Story: Crown entities

Page 3. How are Crown entities governed?

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Acts of Parliament

Most Crown entities have been created by specific acts of Parliament. Some, such as the Crown research institutes, Radio New Zealand, Television New Zealand and the New Zealand Venture Investment Fund, are similar to state-owned enterprises. They are registered under the Companies Act 1993 as limited-liability companies, with shares held by the responsible minister and the minister of finance.

The Crown Entities Act 2004 established some general rules for governance of the non-education Crown entities (of which there were 94 in 2010). The act covers the appointment, powers and responsibilities of members of the governing body, its accountability to Parliament, and financial rules. The relationship between the Crown and the2,512 (as at 2010) educational Crown entities is largely set out in the Education Act 1989.

Crown agents

Each Crown entity has a responsible minister, whose powers vary according to the Crown entity’s classification. Some entities termed ‘Crown agents’ must, like any government department, obey government policy directives. These include some of the biggest service-delivery organisations such as the Accident Compensation Corporation, district health boards, the Fire Service, Housing New Zealand, the New Zealand Transport Agency and the Tertiary Education Commission.

Autonomous Crown entities

A second category of organisations, called ‘autonomous Crown entities’, must only have regard to policy directives. These include the Arts Council, the Museum of New Zealand Te Papa Tongarewa, the New Zealand Symphony Orchestra and Te Māngai Pāhō (Māori Broadcasting Funding Agency).

Independent Crown entities

Organisations in a third category, called ‘independent Crown entities’, are generally fully independent of government policy and include some important regulatory and quasi-judicial bodies like the Commerce Commission, Electoral Commission, Independent Police Conduct Authority and the Financial Markets Authority.

Governing bodies

Most Crown entities are governed by boards or councils. In a few cases, the governance is in the hands of a single person, for example the Independent Police Conduct Authority and the Children’s Commissioner. With some exceptions (some elected members of school boards, tertiary education institutes and district health boards), appointments are made by the government of the day.

There are around 650 government appointments. Ministers are free to appoint or nominate who they wish but are supposed to take into account appropriate knowledge, skills and experience and the desirability of promoting diversity in membership. Anybody can apply to be considered for appointment. Appointments are generally for three years, except for independent Crown entities, where the term is five years. Members receive fees, mostly on a scale decided by the government but, in the case of independent Crown entities, according to decisions by an independent remuneration authority.

The general powers and responsibilities of governing bodies are set out in the Crown Entities Act. The Companies Act governs the duties of directors of Crown companies (such as Television New Zealand), but the general provisions for board decision-making, managing conflicts of interest and reporting are similar to those for other Crown entities. Members are generally protected from civil liability for any decision or action by the Crown entity for which they are responsible.

An odd fish

New Zealand’s 12 fish and game councils are also Crown entities. Although they receive no direct government funding – almost all of their revenue comes from licence sales – they still report annually to the minister of conservation.

The formal relationship between the government and Crown entities is conducted between the responsible minister and the governing body (usually a board). In practice many Crown entities have direct contact with ministers through senior management, particularly when there are significant issues of public policy involved in their operations. Ministers very rarely make use of their formal powers to direct Crown entities, and almost always work less formally with board members and senior management.

Accountability

Crown entities have documents called statements of intent that set out their goals and funding. These are agreed with the minister at the start of each financial year. Each Crown entity reports on the achievement of these goals in its annual report to Parliament and its financial statements are audited by the controller and auditor-general. Each year parliamentary select committees scrutinise the estimates and review the statements of intent and annual reports of Crown entities. The ombudsman can consider complaints about the administration of Crown entities under the Ombudsman Act 1975 and (under the Official Information Act 1982) about decisions by these organisations to withhold information.

How to cite this page:

Rob Laking, 'Crown entities - How are Crown entities governed?', Te Ara - the Encyclopedia of New Zealand, http://www.TeAra.govt.nz/en/crown-entities/page-3 (accessed 23 October 2019)

Story by Rob Laking, published 20 Jun 2012, updated 30 Jun 2015