The Year's Key Achievements
The Ministry has made good progress in implementing its strategy to support New Zealand's economic development. This strategy, spelled out in our successive Statements of Intent, is designed to build and maintain an effective environment in which business can succeed.
Our strategy highlights five strategic priorities as essential to our drive to strengthen the business environment and promote innovation. These are demanding goals and the Ministry has made good progress with their implementation. Some of the more important initiatives we have taken are described below.
Also noted are significant steps we have made to implement the Ministry's organisational development strategy. The aim of this strategy is to ensure we have the capability to achieve the Ministry's vision, strategic priorities and business environment outcomes.
This overview highlights key areas we are focusing on to achieve our big picture goals. But I also want to acknowledge all the other activities our staff perform. I'd like to thank all staff and managers whose professionalism and commitment throughout the year is reflected in this report.
SP1: Facilitate the Alignment of Economic Development Activities across the Public Sector
Facilitating alignment is important because achieving a significant increase in growth depends on a wide variety of factors, many of which are influenced by other government agencies, regional and local authorities. The more closely the activities and policies of these agencies are aligned with the Government's economic objective, the better positioned the public sector as a whole will be to achieve that objective.
During 2003/2004 the Ministry identified a range of additional opportunities and points of leverage for enhancing alignment in the areas of leadership and co-ordination, communicating and influencing, and overcoming obstacles to alignment. A detailed action plan is currently being developed in each of these areas.
We obtained sign-off from each of our seven Ministers on the strategy outlined in the Ministry's Statement of Intent 2004-2007. This will, amongst other things, ensure greater alignment with other agencies and portfolios for which these Ministers are also responsible.
The Ministry has developed joint outcomes with the Ministry of Foreign Affairs and Trade and the Ministry of Research, Science and Technology. These form the basis for ongoing discussions with these agencies on strategic direction, perspectives and priorities. They also promote improved alignment of our respective work programmes.
Throughout the year we continued to develop and implement the Growth and Innovation Framework (GIF) across the public sector. For example, the Ministry led development of the growth and innovation component of Budget 2004, resulting in a four-year $500 million package, with a particular focus on initiatives to further New Zealand's international connections. We also developed and launched a GIF website, which draws together and explains the inter-agency work programme and key achievements.
The Ministry co-ordinated a whole-of-government response to the GIF Taskforce recommendations, culminating in Cabinet approval of a range of initiatives and establishment of industry sector bodies to help drive them.
During the year we established a position of Director, Auckland Business and Government Relations. This is based in Auckland - New Zealand's largest city and greatest concentration of business activity. The Director has responsibility for improving the Ministry's connection with the Auckland business community, and for promoting alignment between the Ministry's work and that of the city's local and regional authorities.
The Ministry completed and reported on the Regional Integration Project. The findings provide a better understanding of the alignment and integration of New Zealand Trade and Enterprise-administered regional development programmes with other programmes, including those of economic development agencies and local government.
All these activities, plus our external relations programme, have been successful in further raising the profile of the economic development agenda across the public sector and the wider community.
SP2: Improve International Connections, Particularly with Australia
Improving New Zealand's international connections is important because our economic growth is directly linked to our ability to integrate with the regional and global economies. Success will be measured by business' ability to deepen and broaden markets for New Zealand goods and services, our ability to attract investment and to make successful investments offshore, our ability to build productive business and innovation networks, and our ability to attract international skills and build the management capabilities of our businesses to operate globally.
Regulatory Barriers
Nearly all domestic regulation today has an international dimension. New Zealand's regulatory development must reflect international developments and seek, where possible, to influence those developments in our interest. The Ministry has provided leadership across a number of fronts in shaping the regulatory integration agenda. In business law we sought to ensure that the substantive body of our domestic reform programme was based on convergence towards new international best practice.
Key outputs in 2003/2004 included developing a draft Bill on Securities Trading Law Reform relating to insider trading, market manipulations offences, the scope of securities trading law and related matters; and input to Cabinet policy decisions updating the Patents and Plant Variety Rights Acts with a view to introducing Bills in late 2004.
The Securities Trading Law Reform Bill is intended to bring New Zealand's securities trading regime in line with our key investment partners and with the expectations of international financial benchmarks. Similarly, the Patents Bill and Plant Variety Rights Bill will take into account the implications of new technology on our intellectual property rights regime and ensure that the new regime supports our growth and innovation objectives.
Australia
The Ministry has also sought to closely align, where appropriate, New Zealand's business law reform with our key trading partner, Australia. The work programme under the CER Memorandum of Understanding on Business Law has both deepened and broadened in scope over the last year. This reflects the priority the New Zealand Minister of Finance and the Australian Treasurer have given to closer co-ordination and, more recently, their commitment - endorsed by the two Prime Ministers - to advance a single economic market.
There is today an acknowledged greater joint responsibility between Australia and New Zealand to define and grow the business law co-ordination agenda. The work programme has been extended to include co-ordination on competition policy and intellectual property. An advisory group has been established to formulate advice to both Governments on establishing a set of trans-Tasman accounting standards and to maximise the two countries' influence on the development of international standards.
The Ministry also made arrangements to second a senior advisor to the Australian Productivity Commission, which was commissioned to undertake a study on the Australia New Zealand Competition and Consumer Protection regimes. This study will underpin future co-operation on policy development. In addition, the Ministry has established a process for exploring the scope for increased co-ordination with the Australian Intellectual Property Office on both policy development and the delivery of services.
The Trans-Tasman Mutual Recognition Arrangement (TTMRA) remains a cornerstone of a single economic market, providing for an integrated regime that substantially reduces regulatory costs associated with the sale of goods and providing occupational services in each others' jurisdictions. A Cross Jurisdictional Review Forum, including New Zealand, the Commonwealth and Australian States, was established to make final recommendations to heads of governments by 30 September 2004. The Productivity Commission study on which the review is based made three broad recommendations: the need to engage in a renewed education campaign with regulators and other stakeholders; the need to ensure that any implications for the TTMRA are built in early in the policy development and regulatory design process; and the need to identify administrative efficiencies.
The Ministry led the consultation process with business and regulators under the review. It consulted closely with the Office of Regulatory Review in Canberra on the reform of the Committee of Australian Governments' Principles and Guidelines on standards and regulation to ensure early consultation with New Zealand on regulatory policy development. In turn, the Ministry initiated a review of the Government's Regulatory Impact Guidelines to ensure the same commitment to consult with Australia.
Recognising the strategic importance of further deepening New Zealand's economic relationship with Australia, the Ministry appointed a senior Economic Counsellor to the New Zealand High Commission in Canberra. This will strengthen our efforts to advance the business law and competition agendas, and will also help New Zealand to build a productive, broader and industry innovation agenda with Australia.
Rules of Origin
New Zealand has consistently argued that the CER Rules of Origin are out of date and act as a constraint on trade and the efficient organisation of trans-Tasman business. Australia agreed last year to charge its Productivity Commission to study the Rules. The Ministry, in conjunction with the Ministry of Foreign Affairs and Trade and New Zealand Customs, provided a comprehensive economic submission supporting reform.
The Productivity Commission's findings supported most of New Zealand's arguments and recommended substantial reform. The Australian Government has indicated a strong preference for reform based on a Change in Tariff Classification approach, consistent with the new models it has achieved with the US and Thailand. New Zealand recognises that such an approach is now more consistent with international trends and could provide a useful CER model. New Zealand is currently awaiting an Australian proposal as the basis for moving forward to negotiations.
Recognising that there was a need to better inform ourselves on the scope and depth of the business linkages with Australia, the Ministry, with support from the Treasury and the Ministry of Foreign Affairs and Trade, commissioned a major study on New Zealand Australia Economic Interdependence. Some 40 firms were interviewed in depth. The results indicated three broad conclusions: some firms are highly integrated and view the trans-Tasman market a single market; others pointed to considerable business constraints to breaking into markets; and some firms see their future in global markets as much as in Australia. The study was provided to the first Australia New Zealand Leadership Forum in May 2004, and will provide a basis for further policy reflection.
Tariffs
Tariffs are a key domestic policy instrument to promote domestic economic growth and improve New Zealand's competitiveness. The Ministry completed a full tariff review in 2003 to determine New Zealand's post-2005 tariff regime. This was a comprehensive first principles review and involved wide consultation with business, government departments and other stakeholders. Most businesses recognised the need to eventually compete in an open competitive global environment.
The tariff adjustment issue was one of timing, to allow for appropriate changes to be initiated and bedded in. Many businesses identified the need for more time to position themselves in global markets where market entry overheads were high. Government's decision on 30 September 2003 approved a programme of tariff reductions to 2009 while recognising the value of some continued protection. It agreed that further reductions could take place on a reciprocal basis with bilateral trade partners.
Internationally
New bilateral trade negotiations with Chile and Singapore (under the so called P3) and Thailand were initiated during the year. In addition, New Zealand entered into a Trade and Economic Cooperation Agreement with China, paving the way for negotiation of a Free Trade Agreement beginning early in 2005, on completion of a joint feasibility study.
The Ministry made a significant contribution to the P3 and Thailand negotiations, particularly in the areas of competition, technical barriers to trade, rules of origin, trade remedies, government procurement and intellectual property. Given its responsibility for tariff policy, the Ministry is also closely involved in continuing market access calculations.
The overarching objective of our efforts under traditional free trade negotiations is to open up our bilateral partner markets to greater competition disciplines and lower transactions costs, while ensuring that appropriate protections remain in place to deal to detrimental trade practices. The Ministry is also focusing on the benefits of promoting deeper co-operation arrangements with New Zealand's trade partners and better defined "New Zealand Inc" business plans to exploit new opportunities opened by a Free Trade Agreement.
By any yardstick China is a growing economic force globally. While providing huge market and investment potential for New Zealand business, it also poses a major challenge. Recognising the high priority of building an early effective relationship with China's regulator in the area of standards and conformity assessment, the Ministry entered into a Memorandum of Understanding with the Chinese General Administration for Quality Supervision Inspection and Quarantine (AQSIQ). It held an early first round of discussions with senior AQSIQ officials in May 2004, and set the scene for more detailed discussions to reduce the transactions cost for exporters associated with meeting different technical regulations and the requirements at present for considerable double testing. Further discussions will take place in September 2004.
More generally, the Ministry has worked closely with the Ministry of Foreign Affairs and Trade to develop a comprehensive and coherent "New Zealand Inc" strategy which, in addition to the FTA, will include deepening the Trade and Economic Cooperation Framework (TECF) and identifying clear trade and investment promotion initiatives and business capability support.
In keeping with the top priority that New Zealand accords the multilateral trade process, the Ministry undertook significant preparatory work in the areas of industrial tariffs, government procurement, trade remedies and competition policy work in the lead-up to the WTO Cancun Ministerial. It also continued to play a substantial role in APEC activities, including in the standards and conformance sub-committee, the e-commerce, telecommunication, and government procurement working groups. In addition, it played a central role in developing a working relationship between the OECD and APEC in the development of policy guidelines on competition and regulation. A key objective for New Zealand is to promote stronger links between the trade policy machinery and regulators in multilateral and regional fora. As tariffs come down, attention must increasingly focus on regulatory barriers to trade and investment.
SP3: Stimulate Enhanced Entrepreneurial and Innovative Capability of New Zealand Firms
Innovation and entrepreneurship are fundamental to economic success in a fast-changing world. The Ministry undertakes a broad range of activities that impact significantly on the environment for innovation in New Zealand - from advice on business law and the operation of the Companies Office to advice on more facilitative policies to promote economic development. In the latter sphere, the past year has been one of consolidation for New Zealand Trade and Enterprise, following the merger of Industry New Zealand and Trade New Zealand. In the years ahead there will be an increasing emphasis on evaluating the effectiveness of programmes and implementing improvements.
Key achievements in 2003/2004 included:
Investment
The Ministry completed, together with the Ministry of Foreign Affairs and Trade, a review of the implementation of Investment New Zealand. In parallel, we undertook policy work with Investment New Zealand, MFAT and the Treasury to develop a revised, more strategic policy framework aimed at attracting more and better quality foreign direct investment. Based on this advice, the Government announced in Budget 2004 a package of initiatives designed to enhance New Zealand's investment promotion and attraction capability, including an expansion of the Strategic Investment Fund (SIF). The Government also took steps to improve the SIF criteria, and charged Investment New Zealand with implementing a more highly-targeted, strategic approach to investment attraction.
Business Finance Survey
In 2003/2004 the Ministry completed phase one of its work on the 2004 Business Finance Survey, which involved work, together with Statistics New Zealand, on design of a survey methodology and questionnaire. The survey, which was posted out by Statistics New Zealand in August 2004, will provide detailed information on the capital structure, sources of finance and recent financing experiences of New Zealand firms. In 2004/2005 the Ministry will commence phase two of the project - the reporting and analysis of survey results.
Regional Development
Following the review of the Regional Partnerships Programme (RPP), the Ministry has worked with New Zealand Trade and Enterprise and others to implement a number of changes related both to the programme itself and its operating environment. Programme changes include introducing a more flexible approach to capability building and major regional initiative funding under the RPP. The Ministry has also worked with New Zealand Trade and Enterprise and other stakeholders to strengthen the alignment of the RPP with other regional development programmes.
A pilot Growth and Innovation in the Regions report will be completed by 30 September 2004 to assess the range of currently available regional economic statistics and identify critical gaps. We are also currently in the final stages of a project aimed at assessing RPP delivery for Māori economic development. Broader initiatives related to co-ordination and collaboration across central government in the interests of supporting regional economic development outcomes include ongoing efforts to address whole-of-government issues arising from the Auckland Economic Development Strategy (AREDS).
Small to Medium Enterprises (SMEs)
The Small Business Advisory Group met for the first time in October 2003 and quickly established itself as a credible source of advice on small business issues. Government agencies and Ministers have sought the group's views in areas such as employment legislation and workplace productivity.
The Ministerial Group on Small Business has proved a useful vehicle (either in meetings or by round-robin) for discussing proposals which potentially affect SMEs, outside of the formal Cabinet process. We organised the Small Business Days events series. Starting with visits by Ministers and MPs to individual SMEs, the series of 24 regional events allowed government agencies to connect with SMEs throughout New Zealand. The events also enabled communities to recognise the contribution of SMEs to their regional economy, and generated greater awareness of the barriers to growth SMEs face. Over 5,000 business people visited the events, which were held throughout New Zealand.
Sectors
Whole-of-government responses to the recommendations of Biotech, Design and Information and Communications Technology (ICT) Task Forces were completed this year, resulting in the establishment of four industry bodies, one for each taskforce sector. Additional work was required to complete a response on the Screen Industry Task Force, along with associated work on the Large Budget Screen Production Grant. Advice was provided on the policy and operational framework for selecting and prioritising whole-of-government engagement with industry sectors.
Project Probe
The Ministry worked with the Ministry of Education to provide broadband access to all 2,700 schools in New Zealand through Project Probe; and with the Ministry of Research, Science and Technology to develop a high speed advanced research network.
Digital Strategy
The Ministry's production of a draft digital strategy for the Government has also seen the commencement of a whole-of-government ICT strategy for the next 3 to 5 years. All government agencies and local government were involved in producing the draft digital strategy, which focuses on the economic growth potential of ICT. The draft strategy covers a wide spectrum of government activity, including issues such as infrastructure availability, digital divide, skills and capability, digital content and e-Government.
Tourism
Much work undertaken by the Ministry of Tourism to enhance the quality and sustainability of tourism development is done under the umbrella of the New Zealand Tourism Strategy 2010. Guided by this strategy the Ministry has worked closely with regional tourism organisations, local government agencies and Māori groups to assist them to achieve economic development through sustainable tourism. On a regional level, the Ministry assisted the development of five regional cultural tourism plans to improve the quality of, and grow demand for, cultural tourism products in specific regions.
SP4: Improve the Regulatory Environment for Business
Regulation plays a critical role in shaping the business environment. It sets standards for goods and services, provides incentives for innovation, encourages competition in markets, and provides assurance to investors. Government also regulates for a wide variety of non-economic objectives such as health, public order and protection of the environment. The challenge is to strike the right regulatory balance between policies designed to achieve these different outcomes. From the economic perspective, this means developing policies aimed at achieving social and environmental outcomes in such a way as to maximise our ability to achieve economic objectives.
The Ministry has a key role to play in the achievement of this business environment where regulation is easy to comply with, balances the costs it imposes with the benefits to the community, and results in business and consumers having confidence in the effectiveness and integrity of markets. In particular the Ministry has a role in three areas:
- leading the development of knowledge in the public sector on the impact of regulation on firms and their productivity;
- using that knowledge in the design and implementation of Acts and regulations we administer; and
- working across government to improve the overall quality of regulation, and to ensure other departments give due consideration to the impact on economic development of regulation they develop and administer.
Key achievements towards these objectives in 2003/2004 included:
Improving Our Understanding of the Impact of Regulation on Growth
The Ministry is working to help improve the public sector's knowledge of the impacts of regulation on business. Our SME directorate has worked extensively with firms throughout the year to improve our appreciation of the cost of regulation to firms and its impact on them.
Research undertaken by the Ministry has identified six legislative frameworks of most concern to business - Resource Management, Employment Relations, Hazardous Substances and New Organisms, Health and Safety in Employment, ACC and taxation. Although much of this regulation which impacts on business is developed, implemented and/or monitored by agencies other than the Ministry, we have been actively involved in contributing to advice on measures to improve the Resource Management Act 1991 and the Hazardous Substances and New Organisms Act 1996.
In particular, the Ministry made significant input to the RMA review, which is being led by the Associate Minister for the Environment. In addition, working with the Ministry for the Environment, we have contributed to the implementation of aspects of the Hazardous Substances Strategy.
Improving the Design and Implementation of Ministry-Led Regulation
The Ministry has continued to review and refine the design of regulation for which it is responsible, paying particular attention to:
- providing advice and support to facilitate the passage of the Business Law Reform Bill 2004, which was enacted on 14 April 2004;
- significantly progressing the Government's extensive intellectual property law reform programme. During the past year, the Government took decisions on updating the Copyright Act, Patents Act and Plant Variety Rights Act, as well as bringing in the new Trade Marks Act 2002 in August 2003 and passing the Copyright Amendment Act (Parallel Importing and Onus of Proof) Act in December 2003;
- providing advice to facilitate release of the Insolvency Law Reform Bill discussion document in April 2004; and
- developing a new regulatory regime for the building industry which provides a new strengthened regulatory framework to ensure that inputs into buildings are of a high quality and that there are fewer building failures.
The Ministry manages a number of regulatory regimes affecting business, for example through the Companies Office and Intellectual Property Office. In this work there is a strong commitment to minimising compliance costs. We achieve this through smart use of technology in our service delivery and passing on efficiency gains to clients in the form of fee reductions.
Significant fee reductions were implemented in the Companies Office and Radio Spectrum Management Group. Additional on-line services were introduced in the Intellectual Property Office, Radio Spectrum Management Group and Companies Office, and a new electronic registry system was developed for motor vehicle traders with implementation of the Motor Vehicle Sales Act.
Promoting Quality Regulation throughout the Public Sector
We are using our increasing understanding of the impact of regulation on firms to help improve regulatory design and implementation across the public sector. During the past year, our major focus has been on reviewing Regulatory Impact Statements (RISs) and Business Compliance Costs Statements (BCCSs) for departments. The aim is to increase the rigour of analysis and improve the capability for this function across government. In 2003/2004 the Ministry reviewed 249 RIS/BCCS, and provided informal feedback on many other RISs and Cabinet papers. A growing number of departments are seeking advice from the Ministry, and we have provided targeted training sessions to departments on the preparation and analysis of RIS/BCCS.
In addition to our RIS/BCCS review function, the Ministry is also working to facilitate best practice regulatory design across government. We are currently developing an easily accessible reservoir of information on regulatory design and implementation to be made available via a regulatory portal. This portal will enable people involved in the development of regulatory policy to access the various regulatory guidance material, knowledge and documents via the web. We anticipate the portal will go live in mid 2005.
SP5: Improve the Quality and Reliability of Key Infrastructure Services
Network infrastructure such as transport, electricity, communications and water distribution is essential to New Zealand's productive capacity and quality of life. Efficient and reliable infrastructure services reduce the costs of production, increase the attractiveness of New Zealand for investment, and facilitate the flow of ideas, goods and services, and people. Conversely, when there are shortages or bottlenecks in infrastructure provision the productivity of firms can be jeopardised, and their profitability and even viability put at risk.
It is important that firms and consumers have access to the infrastructure services they need, when they need them. Problems have emerged in some areas, particularly regarding the security of electricity supply. The main issues are dry year threats to the provision of hydro-electric power, the imminent depletion of the Maui gas field and the need for an upgrade of the transmission network.
Key achievements during 2003/2004 included:
Improve the Functioning of the Electricity and Gas Sectors
Efficient management of security of supply: The Ministry managed construction of a new reserve generation power plant at Whirinaki, near Napier. Whirinaki will have an important role in ensuring increased certainty of electricity supplies by providing reserve generation during dry periods, or in the event of major transmission or generation breakdowns.
In advance of the full establishment of the Electricity Commission, the Ministry took the lead in implementing a project to enhance the security of electricity supply for 2004, in order to ensure New Zealand's electricity needs were met. In future years this work will be the responsibility of the Electricity Commission.
Effective governance of the electricity sector: The Ministry was instrumental in establishing the Electricity Commission on 15 September 2003. The Commission now governs the electricity industry within an accountability framework established by the Government. In particular, the Commission is responsible for managing the electricity sector to ensure that electricity demand can be met in a 1 in 60 dry year without the need for national power conservation campaigns.
The electricity governance rules and regulations have been gazetted and contracts signed with service providers who will administer the electricity market. Part F of the Electricity Governance Rules relating to transmission pricing and grid upgrade plans came into force on 28 May 2004. Part F empowers the Electricity Commission to oversee a process which should result in an agreed transmission upgrade plan, and an agreed transmission pricing methodology through which Transpower will recover the costs of the upgrade.
Gas
Effective governance of the gas sector: The Ministry has led work aimed at smoothing the transition from Maui gas by improving the governance and market arrangements for gas. This work has included revising the Government Policy Statement, detailing important milestone dates for industry to meet. The Ministry forwarded the revised statement to industry stakeholders for comment in July 2004.
The Ministry also led the development of legislation containing powers for co-regulation in the gas industry. This allows the Minister of Energy to recommend that the Governor General authorise an industry body that will recommend regulations and rules in the areas of wholesaling, processing, transmission and distribution of gas. This legislation had been reported back to Parliament by year-end and is expected to be passed in the first half of 2004/2005.
Security of gas supply: The Ministry has led policy work to encourage further gas exploration. As a result, incentives to encourage petroleum exploration (especially gas) were agreed by Cabinet on 14 June 2004. Royalty-based incentives for a set period have been included in the draft Minerals Programme for Petroleum, which is expected to come into effect on 1 January 2005. Other measures to encourage exploration were being developed at year end.
Maui contracts and pipeline access: The Ministry was also involved in complex negotiations on the Maui gas contracts. These negotiations have now been completed and should ensure that as much gas as is economically viable will be recovered from the field. The renegotiation also allows gas prices to settle at levels that appropriately reflect the value of gas, giving clearer price signals to producers and consumers. The Ministry is continuing to monitor progress on the development of open access arrangements for the Maui pipeline. These are expected to be in place by March 2005.
Other Energy Work
Resource Management Act: The Ministry developed and provided four substantive submissions under the RMA in support of renewable energy projects, particularly wind and geothermal.
Sustainable Development Programme of Action for Energy: Significant progress was made on developing a discussion paper on sustainable energy intended for public release in the first half of 2004/2005. The process was a whole-of-government exercise being led by the Ministry. The purpose of the paper is to explain the Government's strategic direction in energy policy and to discuss the opportunities and challenges facing New Zealand's energy system going forward.
Information and Communications Technology Issues
Telecommunications: The Ministry, through its work on Project Probe and the proposed Advanced Research Network, has contributed to the roll-out of broadband infrastructure while enhancing competition in the provision of telecommunications services and benefiting consumers through lower prices.
The Ministry has also played a significant role in the maintenance of an effective regulatory regime for the telecommunications sector with a major report to the Government on accepting and implementing the Commerce Commission's decision in regard to unbundling the local loop in order to attain the best long-term interests for the consumer.
Following the Government's decisions on local loop unbundling the Ministry prepared a report benchmarking New Zealand telecommunication services against other OECD countries, so the performance of the sector and its contribution to economic growth can be assessed. If New Zealand is to achieve top half of the OECD ranking, it is essential that high growth infrastructure sectors such as telecommunications are well positioned against their OECD peers or that they are showing progress against them. Ongoing benchmarking by the Ministry, along with Commerce Commission monitoring of commitments to the uptake of new services made by Telecom New Zealand, will be used to advise ministers on the performance of the sector and its contribution to higher economic goals.
Radio spectrum: A price-setting formula has been developed and a discussion paper was released in June 2004 setting out the proposed arrangements for the renewal of radio spectrum rights. The general objective is to maximise the value of the spectrum to society as a whole while providing certainty to rights holders.
The Ministry was also involved in finalising arrangements for the allocation of two blocks of 3.5GHz spectrum reserved by the Crown. The Ministry advised on the allocation plan which is based on the innovative use of area licences to promote the use of the spectrum by community and regional organisations. This work supports Project Probe and other regional broadband projects.
Water and Sewerage
Research to assess the impact of tourism on regional water and sewerage systems was completed early in the year. This research provided the basis for establishment of an infrastructure funding scheme that will deliver $11 million over the next three years to assist local authorities to develop water and sewerage infrastructure to support increased visitor numbers.
Assessing the Infrastructure Changes Needed to Improve Economic Development in New Zealand
The infrastructure stocktake: New Zealand's first nationwide infrastructure stocktake was completed in May 2004. The stocktake was undertaken by an interdepartmental group, led by the Ministry. The aim was to assess the quality of current and planned infrastructure stock, and to reach a view on whether policy settings adequately support sustainable development objectives. While some significant concerns were identified, no new issues came to light that might pose a serious barrier to growth and sustainable development objectives.
Auckland transport: The Ministry was involved in developing the Investing for Growth transport package announced in December 2003 that will provide for new investment of an average of $297 million per year for land transport, including a specific funding allocation for Auckland transport. In 2004 the Ministry continued its work on Auckland transport issues by preparing a report on "buildability" issues.
Organisational Development Strategy
The Government has high expectations of the Ministry, and we have high expectations of ourselves. Achieving our Vision and delivering against our strategic priorities and business environment outcomes is demanding. To succeed the Ministry must be a leading edge organisation, responsive to the needs of government, business and the wider community, and acknowledged as expert in economic development.
Our organisational development strategy spells out broad initiatives to ensure we have the necessary capability to achieve these goals. Over the past year we concentrated our efforts in four areas:
Strengthening Our Leadership Role
Build a higher external profile: The Ministry undertook a range of activities in 2003/2004 to improve stakeholders' understanding of the sustainable economic development process and the Ministry's role in it. The Chief Executive and other members of the Strategic Leadership Team spoke at a range of external events, and also provided briefings on the Ministry's strategic priorities for a number of senior journalists and commentators. The Ministry also ran a one-day seminar on economic development issues for 25 journalists, under the auspices of the Journalists' Training Organisation.
Managers at all levels have worked to develop sound relationships with the business sector. The Ministry's appointment of a Director, Auckland Business and Government Relations signals its intention to deepen its interaction with the Auckland business community. Towards the end of the year the entire Strategic Leadership Team hosted a function for Auckland business leaders, profiling the strategic priorities and listening to the concerns of Auckland business.
Building an Integrated Organisation
Planning and strategy: The Ministry has enhanced its strategy development processes and made the strategic priorities central to branch business plans across the Ministry's many Votes and Ministers. The strategic priorities are being used to establish work priorities and resource allocation. They also provide the focus for our longer term research and evaluation activity to expand our understanding of the drivers and enablers of sustainable economic development.
Good progress has been made in 2003/2004 in developing our thinking in relation to the five strategic priorities. We are developing and refining an action plan for each strategic priority. The Ministry's Statement of Intent 2004-2007 includes executive summaries of the five action plans, and hence is more strategically focused than its predecessors.
Work on development and monitoring of each of the strategic priorities is led by a member of the Strategic Leadership Team (SLT), with the assistance of a small cross-Ministry group. The overall strategy is integrated at SLT level under the direction of the Chief Executive. Feedback from the Ministry's internal survey of organisational culture and climate showed high levels of staff support for the Ministry's strategy.
The Ministry has reviewed its risk management processes in 2003/2004 to ensure they support the development of innovative and practical outputs. As a result, a revised Risk Management Framework has been rolled out as part of the 2004/2005 planning round.
Role clarity: During 2003/2004 the Ministry completed a project to clarify and describe accurately the roles of all staff, and hence the contribution they make to the wider Ministry. New role descriptions clarify accountabilities and ensure that the right level of work is being done in each role. This was a collaborative process, with staff contributing their insights to the work of their role. The end result is a system in which people know and understand their own role and its boundaries, and the roles of those around them.
One brand: Although the Ministry has diverse functions and business units, we are a cohesive organisation, and our visual identity needs to reflect this. During the year the Ministry completed a rationalisation of its branding, to ensure we present a more coherent identity to stakeholders across all our activities. For historic reasons, several of the Ministry's business units had independent brands. Sub-brands have been developed for each business unit to reinforce for stakeholders how each works to help achieve the Ministry's central economic development purpose.
Developing Our Skills and Expertise
Develop our leaders: To provide strong leadership for the Government's economic development agenda requires the Ministry to have effective, visible leaders. Over the last year the Ministry has continued to invest significantly to build its leadership capability. All managers and team leaders have been through an intensive residential programme designed to build capability in interpersonal, organisational and sector leadership.
Recruitment of policy capability: The Ministry contracted specialist recruitment resources to support the identification and attraction of key skills, particularly in the policy development area. Work was also undertaken during the year to introduce a range of initiatives to attract and retain staff, both domestically and internationally. Work was also undertaken to enhance staff and manager induction processes.
Training programmes around core capabilities: As part of performance management discussions, staff and managers identify specific development needs. These training and development needs are addressed through a range of initiatives provided both internally and externally. Examples of internally provided programmes include advanced negotiation, treaty awareness, use of technology and presentation skills.
Secondments: Each branch has worked with staff to facilitate secondment opportunities as these arise. The Ministry continues to encourage opportunities for people to move in and out of the Ministry on secondments to gain experience, expertise and build relationships. Examples during 2003/2004 include outward secondment of a Ministry senior analyst to the Australian Productivity Commission and inward secondment of a senior analyst from the Ministry of Foreign Affairs and Trade.
Knowledge management: The quality of the Ministry's advice depends on how well staff access, use and apply learning they gain from a wide range of experience, colleagues and contacts, research, networks and evidence that has been documented anywhere in the world. The Ministry has enhanced its knowledge management function and centre to support staff in their access to and use of knowledge. As well as building the capability of this group, key projects were commenced to improve the flow of core information across the Ministry, and to enhance our use of web technology.
Improving Our Performance
Managing our performance: During the year we consolidated our performance management system, which involves setting stretch expectations for staff and then coaching and monitoring their achievement. The system provides a check that staff are working to role, and enables the Ministry to reward high performers and manage poor performance.
Fundamental infrastructure: The most significant development here was completion of a comprehensive review of the Ministry's approach to information technology. We are adopting a "whole of organisation" IT system that meets the Ministry's business needs. As part of the Ministry's capital planning we have developed a three-year IT plan, which provides a clear sense of the Ministry's longer term financial needs.
A single team is now responsible for the delivery of all IT projects across the Ministry. The IT team has a service culture and is engaging with business owners to identify their needs and how best to meet them.
We have started a process to rationalise, standardise and automate the IT infrastructure to reduce costs and maximise reliability and business functionality.
A number of significant new IT projects were implemented during the year, including:
- Motor Vehicle Traders Register (to a legislated timeframe)
- Companies Office significant enhancements (BizNet)
- Data centre consolidation to Albany
- Consumer Affairs Consumer Information Database
- Energy Statistics database
- Consolidation of Telco supplies
During the year we continued to review our systems for support service delivery, with a focus on achieving integrated structures to provide best support to internal clients. For example, financial management support formerly provided internally within two branches has been integrated into the Organisational Development and Support branch's Finance section.
Accommodation: The Ministry is progressively implementing an open plan work environment, with the aim of encouraging team work, knowledge sharing and co-operation through a more open and interactive environment. Two floors of our Wellington head office were refitted during the year, and regional offices are also being refurbished to the same standard.
Geoff Dangerfield
Chief Executive
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