Public Service Commissioner Sir Brian Roche considers axing government entities, as Prime Minister Christopher Luxon wants sector simplified

Sir Brian Roche is to confront the size and scale of the public sector. Photo / Marty Melville

Public servants are still under the microscope as their boss considers cutting government entities, and a parliamentary committee launches an inquiry into the way they report on what they achieve.

Public Service Commissioner Sir Brian Roche fears the sheer number of entities, departments and agencies – some of which are small – creates inefficiencies and duplication.

Speaking to the Herald, he said he was exploring the “open question” of whether some entities should be culled or amalgamated.

“Do we need that many agencies – all of which have their own infrastructure and associated costs – to deliver what’s required?

“It’s work that we’re going to have to confront and address within the next year or two.”

Asked by Newstalk ZB whether he could see entities disestablished, Prime Minister Christopher Luxon said “that may well be the case”.

“We need much more simplicity and if that means sort of sharpening up agencies and portfolios and simplifying all of that, that would be great,” he said.

Luxon noted the number of “small agencies that lack scale”, saying, there were “probably too many of them at times” and that he wanted “every agency really focused on what its core business actually is”.

Roche hadn’t thought about which entities might need to go, but told those attending a University of Waikato Economics Forum last week: “If we started today, we would not design a system as it’s currently operated, and we would not have 46 entities. We need to modify it.

“Ultimately where we need to be is totally different to where we are now. The market’s changing and the machine isn’t responding.”

Roche later told the Herald his comments shouldn’t be interpreted as a “threat”, and a restructure might not actually end up being the best way forward.

“I’m not predetermining an outcome. It’s just a question – can we justify to the taxpayer the need to have that many entities?”

Since coming into power in 2023, the coalition Government has closed the Productivity Commission and created a Ministry for Regulation and Social Investment Agency.

The public sector has been growing as a portion of the workforce since 2017, when it accounted for 17.9% of the workforce. By June 2024, it made up 19.2% of the workforce.

Stripping out the health and education workforces, which correlate more closely with population growth, as well as people who work in local government, the public sector grew as a proportion of the workforce from 6.1% in June 2017 to 6.8% by June 2024.

The Government has committed to cutting jobs across the public sector, while maintaining frontline services.

According to a narrower, but more timely, dataset, the public service (a subset of the public sector) shrank by 2.2% in the year to September 2024.

Roche said the size of the public sector was one of the things he was running the ruler over, as he looked to modernise it with the help of a small group of chief executives: Peter Mersi of Inland Revenue, Andrew Kibblewhite of the Ministry of Justice, Andrew Coster of the Social Investment Agency, Gerardine Clifford-Lidstone of the Ministry for Pacific Peoples, Christine Stevenson of Customs, and James Palmer of the Ministry for the Environment.

Roche was also wary of all the meetings and layers of management in the sector, as well as a culture of risk aversion.

He said he would seek the support of the Government and those affected, before he made any big moves to shake things up.

Neither the Minister for the Public Service Judith Collins (who is overseas) nor Finance Minister Nicola Willis wanted to comment on his openness to cut entities.

Separately, but on a related matter, Parliament’s finance and expenditure committee has agreed to launch an inquiry into “performance reporting and public accountability” across the public sector.

Auditor-General John Ryan, who had been calling for the inquiry, will report back to the committee on how to progress the inquiry ahead of a terms of reference being released.

Raising his concerns with the Herald in January, Ryan noted it could be difficult to track what came of various government policies or programmes.

He urged the Government to change the law to require departments to better report on what their spending achieves.

“Often we get Budget announcements at the time the Budget is announced, but that’s the last we hear of them,” Ryan said in January.

“They then get distributed into multiple agencies, into multiple appropriations within those agencies, and unless it’s required to bring them back together [which it isn’t at the moment], then you can never see them again.”

A problem Ryan identified was entities changing performance metrics, so they couldn’t be fairly compared year-on-year.

He said his office recently looked at reporting done by 33 agencies over a three-year period.

A year after the base year, 30% of measures in the reports were either new or had changed. Two years after the base year, half were either new or had changed.

“You can’t track performance on that basis,” Ryan said.

Ryan said much of the performance reporting he saw also zeroed in on short-term measures, and was fairly internally focused.

Neither Ryan nor Roche wanted to throw stones at hard-working public servants, but stressed the need for reform.

Jenée Tibshraeny is the Herald’s Wellington business editor, based in the Parliamentary Press Gallery. She specialises in government and Reserve Bank policymaking, economics and banking.