State Sector Governance Essentials – Kāinga Ora Governance Capability Uplift Programme
Workbook
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(March 2021) SSC 11996 A3 Poster v4 19/6/07 10:53 AM Page 1
A code of conduct issued by the State Services Commissioner under the State Sector Act 1988, section 57
WE MUST BE FAIR FAIR, IMPARTIAL, We must: – treat everyone fairly and with respect RESPONSIBLE & – be professional and responsive TRUSTWORTHY – work to make government services accessible and effective – strive to make a difference to the well-being of New Zealand and all its people. The State Services is made IMPARTIAL up of many organisations with powers to carry out the work of We must: New Zealand’s democratically – maintain the political neutrality required to enable us to work with elected governments. current and future governments – carry out the functions of our organisation, unaffected by our Whether we work in a department personal beliefs or in a Crown entity, we must act – support our organisation to provide robust and unbiased advice with a spirit of service to the – respect the authority of the government of the day. community and meet the same high standards of integrity and conduct in everything we do. RESPONSIBLE We must comply with the We must: standards of integrity and conduct – act lawfully and objectively set out in this code. As part of – use our organisation’s resources carefully and only for complying with this code, our intended purposes organisations must maintain – treat information with care and use it only for proper purposes policies and procedures that – work to improve the performance and efficiency of our organisation. are consistent with it. For further information see TRUSTWORTHY www.ssc.govt.nz/code We must: – be honest – work to the best of our abilities – ensure our actions are not affected by our personal interests or relationships – never misuse our position for personal gain – decline gifts or benefits that place us under any obligation or perceived influence – avoid any activities, work or non-work, that may harm the reputation of our organisation or of the State Services.
Published June 2007 ISBN: 978-0-478-30309-4 3
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Source: https://www.beehive.govt.nz/release/parliament-passes-bill-reform-public-service
5 Te Kawa Mataaho Public Service Act 2020 Public Service Commission
An overview of the changes
New Zealand’s public service has an enviable international reputation for integrity, responsiveness to government and effectiveness for New Zealanders. The most recent Kiwis Count Survey reinforces this reputation, with 2019 results showing New Zealanders have increasing trust in, and satisfaction with, their public services. The new Public Service Act 2020 (the Act) builds on the high-performance base of the public service, with the overall aim of delivering better outcomes and services for all New Zealanders.
The Act provides a modern legislative framework that enables a more adaptive, agile and collaborative public service and includes stronger recognition of the role of the public service in supporting the partnership between Māori and the Crown.
The key enablers to this are: public service culture and behaviour; an updated framework for employment; effective leadership; and a greater range of options for configuring fit-for-purpose public service organisations.
Ngā whakataunga matua | Major decisions The Government has repealed and replaced the State Sector Act 1988 with the new Public Service Act 2020. This new Act includes provisions across five key areas that will help the public service join up services around New Zealanders’ needs and secure public trust and confidence, so it remains well placed to serve New Zealand in the future. The five areas are:
• A unified public service
• Strengthening the Crown’s relationships with Māori
• Employment and workforce
• Leadership
• Organisational flexibility Along with the system-level public service reform, there is also work being done to improve how public service agencies organise themselves in the regions.
1 Factsheet 1 of 6 6 Te Kawa Mataaho Public Service Act 2020 Public Service Commission
Ngā pātai me ngā whakautu | Questions and answers
Why do we need the new Public Service Act? The previous State Sector Act was more than 30 years old and had been amended 13 times. Times have changed and there are areas where the public service can do better. The new Public Service Act reflects the context and expectations the public service needs to respond to, today and into the future.
How does the new Public Service Act acknowledge a post COVID-19 environment? The response of the New Zealand public service to the coronavirus pandemic has been widely recognised as exemplary, receiving accolades both locally and internationally. In many ways, the pandemic revealed the public service at its finest – working across boundaries to meet the needs of New Zealanders in a complex and rapidly changing environment.
The new Act acknowledges the need for more flexible and collaborative approaches to tackling the more complex challenges that lie ahead and provides the legislative environment that is required to enable this.
What is the significance of the change in focus from State Sector Act to the Public Service Act? The naming of the Act itself also signals a shift in focus, placing a clear emphasis on the benefit to New Zealand’s individuals, organisations and communities as the key focus and motivation for all public service agencies and activities.
How will New Zealanders benefit from the changes in the new legislation? The public service works for the Government that New Zealanders elect and New Zealanders depend on the public service for a wide range of services. A public service that is more adaptive, agile and collaborative can more effectively meet the needs of New Zealanders and the communities it serves.
Was there an appetite for change? Yes. Consultation feedback showed strong support for the overall direction of the reforms. The new Act builds on the already strong reputation of the public service for delivering on New Zealanders’ needs.
When will the changes take place? Some changes have already come into effect, but many of the provisions in the Act are for tools and instruments that are designed to enable the public service to meet both current and future needs. These changes will come into effect over time as the need arises.
2 Factsheet 1 of 6 7 Te Kawa Mataaho Public Service Act 2020 Public Service Commission
He ratonga tūmatanui e kotahi ana A unified public service
A unified public service that acts as one team, with a spirit of service to the community, will lead to more joined-up, effective services and improved wellbeing outcomes for all New Zealanders.
Ngā whakataunga matua | Major decisions
The new Public Service Act 2020 (the Act):
• helps to create a unified public service with a common purpose, upholding foundational principles and embodying our core values; • makes appropriate chief executives and boards of Crown agents responsible for upholding the principles; • acknowledges a spirit of service as fundamental to the public service and • reaffirms the term ‘the public service’ to include Crown agents (for the above purposes).
Ka pēhea mō ngā kaimahi tūmatanui | What it means for public servants
The Act affirms and clarifies the purpose and foundational principles and values for all public servants. It highlights acting with a spirit of service to the community as the fundamental characteristic of the public service and requires public service leaders and boards to nurture the spirit of service that their staff bring to their work.
The Act captures why the public service exists and how it fits into New Zealand’s system of government, as well as enshrining the five foundational public service principles and expected behaviours that support the integrity of the public service.
Strengthening the shared identity of public servants is intended to unite them in their goal of serving New Zealanders, regardless of which agency they work in. This will help to drive the cultural shift to build a unified public service that can quickly mobilise across the sector to tackle specific issues and deliver better outcomes for New Zealanders.
The unified public service provisions of the Act extend to Crown agents, many of which provide core public services in areas like health, education, transport and housing. They give effect to government policy and often need to work closely with other public service agencies.
1 Factsheet 2 of 6 8 Te Kawa Mataaho Public Service Act 2020 Public Service Commission
Ngā pātai me ngā whakautu | Questions and answers
What is the common purpose of the public service? The Act confirms the purpose of the public service: “The public service supports constitutional and democratic government, enables both the current Government and successive governments to develop and implement their policies, delivers high-quality and efficient public services, supports the Government to pursue the long-term public interest, facilitates active citizenship, and acts in accordance with the law.” - Section 11, Public Service Act 2020.
What are the five public service principles? The five principles are: politically neutral, free and frank advice to Ministers, merit-based appointments, open government and stewardship.
Although these principles have been in operation across the public service for some time, they have now been more explicitly formalised through the Act.
What are the values? The five values are: impartial, accountable, trustworthy, respectful, and responsive.
What is the difference between principles and values? The principles are fundamental features of the way in which the public service operates. The values describe the necessary behaviours of public servants to maintain the integrity of the public service.
Why put the purpose, principles and values for the public service into law? It preserves them as part of our legislative framework and underscores how important they are. It also gives a much stronger and clearer signal to both the public and those working within the public service regarding the behaviours that are expected of all public servants and public service agencies.
Who is responsible for upholding the principles? Public service chief executives and boards of Crown agents are responsible for ensuring the principles are upheld in their agencies.
What happens if someone breaches a value? The public service values are given effect through minimum standards set by the Public Service Commissioner. Minimum standards may be binding on public servants as terms of their employment. Behaviours inconsistent with minimum standards would be addressed through employment management processes within an agency.
2 Factsheet 2 of 6 9 Te Kawa Mataaho Public Service Act 2020 Public Service Commission
Why are Crown agents now included in the public service? Of the Crown entities, Crown agents are closest to government. They give effect to government policy, include core public-facing service delivery, and often need to work closely with public service departments to deliver public services. It makes sense for all Crown agents and public service agencies to be unified under a common purpose and common principles and values.
What does this mean for Crown agents? Under the new Act, Crown agents are now bound by the same purpose, principles and values as public service departments and other public service agencies. Boards of Crown agents are responsible for ensuring that the entities they govern uphold the public service principles.
Which organisations are in the Crown agents group? There are 46. They include all 20 district health boards, Accident Compensation Corporation, Kāinga Ora, Waka Kotahi New Zealand Transport Agency, New Zealand Trade and Enterprise, Tertiary Education Commission, and PHARMAC.
Have the legal status or decision-making powers of Crown agents changed? No. The provisions in the new Act are about strengthening the shared identity and underlying behavioural foundations of all public servants – regardless of where they work. It’s aimed at bringing them closer together in the goal of serving New Zealanders, without fundamentally changing the governance of individual agencies. Their status remains the same under the Crown Entities Act.
3 Factsheet 2 of 6 10 Te Kawa Mataaho Public Service Act 2020 Public Service Commission
Te whakapakari i te honongai waenga i te Māori me te Karauna Strengthening the Māori Crown relationship
Ngā whakataunga matua | Major decisions
The Government is committed to improving services and outcomes for Māori and strengthening the Crown’s relationships with Māori. The Public Service Act 2020 (the Act) section 14 explicitly recognises the role of the public service to support the Crown in its relationships with Māori under Te Tiriti o Waitangi/the Treaty of Waitangi. To this end, the new Act includes provisions that put explicit responsibilities on:
• Public service leaders for developing and maintaining the capability of the Public Service to engage with Māori and to understand Māori perspectives.
• The Public Service Commissioner, when developing and implementing the newly required leadership strategy, to recognise the aims, aspirations and employment requirements of Māori, and the need for greater involvement of Māori in the Public Service. The new Act also carries over the current requirements on public service employers to operate an employment policy that recognises the aims, aspirations and employment requirements of Māori, and the need for greater involvement of Māori in the public service. The Commissioner and chief executives are accountable to their Minister for upholding their responsibilities to support the Crown’s relationships with Māori.
1 Factsheet 3 of 6 11 Te Kawa Mataaho Public Service Act 2020 Public Service Commission
Ka pēhea mō ngā kaimahi tūmatanui | What it means for public servants
The reforms aim to unify the Public Service to fulfil its stewardship responsibility to support the Crown’s relationships with Māori. In practice this will mean:
• Improving the Public Service’s relationships with Māori by creating and continuing collaborative approaches that are mutually beneficial.
• Greater understanding of te ao Māori woven into the work and ethos of public service, including: • Te ao Māori concepts, knowledge, values and perspectives • Te reo Māori (Māori language) • Tikanga Māori (protocols and customs) • Te Tiriti o Waitangi/the Treaty of Waitangi and understanding how it applies day-to-day
• Exercise of individual and collective responsibility for a culturally competent public service that delivers with and for Māori and is committed to supporting Māori leadership and decision-making roles in the Public Service.
Ngā pātai me ngā whakautu | Questions and answers
What changes will public servants need to make in their routine work because of the reference in the Act to Te Tiriti o Waitangi/the Treaty of Waitangi? Guidance will be issued to agencies on what it means to support and strengthen the relationships between Māori and the Crown under Te Tiriti/the Treaty. Te Arawhiti (the Office for Māori Crown Relations) has issued guidance to public servants on how they should consider Tiriti/Treaty implications in policy development and implementation, alongside a range of guidance, tools and training for agencies on how engagement with Māori should be approached.
Does this new clause require a big shift in thinking and practice for the Public Service? There are already examples of good practice across the public service – however, we can do a lot more to strengthen the relationships between Māori and the Crown and ultimately improve outcomes for Māori. The Act supports the intent of other legislative documents that require the public sector to recognise the Māori Crown relationships.
How will public servants be supported to make these changes? Public service chief executives will determine what their agency needs and support each other through the Public Service Leadership Team to implement these practices. Te Kawa Mataaho Public Service Commission will provide leadership and advice to support a wider lift in capability across the system.
Te Arawhiti is responsible for supporting Māori Crown relationships, building public sector capability to engage with Māori, ensuring Crown agencies meet their Te Tiriti o Waitangi/Treaty of Waitangi settlement commitments and administering the Marine and Coastal Area (Takutai Moana) Act 2011.
2 Factsheet 3 of 6 12 Te Kawa Mataaho Public Service Act 2020 Public Service Commission
Te Puni Kōkiri is the principal policy advisor to Government on Māori wellbeing and development. Their role includes building Māori capability and capacity, monitoring the effectiveness of public services for Māori, and leading policy advice on specific issues of importance to Māori.
Who is responsible for making sure public servants can deliver these expectations? The Public Service Commissioner and public service chief executives will be responsible to their Minister for delivering on these expectations.
Do the new responsibilities apply to Crown agents and the boards of the Crown agents? No. However, many Crown agents already recognise special relationships with Māori. For example, district health boards have specific obligations and responsibilities set out in their governing legislation.
How does this fit with the Maihi Karauna work already underway? Maihi Karauna is the Crown’s Māori Language Revitalisation Strategy that outlines a vision for the future of te reo Māori in New Zealand. Maihi Karauna is for all New Zealanders. The strategy puts specific emphasis on three particular groups that will benefit from revitalising te reo Māori, one of which is the public service.
The public service reforms to strengthen and enhance Māori Crown relationships complement the work of Maihi Karauna by extending beyond language revitalisation and broadly setting out both system and agency baseline capability expectations.
3 Factsheet 3 of 6 13 Te Kawa Mataaho Public Service Act 2020 Public Service Commission
Te whai mahi me te ohu mahi Employment and Workforce
The employment and workforce provisions of the Public Service Act 2020 (the Act) are designed to help develop the public service workforce of the future. The changes also support the aim of building a unified public service that acts as one team, with a spirit of service to the community, resulting in more joined-up, effective services and improved wellbeing outcomes for all New Zealanders.
Ngā whakataunga matua | Major decisions Provisions in the Act include: • Employees being appointed to the public service at the same time as being employed by departmental chief executives, or by the board in the case of an interdepartmental venture. • Broadening the Public Service Commissioner’s delegation powers for collective agreement negotiations. • Adding pay equity claims as one of the things the Commissioner is responsible for negotiating in the public service. • Setting out government expectations in public service-wide workforce policy statements covering, for example, pay equity, diversity, development, and the portability of service-related entitlements. • Improving workforce diversity by explicitly recognising its value and requiring chief executives and boards of interdepartmental ventures to foster workplaces that are inclusive of all. • In the future, making annual leave entitlements portable across the public service to aid career mobility across departments
Ka pēhea mō ngā kaimahi tūmatanui | What it means for public servants These changes are about making the public service a more attractive and inclusive place to work, by:
• fostering a common shared identity for public servants • recognising the importance of diversity, and inclusive workplaces • supporting the sector to address pay equity and other cross-sector workforce issues • enabling cross-public service negotiation of terms and conditions of employment and • making career mobility between departments easier through portability of annual leave.
1 Factsheet 4 of 6 14 Te Kawa Mataaho Public Service Act 2020 Public Service Commission
Ngā pātai me ngā whakautu | Questions and answers
What does being appointed to the public service mean? Although public servants continue to be employed in their departments under the new Act, they are also considered to be ‘appointed to the public service’ by their chief executive (or by the board in the case of people employed by an interdepartmental venture). The intent is to encourage public servants to identify not just as employees of their agency but as part of a much bigger unified public service.
How does being appointed to the public service affect someone’s employment in individual agencies? It doesn’t affect any individual employment processes. The agency chief executive (or board of an interdepartmental venture) still employs individual staff and continues to have all the obligations, rights, and powers that go with being the employer.
Are there any changes to rights in negotiations? No. The Employment Relations Act 2000 sets out the rights of employers, unions, and employees to negotiate on employment matters. The new Public Service Act does not change these rights.
Will there be common terms and conditions across the public service? The Public Service Act enables common terms and conditions of employment to be negotiated where all parties agree this is a good idea.
Will there be changes to leave provisions? The Public Service Act includes a change to ensure that accumulated statutory leave – including annual leave – can transfer with public servants when they move from one department to another.
These provisions will come into force after any changes to the Holidays Act 2003.
Would redundancy entitlements change? No. Redundancy options and entitlements stay the same as they are now.
Can public servants be compulsorily moved to a new job in a different department? No. Public servants continue to be employed in their specific departments and any move to a new job requires their agreement.
Why are the Public Service Commissioner’s responsibilities broadened to include pay equity? The intent of the pay equity provisions is to provide a statutory mandate for the Commissioner to monitor and promote the orderly and efficient handling of pay equity claims in the public service, consistent with the Reconvened/Joint Working Group Pay Equity Principles. This oversight role will also help the Government to plan for the impact of any pay equity settlements in the public service.
2 Factsheet 4 of 6 15 Te Kawa Mataaho Public Service Act 2020 Public Service Commission
What impact does the pay equity provision have? The public service is already responding to the Government’s commitment to achieve pay equity, with a number of pay equity claims currently being progressed by applying the Pay Equity Principles ahead of amendments to the Equal Pay Act 1972.
The Public Service Act’s provisions add legislative strength to these efforts by making the Public Service Commissioner responsible for pay equity claims in the public service as if the Commissioner were the employer. The Commissioner can delegate their functions relating to pay equity and may set conditions on the delegations.
What changes need to be made to agency workplaces because of the diversity and inclusion provisions under the new Act? Chief executives and boards of interdepartmental ventures are expected to build an inclusive workplace culture that attracts and promotes diversity. This includes the removal of any barriers that prevent people from having fair and equal access to employment and career progression opportunities.
Diverse workforce and inclusive practices help the public service to treat all employees fairly and to be responsive and engage more effectively with the communities it serves. This in turn enables the public service to deliver more innovative and effective programmes that have a meaningful impact on social, economic and wellbeing outcomes for New Zealanders.
Under the new Act, do public servants have individual or standardised employment agreements? This will be negotiated between employers and employees in each case, with agreement from both parties as to the most appropriate approach.
3 Factsheet 4 of 6 16 Te Kawa Mataaho Public Service Act 2020 Public Service Commission
Te kaiaratakinga o te ratonga tūmatanui Leadership of the Public Service
Strong, system-focused public service leadership is needed to improve outcomes for all New Zealanders. System-focused leadership also positions the New Zealand public service for the future, helping reaffirm and preserve the key elements that have helped win our strong international reputation for integrity, effectiveness and responsiveness.
Ngā whakataunga matua | Major decisions
The Public Service Act 2020 (the Act) supports system-focused leadership through:
• Establishing a Public Service Leadership Team (PSLT) of chief executives. This will work as an executive team to support a unified public service and will be led by the Public Service Commissioner.
• Requiring the Commissioner to develop a leadership strategy that enables and supports the development of senior leaders to lead and move across boundaries and take a broad range of experience and skills into chief executive roles in the future.
• Allowing for the creation of functional chief executives who, along with chief executives of departments, can be designated as system leaders, with responsibility for leading and co-ordinating work in a particular area across the State services.
Ka pēhea mō ngā kaimahi tūmatanui | What it means for public servants
Under the Act, the public service shifts from a primary focus on agency leadership to an additional strong focus on system leadership. This is about building the right culture and behaviour first, rather than relying on rigid systems and processes. Chief executives have already started to lead together for the system. Under the Act, this group becomes formalised as the new Public Service Leadership Team, which will help public servants build on this collective way of working. Under the Act, chief executives can be mandated as ‘system leaders’, giving them the power to create standards (with Ministerial agreement) that have mandatory effect across the public service and will help public servants with specific functions. This formalises the existing model of ‘functional leads’ to provide leadership on system-level issues such as digital, property, and health and safety. The leadership strategy will support the development of the skills and experience needed for the future and help senior leaders to more easily address system-wide issues beyond agency boundaries. This will also create a broader range of public service leadership opportunities. The Act includes mechanisms to enable senior leaders to identify development opportunities and/or move between roles, while upholding the principle of merit-based appointment.
1 Factsheet 5 of 6 17 Te Kawa Mataaho Public Service Act 2020 Public Service Commission
Ngā pātai me ngā whakautu | Questions and answers
Does the new legislation establish a senior leaders’ service? No. The legislation does not set out a structure or process change for the employment of senior leaders. Instead, the leadership strategy will be developed and implemented in consultation with chief executives and senior leaders. This will further develop the role of the Public Service Leaders Group.
What will the leadership strategy cover? All public service chief executives will assist in the development of the strategy. It will address both the development of senior leadership and management capability in the public service.
Under the Act, the Commissioner may issue guidance to help implement the leadership strategy. Chief executives and boards that are employers of staff in public service agencies will be required to have regard to the strategy in making appointments and deploying leaders.
Do senior leaders have a say on when they move across the system into another role? Yes. The agreement of the individual concerned and of the relevant chief executives is required before any moves can be confirmed.
How is Te Kawa Mataaho Public Service Commission structured? Te Kawa Mataaho Public Service Commission is led by the Public Service Commissioner and two statutory Deputy Public Service Commissioners. The previous legislation only provided for one statutory deputy.
What’s the purpose of the Public Service Leadership Team? The Public Service Leadership Team (PSLT) is building on the progress made towards a more collective approach to system issues. The PSLT brings together public service chief executives and other senior leaders to focus on the interests of the whole system, rather than those of a single agency. Providing for a PSLT in legislation embeds this collective way of working for the future and ensures it remains sustainable.
If chief executives are required to work collectively, how will this affect how they lead their agencies? Agency chief executives still have individual responsibilities and will continue to focus on the results they are expected to deliver as agency leaders. Alongside those responsibilities, the PSLT is about chief executives working together as a team to improve how the system operates.
2 Factsheet 5 of 6 18 Te Kawa Mataaho Public Service Act 2020 Public Service Commission
Why do we need system leaders? System leaders support improved capability and inter-operability across the public service in a way that benefits all agencies. For example, better back-office integration and more integrated services for New Zealanders are only possible through system leadership that focuses on improvements to digital and data systems across the public service.
A system-wide leadership approach enables the public service to meet its system stewardship responsibilities on behalf of the individuals, communities and organisations across New Zealand.
Who are functional chief executives responsible to? They are responsible to the appropriate Minister for their functions. Like chief executives of departments, they are appointed and employed by the Public Service Commissioner.
Does the Public Service Act apply to Crown agent chief executives? Crown agent chief executives may be invited by the Public Service Commissioner to join the Public Service Leadership Team. Similarly, the Commissioner may promote the leadership strategy to the State services (which includes Crown agents) and invite them to assist in the development and implementation of the leadership strategy.
Crown agent chief executives cannot be made system leaders under the legislation.
3 Factsheet 5 of 6 19 Te Kawa Mataaho Public Service Act 2020 Public Service Commission
Ngā whakahaere o te ratonga tūmatanui Organisations of the public service
The public service needs to be able to organise flexibly around the needs of New Zealanders without being unnecessarily constrained by administrative boundaries.
Ngā whakataunga matua | Major decisions
Under the Public Service Act 2020 (the Act), the new system design provisions allow for:
• A more flexible departmental agency model.
• Two different types of public service joint ventures – interdepartmental ventures and joint operational arrangements – that support joined-up, agile service delivery and joint resource management, including of assets and staff.
• Interdepartmental executive boards that support joined-up planning and budgeting and/or policy alignment on complex cross-cutting issues.
Ka pēhea mō ngā kaimahi tūmatanui | What it means for public servants
Under the Act, there are more formalised and flexible options for organisational arrangements to support public service agencies taking a truly collaborative, joined-up approach to tackling some of the big challenges facing the country today. This means that: • Some of the most successful collaborations are further strengthened. • The ability to be truly collaborative is supported and encouraged, rather than held back or obstructed by system settings. Collaborating agencies are now able to align strategy and planning activities in overlapping policy areas. This makes it possible to harness the capabilities of individual agencies to collectively plan for and respond to complex cross-agency problems or priorities.
1 Factsheet 6 of 6 20 Te Kawa Mataaho Public Service Act 2020 Public Service Commission
Ngā pātai me ngā whakautu | Questions and answers Why is there a need to change the way the Public Service organises itself? The current organisation of our public service into agencies that operate as separate businesses works well for many tasks. However, it has struggled to respond effectively to complex issues that cross agency boundaries.
What can an interdepartmental venture or executive board do that couldn’t be done before? Until now, cross-agency working arrangements have been voluntary and it was often difficult to fund and sustain them over time. Interdepartmental ventures and executive boards provide formal structures to support collaborative working. For example, they allow boards of chief executives to administer funding and employ public servants collectively, instead of one chief executive having to do so on behalf of a group.
What is the difference between an interdepartmental venture and an interdepartmental executive board? An interdepartmental venture brings together the delivery of services from across a small number of agencies. An interdepartmental executive board provides collective strategic policy advice to Ministers for cross-agency issues.
Who appoints the board members of interdepartmental ventures? The agencies involved are determined by Cabinet when the venture is established. Interdepartmental venture boards are automatically comprised of the chief executives of the agencies involved in the venture.
Who decides which chief executives govern executive boards? Cabinet determines which agencies are included in the remit of the board. The Public Service Commissioner – as the employer of Public Service chief executives – then appoints chief executives from within this remit as board members, after consulting with Ministers.
Who employs the staff in the executive boards and interdepartmental ventures? The board of an interdepartmental venture can employ staff directly, in the same way the board of a Crown entity does. An interdepartmental executive board can act as the employer of staff, for most purposes, in a similar arrangement to the departmental agency model.
2 Factsheet 6 of 6 21 Te Kawa Mataaho Public Service Act 2020 Public Service Commission
What are the differences between the new flexible departmental agency model, and the old one? The new model provides additional flexibility across three key structural decisions: • Whether the departmental agency operates within the strategic framework of its host department or sets its own strategic framework. • Whether the departmental agency will receive corporate service support from its host department. • Whether the departmental agency holds control and responsibility for the financial management of assets. The Public Service Act also clarifies the responsibility of the departmental agency chief executive for the relationship with individual departmental agency employees, and how relevant legislation such as the Health and Safety at Work Act 2015 and the Privacy Act 2020 apply to departmental agencies.
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Circular 22 October 2019
Intended for All Ministers All Chief Executives All Senior Private Secretaries All Private Secretaries All officials involved in policy development
Te Tiriti o Waitangi / Treaty of Waitangi Guidance
Introduction
1 This circular sets out guidelines agreed by Cabinet for policy-makers to consider the Treaty of Waitangi in policy development and implementation.
Background
2 The Treaty of Waitangi (the Treaty) is one of the major sources of New Zealand’s constitution1.
3 Much has been thought, written and said about the Treaty, the circumstances of its creation, the differences between the English and Māori texts and the consequent difficulties of understanding its meaning and implications in the modern day. The texts of the Treaty (from the Treaty of Waitangi Act 1975 and a translation by Sir Hugh Kawharu) are attached to this guidance as Appendix 3.
Te Tiriti o Waitangi/The Treaty of Waitangi
4 The Treaty consists of a preamble and three articles. The influence of the Treaty on New Zealand’s constitution has fluctuated in the years since its signing. Since 1975, however, reference to the Treaty has been included in many laws passed by Parliament, and the courts and Waitangi Tribunal have developed a considerable body of Treaty jurisprudence.
5 The Cabinet Manual states the Treaty of Waitangi is regarded as a founding document of government in New Zealand and that it:
“may indicate limits in our polity on majority decision-making. The law may sometimes accord a special recognition to Māori rights and interests such as those covered by Article 2 of the Treaty. And in many other cases the law and its processes should be determined by the general recognition in Article 3 of the Treaty that Māori belong, as citizens, to the whole community. In some situations, autonomous Māori institutions have a role within the wider constitutional and political system. In other circumstances, the model provided by the Treaty of Waitangi of two parties negotiating and agreeing with one another is appropriate. Policy and procedure in this area continues to evolve.” [Cabinet Manual 2017, p. 2]
1 Other major sources include The Constitution Act 1986, the prerogative powers of the Queen, the State Sector Act 1988, the Electoral Act 1993, the Senior Courts Act 2016, the New Zealand Bill of Rights Act 1990 and other relevant New Zealand, English and United Kingdom statutes, relevant decisions of the courts and the conventions of the constitution (Cabinet Manual, p. 2).
289676v1 1 23 6 For further discussion see the Te Puni Kōkiri booklet ‘Key concepts in the Treaty exchange’2.
Context is important
7 The Treaty creates a basis for civil government extending over all New Zealanders, on the basis of protections and acknowledgements of Maori rights and interests within that shared citizenry.
8 Any specific meaning of the Treaty, and its implications for particular issues, is not easy to specify in advance as it depends on circumstances and views that surround any issue at the time it arises.
The Treaty must be considered ‘on the whole’
9 No article of the Treaty stands apart from the others. Consideration of how the Treaty applies in any situation will require consideration of the applicability of all articles and the relationship each has to the others.
Existing government guidance on the Treaty of Waitangi
10 There are sources of information about the appropriate policy tools to use in developing policy and the Treaty and its place in the New Zealand constitution that policy makers should be aware of. They include:
10.1 the Department of Prime Minister and Cabinet’s Policy Project website, including the policy methods toolbox;
10.2 the Cabinet Manual (the authoritative guide to central government decision making for Ministers, their offices, and those working within government);
10.3 Legislation Design and Advisory Committee’s Legislation Guidelines (2018 Edition).
11 Since the government last provided broad Treaty guidance to the public service in 1989 over 70 Treaty settlements have been negotiated between Māori and the Crown. The courts have recognised tikanga Māori as part of New Zealand common law and as a value that informs development of the common law. While their precise impact on the common law and statute will vary, rights at tikanga may have a relevance in legal disputes independent of statutory incorporation of the Treaty.
12 Treaty settlements settle claims relating to, and provide redress for, historical acts and omissions of the Crown. The Māori Crown relationship continues post-settlement, and past conduct (even if settled) may inform what a reasonable and honourable Treaty partner will do in the future.
13 A number of government agencies have guidance about applying the Treaty (and more commonly, its principles) in the course of their work. The New Zealand Productivity Commission reviewed 10 examples in 2014. More information can be found on the Commission’s report ‘Regulatory institutions and practices.
Guidance provided by the Courts and Waitangi Tribunal
14 The body of Treaty jurisprudence developed by the courts and the Waitangi Tribunal focusses on principles derived from the Treaty. For more information on this see the Te Puni Kōkiri booklet ‘The principles of the Treaty of Waitangi as expressed by the Courts and the Waitangi Tribunal’3.
2 https://www.tpk.govt.nz/documents/download/179/tpk-treatykeyconcepts-2001-en.pdf 3 https://www.tpk.govt.nz/documents/download/179/tpk-treatyprinciples-2001-en.pdf
289676v1 2 24 15 New Zealand courts have held that Māori rights might be recognised by the common law, without statutory expression, and a decision maker may be required to weigh the Treaty rights/interest even where there is no Treaty reference in statute. The courts will generally presume that Parliament intends to legislate in accordance with Treaty principles4.
16 The Waitangi Tribunal plays an important role in providing advice to government on the application of Treaty principles in relation to acts or omissions of the Crown which Māori allege breach the principles of the Treaty.
This guidance
17 While the courts and previous guidance have developed and focussed on principles of the Treaty, this guidance takes the texts of the Treaty as its focus.
18 A glossary of Māori terms used throughout this guidance is attached as Appendix 1.
19 This guidance does not:
19.1 rewrite the Treaty. It provides guidance on how the terms and concepts in the texts of the Treaty should be applied by government officials in undertaking their work;
19.2 create new legal obligations on Crown agencies. It should instead guide and support Crown agencies processes and decision-making. Agencies will consider the specific context of the relevant issue, policy or initiative;
19.3 replace all previous government guidance on the Treaty. It sets out questions for policy-makers to consider in developing policy proposals so that the resulting policy appropriately recognises the influence the Treaty should have in the circumstances.
20 Answering the questions in this circular will allow policy makers to demonstrate an appreciation of kawanatanga, rangatiratanga and other key Treaty concepts and their applicability to their work.
21 A quick reference ‘Treaty guidance at a glance’ is attached as Appendix 2 for use when policy-makers are more familiar with the guidance.
22 The courts will continue to have a role in interpreting laws where the Treaty is relevant to a matter.5
4 The Treasury, ‘Consistency with the government’s Treaty of Waitangi obligations’ 5 Specifically, in relation to the Supreme Court, see ss66(1) and 74(3) of the Senior Courts Act 2016
289676v1 3 25 Article One
23 Put simply, by Article One the government gained the right to govern.
Back translation of Māori text English version Māori version by Sir Hugh Kawharu6 Article the First Ko te Tuatahi The first The Chiefs of the Confederation of Ko nga Rangatira o te The Chiefs of the Confederation the United Tribes of New Zealand Wakaminenga me nga Rangatira and all the Chiefs who have not and the separate and independent katoa hoki ki hai i uru ki taua joined that Confederation give Chiefs who have not become wakaminenga ka tuku rawa atu ki absolutely to the Queen of England members of the Confederation cede te Kuini o Ingarani ake tonu atu-te for ever the complete government7 to Her Majesty the Queen of Kawanatanga katoa o ratou over their land. England absolutely and without wenua. reservation all the rights and powers of Sovereignty which the said Confederation or Individual Chiefs respectively exercise or possess, or may be supposed to exercise or to possess over their respective Territories as the sole Sovereigns thereof. Questions to guide policy-makers: 1. How does the proposal/policy affect all New Zealanders? What is the effect on Māori (if different, how and why?) 1.1. Will the proposal affect different Māori groups differently? 1.2. What could the unintended impacts on Māori be and how does the proposal mitigate them?
2. How does the proposal demonstrate good government within the context of the Treaty? 2.1. Have policy-makers followed existing general policy guidance? 2.2. Are there any legal and/or Treaty settlement obligations for the Crown?
3. What are the Treaty/Māori interests in this issue? 3.1. How have policy-makers ascertained them?
4. How does the proposal demonstrate that policy-makers are meeting the good faith obligations of the Crown?
5. To what extent have policy-makers anticipated Treaty arguments that might be made? 5.1. And how does the proposal respond to these arguments?
6 Sir Hugh Kawharu’s translation sets out to show how Māori would have understood the meaning of the text they signed. It was published in the book Waitangi Revisited: Perspectives on the Treaty of Waitangi, edited by Michael Belgrave, Merata Kawharu and David Williams (Oxford University Press, 1989) 7 'Government': 'kawanatanga'. Sir Hugh’s view was that “there could be no possibility of the Māori signatories having any understanding of government in the sense of 'sovereignty': ie, any understanding on the basis of experience or cultural precedent.” This view is not universally held. For more discussion of the views and understandings of participants at 1840 see He Whakaputanga me te Tiriti / The Declaration and the Treaty: The Report on Stage 1 of the Te Paparahi o Te Raki Inquiry, particularly chapter 10 (Waitangi Tribunal 2014).
289676v1 4 26 How does the proposal/policy affect all New Zealanders? What is the effect on Māori (if different, how and why)?
24 The Treaty may justify different treatment of Māori interests or involvement of Māori in an issue, but it does not confer greater rights on Māori than the government owes to all New Zealanders.
25 This question asks that policy-makers consider whether, having properly assessed the Māori/Treaty interest in an issue, the proposal demands an approach/approaches for Māori that differs to the approach/approaches for other New Zealanders. If it does, then policy-makers should be able to articulate how and why.
26 There are two secondary questions to ask in relation to this question:
26.1 Will the proposal affect different Māori groups differently?
26.2 What could the unintended impacts on Māori be and how does the proposal mitigate them?
How does the proposal demonstrate good government within the context of the Treaty?
27 In a Treaty context, ‘good government’ means government properly conducted with due regard to the range of obligations a government has to the people it governs, and particularly in regard to Treaty obligations.
28 In essence, this question asks whether work towards the policy under development appropriately acknowledges the right of government to make laws with the right of Māori to retain authority over certain things.
29 There are two supplementary questions to ask in relation to this question:
29.1 Have policy-makers followed existing general policy guidance?
29.2 Are there any legal and/or Treaty settlement obligations for the Crown?
Throughout all phases of a policy project, policy-makers should assemble and review what they know about the economic, social, technical, cultural and other important forces causing or perpetuating the policy problem. The question in paragraph 29.1 above asks whether the existing guidance referred to in paragraph 10 has guided policy development. If it has, then policy-makers can have some confidence that the outcome has accounted for a Treaty interest to an extent.
30 There are other tools available to policy-makers who may be unaware of whether there are existing legal obligations for the Crown to Māori in relation to many issues, among them:
The Settlement Portal – Te Haeata Te Haeata is an online record of Treaty settlement commitments, to help agencies and settled groups search for and manage settlement commitments.8
List of Treaty references in primary legislation
Pages 160-163 of the New Zealand Productivity Commission’s 2014 report ‘Regulatory institutions and practices’ lists 36 Principal Acts with references to the Treaty or Treaty Principles.
8 http://www.tearawhiti.govt.nz/te-kahui-whakamana-settlement-commitments/
289676v1 5 27 31 Even where “Treaty clauses” are not present in legislation or regulations, the particular context may require the Crown to have regard to the Treaty.
32 Statutes with references to the Treaty or Treaty principles often contain regulatory provisions and create obligations on a range of parties that are not the Crown (e.g. local government, Crown entities, Officers of Parliament and body corporates).
What are the Treaty/Māori interests in this issue?
33 Identifying the Treaty/Māori interest in a given issue is critical to being able to answer the question of the extent to which Māori retain the right to control and/or implement the policy being developed.9
34 The extent of the Māori interest in an issue will vary from issue to issue.
35 There is a secondary question to ask in relation to this question:
35.1 How have policy-makers worked out the Treaty/Māori interests?
36 Following Te Arawhiti’s engagement framework and guidelines will give policy-makers confidence that they have appropriately determined the Treaty/Māori interests in an issue.
How does the proposal demonstrate that policy-makers are meeting the good faith obligations of the Crown?
37 The courts and Waitangi Tribunal have described the Treaty generally as an exchange of solemn promises about the ongoing relationships between the Crown and Māori with qualifications. By signing the Treaty, Māori expected the Crown to act honourably towards them; they expect the Crown to protect their interest in everything it promised to, and they expect the Crown to respect their right to make decisions over matters of significance to them.
38 Put more simply, this question asks policy-makers to consider whether the policy being developed keeps the promise the Crown made to Māori to protect their interests and allow for Māori retention of decision-making in relation to them.
39 Because the Māori Crown relationship is a continuing one, the Crown and Māori should act reasonably and in good faith towards each other, consulting with each other and compromising where appropriate.
To what extent have policy-makers anticipated Treaty arguments that might be made?
40 There is a supplementary question to ask in relation to this question:
40.1 How does the proposal respond to these arguments?
41 Māori have long had recourse to the courts to challenge Crown decisions and actions. The courts have made significant decisions in relation to the application of the Treaty in New Zealand, particularly over the last 35 years. The Waitangi Tribunal is also an important forum where Treaty arguments may be made by Māori and the Crown.
9 Legislation Design and Advisory Committee, legislation Guidelines (2018 Edition), Chapter 5.1, page 28, http://www.ldac.org.nz/guidelines/legislation-guidelines-2018-edition/
289676v1 6 28 42 In recent years the Courts have indicated they may take particular care where Māori rights and interests are raised in cases, including when interpreting laws passed by Parliament. This reinforces the constitutional importance the Treaty has grown to have in New Zealand. It is important that policy- makers conduct their work in such a manner as to make Treaty consistent decisions. This in turn will assist in any response to litigation.
43 This question requires policy-makers to consider what arguments could be made that their work is inconsistent with the Treaty. When considered early in policy development the answer to this question may lead policy-makers to modify their intended course of action.
44 This question does not imply a Māori right to veto government decisions. It is a means of testing whether the proposed actions/decisions are cognisant of the obligations the Treaty conferred on the Crown. Care must be taken to weigh and balance the relevant considerations in a particular issue.
45 This question points to the importance of a Minister and/or department being able to have confidence that they have appropriately considered the range of relevant factors in relation to a certain issue, and specifically the Treaty/Māori interest in the case of challenge by Māori.
289676v1 7 29 Article Two
46 Put simply, by Article Two the Crown promises that Māori will have the right to make decisions over resources and taonga which they wish to retain.
Back translation of Māori text English version Māori version by Sir Hugh Kawharu Article the Second Ko te Tuarua The second Her Majesty the Queen of England Ko te Kuini o Ingarani ka wakarite The Queen of England agrees to confirms and guarantees to the Chiefs ka wakaae ki nga Rangatira ki nga protect the chiefs, the subtribes and Tribes of New Zealand and to the hapu-ki nga tangata katoa o Nu and all the people of New respective families and individuals Tirani te tino rangatiratanga o o Zealand in the unqualified thereof the full exclusive and ratou wenua o ratou kainga me o exercise10 of their chieftainship undisturbed possession of their Lands ratou taonga katoa. Otiia ko nga over their lands, villages and all and Estates Forests Fisheries and other Rangatira o te Wakaminenga me their treasures.11 But on the properties which they may collectively nga Rangatira katoa atu ka tuku ki other hand the Chiefs of the or individually possess so long as it is te Kuini te hokonga o era wahi Confederation and all the Chiefs their wish and desire to retain the same wenua e pai ai te tangata nona te will sell12 land to the Queen at a in their possession; but the Chiefs of the Wenua-ki te ritenga o te utu e price agreed to by the person United Tribes and the individual Chiefs wakaritea ai e ratou ko te kai hoko owning it and by the person yield to Her Majesty the exclusive right e meatia nei e te Kuini hei kai hoko buying it (the latter being) of Preemption over such lands as the mona. appointed by the Queen as her proprietors thereof may be disposed to purchase agent. alienate at such prices as may be agreed upon between the respective Proprietors and persons appointed by Her Majesty to treat with them in that behalf. Questions to guide policy-makers: 1. Does the proposal allow for the Māori exercise of rangatiratanga while recognising the right of the Crown to govern? 1.1. Can/should the proposal, or parts of it, be led by Māori? 1.2. What options/mechanisms are available to enable rangatiratanga? 2. Have Māori had a role in design/implementation? 2.1. If so, who? 2.2. If not, should they? 3. Does the proposal: 3.1. enhance Māori wellbeing? 3.2. build Māori capability or capacity? 4. Is there any aspect of this issue that Māori consider to be a taonga? 4.1. How have policy-makers come to their view of whether the issue is a taonga, and is there consensus? 4.2. What effect does that have on the proposal?
10 'Unqualified exercise' of the chieftainship — would emphasise to a chief the Queen's intention to give them complete control according to their customs. 'Tino' has the connotation of 'quintessential'. 11 The Waitangi Tribunal has stated that “the Māori interest is not absolute. The degree of protection must be decided on a case-by-case basis, and may be overridden in appropriate circumstances following a proper balancing of kaitiaki and competing interests. There may be some circumstances in which access and benefit sharing arrangements cannot be justified even where matauranga Maori is used.” (Ko Aotearoa Tenei: Report on the Wai 262 Claim). 12 Māori 'hokonga', literally 'sale and purchase'. 'Hoko' means to buy or sell.
289676v1 8 30 Does the proposal allow for the Māori exercise of rangatiratanga while recognising the right of the Crown to govern?
47 Māori were guaranteed rangatiratanga by the Treaty. This promise holds true today. It is the duty of the Crown to respect the right of Māori to control decisions in relation to their lands and the things of value to them. These rights are exercised within the context of the Crown’s right to govern.
48 The Crown has, at times in New Zealand history, ignored or denied the right of Māori to control their affairs. Not all such efforts have been based on ignorance of the Treaty – in many cases the government relied on its right to make decisions affecting Māori that it considered would be in their best interests, but without respecting the right of Māori to be involved in those decisions.
49 There are two secondary questions to ask in relation to this question:
49.1 Can/should the proposal, or parts of it, be led by Māori?
49.2 What options/mechanisms are available to enable rangatiratanga?
50 The question in paragraph 49.1 above requires policy-makers to consider the role Māori should have in relation to proposed policy.
51 By way of example, Whānau Ora is a public sector initiative that devolves funding decisions for services to community-based commissioning agencies. It is not limited to Māori but it does put whānau and families in control of the services they need to build on their strengths and achieve their aspirations. It recognises the collective strength and capability of whānau to achieve better outcomes in areas such as health, education, housing, employment and income levels.13
52 Similarly, the Māori pathways programme aims to provide a wrap-around service for those leaving prison and greater engagement with whanau and iwi from pre-sentence through to release. The values underpinning the programme are universal, and non-Māori are also able to be a part of the programme.
53 The question in paragraph 49.2 above requires policy-makers to consider existing options/mechanisms to enable rangatiratanga. This can relate to Māori entities that can, together or alone depending on the issue, formulate policy, and it can also relate to Māori entities implementing a properly developed policy.
54 If policy-makers consider the development of policy can and should be led by Māori in accordance with paragraph 49.1, then it will help to answer the question set out in paragraph 49.2 - what options/mechanisms are available to enable rangatiratanga?
Have Māori had a role in design/implementation?
55 The Treaty guarantees and promises apply to all Māori – as individuals, whānau, hapū and iwi. Depending on the issue, it may be appropriate for policy-makers to engage with Māori individuals, whānau, hapū or iwi, or a combination thereof.
56 Because the Treaty guaranteed Māori the control and enjoyment of those resources and taonga, policy- makers must consider what responsibilities Māori already have in relation to the matter. Importantly, Treaty interests are not confined to resources and taonga that Māori have retained possession of. For example, even where land has been alienated Māori interests may still be engaged.
13 https://www.tpk.govt.nz/en/whakamahia/whanau-ora
289676v1 9 31 57 There are two supplementary questions to ask in relation to this question:
57.1 If so, who?
57.2 If not, should they?
58 The engagement framework and guidelines will help policy-makers answer a question that flows from question in paragraph 57.2 above – if Māori have not had a role in design and implementation, but it is considered that they should, then policy-makers will need to consider who could participate in this.
Does the proposal: a) enhance Māori wellbeing; and b) build Māori capability or capacity?
59 It has been common, in New Zealand history, for government to not recognise or protect the right of Māori to be involved in aspects of government of the country. Increasingly, government is looking to work with non-government parties on issues of common purpose.
60 In thinking about how a proposal can enhance Māori wellbeing and build Māori capability or capacity, the response of the government should reflect the nature and extent of the interests involved.
Is there any aspect of this issue that Maori consider to be a taonga?
61 The scope of things that may be considered taonga, from a Māori perspective, are broad. At its most broad taonga can be said to be anything considered to be of value - including socially or culturally valuable objects, resources, phenomenon, ideas and techniques.
62 For more discussion of the views of the courts and Waitangi Tribunal on taonga see pages 60-64 of the Te Puni Kōkiri booklet ‘Key concepts in the Treaty exchange’14. The Waitangi Tribunal report Ko Aotearoa Tenei contains important discussion of how laws have side-lined Māori and Māori cultural values from decisions of vital importance to their culture which have left Māori unable to fulfil their obligations as kaitiaki (cultural guardians) towards their taonga –obligations which are central to the survival of Māori culture.
63 There are two supplementary questions to ask in relation to this question:
63.1 How have policy-makers come to their view of whether the issue is a taonga, and is there consensus?
63.2 What effect does that have on the proposal
64 There is not always consensus between the Crown and Māori on whether an issue or thing is a taonga. It is important for policy-makers to be able to demonstrate that they have considered the question openly and considered Māori perspectives in their thinking.
65 Absence of consensus on whether an issue or thing is a taonga need not prevent the Crown and Māori agreeing on how to develop a policy in relation to it.
14 https://www.tpk.govt.nz/documents/download/179/tpk-treatykeyconcepts-2001-en.pdf
289676v1 10 32 Article Three
66 Put simply, by Article Three the Crown promises that its obligations to New Zealand citizens are owed equally to Māori.
Back translation of Māori text by English version Māori version Sir Hugh Kawharu Article the Third Ko te Tuatoru The third In consideration thereof Her Hei wakaritenga mai hoki tenei For this agreed arrangement therefore Majesty the Queen of England mo te wakaaetanga ki te concerning the Government of the extends to the Natives of New Kawanatanga o te Kuini-Ka Queen, the Queen of England will Zealand Her royal protection tiakina e te Kuini o Ingarani nga protect all the ordinary people of New and imparts to them all the tangata maori katoa o Nu Tirani Zealand and will give them the same Rights and Privileges of British ka tukua ki a ratou nga tikanga rights and duties15 of citizenship as Subjects. katoa rite tahi ki ana mea ki nga the people of England.16 tangata o Ingarani. Questions to guide policy-makers:
1. Does the proposal aim to achieve equitable outcomes?
2. How does the proposal differ from previous efforts to address the issue?
3. How does the proposal demonstrate that policy-makers have looked at the proposal from the perspective of legal values such as natural justice, due process, fairness and equity?
4. How does the proposal demonstrate that policy-makers have looked at the issue from the perspective of tikanga values?
Does the proposal aim to achieve equitable outcomes?
67 Article Three has an important significance in the implicit assurance that rights would be enjoyed equally by Māori with all New Zealanders of whatever origin. Special measures to attain that equal enjoyment of benefits are allowed by international law.
68 Consideration should be given to how Māori and the Crown define and measure equitable outcomes, and policy-makers must be live to the likelihood engagement with Māori may be required to align views on this.
How does the proposal differ from previous efforts to address the issue?
69 Few challenges faced by government are entirely new or have not been tackled by government before. This question prompts the Minister and/or department to examine how a current proposal to address an issue is different to previous attempts.
70 It is possible (and potentially likely) that previous government attempts to address an issue did not give due regard to Treaty obligations and/or appropriately acknowledge the rights and duties of Māori in the matter.
15 'Rights and duties': Māori at Waitangi in 1840 refer to Hobson being or becoming a 'father' for the Māori people. Certainly, this attitude has been held towards the person of the Crown down to the present day — hence the continued expectations and commitments entailed in the Treaty. 16 Sir Hugh’s view was that “there is, however, a more profound problem about 'tikanga'. There is a real sense here of the Queen 'protecting' (ie, allowing the preservation of) the Māori people's tikanga (ie, customs) since no Māori could have had any understanding whatever of British tikanga (ie, rights and duties of British subjects). This, then, reinforces the guarantees in article 2.” More recent scholarship suggests that Sir Hugh underestimated the knowledge of British tikanga that some Māori had.
289676v1 11 33 71 In essence this question asks why would the outcome of the current effort be any different to previous outcomes?
How does the proposal demonstrate that policy-makers have looked at the proposal from the perspective of legal values such as natural justice, due process, fairness and equity?
72 Article Three contains a promise by the Crown to extend to Māori all the rights and privileges/duty of British subjects, which can be read today as New Zealand citizens.
73 Considering proposals through the lens of the legal values listed as examples in this question is a means of demonstrating that the Crown is upholding the promises in Article Three of the Treaty.17
How does the proposal demonstrate that policy-makers have looked at the issue from the perspective of tikanga values?
74 This question recognises that courts have, in recent years, considered tikanga values to be important to the consideration of matters relating to Māori and should be given appropriate weighting in decision- making.
75 Tikanga values that could offer perspective on an issue include:
75.1 Mana: enduring power and authority that can be derived from ancestry, from possession of lands and acquired by individuals according to their ability to develop skills and gain knowledge;
75.2 Whakapapa: the genealogical descent of all living things;
75.3 Whānaungatanga: relationship, kinship, sense of family connection - a relationship through shared experiences and working together, which provides people with a sense of belonging;
75.4 Manaakitanga: hospitality, kindness, generosity, support - the process of showing respect, generosity and care for others.18
76 The courts have recognised tikanga Māori as part of New Zealand common law and as a value that informs development of the common law. The precise impact of tikanga Māori on the common law and statute will vary, however, tikanga may have a relevance in legal disputes independent of statutory incorporation of the Treaty.
Michael Webster Secretary of the Cabinet
Enquiries: Te Arawhiti [email protected]
17 Legislation Design and Advisory Committee, legislation Guidelines (2018 Edition), Chapter 5.3, page 29, http://www.ldac.org.nz/guidelines/legislation-guidelines-2018-edition/ 18 Further discussion of a wide range of tikanga values can be found at Hirini Moko Mead, Tikanga Māori: Living by Māori Values (particularly chapter 3), Huia Publishers, 2016 edition and Cleve Barlow, Tikanga Whakaaro: Key concepts in Māori culture, Oxford University Press.
289676v1 12 34 Appendix 1: Glossary of terms
The Māori dictionary contains the following definitions:
Hapū
(noun) kinship group, clan, tribe, subtribe - section of a large kinship group and the primary political unit in traditional Māori society. It consisted of a number of whānau sharing descent from a common ancestor, usually being named after the ancestor, but sometimes from an important event in the group's history. A number of related hapū usually shared adjacent territories forming a looser tribal federation (iwi).
Iwi
(noun) extended kinship group, tribe, nation, people, nationality, race - often refers to a large group of people descended from a common ancestor and associated with a distinct territory.
Mana:
1. (verb) to be legal, effectual, binding, authoritative, valid.
2. (noun) prestige, authority, control, power, influence, status, spiritual power, charisma - mana is a supernatural force in a person, place or object. Mana goes hand in hand with tapu, one affecting the other. The more prestigious the event, person or object, the more it is surrounded by tapu and mana. Mana is the enduring, indestructible power of the atua and is inherited at birth, the more senior the descent, the greater the mana. The authority of mana and tapu is inherited and delegated through the senior line from the atua as their human agent to act on revealed will. Since authority is a spiritual gift delegated by the atua, man remains the agent, never the source of mana. This divine choice is confirmed by the elders, initiated by the tohunga under traditional consecratory rites (tohi). Mana gives a person the authority to lead, organise and regulate communal expeditions and activities, to make decisions regarding social and political matters. A person or tribe's mana can increase from successful ventures or decrease through the lack of success. The tribe give mana to their chief and empower him/her and in turn the mana of an ariki or rangatira spreads to his/her people and their land, water and resources. Almost every activity has a link with the maintenance and enhancement of mana and tapu. Animate and inanimate objects can also have mana as they also derive from the atua and because of their own association with people imbued with mana or because they are used in significant events. There is also an element of stewardship, or kaitiakitanga, associated with the term when it is used in relation to resources, including land and water.
3. (noun) jurisdiction, mandate, freedom.
Manaakitanga:
(noun) hospitality, kindness, generosity, support - the process of showing respect, generosity and care for others.
Ōritetanga
(noun) equality, equal opportunity.
Rangatiratanga: 1. (noun) chieftainship, right to exercise authority, chiefly autonomy, chiefly authority, ownership, leadership of a social group, domain of the rangatira, noble birth, attributes of a chief.
2. (noun) kingdom, realm, sovereignty, principality, self-determination, self-management - connotations extending the original meaning of the word resulting from Bible and Treaty of Waitangi translations.
289676v1 13 35 Taonga:
(noun) treasure, anything prized - applied to anything considered to be of value including socially or culturally valuable objects, resources, phenomenon, ideas and techniques. Examples of the word's use in early texts show that this broad range of meanings is not recent, while a similar range of meanings from some other Eastern Polynesian languages support this (e.g. Tuamotuan).
Tikanga:
(noun) correct procedure, custom, habit, lore, method, manner, rule, way, code, meaning, plan, practice, convention, protocol - the customary system of values and practices that have developed over time and are deeply embedded in the social context.
Whakapapa:
(noun) genealogy, genealogical table, lineage, descent - reciting whakapapa was, and is, an important skill and reflected the importance of genealogies in Māori society in terms of leadership, land and fishing rights, kinship and status. It is central to all Māori institutions. There are different terms for the types of whakapapa and the different ways of reciting them including: tāhū (recite a direct line of ancestry through only the senior line); whakamoe (recite a genealogy including males and their spouses); taotahi (recite genealogy in a single line of descent); hikohiko (recite genealogy in a selective way by not following a single line of descent); ure tārewa (male line of descent through the first-born male in each generation).
Whānau
(noun) extended family, family group, a familiar term of address to a number of people - the primary economic unit of traditional Māori society. In the modern context the term is sometimes used to include friends who may not have any kinship ties to other members.
Whanaungatanga:
(noun) relationship, kinship, sense of family connection - a relationship through shared experiences and working together which provides people with a sense of belonging. It develops as a result of kinship rights and obligations, which also serve to strengthen each member of the kin group. It also extends to others to whom one develops a close familial, friendship or reciprocal relationship.
289676v1 14 36 Appendix 2: Treaty of Waitangi guidance at a glance Treaty timeline
1877 2019 Supreme 1975 1985 1989 Early 2000s Opportunity 1840s-1975 1987 1840 Court Treaty of Jurisdiction of Principles Principles to provide declares Ongoing representations from Māori nationally Waitangi Act and Tribunal Lands for Crown for Crown more Treaty signed Treaty a regarding alleged breaches of Te Tiriti/The Treaty establishment of extended case action on action guidance for ‘simple Waitangi Tribunal back to 1840 Treaty reaffirmed public nullity’ servants
The Treaty
The Preamble The preamble to the English version states that the British intentions were to: protect Māori interests from the encroaching British settlement provide for British settlement establish a government to maintain peace and order. The Māori text suggests that the Queen's main promises to Māori were to: secure tribal rangatiratanga • secure Māori land ownership.
Treaty Guidance
Consult Te Arawhiti early for guidance on Definition of key Treaty terms can be found Examples of agency specific guidelines can Consult Crown Law early to assist engaging with Māori in the Glossary of CO circular (19) 5 be found in the Productivity Commission identification of interests report Regulatory institutions and practices
This guidance does not create new legal obligations on Crown agencies or override existing statutory obligations or duties. It should instead guide and support Crown agencies processes and decision-making. Agencies will consider the specific context of the relevant issue, policy or initiative.
289676v1 15 37 Appendix 3: The Treaty of Waitangi
English version Māori version Back translation of Māori text by Sir Hugh Kawharu1 Preamble HER MAJESTY VICTORIA Queen of the United Kingdom of Great Britain and Ireland Ko Wikitoria, te Kuini o Ingarani, i tana mahara atawai ki nga Rangatira me nga Hapu o Nu Victoria, the Queen of England, in her concern to protect the chiefs and the subtribes of New regarding with Her Royal Favour the Native Chiefs and Tribes of New Zealand and anxious Tirani i tana hiahia hoki kia tohungia ki a ratou o ratou rangatiratanga, me to ratou wenua, a Zealand and in her desire to preserve their chieftainship2 and their lands to them and to to protect their just Rights and Property and to secure to them the enjoyment of Peace and kia mau tonu hoki te Rongo ki a ratou me te Atanoho hoki kua wakaaro ia he mea tika kia maintain peace3 and good order considers it just to appoint an administrator4 one who will Good Order has deemed it necessary in consequence of the great number of Her Majesty’s tukua mai tetahi Rangatira hei kai wakarite ki nga Tangata maori o Nu Tirani-kia wakaaetia negotiate with the people of New Zealand to the end that their chiefs will agree to the Subjects who have already settled in New Zealand and the rapid extension of Emigration e nga Rangatira maori te Kawanatanga o te Kuini ki nga wahikatoa o te Wenua nei me nga Queen's Government being established over all parts of this land and (adjoining) islands5 and both from Europe and Australia which is still in progress to constitute and appoint a Motu-na te mea hoki he tokomaha ke nga tangata o tona Iwi Kua noho ki tenei wenua, a e also because there are many of her subjects already living on this land and others yet to functionary properly authorized to treat with the Aborigines of New Zealand for the haere mai nei. come. So the Queen desires to establish a government so that no evil will come to Māori and recognition of Her Majesty’s Sovereign authority over the whole or any part of those Na ko te Kuini e hiahia ana kia wakaritea te Kawanatanga kia kaua ai nga kino e puta mai ki European living in a state of lawlessness. So the Queen has appointed 'me, William Hobson a islands—Her Majesty therefore being desirous to establish a settled form of Civil te tangata Maori ki te Pakeha e noho ture kore ana. Captain' in the Royal Navy to be Governor for all parts of New Zealand (both those) shortly Government with a view to avert the evil consequences which must result from the absence to be received by the Queen and (those) to be received hereafter and presents6 to the chiefs of of the necessary Laws and Institutions alike to the native population and to Her subjects has Na, kua pai te Kuini kia tukua a hau a Wiremu Hopihona he Kapitana i te Roiara Nawi hei the Confederation chiefs of the subtribes of New Zealand and other chiefs these laws set out been graciously pleased to empower and to authorize me William Hobson a Captain in Her Kawana mo nga wahi katoa o Nu Tirani e tukua aianei, amua atu ki te Kuini e mea atu ana ia here. Majesty’s Royal Navy Consul and Lieutenant Governor of such parts of New Zealand as ki nga Rangatira o te wakaminenga o nga hapu o Nu Tirani me era Rangatira atu enei ture ka may be or hereafter shall be ceded to her Majesty to invite the confederated and independent korerotia nei. Chiefs of New Zealand to concur in the following Articles and Conditions. Article Article the First Ko te Tuatahi The first One The Chiefs of the Confederation of the United Tribes of New Zealand and the separate and Ko nga Rangatira o te Wakaminenga me nga Rangatira katoa hoki ki hai i uru ki taua The Chiefs of the Confederation and all the Chiefs who have not joined that Confederation independent Chiefs who have not become members of the Confederation cede to Her wakaminenga ka tuku rawa atu ki te Kuini o Ingarani ake tonu atu-te Kawanatanga katoa o give absolutely to the Queen of England for ever the complete government7 over their land. Majesty the Queen of England absolutely and without reservation all the rights and powers ratou wenua. of Sovereignty which the said Confederation or Individual Chiefs respectively exercise or possess, or may be supposed to exercise or to possess over their respective Territories as the sole Sovereigns thereof. Article Article the Second Ko te Tuarua The second Two Her Majesty the Queen of England confirms and guarantees to the Chiefs and Tribes of New Ko te Kuini o Ingarani ka wakarite ka wakaae ki nga Rangatira ki nga hapu-ki nga tangata The Queen of England agrees to protect the chiefs, the subtribes and all the people of New Zealand and to the respective families and individuals thereof the full exclusive and katoa o Nu Tirani te tino rangatiratanga o ratou wenua o ratou kainga me o ratou taonga Zealand in the unqualified exercise8 of their chieftainship over their lands, villages and all undisturbed possession of their Lands and Estates Forests Fisheries and other properties katoa. Otiia ko nga Rangatira o te Wakaminenga me nga Rangatira katoa atu ka tuku ki te their treasures.9 But on the other hand the Chiefs of the Confederation and all the Chiefs will which they may collectively or individually possess so long as it is their wish and desire to Kuini te hokonga o era wahi wenua e pai ai te tangata nona te Wenua-ki te ritenga o te utu e sell10 land to the Queen at a price agreed to by the person owning it and by the person buying retain the same in their possession; but the Chiefs of the United Tribes and the individual wakaritea ai e ratou ko te kai hoko e meatia nei e te Kuini hei kai hoko mona. it (the latter being) appointed by the Queen as her purchase agent. Chiefs yield to Her Majesty the exclusive right of Preemption over such lands as the proprietors thereof may be disposed to alienate at such prices as may be agreed upon between the respective Proprietors and persons appointed by Her Majesty to treat with them in that behalf. Article Article the Third Ko te Tuatoru The third Three In consideration thereof Her Majesty the Queen of England extends to the Natives of New Hei wakaritenga mai hoki tenei mo te wakaaetanga ki te Kawanatanga o te Kuini-Ka tiakina For this agreed arrangement therefore concerning the Government of the Queen, the Queen Zealand Her royal protection and imparts to them all the Rights and Privileges of British e te Kuini o Ingarani nga tangata maori katoa o Nu Tirani ka tukua ki a ratou nga tikanga of England will protect all the ordinary people of New Zealand and will give them the same Subjects. katoa rite tahi ki ana mea ki nga tangata o Ingarani. rights and duties11 of citizenship as the people of England.12 Post script Now therefore We the Chiefs of the Confederation of the United Tribes of New Zealand Na ko matou ko nga Rangatira o te Wakaminenga o nga hapu o Nu Tirani ka huihui nei ki So we, the Chiefs of the Confederation of the subtribes of New Zealand meeting here at being assembled in Congress at Victoria in Waitangi and We the Separate and Independent Waitangi ko matou hoki ko nga Rangatira o Nu Tirani ka kite nei i te ritenga o enei kupu, ka Waitangi having seen the shape of these words which we accept and agree to record our Chiefs of New Zealand claiming authority over the Tribes and Territories which are tangohia ka wakaaetia katoatia e matou, koia ka tohungia ai o mātou ingoa o matou tohu. names and our marks thus. specified after our respective names, having been made fully to understand the Provisions of Ka meatia tenei ki Waitangi i te ono o nga ra o Pepueri i te tau kotahi mano, e waru rau e wa Was done at Waitangi on the sixth of February in the year of our Lord 1840. the foregoing Treaty, accept and enter into the same in the full spirit and meaning thereof: in te kau o to tatou Ariki. witness of which we have attached our signatures or marks at the places and the dates respectively specified. Ko nga Rangatira o te wakaminenga. Done at Waitangi this Sixth day of February in the year of Our Lord One thousand eight hundred and forty.
1 Sir Hugh Kawharu’s translation sets out to show how Māori would have understood the meaning of the text they signed. It was published in the book Waitangi Revisited: Perspectives on the Treaty of Waitangi, edited by Michael Belgrave, Merata Kawharu and David Williams (Oxford University Press, 1989) 2 'Chieftainship': this concept has to be understood in the context of Māori social and political organisation as at 1840. The accepted approximation today is 'trusteeship'. 3 'Peace': Māori 'Rongo', seemingly a missionary usage (rongo — to hear: ie, hear the 'Word' — the 'message' of peace and goodwill, etc). 444 Literally 'Chief' ('Rangatira') here is of course ambiguous. Clearly, a European could not be a Māori, but the word could well have implied a trustee-like role rather than that of a mere 'functionary'. Māori speeches at Waitangi in 1840 refer to Hobson being or becoming a 'father' for the Māori people. Certainly this attitude has been held towards the person of the Crown down to the present day — hence the continued expectations and commitments entailed in the Treaty. 5 'Islands': ie, coastal, not of the Pacific. 6 Literally 'making': ie, 'offering' or 'saying' — but not 'inviting to concur'. 7 'Government': 'kawanatanga'. Sir Hugh’s view was that “there could be no possibility of the Māori signatories having any understanding of government in the sense of 'sovereignty': ie, any understanding on the basis of experience or cultural precedent.” This view is not universally held. For more discussion of the views and understandings of participants at 1840 see He Whakaputanga me te Tiriti / The Declaration and the Treaty: The Report on Stage 1 of the Te Paparahi o Te Raki Inquiry, particularly chapter 10 (Waitangi Tribunal 2014). 8 'Unqualified exercise' of the chieftainship — would emphasise to a chief the Queen's intention to give them complete control according to their customs. 'Tino' has the connotation of 'quintessential'. 9 'Treasures': 'taonga'. As submissions to the Waitangi Tribunal concerning the Māori language have made clear, 'taonga' refers to all dimensions of a tribal group's estate, material and non-material — heirlooms and wahi tapu (sacred places), ancestral lore and whakapapa (genealogies), etc. 10 Māori 'hokonga', literally 'sale and purchase'. 'Hoko' means to buy or sell. 11 'Rights and duties': Māori at Waitangi in 1840 refer to Hobson being or becoming a 'father' for the Māori people. Certainly, this attitude has been held towards the person of the Crown down to the present day — hence the continued expectations and commitments entailed in the Treaty. 12 Sir Hugh’s view was that “there is, however, a more profound problem about 'tikanga'. There is a real sense here of the Queen 'protecting' (ie, allowing the preservation of) the Māori people's tikanga (ie, customs) since no Māori could have had any understanding whatever of British tikanga (ie, rights and duties of British subjects). This, then, reinforces the guarantees in article 2.” More recent scholarship suggests that Sir Hugh underestimated the knowledge of British tikanga that some Māori had. 289676v1 16 38 39 40 A Guide to New Zealand’s State Sector Agencies
Public Service – By definition, the Public Service comprises the departments listed on the Schedule 1 of the State Sector Act 1988 including any departmental agencies listed on Schedule 1A of that same Act.
State Services – By definition, the State Services comprises the agencies that operate as instruments of the Crown in respect of the Government of New Zealand (i.e. the Executive Branch of Government). This includes the Public Service, most Crown entities, the Reserve Bank, a range of agencies listed on Schedule 4 of the Public Finance Act 1989, companies listed on Schedule 4A of the Public Finance Act, and a small number of departments that are not part of the Public Service.
State sector – By convention, the State sector comprises the agencies whose financial situation and performance is included in the Financial Statements of the Government of New Zealand as part of the Government reporting entity under the Public Finance Act 1989. This includes the State Services, tertiary education institutions, State-Owned Enterprises and Mixed Ownership Model companies, as well as a small number of agencies that operate as instruments of the Legislative Branch of Government.
Public Service 32 Departments subject to the State Sector Act 4 Departmental Agencies subject to the State Sector Act State Services 3 Non-Public Service Departments Crown Entities State Crown Agents (incl DHBs) Services Autonomous Crown Entities Independent Crown Entities School Boards of Trustees State Crown Entity Companies (incl CRIs) sector Crown Entity Subsidiaries
Other organisations and companies subject to the Public Finance Act Reserve Bank of New Zealand
2 Non-Public Service Departments Offices of Parliament Crown Entities Tertiary Education Institutions
State-Owned Enterprises Mixed Ownership Model Companies
State Services Commission 16 July 2020 41
Public Service Non-Public Service departments
Departments In the Executive Branch
• Crown Law Office • New Zealand Defence Force • Department of Conservation • New Zealand Police • Department of Corrections • Parliamentary Counsel Office • Department of Internal Affairs • Department of the Prime Minister and Cabinet • Education Review Office In the Legislative Branch • Government Communications Security Bureau • Inland Revenue Department • Office of the Clerk of the House of • Land Information New Zealand Representatives • • Ministry for Culture and Heritage Parliamentary Service • Ministry for Pacific Peoples • Ministry for Primary Industries Crown entities • Ministry for the Environment • Ministry for Women • Ministry of Business, Innovation, and Employment Statutory entities • Ministry of Defence • Ministry of Education Crown Agents • Ministry of Foreign Affairs and Trade • Ministry of Health • Accident Compensation Corporation • Ministry of Housing and Urban Development • Callaghan Innovation • Ministry of Justice • Civil Aviation Authority of New Zealand • Ministry of Māori Development—Te Puni Kōkiri • District Health Boards (20) • Ministry of Social Development o Auckland • Ministry of Transport o Bay of Plenty • New Zealand Customs Service o Canterbury • New Zealand Security Intelligence Service o Capital and Coast • Oranga Tamariki—Ministry for Children o Counties Manukau • Public Service Commission o Hawke's Bay • Serious Fraud Office o Hutt • Statistics New Zealand o Lakes • Te Kāhui Whakamana Rua Tekau mā Iwa— o MidCentral Pike River Recovery Agency o Nelson Marlborough • The Treasury o Northland o South Canterbury o Southern o Tairāwhiti Departmental Agencies o Taranaki o Waikato • Cancer Control Agency o Wairarapa • National Emergency Management Agency o Waitematā • Office for Māori Crown Relations—Te Arawhiti o West Coast Whanganui • Social Wellbeing Agency o • Earthquake Commission • Education New Zealand Interdepartmental executive boards • Energy Efficiency and Conservation Authority • Environmental Protection Authority • Border Executive Board • Fire and Emergency New Zealand • Health Promotion Agency • Health Quality and Safety Commission
42 • Health Research Council of New Zealand • Transport Accident Investigation Commission • Kāinga Ora – Homes and Communities • Maritime New Zealand • New Zealand Antarctic Institute Crown Entity Companies • New Zealand Blood Service • New Zealand Qualifications Authority Crown Research Institutes (CRIs) • New Zealand Tourism Board • New Zealand Trade and Enterprise • AgResearch Limited • New Zealand Transport Agency • Institute of Environmental Science and • New Zealand Walking Access Commission Research Limited • Pharmaceutical Management Agency • Institute of Geological and Nuclear Sciences • Real Estate Agents Authority Limited • Social Workers Registration Board • Landcare Research New Zealand Limited • Sport and Recreation New Zealand • National Institute of Water and Atmospheric • Tertiary Education Commission Research Limited • WorkSafe New Zealand • New Zealand Forest Research Institute Limited • The New Zealand Institute for Plant and Food Autonomous Crown Entities (ACEs) Research Limited
• Accreditation Council • Arts Council of New Zealand Toi Aotearoa Other companies • Broadcasting Commission • Government Superannuation Fund Authority • Crown Irrigation Investments Limited • Guardians of New Zealand Superannuation • New Zealand Growth Capital Partners Limited • Heritage New Zealand Pouhere Taonga • Radio New Zealand Limited • Museum of New Zealand Te Papa Tongarewa • Television New Zealand Limited Board • New Zealand Artificial Limb Service • New Zealand Film Commission Crown Entity Subsidiaries of NZIST • New Zealand Infrastructure Commission/Te Waihanga • Ara Institute of Canterbury • New Zealand Lotteries Commission • Eastern Institute of Technology • New Zealand Symphony Orchestra • Manukau Institute of Technology • Public Trust • Nelson Marlborough Institute of Technology • Retirement Commissioner • Northland Polytechnic • Te Reo Whakapuaki Irirangi (Māori • Open Polytechnic of New Zealand Broadcasting Funding Agency) • Otago Polytechnic • Te Taura Whiri I Te Reo Māori (Māori • Southern Institute of Technology Language Commission) • Tai Poutini Polytechnic • Toi Ohomai Institute of Technology • Unitec Institute of Technology Independent Crown Entities (ICEs) • Universal College of Learning • Waikato Institute of Technology • Broadcasting Standards Authority • Wellington Institute of Technology • Children's Commissioner • Western Institute of Technology • Climate Change Commission • Whitireia Community Polytechnic • Commerce Commission • Criminal Cases Review Commission • Drug Free Sport New Zealand Other Crown Entity Subsidiaries • Electoral Commission • Electricity Authority • Approx 150 Crown entity subsidiaries • External Reporting Board • Financial Markets Authority • Health and Disability Commissioner School Boards of Trustees • Human Rights Commission • Independent Police Conduct Authority • Approx 2,416 (including Te Aho o Te Kura • Law Commission Pounamu – The Correspondence School) • Mental Health and Wellbeing Commission • New Zealand Productivity Commission • Office of Film and Literature Classification • Privacy Commissioner • Takeovers Panel
43 In central government • New Zealand Lottery Grants Board
Tertiary Institutions Public Finance Act Schedule 4A • Universities Companies o Auckland University of Technology o Lincoln University • o Massey University City Rail Link Limited o University of Auckland • Crown Asset Management Limited o University of Canterbury • Crown Infrastructure Partners Limited o University of Otago • Education Payroll Limited o University of Waikato • The Network for Learning Limited o Victoria University of Wellington • New Zealand Green Investment Finance Limited • New Zealand Institute of Skills and • Ōtākaro Limited Technology (NZIST) • Predator Free 2050 Limited • Provincial Growth Fund Limited • Research and Education Advanced Network • Wānanga New Zealand Limited • Southern Response Earthquake Services o Te Wānanga o Aotearoa (Te Limited Awamutu) • Tāmaki Redevelopment Company Limited o Te Wānanga o Raukawa (Otaki) • Ngāpuhi Investment Fund Limited o Te Whare Wānanga o Awanuiārangi (Whakatane) Reserve Bank of New Zealand Public Finance Act Schedule 4 Offices of Parliament Organisations • Office of the Ombudsmen • The Controller and Auditor-General Fish and Game Councils • The Parliamentary Commissioner for the Environment • New Zealand Fish and Game Council • Fish and Game Councils (12) State-owned enterprises Reserves Boards (20) • Airways Corporation of New Zealand Limited • Animal Control Products Limited Trusts • AsureQuality Limited • Electricity Corporation of New Zealand Limited • Agricultural and Marketing Research and • KiwiRail Holdings Limited Development Trust • Kordia Group Limited • Asia New Zealand Foundation • Landcorp Farming Limited • National Pacific Radio Trust • Meteorological Service of New Zealand • Ngāi Tahu Ancillary Claims Trust (inactive) Limited • Pacific Co-operation Foundation • New Zealand Post Limited • Pacific Island Business Development Trust • New Zealand Railways Corporation • Te Ariki Trust • Quotable Value Limited • Transpower New Zealand Limited Other (Bodies Corporate) Mixed Ownership Model companies • Game Animal Council • The Māori Trustee • Genesis Energy Limited • New Zealand Game Bird Habitat Trust Board • Mercury NZ Limited • New Zealand Government Property • Meridian Energy Limited Corporation
Other (Unincorporated)
44 Categories of Crown entities
Source: State Services Commission (2014), Statutory Crown Entities – A Guide for Ministers.
The full guide can be accessed on www.publicservice.govt.nz
45 Annual Cycle
46 State Sector Entities
State Sector Entities Map Activity
In your table group discuss each of the four state sector entities you have been provided with.
• What type of state sector entity are they? • Where are they located on the state sector map?
Place the entity in the correct location on the map. In doing so, discuss the 'reach' of the relevant Minister into each entity.
Notes:
47 Getting on board with diversity A guide to getting diverse talent on boards
iod.org.nz48 Change is constant. We live in a dynamic and complex world with globalisation and technology reshaping the business landscape. It is ever more critical that the best talent is sourced for our boards.
Boards are at their best when they are distinguished by diversity of thought and capability. The Institute of Directors in New Zealand (IoD) has long held that diversity of thought and perspective in the boardroom improves business performance and innovation. We know diversity is important to boards – over 60% of directors told us diversity was a key consideration in making appointments in 2014 and 2015. To date the focus on board diversity has mainly been on women but diversity encompasses a wide range of dimensions such as ethnicity, Māori whakapapa, LGBTI affinity, age, culture, disability, background and experience. New Zealand has over 213 ethnicities making us one of the most diverse countries in the world. This guide provides practical steps and tips to help boards improve board capability. It will help them attract and retain the best talent onto the board and to lead an inclusive culture that enables diverse thinking to thrive in the boardroom. Embracing diversity does not mean compromising on the skills, experience and professional qualifications of board members. It’s about appointing people on merit who also bring diversity of thought and perspective to enhance board decision-making. This will help drive better outcomes, and long-term success.
“Diversity on a board is vital but should always be approached through the lens of demonstrated competence.” THE FOUR PILLARS OF GOVERNANCE BEST PRACTICE, IoD
Disclaimer: This practice guide has been prepared as a resource for boards and should not be used or relied upon as a substitute for proper professional advice. © Institute of Directors in New Zealand (Inc). Getting on board with diversity may not be reproduced in whole or in part without prior written permission.
49 GETTING ON BOARD WITH DIVERSITY | 3
Five steps for getting on board with diversity Get on board with diversity by taking an active, conscious and thoughtful approach to how you support diversity in your boardroom and organisation.
Create an inclusive culture Take active steps to make a diverse mix of people, with all their similarities and Recognise differences, work. and address unconscious bias Increase objectivity by reducing biased decision-making. Review board composition Get the right mix of people so that ‘the whole is greater Identify than the sum of its parts.’ and appoint diverse talent Cast a wide net to find the best people for the board.
Set targets and measure progress Go beyond compliance and measure what matters.
50 4 | GETTING ON BOARD WITH DIVERSITY
Create an inclusive culture Take active steps to make a diverse mix of people, with all their similarities and differences, work.
Leading an effective culture is fundamental There are big challenges in re-shaping to how a board adds value. Board a culture. It is not about a ‘bad’ culture composition and a commitment to a high becoming ‘good’ but instead it’s lifting performance culture focused on engaged, the game to get the best out of everyone. quality governance underpins an effective Inclusion is about making a diverse mix culture. An effective board champions of people, with all their similarities and debate, diversity, thoughtful challenge differences, work. and dissent. The chair has a pivotal role in leading the The board also sets the tone for the culture board but every board member contributes of the organisation. The importance and to the culture of the board. Individual board value of diversity needs to be integrated and members can have different degrees of embedded into the culture of both the board influence and power within a board and and the organisation. actively avoiding a ‘pecking order’ will help foster inclusion. International research, including work by Tomorrow’s Company, McKinsey & Co and All board members have a responsibility for Deloitte, maintains that to achieve greater creating an inclusive culture that enables diversity we need to focus on creating a contribution with respect. merit-based culture that supports inclusion and diversity. It’s about accessing and optimising diverse talent to enhance “Companies should build an individual and collective capability. ecosystem that nurtures all kinds Central to this is recognising and addressing biases, assumptions and language that of people, but that also changes underpin the existing culture. For example, the culture itself.” unconscious bias (see Step 2) can be HELENA MORRISSEY, UK 30% CLUB FOUNDER, embedded in organisational structures and WWW.HRMAGAZINE.CO.UK (FEBRUARY 2015) processes, such as recruitment, performance management and talent selection, and can undermine the achievement of meritocracy.
51 GETTING ON BOARD WITH DIVERSITY | 5
Role of the chair Tips for creating an inclusive The chair is uniquely placed to lead an culture: inclusive culture and promote diversity on ▪▪ Put a stake in the ground. Be explicit the board and in executive management. that diversity matters: be vocal and be prepared to measure yourself Effective leadership from the chair can ▪▪ Have an open mind-set that values make the difference between a high or diversity of thought and facilitates full low functioning board. The chair frames participation of all members and stimulates debate on issues while ▪▪ Address expectations about board supervising the conduct of the meeting. inclusiveness in the interview and Good chairs draw out the views of more orientation process reticent board members and manage the ▪▪ Respect and treat people fairly based on more zealous contributors. They help create abilities a culture where directors can bring a robust, ▪▪ Put diversity on the agenda for regular independent view to the table, and where discussion, eg annually, as part of strategy, board evaluation and succession appropriate dissent is valued. planning discussions Recent research highlights the need for ▪▪ Encourage diversity throughout the inclusive leaders to adapt to different organisation – especially in middle and contexts and this includes diversity of senior management – the executive and thinking. Leading a diverse group is more governance pipeline challenging than leading people who are similar. Courage and self-awareness are key enablers.
“True diversity is about having Tips for chairs: different perspectives through a ▪▪ Champion diversity and lead by example – balance of expertise, knowledge, set the tone from the top gender, ethnicity, age and ▪▪ Demonstrate a commitment to inclusive behaviour background. We encourage ▪▪ Take an active view on diversity in boards to think about how they appointment and selection processes ▪▪ Seek and welcome different and contrary can improve diversity for their views into discussion organisation, and get the best ▪▪ Dig for value: See that dissent and different perspectives have value and mix of talent, diverse thinking manage them appropriately and capability.” ▪▪ Recognise differing boardroom styles to take the best from each director KIRSTEN PATTERSON, CHIEF EXECUTIVE, IoD
52 6 | GETTING ON BOARD WITH DIVERSITY
Recognise and address unconscious bias Increase objectivity by reducing biased decision-making.
Bias can come in different forms. It includes “I learned that even when a woman using stereotypes and the tendency to gravitate toward those we immediately earns a seat at the table, the men recognise as familiar (think about who you can put you in a soundproof booth.” choose to sit next to on the bus). Bias is a LIZ DOLAN, FORMER DIRECTOR OF QUIKSILVER human trait, used to make quick decisions BOARD, FORTUNE MAGAZINE (JUNE 2015) about our personal safety and who we surround ourselves with. We use biases every This may seem more efficient but if relevant day to make decisions from what bread to buy information isn’t considered, then decision- to how we travel to work. making, for example on appointments, may not be optimal. The downside of bias is that we can make quick and final judgments about others. Unconscious bias can be overcome in It provides a fast track for decision- recruitment by ensuring there is a merit- making that leads us toward the familiar. based appointment process. For example, in In board composition terms, we can end up the late 1970s the top five orchestras in the surrounding ourselves with similar people. USA had fewer than 5% women members. Blind auditions were introduced – with There are many types of biases. For example, auditioning candidates behind screens in the confirmation bias is when one actively seeks early rounds. Women now make up over 30% information and interpretation which affirms of members. established beliefs while missing information that contradicts established beliefs. A lack of board diversity can indicate unconscious bias influencing decision-making Unconscious bias is the product of about board appointments. This could unconscious knowledge (what we know) mean the composition of the board may not and unconscious thinking processes (how be based on what the company needs and we think) and can happen automatically or therefore not as effective as it could be. quickly (fast thinking).1
1 Ministry of Women’s Affairs, Realising the opportunity: Addressing New Zealand’s leadership pipeline by attracting and retaining talented women (2013) 53 GETTING ON BOARD WITH DIVERSITY | 7
The thing about unconscious biases is that we are not aware of them. Even Tips for recognising and if you support diversity there will be addressing unconscious bias: biases that have shaped your world and ▪▪ Acknowledge that unconscious bias exists continue to do so. The challenge is to ▪▪ Question assumptions and build be aware of, and overcome biases, both awareness of biases – try one of the conscious and unconscious. Online tools online tests to identify your biases and tests can provide a good starting ▪▪ Take time to consider and evaluate point for identifying individual biases. decisions, eg seek an independent/peer review ▪▪ Ensure there is an objective competency and merit-based appointment process, In 2017 only 19% of directors eg remove personal information from CVs of NZX listed boards were ▪▪ Give appropriate weight to intrinsic women, compared to 26% in competencies and capabilities, rather than Australia and 27.9% in the over-valuing certain kinds of experience United Kingdom. Internationally we are lagging rather than leading on listed boards.
“The root causes of bias include one difficult truth: no one is immune. Concerted, consistent and continuous action is required.” PROFESSOR IRIS BOHNET, BEHAVIOURAL ECONOMIST, HARVARD UNIVERSITY
54 8 | GETTING ON BOARD WITH DIVERSITY
Review board composition Get the right mix of people so that ‘the whole is greater than the sum of its parts’.
Board composition is about culture as well Consideration of board diversity needs should as structure and it’s a direct contributor to be embedded in all of these processes. board performance. It’s not just about pulling When assessing board diversity, avoid a together a group of high performing individuals, compliance or tick-box approach. It’s about it’s also about getting the right mix of people. building a board that considers diverse There are common attributes that all perspectives in discussion and decision- directors need such as intelligence, diligence, making to add greater value to the business. honesty, independent thought and sound It can be a lonely and difficult job for the one business judgment. Other attributes such woman or one person from a different ethnic as skills, knowledge, expertise, experience, background to bring different views to the communication styles and interpersonal discussion, if everyone else around the board skills can differ. They all contribute to an table is from one homogeneous group. effective board by having a diverse range of perspectives and insights that enhance board decision-making. Tips for reviewing board composition: Diversity is about looking at the whole ▪▪ Understand the mix of attributes, board and its strategic needs, rather than including experience, skills and diversity individual appointments. Tenure should also around the table be considered this way – so that the board as ▪▪ Assess the composition of the board and a whole has a balance of the new and the old. the aspects of diversity it has, or needs, Good diversity means experience and wisdom including how they relate to: combine with fresh ideas, appropriate to the –– the business and sector it operates in needs of the organisation. –– customers, strategy and future needs ▪▪ Diversity is not about finding minority Key mechanisms that contribute to continuous board members for cosmetic effect: avoid improvement in board composition are: a compliance or tick-box approach to ▪▪ assessment of board skill and attribute board diversity needs (eg using a board skills matrix) ▪▪ Ensure the composition of the nomination ▪▪ succession planning, and committee demonstrates a commitment to diversity ▪▪ formal evaluation of board performance.
55 GETTING ON BOARD WITH DIVERSITY | 9
Succession planning Board evaluation Board composition will not, and should not, Board and individual director evaluations are be transformed overnight. important to hold the board accountable and as part of continuous improvement. Succession planning is about taking a strategic approach to refreshing the board. Over half (55%) of boards formally evaluate It’s having a formal process and plan to their performance on a regular basis.2 Regular ensure the board has the skills and attributes board evaluation provides a key opportunity it needs now and for the future – to ensure to ensure the board has the skills and quality, continuity and a balanced mix. capability it needs now and for the future – and that it has sufficient diversity. Look to the medium-term for succession planning Individual self-evaluations enable board Develop medium-term succession plans that members to assess personal performance, identify the balance of experience and skills to see if they have the skills and attributes the board will need to recruit for over the the board needs for future success – and, if next two to three years. Thinking longer term not, to consider stepping down. This can be allows the whole board to plan and does not difficult for both individuals and the board as concentrate on individual hires. a whole. Courage may be needed to combat ‘vested interests.’ Tips on succession planning: Evaluation can be formal or informal, simple ▪▪ Develop succession plans that identify the or comprehensive, unstructured or highly balance of experience and skills the board structured, verbal or written – or a mix of all will need over the next two to three years of these over time. that strengthens board diversity and maximises board effectiveness ▪▪ Integrate board diversity targets into Tips on board evaluation: succession planning ▪▪ Undertake regular and formal board evaluation, and consider including diversity questions “Diversity: the art of thinking ▪▪ Undertake regular, individual self- evaluations to ensure current board independently together.” members have the skills and attributes MALCOLM FORBES, PUBLISHER, the board needs FORBES MAGAZINE ▪▪ Ensure there are follow-up actions regarding evaluation findings
2 IoD/ASB Director Sentiment Survey 2017 56 10 | GETTING ON BOARD WITH DIVERSITY
Identify and appoint diverse talent Cast a wide net to find the best people for the board.
Board appointments must be based on merit, the needs of the board as a collective and its Tips for identifying and strategic objectives. A robust and objective appointing diverse talent: process will enable the best talent to be put ▪▪ Skills first: recruit on the basis of merit forward for consideration. and capability ▪▪ Establish a proper process for Director candidates are often identified appointments and benchmark all through personal networking or word of candidates mouth. By focusing on ‘who we know’ and ▪▪ Ensure nomination committees and shoulder-tapping, potential candidates interview panels have at least one may come from similar social circles or woman on them ▪ Ensure transparency in board selection professional relationships which can ▪ and appointment processes perpetuate the status quo in board ▪ Ask for CVs without names, gender, age, 3 ▪ composition. There needs to be clarity ethnicity, residential addresses and other about what skills are required rather than personal identifying information to help who the board may know. Formal and reduce bias transparent appointment processes will help ▪▪ Do not accept short-lists with a lack ensure appointments are based on merit. of diverse candidates, have a process Diversity is not about throwing the for returning to the market for further baby out with the bath water. We need candidates ▪▪ Periodically advertise board positions to retain the wealth of knowledge and to encourage greater diversity in experience of senior directors and ensure applications they are champions for diversity. ▪▪ Provide appropriate support for the It’s important to also look beyond traditional candidates sources of potential directors (such as ▪▪ Seek the advice of search firms and ensure they have a commitment to chief executives, senior managers, lawyers diversity and accountants) for candidates that have business acumen and core director capabilities but who also have diverse skills, experience and attributes.
3 NACD, The Diverse Board: Moving from Interest to Action, 2012, page 13. 57 GETTING ON BOARD WITH DIVERSITY | 11
Using a range of methods to identify Several government agencies provide candidates, such as search firms, databases diversity nomination services for their and advertising will ensure the short list has a respective areas, these include: diverse range of candidates with the required ▪▪ Ministry for Women skills and competencies. ▪▪ Te Puni Kokiri ▪▪ Office of Ethnic Communities Executive search firms provide services to ▪▪ Treasury identify and appoint board members, as do a number of other specialist services such as the IoD’s directorSearch.
Reducing the risk of groupthink has a balance of problem solving Board diversity is not an end in itself but a approaches, including through discipline means to improve board effectiveness and and functional/role diversity, gender and company performance. When presented racial/cultural diversity. with options, a board with a variety of perspectives is likely to ask a wider range Consequences of groupthink of questions. Whereas overly homogeneous boards run the risk of groupthink and can Incomplete struggle with change. survey of alternatives or Groupthink can occur when boards become objectives deeply cohesive and of one mind. Members Failure to Failure to work out examine risks try to minimise conflict and reach consensus contingency of preferred plans choice without considering alternatives. They can CONSEQUENCES fail to weigh decisions against strategic OF GROUPTHINK objectives and assess risks of the preferred Failure to Selection bias re-evaluate option. Irving Janis (1918-1990), a research in collecting previously psychologist who coined the phrase information rejected alternatives groupthink, identified eight symptoms that Poor can indicate a groupthink problem exists. information search Deloitte partner Juliet Bourke’s4 diversity research suggests that leadership groups are often dominated by people who tend to focus on outcomes and options. “I think diverse boards avoid the There is a need to widen the kinds of thinking problem of groupthink.” we typically see at New Zealand board ELIZABETH PROUST, CHAIR, AUSTRALIAN tables. Thought leadership tends INSTITUTE OF COMPANY DIRECTORS to be broader and deeper if the group
4 Juliet Bourke, Which Two Heads are Better Than One? 2016 AICD 58 12 | GETTING ON BOARD WITH DIVERSITY
Set targets and measure progress Go beyond compliance and measure what matters.
Ultimately, what gets measured gets done. “Diversity in the boardroom helps In corporate New Zealand, employers need to understand their employee pipeline. That improve the quality of decisions by includes diversity at all stages in the hiring getting a broader range of views process, promotion rates, performance around the table. This helps boards ratings and allocation of stretch and high- visibility assignments, compensation and avoid blind spots and ultimately reasons for exit at all levels. achieve better outcomes.” LIZ COUTTS, PRESIDENT, IoD Targets and disclosure policies can and do make a difference. In New Zealand there has been some improvement at a macro level on gender diversity. Women make up 43% It also includes holding management to of people on state sector boards which is account for leading and embedding diversity getting close to the government’s 45% target. in the organisation. Women made up 17% of directors on NZX Increasing board diversity should not be listed companies in 2015. This is up from 12% about compliance, but about improving in 2013, when NZX introduced requirements5 board effectiveness. One woman or one Māori for issuers listed on the main board to report member on the board does not mean there is on the gender breakdown of directors and board diversity. There needs to be a critical officers in their annual reports. mass for diversity of thought and perspective However, this is still slow progress and the to flourish. For example 30% representation proportion of women on NZX listed is regarded as a level at which minority voices companies lags behind other countries. can be heard. At the entity level, boards need to lead the Setting targets and measuring progress way in changing culture and making diversity will provide boards with the information a priority. This includes setting diversity they need to track progress and achieve objectives aligned to board review findings, diversity goals. Reporting on progress in an and ensuring the board has the skills and open and meaningful way that goes beyond experience it needs now and for the future. compliance, is simply good governance.
5 NZX Listing Rule 10.4.5(j) 59 GETTING ON BOARD WITH DIVERSITY | 13
“More diverse leadership Tips for setting targets and measuring progress: in organisations results in ▪▪ Develop and implement diversity better decision making, better policies and establish measurable diversity objectives for the board organisational resilience and and the organisation better performance. It also ▪▪ Tailor targets to the board’s needs and strategic objectives opens up more opportunities ▪▪ Ensure there is sufficient and transparent for women to succeed and disclosure about board diversity contributes to a more inclusive processes, eg board evaluation and appointments, and progress in achieving and fairer society. ” objectives JULIE ANNE GENTER, MINISTER FOR WOMEN ▪▪ Consider setting targets for short lists, such as a gender balance of between 30% and 50% ▪▪ Hold management to account for “You can’t solve a problem that leading and embedding diversity in you can’t measure and see. ” the organisation TINA TCHEN, FORMER ASSISTANT TO BARAK OBAMA, CHIEF OF STAFF TO MICHELLE OBAMA
60 14 | GETTING ON BOARD WITH DIVERSITY
A final word Organisations and boards need to harness all our talent for future success and long-term business sustainability. Diversity of thought, experience and perspective is essential if we are to keep pace in our ever-changing world.
There is no one-size-fits-all solution, and There are many organisations and initiatives making a difference can take longer than focused on supporting diversity, such as we think, and will require commitment and Global Women and Champions of Change, NZ leadership. Asian Leaders and the Ministry for Women. IoD initiatives include Mentoring for Diversity Better gender balance, ethnic, cultural, and the Future Directors programme. skill, experience and age diversity on the board requires a shift in board composition This guide aims to complement these and culture. An inclusive culture underpins initiatives to help boards get on board with diversity of perspective and thought on the diversity and access the best talent to help board, and enables better decision-making drive success and business sustainability. and long-term business sustainability. Ultimately, however, it is up to boards and chairs to commit to making diversity and We need to take up the diversity challenge. inclusion a priority. Real change will take a cultural shift and a multi-pronged approach.
Acknowledgement There is an abundance of information on Governance women on boards, diversity and inclusion. In Leadership Centre developing this guide we want to particularly acknowledge the work of the National Further information and resources Association of Corporate Directors (US), are available at www.iod.org.nz Australian Institute of Company Directors, Juliet Bourke and Deloitt e, Catalyst, Credit Suisse, McKinsey & Company, Tomorrow’s Company, Korn Ferry Institute, and the Ministry for Women.
61 GETTING ON BOARD WITH DIVERSITY | 15
What the IoD is doing The IoD has long held that diversity of thought and perspective add value to boards and board decision-making. We are advocating for greater board diversity through media commentary and a range of programmes and initiatives.
Mentoring for Diversity Branch networks The IoD Mentoring for Diversity programme IoD has a regional network of eight branches started in 2012. Initially focused on throughout New Zealand, five in the North women, the programme was expanded Island and three in the South Island with in 2015 to consider mentees in terms of a sub-branch on the East Coast. Branches ethnicity, age, skillset and background, provide networking opportunities through in addition to gender. The programme regular events. Some branches, such as targets top performers and pairs them Waikato have established women’s networks. with a leading New Zealand director or chair for a 12 month period. DirectorSearch DirectorSearch is an impartial and Future Directors professional service, helping organisations Founded by Sir Stephen Tindall, Michael find the right director for their board. We Stiassny and Des Hunt, Future Directors helps search our database with diversity top of develop the next generation of directors by mind. It’s not just about finding the right providing the opportunity for successful person but also about ensuring they add candidates to gain board experience by balance to the board as a whole. Our participating on a board of a large New searches focus on candidates’ skills and Zealand organisation for a year. sector experience and we include a mix of diverse candidates in each long list, ensuring Supporting aspiring and our clients have a wide pool of potential emerging directors candidates from varying backgrounds. Informal and formal initiatives, including awards and scholarships, offered by IoD branches around the country to foster upcoming talent in governance through mentoring, formal training and access to leading speakers at branch events.
62 16 | GETTING ON BOARD WITH DIVERSITY For further information www.iod.org.nz
Institute of Directors in New Zealand (Inc) Mezzanine Floor 50 Customhouse Quay PO Box 25253 Wellington 6146 New Zealand
Telephone: 04 499 0076 Facsimile: 04 499 9488 Email: [email protected]
August 2018 I S B N 978-0-473-38404-3
63 governance PRACTICE GUIDE Leadership centre Conflicts of Interest Practice Guide Recognising, declaring and managing conflicts of interest
At the Institute of Directors we’re raising the standard of governance in all areas of New Zealand business and society. iod.org.nz 64 INSTITUTE OF DIRECTORS IN NEW ZEALAND CONFLICTS OF INTEREST PRACTICE GUIDE INTRODUCTION 1
“A conflict of interests can This guide provides directors with an overview of how to recognise and manage conflicts of interest in the boardroom, along with a useful arise where two lens through which to observe and model good practice. different interests It’s about more than just understanding legislation. Even where overlap.” there is no statutory requirement to disclose interests, if the associated risks and implications are not managed, they can lead to significant consequences, including reputational damage and loss of shareholder and stakeholder value. The existence of a conflict of interests does not necessarily mean that the director concerned has done anything wrong. What it means is that the conflict needs to be managed.
Disclaimer This guide is not a comprehensive analysis of the laws concerning conflicts of interest for New Zealand companies. Equally, it is not a substitute for legal advice for directors in conflicted situations. It is a critical part of the role of a director to read and understand the legislation to which he or she is held to account. Our aim is to point the reader in the right direction and highlight the need for directors to be vigilant about conflicts of interest.
© Institute of Directors in New Zealand (Inc). The Conflicts of Interest Practice Guide may not be reproduced in whole or in part without prior written permission. 65 INSTITUTE OF DIRECTORS IN NEW ZEALAND CONFLICTS OF INTEREST PRACTICE GUIDE 2
It is crucial for boards to have procedures in place to deal with conflicts of interest. The process for handling a conflict of interests or conflict of duties consists of three steps:
1 The conflicted director identifies that they have conflicting interests with Identify regard to their role or responsibilities.
2 Usually, following a conversation with the chair, the conflict Declare is declared to the board and recorded in the company’s The board collectively agrees on interest register. how the conflict should be managed, which may involve abstention from voting, being absent while the matter is discussed, or simply being aware Manage and transparent about the fact that a conflict of interests exists. It’s about preserving individual and organisational integrity. 3
© Institute of Directors in New Zealand (Inc). The Conflicts of Interest Practice Guide may not be reproduced in whole or in part without prior written permission. 66 INSTITUTE OF DIRECTORS IN NEW ZEALAND CONFLICTS OF INTEREST PRACTICE GUIDE 3
Directors often have to make tough required to act in the best interests of the What is a conflict decisions including decisions relating to company. The Companies Act also contains conflicts of interest or biases. For example: provisions relating to the disclosure of •• What level of board remuneration should conflicts of interests in transactions. of interests? we recommend for ourselves? NZX rules apply in the case of publicly •• Can I provide services to my company, listed companies. beyond my role as a director? Specific legislation applies to members •• Will I support a company merger, of the governing boards of local councils, “A conflict of interests knowing that the resulting restructure crown entities, district health boards and may cost me my position on the board? occurs when a director education boards and bodies (school Biases which commonly surface in board boards of trustees and tertiary education has multiple interests, decision making include divided loyalties institution councils). and self-interest. These biases can create Currently, there are no codified statutory one of which will or conflict for the director and can affect obligations in the Incorporated Societies professional judgement and the ability to Act 1908 regarding declarations of interest. might impact the remain impartial. Put simply, directors are The Law Commission’s recent review of often put in situations where they try to motivation for an act the Act recommends that it be replaced serve two interests at once. by a modern statute likely to include in another” It is important to understand the New requirements for dealing with conflicts Zealand context. As a small country, of interest. New Zealand has a relatively small pool However, irrespective of whether of professional directors and a highly particular legislation applies, common interconnected business community. This law requires directors and other board can impact the probability of conflicts of members to carry out their duties fairly interest occurring. and free from prejudice. The Companies Act 1993 is clear that directors must not take improper advantage of their position and they are legally
© Institute of Directors in New Zealand (Inc). The Conflicts of Interest Practice Guide may not be reproduced in whole or in part without prior written permission. 67 INSTITUTE OF DIRECTORS IN NEW ZEALAND CONFLICTS OF INTEREST TOOLKIT IDENTIFY 4 1 “What would Identify a reasonable person think?”
© Institute of Directors in New Zealand (Inc). The Conflicts of Interest Practice Guide may not be reproduced in whole or in part without prior written permission. 68 INSTITUTE OF DIRECTORS IN NEW ZEALAND CONFLICTS OF INTEREST PRACTICE GUIDE IDENTIFY 5 1 The Companies Act (section 139) defines Common examples the circumstances in which a director is •• Directors approving transactions to which the “interested in a transaction.” company is a party and which directors are also a Identify party or where directors have a direct or indirect These include: material interest in a transaction. •• where the director is a party to the transaction or •• Directors using confidential information eceivedr has a material financial interest in a party in their capacity as directors. •• where the director or an entity they are a director •• Directors owning property adjacent to the of may derive a material financial benefit company’s property, whose value may be affected •• where the director is closely related to someone by company activity. who may derive such a benefit or •• Directors offering their services or acting in “What would •• where the director may be otherwise directly or an advisory capacity (financial or legal) to the a reasonable indirectly materially interested in the transaction. company, clients of the company or to a competitor. • The scope and extent of what constitutes an interest • Directors taking up opportunities offered to but person think?” varies across the range of statutory rules concerning declined by the company. conflicts of interest. Directors, trustees and other One way to identify whether a conflict of interests fiduciaries should be aware of the legislation which may exist is to ask whether a “reasonably informed applies to their organisations. objective observer would infer from the circumstances that the director’s judgement is likely to be influenced to the detriment of the company’s best interests”. If we look closely, this tells us two things. 1. The test for a conflict of interests is an objective one. We are asking whether a reasonable observer might see a conflict. 2. That the potential for a conflict of interests is equally important to recognise. Note that the question asked is whether the circumstances make it likely that a director’s judgement will be influenced, not necessarily that it has been or will be so.
© Institute of Directors in New Zealand (Inc). The Conflicts of Interest Practice Guide may not be reproduced in whole or in part without prior written permission. 69 INSTITUTE OF DIRECTORS IN NEW ZEALAND CONFLICTS OF INTEREST PRACTICE GUIDE IDENTIFY 6 1 Identify What is the difference between an Perceived conflicts actual and a potential conflict? In certain circumstances, there may be a perception An actual conflict is where circumstances are of a conflict of interests where the interests come or could be perceived to influence a director’s close but do not intersect. In these situations, careful judgement to the detriment of the company. management is still required. Not taking steps to manage these risks can undermine a company’s A potential conflict occurs where it is reputation and hiding conflicting interests can give reasonably probable that in future, an actual rise to perceptions or allegations of misconduct. conflict of interests will come into play. At the end of the day, shareholders and Example stakeholders alike should be left in no doubt •• John is a director of Company X. Company X is that any director with conflicting interests (or currently engaged with Company Y, a supplier. potentially conflicting interests) is appropriately John’s daughter Lucy is considering applying for a motivated and free from bias. Whether that role in distribution at Company Y. While there isn’t bias is real or perceived is sometimes a matter an actual conflict yet, as she has not cemented her of debate, but the tests remain the same: plans with regard to the position at Company Y, if What would a reasonable person think? she does apply for the role a conflict will need to be managed. What would this look like as headline news? It is important to note here that an actual conflict Would you be willing to stake the company’s is not required to present itself before the situation (and your personal) brand and reputation on the is treated as though it has. Potential or perceived impartiality and good faith of your decision? conflicts of interest must also be addressed by a director when considering how to execute their duties. If directors are unsure whether a conflict may exist, they should discuss the matter with the chair.
© Institute of Directors in New Zealand (Inc). The Conflicts of Interest Practice Guide may not be reproduced in whole or in part without prior written permission. 70 INSTITUTE OF DIRECTORS IN NEW ZEALAND CONFLICTS OF INTEREST PRACTICE GUIDE DECLARE 7 2 Declare
“If in doubt, declare.”
© Institute of Directors in New Zealand (Inc). The Conflicts of Interest Practice Guide may not be reproduced in whole or in part without prior written permission. 71 INSTITUTE OF DIRECTORS IN NEW ZEALAND CONFLICTS OF INTEREST PRACTICE GUIDE DECLARE 8
2 Once it has been established that a director has an actual, perceived or potential conflict of interests, two things must occur.
Declare It is the responsibility of the director concerned to declare the interest to the board. There are statutory and other rules that Registered companies require disclosure in some form. Some regulations require Obligations of registered companies are disclosure to be in writing and recorded in the minutes of the covered under the Companies Act 1993. meeting or an interests register, or both. NZX listing rules also apply to listed companies. The board (led by the chair) is then collectively responsible for the decision regarding what action is to be taken. Crown Entities “If in doubt, Obligations of Crown Entities are covered Interests register in the Crown Entities Act 2004. declare.” Conflicted directors of companies registered under the Companies Act must have their interests noted in the District Health Boards (DHBs) Obligations of DHBs are covered in the company’s interests register. If there is more than one New Zealand Public Health and Disability director on the board, a declaration to the board is also Act 2000. required. All particulars of interests register entries made during the relevant accounting period must also be stated Education institutions in the company’s annual report. Please see Appendix 1 Obligations of school Boards of Trustees’ for a sample interests register and disclosure template. are covered in schedule 6 clause 8 of the Education Act 1989. Maintaining an interests register as a standing board meeting Obligations of Tertiary Education agenda item is good practice. Institution Councils are covered in Section 175 of the Education Act 1989. It is also worth noting that while some organisations may not be legally bound to make declarations in writing or in a register, transparency is good governance. With the potential damage to the organisation, the imperative in a conflicts of interest situation is always, “If in doubt, declare.”
© Institute of Directors in New Zealand (Inc). The Conflicts of Interest Practice Guide may not be reproduced in whole or in part without prior written permission. 72 INSTITUTE OF DIRECTORS IN NEW ZEALAND CONFLICTS OF INTEREST PRACTICE GUIDE MANAGE 9 3 Manage
“What is in the best interests of the organisation?” golffoto / photocase.com / golffoto
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3 Once a real or potential conflict of interests has been Under the Companies Act an identified and declared, the board has a collective ‘interested’ director is legally responsibility to determine what course of action able to: •• attend a meeting at which the Manage should be taken. matter is to be considered •• be counted as a part of the In dealing with conflicts of interests, regard should be given to quorum of the meeting legislative requirements and best business practice or convention. •• sign a document relating to the The IoD holds that “procedures for participating in board transaction on behalf of the decisions where directors have a personal interest should ensure company and the protection of the legal and ethical positions of those involved •• do any other thing in his or her while preserving the general principle that a company should be capacity as a director in relation to entitled to the collective wisdom of all its directors”. “What is the transaction. Speaking broadly, in most conflict of interest scenarios, the board However, some companies may also in the best has two options: have additional procedures set out in interests of the 1. The board agrees the conflict exists, and: their constitution. a. the director withdraws from the meeting for the course NZX listing rules currently require organisation?” of discussion and doesn’t vote, or that conflicted directors of listed b. the director stays for the course of discussion and companies neither be included as a doesn’t vote, or part of the quorum of the meeting nor c. the director stays for the course of discussion and votes. vote on the matter in question. 2. The board agrees that there is no (or no significant) conflict. For legal provisions relating to other types of entities see It is important that boards ensure minutes accurately reflect all Appendix 2. decisions/declarations, including the rationale for the chosen course of action. The minutes are the collective memory of the board and evidence of the decision-making process. In cases where the judgement of a board or director is questioned, they are also potentially evidentiary.
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Right to participate in discussion In such cases it is particularly important that the board is able to show it has clear and robust A classic tension in conflicts of interest scenarios processes in place for managing the conflict. 3 occurs when the person with the best knowledge about an issue is conflicted. A director must exercise a high degree of care and thought in balancing the Right to vote Manage best interests of the company with the need to In most circumstances it is considered best operate, insofar as is possible, free from bias. practice that even if legislation and the company’s constitution permit it, a conflicted director should Generally speaking, it is best practice that the not vote on the conflict matter and should offer to conflicted directors should not participate except absent themselves during the vote. The board should to the extent established by the board. Examples feel free to decline this offer (through the chair) include stating their position, answering questions or unless the conflicted director’s presence is likely to speaking to matters of fact. At a minimum, conflicted adversely affect the voting process. directors should volunteer to withdraw from at least part of the meeting to facilitate full and frank discussion of the conflict matter. Statutory provisions can differ between types of organisation, but at the end of the day they denote It is also in the board’s interests that it ensures a the minimum standard of response or action required director is able to put their ‘hand on their heart’ and from a legislative perspective. This should not be say they were not present in a discussion where it perceived as a limit to which directors may apply was not appropriate. good governance practice and, at all times, directors There may be an exception if the board consents should keep their duty to act in the best interests of and the conflicted director believes that the the organisation top of mind. board will otherwise make an unsound decision. In certain circumstances, requiring a conflicted director to be absent from discussion may not be realistic or practical. The Law Commission has noted that a particular conflicted individual may be key to the functioning of the organisation and have valuable information to contribute. In fact, a director may be appointed for their industry experience, which can result in a conflict that needs to be managed.
© Institute of Directors in New Zealand (Inc). The Conflicts of Interest Practice Guide may not be reproduced in whole or in part without prior written permission. 75 INSTITUTE OF DIRECTORS IN NEW ZEALAND CONFLICTS OF INTEREST PRACTICE GUIDE APPENDIX 1 12
Appendix 1 Sample templates
Interest register template: (Useful to include in board meeting agendas/minutes for quick reference and to maintain currency)
<12/4/15>
COMPANY NATURE OF INTEREST Grandpa Figgs Ltd. Director Blog Holdings Ltd. CEO CMPC Property Shareholder
Template for recording conflicts of interests:
Date of Disclosure 12/4/2015 Type of Disclosure Conflict of Interests Director Name Joe Smith Details Family connection to tenderer for telecommunications contract Approved by board? Yes No N/A Annual Report Disclosure? Yes No N/A If “No”, Shareholder resolution? Yes No N/A
© Institute of Directors in New Zealand (Inc). The Conflicts of Interest Practice Guide may not be reproduced in whole or in part without prior written permission. 76 INSTITUTE OF DIRECTORS IN NEW ZEALAND CONFLICTS OF INTEREST PRACTICE GUIDE APPENDIX 2 13
Appendix 2 Table of legal provisions regarding board conflict process requirements Crown Entities Generally under the Crown Entities Act, a member who is interested in a matter relating to a statutory entity must not vote or take part in any discussion or decision of the board or any committee relating to the matter. The interested member must not sign any document relating to the entry into a transaction or initiation of the matter and does not count towards a quorum for the part of the meeting during which the matter is discussed. They must also take no part in any activity of the entity that relates to the matter in question. District Health Boards A member of a board who makes a disclosure under section 36 of schedule 3 of the New Zealand Public Health and Disability Act 2000, must not take part, after the disclosure in any deliberation or decision of the board relating to the transaction; or be included in the quorum for any such deliberation or decision; or sign any document relating to the entry into a transaction or the initiation of the transaction, unless the board permits otherwise. Local authorities and committees According to the terms of the Local Authority (Members’ Interests) Act, members may not vote or take part in any discussion regarding a matter in which they have a pecuniary interest. Members are also required to disclose their interest to the committee or local authority meeting at which the matter in question is raised. This disclosure and an abstention from voting and discussion must be recorded in the minutes of the meeting. Notwithstanding the above, The Auditor General may, by his or her own accord or upon written application by the member concerned, declare that the above should not apply where it’s application would be an impediment to the transaction of business, or where it would be in the best interests of the relevant electors or district inhabitants, that the subsection should not apply. Education institutions The Education Act provides that unless they are present solely for the purpose of making a submission, giving evidence or answering questions, a conflicted school-board Trustee is to be excluded from any meeting of the board while it discusses, considers anything relating to, or decides the matter. In the case of conflicts occurring within the Council of a Tertiary Education Institution, the Education Act states that the conflicted member shall not (unless the council decides otherwise) be present during any deliberation of the council or committee with respect to that matter; or take part in any decision of the council or committee with respect to that matter.
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References and further reading1
Legal and regulatory, Other including particular sections New Zealand Law Commission State Services Commission, used for this guide R129: A New Act for Incorporated Members’ interests and conflicts. Companies Act 1993, s131, s139 (1), Societies, 2014 (chapter 6 – Guidance for Crown Entities. s140, s144 and s211 (1)e Committees, officers, duties Financial Markets Authority, and arrangements for running Crown Entities Act 2004, s31 (1)c, Corporate Governance in societies: Conflicts of interest.) S55, and ss62-72 New Zealand: Principles Institute of Directors in and Guidelines, Principle 1: New Zealand Public Health and New Zealand (Inc), The Four Ethical Standards, 2014 Disability Act 2000, sch3, cl36 Pillars of Governance Best Education Act 1989, s175 and Practice, 2014, p106-108 sch6, cl8 (8) Auditor General’s Good Practice Local Authority (Members’ Guide: Managing conflicts of Interests) Act 1968, s6 interest: Guidance for public NZX, NZSX & NZDX Main Board/ entities, 2007 Debt Market Listing Rules (2013), Julie Garland McLellan’s rule 3.4.3, p43 website contains a rage of Director’s Dilemmas, which often illustrate conflicts of governance interest in the boardroom and For more information see the offer different perspectives Leadership Governance resources section on how to deal with them. centre of our website www.iod.org.nz
1 All links operational as at 20/5/2015 ISBN 978-0-473-38398-5
© Institute of Directors in New Zealand (Inc). The Conflicts of Interest Practice Guide may not be reproduced in whole or in part without prior written permission. 78 When you have to make a decision, ask yourself:
A situation does not need to involve cash changing hands to be considered a financial interest. A financial interest could, for example, relate to an effect on the value of property. Do you stand to gain or lose financially from the decision? A financial interest might be direct or indirect. In situations that someone close to you or a Managing conflicts of interest business you are involved with has a financial interest, you might be considered to share Does someone close to you – like an immediate their interest. A conflict of interest is a situation where the responsibilities you have family member – or a business you are involved with Financial interests are generally treated more strictly than other types of interest. If you have a stand to gain or lose financially from the decision? in your work for a public organisation are affected by an interest or financial conflict of interest, the law presumes you are biased. This is why you should automatically relationship you have in your private life. FINANCIAL treat a financial conflict of interest seriously, even if it seems trivial to you.
Having a conflict of interest does not necessarily mean you have done For some entities in the public sector, there are specific statutory requirements that apply to anything wrong. It all depends on how you manage it. managing the financial conflicts of interest, which you need to be aware of.
You need to ask yourself not just whether the interest or relationship If you have a conflict of interest, but not one from which you stand to gain or lose financially, the means you are biased, but also whether someone looking in from the law does not automatically assume you are biased. outside could have reasonable grounds to think you might be. Is someone close to you or an organisation you are involved with likely to be affected by the decision you This does not necessarily mean a non-financial conflict is less serious than a financial The “rules” for managing conflicts of interest in the public sector are make? conflict – but there is generally more room for judgement about whether it is acceptable for you generally stricter than in the private sector. If you work for a public to participate. organisation, the public needs to have confidence that any decisions If so, is there a risk that you will be seen you make: to be biased in your decision because of Questions you need to think about include: • are made impartially and for the right reasons; and this relationship or association? - How close is your relationship with this other person or organisation? • are not influenced by personal interests or ulterior motives. NON-FINANCIAL - Will they be directly affected by the decision? - How seriously will they be affected? Any decisions about conflicts of interest should take into account the core public service values: The issue with a conflict of roles is not so much whether you personally have a conflict, but • integrity; whether the interests of the two organisations conflict. • impartiality Will a second organisation you have a role • trustworthiness; in (entity B) be affected by the decision you are If you have a conflict of roles, you will need to consider whether it is appropriate for you to • respect; and making for the public organisation you work participate in the decision-making process “on both sides of the table”. You will also need to think • responsiveness. for (entity A)? about whether you are going to be in a position to fulfil your obligations to both entities at the same time. If so: If there is a risk that there might be conflicts at some point during the decision-making • Is there a risk that you will be seen to be acting in process, you should discuss your situation with the interests of entity B rather than entity A? both entities. This gives each an opportunity to • If you participate in this decision, is there a risk consider the risks from their perspective and that you might breach obligations you owe to decide whether they are comfortable with you either entity – for example, a duty of loyalty participating on both sides. CONFLICT OF ROLES CONFLICT Tips for managing • As a minimum, declare any or confidentiality? conflicts you have as soon as you conflicts become aware of them, preferably • Make sure you know what rules in writing. apply to you, whether in your • Think about what else you employment contract, contract for It is accepted that people working for public entities will have their own views on many matters, might need to do to manage the services, terms of appointment, or and, in many cases, might already have views on what the “right answer” to an issue is. conflict. Get advice if you need to. any internal policies of the entity Is there anything you have previously done or said that Talk to your manager, or if you are you work for. might make people think you are not going to listen You are not required to approach every decision as though you have given it no prior thought, or have on a board, the chairperson. fairly to all the relevant information before you make no existing knowledge or opinion. However, you are required to keep an open mind, and you must be • Declare any interests you have that your decision? prepared to change or adjust your views if the evidence or arguments warrant it. might pose a conflict. This shows • You need to consider ethics as you are being open. It will also well as legal rules. Just because That means you need to take care that what you do or say does not make it look like you help the entity you work for avoid it’s not unlawful to participate, have already made your decision before you have considered all the relevant information putting you in a situation where a that does not necessarily mean PRE-DETERMINATION and evidence. conflict might arise, or to manage a it would be appropriate to participate. conflict if one arises. Where to read more • Follow any rules or guidance If in doubt, stay out. FINANCIAL NON-FINANCIAL CONFLICT OF ROLES PRE-DETERMINATION provided by the entity you work Paragraphs 3.7-3.11 Scenarios 3, 5 Paragraphs 3.12-3.24 Paragraphs 3.25-3.31 Paragraphs 3.32-3.40 for when deciding how to manage a conflict. If you are an elected member of a local council, or a Scenarios 1, 2, 3, 9, 11 Scenarios 8, 10 Scenarios 4, 7 member of the governing body of any other entity to which the Local Authorities (Members’ Interests) Act 1968 applies, please also read our Guide on that Act. 79 iod.org.nz Institute of Directors in New Zealand (Inc) Mezzanine Floor, 50 Customhouse Quay PO Box 25253, Wellington, 6146 New Zealand
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