A public service in decline

Matt Burgess
NZ Herald
18 November, 2021

The news that our public service is ranked second in the world, according to a UK survey, was overshadowed by two events last week which cast it in a less positive light.

New Zealand’s public service placed second in the International Civil Service Effectiveness (InCiSE) Index from Oxford University. The report, which was prepared with support from the UK civil service, awarded first place to – surprise, surprise – the UK civil service.

It is the third edition of the InCiSE survey since its launch in 2017. New Zealand has placed second each time.

Peter Hughes, the head of this country’s public service, welcomed the news. “Facts are stubborn things,” he said. “It’s a fact that New Zealand’s public service is one of the best in the world,” Mr Hughes said.

However, some less flattering facts emerged last week, raining on Mr Hughes' parade.

The first was that officials at Kāinga Ora, formerly Housing New Zealand, hid the fact they knew that the person they were using to front their advertising campaign would be a political candidate in the 2020 general election.

The taxpayer-funded ads ran only weeks before the start of the 2020 campaign, raising the profile of Labour candidate Arena Williams. That breached longstanding rules for political neutrality in the public service.

Helpfully, officials conducted their conspiracy in writing via email. Their messages were released under the Official Information Act last week. They reveal that concerns were raised at the time, notably by the candidate herself, yet Kāinga Ora officials proceeded with the campaign regardless. Williams won her electorate in a landslide.

The second event last week was more serious.

The Auditor-General found the Ministry of Health awarded a $60 million saliva testing contract to a provider with no appropriately validated test.

The Ministry ran a fundamentally flawed process, riddled with conflicts of interest. Four of the five people on a panel evaluating the bids had undisclosed conflicts of interest. Panel members signed statements indicating they had no conflicts, only to change their disclosures later to acknowledge that they did.

The Ministry claimed it had received independent advice from Audit New Zealand in April. However, Audit New Zealand was not formally engaged and did not know a major procurement was being discussed.

More than a year after the Simpson/Roche report, which said “[a]ll efforts should be made to introduce saliva testing as soon as possible,” New Zealand still has no deployment at scale of saliva-based PCR testing. Rako Science, which has been able to provide certified testing since January but was not chosen by the Ministry's compromised panel, has endured repeated false assertions about the accuracy of its tests from the Director General at 1pm standups. Meanwhile, citizens have had to line up for as much as 12 hours for tests as the Ministry’s preferred provider struggles with volumes.

Unfortunately, the Ministry of Health’s dithering incompetence is not isolated. Far from it. Falling capability and rising politicisation have infested the public service over recent years. The decline in capability began more than ten years ago, before this government was elected in 2017.

One of the factors which led to capability issues, at least for one central agency, the Treasury, was the desire to maintain access to a future centre-Left government.

Under the Clark-Cullen government, Treasury found itself on the outer with ministers. It lost influence, which is devastating for any department. Capable people left.

To avoid a repeat, the department decided to raise its appeal to the centre-Left by taking on a more political persona. Today, we would say Treasury went woke: it hired for diversity; it replaced established concepts like efficiency with softer ideas like wellbeing; it started making value judgments. This was new territory normally left to elected governments.

In short, the department decided to do a different job at the expense of its core business.

The result: a lot of people without relevant skills entered the building, and a palpable decline in the quality of the advice set in. It will take years to rebuild Treasury.

Politicisation is a more recent development. Probably the most egregious instance is the Reserve Bank. It has become fixated on climate change while – and this may not be a coincidence – rising inflation and soaring asset prices become ever more pressing threats to stability.

Politicisation has infected other government agencies, too.

Spending and staff numbers in the public service have soared since 2017. Department spending has increased by a whopping $1.3 billion in four years. New Zealanders paying the bill might wonder what they are getting in return for spending.

For example, one might ask how the Ministry for the Environment could employ 40% more staff yet fail to notice that most of the government’s climate change policies will not reduce emissions.

One could ask what 3,500 people in the Ministry of Education are doing – up 32% in three years – while Kiwi kids languish at the bottom of OECD rankings for learning.

Basic disciplines like cost-benefit analysis have been all-but discarded as a policy tool by some agencies just when it is needed the most.

There are a few glimpses of hope. The Treasury, the government’s lead economic advisor, recently hired several PhD economists. (In mid-2018, the New Zealand Initiative had more economics PhDs among its 12 staff than nearly 500 staff at Treasury).

The Ministry for the Environment continues its excellent work on the Emissions Trading Scheme.

The Ministry of Businesses, Innovation and Employment (MBIE) has been at times fearless in its advice to Ministers on minimum wage and energy policies.

And changes to the Reserve Bank Act next year will bring some much-needed scrutiny for the Governor via a strengthened Board.

But these are little more than vague glimmers.

If the InCiSE survey tells us anything, it is that capability and politicisation are problems for civil services in other countries as well.

There is much to lose with a politicised public service. Governments who lose the public’s trust can be unelected. Public servants cannot.

A politicised public service will first lose its independence and eventually its social license. What then? Functions formerly in the hands of independent institutions will be returned to Ministers, including control over interest rates and regulation. These powers will once again be wielded for political advantage in election years. We will be the poorer for it.

The current approach is supremely short-sighted. Peter Hughes, the powerful head of the public service, might relish the survey which declares the New Zealand public service the best after Britain’s. But perhaps we look good only when seen from the cloistered colleges of Oxford? The closer you get to it, the less impressive things look.

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