Interviewed by SEAN PLUNKET
Sean What exactly does National intend to do with the Public Services? State Services Minister Tony Ryall joins me
now from Tauranga. Good morning Minister. Let's talk numbers because effectively the freeze on core Public Service
activity that Bill English has announced, means over three or four years a 10% drop in real terms in expenditure.
Correct? Or just over 9%?
Tony Ryall – State Services Minister
Well certainly it does mean if you allow for inflation etcetera that we are having a reduction in the size of
the State in real terms. That’s going to be needed, because as we make our way to getting back into surplus in the next
three years we're going to all have to tighten up and the Public Service is going to have a role in that.
Sean So you accept in real terms there will be less money to run core Public Service activities. How on earth are you
going to do that without actually degrading those services across a whole range of areas.
Tony Well the Prime Minister's made it clear that our spending priorities are in the areas of Health and Education,
and they're going to continue to get additional resources, but the rest of the Public Service is going to have to live
within a much tighter parameter.
Sean Well it's not a tighter parameter Minister it's with less money, less real terms money.
Tony That’s right and this is part of the zero budget we have this year. This is about getting on track to getting
ourselves back into the black in the next three years. We've been doing quite a lot of work across the Public Service in
terms of benchmarking and looking at how we can improve efficiency, and what we know is that having done a big exercise
across 33 government departments last year, if we can get those who are above the average in a whole lot of cost areas
like administration, HR costs, you know square footage …
Sean Which ones are above average, can you tell us?
Tony If we can get them above the average cost to the average, we can save about 240 million dollars a year. So it
all about making sure that we can get best value for the taxpayers' dollar.
Sean Which ones are above average in their spend?
Tony Well this information is different for each different department. Some have got more per head of population, or
per staff member on floors, others have higher administration costs. If I look at the State Services Commission for
example, they are moving to new premises and that will reduce the amount of floor space per employee and I think it's
saving accommodation costs of about two thirds. So these are the sorts of efficiencies and savings that various
government departments can make.
Sean The unions would argue that actually the easiest way to cut cost is to cut what you pay people and eventually
cut jobs. Would you agree with that?
Tony Well look it's up to individual chief executives to make sure that they can live within their budgets, and we
have seen jobs drop in the Public Service. We had an unrelenting increase in the number of Public Service core
administration jobs under the previous government. We have capped them.
Sean And you haven’t told those Public Service bosses that cutting jobs or cutting wages should be the last thing you
do. You haven’t made the maintenance of employment in the Public Service a priority in this restructure, have you?
Tony Well what's we've made the priority is making sure we get more services for the money that we're putting in, and
what's quite clear from a recent poll that came out from Fairfax, is New Zealanders recognise that their Public Services
have been improving over the last three years, and that’s because we've had a strong focus of moving from back office
administrative functions, into improving the front line. So at the same time while we've had reductions in core
government administration, this government has delivered 1600 extra teachers in front of classrooms, 800 extra doctors
in hospitals, 2000 extra nurses in hospitals, and 600 extra front line Police Officers. So it's about how you prioritise
your resources to make sure you can improve services for the public. We would not have got a tick for improved Public
Services in those surveys if we had not been taking a sensible approach focused on efficiency and getting the best for
taxpayers' dollars. And the next three years if we are fortunate enough to be the government again, will be a
continuation of that moderate, taking the opportunities, getting the best efficiencies we can. That’s what you want us
Sean Right. At the start of this term of government, the silver bullet to these problems were public private
partnerships. We've seen the Eden Remand facility, but little else, and little else in particular at another area you're
involved in, in Health. Are public private partnerships now off the agenda, or not the great solution you thought they
Tony Well I think there is more progress to be made with this, and I think there are a number of areas in the future
where we will be continuing to see these sorts of public private partnerships.
Sean Could you name a couple for me?
Tony Well I think we're going to see in Housing a much greater involvement of the third sector in that. I think in
Health we're going to see greater partnerships in the use of purchasing diagnostic equipment, CT scans, MRIs. Indeed
here in Tauranga we have a public private partnership between the District Health Board and the private sector in
providing those sorts of services. So these things will continue, we're gonna use them pragmatically to get the best
value for taxpayers. Our real focus is on making sure we improve those services that the public gets.
Sean What about Education, the PPPs in Education in the construction of schools?
Tony Well there's been some talk about that, and I think there is an opportunity around that. The important
opportunity I think for all New Zealanders is that money is tightening up, is that we should look at smart ways of doing
things, and if there are opportunities to work constructively with the private sector then I think we will. Certainly in
the Health Service we use the private sector to supplement the extra performance that we're giving New Zealanders, and
that’s part of making sure that we get best value for every dollar.
Sean Could I ask you in the area of Education the Prime Minister's indicated that some of the proceeds, or the
proceeds of state asset sales, or partial privatisation of state assets, will go into creating capital or capital
expenditure in the Education sector. Will that be by way of public private partnerships. Is that part of the plan?
Tony Well look, we'll take a look at those opportunities as they arise. The government does not have any ideological
opposition to working smartly with the private sector to achieve these things. We want to make sure that the money that
we are realising if we get the opportunity to from the mixed ownership model, that we maximise that benefit for New
Zealanders, and I think working smartly with the private sector is part of that. But this is not an ideological thing,
this is all about what works for New Zealand to get best value.
Sean There is the Better Public Services Advisory Group headed by Martin Weavers from the Prime Minister's
department, I understand that is getting some pretty heavy hitters together to look for these innovative ideas. Has it
actually found any yet? Can you give us some concrete examples, because otherwise a lot of this sounds like rhetoric, a
lot of hooey and not much dooey Minister?
Tony No I don’t think so. Look I think we were looking forward to getting their report if we're the government after
the election. But one of the things they have been talking about is how departments can work more effectively, not only
in shared back office. And we know that if we can get the average, you know the worst performers down to the average, we
can save you know quarter of a billion dollars a year. But they’ve also been talking about clustering and having
departments working more effectively together, and I think we've got a perfect example of that at the moment with the
way that the Justice Departments, Police, Corrections, Courts and Justice, work very effectively together. What they’ve
been able to do is start reducing the prison muster which has allowed us to free up resources which can go elsewhere in
prevention, and also in helping us balance the books. So these ideas, I don’t think you should expect there's gonna be
some great big bang that’s gonna come out of this work that’s going on. What I think you will see is very sensible
advice from the chief executives and these business people, about how we can take more efficient means of achieving the
things that the New Zealand public wants. What we know is that by back office sharing we can get gains, by smarter
purchasing we can get gains and by working together better we can get gains. Look it's a lot of commonsense.
Sean But can you get gains of 9.25% over four years? Can you really achieve that Minister because that’s what you
have to do if you're gonna freeze the funding?
Tony Look I think having said that, that it's very important to remember additional resources are gonna flow in to
Health and Education. But yes we can do that because it's quite clear that if we get most efficient practices in the
purchasing and the management of our government departments we can save large amounts of money. This benchmarking
exercise we did indicated if we could lift every department's performance up to the top quarter of government
departments we could save over 400 million dollars a year. So there are very significant savings to be made by a strong
focus on efficiency. And just as we've done this over the last three years, taking opportunities, bringing departments
together, and focus on efficiency we can continue doing this.
Sean And you're telling me then because of all that structural efficiency, you won’t have to lay anyone off?
Tony Look we're expecting – the latest projections that we released mid year, thought that we'd lose about 500
positions over the Public Service in the next couple of years. A number of departments though are undertaking
restructuring so I think there will be more than that. So yes there will be some staffing reductions.
Sean How much more?
Tony Well we're projecting 500 over the next couple of years. I think it will be more than that as a number of
government departments are making changes.
Sean So by what factors. Are we talking a 1000 another 1700 maybe?
Tony Oh look, look it depends on how departments respond, but what's important is that we get best value for those
taxpayers' dollars and that allows us to free up money that can go into improving front line services and helping the
country get in the black sooner. The fact is that the things that we've done over the last three years which have
contributed to improved efficiency, saving money, have all been opposed by the Opposition. They’ve all opposed them,
they don’t want to do their sums.
Sean And I'm sure they will be still. Thank you very much indeed for your time Minister State Services, Minister Tony