This Thursday John Whitehead will do another of his big public speeches. It will be reported as another attack on the public sector, a follow-up to that of Bill English last Thursday. That misreads what both are on about.
Whitehead’s speech a year ago on this theme attracted criticism on two grounds: that it demanded changes in the public service that amounted to cuts; and that it was stepping outside the proper role of a public sector chief executive as the executor of policy into the role of progenitor.
The second criticism was wrong. Whitehead spoke with the approval and authority of his political master, Bill English. At most he was filling in detail. English was explicit about that to anyone who asked him.
The first criticism was misplaced. English and Whitehead are not on about “cuts”, though there are cuts. They are on about change.
Whitehead will on Thursday review the changes over the past 18 months and outline what has still to change.
One change is driven by money constraints. After allowing Michael Cullen’s fiscal stimulus to roll on in 2009-10 and chucking in a bit this year to sweeten the tax changes, English is in effect demanding state spending rises by less than inflation until the budget is back in surplus.
Last week he pushed that out further: to pay down debt and restart contributions to the superannuation fund he wants a $2 billion-a-year surplus “before we even have the choice of significantly increasing public spending”. That, he added, “may not occur in the professional lives of a large group of middle to senior civil servants”.
As he and Whitehead repeatedly said last year, that requires imaginative management. To get money for new projects or expand existing ones, departmental chief executives have to find savings.
One way is by “reprioritising”, a nice word for cutting some services (example: adult education). That yielded around $4 billion over the next five years in the 2010 budget.
A second way is through shared back-office services. That has led to the unwise folding of the National Library and National Archives into the Internal Affairs Department and to bulking up purchases of IT and other services. Whitehead will on Thursday suggest some front-office activities could be shared, too.
A third way is to contract out more service delivery to the private sector and not-for-profits to get efficiencies and draw on the sort of enterprise that is difficult to develop in a heavily rules-based organisation, which government agencies have to be (witness the hysteria over credit cards).
Whitehead talks of “myriads of initiatives” from chief executives and says they are still coming.
But he also says there is more to do. Earlier this year the State Services Commission appointed “lead assessors” to drive “performance improvement”. Whitehead will soon announce a new initiative focused on “governance”.
There is a bigger issue: what agencies and their chief executives are to be accountable for.
In the 1980s the accountability shifted from inputs — what agencies bought — to outputs — what agencies produced. In the 1990s there were attempts to relate outputs to “outcomes”, the results of what agencies did. These are supposed to be encompassed in agencies’ “statements of intent”.
But there is a lot of work to do make these meaningful and to develop ways of holding agencies accountable for what does actually “come out” of what they do. And politics gets in the way.
On top of all this is the Rodney Hide-driven review of all legislation and regulation to see how relevant it still is and whether it meets cost-benefit and national-interest criteria. Agencies have done a full “stocktake” of the thousands of acts and regulations in their portfolios and are now expected to subject a “quota” each year to the Hide criteria (jointly announced last August with English).
But all this busy-ness has a bigger context. That bigger context is what English and Whitehead are really on about.
First, look to Britain. In the budget in June the new government ring-fenced health and foreign aid but said the other agencies have to cut an average 25 per cent from their budgets. As the Economist magazine said last week, this is about decentralisation as much as about money.
Most rich countries, in the aftermath of the financial crash and the panic measures to avoid economic collapse, face big debts and a need to cut public spending and/or raise taxes, if not now then in future. English reckoned last week it will take them two decades to sort this out.
Meanwhile, he added, “fast-emerging economies” will experience “a demand for more public services”.
New Zealand is not insulated from these tectonic shifts, to which you might add rapid technological change. The public service will look different 10 or 20 years from now. “Public” services will be thought of, delivered and consumed differently.
To read English and Whitehead as just driving “cuts” is to miss the point. They are climbing aboard history.