The Act provides that the Crown’s direct funding for TEIs is conditional on them submitting a “plan” (known as the “Investment Plan”) for funding and approval by the TEC (ss 159P–159YA). Direct Crown funding (for both operational and capital purposes) is characterised as an “investment”, and TEIs are required to specify what they will do with the investment and how they will contribute to the Government’s current and medium-term priorities as specified in the TES.
The Act specifies the requirements TEIs need to take into account when preparing their Investment Plans (s 159P), and it sets out the decision-making criteria the TEC is obliged to apply when considering proposed plans (s 159Y). The Act also states that the TEC is required to issue guidelines to TEIs prescribing the content of the proposed plans and the information to be included (s 159R).
Preparing Investment Plans is typically an iterative process between the TEIs and the TEC, whose investment managers can help TEIs with their Investment Plans.
The objective of the Investment Plan engagement process is to ensure that TEIs are specific about what they provide for the funding they receive. Investment Plans can cover a period of up to three years, which provides a greater degree of certainty to TEIs than an annual funding system. TEIs must, however, report annually against their Investment Plans, and continued funding is contingent on compliance with the plans.
Investment Plans, and monitoring and reporting against them by both the TEC and by TEIs, are key components of TEI council accountability.
The current framework for TEI Investment Plans is shown below.
|Key components||Information requirements (summary only)|
|Plan context|| |
|Summary of programmes and activities|| |
|Performance commitments|| |
The TEI Investment Plans must include a forecast Statement of Service Performance (SSP), which summarises the performance commitments that the TEI makes in return for the SAC funding that it receives. The SSP typically includes commitments on:
The annual report documents the TEI’s actual performance against the commitments in the SSP. The audit of the SSP requires that the measures, targets and performance data are robust and of an auditable standard. Since 2012, the audit must express an opinion on the SSP by: