Peter Lyons writes in praise of the public service.
My elderly father has had major health issues over the past
year. We have had numerous encounters with the public
hospital system. The nurses, doctors and support staff have
been superb in their sense of duty and care.
It is obvious they are motivated by compassion for others.
Despite the stress and sadness, it has also been a
heartwarming experience because of these angels. Over the
past few decades we have lost sight of the fact that those
who embark on careers in health care or education usually do
so out of a sense of duty and a desire to serve others.
It is called public service for a reason. Free market
ideology is based on the premise that government employees
are less efficient than their private sector counterparts due
to a lack of monetary incentives.
My fleeting experiences of the public health system and my
extensive experiences in education suggest to me that
monetary reward is not the primary motive for people in these
occupations. This is not to deny that they wish to be paid a
Yet politicians persist in their belief that performance pay
and using dubious statistics to quantify results will improve
outcomes in these sectors. They constantly restructure and
reform in attempts to squeeze greater efficiencies out of the
They propagate the belief that our public sector is bloated
and inefficient. If only it was more accountable to
competition and market discipline it would function in a
magically efficient way like banking and finance.
The reality is that constant reforms and budget cuts serve to
erode the goodwill of public servants. It is this goodwill
and sense of duty that allows these threadbare systems to
function effectively. It is not an inept public sector that
has hindered New Zealand's prosperity.
The central problem has been appalling policy decisions. In
the mid 1970s, New Zealand had a standard of living on par
with Australia. Our living standards are now less than
two-thirds of our neighbour. While minerals matter, good
policy matters more.
Examples of bad policy decisions include Robert Muldoon's
canning of the compulsory superannuation savings scheme in
the 1970s. The Muldoon administration was also responsible
for the poorly conceived and executed Think Big projects of
The Rogernomics reforms in the 1980s included the sale of
prize public assets at rock-bottom prices to mainly overseas
buyers. This process also gave monopolistic power to outfits
such as Telecom that proceeded to gouge consumers and inhibit
technological progress. Most of the profits from the
privatisation process went offshore and still do.
The Douglas reforms contributed to a massive surge in
unemployment, partially due to lack of transitional
assistance for those affected by the sudden changes.
Unemployment in the 1980s rocketed by over 170,000 resulting
in a huge loss of potential output and incomes. The growth in
unemployment was often blamed on the sudden emergence of a
large cohort of shirkers in our society.
The reality was that many ordinary Kiwis were blindsided by
the rapid changes which had not been signalled by the
We were mugged by an ideology. The deregulation of our
financial sector contributed to the 1987 sharemarket crash.
More recently, our lightly regulated financial sector
resulted in the finance company collapses with a huge loss of
Banks operating in our laissez faire financial environment
make record profits in tough times by feeding our addiction
to housing investment in a severely distorted market.
Poor policy settings continue to cost us dearly. It is a well
perpetuated myth of modern capitalism that a teacher, doctor
or nurse who steps out of the public service into the same
role in the private sector suddenly becomes a hyper
efficient, high performer due to monetary incentives.
It is the goodwill of thousands of workers in public health
and education that holds the systems together.
- Peter Lyons teaches economics at Saint Peter's
College in Epsom, Auckland, and has written several economics