A constructive, professional and trusting relationship between the board of the Crown entity, the responsible minister, and the monitoring department is a major enabler of improved board and entity performance. This relationship needs to recognise the statutory roles and responsibilities of all three parties. A “no surprises” relationship is critical for the responsible minister and board chair to build trust and sustained good performance by the entity.12 “No surprises”13 means that the Government expects a board to:

  • be aware of any possible implications of their decisions and actions for wider government policy issues
  • inform the Minister of any significant risks
  • advise the responsible minister of issues that may be discussed in the public arena or that may require a ministerial response, preferably ahead of time or otherwise as soon as possible
  • inform the minister in advance of any major strategic decisions

High quality trust-based relationships will enable greater transparency, clarify purpose and add value to the entityʼs work.


Key message

Your roles and responsibilities under the CEA (s. 27) are to:

  • oversee and manage the Crownʼs interests in, and relationships with, the Crown entities in your portfolio. You are answerable to Parliament for these interests
  • make sure an effective board is in place to govern the Crown entity through the appointment, reappointment, and removal of board members, and determine the remuneration of some board members (see section 4)
  • participate in setting the strategic direction and annual performance expectations of Crown entities, which may include multiple agencies operating within a sector (see section 3 of this guide)
  • review Crown entity performance and results (see section 5 of this guide)
  • manage risks on behalf of the Crown.


Along with being answerable to the Parliament, you are also answerable to the public for problems or controversies arising in connection with the entity by responding to questions and participating in debates and reviews. You table in the Parliament each entityʼs Statement of Intent (SOI), annual Statement of Performance Expectations (SPE) and annual report, and appear before Select Committees where you may be asked to comment on the entityʼs activities.

The board of the entity should maintain open communication with you and your monitor. As the responsible minister, you have a strong interest in the board:

  • clearly setting the direction and annual performance expectations for the Crown entity which should align with your priorities and wider government expectations
  • managing any risks to the Crown
  • collaborating where practicable with other public

As set out below, boards have the primary responsibility for entity performance. As the responsible minister you have many levers to assist you in getting the performance you want from your entities, for example:

  • You have the formal power to direct a Crown entity of any type to amend parts of the Statement of Intent and annual Statement of Performance Expectations (provided youʼre not acting outside their statutorily independent functions).
  • You also have the power to review a Crown entityʼs operations and performance at any time. If contemplating such a review, you must consult the Crown entity and consider any submission it makes on the Crown entities must take all reasonable steps to cooperate with the review.
  • You have the power to require Crown entities to supply a wide range of information which assists you to monitor their You must exercise these powers in a way that recognises any statutorily independent functions.

To ensure the board is clear about your expectations and that you are fully informed about the boardʼs perspective, engaging with the board chair with appropriate frequency is essential. Letters of expectation can reinforce your expectations of the board and entity.

To get the performance you require, there is a range of key levers available to you.(PDF, 144 KB) It's recommended that ministers seek advice from the monitor before using these levers.

Crown entity boards

Key message

The entityʼs board has the primary responsibility for the entityʼs performance – it's the primary monitor of performance.14 As the responsible minister, you should firmly place responsibility with the board for the delivery of ministerial and Government priorities, the setting and achievement of meaningful performance indicators, for the monitoring of entity performance, and for high quality performance reporting and raising significant risks with you.


The legal mechanisms of board accountability include:

  • the board membersʼ collective and individual duties, including acting consistently with the entityʼs objectives, functions, SOI and SPE and collaborating with other public entities where practicable
  • obligations to follow ministerial policy directions (according to the category of entity and applicable legislation)
  • an obligation to report on performance to Parliament, and
  • an obligation to appear before a Select Committee if Board members who wish (or are invited) to make a submission to a Select Committee on a Bill are expected to discuss the matter with you before doing so.15

Boards are accountable to you as their responsible minister and you should expect mutually constructive and professional engagement between you, the board and your monitoring department. The board has a collective duty to you as minister, and must act in a manner consistent with its objectives, functions, current statement of intent, and current statement of performance expectation.16

Crown entity chief executives

In most cases, a chief executive is appointed by the board and is tasked with running the Crown entity on a day-to-day basis (i.e. a management role).17 The chief executive manages the Crown entity, including exercising the powers and performance of entity functions as delegated on behalf of the board. Some entity chief executives have statutorily independent powers (e.g. in regulatory activity). The table below briefly outlines the process a board must follow when setting (or changing) a chief executiveʼs terms and conditions of employment.

Entity type

Process for the board setting a chief

executive’s remuneration

Statutory Crown entities (excluding DHBs)

Crown entities that employ a chief executive must obtain written consent of the Public Service Commissioner before agreeing to any terms and conditions of employment for a chief executive.18

District Health Boards (DHBs)

DHBs must obtain the written consent of the Public Service Commissioner on their chief executiveʼs terms and conditions.19

Monitoring department

Key message

The monitoring department supports the minister to fulfil their role and undertakes other statutory functions such as administering appropriations and legislation as required. You need to decide on your expectations of the monitoring department and whether you want to make alternative arrangements for another agent to undertake selected monitoring functions.


The monitoring of an entity is usually undertaken by the relevant policy department, unless a minister makes alternative arrangements such as with Ministerial office staff or staff from another department. Monitoring is the process whereby you obtain independent advice on how to:

  • work with the particular type of entity (Crown agent, ACE or ICE), and any entity specific provisions that apply
  • manage the processes relating to board membership such as upcoming appointments
  • engage in setting strategic direction and annual expectations, and
  • respond to issues and risks that emerge from monitoring the entityʼs

High performing monitoring departments maintain ʻhigh trustʼ relationships with entities. They engage with entities as a ʻfriendly criticʼ (at times acting as an advisor or sector leader) without prejudicing their primary role as the agent of and advisor to the minister, or undermining the boardʼs direct lines of accountability to the minister. Striking the right balance is not easy.

The roles of the Minister of Finance and Minister for the Public Service

The Minister of Finance and the Minister for the Public Service have both ownership and purchase interests in the overall capability and performance of the Public Service. The Crown owns the entity because it has a purchase/public policy interest. The Minister of Finance and Minister for the Public Service may jointly issue a direction requiring all or some Crown entities to support a whole of government approach. To invoke this power, the direction must support a ʻwhole of government approachʼ and must directly or indirectly improve public services.20 The process for such a direction includes a statutory requirement to consult with those entities to which the direction is proposed to apply ʻto the extent that ministers consider necessary in the circumstancesʼ.21

An enduring letter of expectations sets out the ongoing expectations that the Minister of Finance and the Minister for the Public Service have of all statutory Crown entities. It remains ʻin forceʼ until it is replaced. The current enduring letter of expectations includes the need for entities and ministers to have a “no surprises” approach to their relationship. This will ensure that responsible ministers are informed at the earliest possible stage of any matters concerning the entity that may be controversial.22

The role of the Minister for the Public Service

You should consult the Minister for the Public Service (who has overall portfolio responsibility for the Public Service) on any proposals that You should consult the Minister for the Public Service (who has overall portfolio responsibility for the Public Service) on any proposals that could result in the establishment of a new organisation that might be a Crown entity, or that could involve the disestablishment or amalgamation of an existing Crown entity. This ensures that any machinery of government implications are considered. See Machinery of Government – Guidance on the process.

As noted above, the Minister for the Public Service has a portfolio overview of overall Crown entity system capability and performance. The Minister for the Public Service may request information from groups of no fewer than three entities for this purpose. In addition, the Public Service Act enables the Minister for the Public Service to approve Government Workforce Policy Statements (GWPS) for the purpose of fostering a consistent, efficient, and effective approach to workforce matters across the public sector. Affected Crown agents must give effect, and ACEs must have regard, to a GWPS. ICEs also need to have regard if a GWPS says it applies to them.23

The role of the Minister of Finance

You should seek the Minister of Financeʼs support or advice on proposals that have budgetary implications or regulatory requirements that may involve regulatory impact analysis.

The CEA gives the Minister of Finance important powers regarding the finance of Crown entities. In partnership with you, the Minister of Finance has the power to approve the acquisition of securities, borrowing, guarantees, indemnities and derivatives. In addition, the Minister of Finance has the following powers on their own:

  • some powers to require information
  • some powers to set standards of reporting
  • power to approve use of bank accounts not automatically authorised for use in the CEA
  • power to approve an entity holding money other than in New Zealand dollars
  • power to require a Crown entity to pay to the Crown an amount up to its net surplus
  • power to set a capital charge
  • power to require additional reporting from any member of a Crown entity group (i.e. the parent or the subsidiary) where this is necessary or desirable to enhance public accountability of the individual member of the group).

You would be involved in any discussion related to the areas above prior to the Minister of Finance employing any of these powers.

The roles of the Public Service Commission and the Treasury

The Commission and the Treasury have statutory roles in respect to Crown entities and jointly administer the CEA. Together with the Department of the Prime Minister and Cabinet they provide guidance material to assist ministers, boards, Crown entity staff and monitoring departments. For more information see Crown entities guidance.

The Public Service Commission

The Commission administers Parts 1 (preliminary provisions), 2 (establishment and governance of Crown entities), 3 (operation of Crown entities), and 5 (miscellaneous provisions) and the Schedules to the CEA. relation to the Ministerʼs portfolio interests in Crown entities, principally with regard to overall Crown entity system capability and performance.

The Public Service Act 2020

The Public Service Act 2020 provides a modern legislative framework that enables a more adaptive, agile and collaborative public service and incudes stronger recognition of the public services role in supporting the partnership between Māori and the Crown.

The new legislation signals a shift in focus, placing a clear emphasis on the benefit to New Zealandʼs individuals, organisations and communities as the key focus and motivation for all public service agencies and activities.

Under the legislation, Boards of Crown agents are responsible for ensuring the entities they govern uphold the public service principles.

Under the new Act, the Public Service Commissioner has several responsibilities in relation to Crown entities. The Commissionerʼs overall role is to act as the Head of Service by providing leadership of the public service, including of its agencies and workforce and by oversight of the performance and integrity of the system. For this purpose, the Commissioner has a range of functions pitched at the system level, including to review the system of government agencies in order to advise on possible improvements to “delivery of services and inter-agency cohesion”(s.44). The Commissioner also reviews governance and structures across all areas of government, including advice on potential structural change and the allocation and transfer of functions (s. 44(e)). The Commissioner sets standards of integrity and conduct and issues a code of conduct with which Crown entity employees must comply (s.17). Government Workforce Policy Statements (GWPS) are prepared by the

Commissioner, who must consult with affected agencies as part of the process (s.96). Within the GWPS, the Commissioner has the power to require Crown entities to supply information relating to the Commissionerʼs functions in respect of the entities, to specify how information is to be collected, classified and reported to the Commissioner (s.96).

The Commissioner must act on a range of matters affecting Crown entities if directed by the Prime Minister or a minister responsible for an agency outside the public service. The Commissioner may also act on a range of matters, if asked by the head of any part of the Public Service.24

Crown agents are now part of the Public Service for some purposes, specifically subparts 2 and 4 of Part 1 of the Public Service Act 2020.

This is because Crown agents deliver by far the greatest number of services to New Zealanders and are the ʻface of governmentʼ to citizens and how people experience these important government services. Crown agents are now covered by the same purpose, principles and values as public service departments and other public service agencies. Boards of Crown agents are responsible for ensuring that the entities they govern uphold the public service principles.

Importantly, under the Public Service Act, the relationship between the Crown agent and the minister remains unchanged. Crown agent duties in relation to the principles and spirit of service are collective duties under the CEA.

The two other categories of statutory Crown entities – autonomous and independent Crown entities – remain outside the public service but are part of the broader public sector.25

The Treasury

The Treasury provides advice on:

  • Budget and expenditure information and processes
  • the application of rules set down under the CEA relating to: the acquisition of securities; borrowing; the giving of guarantees; the granting of indemnities, and the use of derivative financial instruments, and
  • the interpretation of, and compliance with, reporting

The Treasury should be consulted on all issues that impact on appropriated expenditure or revenue, or that have financial, fiscal or economic implications. This includes all performance and reporting issues that may influence decisions on value-for-money.

The Treasury administers:

  • Part 4 of the CEA, which relates to Crown entity reporting (including SOIs, SPEs and annual reports) and Crown entitiesʼ financial obligations26
  • the Crown Entities (Financial Powers) Regulations 2005, and
  • the Public Finance Act 1989 which contains some provisions relating to Crown entities (g. powers to obtain financial information from entities) and Minister of Finance instructions on matters such as financial reporting standards.27

12An Independent Crown Entity making quasi-judicial decisions can tell the minister when sensitive decisions are due, but may only tell the minister the actual result when the decision is made public or otherwise released.

13The ʻNo surprisesʼ convention can be found in the Cabinet Manual at 3.22.

14Crown entities are encouraged to undertake the Capability Review Programme self-review. See to enhance performance. See the Capability Review programme for further information.

15Further guidance is available at Officials and Select Committees - Guidelines.

16Refer CEA, s.49

17In most cases, corporations sole (a Crown entity with one office holder, e.g. the Privacy Commissioner) do not appoint a full time chief executive.

18Refer CEA, s. 117.

19See Clause 44 (1), Schedule 3 of the New Zealand Public Health and Disability Act 2000.

20For a fuller description of the whole of government power of direction and the process for its use, see Cabinet Office Circular (13) 04 – Crown Entities Act 2004: Section 107 Directions to Support a Whole of Government Approach (12/08/2013)

21Refer CEA, s. 108.

22The letter can be found at Enduring Letter of Expectations - to Statutory Crown Entities.

23See Governmentʼs expectations for employment relations in the public sector.

24Refer Public Service Act 2020 Schedule 3 Clause 5.

25The term public sector refers to the Public Service and all other government agencies, including those which support all three branches of central government (executive, judicial or legislative) as well as local government. Appendix 1 shows how Crown entities relate to the Public Service and wider public sector.

26See Guidance and information on Crown entitiesʼ financial powers.

27Departmental chief executives are responsible for the reporting on the use of non-departmental appropriations (Section 35 of the Public Finance Act) but not the outputs, capability or financial performance of Crown entities.