From: Future State, edited by Bill Ryan and Derek Gill

Introduction

For many years, New Zealand’s public sector performance has been consistently rated in the top tier of countries on a variety of measures of comparative government performance. New Zealand achieved a step change in public sector reform in the 1980s when it introduced a distinctive and widely applauded model of public management. Despite attempts at continuing improvement, however, New Zealand has struggled over the past decade to keep developing that model, and to supplement and improve the frameworks and tools that public managers require to manage efficiently and effectively in the public sector in the changing circumstances of the twenty-first century.

The aftermath of the global financial crisis provides an imperative that was previously missing. Opportunities are now appearing for governments, ministers and public officials to strike out in new directions. A spirit is emerging within central government to take ideas that have been developing in public management internationally and to make them happen in ways that benefit New Zealand society. Public sector managers and staff are being encouraged by government to innovate so as to improve the efficiency and effectiveness of policies and management. In central agencies, work is well advanced on a project known as ‘Better Public Services’,¹ and, while this is still in its early days in terms of changes to formal systems and enacted practices, the promise is there. The major public sector union, the Public Service Association, is also adding to the mix with its ‘Modern Public Services’ project.² Equally interesting, in many pockets throughout the public sector, sometimes at the coal-face, sometimes in the middle and sometimes close to the top, individuals and small groups of public officials are doing interesting and innovative things in response to the circumstances confronting them, often working closely with others from the non-government sector. Frequently, they create these innovations by working around any constraints in the system.

Signs of this renewed enthusiasm surfaced in 2009 when the chief executives of several public sector organisations commissioned a group of researchers in and around the School of Government at Victoria University of Wellington to undertake a project looking at the ‘future state’. They asked us to consider present trends that would impact on public management in coming years and wanted ideas on how those might play out. This book pulls together the results of that work.

The project was completed in two stages. Future State 1 was an exploratory project that identified the longer-term public policy and management challenges facing New Zealand (a summary of the subsequent report is included as the first chapter in this book). A key conclusion was that the significant challenges facing New Zealand will inevitably cut across individual organisational boundaries. Therefore, a focus on bottom-line performance of individual public organisations (a feature of the New Zealand approach to public management) will not generate the step changes required to address the challenges identified in the report. Greater focus will be needed on whole-of-system performance in addition to initiatives designed to improve performance of the component parts. Some of the new approaches required were already emerging in practice but were operating at the margins and were yet to be recognised and reinforced. The second stage of the project focused on the implications for the public management system of the policy challenges identified in Stage 1. This work has been undertaken by a group of academic researchers with an interest in practice and who have advised and consulted government. Others in the team are experienced practitioners who have moved – permanently or periodically – into the academic world. In this way, collectively, we have tried to bring a combination of theory and practice to our work. The resulting essays comprise the bulk of this book.

Future State 2 began with the project team surveying the state of knowledge and the issues identified as problematic and in need of further investigation. This was done by systematically sieving the existing evidence, identifying gaps in knowledge and areas demanding more focused investigation. The result was seven work streams. They were:

• an exploration of emerging trends in governance;

• an international perspective on trends in governance;

• joint or shared accountability: issues, options and policy implications;

• experimentation and learning in policy implementation;

• agency restructuring;

• skills and capability; and

• the authorising environment.

An additional stream – on e-government – was commissioned for this book.³

The Future State project was able to build on evidence-based knowledge that has been accumulated in recent years, containing insights into how New Zealand’s state sector actually operates. This included doctoral research completed in the School of Government ⁴ that examined accountability, regulation, policy processes, information and communication technologies in public management, and service delivery. In addition to Future State 1, ongoing research into key aspects of public management known as the ‘Emerging Issues’ project contributed as well, also funded by the public service chief executives and undertaken through the Institute of Policy Studies as part of the School of Government. This included projects on:

• organisational performance measurement and management;

• the relationship between parliament, ministers, officials and judges;

• what enabled and what hindered joined-up government working; and

• information-sharing across government agencies to support more joined-up government.

So what emerged out of this research?

The Future State 1 report was written in the same spirit and identified similar issues and trends as the OECD’s Government of the Future (2000) and Governance in the 21st Century (2001a). Its contents also resonate with ideas in the recent Moran Report (Advisory Group on Reform of Australian Public Administration, 2010) in Australia, and work of a similar nature emanating from think tanks such as Demos and the Work Foundation in Britain and the ‘New Synthesis’ project in Canada. Among them, there is considerable agreement on the most significant signs of the future, particularly the shift towards greater emphasis on ‘governance’ and the sense that a new era of public management is upon us. Inevitably, in discussing such trends, a work of this kind seems to imply that they have already arrived, fully formed and impacting on everything. Future State, however, should not be read in this way. The patterns it identified are still taking shape. As a result, the report itself and the chapters in this book should be understood as akin to scenario analyses. Trends are explored in order to visualise – all things considered – how the future might look if they were to mature.

The public management reforms of the late 1980s and early 1990s were a response to the economic, fiscal and political concerns of the time. They dramatically changed the manner in which New Zealand was governed and brought significant benefits in doing so, particularly in relation to budgetary and financial management, accountability and transparency (e.g., Schick, 1996). Subsequent reviews (e.g., Ministerial Advisory Group for the Review of the Centre, 2001) added new components (like ‘managing for outcomes’), but the essential features of ‘the New Zealand model of public management’ (Boston, Martin, Pallot and Walsh, 1996) are still in place today (as shown, for example, in the case studies and analysis in The Iron Cage Recreated collection; Gill, 2011). Some aspects of this model, however – e.g., its hierarchical, vertical, control-oriented framework, and its exclusive focus on single-organisation budgeting and management – are not necessarily appropriate for some of the circumstances confronting government now.

Future State 1 canvassed a range of ideas for the future and these are summarised in the first chapter of this book by Derek Gill, Stephanie Pride, Helen Gilbert, Richard Norman and Alec Mladenovic. Even before the global financial crisis of 2007–9 and the uncertainties created by the Christchurch earthquakes, the world in which New Zealanders live had become more globalised, more complex, faster moving, uncertain and subject to change. As the twentieth century flowed into the twenty-first, partly because of international inflows and outflows of people, money, goods and services, and the possibilities created by new information and communication technologies (ICT), New Zealanders were becoming increasingly diverse in their needs and ethnicities, varied in their lifestyles, demanding in their expectations and more ready to use their influence. The weight of these expectations increasingly impacts on government. In the world of the future, what will be needed are governments, ministers and public officials capable of recognising critical and decisive changes in society and seeing the implications for ways and means of governing. They will have to grasp where, when and how something needs to be done differently, where ‘business as usual’ no longer suffices.

What is needed now to achieve this is another step change. Step change for the future state – or certain key parts of it, anyway – cannot be achieved by working entirely within a single organisation and managing in risk-averse and routine ways. It demands working collaboratively with a wide range of partners in networks that may stretch out into the economy and civil society. Rather than delivering pre-determined responses or services to clients defined by eligibility assessed against standardised criteria, the search will be on for differentiated and customised responses that may include using new technologies in innovative ways to extend and deepen the range of options. Further, the users of government services will frequently be engaged no longer as ‘consumers’ but as ‘producers’ of the services and outcomes they need. Increasingly they will be involved as co-designers and co-producers in ways that bring citizens directly back into policy processes that affect them. Enabling these conditions demands that governments act in ways that build trust and share authority, negotiating new kinds of relationships with citizens. To be effective, new kinds of skills and competencies will be required of public officials, both ministers and public servants. These will include the capacity to scan society for key changes, the ability to make sense of ambiguity and uncertainty, a talent to mobilise organisational capability to adapt, and the skills and confidence to learn the way forward to an uncertain future, rapidly, and without losing sight of the desired outcomes. And, of course, it will need to be done affordably and sustainably.

These are exacting demands but, as the Future State Stage 1 report pointed out, there is more. Singular, universally applied approaches to public management throughout a jurisdiction will no longer suffice. The future is likely to be one of ‘both–and’, not ‘either–or’. Performance will still be expected of public officials in efficient production of core output tasks (that is, ‘bottom-line’ individual and organisational performance) but also on their ‘top-line’ capacity to respond effectively to emerging problems and to achieve the goals and objectives of government.

Some of the new approaches required are already becoming apparent in practice, but have not yet been recognised and reinforced. Moreover, the frameworks supporting ongoing adaptations in the twenty-first century are likely to be different to the reforms of the late 1980s. They relied on changes to the ‘hardware’ of the architecture of government, the structural and system components of public management systems. The changes ahead, however, will depend more on subtle and multi-faceted modifications to the ‘software’ or mental models and practices used in the public sector. The future state must involve applying and integrating a wider range of values and approaches in order to respond to the twenty-first century environments. Doing so will require new types of multi-dimensional approaches to system coherence.

The question of system coherence in the face of the diversity and multiplicity of approaches to delivering policy and services is Evert Lindquist’s starting point in Chapter 2 of this book. In the past, theory and practice in public administration and management would have looked for and been based on some kind of integrating framework. A good example is Government Management (Treasury, 1987), which elaborated the framework upon which the new model of public management would be constructed. Writing today and from an ‘outside–in’ perspective, Lindquist (a Canadian academic presently associated with the Australia and New Zealand School of Government) surveys what is sometimes called ‘post-NPM’ thinking (‘NPM is dead’), with NPM being the acronym for new public management. He concludes, firstly, that there is little point in asking whether NPM is dead, since many of those ideas – along with new ones (many of which are not really new) – will continue to animate dialogue inside and outside New Zealand on public sector reform; and, secondly, that the future will be one wherein ‘no reform will be left behind’. What has changed, though, is that fiscal and other pressures have introduced a greater urgency, along with new technological possibilities for realising policy and service delivery objectives. Lindquist goes on to explore the potential of recent integrating frameworks such as the ‘competing values framework’ and the ‘new synthesis’ to capture the unique combinations for delivery policy and services, old and new, that will emerge in New Zealand and variously across different policy sectors. Indeed, the government and its central agencies need to develop such frameworks in order to anticipate the future challenges confronting these sectors, to assess the state of capabilities inside and outside government for addressing those challenges, to inform engagement with citizens and stakeholders about strategic directions and choices, and to monitor the performance of those choices.

In Chapter 3, Bill Ryan argues that the future will be best served by multiple approaches to public management, not a singular model applied across a whole public sector, and that an additional model is currently taking shape. He explores a range of ideas presently featuring in the international public management literature (networks and governance, partnership and collaboration, participation and co-production) and suggests that, together, they represent a ‘community-like’ approach to governing that is coming more and more to the fore in some areas of state activity. Generally speaking, these ideas are not discussed in official public management documentation in New Zealand. Notwithstanding, they are starting to emerge in some examples of practice. Public managers confronted with new realities in their interactions with citizens are adapting to those pressures in ways consistent with what is also occurring in comparable jurisdictions. These ‘community’ approaches to public management are signs of the future and should be recognised, explicated and authorised. Public management across New Zealand government in the future is likely to be a context-dependent mixture of three approaches. Some government activities will be best conducted along bureaucratic lines, some in terms of a market, and others as a community. The formal public management system must enable each approach to be applied as each context demands. Shifting in this direction, however, will require a consideration of how Westminster-based conventions regarding relationships between ministers and officials will need to keep evolving.

Talking of ministers, in Chapter 4, Michael Di Francesco and Elizabeth Eppel tackle what some might regard as a ‘heresy’ within public management. The NPM reforms adopted in New Zealand proposed – in fact, expected – that ministers would play an important role in the new ways of governing. In particular, ministers endorsed a framework of management and performance accountabilities that to be effective not only demanded new behaviours from public officials but also required ministers to adapt their own practices, for example, by taking a more ‘managerial’ approach to interacting with officials, and by making policy decisions based on evidence arising from a range of sources including (but not restricted to) monitoring and evaluation. Within the NPM context it was also assumed that ministers would assess the performance of the public sector in those terms. The role of ministers in public management is not often discussed by either academics or practitioners, and is a fundamental issue that Di Francesco and Eppel take up. They suggest that few ministers have developed the ‘managerial’ side of their job and argue that public management cannot progress further until ministers learn to do so (or that failed expectations of the model are revisited). The authors compare practice in New Zealand and Australia, including ministerial role designations, and expectations of ministers and parliament in responding to and using performance information provided by public servants. They suggest that we can no longer afford to ‘sanctify’ the role of ministers within Westminster conventions and that ministers should be expected to carry out their executive and parliamentary work in accordance with the expectations they themselves have set, as well as being made accountable for this. Di Francesco and Eppel’s chapter concludes by canvassing various options to encourage greater ‘professionalism’ among ministers in these respects, including training and standards setting, ministerial appointments from outside parliament to inject external experience, using governance structures as ‘choice architecture’ to impose leadership and managerial responsibilities on ministers, and chipping away at the inherent adversarialism of Westminster-based parliaments by experimenting with consensus-based accountability structures.

The Future State 1 report emphasised the context of fiscal constraint in which public management will need to be conducted in the immediate years ahead but it also suggested that tweaking existing approaches may no longer be sufficient for the scale of the task required. What then needs to be done to ensure the affordability and sustainability of the public sector in the future? Bill Ryan confronts this question in Chapter 5 by first casting a sceptical eye over the usual methods of achieving savings such as cutbacks, prioritisation and efficiency drives. There is little evidence that these methods lead to major savings; the cost of government on a number of measures, including total expenditure relative to GDP, has remained relatively stable in countries like New Zealand for many years. More radical innovation may be needed. To illustrate the measure of new thinking required, Ryan discusses the ‘radical efficiency’ agenda being discussed in Britain – an approach to public management that is predicated not on a market failure/tax-and-spend conception of government relative to society and the economy but one of ‘social investment’. This kind of approach would recognise all the social and human capital brought to bear in achieving government policy goals. Under such an approach, the call on the public purse may in itself be reduced as a proportion of the aggregate volume of resources brought to outcome production; but, more importantly, the whole notion of the public value and governance produced might take on a deeper meaning, and hence affordability and sustainability could be thought of in new ways. Whatever the merits of such an approach, ‘radical efficiency’ thinking is a reminder of the importance of breaking away from unreflective repetition of the past and entertaining the types of radical innovation required for the future.

Radical rethinking as a requirement for the future is also addressed in Chapter 6, which deals with experimentation and learning in implementation, written by Elizabeth Eppel, David Turner and Amanda Wolf. Too often, implementation and delivery have been treated in public administration and management as either a simple step in a linear, rule-guided sequence, located as a series of planned activities between policy design and the eventual results detected by evaluation, or more blithely entrusted to third-party delivery agents. Either way, the goals, objectives and strategies are designed in advance and the task of implementation is to operationalise the plan or achieve the pre-ordained targets nominated by the funder. Eppel, Turner and Wolf theorise an alternative interpretation of the nature of implementation, and draw out the management implications. Picking up on the Future State Stage 1 pointers to complexity, they show that implementation is, indeed, often complex. In consequence, implementation needs to be reconceptualised as a continual process of experimentation and learning. ‘Experimentation’ is understood in an everyday sense as describing an orientation that allows policy managers to make use of a full range of information and expertise gained in the process of implementing policy. They note that implementation refers to an evolving and emerging set of activities and behaviours in the ‘real world’. The authors’ research finds that successful organisational and individual practices are built upon identifying and working with observations that appear only when a policy is tested. Given a consistent strategic view of end goals, such learning enables redirecting efforts to build up a successful policy. Implementation practice requires appropriate permission and the ability to conduct design and implementation activities outside the responsible agencies at an early stage. Making use of learning as you go requires the continuous application of a habit of mind that asks not ‘what are the facts?’, but ‘what does not seem right?’ and ‘what is the next question?’

Accountability is important in the public management system; it is even more so with joined-up government. As Future State 1 pointed out, a system wedded solely to vertical accountability will not work well in the future. Jonathan Boston and Derek Gill (Chapter 7) explore directions for thinking about accountability. Joined-up government can take several forms, two examples of which are co-ordination and collaboration. The choice of form depends on the policy context, the intensity and scope of joint working, options regarding ‘hard’ and ‘soft’ factors, and the separability and interdependence of the task. How best to proceed with a joined-up task is often uncertain and views may conflict. In determining how to work together, argue the authors, a number of points need to be underscored. Participants must feel a sense of ‘ownership’ to generate a strong sense of shared responsibility; this is essential whatever the formal accountability regime. In the context of joint working, a concentrated approach to accountability is likely to be more effective where the policy problems are relatively ‘tame’, the tasks are clearly separable, levels of interdependence are low and there is minimal sole-person risk. Shared or diffuse accountability will be preferable when tasks are inseparable, and there is high interdependence and much collective wisdom. Boston and Gill go on to suggest that, given the importance of joined-up government, creative thinking is needed about how best to encourage new and successful forms of joint working. This requires central agency leadership, as well as a willingness to place more emphasis on horizontal accountability mechanisms to sit alongside hierarchical and vertical accountabilities. Joint working will be essential in the future – but so will be delivering ‘results’, fiscal constraint and meeting the challenges of ‘wicked’ problems. Innovative practices will be required with a new openness to collaborative arrangements and alternative accountability arrangements.

Quite rightly, the Future State report noted that the new information and communication technologies are playing a major role in what we are coming to understand as the ‘twenty-first century’. These are also contributing to how we rethink government of the future. At one stage the field was given its own name: ‘e-government’. Some think that ‘digital-era governance’ defines the future. In Chapter 8, Miriam Lips argues, however, that much of the complexity surrounding electronic applications in government comes about because of narrow perspectives on e-government and misleading expectations about the transformational potential of technology in public sector reform. Recommendations for future models are not usually aligned with the managerial, governmental and democratic realities. Another problem arises with ‘technological determinism’. Technologies do not drive change but public managers can use them to enable it. Lips continues by arguing that we need more research into the actual application of ICTs so governments in the future can make the best use of the opportunities and work in appropriate ways. They need to move away from a government-centric approach towards public service development and delivery, and shift towards new ICT-enabled citizen-centric service models such as networked governance. Lips concludes her chapter by noting a few ‘system errors’ that need to be fixed in the current public management system in New Zealand in order to make any progress with the design of an effective and efficient ICT-enabled future state.

New Zealand stands out for the extent to which chief executives have used structures as a lever for strategic change. Richard Norman and Derek Gill explore in Chapter 9 what triggers organisational restructuring, how restructurings are undertaken and some of the consequences of restucturing. They find that pressures from the formal system to initiate change (and to be seen to initiate change) encourage the use of structural change by new chief executives who in many cases are under pressure to demonstrate results within a five-year contract period. Restructuring provides a symbolic action visible to central agency reviewers and political leaders. Norman and Gill suggest that restructuring results in not easily observable losses in capability, and invariably takes longer to deliver improvements than anticipated. Restructuring initiatives are largely regarded as a ‘freedom to manage’ operational decision for a chief executive. The authors argue that, given the potential impact of the loss of organisational capability and relationship capital, as agencies become less able to collaborate with other agencies, this area of change needs scrutiny in a manner similar to a case for a budget bid for capital investment.

As Future State 1 and several chapters in this volume emphasise, new ways of working will be required across many aspects of governance. In the penultimate chapter, Geoff Plimmer, Richard Norman and Derek Gill discuss how, in turn, these new ways will require new skills and capabilities in public sector organisations. Their research found that a focus on building skills and capabilities provides a means of managing the inherent tensions between an authorising environment that emphasises control and risk aversion, and increasing demand for flexibility and innovation. A ‘strategic human resource management’ approach can be effective in building the skills and capabilities required. However, there are a number of barriers to taking this approach – ministers’ specific and immediate demands, the struggle for management attention, weak central leadership and under-skilled line managers – all of which act as either distractions or impediments to capability.

In the final chapter, Ryan and Gill discuss the need to reignite the spirit of reform in public management in New Zealand. This spirit soared in the 1990s and again, briefly, in the early years of the twenty-first century but then faded. Future State 1 called for a step change in the means and methods of governing, a view that is supported in various ways by the contributors to the collection of essays in this book. Ministers in the present government say they are looking for innovation. If recent views emanating from Treasury are any indication, the leadership of the public service recognises that the conditions of governing have changed significantly in recent years. In response it appears that they want to address this fact by making continuing modifications to the existing public management system but not to considering fundamental change. On the other hand, in pockets throughout the public sector, confronted by circumstances where normal operating practice does not help them to achieve the policy outcomes sought by government, officials are creating new ways of ensuring they can. In doing so they are showing the way towards creating approaches to public management that point to the future. The authors argue that it is these individuals and networks that are reviving the spirit of reform and their work should be supported, applauded and taken forward. Ryan and Gill finish by identifying a selection of principles distilled and combined from the chapters in this book that could and perhaps should be adopted as part of the future state, as the directions for continuing reform by practitioners of public management in New Zealand.

Bill Ryan
Derek Gill

October 2011

¹ See <http://www.dpmc.govt.nz/better_public_services/case_studies.
htm>.

² See <http://www.psa.org.nz/CampaignsAndIssues/ModernPublic
Services.aspx>.

³ A further work stream was later developed looking at the public management implications of the Treaty of Waitangi. Unfortunately, this work did not reach fruition. It is clearly, however, a line of research that should be picked up again.

⁴ Including Judy Whitcombe (2008), Rose O’Neill (2009), Elizabeth Eppel (2009) and Peter Mumford (2010).