Budget 2015: Hope for innovation

Opinion

A rule we were taught as children is not to make a promise you can't keep.

But it's hard to keep a promise when so many of the variables are outside your control.

The Minister of Finance will be feeling this acutely as he delivers the Budget this week.

While government expenditure is largely under control, the impact of low inflation, revaluations and commodity prices have put a dent in revenue so the promised surplus is still elusive.

The minister will argue that the direction of travel for the government's fiscal position is still positive and much better than our neighbour, Australia.

Time will tell whether he can sell this to voters, or whether voters actually care about a surplus if wages are increasing and the economy is producing jobs and, should I also add, there are affordable homes to live in.

If government revenues are under pressure, we must look at the effectiveness of government expenditure.

Consecutive National governments have been focusing on the efficiency and effectiveness of the public sector through the Better Public Services Program.

The public face of this program has been agencies cooperating to achieve 10 key result areas covering everything from supporting vulnerable children through increased immunisation rates to improving interaction with government through digital channels.

Anyone who has applied for a passport online recently will understand the convenience of an efficient digital service.

But voters and the media need to be asking more questions about the effectiveness of government programs that have been embedded in the system for many years.

Discussions around the head room for $1 billion of new spending when we reach surplus is like discussing the tip of the iceberg when the vast majority of government programs and the associated spending is rolled year to year.

We all agree we are looking for better educational, health and housing outcomes for the most disadvantaged in New Zealand.

This government has perfected the skill of presenting a calm surface while kicking hard under water on quite fundamental change.

Alan Judge

If the evidence suggests that, despite throwing more money at the problem with the same programs year after year we are not achieving the desired results, or could be allocating funding more efficiently, innovation is required - innovation in who delivers and how we deliver services to those families and individuals needing support.

Innovation is often quite hard to achieve in large, tightly structured public or private organisations.

This government has perfected the skill of presenting a calm surface while kicking hard under water on quite fundamental change.

You should hear the word "commissioning" quite a lot in the next few years. Put simply, commissioning is looking for innovation and better results from contracting the charitable and private sectors, either alone or in partnership with government, to provide services currently delivered by government.

We could even go so far as giving citizens the right to choose which organisation will provide them with better support and be the most customer focused. Just like the mixed ownership model was not privatisation, commissioning is not outsourcing but the government will need to sell that to the voters.

Whanau Ora, social impact bonds and the social housing initiatives are all examples of commissioning non-government organisations to be innovative, customer focused and results driven.

In the context of social services, the recent productivity commission report, still in draft, provides a platform for the government to continue down this path.

In Thursday's Budget maybe we can hope for further innovation on how the government is spending our money. And maybe we can ask vested interests to put aside bias and engage in a proper debate around the merits of thinking differently about service delivery.

Alan Judge

The challenge is that overseas these policy initiatives have been austerity measures whereas in New Zealand, having survived the GFC with few scars, the government needs to sell this approach as an innovative way to solve intractable social issues that are holding back New Zealand.

Commissioning still involves the use of public money. So, as has been recently highlighted by the Auditor General's report on Whanau Ora, the public still has a right to know that money is spend efficiently and effectively.

In Thursday's Budget maybe we can hope for further innovation on how the government is spending our money. And maybe we can ask vested interests to put aside bias and engage in a proper debate around the merits of thinking differently about service delivery.

Alan Judge is a partner at EY and the firm's Financial Services, Government and Public Sector Leader.