Annual Report for the year ended 30 June 2009
Part 3: Statement of objectives and service performance
Objectives
The Estimates of Appropriations, Statement of Intent and Output Plan formed the framework for the definition of objectives and performance indicators by divisions within the Ministry. These were reviewed and adapted where necessary in response to external change during the year. In addition, at the end of each quarter, divisions formally evaluate their performance against their objectives in order to compare results with priorities, resource allocations and targets set at the beginning of the year. Quarterly reports were made to the Minister of Defence on the delivery of these outputs to the Crown.
Quality assurance
The Ministry applied to all outputs quality assurance processes designed to maintain professional standards and quality of work. These processes included: the provision of appropriate training and skills programmes and career development opportunities; annual evaluations and reviews of staff performance; and managerial oversight. International Standards Organisation (ISO) 9001 accreditation has been maintained in the Acquisition Division. The Ministry maintains the financial management systems necessary to ensure that classes of outputs are delivered within approved appropriation and in compliance with the provisions of the Public Finance Act. Regular monitoring and reporting of expenditure against output forecasts was undertaken. Systems are in place to ensure working capital is managed at an optimum level and foreign currency exposure is minimised.
Cost effectiveness of the Ministry's interventions
The Ministry's interventions impact primarily on the operations and capabilities of the NZDF. The cost effectiveness of the Ministry's interventions is therefore manifest through the contribution that they make to the efficiency and effectiveness of the NZDF.
In April 2009 Cabinet approved the Terms of Reference of a defence review, known as the Defence Review 09, commissioned pursuant to section 24(2)(c) of the Defence Act 1990. This review, led by the Secretary of Defence, is tasked with examining many aspects of the capability and operations of the NZDF. Through its value-for-money programme, the government is examining the efficiency and effectiveness of every government agency. The Defence Review 09 is the agreed mechanism by which the efficiency and effectiveness of Defence will be subject to critical scrutiny. The exercise will be complete with the intended publication of a defence white paper by 30 March 2010.
A necessary first step for demonstrating that expenditure is cost effective in achieving desired outcomes is to be able to specify those outcomes in measurable terms. In a defence context, this is a difficult task. The Ministry has been leading an exercise through which government agencies in the security sector are working together to specify relevant outcomes in measurable terms. When complete, this work will support evaluation of the cost effectiveness of the Ministry's interventions.
