Restructuring yet again without an underlying philosophy

BY VERNON SMALL

OPINION: John Key may believe - or want us to believe - that restructuring in the state sector is not ideological. But if it is not driven by ideology, beyond an underlying preference for a smaller government, it would be nice to think it was at least consistent or coherent because there is precious little sign of that.

So if we believed in the 1990s that it was a good idea to separate funders and providers, so the providing function did not capture the funding one, do we still believe that now?

In microcosm, the folding together of the various boards of Creative NZ into one board, which will allocate funding to the various sectors and pick the groups that will get the cash, suggests we do not. The expected amalgamation of the ministry and foundation for research science and technology sends the same message.

And while we are at it, where do we stand on ministries and departments incorporating a policy, oversight or regulatory role alongside their service delivery function? Does the stew that includes the Social Development Ministry, Child Youth and Family and Work and Income suggest similar amalgamations can be expected in the other big-spending state agencies such as education or housing?

Perhaps that is what Anne Tolley is edging towards with her statement yesterday that savings of $25 million will need to be found in the Education Ministry as it reshapes "its role, size and focus".

If there is a sense the Government does not have an underlying philosophy for the structure of the state sector, it is not alone. Labour was not noticeably better. And the various attempts so far to squeeze spending and efficiencies out of the core state sector by the Treasury, the Government and the State Services Commission - though all pointing in the direction of job cuts and spending restraint - look more like a smorgasbord sampled by a dog than a menu of fine options.

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So we have had the line-by- line review last year, when the economy was on its knees and big cost-cutting was off the agenda, which is still rumbling on. Mrs Tolley is still looking for savings of $10m from that exercise for this year's Budget. There has been no hurry over that in her portfolio then?

Purchase advisers, under ministerial control, did the first rough cut before it was decided they were the wrong way to go. Since then we have seen the semi-autonomous Crown Company Monitoring and Advisory Unit subsumed into the Treasury but with emissaries still out there looking for further efficiencies.

Meanwhile, the second round of cost cutting, in the shape of the "value for money" process is well under way even as agencies have been asked to undertake a so-called "baseline alignment"; a gentle euphemism for finding ways to live within your means especially if you are one of those many agencies that are not getting a brass cent more cash for the foreseeable. In that case, if you want any more money to play with elsewhere, find it by cutting something you are doing already. Then, oh mandarins, your baselines will be truly aligned.

Meanwhile, the State Services Commission is also grappling with how to further tune up chief executives and their agencies. (As an aside, wouldn't it be droll if the biter was bitten and the bulk of the SSC's functions were amalgamated with the Department of Prime Minister and Cabinet, leaving an independent commission - perhaps the Remuneration Authority - to hire and set salaries.) Its latest effort, in harness with the Treasury, is the Performance Improvement Framework. A briefing for reporters last week outlined its basic tenets - and produced somewhere close to no column inches of copy. In essence it instructs departments to assess their core businesses, consider if they are meeting ministers' expectations and achieve the fiscal restraint required. In other words assess themselves.

At the same time a Productivity Commission is being put together that will also emulate the SSC's role if - as expected - it follows the Australian model.

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Politically, the Government cannot go wrong with its mantra of value for money, sack a few bureaucrats and move functions from the back office to the frontline. It may not get us any closer to the perfectly sized state sector, because whoever is in power will tend to overshoot. National will always cut too much (and fill in the gaps with consultants and contractors) while Labour will always expand too much (and top that up with consultants and contractors). Remember in 1999 former finance minister Michael Cullen made a virtual scandal out of under- investment in key areas, such as Inland Revenue, by the previous National government.

So before we are given yet another commission or framework or exercise in cost-cutting - and go back around the wheel like hamsters in a cage - it would be good to hear a clear statement of direction and underpinning principles from State Services Minister Tony Ryall.

Or is tucking Archives New Zealand into Internal Affairs here, or forcing Forst into bed with Morst over there, as principled as it gets? Will the Families Commission survive for any other reason than to keep UnitedFuture's Peter Dunne purring on the sofa?

Will 2010 go down as another year of the sort of state sector ad hocery that got us here in the first place?

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