Robertson eyes greater flexibility in govt financial management
By Paul McBeth
July 26 (BusinessDesk) - Finance Minister Grant Robertson says too much government time is spent juggling small funding
pools rather than focusing on strategic issues and getting value for money and he plans to introduce greater flexibility
to its financial management.
The government has already made changes to the Public Finance Act requiring the finance minister to report on child
well-being and child poverty at every budget. Robertson will introduce legislation to amend it further by requiring the
government to show how its well-being and fiscal objectives will guide its budget and for the Treasury to report on the
state of current and future well-being in New Zealand at least every four years.
Robertson today told a Victoria University conference recognising the 30th anniversary of the Public Finance Act that
the legislation and public finance system have limitations that undermine the government's pursuit of well-being goals.
"While the original intent of the reforms may well have been to bring about greater flexibility, the way they have been
operationalised has sometimes had the effect of putting an 'electric fence' around parts of the fiscal management
system," Robertson said.
"This can hinder co-operation and innovation, create silos, and make it harder to help people who have needs or problems
that fall across agencies."
The framework means the annual budget cycle focuses on marginal increases in funding rather than total government
spending, annual appropriations are too rigid to adapt to changing circumstances, and performance accountability
conventions restrict innovation, he said.
Robertson unveiled his first well-being budget this year. The government plans to report more broadly what its policies
and spending programmes are achieving, rather than simply posting the numbers.
The 2019 budget also introduced a multi-year allowance for capital investments, which, combined with the new
Infrastructure Commission, is hoped to bring greater certainty to a construction sector that's been contending with
tight margins and limited labour availability. Separately, State Services Minister Chris Hipkins is eyeing major law
reform to force far more collaboration between government agencies on the biggest policy challenges.
Robertson said his three main themes to align the system to a well-being approach are embedding well-being in the
legislation, making the financial management framework more flexible, and incorporating existing spending into the
budget.
He said changes to the financial management framework aim to make it smarter and more flexible, and get people thinking
differently about planning and reporting.
"Our current system has a very high degree of regulation, which means we spend far too much time and resource on
authorising, managing and keeping track of a large number of small funding pools, rather than focusing on the strategic
issues and value of spending – the areas where we can make a difference," he said.
"Although the system does give some flexibility to shift funding across pools, and to move it from programmes that
aren’t working to those that are, this can be difficult and have high transaction costs."
Robertson also wants better strategic planning by government agencies, because too many plans involve significant time
and effort, "but end up sitting on the shelf gathering dust".
He plans to take a proposal to Cabinet to improve strategic planning, testing a fundamentally different approach with
one or two pilots, each of which will shine a spotlight on a specific long-term issue.
Robertson said about 98 percent of government spending sits outside the budget process, which means the annual
centrepiece is largely reactive and often too late to respond to major strategic moves.
A baseline review of the Ministry of Social Development found "years of under-investment in case management meant that
services had become run down, meaning fewer people getting into work, and driving up costs to the taxpayer." It also
highlighted how reactive processes saddled the agency with expensive, inefficient and risky IT systems which will take
years to address, he said.
A baseline review on defence spending has already been started and Robertson plans to accelerate that work so larger
agencies can come under the microscope.
(BusinessDesk)