Executive Summary

The decision to integrate in a new agency four separate business units from two existing departments to achieve employment based policy outcomes was made in 1997, based on the Coalition Agreement of December 1996.

The responses reflect the complexity of the machinery of government arrangements for the Department of Work and Income (DWI). More importantly, however, the department operates in one of the most complex policy and service delivery environments, where problems are deep-rooted and long-standing, and solutions are elusive, and individual interventions are not easily linked to changes in social outcomes. The lives of a third of New Zealand's population are affected by the department.

The diversity of respondents' opinions around establishment, integration and the subsequent performance is an indication of the difficult operating environment of the department.

Respondents saw the integration and establishment of the new department as an enormous task, particularly in the short timeframe allowed and with concurrent substantial policy change. The subsequent addition of further responsibilities may have made effective performance in some areas unrealistic.

The process of integration is believed by those involved to be have been difficult. This was exacerbated by sometimes difficult relationships between the parent departments and the Integration Transition Team.

The department is seen to be focused on internal management, to the detriment of external relationships. Respondents state that if these crucial stakeholder relationships are not nurtured there is a risk to the department that it will not be able to contribute to the delivery of the outcomes Government expects.

Many respondents acknowledge that in recent times the department is making more effort in building relationships, mainly within the Public Service. Some respondents report positive working relationships with the department, whilst others indicate difficult interactions.

There is some confusion around policy boundaries between the department, the Ministry of Social Policy and the Department of Labour on the part of other agencies. Related to this is a need for the department to be allowed to develop its policy capability.

The majority of respondents feel that a high level of stability and certainty in the social service policy and delivery area would enable the department to focus on achieving Government's goals in this area.

Many believe that the department is capable of achieving high quality performance, albeit with changes to its operating style. These changes focus on moving from a somewhat inflexible and doctrinaire approach to management, to one that reaps the benefits of diversity of opinion and approach. This includes encouraging flexibility of delivery solutions, inclusion of Maori and community groups in decision making processes, an appreciation of complementary working styles and the necessity of healthy debate and discussion in order to achieve positive, whole of government outcomes, particularly for Maori.

Context

Cabinet approved a Ministerial review into the Department of Work and Income (DWI) on 14 February 2000 [CAB (00) M 4/11 refers].

The review was tasked with answering nine questions outlined in the terms of reference for the review. The Terms of Reference also stated that the review should "draw on the views not only of Ministers and the management and staff of WINZ, but also of a range of clients and stakeholders around the country both within the Government and Social Sector."

Purpose

The review team sought to obtain a view of the policy and operational environment in which the department operates, including integration. The team also asked for any suggestions for improvements to the capability and performance of the department and associated organisations that could contribute to the achievement of Government's outcomes in the social service delivery area. The questionnaire that formed the basis for responses is attached as Attachment One.

Interviews with departmental and Crown entity chief executives were carried out in tandem with the written questionnaire. This paper should be read in conjunction with that analysis.

Categories of Respondents

The are three types of respondents to the questionnaire:

• Central/monitoring agencies (State Services Commission, Department of the Prime Minister and Cabinet, Te Puni Kokiri)
• Purchase/policy advisers (Ministry of Social Policy, Department of Labour)
• Departments/Crown entities with an operational/policy relationship with DWI (Department of Child Youth and Family Services, Ministry of Youth Affairs, Ministry of Education, Inland Revenue Department, Ministry of Justice, Ministry of Women's Affairs, Ministry of Health, Department of Corrections, Skill New Zealand).

Categories of Response

Two departments provided individual answers to all questions in the survey. The majority of respondents categorised their answers under thematic headings, based on the nature of their relationship with the department. A small number wrote a general response. The depth of responses reflected the level of involvement each respondent has, ranging from minimal operational policy implementation through to strategic and operational policy and performance management relationships.

Summary of Feedback

The responses have been analysed under the six headings of the questionnaire, not individual questions.

i.    Basis and management of relationship

As stated above, the 14 respondents' relationships with the department cover the continuum from ad hoc contact on policy implementation exercises to formal performance monitoring and policy development relationships.

Relationships are described as improving in quite recent times, albeit from a low base. The department is seen as isolationist, with very little contact at senior management level across the Public Service. There is a perception by other agencies that the collective interests of government do not have priority with the department. Relationships have been neglected but some are beginning to be re-established.

Some departments reflected that the merger and the need to achieve enormous structural and policy implementation change on a compressed timetable could have caused this inward-looking focus.

There are a number of areas where relationships are good. Regionally these tend to be because of the strength of personal relationships. The existence or absence of memoranda of understanding does not seem to contribute to the quality of relationships.

Nationally a range of operational policy implementation relationships are positive. In these areas inter-agency relationships are professional and productive. Again this is not because of the presence of any existing memoranda of understanding.

The majority of the inter-agency relationships, however, are framed by the perceived attitude of the department. This can best be described as an inflexible "this is the way we do things around here" attitude, rather than a consultative, collective approach. Some relationships are conducted bi-laterally, where other agencies see benefits in a wider, cross-departmental approach.

A comment that was made by a number of respondents, and one which has an impact on the quality of the relationships between agencies, is the lack of clarity around responsibilities for policy in the social sector. It is not clear what is operational policy and what is not and therefore not within the ambit of the department. Some respondents felt a greater policy capability within the department and greater clarity around the responsibilities of DWI, the Department of Labour and the Ministry of Social Policy would be useful and go some way toward improving relations with the remainder of the agencies involved in policy development.

ii.    Origins and Purpose

There is a high level of understanding about the intended outcomes behind the establishment of the department (reducing the number of long-term unemployed and increasing the number of job-seekers in community work and training). These were cited from the initial Cabinet papers and the Coalition Agreement between the National and New Zealand First parties.

There is disagreement in two areas that lie behind the outcomes. The first is around problem definition - what problem(s) the integration intended to solve. One department was of the view that the solution was designed with an unclear problem definition in mind. The second area of contention is whether a structural solution was the right answer to the problem(s) as identified.

International models were used in developing the organisational design of the new agency, although there are differences of opinion as to the preferred model, and the amount of emphasis placed on replicating international models in the New Zealand context. The United Kingdom, Australia and various state-level organisations in the United States are cited as models. Views range from acknowledgement that the models were looked at but the new agency was devised from a New Zealand perspective to the observation that differing models have been adapted.

The majority of respondents favoured the departmental model as the most appropriate organisational form for the new agency. One department preferred the Crown entity form because of the perceived fit with the policy/delivery split model. All departments that contributed to the original organisational design work have not moved from the views proffered at the time.

The achievability of the policy objectives inspires a wide range of views. The opinion of all respondents is that the compressed timeframe between the decision to integrate the four separate units into one organisation and the start-up date of 1 October 1998 placed enormous pressure on those involved. Any risks identified in the integration process were exacerbated by the short timeframe. The differences in opinion on achievability of the policy objectives cannot be separated out from a discussion around the integration process, which takes place below.