24 june 2009

I OFFICE?¿RUDITOR.−GENERA. L

Office of the Auditor−GeneralBriefing to the Māori AffairsCommittee

2009/10 Year

24 June 2009

il i:

Assistance to the CommitteeThe Māori Affairs Committee is conducting an Estimates examination of Vote M~ori Affairs for the2009/10 financial year in accordance with Standing Order 330.

The Controller and Auditor−General provides Parliament with assurance on the performance andaccountability of public entities. The Office of the Auditor−General's assistance to Select Committeeswith their Estimates examinations is guided by the Code of Practice for the Provision of Assistance bythe Auditor−General to Select Committees and Members of Parliament.

Our suggested lines of enquiry are informed by the Auditor−General's mandate under the Public AuditAct 2001. This mandate covers matters of performance, accountability, waste, probity and authoritywithin public entities.

The quality of performance reporting by public sector entities is an area of strategic focus for theAuditor−General. After two years of concentrated reviews of government departments' and Crownentities' Statements of Intent (SOls), our auditors will be placing more emphasis on entities'underlying performance management arrangements (i.e. planning, managing, reporting, andmonitoring systems) and evaluating how well their strategic and operational priorities are reflected intheir 2009/12 SOls. The Office will begin to issue grades for the 2009/10 forecast serviceperformance information as part of the 2008/09 audit. Committees will be briefed on auditobservations as part of the 2008/09 financial review process. (The Auditor−General also intends toissue a revised auditing standard on performance information later this year to take effect for2010/11.)

In preparing our Estimates briefing we have reviewed the following documents:

• the 2009/10 Estirnates of Appropriations (Estimates);

• the 2009/10 SOI for Te Puni Kōkiri (TPK);

• TPK's 2007/08 Annual Report; and

• the Minister's response to the Standard Estimates Questionnaire (SEQ).

We have also drawn from other sources, including inforrnation we have received in the course of ourduties as TPK's statutory auditor.

In developing the advice within this briefing, the Office of the Auditor−General consulted with suchparties as was necessary to ensure that the advice was correct. This process involved providingfactual information of audit interest to the parties concerned (in either oral or written form), andobtaining confirmation of those facts, before giving advice to the Committee. The process did notinvolve providing to the parties any contemplated or actual advice.

If any Member of the Committee would like further explanation or elaboration of any aspect of thisreport, please contact Pania Gray, Sector Manager, on (04) 917−1596 or email [email protected] at the Office of the Auditor−General.

Summary of Key Issues

Vote Māori Affairs administrationTe Puni Kōkiri (TPK) administers Vote Me3ori Affairs.

Total appropriations sought for Vote Māori Affairs in 2009/10 are $179.590 million.' This represents a$27.299 million decrease between years (13%). The Vote is forecast to reduce further in 2010/2011to an estimated $169.508 million.2 There had been a steady increase in the Vote for the four yearspreceding 2009/10.

The Committee may wish to examine an apparent decrease in the Vote in out−years.

Strategic directionTPK's 2009 SOI contains a revised set of priorities for TPK. These changes are reported to arise fromTPK sharpening its focus on the new Government's priorities and the significant changes in globaland domestic economic conditions? A summary diagram of the outcomes framework can be found onpage 13 of the SOI. While TPK's core role remains as 'principal advisor on Crown−Māorirelationships', TPK will now pursue a new overall outcome: tino rangatiratanga and whānau ora.

We raise some lines of enquiry relating to TPK's revised outcomes and performance informationframework.

Line by line reviewIn December 2008 the Treasury issued instructions on the 2009 Budget process to all departmentalchief executives (CEs). The Treasury Circular outlined the Government's priorities for Budget 2009,which included working with CEs to identify an initial round of savings. TPK has identified somesavings within the Vote as part of the budget round, reprioritised some funding and discontinuedsome programmes. We suggest some lines of enquiry about TPK's intention to continue to identifyefficiencies during 2009/10.

New initiativesWe provide some background information and suggest associated lines of enquiry on 3 newinitiatives for Vote Māori Affairs:

• Integrated Whānau Social Assistance;

• Māori Trustee reform; and

• Ministerial economic taskforce.

Maori, Other Populations and Cultural Sector − Information supporting the Estimates 2009/10, parliamentary paper B5.AVol 8, page 106.

2 Maori, Other Populations and Cultural Sector − Information supporting the Estimates 2009/10, parliamentary paper B5.AVol 8, page 106.

2 Te Puni Kōkiri (2009), Statement of Intent 2009 − 2012, page 7.

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Vote overviewTrends in appropriations

Total appropriations sought for Vote Māori Affairs in 2009/10 are $179.590 mUlion.4 Thisrepresents a $27.299 million decrease between years (13%). The Vote is forecast to reducefurther in 2010/2011 to an estimated $169.508 million." There had been a steady increase inthe Vote for the four years preceding 2009/10.

Figure 1 below shows the trends in appropriations from 2005/06.

250

200

9 150 −

E 1004•50 −'

0−

Fig 1: Trends in Appropriations

179.590 169.508

2005/06 2006/07 2007/08 2008/09 2009/10 2010/11Actual Actual Actual Est Actual Vote Estimated

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1.4

The format for presenting the performance information for each Vote allows for theexplanation of significant trends. Historically, Vote M~ori Affairs has included a detailed andhelpful analysis of the significant trends in the Vote. This is absent in this year's Informationsupporting the Estimates for Vote Māori Affairs. However, the Minister's responses toquestions 6 − 8 in the Standard Estimates Questionnaire (SEQ) outline the major changesaffecting the Vote in 2009/10. The Committee may wish to seek a more direct explanation asto the apparent change in trends in appropriations.

The Committee may wish to ask:

We note that there was a steady increase in the Vote for the four years up to2009/10. Please explain the rnain causes of the difference between the 2007/08actual expenditure, the estirnated actual expenditure for 2008109 and forecastexpenditure in 2009/10, by appropriation type.

We note that the out−years funding projected for the Vote rernains relatively staticafter the $10 million decrease between 2009/10 and 2010/2011.

• What is the expected trend in the Vote over the next five years?

4 Maori, Other Populations and Cultural Sector − Information supporting the Estimates 2009/10, parliamentary paper BS.AVol 8, page 106.

6 M~ori, Other Populations and Cultural Sector − Information supporting the Estimates 2009/10, parliamentary paper B5.AVol 8, page 106.

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Vote Māori Affairs structure

Departmental appropriations account for 36% of the Vote at $64.2 million in 2009/10." Therehas been little change between years.

Non−departmental appropriations continue to account for the largest proportion of the Vote.Non−Departmental Output Expenses (for goods and services purchased from third parties,like Te Māngai Pāho and Te Taura Whirl I te Reo Māori) represent 53% of the Vote in2009/10 (51% in 2008/09).

The most significant change between years is the proportion of the Vote classified as Non−Departmental Other Expense appropriations. The Vote proposes $13.686 million for thispurpose in 2009/10 (almost 8% of the Vote), compared with an estimated $46.445 million in2008/09.7 The $32.759 million decrease in the total of Non−Departmental Other Expensesbetween years explains some of the apparent reversal in trends in the Vote (see paragraph1.3 above).

Figure 2 below shows the split of appropriation types across the Vote for 2009/10.

Fig 2: 2009110 Appropriations

1.78% 1%

[] Departmental Output Expenses W Non−Departmental Output ExpensesWBenefits and Other Unrequited Expenses W Non−Departmental Other Expenses[] Non−Departmental Capital Expenditure Ō Departmental Capital Expenditure

1.9 The Committee may wish to ask:

We note that the most significant change between years is the proportion of the Voteclassified as Non−Departmental Other Expense appropriations. This includes$13.686 million for this purpose in 2009/10, compared with $46.445 million in 2008/09.

• Does the Minister expect to have such significantfluctuations in the level of Non−Departmental Other Expense funding sought over time'?

* Maori, Other Populations and Cultural Sector − /nformation supporting the Estimates 2009/10, parliamentary paper B5.AVol 8, page 106.

7 The Supplementaty Estimates of Appropriations and Supporting Information 2008/09, parliamentary paper BT, page 172

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Strategic directionThe 2009 SOI and the Information supporting the Estimates set out Te Puni Kōkiri (TPK)'soutcomes framework.

The Chief Executive reports that the SOI contains a revised set of priorities for TPK. Thesechanges are reported to arise from TPK sharpening its focus on the new Government'spriorities and the significant changes in global and domestic economic conditions." Pages 11−27 of the SOI set out TPK's outcomes and performance information framework. A summarydiagram of the outcomes framework can be found on page 13 of the 801. While TPK's corerole remains as 'principal advisor on Crown−Māori relationships', TPK will now pursue a newoveral| outcome: Uno rangatiratanga and whenau ora.

An underlying message in TPK's SOI commentary about its outcomes framework is thecontribution that both Māori and all state agencies make to the achievement of tinorangatiratanga and whānau ora. TPK reports that it works closely with state agencies with aprimary responsibility for achieving the Government's outcomes, and that its extensiveknowledge and understanding of M=āori communities provides it with a unique ability toanchor its policy advice in the realities of Māori communities, and to manage the Crown−Māori relationship on behalf of government." TPK also states that in developing its policyadvice, it is "moderated by kaupapa Māori principles" to ensure that it is developed in waysthat are respectful of and appropriate to Māori, and not just on matters important to Māori."

The Committee may wish to ask:The Committee may wish to ask:

We note that Māori and all state agencies will contribute to the achievement of tinorangatiratanga and whenau ora,• How does TPK intend to prioritise which activities it should devote its limited

resources to, to best effect within the outcome areas specified in the outcomesframework'?How does TPK intend to balance the demand for it supporting the work of otherstate agencies with its need to ensure that state agencies develop their owncapability to develop and deliver policies and services that are effective forMāori?

What training is proposed in 2009/10 to focus TPK staff on how to apply the revisedoutcomes framework in their day to day work?

What is meant by the statement that TPK's policy development is moderated bykaupapa Māori principles?

How does TPK intend to monitor the extent to which its policy is developed inways that are respectful of and appropriate to Maori, and not just on mattersimportant to M=āori?

• How will this be reported?

s Te Puni Kōkiri (2009), Statement of Intent 2009 − 2012, page 7.* Te Puni Kōkiri (2009), Statement of Intent 2009 − 2012, page 10.~o Te Puni Kōkiri (2009), Statement of lntent 2009− 2012, page 12.

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TPK has developed a suite of performance indicators and measures as part of its revision ofits outcomes framework. A diagram setting out the performance information framework is onpage 15 of the SOI.

TPK acknowledges that the indicators do not necessarily represent an 'ideal set' and thatmany are individually focused. In the future, TPK reports that it "will explore options for morewhānau oriented measures of wellbeing and prosperity"."

TPK has committed to improving its performance measurement as a means of supportinggood decision−making. 12


We note that TPK has developed a suite of performance indicators and measures aspart of its revision of the outcomes framework.

At what frequency does TPK intend to report progress, and to whom, againsteach of the tiers of measures in the performance information framework'?Please explain what, if any, data limitations exist with the indicators andmeasures TPK has selected for reporting against.

We note that TPK has committed to improving its performance measurement as ameans of supporting good decision−making.

Please outline TPK's intended activity to improve its performance measurementin 2009/10.What, if any, work to improve TPK's performance measurement is planned forout−years.

We note that TPK reports that it "will explore options for rnore wh~nau orientedrneasures of wellbeing and prosperity".

What examples of improved measures of whānau wellbeing and prosperity isTPK considering using in future?

• Please describe how this work will be progressed in 2009/10.

" Te Puni Kōkiri (2009), Statement of lntent 2009− 2012, page 19.12 Te Puni Kōkiri (2009), Statement of Intent 2009− 2012, page 34.

3 Line by line review

3.1 In December 2008 the Treasury issued instructions on the 2009 Budget process to alldepartmental chief executives (CEs). The Treasury Circular outlined the Government'spriorities for Budget 2009, which included working with CEs to identify an initial round ofsavings.1~

3.2 The Treasury Circular also advised that:

there would be a process for Ministers to work with CEs to identify savings that couldbe found from reprioritising funding from programmes which do not align withGovernment priorities or are inefficient and/or ineffective;to assist with the Government's longer term focus on improving value for money, CEswere required to identify areas, for future reviews, where there may be opportunities forimproved efficiency and effectiveness; and

a panel of Senior Executives was to be convened to provide input to the Treasury toinform their advice to Ministers on the savings identified in the line−by−line reviews.'~

3.3 It is important for departments to use public resources efficiently, It is therefore appropriatefor departments to regularly review and refocus their outputs to ensure that efficiency isachieved. That said, departments must ensure that decisions about the discontinuing orrefocusing of outputs to achieve savings are made on the basis of good information, with aclear understanding of the impact such decisions may have on end users of services.

3.4 The Committee may wish to examine the rationale for reducing the amounts of anyappropriations in Vote M,āori Affairs in the line by line review.

3.5 The Minister's response to the SEQ states that amounts from some existing appropriationshave been reprioritised to new initiatives in Budget 2009 $7.1 million), and that someprogrammes have been discontinued in favour of that funding also being redirected to newinitiatives $6.922 million)."

3.6 TPK reports that it will continue to focus on value−for−money during 2009/10. Specifically,TPK will:

discontinue any activity or programme that does not contribute to a Governmentpriority;benchmark TPK's costs;reduce costs and/or enhance productivity and effectiveness,

monitor and measure its effectiveness; and

The Treasury (2009), Treasury Circular 2008/14. paragraphs 5 − 10.The Treasury (2009), Treasury Circu/ar 2008/14, paragraphs 5 − 10.Standard Estimates Questionnaire Vote Maori Affairs, question 6, pages 2 − 3.

• review its effectiveness where necessary.TM


The Committee notes that as part of the line by line review, savings were identifiedacross Vote Māori Affairs for 2009/10.

On what basis have savings been made from the appropriations within the Vote?Please provide a specific explanation for each appropriation affected.

What savings have been returned to the 'consolidated pool' for wider use by theGovernrnent outside of Vote Māori Affairs?

Has TPK considered the impact of the reduced Vote on Māori communities?

TPK states that it will focus on value−for−money during 2009/10 through a range ofactivities.

Ō How will this work be carried out, and by whom?To whom will the results of this work be reported, and by when?

What methodology is proposed for TPK to benchmark its costs?

4 New initiatives

4.1 The Estimates documentation sets out the new budget policy initiatives for the Vote." Wesuggest lines of enquiry about three of the most significant initiatives.

integrated Whānau Social Assistance

4.2 The Information supporting the Estimates describes the initiative as community level socialassistance to Māori whānau through a network of Whānau Advocates and Māori Wardens.The Whānau Advocates and Māori Wardens will engage with those wh~nau experiencingsocial hardship with a view to increasing their access to government programmes andservices?"

4.3 The initiative's 2009/10 funding of $7.334 million combines the previous $2.334 million offunds allocated for Māori Wardens in the Vote, with $5 million reprioritised across from theOperations Management Departmental Output Expense (from the Kapohia Ngā Rawa and

Te Puni K5kiri (200g), Statement of Intent 2009− 2012, page 33.Māori, Other Populations and Cultural Sector − Information supporting the Estimates 2009/10, parliamentary paper B5.AVol 8, pages 107 − 108.Maori, Other Populations and Cultural Sector − Information supporting the Estimates 2009/10, parliamentary paper B5.AVol 8, pages 110 − 111.

KaitStaki−~−Rohe programmes)." The initiative forecasts expenditure of $7.078 million in2010/2011 and $6.802 million in out−years.

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4.5

It is expected that a minimum of 40 Wh~nau Advocates will be in place to assist vulnerablewhānau in 2009/10, along with a national training framework for the Wh~nau Advocates. Wealso understand that the initiative will result in improvements in social outcomes for thosevulnerable whānau engaged in the initiative.


We note the establishment of the Integrated Whānau Social Assistance Programme,with at least 40 WhSnau Advocates appointed in 2009/10.

What is the problem that this initiative is trying to solve?How will these Wh~nau Advocates be deployed across the country?How will the Whānau Advocates identify those wh~nau who warrant theirimmediate focus?

− How will the term 'vulnerable whānau' be defined?

What will be the relationship between the work of the Whānau Advocates and theexisting community work of Māori Wardens?

• How does TPK propose to manage any risks of potential duplication of effort?

How will the Integrated Whānau Social Assistance Programme link with otherprogrammes and services offered by other state agencies to people, family andwhSnau experiencing multiple disadvantage?

We understand that there is an expectation that the initiative will result inimprovements in social outcomes for those vulnerable whānau engaged in theinitiative.

° How wilt this be measured and reported?

Māori Trustee reform

4.6 The Government is continuing to progress the work that was underway to establish the MāoriTrustee as a standalone organisation. Budget 2009 includes $645,000 to establish newcorporate service functions to enable this separation of the Māori Trustee from TPK.2°

4.7 Some corresponding adjustments have also been made in out−years to remove the provisionfor M,aori Trustee debt to the Crown on the assumption that the Māori Trustee AmendmentBill would become law in 2009. The Māori Trustee Amendment Act takes effect from 1 July2009. The enactment of this legislation will trigger the transfer of the existing Departmental

" Mtfori, Other Populations and Cultural Sector − /nformation supporting the Estimates 2009/10, parliamentary paper B5.AVol 8, page 111,

20 M&orir Other Populations and Cultural Sector − Information supporting the Estimates 2009/10, parliamentary paper B5.AVol 8, pages 107 and 126 − 127.

Output Expense appropriation for Services to the Māori Trustee to the newly establishedMāori Trustee Functions Non−Departmental Output Expense appropriation.2, ill

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4.9

The performance measures associated with this new appropriation relate to a purchaseagreement containing agreed performance measures being in place between the Minister ofMāori Affairs and the Māori Trustee by 30 September 2009.


We note that the Māori Trustee Amendment Act takes effect from 1 July 2009.

• What progress has been made on developing the purchase agreement betweenthe Minister of Māori Affairs and the Māori Trustee?

− When will it take effect?

• Please outline what measures are being considered for holding the M,āori Trusteeto account for the discharge of the seven functions previously agreed by Cabinet.

Ministerial economic taskforce

4.10 Budget 2009 proposes a new Departmental Output Expense appropriation to fund the costsassociated with running the Ministerial Economic Taskforce for the Minister of Māori Affairs.The Supplementary Estimates contain $200,000 in 2008/09 for this purpose22, and $500,000is sought for both 2009/10 and 2010/2011 for this purpose. The performance measuresassociated with this funding relate to the number of taskforce meetings held in 2009/10 andthe number of issues the Minister receives briefings on.23

4.11 The Minister's response to the SEQ notes that some fiscally neutral adjustments were madeto the policy related Departmental Output Expenses.24 This results in an increase in resourceto the Policy − Social and Cultural Departmental Output Expense $1.311 million). The Policy− Economic and Enterprise Departmental Output Expense also reduces between years$179,000).23

4.12 The Committee may wish to explore whether there is any relationship between himpurchasing less economic and enterprise policy advice from his department in 2009/10 andthe establishment of the Ministerial taskforce.


21 Maori, Other Populations and Cultural Sector − Information supporting the Estimates 2009/10, parliamentary paper B5.AVol 8, pages 107 and 126 − 127.

22 The Supplementary Estimates of Appropriations and Supporting Information 2008/09, parliamentary paper BT, page 170." Mtiori, Other Populations and Cultural Sector − Information supporting the Estimates 2009/10, parliamentary paper B5.A

Vol 8, pages 112.24 Standard Estimates Questionnaire Vote Māori Affairs, question 6, page 3.» Standard Estimates Questionnaire Vote Mttori Affairs, Appendix One, page 10.

We note that $500,000 is being sought for the Ministerial economic taskforce in2009/10.

• To what extent will the Minister be directing the issues he receives briefings on in2009/10'?

• What, if any, relationship is there between the establishment of the taskforce andthe reduction in the funding sought for the Policy − Economic and EnterpriseDepartrnental Output Expense in 2009/10'?

GlossaryThe following information is sourced from the Estimates of Appropriations and the Guide to the PublicFinance Act (PFA).23

A parliamentary authorisation for the Crown or an Office of Parliament toincur, expenses and capital expenditure, for a specified purpose.Appropriations are limited by their scope (purpose of use and any conditionson use), amount (the maximum amount of expenditure allowed) and period(the timeframe over which the appropriation applies).Payments by the Crown (generally made to individuals for their benefit) forwhich no direct exchange of value is expected in retum. Examples includethe unemployment benefit and student allowances.Capital expenditure to acquire or develop Crown assets, including thepurchase of equity, or making a loan to a person or organisaUon that is notadepartment„Departments are authorised, under the PFA, to incur capital expenditure byusing the proceeds of the sale or disposal of any of its assets together withany working capital held. The effective constraint on capital expenditure bydepartments is the total amount of its net assets projected in theAppropriation Act (and shown in the departmental net asset schedule). Thislevel can only be exceeded in certain circumstances.A schedule showing the opening balance, projected movements and closingbalance of a department's net assets. Specifically, it includes the details ofany retained surplus, capital injections or withdrawals.

Appropriations for any expenses to be incurred by the Crown (excludingdepartments) that are not output expenses, benefits or borrowing expenses.States or conditions of society, the economy or the environment, includingchange in that state or condition.The Minister responsible for specific appropriations within a Vote. As severalMinisters may now hold appropriations within a single Vote, eachappropriation has a tag (M1.2 etc) identifying the Minister responsible forthat line item.

26 Published by the Treasury in August 2005.

The Minister responsible for the financial performance of a department orCrown entity. In relation to an Office of Parliament, the Speaker is theResponsible Minister.A grouping of one or more appropriations that are the responsibility of oneMinister of the Crown and are administered by one department.The Minister responsible for the appropriations being sought for a Vote.

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24 june 2009

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