Kia whakatōmuri te haere whakamua

30/10/2023

This post is a letter to my friends and whānau working in the public service.

As the whakataukī suggests you are always working in the past, present and future.

That is because the past is central to and shapes your present and future reality. It also because you are always carrying previous attempts at public sector reforms.

This letter is to remind you that many of the challenges you face are a result of the ’80s reforms. Be careful, I am not saying the ‘80s reforms are bad – I am saying they left you with problems that haven’t really been resolved.

To understand those problems, we need to go back 40 years.

The 1984 Treasury briefing to the incoming government included detailed criticism of how the public service was organised and managed. It also included a narrative and prescription for reform.

The 1987 briefing followed up the 1984 Treasury briefing with a comprehensive examination of the change required, as well as a detailed plan. The 1987 briefing proposed a public service transformed through the introduction of new institutional economics. At the heart of this transformation was the goal to make the public sector more businesslike in order to improve government efficiency.

The transformation emphasised the centrality of citizens as customers and users of public services. It proposed the decentralisation of the control of resources in order to encourage third-party service delivery models. It also set up quasi-market structures where public and private provisions were supposed to be in competition with one another. It also proposed a stronger focus on financial control and increasing efficiency.

Unfortunately, as the transformation started to be implemented a command-and-control mode of functioning emerged that valued targets and monitoring over continuous improvement and handing over the power to the front lines. From this the system was flooded with audits – both financial and non-financial – often designed without frontline experience or knowledge. It also included discouraging the self-regulatory power of the professions and handing over the power from the professions to the managerialists. Finally, we saw new forms of corporate governance introduced into public sector governance, with those governance models concentrating power to the top of the entity.

The transformation pottered along for a while. While there was a sense that significant damage had been done by the reforms, it was not until Logan landed his report in 1991 that we discovered the collective strength of the public service had been undermined by the reforms. Logan also found that the performance management systems had been irreparably degraded, and the service had lost a significant amount of talent.

Then Cave Creek happened. We must never forget the lesson of Cave Creek. The lesson is that cost-cutting, while easy and seemingly straightforward, can also undermine the ability of public institutions to do their core business and, in doing so, put New Zealanders in harm’s way.

Boston and friends offered their review of our public management system just after Cave Creek. They found while the institutional moving around the deck chairs might have appeared sound, there were much simpler and easier ways to achieve the same outcomes. They also found that Aotearoa had one of the most fragmented bureaucracies by international standards, and the separation of policy, purchasers, and providers had not worked. They also found low competence in policy advice and a tendency for the Treasury to dominate policy advice, even though few Treasury advisors had any experience in service delivery, let alone leading organisations.

Schick, in his Spirit of Reform work, picked up the themes from Boston et al. Schick said while the 80s reforms had lived up to their lofty expectations, genuine weaknesses have been created in ownership advice, the medium-to-long-term view and input and output costing. Schick also noted the costly accountability system as well as the large number of agencies.

Don’t forget that while all of this was happening, the Office of the Auditor General was simultaneously finding weaknesses in performance reporting, impact measures, and governance of the broader state services. At the same time, the Waitangi Tribunal was finding weaknesses in the Crown’s ability to engage positively and coherently on contemporary policy issues with its Te Tiriti partner.

Then, in 1999, the fifth Labour Government arrived, and so did Petrie and Webber’s report on our outcomes management system. Heroically called The Evidence on Broad Outcome of Public Sector Management Regime, their report called attention to a public service that was better at identifying outputs and their cost but weak at alignment between outputs and outcomes. They noted the poor links between government priorities and budget spending and the uneven and unclear performance of departments and agencies.

In late 1999, the SSC was asked to review public service accountability for the new Labour Government. Their report found an overly expensive and complex system, poor performance information, and a short-term focus. Their report mirrored the Petrie and Webber report but noted the Parliament and the select committees, in particular, were key to lifting the outcome performance of the state sector.

In 2002, Scott – one of the architects of the ’80s reforms – suggested Ministers needed training and guidance in getting into the role, the central agencies needed to better monitor and shape performance, and the entire senior civil service needed to step up.

At the same time, the Review of the Centre (2002) was published. It also found problems between Ministers and senior officials setting objectives and priorities, the dominance of efficiency over effectiveness, poor agency performance information and low capability in integrated service delivery. So began the work on integrated service delivery and strategic frameworks to help align investments and significant investments in people and culture.

From there, we saw the serious implementation of the outcomes orientation. This was the attempt to return the public service to its roots: not managing technocratic machines (or closed systems) but “managing the process to support outcomes determined by Ministers”. As the service re-orientated itself and its systems to outcomes, it welcomed the 38th Prime Minister of Aotearoa with advice on how to shape the public service to be better using an outcomes-focused lens.

This resulted in the Better Public Services report (2012). That report offered concrete proposals for working together and organising themselves around Government priorities, sharing back-office functions and services, and accelerating the shift to digital channels. It also included a commitment to be transparent about how agencies measure and report on performance. The BPS result areas and PIF were practical examples of that shift in action.

This post ends here. I’ll cover the inclusion of public service motivation via the new Public Service Act 2020 in the coming weeks. I’ll also cover what I think ought to be a return to the performance tools the fifth National Government designed with the central agencies.

Frankly, no government ought to expect to be elected or re-elected if they don’t understand the importance of outcomes and performance to trust and confidence. Relatedly, no government ought to be surprised at a Waitangi Tribunal Te Tiriti claim if they don’t seriously lift their kāwanatanga game in respect of outcomes and performance reporting for Iwi/Māori and whānau.

In the meantime, I want those in the public service to know you are on a journey. You are your past, present and future. You are still working on the problems the ’80s created. While you are better placed than your colleagues were ten and twenty years ago, like it or not, it is time to complete the final yards on a few problems the ’80s left us all with.