Minister of State Services

Current problems in public management

1 The development of the public management system over the last two decades could be caricatured as:

• pre 1984 - dominated by bureaucracy and process (doing the job correctly and lawfully)
• 1984-2000 - development of managerialism and outputs (doing the job efficiently)
• 2000 on - moving towards leadership and outcomes (getting results).

2 The 1986-94 reforms were a major shift in public management. They brought some real strengths, notably:

• transparency;
• greater focus on delivery and efficiency; and
• improved financial management and accountability.

3 But, largely driven from an economic basis of public choice and agency theory, they also brought a series of changes which have not helped subsequent development:

• they broke up the public sector into smaller units (eg funders, purchasers and providers, policy and delivery agencies, and commercial and non-commercial interests) - this could be called decoupling, or fragmentation;
• they hard-wired in an output-based management system (and consequently under-emphasised outcomes - managing for results, and capability - fitness of the public sector for its purpose); and
• they strengthened a culture and practice of Wellington-based policy-making and solution-seeking (and consequently de-emphasised evidence-based, citizen and community-centred, policy making, service design and delivery) .

4 In a nutshell, the reforms did some of the easier yards - structures, outputs, and vertical accountability. There are some harder yards still to be done: staffing and skills, outcomes, and working with other communities. This has to be done, too, in a world where citizens and businesses are getting more demanding, the speed of change is increasing and the political environment is more complex (particularly because of the change to MMP).

5 Numerous commentators, from 1992 on, have assessed the reforms. Some have said "we need a fundamental transformation from where we are now", more have said "we need to build more fully on what we have". Both positions have, however, led to similar prescriptions.

6 The 2001 Review of the Centre was an overview of the current state of the public management system, taking into account previous commentaries and current initiatives. It analysed the strengths and weaknesses of the current system, and proposed or endorsed a number of ways forward.

7 The Review concluded that we should build on what we had already, but that we had to work to remedy the key weaknesses identified:

• interaction with Government is not easy for citizens;
• there is no systematic approach to setting and achieving outcome goals and priorities;
• the fragmented state sector makes it difficult to pursue complex or cross-cutting objectives;
• the system is weak at developing and managing capability (people, culture, and common systems); and
• (in particular) many agencies are struggling to understand and meet needs of Maori.

8 The Review did not offer any new conceptual underpinnings for the public management system. It pulled together and articulated a number of ideas about how the existing system needed to be improved.

Proposed Solutions

9 The ways forward proposed in the Review were framed under three headings which I think, in hindsight, might have been put slightly better, more in line with the "weaknesses" described above, and more accurately reflecting the developments already underway or proposed.

10 Reframing the Review descriptions, the main drivers and directions of movement of the current reforms (and, in broad terms, payoffs for Ministers, citizens, and public servants respectively) are:

• Focusing more on results (managing for outcomes)
• Getting more citizen and community centred in how we do business (moving from Wellington-centred to community-centred; helping build capability for "subsidiarity" [including partnership in problem-solving]; using enabling technology to simplify things for citizens)
• Building public sector capability, from two angles:
  
  • Strengthening people, culture and leadership (developing values and culture, building leadership capability).
  • Strengthening the integration of structures and processes (breaking down the silos, building a networks culture and processes, improving coordination, using enabling technology better).

11 As a result of the Review, a number of initiatives were begun, aimed at solutions in all four areas. These initiatives were, however, only part of the picture in providing solutions. Other major development initiatives, which preceded or were concurrent with the review, were:

• e-government, which is mostly about citizen-centred delivery. To the extent it will affect "back-office" operation, it also contributes to integrating processes. The Commission's EGU is focused on infrastructure and service delivery, while DPMC leads on the digital divide, and MED on E-business aspects;
• managing for outcomes, which is all about improving results. The rollout of Statements of Intent across all Government Departments is being managed jointly by the Treasury and the Commission, with input from Te Puni Kokiri. It aims to refocus Departmental planning on outcomes and capability as well as outputs, and thus also contributes to more citizen-centred service delivery;
• the Senior Leadership initiative, which is all about strengthening the people, culture and leadership in the public service, and was acknowledged by the Review as the crucial initiative in this area. It replaces the moribund SES with a more vital programme of development of current and future public sector leaders;
• ethics, values and standards is also all about strengthening public sector people and culture.

12 Attachment 1 to this report gives a visual map of the broad relationships between the initiatives and the drivers, and also identifies the major deliverables under each initiative.

13 Attachment 2 describes the projects begun under the Review, under the drivers they mainly contribute to.

14 However, many of the projects touch on more than one, or indeed on all four drivers, because the drivers are interrelated. Using Circuit Breaker teams as an example:

What will be different as a result of all this activity?

15 To expand the caricature which opened this paper:

• before 1984 (dominated by bureaucracy and process) it took 6 weeks to get an initial benefit payment;
• now (with the development of managerialism and an output focus), assessment and payment are much quicker, and emergency benefits for food and shelter are available on the day; and
• tomorrow (moving towards leadership and outcomes) we want to be able to initiate full, effective, citizen-centred case management which begins addressing the underlying issues (e.g., breaking the cycle of welfare dependency) on the day as well.

16 Many of the initiatives, on their own, will make only small differences to how citizens and Ministers perceive the operation of the state sector. However, cumulatively, over time, they will add up to substantial - even transformational - change in how the state sector does its business, provided that we keep reinforcing and driving the shift. Many of the effects are also long term. For example:

• the Leadership programme will be very visible within the public service quite soon, but its external effects will not be fully seen or felt for 5 to 20 years; and
• the next phase of ethics, values and standards is only just beginning.

17 Conversely, some of the changes are already happening, or are imminent, and what remains is to spread the good practice they represent across the state sector. Managers in the public service have taken the Review of the Centre directions on board, and there is more going on at agency level than we can keep track of at the centre. Some of the more visible examples of change, grouped under the four drivers, are:

• More focus on results:
  
  • an integrated development package to support start up of a beef jerky factory in Manukau, putting 200 people into export work;
  • greater engagement with some Ministers on the definition and design of outcomes;
  • piloting a change in the way outputs are appropriated to the Immigration Service, to facilitate management on an outcomes basis; and
  • proposals under EXG Paper 4 to remove some barriers to more flexible and effective funding.
• More citizen- and community-centred:
  
  • establishment and operation of three circuit-breaker teams;
  • the imminent launch of the e-government portal; and
  • development of call centres as "first stop shops" for a range of services, with more enabled front-line staff.
• Stronger integration of structures and processes:
  
  • initiatives to engage more with local government on regional coordination; and
  • the Crown Entity Governance proposals tabled under EXG Paper 3.
• Stronger people, culture and leadership:
  
  • the recent announcement of the Australia New Zealand School of Government; and
  • the imminent business case for, and roll out of, the Senior Leadership initiative.

18 Another useful illustration of how things will be different is given by one of the tables in the original Review report, slightly modified to reflect subsequent events and analysis.

How do all these initiatives fit together?

19 As described above, this is a series of initiatives (some of them quite experimental) and not a single project coming off a single conceptual base.

20 Governance arrangements for the initiatives include a lot of cross-representation between workstreams. This ensures there is reasonable communication between each of the workstreams, and awareness of where each is going. Public Service Chief Executives are showing high commitment to the process, both at their fortnightly group meetings and through representation on workstream reference or steering groups.

21 However, there is still work to be done on the interconnectedness of the initiatives, the risks and issues associated with their multiplicity, and exactly how they might change the public management system in total. We will be reporting back to MoSS on connections and risks by the end of November, and on how they may change the system in total by the end of the year.

How does the suite of EXG papers relate to the foregoing?

22 The five papers originally presented to EXG on 30 September were organised in accordance with the original Cabinet minute (01 39/14), rather than under the drivers as described in this paper.

23 Attachment 3 maps the elements of each paper to the drivers described in this paper.

Michael Wintringham
State Services Commissioner

Attachments:

1 Chart: Improving Public Sector Performance

2 Review of the Centre Projects - A Brief Description

3 EXG Papers Mapped to Improvement Drivers

Attachment 1

Attachment 2

REVIEW OF THE CENTRE PROJECTS - A BRIEF DESCRIPTION

A number of the projects contribute across more than one driver. Descriptions of each project are given only once, but where they are significant to more than one driver, they are also listed under the others:

• Focusing more on results:
  
  • Establishing circuit-breaker teams - three teams have been established to try to resolve long running problems which seem incapable of resolution by normal departmental approaches - they are working on funding of services related to domestic violence, settlement services for migrants, and truancy.
  • Improving evaluation - an advisory team is working on factors influencing supply and demand of evaluation, and the circuit-breaking, regional coordination and networks projects will include evaluation processes (which also take the interests of Maori into account). The aim is to get better at finding out what works, for citizens, for Ministers, and for communities.
  • Vote and accountability changes - to provide a more flexible framework for pursuing results. EXG Paper 4 describes possible Vote changes to give more flexibility to pursue different activities without usurping Parliament's prerogative or losing some of the rigour associated with output -based appropriations. It also recommends legislative backing for Statements of Intent. The steps proposed are acknowledged in the paper as only part of any "final" solution.
  • Innovation - to help build a public service environment more conducive to new ideas and solutions. It is proposed to identify good practice, assess the current state of innovation on the Public Service, and establish what the right conditions are for innovation.
• Getting more citizen and community centred:
  
  • Establishing circuit-breaker teams, improving evaluation, and
  • Improving responsiveness to Maori - this issue is built into the various workstreams (for example, evaluation processes as described above). The Change Implementation Advisory Group is taking a keen interest in this, and has recently received a report from the leaders of the four workstreams on how they are approaching it.
  • Regional coordination - after an initial survey of some existing coordination mechanisms in social services, the project team is examining more closely what works and what doesn't. It will report in November on lessons learned, and a possible range on interventions to improve regional coordination.
• Strengthening the integration of structures and processes:
  
  • Establishing circuit-breaker teams, Vote and accountability changes, regional coordination, and
  • Sectoral reviews - Ministers will soon be asked to support reviews focused on improving the performance of agencies, through the possible use of a variety of structure and alignment mechanisms, including networks, in a small number of sectors.
  • Networks - Discussions with Northland and Manawatu regional managers have shown the value of regional networks. Following the regional coordination work, it is proposed to establish a pilot "mandated" regional network. A pilot central network is also proposed, in a sector not affected by the sectoral reviews.
  • Crown entity governance - EXG Paper 3 proposes changes to Crown entity governance by improving vertical accountability (Minister to Board to management) and addressing concerns about "horizontal" connections (ensuring the work of the agency is well aligned with whole-of-government interests, and work towards common outcomes).
• Strengthening people, culture and leadership:
  
  • Innovation, and
  • Human Resources Framework- Work is being done (in conjunction with the PSA) to develop a framework for coordinating and sharing good practice and policies.
  • Central agency roles - The central agencies and a small group of Chief Executives are working on practical ways in which the central agencies can take more opportunities for effective leadership. They are also trying to identify principles which would help decide where central or devolved responsibility is likely to be more effective.
  • State Services Commissioner's mandate - to reinforce the more integrated and whole-of-government approaches foreshadowed in the Review of the Centre, proposals will soon be put before EXG to extend the Commissioner's mandate to provide leadership on specific matters in the broader State sector.

Attachment 3

EXG PAPERS MAPPED TO IMPROVEMENT DRIVERS

The table below charts the contents of EXG Papers 2 to 5 in relation to the four drivers identified.