1. SUMMARY

1.1 The Initiative welcomes and supports this inquiry. Parliament's ability to hold the Executive accountable for value-for-money for the public from government spending and regulation is fundamental to New Zealand's democratic governance and economic wellbeing.

1.2 This submission argues that greater accountability for value-for-money of the Executive to Parliament and the public is a prime need. The current system lacks adequate incentives, checks and balances to ensure that public resources are used effectively.

1.3 Parliament is the institution best placed to improve transparency and accountability. But it also needs greater analytical and institutional capacity to hold the Executive to account.

1.4 With respect to transparency, what is needed is a greater focus on information on value-for-money from spending. What are the deep causes of the problems for which that spending is the remedy, why is it the best remedy, is it likely to deliver the hoped-for benefits, are they or will they be measured and would those benefits justify the costs?

1.5 The same focus is needed for government laws and regulations, along with respect for the fundamental legal principles that are embodied in the government’s Regulatory Standards Bill.

1.6 Having obtained the Executive’s justifications for spending and regulatory proposals, select committees and parliamentarians need the resources and expertise to scrutinise and evaluate those justifications.

1.7 Options for increasing such Parliamentary scrutiny include creating a parliamentary office with this focus, making select committee chairpersons more independent of the executive, and greater recourse to Standing Orders to enforce compliance with reporting and evaluation requirements.

1.8 The Initiative has proposed for many years now that a fiscal council be created as a parliamentary office.

1.9 Because value-for-money from government regulation is also important, we suggest that the Committee consider the broader option of establishing a new parliamentary institution with the ability to assess both spending and regulatory proposals —a value-for-money audit office.

1.10 The new office could be called the Parliamentary Review Office or the Office for Fiscal and Regulatory Analysis. The name is less important than its purpose. Its purpose would be to provide Parliament with independent, expert analyses of whether public spending and regulation are delivering value for money for New Zealanders.

1.11 This office could also be charged with annually undertaking ‘zero-based’ reviews of existing laws and regulations and spending programmes, perhaps adapting the Netherland’s example to New Zealand’s circumstances.

1.12 Broader options should also be considered. Greater Parliamentary scrutiny is of limited benefit if the Executive enjoys a parliamentary majority. Consideration should also be given to mechanisms that give external parties a greater ability to hold the Executive to account. Departmental obstruction of OIA requests could be reduced and New Zealand should be prepared to learn from countries that make greater use of citizens’ referenda.

1.13 In a nutshell, it is extraordinary that Total Crown spending is approaching $190 billion a year, but so little is known about how much of that represents value-for-money.

1.14 We wish the Committee well in considering these and other options and would be pleased to appear before it to answer any questions.