Introducing Public Sector Financial Management - The Treasury

6 PUTTING IT TOGETHER The purpose of New Zealand’s public sector financial management system and the structures within which it operates. 1 INTRODUCING PUBLIC SECTOR FINANCIAL MANAGEMENT PUTTING IT TOGETHER 7 INTRODUCING PUBLIC SECTOR FINANCIAL MANAGEMENT The Purpose of Public Sector Financial Management The New Zealand public sector financial management system aims to: • assist the Government to translate its strategy into action • promote informed decision-making and accountability • encourage a responsive and efficient public sector. The system achieves these aims through the planning, decision-making and scrutiny processes that culminate in the passing of the Government’s Budget, the incentives for managing efficiently, and the reporting and feedback processes. Chapters Three, Five and Seven respectively, describe these features. Understanding the

financial management system requires a knowledge of the constitutional environment within which it operates. The Government is accountable to Parliament. The public sector financial management system supports this constitutional structure. It provides accountability, in particular through the appropriation system and through parliamentary scrutiny of the Government’s performance. Chapters Four and Eight outline how these work. The public sector comprises more than just government departments. Some types of government operation are better suited to alternative organisational structures such as companies. Chapter Six explains financial decision- making and accountability structures employed for organisations forming part of the wider public sector. However, this booklet does not cover local government. This and the next chapter introduce the key concepts underlining the system. Firstly the environment in which the system operates is looked at. Key Documents generated by the Public Sector Financial Management System The public sector financial management system focuses on Government’s accountability for its financial performance in the public sector (i.e., through its government departments, State-owned enterprises, Crown entities and other organisations). Public sector financial management operates in the context of New Zealand’s constitutional and administrative structures. Budget Departmental Forecast Reports Key Result Areas Supplementary Estimates Estimates of Appropriation Performance Agreements Appropriation (Financial Review) Bill Imprest Supply Strategic Result Areas Budget Policy Statement Performance Reports to Ministers Purchase Agreements Strategic Business Plans Monthly Financial Statements Legend Government-wide reports Dept specific reports Department Financial Statements Crown Financial Statements 8 PUTTING IT TOGETHER What is the Constitutional Structure of the Public Sector? Public sector financial management operates in the context of New Zealand’s constitu- tional and administrative structures. New Zealand is a monarchy. It is a parliamentary democracy. New Zealand’s constitution increasingly reflects the fact that the Treaty of Waitangi is regarded as a founding document of government in New Zealand 1 . The Constitution Act 1986 recognises that the Queen is the Head of State of New Zealand and that the Governor-General is appointed as her representative in New Zealand. Section 2 of the Public Finance Act 1989 defines the “Crown” to mean: Her Majesty the Queen in right of New Zealand; and includes all Ministers of the Crown and all departments, but does not include: New Zealand is a monarchy, it has a parliamentary system of government and it is a democracy. The Governor-General is the Queen’s representative in New Zealand. Parliament is elected every three years, and controls the public finances and...

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