The State Services Commission's response to Russel Norman, released by the Green Party

7 October 2011

Dear Dr Norman,

Thank you for your letter of 22 July requesting that I investigate whether the practices of the New Zealand Treasury have breached the State Services Guidelines for accepting gifts and hospitality. This letter is further to my interim reply of 19 August.

I have given serious consideration to this matter and there have been a number of discussions with the Secretary to the Treasury and his staff. An external review of internal policies and procedures has been commissioned by the Treasury and their internal policies have been strengthened, with my staff being consulted in the process. Therefore, I do not consider that a further investigation by me is warranted. I outline below my reasons for drawing this conclusion.

The Treasury is required to follow the guidance provided by both the State Services Commission and the Office of the Auditor-General for determining the appropriate conduct for receipt of gifts and hospitality. This guidance sets out the framework to be followed by State Services agencies for receipt of gifts and hospitality.

An underlying principle from the State Services Code of Conduct is that gifts or hospitality that could place a State servant under any obligation or perceived influence must be declined.

In the event that consideration is being given to acceptance of gifts or hospitality, the following aspects need to be taken into account:

• consistency with the principles and guidelines applying to the State Services generally, or departmental or other relevant policies

• the value, source, timing and frequency of gifts and hospitality

• relevance of the event or function to the agency's core business.

It is important for the Treasury to maintain effective engagement with the private sector. This engagement is critical to the development of an outward-looking, high- performing State sector. I would expect that the Treasury, given its role as the principal economic and financial advisor to the government, is actively engaged with the private sector. Specifically, the Debt Management Office, which has received the majority of hospitality extended towards Treasury staff, has a legitimate role in maintaining relationships with investors and financial institutions.

For the most part, this interaction will occur in the course of standard business engagements. However, I acknowledge that, on occasion, there is sometimes a role for State servants to develop relationships outside the government sector through accepting a modest level of hospitality. As outlined in the guidance, acceptance of such hospitality must not come at the cost of inappropriate influence on the advice or decisions of State Servants, or create perceptions that inappropriate influence is being exercised.

Notwithstanding the need for Treasury staff to engage with the private sector, the published gifts and hospitality register gave me some concerns about the receipt of gifts and hospitality by Treasury staff in a number of circumstances.

These instances did not meet the standards I and New Zealanders expect of an impartial State Services.

Some of the gifts and hospitality received by staff since 2007 appeared to be excessive in volume. In addition, I was concerned by the large amount of hospitality received by some individual staff, and the receipt of high-value and highly sought after entry to significant sporting and recreational events.

The Secretary of the Treasury instigated an external review of process and procedures to ensure that all gifts and hospitality accepted by the Treasury fall within the guidance framework. The review assessed the alignment of the Treasury’s current policy and practice with State Services Commission and Office of the Auditor-General guidance and principles, as well as identifying improvements required in Treasury policy and supporting processes and procedures to improve understanding and compliance by Treasury staff.

I have discussed the issues and the approach to addressing the situation with the Secretary to the Treasury. I am confident that the Secretary is committed to ensuring that the guidance provided by the State Services Commission and the Auditor- General is incorporated into Treasu.ry`s revised intemal policies and practices and is consistently followed by Treasury staff and management.

As there has been significant public interest in this matter, I will be issuing a media statement covering my response. I have attached a copy for your information, embargoed until 1:oopm on Friday, 7 October 2011.

Thank you again for bringing this issue to my attention.

Regards
Iain Rennie
State Services Commissioner

[Original document: SKMBT_C45111100711140.pdf
Attached release: Gifts and Hospitality in the State Services]

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