Reference: 20200087
22 May 2020
s9(2)(a)
Dear s9(2)(a)
Thank you for your Official Information Act request, received on 21 February 2020. You requested:
1. Joint Report by the Treasury and the Reserve Bank of NZ T2019/3011: Update on Deposit Takers Act and Deposit Insurance work. 2. Joint Report by Treasury and Ministry of Health T2019/3055: Taranaki DHB Project Maunga Stage Two Indicative Business Case. 3. Treasury Report T2019/2743: Letter to the Finance and Expenditure Committee on Public Finance System Modernisation. 4. Treasury Report T2019/2732: Advice on the Government Response to the Tomorrow's Schools Taskforce Final Report. 5. Aide Memoire T2019/3173: State of Play as at 10 October 2019. 6. Treasury Report T2019/2929: Unfunded costs of development infrastructure to catch up to Auckland's population growth. 7. Treasury Report T2019/3113: Possible impacts of a NZ Aluminium Smelter Closure. 8. Treasury Report T2019/2476: Parliamentary Budget Office - Draft Cabinet Papers. 9. Joint Report T2019/3033: City Rail Link - revised Project Delivery Agreement. 10. Treasury Report T2019/3107: Welfare Overhaul- Advice for Meeting of Joint Ministers on 22 October 2019. 11. Aide Memoire T2019/3307: Updates to the Pay Equity Governance and Oversight Framework. 12. Joint Report by the Treasury and Ministry of Health T2019/3282: DHB Performance joint meeting, Ministers of Health and Finance, October 2019. 13. Joint Report by the Treasury and Ministry of Health T2019/2658: District Health Board 2019/20 Annual Plans Fiscal Risk Assessment.
On 11 March 2020 I advised you that I would be transferring your request for the document titled ‘Joint Report by the Treasury and Ministry of Health T2019/3282: DHB Performance joint meeting, Ministers of Health and Finance, October 2019’ to the Minister of Finance for response.
1 The Terrace PO Box 3724 Wellington 6140 New Zealand tel. +64-4-472-2733
https://treasury.govt.nz
The Treasury extended the timeframe for communicating a decision on the remainder of your request by 20 working days.
Information to be released
Please find enclosed the following documents:
Item Date Document Description Action
2. 4/10/2019 Joint Report by Treasury and Ministry of Health Released in part T2019/3055: Taranaki DHB Project Maunga Stage Two Indicative Business Case
3. 9/10/2019 Treasury Report T2019/2743: Letter to the Released in full Finance and Expenditure Committee on Public Finance System Modernisation
5. 10/10/2019 Aide Memoire T2019/3173: State of Play as at Released in part 10 October 2019
4. 9/10/2019 Treasury Report T2019/2732: Advice on the Released in part Government Response to the Tomorrow's Schools Taskforce Final Report 9. 15/10/2019 Joint Report T2019/3033: City Rail Link - Released in full revised Project Delivery Agreement. 11. 18/10/2019 Aide Memoire T2019/3307: Update to the Pay Released in part Equity Governance and Oversight Framework
13. 22/10/2019 Joint Report by the Treasury and Ministry of Released in part Health T2019/2658: District Health Board 2019/20 Annual Plans Fiscal Risk Assessment
I have decided to release the documents listed above, subject to information being withheld under one or more of the following sections of the Official Information Act, as applicable:
personal contact details of officials, under section 9(2)(a) – to protect the privacy of natural persons, including that of deceased natural persons, names and contact details of officials, under section 9(2)(g)(ii) – to maintain the effective conduct of public affairs through protecting ministers, members of government organisations, officers and employees from improper pressure or harassment, advice still under consideration, section 9(2)(f)(iv) – to maintain the current constitutional conventions protecting the confidentiality of advice tendered by Ministers and officials, certain sensitive advice, under section 9(2)(g)(i) – to maintain the effective conduct of public affairs through the free and frank expression of opinions, commercially sensitive information, under section 9(2)(b)(ii) – to protect the commercial position of the person who supplied the information, or who is the subject of the information,
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9(2)(ba)(i) – to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to prejudice the supply of similar information, or information from the same source, and it is in the public interest that such information should continue to be supplied, under section 9(2)(h) – to maintain legal professional privilege, direct dial phone numbers of officials, under section 9(2)(k) – to prevent the disclosure of information for improper gain or improper advantage.
We have redacted the direct dial phone numbers of officials under section 9(2)(k) in order to reduce the possibility of staff being exposed to phishing and other scams. This is because information released under the OIA may end up in the public domain, for example, on websites including Treasury’s own website.
Information publicly available
The following information is publicly available on the Treasury website:
Item Date Document Description Website Address
1. 3/10/2019 Joint Report by the Treasury https://treasury.govt.nz/public and the Reserve Bank of NZ ations/information- T2019/3011: Update on release/reserve-bank-act- Deposit Takers Act and review-phase-2-review- Deposit Insurance work update-proactive-release
7. 11/10/2019 Treasury Report T2019/3113: https://treasury.govt.nz/sites/ Possible impacts of a NZ default/files/2019-12/oia- Aluminium Smelter Closure 20190767.pdf
Accordingly, I have refused your request for the documents listed in the above table under section 18(d) of the Official Information Act:
the information requested is or will soon be publicly available.
Some relevant information has been removed from documents listed in the above table and should continue to be withheld under the Official Information Act, on the grounds described in the documents.
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Information to be withheld
I have decided to withhold the documents listed below in full under the following sections of the Official Information Act, as applicable:
Item Date Document Description Proposed Action
6. 11/10/2019 Unfunded costs of development infrastructure Withheld in full under to catch up to Auckland's population growth section 9(2)(f)(iv)
8. 11/10/2019 T2019/2476: Parliamentary Budget Office - Withheld in full under Draft Cabinet Papers section 9(2)(f)(iv)
10. 17/10/2019 Treasury Report T2019/3107: Welfare Withhold in full under Overhaul- Advice for Meeting of Joint Ministers section 9(2)(f)(iv) on 22 October 2019
Following the recent release of the Budget we are reviewing the documents listed above to see if they can now be released and if so whether they can be released in full or partly redacted.
In making my decision, I have considered the public interest considerations in section 9(1) of the Official Information Act. Please note that this letter (with your personal details removed) and enclosed documents may be published on the Treasury website. This reply addresses the information you requested. You have the right to ask the Ombudsman to investigate and review my decision.
Yours sincerely
David Hammond Team Leader Ministerial Advisory
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Table of Contents
1. Joint Report by Treasury and Ministry of Health T2019/3055: Taranaki DHB Project 1 Maunga Stage Two Indicative Business Case 2. Treasury Report_T2019/2743: Letter to the Finance and Expenditure Committee 11 on Public Finance System Modernisation 3. Aide Memoire T2019/3173: State of Play as at 10 October 2019 14 4. Treasury Report T2019/2732: Advice on the Government Response to the 18 Tomorrow's Schools Taskforce Final Report 5. Joint Report T2019/3033: City Rail Link - revised Project Delivery Agreement 27 6. Summary of material changes to PDA- Attachment 2 31 7. Aide Memoire: T2019/3307: Updates to the Pay Equity Governance and Oversight 32 Framework 8. Joint Report by the Treasury and Ministry of Health T2019/2658: District Health 36 Board 2019/20 Annual Plans Fiscal Risk Assessment
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Doc 2 11 of 51
IN-CONFIDENCE
Treasury Report: Letter to the Finance and Expenditure Committee on Public Finance System Modernisation
Date: 9 October 2019 Report No: T2019/2743 File Number: ST-6-0
Action sought
Action sought Deadline Hon Grant Robertson Provide feedback on attached letter Wednesday 16 October 2019 Minister of Finance Sign attached letter (subject to
incorporation of feedback) Send letter to the Chair of the Finance and Expenditure Committee
Contact for telephone discussion (if required)
Name Position Telephone 1st Contact
Emily Fulford Senior Analyst, System s9(2)(k) N/A Design and Strategy (wk) (mob)
John Marney Manager, System Design s9(2)(k) N/A and Strategy (wk) (mob)
Minister’s Office actions (if required)
Return the signed report to Treasury. Send attached letter to the Chair of the Finance and Expenditure Committee (subject to incorporation of feedback).
Note any feedback on the quality of the report
Enclosure: Yes (attached)
Treasury:4167070v1 IN-CONFIDENCE Doc 2 12 of 51
IN-CONFIDENCE
Treasury Report: Letter to the Finance and Expenditure Committee on Public Finance System Modernisation
Purpose of Report
1. This report seeks your feedback on the attached letter to the Chair of the Finance and Expenditure Committee (FEC) on public finance system modernisation. It also seeks your agreement to send the letter once any feedback has been incorporated.
Letter to FEC
2. On 2 September, Cabinet approved four proposals as a first step to modernising the public finance system [CAB-19-MIN-0439.01].
3. In this Cabinet paper, you noted your intention to not consult FEC on these proposals as the changes:
a are focused on the consolidation of appropriations within current system settings,
b do not involve significant changes to the format or content of information presented with Appropriation Bills, and
c do not require legislative amendments.
4. However, your office has advised that you have agreed to inform FEC of the proposals via a letter.
5. Attached is a draft letter to the Chairperson of FEC, for your feedback. In addition to outlining the step 1 proposals, it provides some background on the broader work programme, and a brief overview of the next phase of work.
Next Steps
6. Following the incorporation of your feedback, we will provide a final copy for your signature.
T2019/2743 : Letter to the Finance and Expenditure Committee on Public Finance System Modernisation Page 2
IN-CONFIDENCE Doc 2 13 of 51
IN-CONFIDENCE
Recommended Action
We recommend that you: a provide feedback on the attached letter to the Chair of the Finance and Expenditure Committee (FEC) on public finance system modernisation, b sign the attached letter (subject to the incorporation of your feedback), and c send the attached letter to the Chair of FEC.
John Marney Manager, System Design and Strategy
Hon Grant Robertson Minister of Finance
T2019/2743 : Letter to the Finance and Expenditure Committee on Public Finance System Modernisation Page 3
IN-CONFIDENCE Doc 3 14 of 51
COMMERCIAL-IN-CONFIDENCE
T2019/3173: Commercial Performance State of Play as at 10 October 2019
To: Minister for State Owned Enterprises (Rt Hon Winston Peters) Minister of Finance (Hon Grant Robertson) Associate Minister of Finance (Hon David Parker) Associate Minister for State Owned Enterprises (Hon Shane Jones) This report provides an update on current issues in relation to State Owned Enterprises, Airports, Air New Zealand and Mixed Ownership Model companies within your portfolio. Please tick a box if you would like more information on a topic.
1. New and notable issues More Entity / Issue Update info?
The Social Credit political party has recently filed papers in the High Court at Wellington seeking a judicial review of the Overseas Investment Office (OIO) Landcorp decision to grant approval for the takeover of Westland Milk by Chinese conglomerate Inner Mongolian Yili. The Party Leader Chris Leitch said the (David Blue) party is concerned that the OIO might have failed to apply a much stricter set of criteria under the Overseas Investment Act, which would have seen Ministers rather than the OIO make the final decision.
SOE’s have sent Shareholding Ministers their 2018/2019 Annual Reports. The following reports have already been presented to the House of Representatives: - Airways - AsureQuality SOEs Annual - Electricity Corporation of New Zealand Reports - KiwiRail - Kordia (Catalina De - Landcorp Mendoza) - MetService - New Zealand Railways Corporation - Orillion - Quotable Value - Transpower - New Zealand Post has sent its annual report which will be tabled shortly. The SOE’s will also publish their annual reports on their websites. Mercury NZ’s CEO Fraser Whineray has announced his resignation to take up Mercury NZ – the newly created Chief Operating Officer role at Fonterra. Mr Whineray has been CEO of Mercury for 5 years and has worked with the company for CEO resignation 11 years. He will start at Fonterra in March or April 2020. The Mercury NZ (Juston Anderson) Board has begun a search for a replacement. There will be strong external interest in the role as well as a number of internal candidates.
Transpower – Transpower Chair Pip Dunphy on 7 October 2019 announced the resignation of Director Dr Tim Densem effective 4 October 2019. Mr Densem reluctantly Director resigned as being on the Board of Trasnpower has impacted his consultancy resignation business within the industry. Ms Dunphy noted that while she is disappointed (Maruta Kanepa) to be losing him after such a short period, she respects his decision. Dr Densem was appointed to the Board of Transpower in March 2019.
Treasury:4183433v1 1
COMMERCIAL-IN-CONFIDENCE Doc 3 15 of 51
COMMERCIAL-IN-CONFIDENCE
T2019/3173: Commercial Performance State of Play as at 10 October 2019
More Entity / Issue Update info?
9(2)(g)(i) 9(2)(ba)(i)
Appointments to Ministers will receive advice in early November 2019 on terms ending on SOE SOE Boards Boards in 2020, along with advice on improving diversity and the gender (Murray Costello) balance on these Boards.
Spark Sport has won the broadcast rights to NZ Cricket fixtures for six years starting from April 2020, with TVNZ as its free-to-air partner. Spark Sport will stream the fixtures online, while TVNZ will broadcast a selection of matches, TVNZ – domestic including the first T20 International of each series live (both men’s and women’s cricket); two regular season men’s Super Smash matches per week; cricket coverage and two regular season women’s Super Smash matches per week. It appears (Juston Anderson) from the announcement that Spark Sport will be responsible for production of the broadcasts.
As you will be aware Spark Sport is also bidding for the SANZAR rugby rights, in competition with Sky TV.
We met with the Cuban Ambassador Mario Alzugaray and the Embassy’s Third Secretary Mrs Saimin Fis Abad on 3 October 2019 to discuss New Zealand’s SOE framework. 9(2)(g)(i) 9(2)(ba)(i) Meeting with the 9(2)(g)(i) 9(2)(ba)(i) Cuban Ambassador (Juston Anderson) The Ambassador’s posting to New Zealand has now ended and he is returning to Cuba, but he said his successor may want to follow up us. We will advise if we are contacted again.
2. Upcoming Reports/Cabinet Papers Company Report No. Subject Date
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Transpower T2019/3214 Gisborne’s High Voltage Network 24 October 2019
QV T2019/3051 QV Strategic Review 31 October 2019 s9(2)(i)
Landcorp T2019/2756 Meeting with Landcorp Farming Limited 7 November 2019
Landcorp T2019/1233 Landcorp – Waitangirua Land 8 November 2019
KiwiRail T2019/3158 Meeting with KiwiRail on 13 November 2019 11 November 2019
Treasury:4183433v1 2
COMMERCIAL-IN-CONFIDENCE Doc 3 16 of 51
COMMERCIAL-IN-CONFIDENCE
T2019/3173: Commercial Performance State of Play as at 10 October 2019
3. Upcoming Governance and Appointments Reports (SOEs portfolio only) Company Report No. Subject Date Minister
Documentation to Minister of Finance QV TBD Week of 21 October Confirm Appointments Associate Minister for SOEs Minister for SOEs CIP TBD Short-listing Early November Minister of Finance Minister for SOEs KiwiRail TBD Short-listing Early November Minister of Finance
4. Official Information Act (OIA) Requests under Action Company Report No. Subject Date Minister
Titles sent to SoE 1 July to 31 August Reply due: 2019 11 October 2019 N/A T2019/3166 Minister for SOEs (submitter: s9(2)(a) from Minister’s due: Newsroom) 18 October 2019 Information regarding Animal Reply due: Products Ltd 15 October 2019 Orillion T2019/3146 Minister of Finance (submitter: s9(2)(a) Minister’s due: s9(2)(a) ) 22 October 2019 All advice and information sent or received regarding Fonterra's asset Reply due: writedown and Landcorp since 1 June 23 October 2019 Associate Minister Landcorp TBD 2019 Minister’s due: for SOEs (submitter: s9(2)(a) from the 30 October 2019 Office of the Leader of the Opposition)
Maureena van der Lem Manager, Commercial Performance
Rt Hon Winston Peters Hon Grant Robertson Minister for State Owned Enterprises Minister of Finance
Hon David Parker Hon Shane Jones Associate Minister of Finance Associate Minister for State Owned Enterprises
Treasury:4183433v1 3
COMMERCIAL-IN-CONFIDENCE Doc 3 17 of 51
COMMERCIAL-IN-CONFIDENCE
Annex: Entities covered by this SOP
Entities Shareholding Ministers State Owned Enterprises Airways Landcorp - Minister for State Owned Enterprises delegated to Associate MfSOEs (Jones) AsureQuality MetService
Electricity Corporation of New Zealand Quotable Value (QV) - Minister of Finance delegated to Kordia Transpower Associate MoF (Parker)
New Zealand Post (NZ Post) New Zealand Railways Corp - Minister for State Owned Enterprises KiwiRail - Minister of Finance Orillion (Animal Control - Minister of Finance delegated to Products) Associate MoF (Parker) - Minister of Biosecurity Mixed Ownership Model Companies Air New Zealand - Minister of Finance Genesis Energy - Minister for State Owned Enterprises Mercury NZ delegated to Associate MfSOEs (Jones) Meridian Energy - Minister of Finance Airports Christchurch International Airport - Minister for State Owned Enterprises Dunedin International Airport - Minister of Finance Hawkes Bay Airport
Treasury:4183433v1 COMMERCIAL-IN-CONFIDENCE 4
Doc 4 18 of 51
SENSITIVE
Treasury Report: Advice on the Government Response to the Tomorrow's Schools Taskforce Final Report
Date: 9 October 2019 Report No: T2019/2732 File Number: SH-4-5-3
Action sought
Action sought Deadline Hon Grant Robertson Agree to discuss the Before SWC on 16 October Minister of Finance recommendations outlined under 2019 Recommended Actions with the Minister of Education.
Refer a copy of this report to the Minister of Education.
Contact for telephone discussion (if required)
Name Position Telephone 1st Contact
Hanna Alder Senior Analyst, Education s9(2)(k) s9(2)(k) Ovenden and Population Agencies (wk) (mob)
Kate Williamson Acting Manager, Education s9(2)(k) N/A and Population Agencies (wk) (mob)
Minister’s Office actions (if required)
Return the signed report to Treasury.
Note any feedback on the quality of the report
Enclosure: No
Treasury:4166808v1 SENSITIVE Doc 4 19 of 51
SENSITIVE
Treasury Report: Advice on the Government Response to the Tomorrow's Schools Taskforce Final Report
Executive Summary
The Minister of Education has submitted the proposed Government response to the Tomorrow’s Schools Taskforce final report (the Report) for SWC on 16 October. The Cabinet Paper seeks agreement to the proposed response, to the approach for taking this work forward, and to publicly release both the Taskforce’s final report and the Government response.
We are providing this advice, ahead of SWC on 16 October, in order to support you in discussions with colleagues. We have worked closely with the Ministry of Education on the development of the response over several months.
The three core components of the Government’s response include:
• establishing a separately branded business unit within the Ministry of Education (Education Service Agency (ESA)) which will serve as a locally responsive, integrated and accessible support function, with more decision rights and flexibility with funding than the current Ministry regional offices
• establishing a leadership centre within the Ministry to coordinate and support leadership networks, promote best practice, develop professional learning networks, promote leadership career pathways, develop performance management frameworks and operationalise criteria for entry to principal roles, and
• the shifting of responsibility for key property and school network management functions from school boards and principals to the Ministry and the new Education Service Agency respectively.
In the final Cabinet Paper, whilst there is a clearly articulated Case for Change, there are some key issues that merit further discussion and accompanying advice. These include: • the continued importance of maintaining a focus on equity – we recommend that detailed, costed proposals for the proposed structural changes include clear information on how changes will address equity, achieve the objectives outlined in the Case for Change and improve educational outcomes (scheduled for the December 2019 report back to Cabinet)
• the need to ensure that a number of key high impact non-structural measures designed to address equity are implemented alongside structural changes – we recommend that the Minister of Education outlines a clear plan, in the December 2019 report back, for building on Kāhui Ako, with particular regard to their function in relation to the proposed ESA and associated regional design. We also recommend that priority be given to an Equity Package related to the implementation of the Equity Index, and
• our advice on timing of proposals and budget considerations – we recommend that the Minister of Education provides a detailed roadmap and accompanying multi- year Budget strategy for those measures to be implemented over a 5-10 year timeline through the Education Work Programme (EWP), as part of the December 2020 Cabinet report back.
T2019/2732 : Treasury Report: Advice on the Government Response to the Tomorrow's Schools Taskforce Final Report Page 2
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The Minister of Education is scheduled to report back to Cabinet in December 2019 with advice on the design of the ESA and the related operating model, including a programme of substantial service transformation, along with a redesigned Ministry of Education.
The Treasury will continue to work closely with the Ministry throughout the Budget 2020 process to provide support on the effective prioritisation and sequencing of proposed reforms within the fiscal context. We will provide you with further advice on this as the process develops.
Recommended Actions
We recommend that you: a agree to discuss the following recommendations in the report with the Minister of Education:
i. to provide clear information at the December 2019 report back on how the implementation of the proposed structural changes will address equity, achieve the objectives outlined in the Case for Change and improve educational outcomes (including how these will be evaluated)
ii. to ensure that a number of key high impact non-structural measures designed to address equity are implemented alongside structural changes
iii. to provide more detailed information on how the Ministry proposes to build on Kāhui Ako, with particular regard to how they might feature as part of and, interface with, the new Education Service Agency and associated regional design, and
iv. to include in the December 2020 Cabinet report back a detailed roadmap and accompanying multi-year Budget strategy for those measures to be implemented over a 5-10 year timeline.
Agree/disagree b refer a copy of this report to the Minister of Education
Refer/not referred
Kate Williamson Acting Manager, Education and Population Agencies
Hon Grant Robertson Minister of Finance
T2019/2732 : Treasury Report: Advice on the Government Response to the Tomorrow's Schools Taskforce Final Report Page 3
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Treasury Report: Advice on the Government Response to the Tomorrow's Schools Taskforce Final Report
Purpose of Report
1. The Minister of Education has submitted the proposed Government response to the Tomorrow’s Schools Taskforce final report (the Report) for SWC on 16 October. The Cabinet Paper seeks agreement to the proposed response, to the approach for taking this work forward, and to publicly releasing both the Taskforce’s final report and the Government response.
2. The purpose of this report is to provide you with advice on the proposed response, ahead of SWC on 16 October, in order to prepare you for conversations with colleagues. We have worked closely with the Ministry of Education on the development of the response and have seen the response evolve over a number of months. In this final version, there are some key issues that merit further discussion and advice.
3. This report covers: • an overview of the Case for Change made by both the Taskforce and the Minister of Education • a summary of the proposed Government response • the continued importance of maintaining a focus on equity • other non-structural measures to prioritise, and • our advice on timing of proposals and budget considerations.
4. The advice in this paper builds on previous advice provided over the course of this process so far. This includes the following:
• addressing equity is the central challenge for the New Zealand education system (TR 2019/1139 refers) • careful prioritisation and sequencing are central to creating a well-designed reform programme that could have a significant impact on educational and wider social outcomes (TR 2019/2629 refers) • reforms should be prioritised based on their potential for impact – the extent to which they will make a direct contribution to more equitable student outcomes – relative to costs and implementation difficulty (TR 2019/1139 refers), and • leveraging from existing mechanisms in the system (for example by building on Kāhui Ako) is a more effective, less disruptive and less costly way to achieve the outcomes the Government is seeking (TR 2019/1882 refers).
The Case for Change
5. The Cabinet Paper, drawing on the findings in the Taskforce Report, outlines a compelling case for change. While New Zealanders value and appreciate our education system’s strengths, it must do better for those learners that are underserved by the system, specifically Māori and Pacific learners, those with special educational needs and others from disadvantaged backgrounds. The case is made to address three key issues: T2019/2732 : Treasury Report: Advice on the Government Response to the Tomorrow's Schools Taskforce Final Report Page 4
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• Persistent disparities – our current system has failed to address disparities in educational outcomes and continues to leave some specific groups of learners underserved. Addressing these disparities within compulsory schooling is now an urgent priority.
• Schools are often isolated and unable to access adequate networks of support – they operate as autonomous, self-managing entities with a distant relationship to the centre which has contributed to slow and uneven transfers of professional knowledge and skills, as well as wide variability in learner performance across schools.
• Lack of trust in the system – there is widespread frustration for schools and parents at the lack of consistent and accessible support from agencies, a compliance-focused culture, and a profession feeling undervalued and excluded.
6. The Treasury supports the Case for Change made in the Cabinet Paper. We have made clear in previous advice (TR 2019/1139 refers) that we consider equity to be the central challenge to address in the New Zealand education system. Furthermore, given population trends, and the changing nature of work in the 21st century, addressing this challenge is fundamental to reducing current, and mitigating against, increasingly significant performance gaps. In our view, the Tomorrow’s Schools Review provides a critical opportunity to drive transformative change for those learners most in need.
The Government’s Proposed Response
7. The Taskforce makes eight core recommendations, with 52 associated actions, in its final report. It focuses heavily on establishing a strong middle layer through the creation of a new entity, the Education Support Agency (ESA), administering a network of locally based Education Support Learning Networks (ESLNs), and the creation of new Leadership Advisor roles to work directly with boards of trustees and principals. The overall aim is to create more localised support and decision-making to rebuild trust in the system.
8. In the Cabinet Paper, the Minister of Education supports the findings and the case for change outlined in the Taskforce Report, confirming that these also align with what he has heard through the Kōrero Mātauranga, fono, wānganga and other fora that have been part of the wider Education Work Programme. He also proposes that the Government accepts, or accepts in principle, the majority of the Taskforce’s recommendations.
9. To address the issues outlined, the Minister proposes a reset of the system involving moving from the current state of a highly devolved, largely disconnected and autonomous set of institutions, to a much more deliberately networked and supported system. The overall aim of this reset is to facilitate the sharing of expertise, foster new levels of engagement and build the mutual trust necessary for better system performance, anchored by professional collective responsibility and high levels of trust.
10. To achieve this, the Minister proposes an approach with three key parts:
• Establishing a separately branded business unit within the Ministry of Education (ESA) which will serve as a locally responsive, integrated and accessible support function, with more decision rights and flexibility with funding than the current Ministry regional offices.
T2019/2732 : Treasury Report: Advice on the Government Response to the Tomorrow's Schools Taskforce Final Report Page 5
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• Establishing a leadership centre within the Ministry to coordinate and support leadership networks, promote best practice, develop professional learning networks, promote leadership career pathways, develop performance management frameworks and operationalise the criteria for entry to principal roles (to be designed). This part also includes the creation of new Leadership Advisor roles to deliver localised support for school leaders (the detail of which is yet to be determined).
• The shifting of responsibility for key property and school network management functions from school boards and principals to the Ministry and the new Education Service Agency respectively.
11. The Minister then proposes a range of other initiatives to be progressed through the Education Work Programme (EWP) over the next five to ten years. These are grouped according to the Government’s five objectives for education:
• Learners at the centre: Learners/ākonga with their whānau are at the centre of education
• Barrier free access: Great education opportunities and outcomes are within reach for every learner/ākonga
• Quality teaching and leadership: Quality teaching and leadership makes the difference for learners/ākonga and their whānau
• Future of learning and work: Learning is relevant to the lives of New Zealanders today and throughout their lives, and
• World class inclusive public education: New Zealand education is trusted and sustainable.
12. Appendix Two to the Cabinet Paper sets out in detail the proposed response to each of the 52 actions recommended by the Taskforce. We note that the paper proposes that the Ministry should begin work to respond to more than 80% of these actions in the next 12-18 months. Whilst the paper notes that this is the period in which policy work will begin (or continue), rather than a timetable for full implementation of the actions, you may wish to seek reassurance that the Ministry has the capacity to deliver in line with this proposed timetable.
13. Finally, the Minister proposes to make a number of legislative amendments through the Education and Training Bill which are outlined in a companion paper. The Ministry has consulted with the Regulatory Quality Team at the Treasury on the Regulatory Impact Analysis (RIA) requirements and where RIA are required for any changes proposed, quality assurance will be undertaken by the Ministry’s RIA panel.
Maintaining the Focus on Equity
14. As noted above, the Treasury agrees with the Case for Change made by both the Taskforce and the Minister of Education. The proposed work programme undoubtedly has the potential to address disparities in the system. However, it remains unclear at this point how the implementation of the three key proposals outlined (see paragraph 10) will have a direct impact on reducing disparities.
T2019/2732 : Treasury Report: Advice on the Government Response to the Tomorrow's Schools Taskforce Final Report Page 6
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Addressing the needs and aspirations of Māori and Pacific learners
15. Directly related to maintaining the focus on equity is the need to give greater attention to addressing the needs and aspirations of Māori and Pacific learners. The Cabinet Paper discusses the Government’s intention for a Te Tiriti o Waitangi-led approach throughout the work programme. It also proposes to address Māori learner needs through supporting a parallel Māori medium pathway. Whilst we recognise the importance of taking this work forward, there is a clear need to address the needs of the 90% of Māori learners currently attending non Māori medium education institutions. If the aim of this work programme is to address disparities throughout the system, then proposals need to clearly articulate how they will address the issues identified for these population groups throughout the system.
Structural change alone will not be sufficient to improve equity outcomes
16. With regards to the establishment of a branded business unit (the ESA) within the Ministry, we agree with the need to focus on how the Ministry supports the sector at the regional level. However, the information in the paper is high level and lacks detail about the expected impacts.
17. The Treasury has advised consistently that structural change alone will not drive the behaviours and incentives required to achieve the type and level of change needed to address equity. In our view, structural change, sequenced carefully and implemented appropriately, has the potential to go some (though not all) of the way towards shifting behaviour. We also see effective structural change as a key part of the foundational infrastructure (alongside effective resourcing) on which to build trust and relationships, and foster greater collaboration across the system through other measures.
18. We recommend that the detailed design of the ESA and Ministry redesign outlines a carefully sequenced plan for implementation and evaluation that clearly articulates how each function and element will support the Government’s desired outcomes. In addition, greater detail and clarity is essential for those measures grouped under the heading ‘Other proposed components of the Government position’, to be pursued on a 5-10 year timeframe. There is a clear risk that in prioritising structural change, with other measures on a longer track, momentum could be lost and the opportunity missed to implement targeted interventions addressing equity at a system wide level.
Prioritising equity in the short term
19. s9(2)(f)(iv)
20. Priority should be given to those interventions that have the greatest impact for equity outcomes where the benefits outweigh the costs. We would therefore expect to see clearly costed and sequenced proposals at the December 2019 report back to Cabinet, supported by a clear intervention logic that demonstrates how proposals will directly achieve the objectives outlined in the Case for Change and improve educational outcomes.
Other Non-structural Measures to Prioritise
21. Previous Treasury advice has emphasised the value and importance of leveraging existing mechanisms in our education system to achieve the Government’s desired
T2019/2732 : Treasury Report: Advice on the Government Response to the Tomorrow's Schools Taskforce Final Report Page 7
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outcomes (TR 2019/1882 refers). In particular, we recommend that the existing infrastructure of the Kāhui Ako be built on and improved to this end.
22. We note that a small mention is made of Kāhui Ako in the Cabinet Paper under a section on other components of the Government position. However, greater priority should be given to building on and improving Kāhui Ako as a core element for building a more locally responsive, integrated and accessible support function. In recognition of the potential for Kāhui Ako to carry out an important function in rebuilding trust and relationships in the system, particular regard should be given to how they might feature as part of – and interface with – the new ESA and associated regional design. We see this as a key component of the regional build out and to supporting Māori and Pacific learners.
23. s9(2)(f)(iv)
Timing and Budget Considerations
24. The timeline proposed for reporting back is as follows:
• November 2019 – the Secretary for Education to advise the Minister of Education on the design of the ESA and the related operating model, including a programme of substantial service transformation, along with a redesigned Ministry of Education.
• December 2019 – the Minister of Education to report back to Cabinet with further advice on the initial decisions arising from the Government’s position on the reform of Tomorrow’s Schools, as required.
• March 2020 – the Ministry of Education to report back to the Minister on proposals to develop and support a parallel Māori medium pathway.
• June 2020 – Officials to report to the Minister of Education and the Associate Minister of Education (Māori Education) with advice on options for engagement by Māori, including mana whenua, in school governance.
• 16 December 2020 – the Secretary of Education to report to the Minister of Education on progress with implementing changes across the education system.
25. The Treasury will be monitoring closely the development of the design for establishing an ESA and the associated redesign of the Ministry, particularly with regards to fiscal implications and timing, the impact on the centre (resulting from the movement of functions) and the strategy around people resources to ensure that there is the required experience and expertise in the regions.
26. The indicative timeline provided in the Cabinet Paper proposes a timeline for the phasing of interventions. We note in particular that policy decisions for the following proposals are scheduled for May 2020:
• the establishment of an ESA
• the redesign of the Ministry
• the establishment of a Leadership Centre or College, and T2019/2732 : Treasury Report: Advice on the Government Response to the Tomorrow's Schools Taskforce Final Report Page 8
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• the implementation of the Equity Index.
s9(2)(f)(iv)
27. Whilst we acknowledge that the proposal to build a regional function will be progressed through existing organisational forms, at a much lower cost than other potential machinery of government changes, any restructure is still likely to have significant fiscal implications. At the December 2019 report back to Cabinet, the Treasury will work with the Ministry of Education to ensure that proposals include:
• detailed information on costings for each initiative
• information on how funding will be secured - whether through budget, or from a reprioritisation exercise across the Education portfolio, and
• how initiatives fit within the overall Education Work Programme priorities and Budget 2020 priorities and timeline.
Next Steps
28. The Minister of Education is scheduled to report back to Cabinet in December 2019 with advice on the design of the ESA and the related operating model, including a programme of substantial service transformation, along with a redesigned Ministry.
29. The Treasury will continue to work closely with the Ministry throughout the Budget 2020 process to provide support on the effective prioritisation and sequencing of proposed reforms within the fiscal context. We will provide you with further advice on this as the process develops.
T2019/2732 : Treasury Report: Advice on the Government Response to the Tomorrow's Schools Taskforce Final Report Page 9
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Amended Project Delivery Agreement for City Rail Link
Reason for this To advise, and obtain your approval, of proposed changes to the Project briefing Delivery Agreement (PDA) negotiated between Auckland Council, the Crown and City Rail Link Limited (CRLL).
Action required Agree to the Amended and Restated Project Delivery Agreement, and sign the Deed of Amendment and Restatement document.
Deadline 18 October 2019
Reason for To ensure that the new PDA is signed by all parties in a timely fashion. deadline
Contact for telephone discussion (if required) Telephone First Name Position contact Ngaire Best Manager, Governance and Commercial, s9(2)(k) Ministry of Transport s9(2)(a) Principal Advisor, Governance and s9(2)(k) Commercial, Ministry of Transport David Taylor Manager, National Infrastructure Unit, The s9(2)(k) Treasury
MINISTER’S COMMENTS:
Date: 14 October 2019 Briefing number: T2019/3033 (Treasury) OC190935 (Transport) Attention: Hon Grant Robertson Security level: In confidence Minister of Finance Hon Phil Twyford Minister of Transport Copied to: Hon Julie Anne Genter Associate Minister of Transport
Minister of Transport’s office actions
Noted Seen Approved
Needs change Referred to
Withdrawn Not seen by Minister Overtaken by events
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Purpose of report
1. To notify you of proposed changes to the Project Delivery Agreement negotiated between Auckland Council (Council), the Crown and City Rail Link Limited (CRLL).
2. To obtain your approval to the Amended and Restated Project Delivery Agreement, and signature on the Deed of Amendment and Restatement.
The need for an amended Project Delivery Agreement (PDA)
3. The PDA is a contractual agreement between the Crown, Council and CRLL that sets out the terms for CRLL to manage the delivery of the City Rail Link (CRL) Project on behalf of the Crown and Council, as joint Sponsors.
4. The PDA was entered into on 30 June 2017. Since that date there have been some key changes to the project, principally:
4.1. Scope: the Sponsors agreed to vary the scope of the CRL Project to enhance the capacity of the railway (by extending platform designs to accommodate nine car trains and delivering the additional Beresford Square entrance adjacent to Karangahape Road) [refer DEV-18-MIN-0145 ].
4.2. Procurement delivery strategy: the procurement strategy for the major works, comprising the C3 Contract works (the tunnels and stations – Aotea, Karangahape and a remodelled Mt Eden) was changed from a design and construct model to an alliancing model in May 2018. The C5 (Western Line) and C7 (track-work and railway systems integration) works will now also be incorporated into the Alliance, as per CRLL’s request and Sponsors’ approval in December 2018.
4.3. Increased Funding: CRLL requested increased funding after a full project cost reassessment reflecting, amongst other things, the increase in scope and changing market conditions [refer DEV-19-MIN-0071].
5. Following these changes, the PDA required updating to ensure CRLL is accountable for delivering the CRL project according to the revised scope and budget.
The amended PDA also reflects changes to programme dates from CRLL and enhanced monitoring for Sponsors
6. Since the PDA was originally signed CRLL has gained a better understanding of the timing and cost of the project, and this will continue as procurement of the remaining works is finalised. CRLL has revised some key project delivery dates in the PDA as a result of some slippage in the programme and more advanced risk assessments.
7. s9(2)(ba)
8. s9(2)(ba)
s9(2)(ba) There will be a further assessment when the proposals to incorporate the C7 and C5 packages of works into the C3 Alliance have been presented (likely early 2020). We will continue to monitor the target delivery date and keep you apprised of any changes. The
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revised PDA requires CRLL to notify Sponsors of any significant delay to the delivery date, and to provide a remedial action plan should forecasts suggest they are unlikely to achieve it.
9. The revision of the PDA also updates the monitoring approach and includes other general improvements to make it an effective agreement for governance of the project. These changes include:
• A timeframe for a decision by Sponsors on the final ownership of assets. The PDA sets out a requirement for the decision on station and tunnel asset ownership to be made by Sponsors no later than two years prior to the anticipated construction completion of the C3 works (June 2021). Officials are working towards presenting a recommendation for asset ownership to Sponsors in mid-2020.
• s9(2)(j)
• Two additional review points by the Sponsors' assurance manager, specifically:
o a pre-tunnelling construction review (anticipated late 2020), and
o a pre-testing and commissioning "test readiness" review.
• Increasing the quality of the monthly reporting requirements from CRLL to Sponsors, including more detailed information on the allocation of contingency in the ongoing monthly cost forecasts. This will ensure officials have better advanced warning of any budget or timing issues arising over time in the Project.
• A refined approach to ‘monitoring points’ that describe actions that the Sponsors can take in response to an increased forecast cost or slippage in the timing of the project. If, at any time, the project is likely to exceed the current budget ($4.419bn) or unlikely to meet the target project delivery date ( s9(2)(ba) then CRLL is required to produce a remedial action plan that must be agreed to by the Sponsors. The original monitoring points that included (1) appointment of an observer to the Board, and (2) replacement of the Board are no longer included in the PDA on the basis that both options are available to Sponsors in their capacity as Shareholders.
10. There are other non-material changes to the PDA. A table of key changes to the PDA is attached to this report that identifies each major change with reasoning and comments. A fully marked up version of the PDA is also attached for your reference.
11. The Crown sought legal advice on the Amended and Restated Project Delivery Agreement
and the document has been reviewed by MinterEllisonRuddWatts.
Next Steps
12. Officials from Council, the Crown and CRLL, and their legal representatives, have reviewed and approved the Amended and Restated Project Delivery Agreement. A copy of the Deed of Amendment and Restatement, and the final version of the Amended and Restated Project Delivery Agreement, are attached for your reference.
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13. The Amended and Restated Project Delivery Agreement has been circulated to all of the CRLL Board and they have each provided their written approval that the Deed of Amendment and Restatement can be signed.
14. The process is then for three copies of the execution versions of the Deed of Amendment and Restatement to be signed in sequence by Auckland Council (Mayor, Deputy Mayor and Chief Executive), the Crown (Minister of Transport and Minister of Finance) and CRLL (Chair Sir Brian Roche and another Director).
15. Council officials have briefed the Mayor, Deputy Mayor and Chief Executive, and obtained their agreement and signatures.
16. Your Offices will provide you with execution versions of the Deed of Amendment and Restatement for your signatures.
Recommendations
17. The recommendations are that you:
(a) approve the Amended and Restated Project Delivery Agreement for the City Rail Link Project, and give effect to this approval by signing the Deed of Amendment and Restatement.
Yes / No Yes/ No Minister of Finance Minister of Transport
David Taylor Ngaire Best Manager, National Infrastructure Unit Manager, Governance and Commercial The Treasury Ministry of Transport
Hon Grant Robertson Hon Phil Twyford Minister of Finance Minister of Transport
Date: Date:
Attachments: • Deed of Amendment and Restatement Attachments 1, 3 and 4 are withheld under s18(d)- will soon be made publicly available • Summary of Amendments to PDA • Execution version of Amended and Restated Project Delivery Agreement • Marked up version of Amended and Restated Project Delivery Agreement. Treasury:4177491v4 Page 4 of 4
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Summary of Amendments to PDA
PDA Section Description of change 4.7 Project Delivery Schedule Change to report monthly on progress against Project Delivery Schedule 4.11 Post-Completion Change to provide for the staged handover of assets following completion of Operations Works Packages, subject to the decision on ownership of the assets by Auckland Council and the Crown. The parties have agreed to reach a decision on assets ownership no later than 2 years prior to practical completion of the CRL Project. 5.2 Material Contracts Change to include that CRLL not suspend or take any step to suspend a material contract 5.4 Major Transaction Approval Change to include the amendment of any material contract, as well as the existing provisions for entering into a material contract 5.9 Claims Management Change to include reporting on any claims as part of the monthly reporting to Sponsors and that any settlement of claims, disputes or proceedings represents good value for money for Sponsors 7.1 Sponsor Funding Change Forecast Project Cost to Target Delivery Cost. Definitions are also amended to reflect this. Change to include that sponsors may agree between themselves different funding contribution ratios provided the total amounts to 100% 7.2 Forecast Project Costs Change Total Delivery Cost to Forecast Project Costs, monitored against the May 2019 P50 Forecast Project Costs 8 Forecast Project Costs Change to include monthly reporting and CRLL to provide written notification to the Sponsors as soon as CRLL becomes aware of any material change which affects (plus or minus) the Forecast Project Costs and/or the Quarterly Cash- flow Forecast as set out in Schedule 6. 13.2 CRLL’s Representative Change to clarify CRLL representative is CRLL Chief Executive 14.1 Reporting Change to make reporting occur on a monthly basis, with clearer set of requirements 17 Monitoring Performance Change from focus on monitoring points to monitoring performance, and removal of previous monitoring points 19 Remedial Action Plan Change to include the remedial action plan to address the relevant event (Including on Forecast Project Costs and the Project Delivery Schedule) Schedule 1: Definitions and Inclusion of definition for C3 PAA, Monthly Report Interpretations Changes to Permitted Variations, Target Delivery Cost, Total Available Funding Removal of monitoring points Schedule 2: Project Scope Updated to include 9 car capability Schedule 3: Sponsors Updated to include 9 car capability Requirements Schedule 4: Review and Removal of C5 and EOI and RFP to reflect changed procurement process Approval Process Updated to include review points for: pre tunnel construction review, pre test and commission phase and pre operations 3.1 Material Contracts – Specific matters for sponsor approval and 3.2.1 Items of Delivery Strategy for approval by sponsors, updated to reflect procurement strategy changes Schedule 5: Project Delivery Updated Schedule Schedule 6: Forecast Project Updated to reflect revised agreed project costs Costs Schedule 7: Monthly Reports Updated for monthly reporting and expected minimum requirements Schedule 8: Completion Change to clarify Completion of specific Works Packages Requirements
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NEGOTIATIONS-IN-CONFIDENCE
Reference: T2019/3307 SH-2-2-3
Date: 18 October 2019
To: Minister of Finance (Hon Grant Robertson)
Deadline: None (if any)
Aide Memoire: Updates to the Pay Equity Governance and Oversight Framework
You will have received from the State Services Commission (SSC) an updated version of a Cabinet Paper seeking agreement to the Pay Equity Governance and Oversight Framework for State Sector Claims (the Framework). s9(2)(h) s9(2)(h)
s9(2)(h)
s9(2)(h) s9(2)(h) We suggest you now seek Cabinet’s approval of the Framework. Implementing the Framework is critical as many large claims in the State sector are continuing to progress to significant steps in the process without clear access to an advisory group.
Changes to the Framework
Change 1: s9(2)(h) clarifying in the Framework (Appendix A) that the Treasury’s fiscal management advice is separate to its role on the Governance Group s9(2)(h)
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To make it clear that the Governance Group will only have regard to process and not outcomes, s9(2)(f)(iv) ‘ s9(2)(f)(iv)
The Governance Group will be permitted to ask questions about fiscal management, in the context of good process s9(2)(f)(iv) s9(2)(f)(iv)
Separate to its role on the Governance Group as an adviser, the Treasury will continue to provide fiscal management advice to agencies and Ministers. This will happen at four distinct points:
1. Once the comparator workforce evaluation is significantly advanced, the Treasury will work with the agency to develop estimates of the financial impact of the settlement on the agency.
2. s9(2)(f)(iv)
3. s9(2)(f)(iv)
4. s9(2)(f)(iv)
This fiscal management role will be kept entirely separate from the Treasury’s role on the Governance Group, as the Governance Group will not be considering fiscal outcomes when providing process advice.
Change 2: s9(2)(h) ‘ s9(2)(h) s9(2)(h)
s9(2)(h) . The Governance Group will continue to provide assurance to Ministers around the quality of the process being followed by the employer.
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Update on Legal Advice
Agencies have recently commissioned three separate pieces of legal advice in relation to Pay Equity: s9(2)(h)
• s9(2)(h)
•
•
•
•
s9(2)(h)
• s9(2)(h)
• s9(2)(h)
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• s9(2)(h)
• s9(2)(h)
• s9(2)(h)
s9(2)(h)
Officials are available to meet and discuss this advice with you.
Avril Gillan, Analyst, Skills and Work, s9(2)(k)
Nick Carroll, Manager, Skills and Work, s9(2)(k)
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s9(2)(k)
s9(2)(k)
s9(2)(k)
s9(2)(k)
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s9(2)(f)(iv)
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s9(2)(f)(iv)
s9(2)(f)(iv)
s9(2)(f)(iv)
s9(2)(f)(iv) s9(2)(f)(iv)
s9(2)(f)(iv) s9(2)(f)(iv)
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s9(2)(g)(i)
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