Government’s savings programme is half-hearted and poorly targeted so far - Matthew Hooton

Should we reduce Wellington to a pre-mammalian state? Photo / Mark Mitchell

OPINION

There are those of us who won’t be happy until Wellington is reduced to a pre-industrial state, with its remaining beragged residents trudging with their oxen before dawn each day, to tend to their rice paddies in what were once Petone and Kilbirnie.

Better still, Wellington could revert to a pre-mammalian state, as one great big Zealandia for the rest of us to explore and enjoy.

Even those with less robust visions for the capital are unlikely to support the proposed multibillion-dollar mega-tunnel to ferry politicians and bureaucrats on a new ministerial motorway from the central city to the airport.

We can probably trust Transport Minister Simeon Brown, also MP for Pakuranga and Minister for Auckland, to delay the plan until 2050 or later.

What we cannot trust is the Wellington bureaucracy or its local politicians and media to take seriously the need for radical downsizing of the state after its extraordinary explosion this century.

So far, mandarins have identified just 3000 roles for the chop, merely taking the bureaucracy back to its size last year.

Assuming each position costs $300,000 a year - and given this is a bureaucracy that spends an average of $1 million on each new school classroom, anything is possible - the annual savings of getting rid of 3000 Wellington bureaucrats is just $900m. Charitably rounding that up to $4 billion over four years, it’s still dwarfed by the extra $10-15b the Government now needs to borrow over that time above the pre-Christmas forecast, plus another $15b or so for National’s tax cuts and higher Working for Families handouts.

Worse, before the election National promised the savings from cutting the bureaucracy would be used to fund those tax cuts. Now it says most of the money will be churned back through the system and spent elsewhere.

There’s no longer much doubt that the tax cuts and handouts - if they proceed as promised, as the Prime Minister insists they shall - will be funded entirely by borrowing.

But the only real tax cut is a spending cut, so the truth is none of us are getting one. We’ll all just have to pay higher taxes in the very near future to service the massive debt and then to try to pay it back.

In fact, it’ll probably never be paid back since Treasury projects we’ll soon enter a permanent debt spiral that will continue until we default.

Getting anywhere near surplus merely by sacking bureaucrats would indeed require Finance Minister Nicola Willis to adopt the Zealandia solution, at the very least.

Much greater ambition is needed, including abolishing whole departments and functions, and urgently getting on top of superannuation, health and debt-servicing costs, now all ballooning.

The savings programme has so far been poorly handled, with not a hint of strategic leadership from the Beehive. Asking bureaucrats to find savings is to pass control over the Government’s operational priorities from ministers to mandarins.

Predictably, those officials have largely offered up roles that just happen to be currently vacant, whether or not there’s a good reason for those positions to exist. The remainder have mostly been identified through voluntary redundancies, meaning the 5 per cent with the most marketable skills are the ones most likely to be walking out the door.

Private-sector experts in downsizing say voluntary redundancy is worse for an organisation than even random redundancy. A random approach at least sees only 5 per cent of the top performers leave the business, along with 5 per cent of the bottom performers and 5 per cent of the middle.

The best strategy would be moving the worst performers out, but that’s impossible in a bureaucracy lacking meaningful performance measures.

Even then, many of the offered cuts are derisory. The Ministry of Pacific Peoples is the standout champion, getting rid of half its roles. The ministries of health, education and primary industries along with WorkSafe and Niwa are also acting in the spirit of the times, planning to disestablish over 10 per cent of their roles this year alone.

But others aren’t co-operating, with that monument to Wellington excess, the Ministry of Business, Innovation and Employment, arguing its 6650-strong bureaucracy can lose just 354 roles, little more than 4 per cent.

The Tertiary Education Commission plans to lose just 28 of its estimated 400 staff. It’s not clear what the commission does. Before it was established to do strategy and provide advice, the much-maligned Ministry of Education funded and regulated the entire tertiary education sector with fewer than 10 fulltime equivalents.

It’s not obvious our universities and polytechnics have benefited from the hundreds of extra bureaucrats. It would be easiest just to close the commission down.

When challenged by long-suffering taxpayers, Christopher Luxon promises another round of similarly sized cuts.

If so, work must start immediately after Willis presents her first Budget on May 30 with a first-principles approach.

Each department should first be required to write a business case for why it should even exist, against what the Government says it wants to achieve - by which more is needed than nine bullet points.

Some agencies should find that easy, like the police, courts, Corrections and, right now, Treasury’s debt management office. If others struggle, so much the better for taxpayers, present and future.

For agencies that pass that first hurdle, ministers would then demand business cases for each of their existing functions - again starting with why they should even exist, and against clearly stated but substantive Government objectives.

Some agencies may even be able to make cases for some of those functions to be funded more.

It’s even possible the exercise would identify gaps in the Government’s functions.

But most likely it would reveal multiple bureaucracies tripping over one another to do the same alleged “work”.

Just who is primarily responsible for climate-change policy in New Zealand? The Climate Change Commission? The Ministry for the Environment? The Parliamentary Commission for the Environment? Or the Environmental Protection Agency that runs the emissions trading scheme? Could the Prime Minister or the agencies themselves tell us were they asked?

The bleating from public-sector unions, the Labour Party and the rest of the left-wing establishment about the coalition rolling back less than one year’s growth in the Wellington bureaucracy should be entirely ignored.

The public debate should start from the opposite direction. Just what would be the harm to the rest of the country were Willis to proceed with the Zealandia option? Once those harms are identified, a rigorous case could be made for what parts of the Wellington bureaucracy should be allowed to survive.