Governance principles and practice

Statutory Crown entities undertake a broad range of executive government functions (such as regulatory, advisory, and purchasing). Some entities exercise coercive powers, including powers to inspect, approve licences, and impose charges; others deliver public services in health, education, housing, or transport.

Governance in the State sector is about achieving desired results and achieving them in the right way. It is not a static situation, but includes the processes by which organisations are directed, controlled and held to account; their stewardship, openness, programme delivery and leadership. It includes such 'generic' corporate governance imperatives as ethical conduct, integrity in reporting and disclosure, and risk management. But there are additional elements that reflect the ethos of public service and the impact that State Services have on individuals, business and communities in New Zealand.

Good governance in the Crown environment includes:

  • clarifying and understanding the respective powers and responsibilities of Ministers, boards, management and employees
  • having, and following effective and well-understood accountability processes
  • working in collaboration with other public entities, where practicable
  • modelling acceptable behaviours
  • probity in the management of public funds and disclosing and managing conflicts of interest.

Performance failure or the abuse of powers arising from inadequate governance structures and arrangements can have serious consequences, such as:

  • loss of credibility and trust from communities, business and Parliament
  • a reduced ability to carry out policies or deliver services, because the focus of management is diverted from positive achievement onto the need to 'fight fires'.

The distinction between the governance and management roles of boards and chief executives needs to be clearly understood by all parties. Unless the chief executive or other office holders have specific statutory functions or powers (e.g. the Director of Maritime New Zealand), all decisions about the agency's operation are made by the board, or under its authority. Some legislation provides a partial exception, where a Minister is authorised to direct a board to do or to take account of certain things.

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