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Room for savings in state sector back office

Hon Bill English
Minister of Finance

13 April 2011

Room for savings in state sector back office

A report benchmarking the administrative and support functions of state sector agencies shows there is room for further savings that can go towards improving frontline public services, Finance Minister Bill English says.

Treasury today released the results of its benchmarking report, which concludes government agencies could save more than $230 million a year through greater sharing, standardisation and automation of back office processes and systems.

"The Government is committed to moving resources from the back office to the frontline so we can deliver improved public services to taxpayers with little or no new money over the next few years," Mr English says.

"The report shows that in many instances the cost of functions like property management, human resources, finance and ICT in New Zealand is higher than international benchmarks.

"For example, the average office space per person in our public service is about 21m2 compared with best practice in some New Zealand agencies of about 15m2. This is one of many areas where we believe there is room for improvement.

"The Government welcomes this increased transparency and we expect it to result in change. In some cases this will be through Government initiatives. In other cases departments will be expected to apply the lessons themselves from other higher-performing agencies.

"As an initial response, the Government is setting up a property management centre of expertise based in the Ministry of Social Development, which will help public agencies better manage their property needs. It will:

• Set expectations for departments and monitor their performance.
• Provide a brokerage service to match agencies with spare property with those seeking additional space, investigate shared property-related services and support the co-location of agencies.
• Provide guidance and support to agencies and document and circulate best-practice examples they can learn from.

"Officials estimate that better property management across the state sector could eventually save over $50 million a year.

"This work sits alongside a range of initiatives focused on moving resources to frontline public services in areas like health, education and law and order. Examples include:

• Reprioritising $3.8 billion of lower quality programmes in Budget 2009 and Budget 2010.
• A series of state-sector wide contracts for goods like stationery, office supplies, some IT hardware and vehicles, expected to save about $115 million over five years.
• A shared services agency in the health sector, which is expected to save several hundred million dollars over the next few years.
• Capping the size of the bureaucracy, while increasing the number of frontline public service jobs.

The full report can be viewed on the Treasury's website at:


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