Treasury reviews NZ$880 million worth of govt spending on policy advice, but doesn't recommend specific cuts

Treasury reviews NZ$880 million worth of govt spending on policy advice, but doesn't recommend specific cuts

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)

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Love it

...The report recommended Treasury should work with other government departments to establish a common definition of policy advice...

You'd have assumed govt would have had one definition of what policy advice was...

Obviously not

Great work when you can get it.

Obviously there is a need for a 'working group on policy advice' to be established for oh about 5 years...anyone still think the Beehive is not a hive full of fools?

$324m by MFAT alone. Probably on fat-cat lawyers advising on FTAs we don't need so there's a massive saving already.

holy f**kin sh*t ! what?! $800million? that can't be right. surely that's a mistake right?


that explains why my make who says audis in welly says business never really slowed down since the gfc.....

Societies paying massive for cleaning up the planet on many fronts and soon for military expenditure.

 My advice: Economic policies should be designed around respecting climate change, the recognition of economy vs. nature/ environment/ morality and the limitation of growth.

I’m worried the world is shifting from “Boom Economies” 15 years – currently turning into “Broom Economies” and ending up in “Doomed Economies”.

Sack Hide and and others not following these guidelines.


But to do that we need to get rid of all those giving the 'advice'. All unelected of course. Voting won't make any difference until treasury gets a clean out.

 Doesn’t even make the NZnews anymore.

Governors in Alabama, Arkansas and Tennessee each declared a state of emergency as more than 20 deaths were blamed on a recurring round of severe storms this week moving eastward across the southern United States

No word on the costs of the damage - some kind of strange or.... ???

  Did you know: typical American prepared meal contains, on average, ingredients from 5 countries outside the US? Or that the average food on the plate is trucked in from more than 1,500 miles away and spent 7- 14 days in transit?

This is hands down the best 3 minutes on the subject.

Employment categories on the govt jobs website shows policy and analysis consistently with the highest number of positions available.  All govt departments seem to have their own chief economist and I see the Ministry of Health is also advertising for a chief economist.  Add to this the numerous policy and analysis positions I've seen advertised for the Auckland Supercity and it looks to me like both central and local govt are overflowing with huge amounts of "waffle".

This spending on policy advice is a cameo of the confused approach this government has adopted. Let's not practice what we preach when it comes to restraining our spending. The GFC was almost a nice problem to have when you come to power. What a wasted opportunity. No wonder Rodney had to go, for it was left to him and his merry band to keep Mr Smiley Wavey and Double Dipton honest!! The ChCh earthquake has left them looking like possums in the headlights. We have a 'do nothing' approach to the economy with no vision and accompanying manifesto of how to transform our generational debt millstone. If only JK could be as enthusiastic about the NZ economy as he clearly is about rubbing shoulders with the Royals. The ambition of being PM appears to have been sated and we've moved to self actualisation with the evident pleasure at joining the 'A' list.

And the result of all this consultancy is nothing, but hey we covered all our combined backsides.

People are too scared to make a decision and so they need to get a consultant to say good idea, but your downside is.......

You should hear the accounting firms justify why you need reveiws, all the risks if you don't, the overpaid mandarins need to manage the so called experts who are never responsible for any outcomes and just move on to the next easy mark, and the government is one easy mark as beneficiaries through to consultants all know.

Does anyone know of any private sector consulting on a similiar scale or has the government cornered the market?

And this is one reason why I keep saying: "The less tax we pay the better off we are, as there will be less money wasted by the Govt departments". This is why suggestions to add more tax (capital gain tax, land tax, whatever tax) are complete nonsense. Reduce the Govt spending to only the very necessary public services, reduce the tax rates accordingly (still better, a single flat tax rate of say 10%) and minimise the awful wasting of human and monetary resources...

Just appalling, appalling waste

The productivity commission review into housing affordability is a classic example - there is a huge amount of governmental and non-government research into this issue, no need to look at it again

The policy industry is one big gravy train

I'm no ACT fan but starting to think that a respectable ACT party under Brash is needed to give the complacent Nats a kick up the butt to get rid of this sort of waste 

Hello.  This productivity commission is yet another money wasting act idea.

I don't see anything wrong with getting policy advice, the problem is the fact free government we currently suffer.


and what really stinks is that the Govt in their infinite wisdom usually ignore the policy advice anyway!!!!! 

It does make a bit of a mockery of election manifestos which I thought set out the policy of the parties.

Seems they need an additional  continuous  $ 880 million per annum for fine tuning.

This can only be described as beyond  obscene and I am afraid leaves any thought that JK and BE have expenditure under control as no more than a laugh.

If I had been told it was $ 88  million pa I would have thought that excessive.

This is unbelievable !

Still we all knew where the real growth areas are in NZ and this confirms any lingering doubt.

National - Labour they are all the bloody same. Government is where it's at.

Life goes merrily on while exporters other than dairy and commodity haemorrhage.

I am looking at Brash in a new light - someone has to stop the rot and after 3 years it's not going to be JK.




If approx. 1 million families in NZ. This = $880 bucks per family. Or 3 months power. Is it any wonder we are all going f&^&'ing mad. Shoot the lot of them I say. Disgraceful!!!