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New Ministry to drive business growth agenda

Hon Steven Joyce
Minister for Economic Development

15 March 2012

New Ministry to drive business growth agenda

The new Ministry of Business, Innovation and Employment will help the Government’s business growth agenda by implementing integrated policies to build a more competitive and internationally-focused economy, Economic Development Minister Steven Joyce says.

Prime Minister John Key today announced that Cabinet had agreed in principle to establish the new Ministry, which will absorb the functions of the Ministry of Economic Development, the Department of Labour, the Ministry of Science and Innovation, and the Department of Building and Housing.

The intention is for the Ministry of Business, Innovation and Employment to come into effect on 1 July this year, with the current departments forming the initial functional business units of the new Ministry. This is subject to due diligence being completed for a report back to Cabinet in April.

"If we want more and better jobs for New Zealanders we need to encourage more businesses to be based here. That means making it easier for businesses and companies to access innovative ideas, markets, capital, skilled workers, resources, and the supporting public infrastructure. The Government has a comprehensive business growth agenda to assist business, and a single focused business-facing government ministry will further boost our momentum," Mr Joyce says.

"The new Ministry of Business, Innovation and Employment will also ensure we have clear, co-ordinated and focused government policy leadership with a commitment to economic growth and innovation.

"The new Ministry will reduce the complexity involved in working between agencies, and between agencies and business. At present when businesses engage with government they work with multiple government agencies, which takes away valuable time, as well as incurring unnecessary duplication of effort. This is time that could better be served in allowing companies to work on their businesses rather than on their government relations.

"A more efficient and effective Ministry focused on lifting overall productivity and supporting the growth of competitive businesses is a crucial element in creating more jobs and higher wages, and boosting our standard of living," Mr Joyce says.

Questions and Answers

What are the benefits of the creation of the Ministry of Business, Innovation and Employment?
• Principal benefits include:

o Stronger policy leadership of the Government’s business growth agenda.
o Making it easier for business to engage with Government.
o Strengthening Government’s ability to work on big cross-sector issues.
o Realising efficiency gains over time.

How will the change take place and over what time frame?
• Subject to the due diligence process and final Cabinet approval, the new Ministry will be established by 1 July 2012.
• The integration will take place in two phases:

o The initial transition by 1 July 2012. This will involve putting in place the framework for the start-up of the new Ministry, including an acting CE and second tier arrangements.
o The current departments will form the initial functional business units of the new Ministry.
o From 1 July, the Acting Chief Executive will then be responsible for integrating the functions of the new Ministry.
o This will ensure we can achieve an integrated agency over time while also continuing to deliver on existing work programmes underway in each department.
o Clear priorities and a timetable will be set to guide internal integration and the concurrent delivery of economic growth objectives.
• In the interim, individual Chief Executives will remain accountable for their Departments.

Is there any precedent internationally for this proposed change?
• There are a number of precedents for the proposed change in international jurisdictions. The United Kingdom government (establishing the Department for Business, Innovation and Skills in 2009) and the Australian government (establishing the Department of Industry, Innovation, Science, Research and Tertiary Education in 2011) have recently reformed their economic advice agencies to ensure those agencies are able to respond effectively to the current global economic situation and to have established a strong platform for growth as the global economy improves.
• While there are obvious difficulties in making international comparisons, both of these reforms have sought to integrate and strengthen policy capability around supporting innovation as the primary driver for improved productivity and competitiveness for business.
• As part of the 2009 reforms, the United Kingdom government also moved to ensure its labour market and employment support functions were integrated with its broader economic advice agency. Australia and Canada maintain separate departments for labour market functions, as they have sought alignment for those functions closer to social development policy.

How many jobs will be lost?
• It is our intention for current employees of the four departments to move across to the new Ministry on 1 July. It is not possible at this stage to identify how many jobs will be lost from the merger. Any changes will be identified through the detailed structural design process for the new agency, which will take place over time.
• The key motivation for the merger is to achieve better coordination and a more integrated policy approach than has been possible with the four separate agencies. However, efficiencies will be sought over time where they are appropriate.

When will the staff in these departments know what is happening to their jobs?
• Further analysis and planning is underway to help determine the structure of the agency pending a report back to Cabinet in April seeking a final decision.
• It is intended the current departments will form the initial functional business units of the agency
• Further integration will occur progressively over time and affected staff will be fully consulted as changes occur.

What are the financial implications?
• We expect to see efficiencies through reducing duplication and overlaps, and to achieve integration within the existing baselines of the four current departments.
• The State Services Commissioner will convene a Transition Group to undertake due diligence for a report back to Cabinet in April 2012. This report-back will include financial implications and scoping of efficiency gains.

How much is it expected to save in the longer term?
• Given recent experience of the efficiency gains possible through bringing separate departments together (such as bringing Archives New Zealand and the National Library into DIA and the Ministry of Fisheries and the NZ Food Safety Authority into MAF), we expect to see a clear efficiency dividend. The actual amount won’t be known for some time.

What does this mean for the stakeholders of these agencies?
• During the transition, stakeholders can expect business as usual from the four departments.
• Over time it will be easier for stakeholders to interact and do business with the new Ministry, which will bring together a range of business-focused functions that previously businesses would have to go to multiple agencies to access.

What other agencies may be brought into the new Ministry?
• We don’t expect any other agencies to be integrated into the new Ministry, but other functions may transfer in or out of the new Ministry depending on the due diligence process.

What will the process be for appointing the Chief Executive of the new Ministry?
• This will be considered as part of the due diligence process for report back to Cabinet in April.

Are there plans to bring all business-facing government activities into the one agency?
• No. There are no plans to bring further agencies into the merger.
• However, we will be looking at how some Crown entity functions will report into the new Ministry.

Are there other mergers planned?
• This merger is the only departmental merger the Government is planning. We are not ruling out further change in the future, but there is no plan for wholesale reorganisation of the public sector.

Isn’t this just a cost-cutting move?
• No. The driving goal of this change is to develop a single dedicated business-facing Government department that can strengthen policy capability, improve the regulatory environment, bring together business-facing services and improve the Government’s own internal co-ordination.

• However, given recent experience of the efficiency gains possible through bringing separate departments together ( such as bringing Archives New Zealand and the national library into DIA, and the Ministry of Fisheries and the NZ Food Safety Authority into MAF), we also expect to see a clear efficiency dividend as we eliminate duplication, overlaps and integrate back office functions.

Won’t this new Ministry be too big and unwieldy?
• No. The new Ministry would have around 3200 employees at the outset, making it a similar size as the Ministry of Justice.

ENDS

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