John Whitehead: Old tools and mindsets don't fit new environment

Photo / Mark Mitchell

A speech I made recently to senior public servants has sparked much reaction and commentary. The key point of the speech was that the world has changed radically over the past 18 months and whether we are in the private or public sector, we all need to consider new approaches and ideas.

We can't use old tools and mindsets to deal with the new environment. They were already out of date before the crisis hit.

Unfortunately, the commentary and debate veered into arguments about privatisation, which wasn't mentioned in my speech. Some people accused me of exceeding my brief by making comments that they believed should have been left to the State Services Commissioner or to politicians.

It is clear that there are widely varying ideas about making the public sector efficient, and it is also clear that some people don't understand that Treasury is one of three agencies (along with the State Services Commission and the Department of Prime Minister and Cabinet) that the Government has tasked with improving state sector performance.

We need debate to remain focused on what will improve things for New Zealand, rather than retreating to ideological bunkers or getting stuck on the messenger rather than the message. I'm reminded of the wisdom of 19th century French writer Joseph Joubert, that: "The aim of argument or of discussion should not be victory but progress."

Choices about priorities have been thrown into stark relief by the credit crisis and recession. We've lost the luxury of government surpluses and a strong global economy, with a $50 billion hit on our economy and future deficits totalling tens of billions over several years.

Unless we focus on growing the economy and controlling spending - including spending on public services - then New Zealanders face higher taxes to pay for growing debt, and less money to pay for services that they want or need the Government to deliver.

New Zealand urgently needs to think differently about what we do and how we do it. We face tough decisions and can't afford to be side-tracked or avoid decisions, even though some of them will be unpopular and painful. We also have huge opportunities, as a nation, if we're prepared to take them.

The public sector may need to adopt and adapt private sector ideas, techniques, experience and expertise. The private sector already provides many public services, such as the Automobile Association issuing drivers' licences, physiotherapists providing treatments paid for by ACC, or construction crews building and maintaining roads.

We don't want or need an army of government employees doing these jobs. And sometimes a bit of competition can be good for the public sector.

No government can do everything that it, or the public, wants. The public sector needs to confront that issue more explicitly and be clear about the need to make trade-offs.

But we don't want to repeat what hasn't worked well in the past. Often when public sector agencies are under pressure, the response is "indiscriminate" cost cutting, rather than looking to do things differently.

Policies and programmes introduced 10 or 15 years ago may no longer be effective or fit government objectives and should be examined. In many cases we'll find they're worthwhile but in some cases we'll find that taxpayers are funding programmes or services that are past their useful life.

Treasury doesn't have a grand plan, secret agenda, or universal prescription for change. Each public agency knows its own business far better than us and some public sector agencies and chief executives are already starting on this work.

Treasury's role is to ensure that public agencies ask themselves the right questions and then take action on the answers they find. Together with other central agencies, we're setting the scene for that to happen.

We need to focus on continuing the most important services that make the most difference but how they are provided and by whom is far less important than ensuring that they remain available to those who need them. Public sector agencies need to ask if what they are doing makes a real and positive difference for New Zealanders is the result the Government wants.

And they need to ask if someone else could do it better. This is not driven by any desire to promote privatisation - it is simply ensuring that taxpayers' dollars are spent well.

In countries with which we like to compare ourselves (Australia and Britain, for example) such questions are hardly controversial any more.

Sometimes, the answer will not lie in contracting out. Overseas experience has demonstrated changes in systems, processes and technology can generate gains in service quality, timeliness and value for money.

Agencies with similar needs can share systems and processes. For example, in Ontario, savings of 30 per cent were achieved across government on administrative and support services in finance, payroll and benefits administration, supply chain management and areas like print, mail, forms and so on.

Across Canada, there have also been major changes to focus on the customer. More than 70 services from several agencies merged into a single customer service organisation, saving more than CN$400 million ($544 million) a year.

One commentator said public servants should not take risks because "that is the job of the private sector". While the public sector shouldn't try to do what the private sector can do better, it is nonsense to claim that public servants should not take risks.

All change involves risk, but the biggest risk of all is to try to stay the same when all the world is changing around you.

New Zealanders deserve better than that. I believe public servants are up for the challenge.

* John Whitehead is Secretary to the Treasury.