Institutionalising Strategic Spending Reviews: A Step Foward

24/03/2025

Running a country is hard. Governments need to make sure they spend money wisely to improve people’s lives. In a recent article, Robert P. Shepherd and Evert A. Lindquist talked about something that could help: regular strategic spending reviews. These reviews would not just check if money is being spent, but also if it’s being spent well to meet the government’s goals. This idea could be really helpful for Aotearoa New Zealand, where we want to make sure every dollar works hard for the public.

Shepherd and Lindquist explain that while Canada has done occasional reviews of public spending, other countries have found more success with regular, ongoing reviews. These reviews are linked to the national budget and help make sure that the money spent supports bigger goals, like improving education or healthcare. Countries like Denmark, the Netherlands, Ireland and Spain have already set up systems that link reviews directly to budgets. By doing this, they make sure public money is being used in the best way possible.

For Aotearoa New Zealand, starting regular strategic spending reviews could be a good next step. It would help us see where money is being spent and whether it’s achieving the things we want. This could make our government smarter and more prepared for future challenges.

I’ve done some research of my own to understand what makes public services work better. I looked at 53 reviews from the government to see what really matters for success. I used tests called Spearman’s (S test) and partial correlation (R test) to see how things like leadership, money management, and efficiency are linked.

Here’s what I found:

Leadership and Strategy Go Hand-in-Hand
Strong leadership helps shape the direction of an agency. Leaders make sure the team works towards the same goals. This could also true in spending reviews. Shepherd and Lindquist argue that strong leadership is key to making these reviews work. When leaders make good choices, it helps agencies use their money wisely.

Financial Management is Key to Efficiency
How agencies manage their budgets matters a lot. The better they manage their money, the more efficient they are. This is important in Shepherd and Lindquist’s article , too. Having regular reviews would help Aotearoa New Zealand focus on better ways to control and spend money.

Efficiency and Effectiveness Work Together
A well-run agency is both efficient and effective. In my research, I found that agencies that operate efficiently also tend to meet their goals. Shepherd and Lindquist agree: regular spending reviews help keep agencies on track, ensuring that spending matches their goals.

Service Delivery and Efficiency Are Connected
Agencies that focus on delivering great services tend to be more efficient. Shepherd and Lindquist suggest that regular reviews could help agencies find ways to improve service delivery without wasting money. In Aoteaora New Zealand, we could benefit from this focus on service quality to make things run more smoothly.

Therefore, the adoption of regular funding reviews would help us make better decisions. The government could assess where money is being used effectively and where it could be used better. The reviews would also help agencies focus on long-term goals and prepare for future challenges.

But – and there is a but – Shepherd and Lindquist’s also point out that setting up such a system is not easy. Canada’s recent attempts at reviews have been mostly internal and focused on cutting costs. Aotearoa New Zealand will need to adapt the model to do things differently, for example by making the reviews more transparent, by for example using some of the principals of participatory budgeting or from the practice of long term planning we see at local government levels. Involving the public in the process might help make these reviews even more effective.

In closing, institutionalising strategic spending reviews could be one of the keys to smarter governance in Aotearoa New Zealand. By making sure public money is always used to support long-term goals, we can create a more efficient and transparent government. Shepherd and Lindquist’s model can help us ensure that every dollar spent works towards a better future for all New Zealanders. With regular spending reviews, we can continue to improve our public services and become more adaptable to change. By learning from both Shepherd and Lindquist’s research and my own findings, we can make informed decisions that strengthen our government, now and in the future.

Footnotes:

1. Leadership and Strategy Go Hand-in-Hand
   Spearman’s test (ρ = 0.578, p = 0.000006) shows a strong link between leadership and strategy. Even when we account for business effectiveness, the link stays strong (R test: ρ = 0.430, p = 0.0013).
2. Financial Management is Key to Efficiency
   Spearman’s test (ρ = 0.508, p = 0.000103) shows a strong link between financial management and efficiency. Even when business effectiveness is accounted for, this link holds (R test: ρ = 0.447, p = 0.0008).
3. Efficiency and Effectiveness Work Together
   Spearman’s test (ρ = 0.504, p = 0.000121) shows that efficiency and effectiveness are linked. The link stays strong even when leadership is taken into account (R test: ρ = 0.446, p = 0.0008).
4. Service Delivery and Efficiency Are Connected
   Spearman’s test (ρ = 0.475, p = 0.000324) shows a moderate link between service delivery and efficiency. The link remains even when we account for financial management (R test: ρ = 0.417, p = 0.0019).