The Portfolio Panic: Missing the Forest for the Organisational Trees

24/2/2025

Let’s talk about the latest concern over Aotearoa New Zealand’s ministerial portfolios.

Some commentators suggest we should reduce them because “other countries have fewer.” This is a bit like suggesting we reorganise our national parks based on how Denmark manages its forests.

Now, don’t get me wrong, the critics are onto something real. They’ve noticed the complexity of our public management system. But they’re misdiagnosing the problem.

Yes, the system is complex, and yes, Sir Brian Roche is right when he says the operating model isn’t working as it should. But the issue isn’t about having too many portfolios.

The real problem runs deeper.

Over decades, we’ve layered reform upon reform, each one intended to fix the problems created by the last, and each adding its own complexity.

Picture trying to renovate a house while changing the building code every few years. Eventually, you end up with a very interesting structure, but it might not actually work as a home for you and your whānau anymore.

The most recent public service reforms, despite their good intentions, may have caused more harm than good. Known as the New Public Service reforms, these were based on the idea of public service motivation, with the aim of reshaping the service’s culture based on the “spirit of service”.

However, in practice, they shifted the role of central agencies from driving performance to convening the system with a velvet glove. Under that soft exterior was a micromanaging hand that layered on complexity without the necessary funding.

The result?

Instead of pushing the public service to focus outward, these reforms turned it inward, stifling the very progress they aimed to encourage. Sir Brian Roche inherited a system with just 3,000 entities that are incentivised to spend more time managing internal processes than delivering with and for communities. It’s like we’ve built an incredibly sophisticated machine that’s mostly focused on maintaining itself rather than serving its intended purpose.

Let me circle back to the criticism about portfolios.

Ministerial portfolios aren’t just bureaucratic decoration. They’re essential tools for governing a massive, complex system of about 3,000 entities and over 300,000 people across the public sector. These portfolios help ministers coordinate related work towards specific outcomes. They’re the instruments through which ministers oversee and govern the powers granted by Parliament to be used on behalf of the public.

Without portfolios, imagine trying to coordinate 3,000 independent units, each trying to serve the public good in its way. It would be like trying to run a restaurant where every ingredient has its own separate kitchen. You can see the chaos, right?

The fundamental question here isn’t whether we have too many portfolios. The real question is: what kind of operating model does the core public service need to ensure that the entire system, portfolios, agencies, and endless reforms, actually delivers coherent outcomes for all New Zealanders?

Frankly, reducing portfolios would have the opposite effect. It wouldn’t create a public service that looks outward and delivers. Instead, it would leave us with a system bogged down in its own complexity. Portfolios aren’t the problem. If my significance testing is correct, they’re one of the few tools we have to make sense of the complexity we’ve created. The conversation we should be having isn’t about reducing portfolios. It’s about rethinking how the core public service supports the wider state sector in serving New Zealanders.

That’s the real challenge ahead.

If we were designing our public management system from scratch today, would we create what we have now? Probably not. But we’d need something like portfolios to make it work. They’re not perfect, but they’re like having a map to get from Ōtautahi to the Okuku River. Said more plainly, getting rid of the map won’t make the trip any simpler to navigate.

So, let’s not get distracted by counting portfolios. Let’s not allow those who don’t engage with the empirical work and lack experience governing large, complex delivery systems to lead us into the wrong conversation. We need to rethink the entire core public service operating model, not get distracted by the noise.

Three essential questions need to be asked and answered in the coming months: What is the role of the state? Which functions and powers should remain within the core public service, and how can they be best consolidated? Which functions and powers need more independence and, therefore, need to be placed in the wider state services, state sector, local and regional government, and/or with community institutions themselves?

As always, form follows function, and the institutional form supporting these functions ought to be determined by how politicised they need to be and how close decision-making rights need to be where the work is done.

Though, I admit, counting portfolios is easier. Maybe that is why it is an attractive and easy distraction for those who sit on the sidelines.