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Categories of Crown entities

Crown entities are defined under the CEA as falling within five categories:

1. Statutory Crown entities comprising:

  • Crown agents (e.g. ACC, District Health Boards)
  • Autonomous Crown entities (ACEs, such as Te Papa)
  • Independent Crown entities (ICEs, such as the Commerce Commission)

2. Crown entity companies (e.g. Crown Research Institutes, and other companies such as Radio New Zealand)

3. Crown entity subsidiaries

4. School boards of trustees, and

5. Tertiary Education Institutions.

In addition, sections of the Crown Entities Act (Part 4 in particular) now apply to companies listed on Schedule 4A of the Public Finance Act. As mentioned above, this Guide focuses primarily on statutory Crown entities.

The extent to which a Minister has control over a statutory Crown entity varies by category. Your powers to direct on government policy vary depending on the type of statutory entity. There are some limits to your powers, for instance you cannot give directions to a Crown entity on a statutorily independent function and you cannot direct a Crown entity, board member, employee or office holder to provide a service to, or bring about a particular result, in respect of a particular person or persons. The table below summarises the differences in Ministerial powers for the three types of statutory Crown entities: 6

 

Crown agent

Autonomous
Crown entity

Independent
Crown entity

Power to appoint board members

Minister

Minister

Governor-General, on recommendation of Minister

Power to remove board members

Minister's discretion

Minister, for justifiable reason

Governor-General, for just cause, on advice of Minister.  Attorney-General consulted

Power to direct on government policy

Must "give effect to" policy that relates to the entity's functions and objectives if directed by Minister

Must "have regard to" policy that relates to the entity's functions and objectives if directed by Minister

No power to direct, unless specifically provided for in another Act 7

Power to set direction and annual expectations

Minister

Minister

Minister

Whole of Government approach

Must "give effect to" if directed by Ministers of Finance and State Services

Must "give effect to" if directed by Ministers of Finance and State Services

Must "give effect to" if directed by Ministers of Finance and State Services

You may want to direct a Crown agent or Autonomous Crown entity on government policy when:

  • you want to provide clarity or consistency of strategic and/or policy direction
  • a board asks for clarification or a Ministerial mandate before implementing a policy, or
  • Crown entities and departments need to work together to achieve goals. 8

A policy direction must relate to the individual entity's functions and objectives. As discussed below, there are separate powers of direction available to the Minister of State Services and Minister of Finance, acting jointly, to issue directions to support a whole of government approach.

Ministers oversee and manage the Crown's interests in the entities in their portfolios and remain answerable for their performance. As discussed below, Ministers can direct a Crown entity of any type to change the Statement of Intent (SOI) and Statement of Performance Expectations (SPE).

Formal powers of direction are likely to be used infrequently. This is because Ministers tend to prefer voluntary compliance with expectations and because other tools (including annual engagement with the board on an entity's strategic direction) work well in conveying Ministers' expectations.

 

 

 

 

 


 

6: The table is based on sections 103, 104, and 105 of the CEA. This table expresses the most general state of affairs under the Act; variations may be provided for expressly in a particular entity's Act.
7: Statutory Crown Entities: A Guide for Departments advises departments to ensure that Ministers are advised not to act in any way that could imply a direction to an independent Crown entity. This guidance can be found at publicservice.govt.nz/guidance-depts-crown-entities
8: Directions may only be given after consultation with the Crown entity. The direction must also be published in the New Zealand Gazette and presented to the House of Representatives. Directions must be reviewed by the Minister or Ministers, as set out in  section 115A of the CEA.

 

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