So Bill if I could start with you – why is performance reporting important in building
trust in the public sector?
Put simply, they spend public money. But we don’t stop there. What do they spend public
money on? Well, a lot of government agencies deliver public services, they exercise executive
powers, so they have the power to tax, they have the power to levy, some have the power
to provide grants, transfer payments, so they’re moving money around, others are regulators
and they license, they confer rights, and impose obligations. So what we’re talking
here is the exercise of state power. So, they spend public money. They exercise state power.
And in a democracy they do that by the consent of the public.
So the public wants government to hold this sort of power, they want to be able to trust them.
So how do you gain trust? Well, you’ve got to earn it. And how do you earn it?
You've got to demonstrate that you’re trustworthy. That you can be trusted. How do you demonstrate
that you’re trustworthy? Well, you need to provide an account of yourself.
That's one way of doing it. And one way of providing an account of yourself is to report accurately
and transparently on your performance.
And what developments are there affecting performance reporting?
What has happened with the legislation is that it’s loosened up a little bit.
And it’s tried to provide a bit more flexibility. So one of the concerns with the old legislation
is that it used a bunch of technical terms. And one of the criticisms of that was that
some agencies took a kind of a mechanistic rule book approach to performance reporting.
And if you take a rule-based mechanistic approach, you’re very rarely going to get a rich performance
report, the sort of performance report that we’re looking for. So by loosening things
up and saying to agencies – well you need to give an assessment of what you intend to
achieve, opens up the field for the agencies to make some very thoughtful judgements about
what’s most important. What sort of achievements are most important in terms of the minister,
in terms of the customer, in terms of the stakeholder? What are the important things to report?
And so the legislative requirements have helped to facilitate more flexibility in that.
What we also have seen in the last couple of months – I think February –
the XRB released an exposure draft on service performance reporting. Submissions on that
exposure draft are open until the end of July this year. That is a reporting standard, or
a proposed reporting standard, which is largely principles based. Although it does propose
to mandate more specifically the reporting of outputs and impacts
and the linkages between the two.
So what does good performance reporting look like, Bill?
Ask yourself: what are the properties of good communication? Again, as I’ve said, a mechanistic
approach and rule book-based approach won’t get you there. You will get so far, by looking
at somebody else’s example of a good report but in the end it’s got to start with a
thoughtful expression of your own business, an understanding of what your business model is,
what your value chain is. And by that I basically mean a description and a picture
of how your organisation organises the resources to achieve what it sets out to achieve.
And if you can look at that from a perspective of a user of those statements or reporting
then all the better. The user per perspective is very important here.
The user perspective is critical. And then we get into the other quite qualitative
characteristics again so we talk about relevance – what’s relevant to the user, what’s
important to them, what do they see you should be held to account for?
And it needs to be understandable – plain English.
Thanks, Bill. Marcus – If I can turn to you. What has our recent work found about performance
reporting in the public sector about financial assets?
Well, our report looked at the management and governance practices across 14 financial
asset intensive entities in the public sector. We generally found that all 14 entities had
good management and governance practices, however there was some room for improvement
– particularly in the area of transparency. And by transparency we meant not the quantity
of the information but the quality of it. Financial assets are very complex. And there
are a lot of them. And they are frequently traded. So being able to summarise these financial
assets in a way in which users can usefully use them, and understand them, is a very difficult task.
But it is a very necessary one. All of what you’ve been talking about here is
a huge challenge for many entities that hold financial assets.
So Marcus what opportunities are there to improve the reporting about the performance
of financial assets?
Well, I think from a user’s perspective we continually hear that they can’t see
the wood for the trees. We need to look at what these financial assets are, how they’re
being used, and why they’re being used. If I could mention the New Zealand Super Fund
as a good example of an entity trying to communicate with its users, with the public, in a very
simple way. It would be worth having a look at their website and how they communicate
their performance.