PART ONE: Annual Report of the State Services Commissioner

Provided under the State Sector Act 1988
For the year ended 30 June 2005

The State Services Commissioner is central to New Zealand's politically neutral, professional and permanent Public Service.

The Commissioner has two separate roles:

• As the holder of a statutory office the Commissioner acts independently in a range of matters to do with the operation of the Public Service and the State sector.
• As Chief Executive of the State Services Commission (SSC), the department that supports the Commissioner in the performance of this role, the Commissioner is responsible to the Minister of State Services for the SSC's capability and performance.

Part One of this Annual Report relates to the first role. Under the State Sector Act 1988 the Commissioner is required to provide the Minister of State Services with an annual report on the operations of the Commissioner and other matters affecting the State Services.

The State Services Commissioner's Annual Report on the State Services

Over the period covered by this Annual Report, the major initiative by the SSC was the formation and launch of the Development Goals for the State Services. The following section explains the thinking behind the goals and outlines their possible future implications for the SSC and other agencies. Secondly, this report looks at the 2005 election, conduct of the State Services, and new challenges to political neutrality.

The wider mandate

One of my first tasks as the new State Services Commissioner was to consider how the SSC could best fulfil the wider State Services leadership role required by legislative changes arising from the enactment of the Public Finance (State Sector Management) Bill. The legislation was a major prompt for change for the SSC, to enhance the effectiveness with which we carry out our current work and to deliver on our expanded role in the State Services.

The legislation followed the recommendation in the 2001 Review of the Centre that the three central agencies (SSC, the Treasury, and the Department of the Prime Minister and Cabinet) exercise more leadership, particularly on all-of-government matters. Working together, and separately, the central agencies have an opportunity to look over New Zealand's State Services as a whole, consider the environment within which government agencies operate, and analyse the sector as a system of services delivered to New Zealanders. In essence, this is an opportunity to consider how the operation of the whole can be greater than the sum of its parts.

Internationally, government sectors at the forefront of State Services development are increasingly focused on people's experience of government services. This can be referred to as the adoption of an "outside-in" perspective, in contrast with the internally focused perspective characteristic of many large government organisations. This approach offers new insights and opportunities for improving the quality of agencies in the State Services.

A well-performing State Services can make a huge difference - to our success as a country and to the people who make up our communities. It is not surprising therefore that successive governments have pushed for a better-performing and more flexible State sector.

A platform for change

Over the last couple of decades this has resulted in a series of reforms of the State Services. The positive aspects of these reforms are known - including increased transparency, accountability, efficiency and better service in many areas. More recent reforms have placed greater emphasis on results and the way in which government agencies work together, with a particular emphasis on cross-agency collaboration and interaction.

The recent passage of new State sector legislation is the most recent major change in direction for the State Services. This legislation put in place a framework that encourages coherence and leadership in the State Services. This direction is focused on improving the overall performance of the State Services to ensure the system can meet the needs of New Zealanders, while serving the government of the day. For example, amendments made to the State Sector Act extend my mandate, as the State Services Commissioner, wider than the core Public Service and into the State Services. This is designed to help strengthen integration, build capability and provide stronger leadership on values and standards in the sector.

The foundations for a change were in place already. To respond to this change the SSC management team decided, after a strategic review process, that the SSC needed to concentrate more on the quality of New Zealanders' experience of State Services. To do this, the SSC needed to evolve from its current focus on the Public Service to a 'true' SSC exercising leadership in the State Services.

The focus for this future work will be determined by a new set of Development Goals for the State Services, which were agreed by the Government and launched to the State Services in March 2005. These ambitious goals reinforce the need for the SSC to have an external focus that takes into consideration New Zealanders' experience of State Services.

The ideas behind these goals are not new, but by making them clear and visible, and by setting timelines for progress, a clear agenda has been set for the State Services.

The overall goal for the State Services is:

A system of world class professional State Services serving the government of the day and meeting the needs of New Zealanders

For New Zealanders to lead healthy and satisfying lives, they need quality services delivered by highly professional government agencies. For government agencies to be world class, they need the best possible systems and the best possible staff, operating with high levels of integrity.

This overarching goal is supported by a set of six Development Goals with specific targets for the years 2007 and 2010. The goals set out the next steps on from the Review of the Centre, and give us an opportunity to focus on performance and quality.

These goals do not outline what the State Services will achieve, such as delivery of health services, as that is a matter for government policy. Rather, the goals are aspirations for how the State Services will be arranged and perform. Some of the goals impact more on some parts of the State Services, e.g. Public Service departments, than other areas, e.g. Crown entities.

The essential shift in these goals is that the agencies in the State Services are now explicitly expected to work together, and have tangible targets to achieve together.

Goal 1: Employer of choice

Government agencies include many of the largest employers in the country. Taken as a whole, the government is by far the largest employer. Though the government ought not to be an over generous employer (since it is funded through taxes) the government must be a good employer - both in perception and reality. Promotion of the State Services as an 'employer of choice' will make it easier for any State servant to see how they could work in a variety of agencies and help all government agencies to attract new staff.

Goal 2: Excellent State servants

The amendments to the State Sector Act allow the State Services Commissioner to take an interest in the development of potential leaders across the State Services. The first steps of this are in place with the establishment of the Leadership Development Centre to provide senior leadership and management development, and the continued work of the Public Sector Training Organisation to coordinate a range of learning opportunities. There is now an opportunity to renew and reinvigorate training and development across all parts of the government.

Goal 3: Networked State Services

A succession of governments have been concerned that the public sector has become fragmented - making it hard to deal with government as a whole. E-government enables a more networked style of government, where agencies act more coherently, making government as a whole easier to deal with. The e-government goals focus on the way in which the State Services interact with New Zealanders. They promote developing shared State Services data resources; building an infrastructure of shared software and hardware; and finding innovative ways of conducting business between agencies, and with New Zealanders.

Goal 4: Coordinated State agencies

The work programme associated with this goal reflects a continuation of recent developments in State sector management. Managing for Outcomes has seen the development of a stronger link between the use of resources and the achievement of results, and the Public Finance Act amendments introduced greater flexibility in Vote structures and clarified accountability requirements for Crown entities. The aim of this goal is to ensure that the accountability for results is broadened beyond individual agency contributions, so that agencies can plan together and work better together.

Goal 5: Accessible State Services

The location and delivery of government services have generally been treated on a case-by-case basis, with individual agencies making separate decisions on the delivery of services. This Development Goal is not intended to change the fundamental responsibility and accountability in present arrangements. It is, however, intended that agencies will work together far more closely to ensure that services are delivered to meet New Zealanders' needs in an integrated way.

Goal 6: Trusted State Services

The promotion of the highest standards of behaviour in a politically neutral Public Service is a defining function for the State Services Commissioner. With the extension of the State Services Commissioner's mandate the Government has signalled a focus on trust in the wider State Services. This recognises that constitutional status is of little meaning for most New Zealanders; their concern is simply that government agencies should be trustworthy.

If this task is to be achieved, it will require extensive partnership with agencies throughout the State Services. A consultation process is currently under way with agencies in the wider State Services in order to find out the best approach to setting minimum standards of behaviour. This may include issuing a code, or codes, of conduct for the State Services.

Why trust is important

The six individual Development Goals work together to support each other and collectively contribute towards strengthening the degree of trust New Zealanders have in the State Services.

Improving trust is therefore the ultimate desirable outcome as well as being the sixth goal. So should we care about whether or not government agencies are considered trustworthy? And doesn't "trust" have many meanings anyway?

I agree that "trust" has many different meanings. In this context, the two that I consider most important are trust in terms of "reliability" or consistency, and trust in terms of "integrity" or honesty.

In terms of reliability, if you're a government agency providing a benefit of a certain sort at a certain time then people need to depend on it being paid.

But it's also trust in the sense of integrity - you know that you can trust the State servant you are working with to deal with you evenly, fairly and honestly.

The strength of any government system lies in the extent to which it earns and holds the respect of its citizens. That respect comes from the confidence that people have in the integrity of government and the services it provides. Everyone employed in the State Services has a part to play in earning public respect for government and maintaining confidence in the institutions of government.

The State Services has extensive influence over people's lives. It is responsible for a large part of the work of government. Mismanagement or abuse can have serious and far-reaching effects. As State servants, we work for the Government. New Zealanders are entitled to have high expectations of staff in government agencies. They expect that we are honest, fair and loyal. These are absolute standards. We must meet those expectations. There is no middle course.

New Zealanders expect departments to comply with both the letter and the spirit of the law. They expect official decisions to be made fairly and impartially. They expect that public money will be spent wisely and public assets will be used and cared for responsibly. They expect that State servants will always behave ethically, and be conscientious and competent in their work. Generations of State servants have strived to meet these expectations.

Where expectations are not met, public criticism quickly follows. Where people lose trust in government, they don't seek the help they are entitled to; they don't provide information necessary for delivering effective services; they resist paying tax and become increasingly resentful of State Services activities.

Any abuse of trust, abuse of resources, abuse of information, or personal opportunism corrodes the entitlement of all New Zealanders. Standards of integrity and conduct underpin the way we go about our business. The way individual State servants go about their responsibilities, and the way in which the State Services as a whole goes about its functions, reflect on us all. It is not only what we do, but how people perceive what we are doing. We must always be seen to be acting with integrity.

There has been a lot of national and international research done into trust in government. The consensus of this research is that public trust in government is declining despite consistent improvements in individual government agency performance.

That is why I believe strengthening New Zealanders' trust in the State Services is integral to the Development Goals agenda.

Implementing the agenda

The Development Goals are designed to provide a unity of purpose within the State Services, over and above the diversity of individual departments and agencies. Ideally, they will be used as a resource for agency planning and will reinforce the sense of common purpose among State Services employees.

The SSC has the responsibility for driving the Development Goals programme. However, the programme is far broader than could be completed by the SSC working alone.

In many cases, the work programmes associated with the Development Goals link directly to work already going on in agencies. The essential shift in these goals is that agencies are now explicitly expected to work together, and to have tangible targets to achieve together.

The Development Goals are not intended to give a complete picture of the work that the SSC will be involved in for the next five years. Much of our day-to-day work will be business as usual. There will be the ongoing requirement to appoint and monitor chief executives, conduct investigations, and provide guidance and advice etc.

The point of the Development Goals agenda is to demonstrate where change, development and improvement are required. It is also a framework for use to encourage participation and support from various public sector agencies.

SSC staff will help develop the work programmes designed to achieve the Development Goals. The programmes themselves, being management initiatives within and between government agencies, will principally be administered and delivered by the agencies themselves. In addition, the performance management process for Public Service chief executives will take full account of contributions and success in respect of the State Services Development Goals.

The SSC has been organised into six branches, structured around different functional areas and aligned to different Development Goals.

A high-level advisory committee, primarily comprising chief executives, will provide momentum and support for the development programme. The advisory committee will meet quarterly, and be chaired by the State Services Commissioner. Regular reports on progress will be made to Ministers. A means of monitoring progress towards the goals is being developed to ensure results are achieved.

It is expected that the overall goal will not change, but there could be changes made to the six Development Goals as targets are achieved or redefined.

The Development Goals are a long-term plan. They are not intended to immediately change the day-to-day accountabilities of agencies. However, agencies are being asked to factor the goals into their future planning and thinking about their operations. In many cases the work that agencies are already doing will be linked into the ongoing work programme.

There are nearly 200,000 people in the State Services. They are the people meeting the needs of New Zealanders while serving the government of the day. They are the people who should be united in their day-to-day work by the desire to provide world-class professional State Services.

Modern technologies bring new challenges

The rapid rise of modern information and communication technologies and associated applications brings new challenges for the State Services and political neutrality.

The State Services needs to be technology-literate and have the capability to make the most of a helpful resource. This needs to be balanced with the need to use resources wisely and maintain the public's trust. Any State agency's policies and procedures must support these dual objectives.

For example, in April 2005 the Commissioner of Police, Rob Robinson, announced that internal checks had identified inappropriate use of Internet and email systems by a number of Police staff. I support and applaud the actions taken by the Commissioner of Police both to undertake an audit of Police systems and to respond strongly and appropriately to the results of that audit.

Inappropriate use of the Internet and email has been the subject of guidance from the SSC in previous years and is likely to be an "integrity and trust" issue for years to come. To minimise risk and to protect the reputation of the State Services, it is good practice to regularly audit Internet and email systems.

A more recent online development is the rising number of weblogs (or "blogs"). Blogs range in scope from individual diaries to being part of political campaigns or a company's business.¹ They range in scale from the writings of one occasional author to the collaboration of numbers of writers. Many weblogs allow visitors to leave public comments.

I am concerned about the potential risks blogs can pose. The existing principles of the Public Service Code of Conduct still apply in this very modern medium and State servants should still be very careful that they do not bring the Public Service into disrepute through their private activities.

In some online forums, there have been various allegations, or personal slurs, made against senior public servants. As for other media, just because an allegation has been made it should not be assumed that it has a solid foundation. It would be regrettable if this new medium gave unjustified currency to baseless accusations. On occasion the entries in some weblogs have amounted to political personal attacks on public servants. It has long been accepted that such attacks ought not to occur in Parliament, or in other forums, because public servants adopt a self-restraining convention of avoiding public response and cannot defend themselves. The web is no different.

The public, and State servants, can be assured that, as State Services Commissioner, I will have a role in investigating any potential online breaches of the Public Service Code of Conduct that are brought to my attention.

The 2005 general election

Lastly, as I write this Annual Report, the country has just concluded the 2005 general election. In last year's report I took the opportunity to outline some thoughts and guidance for State servants on the principles of political neutrality. This was partly due to the extended functions in the new State sector legislation, by which the State Services Commissioner can provide advice and guidance to employees within the State Services (except Crown Research Institutes) on integrity and conduct matters.

In previous elections, political neutrality guidance had only been made available to the Public Service. In this year's election, guidance and fact sheets were developed that received wider distribution and resulted in a high level of sensitivity to political neutrality obligations. A consequence was that there were very few reported incidents of improper conduct.

Often, the way State servants conduct themselves during an election has to come down to judgement. Being part of the politically neutral State Services can be a complicated matter. The following range of political neutrality issues that did occur during the 2005 campaign illustrates some of this complexity.

Contractor endorsement at workshop

In early August, a Ministry of Education contractor allegedly encouraged teachers participating in a Wellington early childhood workshop to vote for a particular political party because of its policies. The contractor running the workshop was not a State servant. However, the Ministry of Education had funded the workshop and departmental funds should never be used to advocate one particular political party over another.

Once aware of the issue, the Ministry of Education took immediate action to contact the person concerned to stress the importance to the Ministry of political neutrality, and took steps to ensure such a situation could not arise again. I supported the Ministry's comments and action. The State Services must serve the government of the day without bias towards one political party or another.

Children's Commissioner's public comments

In August, the Children's Commissioner made some public comments about the inadvisability of smacking children in response to an Auckland Christian school's distribution of a pamphlet on the issue to its parents. I received a complaint on the issue alleging that the Children's Commissioner had directly intervened in a "party political issue".

In looking at the issues, I determined that it was neither surprising, nor a breach of convention for the Children's Commissioner to have a view on this topic. It is the Children's Commissioner's job, as set out in legislation, to advocate on behalf of children and to form her views independently. I did not agree that she had become involved in a party political issue as her comments were made in direct response to a specific and relevant event.

Public Service Association (PSA) leaflet distribution

Another incident brought to the attention of the SSC was an allegation that an employee at a reception desk at Whakatane Hospital was handing PSA brochures to members of the public. The brochure itself was not party political in that it did not promote the policy of a named party, but it is inappropriate for a State servant on the job to distribute election-related material of this nature to the public.

The offending material was immediately removed from the public area once the District Health Board management received a complaint. The employee was reminded of the requirement to keep their job out of politics and politics out of their job.

New Zealand Qualifications Authority (NZQA) and Ministry of Education information mailout

In early September the Ministry of Education and the NZQA jointly sent a brochure to parents of children participating in the secondary school exam system. The respective chief executive and acting chief executive signed the accompanying letter. Hon Bill English MP, subsequently made a complaint about the political neutrality of this information.

In the run-up to an election, agencies need to consider whether communication campaigns could be seen as "party political", even if they might be unexceptionable at other times. This does not mean that government communication campaigns which are needed to inform people of their rights and obligations should stop.

In looking at this issue, I had to determine what the information was being sent for, why it was being sent at that time, and whether the content was appropriate. In this case, several reports on the implementation of the qualification system had recommended that more information be provided for parents. The Ministry and the NZQA believed the information needed to be sent during the election campaign as the close-off for National Certificate in Educational Achievement (NCEA) enrolments was in late September 2005.

After studying the material sent, and the reasons for mailing it out at that time, I concluded that the letter and brochure were appropriate. It would have been helpful if the reason for the timing of the mailing had been made clear in the accompanying letter. This was an oversight of the communication which meant that the motivation for the mailout could be misinterpreted. With hindsight, the two agencies agree with this conclusion and will aim to avoid such confusion in the future.

Eviction notices

The last issue I wish to raise is the unintended and complex consequences for State servants of actions taken during political campaigns. In this election period, the Labour Party sent fake "eviction notices" to several thousand individual State house tenants as part of a housing policy promotion. This action had two consequences for the State Services. Firstly, it raised trust issues as tenants were suspicious that a government agency had given their private information to a political party, and, secondly, Housing New Zealand staff had to manage calls from worried and scared tenants.

Housing New Zealand confirms that it did not release its tenants' mailing list. Labour Party president Mike Williams stated the party "constructed its own list" from publicly available information (New Zealand Herald, 10 September 2005). However, the outcome of this communication meant that Housing New Zealand call centre staff were placed in the potentially difficult predicament of managing calls from concerned tenants. Call centre staff were given guidance that they must remain neutral and not get into the position where they are discussing the pros and cons of various party policies on housing with tenants.

Political involvement

As a general rule, as private citizens, State servants are free to belong to any lawful organisation including a political party. This is qualified by the need for State servants to be, and be seen to be, politically neutral. For example, senior State servants, and State servants who have a close working relationship with Ministers, should avoid any affiliation with a particular political party.

As shown in this election campaign most State servants have taken the political neutrality advice seriously, so much so that I am concerned that some people in less sensitive jobs are almost being too cautious in their approach. For most State servants, in most jobs, membership of a political party is acceptable, as is purchasing a raffle ticket, or assisting with a leaflet drop, or other forms of low-key support for a party. As always it is a matter of judgement. When taking a role within a political party a State servant must be careful to avoid bringing their politics into the job, or their job into politics.

Mark Prebble State Services Commissioner

¹ From Wikipedia (www.wikipedia.org).