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New State Sector and Public Finance Reform Legislation

30 July 2013


Speech to IPANZ hosted launch of new State Sector and Public Finance Reform Legislation

I’d like to begin by thanking our hosts IPANZ and Deloitte for bringing together senior public servants, partners from across the public and private sectors, and many of you who took the time to help shape this new Act.

This legislation was never going to generate the media excitement of Kim Dot Com’s musings on the GCSB Bill, but it’s going to have an enduring impact on the delivery of public services and a positive effect on the lives of New Zealanders, rather than being another beltway issue. For this reason, it has an importance that will reach into the life of every New Zealander.

Better Public Services - Results

I can tell you that as a politician, I get regular and direct feedback on the streets of my electorate. Not all the feedback is always constructive, but if you summarised the key themes, people’s primary concern in life is managing a decent standard of living. They want to know their kids are getting well educated, that quality healthcare is available when they need it, and that they’re safe in their houses on the street.

A year ago the Prime Minister set some difficult, but not unachievable targets for the public sector as part of the Better Public Services programme.

Those results based targets were all about getting the state sector to work as a team to get traction on difficult issues; issues that matter to New Zealanders like reducing crime, reducing long-term welfare dependence and reducing educational under-achievement.

Recently we released the first report into the progress on reaching those targets. It confirmed that we are starting to make gains and that those gains are directly benefitting New Zealanders and their families – including our most vulnerable young people.

We are finding that what’s good for communities in terms of better services and better results is also good for the Government’s books. For example, the number of people continuously receiving a working-age benefit for more than a year has fallen by almost 3,000 since March last year to 75,300. The target is 55,000 by 2017.

We are making some good progress, but there is still a long way to go. To help this happen we are establishing a $20 million annual seed fund for the next four years, funded from 2012/13 departmental underspends, to support the Better Public Service results.

It will help to enable business case development and design work for collaborative Better Public Services initiatives. I look forward to seeing those initiatives as they come through.

Transformation and a Head of State Services

The State Sector and Public Finance Reform Bill has been passed by the House and has received Royal Assent.

During the Bill’s passage, I described the changes that the state sector is going through as being the biggest in a generation. Not since the 1990s have we seen such ambitious plans for the state sector. The Bill is a part of that process. The fact that this Bill received bipartisan support shows how keenly the need for change is felt across the House.

What the legislation does is give the state sector the tools, the flexibility, and probably most important of all, the permission to get stuck in. I know that this transformative process is already underway. Now there is a mandate to get things done.

The legislation formalises the State Services Commissioner’s role, effectively as Head of State Services in terms of leadership, oversight and responsibility for driving change across the system.

Iain Rennie was recently reappointed State Services Commissioner. His reappointment reflects the need for sustained and focused leadership during these changing and challenging times for the state sector. I look forward to continuing to work with Iain in this role.

In less than five years we expect to see a unified state sector that is focused on innovation, provides high quality services, manages change effectively, and delivers value for money.

In establishing the BPS targets, ministers have raised the stakes and know they will be measured against them, so everyone has a vested interest.

Legislation recap

I know that you are all aware of what is in the legislation but let’s look at it once again.

The State Services Commissioner is now committed to treating chief executives as a single team with flexible deployment – this means he can now transfer an existing chief executive into a vacancy where he sees a need or development opportunity. The State Services Commissioner also has greater responsibility for developing the capability and capacity of senior leadership, and in setting terms and conditions.

Chief executives have greater powers to delegate functions, including to non-government organisations where appropriate. Chief executives responsibilities have been extended to consider collective interests of government and longer-term sustainability. Chief executives are obliged to develop their department’s senior leadership capability and to assist the States Services Commissioner in fulfilling system-level obligations. Ideally they will leave their departments in a better condition than they found them!

There is now the option of using a new operational ‘departmental agency’, set up within a department to carry out a specific function to deliver effective and efficient services. The legislation delivers improved financial flexibility to support innovation and different ways of working within government.

And importantly for those of you who are not part of the core public sector, there is permission to work with those across the state sector and outside of government. Sometimes the answer to a good service might need some crown entity or private sector savvy, or NGO “know how”.

It’s interesting to look at what’s going on overseas. My British counterpart the Rt Hon Francis Maude and Sir Bob Kerslake, Head of the Civil Service, recently released their “One Year On Report” for their “Civil Service Reform Plan.”

It includes a traffic light summary of what they said they would do, and what they have actually achieved, and I encourage you read it for yourselves.

Many themes in that report are similar to what our own public service are grappling with.

For example, the first four actions in the plan are:

• implementing new models to deliver public services;

• becoming digital by default, moving more services online;

• creating shared transactional services centres for government; and

• executing plans to share expert services across government.

Sound familiar?

The State Services Commission and I regularly meet with counterparts from other countries who come to New Zealand to learn about how we’re shaping our public services – for example, how we use the Performance Innovation Framework, or how ministers and chief executives work together.

What we hear from these delegations is New Zealand is not unique in the issues we face: a constrained financial climate, complex societal issues, and the irresistible lure of the status quo; resistance to change.

But we are well placed as a small country to innovate. We have the opportunity to be nimble and back ourselves to try new ways of meeting New Zealanders’ needs. The investment approach to welfare is a good example of this.

Finally, I recently saw an editorial in the Otago Daily Times which referred to the state sector as the engine room of the country, with its departments responsible for driving our publicly-funded services. This is a great analogy. To stay on track state sector leaders have to work together to keep driving forward.

As long as we have a well maintained and well-oiled machine we will stay on track. When parts of the machine don’t work with other parts of the machine that is when the wheels fall off.

The challenge I lay down for you today is what are you going to do to ensure we see a more unified, effective and skilled state sector in less than five years? What kind of leadership do you need and what do you have to deliver to make this happen?


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