Keeping public sector costs down
The NZ Herald reports sound words from the Treasury Secretary:
In a speech to government department chief executives in Wellington yesterday, Treasury Secretary Mr Whitehead said the public service needed to move out of its traditional comfort zone and take some risks to ensure it delivered services as cost-effectively as possible.
“There is a stark alternative to mobilising ourselves as public servants. If we don’t rise to the challenge and make real progress, change will occur – but it will be done to us rather than by us.”
Absolutely. To be fair some CEs have risen to teh challenge.
The Government’s edict was for better services without spending increases – and Mr Whitehead said nothing should be off the table to try to lift the productivity of the state sector.
Options included contracting out more services to the private sector, merging administrative services with other departments to lower costs and cutting projects despite the possibility of staff cuts.
I am interested in the merging of admin services.
If you add quangos to core departments, we now have 250 or so public sector CEOs. It also means we have 250 IT systems, 250 payroll systems, 250 HR systems etc etc.
I would advocate creating around a dozen sector super-ministries. One for the justice sector, one for the social services sector, one for health sector etc. You might still have different agencies within that super ministry, but they would all use the same IT, HR, payroll systems etc. And there would be just one CEO over them all who is in charge of strategy and ensuring the whole sector works together.
You see this in the UK where the Home Office is in charge of all law & order – corrections, police, courts etc etc.
In the speech, Mr Whitehead says “tough decisions” are needed. Staff numbers working in the core bureaucracy had grown by 44 per cent since 1999 – a far greater number than those affected by recent redundancies.
Mr Whitehead told the government departments more savings would be sought through the “line-by-line” reviews of spending that have become a regular part of the Budget process.
So trying to reduce costs won’t be a one off exercise, but an annual event. Excellent.
July 21st, 2009 at 11:08 am
I’d like to see your list of a “dozen” ministries we would actually need. The easiest way to cut public sector spending is just to stop doing stuff. The majority of the public wont even notice.
Also “line by line” reviews are for the weak. Zero base is the way to go.
July 21st, 2009 at 11:10 am
Where’s Bill English to say “The government sets public sector policy, the treasury does as its told”?
Can’t have judges commenting on criminal law matters, but its OK for Treausury to make governmet policy on the run?
July 21st, 2009 at 11:13 am
A key comment by Whitehead was that programmes initiated 5, 10, 15 years ago may no longer be relevant. In which case he is quite right that they should be cut.
Of course the dreadful Brenda Pilott is frothing at the mouth.
The real question is that for many years, including I suspect under the last National administration we have had poor quality spend.
Now is the time to attack such waste.
July 21st, 2009 at 11:14 am
So making super ministries is going to make things more productive?? KLike to see that in practice. The bigger the ministries become the more bureacracy is created the less govt depts actually listen to the people they are serving
July 21st, 2009 at 11:15 am
250 IT systems is of course a target worth scrutinising, but an IT system capable of running the entire public sector would be a massive unweildy monster that would make the costs of the INCIS debacle look like the contents of the tip jar at the local bar.
Somewhere a balance might be struck between one system and 250, but I suspect that the various departments are mostly sufficiently different in form and function that an independent system will be justifiable. (This is an expression of my opinion based on a lifetime in that industry, not based on any research)
[DPF: I am not advocating one IT system. But (as an example) we have Parliament with multiple IT systems where backbench MPs are on MS Outlook and Ministers on Lotus Notes. Sheer madness - and all because we have five different agencies at Parliament instead of one]
July 21st, 2009 at 11:21 am
Our Ministers use Lotus Notes? Truly we are a third world country.
July 21st, 2009 at 11:24 am
Jack judges and Treasury are two different things. There is a delicate balance between the three ‘arms’ of Government – Parliament, Executive and the Judiciary, and the CJ has in some peoples views overstepped the mark in her comments.
The Treasury Head’s comments are a matter for within the Execuitve and he would not have made them if he could not count of the support of his ‘responsible minister’.
One could say it was an ‘internal’ message to the Public Service, but he put it in the public domain as it would have got there anyway. Suffice to say if he had said this in the Clark/ Cullen era there would have been a horrid bloody mess on the floor by now.
As for super-ministries, there is a point where they can get so large and heavy that efficiency suffers. One only has to look at the failure of Fletcher Challenge in the private sector as an example. A top-heavy corporate services structure inhibited managers from getting on with the job, for example they were forced to borrow money from the central finance group at higher than market rates.
We are seeing this where Departments are expected to pay a 10% ‘dividend’ on real estate assets – this is artificially high when private landlords only get 7 – 8% return on commercial real estate. It for example forces Foreign Affairs to lease embassy space whereas an outright purchase would be a better bet.
July 21st, 2009 at 11:28 am
Ministers are on Lotus Notes!?!
Dear god, I NEVER want to be a minister! :O
July 21st, 2009 at 11:38 am
I would not cite Fletcher Challenge for example. GEC UK in Arnold Weinstock’s day ran a very efficient and lean HQ. FCL’s problem in my view was the quality of management.
July 21st, 2009 at 11:39 am
Supposedly they are on Lotus notes because it has better security than Outlook. But it is the worst system to use
July 21st, 2009 at 11:43 am
Sigh. I’m at a Big 4 accounting firm in the US and we’re stuck on Notes.
MNIJ – Not the worst troll you’ve ever attempted, but pretty weak. There’s a clear distinction, as peterwn has stated, between the various branches of government and, therefore, a clear difference between policy pronouncements working their way downwards within the Executive versus policy suggestions coming from the Judiciary.
July 21st, 2009 at 11:47 am
KiwiGreg
I was taught good administration at the knee of a great practitioner of the art many years ago
The answer is that every form process and procedure comes with a sunset time limit.
the person who instigates the form process or procedure has the complete authority to stop it on the prescribed date unless they recieve countering instructions.
If its that important the time limit will be extended.
Mostly the forms processes and procedure just died a natural death.
As an Auditor dor some years I used to review froms processes and procedures as part of my Audit
Always found stuff was being done that had no purpose or was bought in 5 years ago to counter a one off situation and then forgotten but the drones werent told.
I would reckon I and any other competent auditor could go thru the public and private sectors and find 10% to 20% of forms processes and procedures that could be curtailed without adverse consquences
July 21st, 2009 at 11:55 am
Start to relocate public sector jobs to the Philippines. Call centers should all be there along with standard processing.
Relocate public sector head offices to Masterton.
You could also move government audit to the Philippines as well.
July 21st, 2009 at 12:05 pm
I’m not sure why Whitehead’s speech has got such wide coverage.
Most departmental CEO’s have been saying the same thing for the past six months (mine ceertainly has), as has the Finance Minister.
DPF – that is the first time I have seen anyone refer to the UK Home Office as an example that should be emulated, rather than avoided. It is generally regarded as inept, unaccountable and virtually un-reformable.
July 21st, 2009 at 12:10 pm
MHIJ – before you start accusing John Whitehead of being a National Party hack, you might want to “research” his background – you might get a surprise!
http://keepingstock.blogspot.com/2009/07/public-service-revamp.html
July 21st, 2009 at 12:35 pm
The 44% growth in staff over the term of the Labour Government is what concerns me. There is no need for every Government Department to have its own HR system and computer staff. I bet the growth in the “corporate services” area is where there has been the most growth. This needs to be curbed back with mergers of these back office systems. In the old days the SSC used to handle HR for the whole public service and much of computing as well. Maybe a return to a more centralised system is what is required.
July 21st, 2009 at 12:51 pm
Move the Navy to Whangarei and free up all that Devonport land…
July 21st, 2009 at 1:02 pm
I don’t believe Centralisation is the answer. The massive overstaffing is a result of Liabour’s desire to create a critical mass of peons to vote them back into office. Staff reductions should start with Parliamentary services then follow through with downsizing of the various head offices. Kiwi Greg is right , the Departmental functions and staffing need to be redefined from scratch.
July 21st, 2009 at 1:10 pm
I vote Treasury is the first department to be contracted out. Their estimates have been woefully inaccurate and they have been growing faster than any other department. Ask Bill English how many low value activities have been cut in his department.
Their advice has also been widely ignored by both goverments- they have no credibility.
Perhaps Mr Whitehead can practise what he preaches, thereby saving us his 400K salary.
July 21st, 2009 at 1:19 pm
bchapman, see that: http://dimpost.wordpress.com/2009/03/23/key-announces-plan-to-privatise-treasury/ ?
July 21st, 2009 at 1:30 pm
I heard that Brenda Pilott frothing on the radio. Man what a stupid woman, she should engage her rather feeble brain before opening her trap. She’s spewing her ring out because the public service is in for the chop and it’s all because the private sector can’t get their shit together. Brenda might have a leg to stand on had the private sector enjoyed a 44% lift in productivity in the last decade but parasitic sponges like Brenda and her precious public service put pay to that. Anyone with more then two brain cells to spare would realise that the growth in shiny arses in the last decade was unsustainable, apparently Brenda is rather deficient in brain cells.
July 21st, 2009 at 2:00 pm
Wouldn’t it he easier to have proper performance measures for staff in the first place? Isn’t this supposed to be done through annual performance reviews? If we could measure performance and remove the lesser performing staff as due course we wouldn’t need to privatise/prioritise/merge etc..
Pretty damning of current executive management that this hasn’t been done already.
July 21st, 2009 at 2:32 pm
PART of an excellent opinion by Richard LONG in todays Dom.:::::::::::::::::::::::
NION: Frankly, there is a case for Chief Justice Dame Sian Elias to be banged up in the slammer herself, along with some of her colleagues.
Not for challenging the size of the jail population and suggesting a prisoner amnesty, but for presiding over the outrageous waste of public expenditure involved in the new $80 million Supreme Court building in Wellington.
Restoration of the old High Court building, to house a Supreme Court of only five judges, was initially to cost $20 million. That was exorbitant enough. But now the cost has gone from $4 million a judge to $16 million a head.
The judiciary and the last government decided that the renovated old High Court would not be grand enough and that they could not fit the five judges, with their court and chambers, into the old category one-listed historic building.
So taxpayers were then landed with funding a new structure for the Supreme Court while still restoring the old High Court building.
A bit of double-bunking in one of those flash new container prison cells sounds like just the thing to bring the judiciary down to earth.
If anyone had the slightest inkling of this runaway cost of a Supreme Court, who would have voted for cutting our links with the Privy Council?
That gave us an alternative final court of appeal on the cheap – in a manner more befitting our circumstances as a tiny, hugely indebted country.
The growing band of unemployed, pensioners, those who have lost money in finance house crashes, and those having trouble meeting their power and food bills, are likely to take a dim view of paying for these grandiose plans by the judiciary.
Justice Minister Simon Power is getting it in the neck from the liberals for telling Dame Sian that, contrary to her suggestion, it is not Government policy to offer an amnesty to prisoners to get jail numbers down.
He could offer, as a counter, to divert a few of those containers from Corrections to Justice to house the Supreme Court judges in the meantime, while reconsideration is given to the question of judicial accommodation and to possible re-establishment of links with the Privy Council.
July 21st, 2009 at 3:32 pm
David,
Tell me again how much Mr Whitehead is paid by taxpayers? I’m sure he will lead by example and ask that his pay be cut by 10% because he is a principled fellow.
July 21st, 2009 at 6:17 pm
The Supreme Court was a cynical roadmap to Socialist Heaven. Total Rule by the Elite. Police fettered, Courts, and Judiciary boxed off.
MSM cowed and fed prepared lines by well oiled SpinMeisters. Burgeoning Civil Service to insulate the Elite from Poor Folk.
Chardonnay on tap.
July 21st, 2009 at 9:45 pm
Last Man Standing – is always the Collective Man. – Tease me to list the malfeance!
When will these advocates of the premacy of the Right and “betterness” of private enterprise realise that their arses are honed and owned?
July 21st, 2009 at 9:51 pm
“When will these advocates of the premacy of the Right and “betterness” of private enterprise realise that their arses are honed and owned?”
Every time they fill in a tax return – about fifty times a year probably for those trying to do something productive. But I guess you wouldn’t know?
July 21st, 2009 at 9:58 pm
Hey Alan
Tell me where the privates did it better than the collectives – just once!
Tax – haaha – bet mine is bigger than yours.
July 21st, 2009 at 10:05 pm
Every time the bureaucrats had to hire them as consultants.
July 21st, 2009 at 10:16 pm
Just what world do youl live in Alan?
Every Consultant that I interact with in my daily productive life does not give a shit as to the nature of their engagement.
It’s just the money!!
But those with the nous to understand the relationships and limits to the value of the individual generaly prosper – call it Evolution!
July 21st, 2009 at 10:26 pm
Yep, the good thing about being a consultant to bureaucrats is that you don’t have to care about their stupid political games and mindless time and money wasting.
You just get on with doing your job and get out of there.
Though the last time I was asked to play I told them life was too short to get involved in obvious disasters and they would have to play without me. They flushed $30M down the dunny and then canned the project. I guess that’s what you call Evolution.
July 21st, 2009 at 10:32 pm
Are you looking for work Alan?
Cos there are plenty of competent people under State engagement that could do what you do!
Elucidate otherwise?
July 21st, 2009 at 10:35 pm
Nope, I’ve got plenty to do thanks – in between filling in tax returns.
July 21st, 2009 at 10:51 pm
So Alan
Tell me some demographics?
Tell me why those “returns” are such a burden – I just let mine happen – no minimisation regime – fairness will prevail.
You got kids?
You got pain?
Your wife got pain?
Ha – I suspect you have an expectation of supremacy – cos you not brown – and cos you inert.
Ha – you mum be sick (PBUH)
Ha
July 21st, 2009 at 11:04 pm
valeriusterminus, did you ever consider that you might be a pain? Or are you competing with philu for the drivelling nonsense prize?
July 21st, 2009 at 11:13 pm
Lets leave the prizes to Whaleoil;
http://www.whaleoil.co.nz/content/whaleoil-awards
Otherwise I am an unashamed advocate for the “Last Man Standing” rationale.
The “Right” has had to embrace this – but will never admit!
July 21st, 2009 at 11:32 pm
bchapman
Your idea of performance measures is an interesting one as my local body group is going through the process of trying to force this through.
I would say that a good idea in the wrong place is a bad idea and the thinking that by implementing a performance system on every type of job is one bad idea.
I could tell you how my job, that is more data gathering, now requires me to invent a goal to aspire to so I can exceed my performance. This requires time and the extra staff in HR to implement the scheme and managers time to fill out the crap
or
I could tell you about my previous private company which set it’s internal groups, that should work together and complement one another, against each other and how my managers used to introduce new equipment at ~2 million a pop meet their performance criteria then move on after which the equipment was shelved as we expected as it would never meet our requirements
but instead
I will tell you how I went to increase my VISA card limit, the customer service person promptly cancelled my old cards and required me to fill in a whole new application form after this I realised that she obviously needed to meet her performance indicator.
You look at the people in the system, it is the system it’s self
Education change the ministry to an auditing group and give all the money currently spent on education to the children
Health change the ministry to an auditing group and give all the money currently spent on health back so each person can buy insurance.
Welfare give the people back their tax and make them save for retirement (a far greater cost then the dole)
ACC give people back their tax and make people and companies buy insurance.
Everyone should be made to have a minimum insurance cover and if they can’t that is where the government steps in.
Also user-pays (aarrg) pay for transport, pollution, resource use (water)
It is the systems that we run by that are past their use by date. They will one day be better than what we create but for now their time has come.
July 21st, 2009 at 11:41 pm
The required outcomes from all public services are obvious and measurable. The incumbents are best positioned to deliver these – to provision excellence and value. Profit is an erroneous mantra.
July 22nd, 2009 at 7:43 am
“The incumbents are best positioned to deliver these – to provision [sic] excellence and value.” Amen to that brother!
However let us see how the 18 “strategic planners” employed at WINZ HQ [who have a support staff of 60] stir themselves to deliver on this “aspirational” goal. Fat chance methinks.
In my opinion the public service today is shaped by nine years of Labour who lucked into nine years of economic sunshine: so of course this country now has legions of jobsworths and swarms of meeting-flies obsessed with inventing make-work processes and buying large quantities of cloth-of-gold underwear so that they can be incredibly busy taking in each other’s washing.
But now the economic fundamentals are very different. Change is required. And denial in the marble, latte machine and plate glass public service antheap simply will not do.