This guidance provides information on how to develop and issue a section 107 direction under the Crown Entities Act 2004 (the Act). This guidance is also reflective of Cabinet’s expectations on the process for issuing a direction. A step-by-step overview of the process for issuing and giving effect to a direction is provided below.
Steps and responsibilites in issuing a section 107 direction
Throughout this process, Ministers should consider the need for consultation at various stages with the government caucus and with other political parties as appropriate, in accordance with standard Cabinet requirements.
1. Development
The process for a section 107 direction may be initiated by any Minister; however a direction can only be issued jointly by the Minister for the Public Service and the Minister of Finance.
A department, other than the Treasury or the Public Service Commission, working on a proposed direction should inform those agencies (and their Ministers) that development is underway, inform them of any expectations around timeframes, and work with them when advising on a proposed direction. A checklist of information to include in a proposal is included below.
Checklist for development of a section 107 direction
Initial steps may include some engagement with relevant parties where appropriate, however, formal consultation should occur following Cabinet’s approval to using a direction of this nature.
2. Initial Cabinet approval
The Minister of Finance and the Minister for the Public Service - with the initiating Minister where appropriate - must seek Cabinet approval through the relevant Cabinet Committee to taking a whole of government approach to progressing government policy and the draft direction. This should occur before further developing and/or formally consulting on a direction. The proposal to Cabinet should include information listed in the checklist below.
Checklist for development of a section 107 direction
Examples of current directions and other relevant material are provided in section 3.
Section 3: Current directions and related links
3. Consultation with affected parties
The Act is clear that before giving a direction, to the extent that the Ministers consider necessary in the circumstances, Ministers must consult with:
- The entities to which the direction is proposed to apply; and
- Any others that the Ministers consider represent the interests of those likely to be substantially affected by the proposed direction.
Section 108, Crown Entities Act 2004
The consultation process may be led by the initiating Minister. If this is the case, the initiating Minister will need to satisfy the Ministers of Finance and State Services that the proposed process will meet the legislated requirements (the Treasury and Public Service Commission will likely be able to provide advice on an appropriate approach).
4. Final Cabinet approval
Following consultation, the Minister of Finance and the Minister for the Public Service - with the initiating Minister where appropriate -are expected to return to Cabinet (through the relevant Cabinet Committee) to seek approval of the final text and scope of the direction. If the proposed direction is substantially different from the initial proposal this should be brought to Cabinet’s attention. It may also be appropriate to also inform Cabinet of the development process (including the outcome of consultation) and proposed implementation.
It is also expected that the issuing Ministers seek Cabinet endorsement of their decision to issue a section 107 direction, ahead of it being issued.
5. Issuing the direction
Under the Act, the Minister of Finance and the Minister for the Public Service can jointly issue section 107 directions. Once a direction has been given, the Ministers must notify the affected entities, and present the direction and any relevant material to the House of Representatives (section 108) [8].
6. Select Committee consideration
Under the Standing Orders [9], a section 107 direction presented to the House of Representatives stands referred to the Governance and Administration Committee. They may retain the direction for examination or refer it to another select committee. The examining committee must report back to the House on the direction no later than 12 sitting days after its referral to the committee.
Assistance from departmental advisers may be sought during consideration of the direction. If useful, specific guidelines relating to the attendance and conduct of officials before select committees can be found on the Commission’s website.
Guidance: Officials and select committees
7. Publication of a direction
A section 107 direction generally comes into force 15 sitting days after it is presented to the House unless the House has resolved to disapply it under section 109 [10]. If the direction is confirmed, the Ministers who gave the direction must ensure that the direction is published in the Gazette and on the internet as soon as is practicable (section 111) [11].
It is advised that these timeframes are taken into account in initial stages of developing a direction.
If House of Representatives resolves to disapply a direction, the Ministers who gave the direction must notify the entities to which the direction would have applied that the direction has been disapplied and will not come into force (section 111(2)) [12].
[8] Section 108, Crown Entities Act 2004
[9] Standing Orders | New Zealand Parliament
[10] Section 109, Crown Entities Act 2004