With a Whimper: Put Public Service Back in the Public Service

Listener 28 August, 1999.

Keywords: Governance;

In the opening chapter of Das Kapital, Karl Marx wrote in 1864 how recent developments in economics had “discovered the content” of value theory. His excitement is palpable, for the labour theory of value seemed to underpin his concerns of human alienation in industrial society. Unfortunately the theory does not quite work. Marx struggled with the idea, never completing Volume 3 (the text being put together from Marx’s notes). We all have brilliant ideas, which seem to solve the problems of the universe yet, as time go by, we realise are flawed. Fortunately, like Marx, we are not usually in a position to implement our faulty theories. When we are, things can go desperately wrong.

That happened in the 1980s, when some officials thought that by running government agencies as businesses, problems with which the Treasury had been struggling would be resolved. There was no pretesting of their theory. It was directly implemented in the 1988 State Sector Act and the 1989 Public Finance Act. Unfortunately the brilliant insight has not worked. Today we see failure after failure – ranging from the fiasco over the previous auditor-general to the bizarre goings on in WINZ. The picture of the public service is of a ship of state which keeps springing leaks. Whenever the shipwrights repair one, another appears. The Prime Minister in the premier cabin, is complaining about Captain State Services Commissioner (but she chose the ship). Those manning the bilge pumps know that something is desperately wrong.

A fundamental idea behind the 1980s reforms is deeply flawed. You cannot run a public service as if it is a private business. Professor Allen Schick’s 1996 report, Spirit of Reform sets down why. The reforms were right to give public servants the freedom to manage. But they overreached themselves by trying to commercialise the public service. Imposing business practices is destructive to good public practice. The required reform is not a matter of repairs. It is a rebuilding the ship. We need to put public service back into the public service.

The most important cabinet appointment after the 1999 election will be the Minister for State Services. (The Treasurer is the key appointment, but we know whatever happens, we are going to get a good un.) In the past, the portfolio has been given to an overloaded minister, because the State Services Commission could be relied upon. But today it needs a fundamental rethink, which the Commission – busy with day-to-day management – is not going to do by itself. If the Prime Minister appoints another part-time Minister, she will find state sector problems crucifying the government, as is happening to this one. Much of the recent bad publicity is not its fault – other than it chose the vessel.

I will not preempt the likely changes. But Schick was anxious about the abandoning of input control, so we may see a return to greater SSC and parliamentary supervision of the production process (which is currently the statutory responsibility of each department’s chief executive). I shall not be surprised if the SSC gets more involved in the appointment of the second managerial tier (instead of leaving it to the CE). One important reform would be for parliament to set some rules about how MPs may criticize public servants. As ministers have avoided responsibility, the attacks on their officers have become too brutal. However, public servants cannot attack back. Parliament’s treatment of the Commissioner of Inland Revenue has not only been unacceptable, but it will inhibit any decent person taking up the job in the future. Yet the integrity of the tax system is fundamental to a civilised society (as recent sad experiences in Russia show).

The ship of the state sector is not going to sink over-night. Rather it is wallowing in the seas. Or to misquote T.S. Eliot: it goes down, not with a bang but a whimper.

From Listener 17 July, 1999.


Journalists joke “it fell off the back of a bus”. More often they make careful use of official resources. Recently, a senior Treasury official apologised they had nothing on a topic I asked about, but insisted sending the nearest paper. Meanwhile, a Reserve Bank official zipped back a request for some specialist data by email. All so typical it hardly bares mentioning.

Later that day I rang Work and Income New Zealand. The hostility of the officer and her supervisor was palpable. “What do you want the data for?” The Official Information Act gives the right to information without justification. (As it happens all three questions were about meticulous cross-checking of results which are unlikely to appear in public.) Eventually I was told I would get an answer in 21 (working) days. Apparently the new department has not got round to its public relations. One wonders how WINZ treats some poor sod who wants a benefit or a job.

From Listener 9 October, 1999

Parliamentary Patronage

The revelation that all the appointed members on the Lotteries Board were National Party members does not tell us that National are the gambling experts. Rather it illustrates the practice of governments appointing their friends and relations to public office. Patronage is hardly ever studied by academics – maybe they are hopefully of being its beneficiary one day. Yet it is a fundamental lever of government, albeit one usually hidden from the public. Even if the government goes for competence, a large chunk of the able are excluded by not being politically acceptable. It is like never appointing a woman because of her gender.

MMP may break the stranglehold of the party in power over patronage appointments. There were explicit provisions in the Coalition Agreement, but that has lapsed. Better still, let’s go for a balance of appointees reflecting the balance in parliament, rather than just the politically correct. That should raise their average competence. Today it often appears that when the appointment was made, competence was judged a negative.