Prime Minister Jacinda Ardern has publicly announced that 2019 is her Government’s “year of delivery”. There are many complex issues on her Government’s current policy agenda for which delivery is important, both in terms of policy-making and in terms of political management.
Several of the more important policy delivery issues fall on to Chris Hipkins’s crowded desk. In addition to being Leader of the House, Hipkins is Minister of both Education and State Services. His schedule for 2019 includes addressing major problems in the polytechnics and the industry training organisations, reforming the Tomorrow’s Schools system, and the small matter of seeing through the biggest reforms in the state sector for three decades.
Anyone who is a parent is going to be personally caught up in the first two reforms, and consequently many of us will doubtless take a great deal of interest in them. The last—state sector reform—is probably the issue of least widespread public interest. But how we regulate the state sector matters, seriously, to all New Zealanders.
The relationships between the public service, the executive and the citizenry are a fundamental part of our unwritten constitution. Additionally, the effective functioning of the public service is vital to citizens’ wellbeing in an economy where roughly a third of the national income is allocated or redistributed by government. We need to get the state sector right and we are currently failing to do so.
But the reform process Hipkins is overseeing is struggling. The problems revealed in the process themselves illustrate some long-term failings in the New Zealand public sector, problems in the system that reform should be addressing but is not.
The initial State Services Commission discussion document that kicked off the reform process was widely perceived to be disappointing. It failed to clearly articulate problems in the system, many of which had been in the public domain for a long time, in relation to the evidence. It also failed to set out a range of policy options to address the identified problems and clearly discuss their pros and cons.
Public feedback on the discussion document was solicited. Submitters had six weeks to put together their submissions, with a final deadline in mid-October 2018. It is now late February 2019. More than four months after it took receipt of submissions, the State Services Commission has yet to make these submissions publicly available. It has yet to provide a summary of submissions. It shows no willingness to engage with submitters by publicly responding to the feedback received.
Why has the initial policy work been so weak and why has the response to the public submissions been non-existent?
One doesn’t have to go far to find an important proximate cause. In the past decade the State Services Commission, reform leader, has had an average annual staff turnover rate exceeding 36 percent. Its maximum annual turnover rate has been an eye-watering 54 percent (in 2011) and the minimum rate a very high 28 percent (in 2013). The 2018 rate was 34 percent. To put these staff turnover rates into a broader context, the Commission’s average turnover rate in that period is more than double that of the public service as a whole (which averages 17 percent over the past decade). Its average turnover rate exceeds nearly all sector-based turnover rates in New Zealand’s private sector in 2018, being higher even than retailing (34 percent). In fact, in 2018 the only private sector industry identified as having higher turnover rates than the Commission is the fast food industry (46 percent).
High turnover is intuitively bad for organisations, and this intuition is unsurprisingly supported by academic research. Meta-analysis reveals higher workforce turnover is associated with lower organisational performance.
It is not simply at the macro level where this concerning Commission turnover is occurring. It is understood that the leadership of the policy team within the Commission tasked with driving reform is now on to its third incarnation.
No effective organisation—discounting only those whose aims are to sell jeans, flip burgers or ask whether drinks or fries should be upsized—can sustain high-quality performance with staff turnover rates like the Commission’s. Especially not an organisation whose performance depends for success, as the Commission's does, on strong and enduring networks within and outside the public sector, and on robust institutional memory, in combination with high levels of sector- and issue-specific intellectual capacity.
So, given the mess that is the reform process, and the strong competing claims on his attention in other important areas, what should Minister Hipkins do? The answer to Prime Minister Ardern’s call for quality delivery can only be ruthless prioritisation: deliver fewer things well, not lots of things badly. Hipkins needs to park state sector reform with a view to doing it slowly and properly further down the track. As Sir Geoffrey Palmer, former Prime Minister and eminent constitutional lawyer, has previously proposed, a Royal Commission on reform in the state sector remains the best way forward.
This article is in the latest fortnightly newsletter from Victoria University of Wellington’s Institute for Governance and Policy Studies (for which free subscriptions are available from igps@vuw.ac.nz with 'Subscribe to newsletter, please' in the subject line).
Read the article on Newsroom.