The Ministry's Outcome Framework
The Economic Context
New Zealand is a developed country. In 1950, we had the third highest standard of living, per capita, in the world. Over the following half-century, New Zealand's real per capita incomes grew a further 75%. However, other countries grew even faster, and by the turn of the millennium New Zealand ranked twentieth in the world in terms of per capita income.
On a broader measure of wellbeing - UNDP's Human Development Index - New Zealand ranked nineteenth in the world in 1999. It ranked twelfth in terms of public education expenditure per capita and only twenty-first in terms of life expectancy at birth. Its health expenditures per capita ranked nineteenth within the OECD.
The prosperity of any country - especially a developed country - is derived from a thriving, entrepreneurial, innovative and productive private sector that is intent on, and capable of, generating wealth. This, in turn, requires an environment that encourages individuals and businesses to make decisions that optimise value from investments in people, capital, ideas and technology.
Government has a major role in facilitating such an environment. It has to ensure solid micro-economic foundations, including:
- effective specification and protection of property rights;
- existence of incentives for individuals and firms to take risk;
- efficient provision of infrastructural assets;
- competition policy that promotes efficiency and innovation;
- efficient access to knowledge, capital, labour and other resources;
- effective provision of training and other human capability development;
- efficient management of business failure; and
- a low cost regulatory environment.
A cornerstone of successful economies is maintenance of an open economy, so assisting the movement of ideas, people and capital, as well as goods and services. Openness fosters competition, innovation and knowledge transfer, encouraging firms to specialise in areas in which they have competitive advantage. Government policy in New Zealand has, and will continue to promote an open economy consistent with enhancing the micro-economic foundations of the economy.
Solid micro-economic foundations are necessary to ensure strongly rising national prosperity. New Zealand has solid micro-economic foundations and it is a prime role of the Ministry to ensure that these foundations evolve, as required, to facilitate economic development. However, rapid economic development requires more than just solid foundations. The fact that New Zealand has had solid foundations but has grown more slowly than other developed countries testifies to this.
Government policy must also support the drivers of growth. Strategies must be tailored to fit national circumstances. In New Zealand's case, this requires recognition of the country's size and geographical location, its natural resource endowments, its people and its business structure, focused chiefly on small and medium-sized enterprises.
Successful countries are characterised also by a high degree of social cohesion. Social cohesion is an important aspect of sustainability, which also incorporates environmental and other aspects. The requirement for policies to result in sustainable outcomes is an important part of the context in which policy-making must, and does, occur. By enhancing national prosperity, economic policies can contribute both to a higher rate of economic development and to sustainable social and environmental outcomes. The most successful countries in the world have achieved these outcomes.
The Ministry of Economic Development
Established in February 2000, the Ministry of Economic Development incorporates the Ministry of Consumer Affairs and the Ministry of Tourism. We work directly for the Ministers for Economic Development, Industry and Regional Development, Commerce, Tourism, Communications, Consumer Affairs, Energy, and Information Technology. Our outputs are hence very diverse and contribute to economic development across a broad spectrum. Many of them may be considered as providing the foundations for sustainable economic development on which higher growth rates may be built. Others contribute more specifically to the Government's active promotion of growth and innovation.
The Ministry's Contribution to Government Goals
The Government wants to create a growing, inclusive and innovative economy for the benefit of all. This is one of the Government's key goals, and this vision is a driver of the Ministry's activities. The themes of growth and innovation were reinforced in the more recent growth and innovation framework. Released in February 2002, that document represents the Government's primary public policy statement on economic growth and development.
The growth and innovation framework is based on extensive research and consultation. It highlights the need to promote innovation and the adoption of new technologies in order to generate growth in the New Zealand economy. It also identifies a range of factors that underpin growth, including robust economic foundations and proactive and focused support from Government.
The growth and innovation framework articulated a specific economic objective: to return New Zealand's per capita income to the top half of the OECD rankings and maintain that standing.
The Ministry's main contribution to this, and to the key goal stated above, is to create the micro-economic conditions in which growth can occur. Government cannot generate wealth or growth per se: only businesses can achieve this. However, government can provide the regulation and direction, the active support and facilitation to enable businesses to start, to thrive and to grow. We think of these conditions as comprising the business environment.
In its work the Ministry is mindful of the Government's key goal of strengthening national identity and upholding the principles of the Treaty of Waitangi. Some of the issues we advise on are of particular relevance to Māori, including the use of Crown-owned natural resources, access to the radio spectrum, intellectual property, regional development, implementation of the Tourism Strategy, and consumer and energy safety matters.
Major Outcome
Given our sphere of influence and operation, the Ministry's aim is to achieve the following outcome:
New Zealand's business environment actively promotes and enables a higher rate of sustainable economic development
Intermediate Outcomes
To make this high level major outcome a more meaningful and direct driver of the Ministry's diverse range of activities we have derived two intermediate outcomes:
1. Foundation Outcome: The Regulation of Economic Activity Is Effective and Low Cost
An open and competitive micro-economy is a crucial foundation for economic growth and business success. The management and regulation of New Zealand's micro-economic environment are fundamental roles for the Ministry, and the majority of our resources are deployed accordingly. This outcome relates to these activities.
2. Growth Outcome: Regional Development, Business Growth and Innovation Are Actively Facilitated and Encouraged
As the Ministry of Economic Development, we have a responsibility to ensure that all our activities support and enable business growth, innovation and sustainable economic development in New Zealand. This includes our work on micro-economic regulation, but we also have a range of activities that are more specifically focused on active support for businesses. This outcome relates to these aspects of our work.
Supporting Goals
For each of these outcomes the Ministry has identified a series of supporting goals. These are the things the Ministry must do to achieve the outcomes, and they are phrased in terms of the results to be achieved. Listed under each goal are some examples of the types of output we will deliver in order to achieve these results.
Strategic Priorities
Under some of the supporting goals we have listed related strategic priorities. These are initiatives for the coming year that we believe will make the most significant contributions to strengthening the foundations of the economy and/or promoting innovation and growth.
The Outcome Framework
This outcome framework is illustrated in the diagram below.
As the diagram illustrates, the outcomes and the goals associated with them are not all mutually exclusive. In part, this is a function of the complexity of our organisation: we do a lot of things, and the things we do tend to impact on the economy in a number of ways. Moreover, we will identify opportunities for linking work programmes with more than one outcome: for example, by using the regulatory framework to enable growth and innovation. However, the foundation and growth outcomes and their supporting goals do represent relatively homogeneous categories of work. These are described in more detail in the next section.
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