Guest blog - It Takes Three: How New Zealand thinks about arm’s-length bodies

New Zealand, like the UK and other western liberal democracies, has yet to be satisfied with the overall performance of its arm’s-length body (ALB) arrangements. New Zealand’s ALB or Crown entity system was reformed in the early 2000s. The Crown Entities Act 2004 set out to establish an integrated governance and accountability regime that recognised the diverse nature of Crown entities but sought to unify governance arrangements. In other words, while each entity has specific functions, from a governance perspective they are all largely the same. The reforms assigned each Crown entity to a particular category that reflected the ‘length of arm’ sought by ministers. For instance after the reforms, Ministers cannot interfere with the quasi-judicial decisions of independent entities such as the Commerce Commission; a Crown Agent must give effect to Government policy e.g. a District Health Board; and an Autonomous Crown entity must pay regard to Government policy e.g. the Nation Museum of New Zealand Te Papa. (Find out more about the categories of Crown entities) In early 2013, New Zealand’s Ministry for Culture and Heritage (the Ministry) embarked on a project to improve its own ALB monitoring systems. A decade on from the 2004 legislation, the Crown entity system was suffering from inconsistent and fragmented guidance and a lack of clarity about roles and responsibilities. Amendments to the Act were imminent, driven by a desire for three main ideas. •First, the need for greater flexibility around Crown entity reporting and planning. •Second, a need to break down agency silos and for agencies to collaborate across portfolio boundaries where practicable. •Third, to make available to Ministers better mechanisms to get things done – the levers to get the performance a Minister wants. Picking up on ideas contained in the Institute for Government’s It takes two report, the Ministry applied systems thinking to the task and developed an operating framework for its Crown entities. It was branded as “It takes three” – no sense of one-upmanship intended! At the heart of "It takes three" is the idea that responsible Ministers, departmental monitors and Crown entities need a shared understanding of each other’s roles and responsibilities, all within the context of State sector service delivery. Launched in mid-2014, the Ministry’s “It takes three” resource has been adapted as an all-of-government online resource with access to legislation (rules), formal central agency guidance (tools), good practice advice and examples of how different monitors and entities have addressed strategic and operational system challenges. The striking thing about “It takes three” was the extent to which the founding principles for a resource designed to support the cultural sector were applicable across all Crown entities. As we worked with the Treasury and State Services Commission to reconfigure “It takes three” for all-of government, feedback soon revealed how many issues were shared across the system. Importantly, the principle-based framework provided a basic structure upon which to hang the expectations of all three parties and a means to clarify roles and responsibilities, especially for boards. As part of the Ministry’s programme to support its ALBs, “It takes three” has formed the core of new board induction programmes. Perhaps unsurprisingly, “It takes three” has proved an ideal launch pad for engaging board members in the idea of being part of the State sector and under the authority of a responsible Minister. The implications of that idea have been quite a surprise to some members! Experienced private sector directors appointed to a Crown board for the first time, encounter an array of expectations not found in the private sector, such as the need to: •provide statements of intent •respond to parliamentary questions, •reply to official information requests •and deal with select committee questioning. Understanding the authority of responsible Ministers often challenges board members who are more accustomed to being the foremost authority in a company. It’s too early to tell whether or not “It takes three” will lead to more productive working relationships between the three parties. Early feedback has led to refinements to the online tools and the site’s functionality has improved. Feedback by users is encouraged and work is now underway to look at review tools in real time and how to measure the efficacy of “It takes three". The enduring question to answer is: is it delivering better results for citizens?