Time for a public sector reset

Roger Partridge
NZ Herald
16 March, 2023

The country’s public service is at a crossroads. Under former Public Services Minister Chris Hipkins, public sector headcount has exploded. The ballooning bureaucracy has coincided with a dramatic increase in the public service’s use of outside consultants. It also coincides with a dramatic decline in public service outcomes, including in education, health, and law and order.

Alongside these issues is a growing sense that the public sector is singing its own tune rather than responding to the demands of the government of the day. The political activism shown by Te Whatu Ora chair Rob Campbell is only the most prominent example. Campbell’s activism would have been inconceivable in the recent past.

That the ACC chair Steve Maharey put his hand up for a similar offence – and that Ruth Dyson has been similarly caught out – indicates Campbell was not merely a one-off. It suggests the idea of an impartial, apolitical public service is a myth.  And this is not because Campbell and co were outspoken with their views. Their partiality would remain even if they had kept their views to themselves.

In combination, these developments suggest a public service re-think is needed.

Hipkins’ flawed Act

Flaws at the core of the Public Service Act 2020 may be contributing to the underlying malaise. The Act was introduced into Parliament shortly before the pandemic in November 2019. It was then passed under urgency in July 2020, ahead of the 2020 election.

Promoted by Hipkins when he was Minister of State Services, the implications of the controversial Act were not widely debated in the media. Yet, concerns about how the Act would shift power to unelected officials were voiced by numerous public sector experts.

Writing in The Spinoff, former Treasury Deputy Chief Economist Tony Burton warned that, by putting an unelected official, the Public Services Commissioner, in charge of the public service, Hipkins’ new Act would end public service leadership by democratically elected ministers.

Understanding why requires only a high-level comparison of the Public Services Act with the State Services Act 1988 it replaced.

Prominent among the objectives of the old Act was ensuring the State sector system “operates in the collective interests of government.”

Hipkins’ new Act is subtly different. But the difference has important constitutional implications.

Despite a lot of well-meaning words, the Act lacks a clear statement that the purpose of the public service is to assist the democratically elected government with policy development and implementation.

More troublingly, there is nothing in the new Act directly linking the Commissioner’s general functions with assisting the government with its policy agenda.

Instead, the Act provides that the Commissioner’s functions include “establish[ing] and lead[ing] a public service leadership team so that public service agencies work as a system to deliver better services to, and achieve better outcomes for, the public”.

But “better services” and “better outcomes” as decided by whom? Without the link in the old State Sector Act to the government of the day, the Commissioner may be encouraged to conclude that his or her view of what are better services or better outcomes should prevail.

The framework of Hipkins’ Act involves a deliberate move away from a “contracting model”, which involved departmental CEs operating under the direct control of ministers. While continuing to owe statutory duties to their minister, senior CEs now sit on a public service leadership team led by the Commissioner.

This change involves a material increase in the Commissioner’s power over officials. It makes him the de facto operational leader of the civil service. And, as the “employer” of departmental leaders – and the person primarily responsible for their promotion – senior civil servants will inevitably feel beholden to him.

Other provisions in the Act, including those permitting the Commissioner to establish outside “advisory groups” to assist with the Commissioner’s expanded general functions, only serves to reinforce the Commissioner’s power.

Revolutionary change

The changes to the Commissioner’s role are not simply operational. They are revolutionary. By placing the Commissioner between the democratically elected government and its control of the bureaucracy, they drive a wedge between the leadership of government departments and the ministers to whom they are supposed to report.

The resulting loss of public sector accountability to democratically elected ministers is a profound change to the way the public sector works. Yet the Act’s implications seem to have been ignored.

Following these changes, no one should be surprised to see a government struggling to get things done. Especially following a change of government. Incoming ministers will find the Public Service Commissioner sitting between them and the implementation of their democratically endorsed policy agenda.

Of course, there were other ways the perceived silos problem could have been solved without putting the Commissioner in charge of the public service. The obvious one was by ministers themselves directing their CEs to work with other ministries where this was required. Addressing the problem this way would have strengthened departmental accountability to the elected government rather than weakened it.

When Hipkins’ Act was passed under urgency in 2020, neither opposition party voted for it. The principal objections were threefold. First, the issue of process and timing. Second, a concern that the Bill was a missed opportunity to create a more accountable public service focused on outcomes. And third, that the Bill facilitated larger government.

These objections have already proved prophetic.

But prescience was not unique to the Opposition. In the two-and-a-half years since Hipkins’ Act came into force, the Cabinet Secretary has not seen fit to update the Cabinet Manual to take account of the new Acts’ provisions. Perhaps she knew better. The starting point to solving the public service’s woes may be repealing Hipkins’ ill-thought-through statute.  

That approach might seem radical. But the State Sector Act 1988 avoided many of the new Act’s pitfalls. A u-turn may be the first step in a much-needed public services reset.

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