Speech to State Services Policy Leaders Forum

Thank you for the opportunity to speak to you.

This morning I am going to discuss the challenges of the world economic crisis as it will affect the State sector here in New Zealand, and to talk about the new Government's objectives for improving the public services we provide to New Zealanders. 

I'd also like to canvas your role in helping us meet those objectives.

In less than a year the economic outlook both here and overseas has declined dramatically.

Every day you're seeing more bad news about the state of the world's financial system: Failing businesses.  Abandoned homes. Mass job losses.

As a small open economy, our prospects rise and fall with those of the wider international economy.

The IMF predicts that world economic growth this year could be the weakest since World War II.  Even worse, it predicts that the advanced economies - most of our trading partners - will shrink by 2 per cent.

New Zealand faces a harsh quartet of falling growth rates, lower commodity prices, falling demand for our exports and rising unemployment.

While we can't shelter from the economic storm clouds, we can blunt the sharp edges of the economic crisis.  The new Government's stimulus package is proportionately one of the largest in the world.  Long overdue tax cuts married with smart infrastructural investments will help many families and communities get through the challenges ahead.

But after a decade of strong economic growth and overflowing tax takes, the country now faces a decade of deficits.  The public accounts are now tracking Treasury's worst case scenario.  Annual tax revenues are expected to fall ... something unimaginable in the past 20 years.

For many in the State Services this is the first time they have faced these economic challenges.  Ministers have been given a clear message to manage within existing resources and we will need your assistance to achieve that.  When your Minister says there is no more money, then he or she is telling you like it is.  For most of your agencies, there will be no extra money over the next few years.

Prior to the election, the new Government made it clear we would limit new spending in our first Budget to the priorities we have identified in the election campaign and nondiscretionary pressures that cannot be deferred or absorbed.  We will not consider any ‘budget bids' for new funding.  Additional public services will need to be funded by back-office savings.

Ministers and chief executives still have spending pressures to contend with.  However, these pressures will be met in the first instance by reallocating funding within departments and Crown entities.

Because the State Services comprise 30 percent of our economy, it is absolutely essential that the State Services play their part.  More focused, efficient, and productive State Services is a key element of the Government's plan for a faster-growing economy.  Years of unfocused and largely unmanaged growth have left the State Services unbalanced between head office administrators and frontline service providers.  Productivity levels are too low and they now represent an impediment to the better growth levels our economy must achieve in the future.

Every tax dollar taken out of the pay packets of hard working New Zealanders must be spent where it counts - wisely - efficiently - where it can do the most good - to assist the New Zealand public to get on with their businesses and lives.

At a time of financial restraint like this, the Government's priority is to focus on the frontline services that we provide to the public.  As stated prior to the election, the Government believes restraint and prudence within the State Services, easing of pressure on taxpayers in the short term, and leaving maximum room for growth in the productive sector as we move out of recession, must be amongst the government's responses to these times.

Your agencies have recently completed line-by-line reviews of your budgets, so that you can move people and funding into areas that will deliver the best value for money and the best improvements to frontline services for taxpayers.  This is a constructive approach which recognises the leadership of Ministers and Chief Executives in managing their resources and demands on them.  This is an important first step.

But this environment of restraint and prudence will last for some years, reflecting the uncertain economic times ahead.  This year's line by line review is not the entirety of the State Services' contribution to the restraint.  It is the beginning.  Seeking value for money and moving resources to the frontline will be an on-going feature of your department's work for the next few years.

The Government expects you, like everyone else, to focus on core activities... on services to taxpayers.  A tighter focus on the programmes and policy that will deliver results.  An emphasis on the things that make a tangible difference to the lives of New Zealanders.

In 2007 the State Services Commission conducted the Kiwis Count survey - I am sure that you are all familiar with it.  Part of that research program established - unsurprisingly - that the most important driver of service satisfaction with the New Zealand public was whether or not the service met their expectations.

Two thirds of Kiwis, 66 percent, agree that - based on their experience of a government service in the last twelve months - they were satisfied that it did meet their expectations. 

On the other hand, 18 percent of the people who were surveyed disagreed with that statement.

That roughly equates to 700,000 people.

Or more specifically - that is equivalent to the combined populations of Auckland and Manukau cities.

That tells me that there is room to improve New Zealander's experience of our front line public services.

New Zealanders are becoming more demanding - they want more personalised service, faster service, and greater convenience.

Better public services come from an understanding of users and their needs and expectations.  This applies from the beginning of policy development as well as in the delivery of frontline services.

British research has found that the quality of frontline public services such as hospital care or vehicle licensing is increasingly compared with other service experiences such as banking or shopping.  People expect public services to match the quality of those services provided elsewhere.

And a successful user-focus needs commitment not just from frontline staff, but also from management, strategy and policy.

The new Government is less interested in strategic visions, overarching frameworks, and blue sky waffle.  Our priority is improving the service we provide to the public within the constrained resources we have inherited.

Whether it is in our hospitals, our schools, our WINZ offices or the State Services Commission, the Government wants to improve services and responsiveness.

As things get tougher, taxpayers will become more demanding of the services their hard-earned tax dollars are funding. Scrutiny will increase.  They will not tolerate waste or inefficiency.  Kiwis will expect the public service to play its part.

And we look to you to assist us in achieving that objective.

Prior to the election the National Party in Opposition stated its belief there is a high level of professionalism and competence in the State Services.  That is certainly the view of the new Government.  We have appreciated the work so many of you have done to assist us, in the first part, in meeting our commitments under the 100 day action plan, and also, in further progressing our wider manifesto commitments.

As the Prime Minister has said, creating a professional environment of mutual respect is the best way to improve performance and productivity in the State Services.  We are welcoming the competent professional advice and respect the right of officials to tender a dissenting view.

The interaction between Ministers and officials is changing.  For example, relevant departmental officials have begun attending Cabinet committee meetings and gaining a stronger understanding of the Government's thinking and expectations around various policy issues.

The Government is also committed to capping the size of the core bureaucracy over the next three years.  We want to restore the balance between core government administration and frontline service delivery.  Obviously the economic situation and its fiscal impact will be the strongest pressure on restraining growth in core government administration.  There simply aren't the resources available to grow core government administration as there was in the past nine years.

Again, the Government appreciates the work you are doing to help us meet the priorities New Zealanders expressed when they changed the Government last year.  These new priorities need to be reflected in your work.

It is important that the State Services acknowledge that there has been a change of government and a change in priorities.  Your work programmes need to reflect the new Government's agenda and the priorities endorsed by New Zealanders.

That is part of building the trust that is essential to any effective working relationship.  And this Government wants this relationship to work.  Delivering on our agenda, improving the public's experience of public services, depends upon it.

We want to be a good employer - we want to engage with officials and we expect free and frank advice as part of that.  But that free and frank advice needs to be targeted at making an impact on service delivery.  As I said earlier, this is a new Government unwedded to the previous regime's love affair with endless strategies, visions and frameworks.  We know you want to provide concrete advice in plain English on how we can deliver better services to New Zealanders.

Good, clear, balanced thinking expressed logically and directly.  Ministers are looking to see advice that matches their expectations and is communicated in a way that shows clarity of thought and purpose.

And we want a sense of urgency about it.  Yes, it needs to be deliberate and thoughtful, but it doesn't have to happen glacially.  We expect that your advice will be informed by practical experience.

You know what New Zealanders want at the front line.  They want their expectations met, they want the staff they deal with to be competent and to keep their promises, they want to be treated fairly and their individual circumstances taken into account.  And they want the services that they receive to be an example of good value for tax dollars spent.

That is what your ‘customers' want.  Now it is up to us to provide those services that meet their needs within the serious financial constraints before us.  This Government expects better services delivered more efficiently.  And we are looking to you, as policy leaders, to help make that happen.

I wish you all the best for today and I encourage you to support the government in having a material impact on New Zealanders' experience of their State Services.