John Armstrong: Forcing the pace on public service

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You won't hear National saying as much. But the minority Government has quietly begun what in the end might be the biggest shake-up of the core public service since the 1980s.

This overhaul is not going to happen overnight. It is going to be more gradual and more piecemeal than the big-bang reforms two decades ago which ended the era of Gliding On, created stand-alone commercial state enterprises and modernised the management of the rest of the state sector.

The latest upheaval will be less visible than National's previous attempts to pare back the State - deliberately so in order to blunt attacks from Labour and the public sector unions.

It is less driven by ideology and more by John Key's view that public services are always comparatively high-cost operations and therefore should not be immune from being made to re-invent themselves as selling smarter, better services.

Such a transformation will occur over years, rather than months. It was always going to happen regardless of the economic downturn. However, the ever-deepening shade of red in the Government accounts has given National in general and Finance Minister Bill English in particular the latitude to force the pace.

The rejig is being done through a carrot-and-stick strategy which is designed to build trust with departmental chief executives and get them to take "ownership" of the Government's objective of a "more focused, efficient, and productive public service" as spelled out in National's election policy last year.

In other words, National is expecting the heads of government departments and ministries to do the restructuring needed to achieve a "rebalancing" of resources away from the Wellington back-room bureaucracy and into "front-line services".

It looks like much of this change will take place below the radar. The less information available to opponents to build a broad picture of what is going on, the easier it will be to force change. Programmes will end and staff will be shifted or sacked without fanfare.

Public servants can sense what's coming. Nervousness and uncertainty stalks the pavements of Lambton Quay, Wellington's shopping Mecca and lunchtime haunt of hordes of state sector employees.

Wellington is a Labour town; thus the trepidation felt now the Twin Horsemen of the state sector's Apocalypse - a National Government and bad economic times - have taken up residence in the capital.

And there is solid reason for public servants to fret. National has made reassuring noises by saying it will merely cap the size of the core bureaucracy - the implication being that the number of state servants will not increase, but won't decrease either.

Ignoring the fact that ministers are still determining the exact size of the cap, it does not prevent movement occurring within that cap both within departments as more resources are pushed to the frontline at the expense of the back-room bureaucracy and between departments to implement National's policy priorities and shut down some of the previous government's programmes.

National has been perfectly transparent about this "rebalancing" of resources which could mean, for example, more probation officers in the regions and fewer policy analysts in Wellington.

It cannot be accused of running some sort of secret agenda. It spelled it all out very clearly in last year's election policy.

National has learned from its mistakes in office in the 1990s. Its muscle-flexing attempts at rationalising and restructuring then were quickly portrayed by its enemies as attacks on public services. That defined the debate. National found itself on the wrong side of that argument.

The Wellington bureaucracy may be a handy whipping boy for conservative parties campaigning out in the sticks, but tackling the behemoth head-on only reinforced voters' perceptions of National as cold and heartless. This time National has positioned itself as the party putting the emphasis on customers and services.

Now enjoying their second stint in the Cabinet, the likes of English and State Services Minister Tony Ryall have had plenty of time to reflect on why things went wrong the first time.

They have returned to power more focused, more determined and much tougher beasts. Ryall's sacking in his capacity as Health Minister of the chairman of the Otago District Health Board is indicative of a far stricter stance when it comes to accountability.

The Shipley government, of which English and Ryall were members, was held hostage for months in its latter stages by its failure to move against unpopular figures like Work and Income boss Christine Rankin and former Fire Service chief Roger Estall.

The public flogging and probable execution of Corrections Department head Barry Matthews would suggest such a fate is not going to befall the current Government.

National is being equally uncompromising, but far less confrontational, in how it handles reform in the wider context.

National is promising there will be no "slash and burn"approach. Partly, that is out of self-interest. The indiscriminate short-term slashing of departmental budgets on some fixed percentage basis is too blunt an instrument and only ends up backfiring on the Government as bureaucrats cut services in response.

Likewise, big-deal announcements flagging restructuring or rationalisation are treated with scepticism by the public which thinks they end up costing more than they save.

National is instead putting the onus on departmental chief executives to do the job for it. A few chief executives saw the writing on the wall and initiated cost-saving reviews within their ministries before the election.

However, they have since all been given the message about the Government's priorities, having been called in by English collectively for no less than three sessions with him explaining exactly what he is expecting of them.

National has imposed a line-by-line view of spending, with some ministers rejecting the first offerings from officials as too little.

Meanwhile, the new Cabinet expenditure control committee is beginning a more comprehensive review of what departments and ministries do and why.

On top of that, there is the option of bringing in private sector expertise to examine departmental budgets. Former Treasury boss Murray Horn is chairing a ministerial group charged with scrutinising spending in the health sector.

All the time, English is tightening the fiscal clamp on departments as his revenue projections worsen.

His message to chief executives this week was particularly blunt. Their budgets faced permanent restraint, yet he expected them to provide more and better services with the same number or fewer people and the same or less funding.

National suspects that after a decade of plenty when the number of core public servants jumped from 29,000 to nearly 44,000, there is plenty of slack in the system. It knows that it will be obliged to give some backing to chief executives when things get sticky politically for them.

But if there was ever a time to apply the blowtorch to the bureaucracy it is now. With widespread job losses anticipated in the private sector, not much notice is going to be taken of squealing by the public sector.

- NZ Herald

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