Week in Review

A largely unnoticed power grab

Dr Simon Chapple discusses what he describes as a considerable power grab by government ministers - to the detriment of the public good

Since the passing of the 1988 State Sector Act, slated for change in 2020, our public service has evolved. It has morphed from a circumscribed independence, with a commitment to providing free and frank policy advice to the executive, into something rather more like a secretariat, better suited to short-term policy implementation.

In core areas, it has lost considerable capability for long-term, quality independent thinking. In matters such as free and frank advice and its “no surprises” policy, it has become more prone to what former Australian Treasury Secretary Ken Henry’s taxonomy of the public service calls ‘obsequious’ – defined as telling politicians what they want to hear, not what they need to know.

Over the past generation, we have quietly shifted across the spectrum from a mandarin towards a valet public service. The shift has been a considerable and largely unnoticed power grab by government ministers, to the detriment of the public good.

How did this grab come about? A major cause is how chief executives’ appointments process and employment contracts have evolved out of the new constraints of the 1988 Act. One important change the Act introduced was from open-duration to limited-term chief executive contracts, with a maximum of five years a contract. (In practice, contracts have ranged between three and five years, with total maximum tenure typically eight years.)

This form of employment opens up the public service to more regular political pressure. Short-term employment contracts at the top have incentivised chronic short-termism at the top as a norm, as chief executives’ horizons have been yanked in the direction of their myopic ministerial masters. More opportunity for political input has also meant growing politicisation – by which I mean public servants’ responsiveness to political needs of ministers, not party or ideological politics – at the top.

Over the past generation, we have quietly shifted across the spectrum from a mandarin towards a valet public service.

Before any search for candidates, ministers confer with the State Services Commissioner about the skills required for each chief executive position. The Commissioner then hires based on criteria developed by and for the minister of the day. Before being signed off by the Governor-General, the Commissioner’s decision goes through Cabinet for their approval.

Once chief executives are in place, ministers are consulted on their expectations at the start of each year, and at the end of the year give their feedback to the State Services Commission.

In the past few decades, most governments have lasted several terms. This pattern means chief executives know there is a good chance their term will expire, and reappointment become a prospect, under the government and often the minister of the day.

Ministers have exploited these openings offered by the 1988 Act to increase their influence over appointments and hence their agencies. Indeed, this greater political input into chief executive appointments was lauded as a positive feature of the New Zealand public sector model in a speech in London in 2013 by then Minister of State Services Jonathan Coleman.

The years of fixed-term chief executive appointments have also seen a growth in the numbers with significant holes in their sector-related skills or institutional expertise. Why this pattern? One major reason is the ideology of managerialism – a fashionable notion that managing is a generic skill involving coordinating the transformation of inputs into outputs. As they nimbly flit from agency to agency and job to job on their path ever upwards, chief executives often no longer have the mana to resist raw ministerial power that comes from the wisdom, knowledge and experience garnered by a long career within the agency they run.

Because of their short-term contracts, chief executives have limited opportunity to acquire institutional and sector-specific skills on the job. For example, of our 34 departmental chief executives as at August 2019, the average head had been in the job for only two years. In terms of time in the job, things are no better for the second tier of the public service. The same two-year average job duration is found for departmental senior leadership teams. Many of these senior positions are complex ones with a high degree of skill specificity, requiring long learning curves on the job for mastery. This short average job experience is therefore concerning.

As they nimbly flit from agency to agency and job to job on their path ever upwards, chief executives often no longer have the mana to resist raw ministerial power that comes from the wisdom, knowledge and experience garnered by a long career within the agency they run.

There is ample academic evidence for concern regarding our current approach to chief executive employment contracts. As British academics Christopher Hood and Michael Jackson observe, an “[e]mphasis on term contracts for public managers weakens the impact of experience and independent advice on public policy”.

Meanwhile, overall technical and institutional knowledge has also been draining away at lower levels as well, possibly since people with skills and knowledge rarely find a great deal of job satisfaction in acting as valets. The central state agencies of Treasury, State Services Commission and Department of the Prime Minister and Cabinet,  primarily responsible for cross-departmental coordination and for driving the public service intellectually, have experienced extremely high staff turnover rates since measurement began at the beginning of the millennium. Annual staff turnover rates have averaged about one in four staff for Treasury, one in three for the Commission and one in five for Prime Minister and Cabinet. These are worrying numbers.

So what legislative reforms addressing these issues are proposed in 2020? The major suggestion from government is writing a set of existing values for public servants into the new Public Service Act, including political neutrality and free and frank advice. It is difficult to see how such a move – making existing notional norms into law – will by itself motivate meaningful change, without also rejigging incentives.

In terms of chief executive appointments and contracts, the relevant Cabinet paper concludes that “[n]o fundamental change is proposed”, without any analysis in support of this conclusion. Worse, it even points to possibly offering ministers more options for political influence – a greater opportunity “to inform the Commissioner of matters to take into account” when making appointments.

As essential constitutional checks on ministers, we need to reduce risks of obsequiousness, promote fewer valets and build more mandarins in our public service. A necessary condition for achieving these goals will be new legislation that creates incentives pulling in the same direction as the legislated values.

There is a good case to be made for employing departmental chief executives on the same basis as most of their staff – that is to say on open-duration contracts. Such contracts would better align them with the proposed legislated values of high-quality independent free and frank advice.

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