Public services are changing, not just being cut

Which pinko lefty bloated waffler said this: “Public servants … are a vitally important component of democracy. The better the public servant, the stronger and more effective the democracy?”

Answer: Rodney Hide, in a speech to the Society of Local Government Managers on 14 February. That was shortly after John Key said the public service was bloated and Bill English said it delivers waffle.

Hide hadn’t suddenly gone wet. He is still 100 per cent for much smaller government. He was retailing what many outsiders find when they get up close inside the government: that most bloated wafflers are hard-working, dedicated, mostly intelligent and capable and, some of them, imaginative and innovative, motivated less by cash than by the reward of doing something they think has public value.

English himself in off-the-cuff comments in November said he looks for — and implied he often gets — “excellent analysis” from public servants to correct politicians’ own belief in “hunches, feelings, moods and votes”.

But good intentions don’t alone deliver the right services in the right amounts to the right people at the right price and time. And governments have for two centuries been growing as a proportion of their economies as demand for their services grew and their output per person mostly grew more slowly than in most of the private sector.

We now may be at the point where tough questions will be asked. Across the rich world the 2000s bubble’s deflation into large fiscal debts and deficits is forcing large cuts just to return spending to the share of national output in the bubble years. Ireland’s and Portugal’s governments have lost office trying to adjust. Britain’s budget on Thursday held last year’s line on swingeing cuts, though they have yet to really bite so the acid test is ahead.

The fiscal state here is not so dire. English can change at a more measured pace, albeit now jolted by February’s earthquake. A one-off adjustment in the 2011-12 Budget cuts new spending to net zero. The 2010 forward track for new spending of $1.1 billion plus 2 per cent a year will then be lower for some years ahead, to offset higher servicing costs for the additional debt to fund government earthquake costs and make up for lost revenue.

In any case, as English will probably underline tomorrow in a speech to public servants postponed from February 23 by the earthquake, there is a long haul back to fiscal comfort: till 2020 or later.

This is beginning to intensify a drive for productivity improvements if the level of public services is to be maintained, as English and Key insist. That requires innovation. That requires rethinking the reason for, structure of and the methods of delivery of services and rethinking entitlements to state assistance.

So after the near-term cuts a deeper change may be in prospect in rich countries. They will face globalising pressures from countries which have much smaller — and in Singapore’s case, much more efficient — public sectors. Those countries will over time expand their public sectors but they are unlikely to make them as ambitious as in the rich world.

So there is pressure from above on the public sectors in our sorts of countries. For now English is essentially expecting innovations to come from chief executives whom he is forcing to make do on tighter budgets; he says he is seeing movement. Next parliamentary term deeper rethinking might be on the cards: a paper which circulated at high levels before Christmas edged into this territory.

There is also evolving pressure from below. The post-baby-boom generations, especially the under-30s, expect their services customised and expect to have choice.

English has been on about this since he was a minister in Jenny Shipley’s late-1990s government. A dozen years on, as the post-baby-boomers have become the voting majority and as social media and other IT options have multiplied, this is likely to break open conglomerate public services as it has conglomerate businesses. Will factory-schools predominate in 2030?

Will citizens and social entrepreneurs then still put up with multiple agencies on separate budgets? In Christchurch government agencies have been thrust together in shared premises outside the army’s cordon. Some in Wellington wonder if interaction learned there might be transportable and developable.

Another innovative idea was flagged by the Welfare Working Group but was lost in the shove-them-out-to-work static: use actuarial techniques to identify long-term costs and justify early interventions that are expensive upfront but obviate bigger spending later. The Treasury’s next long-term fiscal projections in 2013 might draw on this.

But this is longer term. English is likely tomorrow to keep feet on the ground. He likes big concepts but personifies Southland practicality. So, while big change is coming in our public sector, don’t expect it to come fast. Hide will have plenty of public servants to praise for a time yet.