The present framework for the public sector - notably the State Sector Act and the Public Finance Act - is the creation
of the Fourth Labour Government.
A decade on, that framework shows signs of some considerable stress and it is time for us to look at it carefully to see
what remedial work may be required.
I want to discuss this with respect to three main aspects: Labour's view of the purposes of the public sector, our view
of the appropriate structure, and our view of the necessary ethos.
Labour, I think it is fair to say, has a less ambivalent attitude to the public sector than the present government. We
want an efficient public service, a matter I will come back to later. We do not seek a return to the world of Roger
Hall's Glide Time, caricature though that was (and, after all, glide time was a concept designed to enhance efficiency).
But we do want a public service; we see it as an essential part of a civilised society. Let me here also distinguish
various parts of the public sector. There are really four different public sectors.
The first is the policy and administrative public sector - what is sometimes thought of as the core public sector. The
second is the collection of semi-autonomous social delivery agencies in areas such as health and education - schools,
hospitals, etc. The third consists of the guardians of public security and safety --police, prison officers,
firefighters, the armed forces. And the fourth consists of the state's remaining commercial activities, such as NZ Post.
The failure to recognise clearly the differences between these various functions and divisions within the public sector
has been a partial cause of some of the difficulties we now face.
The key demands as far as the core public sector is concerned is efficiency and accountability. Arguably neither is
being delivered as well as it could be.
Whether the difficulties in that respect necessitate changes to the State Sector Act is, I think, an open question. It
is certainly one on which we should avoid having closed minds.
Arguably the Act has encouraged both a false and a politically unsustainable view of accountability. In theory the
Minister sets policy and "purchases" outputs. The Chief Executive is entirely responsible for administration within
those constraints.
The reality remains more complex. The policy is often developed under the Chief Executive's guidance. The Chief
Executive can blame administrative problems on either policy or lack of money. And, in practice, the Minister cannot
successfully wash his or her hands of administrative failure, even of the most detailed kind.
It is not my purpose to imply that the reforms of the 1980s have not driven significant efficiency gains (though
arguably the Public Finance Act has been more important in that respect than the State Sector Act).
But it has also encouraged the excess balkanisation of the core structure. More importantly, and exacerbated by that
balkanisation, there has developed a view that each government agency is a separate business, isolated and, indeed, in
competition with the other businesses that collectively form the public sector.
Departments and ministries thus exist in isolation, making decisions with little or no reference to each other or to
overall system needs. Mistakes are repeated with monotonous regularity, policy options are pre-empted, and unnecessary
duplication and inefficiencies occur.
Even more fundamental a concern is the belief that the agencies of the core public sector are businesses at all. The
language of customers and clients is at best an unnecessary conceit, at worst a dangerous fallacy. There is no way that
taxpayers or beneficiaries are in any real sense customers or even clients.
Moreover, their position is such that it is incredible that the service providing department should consider it
necessary to engage in branding exercises, as if it faced some form of serious competition. It is an absurd parody of
the reality.
It also ignores the fact that the fundamental disciplines of a business do not apply. In reality dismissal of the chief
executive is very difficult (in part because that itself tends to reflect upon the government).
We need to change this false culture. The key role needs to be taken by the government itself, but the lead in terms of
implementation has to be taken by the State Services Commission.
There has been a weakness of purpose and leadership from the State Services Commission which is in part responsible for
recent excesses. We can no longer blame inadequate salaries - with departmental heads now paid much more than the Prime
Minister.
Other areas also need attending to -
· commonality of functions
· career structures
· partnership for quality
· ethos of public service
The last reflects a wider ethical and cultural dilemma at the heart of the new society. We have come to emphasise only
material reward as the reflection of worth, building a society on particularly crude cash nexus.
In the second area of the public sector - schools, hospitals, etc. - the issues are often very different. Excessive and
petty managerialism certainly has presented problems. But the fundamental issues are of resources being limited while
expectations are infinitely expandable.
Solutions:
Ø intermediate democracy
Ø clearer funding in health
Ø greater strategic co-ordination
SOEs and similar businesses to fit the business model. Here we need to return to the fundamentals of the reforms of the
1980s -
· appointment of quality boards
· non-interference in commercial decisions.
We also need to add a stronger emphasis in some instances on the formation of strategic alliances.
Finally, the size of the state. Less important than the quality.
[Dismiss Scully/Caragata work - economic model, auto-correlation, dubious data, false causality].
Funding remains, however, a key issue.