Tēnā te ngaru whati, tēnā te ngaru puku

15/03/2023

I love this whakataukī. It reminds me that understanding comes from knowing and welcoming the difference between similar things and people.

I have heard a lot of korero this week about our golden age of public management. Many commentators assumed the 1980s public management reforms are our high point.

Sadly, those people are wrong.

Let me explain.

The 1980s reform began in 1984 as a new government’s response to the financial crisis. The government focused on liberalising the economy, it then moved to restructure its commercial activities (via privatisation and corporatisation) and finished with changes to the labour market. Those reforms are with us today – in one way or another.

The State Sector Act 1988 made heads of departments chief executives responsible for running their departments. They were given the freedom to make all the input decisions.

The Public Finance Act 1989 introduced accrual-based accounting and budgeting. The distinctions between inputs, outputs and outcomes were made transparent, with ministers now responsible for outcomes with chief executives accountable for the delivery of outputs.

Then in 1994, the Fiscal Responsibility Act was introduced. Its goal required as much information as possible to be disclosed about the economy and the progress of the government’s strategies.

Subsequent developments have addressed specific concerns arising from the initial reforms without challenging their fundamental structure. Each development has been an attempt to address the plural rigidities arising from the contractual focus of the early reforms. The attempts layer in new design elements to encourage a focus on impact and outcomes, without changing the fundamental architecture.

Alongside these changes was the evolution of the central agencies, who have layered on new obligations to decrease fragmentation, build capability, and assess efficiency and effectiveness. The best example of this is the new Public Service Act 2020.

There have been some positive results from the reforms. For example, there is more focus on the medium to longer term in fiscal management than there was in the 1980s. Some argue there is more fiscal discipline and a better understanding of fiscal risk.

But there have been some series downsides:

• Thousands of people lost their jobs.
• Communities nationwide were hollowed out as people had to move to the cities and towns for work.
• Managers were not left to manage. Some ministers became deeply involved in operational matters.
• The focus on annual outputs displaced the focus on longer-term outcomes for almost two decades.
• Providers were told to do what was contracted for rather than what was right.
• Managerialism displaced professional judgement.
• The promised debate on allocation issues never happened. For example, no major areas of core spending are subjected to public scrutiny.
• The focus went on “box-checking” compliance with contracts over a concern for the public interest and collaboration.
• The central agencies developed a costly (and distributed) infrastructure for negotiating, reporting on, monitoring, and auditing compliance of entities across the entire public sector.

In summary, there is no way the 1980s represents a golden age.

And the faster some people come to terms with that, the better able we will be to address the overly complicated and expensive public management system we find ourselves with.

I suspect there are a great many good officials working incredibly hard to get very simple things done.

To close where I began – it’s crucial to be able to distinguish bad from good.