the department of internal affairs Statement Of Intent 2010–13

CAPABILITY TO DELIVER

The Department must continue to invest in building and maintaining its capability. This is a constant challenge, but more so when the public sector is faced with significant financial constraints and the need to deliver more with less. Ultimately, delivering the same or new things with the same or less resource may require the Department to be managed differently, and across functional lines. The Government’s decision to integrate the National Library and Archives New Zealand with Internal Affairs will also require a review of the Department’s operations.

The 2010/11 year will be one of transition in which we plan for the successful integration of the three agencies and, at the same time, continue to meet the expectations of Ministers and deliver our core functions. A particular focus will be the Minister of Internal Affairs’ key ownership priority; to build the Department’s capability to allow it to be the preferred home for selected government functions that require high quality service delivery to people, communities and government.

In the foreseeable future, we will focus on efficiently using the capability we have and effectively build new capability. The following sections outline some of the ways in which we will do this.

Performance improvement actions

Departments have been asked to contribute to the Government’s policy driver of ‘providing better, smarter public services’ by identifying actions that will contribute towards improved performance.

One of the first ways in which we will do this is to focus on improving the performance and productivity of existing resources.

We initiated a Performance and Productivity Improvement Programme (PPIP) in December 2009 which aims to:

• deliver better outcomes for our clients (people, communities and government)
• make Internal Affairs a better place for staff to work in and develop their capabilities
• provide greater value for money and improved productivity
• provide greater transparency of the Department’s performance, and establish the Department as a leader in public sector performance improvement.

The programme, which uses a structured ‘systems thinking’ approach based on lean management principles, will enable us to gain a better understanding of how our work systems operate and how they currently perform for customers.

Specific actions to achieve the objectives of this programme will be identified following an evaluation of current performance in Identity Services, due for completion in July 2010. The results will inform our approach to other parts of the Department and help identify future improvement actions. 

Throughout the course of this programme, we will also implement performance measures that will show how well our systems achieve their intended purpose and support continuous improvement and learning. Any improvement interventions will be based on a people-centred change management approach.

As well as performance measures, the programme will support the design of work systems that deliver to purpose and streamline processes to meet customers’ needs.

This programme is a proactive initiative to enhance productivity and improve the efficiency and effectiveness of expenditure. It underpins the commitments, objectives and intentions set out in this Statement of Intent, and has enabled the Department to respond to the current set of ministerial priorities without seeking additional funding, and ensures that the Department will continue to deliver its core services.

The PPIP work will initially focus on our functions with large operational groups that serve many customers. As the programme rolls out, we will actively share our approach and the lessons we have learned with other government agencies.

Being cost-effective

To ensure we provide cost-effective services, we will continue to monitor and evaluate our activities regularly to determine how well they are meeting Ministers’ and customers’ expectations.

This will enable us to identify and implement improvements that contribute to an improved relationship between the levels of resources used (costs) and progress towards a predetermined outcome (effect).

For most of our activities, we will use the impact measures identified in this Statement of Intent alongside the Information Supporting the Estimates to analyse the cost-effectiveness and, where effectiveness measures are not available, cost-efficiency of our services. These will inform decision making for future interventions.

Some of our activities are sufficiently remote from the point of impact that they cannot be easily attributed or quantified – such as policy advice, support to Executive Government and contestable services. Therefore, we will use the output measures in the Information Supporting the Estimates combined with periodic evaluations and reviews of these activities to help give us assurance that our work is cost-effective.

People capability

This Statement of Intent sets out the Department’s core areas of strength that are relevant to our response to the current operating environment, and also the approach we will take to maximise those strengths.

We need to ensure, firstly, that we have the people capability to preserve and protect the strengths we have and, secondly, to build the capability to manage our strengths in a way that is consistent with our strategic approach. Specifically, we need to exploit and maximise the benefits from particular strengths that will be central to progressing the Minister’s priority to build capability to be the preferred home for selected government functions.

We will develop a programme of work that enables us to maintain and build that capability, and to meet an increasingly broad portfolio of common services to deliver to the public and government.

The work programme will include building our people capability and reviewing our organisational design to ensure it supports our ability to be agile and flexible in the way we manage our resources. This will include planning for the integration of the National Library and Archives New Zealand.

To support organisational change, we will continue to develop and strengthen the existing internal model of shared corporate services, and we will take a systematic approach to building and entrenching behavioural competencies across the organisation that require managers and staff to demonstrate behaviours that align with our strategic approach and deliver the Department’s outcomes. We will do this through implementing a new Lominger-based competency framework.

A key focus of the competency framework will be on developing leadership and management capability. We want to ensure people are able to manage change in a way that brings together the organisational, strategic, business and process change to deliver results that ensure staff are fully engaged and productive.

We will also maintain a strong focus on getting the fundamentals right in terms of recruiting, retaining and engaging the right people with the right skills for the right jobs, and will continue to build capability and address future needs by reviewing and updating the Department’s existing People Strategy.

As part of being a good employer, the Department will continue to promote diversity and equal employment opportunities (EEO) and support the Equality and Diversity: New Zealand Public Service Equal Employment Opportunities Policy. We recognise the value of a diverse work force and support a number of EEO network groups within the Department.

The Department will also continue to build the internal capacity and capability of our staff to develop good relationships with communities and non-government organisations. This includes developing our skills to work with those from diverse cultural backgrounds including those of Māori, Pacific or other ethnic descent. The Te Whakamotuhaketanga Hapū Strategy is one example of how we will develop our capability to work with whānau, hapū and iwi.

Technical capability

The Department is maximising the benefits of its expertise in delivering government technology services (GTS) to ensure it has the technical and service delivery capability that it needs internally to deliver on its outcomes.

The GTS function within the Department uses a standard ‘client-service provider’ model to deliver services to the various internal functions. This allows GTS to use the same service model for both internal and external clients and is achieving measurable improvements as a result.

This approach ensures that services provided to GTS clients are supported by clear and agreed service parameters, and clear visibility of the cost of services and the resulting value delivered. This in turn encourages a focus on value-for-money and standardisation of services where appropriate to achieve economies of scale, while retaining the ability to serve a diverse range of clients.

Financial and asset management

The tight economic and fiscal environment means that we will need to continue to operate within a static baseline over the medium term, while any capital investment proposals will need to align with the Government’s aim of using improvements in national infrastructure to drive productivity growth within the public sector and the wider economy.

The Department is subject to a number of environmental and other influences that impact to varying degrees on its financial operations and capability, including the following:

• The cross-functional nature of the Department’s operations means that processes and systems must be sufficiently flexible to meet individual business group requirements, while still conforming to overall corporate requirements.
• Changing requirements are reflected in the transfer of functional activities and roles, and the technical complexity of the operating environment within and outside of the Department has increased.
• The increasing complexity of the business and financial reporting requirements has compelled a focus on systems enhancements, together with additional, robust compliance and reporting frameworks, to ensure we deliver consistent, accurate and meaningful information in a timely way.
• Continuing pressure on the available resources and the scarcity of new financial resources mean the Department will need to continue to do more for less in relative terms.
• The continuing growth in the scope and complexity of the Department’s business activities requires the delivery of customised solutions that are effective and financially sustainable, and particularly where workloads and staff requirements for financial management have increased.
• An increasing emphasis on accountability, efficiency and transparency is generating changes in organisational financial requirements.

The Department has been progressively strengthening its financial management capability in line with new expectations, processes and rules for Public Service departments and Crown entities. These are designed to improve the focus on, and quality of, capital asset management and to produce worthwhile value-for-money gains over time.

Appropriations	2009/10 $million	2010/11 $million	2011/12 $million	2012/13 $million	2013/14 $million
Departmental:
Output Expenses	232.475	239.891	241.638	248.658	263.439
Capital	31.786	23.590	13.161	16.605	14.800
Total Departmental	264.261	263.481	254.799	265.263	278.239
Non-departmental:
Output Expenses	7.142	7.142	7.142	7.142	7.142
Other Expenses	48.665	54.644	48.680	48.679	46.438
Benefits and Other Unrequited Expenses	48.120	57.475	60.475	60.475	60.475
Capital	30.507	45.827	0.034	0.034	0.034
Total Non-departmental	134.434	162.088	116.331	116.330	114.089
Total Baselines	398.695	425.569	371.130	381.593	392.328

Changes to departmental baselines are due to:

• increases in revenue due to volume increases in demand-driven services, particularly passports and citizenship (output expenses)
• completion of the Passport System Redevelopment Programme (capital).

Changes to non-departmental baselines reflect:

• forecast decreases for emergency expenditure due to completion of local authority hazard mitigation work by and support for Chatham Islands Council (other expenses)
• forecast increased demand for the Rates Rebate Scheme based on eligibility criteria (benefits and other unrequited expenses)
• cessation of capital funding arrangements for Auckland governance reform (capital).

Baseline management

The Department depends on revenue from fees for over half of its income. Baselines can fluctuate as demand for products and services changes.

The most significant area of fee generation is for passport production. Volumes in this area are predicted to rise, and then plateau over the next five years reflecting the commencement in March 2010 of the renewal cycle for the five-year passports.

A regular review of fees is essential to ensure cost recovery and to ensure adherence to the principles of equity and financial prudence in the setting of fees.

The Department has an overall pricing framework for fees which encompasses good practice public sector guidelines, a set of overarching pricing principles and specific pricing mechanisms for individual products and services provided in both contestable and non-contestable environments and markets.

For services we provide on a cost recovery (fee-for-service) basis in non-contestable markets, the Department operates memorandum accounts[3] to assist in managing costs and revenue, particularly where fees charged are set under regulations. Other fees are charged for services that are not regulated through specific statute. 

To reduce the risk of a deficit over the three-year planning horizon, the Department will implement the Performance and Productivity Improvement Programme to reduce costs, will ensure that revenue is being used appropriately, and will ensure that the fee mechanisms for recovering costs are effective.

Capital and asset management

Given the constraints on capital injections from the Crown, a key challenge is ensuring the sustainability of the Department’s funding flows from depreciation as a means of fully funding future capital investment (that is, self-funding capital investments through balance sheet management).

In order to realise the greatest benefits from our capital investments, the Department will improve the alignment and integration of strategic, business and operational planning across the Department, and will work to reduce ICT infrastructure risks while meeting capacity demands and maintaining service.

The Department will have substantially completed a number of major infrastructural asset projects during 2010/11, including the Passport System Redevelopment Programme and the introduction of a replacement grants management system and a replacement point of sale system.

Forecast capital expenditure

Asset category	2009/10 $million	2010/11 $million	2011/12 $million	2012/13 $million	2013/14 $million
Intangibles	29.553	20.425	6.940	12.477	12.325
Property, plant and equipment	2.233	3.165	6.221	4.128	2.475
Total	31.786	23.590	13.161	16.605	14.800

The ‘Intangibles’ category largely comprises software, much of which is proprietary to or custom-built for 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, office fit-outs and associated furnishings, and cyclical replacement of the VIP transport fleet.

How we will measure success

People capability

Measure	Context and desired standard
Ratio of employee engagement	This is a new measure.[4] The Department will undertake a survey of employee engagement and will aim to achieve a score that exceeds the average score of a benchmark group comprising other State sector agencies.
Percentage of new recruits that would recommend DIA as a great place to work, three months after commencing employment	This is a new measure. It will enable the Department to assess if new recruits are engaged and believe that Internal Affairs has a good work environment. We will aim to achieve at least 75%
Rating in ACC assessment	2008/09: Tertiary status 2007/08: Tertiary status Tertiary status attests to the Department’s ability to provide a healthy and safe environment for its staff.  We will aim to achieve Tertiary status each year.
Percentage of staff turnover	30 June 2008 30 June 2009 DIA 21.7% 11.8% Public service 14.6% 10.7% The Department monitors turnover as an indicator of staff engagement and retention of key skills and institutional knowledge. We will aim for turnover to be within 5% of the public service average.

Finance and asset management

Measure	Desired standard
Operating expenditure
Expenditure variance (excluding demand-driven third party expenditure) is:	Within +-1.5% of budget
Percentage of variation between the estimated actuals published in the Estimates of Appropriation and the actual outturn at 30 June	Within +-1.5% of budget
Average creditor days outstanding	23 days
Average debtor days outstanding	10 days
Working capital
Liquid ratio	1.00:1.00
Current ratio	1.20:1.00

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