZ and Te Māngai Pāho working together to broadcast Māori media on mainstream television.

Te Māngai Pāho stated that it did not want there to be competition over who “owns” te reo Māori. It said it aims to collaborate with media outlets in New Zealand so that Māori media has a broad reach. We heard that the policy review of the Māori media sector will consider how Te Māngai Pāho can work with other broadcasters to achieve its goals.

We asked whether there is any commercial benefit to Te Māngai Pāho if content it funded is successful on the world stage. Te Māngai Pāho said that there is not. Its licensing agreement focuses on making content freely available in New Zealand and the consequence of this agreement is that producers have rights to sell their content offshore.

Public media advisory group In February 2018 a media advisory group was established to investigate setting up a Public Media Funding Commission. We asked whether Te Māngai Pāho expects to be amalgamated into the Public Media Funding Commission, if it was established.

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Te Māngai Pāho said it does not know what the outcome of the advisory group’s report will be. It stated that it sees itself as a Māori language agency, operating in the media sphere, rather than as a broadcasting agency. We heard that this makes Te Māngai Pāho different from other public broadcasters, because every decision is made based on the impact it will have on te reo Māori.

Funding Te Māngai Paho said it has not received an increase in funding for several years. We heard that when figures are adjusted for inflation, it receives 15 percent less funding than it did in 2004. Te Māngai Pāho said that, while funding remains static, the demand for funding and what audiences expect Māori media to deliver has increased. Te Māngai Pāho said this situation is unsustainable.

Te Māngai Pāho has a budget bid for Budget 2019.

Funding for television We heard that Te Māngai Pāho has made changes to how often it allocates funding from its contestable fund for production of television programmes. In the 2018/19 financial year there will be two, rather than three, funding rounds for television programmes. Te Māngai Pāho made this change so that it could put more funding into new media, for which demand is increasing. Te Māngai Pāho said that the change illustrates the strain being put on a finite amount of funding.

We asked whether Te Māngai Pāho would fund drama programming in the future. We heard that it is already funding a small drama called Ahikāroa, which has been popular with rangatahi (young people). It said that if it had more money it would consider funding more dramas.

Funding for digital and new media We heard that Māori media is moving away from its traditional platforms of radio and television and towards digital and new media. Te Māngai Pāho said it expects that there will be a change in focus from the platform used, to the content produced, and it will need to redesign for this change.

We asked why Te Māngai Pāho spent more money on administration ($2.6 million) than on digital and new media ($2.3 million) if it is transitioning towards using digital and new media. Te Māngai Pāho said it does not have capability to allocate more money to digital and new media. We heard that when Te Māngai Pāho was given responsibility for allocating funding to digital and new media in 2008, it was not given any additional funding to do so.

Other funding When Te Ture mō Te Reo Māori (the Māori Language Act) came into effect in 2016, Te Māngai Pāho was empowered to administer contestable funding for “other activities to promote te reo Māori”. In 2017/18 it spent $1.007 million on these activities. It said that archiving is included in this appropriation. We heard that around $575,000 is spent on archiving and the remaining money funds innovation.

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Target audience In 2017/18 Te Māngai Pāho funded 502 hours of television for fluent speakers and only 249 hours of television for both second-language learners and receptive audiences. We asked why Te Māngai Pāho targets its funding towards content for competent reo speakers. We heard that te reo Māori is maintained by a small group of people with advanced ability, and Te Māngai Pāho has to cater for this demographic’s needs in order to maintain the language.

Managing conflicts of interest We asked whether Te Māngai Pāho is confident that its funding decisions are open and transparent. It said it has an independent industry panel which makes its funding decisions in order to manage any conflicts of interest.

Iwi radio We were pleased to hear that iwi radio listenership increased by over 5 percent in 2017/18. This is a significant improvement from 2016/17, when listenership decreased by 9 percent. Te Māngai Pāho said that the increase in listenership was due to iwi radio stations making changes to the content they offer listeners and to the way this content is delivered.

Iwi radio is being looked at as part of the policy review of the Māori media sector. Te Māngai Pāho said it will not be making any changes to iwi radio until the review is complete. It assured us that it is not intending to disestablish any of the 21 iwi radio stations. Te Māngai Pāho hopes the review will continue to support iwi radio to grow. We will monitor any changes to iwi radio with interest.

We asked why each iwi radio station receives equal funding of $500,000. Te Māngai Pāho said the reason for this is historical, and it hopes that the way funding is allocated will be considered in the review. It agreed that it does not make sense for stations in Auckland, which have a large Māori population in their broadcast footprint, to receive the same amount of funding as provincial stations.

Measuring outcomes Te Māngai Pāho said it is transitioning from reporting against what it does (its outputs) to what it actually seeks to achieve (its outcomes). We were interested to hear how Te Māngai Pāho measures its outcomes.

We heard that work is being done to quantify Te Māngai Pāho’s ZePA model. This work aims to measure shifting societal attitudes towards te reo Māori and is currently being reviewed by Statistics New Zealand. Te Māngai Pāho said that it also uses statistics from Te Kupenga (Statistics New Zealand’s survey of Māori wellbeing) and the census to measure its outcomes.

Te Māngai Pāho said that measuring audience engagement is a good way to see whether it is achieving its outcomes. We heard that measuring how many people engage, how often people engage, and where they engage from, provides important information about the

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2017/18 ANNUAL REVIEW OF THE TE REO WHAKAPUAKI IRIRANGI community value of its broadcasts. Audience engagement will be used as a measure in Te Māngai Pāho’s strategic performance expectations for 2019/20.

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Appendix

Committee procedure We met on 13 March and 3 April 2019 to consider the annual review of Te Reo Whakapuaki Irirangi (Māori Broadcasting Funding Agency), also known as Te Māngai Pāho. We heard evidence from Te Māngai Pāho and received advice from the Office of the Auditor-General.

Committee members Rino Tirikatene (Chairperson) Dan Bidois Marama Davidson Joanne Hayes Tutehounuku (Nuk) Korako Adrian Rurawhe Hon Nicky Wagner Hon Meka Whaitiri

Melissa Lee participated in some of this review.

Office of the Auditor-General, Briefing on Te Reo Whakapuaki Irirangi (Māori Broadcasting Funding Agency), also known as Te Māngai Pāho, dated 13 March 2019.

Te Māngai Pāho (Māori Broadcasting Funding Agency), responses to 2017/18 written questions (appendices included), dated 13 March 2019.

Te Māngai Pāho (Māori Broadcasting Funding Agency), responses to additional written questions (appendices included), dated 29 March 2019.

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Pūrongo a te Komiti Whiriwhiri Take Māori

Paengawhāwhā 2019

Ngā kōrero Tūtohutanga ...... 2 Mō Te Taura Whiri i te Reo Māori ...... 2 Whanonga pūtea ...... 2 Pikinga o ngā pūrongo whanonga ...... 2 Kia ū te āheinga reo Māori ki te rāngai tūmatanui ...... 2 Marutanga raraunga ...... 3 Akiakina te mahi tahi e Te Whare o te Reo Mauriora ...... 3 Ko te reo Māori te reo o Aotearoa ...... 4 Tāpiritanga ...... 5 English version...... 6

Rino Tirikatene Heamana

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Te Taura Whiri i te Reo Māori

Tūtohutanga Kua oti i te Komiti Whiriwhiri Take Māori te arotake ā-tau o Te Taura Whiri i te Reo Māori 2017/18, ā, e tūtohu ana kia mataara Te Whare ki tana pūrongo.

Mō Te Taura Whiri i te Reo Māori Ko Te Taura Whiri i te Reo Māori he rōpū mana motuhake o te Karauna, nā Te Pōti Whanaketanga Māori te pūtea. Ko Te Puni Kōkiri tana rōpū aroturuki. E whai ana Te Taura Whiri kia whakarauoratia, kia whakatairangatia, kia whakawhanaketia, kia rangahaua te reo Māori.

Kua panoni te wāhi ki Te Taura Whiri i muri mai o te whakamanatanga o Te Ture mō Te Reo Māori 2016. Ko Te Taura Whiri te rōpū takitaki i te whakahaerenga me te whakatinanatanga o Te Maihi Karauna (te rautaki reo Māori a te Karauna). I roto i te tūranga nei nā, e arotahi ana Te Taura Whiri ki te tautoko i te whakamahinga me te whakatairangatanga o te reo Māori i roto i ngā tari kāwanatanga.

Ko Ahorangi Rawinia Higgins te toihau o te kōmihana, ā, ko Ngahiwi Apanui te tumuaki.

Whanonga pūtea E $5.99 miriona te tapekenga moni a Te Taura Whiri i te tau 2017/18, ā, $10.41 miriona te tapekenga whakapaunga utu. E $4.42 miriona te nui o te nama i pūrongotia e Te Taura Whiri, he reanga mā te toru o te nama i te tau ō mua, arā $1.269 miriona.

I whakawhitia atu ngā pūtea hapori a Te Taura Whiri i te tau 2017/18, ā, he putanga te nama i te tau 2017/18 o te herenga ki ētahi oati kirimana ō mua. I whakamaheretia e Te Taura Whiri i te Reo Māori he nama e $5.765 miriona te nui i te tau 2017/18.

Pikinga o ngā pūrongo whanonga I koa te ngākau i te kitenga e “pai” tonu ana ā Te Taura Whiri taukī pūtea me ngā pūrongo whanonga, ā, i whakatikaina ētahi o ngā takarepatanga o te tau 2016/17.

Pērā anō i te tau ō mua, i kitea e te kaiarotake he “pai” te taiao tiaki whakahaerenga, ngā pūnaha mōhiohio pūtea me ngā whakamatua, tae atu ki ngā kōrero whanonga, me ngā pūnaha me ngā whakamatua e hāngai ana. Tērā ētahi tūtohutanga a te kaiarotake kia pai ake ai ngā āhuatanga, pēnei me te whakapakari i ngā kōrero whanonga kia pai ai ngā pūrongo; te whakaū hoki i te hāngai o ngā whakatau, me te tuhinga ōna, ki ngā kupu whakamāhere i whiwhi; tae atu ki te tītohu i ngā raraunga ō mua me ngā kōtiutiutanga whanonga. E rikarika ana mātau ki te kite i te pikinga o aua āhuatanga.

Kia ū te āheinga reo Māori ki te rāngai tūmatanui E kaingākau ana mātau ki ngā mahi e tika ana kia wātea ake ai te reo Māori ki ngā hapori puta noa i Aotearoa. I kīia mai ahakoa ngā mahi hei mahi mā tātau, nā Te Whare o te Reo

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Mauriora i pai ai te mahi tahi me te kōrerorero tahi a ngā rōpū e tika ana. Koirā hoki te tauira mahi ngātahi a te Māori me te Karauna mō te reo Māori te take. Ko te whakatairanga hoki tērā i te mana o te reo hei akiaki i te tangata ki te tū hei kaiwhakawhitireo, hei kaiako hoki; ki te ako i te reo; me te whakarite hoki i te āhuatanga ki roto o te motu whānui e hāpaitia ai te reo hei reo whaimana.

Te whakangungu me te aromatawai kaiwhakawhitireo I ui mātau mō ngā taumata tiketike hei eke mā ngā kaiwhakawhitireo ā-waha whai tiwhikete, me ngā mahi e tika ana ki te whakawhānui i te hunga e eke ana ki te taumata. I ako mātau ko te mahi nei te whakawhitireo ā-waha he tohungatanga tiketike, me tautōhito rā anō te tangata ka tika, ā, he pūkenga kē atu tērā i te mātau ki te reo. He tokomaha ake te hunga e whai ana i te whakamātautau, ā, he take tērā kia rorotu te ngākau.

I ako hoki mātau me tae ā-tinana atu te hunga e whai ana i te mahi nei ki ētahi wānanga i mua i te whakamātautau. E whakaaro ana Te Taura Whiri ki te tahuri ki te mea nei te wānanga hei aromatawai, kaua ko te whakamātautau e toru hāora nei te roa.

Marutanga raraunga I pātai mātau mō ā Te Taura Whiri mahere mō te tiaki i āna raraunga. I kī te kōmihana i oti i tana kaituku ratonga hangarau te taupoki te take i puea ake i te tau 2017/18. Mai anō i reira kua whakapakaritia ōna ngerengere kia kaua e whakaeketia anō. Kua arotake tonu te kōmihana i āna tukanga, ā, tae atu ki āna pūnaha hangarau mōhiohio.

Akiakina te mahi tahi e Te Whare o te Reo Mauriora I tukuna Te Maihi Karauna, tā te Karauna rautaki mō te reo Māori, i te 21 Poutūterangi 2019, kotahi wiki whai muri iho i tā mātau hui me Te Taura Whiri. I rongo mātau e mahi tahi ana Te Taura Whiri me Te Mātāwai, ko te rōpū nā te ture i whakamana hei arataki i te whakarauoranga o te reo Māori mā ngā iwi me Ngāi Māori. E hiahia ana ia kia waia te tangata ki Te Whare o te Reo Mauriora, ā, ki te whakaū i te mahi tahi o ēnei rōpū e rua.

I rongo mātau ko te nui o ā Te Taura Whiri pūtea e pai ana mō ngā kokenga popoto ki te whāinga nui, kaua ko ngā kokenga roroa. E tūmanako ana te kōmihana kia eke ai te rurukutanga o ngā mahi i te kaha ki te mahi tahi. Arā ko tēnā rōpū e tautoko ana i tēnā rōpū, ā, kāore e tōwaitia ngā ratonga. I mea mai Te Taura Whiri ka pau tana kaha kia hāngai āna mahi ki tana pūtake hei whakawhānui i te urunga o te reo Māori ki ngā mahi a te hunga kaingākau, mā ngā mahi pēnei me ngā akoranga, ngā wānanga, ngā tohu, me te akiaki.

I pātai mātau mō te āhua o te aroturuki i te mahi tahi kia mārama ai te whaitake o te ako o te reo Māori. I whakamahuki mai Te Taura Whiri ko Te Puni Kōkiri te hunga aroturuki, te hunga aromatawai hoki. I rongo mātau i huia e te Minita ngā rōpū reo Māori matua kia riterite ai te kōrerorero. Waihoki e whakatinana ana te Minita tonu i ngā pākanga Tiriti e ora ana, arā koia hoki te heamana o aua hui.

E pukumahi ana te tumu whakarae me ngā kaimahi ki te whakarite whakaaetanga mahi tahi me ētahi rōpū e kaingākau ana ki ngā mahere reo, i tua atu i ngā rōpū e rārangi mai ana i roto i Te Ture mō te Reo Māori 2016. Ko te Kaunihera o Pōneke tērā, me te Tāhuhu o te Mātauranga e kaha nei te kaingākau me te ū ki te reo. Ko ētahi o ngā kaupapa ko ngā mahi

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2017/18 AROTAKE Ā-TAU O TE TAURA WHIRI I TE REO MĀORI me te rōpū rautaki mō ngā kaimahi mātauranga e pā ana ki ngā hiahia mō te hunga kaiako, tae atu ki Te Ahu o te Reo, he hōtaka mō ngā tauira kaiako kia āhei ai rātau ki te whakaako i te reo Māori.

Ko te reo Māori te reo o Aotearoa E whakaae ana mātau ki tā Te Taura Whiri mō te reo Māori hei kaiwhakakotahi i Aotearoa katoa. He whakahirahira te whakatairangatanga o te reo Māori. E hākoakoa ana mātau i tō te kōmihana whāinga kia hūmārie ai te āhua kei āmaimai te hunga kōrero ki a ia. Mā reira e whaitake ai tana whakatairanga i te whakamahinga o te reo Māori.

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Tāpiritanga

Hātepe komiti I hui mātau i te 13 Huitanguru me te 3 Paengawhāwhā 2019 hei whiriwhiri i te arotake ā-tau o Te Taura Whiri i te Reo Māori. I rongo mātau i ngā kōrero taunaki a te kōmihana, ā, i whiwhi i a mātau ētahi kupu whakamāhere a Te Tari o te Mana Arotake.

Ngā whakamāherehere me ngā kōrero taunaki i whiwhi I whiwhi i a mātau ngā tuhinga i raro iho nei hei , hei kōrero taunaki hoki mō te arotake ā-tau. Kei te paetukutuku o Te Whare Pāremata, www.parliament.nz.

Tari o Te Mana Arotake, Hui whakamōhio mō Te Taura Whiri i te Reo Māori, i te 21 Huitanguru 2019.

Te Taura Whiri i te Reo Māori, Whakautu ki ngā pātai arotake ā-tau 2017/18 1-112.

Te Taura Whiri i te Reo Māori, Whakautu ki ngā pātai tāpiri i tuhia 2017/18 113-125.

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Report of the Māori Affairs Committee

April 2019

Contents Recommendation ...... 7 About the commission ...... 7 Financial performance ...... 7 Improvements in performance reporting ...... 7 Ensuring te reo Māori capacity in the public sector ...... 8 Data security ...... 8 Te Whare o te Reo Mauriora encourages collaboration ...... 8 Te reo Māori is New Zealand’s language ...... 9 Appendix ...... 10

Rino Tirikatene Chairperson

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Te Taura Whiri i te Reo Māori

Recommendation The Māori Affairs Committee has conducted the annual review of Te Taura Whiri i te Reo Māori for 2017/18, and recommends that the House take note of its report.

About the commission Te Taura Whiri i te Reo Māori (the Māori Language Commission) is an autonomous Crown entity funded through Vote Māori Development. Te Puni Kōkiri is its monitoring agency. The commission aims to revitalise, promote, develop, and research the Māori language.

The role of the commission changed after the introduction of Te Ture mō Te Reo Māori 2016 (the Māori Language Act 2016). The commission is now the lead agency for the coordination and implementation of Te Maihi Karauna (the Crown’s Māori Language Strategy). In this role, the commission focuses on supporting the use and promotion of te reo Māori in government agencies.

Professor Rawinia Higgins is the chairperson of the commission’s board and Ngahiwi Apanui is the chief executive.

Financial performance Te Taura Whiri i te Reo Māori’s total revenue in 2017/18 was $5.99 million, and total expenditure was $10.41 million. The commission reported a deficit of $4.42 million, more than three times its deficit of $1.269 million the previous year.

Community funding was transferred from the commission in 2017/18, and the deficit in 2017/18 was in large part due to meeting existing contract commitments. Te Taura Whiri i te Reo Māori had budgeted for a deficit of $5.765 million in 2017/18.

Improvements in performance reporting We were pleased to note that the commission’s financial statements and service performance reporting continue to be rated “good”, and deficiencies noted in 2016/17 have been resolved in part.

As in the previous year, the auditor found the commission’s management control environment, financial information systems and controls, and performance information and associated systems and controls to be “good”. The auditor has made some suggestions for improvement, including strengthening performance information for improved reporting, ensuring that final decisions are made and recorded in respect of any accounting advice received, and showing historical data and trends in performance. We look forward to seeing improvements in these areas.

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Ensuring te reo Māori capacity in the public sector We were interested in the work that needs to be done to make te reo Māori more available throughout New Zealand communities. We were told that while there is work to be done, the opportunity for relevant entities to collaborate effectively and have coordinated conversations is made possible by Te Whare o te Reo Mauriora, the model for active partnership between Māori and the Crown for the revitalisation of te reo Māori. This includes increasing the status of the language to encourage people to become interpreters and teachers, acquire the language, and create conditions at a societal level that promote the language as one that is valued.

Interpreter and translator training and assessment We asked about the high standards required of qualified interpreters, and what is needed to increase the numbers of those passing the assessments to become qualified interpreters. We learnt that interpretation is a high-level speciality that requires very skilled people, and is distinct from competence in the language. More people are now sitting the exam, which is reason for optimism.

We learnt that prospective interpreters and translators are required to attend a number of wānanga (seminars) before sitting the exams. The commission is now considering a shift in assessment from a three-hour exam to a wānanga-based model.

Data security We asked about the commission’s plans for maintaining the integrity of its data. The commission said that its IT provider addressed the issue it had in 2017/18, and it has since made improvements to strengthen security and prevent any infiltration. The commission will shortly review its processes, including its information technology systems.

Te Whare o te Reo Mauriora encourages collaboration Te Maihi Karauna, the Crown strategy for te reo Māori, was released on 21 February 2019, a week after our hearing with the commission. We heard that the commission has been working with Te Mātāwai, the statutory entity responsible for leading the revitalisation of te reo Māori on behalf of iwi and Māori. It wants to familiarise people with Te Whare o te Reo Mauriora, and to ensure effective collaboration between the two agencies.

We heard that the commission’s resourcing is at a level that allows small steps towards the ultimate goal, however not major gains. The commission hopes that greater collaboration will lead to better coordination, with each entity supporting the other and avoiding duplication of service. The commission said it works hard to ensure it is fit for purpose to support the inclusion of more reo Māori by interested parties, through things like classes, wānanga, signage, and coaching.

We asked how collaborative work is being monitored to gauge progress and the efficacy of uptake of te reo Māori. The commission explained that the Ministry of Māori Development is the monitoring and evaluation agency. We heard that the Minister brought together the key Māori language agencies to ensure regular communications. The Minister also demonstrates the active Treaty relationship by chairing meetings herself. 8

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The chief executive and staff have been building mahi tahi (collaboration) agreements with various agencies that are interested in language planning, other than those listed in Te Ture mō te Reo Māori 2016 (Māori Language Act 2016). They include the Wellington City Council and the Ministry of Education, which have shown a high level of interest and engagement. Initiatives include work with the education workforce strategy group about future needs in the teacher workforce, and Te Ahu o te Reo, a trial programme for training teachers to enable them to teach te reo Māori.

Te reo Māori is New Zealand’s language We agree with the commission that te reo Māori is a unifier of Aotearoa katoa (all of Aotearoa). Promoting te reo Māori as New Zealand’s language is very important. We were pleased to see the commission’s aim to be more approachable so it can be more effective in promoting the use of te reo Māori.

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Appendix

Committee procedure We met on 13 February and 3 April 2019 to consider the annual review of Te Taura Whiri i te Reo Māori (the Māori Language Commission). We heard evidence from the commission and received advice from the Office of the Auditor-General.

Committee members Rino Tirikatene (Chairperson) Dan Bidois Marama Davidson Joanne Hayes Harete Hipango (until 6 March 2019) Tutehounuku Korako Adrian Rurawhe Hon Nicky Wagner (from 6 March 2019) Hon Meka Whaitiri

Advice and evidence received We received the following documents as advice and evidence for this annual review. They are available on the Parliament website, www.parliament.nz.

Office of the Auditor-General, Briefing on Te Taura Whiri i te Reo Māori, dated 13 February 2019.

Te Taura Whiri i te Reo Māori, Responses to 2017/18 annual review questions 1 to 112.

Te Taura Whiri i te Reo Māori, Responses to 2017/18 additional written questions 113-125.

682

2017/18 Annual review of Animal Control Products Limited

Report of the Primary Production Committee

March 2019

The Primary Production Committee has conducted the annual review of Animal Control Products Limited for 2017/18, and has no matters to bring to the attention of the House. The committee recommends that the House take note of its report.

Hon David Bennett Chairperson

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684

2017/18 Annual review of AsureQuality Limited

Report of the Primary Production Committee

March 2019

Contents Recommendation ...... 2 About AsureQuality Limited ...... 2 Financial overview and audit results ...... 2 Performance information in the annual report ...... 3 Biosecurity preparedness and response ...... 3 Overseas investments ...... 4 Managing changes in food regulations ...... 5 Appendix ...... 6

Hon David Bennett Chairperson

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AsureQuality Limited

Recommendation The Primary Production Committee has conducted the annual review of AsureQuality Limited for 2017/18, and recommends that the House take note of its report.

About AsureQuality Limited AsureQuality was established as a state owned enterprise on 1 October 2007, from an amalgamation of Asure New Zealand Ltd and AgriQuality Ltd. It is a limited liability company with its shares held by two Ministers on behalf of the Crown: the Minister for State Owned Enterprises and the Minister of Finance.

AsureQuality provides a wide range of services to the food and primary industries in both New Zealand and internationally, particularly in Australia, Southeast Asia, China, and the Gulf States. It groups its business activities under five broad areas:

 Food testing services: testing and analysis against regulatory and retailer standards for pathogens, toxins, allergens, chemical residues, genetically modified organisms, and nutritional information.  Inspection and certification: independent audit, inspection, verification, and certification against local and international standards; veterinary and field technician services; specialist plant and pest taxonomy, border control, and pathology services; ante-mortem and post-mortem meat inspection; seed testing and certification for farming and export.  International services: advisory services to support food industry clients; international food testing and analysis; manufacturing of diagnostic products and distribution of specialist veterinary test kits for use in disease management programmes; specialist provider of proficiency testing, reference materials, and related services.  Assurance marks: AsureQuality licenses endorsement marks for customers to use on their packaging.  Biosecurity: under agreement with the Ministry for Primary Industries, the business provides readiness and incursion response and surveillance services. Janine Smith chairs the board and John McKay is the chief executive.

Financial overview and audit results AsureQuality’s total revenue for 2017/18 was $211.7 million. It reported a net profit after tax of $8.5 million. The previous year it had total revenue of $180.3 million and a net profit of $5.3 million. It attributed the increased revenue to biosecurity contracts on the myrtle rust and Mycoplasma bovis responses, a longer killing season for meat processors compared with the previous year, and increased business from dairy customers. Its profits did not increase proportionally because the additional business was from work that earns a lower margin.

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The Auditor-General assessed AsureQuality’s management control environment and financial information systems and controls as “good”, with some recommendations for improvement in both areas. Some deficiencies relate to the joint venture Bureau Veritas AsureQuality group, and remain outstanding since 2016/17.

The auditor continues to recommend improvements to AsureQuality’s information security policy, where action on four recommendations remains outstanding from 2015. We note that AsureQuality and its board recognise that the IT environment could become a constraint on the business if these issues are not resolved.

We hope to see progress on these deficiencies by the time of our next review.

Performance information in the annual report We suggested to AsureQuality that it would be useful to have more detail in its annual report, which mainly provides a high-level commentary. For example, we would have liked more information about its biosecurity compliance activities, and a comparison of its performance against previous years.

Biosecurity preparedness and response The Ministry for Primary Industries contracts AsureQuality to provide biosecurity preparedness and response services. Under the preparedness programme, it provides training and ensures that it has resources available if a response is needed.

AsureQuality explained that the biosecurity preparedness contract is due for renewal in mid- 2019. The overall contract has a number of different parts, with different parties pitching for them. AsureQuality told us that its competitors in an open tender process are Biosecurity New Zealand (a business unit of the ministry) and other smaller organisations. It said that the ministry is also considering doing some of the work.

We heard that about eight staff would be affected if AsureQuality lost the biosecurity preparedness contract. AsureQuality considers that those staff could be used in the response part of the business.

AsureQuality explained that the first two weeks are very important in a response. It generally takes staff from other roles to manage the response. However, it acknowledged that this approach is not sustainable. It said that during a long response it either backfills the roles of the AsureQuality staff or contracts people to manage the response so its staff can return to their normal job.

Lessons from responses We asked AsureQuality what it learnt from the Mycoplasma bovis and myrtle rust responses. AsureQuality told us that it has used the lessons from the response to the Queensland fruit fly incursion and its processes and systems are continuously improving. For example, it now uses geospatial mapping, rather than paper. However, it said that the size and scale of the M. bovis response is much bigger than anything it had previously dealt with. This means that certain aspects of the response are new for everyone involved. AsureQuality is capturing these lessons as it progresses to feed into its preparedness work.

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Relationship with the ministry AsureQuality has a commercial relationship with the ministry, which it described as constructive. However, AsureQuality acknowledged that a response the size of M. bovis can strain relationships.

AsureQuality has an overarching partnership agreement with the ministry that sets out how both parties want to operate and work. It also has key service agreements across dairy, meat, apiary, and trees.

Sub-contractors hired for responses We noted that the sub-contractors that AsureQuality hires for the M. bovis response may not understand the pressures of farming. Some of us have heard feedback that farmers blame AsureQuality for this because it is their contract. AsureQuality acknowledged that its interaction with farmers is vital and it believes that this is improving. Given that the M. bovis response is now operating in a business-as-usual way, AsureQuality said that it can now hire better quality staff. This is because it can give them a longer tenure of work.

Overseas investments AsureQuality has a joint venture in Australia with Bureau Veritas (BV). In 2017/18, AsureQuality sold its laboratory in Saudi Arabia to its joint venture partner so that it could focus on Southeast Asia.

Southeast Asia AsureQuality has a laboratory in Singapore, which is the largest food-testing business in Singapore. It told us that it has recently received approval from the board and Ministers to operate the same joint venture model as it has in Australia across Southeast Asia. At the time of our hearing, it said that it would become a joint owner of laboratories in Singapore, Malaysia, Vietnam, Thailand, and Indonesia in late December 2018.

We note that the Singapore laboratory has 40 full-time-equivalent staff and asked whether AsureQuality would need to expand that. The chief executive said that it might grow slowly. He explained that while AsureQuality has a 49 percent stake in BV, the venture is jointly governed and will be jointly branded. AsureQuality will adopt joint governance of staff in the Malaysia, Thailand, Indonesia, and Vietnam markets.

We asked AsureQuality what it looks for in a joint venture partner and what each party brings to the model. We heard that AsureQuality offers technical expertise in food assurance, while BV, as the second biggest testing, inspection, and certification business in the world, has a massive global network and commercial expertise. AsureQuality said that it would be difficult to justify starting a business in Southeast Asia because it would not fit its risk profile. However, BV is already well established in the region.

Joint venture model The chair considers that joint ventures are the future for AsureQuality because its high market share means it is relatively constrained in New Zealand. AsureQuality has technical knowledge, which is highly sought after. We heard that the board considered whether it

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2017/18 ANNUAL REVIEW OF ASUREQUALITY LIMITED should use AsureQuality’s technical knowledge to have it take on consultancy roles, but determined that there was no long-term gain. The chair considers that joint ventures offer a way of developing this knowledge further without becoming a consultant.

While observing that AsureQuality might be minimising risk by operating joint ventures, we queried whether this should be done by the private sector, rather than government entities. AsureQuality told us that it is a commercial operation, charged with creating and preserving shareholder value. It believes that it cannot do so in the longer term if it operates only in New Zealand. AsureQuality said it is taking this risk to grow business for itself and for New Zealand exporters.

Managing changes in food regulations We note the recent changes to legislation, including country-of-origin labelling for food and new regulations under the Food Safety Act 2014. We asked whether AsureQuality is confident that it has the resources to ensure that the legislation can be effectively monitored. Asure Quality told us it is confident that it can. Local and regional authorities implement a lot of the Food Act changes but AsureQuality works closely with them on the larger changes that involve national infrastructure,

AsureQuality is also involved in certifying organic products. It said it is ready for the upcoming work on a national organic standard.

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Appendix

Committee procedure We met on 13 December 2018 and 14 March 2019 to consider the annual review of AsureQuality Limited. We heard evidence from AsureQuality and received advice from the Office of the Auditor-General.

Committee members Hon David Bennett (Chairperson) Kiritapu Allan Hon Nathan Guy Kieran McAnulty Mark Patterson Stuart Smith Rino Tirikatene Hamish Walker

Office of the Auditor-General, Briefing on AsureQuality, dated 13 December 2018.

AsureQuality Limited, Responses to written questions 1 to 131.

AsureQuality Limited, Responses to post-hearing questions 132 to 135.

AsureQuality Limited, Appendix 1, Q44 Gifts over $100.

AsureQuality Limited, Appendix 2, Q68 Contractors by year.

690

2017/18 Annual review of Crown Irrigation Investments Limited

Report of the Primary Production Committee

March 2019

Contents Recommendation ...... 2 About Crown Irrigation Investments Limited ...... 2 Update from the chair and chief executive ...... 2 Appendix ...... 4

Hon David Bennett Chairperson

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2017/18 ANNUAL REVIEW OF CROWN IRRIGATION INVESTMENTS LIMITED

Crown Irrigation Investments Limited

Recommendation The Primary Production Committee has conducted the annual review of Crown Irrigation Investments Limited for 2017/18, and recommends that the House take note of its report.

About Crown Irrigation Investments Limited Crown Irrigation Investments Limited (CIIL) was incorporated as a company in 2013. Its shareholding Ministers are the Minister of Finance and Minister for Primary Industries.

Until November 2017, CIIL had three main functions relating to off-farm regional irrigation infrastructure:

 co-investing in irrigation schemes  providing grants to irrigation schemes in development  applying commercial expertise and leadership to irrigation schemes. Following the 2017 general election, CIIL’s mandate changed to align with the priorities of the new Government. In November 2017, CIIL was advised that the Government’s policy was to wind down investment in large-scale irrigation projects. Cabinet would honour all development contracts within the agreed funding and the remaining contractual commitments to Central Plains Water (Stage 2).

In December 2018, as approved by Cabinet, CIIL agreed terms for loans totalling $35 million for the Waimea Community Dam and $34.4 million for Kurow Duntroon.

Debbie Birch is the chair of CIIL and Murray Gribben is the chief executive.

Update from the chair and chief executive The chair explained that CIIL’s shareholding Ministers directed that it be wound down as at 17 December 2018. She told us that CIIL is awaiting its letter of expectation from the Treasury and it will consider how the business will be managed beyond 30 June 2019.

We asked the chair whether she has a view on what the ongoing relationship might be. The chair said that it is clear to CIIL that it will have a new operating model where it manages and monitors the legacy assets, of which there will be three.

We heard that the board has retained three staff, including the chief executive and the chief operating officer, on a part-time basis while it determines what the model will entail.

The chief executive told us that the Waimea dam will take three years to build, while Kurow Duntroon is an 18-month project that only began construction about a month before the date of our hearing. In addition, CIIL has to manage the legacy loans for the Central Plains Water scheme. The chief executive reiterated that the board will make decisions about how to manage those projects beyond 30 June 2019, with a decision expected in March 2019. He 2

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2017/18 ANNUAL REVIEW OF CROWN IRRIGATION INVESTMENTS LIMITED said that, in the meantime, the staff is ensuring that the business is operating appropriately and that investments are being monitored.

We thanked CIIL for its work on the projects over the last few years, particularly acknowledging the work of the chair.

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Appendix

Committee procedure We met on 21 February and 14 March 2019 to consider the annual review of Crown Irrigation Investments Limited. We heard evidence from Crown Irrigation Investments Limited and received advice from the Office of the Auditor-General.

Committee members Hon David Bennett (Chairperson) Kiritapu Allan Hon Nathan Guy Kieran McAnulty Mark Patterson Stuart Smith Rino Tirikatene Hamish Walker

Office of the Auditor-General, Briefing on Crown Irrigation Investments Limited, dated 21 February 2019.

Crown Irrigation Investments Limited, Responses to written questions 1 to 112.

Crown Irrigation Investments Limited, Appendix 1, Property, plant and equipment.

Crown Irrigation Investments Limited, Appendix 2, Gifts and hospitality register.

Crown Irrigation Investments Limited, Appendix 3, Declared interests as at 26 June 2018.

Crown Irrigation Investments Limited, Appendix 4, Contractors, consultants, and professional services.

Crown Irrigation Investments Limited, Appendix 5, Contractors and consultants 2013–2017.

Crown Irrigation Investments Limited, Quarterly report, Q1.

Crown Irrigation Investments Limited, Quarterly report, Q2.

Crown Irrigation Investments Limited, Quarterly report, Q3.

Crown Irrigation Investments Limited, Quarterly report, Q4.

694

2017/18 Annual review of Land Information New Zealand

Report of the Primary Production Committee

March 2019

Contents Recommendation ...... 2 About Land Information New Zealand ...... 2 Financial overview and audit results ...... 2 Overseas investment ...... 3 Rebuilding Landonline ...... 5 Review of the Crown pastoral land regulatory system ...... 6 Managing the spread of wilding pines ...... 7 Capturing elevation data with LiDAR ...... 7 Appendix ...... 8

Hon David Bennett Chairperson

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2017/18 ANNUAL REVIEW OF LAND INFORMATION NEW ZEALAND

Land Information New Zealand

Recommendation The Primary Production Committee has conducted the annual review of Land Information New Zealand for 2017/18, and recommends that the House take note of its report.

About Land Information New Zealand The work of Land Information New Zealand (LINZ) flows from its statutory obligations, government and ministerial priorities, and its outcomes framework.1 Essentially, LINZ’s main areas of activity are:

 managing property rights transactions, including administering the overseas investment regime  managing and maximising external use of location-based information, including running the New Zealand Geospatial Office  managing New Zealand’s Crown land, rivers, and lake beds, including administering high-country pastoral leases, and Crown forestry licences on land held for Treaty settlements. LINZ pays particular attention to three enduring challenges faced by New Zealand where it feels it can make an impact. These are: better managing New Zealand’s fresh water; supporting efforts to reduce the impact of climate change and one-off events; and responding to pressures in urban areas from population growth.

Financial overview and audit results LINZ’s total revenue in 2017/18 was $146.5 million, about 7.6 percent less than in 2016/17. Its expenditure in 2017/18 was $161.6 million, about 9 percent more than in 2016/17. This resulted in a net loss of $15.1 million. LINZ had forecast a deficit of just under $23.6 million for 2017/18, although it achieved surpluses of $18.99 million in 2015/16 and $10.4 million in 2016/17. It expects to break even in 2018/19.

Audit results and performance against targets The Auditor-General assessed LINZ’s management control environment as “good”. To address the deficiencies it identified, the Auditor-General recommended that LINZ develop its asset management knowledge and practice, and develop and embed performance reporting to support its new outcomes framework.

For its financial information systems and controls, the Auditor-General gave LINZ a rating of “good”. It recommended that LINZ better understand and document its obligations for a number of classes of Crown assets.

1 More detail about the work LINZ undertakes is set out on pp.4-5 of its 2017/18 Annual Report. 2

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A rating of “needs improvement” was issued for LINZ’s performance information and associated systems and controls, with a recommendation that major improvements be made at the earliest reasonable opportunity. The Auditor-General noted that although LINZ has developed a new outcomes framework, it has not adequately developed and updated its performance measures to report on its achievement of these outcomes. We expect to see the Auditor-General’s concerns addressed at the earliest reasonable opportunity.

Overseas investment Implementing changes to the Overseas Investment Act 2005 The Overseas Investment Amendment Act, which came into effect in August 2018, implemented a number of changes regarding overseas people acquiring residential property, forestry rights, and the right to take natural resources from a property.

LINZ is currently working with the Treasury on phase two of the review of the Overseas Investment Act. Although the review is primarily being led by the Treasury, which administers the Act, LINZ provides some policy guidance and has technical expertise in how the Act operates. It expects the review to be completed in 2020.

Expanding the functions of the Overseas Investment Office LINZ’s Overseas Investment Office (OIO) has had to grow and adapt to fulfil the new functions brought about by the Act and by a ministerial directive letter. These include implementing a ban on foreign ownership of residential property and strengthening the OIO’s enforcement capabilities. We heard that the OIO has employed an additional 12 staff, and established three new teams. One team focuses on residential applications, another on forestry applications, and the third is a new monitoring and intelligence team to support LINZ’s enforcement work.

The enforcement team focuses primarily on finding people who have bypassed the requirement of the overseas investment regime, and on people who have not complied with their consent conditions. We heard that the new enforcement team has undertaken 11 enforcement actions in the past year. The enforcement team can impose a variety of sanctions, including levying fines or requesting disposal of the property.

Approvals for the sale of sensitive New Zealand land We observed that, from January to December 2018, 94 approvals were given for the sale of sensitive New Zealand land and significant business assets to overseas persons. This is only four fewer than in the previous calendar year. Similarly, we noted that net overseas investment had risen by over a billion dollars and sales at gross value had risen by over two billion dollars since the previous calendar year.

We note that the intention of the Overseas Investment Amendment Act was to raise the requirements for overseas investment by ensuring that overseas investment will have genuine benefits for the country. We were therefore concerned that only four fewer applications had been granted and that the value of overseas investments and sales had actually increased.

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LINZ told us that the focus of its role in the amended overseas investment regime is to provide robust advice about whether the overseas investment provides genuine benefits for New Zealand. For example, LINZ considers whether the investment might create jobs for New Zealanders, increase industry productivity, and increase export receipts.

Although the number of approvals is similar to before the Act came into force, we heard that there has been a reduction in the number of sensitive land applications being received by the OIO. However, the number of significant business asset applications is increasing. This means that the number of applications to the office is largely unchanged from previous years.

LINZ said another indicator that the Act is successfully raising the threshold for overseas investment is an increase in the number of withdrawn applications. Before it declines an application, LINZ sends a “proposal to decline” letter to the applicant. Many applicants then choose to withdraw their application before it is officially declined. In 2017/18, 30 applications were withdrawn, compared with 9 the year before. In the current year, 22 applications were withdrawn in a single month.

Receiving applications for prospective property purchases We asked LINZ whether the OIO had received information about any prospective bids for property that were not supplied by the vendor. To clarify, we noted that a property vendor might reject bids from prospective local buyers in favour of a larger bid from an overseas buyer. It was our understanding that these rejected bids would not necessarily be disclosed to the OIO. We are concerned that some transparency and integrity would be lost from the bidding process if the OIO was not able to fairly assess every bid.

LINZ reported that, for applications where counterfactual information is relevant (such as applications to acquire sensitive land under the benefit pathway), the vendor must provide information about any other interest and offers on the property. LINZ also noted that vendors of sensitive assets are able to sell to whomever they choose (provided that any overseas buyer first obtains consent). There is no requirement that they sell to a New Zealand person who makes an offer.

We were also concerned that prospective buyers are not aware that they can register their bid or interest directly with the OIO. The OIO must review the bid, even if it has been rejected in the first instance by the vendor.

LINZ told us that it has been working to make sure that people know about its role and its willingness to obtain information. However, we argued that prospective buyers need to know that they can submit their offer directly to the OIO. We suggested that it should be made a requirement that this information be posted in the public advertisement for a property’s sale.

Timeliness of application decisions We noted two recent applications where the OIO had taken some time to return a decision. One was for the sale of land in Otakiri, Bay of Plenty, to a large bottled-water supplier based in China. The other application was for sale of land associated with the Mt Difficulty Wines Limited vineyard to Foley Family Wines Limited, a United States-based investor.

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In both cases, LINZ had to ensure that the investments met the tests required under the Act to provide significant, substantial, and identifiable benefit to New Zealand. It said that it carefully examines how the benefits asserted by the claimants will actually come to fruition.

Transparency of application decisions LINZ releases a summary of its decisions regarding applications for overseas investment every month. We noted one example of a recent consent decision involving an investment valued at over $100 million that withheld information about the purchaser and the asset under the Official Information Act 1982. We asked why this information had been withheld, as we consider it in the public interest that the OIO’s decisions be transparent.

LINZ reported that information can be withheld under the Act, but this happens only very occasionally. Usually information is withheld because it is commercially sensitive. However, LINZ told us that it regularly reviews such instances, checking back with the applicant month by month, to see whether the information can be publicly released.

Threshold for ministerial sign off on application decisions LINZ reported that the threshold for applications requiring ministerial sign off has changed since October 2018. We heard that all business decisions are delegated to LINZ as the regulator, although the Minister may call in those decisions at his discretion. All sensitive land decisions have to be jointly approved by the Minister for Land Information and the Associate Finance Minister.

Rebuilding Landonline Over the last three years, LINZ has been investigating a replacement for its Landonline system, New Zealand’s property transaction system. During 2017/18, the focus changed from procuring a solution from a Canadian provider to building a replacement system.

LINZ told us that it has strengthened its governance to ensure the rebuilding of Landonline proceeds smoothly. It has organised the project in four tranches over five years. Before it embarks on each new tranche, it will report to Ministers for approval and for the draw-down of the funds it needs for the next tranche. It hopes that this staged approach will ensure the smooth running of the project and prevent delays, cost blowouts, or problems switching to the new system.

The rejected solution Initially LINZ investigated procuring an Advanced Survey and Title Service (ASaTS) solution from a Canadian provider to replace the Landonline system. We observed that LINZ had incurred $17 million in researching the ASaTS service before rejecting it.

LINZ believes that the funds it spent on research were prudent to ensure the success of the project. Additionally, LINZ said that some of the research it paid for will be reusable through the next phase of the Landonline rebuild project. The project’s research allowed LINZ to thoroughly engage and plan with customers and other stakeholders, and to understand its own and customers’ requirements and pain points. It was then able to make an informed decision on the preferred delivery pathway, having thoroughly appraised an “as-a-service” model versus the development of a LINZ-owned and operated platform.

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In its financial statements, LINZ had accounted for the $17 million as operating expenditure, because these costs were associated with the research and discovery stage of the project and no approval had been given to go ahead. The Office of the Auditor-General raised some concern that this amount was charged to the memorandum account, but LINZ maintains it sought advice on the legality of using the memorandum account, and is satisfied its accounting treatment is correct. However, as it has now been approved, any future costs associated with the project will be accounted for as capital expenditure.

Review of the Crown pastoral land regulatory system One of LINZ’s current government and ministerial priorities is making the best use of the Crown estate. This includes protecting the indigenous biodiversity and significant inherent values of Crown pastoral land in the South Island high country, establishing policy, implementing a State Land Register, and developing a long-term Crown Estate Strategy.

We noted that during our previous annual review of LINZ, the Minister for Land information had confirmed that she would be reviewing the tenure review process. Tenure review is a voluntary process that gives pastoral lessees an opportunity to buy some of their leasehold land. The rest of the land returns to Crown ownership, usually for conservation purposes. The process has led to the formation of high-country parks, and improved public access and recreation in the South Island high country.

LINZ completed its review of the Crown pastoral land regulatory system and tenure review in February 2019. The review identified several areas where LINZ could improve. They included ways it could better monitor Crown pastoral leases, and how to work better with other agencies, such as the Department of Conservation and local and regional government. We asked whether we could expect to see any significant changes to the tenure review process as a result.

LINZ reported that, by the end of 2017/18, about 45 percent of pastoral lessees had not yet elected to enter the tenure review process. Only 32 lessees are currently engaged in tenure review. Because the tenure review process is specified in the Land Act 1948, any changes would need to be made in legislation. LINZ said it will continue to progress tenure review as normal, as the Minister has not indicated any legislative changes at this stage. The Minister subsequently announced that the tenure review process would not be continuing in its current form.

The Mackenzie Basin Agency Report LINZ has been working alongside the Department of Conservation and three councils— Environment Canterbury, Mackenzie District Council, and Waitaki District Council—to develop a common approach to the management of high-country land in the Mackenzie Basin. Each body has a statutory responsibility for aspects of land and water management in this iconic region.

In February, LINZ released the Mackenzie Basin Agency Report on what could be done to achieve greater alignment between the organisations for the good of the community and New Zealand. We heard that key initiatives of the review include streamlining the councils’

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2017/18 ANNUAL REVIEW OF LAND INFORMATION NEW ZEALAND planning and consent functions, providing information to farmers and to the community, and improving the flow of information between agencies.

Managing the spread of wilding pines We asked about LINZ’s role in controlling the spread of the invasive conifer trees known as wilding pines in the South Island.

LINZ reported that it has developed a new app to facilitate its communication with the public. Using the app, the public can notify LINZ about areas of wilding pines that need to be addressed. LINZ is also a member of the Ministry for Primary Industries’ wilding conifer management programme. Although these initiatives have made significant progress, LINZ reported that the success of the programmes hinges on ongoing funding.

Capturing elevation data with LiDAR LiDAR (Light Detection And Ranging) is a remote sensing technique that uses high- frequency laser pulses to gather information about a surface. LINZ told us that it has secured funding through the Provincial Growth Fund to enable regional councils to gather elevation data, using LiDAR, over five years. LiDAR produces highly accurate 3D maps of the land. The maps can inform councils’ decision-making in relation to infrastructure development, environmental outcomes, building resilience, and agriculture and forestry. LiDAR data will also provide better information about sea-level rise.

We observed that New Zealand’s geography is dynamic, with rising and falling coastlines and land that is vulnerable to change through earthquake activity. We wondered whether it was worth investing heavily in LiDAR, considering that a map produced today might need significant updating in five years’ time.

LINZ told us that right now it is working with local councils to determine how they want to co- fund LiDAR elevation data in their area. It expects this process to take two to three years, in stages. LINZ is confident that the data will prove valuable for helping councils to develop their regional infrastructure.

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Appendix

Committee procedure We met on 14 February and 14 March 2019 to consider the annual review of Land Information New Zealand. We heard evidence from LINZ and received advice from the Office of the Auditor-General.

Committee members Hon David Bennett (Chairperson) Kiritapu Allan Hon Nathan Guy Kieran McAnulty Mark Patterson Stuart Smith Rino Tirikatene Hamish Walker

Office of the Auditor-General, Briefing on Land Information New Zealand, dated 14 February 2019.

Land Information New Zealand, Responses to annual review questions 1–112.

Land Information New Zealand, Responses to written questions: Appendices.

Land Information New Zealand, Responses to post-hearing questions 113–121.

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Report of the Primary Production Committee

April 2019

Contents Recommendation ...... 2 About Landcorp Farming Limited ...... 2 Financial performance ...... 2 Three components of Landcorp’s strategy ...... 3 Submission to the Tax Working Group ...... 3 Sheep genetics ...... 5 Partnerships with iwi ...... 6 Meeting with the EU Commissioner ...... 6 Developing products to attract premium prices ...... 7 Biological farming ...... 7 Ending the use of palm kernel expeller ...... 7 Carbon farming ...... 8 Changes in performance measures ...... 8 Delegations to the chief executive ...... 8 Appendix ...... 9

Hon David Bennett Chairperson

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Landcorp Farming Limited

Recommendation The Primary Production Committee has conducted the annual review of Landcorp Farming Limited for 2017/18, and recommends that the House take note of its report.

About Landcorp Farming Limited Landcorp Farming Limited is a state-owned enterprise established under the State Owned Enterprises Act 1986 and a company registered under the Companies Act 1993. The Ministers of State Owned Enterprises and Finance are its shareholders.

Landcorp Farming Limited is one of New Zealand’s largest farming organisations. It manages 126 properties, covering 372,115 hectares. Landcorp trades under the brand name Pāmu.

Pāmu’s vision is to be the premium supplier of meat, milk, and fibre for niche markets globally. It is now in the fifth year of its strategy, which is to:

 farm carefully: protecting and developing its people, minding the wellbeing of animals, and nurturing its environment  farm smartly: using best practice systems and processes, adopting leading science and technology to drive innovation  create value: integrating its products into niche markets focused on unique consumer needs. Dr Warren Parker was appointed chairman on 1 January 2019. The chief executive is Steven Carden.

Financial performance In 2017/18, Landcorp earned revenue of $247.1 million and achieved a net profit after tax of $34.2 million. This compares with revenue of $230.9 million and net profit after tax of $51.9 million in 2016/17. The reduction was largely due to lower gains from its biological assets (forestry and livestock) and a higher tax expense.

In 2017/18, Landcorp declared its first dividend ($5 million) since 2013/14. Its bank debt, total equity, and total assets all rose, meaning the ratios of debt to assets, and debt to equity have slightly improved since 2016/17.

The Auditor-General assessed Landcorp’s management control environment and financial information systems and controls as “very good”, making no recommendations for improvements. Although he raised some queries about deferred taxation, which Landcorp is addressing, he does not believe this matter alters the overall assessment.

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Three components of Landcorp’s strategy The chief executive described Landcorp’s strategy as having three components:

 Core: This part of the strategy aims to ensure that its core business of farming is operating effectively by producing commodity products and sending them to suppliers and customers. About 90 percent of Landcorp’s work focuses on core farming and ensuring that its farms operate as profitably and sustainably as possible.  Advanced: This involves Landcorp modifying its farming systems to find ways in which it can attract premiums for its products. An example of this is A2 milk.  Transformative: This is the long-term work that aims to transform Landcorp and prepare it for the future. Examples of this work are sheep and deer milking, and exploring alternative uses for its land.

Core farming We asked what plans Landcorp has to transform the 90 percent of its business that is still traditional farming, noting that it could choose to shift from dairy farming if it wished to. The chair told us that it is benchmarking its farms to ensure that it is accurately comparing their performance. It is then measuring the productivity gap and determining how the gap can be closed.

Some of us queried why 90 percent of Landcorp’s business is still traditional farming when it has the option of transforming that business. The chair explained that funding the advanced and transformative parts of its strategy requires capital because they generally have more risk. He said that Landcorp is focusing on ensuring that its core business is using the land for the best purposes.

Forestry The chair expects that some of the changes in the core farming business will involve a change in land use to one with a lower environmental footprint and higher returns. He provided forestry as an example, where 6,000 hectares is available for planting and can generate a carbon return.

The chair told us that its shareholding Ministers’ letter of expectations is clear that it should increase productivity and make the best use of its land. In some cases, this is forestry. We heard that Landcorp has not received any ministerial direction to shift to forestry but it has discussed with its Minister that it has 6,000 hectares available for planting.

Submission to the Tax Working Group In May 2018, Landcorp made a submission to the Tax Working Group. It spent just over $11,100 to hire Ernst & Young as consultants and $750 to hire a consultant to peer review the submission. The chair described this money as well spent because the issues raised are material to Landcorp’s business.

The chair explained that environmental issues will significantly affect Landcorp in the future. He said that Landcorp needs to reduce its environmental footprint on its farms and it also wants to prepare for any changes relating to greenhouse gas emissions. Further, any

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2017/18 ANNUAL REVIEW OF LANDCORP FARMING LIMITED changes in taxation policy or incentives relating to environmental performance will affect Landcorp. The chair observed that Landcorp was not the only state-owned enterprise that submitted to the working group.

We asked why Landcorp hired consultants for its submission when it has environmental expertise within its business. Landcorp told us that it needed specialist advice on taxation policy, which is complex. Its submission combined the specific expertise of Ernst & Young with the knowledge of its in-house people.

Improving processes when making submissions We note that Landcorp has publicly apologised to the Associate Minister of State Owned Enterprises for not informing him about its submission. Landcorp acknowledged that it breached the principle of “no surprises” and that its processes should have been better. For example, the board did not review the submission. Landcorp has now amended its processes so that the senior leadership team reviews all submissions and the board decides whether to make a submission.

Landcorp said that it intends to continue submitting to working groups that are considering policies that might affect its business. One such example was its February 2019 submission on the review of the Dairy Industry Restructuring Act 2001. The chair said he was unaware of any criticism about this submission.

Timing of the submission Landcorp confirmed that the Tax Working Group did not ask it to make a submission. Rather, Landcorp chose to submit because tax policy will significantly affect its business.

We asked Landcorp why its submission to the working group was one month late. The chief financial officer told us it had signalled to the group that the submission would be late. This was because it was late starting and then realised that the submission needed more care, due to the complex issues.

Contents of the submission We asked whether the chair agrees with the contents of Landcorp’s submission, which supports a water tax and a fertiliser tax and is not opposed to a capital gains tax. The chair told us that he was not part of the submission process and he believes he would have focused more on the capital gains tax.

The chair said that he has not explicitly discussed with the board whether it still supports the submission. He said that Landcorp’s environmental work and strategic direction will be reviewed in May 2019.

We asked why Landcorp and Federated Farmers’ submissions had such extremely different views, noting that Federated Farmers represents tens of thousands of farmers throughout the country. Landcorp said it respects that that organisation is seeking the best possible outcome for farmers. The chair told us that he has been pleasantly surprised about the number of farmers who are seeking information and advice about the environmental area.

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Cost of taxes to Landcorp Landcorp used its greenhouse gas emissions (about 800,000 tonnes a year) as an example of how it might be affected by any changes to tax policy. If it had to offset 10 percent of its total emissions under the emissions trading scheme (ETS) at a cost of $25 a tonne, it said that “you can do the numbers”.

In 2017/18, Landcorp’s return on invested capital was 3.4 percent. We asked how Landcorp expects to continue providing returns to shareholders with the proposed new taxes. The chair explained that Landcorp is pursuing a change in land use because forests established after 1990 receive carbon credits. He said that accumulating carbon credits, which are a form of liquidity, can help fund the development of the business.

We discussed how farmers would feel, particularly young farmers, if Landcorp no longer provided returns to the Government. The chair noted that the Dairy New Zealand database indicates that farms’ average rates of return are about 2 percent, although sheep and beef cattle have performed better in the last 12 months. He said that much of the increase in value has been through the appreciation of land values.

The chair observed that it can be difficult for young farmers to get into farming because they need to intensify their input to generate free operating cash flow. He said that Landcorp needs to recalibrate the intensity of its farms, which will change how capital is allocated. The chair considers that Landcorp is helping young farmers by showing them how to farm for the future.

Effect of a capital gains tax The chair told us that Landcorp has not received any advice about the effect of a capital gains tax on its business because it does not know how the regime would be designed.

We asked Landcorp why it did not oppose a capital gains tax when it would potentially lose a third of its capital gain. The chair explained that, 20 years ago, he highlighted the risks of New Zealand becoming over-capitalised, which he said have now come true. He said that the three consequences of this are:

 it leads to favouring volume over value  it increases the average age of farmers, which affects the rate of technological innovation  it is harder for new entrants to get into farming. The chair considers it important for New Zealand agriculture that capital is applied efficiently and it is judged on whether it can generate free operating cash flow.

Sheep genetics We asked how Landcorp manages the perception that it uses its size to gain an advantage over smaller farmers. We were particularly interested in its sheep genetics programme as an

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2017/18 ANNUAL REVIEW OF LANDCORP FARMING LIMITED example.1 We understand that changes to the import rules mean sheep genetics can be imported from the United Kingdom, which Landcorp is doing. However, Australia has now changed its biosecurity rules, meaning many smaller farms are unable to export their genetics to Australia.

The chair told us he is aware of the perceptions and he agreed that Landcorp could improve in this area. The board will soon be inviting the farming community and farming leaders to meetings in the regions, where it will explain its strategy and seek their input.

The chair said it is not widely known that hundreds of farmers visit Landcorp every quarter for advice and to see demonstrations, experiments, and new technology that is being tested. He considers that this work needs to be communicated better.

The chief executive observed that the rationale of the sheep milking partnership is to attempt to build a sheep milk industry in New Zealand. He recognises that the unintended consequences around biosecurity are unfortunate.

Partnerships with iwi All freehold land purchased from the Crown at the commencement of the State Owned Enterprises Act had a memorial placed on its title through the Treaty of Waitangi (State Enterprises) Act 1988. We asked how many of Landcorp’s farms still have memorials or whether they are mostly being removed.

The chief executive explained that it has two groups of land in farms. One group is farms that have been purchased by the Crown for Treaty of Waitangi settlements and are waiting for the settlement process to conclude or for handover. He said about six or seven of these farms remain. The second category is those farms which Landcorp has owned and which the Office of Treaty Settlements has indicated may be part of future settlements. We heard that the memorials will be progressively removed as the settlements are agreed.

We commended Landcorp for its partnership with iwi but urged it to ensure that the spelling of iwi names is correct on its materials.

Meeting with the EU Commissioner We discussed comments about sharemilkers that Hon David Parker reportedly made at a recent meeting with the EU Commissioner for Agriculture and Rural Development. A Landcorp official also attended this meeting, as did a Pāmu board member, albeit in his role as the head of New Zealand Merino. The chief executive told us that the official did not report back to him on the comments. He said that he had heard about them “only second-, third-hand” from the board member who mentioned the controversy around the comments, but indicated that he had not heard them.

The chief executive told us that he does not believe he needs to ask his official what they heard at the meeting. He does not consider that the Minister’s comments are relevant to

1 Landcorp has a 100 percent interest in Focus Genetics Limited Partnership, which aims to enhance genetics in sheep, cattle, and deer and market those genetics to farmers in New Zealand. It also has a 50 percent interest in a sheep milking joint venture. 6

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Pāmu. The chief executive said that he will have that conversation if questions are publicly asked about what the staff member heard in the meeting.

Developing products to attract premium prices We asked how Landcorp identifies opportunities to work with commercial entities that will develop its products to attract a premium. The chief executive explained that Landcorp’s approach has been relatively consistent but quite slow over the past three or four years. It is exploring how it can be paid premiums by existing manufacturers in the market. Landcorp also has a strategy to partner with others to get products to market. An example is getting organic milk into the Chinese market, which involved a number of New Zealand and Chinese partners.

Landcorp has a team that focuses on what the market is signalling. It has also discussed other opportunities for it to differentiate its products and provide them under the Pāmu brand. Part of this discussion involved considering what Landcorp needs to do from a farming perspective to produce the products that the market requires.

Biological farming In December 2018, the Government announced that legislation for a national standard for organic production will be progressed in 2019. Given the increasing interest in biological farming, we asked whether Landcorp believes there would be value in also having a biological standard.

We heard that Landcorp has four organic farms and a regenerative farm at Wairākei that uses biological principles. Landcorp is interested in how it can use regenerative farming practices to achieve results such as lowering its use of synthetic nitrogen and agricultural chemicals and improving the quality of soils. It said that this farming system is very popular in the United States and there is now quite a lot interest in New Zealand too.

Ending the use of palm kernel expeller In 2016, Landcorp announced that it would stop using palm kernel expeller (PKE) supplements.2 The chief financial officer told us that Landcorp’s operating expenses increased in 2017/18, primarily due to climatic conditions. He said that the decision to stop using PKE exacerbated the increase.

We asked what premium Landcorp believes it can gain by being PKE-free given the trade-off that PKE cannot be used to boost production. The chief executive explained that this is difficult to quantify because a lot of variables need to be considered. He said that the effect on production of removing PKE has been fairly marginal.

We were told that Synlait is the only company offering a PKE-free premium. However, now that Landcorp is receiving premiums and its farm systems are operating more appropriately, the financial reward is offsetting the cost of removing PKE.

2 Palm Kernel Expeller (PKE) is a by-product of the palm oil industry and is used as a supplementary feed for cows, such as during drought when grass growth is low.

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Carbon farming Landcorp told us that a request for proposals (RFP) was issued in September and October 2018 to use its land for carbon farming. Five expressions of interest were received through the process and they were considered by an independent expert (BDO New Zealand). We heard that no decisions have yet been made.

Changes in performance measures We note that, in 2017/18, Landcorp changed how it calculated a number of financial measures. As a result, the Auditor-General was unable determine whether Landcorp’s performance had improved compared with the previous year. The chief financial officer told us he is only aware of two numbers changing in the annual report.

We heard that the changes arose from Landcorp’s shift to integrated reporting, which the board and management adopted in in 2017/18. The reporting focuses on six capitals—the environment, people, finance, farms and animals, expertise, and business relationship. The chief financial officer told us that, while considering integrated reporting, Landcorp wanted to ensure that it had the correct financial matrix that aligned with its owners’ expectations. Landcorp agreed that it could recalculate the numbers based on the former methodology to allow for comparisons with previous years.

Delegations to the chief executive The board delegates voting rights, including for cooperative governance roles, to the chief executive. This is because management deals daily at an operational level with these companies and is aware of any issues. Although management advises the board about its decision, it is not required to report back to the board.

We noted that the board is effectively handing over to the chief executive quite a lot of power to vote. The chair said he is confident that the chief executive has the necessary commercial understanding of the business.

We note the current voting rights delegation is unusual and has potential risks for management and the board.

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Appendix

Committee procedure We met on 7 March and 4 April 2019 to consider the annual review of Landcorp Farming Limited. We heard evidence from Landcorp and received advice from the Office of the Auditor-General.

Committee members Hon David Bennett (Chairperson) Kiritapu Allan Hon Nathan Guy Kieran McAnulty Mark Patterson Stuart Smith Rino Tirikatene Hamish Walker

Office of the Auditor-General, Briefing on Landcorp Farming Limited, dated 7 March 2019.

Landcorp Farming Limited, Presentation.

Landcorp Farming Limited, Responses to written questions 1 to 112.

Landcorp Farming Limited, Responses to post-hearing questions 113 to 119.

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2017/18 Annual review of the Ministry for Primary Industries

Report of the Primary Production Committee

April 2019

Contents Recommendation ...... 2 About the Ministry for Primary Industries ...... 2 Financial performance ...... 2 Discovery of fruit flies in Auckland ...... 3 Review of the passenger pathways ...... 4 The role of detector dogs ...... 5 Brown marmorated stink bugs ...... 6 Review of the Biosecurity Act ...... 6 Discussions about items being delayed at the border in China ...... 7 Ministry response to the civil defence emergency of the Tasman fire ...... 7 One Billion Trees Programme ...... 7 Renewed interest in the Emissions Trading Scheme ...... 8 Crown Forestry joint ventures ...... 8 Partnerships with Māori entities ...... 8 Workplace safety ...... 8 Forestry debris ...... 9 Māitaitai reserves ...... 9 Introduction of cameras on commercial fishing vessels ...... 9 GPS technology on boats ...... 10 Appendix ...... 11

Hon David Bennett Chairperson

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Ministry for Primary Industries

Recommendation The Primary Production Committee has conducted the annual review of the Ministry for Primary Industries for 2017/18, and recommends that the House take note of its report.

About the Ministry for Primary Industries The Ministry for Primary Industries is a government department, consisting of four branded business units:

 Te Uru Rākau (Forestry New Zealand)  Biosecurity New Zealand—Tiakitanga Pūtaiao Aotearoa  Fisheries New Zealand—Tini a Tangaroa  New Zealand Food Safety—Haumaru Kai Aotearoa. The ministry’s ambition is that New Zealand is the most trusted source of high-value natural products in the world. It works to achieve four outcomes:

 New Zealand’s natural resources are sustainable in the primary sector.  New Zealand is protected from biological risk and its products are safe for all consumers.  New Zealand’s food and primary sector grows the value of its exports.  New Zealanders participate in the success of the primary industries. Ray Smith replaced Martyn Dunne as director-general in November 2018.

Financial performance In 2017/18, the ministry’s total departmental revenue was $581.6 million, 16.5 percent more than the previous year. It had an operating deficit of nearly $1.2 million. This compares with departmental revenue of $502.9 million and a surplus of nearly $18 million in the previous year.

Crown revenue increased by about $65.5 million and “other revenue” by about $13.2 million compared to 2016/17. About $47 million of the increase in Crown funding was spent on responses to biosecurity incursions and the long-term management of pests. The increase in other revenue was primarily due to increases in third-party revenue from border clearance levies on arrivals by air and cruise ships, rental income for sub-leased accommodation, verification services, and biosecurity systems entry levies.

The Auditor-General assessed the ministry’s management control environment as “very good”, with no recommended improvements. He assessed the ministry’s financial information systems and controls and performance information and associated systems and

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2017/18 ANNUAL REVIEW OF THE MINISTRY FOR PRIMARY INDUSTRIES controls as “good”, with some recommendations for improvement. We look forward to seeing the results of its work on the auditor’s recommendations.

Discovery of fruit flies in Auckland Between 14 and 21 February 2019, three fruit flies were discovered in Auckland—two Queensland fruit flies in Devonport and Northcote and a facialis fruit fly in Ōtara. The director-general observed that the facialis was unlikely to survive in New Zealand beyond several weeks because it originates from Tonga and is used to hotter temperatures. However, he said that the Queensland fruit fly is more adaptive and an influx would be more detrimental to the economy.

The ministry explained that the Devonport and Northcote detections are not linked because the flying distance between the areas (5.7 kilometres) is too far. It is investigating all of the potential pathways of entry. However, without the infested fruit, the ministry said it is unlikely that it will ever know whether the incursions came from the same source.

The director-general told us that the standard procedures were followed to respond to the fruit flies. They involve establishing a zone A of several hundred metres around where the fly is found, where traps are set. People are given bins to dispose of fruit and vegetable scraps or garden cuttings. These are emptied daily. Fruit is taken from within the area and dissected to see if larvae is present. However, people in zone A cannot take fresh fruit and vegetables out of the area.

A wider zone B of 1.5 kilometres has also been established. People are unable to remove home-grown fruit and vegetables from this zone.

The director-general explained that a programme operates for two to three weeks after a fruit fly is discovered. The operation is ended after two weeks if no additional fruit flies are found and if no larvae are found in the dissected fruit. The programme is extended if more fruit flies are found.

Confusion about information provided by the ministry We discussed adverse feedback expressed by people in the North Shore area, particularly about some of the ministry’s advice being confusing. For example, some people were confused about whether cut lunches containing fruit could be taken out of the zone.

The director-general clarified that fruit for lunches should be cut up and examined for larvae. Some of us expressed concern that the instructions about cutting food were not clear on the ministry’s website or its daily media advisories.

The director-general acknowledged that the rules are often complex and it can take several days for people to understand the messages. However, he said the ministry is happy to fix any gaps in information and work with the Member for North Shore to provide any information.

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Ministry staff involved in the response in Auckland We also discussed concerns from North Shore residents about the ministry’s response. We asked for reassurance that the discovery of a third fruit fly would not put too much strain on the ministry’s resources.

The director-general told us that 80 people are “on the ground” in Auckland. He said that the ministry has taken a fairly careful but swift approach after each discovery to ensure it has enough staff. The director-general is confident that Devonport will be well covered, as will Northcote, with the proximity of the locations helping.

We heard that Ōtara was a separate mission. The director-general told us that ongoing conversations are important for people to understand the ministry’s messages. He said that the Ōtara weekend market would help with that, as would schools.

Preventing incursions We note that both Ministers at the time of the fruit fly incursions in 2002 and 2014 indicated that New Zealanders would be naïve to believe any system could stop fruit flies entering the country. We asked what the ministry had learnt from the previous incursions and how this response is different.

Biosecurity New Zealand explained that the biosecurity system acknowledges and recognises that pests will get through the border at some stage. Separate surveillance systems are also critical to identify them when they arrive. It therefore sets out nearly 8,000 traps nationally for fruit flies, which are regularly cleared. It also has traps for other pests, such as mosquitoes and ants.

The ministry told us it has a strong response system when low-level incursions are found. Trained responders are deployed and the ministry can also use resources from across government. The ministry said that it has a “watch group”, which uses the expertise of all of the ministries. This includes planners, responders, and people who can liaise on the ground.

Review of the passenger pathways The director-general has asked Rob Delane, a former director-general of agriculture in Australia, to investigate the pathways by which passengers enter the country (air and cruise ships). The aim is to ensure that systems are as strong as they should be and fix any gaps.

We observed that 26 brown marmorated stink bugs recently found in a person’s shoebox in the South Island would have entered through the mail pathway. Therefore, we asked why the review will not also examine the mail pathway. The director-general told us that he has prioritised the passenger pathways because he believes they pose the greatest risk for fruit flies entering New Zealand. He added that the reviewer could choose to review the mail pathway if time allowed. Some of us disagreed with this statement, noting that the reviewer is unlikely to do so if the ministry does not direct him to. The director-general agreed to consider whether he would direct Mr Delane to also investigate the mail pathway.

The ministry expects the report of the review to be made public by the end of April 2019. We look forward to reading this report.

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The role of detector dogs Review of the dog section The director-general said that issues and tensions in the dog handling team have been widely reported. He told us that he has visited Auckland three times to look at different parts of the operation to determine whether those concerns are accurate.

We heard that the director-general is committed to developing and releasing a plan for the dog section. He is seeking feedback from the dog handlers to ensure the ministry is using their ideas about how to get the best use out of them.

Some of us have heard that dogs are being left in kennels because many staff have left. The director-general told us that the dogs he saw were in kennels because their dog handlers were not rostered on that shift. We heard that the ministry has a recruitment programme to bring in more dog handlers. This will help to manage turnover and provide cover for leave.

Detector dog teams on the mail pathway Some of us have heard that dog detector teams only work on the mail pathway for two hours a day. The director-general said he believes people operate all day in a shift pattern.

Following our hearing, the ministry confirmed that detector dog teams are present at the mail centre daily and are scheduled for a minimum period of time each day according to need. The specific length of time each day depends on the volume and risk profile of mail.

Dogs working on the green lane at Auckland International Airport Some of us are concerned that dogs do not work on the green lane at Auckland International Airport between 2:00am and 5:00am. The director-general explained that this is considered to be a low-risk time, with very low passenger numbers. Some of us disagree with this statement because the flights entering the country at this time are full. Further, it is well publicised that dogs do not operate at this time, which adds risk.

The director-general told us he has requested independent advice because he accepts that people have different views about how to manage risk at this time. Biosecurity New Zealand considers that it is best managed by having trained quarantine officers interview and assess every person arriving between 2:00am and 5:00am. Conversely, other people believe that a dog should be present as well.

The director-general expects to receive the advice within a month of our hearing. Some of us consider that the advice is not needed because the risk is already clear.

The role dogs play in detecting fruit flies We asked about the role a dog would play in detecting fruit flies, noting that they were not mentioned as a tool for preventing incursions. The ministry explained that it bases its risk assessment on science and analysis, which allows it to identify the countries that present the most risk. Staff are given this information in real time and they assess which passengers represent a higher risk. A dog could not do this task.

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The ministry acknowledged that dogs are a very important tool. However, it said there is no link between fruit fly incursions and the number of dogs. It observed that in 2011 Biosecurity New Zealand had 15 dogs and no fruit fly incursions, compared with 52 dogs at present.

Brown marmorated stink bugs The ministry has operated its brown marmorated stink bug programme for nearly eight years. It has established the Brown Marmorated Stink Bug Council, which contains representatives from the pip and stone fruit industries and a range of others. The ministry is working with industry partners to ensure that stink bugs do not reach the border. It also works with researchers, in New Zealand and internationally, to investigate technologies for detection, treatment, and fumigation.

International scientists have advised the ministry that a minimum of about 10 stink bugs is needed to establish a population in New Zealand. The ministry said the instance where 26 stink bugs were found in a shoebox was very unusual. We were pleased to hear that it had been notified by a member of the public, allowing it to contain the situation.

Review of the Biosecurity Act We heard that the Biosecurity Act 1993 has not been reviewed for a long time. The ministry said it is in the early stages of considering a range of issues that should be investigated in a review of the Act. The review aims to ensure that the Act is fit for purpose in the future.

Funding biosecurity responses One area being considered is how biosecurity responses are funded. We asked whether the ministry had provided any advice to Ministers about an insurance-type scheme that would replace Government Industry Agreements (GIA). We were told that the ministry has provided some early advice on a range of issues for the review of the Act. This includes advice on a possible levy.

The ministry highlighted that the levy is an additional proposal, which would not replace the GIA. It explained that it is considering whether a levy should be established that fully funds biosecurity events, rather than seeking funding after an event. The ministry told us that who would be levied would form part of the advice.

The ministry told us it is not aware of having been given a target amount for the fund. It emphasised that it is at the beginning of the policy process, and any matters, including funding, will be subject to the usual consultation.

Consultation with stakeholders The ministry told us that it is determining the critical stakeholders who will need to be involved in the consultation process. It recently had an early discussion with GIA partners.

We asked what feedback had been received from the GIA participants about a possible levy. The director-general told us that there will be a range of views. He said that the ministry has nothing definitive to report back at this stage, nor would it be appropriate.

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Following our hearing, the ministry put out a statement that there is no proposal to add any additional levy to GIA members or partners. The National members of the committee felt that the above statement did not adequately address the concerns raised during the hearing.

Discussions about items being delayed at the border in China The director-general explained that he has not been contacted by people in industry concerned about delays at the border in China, nor has the Minister of Agriculture raised any concerns. He noted that the issues with technical compliance appear to be following the usual pattern and the ministry is not concerned at present.

Ministry response to the civil defence emergency of the Tasman fire The director-general told us that the ministry sent 50 staff to respond to the recent fire in Tasman District. Some of us suggested that the ministry may wish to consider its responsiveness because we heard that it was not responding to emails or texts from people affected. Some of us consider that the ministry’s response did not compare favourably with how Fire and Emergency New Zealand and Civil Defence respond to emergencies.

The director-general apologised if the ministry did not meet everybody’s expectations. However, he highlighted that the loss rate of animals was low, with more than 700 animals accommodated in the showground. He also acknowledged that this was the first time the ministry had evacuated animals in a fire situation to the extent that it did.

We understand that Fire and Emergency were quite impressed with the ministry’s response, given that it had no experience or training in a similar response.

We hope that the ministry undertakes an assessment of its response to this event and applies the lessons to future events.

One Billion Trees Programme The One Billion Trees Programme aims to plant one billion trees by 2028. Te Uru Rākau told us that it is tracking well, with 61 million trees planted in 2018. It said that it is optimistic that it is on track to meet the target.

Grants for landowners On 30 November 2018, the Government launched the One Billion Trees Fund. It consists of a grants scheme that aims to plant 60 million trees over the next three years. Applicants for the grants scheme must own the land or have the right to plant on the land. The Government has set a goal that two-thirds of those 60 million trees should be natives.

We understand that the billion trees programme would create up to 1,000 jobs. Some of us observed there may be far fewer jobs if land that is used for pastoral farming is changed to forestry. The ministry told us that about 1,000 people were employed in silviculture (growing and cultivating trees) and planting before the programme began. This number is expected to double, with an additional 1,000 people working in such roles.

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We heard that, rather than replacing agricultural activities, the grants programme is encouraging landowners to better integrate trees on their farmland. This means that agricultural labour will not be replaced with forestry labour.

Renewed interest in the Emissions Trading Scheme In December 2018, the Government made some decisions to improve how forestry is treated in the emissions trading scheme (ETS). One of those decisions is to bring the Permanent Sink Forest Initiative into the ETS and simplify it. The Permanent Sink Forest Initiative is one of the Government’s sustainable forestry programmes. It enables landowners to receive carbon units by creating permanent forests.

Te Uru Rakāu said that high log and carbon prices have resulted in renewed interest in the ETS. Te Uru Rākau anticipates that the high prices and Government decisions about the ETS will encourage the private sector to plant commercial forestry. This includes planting permanent forests.

Crown Forestry joint ventures The ministry is managing a joint venture with Ngāti Hine, funded by the Provincial Growth Fund. Crown Forestry joint ventures involve the Crown entering into a commercial arrangement with the landowner, with both contributing equity. A commercial deal is negotiated based on that equity. As part of the negotiation, the landowner can choose whether they receive their return on equity as an annual rental, a share of stumpage, or both.

Te Uru Rākau explained that all of the deals it makes for Crown Forestry are for a commercial rate of return, which is agreed with the Treasury. To ensure fairness, all of its contracts are assessed by lawyers and the assumptions used to decide the offer price are peer-reviewed. Te Uru Rākau said it also compares the rates it is paying for stumpage and land rent for a comparable forest.

Partnerships with Māori entities Te Uru Rākau told us that it has been encouraged by the number of Māori entities interested in partnering with it. This includes the Crown Forestry joint ventures, the grant programme for landowners, and planting mānuka and indigenous forest on Māori land. Te Uru Rākau also partners with Māori on a range of training schemes that prepare people to undertake silviculture and harvesting activities.

Workplace safety We were concerned to hear about several deaths in the forestry industry this year. Te Uru Rākau told us it is working with WorkSafe and ACC (the Accident Compensation Corporation) to consider how the sector can improve its health and safety record. The ministry is also a member of a health and safety committee that the forestry sector operates. The committee has developed the Safe Trees programme to educate contractors and a certification system for contractors and employees. We would be interested in learning about the effect of these initiatives. 8

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Forestry debris Following the floods around the Tolaga Bay area in 2018, some of us have heard community concerns about forestry practices, particularly about the debris left behind. The ministry told us that it worked with the Ministry for the Environment to develop the National Environmental Standard for Plantation Forestry. The standard came into effect on 1 May 2018. We heard that, due to the concerns raised in Tolaga Bay, the scheduled one-year review of the standard will now consider slash management (forestry debris).

Māitaitai reserves We note that the Kahutara, Oaro, and Tūtaeputaputa mātaitai reserves in Kaikōura have been extended over 120 square kilometres of farmland.1 Under the Fisheries (South Island Customary Fishing) Regulations 1999, landowners are supposed to be consulted. Some of us heard that the Department of Conservation and Forest and Bird were directly consulted, but the 50 affected landowners were not consulted. Instead, the only consultation was advertising in newspapers that are not distributed where the landowners live.

Fisheries New Zealand told us that it was unaware that a lack of consultation had been raised as a concern. Following our hearing, it confirmed that the public consultation process met the requirements stipulated in the regulations.

We note that landowners do not believe the consultation met the requirements stipulated in the regulations.

Introduction of cameras on commercial fishing vessels We asked about the possible time frame for cameras to be introduced on commercial fishing vessels. Fisheries New Zealand told us that the Minister has said that this is a three-stage programme. The first stage is introducing electronic catch and position reporting on fishing vessels. While the reporting is already available on all trawlers, it is being introduced for all other vessels throughout 2019.

The second stage is considering some of the main policy issues. We heard that the current rules about which fish can be discarded or have to be brought back to shore are confusing, complicated, and do not encourage innovation. At the time of our hearing, the consultation process was under way, with several options being considered. The time frame for reporting on the consultation is May 2019.

We heard that the Minister wants to address the policy issues before deciding whether cameras should be on fishing vessels. This would be followed by further consultation and legislation if Cabinet decided to proceed with cameras. We look forward to following how this matter progresses.

1 Māitaitai reserves are developed and managed by tangata whenua. They recognise and provide for traditional fishing.

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GPS technology on boats Fisheries New Zealand told us that the GPS technology it is now introducing has impressive features, such as triggering alerts when boats enter places they are not supposed to be. It said that it has rules around confidentiality, which it is updating to deal with new technology. Fisheries New Zealand acknowledged it is critical that, if the Government is collecting this information, people need to be confident that it is kept securely and appropriately shared.

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Appendix

Committee procedure We met on 21 February, 14 March, and 4 April 2019 to consider the annual review of the Ministry for Primary Industries. We heard evidence from the ministry and received advice from the Office of the Auditor-General.

Committee members Hon David Bennett (Chairperson) Kiritapu Allan Hon Nathan Guy Kieran McAnulty Mark Patterson Stuart Smith Rino Tirikatene Hamish Walker

Office of the Auditor-General, Briefing on the Ministry for Primary Industries, dated 21 February 2019.

Ministry for Primary Industries, Responses to written questions 1 to 112.

Ministry for Primary Industries, Responses to post-hearing questions 113 to 129.

Ministry for Primary Industries, Responses to post-hearing questions 130 to 135.

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2017/18 Annual review of Quotable Value Limited

Report of the Primary Production Committee

March 2019

Contents Recommendation ...... 2 About Quotable Value Limited ...... 2 Financial performance ...... 2 Audit results for Quotable Value Limited ...... 2 Information provided in the annual report ...... 4 Breaches of legislative requirements ...... 4 Real-time valuations ...... 5 Employee engagement ...... 5 Increase in temporary contracts ...... 5 Staff turnover ...... 6 Performance of QVL subsidiaries ...... 6 Appendix ...... 7

Hon David Bennett Chairperson

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Quotable Value Limited

Recommendation The Primary Production Committee has conducted the annual review of Quotable Value Limited for 2017/18, and recommends that the House take note of its report.

About Quotable Value Limited Quotable Value Limited (QVL) was incorporated in 1998 as a State-Owned Enterprise. It is New Zealand’s largest valuation and property services company. It offers services across the residential, rural, government, and commercial sectors in New Zealand and Australia. The QVL Group consists of QVL and its two subsidiary companies—Quotable Value Australia Limited and Darroch Limited.

In 2017/18, QVL’s three main strategies were to:

 grow and extend the profitability of its core business  complete work on Project Monarch, a programme of work to replace QVL’s current valuation system and enable it to provide new products and services  develop plans and capability to transform QV into a broader property information business for the benefit of all New Zealanders.

Financial performance In 2017/18, the QVL Group earned revenue of $38.199 million. Its profit after tax was $792,000. This compares with the previous year’s revenue of $40.569 million and profit after tax of $2.32 million.

Audit results for Quotable Value Limited The Auditor-General assessed QVL’s management control environment as “good”, with some improvements recommended. It noted that some recommendations from previous years remain outstanding. They include completing a formal fraud assessment and amending the sensitive expenditure policy to provide clearer guidance on acceptable amounts that can be spent on alcohol.

Downgrade of QVL’s financial information systems and controls The Auditor-General assessed QVL’s financial information systems and controls as “needs improvement”, a downgrade from “good” in 2016/17.

The Auditor-General found that internal controls for expenditure were not operating effectively during the year. The auditor has made a substantial number of recommendations for improvements they consider necessary. Although none of the improvements is major when considered individually, the Auditor-General considered that a grading of “good” was not appropriate, overall. 2

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New financial management system The Auditor-General noted that QVL’s current system relies too much on manual processing, making it susceptible to anomalies. We asked whether the board was surprised by the audit results, and discussed QVL’s new financial management system, which will automate processes and controls.

The chair acknowledged that the audit results demonstrate that QVL must improve its financial information systems and controls. She said that the board had been aware that QVL needed to upgrade its financial management system. It was doing so as part of an upgrade to QVL’s entire IT system. This process was taking some time because QVL first needed to assess the systems that it wanted to run parallel to the Monarch programme. The financial management system was the last part of the upgrade because it had to integrate with the Monarch system.

QVL told us that it was surprised by the downgrade because it had not realised that its previous audit result was at the lower end of the “good” scale. Further, the downgrade came at a time when QVL was addressing the system issues, with its audit occurring between the assessment and implementation of the new system.

Addressing the matters raised in the audit The chief financial officer told us that stage one of the upgrade of the financial management system was completed in January 2019. He expects stages two and three to be complete before the end of June 2019. QVL said it will be meeting with Audit New Zealand and its internal audit team at Deloitte to ensure QVL’s processes are appropriate, to help improve its grade.

While not wanting to detract from an audit result that is unacceptable, the chair emphasised that its IT upgrade is not a reaction to the audit report. Rather, it was part of a programme that had been established for some time. She reiterated that QVL had been caught by the timing between the audit and implementation of the new system.

We were concerned to hear about QVL’s audit results. We would like to hear from QVL in six months to see how it is progressing with the Auditor-General’s recommendations.

Sensitive expenditure We were also concerned to hear that the Auditor-General identified instances where expenditure did not align with QVL’s approved policies or was not supported by appropriate documentation. The Auditor-General’s report to the board contained numerous recommendations, including that the board and management consider how they can exercise better oversight or scrutiny in this area.

We asked about QVL’s internal processes for staff expenditure. The chief executive acknowledged that some of the issues identified in the audit were because some of QVL’s processes are manual. She said that QVL operates a one-up authorisation, with some purchases needing approval at a more senior level. The chief executive explained that QVL is planning to implement an automated travel booking and authorisation system within the next few months, which will make the system more robust.

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We heard that staff who are entertaining clients can occasionally purchase alcohol and charge it back to QVL, provided the purchase is pre-approved. The chief financial officer considers that the Auditor-General’s concerns about sensitive expenditure possibly related to QVL’s alcohol policy, which was open to interpretation. Although pre-approval of alcohol purchases has always been required, the policy specified that a person could have a “reasonable” amount of alcohol. QVL told us that it has now tightened this policy by specifying a dollar amount.

Project Monarch We note that the audit identified a number of risks with Project Monarch, including a change of vendor. We asked how the board is using a risk matrix at each meeting to focus on reducing the risks.

The chair explained that Monarch was definitely on its risk register, as any IT project carries risk. While the project was progressing, QVL had a committee that monitored the work and reported back to the board. The chair said that the project has ended and QVL is now working on business cases to make improvements as needed.

Information provided in the annual report We expressed disappointment that QVL’s 2017/18 annual report lacked information about its operational performance and strategic vision, making it difficult to obtain meaningful information. We asked the chair whether she was satisfied to sign off an annual report of that quality.

The chair explained that QVL has regular contact with the Treasury, reporting monthly about what is happening in the business. She said that about two years ago QVL decided to limit the information included it its annual report. This was because a major competitor entered the New Zealand market and QVL had some contracts up for renewal, so information was commercially sensitive. The chair told us that QVL’s next annual report will contain more information because it is now comfortable that it can share more of its work.

We were not satisfied with this response and reminded QVL, that, as a State-Owned Enterprise, it is accountable to its owners.

Breaches of legislative requirements The Auditor-General noted a number of breaches of legislative requirements, some more significant than others. It recommended that the board seek assurance about how QVL is meeting its contractual, professional, and legislative obligations.

One such breach related to valuation objection work that QVL performed for Auckland Council. The Valuer-General found that some of this work did not comply with the Rating Valuation Rules 2009. This resulted in additional work for QVL to achieve compliance.

We asked whether QVL was aware how many legislative requirements had been breached. The chief financial officer told us he was unaware of any serious breaches. The chair said she believes that this relates to contractual issues with Auckland Council, rather than

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2017/18 ANNUAL REVIEW OF QUOTABLE VALUE LIMITED breaches of legislation. We hope to see that QVL has implemented the Auditor-General’s recommendations by the time of our next annual review.

Real-time valuations QVL told us that it is focusing on investing in automation and real-time results. It said that it expects Project Monarch to include some enhancements, such as analytical tools which can generate real-time valuations.

The chair told us that a real-time valuation of every residential property could be completed as of 1 April 2021. She said that QVL was not directed to introduce real-time valuations ahead of a capital gains tax being introduced on that date. Rather, real-time valuation is relevant to QVL’s business and its local government customers.

We are interested in how representative real-time valuation would be of a market value as at 1 April 2021. We asked whether a property owner could be satisfied with the valuation or whether QVL would advise them to have a person visit the property to value it. The chief executive told us that in most cases real-time valuations should be representative of the market at the time. She described them as a work in progress that will continue to be enhanced over time as the analytics, information, and data sets improve.

Employee engagement We note that in 2014/15 and 2015/16, QVL changed the methodology for its employee survey. As a result, it did not publish figures because they were not comparable. Further, QVL did not conduct an employee engagement survey in the 2017/18 financial year and the measure has been removed from the 2019–2021 Statement of Corporate Intent. We asked how QVL plans to report on the health of its organisation in the future.

The chief executive explained that a chief people officer started in November 2017. She told us that they were hired to ensure that QVL has some good foundations to enable it to measure employee engagement. The chief executive said that QVL has shifted from quarterly surveys of employee engagement to real-time feedback. It has recently introduced a new intranet which allows it do so. The chief executive expects to set measures which will be reported on in next year’s annual report.

Increase in temporary contracts In 2017/18, QVL spent about $480,000 on temporary labour costs, including $130,000 on administration staff in Wellington. In addition, the number of people on fixed-term contracts increased from 21 in 2016/17 to 50 in 2017/18. We asked whether QVL is moving towards temporary contracts and using labour hire companies.

The chief executive told us that QVL’s business usually runs in three-year cycles because of its contracts. This means that different resources are needed across the business in some years. She said that QVL needed a lot of people in 2017/18 and it usually employs people on 12-month contracts. The chief executive added that QVL uses workers from labour hire companies because they are not needed every year and because internal people are not usually hired to help with that work.

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Staff turnover In 2017/18, QVL had staff turnover of 25 percent, an increase from 17 percent in the previous year. The chief executive told us that a lot of jobs and opportunities are available in property at present. She said that people leave the company for a range of reasons, such as parental leave and graduates going on their OE.

The chief executive said that QVL is not concerned about the level of turnover but it is working with the chief people officer to help retain staff. She told us that turnover reflects that people now change jobs more often. However, at 10 years, QVL has a good average tenure for a business.

The total spent on the Employee Assistance Programme or workplace counselling increased from $2,781 in 2015/16 to $5,573 in 2017/18. The chief executive said this did not correlate with staff turnover. Rather, QVL has increased the support available to people over the past several years. This has resulted in staff using the service more than in the past.

Performance of QVL subsidiaries We are interested in the performance and plans for QVL’s subsidiaries, QVL Australia and Darroch.

The chair observed that QVL consistently performs well and adds value to the business. However, she noted that all of the contracts in Australia have recently been up for renewal. Although QVL has retained some, it has not been as successful as it would have liked, which will affect the business. The chair told us that in the future QVL will need to consider whether QVL Australia fits within the overall strategy.

Darroch Darroch provides valuations for properties and assets, as well as a range of property management services. We observed that property management services are outside QVL’s core business and were told that they formed part of Darroch’s business when QVL acquired it.

The chair told us that Darroch has been an underperformer for longer than it should have been. She explained that highly skilled valuers are sought after and when Darroch loses a valuer, it loses revenue. Additionally, the property management part of the business is very competitive and Darroch lost a contract at the beginning of 2018, which took some time to recover from.

We heard that QVL now urgently needs to decide how it deals with Darroch. The chair expects that it will have a clearer idea by the time it gets to the budgeting process for the next financial year. She agreed that disposal of the business is one option QVL will consider.

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Appendix

Committee procedure We met on 14 February and 14 March 2019 to consider the annual review of Quotable Value Limited. We heard evidence from Quotable Value and received advice from the Office of the Auditor-General.

Committee members Hon David Bennett (Chairperson) Kiritapu Allan Hon Nathan Guy Kieran McAnulty Mark Patterson Stuart Smith Rino Tirikatene Hamish Walker

Office of the Auditor-General, Briefing on Quotable Value Limited, dated 14 February 2019.

Quotable Value Limited, Responses to written questions 1 to 112.

Quotable Value Limited, Responses to post-hearing questions 113 to 117.

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Report of the Social Services and Community Committee

March 2019

Gareth Hughes Chairperson

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2017/18 Annual review of the Housing New Zealand Corporation

Report of the Social Services and Community

Committee

March 2019

Contents Recommendation ...... 2 Introduction ...... 2 Becoming a part of HUDA ...... 3 Increasing the supply of houses ...... 3 Focus on the needs of tenants ...... 4 Change in approach to methamphetamine contamination ...... 4 Appendix ...... 6

Gareth Hughes Chairperson

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2017/18 ANNUAL REVIEW OF THE HOUSING NEW ZEALAND CORPORATION

Housing New Zealand Corporation

Recommendation The Social Services and Community Committee has conducted the annual review of the Housing New Zealand Corporation for 2017/18, and recommends that the House take note of its report.

Introduction Housing New Zealand is a statutory corporation established under the Housing Corporation Act 1974 (as amended by the Housing Amendment Corporation Act 2001). The Act sets out the corporation’s functions to support the Crown’s social objectives by providing housing and housing-related services. Its role focuses on tenancy and asset management. The corporation is expected to be involved in delivering affordable, market, and social housing, particularly in the Auckland region.

Financial performance In 2017/18, the corporation’s operating revenue was $1.338 billion, a 1.5 percent increase from 2016/17. The corporation’s total expenses for 2017/18 were $1.185 billion, a slight decrease from 2016/17. We note that the corporation’s expenses were about 6 percent below the budgeted $1.258 billion.

The corporation recorded a surplus after tax of $76 million, compared with $65 million in 2016/17. The corporation said that over the 2017/18 year the board had maintained a strong focus on effective stewardship of the corporation’s housing portfolio, which is valued at about $26.7 billion with shareholder equity standing at about $22.3 billion.

The Auditor-General assessed the corporation’s management control environment as “very good”. It assessed the corporation’s financial information systems and controls and performance information and associated systems and controls as “good”, with some improvements recommended. Encouragingly, the auditor commented that the corporation’s performance reporting continues to improve. Lifting encumbrances on properties in Christchurch and Invercargill

In 2015, it was announced that the corporation intended to sell social houses to community housing providers over a number of years. Encumbrances were placed on the titles of the corporation’s rental properties in Invercargill and Christchurch to ensure that their purpose for social housing would be maintained for 25 years. The encumbrances reduced the estimated value of the properties by about $504 million (as at 30 June 2017). However, in 2017/18 the decision was made to not sell these properties and the encumbrances were lifted. This has increased the estimated fair value of the properties by about $525 million.

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Becoming a part of HUDA In November 2018 the Minister of Housing and Urban Development announced the planned creation of a new entity, the Housing and Urban Development Authority (HUDA), which will bring together the corporation, its subsidiary HLC, and KiwiBuild. The intention of HUDA is to use their combined assets, resources, and expertise to drive the development of programmes for new state, affordable, and market housing. HUDA is expected to be operational by late 2019. We will monitor with interest the effects that this transition has on the corporation and HLC.

Increasing the supply of houses The corporation provides housing to a significant number of people—an estimated 185,000 people are living in its properties. However, demand for social housing is continuing to grow. The Government has indicated that making more social housing available is one of its key priorities.

We heard that the corporation had stepped up its asset development programme. In 2017/18 it added 2,188 homes to its portfolio. This compares with 1,524 homes in 2016/17. In Auckland it added 1,511 homes. The corporation is also focused on increasing the number of homes it has in the regions. Its Regional Housing Programme is building houses in some regional locations for the first time in many years. Its aim is that it will have renewed 1,500 homes and built about 900 new homes in the regions by June 2022.

Building new houses The corporation said it is ramping up its building programme. Currently it has 2,500 houses under construction. In Auckland it is taking advantage of the Auckland Unitary Plan that allows it to increase the number of homes it builds on a property. However, it acknowledged that its construction programme had taken longer than the target set out in its Statement of Performance Expectations. We asked why the corporation had not built as many houses as it intended to.

The corporation said that a number of factors affected its ability to build houses as quickly as it would like. It is a “brownfield” as opposed to a “greenfield” developer, and its consistently high occupancy rates (98 percent) reduce the number of opportunities to re-develop its properties.1 The corporation said its commitment to quality urban planning also can affect the pace of its construction programme. This commitment involves going through a process with the community to determine what the best outcomes are for the project.

We will monitor the progress the corporation makes with its construction programme with interest.

Buying houses As well as building new houses, the corporation buys and leases properties from the private market. We note that the number of houses it bought in 2017/18 was higher than it intended. We asked whether this was because the corporation did not build as many houses as it

1 Brownfield developments are on land that has been developed in the past, as opposed to greenfield developments which are on land that has not been built on before.

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2017/18 ANNUAL REVIEW OF THE HOUSING NEW ZEALAND CORPORATION planned to. The corporation said the Government sets targets for how many houses it must have available for people to live in. Some of this target is met through building new houses. However, what it cannot meet through new builds must be met through buying houses.

Focus on the needs of tenants We heard that the corporation has been changing the way it operates to focus better on the needs of its tenants. These changes include making it easier for tenants to interact with it, expanding the range of support services it provides to tenants, tailoring these services to different groups, and matching the homes it builds with the specific needs of its tenants. The aim of these changes is to ensure its tenants have stable housing, which it considers will lead to better life outcomes and healthier communities.

Sustaining tenancies The corporation has changed its approach to moving or evicting tenants and is committed to helping people sustain their tenancies. We were interested in the corporation’s approach to dealing with tenants who misbehave and cause distress for their neighbours. The corporation said its approach is to try to keep people in their homes. It has set up intensive tenancy management teams, which work with people who are being disruptive to help them moderate their behaviour.

The corporation also noted that evicting tenants usually passes on costs to another part of government. It said the special needs grants for emergency housing were an example of this. When it evicted tenants, they would often end up in emergency accommodation, like a motel, which costs substantially more than housing people in one of its properties.

Change in approach to methamphetamine contamination In May 2018 the Prime Minister’s Chief Science Advisor, Professor Sir Peter Gluckman, released a report about the health risks of exposure to methamphetamine residues in residential properties. The report challenged existing standards for levels of methamphetamine contamination. It set out that the level of contamination associated with these standards would have an extremely low, if not negligible, health risk.2 The corporation told us that, based on the updated evidence in the Gluckman report, the standards it had used for testing methamphetamine were incorrect and it has adopted a higher safe contamination threshold.

The corporation has also been changing its approach to dealing with tenants where methamphetamine contamination is detected. It has stopped evicting tenants for methamphetamine contamination, except when methamphetamine manufacture is discovered.3 It also works with other agencies, particularly medical agencies and the Police, when it comes to issues related to methamphetamine. The corporation said it is committed

2 Professor Sir Peter Gluckman, https://www.pmcsa.org.nz/wp-content/uploads/Methamphetamine- contamination-in-residential-properties.pdf 3 Methamphetamine Contamination Housing New Zealand’s Response, https://www.hnzc.co.nz/assets/Publications/Corporate/Methamphetamine-contamination- response/Methamphetamine-Contamination-Housing-New-Zealands-Response-September-2018.pdf 4

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2017/18 ANNUAL REVIEW OF THE HOUSING NEW ZEALAND CORPORATION to providing stable homes, as it considers that this gives other agencies the chance to be more effective in their interventions.

Compensating tenants who had to leave their homes Prior to the release of the Gluckman report, hundreds of the corporation’s tenants had to leave their homes based on an incorrect standard for methamphetamine contamination. The corporation has apologised to these tenants and committed to compensating them for the costs associated with having to leave their homes. About 850 people were identified as eligible for this compensation. We heard that the corporation had been able to make contact with about 574 of these people and 284 of the cases are now complete.

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Appendix

Committee procedure We met on 20 February and 13 March 2019 to consider the annual review of the Housing New Zealand Corporation. We heard evidence from the corporation and received advice from the Office of the Auditor-General.

Committee members Gareth Hughes (Chairperson) Darroch Ball Anahila Kanongata’a-Suisuiki Agnes Loheni Hon Alfred Ngaro Greg O’Connor Maureen Pugh Priyanca Radhakrishnan Hon Louise Upston

Office of the Auditor-General, Briefing on the Housing New Zealand Corporation, dated 20 February 2019.

Housing New Zealand Corporation, Responses to written questions 1 to 125.

Housing New Zealand Corporation, Responses to written questions 126 to 151.

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2017/18 Annual review of the Ministry of Social Development

Report of the Social Services and Community Committee

March 2019

Contents Recommendation ...... 2 Introduction ...... 2 Financial overview and audit results ...... 2 Housing...... 3 Housing vulnerable families ...... 4 Jobseeker support ...... 4 Culture change in Work and Income offices ...... 4 Support for Māori ...... 5 Decrease in fraud investigations and prosecutions ...... 6 Increased funding for family violence services ...... 6 Fees-free tertiary education policy ...... 6 Families package ...... 6 Measuring outcomes ...... 6 Appendix ...... 8

Gareth Hughes Chairperson

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Ministry of Social Development

Recommendation The Social Services and Community Committee has conducted the annual review of the Ministry of Social Development for 2017/18, and recommends that the House take note of its report.

Introduction The Ministry of Social Development advises the Government about social policy and provides services to people in the community. In 2017/18 the ministry’s role included:

 providing employment, income support, and superannuation services  allocating funding to community service providers  providing student allowances and loans  monitoring the Office of the Children’s Commissioner, the Social Workers Registration Board, and the New Zealand Artificial Limb Service  working with the social sector to improve the wellbeing of New Zealanders. The ministry has undergone a lot of changes recently. On 1 October 2018, its role in providing public housing assistance and services was transferred to the newly created Ministry for Housing and Urban Development. Before that, in April 2017 various functions relating to children and families were transferred to the newly created ministry Oranga Tamariki.

Financial overview and audit results In 2017/18 the ministry’s total revenue was $1.016 billion, and total expenses were $988 million. These were much lower than in 2016/17 when the ministry’s total revenue was $1.421 billion and its expenses were $1.39 billion. In 2017/18 the ministry had a surplus of $28 million, $3 million less than in 2016/17.

The ministry’s lower revenue and expenses in 2017/18 reflect the transfer of functions to Oranga Tamariki, which was created on 1 April 2017.

We note that, when the transferred functions are excluded, the ministry’s revenue ($949 million) and expenses ($918 million) were both about 7 percent higher in 2017/18 than the previous year. We asked about the reasons for a 23 percent increase in operating expenses. We were told that the increase was due to the ministry receiving a full year of funding ($86.6 million) to provide shared corporate services to Oranga Tamariki, compared to three months of funding ($25 million) in 2016/17.

Audit assessment The Auditor-General assessed the ministry’s management control environment, financial information systems and controls, and performance information and associated systems and controls as “good”. 2

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The assessment of the ministry’s management control environment was a downgrade from the rating of “very good” in 2016/17. The Auditor-General notes that this does not necessarily indicate any deterioration of the control environment from the previous year, but reflects different areas of focus in the 2017/18 audit. The auditor said the assessment took into account the ministry’s size and complexity, and the significance of areas where improvements are needed. They said there is a need for a formal fraud policy, and to review and refresh outdated policies following the establishment of Oranga Tamariki.

Housing More people on the social housing register Applications to the social housing register increased from 6,773 in 2016/17 to 10,589 in 2017/18. We asked about the reasons for the increase. The ministry said the increase has been caused by:

 greater awareness of what support is available  an increasing number of households moving from private rentals to public housing  fewer people exiting public housing. The ministry emphasised that the increase in people on the social housing register does not account for movement on and off the register. The number of households moved into housing from the register increased from 5,305 in 2016/17 to 6,644 in 2017/18.

Housing supply We were told that an insufficient supply of affordable and adequate housing is causing people to exit the private rental market.

“Adequacy” is a new category on the social housing register. According to the ministry an adequate home is warm, dry, and safe. We were interested to learn that the ministry has noticed more applications to the social housing register because of inadequate housing than any other assessment criteria.

We asked whether the ministry expects to see the number of applications to the social housing register continue to increase. We were told that it will increase as long as there is an insufficient supply of housing. The ministry believes work to increase the supply of affordable, public, and transitional housing should increase the supply of houses.

Transfer of functions On 1 October 2018, the new Ministry of Housing and Urban Development (MHUD) took over many of the ministry’s public housing and transitional housing functions.

In 2017 the Auditor-General made several recommendations for improvements to MSD’s housing functions. The Ministry of Social Development (MSD) has fully addressed two of these recommendations and has made good progress against the remaining six. We encourage MSD to support MHUD to complete the remaining recommendations.

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Housing vulnerable families We are concerned that sex offenders were placed in transitional accommodation where the ministry also housed vulnerable families. In May 2017 the Department of Corrections and MSD became aware that they were using the same motels to house offenders and families.

In response, they signed a memorandum of understanding. The memorandum creates processes to ensure that sex offenders and families are not placed in the same housing. It also outlines the responsibilities of each entity.

We asked how the ministry changed its practices after learning of the oversight. In addition to creating a memorandum of understanding, changes include:

 implementing an information-sharing system between the ministry and Corrections  improving information-sharing systems and processes within the ministry  improving data-collection methods. We were disappointed to learn of two further instances where sex offenders were housed in the same accommodation as vulnerable families, after the ministry became aware of the problem. We were reassured to hear that Corrections no longer places sex offenders in motels. The ministry is also confident that new processes mean the situation will not be repeated. We will continue to monitor the ministry in this area.

Jobseeker support The number of people receiving jobseeker support rose by 8,917 from September 2017 to September 2018, a 7.4 percent increase. The ministry said it does not think the increase is significant. It said a better measure is the percentage of the working age population on jobseeker support, which has remained stable at around 4.5 percent since 2008.1 We asked whether the ministry expects to see the number of people receiving jobseeker support continue to increase. It forecasts that the number of people receiving jobseeker support will decrease over the next five years.

The ministry is concerned by a 10 percent increase in the number of 18–24 year olds receiving Jobseeker support. In response it has implemented initiatives, such as Mana in Mahi, which target this age group. We were pleased to hear that 56 18–24 year olds were referred to the Mana in Mahi programme by 4 February 2019. The ministry was unable to tell us what percentage of 18–24 year olds on Jobseeker support were included in the Mana in Mahi programme, or how many 18–24 year olds are expected to receive Jobseeker support in the future, because it does not forecast by age group.

Culture change in Work and Income offices We were interested to hear what changes the ministry has made to improve its service culture.

1 Ministry of Social Development, Jobseeker Support - December 2018 quarter, https://www.msd.govt.nz/about-msd-and-our-work/publications-resources/statistics/benefit/latest-quarterly- results/jobseeker-support.html. 4

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In June 2018 the ministry introduced a “client commitment charter” with the goals of giving people the best service possible and providing them with the information they need to access services. The ministry said the most important change will be improved customer service. To achieve this, it will give staff and security training in empathy and customer interaction.

To make it easier to access the ministry’s services, the ministry has launched the MyMSD app and an eligibility guide.

Office design The ministry is also redesigning its service centres to make them more welcoming and user- friendly. The design will be implemented across the country by the end of 2020. The changes include:

 brighter colours  better signage  display of local art work  division of service centres into three zones: a customer zone, an intermediary zone, and a staff zone.

Support for Māori We asked what the ministry is doing to improve its responsiveness to the needs of Māori, who are disproportionately represented among its customers. The ministry’s support strategy is called Te Pae Tata. It includes programmes that aim to get Māori into the labour market and uses understanding of tikanga and te reo Māori to support Māori.

The ministry explained that changes it is making to its service culture will also improve support for Māori. The changes which will particularly benefit Māori include:

 recruiting service centre staff who reflect the community where the centre is located  transitioning away from an individual approach to social services towards a whānau- centred approach  getting out of service centres and into the community to deliver services.

Post-Treaty-settlement initiatives We heard the ministry’s work with iwi after Treaty of Waitangi settlements has been successful at supporting Māori.

The ministry used the Te Hiku o Te Ika Iwi – Crown Social Development and Wellbeing Accord, signed as part of the Te Hiku Iwi Treaty settlement process, as an example. The agreement provides a framework for the Crown and iwi agencies to work together to ensure the community is culturally, socially, and economically prosperous. We were told that the agreement has been reinvigorated in the past year with good results.

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Decrease in fraud investigations and prosecutions Fraud prosecutions have decreased by two-thirds between March 2017 and December 2018. We were interested to hear why. The ministry said it has changed its approach to focus on helping people follow its guidelines. This has stopped people receiving benefits they are not entitled to, which has decreased fraud prosecutions.

We heard that the proportion of investigations resulting in prosecutions has remained the same. The ministry said the number of investigations has reduced, but the criteria for launching an investigation remains the same.

We asked how big a problem fraud is in the benefit system. We heard that the large majority of people receiving benefits genuinely need the help. The ministry said the amount of money lost to fraud is tiny in comparison to the amount spent across its services.

Increased funding for family violence services The Government has allocated $76.157 million of additional funding over four years to support family violence services funded by the Ministry of Social Development. The ministry said it has used some of this funding to make changes to the way it delivers its services. The changes include:

 funding more diverse providers, including kaupapa Māori and Pacific providers  measuring success against outcomes  an inter-departmental approach to family violence  emphasis on prevention.

Fees-free tertiary education policy We congratulate the ministry on the fees-free programme winning the Prime Minister’s award for public sector excellence.

We asked how this policy was developed. The ministry said it was a combined effort across the tertiary education sector. It was proud of the work it undertook in six weeks to launch the policy.

Families package We asked what work went into developing the families package. The ministry said it involved intense policy advice and modelling. It said this process was important to help understand how pieces of the package affected existing social services and the market. The ministry is pleased that the outcomes of the package will be measured over time because this will provide it with important data on the effects of the package.

Measuring outcomes The ministry is developing impact indicators as a way of measuring how well it is achieving its desired outcomes.

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We asked when baseline information for the impact indicators will be made available. We heard that work is under way to develop these baselines and they will be used to measure outcomes in the 2018/19 annual report. We are interested to see the results of these changes in next year’s annual report.

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Appendix

Committee procedure We met on 5 December 2018 and 6 March 2019 to consider the annual review of the Ministry of Social Development. We heard evidence from the Ministry of Social Development and received advice from the Office of the Auditor-General.

Committee members Gareth Hughes (Chairperson) Darroch Ball Anahila Kanongata’a-Suisuiki Agnes Loheni Hon Alfred Ngaro Greg O’Connor Maureen Pugh Priyanca Radhakrishnan Hon Louise Upston

Poto Williams replaced Greg O’Connor for some of this review. Simon O’Connor replaced Maureen Pugh for some of this review.

Office of the Auditor-General, Briefing on the Ministry of Social Development, dated 5 December 2018.

Ministry of Social Development, responses to written questions 1–178.

Ministry of Social Development, appendices for questions 1–178.

Ministry of Social Development, Question 38, Q1 2017–2018 performance report.

Ministry of Social Development, Question 38, Q2 2017–2018 performance report.

Ministry of Social Development, Question 38, Q3 2017–2018 performance report.

Ministry of Social Development, responses to post-hearing questions 179–203.

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2017/18 Annual review of Oranga Tamariki—Ministry for Children

Report of the Social Services and Community Committee

March 2019

Contents Recommendation ...... 2 Introduction ...... 2 Financial overview ...... 2 Audit results ...... 2 Three pillars to uphold ...... 3 Caregivers raising their concerns ...... 3 Partnering with iwi and NGOs ...... 4 Notifications of concern ...... 4 Implementing the Child Poverty Reduction Act...... 5 Changes to the Oranga Tamariki Act ...... 5 More homes for tamariki ...... 5 New goals for Pacific children ...... 6 Young people in the justice system ...... 6 VOYCE—Whakarongo Mai continues rollout ...... 6 Appendix ...... 7

Gareth Hughes Chairperson

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Oranga Tamariki—Ministry for Children

Recommendation The Social Services and Community Committee has conducted the annual review of Oranga Tamariki—Ministry for Children for 2017/18, and recommends that the House take note of its report.

Introduction Oranga Tamariki—Ministry for Children was created as a government department on 1 April 2017 to support the wellbeing of children and young people. The ministry took on the functions of the Ministry of Social Development’s Child, Youth and Family business unit, children’s teams, and a large portion of the Community Investment teams.

The ministry was originally named the Ministry for Vulnerable Children, Oranga Tamariki. Its name change took effect from 18 January 2019.

As of 30 June 2018, there were 6,350 children and young people in the ministry’s care.

The ministry employed 3,991 staff as of June 2018, compared with 3,423 in the previous year.

Financial overview Oranga Tamariki had total revenue of $865.748 million in 2017/18. Its total expenditure was $855.57 million. A comparison with the previous year’s figures is not available, as the ministry only operated for a three-month period in 2016/17.

The ministry’s main expenses were personnel costs, which were $301.44 million, shared service fees of $86.907 million, and “other expenses” of $449.658 million.

We noted that personnel costs were higher than the budgeted $268.448 million, but that this budgeting was done before the agency was set up. The ministry has since hired 150 social workers between 1 April 2017 and 30 June 2018.

Audit results The Auditor-General graded the ministry’s financial information systems and controls as “good”. However, the auditor gave a “needs improvement” rating to its management control environment and its performance information and associated systems and controls.

Recommendations for improvement include the following points.

Management control environment The Auditor General’s recommendations covered risk management, policies, and legislative compliance. Regarding procurement, the Auditor-General recommended the ministry ensure its policies and procedures are updated to reflect a changing approach to contracting. The

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2017/18 ANNUAL REVIEW OF ORANGA TAMARIKI—MINISTRY FOR CHILDREN ministry spends over $260 million annually on contracts with over 500 social service providers. It relies heavily on a few organisations that could be regarded as long-term strategic partners.

The Auditor-General suggested the ministry improve its approach to managing and monitoring contract risk. The auditor also suggested awarding contracts with longer terms to give providers greater certainty.

Performance metrics and controls The Auditor-General has recommended that Oranga Tamariki review its performance framework and associated measures, indicating that major improvements are needed. We were pleased to hear that the ministry is working on refining its metrics and working them into its new operating model. The ministry said it would soon report these on a regular basis to the Minister. We look forward to seeing a clearer picture of the quality of its performance and services.

Three pillars to uphold The ministry has outlined three benchmarks to inform its operations for the first 15 months (to July 2019):

 Loving places: increasing the number of safe places available for vulnerable children and young people.  Quality practice: ensuring consistent, high-quality social work practice; strengthening the practice framework; and implementing a quality assurance process.  Stronger partnerships: building further partnerships with NGOs and iwi, and developing iwi-led family group conferences. We heard that the ministry has improved in all three areas, but more work is needed.

Caregivers raising their concerns When hearing from submitters recently, we heard around 2,000 complaints from caregivers. They have told us they are not receiving the support they need. Caregivers have also told us that, when they attempt to find permanent placement for a child, they are being challenged by the ministry. While many new caregivers have been recruited, we are concerned about existing caregivers and the ministry’s ability to retain them.

The deputy chief executive for Children and Families, South said that the ministry has been working to improve its support for caregivers and has introduced a 24-hour helpline. She said that in the long term the ministry would like to provide a team to support caregivers, but it does not currently have the resources to do so. She added that the ministry had worked extensively with iwi about how it might support a community of caregivers.

The chief executive said some of the 150 new social workers had been allocated to support caregivers. She also said the issues around caregiving are complex as different communities require different approaches from caregivers.

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The ministry said it would soon undertake a caregiver satisfaction survey to identify areas of concern and improve support.

We will monitor progress in this area and hope to hear more positive stories from caregivers.

Partnering with iwi and NGOs Improving outcomes for Māori Oranga Tamariki has focused on progressing strategic partnerships with five iwi. The children of these iwi make up the majority of Māori children in the ministry’s care. In its annual report, the ministry said it wanted to use the support of iwi to reduce the need for Māori children to be in statutory care.

The ministry has also hosted 150 leaders from Māori organisations and iwi to develop strategic partnerships and co-design support for Māori children and their families.

Working with NGOs The ministry is working closely with NGOs and has increased its funding to these organisations to recognise their constraints. The chief executive told us the ministry has shifted its long-term funding to NGO providers from just under 30 percent, before the agency started, to almost 80 percent.

Some of us expressed concern about the amount spent on these contractors and partners, noting that compared with 2016/17 there appeared to have been a 300 percent increase in contract spending. However, the deputy chief executive noted that the comparison was distorted because the $5.26 million spent on contractors and partners in 2016/17 related only to the three months the ministry had existed in that financial year. On a 12-month basis, spending in 2017/18 remained relatively consistent at $19.93 million.

We intend to monitor the amount spent on outside parties in the future.

Notifications of concern The ministry has reported an increase in the number of notifications of concern about children that it has received.1 In 2017/18 it received 92,247 notifications of concern about 64,950 individual children, with 41,780 of the notifications requiring further action.

This is an increase compared with 2016/17, and represents a reversal from a downward trend in the previous year. In 2016/17 there were 81,840 notifications with 38,975 requiring further action, a decrease from 44,689 in 2015/16.

The ministry said there is no single factor for the increase, but the following may have contributed:

 more referrals from Police due to raising the care and protection age (explained below)

1 Under section 15 of the Oranga Tamariki Act 1989, any person who believes that any child or young person has been, or is likely to be, harmed (whether physically, emotionally, or sexually), ill-treated, abused, neglected, or deprived may report the matter to Oranga Tamariki or the Police. 4

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 higher Police confidence in Oranga Tamariki, resulting in more reports of concern  Police having a better understanding of family harm and referring more children in vulnerable situations. The ministry said the number of notifications of concern has fluctuated between 59,000 and 65,000 over the past five years. It also said there was a 13 percent increase in the notifications received in 2017/18 compared to 2016/17, and most of this is due to a 23 percent increase of notifications from Police not related to family violence. We will continue to monitor these notifications and hope to see a decrease.

Implementing the Child Poverty Reduction Act We asked the ministry how it plans to reflect the Child Poverty Reduction Act 2018 in its strategy. The ministry said it has set up the Child Wellbeing Unit. The unit is located in Oranga Tamariki’s offices but is managed jointly by the Department of the Prime Minister and Cabinet and Oranga Tamariki. The chief executive said the unit has done a significant amount of engagement with the community to provide a better picture of children’s needs across the system.

Changes to the Oranga Tamariki Act The ministry has been preparing to implement legislative changes to the Oranga Tamariki Act 1989, which will come into force on 1 July 2019. As part of this, the ministry will begin working in an expanded youth justice system that includes 17-year-olds. The ministry will build a new service for 18–25-year-olds which will include the right to remain living with a caregiver until the age of 21.

We appreciate the magnitude of this legislative change and will closely monitor the outcome.

More homes for tamariki Remand homes The ministry was given extra funding in Budget 2018 which has allowed it to increase its number of remand homes to nine. The four new homes have opened in Rotorua, Palmerston North, and Dunedin.

It has also launched a remand service in partnership with Ngāpuhi. Previously, a child or young person would have had the option to go to a remand home or a large institution. Through the remand service they are placed with Ngāpuhi caregivers who provide a safe home environment.

Kaupapa Māori Four kaupapa Māori homes have been opened. These homes have the aim of returning children to their families, and they aspire to deliver on Māori principles and practices. Caregivers introduce children to their hapū and iwi on their marae.

Regular hui are held at the homes to support the children and explore solutions for a better future.

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New goals for Pacific children We were pleased to see that the ministry has launched a three-year Pacific strategy, named the Oranga Tamariki Pacific Strategy 2018–2021. The strategy includes a work programme to build tools and capability within the organisation for assisting this community.

A Pacific engagement plan has also been introduced to maintain relations with Pacific stakeholders nationally, regionally, and locally.

A panel made up of nine Pacific leaders from academic, religious, and community sectors was established in November 2016. It continues to meet bimonthly to strategise on how it can improve the lives of Pacific children.

Young people in the justice system Family group conferences Family group conferences bring family together to support a young person to establish a plan to help reduce their chances of re-offending. The ministry held 4,600 youth justice family group conferences in 2017/18, with 2,250 individual young people. It worked with 600 young people in youth justice custody throughout the year. As of 30 June 2018, 220 young people were in youth justice custody. From July 2019, this will increase because most 17- year-olds will be included in the youth justice system instead of the adult justice system. However, those who have been charged with serious offences will be dealt with in adult courts.

In 2017/18 Ngāti Porou became the first iwi to facilitate family group conferences for its young people who had offended.

VOYCE—Whakarongo Mai continues rollout On 1 April 2017, a non-government organisation called VOYCE—Whakarongo Mai (Voice of the Young and Care Experienced) was established as an independent advocacy service for children and young people who are, or have been, in care.

Whakarongo Mai has a national care service in Auckland. The service is testing its support model with care-experienced young people. It is also supporting children and young people outside Auckland through its website, social media platforms, and 0800 number.

The service connects children in care through regional activities and local networks.

Whakarongo Mai appears to be on track and is meeting its original goals in the expected time frame. It intends to continue to build its capacity, and roll out its services across New Zealand. We will follow its development with interest.

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Appendix

Committee procedure We met on 5 December 2018 and 6 March 2019 to consider the annual review of Oranga Tamariki, Ministry for Children. We heard evidence from the ministry and received advice from the Office of the Auditor-General.

Committee members Gareth Hughes (Chairperson) Darroch Ball Anahila Kanongata’a-Suisuiki Agnes Loheni Hon Alfred Ngaro Greg O’Connor Maureen Pugh Priyanca Radhakrishnan Hon Louise Upston

Advice and evidence received We received the following documents as advice and evidence for this annual review. They are available on the Parliament website, www.parliament.nz.

Office of the Auditor-General, Briefing on Oranga Tamariki—Ministry for Children, dated 5 December 2018.

Oranga Tamariki—Ministry for Children, Responses to written questions 1–131.

Oranga Tamariki—Ministry for Children, Responses to post-hearing questions 132–144.

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2017/18 Annual review of Ōtākaro Limited

Report of the Governance and Administration Committee

March 2019

Contents Recommendation ...... 2 About Ōtākaro Limited ...... 2 Financial overview ...... 2 Central Christchurch anchor projects ...... 2 Appendix ...... 4

Brett Hudson Chairperson

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Ōtākaro Limited

Recommendation The Governance and Administration Committee has conducted the annual review of Ōtākaro Limited for 2017/18, and recommends that the House take note of its report.

About Ōtākaro Limited Ōtākaro Limited is a Crown-owned company that was established in 2016. It took over some functions previously carried out by the Canterbury Earthquake Recovery Authority.

The purpose of Ōtākaro is twofold: to deliver Crown-led anchor projects in central Christchurch by providing procurement, design management, and construction management services, and to divest Crown land and assets. In doing so Ōtākaro is required to balance good commercial outcomes against the Crown’s regeneration objectives for Christchurch.

Ōtākaro’s chair is Ross Butler and the chief executive is John Bridgman.

Financial overview Ōtākaro Limited reported a deficit of $28.3 million for the year ending 30 June 2018. Total expenses were $159.8 million, an increase of 14 percent from the previous financial year. Total revenue was $129.7 million, an increase of 19 percent from the previous year. Ōtākaro also gained $1.8 million from land sales in the 2017/18 financial year.

The Auditor-General issued an unmodified audit opinion. It assessed Ōtākaro’s management control environment as “very good” and made no recommendations for improvement. It assessed Ōtākaro’s financial information systems and controls as “good”, recommending that some improvements be made. The performance information and associated systems and controls were also assessed as “good”, with some improvements recommended. In particular, the auditor noted Ōtākaro’s self-disclosed breach of section 149C of the Crown Entities Act 2004. This section had required Ōtākaro to prepare a Statement of Performance Expectations before the beginning of the 2018/19 financial year, but it had failed to meet this legislative requirement in time.

Central Christchurch anchor projects Convention Centre This project involves the construction of the Te Pae Christchurch Convention Centre, to facilitate large conventions and exhibitions. It will have a 2,000-person capacity including a 700-person conference facility.

Ōtākaro told us that construction is on schedule, and it does not expect any delays for the opening of the Te Pae centre. It has completed 25 percent of the construction, including laying of the first concrete foundations. The project will be completed in 2020, and bookings

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2017/18 ANNUAL REVIEW OF ŌTĀKARO LIMITED are already being taken for that year. Ōtākaro is currently in negotiations with a potential operator for the facility.

Metro Sports Facility The Metro Sports Facility is set to be the largest aquatic and indoor recreation and leisure centre in New Zealand. Ōtākaro is responsible for managing the design and construction of the facility.

Early groundworks have already commenced but the main construction work will begin in March 2019. The targeted completion is set for late 2021.

Ōtākaro told us it is on budget and on schedule for this project. The operator of the facility will be the Christchurch City Council.

East Frame The East Frame project is a residential development in central Christchurch involving the construction of 900 new homes. Construction has started on 172 of the homes.

The project comprises a staged development partnership with Fletcher Living. Ōtākaro holds the land and Fletcher is contracted to develop the land on a staged basis, with certain targets it is required to achieve.

Ōtākaro said that as the investment from the Crown is small, this agreement offers a low-risk opportunity for the Crown. There is a financial sharing arrangement with Fletcher: in the event that a property is sold above the threshold, Ōtākaro will take a share of the profits. Ōtākaro said there would be no down-side risk for the company in the event that a property is not sold.

Other projects Ōtākaro is involved in transport projects as a part of the “Accessible City” programme, which aims to make improvements to the travel network in the central city. Work is complete on all of the projects except development of the hospital corner, which will be completed in 2019.

Ōtākaro is divesting the balance of Crown land in the central city. It told us that it is 60 percent through the programme and it will be completed in the next 18 months.

We asked Ōtākaro how the crash in the Christchurch construction market and flattening of the market for new residential properties would affect current projects.

In regards to the construction market, Ōtākaro told us that there is a strong interest from firms in the Metro Sports Facility. However, it will need to pay attention to ensure there is an adequate supply of contractors. It does not expect to contract another project beyond that.

As for the residential market, Ōtākaro said there is still strong interest in housing, particularly in the central business district. It has also seen interest in land from residential developers.

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Appendix

Committee procedure We met on 5 December 2018 and 13 March 2019 to consider the annual review of Ōtākaro Limited. We heard evidence from Ōtākaro Limited and received advice from the Office of the Auditor-General.

Committee members Brett Hudson (Chairperson) Ginny Andersen Kanwaljit Singh Bakshi Hon Jacqui Dean Paul Eagle Hon Peeni Henare Jamie Strange Dr Jian Yang

Hon Nicky Wagner participated in some of this review.

Advice and evidence received The documents that we received as advice and evidence are available on the Parliament website, www.parliament.nz.

Office of the Auditor-General, Briefing on Ōtākaro Limited, dated 5 December 2018.

Ōtākaro Limited, written responses to pre-hearing questions, dated 5 December 2018.

Ōtākaro Limited, powerpoint, dated 5 December 2018.

Ōtākaro Limited, written responses to additional questions, dated 5 December 2018.

Ōtākaro Limited, written responses to post-hearing questions 113–136, dated 16 January 2019.

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2017/18 Annual review of the Social Investment Agency

Report of the Social Services and Community Committee

April 2019

Contents Recommendation ...... 2 About the Social Investment Agency ...... 2 Audit results ...... 2 Developing measures for social wellbeing ...... 2 Data protection and use policy ...... 3 Function and role of the agency ...... 4 Place-based initiatives ...... 5 Appendix ...... 6

Gareth Hughes Chairperson

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Social Investment Agency

Recommendation The Social Services and Community Committee has conducted the annual review of the Social Investment Agency for 2017/18, and recommends that the House take note of its report.

About the Social Investment Agency The Social Investment Agency is a departmental agency, hosted within the State Services Commission. It was established on 1 July 2017.

The agency’s work focuses on supporting the social sector to improve social outcomes through improved decision making. This includes demonstrating the value of using data, technology, and evidence and trialling how the sector can work together to innovate and embed more effective ways of working.

The agency is funded by an appropriation (Designing and Implementing Social Investment) from Vote State Services. In 2018/19, funding for the appropriation is $13.4 million.

The agency is working towards four strategic goals:

 demonstrating and championing the investing for social wellbeing approach1  making data accessible and useful for all, and building trust in its use  boosting the capability of the sector to understand, measure, and enable what works, using data and evidence  innovating and embedding improved ways of working, in partnership across the sector. Dorothy Adams is the acting chief executive of the agency.

Audit results The Auditor-General did not conduct a separate audit for the agency, but covered it in the audit of the State Services Commission.

Developing measures for social wellbeing The agency explained that an important part of its work programme has been having discussions about the shift from a social investment approach to an investing for social wellbeing approach.2 We asked how wellbeing would be defined.

1 This approach involves using data and evidence to inform how the agency can best improve the lives of New Zealanders by investing in what is known to create the best results. 2 The social investment approach was described as being about improving the lives of New Zealanders by applying rigorous and evidence-based practices to social services. 2

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The acting chief executive observed that there are numerous wellbeing frameworks, with some debate about which is the best. The agency reviewed all of the frameworks and agreed on the OECD Better Life framework. It has made some amendments to the framework, such as cultural components, to allow for a New Zealand context.

The agency has applied the framework twice. In November 2018, it published the working paper “Measuring the wellbeing impacts of public policy: social housing”. It matched the results of the New Zealand General Social Survey (NZGSS) with other administrative data in the Integrated Data Infrastructure (IDI).3 Although the NZGSS is a subjective measure, the agency said it also provides numbers that enable comparisons. The agency considered people’s responses to survey questions, such as how they felt about their material conditions before and after they moved into social housing.

We asked how the agency obtains quantitative data to determine whether an intervention is having an effect. The agency told us that it considers the data source that provides the most accurate information. It said that the IDI has a huge amount of administrative data. For the report on social housing, the agency used the data that was available, such as the condition and warmth of housing, or health outcomes.

We heard that it will always be the agency’s default position to publish its work. It has published the social housing paper and a paper on the various wellbeing frameworks on its website. The agency will also publish another paper on social housing and one on the changes in wellbeing as a result of transitioning from benefits to employment. These are expected by the end of March 2019.

Data protection and use policy The agency is responsible for the cloud-based Data Exchange, which aims to enable the safe and secure sharing of data between social sector organisations.

Between May and September 2018, the agency met with seven groups to learn their priorities for protecting and using data. They were service users, NGOs, regional providers, government agencies, Māori, Pacific people, and disabled people. The agency told us that it considered any previous work that had been done in this area before it began the engagement. This included the work of the Expert Advisory Group on Information Security about the ethics of data collection for child protection.

We heard that transparency was identified as being very important to people. This includes being able to clearly understand what the data will be used for and how it will make a difference to people. It also includes ensuring that access to the data is evenly distributed throughout the system; it should not just be government agencies able to access the datasets.

We were pleased to hear that the agency has received good feedback about the engagement process. We heard that a data protection and use policy is being drafted based

3 The Integrated Data Infrastructure (IDI) is a large research database that holds data about life events. The data comes from government agencies, Stats NZ surveys, and NGOs. The data is linked together to form the IDI.

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2017/18 ANNUAL REVIEW OF THE SOCIAL INVESTMENT AGENCY on this work. About 10 percent of the people involved in the engagement also helped design the policy.

Guidelines for the safe sharing and use of data We asked whether the agency has developed tools around the safe sharing and use of data. The agency explained that this is the aim of the policy. It has drafted a set of five guidelines that focus on the safe and respectful use of people’s information. They are:

 explaining how to get informed consent from people about the use of their data and the obligations that come with that  how to clearly set out the intended purpose of the data that will be used  ensuring that individuals and whānau have easy and adequate access to their own information so they can understand, correct, and control it  ensuring that organisations in the social sector have equivalent levels of access to data that can allow them to help their communities  answers to basic questions, such as how to keep the data safe and the policies that an organisation should have. The agency expects to request permission from Cabinet in April 2019 to confirm the draft policy with the community that it worked with to develop it. The agency then hopes the policy will return to Cabinet in August 2019, with further recommendations about how it should be implemented.

We look forward to hearing about the progress of this policy.

Function and role of the agency We are interested in the different elements of the agency and how they affect the work of other government agencies to try to improve people’s lives. The agency explained that it is still working with its Minister, who will talk to her Cabinet colleagues about the final function and role of the agency. It views the agency’s mission as determining what works for better lives. The agency considers that it is an organisation that creates the infrastructure to improve and increase the creation of evidence.

We heard that the agency was given a very clear direction and vision when it was established. However, the acting chief executive said it has been extremely lucky to have also been given a lot of scope to provide advice and introduce infrastructure.

The agency emphasised that it has to ensure that its work is going to add value to the system. It said that it needs to identify who will use what it creates; it will not do the work if it will not be a useful contribution to the system.

The Hub The Families Commission, which operated as Superu (the Social Policy Evaluation and Research Unit), was disestablished in June 2018. The Hub, a “one-stop shop” for New Zealand government social science research, was transferred to the agency.

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The agency has spent some time assessing the Hub, including its contents, whether it is fit for purpose, and its future direction. It believes that the Hub is a very valuable asset but it would like to develop it further. Therefore, the agency is now investigating a “What Works” function that would sit within the agency.4

The “What Works” function The agency explained that the What Works Centres in the United Kingdom are very expensive and not appropriate for New Zealand. However, it is exploring how it can take parts of What Works and do two things. The first is disseminating evidence through the Hub and making it user-friendly so that users can be confident about the information they use.

The second piece is developing an exemplar for how to evaluate social interventions, which are not easy to evaluate. The agency’s chief science adviser is leading this work. The agency is having discussions with several organisations about evaluating pieces of their work so it can begin developing a method for evaluating social interventions.

Predictive analytics We asked whether the agency is still using predictive analytics in modelling to ensure that investment is targeted at the children and families that will get best results. The agency told us that it is not doing any predictive analytics because it does not need to. We heard that predictive analysis is useful to determine who is going to get the most benefit from a programme. The agency said it is “not in that space”.

Place-based initiatives Place-based initiative (PBIs) were established to bring local social sector leaders together to address social issues and improve outcomes for children, young people, and their whānau. The acting chief executive told us that the South Auckland and Tairāwhiti PBIs will continue but the Northland PBI has been discontinued. The Ministry of Social Development has now replaced the agency as the lead organisation for the PBIs.

The agency has been commissioned to undertake an evaluation of the PBIs over the next year, which will be completed in two parts. The first part is investigating whether the intervention was delivered as it was designed, and the second part is about the effect and outcomes of PBIs.

Informed consent The agency told us that the South Auckland PBI was in the design group for the data protection and use policy. It said that one of its big contributions was its approach to informed consent. The approach, which is whānau based, involves continuous consent, rather than only obtaining consent at one point in time. We heard that the PBIs’ approach more accurately reflects what happens in the real world, with people who care about their data and the customers that they work with.

4 What Works is an initiative in the United Kingdom that aims to improve how government and other organisations create, share, and use high-quality evidence for decision-making. The network is made up of seven independent What Works Centres and three affiliate members.

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Appendix

Committee procedure We met on 13 February and 3 April 2019 to consider the annual review of the Social Investment Agency. We heard evidence from the agency and received advice from the Office of the Auditor-General.

Committee members Gareth Hughes (Chairperson) Darroch Ball Anahila Kanongata’a-Suisuiki Agnes Loheni Hon Alfred Ngaro Greg O’Connor Maureen Pugh Priyanca Radhakrishnan Hon Louise Upston

Advice and evidence received We received the following documents as advice and evidence for this annual review. They are available on the Parliament website, www.parliament.nz.

Office of the Auditor-General, Briefing on the Social Investment Agency, dated 13 February 2019.

Social Investment Agency, Responses to written questions 1 to 116.

Social Investment Agency, Responses to post-hearing questions 117 to 119.

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2017/18 Annual review of the Social Workers Registration Board

Report of the Social Services and Community

Committee

April 2019

Contents Recommendation ...... 2 About the Social Workers Registration Board ...... 2 Financial performance ...... 2 Social Workers Registration Legislation Bill ...... 2 Funding the Social Workers Registration Board ...... 5 Performance measures ...... 5 Appendix ...... 6

Gareth Hughes Chairperson

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Social Workers Registration Board

Recommendation The Social Services and Community Committee has conducted the annual review of the Social Workers Registration Board for 2017/18, and recommends that the House take note of its report.

About the Social Workers Registration Board The Social Workers Registration Board (SWRB) is a Crown entity established under the Social Workers Registration Act 2003. The Act provides the regulatory framework for registering social workers. It aims to protect the safety of the public by ensuring that social workers are competent and accountable for their practice.

The SWRB is responsible for:

 managing the registration of social workers  considering complaints about registered social workers  enhancing the professionalism of social workers  promoting the benefits of being registered as a social worker  setting the standards for social work education and training. Sarah Clark became chief executive of the SWRB in 2017. Shannon Pakura took over from Shayne Walker as chair of the SWRB board on 10 February 2019. We heard from the outgoing chair.

We thanked Shayne Walker for his service and wished him well for the future. We also acknowledged the work of the other members of the board.

Financial performance In 2017/18, the SWRB’s total revenue was $2.224 million. Its total expenditure was $2.118 million, resulting in a surplus before finance income of $106,000. With finance income included, the surplus was $137,000.

The Auditor-General assessed the SWRB’s management control environment, financial information systems and controls, and performance information and associated systems and controls as “good”, with some improvements recommended.

Social Workers Registration Legislation Bill On 16 April 2018, we presented our report to the House on the Social Workers Registration Legislation Bill. As introduced, the bill would amend the Social Workers Registration Act to introduce mandatory registration of social workers and protect the use of the title “social

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2017/18 ANNUAL REVIEW OF THE SOCIAL WORKERS REGISTRATION BOARD worker”. It would also replace the 5-yearly competence assessments with processes that allow for continuous professional development for practising social workers.

The House was still considering the bill at the date of our hearing.1 Most of our hearing focused on how the SWRB would be affected by the legislation.

Scopes of practice On 8 February 2019, the Minister for Social Development released Supplementary Order Paper 187. One of its proposed amendments was to introduce scopes of practice, which would be determined by the SWRB.

In its 2017–2021 Statement of Intent, the SWRB noted that it is confident that it has the operational processes to manage the move to mandatory registration for between 6,000 and 8,000 social workers. We asked how developing the scopes of practice and overseeing professional development for the sector would affect the SWRB.

The chief executive told us that the number of social workers who may be eligible for registration has been revised since the statement of intent was produced. This is because the figure of 8,000 was based on the 2013 Census. She said that the total is closer to 11,000 to 12,000 when graduates are also included.

The chief executive recognises that the challenge is significant, noting that the SWRB has a full-time-equivalent staff of 11. She told us that the sense of scale can be quite daunting because the SWRB does not have a call centre. Although the SWRB has some good processes, the chief executive acknowledged that it is a tight balancing act because it is working in “constrained circumstances”.

The board’s involvement in the bill as introduced We asked how the organisation and its board were involved in the content of the bill as introduced at first reading in August 2017. The chair described the work of the board as immense. He explained that working through the legislation piece by piece was long and hard work but absolutely critical.

The chief executive said that she understands that the board secretariat worked very constructively with the Ministry of Social Development, which is the organisation responsible for the legislation. However, she believes there were some late changes that the SWRB was unaware of, including to parts of the definition. National members were very concerned that the SWRB was not aware of additional changes to the bill.

The chief executive told us that the SWRB decided that, as the regulator, it should submit on the bill so that it could be transparent about, and accountable for, the advice it provided. She said that this meant the SWRB was not included in discussions through the select committee process until it was invited to provide some additional information.

We heard that the bill as introduced did not include scopes of practice. The chief executive explained that the SWRB’s submission proposed the scopes of practice model as its

1 The legislation was subsequently enacted, receiving Royal assent on 27 February 2019.

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2017/18 ANNUAL REVIEW OF THE SOCIAL WORKERS REGISTRATION BOARD preferred alternative. She stressed that the SWRB supports the scope approach and is very pleased to see that scope has been included in the SOP.

Developing scopes of practice The SWRB told us that it has already done a lot of work with the sector on scopes of practice. The chief executive said that the SWRB consulted with the sector in 2017. She acknowledged that it learnt quite a lot about how to engage constructively with the sector during this process. As a result, the chief executive considers that the SWRB is well positioned to work with the sector if the final legislation includes scopes of practice.

The board has also convened the Social Work Alliance, which contains about 10 of the social work bodies. It includes Social Service Providers Aotearoa, the District Health Boards’ Health Social Work Leaders’ Council, and Oranga Tamariki—Ministry for Children. The chief executive said that this means that the three main areas of employment for people on the board’s register are represented.

We asked what additional work and resources would be needed to implement scopes of practice if the SOP is passed. The chief executive told us that the SWRB has already developed a general scope of practice. The scope, which is on the SWRB’s website, is provided as guidance to social workers about whether they require an annual practising certificate.

However, the chief executive recognises that an information campaign is needed. She said that she expects this will include consultation about the scope. The chief executive told us that this campaign will affect its resources but she believes it can be effectively managed because of the work the SWRB has already done.

Preparing for implementation of the legislation We asked how the SWRB is preparing for the implementation of the legislation, including working with employers and universities to ensure people are ready to register. The SWRB told us that its communication planning for the legislation has categorised different stakeholders. They include employers, registered social workers, unregistered social workers, the public, and students. The SWRB said it is aware that the message may not be the same for each group and different groups will be interested in different parts of the legislation.

The chief executive emphasised that the SWRB’s purpose is protecting the public and enhancing the profession of social work. She considers that this needs to be the focus of messages to stakeholders. The chief executive reiterated that an information campaign will be needed to ensure that people understand the importance of the changes.

Timeframe for the legislation to be passed Submissions on the bill closed in January 2018 and the select committee report-back date was April 2018. We asked whether the SWRB expected the legislation to have been passed by now and how the delay has affected the organisation. The chief executive acknowledged that the SWRB had hoped that the legislation would have been passed by the end of 2018. However, she said there are some advantages to the legislation having taken longer because it has given the SWRB more time to prepare. 4

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Funding the Social Workers Registration Board The chair noted that the SWRB does not receive a Crown appropriation and relies on fees from social workers to fund its work. Given the increase in the forecast number of social workers eligible for registration, we asked whether the SWRB is planning to advocate another source of revenue. The chief executive confirmed that it is, explaining that the SWRB is talking to the Minister and officials about how the “pressure points” can be addressed.

Performance measures We note from the annual report that performance against some measures in 2017/18 was below the SWRB’s targets. They include the percentage of applicants who report being satisfied with the registration and annual practising certificate renewal process (78 percent against a target of 95 percent) and the percentage of applicants who report being satisfied with the competence assessments process (53 percent against a target of 95 percent).

We asked how confident the SWRB is that it can improve in areas where it is not meeting its targets, as well as implement the new legislation. The chief executive said the results show that the SWRB has been under some pressure and that internal staff levels have been insufficient to meet some elements of the targets. She told us that the board is relying on its new financial expertise—the finance committee and the board’s accountants—to improve.

Further, we heard that the SWRB had a low response rate to its survey about applicants’ satisfaction with the process for competence assessments. As a result, the chief executive told us that the SWRB will approach this year’s survey differently so that it can obtain more useful information.

The chief executive also noted that the competence assessments will substantially change in the future because the process will be different. She explained that this will give the SWRB more time to consider other parts of its business.

Improving communication The SWRB considers that improving its communication will help it to meet the targets. The chief executive explained that, when the SWRB considered the results of its assessments, it was clear that not everyone understood the questions asked.

In 2017/18, the SWRB developed a Strategy Plan 2018–2022 to help guide the current and future board. The chief executive told us that the reasons for developing the strategy included considering how the SWRB could prioritise its future work and engage with its customers. The SWRB’s customers include the public and social workers. She said that the SWRB needs to understand the perspective of its customers and appropriately communicate its role as a regulator to them. The SWRB hopes achieving this will help improve some of its performance measures.

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Appendix

Committee procedure We met on 13 February, 6 March, and 3 April 2019 to consider the annual review of the Social Workers Registration Board. We heard evidence from the Social Workers Registration Board and received advice from the Office of the Auditor-General.

Committee members Gareth Hughes (Chairperson) Darroch Ball Anahila Kanongata’a-Suisuiki Agnes Loheni Hon Alfred Ngaro Greg O’Connor Maureen Pugh Priyanca Radhakrishnan Hon Louise Upston

Office of the Auditor-General, Briefing on the Social Workers Registration Board, dated 11 February 2019.

Social Workers Registration Board, Responses to written questions 1 to 116.

Social Workers Registration Board, Responses to post-hearing questions 117 and 118.

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2017/18 Annual review of the Tāmaki Redevelopment Company Limited

Report of the Social Services and Community

Committee

April 2019

Contents Recommendation ...... 2 About the work of the Tāmaki Redevelopment Company ...... 2 The annual audit results ...... 2 New approach to Tāmaki’s redevelopment and regeneration ...... 3 Preserving the trust and confidence of Tāmaki residents ...... 3 Maintaining a focus on the social side of the programme ...... 3 Infrastructure constraints and the scale of development ...... 3 Clarification about housing numbers ...... 4 Plans for Tāmaki Town Centre ...... 4 Increasing home ownership, and the affordability benchmark ...... 5 Appendix ...... 6

Gareth Hughes Chairperson

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Tāmaki Redevelopment Company Limited

Recommendation The Social Services and Community Committee has conducted the annual review of the Tāmaki Redevelopment Company Limited for 2017/18, and recommends that the House take note of its report.

About the work of the Tāmaki Redevelopment Company The Tāmaki Redevelopment Company Limited was incorporated on 6 August 2012. Its shareholders are the Crown and the Auckland Council. It is an urban redevelopment company aiming to transform the Tāmaki community over the next 20 to 25 years.

Tāmaki is in Southeast Auckland and includes the suburbs of Glen Innes, Point England, and Panmure. The community is ethnically diverse and young. Many people who are seeking work and receiving government support live in the area.

The company is charged with leading urban regeneration activity in this community through co-ordinated economic, social, and housing initiatives. Its broad-ranging aims include improving education, employment, health, safety, and the environment in Tāmaki. It is expected to work in collaboration with the local community, government, businesses, educational institutions, social agencies, developers, and financiers to achieve these goals.

Tāmaki Regeneration is a subsidiary body, created for housing redevelopment purposes. It manages the social housing transferred by Housing New Zealand in 2016.

The company is chaired by Evan Davies, who replaced John Robertson in August 2018.

The annual audit results The Auditor-General issued unmodified audit opinions for the Tāmaki Group. The auditor pointed out, however, that the company had not completed a statement of performance expectations for the reporting period, which was in breach of the Crown Entities Act 2004.

The Auditor-General recommended improvements to the Tāmaki Group’s management control environment, financial information systems and controls, and service performance information and associated systems and controls. Internal auditors are satisfied that the majority of these issues have been resolved.

In view of the change to a new business model, the Auditor-General also recommended that the company adjust its reporting frameworks to work with the new model. Its management should also confirm the accounting and disclosure implications of the agreement with HLC (2017) Limited.

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New approach to Tāmaki’s redevelopment and regeneration The change of government has meant a new approach in pursuing the objectives for Tāmaki. The company and a subsidiary body of Housing New Zealand, called HLC (2017) Limited, have become business partners as part of that new approach. HLC has been made responsible for delivering new housing in Tāmaki on behalf of the redevelopment company. The company remains responsible for lifting living standards through master planning and programmes for social and economic change.

Preserving the trust and confidence of Tāmaki residents We commended the company for all the work it has been doing at a community level over the past several years. We recognise that it has built up a good level of trust and confidence with community members. We asked how it will ensure that this trust and confidence is not lost under the new partnership arrangements, with HLC coming in as an outsider.

The company told us it is a fair question, and was very much in the minds of the board and management as they negotiated how the new roles would work. The company assured us that the overall intent is unchanged, and there is effectively no change in how people will go about achieving that intent. A particular agent, HLC, has been mandated to deliver the physical built form of the housing redevelopment. However, the company has the role of master planner and retains full responsibility for regeneration in the community, of which the built form is only one part. It assured us it is committed to continuing to work closely within the community. This includes working closely with local whānau to maintain positive and trusting relationships.

Maintaining a focus on the social side of the programme We are aware of some concern among the Tāmaki community that, with HLC coming in, the focus will shift to simply getting houses built. We asked how the company will ensure that the good work it has been doing on the social side is not lost. The company insisted that the partnership with HLC is not about getting the number of houses up, and forgetting the social side.

The company noted that, as master planner for the programme, it is responsible for the regeneration outcome. It pointed to its track record, saying it has been successful in the community because it has kept its promises, and because it has shown a commitment to engagement. For example, when people are being rehoused, it starts talking to them at least 12 months beforehand. The process is handled respectfully, and it has not had to issue 90- day notices.

The company said there is also a practical aspect to its social commitment, because the partnership contract gives it the ability to veto the plans. Its approval is needed development by development, so it can control issues like density, mixed tenure, and other outcomes.

Infrastructure constraints and the scale of development We asked the company to comment on the challenges ahead in providing enough infrastructure to meet the needs of the proposed threefold increase in housing density, from

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2,500 to 7,500 homes. The annual report noted there are significant infrastructure constraints within Tāmaki. The water supply, wastewater, stormwater, transport, utilities (gas, power and communications), along with parks and recreational and community facilities are insufficient to support the proposed increase in housing density. We noted that it had not met all of its key performance indicators in regards to working with the council and other groups on the infrastructure side. We asked whether the Auckland Council is as involved as it needs to be if the company is to achieve its objectives.

The company said work is still being carried out to pin down exactly what the population density will be and therefore what infrastructure will be needed. It is detailed technical work, but it will get done. The costs and physical logistics then need to be worked out. The company acknowledged that the bigger challenge will be working out how, when, and by whom it will actually be executed. However, it has recently met with the Auckland Mayor to ensure both parties are clear about the challenge and that there is mutual responsibility for addressing it in the correct way.

Clarification about housing numbers The target for the housing redevelopment programme is to replace 2,500 existing state houses with at least 7,500 state, affordable, KiwiBuild, and private market houses by 2036.

Budget 2018 announced funding of $300 million to help build 2,100 new homes. The company confirmed with us that the 2,100 homes are within the 7,500 already forecast, not on top of that number. This funding plugs a gap that was left after a private investor withdrew from previous arrangements.

Plans for Tāmaki Town Centre We asked how the company is engaging with the community over plans for Tāmaki’s town centre, and whether new businesses are interested in coming in. The company said redevelopment of the central shopping area has been particularly challenging. This is partly because it does not own the land, and ownership is quite disparate, with many absentee owners. We were told that strategic plans are in place to generally improve the area, and work has already started on that. This work included taking down some houses and returning the freed-up green space to the Tāmaki community. The company is working closely with the business association but acknowledged there is still work to do to create positive changes.

Relationship with the new Housing and Urban Development Authority We asked what relationship the company will have with the new Housing and Urban Development Authority once it is up and running, and what new challenges might arise in terms of reaching the social objectives. The company said it is too early to say where it will fit in the evolving structure for housing delivery, or what relationship it will have with the new authority. However, it was confident that its current role will not be diminished. In fact, from the discussions it has had, it seemed more likely that the new authority would draw on the lessons and skills learned in Tāmaki and apply them elsewhere.

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Increasing home ownership, and the affordability benchmark The company told us that more than 100 local whānau are expected to be ready for home ownership over the next one to two years. It hopes to be clearer in six months’ time what affordable housing will be available within Tāmaki. It is still developing the programme business case and working out what the housing density will be and what proportion will be affordable housing. It is also working with procurement partners on the delivery of some affordable and community housing.

We are encouraged by this, and will follow updates with interest. We also asked the company what benchmark it uses to define “affordable”. The company said that, rather than thinking in terms of property values, it considers that people should be in housing that is appropriate to their stage of life. It considers that people should not be spending more than 35 percent of their gross income on housing.

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Appendix

Committee procedure We met on 20 February and 3 April 2019 to consider the annual review of the Tāmaki Redevelopment Company. We heard evidence from the company and received advice from the Office of the Auditor-General.

Committee members Gareth Hughes (Chairperson) Darroch Ball Anahila Kanongata’a-Suisuiki Agnes Loheni Hon Alfred Ngaro Greg O’Connor Maureen Pugh Priyanca Radhakrishnan Hon Louise Upston

Advice and evidence received We received the following documents as advice and evidence for this annual review. They are available on the Parliament website, www.parliament.nz.

Office of the Auditor-General, Briefing on the Tāmaki Redevelopment Company Limited, dated 20 February 2019.

Tāmaki Redevelopment Company Limited, Responses to written questions 1 to 116, and appendices.

Tāmaki Redevelopment, Responses to post-hearing questions 117 to 122.