REFORM OF THE STATE SECTOR ACT 1988 - Directions and Options for Change Discussion document for public feedback September 2018
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NEW ZEALAND’S PUBLIC SERVICE BELONGS TO YOU, THE PEOPLE OF NEW ZEALAND. REFORM OF THE STATE SECTOR ACT 1988 Directions and Options for Change Discussion document for public feedback September 2018 Published by the State Services Commission on behalf of the Minister of State Services.
CONTENTS
Foreword by the State Services Commissioner Page 4
Foreword by the Minister of State Services Page 5
Chapter 1 Overview Page 6
Chapter 2 The Case for Change Page 8
Chapter 3 Unifying Purpose, Principles, and Values Page 11
for the New Zealand Public Service
Chapter 4 Responding to the needs and aspirations of Māori Page 19
Chapter 5 People Page 21
Chapter 6 Organisational Arrangements Page 23
Chapter 7 Leadership of the Public Service Page 29
Chapter 8 Enhancing the capability of the Public Service Page 38
to serve successive governments
Chapter 9 A New Public Service Act Page 40
State Services Commission | State Sector Act Review | Consultation Document
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FOREWORD BY PETER HUGHES,
STATE SERVICES COMMISSIONER
The Public Service has two important roles in New Zealand society. First, New
Zealanders depend on hard working public servants to deliver vital services
every day. Second, the Government relies on public servants for advice and to
implement its priorities and policies, which are designed to achieve real outcomes
for New Zealanders.
The Public Service is expected to support the Government of the day, regardless of political colour. This means public servants act with
integrity, are politically neutral, provide free, frank and fearless advice, and ensure appointments are based on merit. And it means a
commitment to open government.
The State Sector Act underpins the management of New Zealand’s State sector. The current Act is 30 years old and the Public Service must
move with the times and demands of the people it serves. The Act has proven to be effective when individual departments or agencies deliver
goods and services that they have sole accountability for. But the Public Service is less effective when agencies are required to join forces to
deliver multiple services and solve complex, modern problems.
This means a transformation across the Public Service that requires strong leadership, clear expectations and accountability, better ways of
organising to respond to the needs and demands of citizens, and building more capability across the system as a whole.
That’s why the Government has asked us to review the State Sector Act 1988.
We are considering changes to the Act that would enable the New Zealand Public Service to:
• deliver better outcomes and services, building citizen-centred services and achieving Government priorities
• support the Crown/Māori relationship and better respond to the needs and aspirations of Māori
• respond flexibly and with agility, to new circumstances and the demands of a diverse and fast changing, digitally enabled, society
• work as an unified institution with a common ethos and culture based on the spirit of service to the community
• fulfil its role and responsibilities, as part of the Executive Branch, to support and enable New Zealand’s democratic form of government.
The options and proposals in this paper reflect the thinking that public servants and others have done to date on a new fit-for-purpose statute.
This consultation document reflects thinking so far on how the State Sector Act 1988 can be improved on. We want to know if you think the
possible solutions we have come up with are workable and whether we have missed anything. We’d love to hear from you if you work in the
public sector, community sector, or private sector or you are simply a citizen with ideas to share
Peter Hughes,
State Services Commissioner
State Services Commission | State Sector Act Review | Consultation Document
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FOREWORD BY THE HONOURABLE
CHRIS HIPKINS, MINISTER OF STATE SERVICES
New Zealand’s Public Service exists to serve New Zealand. And it does this in
a wide variety of ways. Most obvious to the public are the thousands of public
servants in the frontline such as nurses, teachers, police officers and those in the
defence force protecting our nation.
Thousands more public servants safeguard our environment, borders and heritage while others provide
social services for New Zealanders who need help. Less visible are the many public servants engaged
in work to help our economy grow, issuing passports, in regulatory and compliance activities and
keeping our prisons and courts running every day.
And then there are those who serve New Zealand by keeping the wheels of our democracy and government turning. Public servants ensure
the integrity of our electoral process, the smooth transition between one Government and the next, and support the elected Government with
expert and professional policy advice.
Without public servants, the country would grind to a halt. Of course, none of this is free. The taxpayers of New Zealand fund the Public
Service. And the Public Service has a responsibility to get the best out of every dollar.
That means constantly striving to do better. Back in the late 1980s and 90s New Zealand took a giant leap towards creating a more modern
Public Service. The 1988 State Sector Act introduced radical changes to the New Zealand Public Service, which had a profound and positive
impact. It was made crystal clear for departments where each of their responsibilities lay and what they were accountable for. And it has
worked well so long as most of the things that New Zealanders need most of the time can be delivered by a department working alone.
But as times and technologies change, so do the demands of citizens. People now expect the Public Service to be joined up and organised
around their needs. Technology is revolutionising how New Zealanders live and buy goods and services. They rightly expect to be able to
deal with government in the same way - online, on demand and on their phones or tablets.
The current Government is seeking a shift in focus within the Public Service from individual departments to the system overall. We used to think
about how to make individual departments work better. Now we need to think about how the system works together as one to increase the
wellbeing of New Zealand and New Zealanders.
We also need to continue to improve the diversity of the Public Service to reflect the communities it serves. In particular, we need to do a
better job of delivering for Māori by developing a workforce that recognises and values the expertise that Māori bring to the job.
The Public Service has changed in recent years to be more effective and responsive to people’s needs. But now we have an opportunity to do
even better.
The options and proposals in this paper reflect the thinking that public servants and others have done to date on a new fit-for-purpose statute.
I encourage all interested individuals, groups, and organisations to provide feedback on the contents of this document.
This Government feels strongly that all New Zealanders should be given the opportunity to have a say on how their institutions are run and
governed and I look forward to seeing the views of New Zealanders on the changes proposed here.
Chris Hipkins
Minister of State Services
State Services Commission | State Sector Act Review | Consultation Document
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CHAPTER 1: OVERVIEW
This document details reform related to the State Sector Act 1988. vital importance to our democracy of integrity and professionalism
It is part of a suite of reforms to the public sector system: the others of the Public Service.
include embedding intergenerational wellbeing in the Public Finance Chapter 3 also asks how we should define the New Zealand Public
Act 1989 and establishing an Independent Fiscal Institution. Service and what its boundaries could be. We are suggesting an
The review of the State Sector Act 1988 aims to enable the Public expanded definition of the Public Service that would include many
Service to: more of the entities involved in providing New Zealand’s public
• deliver better outcomes and better services services.
• create a modern, agile and adaptive New Zealand Public Chapter 4 describes the intended role of the Public Service in
Service, and supporting the Crown in meeting its Treaty of Waitangi obligations
and meeting the needs and aspirations of Māori.
• ensure its role in supporting New Zealand’s democratic form of
government. Chapter 5 discusses the most important part of delivering excellent
public services - our people. This chapter explains how legislation
The legislative changes set out in this paper are designed to enable
could support the growth of a more diverse and inclusive, skilled,
the Public Service to do better for New Zealand. The proposals do
and effective public service workforce.
this by:
Chapter 6 addresses organisational arrangements in the New
• providing a wider range of options for organisational and Zealand Public Service. It suggests that a more flexible range of
workforce development. These form a set of tools that can be organisational options will contribute to the ability of the New
employed where needed to help improve public services and Zealand Public Service to achieve better outcomes and better
the achievement of outcomes for New Zealanders services for New Zealanders.
• unifying the Public Service around a common purpose, Chapter 7 discusses the leadership roles in our system, and
principles and values proposes ways of building more effective system leadership groups
• ensuring strong and capable leadership of the system. and roles. This is about building a system made up of departments
and agencies, working together to deliver better services, while
In reviewing the State Sector Act, we are envisaging enabling, not
being agile and responsive to change, and ethical to ensure the
prescriptive, legislation. That means that not all of the detail of the
integrity of Executive Government.
proposals outlined in this document would be drafted into the Act.
But we have included this detail in this document to show the nature Chapter 8 discusses how the Public Service can support successive
and scope of the change we are suggesting, and which we would governments through publication of foresight and data.
want the Act to enable. Chapter 9 proposes that the legislative changes in this document
Chapter 2 sets out the case for change based on the observed should be introduced by way of a new Aotearoa New Zealand
issues arising from the operation of the State Sector Act over the Public Service Act rather than by way of amendments to the existing
period it has been in existence. State Sector Act.
Chapter 3 proposes that the legislation contain a statement of Throughout the document, we have included questions to highlight
purpose for the Public Service together with statements of the issues on which we would appreciate your views. You can respond
principles and values of the Public Service. Clear purpose, principles directly to the questions in the text, or you can provide feedback in
and values are critical for leading change in complex systems, just any other format you prefer.
as they are in individual organisations. The purpose, principles and We are not proposing changes to all of the provisions of the current
values set out in chapter 3 are designed to be a powerful unifying Act. If this document does not mention a particular provision of the
influence across the Public Service. They will help achieve all the current Act, it means we are not proposing significant changes to
objectives of the review; focusing Public Servants on the need for it. The current provisions of the Act, not discussed in this document,
improved services, on the need for agility and innovation and on the would be moved across to the revised Act either unchanged, or with
technical or drafting modifications.
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Once we have considered all the feedback, officials will prepare
a summary report for the Minister of State Services. This is planned
to occur before the end of 2018 and the Minister of State Services
has indicated he wants to make policy decisions on changes to
legislation in early 2019.
HOW TO HAVE YOUR SAY
Make a submission by Friday 12 October
The closing date for submissions is 5pm, Friday 12 October 2018
You can:
• Email your submission to: submission@havemysay.govt.nz
• Post to: Submissions, State Services Commission, PO Box 329,
Wellington 6140
• Complete an online submission at www.havemysay.govt.nz
We intend to publish all written submissions on the SSC website.
Please note also that all submissions are subject to the Official
Information Act 1982, and that your submission may therefore be the
subject of a request
If you do not want your submission to be made public, please state
this clearly, together with your reasons, and whether your objection
relates to your whole submission or to a part or parts of it.
Any personal information you supply in the course of making your
submission will be used by us only in relation to the matters covered
in this discussion paper. Please clearly indicate in your submission
if you do not want your name to be included in any summary of
submissions that we publish.
HAVE YOUR SAY ON YOUR PUBLIC SERVICE
The New Zealand Public Service is here to serve you, so it’s important you help us shape it in to a service
that will best meet the needs of our country now, and in to the future.
It’s easy to have your say.
WEB EMAIL WORKSHOPS SOCIAL
Go online to Got a question? Email us at Attend one of our public Join the social conversation.
www.havemysay.govt.nz info@HaveMySay.govt.nz. workshops. Visit the website Like and follow us on SSCNZ.
to read more about the proposals for more info.
and make your submission. You can also email
your submission to
submissions@HaveMySay.govt.nz.
CLOSING DATE: The public consultation closes on Friday 12 October 2018.
If you have any questions about the consultation process or the proposals, please email us at info@havemysay.govt.nz.
State Services Commission | State Sector Act Review | Consultation Document
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CHAPTER 2: THE CASE FOR CHANGE
The review of the State Sector Act is an opportunity to ensure lagged behind our practice and now need to catch up. This chapter
the Public Service is best placed to achieve the objectives of discusses this issue in detail. The analysis below forms the problem
Government; increasing the wellbeing of all New Zealanders and definition for the review of the State Sector Act through a discussion
working with integrity and professionalism to help the Government of the strengths and weaknesses of the current legislation.
of the day frame and implement its policies. Our aim is a Public
Service that puts people at the centre of how it organises services, The State Sector Act, in its original version, dates from 1988 and
respond flexibly as needs and priorities change, and works with was part and parcel of the transformation of New Zealand’s State
integrity and a spirit of service. This is an opportunity to change services that occurred through the late 1980s and early 1990s.
aspects of the current law to support this vision, including the Public Over this period the Public Service shrunk to a ‘core’ of agencies
Finance Act 1989 and the State Sector Act 1988. providing policy, regulatory, and non-commercial service delivery
functions of Government. The State Sector Act of 1988 and Public
We will know we have succeeded when New Zealanders tell Finance Act in 1989 was enacted to drive far-reaching change in
us that public services are more effective and accessible, when this remaining ‘core’: including in the governance, accountability,
Ministers are increasingly satisfied with the professional support they management and employment arrangements of Government
receive from public servants, and when we can see that changes to departments.
the legislation governing the Public Service have been of positive
assistance to these developments. As is shown below there are The new State Sector Act was intended to decentralise and devolve
aspects of the current law which are less than optimal to take the decision making in the Public Service to the level of individual
Public Service in the direction required. departments and to the chief executives of departments. The new
system, in combination with the Public Finance Act 1989, gave
chief executives much greater control of departmental funding,
CURRENT STATE operational and employment decisions than had been the case
previously.
New Zealand’s public services perform very well by international
The intention was that with the freedom to manage ‘inputs’ would
standards in terms of both integrity and effectiveness. Levels of
come greater accountability to Ministers for ‘outputs’. Accountability
public confidence in the Public Service are correspondingly higher
was enhanced by making chief executives fixed-term employees
than in other comparable jurisdictions. One reason for this is that
(rather than ‘permanent heads’) who could be rewarded or
the departments and ministries which make up the Public Service,
replaced on the basis of their, and their departments, performance.
are efficient and responsive in their operations. There is general
consensus that the legislative framework for the Public Service,
including the State Sector Act 1988 and Public Finance Act 1989, ISSUES WITH THE ACT
has enhanced this level of efficiency and responsiveness at the
department and ministry level. The State Sector Act is generally acknowledged to have been
positive in terms of increasing the efficiency and responsiveness of
But success at the departmental level is not enough. The Public
individual departments. However, on a larger scale, in terms of the
Service also needs to perform excellently in the things that
performance of the system overall, issues have been identified. There
departments need to do together in a joined up way, and it needs
is concern that a previously unified Public Service was fragmented
to maintain the same high standards of professionalism and
by the Act, that too little was done to ensure a strong ‘centre’ of the
integrity across the board in order to support the role of executive
system, and that a range of issues arise from this. Overall, the issues
government in our democracy. Over time, the focus of the Public
identified tend to fall into three broad groups:
Service has shifted more to these system-wide concerns. Work in
recent years has greatly enhanced the ability of the Public Service • Matters of fragmentation including the narrowing of each
to work in a joined up way. However, our statutory provisions have department’s focus to its own particular outputs and a short-term
horizon. One commentator has called this “the Silo Effect”
State Services Commission | State Sector Act Review | Consultation Document
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• Effects on the capability, in particular the senior leadership The present review is an opportunity to take a system-wide approach
capability, of the Public Service and to reflect the changing expectations of the relationship between
• Concerns about the ethical foundations of the Public Service the Public Service and Māori. Many Māori have now settled
including the conventions around political neutrality and the their historical claims and have a strong expectation of a different
provision of free and frank advice. relationship with the Crown and Public Service. Formal recognition
in legislation of the relationship between the Crown and Māori will
Issues arising from fragmentation have been highlighted in various
signify a more future focussed relationship that can aim to improve
formal reviews to the State Sector Act over the past 30 years,
outcomes for Māori and the nation generally, and help to ensure
including:
that the Treaty partners meet their respective Treaty obligations.
• The Logan Report of 1991, which found that the legislative The Public Service has a significant role in supporting the Treaty
framework enacted from 1988 had been sound, but pointed partnership.
to some emerging problems including in the “translation of
Reviews of the Act have also pointed to capability deficits,
collective strategies into organisational plans”.
particularly in leadership capability. For example, the 2001 the
• The November 2001 report of the Ministerial Advisory Group Report of the Advisory Group on the Review of the Centre noted:
of the Review of the Centre, which found that the current system “This is apparent in the areas of senior management and staff
was a “reasonable platform to work from” and that client service development. There are not enough people with the mix of skills
had improved, fiscal transparency had allowed prioritisation, and experience required to provide effective leadership of the
freedom to manage has enabled flexibility and innovation, and departments and agencies of the State sector…. Current highly
governance in the Public Service was clear and well understood. devolved arrangements for senior management development and
However, it also identified a lack of systematic process for setting career management are inadequate to produce the number of
outcome goals and priorities, and a tendency to a short-term skilled leaders required”. The 2011 Better Public Services Advisory
focus. Fragmentation was also making it hard to agree and Group Report found the same problems persisting. The Group found
pursue cross cutting objectives. that:
• The Report of the Better Public Services (BPS) Advisory Group,
presented to Ministers in November 2011, which found that: • The role of State Services Commissioner to lead the system
“Change is needed to [amongst other things] manage the state was not explicit and there were limited levers to shape the state
agencies that provide or fund services less as a collection of services
individual agencies, in pursuit of their own singular objectives, • The State Services Commissioner had limited ability to plan
and more as a system that is focused on the results that will have succession or develop future chief executives through influencing
the biggest positive impact on New Zealanders’ lives”. second tier appointments or shifting people to development
Governments these days place great emphasis on addressing opportunities.
complex issues that require a highly organised response from the Capability deficits, and leadership deficits in particular, undermine
Public Service. Though the system has improved, it remains the case the ability of the Public Service to work innovatively and agilely in
that the response to highly complex issues, especially those that response to new and different challenges. We live in a fast changing
require sophisticated cross-agency collaboration, is slower than and unpredictable world and it is very important that the Public
it needs to be. This was shown by the experience of the 10 Better Service is able to work in a modern, flexible and adaptive way. For
Public Services Results. Successive progress reports to Cabinet on this reason, building agility and flexibility is the second objective of
the Better Public Services Results highlighted the extent to which the review of the State Sector Act.
agencies found it challenging to make decisions in the best interests
of the broader sector and/or state sector system rather than serving Concerns were also raised about standards of integrity and conduct
the interests of a single portfolio. Progress reports also highlighted in the Public Service. There was in the SSC a renewed focus on
the costs of collaboration between multiple agencies. integrity issues from the early 2000s. This was mirrored in the State
Sector Standards Board which, in June 2002, produced an Ethos
Māori have also raised concerns about the lack of a holistic and of the State Sector report. This reported concerns about the ethical
joined up approach1 in the Public Service and the failures of the and managerial standards of organisations in the State Sector.
Crown in meeting its Treaty obligations to improve outcomes for “Regrettably, instances of inappropriate behaviour continue to come
Māori. Historically, Māori have been over represented in negative to light and underline our observation in last year’s report that there
statistics in most social areas. Concerns about the ability of the is ‘a need to be vigilant, in terms of behavioural standards, effective
system to respond to issues that affect Māori have also been systems, and commitment by leadership.”
expressed in the recent hui Hon Kelvin Davis, Minister responsible
for the new Crown/Māori relations2 portfolio has held, in Integrity and professionalism are fundamental to the public
numerous contemporary claims before the Waitangi tribunal and reputation of the Public Service. Low public credibility would put at
in other processes. It was clearly indicated during the hui held by risk the legitimacy of executive government and the role the Public
Minister Davis that the system has not adequately delivered in its Service plays in ensuring the proper and effective functioning of our
engagements with, and in outcomes for, Māori. democracy.
1
The Waitangi Tribunal, Te Whanau o Waipareira Report, Wai 414, p.230,1998
2
The Crown/Māori relationship is a simple way of talking about the multiple relationships where different parts of the government engage with Māori (as whānau, hapū, iwi, Māori organisations or
other interest/sector groups) on a broad range of issues important to Māori.
State Services Commission | State Sector Act Review | Consultation Document
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For this reason, the third focus of the current review in on ensuring that the Public Service is well placed to perform its constitutional role in
supporting New Zealand’s democratic form of government.
Despite the issues with the State Sector Act there have been, for most of its history, few voices calling for fundamental change in the statute.
Generally, this is testament to the strength of the Act. However, over time the pressure for change has increased as the deficiencies of the
legislation have been seen in practice. This found expression in the 2013 amendments to the Act which, while significant, did not alter the
underlying framework of the Act. Experience since the legislative amendments of 2013 shows the persistence of the same issues that have
been apparent since the early 1990s. Fragmentation, difficulty of system-wide leadership development, barriers to collaboration, and system
integrity concerns still remain.
Consequently, arising from the experience of the State Sector Act in practice, the current review focuses on change that will ensure the Public
Service is able to:
• deliver better outcomes and better services
• create a modern, agile and adaptive New Zealand Public Service, and
• ensure its constitutional role in supporting New Zealand’s democratic form of government.
Reform of the State Sector Act will be a contributor to change in the Public Service, but it is not the only one. A range of drivers of change,
legislative and other, are involved in system change. Changes to the Public Finance Act, to build a wellbeing perspective into Government
fiscal objective setting and Treasury reporting, will make a major contribution. Other levers for change include organisational change, such
as measures to build collaborative organisational cultures. Clear expectations and targets will be of vital importance as will be a range of
employment and workforce policy changes to ensure the Public Service is an exemplar employer.
State Services Commission | State Sector Act Review | Consultation Document
10CHAPTER 3: THE UNIFYING PURPOSE,
PRINCIPLES AND VALUES OF THE NEW
ZEALAND PUBLIC SERVICE
OVERVIEW and values of the New Zealand Public Service. Such statements do
exist, for example in various sections of the State Sector Act, and
Many New Zealanders come to work as part of the New Zealand in the Public Service Code of Conduct issued by the State Services
Public Service every day. They do so to make a positive difference Commissioner. They are also implied in other legislation, like the
for the individuals and communities of New Zealand. They are Official Information Act 1982. However, we lack a single statement
optimistic that public service can make this change. For them, public that can act as a point of identification and unity for the New
service matters. This is the spirit of service that needs to characterise Zealand Public Service.
everything the Public Service does now and into the future. This We propose that the statute include provisions outlining the purpose,
chapter is about ensuring that the Public Service and Public Servants principles and values of the New Zealand Public Service. Placing
are; imbued with a spirit of service; strongly focused on the customer these in legislation will ensure that they form an enduring foundation
and citizen; behave with humility in engagements with individuals for the Public Service. Articulating the purpose, principles and values
and communities; and are motivated by a collective sense of higher of the New Zealand Public Service in one place will also clarify
purpose. the expectations that society places on the Public Service. Clarity
The New Zealand Public Service has a very complex set of roles of understanding will assist us to promote and embed the spirit of
to perform, from providing a huge range of services to New service across the New Zealand Public Service, supporting public
Zealanders, to the fair and uniform application of rules and servants in their efforts to work in new and innovative ways that best
regulations and supporting and advising the Government while meet the needs of New Zealand and New Zealanders.
supporting the constitutional role of the Executive in our democracy. There will also be a need for more detailed specification of how the
Performing these roles to the highest possible standard requires a principles and values should be applied in practice. We propose
range of different approaches. For this reason there is considerable that the Commissioner have the ability to issue guidelines and rules
variation between departments in the way they work, are organised, on the application of the principles and values to specific issues and
and in their organisational cultures and behaviours. circumstances. These will be able to be updated and extended more
However, there are some common standards that form the flexibly that the Act, and therefore will be the appropriate place for
bedrock of the Public Service. Whatever way they are working, matters of detail. We envisage that the guidelines and rules issued
all departments need to maintain high standards of service and by the Commissioner, including through the issuing of codes of
conduct, as failure in one department reflects on all and undermines conduct, will be the means of establishing formal and enforceable
the role of the New Zealand Public Service in supporting Executive obligations. The principles and values in the Act will not be directly
Government. All departments and individual public servants must enforceable. The intention is that they will be given life through chief
work in the way that retains New Zealanders’ trust and confidence executive leadership, corporate documents and agency policies,
and in the Public Service. These considerations point to the need to and other instruments such as active promotion of codes of conduct.
unify the New Zealand Public Service around some fundamental The purpose, principles and values are important; they will shape the
common elements. The expectations of public servants, departments culture of New Zealand’s public service and this will impact on how
and agencies, need to be clear. it interacts with New Zealanders. We have put forward proposals
There is no single legislative statement of the purpose, principles which we think are broadly, but not yet exactly, right. We are keenly
interested in feedback on these proposals.
State Services Commission | State Sector Act Review | Consultation Document
11The proposals in this chapter will help achieve all the objectives statement that adequately captures the purpose of the Public Service.
of the review; focusing Public Servants on the need for improved We know that the Public Service has the following roles and a
services, on the need for agility and innovation to that end, and on purpose statement will be drawn from this.
the vital importance of the integrity and professionalism of the Public
Service in our democracy.
The chapter also proposes that the Act contain an expanded
definition of the Public Service that would include many more of the PROPOSED PRINCIPLES OF THE
entities involved in providing New Zealand’s public services, and NEW ZEALAND PUBLIC SERVICE
which are currently defined as part of the State services rather than
the Public Service. The New Zealand Public Service exists to improve the
intergenerational wellbeing of New Zealanders, including
CONTEXT by –
• Delivering results and services for citizens
The proposals in this document are made within the existing
constitutional conventions. Ministers are accountable to Parliament —— Organise, provide and purchase services
(and therefore to the people) for policy implementation and for the —— Design and operate regulatory systems
operations of their departments. This doctrine of individual ministerial —— Anticipate and manage future risks and
responsibility requires that Ministers have the authority to direct opportunities
chief executives on the administration and operation of departments • Serving the Government of the day and successive
except where there are functions that a chief executive must, under governments effectively and efficiently
statute, perform independently. Public servants (through their chief ——Provide advice that supports Executive
executives) serve their Minister. They are ‘neutral’ in that service in
Government to make decisions
the sense that they are not required to defend or account for policy
—— Implement Government policies
decisions.
—— Undertake the administrative functions of
These proposals are not intended to change or undermine existing Government
constitutional settings and are in fact designed to bolster them. The • Supporting continuity of democratic government
departments of the Public Service remain part and parcel of the —— Serving government with professionalism and
legal Crown and therefore are required to serve the government political impartiality
of the day loyally and faithfully. Moreover, we do not propose
—— Maintaining public trust and confidence in good
to extend the boundaries of the legal Crown so other agencies,
government
like Crown entities, which are intended to operate at arms-length
from Ministers, will continue to be governed in accordance with —— Upholding the rule of law
the Crown Entities Act and their own individual statutes. However, —— Assisting the orderly transition between one
by placing clear statements of purpose, principles and values in government and its successor.
one authoritative document, easily available to public servants
and all New Zealanders, we will provide a stronger basis for
communicating, understanding, and inculcating the fundamentals of
the Public Service role in supporting Executive Government. PRINCIPLES OF THE NEW ZEALAND
PUBLIC SERVICE
PURPOSE OF THE NEW ZEALAND
PUBLIC SERVICE The Public Service Act 1912 first established political neutrality and
merit selection as principles for the New Zealand Public Service.
The State Sector Act 1988 did not set out a purpose for the New The 1962 State Services Act expanded these principles by stating
Zealand Public Service. It focused on actors within the public that the Public Service must be imbued with a spirit of service to the
management system (the State Services Commissioner and chief community. In 1988, the State Sector Act reinforced the existing
executives), and the functions, powers and responsibilities of those principles but spread them throughout the legislation, making it
actors. difficult to read them as a coherent set of unifying principles.
This articulation of the New Zealand Public Service does not reflect The 2013 amendments to the State Sector Act affirmed stewardship
the role and importance of the Public Service in New Zealand’s and free and frank advice as principles for the Public Service (both
constitutional framework. The Public Service is a fundamental of which had long histories as constitutional conventions), but failed
institution within the framework of New Zealand’s democratic to bring the various principles together in one clear statement.
government. It is part of Executive Government, supporting the Alongside the principles found in the State Sector Act, other
Government to achieve its objectives according to law and being legislation (such as the Official Information Act 1982 and the
trusted to serve future governments with the same integrity and Ombudsmen Act 1975) has confirmed openness, with appropriate
professionalism. protections, as a key principle for Executive Government and the
Reform of the State Sector Act can provide a clear articulation of Public Service.
the purpose of the Public Service. We do not yet have a succinct
State Services Commission | State Sector Act Review | Consultation Document
12The reform of the State Sector Act provides an opportunity to set out Merit selection
these foundational principles in a concise statement at the front of the
Act. We propose that the Act includes the following principles of the Appointments to the Public Service must be based on merit, which
Public Service: means appointing and promoting the person who is best suited to the
position. Employment in the Public Service should not be tarnished
by favouritism, nepotism or political considerations.
PROPOSED PRINCIPLES OF THE Appointing and promoting on merit appears the most
NEW ZEALAND PUBLIC SERVICE straightforward principle to implement. The reality is that merit is
constrained when anyone is effectively excluded from applying for
Proposed principles of the New Zealand Public Service a position. Considerations of gender, disability, sexual orientation
and ethnicity have affected and continue to affect many New
The proposed principles of the New Zealand Public
Zealanders. The Public Service needs to address inherent barriers
Service are –
to merit, such as the concerns that there may be discrimination
a) Political neutrality experienced by Māori and some other cultural communities, the
challenges of an ageing population, and inflexible work practices.
b) Free and frank advice The Public Service has a leadership role to meet and demonstrate
employment standards, including a diverse and inclusive workforce.
c) Merit selection The Public Service must reflect the communities it serves and
d) Openness welcome diversity in an inclusive manner.
e) Stewardship. Openness
Individual New Zealanders must be able to have confidence in
decisions made about them, and New Zealand as a community
Political neutrality must have confidence about the decision-making process. Openness
means information is available about what decisions are made, who
Political neutrality is the cornerstone of the Public Service. It requires is making them, and how people can participate.
the Public Service to provide consistent services, including policy
The principle of openness has three elements to it. It is about
development, for the Government of the day, while maintaining the
engaging citizens in the process of designing and delivering
trust that it can continue to serve successive Governments. Political
better outcomes and services, and partnering with citizens and
neutrality requires the Public Service to understand and operate
communities where appropriate. It is about giving citizens and
within the current political context without becoming involved in
organisations the information, knowledge and ease of access to
partisan competition.
engage in the public processes of government and have their voice
A politically neutral Public Service is central to building the trust and heard and valued should they choose to. It is about empowering
confidence of the public. New Zealanders should be confident that people to participate in decision-making, and being receptive to that
their elected Government is professionally supported to develop participation.
and implement its policy, and that services will be delivered in
Openness does not preclude confidentiality. There is a balance
accordance with those policies, regardless of whether the public
to be struck, for instance, when Cabinet needs to work through to
servants involved personally support the policy or not.
a decision or when it is a matter of protecting the information that
government holds on individuals. In many areas, Parliament has
Free and frank advice legislated the need for confidentiality and public servants need to
uphold these laws.
Government decision-making benefits from free and frank advice,
which is based solely on the facts and merits of an issue and which
may be assertively put forward even when it is not welcomed.
Stewardship
Free and frank advice is designed to support Ministers to achieve The Public Service must look ahead to the medium- and long-term to
their objectives. Free and frank advice ensures that Ministers identify and meet future challenges, and to take future opportunities
individually and collectively are better informed about the benefits, to strengthen New Zealand and the security and wellbeing of its
costs, risks and uncertainties associated with the decisions they are people. The Public Service must be able to connect these long-term
being asked to take. perspectives with the shorter-term imperatives of the Government of
the day.
To be effective, free and frank advice depends on a relationship of
trust and confidence between a Minister and officials responsible for This requires a Public Service that values foresight and builds the
the advice. This does not necessarily mean agreeing. In the end, it is experience and capability to think, plan and manage with the
Ministers who decide on policy. Once a decision is made, the Public future interests of citizens at front and centre. A New Zealand Public
Service must implement that decision effectively. Service genuinely delivering on the stewardship principle will be
in the strongest position to provide advice and support so that the
Government can plan and manage for the medium-and long-term
good of the country.
State Services Commission | State Sector Act Review | Consultation Document
13VALUES OF THE NEW ZEALAND entitled to hold political views and engage in political activity in their
private lives.
PUBLIC SERVICE
Accountable
Clear values are critical for leading culture change in organisations
and systems. The values set out here are designed to be a powerful Public servants are given great responsibility to act on behalf of
unifying influence across the Public Service. They will help achieve the State. Public servants may exercise significant powers that
all the objectives of the review; focusing Public Servants on the need influence and affect individual New Zealanders’ lives and those
for improved services, on the need for agility and innovation to that of their communities. It is important that there is a clear chain of
end, and on the vital importance of the ethical underpinnings of a accountability to ensure that decisions are made legitimately.
professional Public Service in our democracy.
How we articulate a series of values will drive the behaviours we Behave with integrity
can anticipate from public servants. Reform of the Act could include
Public servants assist in the stewardship of public resources, provide
a very clear statement of Public Service values.
advice, deliver services and otherwise interact with citizens. Every
We think that the values should provide the ethical underpinning public servant has a part to play in behaving with integrity to
of behaviour in the Public Service. More specific, mission-based maintain New Zealanders’ confidence in the Public Service. New
values that drive organisational performance are best owned and Zealanders expect that public servants will behave ethically, and
articulated within those organisations, rather than being described at be conscientious and competent in their work. A perceived integrity
the system level. failure in one part of government can impact negatively on the
opinion people hold of the Public Service as a whole.
These system-level, ethical values could be:
Respectful
Every public servant treats all people, whether citizens, clients or
PROPOSED VALUES OF THE colleagues, with respect, dignity and fairness.
NEW ZEALAND PUBLIC SERVICE
The Public Service must reflect the communities it serves and be
The proposed values of the New Zealand Public Service inclusive of diverse people and ideas because that gives us strength.
are –
Respect includes being able to understand the circumstances in
a) Impartial which people live, to empathise with people and identify the impact
of actions and decisions on them. Public servants need to manaaki
b) Accountable
by demonstrating a desire and ability to care for people and by
c) Behave with integrity working to achieve the best outcomes possible.
d) Respectful. Committed to Service
e) Committed to Service
Public servants are imbued with a spirit of service; strongly focused
on the customer and citizen, behaving with humility in engagements
with communities, and motivated by a collective sense of higher
purpose. As noted above, a commitment to service involves
Impartial commitment to improvement. The quest for positive innovation,
and the courage to take risk to make improvements, are part of
As discussed above, a key characteristic of the Public Service
our commitment to service now. Also part of our commitment to
is political neutrality. It is important that public servants act in a
service is commitment to working with communities and enabling
way that supports the ability of the Public Service to work with the
participation in policy and service design, recognising that citizens
Government, regardless of the political party any particular Minister
and communities are not passive recipients of services but need to
may represent and regardless of the public servant’s own views.
be active shapers of them.
Behaving impartially means that every public servant:
Questions
• always considers the way their actions may be perceived
• provides advice that is objective, free and frank and is based on 1. Should the purpose, principles, and values of the New
the best available evidence and information, and Zealand Public Service be included in the Act? Why do
• understands the legal and institutional framework in which they you think that?
operate, administers policy fairly and equitably, without bias, 2. How should the principles and values be enforceable?
and in accordance with the law, to provide responsive, efficient
and effective services. 3. How can the Act help build the trust and confidence of
By remaining politically impartial, public servants gain the citizens in the Public Service?
confidence and willingness of future governments to work with the
Public Service. Of course public servants are citizens as well and
State Services Commission | State Sector Act Review | Consultation Document
14State Sector
4. How much detail should be included in the Act and how much
State Servicesshould be specified elsewhere in guidance and requirements
issued by the Commissioner?
Public State-
5. Do you agree with the way weLegislative
have articulated
branch
Executive
branch the purpose, principlesFinance
Public Service andAct:values?
- agencies
owned Are they clear and compelling?
enterprises
non-Public non-Public
Service Service on Sch. 4
6. Are there any concepts you think are missing? What
depts
are they, and why -ondo
Departments on Sch. 1
depts
Departmental Agency on Sch. 1A
Off. of Clerk Police; NZDF Sch.you
companies
4A think they are important?
Parl. Service PCO of State Sector Act Mixed
7. Do you see any constitutional implications arising from these proposals and, if so,ownership are there any risks or costs that we need to
model
Offices of Crown Entities (except TEIs) Registered companies
be aware of? Parliament - Statutory entities (Crown agents, ACEs, ICEs)
- Crown entity companies
teachers
employed by a
- Crown entity subsidiaries free kindergarten
Reserve
association
The scope of the New Zealand Public Service
- School boards of trustees Bankof NZ
Bank
Crown Entities: Tertiary Education Institutions
The final section of this chapter considers what classes of departments and agencies should come within the scope of the New Zealand Public
Service. Other agencies ‘associated with a Ministerial Portfolio’ e.g. NZ Council of Legal Education
Our system distinguishes between entities that operate under the direction of Ministers (departments of the Public Service), and other entities
that are at ‘arms-length’ from Ministerial control. These arms-length entities take various forms, but consist mainly of Crown entities. They
are outside the Public Service as defined in the State Sector Act, and constitute a wider group of State services agencies. There are other
organisations which fall within the State sector, but which are not part of the State services due to their different ownership and governance
arrangements.
The current situation is illustrated in the following diagram:
Regional Councils PUBLIC SECTOR City & District Councils
Legislative branch non-Public Mixed ownership model
Offices of Parliament Service depts STATE SECTOR State-owned enterprises
e.g Off. of Clerk & Parl Service
companies
STATE SERVICES Public Finance Act:
Crown Entities (exept TEIs) - agencies on Sch. 4
- Statutory entities (Crown - companies on Sch. 4A
Executive branch non-Public
agents, ACEs, ICEs) PUBLIC SERVICE Reserve Bank
Service depts
- Crown entity companies
e.g. Police, NZDF, PCO
- Crown entity subsidaries Departments on Sch. 1 Registered teachers employed
- School boards of trustees Departmental Agency on by a free kindergarten
Sch. 1A of State Sector Act association
Crown Entities:
e.g. Tertiary Education Institutions
Other agencies ‘associated with a Ministerial Portfolio’
e.g. NZ Council of Legal Education
The term “Public Service’ as it is used in the State Sector Act, covers only a fraction of the entities that are involved in the provision of important
public services to New Zealanders. From the citizen’s point of view, there is no real distinction between entities whose fundamental purpose
is to serve the public, regardless of their organisational form or whether they are part of the ‘Public Service’ or the ‘State services’. From their
perspective, it matters little if a function that was previously delivered by a department is now performed by a Crown entity, or that a function
conferred on a Crown entity may transfer to a department. What matters to New Zealanders is that all public service entities operate with a
spirit of service to the community, and do the best job they can to provide services to, and achieve outcomes for, the people of New Zealand.
For these reasons, we propose reconceptualising the Public Service. This will involve an expansion of the concept and legal definition of the
Public Service. However, it is important to stress that the proposals we make here will not in any way affect the concept or definition of the
legal Crown.
We propose conceptualising the Public Service:
• as a collective institution in the executive branch of government comprising a broad array of entities, and
• unified by sharing one or more common features such as: delivery of services to, for, or affecting the public; acting under a public
mandate; funded primarily from public money.
It is not necessary to restrict the Public Service to Public Service departments. In the past, the Public Service has included other organisational
forms. The Public Service in other Westminster-based administrations, such as in Canada and Australia, includes a broad range of
organisations in addition to departments.
State Services Commission | State Sector Act Review | Consultation Document
15Impact of proposal
• The future Public Service would expand so that it includes departments, as at present, as well as a range of other bodies known as
Crown entities.
• Public Service departments will continue to be part of the indivisible legal Crown.
• Crown entities will continue to exist as legally separate bodies corporate, operating under the governance of a board and at arms-
length from the responsible Minister, as at present. They will not become part of the legal Crown.
• Accordingly, the proposals will expand the concept and legal definition of the Public Service, without in any way affecting the concept or
definition of the legal Crown.
This change will have the effect of applying to a wider range of public entitiesthe unifying purpose, principles, and values set out in the Act,
and an obligation to support and facilitate the Crown/Māori relationship.
The intent of this unifying level of commonality is to strengthen the spirit of service to the community, and to make it easier for Public Servants
to work across organisational boundaries.
PROPOSED SCOPE OF THE NEW ZEALAND PUBLIC SERVICE
We propose that the New Zealand Public Service should comprise:
• Existing Public Service departments
• All agencies in the existing State services that are subject to a positive degree of Ministerial influence through the power to
appoint and remove board members and/or the power to direct the agency to have regard to government policy.
A diagram of this proposal is set out below.
The purpose, principles, and values would apply to those Crown entities within the Public Service, However the proposal is that the
legislation apply the purpose, principles, and values to the entity only (including its management and staff) but not to its Board. Current
governance and decision-making responsibilities of Crown entity Boards remain unchanged by the proposal to apply principles and values.
We would expect that Boards would reflect the purpose, principles, and values in their agency policies and practices together with the
expectation of supporting the Crown/Māori relationship. Of the proposals in this document only one impacts on Crown entity governance.
This is the proposal in chapter 5 to augment the Commissioner’s powers to issue instructions and require agencies to follow them on integrity
and conduct matters. Compliance with a code of conduct issued by the Commissioner is already a statutory requirement.
Officials have considered how and to what extent the principles and values may apply to agencies of the community and voluntary sectors
which are funded to provide public services but are not part of the Public Service. This issue will be considered further but we note that there
are existing mechanisms which can be used. These are:
• where functions are delegated under s41 of the State Sector Act the delegatee can be required to comply with the Code of Conduct
• where external contractors are used the contractor can be bound by the Code of Conduct if the agency is so bound.
State Services Commission | State Sector Act Review | Consultation Document
16We are not proposing to include local government in the concept of the Public Service.
We wish to consider further whether Independent Crown Entities should be included within the definition of the Public Service. Inclusion of
Independent Crown Entities would require an extension to the criteria to encompass agencies performing functions to, for, or on behalf of the
public.
The table below provides more detail on our proposal to expand the definition of Public Service, including:
• which entities the whole Act would apply to
• which entities the purpose, principles, and values of the Public Service would apply to, and
• which entities may be outside the definition of the Public Service (but specific provisions will continue to apply as at present under the
State Sector Act or another Act).
Questions
8. Do you agree with the extended scope of the New Zealand Public Service proposed in this paper? Do you see any problems
in how this might operate in practice?
9. What entities do you think should be covered by the purpose, principles and values in the Act?
10. What is your view on the inclusion of Independent Crown Entities in the scope of the New Zealand Public Service?
State Services Commission | State Sector Act Review | Consultation Document
17New Zealand Public Service
(New Zealand Public Service: Purpose, Principles, Values to apply)
Existing State Services
Public Service department YES (whole Act to apply)
NZDF, NZ Police - NO: for reasons of constitutional separation and
NZ Defence Force
statutory independence
NZ Police
PCO – NO: receives instructions from the Legislature; chief executive not
Parliamentary Counsel Office
appointed by Commissioner
Crown agent
• DHBs
• ACC; Callahan; CAA; EQC; Educ NZ; EECA; EPA; FENZ; HPA;
YES: subject to positive degree of Ministerial control
HQSC; HRC; HNZC; MNZ; NZAI; NZBS; NZQA; Tourism Bd;
NZTE; NZTA; Walking Access Cssn; Pharmac; Real Estate Agents
Auth; Social Workers Reg Bd; Sparc; TEC; Worksafe
YES: subject to positive degree of Ministerial influence
Autonomous Crown entity
Possible exclusions for consultation, e.g.
• Accreditation Council; Arts Council; Broadcasting Cssn; Families
• Guardians of NZ Superannuation: appointed by Governor-
Cssn; GSFA; Guardians of NZ Super; Heritage NZ; Te Papa; NZ
General; not required to have regard to government policy
Artifical Limb Service; Film Cssn; Lotteries Cssn; NZSO; Public Trust;
• NZ Lotteries Commission: sole purpose is to run lotteries for
Retirement Csser; Te Māngai Pāho; Māori Language Cssn
maximum profit; fully funded from lottery revenue & sales
Independent Crown entity
NEITHER YES OR NO - FOR CONSIDERATION: these agencies do
• E.g. Children’s Csser; Health & Disability Csser; Human Rights Cssn;
perform functions to, for, or on behalf of the public
Law Cssn; Privacy Csser
Crown entity company
• Crown Research Institutes NO:
• 4 others incl. TVNZ; Radio NZ • Purpose is to achieve full or partial commercial objectives
• Directors have statutory duty to act in what they believe to be the
Crown entity subsidiary best interests of the company
• approx. 150 (mainly of DHBs)
School board of trustees employees NO:
• approx. 2405 Not subject to ministerial control or influence.
NO:
PFA Schedule 4 organisation
• Not subject to positive Ministerial control or influence (akin to Crown
• Fish & Game Councils
agent or autonomous Crown entity)
• Reserves Boards
• Trusts: subject to trust law and trustee duties
• Trusts
• or have distinctive features e.g. NZ Government Property
• 5 others (incl. NZ Govt Property Corp.)
Corporation consists of all Ministers of the Crown
PFA Schedule 4A company
• Wholly or majority Crown owned e.g. Tamaki Redevelopment Co. NO: as for Crown entity companies and subsidiaries
Ltd; Ōtākaro Ltd
Existing State Sector
NO: academic freedom and institutional autonomy are explicit intentions
Tertiary Education Institution
of Parliament in relation to TEIs
State-owned enterprise
NO: have fully commercial objectives; statutory duty of directors to act in
the best interests of the company
Mixed ownership model company
Office of Clerk; Parliamentary Service NO: Legislative branch separation of powers
Officers of Parliament NO: Legislative branch separation of powers
State Services Commission | State Sector Act Review | Consultation Document
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