Parliament is asking tough questions about whether taxpayers are getting value for money – Roger Partridge

New Zealand is spending nearly $190 billion this year, but outcomes remain elusive, Roger Partridge writes. Photo / Mark Mitchell

THE FACTS

• The Government will spend nearly $190 billion this year, but performance reporting focuses on spending, not outcomes.
• The Finance and Expenditure Committee is investigating whether current performance reporting meets modern expectations.
• The inquiry aims to shift focus to outcomes, with potential changes to reporting and accountability systems.

This year, the Government will spend nearly $190 billion. Yet we know remarkably little about whether those billions represent value-for-money.

The centrepiece of public sector performance is the Budget – a 700-page ledger of planned spending by department and programme. But it is not a performance report. It tells us how much the Government is doing, not what it is accomplishing. It measures dollars appropriated, not lives improved. That focus on inputs and activity – not outcomes – has shaped the way the Government manages itself for more than a century.

In April, Parliament began asking whether it is time for something better. The Finance and Expenditure Committee has launched an inquiry into performance reporting and public accountability. It will examine whether the way the executive reports its performance – and how Parliament holds it to account – meets the expectations of 21st-century New Zealand. The evidence suggests the answer is no.

Outcomes across core public services have been in long-term decline. Hospital waiting lists remain stubbornly high. Literacy and numeracy scores have fallen steadily. Regular school attendance rates may have risen to 66% this year, but remain well below acceptable levels. And despite high levels of infrastructure spending, New Zealand faces an estimated shortfall of up to $210b.

We are not under-spending. We are underperforming.

These are not problems of the current Government’s making. The decline began long before it took office. And it has taken early steps to arrest the trend – including reinstating public service targets.

But targets alone are not enough. They must sit within a system that measures and rewards success in terms of real-world outcomes. At present, Governments report what they spend and what activities that spending buys. Budget documents list outputs and staffing, but not results.

Are children learning more? Are lives being saved? Are communities safer? These are outcome questions – and our public management system is not orientated to answer them. It is as if a business measured success by the number of staff it hired and widgets it made, but not by whether its customers returned or its bottom line improved.

This is not a new problem. Nor is it one we have completely ignored. Over the past decade, Governments have made various attempts to reorient the public sector toward outcomes. The former National-led Government’s Better Public Services programme set 10 measurable cross-agency targets. All showed improvement over five years.

The Social Investment approach, led by Sir Bill English, the Finance Minister at the time, aimed to target resources based on where they could improve long-term outcomes. And Chris Hipkins’s Public Service Act 2020 introduced new collaborative tools to help agencies work together on complex challenges.

Labour’s Wellbeing Budgets also sought to shift the focus to outcomes – at least rhetorically. The Treasury’s Living Standards Framework emphasised broad indicators of societal wellbeing. But while the framing changed, the machinery of government did not. Agencies were still funded for outputs, not outcomes. Ministers were not held to measurable targets. The result was more vision than execution.

None of these efforts rewired the system. Better Public Services ended when the Government changed. Social Investment lost traction and is only now being revived. The Public Service Act reshaped public service management but left agencies accountable primarily for outputs, not outcomes. As a result, ministers and officials remain focused on what they control: budgets, activities, and compliance. Few are rewarded – or penalised – for whether those activities make a difference.

That is what makes the Finance and Expenditure Committee’s inquiry so important. Its terms of reference go to the heart of the issue. The committee is asking what information Parliament and the public need to assess the Government’s performance. How can reporting show not only what is being done but why, and to what effect? How can outcomes move to the forefront of accountability?

The inquiry will proceed in two phases. The first, now under way, will define the problem and produce a public discussion paper. The second, from September to May, will review submissions, hold hearings and develop specific recommendations.

The scope for change is wide. The committee may recommend amending the Public Finance Act and Crown Entities Act to embed outcome reporting in Budget documents and agency reports. It may propose a central Outcomes and Delivery Unit within the Department of the Prime Minister and Cabinet. It could call for joint accountability agreements for shared goals, or a public-facing outcomes dashboard to track progress transparently.

These tools should be supported by robust cost–benefit analysis that tests whether programmes are improving outcomes for those affected. That shift could also open the door to contracts with NGOs, where funding follows results. Any of these would mark real progress. Together, they could begin a new era of public accountability.

More importantly, the inquiry invites a shift in mindset. It asks us to rethink how we define success in the public service. We should no longer assume that spending more equals doing better. Nor should we accept reports that describe what was done without showing what was achieved. In business, outcomes are the measure of success. In Government, they must be too.

Parliament has recognised that the current model is no longer good enough. Ministers and officials should do the same. Better public services begin not with bigger Budgets, but with clearer goals, better measures, and accountability for results.

The Finance and Expenditure Committee inquiry is an opportunity to get those fundamentals right. Parliament must seize it.