What’s Wrong with the Public Sector? 

Accountability in the public sector has been a big talking point recently

Two reports I saw this week reinforced how poor the performance of the New Zealand public sector is these days.

First, a warning of widespread failings in the public accountability of government agencies. In an extraordinary statement: “I don’t trust CEOs of government agencies – you want trust, you gotta earn it, front up”.

That was said by one of the 35 Māori participants who spoke to an outside agency for the report about their perspectives on accountability and trust in, and with, the public sector.

More and more is spent on communication by public agencies but most of the information that is being published is much more like advertising than it is about accountability for performance.

The second report was about failings in the public sector procurement system. The total value of goods and services procured by Government departments and agencies in New Zealand is around $51 billion a year. It has increased by almost $10 billion, or 25 per cent, over the last three years and is now about 20 per cent of GDP. The efficiency with which this huge amount of money is spent is therefore very important for economic performance and living standards in New Zealand.

Three years ago the government had a major report prepared into the government procurement system because at that time, potential suppliers, government procurement staff and cabinet ministers were all frustrated by. That report was critical of most government procurement practices. The government set up task forces and working groups charged with making recommendations to improve the system. One would have hoped that at least some progress had been made over the past three years.

The most recent annual procurement business survey, rather than showing improvement shows more dissatisfaction than in 2017.

An annual report on progress in improving the procurement system has recently gone to Cabinet. I decided to read it. It was heavy going. It said that “over the last year the foundations of a substantial and complex programme to reset New Zealand’s procurement system has been established”. It sounds impressive. The report went on to talk about things like dashboards, high-level road maps, leadership models and digital procurement platforms but I could find few actions to improve the system that had been completed during the year.

I had not intended to write about the recent reappointment of Adrian Orr as Governor of the Reserve Bank.

But the Reserve Bank has missed its inflation target by about 300 per cent and unemployment is below the its sustainable level measure. With hindsight, that they pumped too much liquidity into the financial system –  and this is proving to be a very expensive mistake – and they were too slow to start raising interest rates again.

This isn’t a great track record – but the Governor has been reappointed anyway.

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