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Serving us right: Will the latest public-sector reforms go far enough?

Opinion.

The Government will undertake “the biggest transformation of the Public Service in 30 years”. Photo/Getty.

Bevan Rapson is unconvinced by the public sector reforms.

I like to picture them in walk shorts. Knee-high socks, a white, short-sleeved shirt and tie complete the ensemble. Accessories might include a packet of Rothmans or even a pipe, and a row of pens in the shirt pocket, perhaps reinforced for the purpose by a plastic protector. Heavy-rimmed spectacles are common, haircuts utilitarian.

This could be a description of any male white-collar workers in New Zealand over two or three decades in the second half of last century; school teachers, or bank “officers”, say.

But I’m thinking of civil servants. Those of the post-World War II era, returned servicemen often enough, who as part of a highly interventionist state apparatus oversaw activities such as the mass construction of state housing, planting of vast forests and development of infrastructure, from hydro schemes to highways and hospitals. Whether advancing the social objectives of the first Labour Government, or the Muldoon era’s Think Big projects, the record suggests they did so without a lot of fanfare. Though the state loomed much larger than it does today, the low profile and wardrobe choices of even its senior functionaries seems in retrospect to have been in keeping with the egalitarianism that was in those days such a badge of national pride.

Which brings us to the 80s, when walk shorts were among the first casualties in the headlong rush towards a new, supposedly improved New Zealand. After Muldoon was vanquished by Labour in 1984, the old New Zealand was dragged into a brash new world informed by American-born theories of economics and business.

Macro alias: ModuleRenderer

The new era’s buccaneering flag-bearers in the business world wouldn’t be seen dead in walk shorts, and nor would the civil servants who realised which way the wind was blowing. Many of those who got on board with the reforms led by Roger Douglas and Richard Prebble seemed happy to adopt the trappings of modern business, along with the structural reforms their political masters demanded. Yes, wardrobes improved. So did lunches, as exciting meetings were held with advertising whizzes all too happy to help with the “branding” the old government departments never needed.

“Corporatisation”, creating state-owned enterprises of many former departments, was followed in 1988 by the State Sector Act, which aimed to inject into the public service the incentives and accountability of the private sector. Heads of departments became chief executives, and the old promotion systems were ditched so private-sector talent could be recruited.

The share market had crashed by then. Some of the heroes of the business world turned out to have been flim-flam men. But in the civil-service corridors, the spirit of the pre-crash 80s was preserved in legislative aspic.

Even today, the State Services Commission website still has a page (last updated in 1998) talking up the positive effects of the 1988 legislation and throwing some shade on the walk-short years. “The Public Service has shaken off the dull, stodgy uniformity of the past, and many departments now have much more of the appearance and style – and ‘client orientation’ – of the private sector,” it gushes.

An update to the website would seem in order, given that, in late June, State Services Minister Chris Hipkins announced “the biggest transformation of the Public Service in 30 years”, with a new Public Service Act to replace the State Sector Act.

The Public Service Association duly welcomed the prospect of change from a system “based on long-outdated 1980s management theory”.

But the details and extent of this latest round of reform remain to be seen. Hipkins emphasised that the new system would unify the public service to tackle specific issues, cutting through organisational boundaries. The changes didn’t mean the current model was broken, he said. But it didn’t work well when agencies needed to come out of their silos and work co-operatively.

Robert Muldoon in 1982. Photo/Getty.

A harsher indictment of the 80s legacy in the public sector arrived from an unexpected quarter just a couple of weeks before Hipkins’ announcement. Business leader Rob Campbell, chair of SkyCity, among many other senior boardroom roles, conceded on the Newsroom website that the corporatisation in which he played a leading hand went too far.

The one-time unionist and Labour Party figure, who switched to the corporate side of the fence in the heady days of Rogernomics, now thinks some government agencies should never have been corporatised. “I’m struck by the many agencies, which have expensive boards and executives duplicating activities and mis-allocating resources while claiming independence from political control, which serve nothing but the interests of those same boards and managers.”

A number of the local and central government agencies running under the corporate model seemed to need a rethink, Campbell said.

He believes we have found ourselves removed from effective control of important agencies. “With our corporate structures we have excessively weak forms of accountability which are bureaucratic and formulaic.” He did not suggest a return to old public service or local-body processes. “But we do need to recognise that corporate structure… is not well suited for all activities.”

Though Campbell, frustratingly, didn’t mention any specific agencies, his inclusion of local-body organisations must have struck a chord with critics of local government in our largest city.

The Auckland Council “supercity”, which began operations in 2010, was created long after the Rogernomics heyday, but tellingly was delivered by a latter-day Rogergnome in then Act leader Rodney Hide.

To its critics, it embodies the worst of corporatisation in the public sector, with many of its most important activities spun off into council-controlled organisations (CCOs), each with their own expensive, unelected boards and management structures. Altogether, it has close to a whopping 200 staff on salaries of more than $200,000.

Few would have argued that the previous system of an Auckland Regional Council and six separate councils across the region worked well, either. It struggled to properly coordinate region-wide activities or advocate with one voice in dealing with central government.

But it often seems that Hide’s model threw the democratic baby out with the bathwater, with decisions made by CCOs behind closed doors, and airy-fairy “consultation” processes replacing proper public debate. The governing body’s mayor and 20 councillors are spread extremely thinly across a region of Auckland’s size, while 21 largely powerless local boards seem little but a democratic fig leaf.

The refusal earlier this year by a CCO, Auckland Transport, to send representatives to a public meeting in genteel St Heliers over controversial traffic changes seemed to epitomise a dislocation between the corporatised arms of the council and the communities they serve.  

Even when dealing with local boards, some of the CCOs much prefer “workshops” out of the public eye, rather than proper meetings, where tricky questions and their answers might end up on the public record.

The traditional, uncorporatised local body model evolved over centuries and could sometimes seem arcane and anachronistic. But the roles of councillors and officers, the latter led by a town clerk rather than a high-flying CEO, had over the years been refined to a set of workable compromises, with checks and balances built into the system.

In comparison, the corporatised version can seem a Kafkaesque world, where Auckland Council ends up doing things like taking itself to court. Local-body elections will be held in October, but how meaningful are people’s votes when council structures can seem impervious to democratic influence?

A dislocation between power structures and the public they supposedly serve can have far-reaching consequences. Those who would defend corporate “efficiencies” should look to the United States and Britain for examples of what resentment of “elites” can lead to.

Chris Hipkins took a worthwhile step in the right direction last year, when he announced that public-service bosses were being stripped of performance bonuses.

Don’t expect any of them to adopt a low-budget walk-shorts aesthetic, as a result, but Hipkins should be encouraged to be similarly bold in the rest of his reforms.

Is it too much to hope he and his fellow ministers have taken Rob Campbell’s complaints on board, along with the frustrations of citizens trying to engage with Auckland’s city hall, and that the worst excesses of corporatisation in the local-body world could also be lined up for a rethink?

This article was first published in the August 2019 issue of North & South.

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