Govt eyes State Sector amalgamations to reduce number of govt agencies, save money; Health, Education, Arts & Culture in firing line

By Alex Tarrant

Health, Education and the Arts, Culture and Heritage sectors are in the government's amalgamation sights, with officials due to tell Cabinet in July what they think of amalgamation proposals, as the government looks to cut public service costs and improve coordination across the State sector.

Finance Minister Bill English and Minister for State Services Tony Ryall have announced eleven proposals for potential government agency amalgamations. They will include disestablishing five crown entities and three tribunals, merging two government agencies, establishing shared corporate services across the government's three central agencies and consolidating the services of a number of others.

Officials will conduct due dilligence on the proposals (see them below), determining possible job losses and potential savings. At a press conference Tuesday morning, English and Ryall would not comment on potential job losses. On potential savings, English said experience from amalgamations such as Archives with the Department of Internal Affairs indicated there could be savings worth 10-15% of back-office costs from the moves.

However, English and Ryall also announced the creation of a new group to advise government on State Sector reform, called the Better Public Services Advisory Group.

The back office functions of the Treasury, State Services Commission and the Department of Prime Minister and Cabinet may also be combined in a shared services centre for the three central government agencies.

'Too many departments'

"New Zealand currently has 39 government departments, over 150 Crown entities of various types, not including school boards of trustees, and more than 200 other agencies," English said.

"As the Prime Minister said in his Statement to Parliament, we want government administration to be as efficient and well organised as it can be. At present the costs of running government are too high and there is too much duplication and waste," he said.

"We have a wide-ranging programme of reform as we seek to improve frontline public services within tight financial constraints. Structural changes are only a small part of that programme and will go ahead only where they make sense. In this case, we believe the proposed changes have the potential to reduce duplication of roles and back office functions and improve the cohesion of frontline services.

Officials were now undertaking due dilligence on the government's proposals, and will report back in July on which ones have merit, or whether there could be alternatives, Ryall said.

Meanwhile, the three central government agencies, the State Services Commission, the Department of the Prime Minister and Cabinet and the Treasury are consulting with staff on a proposal to establish a shared services centre to integrate their back office functions, Ryall said.

"Once final decisions have been made, it is expected that by March 2012 these three agencies will have a single corporate service for transactional functions. This will enable improved performance, cost savings and a lift in productivity," Ryall said.

The government's State Sector amalgamation proposals are:

Crown entities and tribunals – There are seven proposals for changes to Crown entities and tribunals:

• Set up an arms-length health promotion agency to take over the relevant functions of theAlcohol Advisory Council of New Zealand (ALAC), the Health Sponsorship Council (HSC) and theMinistry of Health.
• Disestablish the Crown Health Financing Agency and transfer its district health board lending function to either the Ministry of Health or to the Debt Management Office; transfer the management of residual Area Health Board liabilities to the Ministry of Health, and determine the best location for property functions.
• Enable the Mental Health Commission to complete the new Mental Health Blueprint, while providing for the long-term viability of its other functions by delegating the advocacy functions to a separate Mental Health Commissioner in the office of the Health and Disability Commissioner and delegating other functions to the Ministry of Health; or bring forward the date the Mental Health Commission is due to cease functioning (currently 31 August 2015).
• Transfer the functions of the Charities Commission to the Department of Internal Affairs, while ensuring that registration decisions remain separate from Ministers.
• Disestablish three tribunals – the Health Act Boards of Appeal; the Maritime Appeal Authority; and the Land Valuation Tribunals – and transfer their functions to the District Court, to be included in further work led by the Justice Ministry to streamline tribunals and improve efficiency.

Arts, Culture and Heritage sector:

• Encourage greater collaboration between the New Zealand Film Commission and Film New Zealand.
• Consolidate audiovisual archiving. Encourage the New Zealand Film Archive, Radio New Zealand, and Television New Zealand to consolidate material into the Film Archive.
• Consolidate management of heritage property portfolios between the New Zealand Historic Places Trust, the Department of Conservation and potentially other agencies in the arts, culture and heritage sector.
• Work with the Broadcasting Standards Authority, the Advertising Standards Authority, thePress Council and the Office of Film and Literature Classification to look at opportunities for greater collaboration.

Education sector:

• Transfer work within Vote Employment from the Department of Labour to the Ministry of Education. 
• Merge the Education Review Office and the New Zealand Qualifications Authority into a single education quality assurance agency.

Better Public Services Advisory Group membership

The eight members of the Better Public Services Advisory Group are:

·         Department of Prime Minister and Cabinet chief executive Maarten Wevers (chair).

·         Watercare Services Ltd (Auckland) chief executive Mark Ford.

·         Air New Zealand group general manager, people and technical operations, Vanessa Stoddart.

·         Wise Group, (a large non-government provider of mental health services) chief executive Jacqui Graham.

·         State Services Commissioner Iain Rennie.

·         Acting Treasury Secretary Gabriel Makhlouf.

·         Ministry of Social Development chief executive Peter Hughes.

·         Ministry of Justice deputy chief executive Sandi Beatie.

Cabinet papers and other links relating to the Government's state sector reforms can be found at www.dpmc.govt.nz/better_public_services.

(Updates with comments on costs, job losses)