Ian Ball

Public Financial Management and Reforms to the State Sector Act Abstract This article addresses changes to the Public Finance Act that have been proposed in the Public Finance (Wellbeing) Amendment Bill or are being considered for future legislative or administrative action. It discusses these changes in the context of the State Sector Act. The interrelationship between the two pieces of legislation is described, as are the implications of proposed changes to the Public Finance Act. These changes include requirements for the specification of objectives for wellbeing (outcomes) in the budget process and reporting of wellbeing by the Treasury at least every four years. Changes also include, potentially, greater flexibility in the nature of appropriations and the selection of the services that will be provided within an appropriation, as well as legislative support for the public service to operate in a more ‘joined-up’, innovative and collaborative way. The article identifies as a strength of the proposed changes to the Public Finance Act and the State Sector Act that they maintain consistency between the two acts, but also identifies the risk of replacing one one-size-fits-all system with a different one-size-fits-all system, and considers a ‘two-track’ public management system as an alternative. Keywords Public Finance Act, State Sector Act, wellbeing, outcomes, outputs, appropriations, budget

Ian Ball is Professor of Public Financial Management at Victoria University of Wellington.

Page 14 – Policy Quarterly – Volume 15, Issue 4 – November 2019 his issue of Policy Quarterly is through an appropriation. The act also for the appropriations.2 Outputs are the focused on the reforms proposed establishes the powers of the government ‘goods or services that are supplied by a Tby the current government to the in relation to borrowing, securities, department’ or other organisation (s2). State Sector Act. It is important also to derivatives, investment, banking and Outcomes were, until 2013, defined in the address proposed and potential changes guarantees. act as ‘a state or condition of society, the to the Public Finance Act, given the The Public Finance Act establishes the economy, or the environment; and (b) interrelationship between these two pieces legislative arrangements for the includes a change in that state or condition’ of legislation. government’s management of its overall (ibid.). The requirement to specify There is a common theme to the fiscal position, including the specification appropriations in output terms was a statements of the minister of finance and of the principles of responsible fiscal fundamental change mandated by the the minister of state services on why reform management and requirements for Public Finance Act, and one that has a to the two acts is needed. The theme is that documents that provide transparency for number of challenges in its while both have had positive benefits, in budget decisions. It establishes the ex post implementation.3 terms both of the government’s fiscal reporting and audit requirements for the The public financial management performance and of the performance of government. system can be seen as having two key roles the government in meeting the needs of in relation to the performance of the citizens, the acts are now over 30 years old, government:4 fiscal performance, relating the world has changed and become ever to the government’s aggregate fiscal more complex and interrelated, and both New Zealand’s position; and outcome achievement, acts need to be changed to be fit for purpose. public service encompassing the effectiveness and In the words of the minister of finance: ‘It efficiency of the government’s activities. is time, 30 years on, to bring the Public performs well In relation to fiscal performance, there Finance Act into the 21st century and put is little debate over the effectiveness of the wellbeing and collaborative government at by international Public Finance Act. The fiscal performance the centre of our approach’ (Robertson, standards in and position of the New Zealand 2019). government are very strong relative to the This article will introduce the role of responsiveness decades (of deficits) before the introduction the Public Finance Act and describe the of the legislation. They are also very strong manner in which the State Sector Act and to government, relative to comparable countries such as the Public Finance Act were designed to effectiveness for Australia, Canada, the United Kingdom and operate as ‘twins’. It will address a major set the United States (Ball, 2019). And there is of changes made to the Public Finance Act New Zealanders, international recognition of the level of since it was passed and the rationale for transparency associated with the fiscal those changes. It will describe and assess and integrity. management system in New Zealand.5 On key changes currently being proposed for this dimension of performance, the present the public financial management system, government seems satisfied with the considering also the relationship to the functioning of the act. changes concurrently being proposed for As was noted by the minister of finance the State Sector Act. In establishing the nature and types of and other speakers at the PFA30 conference, The article draws on some of the appropriation, the act determines key New Zealand also ranks very highly in contributions to the ‘New Zealand’s Public aspects of the functioning of the public international indices of standard of living Finance Act at 30: lessons, achievements financial management system at the and social progress, and also in the quality and future directions’ (PFA30) conference departmental or Crown entity level, of the public service. Or, as the minister of held at the end of July 2019 at Victoria including the requirement to have an state services noted in his overview of the University of Wellington. accrual-based accounting system that can proposals for reform of the State Sector Act: record expenses or capital expenditure Role of the Public Finance Act against an appropriation.1 The act also New Zealand’s public service performs The Public Finance Act 1989 establishes specifies the reporting requirements of well by international standards in the architecture for the public financial departments (and departmental agencies) responsiveness to government, management system. This system serves a and Crown entities, which mirror and effectiveness for New Zealanders, and number of purposes. It establishes certain reinforce the nature of the appropriations. integrity. The proposals in these papers key components of the relationship One of the most significant features of are not about fixing a system that is between Parliament and the government, the act, in relation to how it influenced the fundamentally broken. Rather, they are including the conditions under which the behaviour of both departments and about improving from a high base; government can consume resources, when ministers, is that it was outputs, rather than ensuring the public service is making Parliament has authorised that action outcomes, which were specified as the basis the biggest possible difference to the

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Figure 1 basis as the budgeting system to avoid Reporting Requirements of the Public Finance Act - a history the possibility of conflicting objectives. The Original Act “Set out the link between the classes of outputs to be purchased by An accrual budgeting system is one the Crown and the Government’s desired outcomes which is expressed in terms of costs to be incurred rather than in funds to be 1992 Amendment “The performance targets and other measures by which the obligated or spent. (ibid., pp.83–4) performance of the Crown entity or group may be judged in relation to its objectives This recognition of the need to have 1994 Amendment “A Statement of objectives specifying the performance for each class coherence within the accounting, budgeting of outputs forecast to be achieved as agreed with the Minister and appropriations systems was fully reflected in the Public Finance Act.6 2004 Amendment “Future operating intentions .. explaining ... nature and scope of the The aim of having consistent and department’s functions and intended operations, the specific impacts, mutually reinforcing elements could also outcomes, or objectives that the department seeks to achieve or to contribute to ... be seen in the way ‘performance’ was defined, specified and measured for 2013 Amendment “A concise explanation of how performance against the appropriation purposes of both acts. Specifically, the will be assessed ... concept of ‘performance’ envisaged clear Information on the department’s strategic intentions that ... set out distinctions between: ‘ownership the strategic objectives that the department intends to achieve or performance’ and ‘purchase performance’;7 contribute to inputs, outputs and outcomes;8 and Crown and department.9 These distinctions were embedded in the nature wellbeing of New Zealanders, delivering employment and financial management of appropriations as well as in the services that are easy to access and arrangements were subsystems within a performance management documentation joined up around their needs, and broader public management system; and under the State Sector Act. For example, serving an ever more diverse and that management systems work better ‘outputs’ were a key component in the changing community. (Hipkins, 2019c) when their various components operate in specification of departmental and chief an integrated fashion, providing consistent executive performance and accountability Notwithstanding the performance of signals, accountabilities and incentives to within State Sector Act performance the public management system in New actors within the system. The Treasury’s management arrangements, as well as Zealand, both this and previous briefing to the incoming government in being a basis for budgeting, appropriation governments have identified issues with 1987, which articulated the rationale for and reporting10 under the Public Finance outcome achievement and the efficiency of the proposed changes, stated: Act. the system. Consequently, the Public A further illustration of the Finance Act has been amended 58 times When considering reform of the public interrelationship between the two pieces since 1989 (Brumby, 2019) and the State sector it is essential to recognise the of legislation can be seen in the process Sector Act 13 times since its enactment in mutually reinforcing nature of these through which the Public Finance Act was 1988 (Hipkins, 2019c, para 13). A key issue elements and to avoid piecemeal implemented. The move to accrual of concern is the output focus of change that could weaken or distort the budgeting and accounting necessitated a appropriations and accountabilities, and incentives of those given responsibility dramatic improvement in departmental the conclusion that this focus encourages for management decisions to act in a accounting systems. The decision-making departments and Crown entities to operate way consistent with the objectives they authority given to chief executives by the in ‘silos’ and creates barriers to have been given. (Treasury, 1987, vol.1, State Sector Act enabled them to establish collaboration. These issues, apparently, p.55) accrual accounting systems within 18 have not been adequately addressed by months. Such a rapid transition would not successive amendments to the acts, and are In the financial management context, have been possible prior to the act.11 a key basis for the major reforms now the implications of seeking an integrated proposed. system were most radically reflected in the Changes to the Public Finance Act since following statement: enactment The State Sector Act and the Public Finance It was noted above that the Public Finance Act If we are to move to an accrual Act has been amended 58 times since At the time the State Sector Act and the accounting system we would also need enactment. While a number of these Public Finance Act were enacted it was an accrual budgeting system so that amendments are relatively trivial, others intended that they would operate in actual results can be measured against have greater significance. One significant tandem and be mutually reinforcing. plans and budget. The accounting set of changes relates to the manner This reflected the view that state sector system would need to be on the same in which performance intentions and

Page 16 – Policy Quarterly – Volume 15, Issue 4 – November 2019 achievements are specified. Warren (2019) (though not ‘output’) from the act. presents the changes in Figure 1. Irrespective of this,16 the concept is still in This figure captures the continuing In the period since current usage, whether described as struggle to manage ‘performance’ in ‘outcome’ or ‘wellbeing’. relation to outputs (services) and, more the [Public Finance At the very least, the 2013 amendment particularly, outcomes, or wellbeing.12 In Act] was enables appropriations, and the associated the original act both concepts were seen accountability, to be defined in terms of a as being important to making policy implemented, set of expenses and capital expenditure choices, with outputs being one form of designed to achieve a single purpose or intervention the government could take there has been a outcome. This is a fundamental change to to achieve its desired outcomes. When consistent ambition the act, arguably the most significant since ministers, through the planning and it was enacted. In an important way, it budgeting process, had determined the to emphasise the reverts to the programme budgeting outputs they wished departments to approach which New Zealand implemented deliver, those outputs became the basis for role of outcomes in in the Public Finance Act 1977, in that a formal chief executive and departmental representing programme comprised a set of activities accountability; outcomes, while designed to achieve a single outcome, and constituting the rationale for government the fundamental programmes were the basis for action, were not the basis for such appropriation. accountability.13 purpose of public The fundamental problem with In the period since the act was services and programme budgeting that the Public implemented, there has been a consistent Finance Act sought to address was that it ambition to emphasise the role of outcomes to incorporate oversimplifies the nature of the relationship in representing the fundamental purpose between outputs and outcomes. It does this of public services and to incorporate outcomes more by identifying a number of different outcomes more directly into the formal directly into the activities (or outputs) that contribute to management system. There has been a one outcome, and then formatting the parallel pattern of diminishing the formal management budget, with its associated accountabilities, significance of outputs.14 This ambition on that basis. However, the relationship has been articulated consistently in reviews system. There has between outputs and outcomes is not many of the public fincancial management been a parallel outputs to one outcome, as the programme system and given effect through successive concept (and the definition of a multi- changes to the system.15 pattern of category appropriation) implies, but often The legislative change in 2013, designed many to many, and also complex and to give greater focus to outcome diminishing the dynamic, and with interrelationships achievement, resulted in the introduction significance of between different outcomes (health, of a new type of appropriation, adding to education and income, for example). An those already existing. This ‘multi-category outputs. activity or output that contributes to a appropriation’ is specified as follows: health outcome may also contribute to educational and income outcomes. 2 or more categories of 1 or more of the Therefore, relating an appropriation to a following: single outcome had the effect of ignoring (i) output expenses: In effect, this amendment enables the other outcomes to which the set of (ii) other expenses: appropriations for expenses of different outputs contributed. (iii) non-departmental capital types, including different output categories The rationale for the Public Finance Act expenditure. (s7A(1)(g)) and non-departmental capital expenditure, focusing on outputs rather than outcomes so long as those expenses ‘contribute to a within the accountability and The intent of this somewhat inelegant single overarching purpose’. ‘Purpose’ is appropriations structures was outlined by specification of an appropriation type is not defined in the act, though Treasury the author in a 1992 presentation, in which clarified in the following section, where it describes the intent of this set of it was concluded: is specified that the appropriation must be amendments as being to ‘lift the strategic approved by the minister of finance and focus of statements of intent to drive a There are some international precedents ‘must include only categories of expenses clearer focus on results and outcomes’ for giving outcomes a higher profile in or non-departmental capital expenditure (Treasury, 2019). the design of government management that contribute to a single overarching Interestingly, the 2013 amendments systems than has occurred in the New purpose’ (s7B(b)). removed the definition of ‘outcome’ Zealand reforms. There are also some

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good reasons for being sceptical about appropriations, albeit the specific wording reform the public financial management any attempt at comprehensive and requires such an appropriation to system. The first is to establish an detailed specification of outcomes, any ‘contribute to a single overarching purpose’. independent fiscal institution, and the attempt to construct a budget on an Despite the changes, in the June 2019 second is to embed intergenerational outcomes basis, or any attempt to hold speech announcing his intention to wellbeing into that system. Both these managers explicitly accountable for institute public service reforms, State topics have been the subject of discussion outcomes. (Ball, 1992) Services Minister Chris Hipkins stated: papers issued by Treasury (Treasury, 2018a, 2018b). However, the proposal for In the same paper it was noted that the When I came into this job as Minister an independent fiscal institution will not Government Accounting Standards Board of State Services, I said the Public be discussed further here. It is noteworthy in the United States had addressed this Service needs to be adaptive and that in his conference speech the minister issue in its 1990 research report Service responsive to the changing needs of of finance did not refer to the independent Efforts and Accomplishments Reporting: citizens. I talked about what we needed fiscal institution in relation to either the to do to make this happen. These amendments to the Public Finance Act The extent to which public agencies can include moving from outputs to that he will ‘soon’ introduce18 or the affect or control the outcomes and outcomes, even though outcomes are ongoing work programme he described.19 efficiency of the service being measured Rather, he stated: is of continuing concern to public officials. As with financial performance, It is very significant Our modernisation of the public SEA reporting does not indicate why finance system, addressing its current the results are what they are, or what that the 2013 limitations, is a key element of aligning or who has caused or contributed to the public sector to a wellbeing those results. These questions can be amendment changed approach. The work programme answered only, if at all, through in- the act in a manner includes three important themes – they depth evaluation and investigation. are: Fortunately, for public disclosure of which enabled • Firstly, changing the overarching SEA information, as with financial outcome-based framework for measuring success information, it is acceptable that the and identifying the priorities, information presented should be appropriations, through amendments to embed appropriate and accurate in measuring wellbeing in the Public Finance Act, results. This information is not albeit the specific as well as the government’s broader expected to indicate clearly who or wording requires commitment to sustainable what caused the reported performance development goals to be at the levels it is. (Government such an appropriation • Secondly, changing the financial Accounting Standards Board, 1990, management framework, to p.18) to ‘contribute to a increase flexibility, encourage single overarching collaboration and support and This conclusion recognises the enable a more strategic focus. This challenges and limitations in using purpose’. includes changes to the outcome information for accountability appropriation system and a different purposes, and reflects the rationale for the approach to planning and reporting manner in which outcomes were, earlier, • And thirdly, rethinking the addressed in the Public Finance Act. approach to the Budget, so that we However, it nevertheless supported the harder to measure and harder to look at existing as well as new reporting of outcomes provided the control. (Hipkins, 2019a) spending, and create more space to measurement is ‘appropriate and accurate’. focus on the challenges and trade- The Public Finance Act did not require The minister’s statement reflects the offs needed to improve wellbeing such reporting of outcomes, either at the continued ambition to find a way to place for all New Zealanders. (Robertson, departmental17 or whole-of-government more focus on outcomes within the formal 2019) level. This is a key element of the changes management system and less focus on the government is now proposing. This outputs, notwithstanding the earlier efforts All three themes envisage changes to issue is discussed further in the following to achieve this ‘rebalancing’. the Public Finance Act. The first suggests section. that the act will be amended to establish a It is very significant that the 2013 Proposed changes to the Public Finance Act process for specifying wellbeing objectives amendment changed the act in a manner There are two key areas in which the alongside financial and economic which enabled outcome-based government has indicated a desire to objectives, and to specify the associated

Page 18 – Policy Quarterly – Volume 15, Issue 4 – November 2019 reporting requirements. The second refers However, ‘embedding wellbeing’ may performance it is seeking to achieve during to ‘changes to the appropriation system’ also be seen as entirely consistent with the that period. At the end of the period there which may, or may not, require changes to act, or as a logical development from the should be reporting against the desired the act.20 The third theme seems less planning, budgeting and reporting performance, which enables accountability obviously to imply changes to the Public framework established by it. Embedding for performance to be demonstrated. Finance Act, as the key focus of this theme wellbeing in the Public Finance Act is In relation to departments, this is better examination of the ‘baseline’ level entirely consistent with the idea that accountability is expressed through of expenditure. The fixed nominal baseline outcomes are, and should be, the ultimate reporting on both ‘ownership’ performance, and allowances approach to the budget focus of public service activity. Outputs are primarily through the financial statements, process is not specified in the act, and could one means by which outcomes are achieved, and performance in relation to operations be changed without amending it. However, along with transfers, regulation, taxation and strategic intentions (formerly outputs), the minister also noted that within this and ownership. The act as originally which will normally include reporting on theme the appropriation system could be enacted envisaged that ministers would services delivered as well, often, as changed (Robertson, 2019). choose the outputs (or other interventions) information related to outcomes. To There is a clear relationship between reinforce the importance of both the three themes: all three seek to make the dimensions of performance (ownership public financial management system and strategic intentions), the act requires perform better in achieving outcomes Embedding that both dimensions be subject to audit (wellbeing). wellbeing in the in departmental annual reports. The situation is different for the Theme 1: Overarching framework for Public Finance Act government as a whole, the Crown.21 At the measuring success beginning of a year, as part of the budget In relation to the first theme, the minister may be contentious, documentation, the government produces stated that he: depending on how it forecast financial statements for the next three years. At the end of the year the will soon introduce legislation to is done. Scott (2019) government produces a set of financial amend the Public Finance Act so it statements, comparing actual performance includes two key changes: identified the risk of and position against the forecasts,22 and • The Government will be required politicising the these statements are audited. The financial to set out how its wellbeing and statements constitute the ex post reporting fiscal objectives will guide its Treasury, if, as is on the government’s fiscal performance.23 Budget There is no reporting on the government’s • The Treasury will be required to proposed, Treasury is performance in terms of outcome report on the state of current and responsible for achievement or wellbeing equivalent to future wellbeing in New Zealand, that required of departments in relation to at least every four years reporting on the strategic intentions or service delivery. In These changes recognise that we this sense, reporting on outcomes or expect wellbeing monitoring to evolve achievement of wellbeing can be seen as a logical extension over time as theory, evidence and data wellbeing objectives. of the framework underpinning the Public availability develop and improve. Finance Act. In the same way that departments are accountable for delivery Embedding wellbeing in the Public of the agreed services and are required to Finance Act may be contentious, depending report on this, the government as a whole on how it is done. Scott (2019) identified that they considered would best achieve is accountable for outcomes, and under the the risk of politicising the Treasury, if, as is their desired outcomes. ‘Embedding proposed reforms would be required to proposed, Treasury is responsible for wellbeing’ can be seen as elaborating the report on their achievement. reporting on the achievement of wellbeing specific aspects of wellbeing that will be There have been initial moves in this objectives. Differing views on New considered in the budget planning and direction, with an amendment to the Zealand’s wellbeing can often be factually decision-making process and be the subject Public Finance Act requiring reporting on supported, whether defined as outcomes of formal ex post reporting requirements. child poverty, the proposals outlined in the (i.e. ‘a state or condition of society, the There is a significant respect in which Treasury’s discussion paper on wellbeing, economy, or the environment’) or through embedding wellbeing into the Public and the proposed requirement that ‘The a framework such as the Living Standards Finance Act is a logical development of the Treasury will be required to report on the Framework. Descriptions of wellbeing and framework underpinning the act. The state of current and future wellbeing in assessments of wellbeing status will always framework envisages that an entity should New Zealand, at least every four years’. The be the subject of intense political debate. state at the beginning of a period the introduction of the Public Finance

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Figure 2: Using a wellbeing approach to improve strategic decision-making

CABINET AND COMMITTEES

Budgets, strategic policy, and regulatory interventions DECISIONS Government priority setting and value judgements PRIORITIES

THE TREASURY SECTORS AND AGENCIES Living Standards Framework Natural Capital | Human Capital Sector and agency Social Capital | Financial/Physical Capital strategies Risk & Resilience e.g. Child Wellbeing Strategy Culture | Te ao Ma-ori Te Tiriti o Waitangi |Pacific peoples’ wellbeing ANALYSIS AND ADVICE Living Standards Report Domain reporting Released alongside the Dashboard to explain the data eg Environmental reporting INFORMATION Living Standards Dashboard Domain monitoring (sub-set of Indicators Aotearoa New Zealand) (sub-set of Indicators Aotearoa New Zealand, and Current wellbeing indicators other data where appropriate) Distributional analysis | Capital stocks indicators DATA

Indicators Aotearoa New Zealand Current wellbeing | Capital stocks | Our impact on the rest of the world STATS NZ DATA

(Wellbeing) Amendment Bill confirms the done only every four years,25 there would government for the majority of the intent expressed in the earlier discussion be a disjunction with both the annual reporting period. Insofar as the text would paper. budget cycle and the electoral term. From necessarily describe and explain the However, the way forward could be a management perspective, it would mean wellbeing achievements (reflected in the more coherent with the underlying there was infrequent feedback on levels of data in Indicators Aotearoa New Zealand structure of the act in at least two ways. First, achievement26 and therefore a lack of or the Living Standards Dashboard), this part 3 of the Public Finance Act deals with information as a basis for re-evaluating opens significant scope for alternative ‘Reporting by Government reporting entity’, prior budget decisions and reprioritising interpretations, which could make the and states the reporting requirements for if required. Arguably, one of the reasons reporting highly contentious and diminish monthly and annual financial statements, the Public Finance Act has been successful both public confidence in the reporting and the associated audit requirements. in terms of fiscal management is that there and the longevity of the wellbeing focus. Reporting ex post on outcome achievements is feedback on performance on a monthly Second, there is the question of which would logically sit within or alongside part basis, allowing (indeed encouraging) organisation(s) should have responsibility 3 of the act.24 As discussed above, attributing management to respond in a timely fashion for reporting on wellbeing performance causation to changes in outcomes or to emerging circumstances and events. On and in which document(s) should this wellbeing makes accountability more this basis, reporting on at least an annual reporting take place. As stated above, a difficult than is the case with reporting on basis would seem desirable. While it may distinction between ex ante and ex post outputs (or operations and activity) by be that for some outcomes relatively little reporting is a key element of the Public departments. Nevertheless, reporting on or no change could be observed within a Finance Act framework. Hence, the budget outcomes targeted by government provides year, in other cases more rapid change documentation should articulate the useful information on the extent to which would be expected. Indeed, it may be that wellbeing priorities and objectives the its priority outcome or wellbeing targets are outcomes change as a result of factors other government is seeking to achieve through being met. than government interventions, and this the budget, alongside the fiscal objectives. The proposed requirement that may also be relevant information. A step was taken in this direction in the Treasury ‘report on the state of current and Further, with a three-yearly electoral 2019 Wellbeing Budget. future wellbeing in New Zealand, at least cycle, it could emerge that the government Given the concerns above, it is not clear every four years’ has two aspects that in office at the time the reporting on which organisation or organisations warrant comment. First, if reporting were wellbeing takes place was not in should best be responsible for the ex post

Page 20 – Policy Quarterly – Volume 15, Issue 4 – November 2019 reporting – the element of the process that The level of out by different agencies acting closes the accountability loop – collaboratively in pursuit of single notwithstanding the amendment bill’s transaction costs outcome-based objectives, and that the specification that this be Treasury’s formal aspects of the planning, budgeting, responsibility. and the nature operations and reporting of the joint The Treasury and Statistics New and extent of activities should be aggregated in line with Zealand have produced a diagram (Figure the ‘specific long-term issue’.28 2) which depicts the components of a scrutiny in the While this proposition may be valid for wellbeing approach to strategic decision a certain subset of the government’s making. This identifies a number of budget process activities, it may not be optimal for all. different forms of reporting: Indicators are affected by the Below, consideration is given to the Aotearoa New Zealand, the Living possibility that the management system Standards Dashboard and the Living Public Finance Act needs to accommodate a two-track Standards Report, as well domain reporting approach. and domain monitoring by sectors and primarily through agencies. However, the text in the ‘Cabinet its specification Theme 3: Rethinking the approach to the and Committees’ level of the diagram budget suggests that the data and information of the nature of the In relation to the third theme, the minister referred to in the document is intended for noted: decision-making purposes, rather than ex appropriation post reporting. structure. My experience of the past two Budgets The discussion paper issued by Treasury is that they involved quite high in 2018 considered reporting wellbeing transaction costs focussed on a within a number of budgetary documents, relatively small proportion of and stated: (Robertson, 2019).27 government spending. Ministers also The minister elaborated by identifying had little visibility of what was being As a part of developing our under- three problems in the performance of the funded through baselines and where standing of how to measure and report existing system: there were opportunities to stop some on wellbeing, the Government is • the difficulty and transaction costs things to fund other new initiatives. piloting non-legislative options for associated with moving funding from As a small first step, we will consider embedding a wellbeing focus in public one ‘pool’ to another, reallocating bringing in: sector departments’ strategic planning resources from less to more effective • Single departmental output and performance reporting, before programmes; appropriations for small considering further legislative changes. • the difficulty of reporting in one place departments and consolidating (Treasury, 2018a) the result of collaborative efforts of small appropriations to provide multiple departments or agencies in more flexibility to move funding This suggests the government is achieving a single outcome, illustrated between programmes and output correctly conscious of the difficulty of by the example of ‘a joint venture of classes (work that will be phased finding the right approach to ex post eight government agencies who work over two years) reporting of wellbeing. Insofar as outcomes on reducing and eliminating domestic Looking further ahead, we will are affected by all parts of the Crown violence’ (ibid.); consider reporting entity, there might be a case for • the cost and ineffectiveness of agencies’ • Aggregating non-departmental the production of an annual outcomes strategic planning processes, where appropriations aligned to high- report being managed through strategic plans ‘end up sitting on the level outcome areas collaboration by the central agencies and shelf gathering dust’. The minister • Introducing multi-department, Statistics New Zealand. indicated that the government was multi-Minister appropriations, ‘testing a fundamentally different allowing multiple departments to Theme 2: Changing the financial approach with one or two pilots where be responsible – collaboratively management framework each pilot will put a spotlight on a – for what they achieve. (Robertson, The second theme identified by the minister specific long-term issue’. 2019) is to change the financial management The way the government seeks to framework ‘to increase flexibility, encourage address these three problems is In the statements above, a number of collaboration and support and enable a underpinned by a common proposition: issues are raised: more strategic focus. This includes changes that government performance will be • a concern for the level of transaction to the appropriation system and a different enhanced if there is flexibility to reallocate costs in the budget process; approach to planning and reporting’ resources between activities that are carried

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Figure 3 Certainty of forward funding reduces the Outcome-focussed Output-focussed Specialisation incentive to seek greater efficiency or more Collaboration innovative services. The dilemma the minister faces is that Expectations Achievement of Shared Goals Delivery of Services he wishes to reduce the transaction costs Operating Model Value-add through Value-add through specialist associated with the budget process while collaboration skill increasing the scrutiny of baseline expenditure. In his speech he indicated that Information needs Fast feedback loops from Fast feedback loops from system the intent is to look at ‘baselines and citizens marginal expenditure together to better Accountability for Commitment to shared goals The quality, quantity and cost of prioritise what will improve wellbeing for and mana to achieve them the provision of services New Zealanders, and ensure sustainable resourcing to deliver it’. He indicated that Accountable to Citizens before hierarchy Hierarchy before citizens the government was looking to achieve this through baseline reviews, where, ultimately, Accountability direction Horizontal between Up through the hierarchy collaborators ‘80 per cent of baselines are covered by a review every few years’. Trade-offs generally favour Effectiveness Efficiency The following quotation suggests that the minister considers that a significant Funding Collective / Relationships Services element of the transaction costs arises from the number of appropriations: • the relatively small proportion of the costs of a zero-based budgeting process total budget that is scrutinised in the militate against its full implementation,29 There are currently about 840 appro- annual budget process; though its methodology is consistent with priations, and more than a thousand if • the degree of flexibility a department the desire of the government to give greater you [count] the components of multi- should have to adjust the set of outputs consideration to baseline expenditure. An category appropriations, which are it produces within a single incremental approach to budgeting, reported on appropriation; and essentially taking last year’s expenditure as More than half – 50 per cent – of • whether the appropriation system given, will certainly be less costly to the money is in just two per cent of the should have an even greater ‘outcome’ administer, but leaves on the table the value appropriations focus than that granted by multi- that could be extracted from increasing 45 per cent of appropriations – category appropriations, by allowing efficiency and reallocating expenses to again, almost half – have less than $5m multi-department and multi-minister interventions that make a greater in each appropriation (less than one per appropriations. contribution to outcomes. cent of the money). (ibid.) The level of transaction costs and the The fixed nominal baseline system that nature and extent of scrutiny in the budget has been used in New Zealand errs very However, when assessing transaction process are affected by the Public Finance much towards the incremental end of the costs, the size of the transaction is also Act primarily through its specification of spectrum, where, as the minister notes: significant. Using the minister’s numbers, the nature of the appropriation structure. the mean transaction size for the 2% of However, the manner in which the About 98 per cent of government appropriations that constitute 50% of government chooses to administer its expenditure – or $89 billion – sits government expenditure is approximately budget process, within the requirements outside the annual Budget process, and $2.3 billion. These, obviously, are very of the act, is the major determinant of the yet – as I’ve already mentioned – we significant amounts and the process of costs. As in any budget system, there is a spend most of our time assessing how establishing the nature of what is to be trade-off between the desire for scrutiny to allocate the next two per cent or so delivered, issues of distribution, assignment and contest, and the possibility of located at the margin through each of risks, etc. can be expected to generate efficiencies and reallocations, on the one Budget. (ibid.) substantial transaction costs.30 The mean hand, and the desire to minimise the transaction size for the other 98% of the transaction costs on the other. The system of fixed nominal baselines appropriations is $46.5 million, and even At one extreme, an organisation could has at least two effects. First, it limits the this amount would seem to warrant serious adopt a variant of a ‘zero-based budgeting’ amount of analysis and scrutiny that needs analysis and scrutiny. approach. This approach forces an annual to be undertaken in relation to baseline The need for examination of the base reconsideration of all existing expenditure, expenses, reducing transaction costs. implies some increase in transaction costs, and is seen as being of value in facilitating However, it also reduces the incentives on whether that examination is conducted the reallocation of resources to more departments to re-examine the value annually or selectively over a number of productive uses. In reality, the transaction generated by services within the baseline. years. Consistent with this, it is reasonable

Page 22 – Policy Quarterly – Volume 15, Issue 4 – November 2019 to look to reduce transaction costs where greater flexibility. For these other activities, the minister of finance are also supportive it is efficient to do so. However, the which address complex problems that of outcome-focused collaboration. transaction costs associated with the require learning, adaption and However, the specific nature of some of the efficient allocation of approximately $90 experimentation, outcome-focused changes34 seems at least to open the billion should, if the allocation process is collaboration, operating through networks possibility of tailored application, rigorous, be significant. The test is whether rather than hierarchies, is more effective.31 depending on the nature of the activity, the transaction costs are warranted by the An important element of the rationale even if the language used by the minister’s results of the allocation process, not by the for the State Sector Act and the Public implies the universal application envisaged ease with which departments can comply Finance Act was that the context and by the State Sector Act reforms. with the requirements of the process. managerial issues confronting different As currently described, the changes are departments are very different, and the not explicitly confined to a subset of public Same problem, alternative solution. Or is it? pre-existing, highly centralised, approach services, which opens the possibility that, The ministers of state services and finance did not allow for managers to be responsive if applied too widely, outcome-focussed both acknowledge that the existing to those differences. However, as has been collaboration could be used where a more acts have been successful, but identify observed,32 there are elements of the public hierarchical approach would be superior. performance issues that remain. As financial management system that are This is certainly the intent of the State described above, the minister of finance Sector Act approach. However, if the Public is proposing a work programme and Finance Act changes are enabling, rather legislative amendments that have the The description than applying to all services, then the public financial management system changes may be adopted only in those areas focus more on outcomes, give ministers of the proposed where outcome-focused collaboration is and departments greater flexibility in changes to the superior approach. Were this to be the selecting outputs within appropriations, case, the solution proposed by Warren and support collaborative work between the Public Finance might still be achieved, albeit that there is agencies. not within the current proposals a clearly While it might be argued that much of Act and the defined two-track system. what the minister seeks could be achieved State Sector Act, within the existing legislation, the changes The place of outputs in the system are predicated on the view that legislative taken together, The minister noted in his speech to the changes can better support the direction conference that the Public Finance Act in which he aims to take the system. suggests that when it was first introduced ‘shone a Warren (2019) described two different they represent a light on what government was spending approaches to managing activities within money on’ (Robertson, 2019). It did this the public sector, which he describes as move from one by requiring departments to specify the ‘outcome-focused collaboration’ and outputs they were producing, enabling ‘output-focused specialisation’. The ‘one-size-fits-all’ ministers to make strategic decisions differences between the two approaches are model to a different about whether they considered those summarised in Figure 3. outputs were adding value. Warren also refers to organisations ‘one-size fits-all’ In seeking to have the budget process which operate a ‘two-track’ system in examine the base as well as the margin, the which they manage different types of model. same information set is required: that is, a service or activity in different ways, clearly described set of outputs. The value specifically by managing some functions of activities within the base is not a through hierarchies and other functions function of the level or type of expense, but through networks. of the services (or other interventions) that Warren’s contention is that the public themselves insufficiently responsive to the are produced. To examine the base, management system currently operates in differences between those services that can ministers need a clear picture of what a hierarchical manner and that this is most effectively be delivered through services are produced. As the minister suitable for a subset of public services outcome-focused collaboration and those notes: ‘As a Government, we can’t ensure a which are more routine in nature, and are that can best be delivered through output- joined-up, long-term approach to produced more efficiently through output- focused specialisation.33 enhancing wellbeing, if we don’t actively focused specialisation. However, for other The changes being proposed for the look at what agencies are doing, and how activities such a hierarchical approach State Sector Act seek to move the whole it creates public value’ (ibid.). leads to the issues that are problematic in public service from output-focused Unfortunately, the clear ex ante the current system: the creation of siloes, specialisation to outcome-focused specification of outputs, the subsequent lack of collaboration and the need for collaboration. The changes proposed by management of their production and their

Policy Quarterly – Volume 15, Issue 4 – November 2019 – Page 23 Public Financial Management and Reforms to the State Sector Act costing, and their ex post reporting involves chief executives. In relation to these new significant transaction costs. This runs ... ministers organisational forms, the minister notes: against the minister’s intention to make the acknowledge that process ‘easier for agencies’: ‘It’s important To give effect to these new organisational for us to make it easier for agencies to plan, the New Zealand forms in legislation, some will require deliver and account for their work public management amendment to the Public Finance Act programmes, and to do it collaboratively, 1989. These consequential amendments and cost-efficiently, with a minimum of system has produced would not alter the fundamental waste’ (ibid.). elements of the public finance However, in the period since the act was good results and framework – parliamentary first implemented there has been a is highly regarded authorisation of expenditure, progressive degradation in the quality of transparency of objective setting and output specification, meaning that it is now internationally and decision-making, and clear lines of more difficult for ministers to see clearly accountability and reporting from what departments are delivering. The by New Zealanders, officials to Ministers and Parliament. transaction costs associated with the but the ministers What would change is the range of specification and reporting, ex ante and ex administrative units able to become post respectively, of outputs means that are nevertheless appropriation administrators, unless this information is used by performance and strategic reporters management, especially in the budget seeking further and assume public finance process, the incentives to continue to improvements. responsibilities under the Act. (ibid., produce it are significantly weakened. The p.12) use of a baseline in the budgeting process reduces the incentives on departments to This recognition of the need for produce high-quality output information, One of the issues raised by the minister appropriation system changes to reflect the as their revenue stream is not dependent of state services in explaining the need for new organisational forms reinforces the on the production of that information. the repeal of the State Sector Act and its idea that the two pieces of legislation Similarly, high-quality information on replacement with a Public Service Act is should be complementary and mutually output costs also has significant transaction that the departmental form of organisation reinforcing. costs, and if output costs do not play a alone is not flexible enough to help us meet The discussion above concerning a significant role in determining all the needs of New Zealanders. Over and ‘two-track’ system raises the possibility of departmental budgets there will be a again we have found the basic departmental having different operating modes within reduced incentive to produce this form inflexible for: the public sector – outcome-focused information, leading to a degradation in collaboration and output-focused information quality. In order for ministers 3.1 allowing different departments to specialisation. The description of the to examine the base, whether through work together to address complex proposed changes to the Public Finance Act periodic spending reviews or as part of the problems which cross and the State Sector Act, taken together, annual budget process, the decline in the organisational boundaries; suggests that they represent a move from quality of this information will need to be 3.2 creating autonomy, or one ‘one-size-fits-all’ model to a different reversed. independence, without the cost ‘one-size-fits-all’ model. While this may and complexity of a separate have the merit of being a coherent system, How do these proposed changes interrelate department; it does not reflect the experience of the past with the State Sector Act changes? 3.3 creating greater visibility and 30 years in two ways. First, for some The close relationship between the Public strengthening accountability for activities an output-focused, hierarchical Finance Act and State Sector Act at the important issues and priorities. approach to management may be most time they were passed was noted above. (Hipkins, 2019b) efficient. Second, the range of activities in This important interrelationship is also the public sector militates against a ‘one- recognised by the current government in Building on the 2013 amendments to size-fits-all’ approach. While the original advancing its reform programme. And it is the State Sector Act, and the development legislation went a considerable distance in also recognised that the ‘[c]hanges to the of the System Design Toolkit, the changes enabling decision making in different State Sector Act 1988 will build on the high proposed by the minister will give organisations to reflect their individuality, performance base of the Public Service, legislative backing to the following: an the experience since has been that the with the overall aim of delivering better Interdepartmental Executive Board; public system as a whole does not sufficiently outcomes and services for New Zealanders’ service joint ventures; a more flexible accommodate the variation within the (State Services Commission, 2019). departmental agency model; and functional organisations that make up the public service.

Page 24 – Policy Quarterly – Volume 15, Issue 4 – November 2019 Conclusion outputs and their relation to outcomes is overall effect of these changes can be to take us further away from a more meaningful performance framework.’ The changes being proposed for the State better understood and production more 13 While outcomes were not formally the basis for chief executive accountability, in an environment where ministers Sector Act and the Public Finance Act routine. In the words of the Economist were seeking to achieve their priority outcomes, chief are significant. They envisage a public (1992), ‘[t]ime will tell’. executives had an incentive both to demonstrate how their department’s outputs contributed to the minister’s outcomes, management system that operates in a and to seek improvements to the design or delivery of their way that is significantly different to that 1 The different types of appropriation include appropriation outputs. for output expenses, other expenses, borrowing expenses 14 This pattern of diminishing the significance of outputs is originally envisaged by the acts, but in a and capital expenditure. There are also appropriations for illustrated by the use of terms such as ‘widgets’ to describe benefits or related expenses (transfers) and multi-category outputs. The progressive lessening of the specification and way that reflects and extends a number appropriations. reporting requirements in relation to outputs in the formal of changes that have been formalised 2 For departments, outputs remain the basis for most system has the effect of reducing the transaction costs of the appropriations, though there has been a pattern over time system, but runs counter to the point that it is only through through amendments to both acts since of aggregating outputs into fewer appropriations. This the production of outputs (or other interventions) that gives greater flexibility to departments at some cost to outcomes can be achieved; outcomes cannot themselves be their original passage. parliamentary authority in relation to the purpose of the directly achieved without some form of intervention. Key elements of these changes include authorised expenses. 15 The introduction of strategic result areas (SRAs), the Better 3 Key challenges are the effort required to specify ex ante Public Services initiative, the social investment approach an intent to focus more on outcomes than the service(s) that will be delivered in the budget period, and the Living Standards Framework all represent attempts outputs, a desire to give ministers and and the measurement (including costing) and monitoring to find a way of better managing the achievement of of the services actually delivered. For reasons that will be outcomes. departments greater flexibility in the addressed below, there are also incentive issues with outputs 16 At the time it was removed from the act, ‘outcome’ was as the basis for accountability. Because it is markedly easier defined as: ‘outcome – (a) means a state or condition of nature of appropriations and the selection to establish accountability for output delivery than for society, the economy, or the environment; and (b) includes a of the services that will be provided within outcome achievement, departments have stronger incentives change in that state or condition’ (s2(1)). to ensure their outputs are delivered, and as a consequence, 17 Departments were required to report on their service delivery, an appropriation, and a desire for the it is argued, departments are less willing to collaborate with though not the outcomes achieved. This requirement was other organisations in achieving outcomes. amended a number of times and now refers to ‘operations’ public service to operate in a more ‘joined- 4 As distinct from the assignment of decision rights between and ‘strategic intentions’. up’, innovative and collaborative way. These the Parliament, the ministers and departmental chief 18 In the period since the minister made this speech the executives. government has introduced the Public Finance (Wellbeing) changes reflect perceived issues in the 5 A number of speakers at the PFA30 conference, including Amendment Bill. operation of the system and the complexity the minister of finance and international speakers, referenced 19 It is possible that the minister did not refer to this potential the high level of fiscal transparency. reform because it would not be given effect through an of some of the problems New Zealand still 6 While arguably part of the reason for the rapid introduction amendment to the Public Finance Act, but through separate and successful functioning of the act, its integrated nature legislation. It would, however, constitute a significant change faces. There is also an intent to change the has been little emulated internationally, although the to the performance management system. budget process to make it both more adoption of accrual reporting has been (Brumby, 2019). 20 For example, the appropriation system could be changed 7 Ownership performance relates to the aspects of an by making significantly greater use of multi-category efficient and more comprehensive, with organisation’s performance that would be of interest appropriations and/or multi-year appropriations, without to its owner, such as maintenance of capital, financial necessitating changes to the act. reduced transaction costs and greater performance, organisational strategy and risk management. 21 The reporting entity for the forecast and actual financial scrutiny of baseline expenditure. Purchase performance relates to the interests that a statements of the Crown comprises ministers of the Crown, customer might have – including the nature of the product departments, offices of Parliament, the New Zealand A strength of the changes proposed by or service, the quantity and quality of the service, location Superannuation Fund and the Reserve Bank of New Zealand the ministers of state services and finance of delivery and cost. These two interests – purchase and (the core Crown segment); state-owned enterprises, mixed- ownership – could conflict: for example, if a department ownership model companies, Air New Zealand Limited, is that they maintain the complementarity were to run down capital to meet service demands. Accrual Kiwi Group Holdings Limited (the state-owned enterprises accounting was needed to measure performance on both sector); the Crown entities sector; plus other entities not fully of the two acts, emphasising the importance dimensions – whether capital was being maintained consolidated into the financial statements of the government, of a coherent public management system (ownership) and the cost of services (purchase). principally tertiary education institutions. 8 Both acts largely removed controls over inputs, other than 22 The government also produces unaudited monthly financial with consistent incentives on decision the appropriation mechanism that specified total input costs. statements, except for the first two months and the last In exchange for freedom to manage inputs, departmental month of the year. makers. The focus of both is firmly on managers were accountable for the delivery of outputs. 23 Information in the government’s financial statements is wellbeing, both emphasise the importance Through the strategy development and budget processes the basis for assessing conformance with the principles of ministers determined the nature and level of services (or responsible fiscal management contained in the act. of collaboration between departments, and other interventions) required, based on the outcomes they 24 It should be noted that recent amendments to the Public both rely more heavily on the spirit of were seeking to achieve. Finance Act have included reporting requirements in the 9 This distinction required clarity as to the accountability of appropriation part of the act. Specifically, sections 15C public service to drive performance than ministers and chief executives and departments. So, for (End-of-year performance information requirements) and example, ministers would determine and be accountable 15EA (Main Appropriation Bill: supporting information on clear accountabilities. for the level of income tax, while Inland Revenue would be relating to child poverty) require information that relate to However, there are risks associated with accountable for the collection of the tax, and associated wellbeing status rather than to plans. Clearly distinguishing services. Similarly, the Department of Conservation (DOC) ex ante objectives and ex post achievements enables clearer the proposed changes, and this article would be accountable for the management of Crown assets communication about achievements relative to plans, and such as the national parks. In these examples, tax revenue thus more effective accountability. identifies some of the tensions inherent in would be revenue of the Crown, not Inland Revenue, and the 25 It may be that the four-yearly report is intended to be similar the nature of them. Both ministers national parks would be on the Crown balance sheet, not to the Investment Statement, a document that is required DOC’s. by section 26NA of the act to be prepared by the Treasury acknowledge that the New Zealand public 10 Reporting of outputs was required in the Statement of at least every four years. However, this statement is largely management system has produced good Service Performance, and to emphasise the need for high- based on information that has already been reported in the quality information this statement was, like the financial financial statements, which are the formal ex post reporting results and is highly regarded internationally statements, required to be audited. documents. It is not clear where the equivalent formal 11 In the international setting, the speed with which the reporting of wellbeing achievements is intended to take and by New Zealanders, but the ministers accrual accounting systems were put in place in New place, if not in the proposed Treasury report. are nevertheless seeking further Zealand is notable. Most departmental directors of finance 26 In this article I will use the term ‘achievements’ in relation (as they were then described) had little or no experience to wellbeing performance. However, it has been noted improvements. The changes may or may of establishing or operating an accrual-based accounting above that the attribution problem means it is difficult or system, as this was not required in the context of a impossible to demonstrate that the wellbeing changes are not be successful. Or, perhaps the more cash-based and Treasury-operated accounting system. In the result of government action. Notwithstanding this, it is likely result is that they are successful for many cases, chief executives recruited new chief financial central to the reforms the government is considering that it officers who had the requisite skills and experience. This wishes to formalise the place of wellbeing in the planning, some parts of the public sector, where the process would have been significantly more difficult and budgeting and reporting processes, and by implication this is nature of the problems requires more time-consuming if the necessary skills, at both CFO and how it is choosing to be held accountable. subordinate levels, had been developed internally rather than 27 The issues addressed in themes 2 and 3 are not the subject flexible and experimental interventions, imported. of the changes in the Public Finance (Wellbeing) Amendment 12 Little (2018) suggests that the changes have led to a Bill. but less successful where the nature of the ‘“patchwork” system’ and noted that: ‘The irony is that the 28 This term appears equivalent to the term used to define a

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multi-category appropriation – a ‘single overarching purpose’. 31 Little (2018): ‘The current financial and vertical requirement for ex ante specification of services to be 29 A March 2015 article in the Wall Street Journal (Kesmodel, accountability structures incentivise silos – good for delivered are two examples. 2015) noted the recent revival of the zero-based budgeting delivering discrete, tangible outputs that are delivered by a 34 In particular, changes to the appropriation system appear to approach. single agency, but creating a barrier to helping those with recognise that some activities require greater flexibility as to 30 While these transaction costs might be substantial, they complex needs and tackling complex issues that fall across the nature of services than do others. would be very significantly less than the transaction costs departmental boundaries.’ associated with contract specification and performance 32 Little (2018) refers to ‘a hierarchical, top-down control monitoring in relation to an equivalently sized commercial model, and a one-size fits all approach’. contract. 33 The focus on outputs for accountability purposes and the

References Ball, I. (1992) ‘Outcomes’, presentation to the NZSA Public Sector Wellington, https://treasury.govt.nz/publications/speech/taking- Convention, November 1992 stewardship-approach-public-finance-system Ball, I. (2019) ‘Recollections and highlights’, speech to the PFA30 Robertson, G. (2019) ‘The PFA – past, present and future’, speech to the conference, Victoria University of Wellington, July PFA30 conference, Victoria University of Wellington, July Brumby, J. (2019) ‘Insights from international financial institutions’, Scott, G. (2019) ‘Recollections and highlights’, speech to the PFA30 speech to the PFA30 conference, Victoria University of Wellington, July conference, Victoria University of Wellington, July Economist (1992) ‘New Zealand Inc’, Economist, 15 August State Services Commission (2019) ‘State Sector Act reform factsheet: Government Accounting Standards Board (1990) Research Report on overview of the reform proposals’, http://www.ssc.govt.nz/assets/ Service Efforts and Accomplishments Reporting, Norwalk Legacy/resources/Factsheet-1-Overview-of-the-Reform-Proposals.pdf Hipkins, C. (2019a) ‘Announcement of public service reforms’, 26 June, Treasury (1987) Government Management: briefing to the incoming https://www.beehive.govt.nz/speech/announcement-public-service- government, Wellington: Treasury reforms Treasury (2018a) Embedding Wellbeing into the Public Finance Act Hipkins, C. (2019b) ‘Public service legislation: paper 6 – organisations of 1989, Wellington: New Zealand Government the public service’, http://www.ssc.govt.nz/assets/Legacy/resources/ Treasury (2018b) New Zealand’s Fiscal Policy Framework: establishing an Paper-6-Organisations-of-the-Public-Service.pdf independent fiscal institution, Wellington: New Zealand Government Hipkins, C. (2019c) ‘Public service legislation: paper 1– overview of Treasury (2019) ‘2013 amendments to the Public Finance Act 1989 and proposals’, 26 June, http://www.ssc.govt.nz/assets/Legacy/resources/ Crown Entities Act 2004’, https://treasury.govt.nz/information-and- Paper-1-Overview-of-Proposals.pdf services/state-sector-leadership/cross-agency-initiatives/2013- Kesmodel, D. (2015) ‘Meet the father of zero-based budgeting’, Wall amendments-public-finance-act-1989-and-crown-entities-act-2004 Street Journal, 26 March, https://www.wsj.com/articles/meet-the- Warren, K. (2019) ‘Solving the hard problems’, speech to the PFA30 father-of-zero-based-budgeting-1427415074 conference, Victoria University of Wellington, July Little, S. (2018) ‘Taking a stewardship approach to the public finance system’, speech to School of Government, Victoria University of

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