Government says ‘policy-related’ expenditure was more than NZ$880 million in 2010/11, up from NZ$510 million in 2003.
However, some of these appropriations were used for non-policy outputs, leaving actual policy spending at just over NZ$520 million, a government statement said.
Treasury today released a review of expenditure on policy advice, including 36 recommendations to address several significant issues with the cost, quality and management of policy advice. See the report pdf here.
The review did not recommend specific cuts to policy advice spending, the statement said. However, the review, led by ex-Treasury head Graham Scott, recommended government should reduce all policy advice expenditure by 2% per annum for a period of three years to "generate an efficiency dividend to be refocussed on cross-agency policy advice challenges".
The review was instigated as part of the National Party’s coalition agreement with the ACT Party.
'You need a common definition of policy advice'
The report recommended Treasury should work with other government departments to establish a common definition of policy advice that included clear categories for classifying work into certian areas, such as long term policy advice investment, part of an agency's agreed policy work programme, and responsive policy advive demands to address issue as they arose.
Treasury and other agencies should also develop common methodologies and performance measures and standards for the cost, quantity, timeliness, quality and effectiveness of policy advice, the review said.
"As expectations are established agencies should ensure and demonstrate that they have the tools and systems in place to assess the quality of their policy advice management," it said.
In the face of budget cuts
Finance Minister Bill English is shaping up for a ‘zero budget’ on May 19 as government tries to tighten spending in areas other than health, education and justice.
New Zealand’s sovereign credit rating is facing a downgrade unless government gets spending under control and maps a credible return to surplus over the next three to four years
See the announcement from English, Minister of State Services Tony Ryall, and Minister for Regulatory Reform Rodney Hide below:
The Government’s Review of Expenditure on Policy Advice identifies several significant issues with the cost, quality and management of policy advice and makes 36 recommendations to address them.
The review, announced last year, will help the Government’s wider programme to control growth in the costs of public sector back office functions and deliver better frontline public services, Finance Minister Bill English says.
However, it does not recommend specific cuts to policy advice spending.
"It is vital that the Government receives high quality and cost effective policy advice," he says. "Providing policy advice is a core part of what the public service does and it affects how public money is spent, how the Government operates and what future public services will look like.
"The review identified several issues, including the need to set clear policy priorities across agencies and other information sharing initiatives."
The Treasury, State Services Commission and Department of Prime Minister and Cabinet have been asked to produce a detailed plan by 30 June 2011 to pick up on the review’s recommendations and to ensure public agencies follow the plan.
In 2010/11, policy-related appropriations across government agencies amounted to more than $880 million – up from about $510 million in 2003. However, some of these appropriations were used for non-policy outputs, leaving actual policy spending at just over $520 million, according to the review.
"This is a significant amount of money and we owe it to taxpayers to ensure that government spending on policy advice is both effective and well targeted," State Services Minister Tony Ryall says.
"Although this spending on policy advice represents less than 1 per cent of the Government’s $70 billion in total annual spending, it critically shapes the Government’s wider policy programmes and strongly influences New Zealand’s wider economic performance and social outcomes."
Regulatory Reform Minister Rodney Hide welcomed the policy advice review, which fell within the ACT Party’s confidence and supply agreement with National to initiate a series of taskforces on government spending.
"ACT campaigned on the need for stricter disciplines in relation to public sector spending. Currently there is too much variation in the quality of policy advice and we believe the public deserves better," Mr Hide says.
"These changes will improve the value for money in the public sector and will lead to improvements in the quality of advice ministers receive."
The Review of Expenditure on Policy Advice was chaired by former Treasury secretary Graham Scott. Other members of the review team were former secretary of the Department of Human Services in Victoria Patricia Faulkner, and Commerce Commission member Pat Duignan.
The review cost about $80,000, excluding the cost of secretariat support, which was met by reallocating existing Treasury and State service Commission funding.
(Updates with comments from the review)