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Report for the Ministry for the Environment - Manatū Mo Te Taiao

Performance Improvement Framework

July 2018

Introducing the Ministry for the Environment’s Lead Reviewers

Jenn BestwickJenn’s public and private sector experience has involved working in consulting, management and governance roles. Jenn currently works across sectors as diverse as Science and Innovation, Education, Local Government and Primary Industries.

Jenn is on the Boards of Southern Response Earthquake Services, Development West Coast Advisory Body and Tourism New Zealand. Jenn chaired the ARA Institute of Canterbury through its recovery from the Canterbury Earthquakes and was previously on the Board of the New Zealand Qualifications Authority.

Jenn has participated in PIF Reviews of Education New Zealand, Ministry of Foreign Affairs and Trade and the Ministry of Health and was involved in the review of the Environmental Protection Agency, the CRI core funding review and NIWA and ESR Four Year reviews, on behalf of shareholding Ministers.

Lester Levy

Lester has experience as a Chief Executive, entrepreneur and Chairman across the public and private sectors. His roles have involved health, transport, biotechnology, film and television, pharmaceutical, engineering and software sectors coupled with academic interests in leadership and organisational performance. Lester is the Chair of Auckland Transport, Tonkin+Taylor and the Health Research Council of New Zealand. He is a member of the Ministerial Advisory Group on the Health System. He has previously served as Chair of Waitemata, Auckland and Counties-Manukau District Health Boards. He was the foundation Chief Executive of the New Zealand Leadership Institute (University of Auckland) and is an Adjunct Professor of Leadership at the University’s Business School.

Lester has participated in PIF Reviews of New Zealand Trade and Enterprise, the Ministry for Primary Industries and the Ministry of Business, Innovation and Employment.

Published July 2018. ISBN 978-0-478-43483-5 (Online) Web address: www.ssc.govt.nz/pif-reports-announcements

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Contents

Accepting the Challenge 3Ministry for the Environment’s Commitment 4Central Agency Support 10

The Challenge 11Background 12Four Year Excellence Horizon 13Performance Challenge Details 21What will Success Look Like? 27

Strengths and Opportunities 29Overview 30Strengths and opportunities in detail 32

Appendices 52Lead Reviewer Acknowledgement 53About the Ministry for the Environment 54Framework Questions 57Ratings Scale 58Stakeholders Interviewed 59

Performance Improvement Framework – Report for the Ministry for the Environment

http://www.ssc.govt.nz/pif-reports-announcements

The Performance Improvement Framework (PIF) enables State Service leaders to identify opportunities for improvement, building positive outcomes for New Zealand.

The PIF has a forward looking focus on opportunities for improved performance in the face of future challenges.

The framework is designed specifically for agencies in the New Zealand state sector. PIF Reviews are a valuable tool that helps agencies drive organisational change. Change that will improve future performance, resulting in the delivery of better public services.

A PIF Review is led by independent reviewers with significant leadership experience across New Zealand’s public and private sectors. Their third-party perspective helps agencies to stimulate ‘new thinking’ amongst senior leaders as they grapple with the critical issues and challenges that lie ahead for their agency.

The review is a future-focussed exercise. It considers the question - what is the contribution New Zealand needs from this agency? Taking a four-year horizon encourages medium-term strategic thinking and helps agencies have a clear vision of their future contributions. Then reviewing current capability against future goals, it evaluates the agency’s preparedness for the future.

Each PIF Review is a published document that supports transparency and sense of accountability to the people of New Zealand.

Peter Hughes

Performance Improvement Framework – Report for the Ministry for the Environment 1

Four-year Excellence HorizonWhat is the agency’s performance improvement challenge?

Delivering Core BusinessIn each core business area, how well does the agency deliver value to its customers and New Zealanders?

In each core business area, how well does the agency demonstrate increased value over time?

How well does the agency exercise its stewardship role over regulation?

Delivering Government PrioritiesHow well is the agency responding to government priorities?

Performance Improvement Framework

Organisational ManagementHow well is the agency positioned to deliver now and in the future?

Purpose, Vision and Strategy

Leadership and Governance

Values, Behaviour and Culture

Review

Leadership and Direction

Engagement with Ministers

Sector Contribution

Leadership and Workforce Development

Management of People Performance

Engagement with Staff

People Development

Asset Management

Information Management

Financial Management

Risk Management

Financial and Resource

Management

Customers

Operating Model

Collaboration and Partnerships

Experiences of the public

Delivery for Customers and

New Zealanders

Relationships


Accepting the Challenge

In this section:

Ministry for the Environment’s Commitment Central Agency Support

1

Performance Improvement Framework – Report for the Ministry for the Environment 3Performance Improvement Framework – Report for the Ministry for the Environment 3

Ministry for the Environment’sCommitment

Navigating in a new wayWe live in one of the most incredible places on earth, and our natural environment is Aotearoa’s greatest taonga. It shapes where we live, the way we make a living and the customs and activities we value as New Zealanders, from walking, tramping and fishing, to riding a bike, going to the beach and tending mahinga kai.

But our environment is under pressure. MfE and Statistics New Zealand’s environmental reporting shows we are reaching bio-physical limits, and many of our native plants and wildlife are under threat. From a Māori perspective, the mauri, or life force, of our land and water is being compromised.

Our job is to help New Zealanders navigate these issues. We are also responsible for advising on New Zealand’s system for managing natural resources, including rules and policies that regulate activities on the land and sea, and the growth of our towns and cities. The way the built environment supports our quality of life, and affects our natural environment, is a priority for us.

In addition to serving the government of the day, we have a stewardship role. MfE is required to think decades ahead, recognising that typically, the full environmental implications of the choices we make today only become clear generations later. We play an important part in helping the Crown to fulfil its commitments as a Treaty partner, through relationships with Māori. We also help to inform, and meet, New Zealand’s international environmental commitments.

It is more important than ever before that MfE extends its reach and impact – that we work together with agencies, local government, business and community groups alike to ensure our grandchildren have the kind of opportunities and quality of life we have cherished for generations. New Zealanders are passionate about the environment and there are deep social, cultural and economic implications to the solutions available to us.

Recognising the urgency to turn things around, over the last few years we have set a new and challenging course. We revisited our organisational purpose and commenced a programme of change, putting a stronger emphasis on the connection between New Zealanders and the environment. We have adopted a new strategy that puts a much stronger focus on working with others, to bring in more sophisticated systems thinking to make sure we’re getting to the heart of problems and that we identify practical solutions, including alternatives to traditional policy options.

Our aim is not only to halt the negative trends we see but to start increasing the integrity and value of our environment. This will require a paradigm shift, from seeing the environment as an ‘externality’, to an asset that lies at the heart of our wellbeing and way of life and is managed accordingly.

We implemented a new environmental reporting programme, providing increased transparency on the state of our environment and making data more accessible. As well as helping to inform public debate around environmental issues, this is creating a platform for the Ministry and others to make connections and come up with innovative solutions.

Our aim is not only to halt the negative trends we see but to start increasing the integrity and value of our environment.

Photograph courtesy of MfE



The PIF Review has been an important checkpoint on progress. We asked the Reviewers to test our ambition and change in approach and to go beyond the normal four-year PIF horizon, thinking about what the future might hold 10-15 years from now.

Refitting the wakaThe message we have taken from the Review is that we are on the right track. Our purpose of making Aotearoa New Zealand the most liveable country in the world resonates, our strategy is on the mark and we have the leadership and commitment of our people to take it forward. There’s a long way to go to make the strategy a ‘lived reality’ but the case studies in this Report highlight some early successes.

There is no scope to slow down the pace of our organisational change or lessen our resolve to address the challenges facing our country and our environment.

We need to be innovative and mobilise New Zealanders to achieve a shift in natural and built environmental outcomes and achieve our shared goals. This is where our Policy Plus approach will pay dividends as we bring in more sophisticated techniques to deal with increasing and emerging problems.

And we hear the message to go further, faster: to accelerate our transformation.

Driving this change requires an ongoing lift in the capability of the Ministry as an advisor to Government and leader of New Zealand’s environmental management system. We’ll have to take our analysis and advice to another level, and get better at drawing on the expertise and resources of others.

With this in mind, alongside our work on environmental policy, we are reshaping the way we approach our work through our ‘Policy Plus’ and ‘Partnering with Purpose’ strategies. We are investing in our core policy frameworks, our ability to harness data from a range of sources, and our ability to practically apply concepts like natural capital (the country’s natural resources, including air, water, soil and living things) and the circular economy (where resources are regenerated). We have developed a set of new impact measures that improve how we track our delivery against outcomes. And we are looking beyond regulation for different tools to solve problems, underpinning our case with compelling evidence that inspires and focuses action.

Organisational Change Deliverables

6 months 12 months 18 months

1. Key foundational business processes improved (HR, IT and finance)

2. Performance measures embedded

3. New partnerships executive in place

4. Implement Māori capability plan for organisation including how we engage effectively with iwi

1. Prioritised action plan in place to address data gaps to support the delivery of priority operational and policy challenges

2. Shared priorities set with partners, including other government agencies responsible for natural resources

3. Early demonstration projects in partnership with others to deliver policy outcomes nationally and locally.

1. Strategic partnerships and coordinated action are having an impact on priority goals

2. Richer data is strengthening environmental monitoring and reporting systems

3. Compelling analysis and communication are shaping public debate and behaviour change.

Our purpose of making Aotearoa New Zealand the most liveable country in the world resonates, our strategy is on the mark and we have the leadership and commitment of our people to take it forward.

MfE’s Transformation Journey 2018 onwards



We also want to make the most of our position at the centre of the environmental management system. We’re uniquely placed to translate insights from resource users into improvements in the legislation underpinning New Zealand’s environmental performance and help the science system focus on the right things. We’re well connected to the science system and we see opportunities to link data from a range of sources to identify the areas of greatest need and opportunity.

We are deepening connections with other local and central government organisations. We recognise the need for different government agencies responsible for natural resources to be well coordinated. We also need strong partnerships with central agencies. We welcome the State Services Commission’s support for a different vision for the Ministry, recognising that environmental issues are more important to New Zealand than ever, and the need for a fundamental shift in the Ministry’s operating model to get better results. We will keep working with the Department of Prime Minister and Cabinet as we evolve our view of “policy” in future, and work with the Treasury on a range of issues: from how we measure and manage the value of New Zealand’s natural capital, to managing the transition to a low-carbon economy, drawing on each other’s strengths and expertise.

In addition to our work with central and local government, we want to implement new and more impactful ways of working with stakeholders, including iwi, communities, businesses and not-for-profits, around specific, sometimes localised, issues. This will enable us to harness diverse perspectives, develop a wider sense of ownership, and create more immediate action by those best placed to effect change. To help make this happen, we are introducing a new executive position exclusively focused on partnerships.

While we have been investing more in supporting the implementation of government policy, one of the more substantive issues for us will be how we balance our role as an advisor and steward of the environmental management system with the more ‘hands-on’ leader and influencer role described in this report. Connecting more effectively with stakeholders, and directly with New Zealanders, in a sophisticated and nuanced way, will be challenging for a small agency but we are up for it.

As we make these strategic shifts, we have continued to invest in foundational business systems, people and workforce development. We recognise the need for a real lift in the quality of these systems, to give us the base we need to adopt a new operating model, and underpin the basic “health” of the Ministry. Alongside work to strengthen our central people, finance and communications functions, we are taking a fresh look at our workforce strategy, to ensure we are building the capability we need for the future. This includes an ability to knit together data with real-world observations, and a sophisticated understanding of our stakeholders, to provide practical, compelling advice. We also need to invest in our economic and behaviour change capability, and our understanding of mātauranga Māori.


AcknowledgementsWe would like to thank Jenn Bestwick and Lester Levy for the energy they put into the Review, and the many stakeholders from across government, business, iwi, the not-for-profit sector and our staff who contributed. It will only be possible for us to achieve the kind of transformation envisaged in this Report, both for MfE and the wider environmental management system, by working together.

We are also grateful for the talent and tenacity of our people. The last year has been disruptive, with the shift in our organisational direction, the introduction of new ways of working, and an extended period working in temporary premises following the Wellington earthquake in late 2016. We are proud of the way our teams have continued to deliver on a significant work programme despite changes and challenging conditions.

We’re now ready to pick up the pace of change, expand our sphere of influence and leadership and push the boundaries on what a government department can be.

Vicky Robertson

Ministry for the Environment Leadership Team

James Walker Amanda Moran

Claire Richardson

Cheryl Barnes


Acknowledgements


Partnering with Purpose in Action: Climate Change Dairy Action Accord

The Dairy Action for Climate Change (DACC) is a commitment by DairyNZ, working in partnership with Fonterra, and the with support of MfE and MPI, to build the foundation for dairy farmers and the wider dairy industry to address on-farm methane and nitrous emissions over the longer term. The partnership models one of the two key pillars of MfE’s organisational strategy: to Partner with Purpose, working with those best placed to drive action and improve environmental outcomes.

The 2017/18 Action Plan sets the framework for the dairy sector to address biological emissions and to contribute to New Zealand’s transition to a low emissions economy. It is the first stage of a longer term plan to improve dairy farms’ environmental footprint, to understand what dairy can do in conjunction with the wider agricultural sector, plus industry and urban communities, to meet New Zealand’s 2030 gas emissions reduction targets.

The plan includes commitments to build the capability of rural professionals advising farmers through training courses, raising awareness of farmers directly, and pilot projects to improve understanding of dairy farm greenhouse gases. It builds on the extensive environmental protection work already being carried out by farmers on their land, and complements the commitments being undertaken by farmers and dairy companies under the Sustainable Dairying: Water Accord.

MfE played a pivotal role in DACC, keeping the project progressing at pace, helping to set and maintain the level of ambition, and bringing collaborative work approaches. The goodwill and shared aspiration achieved through this initiative has laid the foundation for further collaboration to address emissions in the dairy sector.

The goodwill and shared aspiration achieved through this initiative has laid the foundation for further collaboration to address emissions in the dairy sector.


Energy Efficiency and Conservation Authority, 2017

Policy Plus in Action: Behavioural insights – increasing the uptake of electric vehicles

The transport sector currently accounts for 18.4% of New Zealand’s gross greenhouse gas emissions. Transport emissions have significantly added to New Zealand’s increasing emissions. Projections indicate that by 2020, transport greenhouse gas emissions will be 70.9% above 1990 levels.

The Energy Efficiency and Conservation Authority (EECA) is responsible for delivering a five year information campaign to increase New Zealanders awareness of the environmental benefits and cost savings of electric vehicles. The Electric Vehicles Programme was established to double the number of electric vehicles on New Zealand roads every year until they make up two per cent of the New Zealand fleet (64,000 vehicles by 2021).

MfE is working with EECA to gain insights into customer behaviours and purchasing choices in order to target the campaign effectively. The focus on using behavioural insights is an example of the Policy Plus approach – looking at where there are alternatives to traditional policy and regulatory approaches to achieve environmental outcomes. The team is providing insights into what motivates different types of potential buyers, what they value and how they live, to help them make choices that improve “liveability” and are better for the environment.

The team’s research draws on international experience into the real barriers to the adoption of new or emerging technologies, and the types of evidence and experiences that can help to overcome them. The report is expected in late 2017 and will make recommendations to EECA about how to engage specific audiences such as early adopters, dealerships and corporate fleet managers. It will also offer solutions to address the barriers and biases about electric vehicles, leading to an increased uptake, and emissions reductions, in New Zealand.

Electric vehicles offer the single largest opportunity and a relatively cost-effective way that New Zealand can reduce its transport emissions.


Central Agency Support

This Review highlights the importance of MfE’s role, now and in the future, as stewards of the wider environmental management system, which delivers value for New Zealanders.

The environmental management system consists of the tools, levers, incentives and decision-making frameworks that enable central and local government and New Zealanders to manage natural and built resources, and to prepare for and respond to issues that impact the environment. Although often described as one system, in reality the environmental management system is a grouping of legislative frameworks that have evolved over time, for different purposes, and often in response to specific issues and needs. While the elements of the environmental management system interact with each other, they are not always working towards the same outcomes.

Good environmental outcomes will be the result of the accumulated decisions and actions of all of us – individual, family, firm, whanau, NGOs, iwi, agencies and government. MfE is on the right track to lead the wider environmental management system towards setting in place its purpose of “making Aotearoa New Zealand the most liveable country in the world”. Its commitment in response to this PIF Review indicates MfE is willing to push ahead further and faster.

With the environmental management system being distributed both horizontally (across government) and vertically (private sector, territorial, regional and central government), many of the decision rights and levers sit with others. MfE’s role as system leader – to synthesise and to choreograph – means it must influence the actions and collaborative efforts of others. We agree with the Lead Reviewers that it is not MfE’s scale that will matter, but rather its ability to influence. That will come down to its reputation for:

• bringing valuable information, analysis, insights and intellectual grunt to the table

• engaging and partnering superbly with others and for the quality of engagement and participation it incites from others in the system.

MfE faces some immediate challenges which the central agencies can assist it to resolve:

• further developing its policy capability, particularly in the complex nexus between environment, society and the economy and including through collaboration with key agencies, including the central agencies, on a range of policy issues drawing on each other’s strengths and expertise

• quickly ‘tidying’ up some of its ‘back office’ systems, processes and capability

• in the short-term, accessing skills and experience that it does not have in its capable and talented leadership team

• enrolling the skills and capabilities of stakeholder/partners in government and beyond to begin to resolve some of the gnarly issues we face environmentally and to find innovative ways for those people to work together.

We support the Ministry’s ambition and vision for New Zealand’s environment and natural resources.

This Review highlights the importance of MfE’s role, now and in the future, as stewards of the wider environmental management system, which delivers value for New Zealanders.

Peter Hughes State Services Commissioner

Gabriel Makhlouf Secretary to the Treasury

Andrew Kibblewhite Chief Executive Department of the Prime Minister and Cabinet


The ChallengeIn this section:

Background Four Year Excellence Horizon

Challenge 1 Challenge 2 Challenge 3 Challenge 4

Performance Challenge Details What will Success Look Like

2


Background

Accordingly and at MfE’s request, this PIF Review has been tailored to respond to MfE’s specific context beyond the normal PIF framework. There are two key elements to this.

The timeframe required to impact on environmental outcomesMfE operates in a very long-term, intergenerational context where being able to demonstrate effects on environmental outcomes may take decades. Examples such as the current water quality issues are the consequence of decisions taken over four decades of land-use (eg, nitrate use) and in some cases more than a century of land-management (eg, deforestation and wetland reclamation). Similar issues arise about climate, coast and oceans.

Taking the long-term nature of many environmental issues into consideration we have focused on both the usual Four-year Excellence Horizon timeline and a medium-term approach of 10 to 15 years. Only by setting its sights on the longer horizon will MfE maintain clarity about its nearer-term horizon and so achieve the environmental outcomes New Zealand seeks.

System leadership and stewardshipMfE has a responsibility to provide stewardship of the Crown’s medium and long-term environmental interests. Furthermore, it has a sector leadership role to lift performance across the State sector and deliver value for New Zealanders. In MfE’s context, this means both the Natural Resources Sector (NRS) and the wider Environmental Management System (EMS). Accordingly this Review refers to MfE’s future role in relation to the NRS and wider system (ie, beyond the traditional boundaries of the organisation) aligned to the medium-term Performance Challenge.

This PIF Review has been undertaken as the stakes for the future of New Zealand’s environment heighten and environmental issues and concerns intensify. The intersection of this high-stakes setting and MfE’s aspirations creates the context for assessing its performance challenge.


Four Year Excellence Horizon

In undertaking this Review we asked: “What is the contribution that New Zealand needs from MfE and, therefore, what is its performance challenge, what would success look like in the medium term (10-15 years) and the short term (four years)?”

“………… MfE’s issue is not one of scale, rather it is more of focus, influence and courage.”

IntroductionAs New Zealand’s growth model approaches its environmental limits, the spotlight will increasingly fall on MfE’s aspirational purpose as government’s primary advisor on the environment. Its vision, to make Aotearoa/New Zealand the most liveable place possible, is highly ambitious and to be successful MfE will need to bring the environmental, social and economic pieces of the jigsaw together, to underpin a resilient and sustainable society, economy and environment.

MfE’s aspiration is that by 2045 New Zealand’s environment and natural resources will be sustainably managed (to improve environmental, social and cultural prosperity), increasing the economic returns from the activities it supports.

In this context MfE’s vision for New Zealand in 2045 is that it will:

• be a low-pollution, low-emission nation where cleaner air, land, water and marine environments, and liveable cities enable people to lead healthy and productive lives. Progressive policy solutions will encourage innovation for low-emission, climate-smart agriculture, transport, energy and urban development. Cleaner production standards will stimulate

innovation, leading to new, clean technologies, which in turn will provide jobs and support export-led, sustainable growth. Companies and communities will be held to account for their low-emission, low-pollution commitments

• be able to withstand and effectively adapt to the impacts and ‘shocks’ of climate change through careful and thoughtful preparation, which will lead to effective responses to more frequent natural disasters, volatile weather patterns and other long-term consequences of climate change. The environment will be healthy, well managed and resilient playing a key role in reducing vulnerability to climate change impacts. Climate resilience will be integrated into urban planning and infrastructure development

• have strong and resilient relationships between the Crown and iwi, with iwi having successfully developed its natural resources in ways that will make significant contributions to Māori communities as well as national growth, consistent with Matauranga Māori values. The Crown will actively partner with iwi/hapū to deliver kaitiakitanga, learning from iwi about what works and diffusing these learnings

• have government and non-

governmental groups working seamlessly together to deliver environmental outcomes. Social and environmental processes will be complementary, enabling the public to engage in decisions about the environment and natural resources, which will enhance the speed and effectiveness of resource management system decision-making.

Profound international and domestic shifts are recalibrating the environmental dialogue. At the highest level it is no longer a matter of making trade-offs between economic and environmental outcomes. Rather, given New Zealand’s dependence on primary industries and tourism, the environment is the foundation on which society, culture and the economy are built.

In the urban space resource management processes and the shift to a low-carbon economy will emphasise the need to recognise communities being productive contributors to economic prosperity and achieving social and environmental outcomes.


There is an increasing disquiet among New Zealanders that when it comes to the environment, all is not as it should be and the features New Zealanders have valued as indispensable to their lifestyles and cultural identities are at serious and imminent risk. These include but are not limited to the ability to take a feed of fish, hear the birds singing, enjoy camping at the beach or swimming in the rivers and lakes.

International (in particular) and domestic consumers are increasingly concerned about the provenance of the primary products they purchase (especially value added) and the impact of their purchasing decisions on the environment. The consequence is that, from an international consumer perspective, there is really no such thing as a purely domestic New Zealand conversation. When environmental issues such as ‘swimmability’ are highlighted domestically, as occurred recently, that has the very real potential to influence the mindset and potentially the choices of international consumers.

1 Grint, K. (2008). Wicked problems and clumsy solutions: the role of leadership. Clinical leader, 1(2).

The long-run nature of effective environmental management, whether in the natural or built environment requires MfE to develop an aligned (government, agencies, regional and local government, iwi, NGOs and the public) long-term view of the outcomes sought on behalf of all New Zealanders. Concurrently, MfE needs to have a clear line of sight as to what needs to happen to achieve progress over the short and medium term to give effect to its long-term vision.

Synthesis of the Performance ChallengesThere is very broad, but not absolute feedback, that MfE’s performance improvement trajectory is moving in the right direction. The leadership at MfE is held in very high regard by stakeholders and staff, widely valued as visionary, inspiring, determined, innovative, ambitious and empowering. There is a view that although MfE still has a way to go to realise its ambition, its forward-thinking approach heralded through thoughtful concepts, such as Policy Plus (extending beyond traditional policy to solve environmental problems) and Partnering with Purpose (meaningful collaboration) create an insight into a different future MfE.

There is also a view that MfE’s leadership needs more time and space to succeed and may benefit from some increased experiential diversity to round out its collective skills.

The reality is that given the speed at which the environmental, social and economic contexts are moving (and becoming correspondingly more complex), there is not the time or space and therefore an improvement agenda is becoming decreasingly relevant. The dramatic speed at which the context is accelerating simply neutralises improvement gains as they are made and therefore MfE can no longer afford to ‘run the same race faster’ (improvement), but needs to ‘run a new race’ (transformation).

As MfE moves beyond an improvement approach to pursue a transformation agenda, based on system collaboration, it faces ‘wicked’ challenges1 (Figure 1). These ‘wicked challenges’ are beyond the capacity of present approaches and need ‘new eyes’, fresh mindsets, strategies and tactics from a broad range of system participants, otherwise there is the real prospect of getting ‘stuck.’ Essentially, the complexity that MfE faces in dealing with the nexus between environment, society and economy can only be resolved by heightened and sophisticated system collaboration. This has been recognised by MfE in its Partnering with Purpose approach and while there are big shifts still to be made, the journey has begun. A recent example of this is the Dairy Action for Climate Change initiative, which involves MfE working closely with Dairy NZ, Ministry of Primary Industries (MPI) and Fonterra.


This PIF Review identifies that MfE needs to overcome the following four synthesised performance challenges (the nature of each being different):

• tackling paradox

• re-conceptualising the operating model

• revolutionising communication

• fostering system integration.

Transformation will enable MfE to make a clean break from its traditional roots and realise a significant and positive difference to the environment. It needs to do this by bridging the gap between being the ‘policy shop’ of the past and inspiring real and meaningful action and change on the ground – keeping in mind that policy is a means to an end, environmental outcomes are the end.

We noted how frequently MfE was described by both stakeholders and staff as a small (possibly under-powered) agency. Our view is that MfE’s issue is not one of scale, rather it is more of focus, influence and courage. For MfE to be the authentic and legitimate voice of the environment within the State sector it will need to be perceived, not as an advocate, but as the provider of of evidence based truths. It will need to be informing, facilitating and empowering and its leadership will need to be brave and resilient.

Figure 1: MfE’s typology of challenge: ‘Wicked’

T-Shaped MfE’s target

quadrant

Laggard Lone Star

Butterfly

Incr

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tain

ty a

bout

sol

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n to

the

pro

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(co

mpl

exity

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Adapted from: Grint, K. (2008). Wicked problems and clumsy solutions: the role of leadership.

Clinical leader, 1(2).

Increasing requirement for collaboration to solve the problem

High Wicked Challenge

HighLow

MfE



Challenge 1The ‘economy is a wholly-owned subsidiary of the environment’ – managing the tension between the environment and the economy

Nature of this performance challenge: Paradox

Significant parts of New Zealand’s economy, and particularly its export economy, operate off the foundation of the environment. This includes primary industries, tourism, transport, infrastructure and extractive industries, highlighting the importance and relationship between stewardship and the use of New Zealand’s environment and natural resources. There is a real risk of both the environment and the economy being compromised in the future, unless New Zealand moves beyond the ‘economy or the environment’ dichotomy. MfE’s role is crucial in leading and repositioning the conversation and most importantly, taking action to a place where the dependencies between environment and economy are recognised, and effort that enhances New Zealand’s prosperity and liveability is rewarded.

There is a call for MfE to provide much more inspirational thought leadership for a ‘smart’ growth agenda that stimulates the economy while being protective of the environment in the short-term and restorative in the longer term. Reframing the current discussion and approach from essentially an either/or to a both/and is a critical and urgent priority for MfE, as the notion of environmental limits becomes more widely recognised and accepted.

Managing the tension between the environment and economy over the short (today) and long (tomorrow) term, as well as both locally and nationally will require MfE to quickly, effectively and credibly establish itself as the system choreographer (planning and arranging the patterns, movements and steps of other contributors and participants) and ‘intellectual heavy-weight’.


Challenge 2

Getting MfE’s ‘strategy on the page’ off the page – from the ‘back foot’ to the ‘front foot’

Nature of this performance challenge: Operating model

There are many stakeholders who regard MfE’s long-term strategy (2045) as positive, highly ambitious and aspirational but unlikely to be achieved. This reflects a wider scepticism of the public sector’s ability to achieve complex system change, coupled with the fundamental tension between realising short-term priorities and fulfilling the aspirational role of a long-term steward. MfE has developed an elegant approach to breathe life into is long-term purpose and vision through its ‘strategy on the page’ concept.

The performance challenge now is to get the ‘strategy on the page’ off the page. Pivotal to this will be reshaping its current operating model, which is incapable of moving it beyond its more limited policy-centric approach. A reshaped ‘fit-for-purpose’ operating model will be ‘ambidextrous,’ equally capable of operating in the vertical (agency) and horizontal (system) dimensions. Simultaneously delivering excellent results in the individual agency and the cross agency dimensions has been described as T-shaped management (Figure 2). An effective transformation of MfE’s operating model assimilating T-shaped management will greatly support it in achieving the critical performance challenges of stewardship and system synthesis.

In its wider system relationships MfE cannot afford to just be one of a set of agencies dealing with similar issues differently. It is still the view of a number of stakeholders that MfE is constrained by its mindset and approach of designing to a limited notion of policy and regulation that others implement, even though MfE’s leadership has developed a very different vision and strategic intent. This focus on policy may have been appropriate for the past but looking forward it is unlikely to be fit for purpose. A narrow policy-centric paradigm puts MfE on the ‘back foot’ as opposed to an operating model-centric paradigm (based on relationships, dialogue and co-design), which would put it on the ‘front foot’. MfE has progressive ideas in this domain and to make the difference it aspires to, MfE’s leadership needs to pick up the momentum with this change and take open and deliberate ownership of its leadership role.


As MfE recognises, achieving long-term outcomes is now more about effecting behavioural change using a wider menu of options, beyond policy and regulatory levers. For this reason, MfE needs to define a new way of working, continuing its migration from its ‘small policy shop’ mindset to becoming a powerful (regardless of its size) synthesiser and conductor of the system, including ‘the boots on the ground’ of other agencies, regional councils, territorial authorities, NGOs and the public. Reframing, through sophisticated engagement, relationships and dialogue, what is not in its control to what is in its influence will transform MfE from an organisation with a ‘strategy on the page’ to one fully capable of getting the strategy off the page. In doing so it will answer the question, “what has MfE achieved?” This will not be policy but actual concerted action on the ground that makes a difference to the environment. To achieve this MfE will need to develop a highly sophisticated understanding of the direct and indirect levers at its disposal including using its evidence-based environmental monitoring to influence and align stakeholders.

None of this will be possible without MfE first quickly and successfully addressing another performance challenge – resolving its unsatisfactory, sustained high staff turnover and somewhat ineffectual legacy human resource processes and practices.


Figure 2: Cultivating T-shaped management

T-Shaped MfE’s target

quadrant

Laggard Lone Star

Butterfly

Acr

oss

agen

cy

cont

ribu

tion

Adapted from: Hansen, M. (2009). Collaboration: How leaders avoid the traps, build common ground, and reap big results. Harvard Business Press

High

HighLow

Individual agency performance


Challenge 3From science to ‘information’ – facts don’t speak for themselves

Nature of this performance challenge: Communication, persuasion and influence

Communication is the ‘oxygen’ of leadership for MfE. It cannot take all the communication challenges on itself, it needs to network communication through other agencies, regional councils, territorial authorities and NGOs. The communication transformation MfE needs to make is from one-way communication, essentially the transmission of data, often scientific, to a more conscious communication, which will be more effective in changing behaviour. This more conscious communication will make clear choices about the type of discussion, avoiding lesser forms such as debate in favour of superior forms such as dialogue, which build trust, opens a wider set of options and stimulates creative outcomes. Successful communication will allow MfE to effectively build a more expansive social licence.

Storytelling with narratives borne out of evidence-based science will greatly assist MfE in more effective translation of science and other hard data, creating an opportunity to connect more deeply with key stakeholders and, most importantly the public. Positioning MfE as the single, credible and impartial source of truth about New Zealand’s environment will be critical to MfE’s stewardship and leadership role in the wider environmental management system, as well as in building trust and confidence with New Zealanders. It is no longer simply a matter of communications or managing

messaging, it is about managing meaning to support and require behavioural change, which is why the narrative approach is so crucial.

Almost every environmental issue is or will be politicised, therefore MfE needs sophisticated antennae, coupled with a communication capacity and network to respond quickly, both strategically and tactically ‘front-footing’ communication will allow MfE to stop ‘playing catch-up’ in this critical domain and consequently minimise or eliminate confusion, which as noted by a key stakeholder “never wins friends”.


Challenge 4

From proximity to synthesis – between, across and beyond agencies

Nature of this performance challenge: Integration

In clarifying what is core, common and unique between the wider system participants MfE needs to play the synthesiser and conductor role and focus on converging environmental interests, actions and outcomes. System working is currently characterised by the tension between each agency’s own purposes and goals, tending to subordinate the overall purpose and goals.

The agencies in the natural resource system, including MfE, need to recalibrate their perspectives to understand that competition and collaboration are not opposite but complementary and there is every opportunity to more effectively concentrate resources.

The agencies in the wider system, particularly the lead agencies, including MfE, need to modify the way they work together. They need to move from being in proximity but operating within their own paradigms and ‘patches’, each making separate contributions, to being genuinely connected, system outcome focused and inter-dependent. True inter-agency working draws the different agencies into an integrated whole (subsuming their individual interests) by sharing a unifying goal which is greater than the individual agency’s own goals, and has a completely aligned operating model.

It is important for MfE as the synthesiser to drive the wider understanding that system collaboration is not convening meetings, dispatching data/information/

instructions back and forth, joint monitoring or joint reporting, rather it is about achieving outcomes that individual system participants cannot achieve working alone or together in a dysfunctional way.

To reset the system MfE must exercise stronger leadership, which will transform the current system from what one key stakeholder described as “more of a sieve than a system”.

Concluding comments on the performance challenge:

This PIF Report needs to be interpreted in the context of the longer term Excellence Horizon, the very ambitious environmental agenda set out by MfE, the imperative for a system rather than simply an agency approach and the identified need for a transformative over an improvement approach.

This Excellence Horizon is a call for transformation rather than improvement and while this PIF Review endorses MfE’s strategic direction, it calls for MfE to take it further, faster, through deeper organisational change and more profound partnerships with others in search of improved environmental outcomes. The critical elements of MfE’s transformation falls into three clear areas:

• strengthening the foundations by addressing its ‘business-as-usual’ people, policy and process issues

• wearing its stewardship responsibilities with pride and courage

• unapologetically taking leadership of the NRS and wider environmental management system and setting a transparent and enduring agenda.

This PIF Review places a strong emphasis on stewardship, with a need for MfE to have a clear, independent, long-term view that is persuasively communicated as shared momentum is built towards achieving meaningful long-term environmental outcomes.

In a practical sense, this will include both strong intellectual leadership, supported by evidence, enduring clarity and focus, consummate storytelling and previously unseen system collaboration to drive change on the ground, including direct engagement with the New Zealand public.

In the next section we provide a more detailed description of the challenges MfE faces before describing what success will look for MfE.

Performance Challenge Details

Performance Challenge – Outcomes

Data collection with purpose – a single source of truthA National Environmental Monitoring Framework will be the essential scaffolding for meeting the short to medium-term goals. This Framework will provide the single source of truth about the state of New Zealand’s environment. New Zealanders are increasingly seeking greater transparency about the state of their environment and a lack of consistent, accurate and relevant information results in confusion and misinformation, leading to a loss of confidence. Moreover, the very complex and hyper-connected nature of many environmental issues makes it difficult for the New Zealand public to form a comprehensive picture of the most pressing environmental issues, challenges and opportunities.

Implementing a comprehensive national environmental monitoring network, providing timely, (and in due course real-time), accurate information about the key determinants of the environmental state is an imperative, given the significance of New Zealand’s environment to its national identity, culture and economy. Conceived and designed as a nationally significant database, this network will inform a range of stewardship, kaitiakitanga, legislative, policy, regulatory, investment and social decisions New Zealand will be required to make over the next decades.

New Zealand’s voice for the environment – the public speaks upThere are few things more important to the national identity of New Zealanders than the environment and landscapes, however, currently there is no opportunity for them to have a joined up national discussion about beliefs, aspirations, values and bottom lines for the natural and built environment. Current planning frameworks are at best fragmented and bureaucratic in nature and do not achieve high levels of engagement and participation from the average New Zealander.

The key feedback from the New Zealand public is that what they value about the New Zealand environment, has been undermined or ignored. Examples are not being able to swim in a local river or resource consents approved to establish energy and mining operations. This often results in social license for an activity or industry being severely compromised and in the absence of a coherent discussion or values-based framework, every issue is treated on an issue by issue basis. This is also true for urban environments where the trade-offs between multiple parties and values often compete. Understanding what communities need in a broader sense is important so that local complaints do not derail wider community benefits.

Predictability for investment – the catalyst for confidence When business talks about certainty, they really mean predictability as certainty would mean eliminating all risk, which is neither possible nor desirable. Predictability and confidence go to the heart of any investment, whether in environmental restoration and enhancement, infrastructure or technology research and development. Devising a legislative and regulatory framework that provides increased predictability is critical to secure the investment commitments required to restore and enhance New Zealand’s built and natural environment.

Enhanced confidence and more effective national leadership from MfE with regional and local government will be critical to the design and implementation of a cohesive and integrated planning and management package. Essentially this will require much improved communication and collaboration to cultivate greater respect and trust.


Shared not positional interests – understanding the Māori world view Having successfully achieved settlements with more than 50% of iwi claimants the Crown is now working through how it operates as a treaty partner with those iwi in relation to the provisions of each settlement.

MfE has a critical role in this post-settlement environment owing to the nature of some of the rights and redress responsibilities and obligations in many of the settlements relating to environmental aspects and/or cultural taonga (taonga species, awa, maunga).

In the medium term, individual iwi settlement rights and responsibilities will be fully integrated into the national, regional and local environmental management framework. New Zealanders understanding and commitment to appropriately and proactively engaging with iwi regarding environmental management and the mechanisms for delivering against those expectations will be strong and effective. Iwi will be appropriately resourced to exercise those rights and discharge their obligations.

Science for Solutions – a timely paradigm shift A significant and intentional paradigm shift is required in science and research investment. The historical focus of planning and economic use of the environment has seen science aimed at determining negative impacts, defining limits and identifying proposed mitigations, an approach of rapidly decreasing relevance.

Investment in science and research needs to shift towards solutions and improvement.

The recently released New Zealand Conservation and Environment Roadmap is intended to provide medium and long-term indicators of the science required to ensure that New Zealand is able to both continue to grow its economy while having confidence that it can also improve its environment to achieve the goal of liveability.

Performance Challenge – Organisational

MfE as choreographer – from connecting resources to concentrating resources MfE views itself as a ‘small but important policy shop’ working in the context of the Natural Resources Sector (NRS). MfE’s policy function has customarily operated in the relatively narrow space between the areas carved out by some of the larger ‘sibling’ agencies, with MfE being responsible for the Resource Management Act, Hazardous Substances and New Organisms Act 1996, as well as climate change legislation. The larger ‘sibling’ agencies, in particular MPI, DoC and MBIE all have their own built and natural environmental management legislation and broad mandates.

The perception of ‘the environment’ or ‘the economy’ has left MfE with a limited space to operate and a diluted mandate to engage in solutions-focused policy. Furthermore, its primary focus on environmental policy meant it has been traditionally ill-equipped to engage in economic or investment-based policy thinking. This traditional and fragmented ‘system’ is highly unlikely to deliver for New Zealand. If New Zealand is to realise

the benefit of a forward-looking, aligned and fully functioning system of public sector stewardship, the System and Agency Performance Challenge for MfE is to reconceptualise itself as primarily a system choreographer. In this role MfE would be working with a wider span that sees it operating both within the system (in its policy domain) and concurrently choreographing the system.

Performance Challenge – System

From influence to integration – a shift from making it happen to making it work The NRS grouping of government agencies has been in existence for almost nine years, with MfE as the acknowledged lead. However, neither the purpose nor operating model of the NRS is well developed. Recently a sub-group of the three key NRS agencies (MfE, DoC and MPI) has formed to progress specific issues engaging at leadership team level.

The NRS agency members have not made the shift from addressing issues through a series of agency lenses to a system approach, which considers and resolves issues and priorities. This may in part be attributable to the lack of clarity of purpose and outcomes sought by the NRS. While on the surface there appears to be alignment on the major priorities for New Zealand (climate change, fresh water and predator free), there is no discernible shared vision, value proposition or clarity of outcomes that the system is responsible for delivering to New Zealanders. Consequently, there is no coherent system operating model to support system performance and deliver outcomes.

The horizontal orientation of


government agencies across the NRS is an important factor impeding its ability to deliver outcomes. Each agency has variable policy, regulatory and operational capacities. Unlike MPI and DoC with their substantial delivery capabilities, MfE relies on regional and local government and the EPA for its delivery capacity.

MfE’s System Performance Challenge is to define and develop the wider system or systems that New Zealand needs to deliver the required environmental outcomes. Given the nature of those environmental outcomes, it is unlikely that a single or constant grouping of agencies/organisations will be capable of or necessary to successfully delivering them. Therefore, MfE will need to develop a sophisticated, highly networked suite of interdependent systems, each operating with clarity of purpose and anticipated outcomes and each with an appropriate operating model. System participants need a transformational mindset change to allow a clearer understanding of what true inter-agency system work involves, where alignment to shared interests and the capacity to create multiple options are critical ingredients of success. Thinking about using different systems to achieve liveability will necessitate a greater focus on urban issues, as the majority of New Zealand’s populations live there. This will require leveraging groupings wider than the NRS, and building on existing relationships, eg, the Auckland Policy Office, to help deliver system-wide outcomes.

Key elements of MfE’s System Performance challenge are as follows:

• owning its role and being recognised as the system steward and voice of New Zealand’s values and aspirations for the built and natural environment

• becoming the system choreographer

– architecting, establishing and managing inter-related systems and delivering complex environmental outcomes for New Zealand

• becoming a sophisticated multi-dimension (horizontal and vertical) collaborator working with and across agencies to align and deliver the smart policy, regulation, science, monitoring and innovation environmental outcomes New Zealand seeks

• maintaining its long-term stewardship focus while also supporting the government of the day to achieve its priorities.

From system participant to system lead – from interests to actionMfE’s role means it is the logical agency to lead the environmental management system. MfE needs to be the ‘intellectual heavy-weight’ to be effective in this influential role in the long term. To realise this, MfE must take a broader system focus, developing the strategic and stewardship capability to position it as a credible system lead, irrespective of size or levers. In part this requires MfE to continue its shift from being seen as ‘the advocate’ for the environment (uncoupled from the economy) to owning the role as the lead in ensuring both New Zealand’s environment and economy strengthen and prosper in parallel. MfE needs to capitalise on and drive convergence of interest to establish an interdependent agenda for both environmental and economic gains.

Building a foundation of definitive evidence, information and intelligence is crucial to developing its leadership credentials. As noted earlier MfE must be much more deliberate about the

science, research and engagement activity it undertakes to create a credible body of evidence and information to support and crystallise opportunities for smart and meaningful collaboration. Furthermore, it needs to build a reputation for leading excellent execution and delivery for New Zealand.

MfE will need to be widely and deeply connected across and within whatever system is required to achieve the outcomes sought. It needs to be influential at multiple levels with the capability to produce consistent and aligned changes across and between organisational boundaries.

MfE will need to unite those in the wider system with the capability, levers and incentives to deliver system outcomes. MfE’s influence will be enhanced and extended by its sophisticated evidence and research base. This will have strengthened its position as the leading authority on both New Zealand’s environmental values and environment, based on its public dialogue and deep customer insights. It will be seen as the source of reliable, credible and trusted information and evidence about the current and future state of New Zealand’s environment, as well as being linked into the technology and innovation that will influence the future. To be credible with industry and economic agencies it will need a role well beyond monitoring the state of the environment and defining the problem, but critically also in partnering, or facilitating partnerships, for solutions to New Zealand’s built and natural environmental challenges.

MfE needs to have the capability to influence and contextualise challenges as well as coordinating system activities to deploy collective capacity and effort.


Performance Challenge – Agency

T-shaped leadership and management – effective in the horizontal and vertical MfE needs to make a paradigm shift to be ‘an influential system stewardship shop’ (independent of its size) rather than ‘a small policy shop’. As MfE mobilises change and creates momentum horizontally across the wider system in its system choreographer role, it must simultaneously maintain and grow its own critical capability as a credible environmental steward and policy agency. In doing so it will work vertically with partners in local government, iwi, NGOs and the community to deliver the planning and regulatory frameworks governed by relevant legislation and regulations.

Creating meaningful policy settings that support greater alignment between environmental and economic gains will require MfE to master the ability to work both vertically with regional and local government, NGOs and industry partners and horizontally with central government partners.

Alignment through stewardship – neutral, independent, evidence based As well as demonstrating it understands and identifies with the values New Zealanders hold and the environmental and natural resource management outcomes they seek, MfE must be able to demonstrate how it makes a productive contribution to achievement of long-term environmental outcomes. Understanding and demonstrating the effectiveness of legislative and regulatory settings as a

contribution to outcome delivery over time, will be critical to MfE’s credibility, as will demonstrating the value created by exercising its stewardship across the wider public sector. In this context MfE should reflect on how it can move ‘Policy Plus’ and ‘Partnering with Purpose’ forward, both harder and faster.

MfE has recently made progress in establishing some of the critical elements of its stewardship role. As an example, the State of the Environment Monitoring, while not yet expertly executed is establishing valuable and previously missing foundation pieces to support a wider dialogue about New Zealand’s environment and use of natural resources.

To address its stewardship responsibilities and build on these early foundations, MfE needs to establish a knowledge and awareness information baseline amongst the public about the current state of New Zealand’s environment. The challenge of presenting independent information to the public within a context of the wider ‘politicised’ environment is not to be underestimated. Early efforts by MfE to engage on critical environmental issues have proven challenging, although attempts to present information in the context of where New Zealand should be, as well as encouraging dialogue around the future state, have revealed early but reassuring signs of supporting authentic dialogue regarding values and desired outcomes.

Along with the need to establish a comprehensive monitoring network and database of environmental indicators to meet its long-term stewardship responsibility, MfE will need to facilitate open access and use of information. It should develop the tools and technologies to facilitate effortless uptake and interpretation of that information. This will support and encourage individual New Zealanders, iwi, community and commercial organisations to engage, providing independent and authoritative information and reporting on New Zealand’s collective management of its environment over time.

In addition to its monitoring role MfE needs to mobilise its policy and regulatory stewardship functions to create the setting in which the necessary environmental management gains can be realised. Simply monitoring the state of the environment will not adequately support the shift that needs to be made.

Connected and engaged – from stakeholders to ‘shareholders’To achieve the paradigm shift required to manage New Zealand’s built and natural environment, MfE must become deeply connected and engaged with the broadest network of stakeholders possible. In this context it will need to position itself as an honest and independent broker accountable to New Zealanders for achieving the environmental outcomes aspired to. To contribute to these outcomes, MfE needs to appropriately identify, partner and support others across the economic and environmental spectrum.


A mobilisation of collective effort will be a result of MfE working with aligned organisations and stakeholders to establish pathways and solutions to environmental challenges and opportunities. MfE’s stewardship role will define the establishment of the medium and long-term settings to support early adopters and define clear expectations of others. This can be effectively accomplished by an organisation that is connected, trusted, agile and has access to a well-established implementation capability (requiring partnering). Operational delivery capacity is not currently a strong aspect of MfE’s arsenal and will require a new and different set of skills.

Managing meaning – facts don’t speak for themselvesThe recent MfE ‘Clean Water Package’ was a communication/science disconnect and unfortunately was a significant and public misstep. The ‘Fresh Water Monitoring Report,’ which did not experience the same communication misstep, nonetheless did not make the best communication use of the opportunities presented. MfE cannot afford this sort of shortcoming, which points to a degree of frailty in its philosophy and approach to communications. The science (or data) does not speak for itself and these missteps do little to promote convergence of interests and strong links to public awareness. Poor communication creates an opportunity for the ‘narratives of doom’ to overwhelm or displace the ‘narratives of possibility,’ clearly not a tolerable situation.

MfE’s performance challenge in this

2 Magretta, J. (2002). Why business models matter. Harvard Business Review, 3-83 Osterwalder, A. and Pigneur, Y. (2010). Business Model Generation: A handbook for visionaries, game changers and challengers. New Jersey: John Wiley & Sons.

domain is to develop a much higher order communications capacity, able to create the context for, and understanding of science and data. This will require creativity along with expertise in storytelling and dialogue, both of which would be transformative. The essence of dialogue (nuanced and not well understood by many organisations), is to bring others equally to an interaction which is the responsibility of the party higher up the power gradient. In this case MfE and Statistics New Zealand who share the responsibility, are the common party with the information and therefore the power, which means that in the release of the Fresh Water Report they should have created the climate for dialogue. Exceptional communicators know the difference between transmitting data and managing meaning, a challenge MfE must step up to.

Back office efficacy – the ‘runway’ to successThere is little doubt that MfE has many capable, competent and dedicated people who do an excellent job for the organisation. However, its ability to make the most of its human resources is thwarted by its high historical and current staff turnover. This turnover at a concerning level of 25% undoubtedly affects its impact, credibility and momentum.

It is disquieting to find the processes and systems required to support the performance of MfE’s people are inconsistent or weakly applied across the organisation. These issues are not new or particularly difficult to fix, but do require expert scrutiny and focus on its approach to operations and people management.

A much deeper understanding is needed about what it must do to improve its ability to retain the calibre of people for the future.

MfE’s Performance Challenge is to develop a complete understanding of the workforce profile, competencies and capabilities required to become a system choreographer. MfE will need to align its capability over time as it increasingly migrates to a new operating model and it should design and implement systems and ways of working that support and align with this operating model.

MfE’s Operating Model – gateway to convergence of interests and coherent actionHaving the appropriately contextualised operating model is critical to MfE’s future success. The operating model is effectively the story that clarifies the underlying logic of how the organisation works2 acting as a blueprint for the purpose, vision and strategy to be implemented3. Key assumptions are consolidated in the operating model with the objective of moving MfE beyond policy centric thinking towards operating model thinking.

MfE can only have one operating model, responsive to both its roles ‘for the system’ and ‘in the system’, requiring a refined capacity to operate in both horizontal and vertical dimensions, which is MfE’s, and indeed other system agencies, greatest challenge.


MfE’s current operating model is designed to deliver on its self-view as a policy Ministry, however, this model is incapable of supporting MfE to achieve the performance challenges outlined above and deliver on its system choreographer and stewardship roles.

Key design principles for a new operating model for MfE include the capacity to:

• access, interpret and leverage credible evidence-based information to support a shared understanding and alignment about New Zealand’s environment, reframing MfE as a modern knowledge-based organisation

• enhance communication, engagement and connectivity with the public about environmental issues, challenges and possibilities

• embed agile ways of working to achieve defined outcomes with both interested and willing partners, as well as those indifferent and reluctant

• maintain excellence in timely policy development, given the fast moving context underpinned by credible research, science and engagement

• improve its ability to influence and mobilise system capability

• better align resourcing to support its stewardship value proposition

• invest in capability to operationalise initiatives with regional and local government partners.



An ambitious and challenging transformation agenda has been described for MfE and to be successful in both the medium and short term, it will need to achieve the indicators of success noted below.

In rating MfE we have considered how well placed it is to achieve its challenges in the short term (four years).

Medium Term (next 10 to 15 years)

In the medium term:There will be a clear, fully implemented, National Environmental Monitoring Framework providing leading-edge, real-time trend information about New Zealand’s environment: rivers and waterways, air, land, climate, oceans and native species. MfE will have a clear understanding of the state of the environment, the pressure on it and the likely impacts and will be able to make decisions about whether and how to act.

New Zealand will have benefited from a planned, managed, engaged comprehensive and robust national dialogue designed to explore, educate, inform and, ultimately, to reach a consensus regarding the shared values for New Zealand’s environmental stewardship over the next 50 years. That discussion will underline the reality that the environment is the foundation upon which we build our current and future wellbeing. Investment in social engagement and civic discussion will create an increasingly enabled authorising environment for interventions and activities aligned with the values. There will be clearly

articulated expectations for responsible stewardship, use and enjoyment of the environment.

New Zealand’s investment through both public and private science, research and development will have identified sustainable solutions to the many challenges currently being experienced. Ways to address the adverse environmental impacts of previous decisions will have been developed.

Individual iwi settlement rights and responsibilities will have been fully integrated into the national, regional and local environmental management framework. New Zealanders’ understanding of the benefits of, and commitment to, appropriately and proactively engaging with iwi regarding environmental management and the mechanisms for delivering against those expectations will be strong and effective. Iwi will be appropriately resourced to exercise those rights and discharge their obligations.

MfE will be leveraging its relationships with its customers, stakeholders and partners to understand how the environmental management system is working and to identify how to make it more effective in delivering on New Zealanders’ aspirations. It will be communicating what it has learnt back into the system.

MfE will be the acknowledged steward of the built and natural environmental management system, having demonstrated its ability to identify and define outcomes; in particular outcomes that require a system response, convene ‘coalitions of the willing’ and set in place the operating models to enable the desired achievements.

The legislative and regulatory landscape will have evolved to a timely, responsive and empowering suite of instruments reflective of New Zealanders’ values and ambitions for the built and natural environment. This will provide clarity and predictability of expectation for those who, for whatever purpose, wish to make use of New Zealand’s natural resources and environment. The emphasis will have shifted from understanding impacts and demonstrating mitigations to considering how environmental gains can be made in the context of a national environmental objectives framework.

What will Success Look Like?


Short term (next four years)

In the short term:MfE will have established a credible and successful leadership position as the synthesiser of any agency (or wider) system relevant to the New Zealand built and natural environment.

MfE will be seen as an ‘intellectual heavy weight’ when it comes to managing the tension at the nexus of the economy and environment.

MfE will have become a sophisticated T-shaped manager, highly effective in both the vertical (agency) and horizontal (system) dimensions.

MfE will have developed an advanced communication mindset and skillset and will have a reputation as a highly effective agency when it comes to the most complex scientific communication challenges.

MfE will have addressed the causes of its high staff turnover rate and will have achieved a rate compatible with realising the capacity to meet its ambitious agenda.

MfE will have fit-for-purpose back office systems and processes in place, which satisfy staff that they have the tools they need to be effective in their roles and are well supported as employees.

MfE will have performance measures in place that enable it to describe how effective it is, the value it provides and which inform its decisions about how it will continue to transform to deliver greater value over time.

MfE will have worked with its partners and NRS colleagues to create a stocktake of the information available to understand the performance of the various environmental management systems and will have worked with them to understand where there are knowledge gaps and the significance of those gaps.

MfE will be well down the track in addressing targeted and achievable environmental outcomes in key areas – working as both the synthesiser and a participant in the system

MfE will be operating an engagement strategy that provides an in depth understanding of the needs, aspirations and values of its customers, stakeholders and partners.

New Zealand will have engaged in its biggest coordinated direct national citizens’ dialogue involving New Zealanders grappling with the critical issues that underpin New Zealand’s environmental health, both in its cities and other environments.

This engagement would result in a widespread, shared understanding of the challenges, forming the basis for individual and collective behaviour change.

Legislative and regulatory reform will be ongoing and under the shared guidance and stewardship of central and local government partners.

Māori/iwi and the Crown (through MfE) will have developed consistent, replicable and respectful models for giving effect to the rights and obligations arising from Treaty settlements as they relate to the environment. Māori/iwi experience the commitment that those settlement rights will be honoured by others as a result of effective systems and implementation across national and local government. Investment by and with iwi will be in place to support sustainable outcomes.

MfE will be pushing harder and faster on collecting accurate and meaningful data as a basis for better understanding environmental threats and opportunities. This will have been achieved through applying more advanced tools for collecting and reporting on key environmental trends.

The research investment will have been made into the first five year priorities (environmental monitoring, climate change, integrated ecosystems, fresh water, coasts/oceans and social and cultural factors) of the environmental aspects of New Zealand Conservation and Environment and the Primary Sector Science Investment Roadmaps.

Strengths and Opportunities

This PIF Review was undertaken in May 2017. The ratings and commentary in the following sections reflect the Lead Reviewers’ findings at that time.

In this section:

Overview Strengths and opportunities in detail

3


Overview

The Four-year Excellence Horizon in this report sets out the Ministry of the Environment’s performance improvement challenge for the future. These ratings indicate the agency’s current preparedness to meet that future challenge.

In many ways MfE is well placed to pursue a business-as-usual agenda, however, it has set itself an ambitious strategy to transform the nature of its role and relationships in the public system and also with New Zealanders in the medium to long term. For MfE to be successful in achieving this ambitious agenda, it needs to move swiftly and with determination to commence its transformation and in parallel address the business as usual challenges. The assessments that follow reflect that challenge.

Delivering Core Business

Rating

(Value to customers & New Zealanders)

Rating

(Increased value over time)

Policy

Implementation

Monitoring and Evaluation

Regulatory Stewardship

Delivering Government Priorities Rating

Building Natural Resources

Emergency Response – Christchurch and Kaikōura

Strong Well-placedNeeding development

WeakNot able to rate

The ratings descriptions can be found in the appendices.


Organisational Management

Leadership and Direction Rating




Review

Delivery for Customers and New Zealanders

Customers

Operating Model

Collaboration and Partnership

Experiences of the Public

Relationships


Sector Contribution

People Development




Financial and Resource Management

Asset Management



Risk Management

Strong Well-placedNeeding development

WeakNot able to rate

The ratings descriptions can be found in the appendices.


Strengths and opportunities in detail

Delivering Government Priorities

This section reviews the Ministry for the Environment’s response to the priorities set by the Government. The Lead Reviewers look at current and past performance as a guide to the scale of the performance challenge.

Government Priority 1: Building Natural Resources

Rating

DescriptionMfE leads the NRS, the core agencies charged with delivering on the Building Natural Resources Work Programme.

The focus for the Natural Resources workstream is to invest in New Zealand’s natural and built resource base as a source of global competitive advantage.

In its NRS leadership role MfE was well positioned to be influential with the previous BGA Economic Leadership Group in creating a shift in the overall goal of the agenda to a diversified, internationally connected, resilient and inclusive economy. This is beginning to bring the environment and economy aspects closer together.

The NRS has developed a new goal within the natural resources workstream to reflect a focus on our natural and built assets. This goal involves investment into New Zealand’s natural and built resources to enhance global competitiveness.

The refreshed focus has been translated into six work programmes, each involving a series of workstreams:

• ensuring land is sustainably used toits best value

• freshwater quality and use

• recognising the benefits and value ofbiodiversity to the economy and thelives of New Zealanders

• sustainably realising the full potentialof marine resources

• ensuring New Zealand is a moreproductive, low emissions economythat is resilient to a changingclimateensuring everyone in thesystem has the information anddata they need for better decisions,investments and innovation.

What we foundBGA and NRS priorities are well aligned, with a mix of systematic and targeted work programmes. MfE has led changes to the goals of the natural resources workstream (including the 2017/18 budgeting process) to more appropriately reflect the paradigm of the environment and the economy, bringing in the concept of natural capital.

Significant results, led or supported by MfE, include:

• enactment of the ResourceLegislation Amendment Act 2017and action now under way tosupport its implementation

• development and implementationof the National Policy Statementon Urban Development Capacity,which is designed to addressissues of insufficient opportunitiesfor urban development in high-growth urban areas


Work on freshwater, including options for improving governance and allocation, support for councils in setting limits, consultation on amendments to the Freshwater National Policy Statement and the Next Steps for Freshwater Consultation Document and implementation of the Freshwater Improvement Fund

• climate change work programme to develop a plan for shifting to a low emissions economy and review of the ETS

• establishment and publication of the first reports under, the Environmental Reporting regime

• establish a cross agency approach to work on the future of the resource management planning system

• an agreed prioritised NRS Budget package for Budget 2017, developed using elements of an investment approach and moving towards a systems view.

• the 2050 Predator Free Programme connecting efforts across communities, iwi/Māori, business, philanthropists, scientists and government

• an updated New Zealand Biodiversity Action Plan 2016-2020, outlining the contribution New Zealand will make towards stemming global loss of biodiversity over the next four years

• options to enable aquaculture growth and improve investor confidence in the re-consenting of existing farms.

Our conclusionsThere has been some good progress made over the most recent year in moving the sector towards a more meaningful system approach, through enhanced alignment under a goal of natural capital and the joint delivery of the work programme. The NRS agency members are now pursuing this work programme to address a number of pressing concerns at the interface between the environment and the economy.

Through Budget 2017/18 the natural resources sector developed prioritised investment advice to reflect those areas where the greatest gains could be made in achieving linked environmental and economic outcomes. This was a very good first step to be built upon in future budgets.

Overall, however, given the significant challenges and the outcomes desired, the agencies involved have not yet made the depth of shift to a system approach, which considers and resolves issues and priorities. Beyond the current workstream, they do not have a shared vision, value proposition or clarity of outcomes that the system is responsible for delivering to New Zealanders.

To be rated ‘strong’ MfE needs to:• position the work programme on

the basis of the environment as the foundation of national well-being

• coordinate the development of a coherent and consistent environmental management system.

Overall, however, given the significant challenges and the outcomes desired, the agencies involved have not yet made the depth of shift to a system approach, which considers and resolves issues and priorities.


Government Priority 2: Emergency Response – Christchurch and Kaikōura

Rating

DescriptionResponse to and remediation of the damage caused by the earthquakes in Christchurch and Kaikōura has required a rebalancing of the normal resource management rules and processes. MfE has been involved in providing advice to government on this and in putting in place the rebalancing measures. It was also involved in advice to councils and others in both the response and recovery stages such as advice and support around the management of hazardous waste.

What we foundMfE has developed an Incident Response Preparedness Plan (IRRP) since 2014. This was developed incorporating (explicitly) lessons learnt from the RV Rena grounding, the Christchurch earthquakes and a major gas leak in Taranaki. The IRRP identifies the linkages with the national emergency response system and the process for MfE’s involvement.

The IRRP was tested with the Kaikōura (and Wellington) earthquakes of 2016. MfE’s head office itself was significantly affected by this event. A lessons learnt exercise has yet to be completed.

MfE was effective in supporting the immediate response, in particular the development of the three pieces of legislation necessary to enable the initial response and ongoing recovery operations.

Commentators have identified problems of inter-agency gaps concerning impacts that extend across sectorial boundaries, issues relating to hazardous substances and hazardous waste management in the response and recovery phases of a natural disaster.

Our conclusionsMfE is strong as an agency in responding to recovery in events of natural disaster.

There is an opportunity for a sector/system approach to response and recovery that should be investigated.

To remain ‘strong’ and still improve MfE should:• complete its lessons learned

exercise following the Kaikōura earthquake

• consider with its partners in regional and local government and NRS colleagues, (from both its own and broader sectoral perspectives) whether their combined experience indicates there are gaps or overlaps in functions, roles and responsibilities, which could be identified and planned for or mitigated.

MfE is strong as an agency in responding to recovery in events of natural disaster.


Delivering Core Business

This section reviews how well MfE delivers value to customers and New Zealanders and how well it demonstrates increased value over time. While the questions guide the Lead Reviewers to retrospective and current performance, the final judgements and ratings are necessarily informed by scope and scale of the performance challenge.

Core Business 1: Policy Advice

Rating (Value to Customers and New Zealanders)

Rating (Increased Value Over Time)

DescriptionMfE’s policy mandate is very broad (seven domains), intersecting with that of other NRS agencies (the environmental management system is both vertically and horizontally distributed). The issues involve diverse and sometimes conflicting interests and is intergenerational in its impacts and consequences.

MfE’s work programme is heavy, spans big picture and long-term issues through to very short-term issues management and can be highly episodic eg, progress on the Resource Legislation Amendment Bill.

Providing high-quality advice requires integration of science, economics, customer insights, law and international relations. It requires excellence in the policy profession and deep technical and specialist understanding.

What we foundMfE has invested in systems and processes to ensure good and consistent quality advice, such as an ongoing real-time Quality Assessment process reported in its Annual Report. It is reviewing and updating that process. Observers have noted a lift over time in the quality of MfE’s work.

Notwithstanding that, it does not have a reputation for consistently undertaking high-quality work. Observers note that some of this may be the result of haste, stop-start projects and high levels of staff turnover. The definition of policy within MfE has too narrow a focus and requires updating. MfE’s own quality assessment process, while showing an ongoing improvement trend, demonstrates that there is some validity to this perception. We note the need for MfE to be careful in ensuring it has both agile staff (capable of working across its mandate) and sufficient depth of specialist skills and experience.This is recognised in its workforce strategy.

Observers have noted a lift over time in the quality of MfE’s work.


Māori and other stakeholders, including partners in the distributed delivery model, are concerned they are not engaged early enough in the process, are not able to bring what they know and what their aspirations are in the framing part of the policy process as opposed to being consulted at the end of an internal process.

Policy Plus and Partnering with Purpose are excellent initiatives designed to address these concerns, however, being relatively new initiatives, they are still a ‘work in progress’.

MfE is on a journey having conceptualised its future role in the system and is transitioning from its roots as a traditional narrowly focused ‘policy shop’ to its future system steward state. While at a leadership level this is well understood and demonstrated, as is to be expected with relatively new initiatives, some internal and external observers are yet to appreciate the significance and impact of this shift.

Our conclusionsOverall, MfE is an effective policy agency in the narrower sense of the policy definition, however, to achieve effective long-term environmental outcomes it has ambitions and plans to improve.

MfE has developed a coherent outcomes framework setting out the long-term stewardship aspirations, however, it has not yet developed a strong capability to manage the tension between short-term priorities and achieving these outcomes.

Staff turnover will remain a risk to MfE ability to provide current value and value over time.

Implementation of the underlying rationale for Policy Plus and Partnering with Purpose, and in particular leveraging the value to be drawn from its colleagues and partners will be essential if MfE is to be an effective steward.

To be rated strong MfE will need to: • define its stewardship role (see

Excellence Horizon) and thecapability it will need to deliver onit, and work to integrate short-termpriorities with longer-term outcomes

• fully implement Policy Plus andPartnering with Purpose

• continue the downward trend of staff turnover and implement its workforceplan.


Core Business 2: Implementation



DescriptionMfE either implements or provides for the implementation of climate change, resource management, environmental hazards and waste and environmental management obligations.

In most instances actual delivery is undertaken by the EPA (a Crown Entity) or regional and local government. In some instances implementation is undertaken by MfE, eg, funds administration

What we foundA number of interviewees in regional government, Iwi and NGOs were concerned about a lack of engagement in the early formative stages of MfE proposals, which could lead to impracticable proposals.

While historical tensions exist and acknowledging that MfE has been increasing its efforts in this area, there remain concerns that MfE is not sufficiently engaged with and making use of expertise and information held by regional government in particular. This can lead to duplication, inconsistency of approach and incompatibility of systems and processes. There appears to be increasing goodwill on both sides to address this issue.

The Partnering with Purpose initiative is intended to address these concerns.

Our conclusionsIt is not apparent that MfE considers its distributed delivery providers as partners in the system, it appears to operate as their regulator and is thus missing an opportunity to embrace their input and deliver greater value now and in the future.

To be rated ‘well placed’/’strong’ MfE needs to:• fully implement its Partnership with

Purpose model

• demonstrate it is leveraging itsdistributed delivery team.


Core Business 3: Monitoring and Evaluation

Performance Rating (Value to Customers and New Zealanders)

Performance Rating (Increased Value Over Time)

DescriptionMfE monitoring falls into three categories

• monitoring the implementation of theResource Management Act 1991

• monitoring the EPA – theCrown Entity that undertakesfunctions relating to the ResourceManagement Act, the ExclusiveEconomic Zone, emissions trading,hazardous substances and neworganisms

• state-of-the-environmentmonitoring and reporting under theEnvironmental Reporting Act 2015.

What we found

Monitoring the Resource Management System • MfE is developing and rolling out an

Evidence, Monitoring and EvaluationStrategy and Action Plan

• the strategy coordinates theapproach to evidence, monitoringand evaluation, lays out whereMfE wants to be (outcomes),what it needs to do to get there(objectives), and an action plan

• the objectives are to establish asystem-wide view of how well the RMSystem is achieving its outcomes,improve and coordinate evidence,monitoring and evaluative activitieswithin policy projects, improve MfE’sevidence base and collaborate withexternal stakeholders.

Monitoring the EPA • the EPA is a key partner agency

MfE needs to work with to managenatural resources and impacts onthe environment, recognising thedifferent knowledge and skills eachorganisation has

• MfE engages with the EPA at alllevels. There are good systemsand processes in place to supportand manage the relationship,underpinned by a Memorandum ofUnderstanding signed in 2016

• MfE supports the Minister to fulfilhis or her statutory duties, eg,appointments to the EPA Board,and helping the EPA report onorganisational performance

• in 2015 a series of reviews ofaspects of the EPA’s performancewere undertaken culminating in anMfE Review that included a numberof recommendations for action byboth MfE and the EPA. MfE and theEPA established a joint EPA ReviewGovernance group to oversee theimplementation of the review. All ofthe key aspects of the review areaare now being progressed

• notwithstanding this we heardcomments similar to thosefrom MfE’s other partners andstakeholders about the need forthem to be involved earlier andengaged more effectively in line withthe aspirations in MfE’s Partneringwith Purpose approach.

State of the Environment Monitoring and Reporting• this is a new statutory function and

two pre-enactment reports andtwo post enactment reports (onea Synthesis Report) have beenpublished. Positive response tocomments from the Parliamentary

Commissioner have assisted with the evolution of these reports

• the reports will be a valuableresource and should underpin, asthey become more comprehensiveand more trend evidence isdeveloped, a constructive nationalconversation about aspirations,expectations and priorities forenvironmental management

• MfE is ‘well placed’ with respect tothis aspect of its role.

Our conclusionsIn terms of monitoring the RM System MfE knows it needs to improve and has plans to do so.

Monitoring of the EPA is effective, although there is scope to keep improving the relationship, in line with the aspirations in MfE’s Partnering with Purpose approach

State of the Environment Monitoring and Reporting is ‘well placed’ and on an improvement trajectory. There is an opportunity to use this function to begin the national discussion on our aspirations for our environment, however, communication must improve.

To be rated ‘well placed’/’strong’ MfE needs to:• implement a whole-of-environmental

management monitoring andevaluation system to continuallyimprove environmental management

• continue to evolve the State ofthe Environment Monitoring andReporting System

• make greater use of the release of Stateof the Environment reports to bothhighlight environmental issues andunderpin the national conversationreferred to in the Excellence Horizon.


Regulatory StewardshipHow well does the agency exercise its stewardship role over regulation?



DescriptionThe State Sector Act 1988 requires departmental chief executives to exercise “stewardship of ... the legislation administered by the department” and defines stewardship as the “active planning and management of medium and long-term interests, along with associated advice”.

In April 2017 the Government updated expectations for regulatory stewardship by government agencies. These stewardship expectations include responsibilities for:

• monitoring, review and reporting on regulatory systems

• robust analysis and implementation support for changes to regulatory systems

• good regulator practice.

MfE is one of the seven main regulatory agencies and is required to make an annual assessment of the current state of each piece of legislation, any plans for amendments and its view of important emerging issues.

The environmental management system is regulated by 12 main Acts and underpinned by nearly 200 regulations, codes of practice and notices, National Policy Statements, and National Environmental Standards.

What we foundIn its Regulatory Stewardship Strategy MfE notes:

“Because of the diffuse but interrelated nature of the environmental management system, one of the main challenges for our regulatory regimes is to support (or at least not hinder) outcomes in other domains. To do this, MfE needs to:

• better anticipate the implications of change in one part of an interconnected system

• gain further insight into causes, consequences and cumulative effects

• better develop regulatory solutions that benefit multiple domains.”

MfE also acknowledges the need to move beyond the traditional regulatory toolkit to identify other interventions that will complement and supplement those tools.

In 2015/16, 18 regulatory impact statements (RISs) were subject to quality assessment. Of these, six were assessed by the internal assessment panel and 12 by the Treasury. Six RISs partially met, rather than fully met the criteria, due to either limited consultation or it being considered the RIS did not fully identify the impacts of the outlined options.

As part of its Regulatory Stewardship responsibilities MfE has assessed its regulatory systems. A theme of its assessment was that “It is not clear if MfE is achieving the best possible long-term value in some systems, as they are not regularly reviewed and benchmarked. Also, resources across different systems may not be adequate to effectively implement, monitor, and achieve compliance”.

This is consistent with the findings of the Environmental Defence Society report “Last Line of Defence: Compliance, Monitoring and Enforcement of New Zealand’s Environmental Laws, and the 2017 OECD Environmental Performance Review.”

Our conclusionsMfE knows what its opportunities are and has a plan to pursue them.

It will need to ensure that in implementing its plan it engages early with its partners and colleagues to tap into their experiences and insights.

To be rated ‘well placed’/’strong’ MfE needs to:• implement its Regulatory Strategy

and in doing so give effect to its evolving understanding of the Environmental Management System, as opposed to the Resource Management System, as currently constructed.


Leadership and Direction RatingPurpose, Vision and Strategy• How well do the staff and stakeholders understand the agency’s purpose, vision and

strategy?

• How well does the agency consider and plan for possible changes in its purpose or role in the foreseeable future?

Leadership and Governance• How well does the senior team provide collective leadership and direction to the agency

and how well does it implement change?

• How effectively does the board lead the Crown entity? (For Crown entities only)

Values, Behaviour and Culture• How well does the agency develop and promote the organisational values, behaviours and

culture it needs to support its strategic direction and ensure customer value?

Review• How well does the agency encourage and use evaluative activity?

What we foundThe majority of stakeholders and staff are feeling more optimistic about MfE, particularly its clearer and more compelling purpose, vision and strategy.

Notwithstanding this a number of MfE staff were unclear about how their day-to-day work linked to the purpose, vision and strategy. This vision was introduced late in 2016 and achieving alignment is still a work in progress for some staff. This change does need to accelerate.

External stakeholders are looking for actions to fit the words articulated in the purpose, vision and strategy, with the compelling expectation that MfE will follow through on delivering on the vision.

In the context of its purpose, vision and strategy MfE will likely find itself held to higher standards of accountability by Māori, who have very high expectations based on their own environmental aspirations.

MfE needs to start with a long-term perspective first and work backwards, while not ignoring immediate issues.

From a purpose and strategy standpoint a stronger, more aspirational MfE needs to be more influential with other government agencies and put greater backbone into enforcement to support is strategy.

MfE needs to thoughtfully manage the tension between ideology and evidence by constantly coming back to evidence and providing comprehensible, well contextualised and effectively communicated objective information.


This section focuses on the agency’s organisational management. The Lead Reviewers look at current and past performance as a guide to the scale of the performance challenge.


As it moves from a more internal to external perspective MfE will need to play a more prominent and visible science leadership role.

As it moves from a more internal to external perspective MfE will need to play a more prominent and visible science leadership role.

MfE is perceived by many stakeholders to still have a new leadership team, although the team has been in place for 18 to 24 months.

MfE’s Executive Leadership Team (ELT) is considered by stakeholders and staff to be close knit, mutually supportive, credible, ambitious and having brought positive attitudes to building stronger relationships.

A number of stakeholders and staff identified some new leaders as inspirational and a real gift to the organisation but needing time and space to succeed.

There are also some stakeholders who believe the ELT has limited experiential diversity which may lead to preconceived ideas.

ELT’s focus is identified as being on strategy and up and out, with the relatively new third tier’s focus on delivering day to day business.

Notwithstanding this there is a view that there is no discernibly consistent approach to management across MfE.

The leadership team members are generally held in very high regard by stakeholders and staff and are widely described as being visionary, inspiring, determined, energised, innovative, empowering, open, optimistic and setting a ‘great tone’.

There are concerning communication gaps both internally and externally, with a need for both facts and values to become effectively communicated in or for MfE to become the trusted voice of reason on environmental matters.

MfE is seen as willing to front foot the release of data, “it is good to put the ‘dead rat’ on the table”, ie, confronting reality and transparently framing the issues. Poor communication, however, puts MfE immediately on the back foot.

MfE has a challenge in the post-settlement environment as to how it discharges its obligations to iwi,as it has a fundamental role in most settlements.

While the legislative context is dated and potentially not fit for purpose, the MfE could provide more and better oversight under the current legislation by more sophisticated use of ‘soft levers’.

MfE’s expressed cultural values of ‘Curious’, ‘Innovative’, ‘Courageous’, ‘Take Action’, ‘Lead’ and ‘Help Others Succeed’ are aspirational and described as a work in progress (generally organisational values should be equally split between ‘personality’ and ‘performance’ values – MfE’s values in this context are primarily ‘personality’ values).

There is more work for MfE to do to develop high levels of relational trust across the spectrum of stakeholders, although this is reported as improving reasonably quickly.

There is a fairly widely held view among stakeholders that trust is very good at tier one and two in the agency and becomes more difficult at tier three and has a tendency to break down between tiers four and five. This is common in organisations, however, those with exceptional cultures have trust symmetrically distributed throughout the organisation.

There is concerning thread from stakeholders that MfE too easily defaults to bureaucracy.

The positive aspects of the culture of MfE are widely described by stakeholder and staff as being very slick, professional, caring, serious, intelligent, enthusiastic, inclusive, empowering, curious, balanced, helpful, aspirational and outcome focused.

The areas of culture where stakeholders and staff believe MfE is weaker include a tendency to caution, defensiveness, timidity, fence sitting, inconsistency and insularity.

MfE is described as having variable relationships across a continuum from excellent to positive to poor but with the balance being positive.

There is a relatively prevalent view amongst stakeholders that MfE, despite demonstrating improvement, needs to do much more to step out of its comfort zone – although most suggested this could be applied to most, if not all government agencies.

MfE makes a significant effort to research and review various aspects of resource management processes and to evaluate the outcomes of existing interventions.

There is evidence of MfE being open to external review of its own operations, including, but not limited to a review of the NRS, materiality process, stakeholder perceptions and resource management end-user engagement references.

There is not good evidence of post-project reviews to discover the lessons that should be learned.


Our conclusionsMfE is moving in the right direction, with its leadership having a strong vision and strategy in place. The organisation is, however, still too focused on a narrow range of levers, eg, regulatory policy, and needs to expand this to include a wider set of levers to achieve a change in solutions and the long-term outcomes. This reflects the organisation’s progression from a traditional policy agency to a system steward. An important factor and one of the most difficult challenges for MfE is to be able to authentically think and plan in the long term when the machinery of government has a shorter-term focus. The organisation needs to find a way to constructively and respectfully challenge and persuade government when or if its thinking on environmental issues is too near term.

The essential ingredients for being the objective, reasoned and credible ‘voice for the environment’ are inherent within MfE, however, it needs to exercise more sophisticated leadership in managing the tension between ideology and evidence. To be more effective in this domain MfE needs to apply a direct focus on the evidence and becoming more proficient in commissioning the right science to answer the right questions.

Furthermore, MfE needs to rapidly accelerate the development of a more sophisticated communication capacity – strategic, engaging, more convincing, less orthodox and able to present scientific information in such a way as to be rock solid. Failure to do this will result in increasingly unbalanced public discusses on key environmental issues.

Given its critical role, MfE’s leadership needs to be fearless and more influential with other government agencies, particularly those in the NRS or any alternate environmental eco-system agency grouping.

MfE’s leadership needs to acutely focus the organisation on the convergence of interests between the environment (living within limits), the commercial (premiumisation of primary products) and Māori (New Zealand identity) as the New Zealand narrative is essential to selling value added products, internationally and domestically, and the environment is the nucleus of that narrative.

To be rated ‘well placed’/’strong’ across the full suite of leadership dimensions MfE needs to:• continue to work towards all staff

having line of sight between their day-to-day work and the vision and strategy

• follow through on defining how it will meaningfully measure its achievement of purpose, vision and strategy

• continue to build the strength of its ELT to deliver on its strategy, including widening the experiential diversity of the ELT

• act with more courage and discipline and put a lot more backbone into enforcement

• continue and enhance its current work programme around internal and external evaluation and review

• create greater consistency of management process and ensure that the organisational philosophy, approach and values are uniformly embedded, which will also greatly assist in providing stakeholders with a more symmetrical and less bureaucratic response

• take a more proactive and prominent position in science leadership

• consistently undertake post-project implementation reviews.


Delivery for Customers and New Zealanders RatingCustomers• How well does the agency understand who its customers are and their short and longer

term needs and impact?

• How clear is the agency’s value proposition (the ‘what’)?

Operating Model• How well does the agency’s operating model (the ‘how’) support delivery of government

priorities and core business?

• How well does the agency evaluate service delivery options?

Collaboration and Partnerships• How well does the agency generate common ownership and genuine collaboration on

strategy and service delivery with partners and providers?

• How well do the agency and its strategic partners integrate services to deliver value to customers?

Experiences of the Public• How well does the agency employ service design, continuous improvement and innovation

to ensure outstanding customer experiences?

• How well does the agency continuously seek to understand customers’ and New Zealanders’ satisfaction and take action accordingly?

What we foundMfE’s operating context has traditionally worked in an ‘environment’ or ‘economy’ basis. It is now working hard to reset this paradigm from an ‘or’ to an ‘and’ with evidence of the shift being the successful reframing of the BGA overall goals and the natural resource workstream goals to a natural capital and investment approach.

MfE has a reasonably strong sense of working for New Zealanders at a headline level although this is not yet supported by any formal customer segmentation, client insights or intelligence work.

MfE does engage with, and have a relatively strong understanding of, its iwi partners’ expectations and aspirations and reportedly works relatively well (although not uniformly) with iwi in this regard, although resourcing of post-settlement iwi relationships and engagement is an unresolved challenge for MfE.

The recent State of the Environment reporting demonstrates an understanding of the appetite of New Zealanders to engage on environmental issues and is making some good, if at times challenging, steps in establishing a baseline of common understanding.

The significance of the environment and natural resources to iwi means the demand on MfE and its local government partners to engage on post-settlement commitments will continue to evolve. MfE is not currently resourced to deliver on this expectation over time.

The new leadership team is broadening engagement with a range of stakeholders to understand opportunities and aspirations and the value it can contribute, which is being received positively.

To date MfE does not have a well-articulated or resolved value proposition. It has been doing foundational strategic work and is reflective as it gathers further inputs to this process, however, it has not yet crystallised its value proposition relative to its various customer and stakeholder groups.

MfE’s operating model (how it works) is not clearly articulated and does not appear to have been designed explicitly to reflect the leadership role MfE aspires to. The current operating model is reflective of a policy ministry with little clarity of its value proposition to customers and stakeholders.


Having said that, MfE has introduced elements of an operating model designed to support flexible redeployment of resource to align with strategic priorities and is implementing a distributed management model at its third tier that over time should enhance organisational performance.

There is also evidence of MfE starting to introduce investment thinking in its prioritisation and resource allocation.

MfE’s business systems and processes are underdeveloped, characterised by under-investment in technology and systems to support core functions.

The impact of dislocation following the 2016 Kaikōura earthquake and the need to vacate MfE’s offices has further highlighted weaknesses in business systems.

The NRS is not operating as a true system. Agencies participating have not crystallised or committed to the value proposition for the system and continue to transact on an individual basis in the context of the NRS. While each of the agencies has a role to play in delivering outcomes for New Zealand, these are not currently well synthesised or aligned. While there are signs of some ground having been made in shared decision-making in recent times, the NRS is clearly not a functioning integrated system.

Our conclusionsMfE is in the early stages of developing clarity regarding its stewardship role and the value proposition to its customers, stakeholders and partners at a time when the public sector is exploring this very issue.

MfE’s needs to design a new operating model in light of the performance challenge outlined earlier that adequately addresses its system role and role in the system. This will require MfE to crystallise its answer to the question “What are we doing to execute our strategy?” It needs to adequately consider the core elements of its operating model and develop a model that demonstrates MfE has determined its stewardship value proposition to its customers, stakeholders and partners; and the actions and functions to deliver on that proposition, including what it will no longer do.

There is a very strong case for MfE having strong and direct stewardship engagement with New Zealanders about New Zealand’s environment given the long-term values, aspirations and associated management issues. Customer segmentation and insight work will be required to support MfE to have a successful and ongoing dialogue with New Zealanders. This is essential if New Zealand’s environment and economy are to benefit and be strengthened in the future and to overcome the growing tension between New Zealand’s aspirations for, and use of, the environment.

MfE’s relationship with iwi, while positive, risks deteriorating if it does not find a way to resource and partner with iwi to ensure their aspirations and rights are appropriately valued, reflected, embraced and understood in management of our environment. To be sustainable this requires investment in new models of partnering that respect the inputs required.

MfE struggles to get traction with its NRS and local government partners. The agency does not control a number of the levers required to effect change and consequently relies on influence. Largely as a result of its history and unclear value proposition or desired outcomes, MfE struggles to effectively influence others. The new leadership has made some valuable progress in starting to reset the system parameters, however, progress is slow and unfocused in the absence of clearly articulated outcomes. Arguably the evolution and functioning of the NRS is failing to keep pace with the challenges facing the environment and is falling short of providing the collective leadership required.


We encourage MfE to give deeper thought to the system models that will deliver maximum value for New Zealand.

There is a very real question about whether the NRS’ current operating model will deliver the required leadership for New Zealand in this context. While each of the system participants have valuable contributions to make, those contributions are not and will never be equal and therefore a more nuanced operating model that recognises the value, centricity and nexus points is required to achieve effective participation and engagement. We encourage MfE to give deeper thought to the system models that will deliver maximum value for New Zealand. MfE should then seek to establish and operate within those paradigms as it does not appear that any single grouping is universally engaged or has the controls, levers or incentives to participate across the spectrum of issues in the environment portfolio.

MfE appears to be making some good progress in its working relationships with regional councils in particular and local government in general. Establishing agreed ways of working that respect corresponding responsibilities and interests will support improved partnering and ultimately better align national and local objectives.

To be rated ‘well placed’/’strong’ MfE needs to:• design and implement a new

operating model (way of working) that responds to its system stewardship and leadership responsibilities

• establish a customer insights capability that supports engagement and dialogue regarding New Zealand’s aspirations for the environment

• clearly articulate its value proposition for customers, stakeholders and partners and redeploy resource and capability to align with delivering that value

• understand the system(s) that are going to achieve the desired outcomes and mobilise those systems to deliver

• develop sustainable models for engaging iwi decision-making that respect and value their rights and attitudes towards the environment

• seriously step up its communication mind-set and skillset.


MfE’s primary ministerial engagement is with the Minister for the Environment and the Minister for Climate Change Issues, both of which have Associate Ministers. MfE, also supports BGA – Building Natural Resources Ministers and Housing and Infrastructure Ministers.

What we foundMfE’s ministerial engagement has improved over the tenure of the Chief Executive and senior ELT, with good levels of trust and confidence developing.

The Chief Executive and her leadership team are still perceived as new, even though they have been in post for 18 to 24 months. The team is regarded as having brought intellect, economic literacy, a commercial lens and determination to the agency and is performing well, including efforts to integrate with other government agencies. Community engagement, while regarded as good, could be improved, particularly with the smaller local government agencies.

MfE’s communication of the wider perspective is regarded as poor, likely as the result of the ‘Clean Water Package’ release.

MfE is regarded as reliable in the functional elements and its leadership is trusted, however, there is a perception that the deep institutional knowledge, expertise and networks required for the ‘big picture’ direction are not currently uniformly present.

MfE is regarded as having too many people operating at a generic policy level.

MfE may not have the wider level of respect required to attract the very best people, although this may be a factor of where MfE sits within the architecture of the broader public sector.

MfE is perceived as needing still more economic expertise and depth moving forward.

MfE needs to do more to be clear about its role, both within and outside of the organisation.

MfE should provide a wider and deeper policy perspective on infrastructure.

MfE’s sector interaction has been noted as improving significantly with a recognised positive culture shift.

Our conclusionsThe Chief Executive and ELT are credible advisors to the Ministers and put real energy and intellect into their work in this regard.

MfE could set better boundaries in some of its work with Ministers, without diminishing their relationships and likely improving the quality of outcomes.

The perception that the Chief Executive and ELT are still new is a likely signal of a lack of deep technical knowledge which may be addressed through increased experiential diversity in the ELT.

More emphasis should be placed on having MfE subject matter and/or technical expert present when meeting with Ministers, independent of their hierarchical rank.

The lessons from the ‘Clean Water Package’ communication release should be captured and acted on so that MfE improves it ability to engage effectively.

To be rated strong MfE needs to:• consistently have the relevant deep

subject matter or technical experts present for meetings with the Minister

• identify and fill any human resources gaps

• respectfully set in place clearer boundaries in its Ministerial work

• transform its approach to communicating complex and challenging issues to ensure sophisticated execution is aligned with its stewardship function.

Relationships RatingEngagement with Ministers• How well does the agency provide advice and services to Ministers?


What we foundThe NRS and other system work is progressing well. Recent improvements include greater ease of coordination and collaboration through the budget process to provide Ministers with a single (sector) view of priorities and integrated advice.

The sector is not yet reaching the compelling level of routine collaboration and integration required to meet the ambitious environmental agenda (this is not an MfE-specific issue, all agencies involved are to a greater or lesser extent responsible). The sector’s steps towards the adoption of an investment approach are positive.

The Chief Executive is starting to change the way the NRS works by introducing new mental models, a focus on three critical problems and a shared agenda moving forward.

The Chief Executive’s arrival has balanced the tension between the environment and the economy and brought more of a team approach, with a much broader recognition of the connection between the economy and the environment and what this relationship looks like moving forward. This has been reflected, for example, in a shift in the way the sector is considering climate change, from a largely environmental issue to a whole-of-government issue, with significant economic implications.

MfE seems to find collaboration with MPI challenging and MfE thereby suffers from carrying too much on its own shoulders.

MPI, MfE and DoC as lead agencies in the NRS, need to provide leadership to the wider NRS group to enact a collective approach and accountability, although to date there is no commonly held view of the role or value the NRS can and must deliver.

MfE has good engagement with key business and primary industry stakeholders.

There are opportunities for MfE to expand on the work and established relationships in the Auckland Policy Office. This includes central and local government agencies and business stakeholders in the Auckland region, particularly as MfE is increasingly working across the planning and urban systems.

Our conclusionsThe key agencies need to learn that competition and collaboration are not opposites but are complementary, the opportunity to concentrate resources is stymied by a competitive agency approach (positional versus shared).

MfE staff turnover is a problem in making progress.

Since the arrival of the current Chief Executive the relationship with DoC has significantly improved.

The ‘sweet spot’ for effective system working is collaboration for a purpose (objective aligns with purpose), which in this case means identifying outcomes the system needs to collectively deliver.

MfE is dealing with very large economic agencies and needs to play a very intelligent role, as one key stakeholder said: “small but fierce”.

MfE and the wider agency system need to be integrated and get on the front foot environmentally as the environmental footprint alters with population growth and agricultural intensification.

As part of its role as the system lead, MfE should develop an integrated science plan with the system agencies and the science and research sector to ensure that the evidence to address New Zealand’s environmental policy and development needs is available when required.

MfE’s Chief Executive and ELT do not have enough time to think about leading the system as opposed to leading their own agency. They need resource to allow them to think about the system and need help from somebody who is tough, adept and expendable.

To be rated ‘well placed’/’strong’:• The agency system (but MfE, MPI,

DOC and MBIE in particular) need to shift to a model that requires more than the different agencies coming into proximity and making separate contributions, to a model that is far more closely connected and integrated.

• MfE needs to:

• step up to its leadership role – “small but fierce”

• promote an approach defined by collaboration for a purpose

• lead the development of an integrated science plan with the system agencies and the science and research sector

• diversify its experiential diversity to round out its reach

• overcome its staff turnover problem.

Relationships RatingSector Contribution• How effectively does the agency contribute to improvements in public sector performance?


People Development RatingLeadership and Workforce Development• How well does the agency develop its workforce (including its leadership)?

• How well does the agency anticipate and respond to future capacity and capability requirements?

Management of People Performance• How well does the agency encourage high performance and continuous improvement

amongst its workforce?

• How well does the agency deal with poor or inadequate performance?

Engagement with Staff• How well does the agency manage its employee relations?

• How well does the agency develop and maintain a diverse, highly committed and engaged workforce?

What we foundMfE has a persistent and unusually high staff turnover (approximately 25% in the year to April 2017), which impacts the organisation’s performance and relationships.

As yet it is not entirely clear what the absolute root cause of the turnover is, although key factors include:

• the legacy policy of hiring young analysts with an expectation that they will not stay at the organisation for long, (essentially seeing MfE as a training ground rather than a place people stay)

• a relatively flat structure and the size of the organisation.

MfE is undertaking a significant body of work to understand and address staff turnover issues. Historically, pay parity with other like roles in other agencies has been an issue but the current leadership is addressing this aspect. It is also usual for a natural amount of turnover to happen when an executive team changes and the deliberate shift in organisational purpose and strategy may also have contributed.

Staff are generally motivated and passionate about the work MfE performs.

The latest Gallup Staff Engagement Survey (November 2016) showed an overall deterioration from previous years, including a lower response rate. The main issues, consistent with other feedback referred to in this report, relate to systems processes and support as well as consistent communication of vision and strategy – the ability of staff to see how what they do aligns. That said MfE has comparatively high engagement scores and a low level of disengaged employees, meaning there is fertile ground for lifting engagement scores relatively quickly.

Staff report frustrations with performance management practices in MfE and would like to see these strengthened and applied consistently. Of themselves staff report these are not significant enough to make them leave.

The impact of high turnover is particularly noticeable in the organisation’s apparent inability to actively plan and manage its workforce. With one in four staff leaving each year MfE struggles to develop institutional capacity or capability. It is currently developing a People Strategy and understands this needs to respond to and align with both the strategy and operating model.

Management of performance is reported to be inconsistent across the organisation, with a high degree of knowledge across the organisation on who the ‘good managers’ are. Some staff commented that they did not like not knowing who their manager would be when they applied for a role, which happens as a result of the pool concept. It is unclear how much of an issue this is for MfE’s recruitment but warrants deeper examination.

Systems to support induction, on-boarding and the like are ad hoc and inconsistent. This appears to have deteriorated since MfE has been in temporary accommodation (as a result of the earthquakes) as tools like the intranet and phone systems have not been updated or reinstated owing to the temporary nature of the current accommodation. This has made it a particularly challenging time for new staff.


Our conclusionsOur general observation is that there is a lack of consistent practice with people systems and processes and MfE has not focused on or had strong people management capability to drive improved performance in this area. This is being actively addressed.

While clearly a problem for MfE, workforce planning and management does not appear to have been prioritised and/or resourced at a level that has had an impact and therefore has been allowed to continue in this sub-optimal manner. This too is being actively addressed.

High turnover represents a significant area of weakness and risk for MfE if it is to deliver against its performance challenges. It simply cannot afford to be distracted by the constant turnover and associated cost and will always struggle to build credibility if it cannot retain key people and institutional knowledge. MfE is taking steps to resolve this issue and needs to ensure its current investigation and actions to reduce its turnover to a more acceptable level.

MfE needs:

• a clear Workforce Strategy that supports meaningful roles and career development for its people using all the mechanisms available to it to grow and retain its skills and capability

• to attract and retain senior capability to align with its new operating model and provide meaningful and fulfilling professional opportunities

• upskill its managers and set clear expectations of what being a manager means in MfE and it must also lead and manage the managers.

It is not clear at this stage that MfE has a good enough understanding of the workforce it needs for the future and it appears there is quite a lot of work to be done to get this model right for the future.

To be rated ‘well placed’/’strong’ MfE needs to:• develop a People Strategy aligned

with the organisational strategy and operating model. It would need to have clear strategies for over-coming its turnover challenge

• invest in management capability building and provide support for managers through effective and fit-for-purpose people management systems and processes, having set a clear expectation of excellent people management

• demonstrate its workforce development plans and investments over time are linked to personal development plans for all staff

• have a more in-depth and granular understanding and consistent application of the people performance and development processes, as a human capital, intelligence-rich service agency.


Financial and Resource Management Rating

Asset Management• How well does the agency manage agency and Crown assets, and the agency’s balance

sheet, to support service delivery and drive performance improvement?

Information Management• How well does the agency manage and use information as a strategic asset?

Financial Management• How well does the agency plan, direct and control financial resources to drive efficient and

effective output delivery?

Risk Management• How well does the agency identify and manage agency and Crown risk?

What we foundMfE has a small asset base comprised largely of furniture and fittings and IT equipment.

MfE is responsible for managing large Crown Emissions Trading System liabilities ($2.1 billion).

MfE will take the role of lead agency for the redeveloped Charles Fergusson Tower, involving a 5 fold increase in its capital funding, which will require a more sophisticated approach to asset management.

Staff are not happy with the quality of the IT ‘kit’ and in particular the lack of telephony (as a result of relocation owing to the November 2016 earthquake). It is important that staff feel they have the tools they need to do the job.

In addition, the process for access to the computer system for new staff is seen as overly restrictive and bureaucratic.

MfE Information and Technology Services Strategy (2015) encompasses:

• Governance – alignment of investment decisions in information and technology to better support, enable and deliver MfE strategic outcomes

• Data Stewardship – unlocking the value of information by enabling stronger management of data, accessibility, integration, use and reporting

• Future Working Environment – delivering the right technology and IT services to support staff and operations across the organisation

• Continuous Service Improvement – annual programme of initiatives focused on the improvement of IT tools and services.

Work is being undertaken across the NRS agencies to develop a joint approach to data and data management. It is not clear whether there is a similar approach with regional and local government.

The Four Year Plan acknowledges that the Asset Management and IT/IM strategies will require review in light of the impacts of the November 2016 earthquake.

The latest Audit New Zealand Management letter rates MfE as follows:

• Management control environment – Good

• Financial information, systems and controls – Very Good

• Service performance information and associated systems and controls – Good.

MfE needs to improve its outcome based performance measures. It acknowledges this and has work in progress.

MfE recognises that it has a significant single person risk around the Emissions Trading Scheme accounting. It is taking steps to document this role to manage this risk. Strong relationships are maintained with colleagues in the Treasury who also have knowledge of the ETS.

The Finance team is well integrated into the policy process when required.

Operational risk registers are maintained at directorate level and strategic risk is the responsibility of ELT.

MfE has an Audit and Risk Committee but its function hitherto has focused on compliance rather than value add.

MfE has recently appointed an experienced senior risk advisor and has the opportunity to refresh membership of its Audit and Risk Committee.


Our conclusionsAsset and Financial Management capability are generally fit for purpose. The former will need to evolve and strengthen in light of added asset management responsibilities. Financial Management capability needs to extend to the ability to demonstrate value for money and improving value over time. This will require the development of more sophisticated measures.

Attention needs to be paid to the basics of IT management to support staff to work with access to fit-for-purpose tools in a user-friendly way.

Work with partners (NRS and regional and local government) to improve the ability to gather and share information and to facilitate communications from and to stakeholders and customers, is important to enabling MfE to respond to the challenges identified by this Review and needs to be progressed.

MfE’s approach to risk management is formulistic.

To be rated ‘well placed’/’strong’ MfE needs to:• ensure it is able to access the

capability required to undertake the Charles Fergusson Building lead agency role

• address issues relating to its kit in moving to the Charles Fergusson building and implementing its refreshed operating model

• implement (with its NRS and Environmental Management System partners an integrated approach to data management, accessibility, integration, use and reporting

• improve its outcome-related performance measures

• review its approach to the management of strategic risk and consider how it can use a refreshed Risk and Audit Committee to complement and support ELT.


AppendicesIn this section:

Lead Reviewer Acknowledgement About Ministry for the Environment

Framework Questions Ratings scale

Stakeholders Interviewed

4


Lead Reviewer Acknowledgement

The leaders of the Ministry for the Environment (MfE) asked us to push the boundaries on this Performance Improvement Framework (PIF) Review in two ways. Firstly, recognising the intergenerational implications of environmental management, they wanted us to take a longer-term view than the traditional Four-year Excellence Horizon. Secondly, they wanted us to emphasise their roles as stewards of New Zealand’s environmental management system.

This was an early indication that we were engaging with a leadership team that has a high level of ambition for its agency, the courage to go after that ambition and the humility to recognise they need the help of others to do that.

We appreciate the time MfE’s staff, and stakeholders gave us and the high level of engagement they brought to our conversations. In general they applauded the level of ambition that they observed in MfE’s leadership.

We also appreciate the State Services Commission and its central agency colleagues for supporting the evolution of the PIF in this way. In addition to the insights we trust we have brought to MfE and its partners we hope we have also provided insights into what it means to operate as a system which will have more general application for the Public Sector.


MfE MfE is the Government’s primary advisor on the New Zealand environment and international matters that affect the environment.

MfE’s statutory functions include:

• advice on environmental administration

• information gathering, dissemination and research

• advice to decision-makers

• resolution of conflicts in relation to policies and proposals

• provision and dissemination of information and services to promote environmental policies.

It is required to balance:

• the intrinsic values of ecosystems

• all values which are placed by individuals and groups on the quality of the environment

• the principles of the Treaty of Waitangi

• the sustainability of natural and physical resources

• the needs of future generations.

In 2016 legislation was enacted requiring MfE and Statistics New Zealand to produce synthesis and domain reports describing the state of New Zealand’s environment and the implications of that state.

MfE’s mission is to be “……stewards for the environment, so that we continue to have a prosperous Aotearoa New Zealand, now and in the future. Our purpose is to make Aotearoa New Zealand the most liveable place in the world. Making

New Zealand liveable requires bringing together the environmental and economic bits of the jigsaw to support a strong and sustainable society, culture, economy, and environment”.

MfE employs 329 full-time equivalent staff, with a total appropriation of $395.5 million. This appropriation includes approximately $55 million per annum for policy advice and $64.7 million for non-departmental output expenditure (largely administration of funds for the clean-up of waterways, waste minimisation and funding for the Environmental Protection Agency (EPA)). Nearly 70% of the appropriation is for allocating New Zealand emission units to sectors of the economy under the New Zealand Emissions Trading Scheme.

Natural Resources SectorSince 2008 MfE has been the lead agency of the core government agencies with economic and environmental interests described as the Natural Resources Sector (NRS). The NRS is made up of MfE, Ministry for Business Innovation and Employment (MBIE), MPI, Land Information New Zealand (LINZ), Te Puni Kōkiri (TPK), Ministry of Transport (MoT), Department of Conservation (DoC) and Department of Internal Affairs (DIA).

The NRS aims to provide the Government with consistent, high quality advice on strategic issues to do with New Zealand’s natural resources. These agencies are also the core agencies responsible for the Building Natural Resources workstream of the Business Growth Agenda (BGA).

Auckland Policy OfficeMfE has been a core member of the Auckland Policy Office (APO) since it was first established in 2005. Current agencies represented include SSC, DIA, DPMC, MBIE, Ministry for Justice, Ministry for Pacific Peoples, Ministry for Social Development, and MoT. The APO is geared towards building a better understanding of the needs of Auckland and its communities, as well as functioning as a central government hub in Auckland to build a stronger central government presence. The APO plays a pivotal role between central government, the Auckland Council and other stakeholders to deliver better outcomes and services for Auckland and New Zealand.

About the Ministry for the Environment


Environmental Management SystemMfE advises on the institutions, laws, regulations, policies and economic incentives for sustainable environment management, where ‘environment’ refers to both the built and natural environment. Other agencies, especially the Environmental Protection Authority (EPA) and local government are mainly responsible for implementing and enforcing these laws, regulations, policy and economic incentives. MfE has some operational responsibilities, including: aspects of Treaty settlements, administration of non-departmental funding, waste minimisation, as well as monitoring EPA’s performance. Other NRS agencies also have responsibility for aspects of ‘environmental management’, in particular DoC (Biodiversity), MPI (Primary Industries and Biosecurity), Ministry of Health (Human Health) and MBIE (energy, minerals, health and safety).

The performance improvement journey so far MfE underwent a PIF Review in October 2012 and a PIF Follow-up Review in 2014.

In 2012 the Lead Reviewers noted MfE was responsible for some of the most complex, cross-cutting, medium-term issues facing New Zealand. While it had substantially improved its performance, it needed to be quite exceptional going forward to make the contribution New Zealand needed from it.

Substantial governance, cultural and operational changes had been made, particularly in re-focusing its work on the interface of the environment and the economy, setting a new strategic direction, building its leadership and policy capability, lifting performance expectations and re-engineering processes.

It had also sharpened its engagement with key partners and stakeholders, including the formation of the NRS, developing a shared mission and innovative, collaborative ways of working across these core government agencies. The Lead Reviewers considered MfE had “set a new standard in the Public Service for effective collaboration with external partners and stakeholders”.

These achievements and the fact that they positioned MfE well for the future, were reflected in a number of ‘strong’ and ‘well placed’ ratings. However, some areas required improvement including, improving its relationship with its Minister, resource management reform and all elements in the financial and resource management section of the PIF.

The Lead Reviewers were satisfied that MfE had already worked on improving these areas but assessed it was in the early stages of this work.

The Lead Reviewers identified: “MfE’s performance challenge as leading the NRS to deliver socially and environmentally sustainable development for New Zealand”.

Successfully responding to the Four-year Excellence Horizon challenges would require:

• for environment management: an overarching long-term vision, strategy and multi-disciplinary analytical framework

• for the natural resources system: a strategy and analytical framework that integrated the economy and environment

• ready access to capability across core competencies, such as environmental management, the Treaty of Waitangi, economic and social impacts, ecosystems, regulatory and resource economics and practical business experience

• a culture that valued and fostered thought leadership and policy entrepreneurship at the sector level and within MfE

• ensuring accessible, comprehensive and reliable information about environmental indicators as part of its leadership role

• effective monitoring and evaluation regimes for all critical environment management reforms

• financial and resource management functions that supported MfE’s strategic decisions about deploying its resources.


The PIF Follow-up Review in 2014 found that, while MfE’s direction and progress was on track, it would require more work and a sustained effort to become an outcomes-focused, delivery and stakeholder-centric organisation. The Four-year Excellence Horizon developed in 2012 was still relevant; but given MfE’s environmental stewardship role the following areas required particular focus:

• development of a medium to long-term strategy, with measurable environmental outcomes to enable prioritisation of MfE’s efforts, including ongoing monitoring, evaluation and review of interventions

• continuing to build a stronger leadership role in major environmental system reforms in areas such as fresh water, resource management, Exclusive Economic Zone (EEZ), climate change and hazards and waste minimisation. Optimising MfE’s high-leverage model through deeper collaboration, particularly with councils and other stakeholders

• developing stronger capability to provide increased thought leadership and the knowledge base and policy entrepreneurship that engages and supports both economic and environmental goals of the Natural Resources Sector (NRS)

• delivering on the work programme to implement the improved environmental reporting system to ensure credibility of evidence publicly available for decision-making

• continuing to improve effectiveness and efficiency of its business performance through attention to financial and resource management.


Four-year Excellence Horizon What is the agency’s performance improvement challenge?

Results

Government Priorities 1. How well is the agency responding to Government Priorities?

Core Business2. In each Core Business area, how well does the agency deliver value to its customers and New Zealanders?3. In each Core Business area, how well does the agency demonstrate increased value over time?

4. How well does the agency exercise its stewardship role over regulation?


Leadership and Direction


5. How well do the staff and stakeholders understand the agency’s purpose, vision and strategy?

6. How well does the agency consider and plan for possible changes in its purpose or role in the foreseeable future?


7. How well does the senior team provide collective leadership and direction to the agency and how well does it implement change?

8. How effectively does the Board lead the Crown entity? (For Crown entities only)


9. How well does the agency develop and promote the organisational values, behaviours and culture it needs to support its strategic direction and ensure customer value?

Review 10. How well does the agency encourage and use evaluative activity?

Delivery for Customers and New Zealanders

Customers11. How well does the agency understand who its customers are and their short- and

longer-term needs and impact?12. How clear is the agency’s value proposition (the ‘what’)?

Operating Model13. How well does the agency’s operating model (the ‘how’) support delivery of

Government Priorities and Core Business?14. How well does the agency evaluate service delivery options?

Collaboration and Partnerships

15. How well does the agency generate common ownership and genuine collaboration on strategy and service delivery with partners and providers?

16. How well do the agency and its strategic partners integrate services to deliver value to customers?

Experiences of the Public

17. How well does the agency employ service design, continuous improvement and innovation to ensure outstanding customer experiences?

18. How well does the agency continuously seek to understand customers’ and New Zealanders’ satisfaction and take action accordingly?

Relationships


19. How well does the agency provide advice and services to Ministers?

Sector Contribution

20. How effectively does the agency contribute to improvements in public sector performance?

People Development


21. How well does the agency develop its workforce (including its leadership)?22. How well does the agency anticipate and respond to future capacity and capability

requirements?


23. How well does the agency encourage high performance and continuous improvement amongst its workforce?

24. How well does the agency deal with poor or inadequate performance?


25. How well does the agency manage its employee relations?26. How well does the agency develop and maintain a diverse, highly committed and

engaged workforce?

Financial and Resource Management

Asset Management27. How well does the agency manage agency and Crown assets, and

the agency’s balance sheet, to support service delivery and drive performance improvement?


28. How well does the agency manage and use information as a strategic asset?


29. How well does the agency plan, direct and control financial resources to drive efficient and effective output delivery?

Risk Management 30. How well does the agency identify and manage agency and Crown risk?

Framework Questions


Rating What it means

StrongHigh level of capability and sustained and consistently high levels of performanceSystems in place to monitor and build capability to meet future demandsOrganisational learning and external benchmarking used to continuously evaluate and improve performance.

Well-placedDelivering to expectations with examples of high levels of performanceEvidence of attention given to assessing future demands and capability needsComprehensive and consistently good organisational practices and systems in place to support effective management.

Needing developmentAdequate current performance – concerns about future performanceBeginning to focus on processes, repeatability, evaluation and improvement and management beyond and across unitsAreas of underperformance or lack of capability are recognised by the agencyStrategies or action plans to lift performance or capability, or remedy deficiencies are in place and being implemented.

WeakSignificant area(s) of critical weakness or concern in terms of delivery and/or capabilityManagement focuses on tasks and actions rather than results and impactsAgency has limited or no awareness of critical weaknesses or concernsStrategies or plans to respond to areas of weakness are either not in place or not likely to have sufficient impact.

Not able to rateNo evidence upon which a judgement can be made; orThe evidence available does not allow a credible judgement to be made.

Note: There have been four significant upgrades to the PIF Agency Model since it was implemented in 2009. The first was the inclusion of the Four-year Excellence Horizon in October 2011. The second was the Strategic Financial Management upgrade in December 2012. The third was the Better Public Services upgrade in January 2014. The most recent is the Customer refresh. These upgrades affect comparability with previous PIF reports.

Ratings Scale


Stakeholders Interviewed

The Lead Reviewers and Crown Law are grateful to the following organisations for making time to be interviewed for this review:

• Air New Zealand

• Auckland Council

• Audit New Zealand

• Business New Zealand

• Cawthron Institute

• DairyNZ

• Department of Conservation

• Department of Internal Affairs

• Environment Canterbury

• Environmental Defence Society

• Environmental Protection Authority

• Federated Farmers of New Zealand

• Fonterra Co-operative Group

• Forest and Bird

• Horizons Regional Council

• Insurance Council

• Iron Duke Partners

• Irrigation New Zealand

• Land Information New Zealand

• Landcare Research

• Ministry for Primary Industries

• Ministry of Business Innovation and Employment

• Ministry of Foreign Affairs and Trade

• Ministry of Transport

• Moana Fisheries

• National Institute of Water and Atmospheric Research

• New Zealand Forestry Owners Association

• Office of the Auditor General

• Office of Treaty Settlements

• Our Land our Water Science Challenge

• Petroleum Exploration and Production Association

• Sanford Limited

• Statistics New Zealand

• Tourism Sector

• Waikato Regional Council

• Watercare


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