Implementing High-Level Vertical Sector Engagement
What Will Be Required from Sectors
41. The strategy developed from sector engagements must be sector-led, developed in partnership with the government and jointly owned by the sector and government. The precise process for delivering this result is likely to vary from sector to sector and should be determined on a case-by-case basis.
42. It is important to acknowledge that sector engagement will place significant demands on the sector itself. Typically it is likely to require the sector to contribute (and if necessary develop) a leadership group to provide strategic direction and to work in partnership with government to develop the vision, strategy and plan of action. Working groups, which would analyse individual issues and develop recommendations, may support this process. The sector would also need subsequently to implement those actions that are the preserve of the sector itself, and contribute to sector and government joint actions.
Vertical Sector Selection and Prioritisation
Prioritising Sectors for High-Level Engagement
43. The three delivery agencies with an overview across the whole economy (NZTE, TEC and FRST) are best placed to apply the criteria to select and prioritise sectors. These agencies should work together to develop recommendations in consultation with other departments and agencies that have an interest in the sectors being considered, with MED, as the lead agency for sector policy, acting as a co-ordinator. Where a sector identified for potential engagement has a dedicated sector agency, that agency should participate in this process from the beginning.
Approval Process for Sector Engagement
44. To ensure whole-of-government co-ordination and alignment, and a clear link to the aims and rationale set out in this paper, proposals for high-level engagement should receive Cabinet approval. As part of the development of Cabinet submissions, MED and the delivery agencies should work with other agencies across government to identify potential:
- policy and programme synergies;
- inconsistencies between the policy framework for sector engagement, ongoing engagement through the delivery agencies or issue-specific engagement;
- gaps in high-level sector engagement;
- sector support, and potential benefit for high-level engagement;
- areas of overlap between vertical sector engagement and relevant GPT and horizontal technology diffusion strategies; and
- areas of unnecessary overlap and duplication.4
45. Cabinet submissions seeking approval for high-level sector engagement should address the issues set out in Appendix One: Section C. The approval should be sought well in advance of proposed engagement to enable agencies to identify the resources required for engagement, build up knowledge of the sector and incorporate engagement into output planning.
Co-ordinating Engagement
46. Following Cabinet approval, MED (in consultation with other agencies) should be responsible for overseeing the co-ordination and alignment of sector engagement across government. NZTE should take the lead in co-ordinating and aligning sector engagement at the operational level, using the GIF focus areas5 as organising themes.
Who Should Lead Engagement?
47. On a case-by-case basis, the lead agency (depending on its mandate6) should be that with the best overview of the issues and opportunities confronting the sector. Where this is a dedicated sector agency, it will need to have (or develop) the capability to focus on economic development objectives, and the resources to engage with the sector.
48. If the lead agency is not NZTE, then NZTE should play a supporting role by contributing its sector engagement expertise. TEC and FRST will also need to be closely involved in most, if not all, engagements.
49. The GIF Taskforces also highlighted the important role that Ministers can play in providing leadership for the sector to develop and own the strategy.
Life Cycle of Vertical Sector Engagement
50. Whole-of-government vertical sector engagement will have three stages: i) the process of sector selection and prioritisation, an economic evaluation of the sector, and an approach to the sector to identify its willingness and capability to engage, culminating in a recommendation to Cabinet; ii) the development of a vision, strategy and action plan for the sector; and iii) the implementation phase (which may result in "issue specific" sector engagement).
51. The first two stages could take 12 to 18 months. Implementation of the action plan may take up to three (or more) years. While all stages will be resource intensive, policy agency involvement can be expected to drop off as implementation becomes embedded in the sector. High-level engagement may also end at stage two if it becomes apparent that implementation can be delivered through less intensive engagement.
52. Although high-level vertical sector engagement should reflect the needs of each sector, engagement will typically require government to:
- build an understanding of the sector - its economic significance and performance, structure, linkages (or lack thereof), and its skills and R&D capabilities and requirements. This is crucial both for sector selection and the success of any engagement;
- facilitate the building of governance capability (if necessary) and the development of a sector-led strategy and goals for making a substantial contribution to higher sustainable growth (some sectors will already have some form of strategy which should inform, and may even be suitable for incorporation into, this sector-led strategy); and
- respond to the sector strategy by taking well-justified action to support its implementation and so facilitate sector growth.
Government Actions to Facilitate Sector Growth
53. The question that then arises is what actions government should be prepared to take at this final implementation stage, given that the main focus of government's industry development policy is at the enterprise level, involving the design and delivery of programmes to individual firms, rather than sectors? The range of potential interventions includes, for example:
- initiatives to better co-ordinate existing public sector activity and programmes in respect of that sector, including RS&T and training activities;
- examination of the generic regulatory and tax environment in the light of the experience of that sector;
- review of sector specific regulation;
- initiatives to develop networks and linkages in that sector;
- initiatives to manage the costs of structural adjustment if required; and
- direct assistance to firms in that sector where there are clear spillovers to other parts of the economy that would justify such assistance.
54. The appropriate interventions will need to be considered on a case-by-case basis. Sector engagement should not normally result in any substantial shift in resource allocations to favour specific sectors. As a general principle, interventions that aim to improve the implementation of existing policies and programmes, or improve the quality of regulation, should be favoured over interventions involving sector-specific direct assistance. Exceptions should only be made where there are compelling and overriding reasons, such as an identifiable market failure or spillover that is specific to a particular sector. Even so, care needs to be taken to balance the benefits of using sector strategies to inform and refine existing interventions, against generating expectations that a sector might receive more favourable treatment than in the generic regulatory environment, for example, taxation.
Back to Top