IRD scores an 'A' in Treasury investor confidence ratings, Corrections, Education get C pass

Tuesday 26th July 2016

The Inland Revenue Department has scored an 'A' in the first tranche of the Treasury's investor confidence rating (IRC) for state agencies that manage significant Crown investments and assets, gaining greater autonomy as a result, while the Corrections and Education ministries gained a 'C' rating.

Finance Minister Bill English said the rating scale isn't about giving an organisation a pass or fail mark as much as being a tool that they can use to improve their investment management. "Just like companies have credit ratings which show how sound their investments are, we are requiring government agencies to obtain investor confidence ratings which show how strong they are at managing investments and assets like new schools, roads and IT projects."

The IRC scale runs from A to E, a low rating that indicates "significant assistance is needed for the investment to deliver results," English said. The first tranche assessed six of 25 agencies to be surveyed, with the remaining three tranches to be completed by September 2017.

IRD's strong rating covers its ICT and leased assets and showed evidence that the department had "multiple strengths in investment management," the Treasury said. As a result, IRD's general approval thresholds for all baseline-funded investments have been increased to $50 million from $25 million in whole-of-life cost terms and the commissioner has been given more discretion over the level of assurance activity around individual investments.

“Agencies that receive a very good rating can expect greater autonomy, higher financial delegations and less onerous monitoring and reporting while agencies that do not rate as well will receive additional monitoring and support,” English said in a statement.

The Accident Compensation Corp scored a B for its property and ICT portfolios, and the NZ Defence Force and Ministry of Defence also gained a B for specific military equipment, property and ICT, but excluding minor capital works.

The Treasury said Defence "generally delivers the required benefits from its portfolio of significant investments." But actual project delivery results are "more mixed at an individual project level (and) Defence needs to improve project timeliness and budget management."

Defence's general approval thresholds for selected large scale, low or medium risk investments funded from existing baselines were increased to $50 million from $25 million in whole-of-life cost terms, the Treasury said.

The New Zealand Transport Agency also gained a B rating, covering its management of the state highway asset, management of the National Land Transport Programme, delivery of state highway programmes and projects, and its corporate information systems.

The Treasury said NZTA "has strong asset management practices and consistently meets its asset performance targets" and it also "delivers projects on time, to scope and to budget."

Education got a C investor confidence rating for its management of school properties and ICT assets, which is below the B level the Cabinet expects for the most investment-intensive state agencies, the Treasury said. While Education had made progress in recent years, there was room for improvement. The separate parts of its long-term investment plan needed to be more closely integrated.

The ministry also was unable to provide some key performance information. "In particular, there is limited evidence of asset performance or evidence to show that expected investment benefits have been realised," the Treasury said.

Corrections also missed the Cabinet's expectations by gaining a C rating. While it had strengths in delivering projects to scope and on budget, there were "gaps in key management maturities" and there was "no evidence in this assessment to show it systematically assesses or reports on actual benefits achieved across its property projects and programmes."

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