Focus on results of spending, says Treasury

A series of ministerial reviews of state spending should look to tie departmental funding more closely to results, the Treasury believes.

The reviews are being overseen by a team of ministers, dubbed the razor gang, although the Government denies they are a cost-cutting exercise.

In the next month the ministers will put together the terms of reference for the reviews, which they say aim to improve the prioritisation and quality of Government spending.

But Treasury papers released yesterday suggest the reviews could be of limited use unless they include a much wider overhaul of the way performance is managed in the public sector.

One of the most important changes suggested is tying budget funding more closely to clear outcomes. This would be coupled with expenditure reviews to ensure promised outcomes were being delivered. If they were not, money should be spent in other areas.

The papers suggest that to get the best results senior ministers need to play a more active role in guiding spending into priority areas and co-ordinating sector-wide approaches.

However, they acknowledge that the performance information available to ministers needs to be improved in some areas.

Another area needing attention is the accountability of chief executives for their department's performance.

"The State Service Commission's performance management relationship with the chief executive is one of the major points of leverage over departmental performance," it says.

"This could be used to reinforce any value-for-money process."

Associate Finance Minister Trevor Mallard, who is leading the reviews, said the Treasury's advice contained good ideas, which would be considered in setting the terms of reference.

The Government has outlined nine areas to be examined in the reviews, including its business assistance programmes, Child, Youth and Family (CYF), the public health sector, capital asset management and land transport spending.

CYF is one department expected to come under intense scrutiny. Its funding has increased by 50 per cent to $457 million since a review in 2003 but an earlier Cabinet paper noted it was not clear if better outcomes had resulted.

Mr Mallard yesterday reiterated that the reviews were not a cost-cutting exercise. The aim was to take poor spending and reinvest that in more productive areas.

"There are, within different agencies, areas that we've traditionally spent money on that might not be quite as important as something which misses out in the budget.

"Clearly, when you do have a limited budget, what you do is you prioritise.

"If we can shift the money out of the less important things to the more important things, then I think the taxpayer will thank us."

The reviews would be done this year, although Mr Mallard said the intention was to continue the programme through the Government's three-year term.

The first results were expected later this year, so they could feed into next year's budget process.

- NZPA