Public service under the hammer

Colin James speech to the Institute of Public Administration

I shall start with some politics. It is familiar to you since you live and breathe it or at the very least have to work around it. But it is a useful starting point to set my scene.

The logic of MMP was a sort of two-group system, as Germany has. There the Greens are allied with the Social Democrats and the Free Democrats (who these days occupy a slot akin to ACT’s) are allied to the Christian Democrats. That looked like where our system was heading; a winnowing of small parties until Labour squared off against National, each with an ally or two.

But the current configuration is a long way from that. Labour has twice the seats of National which got no more party votes than Social Credit got in 1981 for just two seats. The right vote dispersed among four parties, one of which has joined with Labour. This creates the possibility that Labour could set up the sort of lopsided centre-left-weighted dominance that has prevailed in Scandinavian countries for much of the past seven decades.

Labour has fully understood this potential prize and is very solicitous of United Future. This includes a high level of comfort with United Future claiming success in marginal changes to government policy. However, there is a limit: Labour needs to be careful not to antagonise its left, the Greens and the unions though it has more leeway than is commonly thought since all three of those groupings can advance their causes only if Labour is in power, recognise that fact of life and are acting on it.

The potential prize for United Future is to embed itself as a long-lived party in, and a bit to the right of, the centre, deciding, working with and influencing governments. But it must first construct a true nationwide party organisation, cement the marriage of convenience between its centrists from the old United party (the minority) and the moral conservatives Future New Zealand has brought in from the evangelical churches and persuade its rank and file and its supporters that alliance with moral-liberal Labour is serving their aims.

United Future has started well. But these are early days and if there is open strife within the party or between it and Labour, that will bury it in the next election. Avoiding such strife will require skilful management. That is for two reasons.

The first is that United Future comes from two different, even if contiguous, segments of the political spectrum and so does its vote. Much maybe most of United Future’s total vote in July was probably from the moral conservative region of politics and would be intuitively more comfortable with National. Much maybe most of the centrist portion of United Future’s vote was tactical, resulting from a desire to make votes count, given that National could not form a government, even if the votes counted only to constrain Helen Clark and/or the Greens. Both segments of United Future’s vote are vulnerable to a recovering National party.

The second reason is that the motivations of the two segments of United Future are different. The centrists’ aim to is to be kingmaker and moderator, to decide which big party shall govern and constrain that party from conceding too much to parties on its flank. Proving to be a stable ally is vital to that and stability means settling for modest influence. But the moral conservatives want to change society and at some point that requires more than modest influence on government policy.

Whilst United Future is in alliance with Labour the centrist tendency has the upper hand. This is likely at some point to cause strain between the centrists and the moral conservatives and some attrition of moral conservative voting support. On the other hand, if National is to recover enough to return to government, it will need votes back from United Future to do that.

For all the difficulties navigating those straits, United Future has started well, seems at the parliamentary level keenly aware of the constraints and is aiming to build support for the long haul. Peter Dunne says the electorate will need to demonstrate a clear desire for a change of government for United Future to switch sides even to a bigger National party in 2005. That ensures Labour will rule for three years and current evidence suggests it will rule for another three after that, though the configuration may change and any significant attrition of the Labour vote would likely bring the Greens into play.

What are the preoccupations of this potentially enduring Labour government?

o It wants to consolidate, to settle people down after the upheavals of the 1980s and 1990s. So no shocks, no big schemes.

o It wants to realise the traditional social democratic ideals of an equitable society, offering opportunity to all and fair shares for all.

o It wants a greener country.

o It knows that to get a socially just, green country, it must grow the economy faster so it has made the economy its central focus and within that focus has given prominence to education, research, business development and infrastructure. The context is an open, relatively lightly regulated, globalised society and economy.

o Putting all that together, it wants Labour language to be the dominant language of politics and Labour governments in power most of the time. The tone is a slightly left-of-centre, small-c conservatism.

What does an enduring Labour government bring for the public service? I will offer six observations.

First, the pressure will remain on public servants to produce more. This pressure has been on for the past 15 years, though the vector is different under this government, less in squeezing more out of staff than in increased demand on an overall staff, which has not increased commensurately with demand.

The “more” comes in three varieties. One is volume: an increase in demand for policy analysis and development by an ambitious and very busy government. A second is complexity: challenges are being attempted that no government of an earlier era would have thought within the competence of the state. Examples are the multiple ramifications of the “Treaty partnership”, breaking the cycle of family violence and generating a sustainable development strategy. A third variety of “more” is in an expectation of “whole-of-government” activity.

Second, ambitions for “more” go hand in hand with risk-aversion. This government is very busy but takes small steps. This creates an impossible tension for officials who are supposed to devise means of achieving the ambitions without making any waves and disturbing any votes. The watchword of this government is “incremental”. There is much to be said for that but it is not the route to a rationalised benefit system, still less a rationalised benefit/ACC interface, nor to 4% growth (unless we cheat with high immigration). How do you get an innovative, high-investment, high-wage economy and a richer society if you eschew boldness?

I am not saying risk-aversion and incrementalism are wrong. There is a lot to be said for them politically and maybe even in national development. Sir Keith Holyoake made a virtue of “steady as she goes” and won four elections in the 1960s. There are remarkable similarities between Helen Clark’s style and Holyoake’s. But Holyoake’s reign ended amid the beginnings of economic decay and was much maligned by hindsight commentators in the 1980s. Clark’s challenge is to avoid the same trap. Officials’ duty is to help ensure she does. Incrementally. I look forward to your solving this conundrum.

Third, there is a suspicion of the private sphere. No state companies are to be sold. Making money out of medicine is in some way immoral. Private educators are perpetrators of inequality or lack of quality. Charities are OK (so there are miserly tax deductions) but they discriminate. ACC is better run as a glorified and flawed benefit scheme than as contract insurance. The state knows better and does better and guarantees equity.

This suspicion has returned to government at the very time when notions of civil society, social capital, social entrepreneurialism and subsidiarity are gaining ground, both on the left and the right. Though in the private sector consumers have long been demanding much more customised goods and services and producers have been trying to respond, the government continues to push uniform, centralised state mass production of social, education and health services.

This might be thought to be good news for state servants. But actually consumers of state services don’t expect to be treated differently from the way they are treated in the private sector. Cosy monopolies are not in fashion. Officials will eventually cop the political discontent that arises from monopolistic state behaviour if people think there should be more individualised treatment and more variety and state servants don’t work out how to deliver that.

There is some movement, however. I don’t want to overstate it but I note the gropings by Steve Maharey towards a more outcomes-focused relationship with non-government social services organisations, Paul Swain’s toe in the water on private-public partnerships for road building and Trevor Mallard’s in the Auckland University Business School, the fact that Serco runs the army’s logistics and Helen Clark’s loosening of the reins (much more modest than its critics allege) on local government. And I note the government’s exploration of the notion of “partnership” generally.

What does this imply for state servants? Acceptance that there will need to be change in the form of partnerships, contestable services, contestable policy initiatives and devolution. And that will pose problems of lines of authority and of accountability.

Fourth, there is the perennial demand for better coordination. The Prime Minister spins complex webs of cross-linking associateships in her cabinet-making. These are impressive and no doubt tie her ministers together better than a simple reliance on cabinet committees and informal linkages. They also send messages about the government’s focal points.

But they pose challenges for state servants, both in distilling exactly what those focal points are and developing mechanisms to give them due attention and effect. Three issues flow from this: the hardy annual of silo-isation, about which far too much has been said; the potential of virtual teams as a way of working on cross-portfolio projects; and, cross-portfolio prioritisation and tradeoffs to focus resources on the focal points. Prioritisation within portfolios is no longer enough; as the Treasury said in its briefing to the incoming government, if effective use is to be made of scarce resources, means will need to be found to transfer resources across portfolios. I doubt if I should hold my breath.

One mechanism to facilitate prioritisation would be better evaluation. The Review of the Centre sanctioned it. But perfunctory evaluation won’t do. It needs to be high-quality and after a project has been given time to produce an indication of progress or not towards a well-defined outcome. And it needs to be acted on. Again, I doubt if I should hold my breath.

Fifth, the state sector could do with some rationalisation of departments and of Crown entities. The government is marvellously fragmented. That is great for cabinet-making when work has to be found for idle hands in the caucus. But it adds another layer of work, pulling together the disparate parts which could mostly sit in large, well-coordinated departments.

Sixth, there is the public service ethos. I don’t intend to say much about that because I said rather a lot in The Tie that Binds, the booklet of the forums on the relationship between ministers and chief executives. There is no doubt the fifth Labour government’s style has strained the conventions of loyalty to the minister, neutrality as between parties and public service anonymity, conventions which were already under strain as a result of the changing operating environment (not least the Official Information Act), the changing managerial objectives and processes since the 1988 reforms and changing attitudes of those who have come into the public service more recently.

This is a big challenge for the public service which, as an outsider, I don’t think it is sufficiently seized of yet. I think that we are approaching a turning point in the way those cornerstone operational principles of loyalty, neutrality and anonymity are interpreted and applied. I think 20 years from now ministers’ personal appointees will play a bigger part than now and will be formally recognised. I think ministers’ offices will be more formally structured and the distinct roles of the minister’s office and the department provided for in the public service’s rules and organisation. I think ministers will have more say about whom they work with as departmental CEOs, at least to ensure personal compatibility.

As a parting thought, may I suggest that there is both too much government and too little government.

The government presents itself as a solver of problems that are beyond solution by governments. It has crowded out the notion of personal responsibility. Social policy (including crime policy) assumes a sort of in loco parentis role for the state toward all misfortune, coupled with increasing punishment for those who break certain rules. But I suspect that breaking the rules is going to become more prevalent. Civil society has frayed and is likely to fray more. And that will prompt ever more frenetic and fruitless rounds of state activity supporting the unfortunate and punishing the errant. That will be great for public servants because more of them will be needed to engage in this activity. And it will be great fodder for the news media. The country is another matter.

An alternative might be to start pushing a message of personal responsibility and corresponding personal rights. Up till now this has been the preserve of the right and it has usually been accompanied by punitive measures which are probably self-defeating and even if not self-defeating do not command a consensus in our society quite the opposite. The left has taken a curiously laissez-faire, minimalist-government approach: one’s moral code is one’s own and must not be interfered with; and if that code or lack of it is socially disruptive, then one seeks the genesis of that warped moral code in societal ills rather than in the individual.

One such ill which used to be the preserve of the right but is starting to be whispered on the left is “dependency”. A culture of dependency on the state does not encourage personal responsibility, since the state has assumed responsibility on the individual’s behalf. For the right this is readily redressed by fashioning sticks to whack people out of dependency. For the left (and also many on the right) this is not an option in a society which has compassion for its members, desires that as many as practicable take a full part in its activities and sees such participation as the best guarantee of stability, cohesion and a well-functioning society.

So where is the solution? My guess is that we might see Maori leading a drive to dimin-ish dependency. I am hearing that from some Maori. It is a theme gaining voice among Aborigines. Dependency, especially for an indigenous people, is a form of bondage. That is overstating the case but it resonates.

Is the public service up to walking with Maori on this? Not if the briefings to the in-coming government are a guide. But if this government and its leading ministers are going to be around for another six years or so, that would give time for some bright, inventive public servants to nudge ministers to think outside the square. Holyoakism is comfortable and seductive to ministers, public servants and commoners alike and we can perhaps live through the 2000s in restful bliss as we lived through the 1960s. But the 1960s were actually a decade of upheaval which turned the value system of countries like ours on its head, with dramatic subsequent impact in the 1980s. It would be unwise to assume that underneath the so-far placid 2000s, soothed by a Holyoakist Prime Minister, there is no similar tectonic shift in progress.