Relevant legislation

Effective Crown entity governance requires board members to have a good understanding of the legislative environment in which they must operate. This includes the legislation that establishes their entity, the Crown Entities Act 2004, Public Service Act 2020 and other legislation that applies generally to Crown entities.  

Entity-specific legislation 

Most Crown entities are established by a specific Act or under wider empowering legislation, for instance: 

• the Mental Health and Wellbeing Commission Act 2020 
• the Education and Training Act 2020, providing for the establishment of the Tertiary Education Commission and Tertiary Education Institutions. 

The governance manual should provide information on critical elements of the entity’s establishing legislation and make clear the relationship between that and other general legislation that applies to the entity. 

Crown Entities Act 2004 

The Crown Entities Act 2004 (CEA) provides a consistent framework for the establishment, governance and operation of Crown entities. It clarifies the accountability relationships between entities, their board members, responsible Ministers and the House of Representatives. Governance manuals need to give all board members a broad understanding of the CEA as it applies to their role on behalf of the entity. 

Application of some of these provisions will vary according to whether it is a Crown agent, autonomous Crown entity (ACE), or independent Crown entity (ICE). Examples of the distinctions can be found in Table 1 Cabinet Office Circular CO (22) 2: Revised Fees Framework for members appointed to bodies in which the Crown has an interest - 6 October 2022 (dpmc.govt.nz).  An entity’s governance manual needs to describe how the main provisions of the CEA apply to it: it does not need to refer to all three categories of entity.  

Categories of statutory Crown entities 

The extent of a responsible Minister’s control and powers over each category of Crown entity varies (Table 1). This table describes those controls and powers generally under the CEA. Variations may be provided for expressly, however, in a particular entity’s own Act.

Table 1: The extent of Ministerial control and powers over different types of Crown entities

For more detail on the role of Ministers responsible for Crown entities seeStatutory Crown Entities: A Guide for Ministers which expands on Ministers’ roles and responsibilities including their relationships with Crown entities, their role in the appointment and removal of board members, performance levers available to them and how to get useful performance information from an entity. 

Later sections of this guidance cover other provisions of the CEA including: members’ individual and collective duties, the role of responsible Ministers and monitors, accountability relationships, accountability documents and reporting requirements (Statements of Intent, Statements of Performance Expectations and Annual Reports) reporting requirements, delegation of power and functions, declaring and managing interests, employment of entity chief executives and staff. 

Public Service Act 2020 

The Public Service Act 2020 makes it easier for government agencies to operate more effectively and as a unified public service. Under provisions of the Public Service Act, Crown agents (a category of Crown entities) are treated as part of the Public Service for the purposes of shared principles, values, spirit of service and standards of integrity and conduct. 

Crown agents are closest to government. They can be directed by their minister to give effect to government policy relating to their functions and objectives, include core public-facing service delivery, and often need to work closely with public service departments to deliver public services. It makes sense for all Crown agents and public service agencies to be unified under a common purpose and common principles and values 

Under the Public Service Act, the Public Service Commissioner’s mandate applies to Crown entities in a number of ways, including:

• to act as the Head of Service (s43) by providing leadership of the public service, including of its agencies and workforce and by oversight of the performance and integrity of the system
• the Commissioner’s general functions (s44) that extend beyond public service agencies including provisions substantively carried over from the former State Sector Act 1988:
  • Section 44(b) - promoting integrity, accountability, and transparency throughout the State services, including setting standards and issuing guidance
  • Section 44(e) - review the design and operation of the system of government agencies in order to advise the Minister or the appropriate Minister on possible improvements to delivery of services and inter-agency cohesion, agency establishment, disestablishment, and amalgamations, the governance and allocation of functions, and the transfer of functions between agencies
• to develop and implement leadership strategy (s61) promote leadership capability in departments and other agencies and to consult with public service leaders to develop the strategy. This is for the development of senior leadership and management capability in the Public Service. The Public Service Commissioner may promote the leadership strategy to other State services and may invite them to assist to develop and implement the leadership strategy
• promote strategies and practices concerning government workforce capacity and capability. The Commissioner may draft government workforce policy for the purpose of fostering a consistent, efficient and effective approach to such matters across the public sector. The Minister for the Public Service may approve a policy as a Government Workforce Policy Statement (GWPS) that may apply to any or all Crown entities. Crown agents must give effect; ACEs and ICEs have regard, to a GPWS
• promote transparent accountability across the public sector
• promote and reinforce standards of integrity and conduct in the public sector
• set minimum standards of integrity and conduct. The Commissioner has issued a Code of Conduct for Crown Entity Board Members, excluding corporations sole (see section on Collective duties of the board and individual duties of board members.)

Detailed information on provisions of the Public Service Act that apply to Crown entities can be found here.

Public Finance Act 1989  

The CEA specifies most of the provisions relating to a Crown entity’s financial powers, accountability and reporting obligations.  

However, the following sections of the Public Finance Act (PFA) apply to Crown entities: 

• s19, s26Z, s29A provide for the Secretary of the Treasury to request information necessary to prepare government statements and reporting. The Treasury’s role includes preparing the Estimates, the appropriation legislation, various annual documents containing fiscal forecasts and projections, and the annual consolidated financial statements for the Government Reporting Entity. Because these documents include Crown entities in different ways, the PFA includes these specific information gathering powers for the Secretary to the Treasury to get information from Crown Entities 
• s35 sets out the responsibilities of departmental chief executives for financial management of non-departmental matters. These responsibilities include reporting on non-departmental appropriations administered by the department (including those used by Crown entities) and advising the appropriation Minister on the efficiency and effectiveness of expenditure under these appropriations.  These departmental chief executive responsibilities are distinct from Crown entities’ financial management and reporting responsibilities 
• Subpart 1 of Part 5 (which is cross-referenced in s150A of the CEA) provides information on: 
  • the first annual report of a newly established entity (s45I)
  • the final annual report for a disestablished entity (s45J)
  • the final annual report for an entity that ceases to be subject to the annual report requirement (s45K)
  • the Minister being able to allow certain information to be included in another entity’s annual report if operations are transferred (s45L)

• s49 provides that the Crown is not liable to contribute towards payments of debts and liabilities of Crown entities
• s74 provides that money that has remained unclaimed in an entity’s bank account for six years from the date it was payable to the person is required to be paid to the Treasury

• s80A allows for the Minister of Finance to issue instructions (for purposes specified in ss81(1)(a), (b) and (c) relating to providing information to the Treasury, preparing financial statements and regulating managing of public or trust money), and Crown entities are required to comply with those instructions
• s81 provides for the Governor-General to make regulations for a variety of purposes.

For further information on the Public Finance Act see Guidance (treasury.govt.nz).

Other legislation with general application 

A considerable body of legislation applies to all Crown entities as employers, in respect of matters such as holiday entitlements, employment relations, and health and safety. Employment matters are generally handled by chief executives rather than board members but, in ensuring compliance with them, the chief executive invariably acts under delegation from the board.

The Official Information Act 1982 applies to Crown entities. Board minutes are among the documents that can be requested under this legislation. The general expectation, as expressed by the Chief Ombudsman for instance, is for official information to be released (either pro-actively or in response to a request), unless there are clear grounds to withhold it under the Official Information Act.

For further guidance on the Official Information Act, see: https://www.ombudsman.parliament.nz/get-help-agencies 

The principles contained in the Privacy Act 2020 include: 

• how an organisation collects and stores personal information and what procedures are required to protect the security of that information  
• how long an organisation can keep personal information 
• what personal information can be used for, and when it can be disclosed. 

For further guidance, see: www.privacy.org.nz/how-to-comply-with-the-privacy-act/.  

The Protected Disclosures (Protection of Whistleblowers) Act 2022 facilitates the disclosure and investigation of serious wrongdoing in the workplace and provides protection for workers who report concerns. All government organisations must have internal procedures for whistleblowing. Under this Act, current or former employees of an entity, contractors and board members can make a disclosure, to the organisation or externally to an appropriate authority, and they will be ‘protected’ if the information they are disclosing is about serious wrongdoing in or by the organisation, they reasonably believe that the information is true or likely to be true and they are not acting in bad faith 

For further guidance, see:  

• https://www.publicservice.govt.nz/publications/protected-disclosures-act-2022/ 
• https://www.ombudsman.parliament.nz/what-ombudsman-can-help/serious-wrongdoing-work-whistleblowing 
• https://www.ombudsman.parliament.nz/resources/protected-disclosures-guidance-internal-policies-and-procedures  

Summary: Relevant legislation 

At a minimum a good governance manual should cover: 

• the relevant entity-specific legislation, the Crown Entities Act and the relationship between them as it applies to the particular category of Crown entity 
• relevant parts of the Public Service Act 
• all other legislation that has general application to boards and entities.