Terms of Reference: Housing Shareholders’ Advisory Group (the Group)
Background
The National-led government is committed to lifting New Zealand’s economic growth. Raising productivity in the public sector is an important component of this.
The Crown holds assets worth more than $200 billion. Effective use of these is critical to achieving the government’s policy goals. Better use of existing resources in a capital constrained environment is a common theme across the public sector.
The Government also remains committed to delivering housing assistance to those most in need, but in doing so it recognises a number of challenges. Demand for low-income housing is likely to continue to increase. Additionally, there is considerable deferred maintenance on the existing state housing portfolio. Addressing these will require the Government to have a clear understanding of how it wishes to achieve its goals, appropriate ways to measure performance and sufficient flexibility to manage the portfolio in an efficient, commercially astute manner.
For housing, the main delivery vehicle is Housing New Zealand Corporation (HNZC). This entity holds assets worth over $14 billion. In addition, the Crown provides annual income-related rental subsidies of over $500 million.
How effectively these resources are meeting the Government’s goals is not entirely clear. HNZC is tasked with delivering a range of programs in addition to its role as a landlord. These have generally proliferated in recent years. They complicate analysis of the corporation’s performance. Moreover, the HNZC model is unusual within the state sector. Most of its expenditure is not appropriated, but nor is it fully subject to commercial disciplines (HNZC itself makes only a small return, on revenues and expenses both in excess of $900m). The KPIs reported by the corporation are numerous but largely operationally focussed.
The constraints and challenges to the Crown's effective provision of state housing were identified by HNZC to Cabinet's Expenditure Control Committee (ECC) in December 2009. The Housing Shareholders’ Advisory Group is a follow up.
Objectives
Given this context, it is timely to review the Crown’s approach to delivering social housing. The Government needs to be satisfied that the available resources are being used to best ensure that those people who have the greatest need are provided with suitable housing, in the highest priority locations, for as long as their need exists.
As part of this review, shareholding Ministers have agreed to establish a Group with the task of providing Ministers with independent advice on:
- The most effective and efficient delivery model for state housing services to those most in need
- More productive and innovative ways to use current social housing assets to better support the objectives of government
- Transparent measures of how the above are being achieved.
Ministers are seeking action-oriented, practical steps to improve delivery of housing to those that need it. Ministers expect the Advisory Group to provide a vision for the delivery of state housing, as well as a clear action path over the next three to five years to achieve this.
Scope
The Group will provide independent expert advice directly to the Minister of Finance and Minister of Housing, addressing the objectives and challenges outlined in these terms of reference.
The main tasks are:
- Understanding the current and likely future demand for subsidised housing in New Zealand
- Identifying the roles for HNZC and the government in delivering this assistance
- Considering how the Crown’s investment could be best employed, and the tenancy and asset management best engaged, to address these challenges.
- Identifying a small number appropriate performance measures that focus on the efficient delivery of the Crown’s subsidy to those most in need.
Wherever possible the output and financial consequences of proposals made by the Group should be quantified.
In undertaking these tasks, it is likely that the Group will need to consider the following:
- The government’s objectives for social housing
- What is needed to achieve improvements in the efficiency and effectiveness of HNZC operations and better utilisation of the current asset base
- What hinders improvements to the effective and efficient delivery of social housing
- What is HNZC’s core business, versus its current scope of business
- What alternative options are available to the government and its agents, to deliver its social housing outcomes, in light of the magnitude of its current investment
- How should HNZC measure its success (or otherwise) at delivering social housing outcomes.
Out of scope
The Group will not have any specific powers or functions other than to provide recommendations to Ministers. The Group’s role will be additional to existing roles of HNZC and monitoring departments.
Areas outside the scope of the Group’s remit include:
- The Government’s objectives when delivering housing assistance
- The level of assistance provided (e.g. the size of income-related subsidies)1
- Budget 2010 process and administration
- Day-to-day staff and personnel management within HNZC.
Timing and deliverables
The Group will be established by 16 February 2010 and will meet as necessary, in order to provide a final report to Ministers by the due date of 30 April 2010.
The key milestones are:
| Deliverable |
Description |
Due by |
| Finalise the review terms of reference |
Ministers to agree the final terms of reference for the Group |
15 February 2010 |
| Interim report to Ministers |
The interim report will summarise the Group’s initial findings and proposed direction |
2 April 2010 |
| Final report to Ministers |
The final report (with recommendations) will address feedback based on the draft report. |
30 April 2010 |
Governance
The Group is convened by and responsible to the Ministers of Housing and Finance. The Ministers have set the terms of reference and agreed deliverables. Individual members and the Chair are appointed by Ministers, and may be removed by Ministers at any time at their sole discretion.
Members will report through the Chair of the Group to Ministers.
The Group is not a legal entity and will not have the power to contract in its own name.
The Group will be supported by a secretariat that will be formed in the Department of Building and Housing. The secretariat will:
- Coordinate meetings of the Group and with Ministers’ offices
- Coordinate information flows and requests from the Group to the officials’ group, as needed
- Facilitate access to external advice as needed/procurement
- Provide analytical support to the Group where needed
- Provide administration services (e.g. travel and expenses).
Relationships
The Group will have a direct relationship with Ministers and Ministers’ Offices. Meetings between the Group and Ministers will be scheduled as necessary.
The Group will be able to call on the resources of various agencies, as required, to receive advice and information. This information will be sourced through the secretariat, which will have arranged in advance for officials from key agencies to be available to respond to such requests, and at the minimum will include:
- Department of Building and Housing
- The Treasury
- HNZC.
Key advisors to the Group will include:
- Suzanne Townsend (Deputy Chief Executive Sector Policy, Department of Building and Housing)
- Pat Snedden (Board Chair, HNZC)
- Dr Lesley McTurk (Chief Executive, HNZC)
The Group will also be able to draw on expertise and advice from other individuals and organisations, which will be coordinated by the secretariat.
Members’ first point of contact for substantive policy discussion will be the Chair of the Group, while day-to-day administrative matters will be addressed through the secretariat.
Communications
Only the Chair of the Group may make statements publicly about the work or anything in connection with the work of the Group. Before the Chair makes any public statement, the Chair must have consulted with and received approval from Ministers.
Conflicts of interest
Where members of the Group face potential conflicts of interest, or the perception of a conflict, these will be declared initially to Cabinet and then, as early as possible, to the Chair of the Group as they may arise.
Depending on the specific circumstances, the Chair will develop a process for managing each conflict as necessary.
1. Note: While the Group will need to consider the inter-relationship between the various forms of government assistance and the incentives/outcomes this creates, the level of assistance is out of scope.