Who said: “The public service is a bit too responsive to politicians”? A lofty academic? A public servant bemoaning servile bosses?
It was Bill English last week.
Set aside that usually ministers complain public servants are not responsive — servile — enough and that English acknowledges some ministerial colleagues are of that ilk.
His comment, in a speech to the Fundraising Institute on May 11, pointed to a subterranean trend within Thursday’s budget: towards a flexible public service.
The public services are the last of the big twentieth-century factories in which workers were tightly unionised with real bargaining power.
Thirty years of deregulation and technology have undermined that power in the private sector. The labour market is now highly flexible. That has enabled businesses to cut wage costs and survive the global invasion.
Now global competition is not just in production costs. Increasingly, consumers drive business change. If they don’t like a price here they can buy online from somewhere else in the world. Examples: a dress or a bet on horses.
That phenomenon is seeping into the public service factories. As in the private sector, this is both policy-driven and, now, consumer-driven.
English talks of “customers”, not “consumers”. He says customers — particularly those brought up in the instant-global-access digital age — increasingly expect public services to be customised to their needs or preferences.
“The process of government is being democratised,” was how English put it.
On this reading, the factory state, highly successful in the twentieth century, when it transformed living standards, is being reordered. (Moises Naim’s “The End of Power” is a breathless but evidence-based exposition of this and inter-related trends.)
Now put that with another English comment to the fundraisers: “We organise collectively one way or another. If there is smaller government, there will be bigger other stuff.”
That “other stuff” is charities, not-for-profits, community organisations, non-government organisations and the like.
They have grown fast. One financial markets expert estimates the broad philanthropy sector’s cash flows climbed by $3 billion in the past 12 months and funds under management rose 10-12 per cent.
This has been partly policy-driven, by a government that wants to devolve delivery of services to organisations which, it says, know more about the people they deal with, and may therefore be more trusted, than a government agency — and which can innovate with fewer constraints.
English insisted that doesn’t equate with “cheaper”. He said state housing had been cheaper than it needs to be. “Tell us what it really costs.”
But the rise of the not-for-profits, etc, also appears to be part-driven by the consumer/customer phenomenon — not people shopping around among not-for-profits and government agencies but people intuitively expecting diversity, including in “public” services.
The Productivity Commission’s “More effective social services” report last month backed decentralisation “where delegated decision-makers have better information and incentives to maximise overall social returns”.
This can be within the government machine. The Ministry of Social Development says its “forward liability investment approach” to potential benefit-lifers has tapped into operational staff’s “care about improving their clients’ lives” (as it still calls “customers”).
Obviously, there will still need to be a strong central government presence, to raise the great bulk of funds, make overarching policy, ensure people are not left out and write, issue and manage contracts, which will need to be a lot more operationally flexible than they are now and (English again) allow for some mistakes.
Government agencies themselves will need more flexibility in English’s brave new world.
So ministers are thinking of “investment boards” to guide or drive multi-agency activities and shuffle money from departmental silos into task-focused pools. One risk is appointing businesspeople who can’t understand that customers of public services aren’t identical to their customers.
Cross-agency activity and collaboration with not-for-profits will not fit within the twentieth-century factory model. That points, some senior officials are saying, to a flexible workforce.
If so, public sector unions may be staring at a similar path to the one their private sector counterparts were rammed down 30 years ago.
The riposte is likely to be that “flexible” in the private sector has meant “lower pay” (which in real terms it has), that it is ideology, not practical delivery of twenty-first-century services.
But what if English is right about the bottom-up, “customer” driver?
If he is right, then smart, thoughtful, well-researched public professionals will be needed to think up innovative policy that is not “too responsive” to politicians and instead serves the wider, longer-term public good.
English at his best would approve.