PM: Speech to Australia and New Zealand School of Government - Why does good government matter?

SPEECH NOTES

Why does good government matter?

E ngā mana, e ngā reo, rau-rangatira mā

Prestigious people, speakers of note, chiefs one and all

Nga tangata whenua, o tenei rohe

Tēnā koutou katoa

I acknowledge the indigenous people of this land and greet all of you in te reo Māori – the language of New Zealand’s indigenous people.

Ngā mihi ki te rangi e tu nei,

Ngā mihi ki te whenua e takoto nei,

Ngā mihi ki ngā mea katoa

Greetings to the sky above,

Greetings to the land below,

Greetings to you all things.

Thank you for inviting me to speak to you today.

Can I start by welcoming the work the Australia and New Zealand School of Government does in support of public policy development in both of our countries.

And my apologies that our best laid plans for me to join you in March were unsuccessful. You did however have our longest serving female Member of Parliament and our now High Commissioner, the Honourable Annette King instead.

She is what I have called a mentor and friend – or a more technical turn of phrase, my political spirit animal. Thank you Dame Annette for your representation.

You have asked me to speak today about why good government matters.

The first premise that I would like to offer in response to this topic is a relatively simple one.

Good government matters, because government affects everything.

This in itself is something that we perhaps take for granted.

I still remember my first election as a candidate. I ran in a traditionally conservative seat in rural New Zealand, but it was my old home town. Near the conclusion of the campaign I was walking down the main street of town when I came across an old school friend’s sister. We stopped to chat. She asked me what I was up to now – once I overcame the small blow this created given she clearly had no idea I was attempting to run for office in a matter of weeks, I tried to pivot towards a conversation about the election. “Oh that” she said. “I don’t think I will bother voting, it doesn’t really have anything to do with me.” A second blow. A women roughly my age who firstly wasn’t interested in politics and secondly had little interest in trying to be.

This crushing, if not edifying, experience happened over 10 years ago. But it could have happened yesterday. We have an impact on people’s daily lives. For better or for worse, whether they know it or believe it. We make decisions that impact on their environment, on their jobs, on their wages and on their healthcare.

That is why good government has always mattered, but in an environment where indifference can and is quite easily turning to distrust, it matters even more.

A quick scan of the horizon and we see that increasingly voters see their governments as not hearing what their interests are, or at worst, working against their interests, even in long-established democracies.

Now that may not be a new phenomenon. Politicians have long been the focus of derision. But what’s new is the increasingly noisy environment that we all operate in – fake news, fragmented interest groups, and multiple sources of news and information that people increasingly distrust. It’s an environment made for shock politics where only the noisy or surprising are heard.

The result?

Around the world, democratic values and institutions are under threat in a way that many of us never expected to see in our lifetimes.

Nationalist sentiment that closes off the possibility of countries working together is surging. Authoritarian movements and regimes are on the rise.

Norms that we in New Zealand and Australia take for granted – the rule of law, the peaceful transfer of power, freedom of expression – are being challenged in new and more explicit ways.

These trends are only possible because large numbers of people believe, rightly or wrongly, that their leaders are failing them.

Unfortunately for us as political animals, I don’t think we can afford to sit back and claim that we’re misunderstood. Not when we look at the context or environment in which all of this dissatisfaction has emerged.

Inequalities past and present

We can start with the state of many developed economies. While they continue to grow in overall economic terms (if not as quickly as they once did), they have too often failed to share the benefits of that growth.

In many countries, while the very wealthiest have grown consistently wealthier, the rest have seen little or no real rise in their incomes or their living standards – over decades.

Inequalities that deepened with the great deregulating reforms of the 1980s and 90s have become a permanent feature of these economies – not a brief moment of pain.

That is certainly the case in New Zealand.

As a small country, we are often at the forefront of global trends, because we can move faster and sometimes further than our larger counterparts. That was evident in the way we embraced – and sometimes pioneered – the free-market reforms of the 1980s and 90s.

Starting in 1984, through to the 1990s, we removed regulations that were said to hamper business, slashed subsidies, transformed the tax system, dramatically cut public spending and massively reduced welfare benefits paid to the sick, those caring for children and the unemployed.

Now we can argue whether those regulatory reforms were necessary, but regardless the numbers speak for themselves.

Within 20 years, my country lost its status as one of the most equal in the OECD. While incomes at the top doubled and GDP grew steadily, incomes at the bottom stagnated and child poverty more than doubled.

I was a child back then, but I remember clearly how society changed. I remember nothing of the Rogernomics of course– I was 5 and I was not the Doogie Howser of politics. But I do remember the human face. Especially the kids who just didn’t have the basics.

This experience is not New Zealand’s alone. It happened in many countries, often with deeper inequalities and more persistently stagnant real wages.

And the change hasn’t always been reversed yet. In fact, more recent trends have added new dimensions to the problem.

The financial crisis of a decade ago did not turn into another Great Depression, thankfully – but it has led to ongoing upheaval in the global political economy.

High debt and prolonged low interest rates have inflated asset values, widening inequalities in new ways. Most obviously for countries like New Zealand and Australia, booming housing markets have put home ownership out of reach of a growing number of younger people, especially when coupled with the debt many accumulate trying to further their education.

That same generation that is facing the prospect of new challenges – climate change and digital transformation putting people out of work now and into the future.

And just to add fuel to that already grim picture, new forms of media and communication are changing how we understand what is happening in our societies – and how we connect with each other. This change has opened up the world, in one sense – but it has also had the opposite effect of making us more distant, at times more entrenched. Stunningly, our most connected generation in New Zealand, has also been found to be our loneliest.

In the face of this fragmentation and disillusion, what does good government look like, not for us but for the very people who are turning away from us?

Two paths

I’ve already mentioned one potential answer to this question.

In recent years, we have seen politicians and governments of all stripes respond to the stresses and challenges I have outlined by turning inwards.

Domestically, some have chosen to reject the independent and expert public service and the possibility of a mutually respectful and diverse nation.

Abroad, they reject the international institutions that they paint as responsible for both economic and cultural problems when they aren’t necessarily at fault.

So this is one answer that is available to people – and that some are signing up for. After all, fear and blame is an easy political out.

As I say, I understand how we got to this point. But I reject this answer.

Because there is another response. Instead of turning inwards, we can improve the institutions that have helped hold together this long period of global peace that we live in.

Instead of austerity measures that only stretch the rich-poor divide, we can offer meaningful support – and more than just financially - to those at the bottom.

Instead of tearing down what works about our societies, we can build the system back up. We can acknowledge the areas where public policy hasn’t met the challenges of economic change, and do better.

One of the ways we can do this is by widening our idea of what prosperity means. Because if a country has been growing economically for 30 years, yet large numbers of its citizens haven’t felt the benefit, is it really moving forward?

If a country has a relatively high rate of GDP growth, but it is neglecting the things that we should all hold dear - like the health of our children, a warm, dry home for all, mental health services or rivers and lakes that we can swim in – then can it be said to be improving?

The broader view: wellbeing economics

This year, in New Zealand, we introduced our first Wellbeing Budget.

We didn’t abandon the previous approach to public finance. We widened it. We said not only “What will be most conducive to economic growth?” but also, more fundamentally: “What will do the most to improve the lives of New Zealanders?”

‘What will help them to pursue lives of dignity and purpose?’

We embedded wellbeing at every stage of the creation of the Budget – from setting priorities to analysing proposals, to making the inevitable trade-offs that come with the privilege of being in government.

This is not a concept we came up with ourselves. For some time now, the OECD and the IMF have urged countries to look beyond economic indicators and the Government’s balance sheet to define success.

Our own Treasury has been preparing the ground for it, too, by developing a wide range of measures of living standards, taking into account social and environmental factors as well as traditional financial ones. After all, surely economic growth cannot or at least should not be a means to an end in itself, but rather the foundation for wider progress including greater equality?

At this point, everyone usually wants to know what a Wellbeing Budget actually means. All the talk about getting beyond GDP is well and good – but what does it change, in practice?

Let me give you the clearest example I can: child wellbeing.

New Zealand is a developed country where most people enjoy relatively high living standards, in global terms.

Yet it has been clear for decades that this cannot be said of a significant proportion of New Zealand children.

There are different measures, but to take one of them, which measures poverty after housing costs have been taken into account, about 250,000 New Zealand children lived in poverty in 2017/18.

Another measure, known as material deprivation, also paints a picture of poverty. Income measures tell us about families’ poverty in comparison with their peers, material deprivation tell us how many families lack the basics like having a couple of pairs of shoes for school or a warm heater in the family home.

Clearly, this is fundamental to a country’s wellbeing. Children who are quite literally the future of New Zealand, who have done nothing to choose their situation, are in unacceptable hardship.

And the effects are obvious – on our health system, where diseases that we should have abolished years ago are taking root again; on our education system, where a tail of under-achievement is plainly tied to legacies of social and economic inequality; on our justice system, where the worst-off kids are often the first to arrive as adults.

Now we can have both an economic argument and a moral one as to why this needs to be addressed – or we can simply say that either way it simply isn’t right. We talk about New Zealand being a great place to raise a family. /but instead, New Zealand should be the best place in the world to be a child – not a place where many grow up in conditions that we consider shameful.

So child wellbeing was one of five focus areas for our first Wellbeing Budget.

Before Budget Day arrived, we passed legislation to make sure that Governments now – and in the future – are held to account for decisions that have impacts on children living in poverty. The Child Poverty Reduction Act ensures transparent reporting on progress against published targets at the Government Budget each year.

For us, that has meant setting ambitious 10-year targets to halve child poverty and three-year targets to significantly reduce the rates. The Act itself doesn’t set out how Governments achieve their reduction goals. That bit is up to the politicians.

In our first year, we introduced a Families Package giving a significant income boost to more than 384,000 families in need. It includes a universal child payment in year one, a winter energy payment, and an extension to paid parental leave.

At this year’s Budget, we made a crucial change to our benefit system – indexing the main benefits to average wage increases, which will halt a drift between the two that has grown for decades. It is estimated that about 329,000 individuals and families will be better off as a result, including many of the children most in need in New Zealand.

Now indications are that, due to our policies, by 2020/21 we will reduce the number of children in poverty by between 50,000 and 74,000 children on the after-housing-cost measure.

Take another example: mental health.

New Zealand’s neglected mental health and addiction services are no surprise to anyone at home. They have been reported on for years. Our suicide rate is devastatingly high.

Last year, a wide-ranging Inquiry into Mental Health and Addiction revealed that we needed a whole new approach to mental health and addiction in New Zealand.

As it stands our mental health and addiction services are often orientated to those with the highest needs. People with emerging issues, or mild to moderate mental health or addiction needs, are largely our missing middle.

This comes at huge cost to individuals, families – and to the economy. It’s estimated that in 2014 the economic cost of serious mental illness alone was $12 billion, or five per cent of GDP.

That’s why we made mental heath a centre piece of our Wellbeing Budget, which included a more than $1 billion investment in New Zealanders’ mental health.

Our aim, in short, is to transform our approach so that within five years every New Zealander who needs it has access to a range of free services that support and maintain their mental wellbeing.

This new layer of services will put trained mental health workers in doctors’ clinics, Māori health providers and other health services so that when people reach out for help there is a trained mental health worker immediately available.

All of this responds to the idea that New Zealanders’ wellbeing must be the foundation of our public spending.

One more example, briefly: the aspirations of Māori are another priority in our wellbeing approach.

Here, once more, despite the Treaty of Waitangi partnership between Māori and Pakeha New Zealanders, despite several decades of settlements for land taken and promises betrayed, a legacy of inequality continues.

Our Wellbeing Budget prioritised new and empowering approaches through greater investment in the flagship Whanau Ora programme, which supports Maori to determine their own needs and desired wellbeing outcomes; through investments in our Māori health workforce; employment programmes and through targeted and culturally relevant support for prisoners, too many of whom are Māori.

At the same time, we have an aspiration that basic te reo Māori will be spoken by a million people in Aotearoa by 2040. So we have put substantial new resources into Te Taura Whiri, the Māori Language Commission, te reo teachers, and more funding for Māori broadcast media.

After all, if the country has a 2.6 per cent GDP growth rate, but its indigenous people aren’t thriving, are we truly in good health?

New purpose in the public service

But let’s be honest, our wellbeing challenges cannot be solved in one Budget – or even ten. Public investment is a powerful lever for change, but it’s only one.

We also need to embed the idea of wellbeing in the heart of our public service – how it works, what it prioritises, who joins and leads it.

That is why earlier this year we announced that we would refocus the New Zealand public service to deliver enduring change, more strongly focused on improving the current and future wellbeing of all New Zealanders.

The changes that we are making in New Zealand are not far from many of the key themes identified in the early stages of your ongoing independent review of the Australian public service – including strengthening culture and leadership, increasing flexibility and capability, and a focus on working collectively to achieve better outcomes.

This doesn’t mean our current model is broken. In fact, our public service has a strong international reputation for responsiveness to government, effectiveness for New Zealanders, and integrity.

For instance, New Zealand is ranked second overall in 38 countries assessed oncentral civil service performancein the 2019International Civil Service Effectiveness Index.

Closer to home, the 2018 Kiwis Count Survey – published only weeks ago – shows New Zealanders have increasing trust in the public service. Satisfaction with theprovisionof services is at a record high.

So why are we embarking on the biggest reforms to the statutory framework of our public service in more than 30 years?

It’s simple. We know we can do better.

We know we can build a more modern, agile and adaptive public service. And we know the importance of the constitutional role our public service has in supporting New Zealand’s democratic form of government.

So we are affirming this role – for current and future generations of New Zealanders – in new legislation.

Just weeks ago, our Government announced the most significant changes to the New Zealand Public Service since the State Sector Act of 1988. That will be repealed and replaced with a new Public Service Act. This will underpin a modernising of the Public Service for the good of New Zealanders and make it easier to tackle the biggest challenges facing the Government of the day.

After all, one department dealing with one part of the problem at a time, can’t fix complex issues like breaking the cycle of child poverty and domestic violence, planning for climate change or providing more effective mental health services. They’re issues that don’t fit neatly into a box, and we can only seriously tackle them with a whole-of-government approach where everyone pushes for the same outcome at the same time.

That’s why under the changes, boards, made up of chief executives from relevant government agencies, will be established to tackle cross cutting challenges. These boards, or joint ventures, will be accountable to a single minister and receive direct Budget appropriations. Public servants from across the system will be deployed as required.

One current example of this is the way we are working to prevent and respond to family and sexual violence. This was a major feature of the Wellbeing Budget. Not only did the Government deliver the largest ever investment into this area but we also delivered a new way of working with the initiative being delivered across eight portfolios: Attorney General, Corrections, Courts, Health, Justice, Oranga Tamariki, Police, and Social Development.

But we know we need more than structural changes. As our Minister of State Services Chris Hipkins has said the shift to a single, unified public service approach will be complemented by cultural change with the new Act acknowledging that a ‘spirit of service to the community’ is fundamental to the Public Service.

A unified public sector around common purpose, principles and values is crucial and we believe we can encourage that practically by making it easier for public servants to move seamlessly through the public service as a whole.

Building trust also means a strengthened public service that supports the Government’s commitment to a stronger Māori/Crown relationship, helping improve outcomes for Māori, the indigenous people of our country.

And we want a more diverse and inclusive public service workforce that reflects the communities it serves.

I want to be clear that this is not about a sudden, large-scale system change.

As I said a few minutes ago, New Zealand’s Public Service in good shape. So changes will be carefully phased and managed over time, with a legislative process that will run into mid-2020.

In the meantime, we are getting on with a wider work programme.

To take just one example, Public Sector chief executives are charged with tackling the gender pay gap in the core public service, which the Government is committed to eliminating.

Substantial progress has been made this Parliamentary term. The public service Gender Pay Gap Action Plan, established in July 2018 includes a focus on:

• Closing gender pay gaps within the same roles

• Achieving flexible work by default

• Removing bias or discrimination in remuneration systems and human resources practices, and

• Achieving gender-balanced leadership – something I am proud to say we achieved this year for the first time.

Women now lead some of the largest public service agencies including our Ministries of Education, Social Development, and Business, Innovation and Employment, Corrections, Treasury, and of course the country.

Good government matters in the world

But all of this is of course part of a much wider goal. Building a public sector than can help build good government. But as is so often the case in this sphere – the buck ultimately starts and stops with us, the politicians.

As leaders globally, we are facing a rising tide of public suspicion towards government, a sense that we’ve let the material differences between us stretch beyond fairness, and as a result there are signs of life in old ideologies.

But if we begin at home, if we broaden our idea of good government and act with a sense of fairness of guardianship – and even kindness - of what we in New Zealand call manaakitanga and kaihakitanga – then I absolutely believe we will make headway on these challenges.

But we won’t succeed unless we apply these same values globally.

For countries like New Zealand and Australia, that means prioritising international rules and norms that work for all countries.

It means encouraging trade, not retreating behind protectionist barriers – trade that means jobs and livelihoods, but also trade shaped by an open, honest dialogue with our communities.

Here, I do think, Australia and New Zealand can be examples to the world.

We share a strong commitment to the rules-based international trading system that is currently under such strain. I welcome and endorse Prime Minister Morrison’s call for countries to mend, not end, this system and to reject the idea that trade is a zero-sum game.

But we can enhance our expectation of the trade agenda to lift labour and environmental standards and prove that they too can respond to the very issues they’re accused of ignoring.

Times may be challenging but I absolutely believe politics can be a place for change, disruption, and a force for good. Good government need not be an oxymoron.

No reira

Tēnā koutou, tēnā koutou, tēnā koutou katoa

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