5. Re-focus public accountability settings to activate a wellbeing approach

This chapter details why and how we need to re-focus our public accountability settings to activate a wellbeing approach. We describe what public accountability is and why it is important to consider in relation to addressing persistent disadvantage, outlining critical gaps in the design and operation of public accountability settings in Aotearoa New Zealand. We analyse how these gaps arise from the interplay of features that strongly incentivise certain ways of working in the public sector before setting out our recommendations.

Public accountability is about how the power of the government is used. In democracies, public accountability is grounded in the relationship between public officeholders and citizens, and it involves three interconnected aims:

• preventing the abuse of power through measures such as sanctions, ranging from disclosure to dismissal and criminal punishment;
• promoting the positive exercise of power, so the Government, ministers, and officials act effectively, efficiently and equitably; and
• encouraging learning across the public management system to support ongoing improvement.

How the accountability relationship works day to day is called an “accountability system”, which is made up of settings that create requirements and drive behaviours. For example, it requires individual agencies to submit an annual report to Parliament.

There is no single document that sets out Aotearoa New Zealand’s accountability system. It is contained in a range of sources, including legal documents (including te Tiriti o Waitangi (te Tiriti) and the Standing Orders of the House of Representatives), laws (notably the Public Service Act 2020, the Public Finance Act 1989 and the Crown Entities Act 2004), court decisions, conventions and practices.

Aotearoa New Zealand’s constitutional framework is rooted in the British (Westminster) parliamentary model, but it has some key differences. It features a sovereign government, a single parliamentary house, and a flexible, unwritten constitution (other than te Tiriti), with limited written civil and political rights relative to other democracies. Due to the absence of additional checks and balances found in other democracies (such as an upper house) the accountability system in Aotearoa New Zealand must bear greater weight.

In addition to demonstrating “to Parliament and the public…competence, reliability, and honesty in their use of public money and other public resources” (Haemata Limited, 2022b, p. 2), in the context of this inquiry, accountability needs “to ensure that the assistance provided to people experiencing persistent disadvantage helps them to live better lives” (Wilson & Fry, 2023, p. iv).

However, many policies and services provided by the public management system do not work well for people experiencing persistent disadvantage (ibid, p. ii). Attempts to introduce and expand new services or adapt existing services have been constrained by the limitations of the current accountability and learning systems. These systems favour centralised service delivery on the assumption this creates efficiencies, and only periodically assess actual impact – often when something goes wrong – while also excessively monitoring contractual outputs. There is a lack of focus on accountability for learning about what matters most to individuals, families, whānau, and communities, and a rarely tested assumption that services achieve the outcomes they are commissioned for.

Given the extent to which disadvantage persists in Aotearoa New Zealand, a step-change in public accountability settings is required, rather than incremental improvements.

This view is supported by the Auditor-General (sub. DR114). The Auditor-General has been calling for a “more responsive, relevant, and accessible public accountability system”, noting that the current approach is inwardly focused, disconnected from the public, compliance-driven and “provides little useful information about what is important to Parliament and the public” (Controller and Auditor-General, 2021c, p. 3). Some of these concerns have also been raised in the context of the environment, by the Parliamentary Commissioner for the Environment (2022).

To effectively tackle complex, long-term issues like persistent disadvantage, and to promote long-term wellbeing in Aotearoa New Zealand, three critical gaps in the accountability system must be addressed:

• weak direct accountabilities for ministers and the public service in addressing persistent disadvantage and the needs of future generations;
• the neglect of te Tiriti as a foundational constitutional document; and
• settings that constrain ongoing learning and more innovative and effective ways of addressing persistent disadvantage, including relational, collective and trust-based approaches.

These gaps reflect an overemphasis on preventing abuse of power, and focusing on “delivery” rather than results, leading to a “pseudo-accountability” trap (Wilson & Fry, 2023, p. 85), which is discussed further below. The focus on delivery deflects attention, energy and motivation away from learning about what is and is not working to improve the lives of people experiencing persistent disadvantage. As discussed in Chapter 6, a well-designed learning system would be able to support and learn from two-way accountability between the public management system and communities.

The three gaps above also reveal settings that are out of sync with the intent of other public sector reforms to the Public Service Act 2020 and Public Finance Act 1989, particularly those around the provision of more modern, connected, citizen-focused public services (PSC, 2020). This is limiting the effective operation of those reforms.

Weak direct accountabilities for addressing persistent disadvantage

Although the need to address persistent disadvantage has been acknowledged for decades, recognition that existing funding, service delivery and accountability models limit our ability to respond effectively is more recent (NZPC, 2015a; Warren, 2021; Wilson & Fry, 2023). Despite recent reforms, including to the Public Service Act 2020 and Public Finance Act 1989, and the introduction of the Social Wellbeing Agency (formerly the Social Investment Agency), accountability settings have largely remained unchanged.

There are weak accountabilities for ministers and chief executives for addressing persistent disadvantage. Accountability within the public sector for addressing persistent disadvantage only exists at the general level. There is no minister responsible for setting policy or overseeing delivery of assistance to people experiencing, or at risk of experiencing, persistent disadvantage, or for addressing the social and economic conditions that underpin disadvantage. Responsibility is spread across many portfolios and departments,³⁰ reflecting the specialised nature of public service structures.

The closest example of a specific accountability regime in law is the detailed approach to setting policy targets and measuring progress contained in the Child Poverty Reduction Act 2018. But there is no direct accountability to people currently experiencing persistent disadvantage, or to people at risk of experiencing it, including future generations, either in this Act or elsewhere. Although efforts to build stronger collective accountability are underway (for example, through Interdepartmental Executive Boards, and the Social Wellbeing Board), there remains a risk that board members’ primary accountabilities to their own agencies dominate, especially when unexpected barriers arise and need to be addressed.

Neglect of te Tiriti o Waitangi as a foundational constitutional document

Te Tiriti requires accountability between Tiriti partners (Waitangi Tribunal, 1998), but accountability settings in Aotearoa New Zealand do not reflect the constitutional status of te Tiriti.

As a founding constitutional document of Aotearoa New Zealand, “[t]e Tiriti o Waitangi should feature prominently in our formal accountability system. Instead, it is largely absent” (Wilson & Fry, 2023, p. iv). This absence needs to be addressed in partnership with Māori as part of the first principles review that we are recommending. But we should not wait for the results of this review before involving Tiriti partners in the design and operation of our accountability system, and better reflecting te ao Māori perspectives in how the public service demonstrates accountability.

Recent work by Haemata Limited for the Office of the Auditor-General has highlighted the need to strengthen public accountability to Māori, recognising the trust that underpins accountability is relational and reciprocal, built through following tikanga, and thwarted by power imbalances (Haemata Limited, 2022b, pp. 4, 10). As well as meeting Tiriti obligations, addressing this would benefit everyone in Aotearoa New Zealand by expanding recognition and adoption of more holistic and collective models of accountability.

Settings constrain more effective ways of addressing persistent disadvantage

A step-change from current accountability settings is needed to drive a more relational, multi-dimensional, wellbeing-focused accountability system that centres the voices of people experiencing persistent disadvantage and tackles the socio-economic drivers that keep people trapped in disadvantage. Our existing settings limit the use of more effective ways of addressing persistent disadvantage in three main ways.

First, outdated accountability settings make it difficult to address complex long-term issues, including persistent disadvantage, because they are designed to support efficient, siloed delivery models. As recommended in our interim report, (NZPC, 2022a) a comprehensive first-principles review of public accountability settings across the public management system will be needed to develop a more fit for purpose accountability system focused on supporting longer-term wellbeing. There are other changes to accountability policy settings that can be made more immediately.

Second, our accountability and funding settings do not yet adequately enable and support more trust-based and devolved ways of working or providing public services, such as locally led, whānau- centred, centrally enabled approaches, or the relational commissioning approaches committed to in the Social Sector Commissioning Action Plan (Ministry of Social Development, 2022).³¹ Local and international evidence demonstrates that building trust, and developing social capital and a network of support that people can draw on when needed, empowers people to make the changes they want to improve their lives and is key to reducing persistent disadvantage (Wilson & Fry, 2023). This approach encompasses more than delivering services to individuals; it involves investing in the social and cultural infrastructure that supports wellbeing.

Third, to the limited extent that current settings hold agencies accountable for outcomes (rather than for how they use inputs or what outputs they produce), the settings are typically focused on the immediate challenges faced by individuals. There is a lack of emphasis on developing protective factors and prevention or working on the upstream drivers of wellbeing. No amount of crisis services, regardless of their quality, will break the cycle of disadvantage and improve wellbeing (Hagen et al., 2021).³² Moreover, many people experiencing persistent disadvantage benefit from more holistic, longer-term assistance that takes into account wider whānau needs. The Whānau Ora Outcomes Framework – which embraces longer-term, collectivist worldviews as the unit of reporting and performance measurement – is an exception to this approach, and it seeks to hold agencies accountable for both short- and long-term outcomes at the level of the collective: individuals, families, whānau or wider communities.³³

As a result of these limitations, the types of locally led and whānau-centred approaches that can provide more effective connected and integrated assistance to people experiencing persistent disadvantage, and collectively work on addressing the drivers of persistent disadvantage, are in short supply. Those that exist often struggle to meet the level of need and aspirations within communities for a range of reasons, as set out in Box 1.

Finding 10

Given the extent to which disadvantage persists in Aotearoa New Zealand, a step-change in public accountability settings is required, rather than incremental improvements. To effectively tackle complex, long-term issues like persistent disadvantage and promote wellbeing for all in Aotearoa New Zealand, now and in the future, there are three critical gaps in the accountability system that must be addressed:

• weak direct accountabilities for ministers and the public service in addressing persistent disadvantage and the needs of future generations;
• the neglect of te Tiriti o Waitangi as a foundational constitutional document; and
• settings that constrain ongoing learning and more innovative and effective ways of addressing persistent disadvantage, including relational, collective and trust-based approaches.

Finding 11

The gaps in the accountability system contribute to the short supply of the types of approaches that evidence shows can provide more effective joined-up assistance to people experiencing persistent disadvantage. These centrally enabled, locally led, whānau-centred approaches are under-resourced. Those that exist often struggle to meet the level of need and aspirations within communities.

These ways of working include:

• siloed decision making and vertical accountability limit collective action on complex issues (as described in Chapter 2);
• entrenched risk aversion works against innovation and learning;
• narrow, transactional contracting approaches curtail responsiveness and adaptability; and
• a lack of investment in the necessary infrastructure constrains collaboration.

Siloed decision making and vertical accountability limit collective action on complex issues

As noted in Chapter 2, the architecture of the public service is based on specialist agencies addressing single dimensions of wellbeing with strong vertical accountability “up the chain” from people working on the ground to chief executives and ministers and, ultimately, voters.

Accountability to people receiving assistance is assumed to happen through standard accountability documents (such as annual reports) and forums (such as the Select Committee process), but these are severely limited forms of accounting to people experiencing persistent disadvantage. They do not adequately centre the voices of people experiencing disadvantage; they fail to recognise ways of working in partnership with whānau, iwi and communities; and they do not provide a mechanism for the active involvement of people in the design of initiatives that are intended to support them.

There is growing evidence that more whānau-centred and locally led services work better for people experiencing persistent disadvantage (Fry, 2022; The Southern Initiative & Auckland Co-design Lab, 2022; Wilson & Fry, 2023). Despite this evidence, chief executives, ministries and people providing assistance remain responsible for delivering siloed services. This limits investment in whānau-centred, locally led initiatives that cut across such silos, constraining the extent to which more connected and integrated approaches can benefit from economies of scale and achieve better return on investment.

Entrenched risk-aversion works against innovation and learning

A common critique of public management systems is that they are “too risk averse”, and Aotearoa New Zealand’s system is no exception (NZPC, 2022a, p. 64). Public servants themselves are not inherently risk averse; indeed, some empirical evidence suggests that altruistic motivations may make public servants more open to change and willing to tolerate risks than the general population (Nicholson-Crotty et al., 2016). Rather, as discussed earlier in this section, our existing siloed delivery models and accountability arrangements incentivise and reinforce risk-averse behaviours.

In 2000, while examining how the public management system in New Zealand had responded to earlier reforms, Gill acknowledged that:

As with all complex systems, [the public management system] was capable of producing a range of behaviours and styles of operation with unforeseen consequences and dynamics. One was the accretion of accountability and process instruments onto a system acclaimed for its simplicity. Another was the inflexible application of the model rather than using the model to handle complexity. (2000, pp. 58–59)

Gill noted that, as circumstances changed, refinements to how the public management system operated were needed. But instead of evolving in a balanced way, the system accumulated measures “focused mainly on [chief executive] accountability for outputs” and, to an extent, these tools became “an end in themselves” (ibid., p. 60).

Our accountability settings need to change to achieve a better balance between the scrutiny and transparency that underpin trust in public institutions. Accountability settings must support an authorising environment that increases responsiveness to people experiencing persistent disadvantage and learning in a complex system. They need to incentivise and support more collaborative, locally led and whānau-centred approaches, and reward greater risk taking and experimentation in the context of developing a learning system.

Even if they genuinely believe that more horizontal, connected and integrated, relational, trust-based ways of working are more effective, public servants, like everyone else, will respond to the incentives they face. In Aotearoa New Zealand, those incentives are the result of a rich ecosystem of constitutional and legal rules that limit the authority given to individual public servants, even those with wide discretion in how they deliver assistance. Because they are primarily held accountable to ministers for delivering services via vertical “silos”, they are constrained from working in different, more collaborative ways that require them to go beyond the mandate of their agency.

Public servants who prioritise the needs of people they are assisting – by pushing the boundaries of accountability through developing “workarounds” that support more collective and collaborative approaches – do so at considerable personal risk: if something goes wrong, they will be held responsible. Being held responsible for the actions of others is especially problematic when there is not a direct relationship between cause and effect.

There are a small number of collective approaches that have successfully demonstrated an alternative way forward. Manaaki Tairāwhiti is one example and is described in Box 12.

If governments want more public servants to become comfortable adopting collaborative, long-term, whānau-centred ways of working that share power differently, they need to change their incentives and their authorising environments to support this. As discussed in Chapter 6, fostering a culture of experimentation and learning is critical. This needs to include central government public servants and for teams to use policy and commissioning levers differently to better enable whānau-centred and locally led ways of working. New forms of governance are needed that build trust, and an accountability architecture and an authorising environment needs to be created where learning and adaptation are expected, it is “safe to fail”, and experimentation is rewarded (Martin, 2016).

The success of Manaaki Tairāwhiti and other collaborative approaches like Whānau Ora demonstrates it is possible to work together with communities in partnership, and to achieve genuine joint accountability to ministers and to people experiencing persistent disadvantage. Although some of the incentives, design features and approaches underpinning this model are likely to have more general application, we expect initiatives that emerge in other localities would evolve arrangements that are tailored to their local contexts, opportunities and aspirations.

Current reform efforts have limitations

Te Kawa Mataaho Public Service Commission (PSC) has undertaken a considerable programme of work seeking to support improved cross-agency working, and provided detailed guidance on cross-agency working via a toolkit, Kete Rauemi Hoahoa mō ngā raru (PSC, 2022b). The guidance identifies various scenarios, ranging from a small number of agencies at the national level “taking a systems approach within sectors”, to most or all agencies taking system leadership roles at the national level, to agencies working collaboratively at the frontline or community level and “organising around customer and place”. The PSC has described a spectrum of levers – from “soft” voluntary coordination to “hard” structural change, and it has examined the conditions under which different approaches might be warranted (PSC, 2022b).

Joint funding arrangements often involve greater complexity and higher administration costs than funding a single agency from a single Budget appropriation, but they can deliver more effective “joined-up” services for people experiencing persistent disadvantage and create the conditions in communities that lead to better wellbeing outcomes. But many Interdepartmental Executive Boards (formerly known as Joint Ventures) have struggled to get traction, in part because agencies have not provided them with sufficient resourcing or taken genuine responsibility for their outcomes.

For example, the Auditor-General’s 2021 report on the Joint Venture on Family Violence and Sexual Violence, Te Puna Aonui, concluded that “sustained and urgent action is required to realise the potential of the joint venture to improve the lives of New Zealanders affected by family violence and sexual violence” (Controller and Auditor-General, 2021, p. 1).

Following an assessment of 18 joined-up social service initiatives including joint funding models, Fry (2022) concluded that improving their effectiveness would require adequate, dedicated funding from the outset; trust between agencies, providers and whānau and community; clear shared objectives, sound governance and enough staff; and effective data collection, monitoring and evaluation. These elements also need to be supported by clear shared accountability and funding arrangements, if shared goals and collective actions are not to be sublimated and viewed as secondary to the “main work” of agencies. As Fry commented:

When it comes to accountability, the right balance has not yet been found. Existing funding and accountability mechanisms are designed to support siloed delivery and do not serve collaborative initiatives well. Many collaborative initiatives face excessive scrutiny. At the same time, alongside a small number of best practice evaluations, there are also examples of over-resourced assessments that fail to get to the heart of the matter: does this particular intervention help people experiencing persistent disadvantage to improve their lives? (2022, p. 4)

Although they have significant potential advantages over siloed services, the Public Service Act 2020 provisions that allow these structures are primarily designed to improve communication and collaboration, not to achieve a fundamental rebalancing of power. Currently, decision making and funding arrangements must be set each time an Interdepartmental Executive Board is established. In some cases, funds are channelled through an associated department, which sets the Board up to monitor the silos, rather than promoting integration. Effective joint accountabilities, particularly for chief executives, remain an aspiration. Significant further changes to accountability and funding settings (which may need to be custom designed to fit specific contexts) are needed to improve the effectiveness of this approach.

Reflecting these challenges, many cross-cutting efforts are not yet using the formal interdepartmental provisions, which essentially delegate management of appropriations and strategic intentions to a separate, new agency, rather than a single existing department. Part of the problem is that under the “Westminster chain of accountability”, departments fear they will be held responsible if something fails after they have handed money over to someone else.

We expect that as collective governance arrangements mature and build trust, they will become more adept at balancing shared and siloed accountabilities and responding to emerging barriers as they surface. But public servants working in this space say they expect tensions are likely to remain.

We recommend Interdepartmental Executive Board arrangements be re-examined in the context of the immediate accountability policy work programme recommended below. Modifications geared towards working with iwi, communities and whānau in different ways that rebalance power dynamics could point the way to a different future paradigm – where public sector work is oriented around outcomes and/or population groups instead of sectors, in response to strategic medium and longer term wellbeing objectives set by governments.

Narrow, transactional contracting approaches curtail responsiveness and adaptability

The challenges associated with and resulting from current contracting practices were extensively canvassed in our More Effective Social Services Inquiry (NZPC, 2015). These include focusing on “units of service” and/or outputs, rather than people’s wellbeing outcomes; having multiple contracts for a single service to accommodate different sources of funding; funding that is inadequate to address the scale of need and is too short term; and accountability arrangements that do not incentivise responsiveness to people receiving assistance.

Transactional contracting approaches undervalue the importance of building trusted relationships and taking time to understand the needs of individuals and whānau experiencing persistent disadvantage. These approaches discourage flexibility, which makes it hard for providers to respond to people’s needs, and difficult to invest in provider resilience. This is a particular problem where providers are staffed by people who “often come from the same communities as those they are working with” and who “may be putting personal networks, relationships and themselves on the line to help others” (Fry, 2022, p. 21).

Although there are some case study examples, such as the healthy homes prototype (The Southern Initiative & The Auckland Co-Design Lab, 2019), that demonstrate more effective ways of working and learning together, these approaches are not yet widespread.

Transactional approaches also contribute to a pseudo-accountability trap (see Box 13), where superficially robust (and often highly burdensome) reporting requirements obscure assistance that appears to be cost effective based on conventional assessments, is failing to address what matters and makes a difference to whānau.

A number of innovative approaches have sought to make progress on these issues since 2015. For example, the Social Sector Commissioning Action Plan recently agreed by Cabinet recommends moving to an accountability model focused more on shared assurance. This will involve clearly expressing, recognising and fulfilling the accountabilities of all parties involved in the commissioning process. The expectation is that this will support a high-trust operating environment among the key actors; ensure quality assurance focuses on what matters to individuals, families, whānau, and communities; enable ongoing improvement; and support accountabilities that are proportionate to the size, scale and risk of the endeavour being commissioned (Ministry of Social Development, 2022a, p. 25).

The issues relating to narrow, transactional contracting are well known, and the responses being led by the Social Sector Commissioning team are expected to make a difference. However, our assessment is that existing accountability settings will continue to constrain their efforts.

A lack of investment in infrastructure constrains collaboration

As discussed in Chapter 2, there are protective factors that enable wellbeing and can help break the cycle of persistent disadvantage. These include social connection, social capital, and a sense of identity and belonging to a particular place. Investing in supporting these factors in ways that are whānau- and community-led – for example by supporting investment into existing social and cultural infrastructure, in addition to services delivered by government or non-governmental organisations – is critical to addressing the impacts of colonisation. This is especially important since many of the activities that redress power imbalances and provide healing and strengthening sit outside formal services (Hagen et al., 2021b).

To enable whānau-centred and locally led shifts to address persistent disadvantage, the public management system needs to operate differently. The PBIs, and other centrally enabled, whānau-centred and locally led approaches like Whānau Ora, enable changes to the whole public management system to be tested – sometimes in a particular place, and sometimes nationally.

These initiatives provide a “microcosm” for testing, learning and adapting; building a learning system; and shifting the settings and mindsets that underpin the public management system.

Effective whānau-centred and locally led approaches need to be centrally enabled by national-level policy, and investment decisions based on what matters most to individuals, families, whānau, and communities. This shift must be underpinned by investment in infrastructure that can support collective action towards shared goals and ongoing learning at a local and regional level.

However, in many cases, the “backbone” functions (see Box 14) required to facilitate this are under-resourced or absent. Backbone functions can be provided by an NGO or collectively funded by (or sometimes housed within) central and/or local government. These functions need to be supported by a governance board with decision-making rights, developed in partnership with central government agencies.

Driving transformational change will require rebalancing power, embedding a new set of values, and evolving more effective ways of working together, supported by stronger backbone infrastructure and effective mutual accountability arrangements.

Finding 12

The gaps in the accountability system arise from the interplay of features that strongly incentivise certain ways of working. These features include:

• siloed decision making and vertical accountability limiting collective action on complex issues;
• narrow, transactional contracting approaches, curtailing responsiveness to needs and the ability to adapt to changing contexts;
• entrenched risk aversion working against innovation and learning; and
• a lack of investment in the necessary infrastructure constraining collaboration.

How to ensure our accountability settings are fit for purpose

The challenge before us is to reshape the public accountability system so it encourages and supports organisations (within and outside central and local government) and communities to work together to break the cycle of persistent disadvantage, and to address other complex long-term issues. This includes giving a greater voice to people and communities experiencing persistent disadvantage, as well as reconfiguring public accountability settings to ensure the public management system is more accountable to the people it serves. Some of our recommendations can be progressed immediately, but others will take longer to move forward.

The first set of recommendations in this section involves ensuring our overall accountability settings are fit for purpose. We recommend undertaking a first-principles review of accountability settings, building on existing work; progressing more immediate public accountability policy work; and introducing legislation that imposes stronger accountability on ministers for addressing persistent disadvantage.

Public accountability settings in Aotearoa New Zealand have not been updated to reflect changing values and priorities, or the emergence of better ways of addressing complex problems including persistent disadvantage. These settings need to be reshaped to give greater voice and agency to people experiencing persistent disadvantage; make the public management system more accountable to them, and the wider Aotearoa New Zealand population; and support organisations and communities to work together to better address these issues.

A particularly glaring gap is the absence of consideration of te Tiriti in the context of accountability settings (Haemata Limited, 2022). At the very least, Māori views and notions of accountability should be given stronger weight when designing these settings; more significantly, Tiriti partners should work alongside the Crown in undertaking the first-principles review of accountability settings we propose below. Specific mechanisms will be needed to ensure whānau, iwi and communities are actively involved in accountability and learning processes.

We recommend the Government commission a comprehensive first-principles review of public accountability settings, building on this report and the reports by the Office of the Auditor-General, the Parliamentary Commissioner for the Environment and others (Controller and Auditor-General, 2019, 2021a, 2021e; Haemata Limited, 2022b; Parliamentary Commissioner for the Environment, 2021, 2022). This review should be undertaken by an external taskforce or ministerial review group.

Although we do not attempt to provide a full terms of reference for such a review here, as a starting point, we recommend that the aim should be to develop a more responsive, relevant, and accessible public accountability system that builds trust and shares power – particularly with people experiencing persistent disadvantage who are not well served by the current settings. This should clarify who is accountable to whom, what they are accountable for and why, what information is needed, the mechanisms for providing information, and appropriate remedies if accountability is not upheld.

Working with Tiriti partners and engaging with a wide cross-section of society, this review should examine:

• how best to honour and give effect to te Tiriti through public accountability settings;
• how best to support a focus on wider wellbeing and better account for long-term, intergenerational priorities;
• how to reflect more diverse values and worldviews of accountability relationships, including te ao Māori values;
• how to develop more meaningful relationships and allow greater participation in governance and accountability mechanisms – particularly between people experiencing persistent disadvantage, their whānau, iwi and communities, Māori as Tiriti partners, ministers, Parliament, central and local government, funders and providers;
• what the public sector should be accountable for;
• in conjunction with the work programme laid out below, how accountability settings at different levels of the public management system need to work – in particular, to support centrally enabled, locally led and whānau-centred approaches to addressing persistent disadvantage; when commissioning social services from third parties; or to enable connected and integrated delivery that crosses agency silos;
• what system leadership function is suitable to advise government on accountability as a system setting and lead implementation of any agreed changes;
• how to implement stewardship responsibilities for accountability and its ongoing development throughout the public management system;
• the relationship between public sector performance management and accountability, including what information, reporting or mechanisms are needed to facilitate public accountability and confidence and to whom;
• how the public accountability system can be better supported by other elements of the public management system – for instance, by strengthening the degree to which our public finance accounting system is able to track expenditure against wellbeing outcomes of interest to the public and decision makers (see chapter 4); and
• how to enable and support an accountable and effective learning system.
  

Consideration of whether there are aspects of the current accountability approach that add little value, and which of these should be reformed or removed would also be in scope.

Our recommendation for a first-principles review reflects our view that public accountability has been significantly under-emphasised as a policy issue in Aotearoa New Zealand, despite the extensive programme of well-argued research undertaken by the Office of the Auditor-General.

Although an independent review will take time to commission and deliver findings, it is imperative that more policy resource is put towards this critical public management issue. As noted by NZIER in the report commissioned for this inquiry, “[f]or people experiencing persistent disadvantage, the consequences of accountability failures are serious and need to be addressed now” (Wilson & Fry, 2023, p. 88). Given the extent to which public accountability settings in Aotearoa New Zealand are now out of alignment with evolving values, frameworks and policy priorities, a parallel process to address more immediate public accountability policy issues is required.

To address more immediate concerns with accountability settings, the Government should significantly strengthen policy work in this area, by commissioning Treasury, along with Tiriti and local partners, to lead a cross-agency policy work programme on public accountability. This programme would also include drawing up the terms of reference for the independent review.

Policy issues raised with us that could be in scope for this work programme include:

• incorporating more diverse and collective views of accountability into our policy settings, drawing on He Ara Waiora and the advice provided by Haemata Limited (2022b) to the Office of the Auditor-General on Māori perspectives on accountability;
• strengthening the role that Independent Crown Agencies and Officers of Parliament (such as the Human Rights Commission, the Office of the Auditor-General, and the Productivity Commission) have as part of the public accountability ecosystem;
• increasing resourcing for parliamentary select committees to strengthen their role as a key forum for public accountability; and
• evaluating or otherwise examining the degree to which the collective accountability arrangements for Interdepartmental Executive Boards are working as intended, and recommending change as needed.

Policy work on accountability settings will also be needed to support centrally enabled, locally led and whānau-centred approaches to addressing persistent disadvantage, and to create mechanisms for two-way accountability between central government and communities.

Following the precedent established by the recent follow-on review (2023) of our 2021 New Zealand Firms: Reaching for the frontier inquiry, we also recommend resourcing the Productivity Commission to undertake a follow-up review to this inquiry within three years. The purpose of the follow-up review would be to to determine if Aotearoa New Zealand is making progress towards reducing persistent disadvantage, or whether more radical change is needed.

Recommendation 10
Commission a first-principles review of public accountability
The Government, with Tiriti partners, should commission an independent, first-principles review of public accountability settings. This review should consider the nature of the relationship between the public, Parliament, and central and local government, and the principles and settings that would best support those relationships, underpin long-term wellbeing, and ensure effective shared accountability.

The objective of the review should be to develop a more responsive, relevant, and accessible public accountability system that builds trust and empowers people – particularly those experiencing persistent disadvantage, who are not well served by current accountability settings. It should clarify who is accountable to whom, what they are accountable for and why, what information is needed, the mechanisms for providing information, and appropriate remedies if accountability is not upheld.

Recommendation 11
Progress more immediate public accountability policy work
The Government should progress more immediate public accountability policy work by commissioning Treasury, along with Tiriti and local partners, to lead a cross-agency policy work programme on public accountability. This programme would also include drawing up the terms of reference for the independent review outlined in Recommendation 10.

The scope for this work programme could include:
• incorporating more diverse and collective views of accountability into our policy settings, building on He Ara Waiora and the advice provided by Haemata Limited (2022b) to the Office of the Auditor-General on Māori perspectives on accountability;
• strengthening the role that Independent Crown Agencies and Officers of Parliament (such as the Human Rights Commission, the Office of the Auditor-General, and the Productivity Commission) have as part of the public accountability ecosystem to better align with the Public Finance Act 1989 and the Public Services Act 2020;
• increasing resourcing for parliamentary select committees as a key forum for public accountability;
• evaluating the degree to which the collective accountability arrangements for Interdepartmental Executive Boards are working as intended, and recommending change as needed.

Recommendation 12
Instruct the Productivity Commission to undertake a follow-up review
The Government should instruct and resource the Productivity Commission to undertake a follow-up review of progress on the recommendations of this inquiry within three years, to determine whether Aotearoa New Zealand is making progress towards reducing persistent disadvantage, or if more radical change is needed.

Stronger direct accountabilities are needed to activate the Crown’s duty of care to people experiencing persistent disadvantage. Given the concentration of power in the hands of the Executive branch of Government, it is likely that legislative solutions will be required to effectively counterbalance this.

As discussed in Chapter 4, and in our interim report, “[we] should view support as grounded in human rights, not who ‘deserves’ it, and we should see that addressing inequities ultimately benefits all of us” (NZPC, 2022a, p. 83). Recommendation 8, which is intended to support this approach, requires Treasury – in consultation with other government agencies, representatives of people experiencing persistent disadvantage, and the public – to develop and maintain levels of both material and non-material wellbeing necessary for social inclusion. The discussion that follows sets out our recommended mechanism for enabling accountability for establishing a social floor, including setting out monitoring and reporting requirements.

The existing Child Poverty Reduction Act 2018 provides a positive example to follow. It has focused ministerial and agency attention on a part of the population that disproportionately experiences disadvantage – children and young people – and attempts to intervene before it persists (Ardern, 2018).

Although we commend work under the Act, ultimately the wellbeing of children cannot meaningfully be separated from the wellbeing of their families and communities (Berentson-Shaw, 2018; Prickett et al., 2022b). There are also individuals, families, and whānau without children who experience persistent disadvantage.

Accordingly, to ensure others are not left behind, we recommend introducing a broader-coverage Social Inclusion Act which requires the government of the day to state its short- and long-term objectives towards reducing persistent disadvantage in measurable terms and explain how it proposes to meet those objectives. This would complement the key Child Poverty Reduction Act provisions in a wider whānau and community context and should strengthen and enhance the effectiveness of the existing provisions.

The purpose of the Social Inclusion Act should be to achieve a significant and sustained reduction in persistent disadvantage across all population groups and, by encouraging a greater focus on solutions across government and society, improve the wellbeing of people experiencing persistent disadvantage through:

• providing transparent and robust reporting on the levels and persistence of disadvantage in Aotearoa New Zealand;
• ensuring a greater commitment to action on the part of current and future governments;
• requiring governments to be held accountable for the results they achieve for individuals, families, whānau and communities experiencing persistent disadvantage; and
• monitoring and reporting on the extent to which the baseline social floor set out in Recommendation 8 is achieved.

We note that, apart from the indicators used for monitoring child poverty, indicators required to support the broader view of wellbeing in the proposed Social Inclusion Act are not currently mature or robust. The Living in Aotearoa survey (see Chapter 6) will offer a partial solution, providing six years’ data for each surveyed group, but this will not reflect the entire lifecycle or intergenerational impacts of persistent disadvantage on wellbeing. The analytical work that underpins this inquiry report was drawn from currently available data and would not necessarily be suitable to build on for further development of indicators under the Social Inclusion Act. We anticipate that development of these indicators will require concerted research, measurement and monitoring involving Statistics NZ, Treasury, and the Ministry of Social Development, similar to the process that occurred when developing specific indicators for the Child Poverty Reduction Act.

Agencies providing transparent and robust reporting on the levels and persistence of disadvantage in Aotearoa New Zealand is important. However, as we discuss further in Chapter 6, the ability for the people most affected to have an independent voice in assessing and reporting progress towards improving outcomes is equally critical.

In addition to the supports for learning systems we propose in Chapter 6, we recommend that the Social Inclusion Act mandate and resource a group, comprising people experiencing persistent disadvantage and their representatives, to report to Parliament on whether the Government is addressing identified issues and system barriers. This could operate in a similar way to the Convention Coalition Monitoring Group, a coalition of disabled-person-led organisations that has the power to report on how Aotearoa New Zealand is implementing the United Nations Convention on the Rights of Persons with Disabilities (Office for Disability Issues, 2019). The group could also function as a governance group representing people involved in or impacted by the social sector that will guide, promote and protect system transformation.

In developing the Social Inclusion Act, we recommend the Government learns from the experience of the Child and Youth Wellbeing Strategy when it comes to taking a partnership approach, centring the voices of people impacted, and avoiding perpetuating or reinforcing current power imbalances.

Of particular note is the conclusion of the review of the Strategy that “central government must shift how it works with iwi/Māori and communities at different levels to achieve the outcomes in the Strategy”, moving from consulting and collaborating to more partnership-based and empowered “whānau-centred, community-led and centrally-enabled approaches” (Department of Prime Minister and Cabinet, 2022, p. 2).

As with the proposed Wellbeing for Future Generations Act set out in Chapter 4, which seeks to ensure the Government of the day is accountable to future generations, the Social Inclusion Act would take an anticipatory, strengths-based approach to improving wellbeing over time through ongoing learning.

Legislative policy analysis should consider suitable machinery of government arrangements for administering the Act.

Recommendation 13
Introduce a Social Inclusion Act
The Government should introduce a Social Inclusion Act alongside, and complementary to, the Child Poverty Reduction Act 2018. The primary purpose of the Social Inclusion Act would be to require the Government of the day to state its short- and long-term objectives towards reducing persistent disadvantage in measurable terms, and to explain how it proposes to meet those objectives (see also Recommendation 8).

The second set of recommendations are aimed at ensuring our public management system supports more locally led, whānau-centred and centrally enabled ways of working. These recommend a programme of policy work to consider the degree to which accountability settings constrain this approach, to develop guidance on when devolved approaches are appropriate and identify the “core ingredients” or eligibility criteria for an expanded network of locally led initiatives. Although there is an opportunity to build on existing infrastructure supporting whānau-centred and locally led ways of working, we also recommend determining a central steward for this ecosystem of initiatives and providing them with a strong mandate to adopt a system-wide approach to improving wellbeing.

In our interim report, we highlighted the effectiveness of devolving services to trusted providers embedded in their local communities (NZPC, 2022a).³⁷ We also found there was inadequate support for this model across government, and there are gaps in the policy and accountability settings needed to enable and sustain them.

To more effectively address persistent disadvantage and honour rights to rangatiratanga under te Tiriti, the Government needs to support the development of a well-stewarded, securely funded national ecosystem of locally led, whānau-centred and centrally enabled initiatives. This will require “backbone” support to enable a public management system that can create the upstream conditions for wellbeing and better support the autonomy of people to make changes in their lives.³⁸

Taking a learning approach is a critical enabler of such an approach. Our recommendations for a learning system to support the public management system to shift toward locally led, whānau-centred and centrally enabled ways of working are outlined in Chapter 6.

Central government needs to provide leadership and stewardship

The recommendations we make in this report acknowledge and build on existing initiatives, including work being undertaken by Te Puni Kōkiri to advise the Government on whānau-centred approaches, the Oranga Tamariki Action Plan, the roll-out of Enabling Good Lives, the updated Social Sector Commissioning model, the prevention and strengthening of policy work occurring in relation to Te Aorerekura – National Strategy to Eliminate Family Violence and Sexual Violence, and the Child and Youth Wellbeing Strategy. All of these have a focus on whānau-centred approaches to improving wellbeing and devolving direction setting and decision making to local communities.

However, efforts across government are piecemeal and not fully coordinated, which limits the potential effectiveness of locally led, whānau-centred initiatives and leaves them vulnerable. For example, despite their potential, PBIs have unstable funding arrangements and only operate in two locations (see Box 12). Similarly, the Auditor-General has expressed concerns about the extent to which agencies adapt their funding, contracting, and reporting requirements to enable whānau-centred ways of working (Controller and Auditor-General, 2023, p. 3). Central government needs to take a stronger role to build enduring support for these initiatives.

We recommend that the Government establishes a collaborative process to undertake a programme of policy work, led by the Social Wellbeing Agency and Te Puni Kōkiri, to support initiatives that span agency and appropriation silos and give effect to locally led, whānau-centred ways of working. As detailed in Recommendation 14, this work will necessitate additional resourcing for lead agencies, and it will require:

• mandating a central steward;
• appointing a lead agency;
• developing and resourcing effective “backbone” support;
• developing monitoring, evaluation and learning approaches;
• introducing eligibility and accountability settings, and clarifying decision rights;
• committing to long-term funding; and
• dovetailing with other system transformation efforts.

Given their existing policy role on behalf of the large number of agencies represented on the Social Wellbeing Board, the Social Wellbeing Agency – together with Te Puni Kōkiri, which already has a mandate to support the adoption of whānau-centred approaches across government – would be well placed to convene a collaborative process with key stakeholders (including iwi, hapū and those deeply connected in locally led ways of working and implementation) to take forward this programme of policy work. We anticipate additional resourcing would be needed for these agencies to convene the policy programme laid out above.

Central government should act as an enabler, funder and provider of key infrastructural support

Although autonomous front-line organisations and supporting backbone institutions will take the lead in identifying what support they might need from central support functions, the Government should act as an enabler, funder and provider of key infrastructural supports to enable locally led approaches to work as effectively as possible. Key central government roles will include:

• ensuring adequate long-term funding and accountability arrangements that ensure decision rights granted to non-public sector organisations are viewed as legitimate and bring decision making closer to whānau (see the Establish a government-wide learning policy section in Chapter 6);
• giving space and time to locally led approaches, acknowledging that investment in relationships and fundamentally different ways of working takes time, and such investment is needed to truly shift the dial on persistent disadvantage;
• removing system-level obstacles via national policy, process, legislative and/or funding changes, so central policy and commissioning can benefit from the collective intelligence of communities;
• creating opportunities for a wider diversity of perspectives to inform policy, strategy and commissioning by the centre, in particular drawing on intelligence generated through whānau and communities;
• capturing insights and evidence of what works on the ground, sharing these across the system, and ensuring accountability for achieving change;
• providing back-office tools like financial and technology support; and
• supporting workforce development.

In seeking to provide greater support for devolved public services, our intention is for the Government to focus on organisations with the potential to build trusted relationships with people experiencing persistent disadvantage, and to deliver bespoke services that better meet their needs. Devolution should not lead to providers “cherry-picking” people who are easiest to help, buck passing, or cost cutting by central government. Indeed, it is likely that devolved social services, particularly initially, will require additional strategic thought and investment.

National leadership, support and investment will be essential to ensure adequate backbone support in different locations – particularly in communities experiencing greater levels of persistent disadvantage. Common goals, entities with overlapping governance, and shared learning are needed to support the coherence, responsiveness and resilience of wellbeing approaches in communities and to avoid unintentional duplication and inefficiencies (Carlisle & Gruby, 2019). Intentionally building additional capacity, contingency capability and service variation will be necessary to ensure sufficient coverage (Wilson & Fry, 2023, p. 29).

Allocation of decision-making rights is critical

As mentioned in the list of items to consider as part of the policy programme to support locally led, whānau-centred initiatives (see Recommendation 14), one important task is to introduce eligibility and accountability settings and clarify decision rights to ensure public funds are used appropriately but do not excessively constrain the cross-cutting nature of these approaches.

Each local backbone organisation would need a governance board, and decision-making rights for these boards would be based on guidelines set in partnership with central government agencies (see Box 15).

To ensure legitimacy, the allocation of decision-making rights will need to be considered and agreed by everyone involved, including central government agencies and people experiencing persistent disadvantage, particularly if decision rights are granted to non-public sector organisations. Deep and genuine engagement will be needed to understand and address the underlying barriers to effective collective action. The work already underway in relation to Social Sector Commissioning provides a useful starting point.

To maximise effectiveness and reduce risk, we recommend that the development of eligibility criteria should draw on the characteristics of successful devolved initiatives identified in earlier work (Controller and Auditor-General, 2023; Fry, 2022; Litmus Partner, 2021; Ministry of Social Development, 2020; NZPC, 2015a). These criteria could include requiring eligible institutions to demonstrate:

• a clear sense of the population being served, with a commitment to serve all in the locality or population of interest according to need;
• strong leadership and a common vision and purpose and outcomes framework that has been agreed by local leaders with the mana to achieve buy-in to the agreed direction;
• a comprehensive and fit for purpose measurement framework;
• a focus on building trusted relationships across the system, and across sectors, to understand the full range of needs individuals, families, whānau, and communities are facing;
• adopting a strengths-based approach that partners with people experiencing persistent disadvantage to identify what they want to change in their lives, and supports them to become self-managing;
• a clear strategy to provide help to “navigate” access to existing services, identify where there are gaps in the assistance provided, and respond to those gaps; and
• robust accountability to the people they are seeking to assist, including via appropriate endorsement that they authentically engage with and are accountable to their respective communities.

Recommendation 14
Commission a programme to support locally led, whānau-centred and centrally enabled initiatives
The Government should commission a programme of policy work – led by the Social Wellbeing Agency and Te Puni Kōkiri on behalf of the Social Wellbeing Board – aimed at enabling and sustaining more locally led, whānau-centred initiatives that directly support people’s autonomy to make changes in their lives. This work, which should be in collaboration with community partners, will require resourcing for both agencies and community partners and should develop proposals which include:
• mandating a central steward to oversee and guide the national ecosystem of locally led, whānau-centred initiatives, and to support two-way accountability between communities and the central government;
• appointing a lead agency responsible for convening central government agencies and working with key stakeholders across the motu to drive a whole-of-government approach to policy work on locally led, whānau-centred and centrally enabled approaches to improving wellbeing and breaking the cycle of persistent disadvantage;
• developing and resourcing effective “backbone” support so that core project management, data collection and reporting capabilities are available to each initiative, and they are able to embed ongoing learning (see Chapter 6);
• developing monitoring, evaluation and learning approaches that are proportionate to the quantum of funding and risk involved and connected into a wider learning system;
• introducing eligibility and accountability settings and clarifying decision rights to ensure public funds are used appropriately, but do not excessively constrain the cross-cutting nature of locally led, whānau-centred approaches. Such eligibility criteria would include appropriate endorsement that eligible organisations authentically engage with and are accountable to their respective communities and, in particular, those people in their communities experiencing persistent disadvantage;
• committing to long-term funding, provided ongoing effectiveness and/or improvement can be demonstrated; and
• dovetailing with other system transformation efforts such as Social Sector Commissioning to provide opportunities for testing and learning what works.

Existing nationally led work programmes need to dovetail with or complement these proposals

The relationship between the centrally set wellbeing objectives (established under Recommendation 4) and locally led initiatives and institutions will need to be considered, to ensure they work together to enable a coherent and integrated public management system. We envisage high-level objectives will be set with input from local actors, and specified at a level of detail so they can guide local actions and accommodate local variation.

We support the recommendations made by the Controller and Auditor-General (2023) aimed at improving how public organisations support Whānau Ora and whānau-centred approaches, and these should be considered alongside the recommendations of this inquiry.

We also support the ongoing roll-out of Enabling Good Lives for people with disabilities. However, we note this approach primarily focuses on individuals, and we recommend that consideration be given to adopting more whānau-centred approaches in future.

We endorse the intent of the Social Sector Commissioning Action Plan – to address the centralised power imbalances in the public management system by making the commissioning of services more collaborative between funders and providers and more focused on shared assurance.

Finally, we recommend formalising the mandate for the cross-government functional leadership of commissioning practice under the provisions of the Public Service Act 2020, to bring this into line with other areas or functions that already have system or functional leads. This will require establishing relational commissioning as a core public role, embedding it into the wider public management system, and lifting the quality of commissioning across the board over time.

Recommendation 15
Strengthen social sector commissioning
The Government should strengthen the mandate, or establish a functional leadership role, for social sector commissioning across government under the provisions of the Public Service Act 2020. We endorse the Social Sector Commissioning Action Plan to address the centralised power imbalances in the public management system by making the commissioning of services and flow of resources into communities more collaborative between funders and providers.