• Home
• About MED
• Publications
• Statement of Intent
• Archive
• 2006-2009
• Section 4

• Publications

• Statement of Intent

• Archive

• 2007-2010
• 2006-2009
• 2005-2008
• 2004-2007
• 2003-2006
• 2002-2005
• 2008-2011
• Departmental Forecast Report
• Strategic Business Plan

The strategic priorities focus on particular areas where increased effort is likely to be most positive for growth, but all the Ministry's work aims to enhance growth.

This section describes the diversity of the Ministry's contribution to growth by outlining its 12 business environment outcomes. It also shows how the Ministry is implementing systems and processes to achieve its strategically identified outcomes and priorities.

Managing for Outcomes

The process of economic development is complex. The Ministry undertakes a wide range of activities to foster it. The strategic priorities focus on particular areas and issues where increased effort is likely to be most positive for growth. For this reason, they do not represent the whole of the Ministry's activity. While not all of our work contributes to the strategic priorities, all our work aims to enhance growth. The diversity of our contribution to promoting growth is reflected in the Ministry's 12 business environment outcomes, which are summarised later in this section.

Beyond the organisational focus of the business environment outcomes, there are also some important cross-cutting principles that influence the way we think about our work to achieve these outcomes. These include:

• designing policy and services in a way that fosters innovation;
• being conscious of where policy and services need to be designed and delivered in different ways to be effective for particular population groups, such as Māori and Pacific peoples;
• considering the impact of the business environment on small business;
• following principles of good regulatory design; and
• ensuring that economic development activities are effectively aligned across key economic players.

Working with Other Departments to Achieve Our Outcomes

The Ministry cannot achieve its major outcome on its own. We also recognise that achieving our business environment outcomes will often be influenced by a range of factors outside the direct influence of the Ministry.

We encourage all government agencies to maintain a focus on productivity and income growth, and seek to ensure that policies aimed at achieving non-economic objectives assist - or at least do not detract from - efforts to improve growth. This work with other agencies is the focus of our Leadership Strategic Priority.

For example, for several years the Ministry has had a shared outcome with the Ministry of Foreign Affairs and Trade and New Zealand Trade and Enterprise in the area of international linkages, and linked outcomes in the area of innovation with the Ministry of Research, Science and Technology. More recently, the Ministry has been developing a closer relationship with Statistics New Zealand to build better data and indicators across a range of activity that is important to the Ministry's growth outcome. This will improve the quality of the evidence base that we can use to develop more effective policy.

Contributing to Wider Government Goals

Our activities to promote economic growth and a supportive business environment need to be seen in the context of wider economic, social, cultural and environmental development objectives, because there are interdependencies between these different dimensions. Social cohesion is an important underpinning for economic prosperity.

Because of these interdependencies, the Ministry needs to collaborate and consult with other agencies to ensure that the total contribution of government agencies is greater than the sum of its parts. In particular, we need to take account of this wider context to ensure that policies are designed to be as effective as possible in contributing to growth, by tailoring our approach to the needs and characteristics of particular sectors. We need to be mindful of such themes that flow across the Ministry's work.

Some of our work contributes to Te Puni Kōkiri's outcome of Māori succeeding as Māori. The Ministry seeks to contribute to Māori economic development where it has the experience and expertise to do so. For example, certain characteristics of the Māori community and the structure of Māori businesses - such as tribal ownership of assets - may provide opportunities for a more tailored approach by the Ministry to certain applications of business regulation. The Ministry has also been doing work to reconcile the relationship between intellectual property and traditional knowledge. For several years, we have sought guidance on our areas of focus from our external Māori economic development advisory group.

Similarly, some of the Ministry's work contributes to the Ministry of Pacific Island Affairs' overall outcome of Pacific families and communities achieving their full potential and contributing to New Zealand society.

Improving Our Ability to Manage for Outcomes

The Ministry is continually sharpening its strategic focus. We want to concentrate effort and resources on the things that matter most for growth, as reflected in our major outcome and strategic priorities. This means we need to adapt our strategy over time to fit the changing external environment and incorporate our evolving understanding about how we can best influence economic growth in New Zealand.

The strategic priorities have become embedded as a focusing device for our activities, and for the "strategic conversations" that help determine these activities. Each strategic priority has:

• an agenda, setting out why the strategic priority is critical to achieving our major outcome, and key issues or opportunities that need to be addressed; and
• a work programme, describing the projects we will deliver to address the critical issues over the next year and beyond, as well as explaining how each project will address the critical issues. The strategic priority agenda and work programme together contain the intervention logic that links our work to our major outcome.

The Focus over the Last Year

Over the last year we have:

• implemented and improved a system for reviewing our strategy, particularly the strategic priority agendas and work programmes, ensuring that our strategy adapts to new issues and knowledge;
• improved our understanding of how we can be most effective, through policy-guided research, and connecting better to New Zealand business. We have also continued our on-going programme of evaluative activity of particular policies and programmes; and
• revised our set of Business Environment Outcomes, so that the Ministry's business units better identify with them. This will improve the effectiveness of these outcomes as a practical device for guiding business-level strategy, and understanding where "shared outcomes" exist within the Ministry - supporting the strategic priorities in aligning the organisation towards common outcomes.

With the annual strategy review becoming a stable and accepted part of the way we do business, our attention has also turned, over the last year, to improving the quality of the strategic thinking and conversations that take place within this review. As part of this, we have instituted a more structured environmental scanning practice by our Strategic Leadership Team, and put more focus on synthesising our research and other learning to distil the implications for our strategy.

The Focus over the Next Few Years

Improving the quality of strategic thinking within the formal and informal strategy processes in the Ministry will remain our focus over the next few years. This will include an increased focus, over time, on the strategies being developed by individual business units to contribute to the Ministry's overall strategy.

The following table shows the Ministry's progress with developing the strategic priority action plans, and the next steps over the years ahead.

The Ministry's Business Environment Outcomes

Our strategic priorities represent the main challenge for the Ministry and are the focal point of our strategy. However, our overall strategy encompasses a wide range of activities aimed at promoting growth, including activities that do not contribute directly to the strategic priorities, as well as activities that do contribute. It is therefore important for each functional part of the Ministry to understand how they contribute to a business environment that lifts productivity and prosperity, to have a clear direction for their own business-level strategies, and to understand which other parts of the Ministry are working toward similar intermediate outcomes. Accordingly, our business environment outcomes are designed to both reflect and provide direction for the primary activities of the Ministry's different groups.

The relationship between the strategic priorities and the business environment outcomes is shown in [Figure 3].

[Figure 3: Relationship between Strategic Priorities and Business Environment Outcomes]

Long Description of "[Figure 3: Relationship between Strategic Priorities and Business Environment Outcomes]"

Growing business capability > Businesses are capable of being more internationally competitive.

Innovation, entrepreneurialism and the ability to operate internationally are fundamental drivers of success and productivity improvement in firms of all sizes. Business success requires entrepreneurs continually to spot opportunities and to produce and market innovative products that consumers want. The Ministry works on policies to help businesses build capability at both firm and sector levels, as well as improving the business environment so that it stimulates innovation, and improving connections between private and public sector research and development. We also help shape the environment for networks at firm, sector and regional levels that will foster greater levels of collaboration and knowledge transfer.

Groups in the Ministry whose primary activities contribute to this outcome include Firm Capability, Growth and Innovation Framework Group, Regional Policy, Monitoring and Evaluation Unit, Sector Policy, and Small and Medium Size Enterprises. Some of our work on the Innovation Strategic Priority contributes significantly to this outcome. This outcome is linked to MoRST's outcomes for the research, science and technology sector.

Making the most of intellectual property > Intellectual property rights in New Zealand support investment in innovation and the sharing of ideas.

Intellectual property rights underpin innovation in New Zealand. By ensuring that people who generate innovative business ideas can benefit commercially from them, these rights provide incentives for continued innovation and invention. Innovation is also generated through access to knowledge and ideas, and building on the work of others. Legal protection for intellectual property must take account of all these factors by aiming to reward innovators, while also encouraging the dissemination of new ideas. The Ministry is responsible for intellectual property policy and also offers efficient intellectual property registration services to support entrepreneurial activity in New Zealand.

Groups in the Ministry whose primary activities contribute to this outcome include Intellectual Property Policy and the Intellectual Property Office of New Zealand. Specific activities under the Innovation Strategic Priority contribute to this outcome.

Protecting dynamic competition > Competition regulation promotes dynamic markets and innovation.

Businesses can start and thrive, and consumers get a fair deal, when anti-competitive behaviour is restricted and firms compete for business in well-functioning markets under clear and transparent rules. Beyond sector-specific market regulation in the energy and ICT areas, which are covered under the specific outcomes below, the Ministry's work on competition policy aims to protect the competitive process so that it promotes innovation, investment, competitive prices and good business practice.

Groups in the Ministry whose primary activities contribute to this outcome include Corporate and Competition Policy, and the Ministry of Consumer Affairs (through the Empowering consumers outcome). Certain activities under the Innovation Strategic Priority contribute to this outcome.

Promoting dynamic and trusted capital markets > The business community has confidence in the integrity and effectiveness of New Zealand capital and financial markets.

Well-functioning, efficient and dynamic capital and financial markets are essential to the maintenance and growth of productive business activity, because firms need the right financial capital arrangements to innovate and be globally competitive. For these markets to work well, market participants must have confidence in the firms, intermediaries, rules and institutions that operate within the investment environment. The financial system must also be resilient in the face of economic and financial shocks, allow firms and individuals to undertake effective risk management by pooling and mitigating risk, and should aim to facilitate increased savings for individuals. The Ministry works to ensure that capital and financial markets are regulated efficiently and effectively so that they deliver a range of high-quality and trusted financial products and services. We also investigate the ability of firms in New Zealand to access finance and work towards addressing any barriers, where appropriate.

Groups in the Ministry whose primary activities contribute to this outcome include Financial Sectors, Firm Capability, and the Ministry of Consumer Affairs (through the Empowering consumers outcome). Certain activities under the Regulatory Environment Strategic Priority contribute to this outcome.

Empowering consumers > Consumers can transact with confidence.

For markets to work well and support innovation, consumers need to have confidence in the products and services they purchase, confidence in the parties with whom they transact, and confidence in the market rules and institutions that govern their transactions. Without this confidence, they are less likely to participate actively in markets, or will spend time and effort protecting themselves against unknown dangers. The Ministry provides advice on a wide range of consumer issues.

The Ministry of Consumer Affairs, an operating branch of the Ministry of Economic Development, contributes significantly to this outcome.

Harnessing ICTs > Information and communications services and technologies make a significant contribution to productivity improvement and quality of life in New Zealand.

Rapid and on-going developments in information and communications services and new digital technologies have high potential to enhance the productivity of New Zealand firms, and our quality of life in general. Through the Ministry's activities relating to ICT, radio spectrum and firm capability, we are aiming to promote seamless and easy access to information resources, enhance the skills needed to utilise the resources and technologies available, and ensure the availability of ICT networks, particularly high-speed/high-quality-of-service broadband.

Groups in the Ministry whose primary activities contribute to this outcome include Radio Spectrum Management, Radio Spectrum Policy and Planning, IT and Telecommunications Policy, Sector Policy, and Firm Capability. Activities under the Infrastructure Strategic Priority contribute significantly to this outcome.

Building international links > New Zealand's international connections support transformation of the New Zealand economy through growth in trade, and through improved flows of investment, skills and technology.

International connections enable growth. This is particularly true for New Zealand, because the domestic market is small and distant from global markets. The Ministry works closely with other agencies to co-ordinate New Zealand's regulatory environment more closely with those of our major trading partners and to promote stronger business networks. This outcome is shared with the Ministry of Foreign Affairs and Trade, and New Zealand Trade and Enterprise.

Groups in the Ministry whose primary activities contribute to this outcome include International Technical and Regulatory Co-ordination, Trade Remedies, Tariff Policy and Trade Rules, and Sector Policy. Activities under the International Linkages Strategic Priority contribute significantly to this outcome, including a number of projects run by cross-Ministry project teams.

Promoting sustainable tourism > Tourism makes a sustainable and increasing contribution to the New Zealand economy.

Tourism is an important contributor to New Zealand's economy and is an area that has significant growth potential. We aim to contribute to the growth of a high-value, sustainable tourism industry by providing policy advice on the role of tourism as a contributor to local and regional economic development, developing Māori tourism capability, improving the environmental performance of tourism, and conserving and sustaining the sector's long-term future. We also develop research and core data to provide information to the private and public sectors to enable high-quality decision-making. The Ministry's primary contribution to this outcome is via the Ministry of Tourism, a semi-autonomous organisation within the Ministry. Implementation of the New Zealand Tourism Strategy 2010 is a key focus for the Ministry of Tourism and the New Zealand Tourism Board.

Securing our energy future > New Zealanders have reliable and safe access to the energy they need, at reasonable and efficient cost, and with acceptable impact on the environment.

Local and global demand for energy will inevitably increase over time, putting pressure on our energy supplies. Pressure on the system will be reflected in higher energy prices. The challenge over the medium to long term is to meet New Zealand's energy needs in a way that maintains our way of life, economy and the environment. The Ministry is responsible for a range of energy-related activities, including advice on the overall direction of energy policy and performance of energy markets, energy safety, the provision of energy statistics, and overall management of New Zealand's oil and gas resources.

Groups in the Ministry whose primary activities contribute to this outcome include Crown Minerals, Electricity Policy, Energy and the Environment, Energy Information and Modelling, the Energy Safety Service, and Fuel and Crown Resources. Activities under the Infrastructure Strategic Priority contribute significantly to this outcome.

Managing our natural resources > Government enables business to generate economic benefits sustainably from New Zealand's natural resources.

Crown resources for which the Ministry is responsible, such as the mineral estate and the radio spectrum, need to be managed and allocated to maximise opportunities for sustainable economic development, whilst recognising the need for the use of these resources to be managed sustainably. The Ministry advises on the management of a range of these assets and allocates rights to utilise them, taking into account the Crown's obligations under the Treaty of Waitangi. The Ministry also contributes an economic development policy perspective on specific natural resource issues, such as bioprospecting and oceans policy.

Groups in the Ministry whose primary activities contribute to this outcome include Crown Minerals, Energy and the Environment, Fuel and Crown Resources, Radio Spectrum Management, and Radio Spectrum Policy and Planning.

Promoting responsible business governance > The rules governing corporate behaviour in New Zealand effectively balance accountability with the need to support innovation.

Confidence in the integrity of the New Zealand business environment depends in part on the effectiveness of rules that establish business accountability and promote responsibility, and the institutions and powers required to ensure effective monitoring and enforcement of these rules. Businesses, their managers and directors need to be accountable to their stakeholders. The Ministry is responsible for developing and administering a range of rules affecting the operation and governance of different types of corporate entity. Regulation both prescribes this accountability and ensures that shareholders have the information they need to hold managers accountable. However, in designing and administering these rules, we strive to strike the right balance between the need for corporate accountability, and supporting entrepreneurs to be innovative.

Groups in the Ministry whose primary activities contribute to this outcome include Corporate and Competition Policy, Financial Sectors, Business Registries and Insolvency and Trustee Service.

Boosting the productivity of Auckland > Auckland continues to grow as a world-class city, balancing economic growth with improvements to the quality of life of its citizens.

Auckland is the country's largest city and its greatest concentration of businesses and economic activity. It lies at the centre of the country's largest region and generates almost a third of New Zealand's wealth. The future economic health of Auckland is vital to the future economic health of the country as a whole, and Government has identified Auckland's development as a priority. The Ministry of Economic Development has led the creation of the Government Economic and Urban Development Office, co-locating Ministry staff with staff from the Department of Labour, the Department of Transport and the Ministry for the Environment. The purpose is to provide advice to government on a co-ordinated approach to Auckland's sustainable economic and urban development.

Cost-Effectiveness of the Outputs the Ministry Delivers or Administers

This section outlines our approach to assessing the cost-effectiveness of the outputs that the Ministry delivers or administers. Although performance can be difficult to quantify in some areas, we use a variety of measures, including evaluation, to provide assurance that our activities have an impact on our outcomes. The Ministry will continue to adopt strategies to ensure we can provide efficient and effective services to Ministers and third party fee-payers, within the resources available to us. To achieve this, the Ministry will:

• improve the efficiency of our own processes and systems to reduce costs to purchasers of our services;
• invest in people and systems to develop the skills needed to deliver;
• ensure our support structures are delivered efficiently and effectively; and
• ensure efficient decision-making around priority work and effective identification of financial implications and capital expenditure.

Therefore, the short-term focus is on prioritising operating expenditure and managing within budgets. The long-term focus is in on examining ways to meet increasing cost pressures within relatively fixed revenue, while maximising the impact of our strategic priorities. Our business planning processes are intended to support this by:

• encouraging an approach that is driven by the Ministry's strategic priorities and outcomes;
• ensuring there is a clear basis for identification of outputs; and
• developing and implementing processes around prioritisation of resources across the Ministry.

The Ministry undertakes a wide range of activities to foster economic development. In its diverse roles, the Ministry develops policy for implementation by other agencies, or through services provided by the Ministry, especially by the Business Services branch.

Policy Advice

The Ministry's core work of providing policy advice does not easily lend itself to direct cost-effectiveness analysis (cost per unit of benefit obtained). Our business environment outcomes do not have readily quantifiable measures of impact. They are typically realised incrementally over a period of years from a cumulative series of interventions on the economic environment - often from a number of government agencies. There can also be unanticipated international events that impact on New Zealand businesses, given much more global influence on the domestic business environment. So it is not an easy task to isolate the impacts and the effectiveness of this Ministry's policy advice outputs, especially within the time period of a Statement of Intent.

In these circumstances, we work to find a variety of measures that allow us to assess the quality of our policy advice and its desired impact. For example, the Ministry has a key role in promoting measures to improve the quality of regulatory analysis and processes across government, combined with taking an overview of business compliance cost reduction. These same principles are applied to the work and advice provided by the Ministry in the policy work it undertakes.

Furthermore, successful programmes comprise activities that deliver real results and essential services. Accordingly, in assessing the effectiveness of policy development, the Ministry focuses on its approach to help translate these policies into appropriately targeted programmes that deliver measurable results. The Ministry uses a monitoring and evaluation approach to support evidence-based policy development, which in turn serves to strengthen the overall efficiency and effectiveness of the interventions it recommends or implements. In particular:

• Because evaluation activities help us to learn more about what works and what does not, evaluation results are important for presenting the case for the direction of economic development policy within government, and in explaining the approach more widely.
• A number of the policy interventions are piloting approaches not previously used in New Zealand. Good evaluation enables these pilots to be refined, discontinued or more fully implemented. The process for doing this is through evaluation reports-back to Ministers, after sufficient time has elapsed, to test policy impacts and decide on policy refinement.
• While policy interventions are targeted to very specific activity, it is important to gauge the policy mix. Evaluation does this by indicating relative impacts, scale issues and complementarities.
• It is important that policy implementation, including the work of New Zealand Trade and Enterprise, develops a performance culture so service delivery is as efficient and effective as possible. Evaluation has an important role in building this performance culture and in improving the relevance and coverage of monitoring information.

As part of the 2006/2007 work programme, a number of programmes will be evaluated to determine whether the design and delivery of these major interventions is meeting the original objectives or as input to looking at how they could be improved. Evaluation is a key component of Vote: Economic, Industry and Regional Development. This work will include the evaluation of a number of specific programmes and completion of the Government's expenditure review of business assistance programmes. All programmes will be evaluated within a four-year cycle.

Service Delivery and Enforcement Systems

Government regulatory regimes require effective enforcement and service delivery systems. These, in turn, need to be supported by efficient, high-quality information systems. The Ministry runs the corporate and intellectual property registers and enforces the corporate governance statutes. Six business units in the Ministry deliver such services to both business and the public (for example, the Companies Office, the Intellectual Property Office, and the Radio Spectrum Management Group). Each of these units provides registry and/or licensing functions in parallel with compliance and enforcement responsibilities.

A key objective of these units is to lower the cost of services to business. This, in turn, contributes to an objective of minimising transaction costs for consumers and businesses in domestic and international markets. The specific priorities for the next three years to achieve this outcome are:

• continuing to enhance the online services the Ministry offers and look at vehicles for new choices in service delivery, and introducing new on-line licensing and registration facilities;
• reviewing annual fees to further simplify categories, removing fee differentials unrelated to administration costs, and providing incentives for on-line payments;
• providing integrated services, with other government agencies, to small to medium enterprises via the internet. For instance, the joint Companies Office/IRD initiative allows someone setting up a new company to ask IRD for a tax number at the same time as they submit their application to the Companies Office; and
• offering increased access to Australian corporate information (through an agreement with the Australian Securities and Investment Commission) to New Zealand businesses, assessing opportunities for co-ordination with Australia in areas such as patent examination and trade mark and plant variety rights processes, or supporting mutual recognition arrangements for electrical product compliance.

The most recent Doing Business - Benchmarking Business Regulations survey issued by the World Bank Group (based on January 2005 data), showed New Zealand ranked 1st for ease of doing business, 4th for starting a business and 21st for closing a business. Often, improvements in the Doing Business indicators proxy for broader reforms, which affect more than the procedures, time and cost to comply with business regulation, among other things.

While the Ministry is not the only player in these processes and cost is not the only metric that is assessed, as an international benchmark, it provides some guidance on how cost-effectively the services of the Ministry are being provided. For example, the cost of setting up a business in New Zealand amounts to just 0.2 per cent of per capita income, compared with an OECD average of 6.8 per cent. Similarly, in New Zealand the cost of resolving a bankruptcy is four per cent of the estate value, compared with an OECD average of 7.4 per cent. However, New Zealand's recovery rate of 71.0 cents in the dollar from an insolvent firm is lower than the OECD average of 73.8 cents.