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Overview

Most of this Annual Report focuses on the Ministry's financial targets and our output delivery. But achieving these targets and delivering on outputs is only possible if the organisation is in strong health.

This section draws on non-financial indicators to measure the health of the organisation and our ongoing ability to meet the demands placed on us. The Ministry continues to develop indicators to assist this measurement, so that we can track our progress over time and continually work to improve our performance. Crucial to this improvement are the initiatives delivered through our Organisational Development Strategy.

Organisational Development Strategy

The Ministry's Organisational Development Strategy sets out our investment programme to lift our capability. Over the past year, we focused resources and managerial effort on strengthening our leadership role, building an integrated organisation and being an employer of choice.

Strengthening Our Leadership Role

During 2006/07 we undertook a number of projects to improve engagement with and monitoring of Crown entities and to ensure our effective leadership of the Government's economic transformation agenda across the State sector. Specifically, we developed
and implemented a best practice approach to Crown entity relationship management and monitoring.

As part of our overall organisational change process, we reorganised our strategy functions to get greater alignment between our internal and external activity. This helped us to more effectively access our internal skills and knowledge about what matters most to economic development.

We led the review of the Government Urban and Economic Development Office (GUEDO) and its network. This review confirmed the overall direction and intent of the office as a collaborative cross-government initiative to advance the government's urban and economic development objectives for Auckland as a world-class city. The review has led to an increase in the number of agencies participating in the GUEDO initiative and more active governance and support to the office and network.

Throughout the year, we undertook an engagement programme to discuss, with key stakeholders, what matters in the economy. This included providing briefings and holding informal sessions with business people and commentators, as well as attending selected conferences. Information packages, presentations and tools (such as our online publication Business Update) were used to support this engagement. In the latter half of the year, we surveyed business to gauge how effective our stakeholder engagement was.

We continued to encourage and create opportunities for staff to gain a greater appreciation of the needs of others working in the economy. We have continued the Industry Insite programme, in which members of the Strategic Leadership Team spend a week in business. Secondments and industry visits were also undertaken to build staff understanding of business and the economic challenges New Zealand faces.

Working Together: Building an Integrated Organisation

During the year, the Ministry undertook a major review of our strategic priorities for 2007–2010, and as a result of our environmental scanning and strategic planning discussions, we proposed to Ministers a shift in a number of our strategic priorities.

We also continued to refine the supporting, planning and review systems to ensure that our work programme is well targeted and achieving its goals. We have strengthened our planning, operating review and risk management processes. We are continuing to build a suite of organisational performance measures.

The diversity of our work programme means that we need to constantly review how we share knowledge and information across the organisation, to ensure that we learn from our experience and engagement with others. This year, we continued to develop our staff's skills in building effective relationships and sharing information with others, particularly through the facilitation initiative and other training. We also continued to work on improving the underpinning information systems (records management and intranet), which support the availability and exchange of information.

Employer of Choice: Developing Our Skills and Expertise

The quality of our management is critical to ensuring our staff are well led and able to perform in their roles. We have continued a programme of ongoing management development, and through the performance management system we have worked with our managers to develop, coach and support them.

Our capability development systems and processes have been reviewed and a more targeted approach to staff development introduced. The corporate training programme was reprioritised to ensure that it meets the overall capability development needs of the organisation.

We completed work on some core support infrastructure to ensure that managers have an environment and systems that enable them to deliver. We focused on reviewing our approach to remuneration and completed the work on upgrading our human resources systems and the implementation of our new financial management information system. Information technology is an important enabler for the work of the Ministry, and this year we focused on bedding in some of the infrastructure changes and a programme of upgrading many of our business applications. We also relocated two of our offices in Auckland and Wellington and completed the refit of our Bowen Street building.

Management Structure and Staff Resources

Strategic Leadership Team

The Ministry's Strategic Leadership Team (SLT) advises the Chief Executive on the organisation's strategic direction and corporate action. SLT is made up of the Chief Executive, and the Deputy Secretaries. The Deputy Secretaries are also responsible for the effective management of their branches and delivery of outputs agreed with Ministers.

Branch Structure as at 30 June 2007

The Ministry has seven branches, each headed by a Deputy Secretary. The Ministry of Consumer Affairs and the Ministry of Tourism are semi-autonomous units within the wider Ministry. The seven Deputy Secretaries report to the Chief Executive. The General Manager of the Ministry of Tourism reports to the Deputy Secretary responsible for the Industry and Regional Development branch. The Director of the Government Urban and Economic Development Office reports to the Deputy Secretary responsible for the Economic Strategy branch.

Our major branches are:

Industry and Regional Development branch, which has the principal responsibility for advancing the Government's economic, regional and industry development objectives. The Ministry of Tourism, which advises the Government on tourism issues, is part of this branch.

Business Services branch, which runs the Ministry's business and operational services, including the Companies Office and other business registries, the Radio Spectrum Management group, Energy Safety and the Crown Minerals group.

Competition, Trade and Investment branch, which provides policy advice on the intellectual property, trade facilitation and tariffs, financial sector, corporate and competition frameworks for business, and the administration of trade rules and remedies.

Energy and Communications branch, which provides policy advice on the regulatory environment for the information and communications technologies sector as well as the energy, postal and broadcasting sectors, and on radio spectrum, natural resource and environmental issues.

Effective Markets branch, which incorporates the Ministry of Consumer Affairs, provides advice and programmes to ensure that markets work effectively for businesses and consumers. This includes consumer safety, rights and information.

Organisational Development and Support branch, which provides specialist advice on organisational development, legal, finance and facilities management, communications, risk management, information technology and knowledge management issues.

Economic Strategy branch, which supports the Ministry, the Government and other departments to develop and implement strategies that improve New Zealand's long-term economic development. This branch also supports the economic development of the Auckland/Upper North Island region – primarily through the Government Urban and Economic Development Office (GUEDO).

GUEDO is a cross-government initiative to improve the focus on Auckland-related policy development. Four government agencies – the Ministry of Economic Development, Ministry for the Environment, Department of Labour and Ministry of Transport – established this shared policy office in Auckland two years ago. As a result of the recent review of GUEDO it now has a chief executive group that also includes the Treasury, the State Services Commission, Inland Revenue, the Department of Internal Affairs and the Department of Prime Minister and Cabinet.

Staff Resources as at 30 June 2007

During 2006/07, changes were made to the way some of the Ministry's work groups are organised. These changes were designed to lift the Ministry's capability and effectiveness. In the figures below, 2005/06 data has not been reallocated to the new branch structure.

Our staff are crucial to the Ministry achieving its strategic priorities and business outcomes. That is why we want to attract the best people to the organisation by providing a supportive, well connected and integrated work environment, and developing talented and committed people.

Equal employment opportunities (EEO) ensure that everyone in the Ministry has the same chance to share in our success. The Ministry continues to be a member of the EEO Trust and also continues to comply with the principles of being a good employer. Examples of this include the provision of good and safe working conditions and impartial recruitment and selection processes as well as fair and responsible employment practices and policies for all employees.

The Ministry continues to have low levels of work-related accidents and injuries.

Staff turnover is higher than last year at 18.9 percent. This reflects increased demand for skilled staff in an environment of low unemployment. Programmes investing in staff and management development through scholarships, study awards and in-house training are in place. Formalised job rotation within the Ministry and secondments to and from other agencies enhance skill development and career opportunities.

Staff Remuneration

→ Full size version of graph [49 kB JPEG]

Environmental Performance

The Ministry's environmental performance is measured using the following key parameters: waste, distance travelled and energy consumption.

Statistical Summary

The 2006/07 financial year yielded both significant highlights and areas in which to focus improvements for the 2007/08 year. The major outcomes of this year's environmental performance include:

• implementation of recycling schemes in all of the Ministry's premises across New Zealand;
• 14 percent reduction in domestic air travel;
• 17 percent reduction in international air travel (including trans-Tasman);
• 10 percent reduction in vehicle travel;
• 11 percent reduction in energy consumption; and
• establishment of a sustainability section on the Ministry's intranet with the aim of:
  • keeping staff informed of actions to improve the Ministry's sustainability programme; and
  • allowing staff to follow progress and celebrate our successes.

Procurement

During the 2006/07 period, the Ministry increased its total use of A4 copier and headed paper by 3 percent to 40.88 tonnes (39.62 tonnes in 2005/06). This equates to 22 reams per FTE, compared to 21 reams per FTE in 2005/06. The Ministry continues to work to reduce the amount of paper used through paper-saving measures such as setting the default for printers to print duplex rather than single-sided. Sixteen percent of office paper reams used contained at least 50 percent recycled content. The remaining 84 percent of the paper came from sustainably grown and harvested forests.

During 2006/07, the Ministry's purchasing initiatives included 15 percent of its stationery and other consumables being classified environmentally friendly. The Ministry's target for 2007/08 is to increase the recycled content of office consumables to 25 percent.

Travel

In 2006/07, Ministry staff flew 2.5 million kilometres domestically, compared to 2.9 million kilometres in 2005/06. This represents an overall decrease of 14 percent in total distance travelled.

For trans-Tasman travel, Ministry staff flew approximately 1.4 million kilometres in 2006/07, compared to just over 1.1 million kilometres in 2005/06. This represents an increase of 27 percent in total distance travelled and reflects the Ministry's increased involvement representing New Zealand in trans-Tasman economic matters. For international travel, Ministry staff flew 3.9 million kilometres in 2006/07, compared to 5.3 million kilometres in 2005/06.

During 2006/07, Ministry staff travelled 765,000 kilometres in Ministry vehicles, taxis and rental cars, compared to 832,000 kilometres in 2005/06.

Waste

Following the success of the pilot recycling scheme in the Ministry's Bowen Street building in 2005/06 (where landfill waste was reduced from 69.59 kilograms per person per year to 24.78 kilograms per person per year), similar schemes were implemented in all Ministry premises during 2006/07 and will be reported against from 2007/08.

The aim in 2007/08 is to reduce the Ministry's landfill waste to 15 kilograms or less per person per year.

Energy

In 2006/07, the Ministry used 2.58 million KWh, compared to 2.89 million KWh in 2005/06. This represents an overall reduction of 11 percent. In terms of space occupied in 2006/07, usage was 107 KWh m2 compared to 120 KWh m2 in 2005/06.

As the general lighting density benchmark for office accommodation is approximately 200 KWh m2, the Ministry is performing well in conserving electricity.

Energy efficiency measures have been introduced to the Ministry's Bowen Street building, including installation of multiple zone lighting sensors, utilisation of combination light fittings and installation of dimmable ballasts to perimeter light fittings, which provide variable light output in response to a signal and automatically adjust for optimal output. Due in part to these initiatives, electricity consumption in the Bowen Street building decreased by 11 percent over the previous 12 months. In terms of space occupied, usage was 107 KWh m2.

In the Ministry's Northern Business Centre, our Auckland office and the Wellington office of the Intellectual Property Office, we are now maximising the use of natural light by placing staff near windows in an open plan work environment. These offices are also controlling electricity usage by using timers. As a result of these changes, improvements in energy efficiency are expected.

Financial Highlights for the Year Ended 30 June 2007

The following explains the most significant movements in actual results between 2006/07 and 2005/06 for departmental activities:

Revenue Crown ($6.493 million)

Revenue Crown earned for departmental outputs has increased by $6.493 million, mainly due to additional funding being provided for:

• costs associated with the preliminary work and pre-staging activities related to the hosting of the 2011 Rugby World Cup;
• increased costs relating to the administration and management of new proceeds of crime orders by the Official Assignee, and responding appropriately to the increasing complexity and risks associated with these orders;
• increased demand for services and in preparation for the insolvency law reform changes;
• costs associated with the Buy Kiwi Made programme;
• the transfers to the Ministry of both the procurement coordination and development activities of the Government Development Procurement Group and the Government Electronic Tenders Service;
• increased responsibilities within Vote Energy for implementation of the Biofuels Sales Obligation and fuel quality legislation, development of the National Energy Strategy and recruitment costs relating to the appointment of the Electricity Commission Executive Chair;
• costs associated with meeting International Energy Agency obligations relating to reserve oil stocks management, and the hosting of the APEC Energy Working Group;
• phasing of work associated with the implementation of the Government's decisions arising out of the Telecommunications Stocktake and Telecommunications (No. 2) Act 2006; and
• an expansion of the work programme including review of Parts 4 and 5 of the Commerce Act 1986, advice on effective investment and pricing of ports infrastructure, and legal costs associated with the Treaty of Waitangi claim Wai 262.

This was offset in part by reductions for:

• Crown minerals litigation activity, with significant cases previously before the courts having now been concluded;
• the phasing of implementing the regional statistics programme, where more funding was provided in 2005/06; and
• one-off costs in 2005/06 for the Central Online Management and Export Trade (COMET) project targeted to provide export assistance to 30 small to medium enterprises via electronic commerce.

Revenue Other ($0.445 million)

Revenue Other earned for departmental outputs has decreased by $0.445 million, mainly due to:

• the operations of the Electrical Workers Registration functions being transferred to the Department of Building and Housing in September 2006 and only two months of revenue recorded in 2006/07; and
• completion of the low sulphur diesel publicity campaign undertaken in 2005/06.

This was offset in part by increases for:

• additional activity relating to petroleum and mineral permit applications, offset in part by the New Zealand Petroleum Conference in 2005/06;
• additional activity in both trade marks and patents applications and renewals; and
• additional Personal Property Security Register activity, Motor Vehicle Trading Register activity and company registrations, offset in part by reduced revenue from company annual returns relating to reduced fees.

Output Expenses ($4.834 million)

Output expenses have increased by $4.834 million, mainly due to the corresponding expenses associated with the changes referred to above.

Net Surplus/(Deficit)

This mainly reflects the forecast impact of a long-term strategy to reduce memorandum account balances administered by the Ministry.

Memorandum accounts are operated in the Registration and Provision of Statutory Information, the Registration and Granting of Intellectual Property Rights (both in Vote Commerce), the Management and Enforcement of the Radiocommunications Act 1989 (Vote Communications), Motor Vehicle Traders Registration activities (Vote Commerce and Vote Consumer Affairs) and management of the Crown Minerals Estate (Vote Energy).

Further information on how the Ministry is working towards reducing surpluses is outlined in the Memorandum Accounts statement that forms part of the financial statements.

Equity

Taxpayers' Funds have increased by $1.061 million, reflecting additional funding for the development and implementation of a national unit register under the Climate Change Response Act 2002 ($1.200 million), offset in part by the transfer of equity relating to the Electrical Workers Registration functions that were transferred to the Department of Building and Housing in September 2006 ($0.139 million).

In addition, while there is an increase to the equity position, additional capital was provided totalling $7.879 million to fund the forecast deficits noted above in the memorandum accounts operated in the Registration and Provision of Statutory Information (Vote Commerce) and the Management and Enforcement of the Radiocommunications Act 1989 (Vote Communications).

New Zealand equivalent to International Financial Reporting Standards

The New Zealand Accounting Standards Review Board announced in December 2002 that reporting entities must adopt the New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) for financial periods beginning after 1 January 2007. The Minister of Finance announced in 2003 that the Crown will first adopt NZ IFRS for the financial year beginning 1 July 2007.

The Ministry will prepare its first set of NZ IFRS financial statements for the year ending 30 June 2008. For the 2008 financial statements, NZ IFRS 1 requires full restatement of comparative balances for the year ending 30 June 2007. Adjustments required to restate the opening NZ IFRS Statement of Financial Position as at 1 July 2006 will be made directly to Taxpayers' Funds (equity).

To ensure preparedness for NZ IFRS, the Ministry has completed a process that:

• assessed the key differences in accounting policies under NZ IFRS and current accounting policies;
• reviewed the financial statements to ascertain differences between current NZ GAAP and NZ IFRS;
• reviewed NZ IFRS to ascertain what new disclosures are required;
• determined and implemented processes to deal with any related business impacts;
• prepared a Statement of Financial Position as at 30 June 2006 under both current NZ GAAP and NZ IFRS;
• collated necessary information for NZ IFRS purposes on an ongoing monthly basis from 1 July 2006; and
• prepared financial statements for the year ended and as at 30 June 2006 under both current NZ GAAP and NZ IFRS.

Removal of provisions for doubtful debts and removal of small inventory items are the main areas that will impact on the Ministry's financial statements. The financial impact of adopting NZ IFRS will be an increase in Taxpayers' Funds as at 30 June 2007 of $0.100 million.