1. noted that the submission under SPH (00) 35 was provided in response to the Cabinet direction that the Ministry of Health, in consultation with the Health Sector Development Officials Group, report to the Ad Hoc Ministerial Committee on the preferred options for the organisational form of District Health Boards (DHBs), including the role, accountability and reporting requirements of Board Committees [CAB (00) M 2/4(gg)(iv) refers];

2. noted that the Boards of DHBs will be placed in a position where they feel a dual accountability to both the Minister of Health and the community which elected them and that reconciling the tension created will be a constant challenge for the Board that needs to be managed by creating a strong accountability to the Minister of Health;

EMPOWERMENT AND ESTABLISHMENT OF DHBS

3. noted that Cabinet has agreed that DHBs will be established by a New Zealand Public Health Services Bill (which may be entitled the New Zealand Public Health and Disability Services Bill);

4. agreed that DHBs be listed in the schedule to the Act (following enactment);

5. agreed that DHBs be established as statutory corporations;

6. agreed that DHBs be Crown entities subject to Part V of the Public Finance Act;

7. agreed that all assets vested in the DHBs will remain in Crown ownership and the DHBs will be consolidated on the Crown balance sheet;

Powers of DHBs

8. agreed that DHBs be established with the full powers of a natural person (of full age and capacity) and that the exact nature and scope of the powers given to DHBs be mitigated by a number of mechanisms;

9. agreed that the risks associated with the exercise of these powers be controlled by clearly outlining the functions of DHBs, limiting the powers of the DHB in statute where appropriate, clear accountability arrangements, transparent Board processes and consultation;

ROLE OF BOARDS

Governance by a Board

10. agreed that the role of the Board is to set strategic direction, appoint the Chief Executive, monitor the performance of the entity and its Chief Executive, ensure compliance with the law, accountability documents and relevant Crown expectations, and maintain appropriate relationships with the Minister of Health, Parliament and the public;

11. agreed that the Board is responsible for delegating responsibility for employment matters to the Chief Executive as it is not appropriate that the Board is involved in staffing issues beyond the appointment of the Chief Executive;

Prudent Financial Management

12. noted that DHBs and their governing Boards will be in control of, and held accountable for, significant sums of Crown-provided revenue and potentially capital which could expose the Crown to financial risk;

13. agreed that to assist with mitigating the financial risks to the Crown and to protect the Crown's ownership interest, mechanisms to ensure sound financial management, including maintaining financial viability, are included in legislation;

ROLE, RESPONSIBILITIES AND DUTIES OF BOARD MEMBERS

14. agreed that, in order for the Boards of DHBs to achieve their overall objective, Board members (both elected and appointed) will be collectively responsible and accountable to the Minister of Health for DHB performance;

15. agreed that Board members undertake an approved training programme upon taking office as Board members;

16. agreed that Board members be required to disclose any actual or potential conflict of interest to the Board and not participate in any Board discussion or decision relating to the conflict after the disclosure is made; Liabilities of Board Members

17. agreed that the Board members, Committee members, and employees of the DHB are liable for failing to act in good faith and with reasonable care and skill in carrying out their functions and powers;

18. noted that Cabinet has previously agreed that the Minister of Health will have the ability to dismiss the entire Board and replace them with a Commissioner in defined circumstances [CAB (00) M 2/4 (m) refers],which will be subject to a report back on Governance by the Health Sector Development Officials Group (paragraph (nnn) below refers); Dismissal of Individual Members

19. agreed that the Minister of Health have the ability to dismiss individual appointed members at the pleasure of the Minister of Health, and dismiss elected members for just cause;

20. agreed that Board members who are dismissed will not have a right to compensation for dismissal;

21. noted that the role of the Chair is pivotal in ensuring the success and smooth functioning of each DHB;

22. agreed that the Minister of Health appoint the Chair and Deputy Chair of each DHB Board;

THE ELECTORAL PROCESS

23. agreed that members chosen by the community in an election are automatically members of a DHB Board, and directed officials to undertake detailed work on the implementation of this option;

APPOINTMENT AND ELECTION OF MEMBERS

24. agreed that DHBs will be defined by geographic boundaries;

25. noted that defining DHB boundaries geographically does not preclude DHBs having relationships with populations which are not defined geographically and may span DHB districts;

26. agreed that the provisions in the Local Elections and Polls Act 1976 concerning who is eligible to stand in an election and vote in an election be used for DHB elections;

aa   agreed that, in addition to the provisions in the Local Elections and Polls Act 1976, the following people are excluded from standing in an election or being appointed to a Board:
1. people convicted of an offence punishable by imprisonment for a term of 2 years or more (unless the person has obtained a pardon, or has served the sentence);
2. any person undergoing treatment for a mental or physical condition that would affect their ability to adequately and competently perform the duties of office;
3. any person who is subject to orders made under sections 10, 11, 12 or 30 of the Protection of Personal and Property Rights Act, or any person in respect of whom a trustee corporation is managing the person's property under section 32 of the Protection of Personal and Property Rights Act;
4. for the election/appointment cycle following dismissal, any person previously dismissed from office (except, to avoid discrimination, where a person was subject to a Compulsory Treatment Order or suffered a severe mental or physical condition at the time of dismissal);
5. any person who is an undischarged bankrupt;

bb   agreed that people declare any conflicts, or potential conflicts, of interest before accepting nomination for election;

cc   agreed that, for the transitional period, employees of HHSs and the HFA declare any conflicts, or potential conflicts, of interest before accepting appointment to a transitional Board;

dd   agreed that the ability of DHB and Ministry of Health employees to stand for election, or be considered for appointment, to a DHB Board requires further investigation (paragraph (nnn) below refers);

ee   agreed that the ability of public servants to stand for election should be guided by the Public Service Code of Conduct;

ff   agreed that people should be able to be elected to only one Board;

gg   agreed that, should the required number of elected Board members fail to be elected, the Minister of Health will have the ability to appoint additional members to the Board until the next election cycle, or allow the position to remain vacant until the next election cycle;

HOLDING ELECTIONS

hh   agreed that DHB elections will be held triennially and concurrently with local body elections, and will utilise existing systems and process to minimise transaction costs;

ii   agreed that the cost of elections for DHBs will be met by DHBs;

APPOINTED MEMBERS

jj   noted that Cabinet has agreed that the Minister of Health will appoint a minority of DHB Board members [CAB (00) M 2/4 (k) refers]; kk   noted that the Minister will Gazette the appointments referred to in paragraph (jj) above; ll agreed that people appointed to DHB Boards are not required to be resident within the DHB district; mm agreed that appointed members may sit on more than one Board;

nn   agreed that the appointments process will follow standard and agreed processes yet to be finalised; oo noted that further consideration is being given to the options for equitable representation of Maori on DHB Boards and Committees, and that a report back on the most appropriate options will be provided by 13 April 2000 (paragraph (nnn) below refers);

pp   noted that final decisions on how disability support services will fit into the new DHB structure, and how they will be represented on boards, have not yet been made, and that recommendations on board representation may need to be revisited after those decisions are made;

NUMBER OF BOARD MEMBERS

qq   agreed in principle that DHB Boards have a maximum of nine members, that the number of members on each Board may be variable, and that further work on the detail of the number of members on each Board will be undertaken by officials (paragraph (nnn) below refers);

rr   agreed that the appointment of members be staggered to ensure continuity of knowledge within the Board;

ss   agreed that appointed Board members serve a maximum of six concurrent years, or longer at the discretion of the Minister of Health;

tt   directed the Health Sector Development Officials Group to undertake further work on the level of remuneration of Board members, including the applicability of local government processes (paragraph (nnn) below refers);

PROCEDURES OF THE BOARD

uu   agreed that mechanisms to achieve a quorum and a "default quorum" be established and reported back (paragraph (nnn) below refers);

vv   agreed that Board meetings be open to the public, subject to the normal restrictions applied to local authority meetings;

ww   directed the Health Sector Development Officials Group to provide further information on how restrictions on media operate at open board meetings;

xx   agreed that standard provisions related to other procedural matters for the Board, eg vacation of office, voting and other standard matters will be included in the DHB legislation or constitution;

EMPLOYEES

yy   agreed that the consent of the State Services Commissioner will be required on the terms and conditions of employment of the Chief Executive;

zz   agreed that the State Services Commissioner will only be consulted on the terms and conditions of collective employment contracts proposed to be entered into by DHBs if required by Order in Council;

GOVERNANCE IN THE EVENT OF A MERGER OR DIVISION OF DHB

aaa   agreed that, in the event of a merger of two or more DHBs, until the next election can be held, the membership of the Board consist of all the elected and appointed members of the merged Boards or fewer members by agreement;

bbb   agreed that in the event of a division of a DHB, the Minister of Health has the ability to appoint additional members to the Board until the next election cycle;

ccc   agreed that legislation include provision for the transfer of assets and liabilities in the event of a merger or division of DHBs;

POWERS OF THE MINISTER OF HEALTH AND THE DIRECTOR-GENERAL OF HEALTH

ddd   agreed that the Minister of Health have the power to direct DHBs and that checks are put in place to avoid inappropriate use of this power;

eee   agreed that DHBs be required to give effect to Government policy as communicated by the Minister of Health;

fff   agreed that the Minister of Health have the power to require DHBs to produce particular outputs;

ggg   agreed that the powers of the Minister of Finance with regard to DHBs be clarified in the report back on accountability arrangements referred to in paragraph (mmm) below;

hhh   agreed that the Minister of Health and the Director-General of Health have the power to undertake investigations and inquiries with regard to DHBs;

iii   agreed that the provisions in section 39 of the Resource Management Act regarding the questioning of witnesses be investigated as appropriate for inquiries and investigations of DHBs (paragraph (nnn) below refers);

HOSPITAL COMMITTEES

jjj    noted that Cabinet has agreed that DHBs will be required to form, at a minimum, a Hospital Governance Committee, and a Primary Care Advisory Committee;

kkk   noted that the precise roles of these Committees, their relationship with the Board, membership and autonomy is largely dependent on decisions made about the overall role of DHBs, and the management of service delivery, and will be the subject of further advice to the Ad Hoc Committee by 13 April 2000;

lll   agreed that transitional Boards of DHBs be wholly appointed by the Minister of Health;

FURTHER REPORTS

mmm   noted that the officials' accountability workstream will be reporting to the Ad Hoc Ministerial Committee on the detail of accountability mechanisms and the implications for legislation by 13 April 2000;

nnn   noted that further advice on governance, and other issues listed below, will be provided to the Ad Hoc Ministerial Committee by 13 April 2000:

1. DHB Committees - their role, relationship with the Board, membership and autonomy;
2. the ability for DHB employees to stand for election, or be considered for appointment to DHB Boards;
3. the election of Maori to DHBs and ensuring equitable representation;
4. the proposed electoral process;
5. the roles of other Ministers in relation to DHBs;
6. mechanisms for establishing a quorum;
7. the circumstances under which a commissioner would be appointed;
8. important issues related to effective DHB financial management including defining the long term financial viability and performance expectations for legislation, taxation status, appropriate capital structures, sources of finance and borrowing powers of DHBs, and other matters;
9. the detail of DHB boundaries;
10. the detail of a residual Ministerial power to merge DHBs;
11. options for appeal by members dismissed from a Board;
12. the use of section 39 of the Resource Management Act;
13. the remuneration of DHB Board members;
14. the number of DHB Board members.