- Title page
- About this guidance
- A. Relationships
- B. Roles
- C. Board appointments
- D. Strategic direction and planning
- E. Output agreements
- F. Budget process
- G. Monitoring
- Appendix 1: Some specific powers of Ministers in relation to Crown entities
- Appendix 2: Letter to board chairpersons, 17 December 2004
- Appendix 3: Central agencies' statutory responsibilities
Monitoring departments work for their Minister. They are expected to help Ministers:
- focus on results for New Zealanders - as well as output and fiscal results
- improve strategic alignment of departments and entities within their area
- build an effective medium and long-run focus and direction
- ensure vital outputs are delivered well, and produce the results intended
- assess non-financial and financial performance
- assess entity capability (e.g. in giving advice on major business cases)
- advise on the merits (or otherwise) of significant business cases, and
- consider risks and avoid surprises through their oversight and review roles.
Crown entities are a large and vital part of government. The Act clarifies and increases Ministers' roles in relation to Crown entities, and establishes a consistent framework for the governance and operation of entities. The Act:
- mandates an annual and long-run engagement between entities and Ministers about strategic direction, purchasing and performance, and
- focuses on all elements of performance, by requiring a broad and balanced set of information about intended and actual performance.
Crown entities are legally separate from the Crown, and usually governed by boards3. Government's interests in Crown entities are reflected in the primary relationship which Ministers have with entities' boards. This separation is most pronounced for ICEs, many of which perform quasi-judicial roles or comment on issues of political significance. Departments are expected to respect the independence of ICEs, while helping Ministers ensure ICEs contribute to overall achievement and apply good governance practices.
Ministers rely on the services provided by departments to support their interactions with Crown entities. Departments' roles in relation to Crown entities are thus very important. Ministers may use agents other than departments to advise them, but this is uncommon. Departments will support their Ministers unless directed otherwise.
This guidance is framed round a typical Crown entity which has a board, and a single Vote minister and monitoring department, but the guidance applies to other situations.
This guidance emphasises the importance of having a good board in place. Boards develop strategic direction and objectives, maintain systems and controls, and monitor performance and risk. They adjust direction, operational policy, delivery and capability in response to performance feedback and changing needs and environments.
Crown entities are bodies corporate established by, or under, an Act. This document covers the monitoring of three types of Crown entity:
Ministers have a range of specific powers (see Appendix 1) with respect to Crown entities, but no Crown entity can be directed regarding statutorily independent functions or to bring about specific results for a particular person (s113).
ICEs typically operate at arm's length from Ministers - either because they are quasi judicial or because they must operate, and must be seen to operate, independently from Ministers.
Ministers have powers with all entities on matters of strategic direction, targets, funding, performance, reporting and reviews (s27). Powers should be exercised so as not to unduly inhibit the functions of ICEs.
Boards govern their entity, and are responsible to the Minister for performance. Departments advise Ministers on individual Crown entities' direction, plans and performance. When appropriate, departments should also advise Ministers on how entities can contribute more widely by working with other entities and departments in a sector, or across sectors. In some recent cases Ministers have expected departments to play a leadership role in a multi-entity sector.
3 Throughout this guidance references to a Crown entity board should be read as applying to the member of a corporation sole (i.e. with a single person performing the governance functions of a board).