Wa koronga: time for a merger?

29/1/2024

If you have been in a lecture or tutorial with me, you will know I have been asking questions about the role, purpose, and design of the three central agencies for many years*.

I think it’s time for a merger.

The shared role of the Department of Prime Minister and Cabinet (DPMC), the Public Services Commission (PSC) and the Treasury is to provide our political executive with advice and assurance on the delivery of the government’s programme while: protecting the independence of the public service; and ensuring our national security settings are working; and the Governor General is supported in her role.

The main levers of DPMC are the proximity to the Prime Minister and Ministers, as well as the experience, skills and talent of the staff. DPMC is the home of some of the hardest working and best policy advisors in the public service. While DPMC has grown over the years, it is still hamstrung by its size relative to its scope.

PSC has, at best, a patchy record for providing leadership to and for the state services. See the Business Desk series on how it has performed recently. Also, I don’t know about you, but something isn’t quite right in the culture of public service when you look at the rise of unauthorised disclosures against the current Government (and, no, I don’t think that is administrative courage – at all).

PSC has a strong set of levers: from recruiting, appointing and regulating the performance of chief executives; to regulating agency, sector and system performance; to regulating the culture and behaviour standards of the public service; to negotiating workforce and collective employment agreements; to designing the system through its machinery of government tools.

All I would say is that there is a real sense we have not seen the best of the Public Service Act 2020, and we won’t until those new co-opt and co-ordination powers are used in pursuit of the Government’s programme.

Treasury is larger and more homogeneous than either DPMC or PSC. It focuses on economics and accounting to ensure Ministers get rigorous and consistent advice. It is successful when Ministers have control of the budget, and its advice is heard when critical decisions are made.

Treasury’s main strength is its economic analysis, but it is limited in how much it can achieve, primarily because much of that capability is now employed outside the public service – with one or two exceptions. 

My take: under the present arrangements, all three central agencies are doomed to struggle. And if they struggle, then the Cabinet will also struggle to govern its programme.

DPMC is smaller than its scope and thus unable to mitigate risks before they reach Ministers.

PSC is too fragmented and has stepped away from its core business. PSC has capable staff who offer imaginative problem-solving skills, but much of the department’s work is routine and a little too input-focused.

This does not reflect a lack of effort or ambition from a succession of commissioners or employees; it is the result of a series of decisions that have created a small-ish agency unwilling to use its powers to strengthen accountability and improve performance.

Virtually all major policy issues have an economic impact, so the Treasury can get into any policy meeting it wants to. However, it is hard for them to know where to deploy if their colleague central agencies do not have a common view of where the political, performance and financial risks are.

I don’t think a strategy unit will solve these problems either. It might once the Cabinet has decided on its strategy. But history tells us that central strategy units eventually fall over.

In my view, a more significant change is required: a merger of PSC and DPMC.

Without it, the Prime Minister and Cabinet are doomed to get the same support the last government got.

Both PSC and DPMC have different cultures, and yes, the Public Service Commissioners need to be independent. But a stronger DPMC – focussed on recruiting and appointing the right people and ensuring their performance expectations are aligned with the Government’s programme and Minister’s expectations – is one solution. Ensuring everyone’s performance is publicly and transparently judged is another. Knowing the politics so the delivery agencies have headroom to perform is yet another.

Incidentally, I would add Te Puni Kōkiri as the third central agency. Their focus should be on original Ka Awatea functions. Those functions should be close to the work of the strengthened DPMC. It would mean big changes at TPK, though, as the focus will go on advisors who are highly skilled in the authorising environment and the need for senior operators in the regional offices.

It will also impact Te Arawhiti. We all know some of the Te Arawhiti functions ought to have been performed by PSC, so those functions will go with PSC into the newly merged DPMC. The Treaty Settlement functions can stay with Justice. But, let me be clear, everyone at Te Arawhiti ought to be proud of their contribution.

For those of you who have fainted because you think this compromises the independence of the Public Service Commissioners, I have three responses: first, they are statutory independent roles and are designed to be non-partisan and unafraid of politics; second, there is no reason we cannot have them directly reporting to the Prime Minister; thirdly, these jobs take experience and courage, so people who are afraid to speak up, ought not apply.

In summary, a merger of DPMC with PSC offers the best opportunity to improve advice and delivery assurance to the Prime Minister and Cabinet. 

All mergers present difficulties, but it is time for a change.

He manakao te kōura i kore ai – wishing for change is not going to bring it.

What’s your solution?

*I am advised by a number of readers that senior ministers and senior officials have canvassed this option before: maybe its time has come?