Health NZ’s ability to deliver digital transformation is being held back by poor data, cumbersome funding processes, weak commercial capability and fragmented governance, according to a government-commissioned review calling for a reset of digital delivery across the public sector.
The Delivering Digital Government – Reset Plan was commissioned after responsibility for the Government Digital Delivery Agency (GDDA) and the Government Chief Digital Officer function transferred to the Public Service Commission.
The reviewers – Adrian Littlewood, Justin Gray and Matt Crockett – concluded that New Zealand’s current approach to digital delivery was characterised by poor prioritisation, duplication, fragmented accountability and a central digital function that has become overly focused on process rather than enabling agencies to successfully deliver major technology programmes.
While the report examines government-wide digital delivery, it singles out Health NZ as demonstrating many of the systemic problems identified throughout the review.
“Health NZ has faced all of these issues leading to major hurdles in delivering tech and service innovation – despite the huge productivity opportunity in health spending,” the report says.
Among issues identified was poor quality information available to decision makers, with the reviewers noting that Health NZ struggled to provide the accurate information needed to inform investment decisions, citing examples where it “cannot report true FTE or junior doctor numbers” and where there are “no simple answers to basic data questions from Health, Treasury or GDDA.”
The report also notes that current funding arrangements actively discourage digital transformation.
It says obtaining approval for digital investment is disproportionately difficult compared with ongoing operational spending, noting it is “easier to get approval for $12bn annual labour cost than $20m digital project,” with technology projects required to navigate lengthy gateway processes and ministerial and Cabinet approval.
The report says the current system is also slowing the adoption of emerging technologies. It says the central digital function lacks the credibility and appetite to support innovation at pace, pointing to “innovation trials” (such as ambient AI in ED) as examples of initiatives that are happening in spite of institutional settings rather than because of them.
Commercial innovation was also being constrained, according to the review, which points to innovative technology proposals becoming delayed by lengthy oversight and procurement processes, with the GDDA lacking sufficient commercial experience and established market relationships to rapidly assess non-standard proposals or provide clear pathways for testing emerging technologies.
Meanwhile, Treasury is cited as viewing health as the government’s largest productivity opportunity.
According to the report, improving productivity across Health NZ through technology transformation could deliver the biggest enduring benefit for New Zealand, with a five per cent reduction in labour costs alone estimated to save around $600 million annually.
The reviewers stated that the government needs to change how broader digital investment is prioritised and delivered.
They recommend undertaking a rapid assessment of all digital programmes across government, reallocating funding toward the highest-value initiatives, establishing stronger cross-government governance, and identifying a small number of foundational capability projects – including digital identity, trusted data exchange and artificial intelligence – with clear lead agencies responsible for delivery.
The review also recommends narrowing the GDDA’s role to focus on strategy, standards, assurance, strategic procurement and capability, while devolving operational delivery to agencies best placed to implement projects. It says the agency should rebuild its technical and commercial expertise so it becomes a trusted centre of excellence rather than attempting to substitute for agency delivery.
The report notes that New Zealand had long recognised the importance of foundational digital infrastructure but had failed to execute its implementation.
It notes that as early as 2013, government identified digital identity, trusted data exchange and payments as the core building blocks needed to improve public services – however, almost 13 years later those foundations remained incomplete.
The reviewers concluded that digital public infrastructure should now become a key focus – with government transformation depending on trusted payments, trusted data exchange with clear consent rules, trusted digital identity and AI as an enabling capability that can help deliver the benefits of those investments.
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