Minister confident NZBN will deliver cost savings over time

Agencies on track with adoption

The New Zealand Business Number Act became law in April, opening the way for every business in this country to have its own NZBN. Registered companies already have them: NZBNs are now being rolled out to an estimated 500,000 unincorporated entities. Each NZBN is a Global Location Number provided by GS1.  

Government agencies are moving to adopt NZBNs for improved efficiency in their interaction with New Zealand businesses. Economic Development Minister Steven Joyce provides SCAN with new insight into progress with the NZBN and related programmes.

Q  The Government is rolling out its comprehensive Result 9 programme. How does the NZBN scheme fit into this? 
 
Result 9 Better for Business is part of the Better Public Services Programme*. It is a partnership of 10 government agencies which are working together to reduce the effort required by businesses in their dealings with government.
 
The NZBN Programme is a key initiative of Result 9. The use of NZBNs will reduce the time and energy businesses spend providing government with the same information in different ways. It is estimated that the benefits to businesses of NZBNs, once these are fully implemented, will be around $60 million a year.
 
Q  How do you see businesses gaining benefit from whole-of-government adoption and use of NZBNs?
 
One of the major criticisms of government agencies is that they constantly request businesses to provide standard information to each agency they are dealing with.  Over time, adoption of NZBNs will allow government agencies to easily recognise a particular business and to share information between them so that business is required to provide its core information only once, to one of the participating agencies.
  
Businesses have told us a unique identifier for each New Zealand business will remove road blocks to innovation and to productivity gains in the provision of services between them and government, and between businesses themselves.
 
Q  One of your goals is a target of 25% for reduction in the costs to businesses of interacting with government agencies and Crown entities by the end of 2017.  How confident are you of such a saving within this timeframe?
 
We are confident we will achieve the savings through Result 9 Better for Business over time, but it remains challenging to achieve them by the middle of next year given the lead-in time that is required for some of the key programmes involved.
 
To track progress towards our targets, the Result 9 Programme uses a rolling Result 9 Business Reference Survey which is completed by 1200 business customers every six months.  Between 2012 and December 2015, there has been an overall 12% improvement in business costs incurred in dealing with government – just under half-way towards the target of a 25% reduction. While results were trending positively to June 2015, an increase in effort was recorded for the first time over the six months to December – that increase was 4%.
 
Agencies involved have identified 37 key initiatives for a “Result 9 Roadmap”, with 18 of these initiatives forecast to deliver a reduction of about $20 million in the form of time saved by businesses in their dealings with government during 2016-17. Those savings are forecast to rise to $569 million annually by 2023-24. 
 
There is a significant amount of activity underway across Result 9 agencies. Examples include: Inland Revenue’s eGST platform; ACC digital services for business; reduction by Statistics New Zealand in the number of businesses it surveys; the Ministry for Primary Industries’ and New Zealand Customs Service’s Joint Border Management System Trade Single Window; and the Ministry of Business, Innovation and Employment’s Procurement Sourcing Rules.
 
Inland Revenue and ACC have transformation programmes now underway and these will deliver changes in customer experience for many businesses.  The two transformation programmes have an estimated benefit to businesses of around $280 million per annum by 2019-20. The programmes will be delivered in stages and their benefits will be realised over subsequent years. For example, it is estimated by Inland Revenue that by 2023-24, customers will spend approximately 37% less time on GST returns than they do now. This equates to cumulative savings by 2023-24 of somewhere between $490-840 million. Stages 2 and 3 of the Inland Revenue transformation programme are anticipated to deliver further savings in customer effort.

Q   In May, Crown entities were given a Cabinet Direction to join a whole-of-government approach to using NZBNs. What does this Direction mean?
 
The whole-of-government directions issued in May cover two things - a Ministerial Direction to Crown entities and a Cabinet Directive to government departments. Combined, these require that:
•    Eight original Result 9 agencies (ACC, Callaghan Innovation, Customs, Inland Revenue, MBIE, Ministry for Primary Industries, NZTE, and Statistics NZ) need to recognise NZBNs in their key business-facing systems by the end of 2017, in their finance/procurement systems by the end of 2018 and have systems and processes in place to be able to share core business information about an NZBN entity by the end of 2020.
•    By the end of 2018, an additional 33 Crown entities and 16 government departments need to be able to identify an entity by its NZBN. They also need to have given consideration to implementing systems and processes for the sharing core business information about an NZBN-identified entity by the end of 2020
 
 
Q  We understand that directions of this kind are rare.  What has been the rationale for Cabinet taking this step to push forward with NZBN adoption and use?
 
Broad implementation by the Public Sector is needed for NZBNs to be successful and for the benefits to be realised.   The Cabinet Directive and Ministerial Direction were the most appropriate mechanisms to make that happen.
 
Both will be reviewed after five years. This will provide an opportunity for Ministers to assess the implementation of the NZBN Programme across the Public and Private sectors during that time and it will provide flexibility for adjustment of requirements on agencies as appropriate.
 
Q  What sort of key business processes are you expecting to be simplified by adoption of the NZBN and data sharing?


We expect to see efficiencies in the following areas:
•    financial processes including invoice payments
•    business verification
•    routine transaction like ACC payments and tax payments
•    tax agent activities on behalf of businesses 
•    regulatory compliance in various areas
 
A good example is the ability for a business to notify ACC about its formation and to then receive information about levy obligations: This will enable the business to budget accordingly. At the moment, a business has to wait up to two years for Inland Revenue to notify ACC about its existence through the sharing of tax return information, and this means businesses unexpectedly receive invoices for two years’ of levies.


Q  Three Crown entities in particular have been directed to use NZBNs for information sharing between them and with central government agencies (as part of the so-called Category B application of NZBNs). What is the rationale for making this requirement of three entities?

The three Crown entities (ACC, NZTE and Callaghan Innovation) are part of the original Better Public Services Result 9 agencies. Along with the other five original agencies (IR, Statistics, Customs, MPI and MBIE) they have been working together since 2012 to reduce the cost and effort required of businesses in their interactions with government. It was a natural progression for these agencies to be the first eight which are required to share core business information between them.

Q  Agencies could meet the direction by simply cross-referencing NZBNs with existing systems. How will government agencies be encouraged to transform their processes and secure the most value from NZBNs through more comprehensive change in their systems?
 
MBIE officials working on the NZBN Programme will work closely with agencies to ensure a strategic view of implementation is taken and opportunities for joined up services are realised.   
 
Q  NZBNs identify business legal entities based on the GS1 Global Location Number standard (or “GLN”). GLNs are also deployed in New Zealand and globally to support the identification of physical locations for supply chain, traceability and e-commerce processes. What is your view on the potential extension of the NZBN scheme to identification of locations like warehouses, farms, processing and government-registered locations (such as MPI’s Risk Management Plan locations)?
 
The first step is to allocate a NZBN to all registered business entities.  Companies and other registered entities such as incorporated societies now have NZBNs.  Others such as sole traders, partnerships, trusts and some State sector entities will be allocated NZBNs shortly.  Once that is complete, the NZBN Programme managers will consider how to facilitate extension of the NZBN scheme to identification of locations. Some businesses already use location data via GS1 connected to their NZBN now. 
 
Q  The Government has taken the view that growing usage of NZBNs will support greater digital interoperability and e-commerce across the New Zealand economy. How specifically do you see this developing?
 
Businesses have advised NZBNs will open opportunities for greater digital interoperability and e-commerce.  Already there are examples of this - case studies are available on www.nzbn.govt.nz including Air NZ and Veda using NZBNs in their e-commerce activities.  Accounting software firms Xero and MYOB also see NZBNs as a means to streamline their clients’ interoperability with other businesses and government agencies
 
Q  New Zealand business and government agencies use a plethora of e-commerce standards for electronic messages such as invoices, purchase orders and advance shipping messages. We note that a Digital Business Council has been set up across the Tasman, supported by the Federal Government, to drive inter-operability and efficiency. Similar initiatives are led by central government in Europe (Scandinavia, France etc). Do you see merit in New Zealand adopting such a model to enable greater standardised uptake of efficient e-commerce?
 
To date, we have not had any requests from business stakeholder to adopt such a model. We would keep an open mind on the possibility but our focus in the meantime is on securing the benefits of NZBNs and of the wider Results 9 programme for businesses. 


With regard to standardised invoicing and other messages, we haven’t had anyone roaring in the door and saying “this is something we want government to do on our behalf”.  I think everyone understands that government can be influential but it can also be slower than doing it yourself. There are things that government has to do, and should do, like the NZBN because no-one else can but the question is, do we have to standardise other stuff. I am open to hearing more on this.
 
 *More information on this Programme is available www.mbie.govt.nz/info-services/business/better-for-business