C: Setting expectations and direction

Amendments to the CEA in 2013 streamlined Crown entity planning and reporting provisions. The Treasury has a suite of guidance to help entities with planning and reporting.

The planning cycle starts with a strategy development phase, during which an effective monitoring department can add real value for the board and Minister, for example through its wider policy, sector and system perspectives. These broader perspectives can be used to inform expectations for the entity over the medium to long term.

The stages in a typical cycle are shown in the diagram below.

 

The stages in a typical planning cycle

 

The new Statement of Performance Expectations (SPE) contains the annual performance information previously included in the Statement of Intent (SOI). As a result, an entity does not need to produce a new SOI every year. However, the Minister has the option of requiring a new SOI at any time. Accordingly, the monitoring department needs to advise the Minister on whether the SOI needs updating or replacing.

The CEA requires entities to assess and describe their performance, but is less prescriptive than formerly about how to do this. There is now much more flexibility for agencies to express:

  • what is intended to be achieved
  • how performance is to be assessed
  • when performance is reported, and
  • where performance is reported.

Requirements such as "set out the specific impacts, outcomes or objectives" an entity seeks to achieve and words such as "measures and standards" have been removed. Entities have many frameworks and methods to choose from that can assist in demonstrating performance. These include: the Investment to Outcomes model; case studies; and special assessment models.

See this section of the Guide for Ministers pages for a discussion of what Ministers should be able to expect from their department on SOIs and SPEs.

A department will advise and support its Minister and the entity through the planning processes shown in the Figure below.

                                                               Strategic Engagement

Engagement, for example through a letter of expectations, which triggers a conversation between the Minister and board chair:

  • provides sufficient time for the board to consider the expectations and to respond
  • informs the planning for and content of:
    • the next SOI
    • the next annual SPE.

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                                                                 Statement of Intent

  • covers at least the next four years but must be refreshed at least every three years [s.139(3)]. May be required by the Minister at any time [s.139A]
  • encourages a focus on strategic direction [s.141(1)]
  • is less prescriptive about how a Crown entity explains and reports its strategic objectives [s.141(2)]
  • draft is provided to the Minister at least two months before the start of the financial year to allow for good engagement [s.146]
  • published on the entity's website as soon as possible after it has been finalised, BUT may be delayed if it takes effect after Budget Day [s.149(1)]
  • may be tabled in the House on its own, or with the Annual Report for the previous financial year, or with other documents [ s.149(3)&(4)].

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                                      Annual Statement of Performance Expectations

  • includes a concise explanation of what is intended to be achieved [s.149E(2)]
  • includes a concise explanation of how performance is to be assessed [s.149E(2)]
  • includes forecast financial statements [s.149G]
  • draft is provided to the Minister at least two months before the start of the financial year [s149I]
  • must be published on the entity's website as soon as possible after being finalised, BUT may be delayed if it takes effect after Budget Day [s.149(L)(1)]
  • may be tabled in the House on its own, or with the Annual Report for the previous financial year, or with other documents [s.149L(3)&(4)]. 

Source: Ministry for Culture and Heritage

 

The key levers that the Minister can use in the direction-setting process are shown below.

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