06 December 2021

Roles and responsibilities – the monitor

Key messages

As the responsible minister, you can expect reporting from your monitoring department that is timely, comparable over time, contains analysis and monitoring judgments on key financial and non-financial issues and performance risks, identifies future implications or trends, and provides clear information on your options if action is required.

 

The CEA recognises the tripartite relationship between the minister, the board and the monitoring department by explicitly including the role of the monitor. As with the board, it's important that you build an effective and high trust relationship with your monitoring department and advise it of your requirements.50

You should expect your monitoring department to:

  • provide advice and support during the appointment and induction process for board members
  • provide advice and support on your participation in setting a Crown entityʼs proposed strategic direction and annual plan (SOI and SPE)
  • advise you whether the Crown entityʼs strategic direction complements Government and sector goals
  • make sure the Crown entity has identified the intended results of its work programme and how it is beneficial for New Zealanders
  • monitor performance against the entityʼs SPE and the SOI
  • provide advice on the Crown entityʼs capability (e.g. by giving advice on major business cases)
  • provide advice on the merit of requests by entities for additional funding
  • monitor financial and other risks, and keep you informed of those risks
  • keep the Crown entity informed of relevant timetables, guidance and information
  • improve coordination of Crown entities within your ministerial portfolio
  • provide advice on how sector wide information can be reported, and
  • facilitate the entityʼs collaboration with other agencies in the public sector.

You can set clear expectations for monitoring and should consider periodically sending a letter of expectations to the chief executive of the monitoring department which serves to confirm your expected monitoring arrangements.51 These expectations may include priority areas of focus for the monitoring department in order to provide advice that adds significant value to you and the entity (e.g. in strategic direction setting and risk analysis). You should emphasise that the staff concerned need to have the credibility and capability to establish high trust working relationships with board chairs and provide high quality independent advice and judgements to the minister. As the responsible minister, you need to be engaged with your monitoring department in order to set expectations and make it clear what you want.

What support can you expect from monitoring departments?

The monitoring department should advise you on the use of your powers under the CEA and provide you with the following support services:

  • an initial briefing on each Crown entity that gives you information about any provisions in the individual Crown entityʼs empowering Act (or any other Act) that materially modifies the core governance provisions in the CEA
  • ongoing briefings on each Crown entity that identify emerging governance or performance issues that require your attention
  • preparing letters of expectation
  • management of all processes relating to board membership including appointments, reappointments, setting membersʼ fees, succession planning and the induction and training of new members
  • distribution of information to each Crown entity about relevant decisions and/or changes in policy by the Government, relevant government processes (especially the Budget), and the Governmentʼs expectations of the Crown entity
  • negotiation of an SPE and any reporting protocols (if required by you)
  • critical review of each Crown entityʼs draft SOI, and
  • advice on how the entity proposes to assess and report performance and the quality of that performance reporting.

The monitoring department should have an explicit agreement with their minister that sets out what monitoring they will undertake and how they will do it. Where a department monitors a number of entities on behalf of a minister, monitoring agreements should require the agencies in the sector to work together. For example, the effectiveness and efficiency of cross-agency initiatives and what changes are needed to ensure better integration may be best set out in a monitoring agreement.

You need to be able to rely on Crown entities responding to information requests in a timely manner, whether they are made direct from your office or via the monitoring department. You should convey your expectation to entities that they will be responsive to information requests in order to enable effective monitoring. You may wish to formalise the monitoring departmentʼs authority to request information by explicitly delegating that power.

The entity should embrace the monitoring relationship, being entirely transparent and open with information and risks, capability and performance. In return, monitors should support a supportive and co- operative relationships for monitoring, including an open sharing of concerns.

Where can my monitoring department get help?

The Commission and the Treasury are jointly responsible for the administration of the CEA. The Treasury administers Part 4 (Crown entity reporting and financial obligations) while the Commission administers all other parts of the CEA. The Public Service Act, Public Finance Act and CEA provide the Commission and the Treasury with powers to require the production of information from Crown entities to allow them to carry out their respective functions. These complement ministersʼ information rights under the CEA.

The Commission can provide advice on matters covered in Parts 1, 2, 3 and 5 of the Act including matters relating to governance, board appointments, chief executive appointments and fees.

The Treasury can provide advice on performance measures and monitoring financial performance. Information on how the Treasury undertakes its monitoring role is available on its website.52 You can ask your monitoring department to review its practice in consultation with the Treasury.

Summary of levers for monitoring performance

The responsible ministerʼs key levers for monitoring performance are summarised below.

Figure 5: The responsible minister’s levers for monitoring performance


50The Treasury has the role of monitoring the Governmentʼs investment in companies and entities owned by the Crown, and can provide advice and good practice guidance to other monitors. See: Company and entity performance advice.

51Aligning this letter with expectations sent to Crown entity chairs will give the monitor time to adjust to any new requirements. Letters of expectations canvass the ministerʼs expectations for a Crown entityʼs strategic direction, governance and performance, and the ministerʼs specific priorities for the planning period. Letters of expectations are likely to be sent annually before the board starts preparing its SOI and/or SPE.

52See Company and entity performance advice.