Servants of the public

The Public Service
Non-State Sector Act entities
State-owned enterprises
Crown entities

The role of the Public Service, updated from the State Services Commission 2000 briefing.

The State sector includes the New Zealand Public Service, Crown entities, and State-owned enterprises (SOEs). The State sector also includes a number of other agencies and departments that are outside the Public Service.

The Public Service

The Public Service is defined by section 27 of the State Sector Act 1988 as “...the Departments specified in the First Schedule to this Act”. New departments can be added to the Schedule, by Order in Council, but may be removed only by legislation.

At the turn of the century the Public Service employed fewer than 30,000 staff (in terms of full-time equivalents). While this was the first time that this has occurred since the Second World War, in recent years the transfer of functions to other parts of the State sector, rather than an overall downsizing, has largely driven the decrease in staff numbers. Policies to strengthen the core Public Service led to a 5% increase in staff numbers in 2002.

In 2002, there were 36 government departments.

Non-State Sector Act entities

Certain agencies, notably the New Zealand Police, the New Zealand Defence Force, the Parliamentary Service, Office of the Clerk, the Parliamentary Counsel Office, New Zealand Security Intelligence Service and the Government Communications Security Bureau are departments in terms of the Public Finance Act 1989, but are not part of the Public Service under the State Sector Act 1988. Officers of Parliament – the Office of the Ombudsmen, the Parliamentary Commissioner for the Environment and the Auditor-General – are not part of the Executive, although they report under the Public Finance Act 1989 as if they were departments. The Reserve Bank is another very significant organisation that lies within the broadest definitions of the State sector but is not a department under either Act.

State-owned enterprises

State-owned enterprises (SOEs) are government-owned organisations operating on commercial lines and are companies under the Companies Act 1993. They are required under statute to operate as successful businesses and, to this end, to be as profitable and efficient as comparable businesses in the private sector. The Government’s interest in these is substantially in their ownership. The Government may purchase services from SOEs, generally on the same basis as other purchasers.

The State-Owned Enterprises Act 1986 specifies principles governing the operation of SOEs, authorises the formation of companies, and establishes accountability requirements. SOEs are named in the First Schedule to the Act. Since 1986 there have been numerous changes to the First Schedule as new SOEs have been added and as others have been sold.

The Government’s shareholding interests are supported by the Crown Company Monitoring Advisory Unit, which is part of the Treasury.

Crown entities

Crown entities are those organisations or officers listed in the Fourth Schedule of the Public Finance Act 1989. The Fourth Schedule can be amended to add to, remove, or change the name of a Crown entity by Order in Council.

The Public Finance Act establishes financial management and accountability provisions for the array of bodies set up by the government or by legislation that depends wholly or partly on public funds. There are about 2,800 Crown entities, including boards of schools and nature or recreational reserves.

Crown entities generally have regulatory, purchasing or service provision functions. Most are run by boards, which appoint chief executives with responsibility for settling terms and conditions for employees.

Some Crown entities are companies, subject to both the Companies Act 1993 and monitoring on the Government’s behalf by the Crown Company Monitoring Advisory Unit.

The Inland Revenue Department is immediately familiar to most New Zealanders; The Ministry of Economic Development touches the lives of ordainary citizens in more subtle ways.