Kiwiblog

The Herald reports:

State Services Minister Tony Ryall yesterday gave an update on the Government’s “cap of core government administration”.

The number of full-time jobs in core administrative roles fell by 1480 or 3.8 per cent last year to 37,379.

At the same time, said Mr Ryall, 540 full-time equivalent jobs had been added in “key frontline agencies outside the cap”, including Child, Youth and Family, Work and Income, and Community Probation.

“National campaigned to cap the size of the core bureaucracy and we’ve done that. This allows us to free up resources for improving frontline services,” Mr Ryall said.

After a 50% increase in the size of the public service under Labour, this is a great achievement.

It is so popular than even Phil Goff was trying to have it both ways. On TV last night he was claiming that Labour would also have capped public sector numbers – just not reduced them. Yeah, Right.

“We would have looked at the quality and the need for the staff, it would have been more about capping and not cutting,” says Labour leader Phil Goff.

I wonder what Grant Robertson thought of his leader’s endorsement of National’s policy of capping the number of staff. Maybe Grant could clarify what Labour’s policy now is? I am sure the PSA have been on the phone to him.

At the last election National campaigned on capping core public service jobs, a policy PSA national secretary Brenda Pilott said was “a farce”.

So is Brenda saying Phil Goff is supporting a farce?

“The Government has been cutting, not capping, jobs at a time when unemployment rose to a 10-year high.”

And the Government is borrowing $240 million a week. Private sector jobs create income for the Government, while public sector ones soak up that money. The fewer jobs we have in the private sector, the fewer we can afford in the public sector. This is why economic growth is rather important.

NBR has a “The good, the bad and the ugly – NBR 24/7’s plays of the week”, It is behind the firewall and always a good and often amusing read.

I am sure they don’t midn me sharing one small extract from it:

The good

Bureaucrats are getting fired (slowly)

If you want to know whether a government policy is a good idea or not you usually just need to listen to the reaction of the Public Service Association and take the opposite view.

This week the PSA, along with the union’s Labour allies, was bleating about comparatively minor ($25 million) restructuring at the Ministry of Education as part of a wider plan that includes possibly merging some ministries.

Voicing vociferous opposition to any pen-pushers being shown the door they said (as if it was some kind of tragedy) that about 2000 public sector workers had lost their jobs since National got elected.

This was quite possibly the best news of the week: National has seemingly managed to sack 2000 bureaucrats without anyone (except Labour and the PSA) noticing.

NBR goes on to explain the difference between jobs that create wealth and those that use it up.

The Herald approves of mooted KiwiSaver changes:

Commerce Minister Simon Power deserves praise for his decision to fast-track tougher reporting requirements for all KiwiSaver providers.

Not so David Ireland, the chairman of superannuation industry body Workplace Savings, who described the move as a “knee-jerk reaction”.

Like some other near-sighted individuals in the funds management industry, Mr Ireland seems to be struggling to come to terms with the idea that investors’ interests must come first.

When the subject is the integrity of KiwiSaver, which holds the investments of 1.3 million New Zealanders, there is every reason to move quickly to plug any gaps in regulation.

What scares me is the poll showing around half of KiwiSaver investors think their fund is government guaranteed.

The Dominion Post wants the public service reined in further:

The public service is a dollar-devouring behemoth that has thwarted many attempts to rein it in.

Prime Minister John Key will need to do better than he has so far, if he is going to succeed in slipping on the halter. It is vital that he does. …

Now the Government is treading so carefully it risks making no progress. Mr Key, through a spokeswoman, has denied there is any proposal that might be described as “radical reform”. Instead, all indications are of a process that smacks of the ad hoc, and of being driven by fear of public reaction as much as by any coherent strategy.

That is not good enough. Despite improvements in government finances, the Treasury is still forecasting deficits will continue to 2016. Finance Minister Bill English rightly wants the focus to remain on getting out of deficit as quickly as possible.

Once we are out of deficit, then we get far more palatable choices. We get to decide whether surpluses are spent on reducing debt, cutting taxes or increasing spending. But until we get back into surplus, it is all fairly unpalatable.

The Press looks at the progress in Iraq:

With so much attention focused on the violence in Afghanistan, there is a risk of downplaying significant events in Iraq, notably its recent election.

The result of this election, in terms of the shape of the coalition which will govern the nation, is likely to take weeks or even months of deal-making.

But the manner in which the election was conducted is one of the most positive developments in Iraq since the United States and its “coalition of the willing” allies toppled Saddam Hussein in 2003. US President Barack Obama could ultimately be proved correct when he declared that the election was an important milestone in Iraq’s history.

The most notable feature of the election was the turnout which defied many observers’ expectations by reaching 62 per cent. This figure might not seem high by New Zealand standards, but it is worth reflecting that it is comparable to the most recent US election.

In a decade or so, Iraq may be doing relatively well.

And the ODT commemorates International Women’s Day:

New Zealand has much to be proud of in its gender equality record, and with the marking on Monday this week of International Women’s Day, there is cause for celebration.

In the most recent Global Gender Gap Report of the Geneva-based non-profit World Economic Forum, New Zealand is ranked fifth out of 134 countries in an index that assesses countries on how well they are dividing their resources and opportunities among their male and female populations – regardless of the overall levels of these resources and opportunities. …

But not so good:

In New Zealand, one in five women will be subjected to violence in their lifetime, compared to one in 20 men.”

NZPA report:

Prime Minister John Key says New Zealand has more government agencies than a country its size needs and has signalled there could be several mergers to reduce their number.

The state sector consists of 41 departments and ministries, 84 statutory Crown entities, 11 Crown entity companies, 17 state-owned enterprises, 31 tertiary education institutions and numerous ‘’schedule four entities” like the Lottery Grants Board.

I don’t really count the 31 tertiary education institutions in the core state sector, but even excluding them that is 153 state entities, plus the Schedule 4 entities.

If Labour really thinks three small mergers is a radical restructuring, they need to get real.

Labour actually started the mergers off – they combined Courts and Justice back together. Does Grant Robertson think this was a radical restructuring?

What a shame to see Labour oppose something that they actually got right in the last Government.

Emily Watt and Colin Espiner report:

The Government is planning a shake-up of state services, with mergers expected in Internal Affairs, MAF and the science sector.

It is not clear how many jobs will be lost, but “back office” functions such as human resources, IT, payroll and communications are likely to be cut back to avoid duplication.

The Dominion Post has been told there will be three mergers, which are to be announced on Wednesday and will see departments, ministries and agencies folded into each other.

Sources say space has been booked at the National Library to announce the formation of what they are calling a Ministry of Information, which would roll National Library and National Archives into the Internal Affairs Department. It is understood Land Information New Zealand and Statistics had also been considered in that merger.

Oh I would so love to be Minister of Information. That would just be the best title, next to Minister of Propaganda. Imagine the first class treatment you would get in all the despotic regimes around the world, when your business card declares you are the New Zealand Minister of Information.

The Agriculture and Forestry Ministry is also due for a shake-up with the Food Safety Authority, with an annual budget of $99.6m, expected to be brought back under its roof.

The science sector will also come under the scalpel, with the Foundation of Research, Science & Technology and Research, Science & Technology Ministry being merged.

I’m delighted to see even this minor reform as it heads in the right direction. We do not need 200+ state sector CEOs, and 200+ IT systems, 200+ HR systems etc. In my ideal would you would have all agencies grouped within a dozen super-ministries.

Mr Robertson said it appeared Mr Key had broken his pre-election promise not to radically reorganise the public service.

Oh Grant. This is not radical. Three small mergers is a welcome but cautious step. It is such a shame to see Labour oppose every measure to reduce bureaucratic duplication and costs in the state sector. Their sole state sector policy seems to be to borrow and spend more money.

Labour should welcome these changes, as they continue a trend started under Labour to bring smaller agencies together. National went the other way in the 1990s and in hindsight got it wrong. Again it is a pity to see Labour oppose something they should support.

The Public Service Association has not been briefed on the plans, but said it was supportive of the Government “sticking things back together” after several decades of splitting departments up.

Indeed. On this one, I agree with the PSA.

The Herald reports:

A directive from the Ministry of Education telling an Opposition MP that information requests needed to be answered by the minister was a communications blunder, the ministry says.

Labour Party state services spokesman Grant Robertson said he would write to the State Services Commission and ask it to investigate after MP Ruth Dyson made an inquiry to the ministry regarding policy about funding for disabled students.

She said she was trying to support the parents of a student whose support funding had been cut and was told that operational issues raised at a local level by government MPs could be dealt with locally, but requests for information from non-government MPs needed to go to the relevant minister formally for a response. …

The ministry said yesterday the directive given to Ms Dyson appeared to be the result of a staff member misunderstanding the rules.

Senior ministry manager Jim Matheson said the error was “regrettable”.

“The ministry will take steps to ensure such an error will not be repeated.”

It is 99% likely to just be a stuff up, but it is an important principle that MPs dealing with constituents issues are treated equally.

I think it would be useful to have the SSC to investigate – not so much to find any improper behaviour, but to send out a signal to other agencies how important it is not to make mistakes like this.

Grant Robertson blogs:

The end of the State Services Commission?

That might not be a title that sets the heart racing for all but the policy wonks. But actually it is important for the health of all the public services that we rely on everyday that there is someone to balance the power of the Treasury in the direction of the public sector.

Sigh. I think there are good reasons for and against having the SSC< but really the old bogeyman of anti-Treasury is so 1990s. You don’t spend $35 million a year on a department, just to “balance the power of Treasury”. That’s simplistic and puerile.

First of all the so called power of Treasury is a myth. Cullen ignored most of what Treasury said for nine years. The current Government goes against Treasury advice pretty regularly also.

And right now the SSC is not doing it.  What’s more if we believe the talk, it might not be around much longer in any case. The rumour mill in Wellington is rife that SSC might be merged into the Department of Prime Minister and Cabinet.

I think it is a legitimate question. We have three central co-ordinating agencies – Treasury, SSC and DPMC. For a small country, that may be overkill.

And as Grant himself acknowledges, SSC is not highly effective. The Commissioner is well regarded, but SSC as an institution is not thought of very well by many in the public sector. Some years ago it was seen as adding a lot of value, but in recent years I hear more and more complaints about it.

The place of the SSC in our public service has changed a lot. Until the state sector reforms of the 80s it played a very hands on role in terms of everything from setting pay to deciding how and when you could order stationery. There is widespread agreement that no one wants to go back there. But even post the 1980s the SSC had a position as the development and quality manager for the public service.  Now it seems all it does is employ the Chief Executives of other departments.

Umm Grant, under which Government did this all happen? It is a trend that started under Labour. And to some degree, it is because SSC got over extended and was trying to do too much. So they are focusing on doign fewer things well.

SSC has already had the responsibility for E-Government work taken away and given to the Department of Internal Affairs.

And when was this decision made? In 2007. And why was it made? Well the SSC record was somewhat patchy – think the huge loss making Government Shared Network.

SSC being absorbed into the Department of Prime Minister and Cabinet would be a bad move from my perspective as it would decrease its independence from the Executive of the day. But given its diminished role it is little wonder that this kind of speculation is about.

Oh Grant. You have worked in the public service. So you know better than talking about the SSC being independent from the Executive of the day. The SSC has the same status as DPMC, and is not independent from the Executive – they are part of it.

I don’t know what point Grant is trying to make. Is he saying that Labour was wrong to diminish the role of the SSC? Or is he saying it should be retained, even though it no longer provides much of a role other than employing CEOs?

Why not propose your own preferred state sector structure, rather than just complain about the power of Treasury? Do we have too many, too few or the right number of agencies for example?

There is a need for change and adaptation in the public sector, and SSC should be  big part of that.  I have given some of my thoughts on how this could happen before. We need the Treasury to be carefully analysing all the spending done by the government, that is their job.  But we have seen before the impact when they are too dominant.  In the case of the public service there needs to be someone looking at the health of the overall system in terms of the quality of services New Zealanders receive, not just from a fiscal perspective.   This should, and could, be the SSC in my view.  But right about now they are on the margins, and in the end it is the public services that all New Zealanders use that will suffer as a result.

but Grant doesn’t say why this so called essential role, can’t be done by DPMC (who are highly regarded and respected by those who deal with them)? They are not the Prime Minister’s Office – they are a Department of State.

Anyway I will float an idea of my own, that who knows Grant may even agree with, in terms of “balancing the power” of Treasury. It is to have a Ministry of Social Policy that is so highly regarded, that the top social policy people in New Zealand want to work there, and just as Treasury comments on basically every Cabinet paper from an economic perspective, an MSP would comment on every paper from a social policy perspective.

Not so much a rival to Treasury, as a peer organisation.

This MSP, should replace the multitude of existing small agencies – specifically Pacific Island Affairs, TPK (their policy arm), MSD policy arm, Ministry of Youth Affairs, Ethnic Affairs Unit,  Ministry of Women’s Affairs, Disability Issues Unit etc etc.

I know some people like the identity of having separate ministries such as Women’s Affairs, but with no offence to the staff, they hold almost no weight with Government. The objections of MWA to a policy probably cause a Minister to pause for five seconds at most as they read that section of a Cabinet paper – and no I am not just talking about National. The small ministries and units are not well regarded.

But if you had an MSP, that attracted the very top social policy analysts in NZ, that was the place where almost all social policy graduates want to work at for at least a few years (as Treasury and MFAT is for many people), then that would carry weight with Government. The “gender equity” team of an MSP, would have far more influence withing Government that the MWA has. Because when their analysis goes out, it goes out with the authority and credibility of the entire MSP and its Chief Executive.

So my model for the public service would be:

1. Merge existing small social policy ministries and units into one top class Ministry of Social Policy, that is resourced to be able to contribute to Cabinet papers to the same degree Treasury is. Treasury’s job will be to report on the economic effects of a polcy, and MSP on the social policy effects.
2. Merge SSC into DPMC.
3. Admit National was wrong in breaking up large Departments like Justice into stand alone agencies (Courts, Corrections, Justice etc) in the 90s and continue the trend started by Labour to merge agencies in a sector together with an eventual goal of a larger number of super-ministries such as the existing MED, DIA, and a smaller number of stand alone agencies. Eventually one might have a dozen super ministries – economic, law& order, health, education, business, social policy, service delivery etc. This should reduce backend costs, but also lead to better leadership and co-ordination.
4. Reduce the number of Ministers in Cabinet so there is one per super ministry.
5. Increase the number of Ministers outside Cabinet who may have delegated responsibility for units or branches within super-ministries, but be accountable to the Minister within Cabinet for them. This is a bit like the UK system where you have two tiers of Ministers – a small Cabinet with Secretaries of State, and a larger external Ministry with Ministers of State.

I’m not wedded to the exact model above, but I would love to see a party or Government give it a serious examination, look at pros and cons, costs and savings etc.

Tony Ryall announced:

“Between December and June this year, the number of fulltime equivalent (FTE) staff positions within the core government administration cap reduced by 1402, while numbers in frontline services outside of the cap have increased.”

Excellent. Considering the Government is having to borrow almost $10 billion a year, it is imperative expenditure be restrained so that we do not have massive tax hikes in the future to pay for the interest on all the debt.

The reduction of 1,402 positions comprised 757 vacancies disestablished and 645 FTE employee positions.  Approximately 60 percent of the decrease was through managed attrition, 21 percent through seasonal variation and 18 percent through redundancies.

It is also good only 18% are redundancies. Regardless of the overall fiscal need, it is never pleasant to have your job made redundant and managed attrition is preferable.

However, the frontline of the Public Service, which was not included in the cap, saw an increase of 173 FTE positions, driven by improvements to service delivery at Community Probation & Psychological Services and Work & Income.

There are also increases planned or occurring in frontline services in Police, Corrections and the Ministry of Social Development.

As I said, a good start. The challenge is to keep it up for the entire term.

There’s also been a 10% reduction in the number of communications staff in the public sector.

Bill Ralston makes easy work of the PSA and Labour:

Erect a stake, pile wood around it as a pyre, tie Treasury Head John Whitehead to it and throw in a match.

The man has committed heresy. He said the public service needed to rethink its approach, trim its fat, move out of its comfort zone and generally get its act together or someone else will come and do it.

Shocking. Dreadful. Appalling.

Next he’ll be advocating that the world is not flat and that the Earth revolves around the sun.

The reactions to that sensible speech were so predictably knee-jerk mid-numbingly stupid.

Of course.

“The groundwork is being laid here for privatisation and further deeper job cuts”, says Labour’s State Services spokesman Grant Robertson.

No it isn’t. Whitehead talked of contracting out some services if it made sense. If a department could get say cheaper legal or accounting services from the private sector, why wouldn’t it look at that option rather than retain or expand its in-house services?

Heresy.

The PSA’s Brenda Pilott chimes in, “We’re amazed Mr Whitehead says we should be privatising public services when bad management in the private sector has created the worst global recession since the Great Depression.”

If this is the PSA’s grasp of economics and world finance then God help its members.

Ms Pilott might be interested to know the recession arose out of the credit crunch brought on by the failure of the US subprime mortgage market. Basically a relatively small group of bankers went greedily mad in a largely unregulated market.

To condemn the entire private sector for the failure of one small part of the capitalist system is nuts.

So primary producers, manufacturers, the services sector and any other part of the private sector nationally and internationally must all beat the blame for the recession?

Would we condemn the entire public service because of the single failure of, say, the Corrections Department? Tempting but unfair.

A good example of the stupidity of those who rant against the private sector and think this means all of capitalism has failed.

A horrified Grant Robertson claimed it signalled the resurgence of Treasury’s influence over the public sector.

Hang on. “Resurgence of Treasury’s influence?” Hadn’t his previous Labour government somehow banished Treasury to a corner where it could not exercise any influence over the financial performance of the public service?

Yes.

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.

Grant Robertson has blogged his concern about the Department of Labour advising staff they should not take part in a pay equity rally.

He has noted:

In recent election campaigns  I have noticed that public servants seemed to be getting inconsistent and inaccurate advice about how involved they can be in campaigns, including whether they could have hoardings on fences, deliver pamphlets or even be seen with a candidate.

I believe that the rights of public servants to participate in the political process as private citizens need to be protected, and if necessary clarified.  Of course their should be guidance as to how to ensure they can continue to serve the government of the day and avoid compromising their ability to provide quality advice and support, but the interpretation of that guidance should respect the professionalism of public servants and give them their hard won democratic rights.

So presumably he deplores as abhorent the sacking of Madeline Setchell from the Ministry for the Environment, because of her boyfriend’s job?

I mean Grant blogs about how he was able to work for MFAT and be a Labour Party campaign manager. Yet Madeline, who has never been politically active herself, got her career destroyed by Labour because of her boyfriend swapping jobs from journalist to working for John Key.

Hopefully Grant was also appalled by Erin Leigh’s treatment by Labour. Another public servant crucified.

And also I hope Grant was appalled that Setchell was also blacklisted from MAF, after they chekecd with Jim Anderton.

Really having Labour go on about public sector neutrality is like Charlie Sheen go on about monogamy.

I’ve been reflecting more on the Ministerial purchase advisors, and while Labour have largely stuffed up this issue, there are a couple of aspects where the Government can be legitimately criticised.

First of all, I have to say that Labour are seriously misjudging NZ outside the beltway, if they think they are going to get any resonance by complaining about how Ministers have used some experienced experts to help cut costs in their Departments. Only the PSA think this is a bad thing. In provincal NZ, and Auckland, you could put on a parade and have these advisors celebrated for their service to NZ. It would get more people along than the Santa parade.

Simon Upton writes in the Dom Post about his experience with purchase advisors:

The country learned last week that government ministers have been employing “purchase advisers”. The scoop was portrayed in sinister tones. The advisers were “secret”, “handpicked” and had been “unmasked”. Their employment amounted to an “unusual arrangement”.

Shocked to the core, I sought clarification and was disappointed to learn that the conspiracy only ran to seven such operatives. I rather hoped there would have been more because it is an eminently sensible use of public money.

So sensible in fact (and so “unusual”) that I took the trouble to extol the virtues of this approach to Trevor Mallard back in 1999 when he succeeded me as state services minister. I strongly commended the continued use of purchase advisers, a role I – and some of my colleagues – used extensively during our decade in office.

Upton continues:

Mr Mallard didn’t apparently take much notice of my advice.

Purchase agreements, I understand, became optional and in recent times ministers have contented themselves with negotiating “statements of intent”. A decade of billowing surpluses meant that no- one had to worry too much about priorities. Ministers could afford to indulge themselves with words rather than don overalls and climb down into the engine room of the numbers.

There are those who regard the idea of ministers “purchasing” outputs as an ideological tool to undermine public service and the Public Service. For me it was completely the opposite.

Without transparently negotiated prices there was no way of resisting the call for across-the- board spending cuts. Nothing is more injurious to the professionalism of the Public Service. It is a lazy way in which ministers can make demands of their officials without taking responsibility for the consequences.

Now there is an issue about whose budget do they get paid out of? Should it be Ministerial Services or the Department whose purchase agreement they are advising on? I would have thought it would be easier to have them contracted and paid through Ministerial Services – as does Andrew Geddis. The Government says it has advice that it was proper for Departments to pick up the cost. I presume the rationale is that as the savings they identify will come out of the Departmental budgets, the costs of the purchase advisors should also be reflected there.

Also in the commercial world, when two parties are negotiating a contract, it is not unheard of for the contract to include that one party will pay for an independent advisor for the other party.

I’ve yet to see the advice the Government has as to whether or not they should be funded out of Ministerial Services or each Department. I think it was tabled in the House yesterday so would be great if someone can publicise it.

So what is my criticism of the Government on this issue? That they allowed Labour to portray this as some sort of secret, to be ashamed of. The Government should be proud they have got former state servants of such high calibre to help negotiate purchase agreements that will result in a more efficient public sector. They should have been boasting of the names and front footing what they were doing.

When in doubt, publicise it. It always looks better being released proactively by the Government rather than weeks later under the OIA.

Once upon a time public sector staff got paid less than those in the private sector. This was because they didn’t have the challenge of actually generating revenue, had better conditions such as study costs covered etc etc.

The situation in the last few years has reversed. Surveys have shown public sector CEOs now get paid more than private sector ones. And a study has shown that there is now a premium of just over 20% for public sector jobs.

So in 2003, the premium was under 5%. Over the next four years it has increased to a massive 22%. And the study adjusted for other variables.

Now this is not an accident. Part of it was that Labour had no fiscal discipline at all with the state sector. Part of it is a deliberate strategy. Ministers encouraged Dpeartments to sign off on higher wage levels or bonuses if people joined the PSA. So taxpayers would pay higher wages to public servants if they joined the PSA. So of course more people would join the PSA, and then the PSA has more money to spent in election year telling people not to vote National. They were the 2nd largest third party spender last election.

A compelling guest blog from an anonymous public service manager at Public Address. It is a must read for those who do not understand the culture of the public service. Some extracts:

On top of that, we’ve seen lots of Head Office bloat in the last few years. Rooms of endless meetings going on and on about “Vision” and “Strategy” … interesting how the best private sector firms don’t stuff around with all that. I have a feeling that we felt a bit inadequate because we didn’t have all the things that CEOs in big private businesses get to play with – you know, HR strategies and Corporate Compliance units. We just had a thing called The Law, which we have to carry out.

I saw this thing in a book once about how people in the institutional banks in the UK used to get posted if they weren’t doing too well: FILTHK (Failed In London, Try Hong Kong). I have to wonder if people who fail in the private sector sometimes end up being posted to Wellington (and it is a noticeably Wellington issue…). To be clear, I don’t think these people are malicious or stupid. I just think they are, well, a bit distant from reality. They’ve started to believe the management books and “Best Practice” guides.

It is a culture issue. Wellington has a very peculiar culture in terms of workplaces – very very risk averse.

Another good example is all the law around careful management of public money. Great intentions, but combined with a culture that says “the auditor is always right [and believe me, they're not most of the time - if you can't do, teach. And if you are really crap, become an auditor] then you end up in a situation where stupid rules are put in place so that rather than have someone take responsibility for a decision, a committee is formed and reports are written. This means there’s a thing called an ‘audit trail’ so you can completely fail to identify who stuffed up if something goes wrong.

We call it “all hold hands and make a decision”.

Decision making by committee.

I recently heard of a situation where a project was completed ahead of schedule, on time and under budget. Much of this was that the person running it didn’t bother waiting for pointless meetings and reports. Instead he just got on and did it, thereby saving the taxpayer two hundred thousand dollars. The audit report on the project flagged it as being very “high risk” in a number of areas. The best bit was the audit report was completed after the project was finished! So they knew it had worked at the time of writing! Did this guy get a medal for being pragmatic and sensible? No, he gets called in for a Stern Talking To. Will he ever try and do anything like that again? I doubt it. And we’re all poorer.

I can’t emphasise how absolutely focused the public service is on risk – to the detriment of most other things. Risk management and mitigation  is very important, but one can’t operate without risk.

Here’s one of my favourites. There was an article in a law newsletter recently that held up a case of a sacking by the IRD as a perfect example of how to get rid of a useless employee. I’m guessing they went through committees and panels to appoint him in the first place. I expect there were several people who thought he shouldn’t have been hired, but they hired him anyway, because after all they’d followed “The Process”.

Reading between the lines, when they realised he simply couldn’t do the job they started The Process of sacking him. It took three years, and then another four years in court. Eventually he lost. But this is held up as the perfect way to sack someone! If it had been the private sector he would have been out on his ear and awarded a few grand by a tribunal. On our side of the fence we spend (I’m guessing) hundreds of thousands of dollars on The Process, because the CEO (and minister) might get beaten up in the press over the payout.

Sacking someone for incompetence in the public service in near impossible. You can soend years documenting every mistake they make, and you will still have to fork out money to stop them taking a personal grievance.

When we buy stuff, there are laws to say how it must be done. These have been around for years. They were designed to reduce the cost of stuff ups. Interestingly, what they’ve done is replaced the chance of a cost blow out with a guarantee of spending far more than necessary on paperwork and “Governance”. In the private sector, a typical project budgets 15 – 30% of cost for management and administration.

In the public sector it starts at 30%. Because the rules a blindly applied, it means there’s a minimum set of paperwork for everything. These aren’t meant to be applied across the board, but woe betide you if you get caught out trying to save some money and then an Issue arises. Years of habit and cover-your-arse have developed a generation of public servants who live by meetings, committees and reports. And a bunch of auditors who NEVER say “it was pleasing to see that processes were not followed unnecessarily, thereby saving the taxpayer X million dollars”.

I think National is going to make some difference with public sector spending. But I doubt it can change the underlying culture as it is too ingrained.

Worth reading the full post.

John Armstrong looks at what National is doing:

You won’t hear National saying as much. But the minority Government has quietly begun what in the end might be the biggest shake-up of the core public service since the 1980s.

It has taken a while for this to sink in to those in Wellington.

The latest upheaval will be less visible than National’s previous attempts to pare back the State – deliberately so in order to blunt attacks from Labour and the public sector unions.

It is less driven by ideology and more by John Key’s view that public services are always comparatively high-cost operations and therefore should not be immune from being made to re-invent themselves as selling smarter, better services.

Indeed, the Government should not be immune from the same restraint the rest of the country is.

The Dom Post reports that not only will MPs probably not be getting a pay rise this year, neither will state sector CEOs.

It is no surprise, that expectations are that overall state sector pay increases will be modest, if at all. The PSA decided to visit another galaxy by exclaiming:

Public Service Association national secretary Brenda Pilott warned if civil servants were denied pay increases, there could be an exodus from the sector.

As wages are higher in the state sector than the private sector, I somehow don’t think this exodus will be very large.

The Dom Post reports that police checks on candidates seeking high profile public sector jobs have become routine since the Mary-Anne Thompson affair, along with verification of qualifications.

This seems pretty sensible to me, and kudos to the State Services Commissioner for initiating it.

One aspect seems to be a bit mistaken though:

He said people currently going for senior positions in the state sector – in ministerial offices at Parliament, for example – were now being carefully looked at.

When I worked in the Beehive I needed both a Police check and a “secret” security clearance. In the PMs Office one needed “top secret” so you got vetted far more rigourously than just a Police check. However these checks did not normally take place until some months after you had started work!

If you have a massively growing public service, then you need many more HR staff to cope with them all, and boy has Labour delivered. Gerry Brownlee has the figures showing the number of HR staff has shot up under Labour from 266 to 638 last year. And the cost has gone from $16 million to $51 million.

This is even higher than the growth in comms and media staff which has doubled.

So which agencies have had the biggest increases in HR staff:

• Treasury from 7 to 14
• Health from 10 to 25
• Education from 9 to a staggering 31
• SSC from 2 to 8
• MSD from 44 to 76
• Justice from 15 to 37
• Labour from 15 to 30
• The brand new Department of Housing and Building alerady has 10 HR staff!!!
• Corrections from 19 to 47
• IRD from 34 to 68

They only set the Dept of Housing and Building up a couple of years ago, and already they have convinced their Minister they need 10 HR staff. Oh I am looking forward to the Cabinet Expenditure Control Committee if National wins.

The NZ Herald reports Alan Bollard discussing some of the flaws in the Government’s hastily announced deposit guarantee scheme.

I am going to touch on that in a later post. First I want to reflect on whether Governor Bollard and Secretary Whitehead have acted properly during this period of Government. A reader (a former senior official in Government) makes the case in e-mail to me that Bollard and Whitehead should have insisted that the Government consult with the Opposition on the scheme, before announcing it. The reader says that “in his day” the Governor and Secretary would have threatened to resign rather than damage the independence of the public service and the Reserve Bank.

This scheme provides a guarantee of $150 billion for deposts – the largest contingent liability in history. It is being done without parliamentary sanction and by a Government in the period just before an election. Traditionally in this period major decisions are not made unilaterally, let alone one of this magnitude.

Did Bollard and Whitehead advocate for bipartisan consultation, and if so why did they not insist on it? Would consulting with the two people who might be Prime Minister and Finance Minister in less than a month have detracted from economic stability and constitutional integrity or enhanced it?

Think of what a disaster it would have been if the Government announced the scheme and the Opposition then did not back it? The result would have been worse than never announcing the scheme in the first place.

I say this with great hesitation and respect for the Governor and Secretary. But their actions have undermined confidence in a neutral public service. To not insist on consultation with the Opposition for a $150 billion guarantee, just four weeks before an election, was misguided at best, and reckless at worst.

Gerry Brownlee has put out a PR about the space taken up by the pulic service in Wellington. This has had a massive impact on office rentals for the private sector. People like Bob Jones have made scores or hundreds of millions of dollars under Labour in Wellington, because of the massive increase. Small and medium businesses have struggled due to the cost of office space.

In the past five years Labour has overseen an increase in the amount of extra floor space leased for bureaucrats in central Wellington equivalent to almost four Te Papas, says National’s State Services spokesman, Gerry Brownlee.

“How can people have faith and trust in Labour’s stewardship of the public service when it has overseen an increase in the amount of extra floor space leased for bureaucrats in the past five years that equates to an additional 13.2 hectares?”

That is a lot of space!

“Meanwhile, Bayleys Real Estate estimates that the government sector now occupies almost 40% of the total commercial space in the Wellington CBD, and says the ‘surge’ of floor uptake involves ‘quite staggering numbers’.”

Gerry included a table of agencies and office space from 1999 to 2008. During that time the amount of office space has increased from 252,000 square metres to 446,000 – a 77% increase.

Some of the largest increases:

1. Human Rights Commission up 178%
2. Commerce Commission up 176%
3. Education Ministry up 155%
4. Social Development Ministry up 122%
5. Transport up 117%
6. Environment Ministry up 110%

In absolute terms the IRD has grown by 25,000 square metres, Education Ministry by 13,000 square metres, Labour Department by almost 7,000 square metres, ACC by 6,000 square metres, NZQA by 5,000 square metres, Justice Ministry by 5,000 square metres.

Congratulations to Treasury who reduced their office space by 2,000 square metres or 18%.

Shareholder activist Bruce Sheppard blogs on the cviil service:

Until quite recently New Zealand could boast an independent civil service that Ministers respected both as to their independence and the quality of advice. It was also a proud and secure service where independence was respected.

Note the until recently.

Politicians also understood that the permanent staffs of various departments should be politically neutral and they also did not interfere in the process of government as executed by the permanent civil services.

In the last nine years under Labour and Helen Clark that has all changed. Political appointments into the civil services are now common, and some have been well documented, the intimidation of the civil service by Ministers is now also well documented and a culture of fear exists in Helengrad.

People think National invented the term. It was someone in the public service, and that is where it is commonly used.

The interference takes the form of removing people not to the government’s liking, appointing people who are and protecting them against all odds. In short Helen’s approach to protecting the undeserving Winston Peters in her cabinet is replicated in the approach to crown employees.

Sounds like a pattern.

Then there is the political appointment of Claire Curran. Direct ministerial interference in that appointment is alleged. Erin Leigh blew the whistle on this and was pilloried by Trevor Mallard in parliament. So much for the Protected Disclosures Act.

Erin Leigh told the truth. For that she got smeared under parliamentary privilege. The target wasn’t even Leigh, but any other civil servant thinking of speaking out.

A study by Waikato University has found that pay rates in the public sector are around 20% higher than in the private sector.

What is amazing about this is that in most countries, public sector pay rates are well below private sector. This is because they tend to have greater security of tenure, are not linked to earning revenue, and have lots of perks such as longer holidays and funding for tertiary study.

To have public sector pay rates 20% higher than the private sector, shows how merrily the Government has been trying to get the PSA happy. That is the same PSA which will shortly be campaigning against National’s tax cuts.

Bernard Hickey takes a close look at public sector wages:

He finds that average wage in the public sector has increased a staggering 9% (hence high inflation and high interest rates) compared to 4.6% for all sectors.  He also finds the gap between public and private sectors wages has grown from $4 and hour to $8 an hour.

Stuff has an NZPA story on the abolition of the SFO. Not surprisingly the former Director is very criticial of the move, and disagrees with it.

The worrying aspect for me isn’t that the Government took a different view to officials, but that they went out of their way to shut down dissenting views internally. The part that concerns me most is:

Ministers would not see him and a final Cabinet paper on this issue did not mention any of the SFO’s concerns, despite his requests for them to be included.

It is normal for dissenting opinions to be included in Cabinet papers.

Again I stress there is nothing wrong with Ministers not following the advice of officials. That is why we have Ministers – to decide.

But when Ministers will refuse to meet an agency CEO to discuss something as fundamental as the future of that agency? That is pigheadedness and arrogance.

And when the Cabinet paper doesn’t canvass all the pros and cons of an issues, but pretends there no no dissenting opinions – that is a very bad thing. When the agency being abolished specifically requests its views to be included – and this is denied – that is even worse.

Ministers can and should disagree with officials. But when Ministers tell officials to only include views they want to hear – then you have a significant politicisation of the public service.

It is with sadness that I see that Mary-Anne Thompson has resigned her job as head of the Immigration Service and Deputy Secretary of Labour. She finished work yesterday

It was the right decision. There had been a lack of judgement by getting involved with applications from family members. And while she did not ask anyone to bend the rules for her, they did, and that reflects adversely on the culture of the NZ Immigration Service which she headed up. And she put staff in a difficult position by even getting involved.

By resigning, Mary-Anne is putting the reputation of the agency and public service, ahead of her own security. She could have demanded a negotiated settlement but chose to simply resign.

As I have mentioned before she has had an excellent career in the public service, and it a shame to see it end over uncharacteristic errors of judgement.  I hope she does very well with her future endeavours.