VOTE INTERNAL AFFAIRS WRITTEN RESPONSES TO THE ANNUAL REVIEW SUPPLEMENTARY QUESTIONS 2016/17
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1 VOTE INTERNAL AFFAIRS WRITTEN RESPONSES TO THE ANNUAL REVIEW SUPPLEMENTARY QUESTIONS 2016/ The Committee notes that DIA has identified significant medium and long-term cost pressures and has initiated a Stewardship and Organisational Sustainability Programme to help address the issues. What are the sources of cost pressures? What challenges and opportunities has the work on financial sustainability identified? In what areas has DIA sought business efficiencies, and what does that mean for services? The Department delivers more than 120 services, and holds two functional leadership roles across all-of-government, through the Chief Digital Officer and Chief Privacy Officer. We are funded by a mix of Crown and recovered third-party funding (primarily from fees). The Department s cost pressures are a result of: Remuneration pressures; Inflationary cost pressures for delivering core services; Unrecovered costs related to products delivered through our functional leadership roles (i.e. common capabilities); Forecast shortfall in the passport memorandum account, primarily as a result of the change in passport tenure from 5 to 10 years. The Department has progressed the first of three phases of work in our Stewardship and Organisational Sustainability Programme. To date, key findings indicate that the Department is operating efficiently with the overall costs for running the organisation similar to comparable Departments. We are doing so with limited discretionary funding, given that ninety per cent of services delivered are currently legislatively required. We have identified strong productivity improvements in our delivery of services over the last four years, with a 7% reduction in the average operating cost per person over this period. The Department s next steps will be to identify options for trade-offs and choices to support its financial sustainability for the medium and long term The Committee notes that about half of DIA s funding stems from fees and other third party funding and that the Memorandum Account balance on 30 June 2017 was showing a surplus of $30.5 million, mainly reflecting movements relating to Passport Products. Please outline key developments behind significant imbalances in memorandum accounts, either current or projected, and initiatives in progress to address the underlying issues. DIA has 11 memorandum accounts as at 30 June The memorandum accounts surplus reserve was $30.5m as at 30 June It is forecast to be $60.4m by 30 June This surplus is representative of a point in time which is expected to change as explained below, by the four most significant current and projected memorandum accounts: Passport Products Current Surplus $34.015m The Passport Products memorandum account balance is expected to continue to increase over the first five years of the planning horizon until adult renewal volumes significantly decrease in the year ending June 2021, at which point the memorandum account will return to a deficit for the balance of the planning horizon. The significant decrease in adult renewal volumes from November 2020 is due to the adult passport validity period increase from five years to ten Page 1 of 7
2 years in November In addition, following approval from Cabinet, the Department will undertake work as part of the Transforming the System of Service Delivery programme to modernise systems for identity-related products. A report back to Cabinet is due in 2018 on options to address the projected deficits from June Common Capability Products Current Deficit ($11.550m) The Government Chief Digital Officer (GCDO) manages a number of ICT Common Capabilities that allow agencies to share ICT investment and pool resources, reducing duplicated investments and allowing costs to be shared across the system. Common Capabilities are procured once for the benefit of all agencies, reducing procurement costs. The memorandum account receives service fees from consuming agencies set as a percentage of their consumption. This is felt to be the most equitable method, i.e. mapping cost recovery to usage. Investment in these capabilities through this memorandum account has resulted in direct sustainable annual savings to government exceeding the $100m target set by Cabinet ($107m FY16/17) resulting in a total of $292m over the period the memorandum account has been in use to June The majority of these savings result from better pricing to government, through government acting as a single customer. These savings fall with individual agencies who consume these services. They have been ratified by a third party audit review and accepted by Treasury. The memorandum account is forecast to break even from FY2021, however updated projections now indicate the break-even position will not occur due to revised projected costs of operation and service fees. A significant review of cost and fee projections has identified the following trends affecting the forecast: future revenue for a number of products is reduced due to changes in agency demand and maturing of the market offerings; increased costs due to: the development and operation of the Marketplace, a digital channel for procurement directed by cabinet and the reopening and additional security certification for Telecommunications as a Service (TaaS) which is the largest by some measure of the AoG capabilities. This has been raised with The Treasury to progress a sustainable solution while continuing to realise the direct (circa $100m pa) and broader benefits from the common capabilities approach. Citizenship Products Current Surplus $15.688m The balance in the Citizenship memorandum account has increased as it has been affected by changing volumes that are driving the account up. The changes in volume are most likely influenced by overseas events. In addition, following approval from Cabinet, the Department will undertake work as part of the Transforming the System of Service Delivery programme to modernise systems for identity-related products. The balance in the Citizenship memorandum account is expected to contribute to the increased operating costs following the replacement of ageing technology. Citizenship fees are planned to be reviewed in 2017/18 taking into account this programme of work. Page 2 of 7
3 Gaming Current Deficit ($7.267m) The increased fees in 2016/17 are contributing towards a reducing deficit balance. The fees are expected to be reviewed again in 2018/19 to ensure a reducing deficit balance as well as full cost recovery The 2016/17 Annual Report shows that DIA missed some of its performance targets. Please provide an update on performance as it relates to RealMe, outline any initiatives to improve uptake, including how DIA is working with other agencies and partners to achieve this. Please provide more detail on how DIA has measured achievement against objectives for Information and Technology Services. Please provide an update on performance as it relates to RealMe, outline any initiatives to improve uptake, including how DIA is working with other agencies and partners to achieve this. All performance targets for the 2017/18 year are currently on track to be achieved. Uptake around RealMe services has continued to trend upwards during the 2017/18 financial year: The number of services using the RealMe login service has steadily increased with an additional 10 services being integrated during the 2017/18 financial year (to 31 January 2018). This brings the total integrated services using RealMe login service to 103. The number of services using the RealMe identity verification has continued to grow with an additional 4 services being integrated during the 2017/18 financial year (to 31 January 2018). This brings the total integrated services using RealMe identity verification service to 15. The number of RealMe logins created is almost 3.8m with peak use running at 1.4m on average logins per month and 66% of people using their same login with multiple services. The number of identity assertions (i.e. when a person consents to share their verified identity information with an organisation) has continued to grow with 135,572 identities asserted in 2016/17 mainly for services relating to student loans and electoral enrolment. In the seven month period from 1 July 2017 to 31 January ,832 assertions have been completed, with 27,252 assertions in January As at 31 January ,472 New Zealanders had a verified RealMe identity that enables them to assert their identity online for both public and private sector services assertions. The number of verified RealMe identities continues to grow steadily with 129,832 issued for the 2017/18 financial year to 31 January The Department has a number of initiatives underway that will contribute to further growing the uptake of RealMe services, including: NZ Transport Agency (NZTA) will be implementing an option to apply for a Driver Licence renewal online (300,000 renewals are processed per annum) using verified identity to provide assurance around the applicant s identity. In addition, the photo collected as part of the RealMe verified identity issuance process will be able to be provided to NZTA to be printed on the Driver License. Implementation date for this is 1 July 2018, subject to changes to the Driver Licensing Rule. There is widespread interest in use of the verified photo which is now possible as a result of recent Page 3 of 7
4 amendments to the Electronic Identity Verification Act, including for professional registration processes and identity card processes (such as for students). The Department is in strategic partnerships with banks to help with identity verification services. The Department is currently in the process of transitioning responsibility for private sector uptake from New Zealand Post. Currently in this area BNZ, ANZ and Kiwibank are integrated with RealMe, with Westpac currently being integrated. The Department is developing an app called RealMe Now that will allow applicants to verify their identity and obtain a RealMe verified account using a mobile device. Initially this will be used by to those who hold a current NZ passport so that their image can be compared to their NZ passport images using facial recognition technology. Please provide more detail on how DIA has measured achievement against objectives for Information and Technology Services. Measure Standard 2016/17 Result Governance Group (Service Innovation Working Group) satisfaction with the quality of advice and support received assessed as 3 or better Percentage of customers who assessed as 4 or 5 the ease of use of digital services Overall online target projections increase How this is measured 75% 100% Measured using a scale of 1 (very unsatisfied satisfied) to 5 (very satisfied). Data collected via an questionnaire sent by the Secretariat to the Service Innovation Group members. At least 80% At least 63% 78% This data is a subset of the KiwisCount survey and provided to the Department by the State Service Commission. 58.0% The percentage is an average calculated from the digital uptake data provided by the ten contributing agencies on quarterly intervals. The performance target of 70% was based on forecast figures provided by each of the participating agencies. Eight agencies out of the total ten failed to meet their forecasts, albeit there was significant variance across the results. Page 4 of 7
5 Measure Standard 2016/17 Result How this is measured Develop a framework for assessment of the effectiveness of ICT functional leadership All-of-Government Common Capability products, where DIA is the lead agency, meet service level agreements GIS All-of-Government online services meet performance measures Achieved Achieved The framework comprises three submeasures that provide broad representation of the functional leader s work: Transforming services Driving digital capability Driving system capability maturity Information is obtained from a range of sources to ensure a robust assessment of these sub-measures. The framework was developed in consultation with Audit New Zealand, and will be used from 2017/18 onwards. Achieved Achieved Suppliers of All-of-Government common capability products are required to meet contracted service levels and report on these on a regular basis. These reports are monitored, as part of a Vendor Performance Management process, and used to track achievement of service level measures and to manage supplier performance. Achieved Achieved This measure is made up of four underlying metrics. Percentage uptime availability of all GIS websites (99%), number of user sessions on number of user sessions on and the number of dataset downloads on User sessions fluctuate based on seasonal trends, and numbers are compared to the same month for the previous years to determine whether there has been a decline or increase. The number of dataset downloads is based on an annual trend increase. If these numbers show an increase, the metrics are counted as achieved. Page 5 of 7
6 127. The Committee notes that in 2016/17 DIA s functional leadership work related to the ICT Strategy was captured by The Integrated Programme of work to Drive Digital Transformation. The latest publicly available update was in June Please provide an update on DIA s work programme relevant to its cross-government leadership, and outline any shift in priorities. What are the main challenges towards achieving the Strategy s objectives and how are these being addressed? Since June 2017, we have made significant progress on our work programme as follows: The Government Chief Digital Officer (GCDO) has led the ICT Strategy and is starting to develop a new government digital strategy that will enable citizen centred capabilities to support the new digital ecosystem. The pace of change from disruptive technologies together with government s broader digital inclusion commitments is necessitating an evolution of the strategy. The GCDO is working closely with the Government Chief Data Steward (GCDS) on information management and data to ensure digital and data are well aligned. New Zealand hosted the D5 Ministerial Summit in Wellington on 21 and 22 February 2018 with a particular focus on digital rights. Incubating ideas using Agile and Lean processes in the Service Innovation Lab is quickly translating into working solutions. Approaches, such as a prototype for automating messages to victims of crime, is created at a fraction of the cost of traditional development approaches. The Government Online Engagement Service (GOES) is making it easy for people to provide feedback into policy discussions and the design of government services. In December 2017, a new digital web presence (digital.govt.nz) was launched. This is an authoritative repository of digital government knowledge. A Skills Assessment Framework is being implemented to lift skills and technical capability to meet new digital demands. In September 2017, the GCDO introduced a new streamlined approach for agencies to selfassess against the Web Standards. New priorities The Department is working on the priorities being indicated by the new Minister of Government Digital Services. The GCDO will work closely with new Chief Technology Officer (CTO) to lead development of the New Zealand Digital Strategy which will strengthen digital capability and inclusion. We anticipate that the New Zealand Digital Strategy will help inform future directions for the government s digital strategy. The Minister has announced a ministerial advisory group for digital economy and digital inclusion to build the digital economy and reduce digital divides. Similarly to the point above, it is anticipated that this advisory group will influence the shape of our future work programme. Challenges Digital disruption is with us now and impacts every aspect of our society and economy. In the medium term this will create opportunities, but it will also impact society as new technologies change the nature of work. We face the wider societal challenge that technology is evolving increasingly rapidly, and in parallel citizens have growing expectations of government in this area. Page 6 of 7
7 Our ability to adapt to changing needs, places New Zealand in an enviable position, and the work we have done to date is recognised internationally. The Fletcher School at Tufts University labelled New Zealand a stand-out nation in their 2017 Digital Planet report. We need to build on this to grow our position as a digital leader The new Government has announced priorities that include the development of a digital strategy and digital inclusion. Broader work on the digital economy will involve collaboration between DIA and MBIE. Please explain how DIA is working with MBIE and others on progressing these priorities, and what that means for DIA s resourcing and capability needs. We have a long track-record of working across government, and we are currently working with MBIE in four key areas. 1. Ministerial priorities We have been working closely with MBIE on progressing ministerial priorities. The Minister has announced her intention to appoint a Chief Technology Officer (CTO) who will play a key role in developing a digital strategy for New Zealand. The Minister has also announced a ministerial advisory group as part of a fuller programme on digital inclusion. MBIE and DIA are jointly supporting the Minister in the establishment of the CTO and ministerial advisory group, and anticipate that secretariat services will be jointly delivered by MBIE and DIA. 2. GovTech industry and network group DIA and MBIE are working together to define the GovTech industry segment and are jointly developing a GovTech network group that includes public sector and business representatives. The purpose of this work is to understand how to improve innovation and the adoption of digital solutions within and across the public sector, while at the same time developing the digital / ICT industry in New Zealand. The work is part of the government digital strategy, with a focus on economic development and is being resourced from current baseline. 3. Digital Government Leadership Group The Government Chief Digital Officer (GCDO) chairs the Digital Government Leadership Group. The Chief Executive of MBIE is a member of this group of public service chief executives, who meet to agree and drive change across the system. 4. Digital Economy Governance Group Page 7 of 7 DIA is part of the Digital Economy Governance Group, which is chaired by MBIE. The governance group has had oversight of the Digital Economy Work Programme (DEWP). The agenda of the governance group has included monitoring updates of the DEWP, strategic advice to mitigate emergent challenges and explore cross agency opportunities. We anticipate the work of the Governance Group and DEWP will evolve along with Government priorities. The four current work streams are: Digital Sector Digital Business Digital New Zealanders (Digital Inclusion) Digital Government DIA is currently the work stream lead for Digital New Zealanders and Digital Government.
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