Hon Tony Ryall
Minister of State Services
11 August 2011

Reduction in State agencies confirmed

The Government has announced final decisions on changes that will further reduce the number of government agencies, State Services Minister Tony Ryall announced today.

“These changes will provide greater value for money, reduce duplication and improve coordination across the state sector,” Mr Ryall said.

“In May the Government signalled our intention to review a number of Crown entities as part of our overall programme of state sector reform. We’ve decided to proceed with the changes that a process of due diligence confirmed had value.

“Reducing the number of government agencies, where it makes sense, will improve the delivery of services to the public, reduce duplication of roles, and allow reprioritisation of spending to where it will have the greatest impact.

“The state sector has an important role to play in New Zealand’s future. These changes will help to ensure the effectiveness and viability of the services that New Zealanders expect from our public services.”

The decisions announced today are:

• Create an arm’s-length health promotion agency that will take over the functions of the Alcohol Advisory Council of New Zealand (ALAC), the Health Sponsorship Council (HSC) and relevant functions of the Ministry of Health.

• Bring forward the disestablishment of the Mental Health Commission and transfer functions to the Office of the Health and Disability Commissioner (HDC) and establish a new Mental Health Commissioner within the HDC.

• Disestablish the Crown Health Financing Agency, and transfer some of its functions to the Ministry of Health, while others continue to be provided by Treasury’s Debt Management Office.

• Transfer the functions of the Charities Commission to the Department of Internal Affairs, while providing for independent registration and related functions through a statutory board.

• Disestablish the Health Act Boards of Appeal, the Maritime Appeal Authority, and the Land Valuation Tribunals, and transfer their functions to the District Court.

“Through the due diligence process the Government received important feedback on how the new entities should be structured and operate to ensure they deliver what is expected of them,” Mr Ryall said.

“For example, decisions on charity registrations will remain independent from Ministers through a statutorily independent board in the Department of Internal Affairs. It is also important that funding collected through alcohol levies is dedicated to alcohol harm related activity and this too will be guaranteed in legislation.

“All these changes will be subject to legislation. This means interested groups will be able to have their say on the proposals through the select committee process.

The changes are anticipated to save $19.6m in the four years from 1 July 2012, with ongoing annual savings after that of $4.1m. The expected transition costs of $1.3m will come from existing budgets.

Combining these savings with the savings from other recent amalgamations will see approximately $92m saved over 4 years, with ongoing savings of $22m per annum.

“Through a series of sensible decisions, the Government is achieving significant efficiencies as well as delivering better public services,” Mr Ryall said.

Where the due diligence has not produced compelling evidence to support structural change, we have decided not to proceed. For example, proposals to merge the Education Review Office and New Zealand Qualification Authority, and to transfer work within Vote Employment from the Department of Labour to the Ministry of Education will not go ahead at this time.

Similarly, the proposal to merge the back office functions of the Privacy Commissioner and the Human Rights Commission will not be proceeding.

The Ministry for Culture and Heritage is leading work on potential changes signalled in the arts, culture and heritage sector. This work is continuing on longer timeframes, recognising the need for consultation with relevant organisations before potential changes can be considered.

Link to Cabinet papers: http://www.ssc.govt.nz/mog

Financial Savings for State Services Amalgamations
The current decisions and past structural changes will result in total estimated savings of $92 million in the four years from 2012/13 (after transitions are complete). Ongoing savings thereafter are estimated to be $22 million per annum.
This total includes savings from changes announced today of approx $19.6 million in the four years from 2012/13, with ongoing savings thereafter expected to be $4.1 million per annum.

Details of changes announced today:
Mental Health Commission
$3.33 million estimated savings in the four years from 2012/13
$350,000 estimated transition costs (in 2011/12)
(The Mental Health Commission was due to be disestablished in 2015)
Charities Commission
$2.032 million estimated savings in the four years from 2012/13
$300,000 estimated transition costs (in 2011/12)
Health Promotion Entity
$7.5 million estimated savings in the four years from 2012/13
$400,000 estimated transition costs (in 2011/12)
Crown Health Financing Agency
$6.8 million estimated savings in the four years from 2012/13
$290,000 estimated transition costs (in 2011/12)
Announced March 2010:
The Department of Internal Affairs, National Library, and Archives New Zealand merged 1 February 2011
$8 million estimated savings in the four years from 2012/13
$4.126 million transition costs (actual costs incurred in 2010/11) (1)
$2.459 million savings achieved in 2010/11, and $2 million estimated savings in 2011/12
The Ministry of Agriculture and Forestry and New Zealand Food Safety Authority merged 1 July 2010
$8 million estimated savings in the four years from 2012/13
$1.974 million transition costs (actual costs incurred in 2010/11) (1)
$950,000 savings achieved in 2010/11, and $2 million estimated savings in 2011/12
The Ministry of Research, Science and Technology and Foundation for Research, Science and Technology merged 1 February 2011 into the new Ministry of Science and Innovation
$16 million estimated savings in the four years from 2012/13
$5.1 million transition costs (actual costs incurred in 2010/11 and 2011/12) (1)
$3 million estimated savings in 2011/12
(1) There has also been an additional $8 million of capital investment in 2010/11 and 2011/12 associated with these three amalgamations, funded from balance sheets, to provide the necessary infrastructure and capability.
Announced March 2011:
The Ministry of Agriculture and Forestry and Ministry of Fisheries merged 1 July 2011
$40 million estimated savings in the four years from 2012/13
$8.5 million estimated transition costs (2010/11 and 2011/12) (2)
(2) This includes capital expenditure associated with the merger, however forecast capital expenditure for these departments is expected to be less as a result of the merger

ENDS

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