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Public Sector Accountability – What Happened To It

Media Release

An address by Rt Hon Winston Peters to Public Sector Accountants Special Interest Group, 4pm Monday 8th March 2004 at Institute of Chartered Accountants of New Zealand, Level 2 Ciga House, 40 Mercer Street, Wellington

“Public Sector Accountability – What Happened To It?”

I want to begin today with a question - does the Institute of Chartered Accountants have a crystal ball?

Just look at the stories that have dominated the news in recent weeks:

- The resignation of the Immigration Minister

- The Ombudsman’s critical report into the “lie in unison” fiasco

- The calls for the resignation of the Secretary of Labour James Buwalda

- The revelations about Lisa Clement milking millions from the Ministry of Social Development

- The appointment of Mark Prebble as State Services Commissioner!

All these stories have a common denominator – they are all about accountability in the public sector, or rather the lack of it!

So in selecting the issue of public sector accountability as the subject for your meeting today the Institute is showing remarkable prescience.

Accountability is not only an entirely topical theme but also a vitally important one. Because accountability – the obligation to account for responsibilities conferred – lies at the heart of our democracy.

It is the ultimate sovereignty of the people – and the accountability of the government to the people - that distinguishes a real democracy from all other forms of government.

Government is accountable to the people through Parliament for how it manages the power and the resources entrusted to it.

In turn Parliament, on behalf of the people, is responsible for seeing that governmental accountability actually happens.

It is worth reminding ourselves that the move to MMP from a first past the post system was a response to the failure of Labour and National to be accountable to the people.

Accountability in the public sector is a large and complex subject but New Zealand First sees some aspects as critical.

And the public sector, of course, covers not only the core public service but also Crown Entities, State Owned Enterprises and the wider state sector including the armed forces and police.

It is apparent there are serious shortcomings with accountability in the public sector - but it is also clear that the overwhelming majority of public sector staff are diligent, conscientious and honest

Public Sector Accountability: Facade or Reality?

Our view on public sector accountability may be summed up quite simply. We want to see the reality of accountability – not the façade.

Because at the moment there is a great deal of façade, a lot of window dressing,

And as illustrated by recent events there is a lot of “air freshener” being sprayed over some rather nasty smells.

The public sector is awash with a spurious accountability.

There are endless so-called accountability documents.

In addition to all the annual reports, statements of intent and so on, there has been a proliferation of codes of conduct, frameworks, principles and guidelines.

For this government a piece of paper is enough! Ministers take the view that if a department’s accountability documents are expensive and glossy enough, then accountability is guaranteed.

As a result New Zealand has erected a Byzantine structure of accountability –on paper.

Much of this is in the nature of Potemkin’s villages – a facade designed to impress the casual observer but having no real substance or value.

Well, it does not matter how many colours the printer uses or how fine the paper is – if there is no actual accountability; all these documents are doing is plastering over the cracks.

There is of course a huge transactions cost associated with maintaining this infrastructure of accountability.

In our view the present government shows a shallow understanding of what accountability in the real world requires.

Accountability – in other words what we count on the public service for –needs certain conditions.

Clarity of Objectives

First - for people in the public sector to be accountable they must have a clear idea of what they are being held accountable for.

But even a cursory look at many of the objectives that public sector CEOs are asked to deliver on shows how weak the accountability structure actually is.

All too often public sector objectives are:

- Multiple

- Vague

- Conflicting if not outright contradictory

- Indefinable and often unknowable

If Ministers lack the integrity to set straightforward and ‘honest’ objectives, accountability is compromised from the start.

If accountability is to be more than a word, it must be capable of being delivered.

For example, how can public sector chief executives be held accountable for implementing Treaty of Waitangi principles when these “principles” are totally undefined?

Failing to apply Treaty principles is the most heinous of crimes and certainly outweighs whether the organisation is actually delivering a worthwhile service to the public.
Government agencies are so besotted with political correctness that chief executives live in perpetual fear that their organisation might be found to be culturally insensitive or guilty of failing to comply with Treaty principles.
New Zealand First parliamentary questions in recent years have consistently revealed that ministers are unable to explain what the so-called Treaty principles mean.

But that has not stopped ministers making public sector managers treat these “principles” as semi-sacred measures of performance.

The Treaty, like lots of other ill explained notions such as “gender sensitivity” has been something to be genuflected to.

What all this bogus genuflection amounts to is a travesty of accountability.

Because while all this stuff is consuming time, effort and attention the likes of Lisa Clement are able to help themselves to $2 million of taxpayers’ money.

Here was a person defrauding her employer on a grand scale but it was hardly a sophisticated scam. If the public sector is that easy to deceive what would happen if someone really put their mind to it?

Where was public sector accountability when Ross Armstrong was claiming multiple expenses?

There needs to be a return to real accountability in the public sector.

That means only making people accountable for what they can actually be held responsible for delivering.

Proliferation of Agencies

Another factor that has undermined genuine accountability is the proliferation of public sector agencies, often with overlapping and unclear jurisdictions.

The fragmentation that has occurred in the public sector has had a significant impact in weakening accountability.

When public sector reform was in vogue there was great faith in the contracting model as a way of ensuring accountability in the brave new world that was being created.

The reformers view was that given a sufficiently detailed contract, accountability could be assured.

The designers of such systems had obviously never spoken to a QC!

There is no contract written that cannot be argued.

Some of that naiveté has been dispelled.

In theory contracts provide transparency – but in practice accountability requires there be effective mechanisms so the public or their elected representatives can apply remedies or call for new directions.

The multiplicity of agencies and organisations creates interfaces and overlapping jurisdictions that provide ample scope for evasion and buck passing when something goes wrong.

For example, does a country the size of New Zealand really need around 40 government departments?

One effect of agency proliferation has been to create a huge coordination task that further undermines accountability.

There is a situation where agencies –particularly the policy ministries – end up taking in each other’s washing –passing comments on each others reports, but carrying no actual accountability or responsibility for policy.

New Zealand First believes there is a strong case to consolidate certain agencies in order to achieve a critical mass of expertise.

Accountability to the Public

If people are not accountable for something real and have to deliver, they end up seeing themselves as accountable to something else.

And in an MMP world that should set many alarm bells ringing.

Because MMP has introduced a new dimension of complexity to our Parliamentary and governmental processes.

The policy making process now typically involves more players, which is the price we pay for a more representative Parliament.

Our aim as a political party is to scrutinise government policy rigorously.

We want to know what policy options are available for the challenges New Zealand faces.

That makes it vital that we have a public sector accountable to the public through Parliament.

Of course those in the public sector serve the Government and the ministers of the day.

But we have an old fashioned view that those in the public sector are ultimately accountability to the public.

A public service that sees its primary accountability as making ministers look good cannot serve New Zealand’s interests.

More than ever in an MMP world, public sector accountability must be impeccable – above reproach.

That is what makes the “lie in unison” affair and the “guinea pig” letter of such concern.

In these instances the only accountability that was displayed was making the minister of the time avoid embarrassment.

There has been a collapse in accountability when the only standard of performance is whether a minister is pleased or displeased.

Attempting to mislead or misinform the public is not serving the public interest – it is serving a political agenda.

In the public service we need people with expertise, skill and integrity who will put the interest of New Zealand first.

The Ombudsman’s inquiry report into the “lie in unison” case goes directly to how seriously real accountability is breaking down.

The Ombudsman was faced by officials who prevaricated, dissembled and stalled when faced by repeated and specific requests for information.

If that is not an outrageous collapse of accountability, what is?

If officials can play games with the Ombudsman what chance has the ordinary Kiwi got of getting a straight answer?

But from the person who is appointed to guard public service standards, the State Services Commissioner, there was little sense that something fundamental was amiss.

Watchdogs are supposed to have teeth!

Within the ambit of the public service, the State Services Commissioner has taken a sanguine view of the charge that public service standards are slipping.

His assertions that New Zealanders can have a confidence in the integrity in the public service have an increasingly hollow ring.

And it is important to note here that a new appointment has been made – someone who failed to release papers from the Prime Minister’s office during Corngate.

Any tendency for those in the public sector to allow their personal preferences to dictate their actions will rapidly undermine our system of parliamentary accountability.

Some of the worst offenders have been in the top echelons.

That is why the utterances of Joris de Bries –the Race Relations Conciliator - equating the actions of European settlement to the Taliban in terms of cultural destruction provoked outrage.

Here was someone who is paid very handsomely for fostering racial harmony, tolerance and understanding.

What he was actually doing seemed to many as being the exact opposite.

This mixing of political agendas into the public sector is easily overlooked.

We saw another instance of it when we discovered that the Ministry of Health had been funding anti-smoking lobby groups.

People in the public sector –like any citizen – are entitled to their personal views and preferences.

It is when they presume to apply them to their role in the public sector –often covertly – that the public is indignant.

Treaty zealots or anti-smoking zealots –that is not what taxpayers are meant to be funding.


Accountability has to be more than a mantra but in many areas of the public sector it has degenerated into tokenism.

And in New Zealand First’s view a country where a former Auditor General was found guilty of fraud has no grounds for complacency in regards to public sector accountability.

Accountability means:

- a public sector that knows clearly what it is accountable for
- a public sector that has the highest ethical standards
- a public sector that is not politically partisan

That is the standard we must have, and if we hold to that standard under MMP, accountability to the public will be assured.


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