The Office of the Auditor General (OAG) has taken a swipe at New Zealand government departments for not fully understanding what they are trying to achieve with some of their policies.
The comments come in the OAG's annual report for the 2022 - 23 year. It was signed off by the Controller and Auditor-General, John Ryan, and the OAG's Chief Financial Officer Aaron Crookston.
Their report picks up on earlier criticism by the Productivity Commission and the Parliamentary Commissioner for the Environment, who spoke of "systemic gaps and barriers" to informed debate on public issues.
"The Auditor-General has made it clear that without legislative change we are unlikely to see sustained improvement," the OAG report says.
"We are concerned that it is often not clear to Parliament or the public what outcomes the Government is seeking when it uses public money.
"In 2021/22, central government spent about $160 billion. In November 2022, we wrote to the Officers of Parliament Committee expressing our concerns about the transparency and accountability of public spending on new initiatives."
The OAG says it proposed changes to the Public Finance Act to remedy this, and the result was a commitment to establish a parliamentary select committee to conduct an inquiry into performance reporting and to make other changes to the scrutiny role that Parliament plays.
In another part of the report, the message is delivered bluntly.
"It is still too hard to tell what New Zealanders are receiving for about $160 billion of central government expenditure each year, and whether it represents value for money.
"I have raised this matter in several of my reports, as well as directly with the Officers of Parliament Committee. In my view, fundamental changes are needed to the system for how public organisations are required to report on performance, to ensure that the public sector meets the accountability requirements of a 21st century New Zealand.
"This is an important and urgent matter."
In its report, the OAG cited several case studies. One concerned an aspect of the Covid-19 recovery which arose from the Provincial Growth Fund (PGF).
"In June 2023, we wrote to the Economic Development, Science and Innovation Committee about how Kānoa-RDU managed the repurposing of $640 million from the Provincial Growth Fund to help regions in New Zealand recover from the economic impact of the Covid-19 pandemic," the OAG report says.
"Although some aspects of Kānoa-RDU’s management of this process were consistent with good practice, other key elements were not.
"For these reasons, we were not certain that Parliament or the public could have confidence that the investments made through the Provincial Growth Fund reset will ultimately represent good value for money."
Another case study concerned the amount of support Whānau Ora gets from state agencies such as Te Puni Kokiri.
The OAG found "limited progress had been made."
"We did not see a significant shift towards implementing these approaches, or structured consideration of where and when they would be appropriate."
The report also spoke of a huge battle by the OAG to catch up with the backlog of work caused by the Covid disruption. It says this process should be finished by the end of the current financial year.
The delays have however caused public organisations’ satisfaction with audit services to fall in the 2022/23 year to 69%, down from 71% the year before.
"One important reason for the fall in satisfaction was the delay in completing audits," the annual report says.
"Many issues are affecting the long-term sustainability of public sector audits, including a global auditor shortage, fewer people studying accountancy-related subjects in New Zealand universities.....and new standards that are increasing expectations on auditors."
The annual report says many audits were deferred, including audits of several councils and Crown entities.
The OAG says it is not all bad news. It was reviewed by the Financial Markets Authority (FMA) and the New Zealand Institute of Chartered Accountants (NZICA), and got good marks both times, for its "robust system of quality control."
It was also making great efforts to overcome its backlog of reports.
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