PM Key unveils 'super ministry' merging Ministries of Economic Development, Science and Innovation, Dept of Labour, Building and Housing

The Ministry of Economic Development, Department of Labour, Ministry of Science and Innovation, and the Department of Building and Housing will all be merged to form the Ministry of Business, Innovation and Employment, Prime Minister John Key announced today.

In a speech to the Auckland Chamber of Commerce, Key said the new department would help drive the government's priority of building a more productive and competitive economy.

The Ministry would be report to current Minister for Economic Development Stephen Joyce.

Meanwhile Key set ten "challenging" results targets for New Zealand's public service he said he expected to be achieved over the next three years, which fell within five themes: reducing long-term welfare dependency; supporting vulnerable children; boosting skills and employment; reducing crime; and improving interaction with the government.

Key also reaffirmed the government would set a new cap on the public service of 36,475 full-time equivalent positions. When National entered government it set a cap of 39,000 FTEs. Since then the number of FTE positions had fallen by around 2,400.

Super Ministry

"It will strengthen the public service's ability to work on business policy, regulation and engagement, so the Government will get a much more coordinated and focused resource," Key said of the new Ministry.

"And it will be easier for New Zealand businesses to engage with government, rather than dealing separately with a number of different agencies when they are seeking advice or support," he said.

Key said the new department would have around 3,200 employees at the outset, making it a similar size as the Ministry of Justice. The government had also asked for a due diligence report in April, which would provide detailed advice on implementation and transition.

The report would also include advice on the future location of some current functions of the Department of Building and Housing, such as social housing policy and the Tenancy Service.

"We’ve always said there is a high hurdle for structural change in the public sector. The benefits have to significantly outweigh the costs. A single business-facing department meets that test," Key said,

"It will help drive the Government’s priority of building a more productive and competitive economy. It will strengthen the public service’s ability to work on business policy, regulation and engagement, so the Government will get a much more co-ordinated and focused resource. And it will be easier for New Zealand businesses to engage with government, rather than dealing separately with a number of different agencies when they are seeking advice or support," Key said.

"Given our recent experience of bringing departments together – into the Ministry for Primary Industries, for example – we also expect to see efficiencies through reducing duplication and overlaps. It is our intention for current employees of the four departments to move across to the new Ministry on 1 July, and for there to be changes at the senior leadership team level," he said.

Agencies had been informed today and Chief Executives would be communicating this proposal with their staff.

"It is worth noting that other countries have also established single, business-facing government departments in recent years," Key said.

"The United Kingdom, for example, established the Department for Business, Innovation and Skills in 2009, and Australia last year established the Department of Industry, Innovation, Science, Research and Tertiary Education," he said.

"And I do want to say that this is the only departmental merger we are currently planning. I’m not ruling them out in the future, but there is no plan for wholesale reorganisation."

10 challenges

Key said the 10 challenges were not a wish list, but a to-do list:

Number one - I expect a reduction in long-term welfare dependency. In particular I want to see a significant drop in the number of people who have been on a benefit for more than 12 months. At the moment about 215,000 people are in that category, and that’s far too many.

Number two – I expect to see more young children, and particularly Maori and Pacific children, in early childhood education. That’s because all the evidence shows that time spent in early childhood education helps future learning.

Number three – I expect immunisation rates for infants to increase, and I want to see a substantial reduction in rheumatic fever cases among children.  These are important health issues for children and were part of our policy at the last election.

Number four – I expect a reduction in the number of assaults on children. Far too many children in New Zealand suffer abuse and assault, and that is simply not acceptable.

Number five – I expect more young people to come through the education system with a solid base of skills, whether they get those at school or at a tertiary institution. So I want to see an increase in the proportion of 18-year-olds with NCEA level 2 or an equivalent qualification. Good progress has been made in this area over the last few years, but I want to see even more.

Number six – I expect to see a more skilled workforce, with an increase in the number of people coming through with advanced trade qualifications, diplomas and degrees.

Number seven – I expect a reduction in the crime rate. And that doesn’t just mean total crime, it also means violent crime and it means youth crime. I want to see all these measures coming down.

Number eight – I expect a reduction in the rate of re-offending, from people who are in prison or serving a community-based sentence.

I also want to change the way government interacts with people and businesses.

Doing business with government, and getting information from government, should be easy.

We live in a world of social media, online sales, internet banking and apps for almost everything.

But the advances we see in the private sector – the sort people have come to expect – have not been picked up well by the public sector.

Part of that is technical. I’ve actually been shocked at how obsolete many public sector IT systems are, and how big the challenge will be to upgrade and modernise them.

The Government is already investing heavily in this area, as we are with ultra-fast broadband, and that will continue to ramp up over the next few years.

But we don't want to just tack new technology onto current business practices.

We are serious about creating a sharper sense of purpose, and that involves maximising the use of technology to provide better and faster services.

I want to see technology used to create a step-change in customer service.

So in addition to the eight results I’ve just mentioned, I want to see two more things.

Number nine – I expect to see a one-stop online shop for all government advice and support that businesses need.

And number ten – I expect to see transactions with government completed easily in a digital environment.

(Updates with Super Ministry quotes)