State service bosses tend to shy from speaking publicly and forthrightly about their budgets and departmental workloads, observing the convention whereby Govts make policy and civil servants implement it. Rob Muldoon wanted them seen but not heard; under Helen Clark they feared what became known as the great clunking fist from the ninth floor. Bill English hence has a hard row to hoe, when he tries to persuade them to “own” the problem of making the state sector leaner and more efficient. They shouldn’t just tender advice; they should initiate solutions and air their ideas. Hence Treasury secretary John Whitehead was obliging his political boss when he warned the public service to lift its productivity and do things differently and more efficiently. Productivity improvements might mean adapting private sector ideas, techniques and experience.

More For Less. Essentially, Whitehead says state service bosses must do their bit for the critical job of improving NZ’s long-term economic performance in a changed world and against a challenging fiscal backdrop. They must meet the Govt’s call for “smarter, better public services for less.” Over the past five years, output in the non-tradable sector (which includes Govt) grew by 15%, but the tradable sector (the part of the economy which really drives competition and national productivity) contracted by around 10%. To help NZ compete internationally and lower costs to exporters, the quality of public spending must be lifted and the lion’s share of increased national resources channelled into the private sector. Every dollar spent by the public sector is a dollar not spent on business investment, or left in taxpayers’ pockets, or saved.

How To Measure Productivity? Left-leaning ideologies responded with grim warnings greater privatisation is being heralded while business people generally were shouting hurrah. But taxpayers’ plaudits need to be tempered with a caution: we must avoid repeating past mistakes with another slash and burn campaign against the state sector. Yes, there are gains to be made. The same can be said of the private sector. A key question: how do we measure the productivity lift called for by Whitehead? With great difficulty is the honest answer. Measuring productivity is straightforward when it involves cans of peas per worker or per dollar of investment. When it comes to measuring the productivity of service providers - educating infants, sentencing murderers, advising the public on how to deal with swine flu, tendering advice on fiscal tightening to the Finance Minister - it’s much more complicated.

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