Fixing the Public Service

Last month vastly-experienced top bureaucrat Ian Fletcher took aim at Accountability in the Public Sector. This month that thought process continues with a diagnosis of the public sector’s overriding ills and a cure that might compromise some political neutrality amongst sector leaders, but will raise much-needed competence and accountability.

Ian Fletcher oversaw a 40 percent head count reduction while working for the Queensland government and says staff cuts in the public sector are possible if competent managers are left to work through the process, but you will not get ‘more for less’ as a result.

By Ian Fletcher

One of the curiosities of the current election campaign is that there is a surprising degree of consensus that the public service isn’t working well, and something needs to be done. New Zealand isn’t alone in this – the new government in the UK is pursuing radical decentralisation of the government. The Elon Musk-led DOGE slash-and-burn binge at the start of the second Trump administration in the US reflected the sense that the system was bloated and should be radically cut. Even the staid EU administration is in (relative) turmoil over the proposal to abolish the semi-independent EU foreign service and merge it into the European Commission, because it has been judged ineffective.

Here, the National Party wants a further radical reduction in the public service, claiming (frankly implausibly) that AI can replace officials. The word on the Wellington street is that the real reason is a lively fear that the country’s credit rating is at risk if spending isn’t cut. This is an easy sacrifice compared to many other programmes.

And the sense that something must be done has been heightened by the recent scandals around the Ministry for Business Innovation and Employment’s (MBIE) immigration system, and the management of Fire and Emergency New Zealand (FENZ). In both cases, senior officials have behaved badly, and seem to have got away with it. I’ve checked, and the rules in the Cabinet manual actually aren’t clear (they jolly well should be) but there’s no excuse for actual deceit of either the Minister or of Parliament. My view is that the Public Service Commissioner should have summarily removed both the relevant chief executives on the simple basis that if you take the big bucks, you carry the can. No excuses.

Ministers have lost trust in both FENZ and MBIE leadership after both, separately, misled the government. New Zealanders should expect better, but to do so accountability will need to be increased by making it easier to ‘sack the bosses’ says Ian Fletcher.

But this leads to the wider question, what is to be done? Like the UK, our public service is over-centralised (and local authorities are infantilised and starved of money). Like the US, there’s widespread belief that the system is bloated and self-serving (and the FENZ and MBIE stories seem to confirm that). Like the EU, we have a system that is fragmented and incoherent: every department hires its own staff, and too many organisations are run independently, and so miss out on the sort of coordination that should make a smaller country work better.

Three observations, and a couple of revolutionary, but not-that-radical, suggestions.

Firstly: How Hard Can it Be?

Human societies have been inventing public services for thousands of years, literally in every great civilisation. Some were based on internal competition (the Roman cursus honorum). Others used examinations and a rigid internal structure, with a clear focus on a narrow but important set of questions (China). Some used religion as the organising principle (ancient Egypt; the more modern Papacy). Some aspired to intellectual virtuosity and ethical high-mindedness (the Indian Civil Service, and its post-independence successor, the Indian Administrative Service). The story goes on. New Zealand faces a more benign environment than any of these; we should be able to get it right.

Second Point: The Public Service Isn’t Like the Private Sector

Attempts to manage the civil service as if it was a company won’t work. There are good reasons for this. A successful company aims for efficiency: maximising output or revenue and minimising costs. The public service deals with permanent ambiguity: managing competing and conflicting demands that just can’t be reconciled, and must be managed. Lower taxes and higher health spending are a simple example. Both are good ideas; success means holding them in tension.

And Finally…

The public service has one employer but many different types of task. The people who run the passport system need different skills to those running the debt management office or the road system, or the Work and Income NZ system, or the courts. The whole system needs to be able to think in detail about complex skills and deployment, as well as see the big picture. Simple answers don’t work, and any politician who claims that there are single solutions to the challenge of making public services work is just wrong.

So, What Can We Do?

Firstly, make it easier to sack the bosses. Do what Australian governments do and put senior managers on contracts with fewer rights. High pay and lots of respect, but matched by clear ‘down the road’ accountability when things go wrong, or the political wind changes. We also need more of a revolving door, so senior officials leave government, go and actually do and learn things, and maybe come back. There’s a lot wrong with the US system, but they get this bit right.

Secondly, recognise that real competence is better than politically-neutral incompetence and groupthink (which is what we have now). The original idea of a politically neutral, professional ‘civil service’ came as an antidote to nineteenth century British governments than combined political favours with laziness and incompetence. It was a great idea at the time. But here in New Zealand, we now have chief executives and others roosting for years in protected roles, with limited skills and no appetite for risk or innovation. We need to think whether we would be better off with a public service that is more political, but also more competent and interested in actually making things better.

And let management manage. If budget pressures mean the public service needs to be cut, let’s do it. But let’s not hide behind AI, and let’s not imagine the ‘efficiency’ means you can always get more from less. That’s fantasy. Make clear what money is available and what the actual priorities are, and let the system work. I ran the Queensland precursor to MBIE and reduced headcount 40 per cent in two years with no fuss, because I was left alone to do it – I was lucky that my Ministers had other priorities.

Finally, don’t settle for second best. Let’s make clear to anyone who will listen that New Zealand deserves really great government. We don’t have it now, but we could. And it saddens me that we tolerate venal incompetence.

Ian Fletcher is a former head of New Zealand’s security agency, the GCSB, chief executive of the UK Patents Office, free trade negotiator with the European Commission and biosecurity CE for the Queensland government. These days he is a commercial flower grower in the Wairarapa and consultant to the apiculture industry with Honey and Bees New Zealand.