State sector rumbles headed for a quake

As the Government embarks on what it describes as the most significant reform of New Zealand’s public service in 30 years, Victoria University of Wellington researchers have revealed it will be but the latest of more than 450 state sector restructurings since 1960.

More than 340 of those restructurings have taken place since the massive overhaul of the machinery of government brought about by the State Sector Act 1988, the object of the reform package proposed for next year.

Phd candidate Masashi Yui and Emeritus Professor Robert Gregory from the University’s School of Government say the Act, and the 1986–1992 period of upheavals of which it was a part, were a turning point in New Zealand’s appetite for government restructuring.

“To use a seismic analogy, these massive quakes have been followed over the past 30 years by a whole host of aftershocks, successive and seemingly endless cases of organisational restructuring, which have left the governmental ecosystem fluid and relatively unstable,” write Yui and Gregory in an article in the latest issue of Policy Quarterly, published by the University’s Institute for Governance and Policy Studies.

“Such restructuring has been much more likely to occur in the decades after the ‘revolution’ than it was in the decades preceding it. Ironically, while the advent of MMP – mixed-member proportional representation – in the mid-1990s has not brought with it increased political instability, as many of its opponents had predicted would happen, instead instability has become a central feature of the governmental bureaucracy.”

Drawing on a unique body of empirical research conducted by Yui, he and Gregory say that between 1960 and 2017 there were 457 structural changes affecting state sector organisations (ministries and departments; non-departmental bodies and Crown entities; and state-owned enterprises).

Changes included the creation of new organisations, the abolition of existing ones, the transfer of functions between organisations, and name changes. Internal restructurings within organisations were not part of the study.

The peak restructuring years of 1986–92 – under the Labour Government of first David Lange and then Sir Geoffrey Palmer, and the National Government of Jim Bolger – saw 169 restructurings.

Outside of this period, Helen Clark’s Labour-led Government between 1999 and 2008 conducted more restructurings than any other administration: 36 in each of its first two terms and 15 in its final – a total of 87.

This was closely followed by Sir John Key’s National-led Government between 2008 and 2016, with 27 restructurings in its first term, 26 in its second and 15 in its third – a total of 68. Under Sir Bill English for the remainder of the Government’s third term after Sir John resigned, there were seven restructurings.

In all, 90 restructurings took place between 1960 and 1985 and 198 between 1993 and 2017.

“Perhaps it is simply appropriate that in a seismically challenged country, where many aftershocks follow major earthquakes, the New Zealand state sector ‘landscape’ should find itself built on ever-shifting political and bureaucratic sands.”

From 1993–2017, there was an average of nearly seven ministry and department restructurings a year, compared with just over three a year from 1960–1985.

At restructuring’s most active point, between 1987 and 89, 42 percent of ministries and departments were affected; only 2011 came close to matching this, with 41 percent of ministries and departments affected.

From 1960–2017, the number of ministries and departments declined gradually, apart from a spike in the late 1980s, from 44 to 33. The late 1980s also saw a huge and rapid increase, followed by a plateauing, of Crown entities, due to the hiving off of functions from large conglomerate departments.

Between 1960 and 2017, National-led Governments held office 68 percent of the time and initiated 58 percent of restructurings; Labour-led Governments held office 32 percent of the time and initiated 42 percent of restructurings. So, proportionate to time in office, Labour-led Governments conducted significantly more restructuring.

“Since 1998 and especially in the earlier years of the Labour-led Governments from 1999–2004, and then under the National-led Government of 2010–12, there were prominent moves towards more ‘joined-up’ government, especially as many departments and ministries were reconnected to their operational arms [from which they had been separated from 1986–92],” write Yui and Gregory.

“When classified by policy area, far fewer reorganisations were found in the areas of defence, finance and foreign affairs, and in the legislative and Cabinet offices. On the other hand, policy areas that are strongly connected with people’s interests were most likely to see restructuring – examples are business and economy, welfare, and communities and social groups [such as those dealing with Māori, Pasifika, seniors, youth, people with disabilities, and so on].”

During the period studied, 55 organisations were completely abolished, five of them ministries or departments: the Legislative Department; the Government Printing Office; the State Insurance Office; the Audit Department; and the Canterbury Earthquake Recovery Authority.

“Organisational restructuring in some shape or form will always be required, and cannot be regarded as a negative thing in and of itself, and ‘turf battles’ and the like have historically been as characteristic of New Zealand government administration as elsewhere,” write Yui and Gregory.

“Clearly, successive Governments since the early 1990s have been addressing ‘fragmentation’ and ‘siloisation’ in their efforts to re-establish ‘joined-up government’, a more strategically coherent state sector; all this in a much more complicated politico-administrative ecosystem than ever before, and when social and technological change demands that the machinery of government be constantly kept fit for purpose.

“Major reorganisations, like the creation in 2012 of the large (by New Zealand standards) bureaucracy the Ministry of Business, Innovation and Employment, reflect this, and, as with this ministry, Governments of different political stripes have continued to reshape the bureaucracy according to their own preferences and priorities: for example, the National-led Government’s establishment of Work and Income New Zealand in the late 1990s, melding the former Employment Service and the income maintenance function of the then Department of Social Welfare; and the current Labour-led Government’s creation of a Ministry of Housing and Urban Development, bringing together a number of functions previously carried out by several agencies.

“However, it may also be that managerialism tends to foster more managerialism, as more people are recruited to bureaucratic executive positions who tend to see ‘good’ management as a function, in the first instance at least, of ‘good’ organisational design, depending on their definition of ‘good design’.

“It is also plausible that the end of the unified state sector career service in 1988, and its replacement with a position-based system, without the establishment of a unifying sector executive service, has seen the inculcation of a managerialist culture, in which structural reorganisation both within and among agencies is an instrument that can be used by executives and managers to expand or consolidate their own control and to advance their personal careers in [what has been called] ‘bureau-shaping behaviour’.”

Perhaps, write Yui and Gregory, restructuring “may simply be a surrogate for genuine innovation designed to effectively achieve better policy outcomes”.

At the same time, they point out, Sir Geoffrey Palmer and others have highlighted the perils of endless restructuring, and as far back as 1998 the then State Services Commissioner warned of the risks to productivity and staff morale.

“Further research is needed to try to trace the connections between the degree of organisational restructuring and such dimensions as public service motivation and morale, and to test hypotheses about its occurrence, and beyond that to determine the conditions under which it is an effective instrument in enhancing productivity and effectiveness, and when it is simply a manifestation of other, less laudable, motivations.

“Perhaps it is simply appropriate that in a seismically challenged country, where many aftershocks follow major earthquakes, the New Zealand state sector ‘landscape’ should find itself built on ever-shifting political and bureaucratic sands.”

Meanwhile, with next year’s State Sector Act reform, that ‘landscape’ faces not just another aftershock but a new fully blown quake.

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