Planned cuts to the public service so far won’t even wind back the last six months of expansion - Public Purse

Finance Minister and Minister for the Public Service Nicola Willis says larger structural changes such as merging public service agencies or disestablishment are not a current priority. Photo / Mark Mitchell

OPINION

From the gory details of job-cuts news, you’d think the public service was being eviscerated.

While the media’s view of the cuts is incomplete, it’s also true that departments have been leaking the particulars faster than a Wellington water pipe (and to be fair, formal update announcements have also commenced).

Consequently, we know of proposed and completed redundancies of some 1000 people to date (give or take), as departments pare their spending in line with reduced and revised Budget allocations, now being finalised for announcement next month.

The Ministry of Business, Innovation and Employment (MBIE), the Ministry of Social Development (MSD), the Ministry for Primary Industries (MPI) and the Ministry of Health (MoH) are among those whose planned reductions are at the higher end and reach into the hundreds.

But those figures remain eclipsed by the number of staff added through just the second half of last year: 368 additions at MBIE (a 5.9 per cent increase); 405 additions at MSD (a 4.5 per cent increase); 12 additions at MPI (a 0.3 per cent increase); and 77 additions at MoH (a 10.5 per cent increase).

All up, the public service expanded by 4.1 per cent in the last six months for which we have data, which amounted to an addition of 2580 net new employees, as of December 31.

The big picture is that the public service workforce is now 65,699 strong, an increase of 39 per cent (18,447 fulltime equivalent (FTE) employees) since June 30, 2017, just a few months before Labour’s coalition Government was sworn in that October.

The rate of population growth over the same period was just 11 per cent.

The Public Service Commission hasn’t released an updated payroll cost to the end of December, but the bill for the base salary component of this work hit an annual $6.14 billion in the last financial year (2022/23) - the cost of superannuation, overtime, and redundancy are additional.

One of two conclusions can be drawn from the data: either the country was woefully underserved by its core government bureaucracy before Labour came to power, and the hiring spree was warranted; or the public service has bloated and cuts are needed (though you can certainly argue over whether any particular cut is to fat or to muscle).

The National-led Government is volubly of the opinion that bloat is the problem and it has mandated spending cuts of 6.5 to 7.5 per cent across the public service (the detail of which is up to the bureaucracy to recommend to ministers).

One aspect of the creeping expansion is the addition of agencies. Despite that, mergers or closure of any of the departments or departmental agencies that make up the core of the central government are not currently on the Government’s agenda.

However, it did shut the Productivity Commission - an independent Crown entity and not part of the public service - in February, shedding some 20 staff, as a kind of unequal offset for establishing the new Ministry for Regulation (MfR), still in embryonic form and expected to employ about 60 staff.

Including the MfR, 39 agencies now make up the core of government; there were 31 at the beginning of 2018.

The Ministry of Housing and Urban Development is the largest of the new creations in that period; it had 390 staff at the end of last year.

The other additions are: the Ministry for Disabled People, 211 staff; Te Arawhiti (the Office for Māori Crown Relations), 187 staff; the National Emergency Management Agency (Nema), 155 staff; the Ministry for Ethnic Communities, 77 staff; the Independent Children’s Monitor, 58 staff; the Cancer Control Agency, 57 staff; and the Social Wellbeing Agency, 40 staff (conceived by the National-led Government of Sir Bill English, but midwifed into being by Labour).

All up, the new agencies employ well over 1000 staff. Though that doesn’t mean that rolling back the clock would eliminate all of those jobs. The Ministry for Disabled People, for example, drew 122 FTEs from the MoH when it was established. Its ranks have since expanded by 73 per cent.

(Ironically, while a standalone ministry for the disabled was created to better work in partnership with those who need its help, it recently forecast a budget overspend of some $50 million to $65m, and announced a surprise narrowing of purchasing rules applied to the recipients of disability funding.)

Along with the expansion of employee numbers, the larger of the new agencies have also come with relatively expensive new leadership teams.

For example, Cabinet papers related to the creation of Te Arawhiti estimate an annual cost of $2m to pay the chief executive and senior leadership team (there are currently seven executives, including the CEO).

Treasury Secretary Caralee McLiesh, Finance Minister Nicola Willis' most senior official; the female power duo should reflect on the ongoing purpose of the Ministry for Women. Photo / Mark Mitchell

That agency, and others, also provide for a considerable level of duplication, sometimes by design, though it’s not clear that this provides a net benefit to the public (part of Te Arawhiti’s remit is to look over the shoulders of other agencies and help ensure they are working in “partnership” with Māori).

Where Te Arawhiti is involved in trying to sort out knotty Māori-Crown relations, as with the recent and largely ongoing machinations over the future of the Mt Ruapehu skifields and the Chateau Tongariro, it often provides a layer of expertise that appears already to be provided for.

For example, among the other agencies involved in deciding the future of the skifields and the Chateau are MBIE and the Department of Conservation (DoC), which together have extensive capabilities in Māori-Crown relations. Perhaps more correctly, they have a large number of staff doing that job.

Indeed, DoC’s deputy director-general for Treaty partnerships Tame Malcolm told the Herald that its Treaty relationships group (Te Pae Whaitake Tiriti) numbers 65 FTEs: 43 permanent and 22 temporary.

Departmental agencies are “hosted” within full departments and share corporate costs such as finance, human resources and payroll. When they were conceived in 2013, they were intended to be cheaper than the alternative of creating whole new departments. They very likely are.

But they’re also considerably more expensive than leaving the work to unfold in the business units of existing departments, where the hierarchies are flatter and the ranks are almost invariably smaller (the Independent Children’s Monitor may be an exception, as it had a handful more FTEs as a business unit of MSD when it fledged in April last year than it employs now).

Still, the Government has shown little appetite for reviewing any of the recent agency additions, or, for that matter, any of the older so-called advocacy ministries. Before the election, the Act Party said it hoped to nix the Ministry for Pacific Peoples (staff 121) but that didn’t make it into its agreement to form a coalition with the National Party.

Finance Minister and Minister for the Public Service Nicola Willis told the Herald that her focus is currently on cutting back-office costs and driving down spending on consultants and contractors.

”Larger structural changes such as merging or disestablishing entities are not our immediate focus. In the medium term, we remain open to these ideas if we can be convinced the benefits of change would outweigh the costs,” she said.

As Willis consults her most senior official, the chief executive and secretary of the Treasury, Caralee McLeish, one or other of this female power duo might also reflect on the ongoing purpose of the Ministry for Women (staff 42).

Among its main work is to maintain a registry of women candidates for public sector boards and to promote their nomination when openings arise. But here’s a funny thing: the Government achieved its target proportion of 50 per cent women on public sector boards three years ago. The figure’s now north of 53 per cent.