More, better with less: inside NZ's silo-breaking reform

By Stephen Easton

September 26, 2014

New Zealand flag

As New Zealand Prime Minister John Key settles in for a third term with an increased majority, his sweeping public service reforms are turning a collection of separate organisations into a cohesive system focused on clear outcomes.

Back in March 2012, Key made taxpayers a familiar-sounding promise: better public services and more bang for their collective billions at the same time. The government set 10 measurable performance targets for the public service to achieve while delivering efficiency dividends of 3-6%.

“Achieving these results will be difficult and demanding — in fact, for some of them, it will be extremely difficult,” the prime minister acknowledged, as he launched the Better Public Services initiative in a speech to the Auckland Chamber of Commerce. “But,” he added, “I make no apology for my high expectations.”

Key was adamant it was a to-do list, not a wish list:

“I want targets that are going to stretch the ability of the public sector to deliver them, and that are going to force change. Because if they are easy targets, they aren’t worth doing. This is not an exercise in ticking boxes.”

The ideas behind the BPS reforms came from an eclectic advisory panel chaired by Department of Prime Minister and Cabinet chief executive Maarten Wevers. It advised that reverberations of the global economic downturn meant the public service had to “do more and better with less”. The group also noted this goal aligned with the changing expectations of citizens for “better public services, delivered to them in more immediate, responsive and flexible ways”.

Going forward, the advisors said, the bureaucracy would need to develop a culture of continuous improvement and innovation with value for money a primary concern. Stronger and clearer leadership was also needed, in order to:

“… manage the state agencies that provide or fund services less as a collection of individual agencies, in pursuit of their own singular objectives, and more as a system that is focused on the results that will have the biggest positive impact on New Zealanders’ lives.”

Legislative amendments empowered bureaucrats to work together in new ways, and made agency chief executives jointly accountable with the relevant ministers for achieving the 10 results. Information about what is being done to reach the targets, including progress updates, was made available online. Key boldly invited his fellow Kiwis to judge the sweeping program’s success or failure for themselves.

Commissioning for results

According to Ryan Orange, a deputy commissioner with the State Services Commission responsible for state sector results, BPS is the biggest transformation the NZ public sector has seen in a generation. His boss, Ian Rennie, was made directly accountable to the prime minister and responsible for the bureaucracy’s overall capability to achieve the ambitious goals. For the first time the state services commissioner’s role is defined in legislation, and an important new job for him is to promote a culture of system stewardship.

Creating that culture is a task for the chief executives at the top of New Zealand’s departments and agencies, whose roles now require them to act in the collective interest of the nation. They are working to four-year plans, which are made public, and three have taken on cross-agency roles known as functional leaders, to maximise efficiency through shared property, procurement and information technology.

Orange says some changes were designed to start producing results quickly in the key results areas while a fundamental transformation will take longer and be undertaken incrementally:

“We are still working through that process, and therefore NZ is learning as we go. In functional leadership, we have achieved some cost efficiency ‘wins’, however, the potential big system gains from functional leadership are arguably less about service efficiency and more about how functional leads can work together to support redesign of public services.

“We are just starting to scratch the surface of the possibilities in this more transformational dimension, and to learn what conditions are critical to success.”

Ryan Orange
Ryan Orange

Of course, there was cross-agency collaboration in the past and the biggest early gains have come in areas where there were already working relationships. It was a relatively simple task to deepen collaboration between police, courts and the correctional system, for example. Another example of NZ’s increasingly joined-up government is the Integrated Data Infrastructure created by Statistics New Zealand.

The SSC deputy commissioner says it’s still early days but there are other hopeful signs, like eight agencies working together to develop efficient “wrap-around” services, which will make it simpler for citizens to interact with government at key points in their lives like childbirth or retirement. While collaboration is mostly being driven by shared cross-agency goals, he says functional leadership serves “an important catalytic role” by helping establish a shared vision of the future.

“It sets up the processes and systems for unifying effort and provides quick (and non-so quick) examples of collaborative success, which then feed more collaboration,” Orange said. “The idea is that functional transformation is centrally led and collaboratively delivered.”

Sharing is caring in property, procurement, ICT

In procurement, 14 whole-of-government contracts for everything from office consumables to advertising services are expected to deliver about $347.9 million in savings. Orange says the procurement lead — the newly consolidated Ministry of Business, Innovation and Employment — started with a service-based approach to the role before it received a cabinet mandate, and “it has deliberately carried forward this approach, focusing on demonstrating value to participating agencies and suppliers in order to get buy-in, rather than relying on a leadership mandate. This approach has served it well in generating demand for its leadership role.”

According to Orange, the value of sharing buildings is twofold: “One project (notably, arising from the tragic events in the Christchurch earthquake, in which government buildings were rendered uninhabitable) accommodates 17 agencies across four buildings, with one building co-locating nine agencies. The resident agencies will be sharing reception and a number of other key services, as well as fleet and ICT infrastructure.

“This not only achieves cost-efficiencies, but also provides a great platform for public servants to work collaboratively with each other in innovative ways. We are just starting now to explore this potential. While property consolidation initially was driven and managed by the property functional lead, we are starting to see agencies now also identifying opportunities to co-locate, embedding an all-of-government mentality.”

“Agencies are working together to develop and deliver ICT products and services for use across government …”

Department of Internal Affairs chief executive Colin MacDonald, as the government’s chief information officer, is charged with ushering in a new whole-of-government ICT system, which, Orange explains, “will enable much improved data-sharing and provision of joint virtual services by government”.

“Agencies are working together to develop and deliver ICT products and services for use across government, such as cloud-based products that avoid future operating system upgrades. The all-of-government website has been redeveloped to connect New Zealanders directly with government services and information from a citizen-centric, not agency-centric perspective,” he said.

“The GCIO’s reflection is that the ICT functional leader must create an environment where fellow chief executives appreciate the benefit to themselves and to the wider system of ICT transformation, and actively engage in this process. The role requires significant stakeholder engagement to achieve the desired outcomes.”

Collaboration between the functional leads themselves has also reportedly increased, with the obvious overlaps between procurement and ICT, and ICT and property.

“All three roles have changed … with the whole-of-government direction, which extends functional leads’ mandates to crown entities, and significantly extends the territory across which they must now exercise their leadership role. This change is still bedding in,” Orange explained.

We’re told the new arrangements enhance contestability through regular re-tendering, and new online resources help businesses build the capability to win government contracts. In the ICT area, Orange says, suppliers are “proactively innovating products and services to stay ahead” and the industry has started to offer “market price corrections beyond agreed contract figures” to stay competitive.

Developing a dual focus

Such a massive reform process is not without its challenges and the SSC is forthcoming about these as well. For one, chief executives need a dual focus, with one eye on their own agency and the other on the overall system as they work horizontally with other agencies. The commission is running a professional development program to develop this capability now and lay the foundations for future leaders. New budget appropriations for the increasing number of cross-agency and whole-of-government initiatives are still being worked through, according to Orange.

“Firstly, it can be a challenge to account for the costs and benefits for agencies, particularly when both can be unevenly dispersed across agencies, and over time (and sometimes, before the fact), it can be hard to estimate what the picture will look like,” he explained. “Secondly, there can be difficulties in generating a sustainable funding stream within the system for cross-agency leadership roles. At present we are working in particular areas where these pressures are being felt to get a better understanding of the issues and to develop solutions.”

“As with any innovation, the benefits can be as much in what you learn as in what you achieve.”

The deputy commissioner says state service leaders have also had to learn how to take account of the widespread impact that can flow from far-reaching decisions about procurement, ICT and property, which he describes as “critical enablers of change within the system”.

“For example,” he said, “a property decision can have wider impacts on the functioning of agencies. The property functional lead is seeking to manage the risks associated with this through prior consultation on (and approval of) strategies, and by ensuring a range of decision-makers are involved in governance of its programmes.”

Along the way there have been some unexpected positives of the BPS program, according to the SSC, and innovation is beginning to snowball.

Orange says it has been surprising to see how rapidly agencies have upgraded to the latest ICT systems, now that they don’t have to go through their own procurement exercises. And, as procurement lead, the Ministry of Business, Innovation and Employment was perfectly placed to ensure taxpayers got value for money as essential government infrastructure was rebuilt after the 2010-11 Canterbury earthquakes.

He adds that more efficiencies and opportunities for collaboration continue to be identified, as agencies become “more open to sharing templates, models, case studies and lessons learned”.

“As with any innovation, the benefits can be as much in what you learn as in what you achieve. In the BPS results programme, while we have achieved some important gains in results for New Zealanders, we have also significantly developed our collective understanding of the most complex social problems,” Orange said.

“Our ability to generate new and innovative solutions is just starting to gain momentum.”

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7 years ago

Great article

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