Colin James’s article in Public Sector April 2010
Governments in the rich world got big and bold in the twentieth century. They got even bigger in the first decade of the twenty-first, when banks collapsed. Where was the public in all this?
The public was of two minds.
When the public saw need or want, as individuals, as part of an interest group or in a fit of altruism, it demanded more government, to start or stop something or to expand a service or make it free of charge. That way we got “free” health care in the 1940s, universal superannuation at 65 in the 1990s and regulation heaped on builders, real estate agents and electricity companies in the 2000s.
When the public came to pay for all this, many thought they saw waste, incompetence, snouts in the trough and some not paying their fair share. Given the chance in California, the public voted limits on taxes. The Californian state government went broke in 2009.
The logic of this unsquare circle is that “my” or “our” services and protections are legitimate but those of some “others” are not. Cut the illegitimate ones and taxes can be cut.
This dislocated logic can comfortably be accommodated if people see the services as “state” not “public”. The “state” is remote and impersonal, often an enemy or a target — something “they”, not “I”, own, something foreign, not family, to be resisted, not embraced.
Putting public services under a State Sector Act in 1988 symbolised the erasing of “public” from big government. Lambton Quay mandarins of old were remote and the lowly servants who dealt directly with the public were shackled in rules the mandarins made. Ironically, the 1980s reforms required more focus on end-users.
But the state remains remote. On the way to 2030 it may be driven to rediscover its “public” dimension. This is for three reasons.
The first reason is that the baby boomers, who loaded costs on to the next generations, notably in infrastructure, as they prioritised debt and material self-gratification, are ageing and, on current superannuation and health policies, will be unaffordable. Over the next 20 years the next generations will have to rethink those policies.
The second reason is external. Asian countries, which will increasingly be the comparator economies, are unlikely to make their government services as generous as we have now and are likely to expect more private initiative and self-provision. Australia will continue to offer higher wages for at least a decade or two, which will give tax-shy next-generation New Zealanders a risk-free escape route.
The third reason is that one-size-fits-all, mass-produced goods and services have been superseded in rich countries by “mass customisation” — kicked along by the new globalisations and revolutionised communications. That requires differentiated “public” services and differentiated service delivery. The “social entrepreneur’s” time has arrived.
This implies rethinking the state but it doesn’t imply the end of public services. It means thinking differently what “public” is.
That might, among other things, mean developing policy more by way of taskforces of experts, practitioners and officials, trying to generate consensus by pushing interest groups, officials and politicians together, drawing on ideas outside the government to define issues and ways of meeting needs, delivering services through private and not-for-profit entities — even accepting a diverse range of education pathways and outcomes.
Next-generation taxpayers might also want an accountable return on their contribution. They might want the state to stop thinking of what it spends as cost and start thinking of it as investment.
This is not a new idea. Some officials have been trying to shift the mindset for a decade. There have even been glimmers of response.
There are three drivers. One is the “dependency” syndrome — the disadvantaged and unfortunate need help but also need dignity and the state’s charity can be no less undignifying than conditional charity from private sources. Another is effectiveness — the less those who are paying can see services get results, the less they will be willing to pay. A third is legitimacy: as the next generations pay off the baby-boomers’ accumulated debt, they will want services they fund to deliver a measurable return — which will require rigour and focus.
This might still be biggish government. The public has a large appetite and individuals can’t meet all the costs of making themselves full (educated and healthy) citizens. But it will be different government: less “state” and more “public”. The right route to that public service is to start some under-35s thinking — then acting — right now.