Restructuring needs vision and direction to make it effective

BY LEN COOK

OPINION: Government has a huge impact on people's lives, and, like the context within which it operates, the public sector will change in order to ensure that we continue to be governed well.

There seems good reason to believe that looking at the organisation of New Zealand's government departments has been somewhat overdue. Departmental mergers, back office integration, and managing frontline staff can be drivers of improvement, but as approaches, they need to move from political slogan to informed leadership.

In New Zealand we have one political party, National, that has a natural inclination towards smaller government, and another, Labour, which has greater confidence in the capacity of the state.

Neither party will ignore the need to cut public spending if it is not affordable, and both seek to present their public spending thrusts as logical, necessary and thoughtful. It is rare for these political calls to inform well any necessary meaningful long-term action, but at their best they will establish a context for change that might otherwise not occur.

All parties usually seek to avoid having to remove any specific element of public spending, preferring themes such as "reducing bureaucracy", "shifting to frontline staff" and "shared services". With the Public Finance Act 1989, the allocation by Parliament of public monies to government departments was through meeting the costs of a well-specified set of outputs.

This shift meant that ministers should delineate what they intended to have provided each year through the appropriation. The monitoring and reporting regimes put in place within this framework in the 20 years since have most strongly focused on reducing cost, often in the guise of "value for money", but rarely with the capacity to know that.

The retrospective nature of the inspection process can mean that future benefits can be lost, or opportunities mortgaged away, as they are harder to take account of. Back-office integration has been a strong trend of commercial enterprises for several decades, and the franchise is an extreme form of this.

The strength of the narrow focus of appropriations and accountability in New Zealand on specific institutions and their chief executives has considerably diminished incentives for this in the New Zealand state sector, partly because of the absence of effective governance mechanisms.

The limited back-office integration among DHBs, for example, suggests these difficulties are both pervasive and systemic. We have also had some significant past failures, such as the centralisation of government computing in the 1970s.

The lack of back-office integration affects the public sector-wide capacity to make full use of staff in finance, human resources, legal services, information technology, communications and other support activity. Its absence also leads to the harbouring within individual departments of small groups of specialists, diluting the likelihood that in these areas New Zealand will have any centre of expertise of international standing because of the inability to build up a critical mass of expertise.

Insightful sector-wide leadership and long-term investment oversight is essential if the state sector is to capture the benefits that have escaped it up until now.

TO ASSERT that "moving resources to frontline staff" can bring significant savings could be a significant confession of failure of the huge degree of monitoring and inspection that government departments have been subjected to for the past two decades.

As the quest to recruit high added-value professionals has made New Zealand an unfortunate international outlier in the recruitment of overseas experts in many fields (medicine and nursing are two examples), then how we use such staff is critical to their retention.

Making typists out of medical specialists is perhaps an extreme example, but it highlights the need for such slogans to be accompanied by a more scientifically based understanding of how the nature of work processes in almost all fields has changed because of technology and skill-accreditation processes, as well as the ways that knowledge is organised and exchanged.

The changes to taxation systems in the 1990s and the completion of Landonline involved a huge shift of staff to frontline activities, underpinned by well-planned investment in contemporary technologies, up-to-date legislation, and highly effective partnerships. We have the potential to continue such innovation, but it cannot be anchored in slogans alone.

Perhaps the mantra that should be dominant among ministers thinking about public-sector change would be one which reduces the amount of time spent by public servants, and those in the community and in commerce who work with government, in reporting, monitoring and inspecting last year's work.

Perhaps instead it is better to have those who are best-placed think about how to do things better next year and into the future. Perhaps we should mainly inspect only where we expect it will improve what we will do in the future with fewer rules. This will only happen if ministers can bring us a good sense of where they see our future, and what we can afford in the way of trustworthy support for that by government.

There are important constitutional issues in how the public sector is organised. The National Archives and Statistics New Zealand are among areas of government where a special relationship between the statutory officer and Parliament needs to remain, regardless of the administrative arrangements in the public sector. Were the chief archivist to become part of a larger entity, then there would need to be some change in the interest taken by Parliament in overseeing how any new directives on financial or other matters affect the authority to act appropriately in the area where autonomy exists.

Already, most statutory roles get more unseen direction of their work through the detailed "output purchasing" in place since the Public Finance Act than might be generally recognised.

Given we have such a national fetish in both main parties for institutional restructuring, it is hardly likely we will recognise the need for acknowledging that the way Parliament operates has a practical influence on the authority of statutory offices and consider consequent actions. Pity we do not have a fully functioning legislature.

Len Cook is president of the NZ Institute of Public Administration, and a former government statisician