Are we confident that the proposed changes to State Services legislation will address the real problems?

The Minister for States Services, Chris Hipkins, has announced a review of the 1988 State Services Act with a six-week consultation period. Such a short period is usually interpreted as an indication that the powers-that-be have already made up their minds so outsiders are wasting their time putting in much effort.

What the powers have decided is unclear. The available material amounts to lots of fluffy promises but not much content. So outsiders expect the worst and insiders are comfortable. You might prefer it to be the other way around.

In case you think I am being a bit hard, consider that if you wanted a serious revision of the Act – of any act of parliament – you would begin with a review of the history of the Act – including its prehistory – and include the major criticisms over the years. Writing that review would take a serious scholar more than six weeks. It would be circulated and then public submissions would be invited.

Rather, we have a process which has all the hallmarks of what Geoffrey Palmer called ‘the fastest gun in the west’. This was before he joined the shootout, for few wielded a faster gun than the Rogernomes.

Thus it was with the 1988 State Services Act. Scholars will report a serious discussion over the years preceding the act, but many of the act’s central ideas popped up only just before. They were based on untested assumptions without any supporting evidence. Basic principles which had evolved over 70-odd years were swept aside to be replaced by ideology – as was common in those days.

The state sector has since limped along. Attempts to patch up the worst have left a system looking like a Heath Robinson contraption. You have six weeks to propose some new patches.

Suppose you were interested in doing a proper review of the Act. A key document is the Schick report: The Spirit of Reform. Its story seems to be this:

 Apparently the powers-that-be were so pleased with what they thought was a pioneering improvement to public sector management that they invited a ‘world leading public sector academic’ (their expression) with the expectation that he would endorse the changes.

Rather than uncritically lauding the reforms, Allen Schick’s report was, from a careful reading, critical. Apparently the powers-that-be took exception to his early draft and there was a year-long haggle over the contents. Later Schick would tell other countries not to go down the New Zealand path.

The report describes the concepts underlying the 1988 State Sector Act as ‘avant garde’ and ‘novel’, while the Treasury 1987 Post Election Briefing, Government Management, which provided its intellectual foundation was ‘extraordinary’. Such adjectives belie the report’s measured tone.

Schick pointed out that the central theme of the reforms were ‘influenced by two overlapping but distinctive sets of ideas, one derived from the vast literature on managerialism, the other from the frontiers of economics. Managerial reform is grounded on a simple principle: managers cannot be held responsible for results unless they have freedom to act. The new institutional economics is grounded on a very old idea: people act in their own self-interest.’ It was the latter that the 1987 Treasury PEB emphasised, but ‘clearly different conclusions might be drawn if the brief were argued from different premises’.

Schick’s sympathies were with managerialism. Thus he only faintly praises the private sector approach of accountability – ‘an impersonal quality, dependent … on contractual duties and informational flows’ – Schick gave greater importance to responsibility, ‘a personal quality that comes from one’s professional ethic, a commitment to do one’s best, a sense of public service’, which had been downgraded by the 1988 Act. Contractualism undermines public managerialism, for it ‘may diminish public-regarding values and behaviour in government’. including values such as ‘the trust that comes from serving others, the sense of obligation that overrides personal interest, the professional commitment to do one’s best, the pride associated with working in an esteemed organisation, and the stake one acquires from making a career in the Public Service.’

Contractualism also weakens the collective interest. The reader is left wondering where the public good belongs in the narrowly defined bilateral contracts which pervaded the new public sector system.

The report also wonders whether the claimed efficiency gains of some processes have been swallowed up in the costs of contracting. Its doubts were based on anecdote – hardly anyone measured the transaction costs generated by the changes – but numerous public servants will say ‘hear, hear’.

Schick also wrote that he was ‘troubled by the concept of split-personality government that has influenced financial and other reform practices’. The report expressed doubts about the efficacy of such key notions as the outcome/output distinction, the ownership/purchaser distinction, the policy/operations distinction, and the complete ignoring of inputs in the assessment of an agency’s performance. It says that ‘there [were] more pressures for conformity and group-think’ in the public service. Apparently criticism was even less tolerated than in the past.

Yet the 1996 Treasury Briefing to the Incoming Government ‘conclude[d] that the reforms were successful, but that there were areas that needed attention’. Of course Schick recognised that there were some successes, especially where the managerialist philosophy had been implemented. But his report is riddled with doubts about the extremism of the contractualism which Treasury was promoting.

The powers-that-be were not totally uninfluenced by the report, but attempts to respond have been thwarted by the headlock of the legislation. One would expect a coherent response would be to start over again. You have six weeks to propose one.

Professionalism has been further undermined by the rise of the generic manager. I first noticed one in 1992 when a Crown Health Enterprise (succeeded by a District Health Board) was led by a chief executive from Telecom. I was struck by his making a presentation to health professionals which failed to engage with them and that of the twelve reporting to him, only one was a clinician.

While the health sector has struggled to rid itself of managers with no knowledge of health issues, a recent article by Simon Chapple suggests that generic managers are now pervasive in the rest of the public  sector.

To be clear, managers need not know the details of an institution when they take it over. But they need to be sympathetic to its professionals. Generic managers surrounded themselves with the equally unsympathetic. Examples abound. For instance, the senior management team at the Department of Internal Affairs contains no librarian nor archivist. Instead there is hand-waving about ‘information’, treating the topic as generic with no appreciation of the intricacies of heritage information in a library or archive. During the recent redisorganisation of the Ministry of Foreign Affairs, there was no appreciation that overseas diplomats had families who were making sacrifices on behalf of New Zealand too. Generic management has not been confined to the public sector. During its project failure the board of Fletcher Building had no one with construction expertise on it.

So do not hold your breath – certainly not for the six weeks of submissions. The indications are that there will be no root-and-branch review of the state services sector; the endemic generic management, which hosts the incumbents,  will continue. Schick would remain unimpressed.

Comments (1)

by Draco T Bastard on September 28, 2018
Draco T Bastard

To be clear, managers need not know the details of an institution when they take it over.

Actually, I'm pretty sure that they do. Without that intimate knowledge they have no idea as to what the institution does. In fact, I'd go so far as to say that not only must the management of the institution rise through it's ranks but that, after a few years, they need to be put back on the front line again so that they don't lose touch with what's happening in reality - so that they don't become an Ivory Tower Intelectual which seems to be the problem with modern NZ management.

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