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2. NATIONAL INTEGRITY SYSTEM ASSESSMENT INTEGRITY PLUS The Assessment Approach Public Sector Conference 6/9/13 Liz Brown, Research Team Manager and former Banking Ombudsman Murray Petrie, Co-Director, NIS Suzanne Snively, Co-Director, NIS Helen Sutch, Chair IPRAG Sir Anand Satyanand, TINZ Patron, Chair NIS External Advisory Group INTEGRITY PLUS National Integrity System Assessment INTEGRITY PLUS National Integrity System Assessment 2

3. New Zealand’s Public Service tops the rankings as the least corrupt Our key competitive advantage It influences everything we do and say Public servants should take pride in this Respect the legacy of those who came before Don’t take it for granted Harder to maintain INTEGRITY PLUS National Integrity System Assessment INTEGRITY PLUS National Integrity System Assessment 3

4. INTEGRITY BRINGS:  Efficiency  Effectiveness  Fairness  Good systems  Good outcomes  Good branding  Resilience  And hope INTEGRITY PLUS National Integrity System Assessment INTEGRITY PLUS National Integrity System Assessment 4

5. For the public sector and New Zealand: Promoting strong integrity systems What is corruption in our context How do we prove ourselves? Carry out an Integrity Plus National Integrity System assessment INTEGRITY PLUS National Integrity System Assessment INTEGRITY PLUS National Integrity System Assessment 5

6. INTEGRITY PLUS National Integrity System Assessment INTEGRITY PLUS National Integrity System Assessment 6

7. A CONSULTATIVE PROCESS Project launch - 13 November 2012 First wave of findings - 8 May 2013 First papers on website - 8 May 2013 Second set of papers on website - late August Public forum Auckland - 14 August 2013 Expert workshop Wellington – Sept 2013 Report launch - October 2013 INTEGRITY PLUS National Integrity System Assessment INTEGRITY PLUS National Integrity System Assessment 7

8. THE REVIEW PROCESS -Training with TI-Berlin based around NIS framework -Researchers reviewed approach and each others’ work -IPRAG reviewed first drafts of Pillar Report -Co-directors reviewed drafts and TINZ Board ratified process for reports to go the TI-Berlin for review -Pillar reports to the External Advisory Group for Review - Following this, Pillar’s scored by Role, Governance and Capacity -IPRAG Reviewed Score -Full report with scores reviewed by TINZ Board -Full report to workshop with representatives from all over New Zealand (and a couple from overseas) for recommendations to be discussed INTEGRITY PLUS National Integrity System Assessment INTEGRITY PLUS National Integrity System Assessment 8

9. PILLAR ASSESSMENTS 1. Capacity 2. Governance 3. Role 4.Treaty of Waitangi INTEGRITY PLUS National Integrity System Assessment INTEGRITY PLUS National Integrity System Assessment 9

10. FOUNDATIONS Political Societal Economic Cultural Environmental Treaty of Waitangi INTEGRITY PLUS National Integrity System Assessment INTEGRITY PLUS National Integrity System Assessment 10

11. CROSS-CUTTING THEMES EMERGENT CROSS-CUTTING THEMES BEING ADDRESSED The nature of the culture of integrity? The informality of the legal framework? Where are the gaps in transparency? Is there sufficient focus on prevention? Are conflicts of interest managed? INTEGRITY PLUS National Integrity System Assessment INTEGRITY PLUS National Integrity System Assessment 11

12. NATIONAL INTEGRITY SYSTEM ASSESSMENT INTEGRITY PLUS Public Sector Pillar The Public Sector Pillar covers “state services” –the public service and crown entities associated with the Executive- and Regional and Local Government Author: Alex Matheson: Governance and Development Consultant (formerly Governance and Management Advisor to the Commonwealth Secretariat and OECD) 12

13. Levels of Corruption and Integrity of Officials Institutional analysis showed NZ deserves its high CPI ranking The New Zealand Public Sector is rule abiding, and transparent & accountable for use of powers and resources ( though public procurement needs some tightening) Because? -a connected, law abiding egalitarian society -a history of open government -a world class public sector financial management and accounting system 13 Public Sector Pillar

14. But some wider good governance concerns No systematic evaluation and feedback on the effectiveness of policies has contributed to: – Persistence with inadequate public management policies (especially lack of cohesion) – Some major regulatory failures Insufficient transparency/accountability for policies of inter- generational impacts vs importance – e.g. lack of regular national environmental monitoring 14 Public Sector Pillar

15. Some areas of “constitutional” friction between Ministers and Public Sector Policy advisory capacity/role of public service Relations between central and local government. Legitimacy of local democracy? Crown entity board appointments and respect for statutory arm’s –length principle 15 Public Sector Pillar

16. Challenging Plans Afoot Better Public Services reforms is aiming at more coherent PS management and action Changes to Public Finance Act make CEs more accountable for policy effectiveness. (Stewardship) Success will require- Ministers to work more closely, cross - government matrix management by officials, & more evidence-based policy culture Long-term benefits from our public sector adaptability depend on the quality of the national conversation on our constitutional health. 16 Public Sector Pillar

17. Integrity Plus NZ National Integrity Systems Assessment: Business Pillar Pattrick Smellie, Business Journalist Business Pillar 17

18. “Pike River” moments Leaky homes Finance company collapses Pike River Ross Asset management Fonterra food scare Business Pillar 18

19. Brands and Trust Trust is hard-won, easily lost, and very difficult to rebuild Brands are above all based on trust NZ’s brand is as much about trust as it is about purity Defending that brand is important Business Pillar 19

20. Do NZ businesses realise this? Complacency, naivety, or lack of knowledge? – Or a bit of all three? – Transparency and integrity vs corruption Key risks – Lack of formal processes/policies – Third party representatives in export markets – Small exporters and importers’ institutional capacity Business Pillar 20

21. JUDICIARY – Margaret Wilson OMBUDSMAN – Liz Brown MEDIA – Dr Bryce Edwards JUDICIARY – Margaret Wilson OMBUDSMAN – Liz Brown MEDIA – Dr Bryce Edwards Judiciary Ombudsman Media Pillars 21

22. JUDICIARY meets high standards of independence and integrity. in particular operates independently of the Executive and provides effective oversight of it through judicial review. has a constitutional relationship of mutual respect with the Legislature is accountable through the appeals process and the Judicial Conduct Commissioner needs a more transparent process of appointment for High Court judges needs to be fully accountable by reporting independently on their activities has some concerns about MoJ focus on administration of justice from the perspective of value for money and customer satisfaction Judiciary 22

23. OMBUDSMAN meets high standards of independence, accountability and integrity is an important check on the exercise of administrative power and on the proper use of the official information legislation funding has not kept up with an increase in complaints and there are unacceptable delays. New functions may not be adequately funded. a recent announcement of increased funding for 2013-4 will help is otherwise effective in the handling and resolution of citizens’ complaints has a limited role in raising public and governmental awareness about standards of ethical behaviour could usefully undertake further educational and awareness programmes Ombudsman 23

24. MEDIA A free and independent media operates A strong focus on corruption in the media But: A lack of diversity (ownership and content) Limited public and community broadcasting Limited (in depth) investigative journalism Media 24

25. Since the 2003 National Integrity System assessment, there have been some welcome areas of strengthening of transparency systems and accountability in New Zealand. It is clear that New Zealand remains highly rated against a broad range of indicators of transparency and the quality of governance. A number of areas of concern, weakness and risk highlighted by the 2003 NIS remain in the face of on- going and new challenges to integrity systems The core message of the assessment is that it is beyond time to take the protection and promotion of integrity more seriously and to act now. 25 Why Strong Integrity Systems Matter

26. Fosters public trust – legitimacy – the sustainability of our institutions – citizens’ respect for our institutions Supports tax system / tax base Trust is an economic as well as a constitutional and social value Strong integrity systems support social cohesion – in an increasingly diverse country 26 Why Strong Integrity Systems Matter

27. 27 Why Strong Integrity Systems Matter Because of the public sector’s good CPI, there are 7 key potential benefits to New Zealand organisations who follow the precepts of good governance. These benefits provide the basis for growing GDP. These have the potential to increase returns through: 1.Good Reputation: The business returns because of a strong reputation and brand from adopting non-corrupt business practices combined, by association, with the current international perception that the New Zealand public sector is amongst the three least corrupt in the world, is the essence of what makes any exporting company achieve quality revenues; 2.Lower cost to doing business (research shows corrupt practices add an average of 35% to the cost of doing business in Malaysia, for example); 3.Lower cost of capital; 4.Easier (e.g. less expensive, more open and quicker) overseas market access; 5.Ethical businesses achieve a higher return on investment (for example, the top 110 Ethisphere Global Companies traded above the Standards & Poor’s top 500 Share market average between 2007 and 2011); 6.Staff prefer to work for ethical organisations; 7.Ethical organisations achieve greater customer satisfaction.

28. SFO Training SFO Training will provide a tool for all, public, private NGOs, large or small, Enterprises to Become as Good as the Public Sector is Perceived Based on UK Training programme adapted for New Zealand Freely available Will be continuously improved to reflect increased knowledge of ways to strengthen integrity systems The Integrity Plus NIS Assessment provides basis to continuously improve integrity systems 28 Why Strong Integrity Systems Matter

29. 29 Objective: Keep New Zealand as Good as it’s Perceived Objective: Keep New Zealand as Good as it’s Perceived Why Strong Integrity Systems Matter Appreciate the strengths of our public sector. Take action now to strengthen integrity. IOD support the development of more robust governance by leading the conversation about the 4 Pillars of good governance. Build stronger relationships between public, private and NGO sectors. Organisations develop plans to realise the returns from the 7 benefits of a high integrity society. Appreciate the strengths of our public sector. Take action now to strengthen integrity. IOD support the development of more robust governance by leading the conversation about the 4 Pillars of good governance. Build stronger relationships between public, private and NGO sectors. Organisations develop plans to realise the returns from the 7 benefits of a high integrity society.

30. 30 Objective: Keep New Zealand as Good as it’s Perceived Objective: Keep New Zealand as Good as it’s Perceived Why Strong Integrity Systems Matter Questions

31. 31 Thank You DISCLAIMER This presentation is for information and discussion purposes. Neither the presenter or Transparency International accept any liability whatsoever for the consequences from the use of this presentation by any party in any circumstances. Comment, including reference to others knowledge, is actively sought and will be considered in future discussion papers and presentations.

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