Strategic priority 2: Increasing our impact with public organisations
As the auditor of every public organisation, the Auditor-General is in a unique position to influence improvements in performance and accountability practices across the public sector. This includes raising the profile of issues that we observe from our work and promoting good practice in matters where we have particular interest and expertise.
Our priorities for increasing our impact in public organisations are:
- influencing more meaningful and useful performance reporting;
- increasing the focus on value for money;
- promoting a long-term view; and
- supporting strong organisational integrity practices.
Influencing more meaningful and useful performance reporting
Performance reporting that clearly shows what was intended and what has been achieved with public spending is crucial for maintaining trust and confidence in the public sector. However, public organisations’ current reporting does not consistently enable Parliament, councils, or the public to fully understand or hold them to account for the value New Zealanders are getting from this spending.
We want to see an improvement in how well public organisations report on their performance. The work proposed below supports this aim.
Finance and Expenditure Committee inquiry into performance reporting and public accountability
The Finance and Expenditure Committee has initiated an inquiry into performance reporting and public accountability and how these could be improved.
The Committee has confirmed its terms of reference and appointed the Office as an advisor. It plans to issue a discussion document in August 2025 and a final report in May 2026. In 2025/26, we expect to focus on supporting the Committee’s work.
Supporting better performance reporting
We will continue our wider work programme to support improved reporting by public organisations.
Our annual audit work includes assessing for some public organisations whether they have the right environment, systems, and controls underpinning their reporting on their performance. We then issue “ESCO” (environment, systems and controls) grades.
In 2024/25 we enhanced the ESCO grading approach for performance reporting. We will now grade the meaningfulness and appropriateness of measures separately from the systems for ensuring that the reported information is accurate and reliable. We will pilot this new approach in 2025/26, starting with the largest organisations that are responsible for the most significant share of public funding and services.
As well as the ESCO grading, we will engage more closely with those organisations, within the limits of our audit independence, to help them report more meaningfully on their performance.
Our insights into organisations’ performance reporting, and any improvements needed, will also inform our advice to select committees for their Estimates and annual review scrutiny.
Increasing the focus on value for money
Public organisations should be focused on value for money. We want to see public organisations plan, measure, and report on the benefits of their spending. Cost inflation and tighter budgets mean that public organisations need quality information to inform investment decisions and budgets. This includes improving the quality of business cases for significant investments and improving the systems and processes that support investment and operational decisions.
We will soon report on the different ways public sector value for money is thought about and measured nationally and internationally. Our report looks at how public organisations and other audit offices approach the assessment of value for money, and identifies good practice.
In 2025/26 we will expand on this work by examining how value for money is considered in the following areas.
Examining how value for money is reflected in the practices of public organisations
We intend to look at the different ways that public organisations consider and measure value for money at different stages of an investment, such as planning, procurement, and processes for ensuring the intended benefits of projects are achieved.
Strategic financial management
Public organisations need to understand their costs and cost drivers and how these affect the sustainability of services and the achievement of outcomes. Knowing this helps public organisations understand value for money and make good decisions about where and when to invest, reprioritise, or be more efficient.
This goes beyond the assessment of new spending initiatives (which typically make up less than 2% of the Government’s total operating budget in any one year) and reporting obligations (which can be tied to the current structure of funding rather than what is the best use of funding for achieving outcomes).
We are interested in how well public organisations perform this strategic financial management function.
| Planned work: Strategic finance – how well set up are public organisations to plan for and achieve value for money? |
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In 2025/26, we will complete a performance audit looking at strategic financial management in a selection of public organisations. We will look at organisational structures and the systems and processes that help those organisations to understand the costs and value of services. This work will assess how well selected public organisations consider whether their baseline spending is still the best use of public funding and how well they position themselves to achieve better value for money when there are cost pressures or changing objectives. Our work will provide an independent view of how well these organisations:
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Procurement in local government
Councils spend a significant proportion of their revenue on procuring infrastructure, goods, and services. It is critical their procurement policies and practices maximise value for ratepayers’ money.
Some councils’ procurement policies include economic, social, and environmental values as criteria for evaluating tenders. We want to understand how councils apply these value for money criteria in practice.
| Planned work: Value for money considerations in local government procurement |
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In 2025/26, we will carry out a performance audit looking at how councils consider value for money in their procurement policies and practices. We will look at a range of councils that include value for money in their procurement policies and will explore any improved outcomes from taking a value for money approach. This includes examining documentation for a sample of procurements. We expect to make observations on the benefits and challenges that councils have experienced in taking a value for money approach in procurement, including lessons that might be useful to other public organisations. |
Monitoring investments
New Zealand has committed a total of $1.3 billion in climate finance for the period from 2022 to 2025 to support developing countries and communities to build resilience to climate change. The Government has required at least 50% of the total $1.3 billion commitment go to Pacific nations. We are interested in how well the Ministry of Foreign Affairs and Trade (MFAT) understands what is achieved with this funding, and how well it supports recipient countries to make best use of it.
| Planned work: Monitoring of New Zealand’s climate change investment in the Pacific |
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| In 2025/26, we will carry out a performance audit looking at how well MFAT monitors and reports on what is achieved with the funding New Zealand provides for climate change initiatives in the Pacific. We are also interested in how well MFAT understands the long-term challenges that Pacific nations face in translating investment into effective climate responses, and what work MFAT does to assist them. |
Benefits realisation and closing the loop on investment decisions
Benefits realisation is the practice of identifying, analysing, planning for, reporting on, and reviewing benefits over the course of a project to ensure that the intended benefits are achieved. This practice helps organisations to demonstrate that projects provide good value for the money invested. We are interested in how well public organisations carry out effective benefits realisation, and how they could improve their processes for ensuring that major investment decisions represent value for money.
| Planned work: Closing the value-for-money loop in National Land Transport Programme investments |
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In 2025/26, we will start a performance audit looking at the processes of New Zealand Transport Agency Waka Kotahi (NZTA) for assessing the benefits of National Land Transport Programme (NLTP) projects after they have been completed. The NLTP is a three-year programme that sets out how NZTA, working with its partners, plans to invest the National Land Transport Fund to create a safe, accessible, connected, and resilient land transport system. Using a sample of NLTP projects, we will look at how well NZTA checks after the completion of an NLTP project that the expected benefits have been realised, that the project represents value for money, and that any lessons are applied in future investment decisions. |
Good practice guidance on procurement
Sound procurement practices are essential to achieving and demonstrating value for money.
We intend to publish updated good practice guidance on procurement to help public organisations improve their procurement practices.3
Our updated good practice guidance on procurement will be broad and principles-based, with wider coverage than the Government Procurement Rules administered by the Ministry of Business, Innovation and Employment (MBIE). Our guidance will cover:
- central and local government organisations;
- commercial contracts and grants;
- the whole life cycle from business cases to benefits realisation; and
- integrity considerations, such as avoiding conflicts of interest, and connections to our integrity framework, as well as value for money considerations.
| Planned work: Updated procurement good practice guidance |
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In 2025/26, we will refresh our procurement good practice guidance to provide practical, principles-based guidance on key areas, including value for money, whole-of-life costs, and contract management, underpinned by integrity. This work will support improved procurement decision-making throughout the public sector and help strengthen trust in how public money is spent, both in commercial contracts and in grants. |
Promoting a long-term view
New Zealand faces a range of long-term challenges that have implications for public services and government finances. Challenges include adapting to the effects of climate change, changes in demographics, responding to the consequences of historical underinvestment in infrastructure, and tackling persistent inequities. To respond to these challenges, planning and decision-making will need to take a long-term view and will often require co-ordination between and across central and local government.
We want to promote long-term planning in the public sector by encouraging public organisations to use data and information to make decisions that will have better long-term outcomes for New Zealanders.
Commentary on the Treasury’s long-term fiscal statement
Every four years, the Treasury must prepare a long-term fiscal statement. The Treasury’s previous publication in 2021 combined its long-term fiscal statement and its long-term insights briefing. In our commentary, we made various suggestions, including that the Treasury should:
- consider whether to continue to integrate the long-term fiscal statements and long-term insights briefings and how it can more effectively incorporate public feedback;
- continue to develop its modelling approaches;
- consider a wider and more integrated range of future scenarios; and
- broaden the measurement and analysis of financial sustainability.
The next long-term fiscal statement is due to be published in 2025. According to the Treasury, it will explore the implications of the ageing population and climate change for the New Zealand government’s financial sustainability and the choices future governments will face in navigating a financially sustainable path. We will provide commentary on the long-term fiscal statement.
| Planned work: Commentary on the Treasury’s long-term fiscal statement |
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| In 2025/26, we will provide commentary on the Treasury’s long-term fiscal statement, which will also explore and discuss the improvements Treasury has made to how it prepares the 2025 long-term fiscal statement. |
Effective delivery of initiatives in the Government’s growth strategy
A core feature of the Government’s strategy to accelerate growth is to increase tourism with an immediate focus on increasing international visitor numbers back to pre-Covid levels. Tourism is New Zealand’s second-largest export earner, bringing in nearly $11 billion in revenue each year, directly contributing around 3.7% to GDP, and creating nearly 200,000 jobs.
The Government Tourism Strategy (2019) encourages an all-of-government approach to achieve the goal of enriching New Zealand through sustainable tourism growth. To achieve this goal, priority actions include co-ordination across the tourism system and better data and insight.
The Strategy is being led by MBIE with the Department of Conservation (DOC). These two agencies have a leadership role in co-ordinating the Government’s tourism efforts across the public sector.
We are interested in how well MBIE and DOC are supporting effective co-ordination across the tourism system, how well data and information is used to plan for growth in tourism, and how they measure whether significant public expenditure on tourism represents value for money.
| Planned work: How effectively are public organisations working together to progress the Government’s tourism strategy? |
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In 2025/26, we will carry out a performance audit to assess how well public organisations are working together and with Tourism New Zealand and the tourism sector to promote New Zealand as a tourist destination and plan for sustainable growth. The focus is on how well MBIE and DOC are working with each other and with other organisations to lead the co-ordination of tourism efforts across the public sector. This includes looking at how well MBIE and DOC are building meaningful partnerships with tangata whenua and other key stakeholders to shape future growth, manage its impact, and co-ordinate investments. We will also consider how they measure whether significant public expenditure on tourism represents value for money. |
Applying a long-term lens to providing services and achieving outcomes
In recent years, the Auditor-General has been interested in the performance of public organisations in dealing with long-term and seemingly intractable issues. This work has included considering family violence and sexual violence, child poverty, and how disparities in outcomes for particular groups of the population are being addressed.
We have several pieces of work under way that we expect to complete in 2025/26, looking at how well organisations are implementing initiatives designed to grapple with long-term social issues. The work covers public services in the justice, housing, and aged care sectors.
Justice sector
The Government has a target to reduce the total number of children and young people with serious and persistent offending behaviour by 15% by 2029. Youth Aid is an example of an early intervention that aims to divert young people from the courts.
If a child or young person is referred to Youth Aid, they can be given a warning, be given an alternative sanction (such as reparation, an apology to the victim, or community work), receive mentoring, or be referred to Oranga Tamariki – Ministry for Children for a family group conference.
We are interested in how effective Youth Aid is at supporting young people who are at risk of entering the justice system.
| Work under way: Diversion and early interventions with youth across the justice sector |
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| In 2025/26, we will complete a performance audit looking at the effectiveness of Youth Aid’s alternative action plans. |
Housing sector
The Government has set a target to reduce the number of households in emergency housing by 75%. According to data provided by the Ministry of Social Development in February 2025, this target has now been met. We want to understand how this and other changes to support immediate housing needs are being experienced by people seeking support.
| Work under way: Addressing housing deprivation |
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| In 2025/26, we will complete our performance audit looking at the effectiveness of the steps public organisations are taking to improve access to housing support, particularly for those communities who disproportionately experience housing deprivation. This includes looking at how well people’s immediate housing needs are understood and how this informs their connection to appropriate support. |
Aged care sector
Long-term planning in the health sector is critical for ensuring that all New Zealanders can access the support they will need and that the Government can afford this.
It is estimated that by 2034 one in five New Zealanders will be aged 65 and older. By 2050, it may be one in four.
The aged care sector (aged residential care and home and community services that support older people in their homes) is a significant and increasing area of health spending, amounting to about $2 billion annually.4
| Planned work: Long-term effectiveness and efficiency of government spending on aged care |
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In 2025/2026, we will carry out a performance audit looking at how the Ministry of Health works with others to ensure the long-term effectiveness and efficiency of aged care services. This may include how the Ministry of Health ensures that the aged care services are effective, in that they provide quality care that meets the needs of diverse groups of older people and their whānau, or how well it is planning for the future of an ageing population. |
Planning for and responding to extreme weather and emergencies
Long-term planning needs to take account of events that are difficult to predict but have significant impacts when they do occur. Public organisations often struggle to factor events of this kind into their planning. The extreme weather events in the North Island in early 2023 highlighted the need for good planning to deploy protective measures and to facilitate fast mobilisation in emergencies.
We are currently carrying out work looking at flood protection infrastructure. Flooding is New Zealand’s most frequent natural hazard. The effects of climate change also mean that floods are occurring more often and that they are more severe. We are interested in how well councils understand and are planning to manage flood risks.
| Work under way: Flood protection in Waikato and Tasman |
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In 2025/26, we will complete our performance audit looking at how well councils are ensuring that flood protection infrastructure mitigates the risk of flooding from rivers and other inland bodies of water. Our work is looking at how Waikato Regional Council and Tasman District Council work with their communities when deciding on the levels of flood protection each council will provide, and how well they are planning to achieve those levels using flood protection infrastructure. |
To complement our work on flood protection, we now want to look at councils’ planning and preparedness for droughts. Droughts typically occur slowly but can have significant and long-lasting economic, social, and environmental impacts. It is in the public interest at community, regional, and national levels that droughts are well managed to mitigate those impacts and support recovery. This is especially important given the projected rise in the frequency, severity, and duration of droughts.
Councils have responsibilities for managing land use, water and other natural resources, and environmental monitoring. At a national level, the Ministry for Primary Industries (MPI) is the co-ordinating agency for drought risks and is responsible for classifying when a dry period becomes an “adverse event”. The National Institute of Water and Atmospheric Research (NIWA) currently has a role in measuring and monitoring drought conditions. NIWA provides this information to councils and MPI to inform their decision-making about drought planning, response, and recovery.
We are interested in how well councils are planning to manage the impacts of droughts, including how they work with the organisations that have responsibilities at national level.
| Planned work: Looking at planning and preparedness for droughts |
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In 2025/26, we will carry out a performance audit looking at how well a selection of local authorities are preparing for droughts. This includes looking at how local authorities work with other public organisations, such as NIWA and MPI, and use available information to inform their planning and decision-making. We expect our work to identify good practices and ways for local authorities and others to improve how they manage the risk and mitigate the impacts of droughts. |
Better use of data, insights, and community feedback
Using relevant and reliable information is essential to long-term planning and to address challenges such as climate change, inequity, and understanding future demand for services such as health and education.
We are interested in the information public organisations use in their long-term planning, how they obtain or create the relevant information, and how they get input from communities affected by their decisions.
| Planned work: What data and information do public organisations rely on for long-term planning? |
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In 2025/26, we will carry out research on how public organisations use data and information to inform their long-term planning and decision-making. We will identify the performance, integrity, financial, cultural, strategic and other information used by a sample of public organisations to inform their long-term decision-making and how they use it. This exercise could reveal what data and information is available for public organisations to use when they are thinking about the long term, whether there is duplication of effort or fragmentation, and whether available long-term sources of information are being used. |
As well as using data and information, seeking input from affected communities can improve the quality of decisions when planning for the future. Moreover, meaningfully engaging with affected communities throughout a planning process or project demonstrates integrity and helps to preserve social licence.
Many different types of communities, such as Maori, Pasifika and other ethnic groups, rainbow communities, and groups of businesses or residents could be affected by public organisations’ planning decisions.
In 2025/26, we will focus on whether councils engage meaningfully with the disability community. Disabled people have lower levels of trust in public organisations than the general public.5 They also risk being overlooked and their needs neglected when projects to build or change public spaces and facilities are planned and implemented, or when major events are held in those spaces. When disabled people’s needs are not well understood, the barriers that they already face in accessing public services can be compounded. However, if there is meaningful engagement with the disability community at the early stages of planning, and this engagement continues as the work progresses, there is a much better chance that projects will have good outcomes.
We are interested in how the perspectives of the disability community are taken into account when organisations are planning for the long term, in particular when developing public spaces for all communities to enjoy.
| Planned work: Councils’ engagement with the disability community to plan and implement significant projects |
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In 2025/26, we will carry out a performance audit looking at how well councils are engaging with the disability community in the development and implementation of significant projects. We will look at a number of councils to assess how they have engaged with the disability community and how the feedback gathered from that engagement has been used in formulating plans for a range of projects, such as infrastructure, major events and safety planning, and how they continue to engage. We propose to take a citizens’ engagement approach to the planning of this work – by consulting the disability community about the questions on which our audit should focus and then using that information to shape our final audit question and lines of inquiry. |
Supporting strong organisational integrity practices
In 2022, we published our integrity framework, Putting integrity at the core of how public organisations operate. We published an updated edition in 2024 to incorporate a te ao Māori perspective.
In 2025/26, we will continue to focus on support and encourage the governors and leaders of public organisations to meet their stewardship responsibilities and uphold the integrity of New Zealand’s public sector.
Our work also helps maintain the public sector’s international reputation for operating with integrity. Although New Zealand ranks highly in most international measures of integrity, the drop in the country’s Corruption Perceptions Index ranking in 2023 and 2024 shows that public organisations cannot be complacent. Public trust and confidence provide public organisations with the social licence to operate, and operating with integrity is fundamental to maintaining that trust and confidence.
We want leaders of public organisations to set an appropriate “tone from the top” and to:
- take a system approach to integrity issues;
- develop strong organisational practices, including reporting; and
- be accountable for their own ethical leadership.
In recent years we have published a range of work to guide public organisations and promote stronger integrity practices. This work includes an integrity framework, supporting guidance on monitoring integrity in public organisations, online tools, blogs, articles, and reports.
In 2025/26, we will continue to use this work to influence improved integrity practices and will continue to examine specific integrity practices.
Public sector Integrity Day
We will continue to raise awareness of the importance of integrity in the public sector and create opportunities for public organisations to discuss integrity issues. In 2024, we launched the first public sector Integrity Day. It included hosting webinars that featured national and international speakers who addressed current integrity issues. We held a similar event in 2025 and we will run the next event in February 2026. We will also aim to partner with other public organisations and non-governmental organisations to broaden the scope of Integrity Day and the range of activities.
Examining specific practices that support integrity
We regularly monitor integrity practices throughout the public sector. We are currently carrying out an inquiry into the systems and processes supporting the management of ministerial conflicts of interest.
We are also carrying out a rapid audit on how the Public Service Commission has gone about promoting a culture of integrity throughout the public service.
| Work under way: Promoting integrity in the public service |
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In 2025/26, we will complete a performance audit looking at how the Public Service Commission promotes integrity in the public service. According to the Public Service Act 2020, one of the Public Service Commissioner’s functions is to promote integrity, accountability, and transparency in public service organisations, including by setting standards and issuing guidance. The Act also gives the Commissioner the power to conduct investigations and inquiries and write and receive reports that the Commissioner thinks necessary or desirable or that the Minister directs. This performance audit will focus on the Commission’s work on promoting minimum standards of integrity and conduct in the public service through codes of conduct, model standards, and guidelines. This includes looking at how effectively the Commission sets standards and how it communicates and engages with public service organisations to promote those standards. The audit will also look at how the Commission monitors the impact of this work and reports on its performance. |
In 2025/26, our integrity assurance focus will be on bullying in schools (both staff and students). New Zealand consistently reports high levels of bullying in schools when compared internationally.6 The results of our public survey suggested that we should look into this topic. We are interested in what the Ministry of Education and schools are doing to address bullying.
| Planned work: Monitoring and responding to bullying and harassment in schools |
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| In 2025/26, we will carry out a performance audit looking at how well the Ministry of Education and schools are working to prevent and respond to bullying in schools. To understand and prevent bullying, the Ministry of Education and schools need to collect and collate the right information and use it effectively in prevention and response activities. We will examine how these organisations understand the risks of bullying and act to manage those risks. |
Operation Respect
Operation Respect, a programme aimed at eliminating inappropriate and harmful behaviours in the New Zealand Defence Force, was first launched in 2016. In 2020, the Ministry of Defence commissioned an independent review of the programme. The reviewers recommended that the Auditor-General carry out an audit of the New Zealand Defence Force's progress on Operation Respect every two years for the next 20 years.
We intend to carry out regular performance audits to determine how effectively the New Zealand Defence Force is implementing Operation Respect. We are also carrying out regular monitoring work to assess the impact of the actions the New Zealand Defence Force is taking. Over time, this will help the New Zealand Defence Force understand whether the aims of Operation Respect are being achieved.
The first audit for Operation Respect focused on how effectively the New Zealand Defence Force had designed and reset Operation Respect. This, and the first monitoring report that established a baseline for measuring progress, were published in March 2023. In December 2024, we completed the second performance audit looking at the design of NZDF’s new Operation Respect strategy and plan and work being done on the complaints and discipline system.
In 2025/26, we will carry out the third performance audit. It will focus on the leadership commitment and support for the implementation of Operation Respect activities. We will also publish our second monitoring report, which will identify any progress made towards achieving Operation Respect’s outcomes.
| Planned work: Operation Respect performance audit |
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| In 2025/26, we will carry out a performance audit looking at the leadership commitment to Operation Respect. In 2024, we reported that NZDF’s new Operation Respect strategy presented a compelling case for change and a promising programme of work. The success of the work relies on leaders throughout NZDF being committed to the vision and prioritising Operation Respect activities. Our audit will focus on leadership’s communication, capability, and accountability. |
| Planned work: Operation Respect monitoring report |
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| In 2025/26, we will produce our second monitoring report, drawing on interview and survey data. We will use our outcomes framework to assess NZDF’s progress towards creating safe, respectful, and inclusive living and working environments. |
Making greater use of our audit capability to identify and highlight integrity issues
We have been monitoring integrity practices in the public sector through our discretionary work programme over the last few years. We now want to consider how annual audits can better support organisations’ integrity. This will enable the core work of the Office to consistently test and monitor integrity matters in all public organisations.
In 2025/26, we will begin publishing data on public organisations that have repeatedly received qualified audit opinions but are not making an effort to address those issues. When an auditor issues a qualified audit opinion, it means that the auditor considers the information is fair except in a specific area. A history of qualified audit opinions can indicate that an organisation is failing to address issues identified in its audits, which can point to an underlying integrity problem.
In 2025/26, we will also map the components of an organisational integrity framework to the elements of the annual audit, including the requirements of auditing standards. This will give us a view of the extent to which the annual audit currently considers organisational integrity and identify opportunities to enhance aspects of the audit that could better support integrity practices. The work might identify changes we could make to the Auditor-General’s auditing standards.
3: Our current procurement good practice guidance was published in 2008.
4: See “Aged Care Funding and Service Models Review” at www.tewhatuora.govt.nz.
5: See the 2024 annual report of Whaikaha, the Ministry of Disabled People, at www.whaikaha.govt.nz.
6: See “He Whakaaro: What do we know about bullying behaviours in New Zealand?” at www.educationcounts.govt.nz.