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Cabinet paper

Cabinet Paper CAB-19-SUB-0060: Investor Confidence Rating Round 2 Tranche 3 results

Issue date: 
Monday, 10 February 2020
Version note: 

No information has been withheld.

Document Date: 
Wednesday, 4 Dec 2019
Publication category: 
Ministerial Portfolio: 
Finance

Accessible HTML version

Only the Proposal and Executive Summary sections of this Cabinet paper are extracted below in HTML. If you require a full HTML version please contact information@treasury.govt.nz and cite CAB-19-SUB-0060 as a reference.

Cabinet Paper CAB-19-SUB-0060: Investor Confidence Rating Round 2 Tranche 3 results

Portfolio: Finance

Proposal

1This paper invites Cabinet to approve the results of the latest tranche of Investor Confidence Ratings (ICR). This tranche assessed six investment-intensive District Health Boards (DHBs): Auckland District Health Board (ADHB), Counties- Manukau District Health Board (CMDHB), Capital and Coast District Health Board (CCDHB), Canterbury District Health Board (CDHB), Waitematā District Health Board (WDHB), and Waikato District Health Board (WKDHB)1.

Executive Summary

2The ICR is a three-yearly evidence-based assessment, in the form of an A-E (high-low) rating, of the performance of the 25 investment-intensive agencies in managing investments and assets that are critical to the delivery of New Zealand Government services. These agencies collectively manage 75 percent of the Crown’s balance sheet and hold assets worth over $100 billion.

3The ICR includes nine elements of investment and asset capability and performance – see Annex 3 for more details, including the scope of the ICR.

4The ICR is proving an effective tool for encouraging and incentivising improvements in the capability and performance of investment-intensive DHBs. The ICR incentive effects are delivering the following benefits:

4.1these six DHBs are starting to take a longer term, more strategic view of investments and assets that will deliver improved intergenerational wellbeing outcomes for New Zealanders.

4.2leadership teams and their organisations have changed their behaviours and are now focused on delivering the improvements suggested as part of the ICR process, often with additional resources and expert support.

5The ICR highlights each DHBs strengths and gaps in core aspects of its investment and asset management. It provides incentives to address these through the Cabinet expectation that they achieve a minimum B rating over time.

6These measurable improvements increase the likelihood that DHBs will deliver the results expected by government and taxpayers now and for the future.

7The Treasury has recently completed Round 2 ICR assessments on six DHBs, with the previous assessments having been completed between 2016 and 2017. Of these DHBs, five retained the ratings obtained in Round 1 and one has decreased from an A to a B rating.

8I invite Cabinet to approve these ratings which, given the more robust assessment in Round 2 of the ICR, better reflect the DHBs investment maturity/performance and improvements made. Approving the ratings will ensure that DHBs continue building capability to improve performance and to contribute to a more effective investment management system.

9Investment system arrangements remain unchanged for DHBs, pending the outcome of the Health and Disability review in 2020. Depending on the outcome of that Review, the Ministry of Health (MoH), in consultation with the Treasury, will consider developing new capital settings to support the incentive effects of the ICR, while also taking account of relevant measures of DHB performance and the need for appropriate oversight of sector investments. My expectation is that this work should be completed next year.

10We will undertake an independent review of the ICR in FY19/20 to assess its value and to inform the future programme of assessments.

1 Northland DHB was deferred from the Round 2 ICR assessments due to the deferral of funding for the redevelopment of Whangarei Hospital (which made them investment-intensive)

[Extract ends]

Last updated: 
Monday, 10 February 2020