The government repeatedly damns the bloated public sector and its growth under the previous government. So what are the facts?

New Zealanders are drifting back to work this week, dozy and with feet-dragging. Many will return to work in the public sector, once regarded as the backbone of a decent, democratic state, now more often slagged off as a bungling bureaucracy.

Talking down the public sector has been one of the few blatantly ideological campaigns waged by this government (along with, it seems, school and ACC reforms). The right/left divide is at is most pronounced when it comes to the size and responsibilities of the state, and the stone in this particular government's shoe when it comes to the big government/small government debate seems to be the number of people it employs.

Led by Bill English and Tony Ryall, government ministers spent much of last year talking about a bloated public sector, about how under Labour growth in the government sector was out of control. Indeed, English has been at it again already this year, arguing that "the public sector has grown rapidly, but with poor productivity".

National's clear election promise to cap, not cut jobs in the state sector has gone by the wayside, and with little complaint in the media or public, it must be said.

By its own admission, the government capped the number of core public service jobs at 38,859, then cut 1402 jobs to leave the number it employed at 37,457.

The political liturgy was simple – National wants more front-line workers, not back-office time-servers. And so the cuts were made in Health, Conservation, Tertiary Education, Biosecurity and on and on...

The lack of controversey is based on this oft-repeated and -swallowed claim that the public sector is bloated, inefficient, and complacent, stemming from the irrefutable fact that the core public service grew significantly under the Labour government, with many staff added to administer the new government-run schemes it created.

But even accepting that the latter, does it means that the former is true? The evidence suggests that the received wisdom on this one is simply untrue.

We've debated this question on Pundit about six months ago when David Beatson wrote about the importance of slimming down the public sector, and better measuring its performance. I've long meant to look more into this, and finally I've got some numbers to report.

Some of the figures were noted in the comments last July, but I've been able to get more data since, including figures going back to 1970:



Public Service: 50,189

Total Labour Force: 1,090,700

Public Service as percentage of Labour Force: 4.6%



Public Service: 64,111

Total Labour Force: 1,299,800

Public Service as percentage of Labour Force: 4.9%



Public Service: 29,463

Total Labour Force: 1,900,000

Public Service as percentage of Labour Force: 1.55%



Public Service: 37,457

Total Labour Force: 2,307,000

Public Service as percentage of Labour Force: 1.6%


So much for bloated. I must say, I'm surprised that the public service is still such a small percentage of the total labour force. I suspected the government was spinning this one, but not as much as this. Contrary to its extravagant claims, the public sector remains the smallest its been for at least two generations, and assuming many more were employed the government coming out of the Great Depression and in the immediate post-World War II years, probably the smallest its been in more than half a century.

A strong public service remains the foundation stone of a decent society, one that works for the common good and enacts the policies promoted by a democratically elected government. Any chance we can value its work, rather than constantly maligning it?

Comments (9)

by Claire Browning on January 07, 2010
Claire Browning

Yes. That is particularly illuminating, as regards the 1999-2009 comparison. However, an important point remains unresolved [reproduced here from previous comments]:

From the Business section of last Saturday’s Weekend Post (not online), according to "one highly experienced public servant" - the core public service payroll, at its peak post-WWII, topped 80,000 fulltime and casual workers in the 1980s.  By 2000, that had been slashed to 29,000 - its lowest level since WWII.  Again in the words of the "highly experienced public servant", “Fifty thousand jobs seemed to have vanished down the plughole but, in fact, something like half went into SOEs, Crown research institutes and other forms of public employment. Probably only half of them were lost, but nobody actually knows.”

That makes the 1979-2009 developments less stark, wouldn't you say? I'm not contradicting the premise of spin, just saying: over the longer time span, perhaps not quite as simple as the picture you have painted.

I also note this from the previous comments:

At 45,934 (43,569 FTE) in 2007 the public service still only represents 2.1 per cent of employees in NZ, compared with 4.5 per cent in 1990. 

So at least for a time under Labour, in 2007, the public service was a fraction bigger than when National left it at 1.55% of employees in 1999. As you say, hardly "bloated", but if an ideologue thought 1.55% was neither too hot nor too cold but just right, that's what the new government returned to in 2009.

by Robert Winter on January 07, 2010
Robert Winter

I am pleased to see this said so clearly. Mr English's comments about public sector productivity are also so churlish, given the PSA's serious and sustained approach to public sector productivity, most obviously in the 'Partnershiop for Quality' process, which this government has canned. Also, as HRM 101 tells us, spending much of your time condemning your workforce as useless (which is the sub-text of much of the government's commentary on the public sector) is hardly conducive to improved performance.

by Sam on January 07, 2010

Your historical analysis is interesting, but largely irrelevant for any useful argument. You actually need to address the issue of whether 1.6% (or any other figure) is warranted given the work that has to be done in order to determine whether the public sector is 'bloated' or otherwise. I don't have that answer, but comparing it to historic data is pretty spurious: the work to be done, and the nature of how it is done has changed dramatically over the years. Any continuously running business operation is likely to have downsized and become more productive over that time, as technology and systems that greatly enhance productivity have been realised and put in place.

by stuart munro on January 07, 2010
stuart munro

It would be interesting to see some international comparisons, these numbers are NSW yearly from 1999. They are down 20% since 1980, mostly, presumably, from the impact of the PC on secretarial work.

SECTOR FTE   ABS NSW POP P/s per 1000 of pop.

272,863             6,411,370         42.6
270,688             6,486,213         41.7
283,099             6,575,217         43
284,610             6,634,110         42.9
283,689             6,682,053         43.6

Raw numbers of course don't really get to the meat of public service productivity, which is about real service delivery. I imagine that the various user charges regimes have eroded this kind of efficiency significantly - but I doubt they appear anywhere on Key's to do list. Key, and most of his opponents too it must be said, only ape the role of government.

by Robert Winter on January 07, 2010
Robert Winter

It is, of course, true that the public sector labour process will have changed over two decades or so, and will be a secular factor in determining appropriate public service size. However, the government does not conduct the debate on that reasoned basis. It starts from an ideological poistion on the public sector, and then operates contingently. The mantra of 'front line services' is underpinned by little technical analysis, comparative or otherwise. One aspect of the Partnership for Quality was an attempt to move beyond political jockeying around the size of the public sector and, instead, underpin shifts in the size and allocation of the public sector with objective analysis. I can't see this government undertaking a similar exercise.

The other, related issue is our poor understanding of what is the size and configuration of the public sector appropriate for any given combination of social and economic policy settings. Neo-liberals do not like this type opf formulation, but it remains a sensible question. I sometimes wonder what the SSC does.

by Claire Browning on January 07, 2010
Claire Browning

"You actually need to address the issue of whether 1.6% (or any other figure) is warranted given the work that has to be done in order to determine whether the public sector is 'bloated' or otherwise ..." and "However, the government does not conduct the debate on that reasoned basis. It starts from an ideological poistion on the public sector, and then operates contingently ..."

There were the line by line reviews, of course (link is to actual departmental reviews on the Treasury website - and see also National Party policy) - presumably intended to facilitate that kind of conversation between departments and their Ministers. If you look here, at the "value for money guidance for Vote Ministers", some of it is about policy consistency with priorities as you'd expect with any new government. But fairly clearly, the broader thrust was shifting the onus onto individual Ministers and their CEs to justify status quo government size.

by Robert Winter on January 07, 2010
Robert Winter

May I also suggest that the size of the public sector is not simply contingent on any particular government priorities, important as they are? Career public servants are not contracted on a project basis - so many appointments for this policy, so many for that, off they gop when the policy is exhausted. At the risk of making a hackneyed Weberian point, the public service is  about a cadre of experienced, competent, flexible and committed professionals. The line-by-line process and the guidelines veer dangerously close to the former view (one which is shared by some neo-liberal theorists). The effect is to demoralise staff, who will not see professional career prospects in such an environment. Some of the more thoughtful HR staff in the public sector have pointed this out before, arguing that performance will be affected adversely by contingent approaches.

by Tim Watkin on January 08, 2010
Tim Watkin

Claire, as to your first point, I'm not entirely clear what the article you quote is saying... that half of the jobs lost do still exist, but just in SOEs, CRIs and others? If so, it's significant. But as the report concludes, no-one really knows.

Sam, there is no 'correct' way to address your issue about how big a public sector needs to be to get the job done, no black and white solution. The answer will always be political. It depends on how much you think the state should do, whether you believe in universal coverage, whether you prioritise efficiency or thoroughness or even full employment, and so on. So for me, the figures aren't irrelevant; they're the only useful facts on offer. The point of them is to challenge political spin. Beyond that, you decide whether the numbers emplyed are too many or too few.

And thanks Robert, nothing like a little Weber to start the new year!

by Sean Spratt on March 09, 2014
Sean Spratt

I know this is an old article, but I was looking over these statistics and I'm wondering were the Public Service numbers came from and what is being defined here as Public Service?  The current figures from Statistics New Zealand show Government job numbers and the employee count numbers for 2012 were 323,030 which is up from 290,720 in 2006. In 2012 that puts government employees at about 14% of the labour force?

Post new comment

You must be logged in to post a comment.