MED reviewers ring-fence conflicts of interest

Tuesday 13th March 2012

A review of the Ministry of Economic Development that recommends it take a lead role in driving New Zealand’s growth stepped around areas where the reviewers had a conflict of interest, including the rollout of superfast broadband.

The lead reviewers of MED, Murray Horn and Sue Suckling, didn’t examine areas which might clash with their other responsibilities. That meant there was barely a mention of the government’s $1.5 billion subsidy to build a nationwide broadband network, something flagged as a key plank in driving New Zealand’s productivity, and one of the ministry’s big-ticket items under Vote Communications in the 2011/12 year.

“Given MED is involved in a large number of activities, we did not examine areas where there was potential for conflict of interest through our other responsibilities, including Dr Horn’s position as a director of Telecom and Ms Suckling’s position as a director of SkyCity Entertainment Group and as a panel member of the Takeovers Panel,” they said.

The performance improvement framework review of the MED, published on the State Services Commission website yesterday, says the ministry should take “stronger ownership” of its role in driving economic development, which is in danger of falling short of the government’s desired step change.

“The economy’s current course and speed is unlikely to deliver on the government’s ambitious goals. Urgent action is required,” Horn and Suckling said in their report. They want a four-year plan implemented that would put the MED in a lead role for growing the nation’s economic performance, rather than merely providing advice and recommendations.

A successful transformation would see MED more willing to take “risks associated with helping the government deliver a step change, rather than incremental change, in New Zealand’s economic performance and to pursue that objective with more determination and urgency,” the report said.

“MED would be seen to be providing real thought leadership across its areas of direct responsibility and on those cross-agency issues that are essential to improve the performance of markets and productivity of firms,” the report said. “It would be defined by this leadership rather than by its component parts.”

The report comes in the week when Prime Minister John Key is to make a major speech on the future of the public service, where he is tipped to announce a major merger of departments based around skills.

The government has been looking to improve the efficiency of the state sector since it won office in 2008, and has urged department bosses to get creative in how they deliver services.

In his response to the review, MED chief executive David Smol said leading the change process “will be the highest priority for me and for the strategic leadership team.”

His team was to have prepared a cabinet paper setting out the ministry’s role by the end of February and will review progress towards the Future State goal as part of its quarterly operating reviews.

“MED needs to work with the Treasury and MSI (Ministry of Science and Innovation), for example, to develop an agreed logic to guide decisions about the nature and form of government intervention most likely to maximise the contribution of science and innovation to economic growth and development,” the report said.

The ministry was also told it needed to accelerate development and extract fatter returns from the Crown’s resource portfolio, as it shifts from being a “relatively passive regulator to a more active asset manager.”

BusinessDesk.co.nz

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