Creating a new public body
The day-to-day business of government is conducted through a number of different public bodies. It may be necessary to establish a new body if new functions are created and there is no appropriate existing body that can perform those functions. Different organisational forms will have distinct governance and reporting requirements. They will also have different relationships with the Executive and different relationships and obligations in respect of government policy.
Te Kawa Mataaho Public Service Commission (Te Kawa Mataaho) advises the Government on the design and capability of the State services. Te Kawa Mataaho should be consulted at an early stage when considering whether or not to create a new public body or alter the functions of an existing one. Te Kawa Mataaho website provides detailed information relating to the public sector organisations, and officials should contact Te Kawa Mataaho for further advice.
If a new public body will be a regulator, this chapter should read together with the guidance in 22.3 on linking the role, functions, and powers of the body to the purpose of the regime in which it operates.
A new public body should be created only if no existing body possesses the appropriate governance arrangements or is capable of properly performing the necessary functions.
Creating a new public body involves considerable expense and should occur only if no pre-existing bodies are capable of performing the new function. As part of the internal government consultation exercise, those public bodies that may have an interest in a particular subject and might be capable, with or without amendment to their structure or powers, of carrying out the new functions should have been identified. In most cases, it is more efficient to give new powers to an existing public body, even if it requires further structural change, than it is to create a new body. (For more information on creating a new public power, see Chapter 18).
Legislation should be used to create a new public body only when it is necessary in order to ensure that the body possesses the necessary powers, authority, and appropriate governance arrangements.
Legislation is required to establish a new tribunal, Crown agent, autonomous crown entity, or independent crown entity (see 20.3 for a discussion of these forms). However, it is not always necessary to establish a public service department, a departmental agency, or any of the other organisational forms mentioned below. Whether or not legislation is required must be assessed on a case-by-case basis, having regard to the need to:
- confer a particular function (whether statutory or otherwise);
- grant the entity powers it would not otherwise have by virtue of being a legal person;
- establish appropriate governance and accountability arrangements;
- give effect to international obligations;
- give statutory recognition to the body; and
- establish a statutory officer within a public sector agency who will have the task of exercising specific statutory functions or powers.
Legislation should ensure appropriate accountability arrangements best suited to the relevant functions.
It is usually more efficient and effective to rely on one of the existing organisational forms discussed below. Good reasons must exist for creating a new organisational form from the ground up rather than relying on an existing form.
The organisational forms below have comprehensive governance rules already in place that can be found in legislation. If a new organisational form is created, legislation still needs to replicate the essential features of the existing forms. Many forms also have existing bodies of case law surrounding their operations that may need to be considered when creating any new form.
Sometimes it may be appropriate to adopt an existing proven regime, such as the Crown Entities Act 2004, but to exclude the application of any particular provisions that are not appropriate (see, for example, the provisions of the Heritage New Zealand Pouhere Taonga Act 2014).
Choosing a particular organisational form purely for reasons of administrative convenience or presentation may result in the body not possessing all the qualities (such as independence or governance arrangements) it requires to operate properly or to fulfil its functions.
Public service departments—Public service departments are also known simply as departments or ministries. Some, such as the Crown Law Office and the Treasury, are named differently. Departments are directly accountable to a Minister and are part of government. All public service departments are listed in Schedule 2 of the Public Service Act 2020.
Departments are the preferred form if the body is required to exercise functions inherent to government (foreign policy, immigration, and citizenship), substantive coercive powers (tax collection, prisons), provide policy advice to the Government, or perform multiple functions. If there is a constitutional requirement for ministerial oversight or direct responsibility, or if the subject matter is important to the Government, carries high public and political expectations, and has significant accompanying risk, a public service department is the preferred form. This may involve granting an existing department a new power or creating a new department.
Departmental agency—A departmental agency is part of the host department, but it is headed by its own chief executive who acts under deemed delegation as the employer of those employees who carry out the departmental agency’s activities.
Departmental agencies are designed to carry out a clearly defined set of services or operational or regulatory activities under autonomous management, but within the policy and resource settings of a host public service department. The choice of a departmental agency can offer a preferable alternative to establishing a separate department or Crown entity, and offers the benefits of maintaining system coherence and avoiding the fragmentation and costs of separate agencies.
Crown entities—Crown entities perform much of the operational business of government and are governed by the Crown Entities Act 2004. They are usually the appropriate form when there is a compelling need to have the function performed at arm’s length from Ministers or under the authority of a governance board. Crown entities can take a variety of forms, each of which vary slightly from each other in respect of their legal form, function, source of funding, and their relationship with Ministers:
- Crown agent (CA)—This form is appropriate if the body is required to give effect to government policy. A CA has a large degree of ministerial oversight.
- Autonomous Crown entity (ACE)—This form is appropriate if the body is required to have regard to government policy as one of a number of relevant factors. An ACE can still have a large degree of ministerial oversight.
- Independent Crown entity (ICE)—This form is appropriate if it is important that the body has greater independence from Ministers to preserve public confidence in the body. The Minister is prevented from directing the body as to how to perform its functions, although the Minister can exert indirect influence through budget monitoring and the Statement of Intent process.
- Crown entity company (CEC)—This form is appropriate if the functions are both commercial and non-commercial in nature but not as clearly defined as may be needed for a State-owned Enterprise.
- School board of trustees—This form is appropriate if a new State school or State-integrated school is created.
- Tertiary Education Institution—This form is appropriate if a new university, polytechnic, wānanga, or institute of technology is created.
Schedules 1 and 2 of the Crown Entitles Act 2004 contain examples of CAs, ACEs, ICEs, and CECs.
State-owned Enterprise (SOE)—An SOE is designed to be run as a commercial enterprise and be independent of government influence over the SOE’s day-to-day operations. The Government is the sole shareholder and is therefore able to ensure that the business is run according to the values and interests of the community in which it operates.
SOEs are governed by the State-Owned Enterprises Act 1986.
An SOE may be the appropriate form if there is an identifiable commercial objective and the body can operate as an efficient and profitable business.
Mixed ownership model company—A mixed ownership model company can be created if the Government sells minority shares (up to 49%) in an SOE. The Government retains control as the majority shareholder and the company ceases to be an SOE. It is also possible to create new companies with the Crown as majority or minority shareholder from the outset.
Officer of Parliament—An Officer of Parliament is accountable to the House, not to Ministers. This organisational form is used for roles that act as a check on the Executive’s use of power and resources. However, in performing that function, an Officer of Parliament must only discharge functions that the House of Representatives, if it so wished, might carry out. Offices of Parliament are rarely created; at present only three exist.
Public Finance Act 1989 body (Schedule 4 and 4A)—If, due to its particular distinctive features, a body does not comply with all of the requirements of the Crown Entities Act 2004, that body may be listed in Schedule 4 or 4A of the Public Finance Act 1989.
Interdepartmental Executive Board – A board consisting of public service chief executives from a range of portfolio areas responsible for dealing with complex issues that have impacts and policy levers that sit across a wide range of portfolio areas.
Interdepartmental Venture – A distinct organisation within the public service akin to a department. Rather than being headed by a chief executive, an interdepartmental venture has a board of chief executives. These chief executives are made up of the existing chief executives of departments relevant to the functions of the venture.
Statutory Board – Statutory board means a body corporate established by or under written law to perform or discharge any public function under the supervisory charge of a Ministry or organ of state.
Te Kawa Mataaho maintains an up-to-date list of all the organisations in the State Sector, categorised by their organisational form. It has also produced guidance on how to identify the organisational form that is most appropriate to the particular functions concerned.
 The Offices of Parliament are the Office of the Auditor-General, the Office of the Ombudsmen, and the Office of the Parliamentary Commissioner for the Environment. See New Zealand Parliament Offices of Parliament.
Legislation should create a new tribunal only if it is inappropriate to give new powers to an existing tribunal and no other court, tribunal, or other specialist body is better placed to exercise the power.
Creating new tribunals is complex and involves considerable start-up and ongoing costs. Creating a new tribunal should be a last resort and only be considered if no other viable option exists.
A tribunal may be the appropriate body to determine questions or disputes that affect people’s rights, particularly if an independent assessment of facts and the application of specialist judgement or legal principles are required. Proceedings before a tribunal are generally more accessible and cost effective and allow greater scope for individual and public participation than proceedings before a court. The procedures adopted are generally flexible enough to enable non-legally qualified people to represent themselves.
Any new tribunal should have, as a minimum:
- actual and perceived independence from the Executive, in particular, any department or agency that is likely to appear before the tribunal or that conducts an investigatory function relevant to the matter before the tribunal;
- members appointed in accordance with set criteria (such as minimum qualifications) including a requirement to appoint at least one legally qualified member;
- a clearly defined jurisdiction, usually in a specialist field;
- a procedure appropriate to the subject matter of the dispute and flexible enough to accommodate the range of parties likely to come before it;
- powers necessary to perform its function and ensure a fair hearing, such as powers to adjourn, summons witnesses, require the production of documents, administer oaths and affirmations, take sworn evidence and, in appropriate cases, close proceedings and suppress evidence or identities (the powers given to inquiries under the Inquiries Act 2013 may provide a suitable precedent); and
- a right of appeal to a court of general jurisdiction (see Chapter 28).
The Ministry of Justice should be consulted before any substantive policy work is undertaken to create a new tribunal or alter an existing tribunal’s powers or functions. The Ministry of Justice has produced detailed guidance for departments that are considering whether to create a new tribunal or improve an existing tribunal. The guidance provides the starting point for any department that is considering creating a new tribunal.
 Ministry of Justice Tribunal Guidance—Choosing the right decision-making body; Equipping tribunals to operate effectively (2015).
All public bodies should be subject to the Ombudsmen Act 1975, the Public Audit Act 2001, the Public Records Act 2005, and the Official Information Act 1982 (or the Local Government Official Information and Meetings Act 1987).
The Acts discussed in this section are key mechanisms by which government bodies are held accountable for their activities. They should apply to all new bodies and existing bodies unless there are compelling reasons for them not to. The Ministry of Justice, Te Kawa Mataaho, the department that administers the particular Act, and any agency with operational responsibilities under the particular Act (departments and agencies identified below) should be consulted when considering whether to apply the following Acts to a government body:
- The Ombudsmen Act 1975, the Official Information Act 1982, and the Local Government Official Information and Meetings Act 1987—The Department of Internal Affairs and the Office of the Ombudsman;
- The Public Audit Act 2001—The Treasury and the Office of the Controller and Auditor-General; and
- The Public Records Act 2005—The Department of Internal Affairs and Archives New Zealand (Te Rua Mahara o te Kāwanatanga).