Kia Takitoru - Anga Paearu Whakahaere mō ngā Hinonga Karauna It Takes Three: Operating Expectations Framework for Statutory Crown Entities

The Crown entity system relies on ministers, entities and monitoring departments working well together. Effective engagement requires clarity about respective roles and responsibilities and a shared understanding of ‘how’ legislative obligations are put into practice. In short, it takes all 3 parts of the government working together to effectively deliver the services that Kiwis deserve.

This principle-based framework sets out in one place the roles, responsibilities and operating expectations for all three parties (ministers, entities and monitoring departments). These expectations are aligned horizontally so that at each stage of the process, each party can see what is expected of the others. Te Kawa Mataaho Public Service Commission and the Treasury jointly administer the Crown Entities Act 2004 and provide a range of guidance to support responsible ministers, Crown entity boards and monitors in carrying out their roles and responsibilities.

The framework tool aims to support 3 user groups :

• Ministers and their offices: Portfolio Private secretaries in ministers’ offices play an important role in supporting their Ministers and have access to a range of guidance. The It Takes Three framework can be used by ministers’ offices in consultation with monitoring departments to assist in the choice of levers ministers can use to get desired performance and to establish the limits of ministerial authority over the entity.
• Crown entity boards and executive management: For an entity to succeed, it needs to understand the nature of the tri-partite relationship between the responsible minister, entity board and monitor. The framework can assist boards with their accountabilities to Parliament and the minister and executive management in its day-to-day management of engagement with the minister and monitor
• Monitoring departments: Acting as the minister’s agent, the monitor has a critical role in supporting relationships between all the parties. The framework can be used to ensure monitors’ advice to ministers and entities balance good practice with what is required under legislation.

The Public Service Commission Guide for Ministers and Guide for Departments expands on their roles and responsibilities. Additional guidance for entities is also available, for example, the Resource for Preparation of Governance Manuals.

Guidance

Statutory Crown entities work to a range of expectations that influence the tripartite relationship, including:

• The ‘Enduring Letter of Expectations’ from the Ministers of Finance and for the Public Service
• ‘Ministerial expectations’, which inform entities’ strategic direction over at least the next 4 years (set out in their Statements of Intent) and priorities for the coming year (set out in their Statements of Performance Expectations)
• ‘Operating expectations’, which guide engagement between the statutory entity, its responsible minister and the monitoring department. These are intended to help the parties achieve trusting and productive relationships
• ‘Government Policy Statements’.

Four guiding principles underpin this operating expectations framework:

Principle 1: clear roles and responsibilities

All parties fulfil their critical roles and responsibilities so that they:

• have a shared understanding of their roles and responsibilities between the parties, in line with relevant legislation
• meet all statutory accountabilities, and
• adhere to the ‘no surprises’ convention.

Principle 2: strategic alignment

Policies are strategically aligned so that:

• relevant agencies are driven by the same principles and contribute toward the same outcomes
• there is cross-government engagement with Crown entities and other parts of the relevant sector.

Principle 3: efficient and effective monitoring

In order to enhance entity performance, a customised approach, proportional to the profile of each organisation, is taken to:

• performance monitoring
• data collection
• assessing and managing risk
• resource management.

Principle 4: trusted engagement

The parties commit to good practice to ensure their relationships are trusting and productive.

Each guiding principle contains a set of working principles, for which specific expectations of each party are laid out. The operating expectations framework allows you to:

• check your own roles and responsibilities and the associated expectations
• cross-check them against the roles and responsibilities of the other parties
• access supporting resources (including legislation, guidance, expert advice and examples of good practice).

For each operating expectation, narrative and links to further information and resources are included. These links enable access to up-to-date user guides designed to meet the needs of:

• ministers, and their staff
• Crown entities boards and staff
• monitoring departments.

This principles-based framework is to help ministers, statutory entities and monitoring departments improve the way they work together to achieve better results for New Zealanders.

The work of Crown entities is immensely important for achieving results for New Zealanders. Crown entities supply many of the services provided to New Zealanders, and so delivering services better requires the government and Crown entities to work well together. To get the best results from government investment in Crown entities, a productive three-way relationship is needed between the responsible minister, the statutory entity and the monitoring department. All parties in the engagement process need to understand the system as a whole and where they fit within it. The operating expectations framework sets out in one place how the respective roles and responsibilities underpinning those relationships are aligned. It is a tool for ministers, statutory Crown entity board members and staff, and monitoring departments to:

• understand the system and the organisation’s place in it, and
• contribute to building productive relationships in the sector between responsible ministers, the monitoring departments and Crown entities.

Statutory Crown entities are part of the wider public sector. The Crown Entities Act 2004:

• requires entities to collaborate where practicable
• allows for Statements of Intent to cover intentions for at least a 3-year period
• enables directions to support an all of government approach to be applied in a more targeted way.

The Crown Entities Act 2004 provides clarity about the role of monitoring departments and streamlined reporting. The law alone, however, will not drive changes in behaviour necessary for productive relationships and better organisational performance. Improving the way the three parties work together will achieve the legislation’s intent.

Crown entities are part of the wider public sector. The Public Service Act 2020 provides that Crown agent boards ensure that the entities they govern uphold the Public Service purpose, principles and values, and spirit of service. The expectation is that the same ethos will pervade the whole public sector including autonomous and independent Crown entities.

The Crown Entities Act 2004 specifies the accountability regime applying to Crown entities. Entities are accountable to government through their minister. Their performance is monitored, as is that of all other public sector entities. The operating expectations framework is designed to assist all 3 parties in a tripartite relationship, to understand their roles and responsibilities and deliver on their legal accountabilities.

Four critical elements are required for accountability to be effective:

Clarity of accountability

Knowing what you are accountable for, and to whom you are accountable. These accountabilities must be documented and publicly available.

Sufficiency of control

Having sufficient control over the things which you are held responsible for.

Clarity of consequences

Being aware of the likely consequences that will result from carrying out responsibilities at above or below defined levels (and consequences should be proportionate).

Sufficiency of information

Enough information must be available to judge whether responsibilities have been performed.

www.instituteforgovernment.org.uk/publications/accountability-top.