Resource material › Corporate Publications › Statement of Intent 2013-16Tauāki Whakamaunga Atu

Capability to Deliver

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• Managing in a changing environment
• Organisational health and capability
• Finance and asset management

Managing in a changing environment

We identify long-term trends and issues through environmental scanning, strategic leadership sessions, and engagement with key stakeholders to underpin strategic development. The Executive Leadership Team (ELT) has collective responsibility for identifying the core capability and capacity requirements to support the Department to respond to external drivers in the short and long term. The Department’s governance committees maintain oversight of the environmental drivers in their areas of focus.

Operating environment

Government, public expectations and ongoing fiscal pressure have changed the operating environment across government.

Like all public sector agencies, the Department is expected to deliver better results for New Zealanders within tighter fiscal constraints. The economic uncertainty also has implications for the people, businesses and communities that agencies serve.

External factors that influence the Department’s operating environment include:

• ongoing global economic uncertainty
• expectations from Government to deliver more for less
• altering public expectations for more tailored, accessible and coordinated services
• continual advances in ICT and the consequences for accessibility, privacy and integrity of information
• changing demographic structure of New Zealand society
• ever-present risks of large-scale environmental hazards and the capability required to respond.

In addition to the external considerations, the diversity of the Department’s functions means it must take into consideration a range of challenges and changes in its operating environment. Specific considerations include:

• expectations of a more responsive and economic system of local government
• a strengthened statutory framework and revised National Plan for recovery from major civil defence events
• a more complex regulatory environment including increased scope and technological requirements
• the trend for information and government records to be ‘born digital’
• greater demand for identity products and community services
• public expectations of more open government data
• ongoing changes to legislative requirements across a number of areas e.g. local government, gambling
• responding to future Commissions of Inquiry and changes in the Executive.

Risk assessment and management

To achieve priorities and outcomes within the operating environment, we need to actively understand and manage risk in order to maximise the opportunities, limit downsides and achieve the desired objectives. This requires us to fully understand both our appetite and tolerance for risk along with the nature and extent of the risk and opportunity when developing appropriate responses.

ELT is collectively responsible for the Department’s risk assessment and management. Governance committees provide oversight of risk and opportunities in their areas of focus to support ELT. The Risk and Assurance Governance Committee has a specific role supporting risk management practice and policies, and provides oversight and guidance of risk management at an organisational level.

Our risk management framework extends risk identification and mitigation to all levels of the Department’s activities. The framework is consistent with the Risk Management Standard ISO 31000:2009. Ongoing review and feedback will ensure that our risk management framework remains appropriate and delivers the right outcomes for the Department.

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Organisational health and capability

Strong organisational health and capability provide the foundation for us to achieve wider strategic priorities and outcomes within a changeable operating environment.

Building organisational capability

Ensuring the Department is a robust, sustainable and fit-for-purpose agency is one of our strategic areas of focus over the next three years. We are building our organisational capability to deliver core services, give effect to our leadership role and deliver on government and public expectations.

Developing our people capability

A strong and committed workforce is critical to achieving our priorities and progressing our strategic areas of focus. We recognise the importance of our people and teams to creating a strong Department and understand that supporting their well-being is critical to the achievement of our goals. The Department has developed a workforce strategy to build the workforce it needs to deliver on these expectations and its changing role.

A strong and clear workforce strategy

Our workforce strategy sets out a planned approach to building and sustaining the workforce required to deliver on the Department’s strategic direction, core functions and leadership responsibilities. This strategy is supported by an Organisational Development Plan which focuses on specific actions that will be implemented across the Department.

Building our people capability will be driven through four focus areas:

Developing leaders to meet the challenge of change – Confident and capable leaders will play a key role in delivering on our strategic priorities, in particular in the all-of-government leadership area. We have been working to develop and deliver an advanced/strategic leadership programme and have implemented programmes to support managers to become good leaders. Our manager induction programme and LeadME refresher workshops provide new and existing managers with the right tools to support their staff and be effective managers while our Excellerate programme is a core management skills programme to support high performance and engagement. We are sharing information and knowledge with senior leaders through a quarterly leadership forum, which is also an opportunity for leaders to build collaborative relationships with their colleagues across the Department. By lifting our leadership capability we are ensuring our successful contribution to effecting the transformational changes taking place across government. Capable leaders also provide a strong force for promoting organisational change.

Building a strong organisational culture – Culture creates the context that drives organisational performance and the experience the staff have of working at Internal Affairs. An engagement survey conducted in 2012 showed that there was the opportunity to more actively develop a strong shared culture. Our Executive Leadership Team has embraced this opportunity and worked actively with our staff to identify the culture necessary to make us a high-performing Department and ensure working at the Department is a positive experience for our staff. The results from a second engagement survey, conducted earlier this year, show a small but significant improvement in staff engagement. This trend is an encouraging indicator that the Department’s focus in this area is having a positive influence on building the culture we need. (The work done to develop our culture is outlined in greater detail under Spotlight on: Organisational Culture).

Developing workforce capability to meet changing business needs – We have a wide capability base that is a major strength across our functions, but our capability needs to be strengthened in the areas where we are to play a lead role, such as functional leadership of ICT. We will refine our operational approach to be more proactive in responding to fast-changing technologies and new customer expectations. To support and develop our managers and staff, we have implemented a talent development approach for the Department. In rolling this out, we have taken a staged approach commencing with tier three managers. This ensured we had the opportunity to test the criteria and approach appropriate for our Department. The roll-out to all staff will be undertaken over several years based on our staged implementation process.

Optimising workforce capacity to deliver results – We will optimise our workforce capacity by matching our workforce to the needs of business, managing within our financial constraints and improving our systems and processes to support productivity. This will include pursuing opportunities to collaborate with other public sector agencies, such as the Optimise HR initiative. This initiative is discussed in further detail under Spotlight on: Shared Corporate Services.

Developing our systems and infrastructure

As the home of the GCIO, the Department aims to be an exemplar in government ICT management. We have a significant programme of change underway to ensure we have the systems and infrastructure in place to support this aim. We realise that to be credible in our GCIO role, we must have a coherent, well-articulated ICT development plan capable of achieving milestones.

To support the development of our internal ICT capability, we have developed a DIA ICT Strategy and Roadmap that set out what and how we need to progress our ICT infrastructure. Our ICT Foundations Programme is key to achieving efficiencies and improving productivity within the Department through reduced duplication and better aligned ICT systems. This programme has been commissioned to carry out the coordinated organisation, direction and implementation of a number of projects such as consolidating and strengthening our cyber-security; establishing Department-wide video-conferencing facilities; and leveraging off the all-of-government Desktop as a Service work to provide a modernised desktop system.

We have also developed an Information Management Strategy and Action Plan to support our information management capability. The Strategy and Action Plan sets out a range of foundational projects which aim to reduce storage costs, improve knowledge and control of our information assets, enable us to make better use of our information assets and support improved staff productivity.

The Department will address core ICT and other infrastructure needs to ensure they are secure, flexible, reliable, cost effective and future-proof. The corporate foundations programme approach will ensure that all infrastructure needs are recognised and that a cohesive and coordinated approach is taken for the development and roll-out of new infrastructure.

Property strategy and implementation

We currently have a considerable property footprint throughout New Zealand, occupying 50 premises across 20 cities and towns, including two sites overseas. We have developed and will be implementing a property strategy that provides a high-level roadmap for future management of our property portfolio. We expect to see improvements to our physical environments to better support our culture and strategic direction and in due course a reduced property footprint that is more efficient.

Security framework

We have developed and are implementing a security framework that will see a strengthening of our physical security practices and a review of our information management practices. We are continuing to review and enhance the security of our ICT systems and our cyber-security in conjunction with other government agencies.

Implementing the findings of the Performance Improvement Framework (PIF) report

In 2012 we were selected as a Department to undergo a PIF review. A self-review was undertaken in the context of just having integrated the last of the new functions, the Charities Commission, into the Department.

In the self-report, we identified a number of areas where there were opportunities for improvement. Following the formal review by external PIF lead reviewers, it was reassuring to see that the findings of the lead reviewers strongly align with our self-assessment, providing us with confidence that we have correctly identified our key challenges.

We recognise the need to make significant progress quickly on core infrastructure issues that impact on the daily working environment of staff. We have already begun to address these issues, and will continue to make changes through the ICT Foundations programme, the Creating our Future workshops and through Shared Corporate Services as discussed earlier.

We will continue to work closely with central agencies to create a new way of working that is consistent with our roles and responsibilities as a functional leader.

Enabling effective Māori-related services

The Department accepts the privileged role and responsibility of holding and protecting the Treaty of Waitangi. In our role as a Crown agency and Treaty partner, we work effectively with Māori. It is essential that we understand our obligations to Māori as part of the Crown.

The Department has developed a strategic framework to guide the work of the whole of the Department and to address all aspects of our role as a Treaty partner and our responsibilities to Māori.

Being a good employer – equal employment opportunities

We aim to be a good employer and an employer of choice. Our organisation provides opportunities for development and growth of staff within the organisation, and also seeks to develop skills useful in the wider public sector by developing leaders.

As a good employer, we recognise the importance of promoting diversity and equal employment opportunities in the workplace. We will continue to support the Equality and Diversity: New Zealand Public Service Equal Opportunities Policy and a number of equal employment opportunity groups within the Department.

We are undertaking a review of our equal employment opportunities policy to ensure it clearly reflects our expanded functions. This review will include a focus on how the Department meets it obligations to Māori staff under the State Sector Act.

How we will assess our progress

Indicators	Progress	Data source
We attract high-quality people in the most cost-effective way possible and create a positive experience for applicants and managers	End-to-end recruitment process complete within 60 days * includes average 13 days advertising, five days for successful applicants to consider signing and seven days for promulgation	Internal Affairs HR data
We have a healthy turnover rate and do not experience low or sudden drops in our retention rate	Reduce current core unplanned turnover rate (14%) against the public sector core unplanned turnover average of 11%	Internal Affairs HR data
Staff have a comparatively high level of engagement and this supports the Department in being a high-performing organisation	Increased engagement levels for staff in annual engagement survey 2013: 14.2% 2012: 9.3%	DIA annual engagement survey
	Percentage of DIA engaged level to exceed State Sector Benchmark by 2017 2013: 14.2% (State Sector Benchmark 21%)	SSC reported data on overall State sector engagement
The Department effectively manages its footprint and generates savings	Total office accommodation per person will reduce from the current 20.77 square metres per person (BASS) to a range of 14–16 square metres per person by 2017/18. Note: Efficiency gains of $1.8 million are expected from this Strategy by 2017/18 as leases expire	Square metres per FTE (BASS) 2012: 20.77sqm

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Financial and asset management

The principles of financial accountability and strategic financial management provide the framework for financial management within the Department, and encompass a number of financial strategies through which we ensure we manage finances responsibly.

We maintain financial policies and procedures designed to ensure best practice financial management and support the strategic goals and priorities of Ministers and the Government. In addition we have been progressively strengthening our financial management capability, in line with Government’s expectations for public service departments.

To adequately support the financial and information needs of the expanded Department and its stakeholders, we are investing in improving systems, tools and processes. By working with the Inland Revenue, the Department is moving onto a SAP platform in a shared service environment, thus increasing capability and minimising the investment in information technology.

Responding to the current fiscal environment

The broader economic and fiscal environment continues to strongly influence our wider operating environment. Expectations for more cost-effective public services and the need for fiscal restraint requires an ongoing commitment to managing cost pressures and using resources cost-effectively.

In the medium term, the need to deliver Departmental and Ministerial priorities within reduced Crown funding, while managing future cost pressures, is a key strategic driver. The current fiscal environment requires departments to consider existing baselines as the first source of funding for meeting cost pressures, funding any new priorities, or for increasing funding to existing programmes.

Our Four-Year Plan outlines the ongoing response to these drivers over the medium term, and how the Department intends to manage its finances in an operating context of fiscal constraint.

We will continue to seek ways to develop new operating models to capitalise on our structure, explore ongoing and sustainable savings, and work more productively and cost-effectively. We have an ongoing focus on baseline management and future savings will be allocated to initiatives that are aligned with government and strategic priorities.

Pricing strategy

We have in place an overall pricing framework for individual products and services provided in both contestable and non-contestable environments and markets. The framework encompasses best practice public sector guidelines, a set of overarching pricing principles and specific pricing strategies.

We depend on revenue from fees for close to half of our income and baselines can fluctuate as demand for products and services changes. Where services are provided on a cost recovery (fee-for-service) basis in non-contestable markets, we operate memorandum accounts to assist in managing costs and revenue, particularly where fees charged are set under regulations.

Although fees have remained static in a number of areas for a long time, we are limiting the need to increase third-party fees where possible. In recognition of the Government’s focus on cost constraint and expectations to deliver more for less, increases in fees are not factored into our budget planning, pending monitoring and reviews of cost pressures on these products.

Capital and asset management

We seek to maintain a capital base that will meet the Government’s aim of using improvements in national infrastructure to drive productivity growth within the public sector and the wider economy, and improve State sector performance.

Within the current fiscal environment, a key priority is self-funding new and replacement capital investments through balance sheet management.

Forecast capital expenditure over the next three years reflects previously approved capital initiatives, with the Department self-funding all other priority future capital investments. In addition, our capital planning acknowledges the importance of retaining an adequate level of unallocated residual funding that can be made available for emerging priorities, emergencies or other capital contingencies.

Enhancements to asset management

We seek to ensure effective capital asset planning, investment, delivery and management. We support this with processes and procedures that provide assurance that required standards are being met, the required capability has been built and the required and credible information is readily available.

We are implementing enhancements to our asset management framework (including capital planning and investment) to align with best practice standards. This will include appropriate compliance and alignment with the Treasury-led Capital Asset Management framework. In order to realise the greatest benefits from our capital investments, these improvements will seek to ensure the alignment and integration of strategic, business and operational planning across the Department.

Key capital and asset management initiatives:

• we will complete a number of major infrastructural asset projects, including the Passports System Redevelopment Programme, and a replacement grants management system
• continuing investment in both corporate and service delivery infrastructure and ongoing investment in replenishing and refreshing the existing asset base
• progressively streamlining and enhancing corporate services and support systems. This includes integrating a range of back office functions and corporate systems with other government agencies (Optimising Finance and HR are initiatives in progress)
• developing an asset rationalisation strategy to streamline our asset base, reducing capital investment and associated operating expenditure
• developing more cost-effective accommodation options to reduce average costs of accommodation, achieve improved office space utilisation and reduce our overall footprint.

Key financial information

Appropriations

	2012/13 $000	2013/14 $000	2014/15 $000	2015/16 $000	2016/17 $000
Departmental:
Output Expenses	387,798	394,037	372,351	371,123	371,123
Capital	45,679	44,691	37,613	41,377	37,337
Total Departmental	433,477	438,728	409,964	412,500	408,460
Non-departmental:
Output Expenses	4,076	4,076	4,076	4,076	4,076
Other Expenses	67,243	51,656	48,538	48,538	47,818
Benefits and Other Unrequited Expenses	55,000	55,550	56,500	57,250	58,100
Capital	2,825	1,883	1,976	1,976	1,976
Total Non-departmental	129,144	113,165	111,090	111,840	111,970
Total Baselines	562,621	551,893	521,054	524,340	520,430

The following summarises the changes in departmental baselines:

1. Output Expenses – the increase in baseline in 2013/14 is mainly due to a forecast increase in demand for passport products in 2013/14 partially offset by a lower level of demand for information technology services by other agencies in 2013/14, one-off funding in 2012/13 only for the visit by the Prince of Wales and the Duchess of Cornwall, and the completion of the Royal Commissions of Inquiry in 2012/13.

   From 2014/15 the baseline remains stable and mainly reflects a lower level of funding for a programme of work to enable New Zealanders to complete their most common transactions with government easily in a digital environment and for the ongoing operation and development of the igovt All-of-Government service.

2. Capital – the baseline reflects the Department of Internal Affairs’ ongoing asset replacement programme.

The following summarises the changes in non-departmental baselines:

1. Other Expenses – the decrease in baseline in 2013/14 reflects one-off funding for response costs for the Canterbury Earthquakes in 2012/13, expense transfers from 2011/12 to 2012/13 for the development of community-led initiatives, hazard mitigation works in the Bay of Plenty, flooding in the Nelson-Tasman region and the Chatham Island Council Solid Waste Management Programme and a lower level of funding for digital literacy.
2. Capital – the decrease from 2012/13 mainly reflects a capital transfer from 2011/12 to 2012/13 for Crown-owned assets at Lake Taupo.

For further details of the changes, please refer to Vote Internal Affairs 2013/14 Performance Information for Appropriations.

Forecast capital expenditure

Category	2012/13 $000	2013/14 $000	2014/15 $000	2015/16 $000	2016/17 $000
Intangibles	20,167	22,596	23,994	23,499	23,499
Property, Plant and Equipment	25,512	22,095	13,619	17,878	13,838
Total	45,679	44,691	37,613	41,377	37,337

The ‘Intangibles’ category largely comprises software, much of which is proprietary to the Department. This includes passport and other identity-related systems.

The ‘Property, Plant and Equipment’ category includes expenditure on computer hardware associated with infrastructural asset projects, building developments, office fit-outs and associated furnishings, and cyclical replacement of the VIP Transport vehicle fleet.

Financial and asset management

How we will assess progress

Indicators	Progress	Data source
The public and government have confidence in our financial information	Unqualified independent audit opinion shows Department’s financial information is fairly presented 2010/11: Unqualified 2011/12: Unqualified	Annual Independent Audit
The Department has a reputation for being timely in its payments	Invoice to payment cycle is equal or better than the public service average as published in Dun & Bradstreet 2011/12: DIA – 35 days (Public Service Average – 44.2 days)	Dun & Bradstreet data
The Department’s corporate infrastructure is robust and fit for purpose	Shared Financial Services with IRD operational from October 2013	Internal Affairs Finance data: Achieved
	Optimise HR – As lead agency complete next phase by November 2013*	Internal Affairs Finance data: Achieved
	Network and ICT Transformation (ICT Foundations Programme) to be delivered progressively by contributing projects with programme 95% complete by June 2014, 100% by August 2014	Internal Affairs data: Achieved

*The next phase includes the following: agreeing the future state service delivery model; confirming the current state baseline; assessing change readiness; undertaking a market scan; developing a detailed business case

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