Something Rotten: The Ship Of State Keeps Striking Leaks.

Listener 18 August, 2001.

Keywords: Governance

A recent Treasury working paper Review of Evidence on Broad Outcome of Public Sector Management Regime reveals that despite the upheaval in the public sector of the last twelve years, there has been surprisingly little evaluation of the changes, and the little of which there is has not been of very high quality. Even more striking is the almost complete absence of the public’s perceptive in the evaluations. The assumption is that no-one was worse off as a result of the changes, although every ordinary member of the public has tales to the contrary. The official studies implicitly reflect an arrogant antipathy to New Zealanders, as if the state sector is only for the state servants and their political masters, and the public are just an irrelevant nuisance.

If the state sector is not systematically monitoring its interfacing with the public, then the task is left to others, most notably the parliamentary opposition. What a feast Labour had in its last year of opposition, with new revelations virtually every week. It is different being in government. One can give instructions to address this or that anomaly. But the imperial command is not always sufficient, and is only retrospective. The government is getting tarnished by public sector failure in the same way that Labour damaged National when it was in government.

Thus the tangle over Christine Rankine. Far too much attention has been about her dress. It is a matter of practice in, say, the National Orchestra for its women players to have more freedom of dress than the men. But the rule is no player may upstage the conductor, the soloist excepted. Similarly a chief executive does not upstage her or his minister. One of the illuminating contrasts in the court case, was between Margaret Bazley who, having headed a number of government departments, understood the unspoken rules and Rankin, who seems not to have.

Historically the public service has functioned on a bewildering set of informal understandings, which public servants learned by experience. Attempts to codify them never worked, but commonsense usually sufficed. In the late 1980s the previous Labour Government tried to put them onto a more legalistic contractual basis, as a part of its state sector reforms. But the statute does not say ‘CEOs should not upstage their minister’. Nor does the employment contract say ‘dont wear distracting things like bo-jangles or kaftans’. And neither says ‘you are the servant of the public’. Should they have to?

The Rankin episode is one of an extraordinary, and extraordinarily long, list of failures. Among the worst of which have been the Cave Creek disaster and the incarceration of an auditor-general for fraud. The ship of state keeps striking leaks. As they rush to caulk the last leak, no-one seems to ask whether the vessel is seaworthy. What event would be necessary for those on the upper decks to contemplate the possibility that their reforms are fundamentally flawed – that the leaks are not accidents, but show the ship unseaworthy?

A key weakness has been their over-reliance on the excellence of chief executives of government departments. The court cases involving Rankin and the fraudulent auditor-general must surely raise doubts that sometimes the system appoints flawed men and women – like you and me – rather than the super-beings the theory assumes. Rankin’s managerial weaknesses were evident shortly after her appointment, and yet the system could do nothing for three years other than counsel her – not very effectively, apparently. (To let you into a secret, there is a widespread belief among insiders that there have been other inept managers which the system could do little about, except not renew their contracts.)

The authority of the head of a government department is at the heart of the 1988 State Sector Act. If that is problematic, the underpinning structure has to be too. Why do politicians who find themselves soaked in the leaking ship not give it a thorough overhaul? Some of the senior ones approved the original reforms, while which chief executive is going to say that there is something wrong with the system which has given them power? Too predictably, there will be further breakdowns – many minor, some major. Do not ask me what they will be. If most of the ship’s planking is rotten it is impossible to tell where the next leak will be.

What is predictable is that in the next year or two a frustrated government will announce it is time to improve the way the state sector treats the public. As these things usually happen the ministers will not have much of an idea what can be done. The likelihood is the officials will come up with a package which on the ‘duck test’ is commercialisation: privatisation; user charging; outsourcing, shifting costs and risk to the public. That is the only thing the officials seem to know, and is the underlying assumption in the State Sector Act which determines how they behave. I am not sure what happens after that.

I would start by renaming the State Sector, ‘The Public Service’.