Hon Simon Upton, Minister of State Services
Crown Entities Package - 15 July 1999

Key background

· A single solution can't be applied to the Crown entity sector - but there are some common and basic requirements for good governance and accountability.

For Ministers

· The Minister of State Services will assume ongoing responsibility for general oversight of the governance and accountability regime that applies to all Crown entities (except Crown companies) but specific responsibility for individual Crown entities remain with each Minister.
· Ministers are responsible for all appointment decisions to Crown entities within their portfolio including any decision not to apply the guidelines and standards being proposed for appointments to Boards.
· Ministers are to formally certify in submissions to APH that an appropriate appointment process has been followed and that a thorough process has been undertaken to identify and manage any potential conflicts of interest;
· Ministers (for other than some categories of Crown companies) must consult the State Services Commissioner of any intention to appoint Board members outside of the conditions provided for within the guidelines;
· Ministers are to formally advise APH of proposed exceptions to guidelines on Board member appointments;
· Ministers must clearly communicate the Government's strategic objectives to individual Crown entities, especially through formal accountability documents in a manner consistent with legislative requirements;
· Ministers must ensure that a purchase agreement is in place for Crown entities that are funded via non-departmental output class appropriations; and
· Ministers are required to formally purchase monitoring of Crown entities from their department or other agency responsible for Crown entity monitoring.

For Departments

A default requirement for all departments who administer Crown entities to

· provide timely advice on purchase, policy and ownership risks associated with the Crown entity;
· manage the appointment, briefing and induction programmes for board members in accordance with the proposed guidelines (unless otherwise directed by the Minister);
· maintain a specified minimum set of records and core information on Crown entity Boards and advise their Minister of upcoming appointments well in advance;
· assist Ministers in setting and negotiating performance requirements for Crown entities in accountability documents that reinforce the Minister’s purchase and ownership objectives; and
· provide of on-going monitoring through a specific Crown entity monitoring output.

For Crown entity boards

· no payments are to be made to board members for the loss of Office;
· remuneration through fees are all-inclusive, and no additional consultancy or ex gratia payments or benefits are to be provided to board members other than fees. Exceptions to the fees regime shall only apply for specific situations identified in the revised fees framework and are subject to:
(i) consultation with the State Services Commissioner (except for some categories of Crown companies); and
(ii) approval by the responsible Minister before being implemented;
· disclosure of the remuneration received by board members in the Crown entity’s annual report; and

· adhering to the guidelines for Statements of Intent and Purchase Agreements that have been issued last month (where applicable).

Chief executives appointed by Boards
· the application of a model contract for chief executive positions that contain basic terms and conditions that are compulsory for all Crown entity chief executive contracts;
· remuneration is to be set within specified categories and bands based on specific job-sizing criteria that will be identified in guidelines;
· provision for severance payments only where they are consistent with a specified formula identified in the proposed guidelines;
· a requirement for Crown entity boards (except for some categories of Crown companies) to consult the State Services Commission on any intention to establish chief executive contracts outside of the guidelines;
· The SSC will alert Ministers where boards propose to sign chief executive contracts that are outside acceptable standards;
· the disclosure of Crown entity chief executive remuneration in the Crown entity's annual report, including severance payments. Crown entities will be also required to disclose total remuneration figures for staff earning $100,000+ (in annual reports in $10,000 bands, in line with the Companies Act); total remuneration figures will include severance payments where they have been made

For legislation

Proposals being developed for the 2000 legislative programme to give effect to these policies. Immediately reviewing existing legislation to clarify:

· the powers of Ministers to dismiss board members; and the powers of Ministers to direct boards;
· providing for disclosure of remuneration and other benefits and consultation on chief executive contracts;
· introducing provision for “Crown agencies” into legislation;

Implementation

· Guidelines completed by 31 July 1999, to come into effect immediately for all new appointments (current legislation permitting) on:
i the role of Ministers;
ii the role of departments;
iii appointment processes.

· Legislative changes to be included in the 2000 legislative programme - In the interim all Ministers should communicate with their Crown entities seeking voluntary compliance with:
i new disclosure requirements for chief executives and Boards;
ii consultation with the State Services Commissioner on terms and
conditions of employment that sit outside of the guidance material

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