Politics : The Many Public Faces of Efficiency

Democracy is an inefficient business. Yet efficiency is at the core of many of its arguments.
If only the private sector was more efficient, productivity would be higher and we would be richer nation. If only public services were more efficient, we could have more and pay less tax for them.
If only our houses, vehicles and lifestyles were more energy-efficient, that would make it easier to meet climate change targets.
That is large part of the point of the Emissions Trading Scheme, which aims to make the polluters pay for exceeding diminishing total of greenhouse gas emissions. But there are wide disagreements about who should pay, at what time and under what caps.
As to private sector efficiency, National and Labour have very different beliefs. Labour and allied ministers set up working groups, devised strategies, looked for administrative roadblocks. But, in part because of low business investment until recently and shortages of skilled – or any – labour, productivity growth has been lower during Labour’s nine years (though in the wake of that belated higher business investment, it picked up in the past year).
National says lower taxes (leaving more for investment), lighter regulation (leaving more time to run the business), and better infrastructure (making movement of goods, people and information easier and cheaper), would lift private sector efficiency.
But lower taxes implies less government spending. That in turn demands greater efficiency if public services are to be maintained. Which National says it would.
Take health services. National has pumped out doom-laden disquisition on the failure to meet need despite huge funding increases.
The implication voters are intended to take from that is that National-led government would end the litany of failures. Services would be there for those who needed them when they needed them.
But that has to be done within the context of an overall smaller government share of the economy. That implies health services would be delivered much more efficiently.
So National says it would reduce the ratio of ‘bureaucrats’ in hospitals and the ministry, give clinicians more decision-making power, get more done in GP clinics and farm more operations out to private hospitals – and, possibly, later encourage individuals to fend for themselves more.
It would apply the same thinking to education, conservation, subsidised housing, income assistance, criminal rehabilitation and so on.
The problem is that the sort of services the government provides are mostly people-intensive, on both the supply and demand sides.
Robots can put cars together. But to teach five-year-olds you need teachers. Moreover, if standards are to be lifted, they have to be good teachers. They cost money.
Now stir in National’s promise to restructure the tax system, with much bigger cuts than Michael Cullen’s, starting in April 2009. Add in slow economy which will blight at least 2009 and constrain company tax revenue for at least two years. Add, too, promise of fiscal responsibility – meaning that any budget deficit must be cyclical and short-term and not become chronic, as in the United States’ after George Bush’s tax cuts.
That adds up to tight constraints on the public sector. Sacking policy analysts and ministry and board bureaucrats won’t suffice.
So National says it would distil out the functions it wants the state to perform, prioritise them and shuffle public servants out of lower-ranked activities into higher-ranked ones while also allowing attrition to reduce overall numbers.
This re-frames efficiency less as higher output per person (though attrition implies that too) than as an efficiency of focus: do those things that can be done most efficiently and/or effectively.
Moreover, bring in the private and non-government sectors, to contribute ideas about what to do and then to implement them – that is, look for, work with, and fund ‘social entrepreneurs’. Labour toyed with this in its early years but got cold feet after one ‘entrepreneur’ went AWOL studying hip-hop.
Sounds good – till you look on the demand side. There efficiency has different meaning. To voters efficiency means services on demand, with the least effort and payment required of the individual.
It is that dislocation of perception that modern governments must juggle. National’s advantage is that it brings younger people, with different perceptions, to the task.
But, fresh or not, they will find, if in government, that delivering on both sides of the efficiency equation is one of their most demanding tests.

Colin James is New Zealand’s leading political commentator and Management’s regular political columnist.

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