Reorganising the state sector

The government’s gradual reorganisation of the state sector is back into action with four recent developments.

* Justice Secretary Belinda Clark was last month made chief executive of the Courts Department, foreshadowing the eventual merger or at least alignment of those two departments.

* Some small ministries, starting with women’s affairs and youth affairs, are to clustered with larger departments to reduce the cost to small ministries of some administrative functions.

* Three “circuit-breaker” pilots involving multi-agency approaches to intractable problems have proved successful enough to prompt the launch of more.

* Long-delayed legislation to regularise governance of the confusing, higgledy-piggledy array of stand-alone Crown entities should reach the House in late winter.

State Services Minister Trevor Mallard is also pushing the integration of computer systems within the state sector to enhance the one-stop-shop government portal.

The reorganisation of departments along portfolio lines made headlines two years ago when Work and Income New Zealand (WINZ), as it was then known, was joined with the Ministry of Social Policy in a new Ministry of Social Development (MSD).

Christine Rankin was refused reappointment as WINZ chief executive and was not offered the MSD job. She took the government to court and lost amid a blaze of publicity.

The government’s long-term aim is to develop the MSD as a department which not only delivers social assistance but develops social policy in much the same way the Treasury develops economic policy. A substantial policy unit has been formed within the MSD.

Over time other relevant departments are to be “clustered” around the MSD. The first obvious candidate is the Department of Child, Youth and Family Services (CYF), now under review.

Under a clustering arrangement CYF will keep its own chief executive and will continue to have an “operational policy” unit — essentially advising on how best to do something CYF is doing — separate from the high-level MSD policy development, which essentially advises on whether something should be done.

In some cases the government is opting for outright merger, rather than clustering. Special education services have been merged into the Ministry of Education and the Early Childhood Education Agency is to be.

This re-aggregation of activities along portfolio lines runs directly counter to the separation of functions after the 1988 reforms.

Policy development was separated from delivery of services and so was funding (or “purchasing” in pre-2000 terminology). Hence the division of the old Social Security Department into a social policy ministry and several service departments, including WINZ and CYF, and the similar dismemberment of the Justice Department into a policy ministry, the Ministry of Justice, and several service departments, including courts and corrections.

Bringing justice and courts back under a single chief executive partially reverses that division, though it is understood the Corrections Department, which runs prisons, will remain a stand-alone agency.

Reaggregation also addresses a long-complained-of fragmentation of the public service into a multitude of departments, some of them very small. At one point there were 39 departments, though mergers since 1999 have reduced that number slightly.

One option — chosen by the Victorian state government — is to amalgamate them into a few super-departments. Victoria has eight. The government, Mallard says, is not heading down this route. It is taking a pragmatic, case-by-case approach.

One problem with fragmentation has been the creation of some very small agencies, such as the Women’s Affairs and Youth Affairs Ministries. Their smallness may affect their ability to do quality work. And they each must maintaining administrative systems, including accounting, human resources and information technology.

Those two ministries are being “reviewed” to see whether they could be absorbed within or clustered with another department.

For example, youth affairs might appropriately be a division of MSD, much as the Ministry of Energy is a division of the Ministry of Economic Development and the Office of Ethnic Affairs is a division of the Internal Affairs Department. Alternatively, women’s affairs might more appropriately remain a stand-alone agency, with its corporate services supplied by or hooked into MSD’s.

Mallard is also taking a pragmatic approach to the sprawl of Crown entities.

Crown entities are public service agencies which are outside the public service departments. They are mostly run under boards or commissions, giving them a degree of independence. The Early Childhood Education Agency, being absorbed into the Education Ministry, has been a Crown entity.

Many Crown entities were set up because the pre-1988 pubic service was tightly centralised and stifled initiative. Today many Crown entities set up for those reasons might be able to achieve the desired freedom of manoeuvre within a department — and even to be headed by a board.

Some were set up in the early 1990s out of a belief that they were more appropriate in a more-market economy.

One was the Building Industry Authority (BIA). Last year the government found the BIA was too arm’s-length for its liking and in any case left ministers with the blame for leaky homes. This month it announced it would bring the BIA back into the public service, as a wing of a yet-to-be determined department. The most logical home would be the Ministry of Economic Development (MED), which handles most business regulation, or the Internal Affairs Department, which has had oversight of the BIA.

Commerce Minister Lianne Dalziel (one of the MED’s ministers) said the regulatory functions of the BIA required more direct contact with the minister than should be the case with an independent entity and because of those regulatory functions the minister, rather than a board, should answer to parliamentary select committees.

But Mallard is not proposing wholesale reabsorptions. In fact, last year the government set up a new Crown entity, the Tertiary Education Commission, to reorganise that sector — a task that might logically have been done by the Ministry of Education.

However, he is now reactivating legislation to regularise Crown entities’ governance. Each Crown entity now has its own legislation and so operates differently.

The new bill, drafted in 2000 but stalled while ministers worked out their overall approach to state sector organisation, will group Crown entities into five categories:

* Crown agencies, which operate very much like mini-departments, carrying out government decisions;

* autonomous Crown entities (ACEs), which have been given a degree of independence, such as the Law Commission;

* independent Crown entities (ICEs), such as the Commerce Commission and Securities Commission, which have quasi-judicial functions that need to be exercised at arm’s-length from ministers;

* Crown-owned companies, which perform a social function as well as a commercial function and so are not wholly commercial entities as are state-owned enterprises; and

* schools, which are a category on their own, operating under boards of trustees but with staffing and funding decided by the government.

The State Services Commission is now working through a detailed alignment of each Crown entity’s legislation with the proposed bill.

That is expected to take several months. Mallard intends to have the revised bill in the House in August.

His bill differs in an important respect from the 2000 version: it introduces the capacity for the government to encourage and, if necessary, direct agencies to work together in pursuit of government aims. This is the extension of the government’s cherished “whole-of-government” approach which it has applied to departments.

One example is the “circuit-breaker” teams that are being developed to tackle social issues at local level.

Three pilots dealing with “intractable” issues — truancy in Rotorua, settlement of skill migrants in Auckland and reducing family violence in Hamilton — have proved successful enough to explore national rollouts of the pilots and to move into economic and environmental issues.

Mallard is also driving the standardisation of government computer purchasing and information technology to reduce costs and make departments more user-friendly to those who deal with them — and to give the public a “whole-of-government” feel.

This in part revolves around the government internet portal (, a one-stop entry to government services for suppliers and users. It is financed with a levy based on departments’ size and computer procurement.

One issue is what level of authentication is needed for different services — a much higher level is required for access to tax records than exam results, for example. Another is to ensure people on “low-grade computers in rural areas” can access the system.