Cover Story: State sector shake up – Canterbury quakes drive change

Public sector agencies such as Inland Revenue and the Ministries of Justice and Social Development may be pushed to cut through patch-protection, break down silos and regroup around some big shared goals. It’s part of government initiative which challenges all public sector agencies’ targets, structures, cultures, incentives, accountabilities and measurements.
A clutch of compelling case studies of so called “innovative” public service responses to the organisational chaos that stuck Canterbury after its devastating September 2010 and February 2011 earthquakes is effectively validating the Government’s plans to push through its Better Public Services (BPS) programme.
BPS is designed to introduce wide-ranging public sector management reforms on scale not seen in New Zealand since the late 1980s and early ’90s. “A better-performing public sector is central to what we will be doing as Government over the next three years,” Prime Minister John Key told the Auckland Chamber of Commerce when he announced his BPS strategy on March 15.
And events in Christchurch have seemingly strengthened his hand. Canterbury’s public sector responses to disrupted essential services illustrate what can happen when public servants are forced, this time through disaster response, to think outside the square and work more cooperatively with each other and with the private sector.
Eight carefully chosen case studies have provided so much grist to Key’s reform mill that last month Cabinet agreed to cement in some of these Canterbury-initiated practice changes on permanent basis and to roll some of them out nationwide.
The Government’s public sector reform blueprint was drafted by the Better Public Services Advisory group, an eight-member public and private sector think panel, set up last year to help design public service fit for 21st century purpose.
New Zealand’s state sector had, they said, an “enviable” international reputation and was generally “well-regarded” at home, but the Government’s commitment to reform had diminished in recent years, just when public management needed to keep up with rapidly changing world. “The role of the state must be progressively redefined,” the Advisory Group’s report said. The system had not, therefore, been very effective in delivering improved social, environmental and economic outcomes.
New Zealand’s public sector accounts for almost quarter of the nation’s economy. It therefore needed to “become more innovative, efficient and focused” on delivering what New Zealanders want and expect, said Key when he announced his BPS initiative. He simultaneously revealed the establishment of new super Ministry of Business Innovation and Employment by integrating the ministries of Economic Development, Labour, Science and Innovation, and Building and Housing.
The “business-facing” department would, under the command of his fourth-ranking Cabinet minister Steven Joyce, strengthen the public service’s ability to work on business policy, regulation and engagement, said Key. The plethora of departmental silos delivered by the radical public sector reforms of the 1980s’ Labour government would go and departments will, in future, work together more, he added.
Government agencies will have to contest the provision of some services; be required to more aggressively deploy new digital technologies; collect, use and publish better performance information; and centralise some capital spending, including accommodation.
None of the 10 challenges set out in Key’s programme needed ratification. They were political fait accompli. But the Canterbury case studies have galvanised the argument for change, within the public service and, obviously, the Canterbury business community. Even the state union, the 55,000 strong PSA, accepts majority of the proposed changes, though with some reservations. It is not, for example, keen to see reduction in the public sector workforce or the outsourcing of more services to the private sector.
The PSA’s joint National Secretary Brenda Pilott is, for example, enthusiastic about the idea of introducing more “innovative” management into the public sector. But, she warns, it won’t happen without management attitude and practice changes at the top. “Old style command and control management is still entrenched in many agencies,” she adds.
There is, says Pilott, need for more flexible management with “high level of trust” between leaders and employees. “We are in favour of picking good people and letting them get on with the job. But this is not common practice in public service management.
“There are hints about (adopting more innovative management) in the BPS report but little or no detail on how to get there. Changing whole systems-based management approach is big step that will require massive culture change and new people with new skills,” she adds.
Innovation in the public sector may not, however, be the anathema it once was. As the recently published book Future State by Victoria University School of Government academics and edited by Bill Ryan and Derek Gill suggests, public sector managers and staff are being encouraged to innovate to improve efficiency and effectiveness of government policies and management. And the PSA’s own Modern Public Services project is adding to the transition process.
And offshore, recent McKinsey global consultancy report claimed there was “an extraordinary” amount of innovation happening in the United States government. The driver was the US government’s embrace of the idea of “open innovation – unleashing the power of the private sector, the academic sector, the non profit sector and the public” to get more done, rather than leave it to the government to do everything itself.
New Zealand may not have reached America’s level of inter-connectedness between the public, private and academic research sectors but, the Christchurch experience is building the case for another round of public management reform.
As Ryan and Gill also suggest, “fiscal and other pressures have introduced greater urgency, along with technological possibilities for realising [government] policy and service delivery objectives”. In future, governments, ministers and public officials will need to recognise when and how things must be done differently and where business as usual won’t work.
Business as usual wasn’t an option in Christchurch after the quakes. “We were all forced to innovate and that included the public services,” says Canterbury Employers’ Chamber of Commerce chief executive Peter Townsend. “We simply had to do things in new ways.”
The Recover Canterbury project, hub set up to connect local businesses to range of support services to help them recover from the quakes, is one of the eight identified by Government as an example of innovative public and private sector cooperation. “We have collaborative model in which the private sector and government – both central and local – are working together to deliver good business outcomes,” says Townsend.
“Government departments found there were both new and indeed better ways of doing things,” he says. “Being forced to innovate resulted in them adopting innovation. And I reckon this change in approach is sustainable.”
The State Service Commission rides shotgun on the Government’s public sector change programme. Its minister, Jonathan Coleman, thinks the Christchurch experience has helped his government “feel confident” that its reform programme is achievable.
The necessary legislative changes will take time to get through, meanwhile he expects the public service to “reorganise itself around the expectations” the legislation will facilitate. “We won’t be able to move appropriations around prior to passing the legislation but there will be clear direction that agency heads will be working to.”
The minister is also happy with the “positive” reaction of the public service generally. While he doesn’t make the comparison, BPS is potentially as great as an

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