It's time to end big severance deals

19:47, Mar 06 2013

Perhaps we should thank former Ministry of Education head Lesley Longstone for stinging taxpayers for only $425,000 as a severance package.

Yes, it is a lot of money to most salary and wage earners.

Given the circumstances of her departure - just over a year into a five-year term and as a result of a personality clash with her minister - she could have asked for more.

There was no sense in which she lacked competence for the job. On the day he announced she was going, State Services Commissioner Iain Rennie made it clear he would hire her again.

Political opponents may attack her enthusiasm for the equivalent of charter schools in her native England, and there is widespread criticism of hiring from overseas, but that is hardly her fault. She did not appoint herself. Nor did she, presumably, dictate the terms of her contract, including its severance provisions.

Although she may not have clashed with Ms Parata's politics, her removal was driven by politics, if only to take the heat out of the backlash against the minister and the Government's problems in education.


So given that, and the public revulsion at such payouts, it is time to look again at how those contracts are written.

Setting aside for now the fact it would have been cheaper all round (and arguably fairer) to have shifted Ms Parata rather than Ms Longstone, it is time to dispense with the fiction that state sector chief executives are not on grace and favour contracts - essentially at the behest of their minister.

The Longstone example makes it as clear as day that a chief executive cannot stay on if they fall out badly with their minister. But the fiction forces the State Services Commission (SSC) to dance on the head of a pin over why they go, and the payouts that follow are eye-watering to most people.

There are strong arguments that can be advanced about the quality of chief executives that might be recruited, and state sector purists will choke into their lattes at any move away from the notional independent public servant.

But there are precedents. Press secretaries and political advisers in politicians' offices are on the public payroll but are on so-called "events-based contracts". The "events" are essentially the continuation of the MP or minister in that office, but include a clear parting of the ways between a minister and a press secretary. Payouts are modest.

A few press secretaries and advisers make the transition back and forth between administrations, but not those who are so typecast as true believers that they are more than simply mouthpieces for their minister. All the same, when the minister bleeds, they bleed. They catch a cold if the minister sneezes. That is the nature of a grace and favour contract.

Acknowledging - and embracing - the reality that senior public servants are to all intents and purposes there at the will of their minister is an argument that has some resonance among some MPs, too, but from a different perspective. As they see it, politicians are elected and they should expect their decisions to be implemented. Something akin to an "events-based" chief executive could eliminate deliberate attempts to frustrate the will of their minister or Cabinet.

Green MPs with junior responsibilities under the support deal with Labour used to get frustrated at slow progress in some of their votes. Previous ministers report other examples of chain-dragging by officials over policies with which they did not agree.

Free and frank advice is one thing. Disagreeing and acting on that to frustrate policy is another.

It is particularly relevant in some of the central government oversight agencies - the Department of Prime Minister and Cabinet, arguably Treasury and contentiously the SSC; contentiously because the SSC appoints chief executives and to "politicise" that role risks politicising the appointment of all public-sector chief executives.

So what is the compromise that would cut payouts by establishing events-based contracts; acknowledge the "political" nature of some public service roles - and the need to have someone driving hard to implement government policy; but maintain a flow of contestable advice?

One option would be to insist on a competence-based (not purely political) selection process where the nominee is examined by a select committee, much as the United States does with its Senate confirmation hearings. That would allow the government to win the day, but in the process unearth incompetence and expose any skeletons to the public eye.