Fallacy in approach to state sector reform exposed

Bill English
Bill English
A politician of the calibre of Bill English should never have got into the kind of pickle he landed himself in this week.

Normally it just wouldn't happen. As Mr English and other politicians are fast discovering, however, these are no longer normal times.

The Minister of Finance trapped himself in the old "won't rule anything in or out" refrain when asked what sacrifices the rest of the country would have to make so the Government could fund its share of the gigantic bill for rebuilding Christchurch.

The fuzziness of Mr English on some sensitive options for raising cash generated the wrong sort of headlines, forcing the Prime Minister to intervene.

Yes, John Key confirmed, it was likely those on high incomes who now get Working for Families payments because they have a lot of children would no longer qualify.

No, the Government would not be reintroducing interest payments on student loans.

The fluffing of things by Mr English might be excused on this occasion, however. He is in the middle of writing (or, more likely, now rewriting) this year's Budget.

With the Treasury now estimating the recessionary impact of the earthquake will slice some $5 billion off the tax take, Mr English is going to have to grasp some big political nettles to satisfy the international credit rating agencies, while simultaneously avoiding throwing the nationwide economy into full-scale recession in an election year.

The likely postponement of major infrastructure projects raises the question of the extent to which the earthquake has derailed National's carefully-calculated election agenda.

At his weekly press conference, the Prime Minister was left grasping for examples that were medium-term projects and thus less affected by this year's fiscal constraints. He cited the restructuring of the state sector and welfare reform as areas where it would still be full speed ahead.

But even in these cases, the earthquake has rearranged the political furniture.

While the fiscal thumbscrews applied to the chief executives of Government departments might well be tightened even more mercilessly, the earthquake has revealed the fallacy in National's approach to state sector reform.

National's restructuring of the state sector is ideologically driven. But that has been disguised by its argument that it is bolstering the front line with extra staff which will result in better services from state agencies.

This is being done by drastically scaling down the number of "backroom" bureaucrats in Wellington.

National knows that outside the capital there is little sympathy for public servants, even though they have endured round after round of job-shedding driven by real cuts in departmental budgets.

National has sought to widen that divide by painting the Wellington-based core public service as chronically overstaffed, ridiculously under-worked and pathologically inefficient.

It is easy, but cynical, politics. Last month, Mr English - knowing full well that state servants cannot answer back - accused them of producing "waffle" in the policy papers which come before the Cabinet.

Then came the earthquake.

Suddenly, it has become patently clear why those Wellington-based public servants are so essential. The Herculean, but largely invisible, efforts by head office officials have underpinned what has so far largely been an effective and well-co-ordinated response to getting Christchurch back on its feet. No prizes for guessing who will be basking in this success, however.

The earthquake's impact on welfare reform was more immediate. The report of the welfare working group, chaired by former chairwoman of the Commerce Commission, Paula Rebstock, was released less than an hour before the quake struck.

It has received scant attention since. Those of centre-left persuasion argue that should remain the case. With its recommendations calling for a tightening of the distribution of hardship grants, getting sole mothers back to work as early as 14 weeks after they have given birth, refusing additional financial help for beneficiaries who have another child while on a benefit, and beneficiaries being given ready access to long-acting contraception, the report is more to the right than an Act New Zealand manifesto.

Such fringe ideas can and will be dismissed by National. Harder to ignore is the working group's call for a new model for welfare - one which switches from a "passive" system concentrating on providing income-tested financial support to one where the emphasis is on a rapid return to paid work.

Many of its recommendations here are pretty conventional. But to achieve success requires application of most, if not all, of them, and that costs big money.

The working group is urging a change of mindset - and not just on the part of beneficiaries.

Tackling so-called welfare dependency requires employers to come out of the Dark Ages and start offering sole mothers flexible work hours, for example, so they have no excuse for not using available child care.

But the biggest shift in thinking is required by government. The working group's view is that the state has to dramatically lift its game and start providing help across the board, so beneficiaries have a much better chance of landing jobs.

The report is now with the Government and the PM is thought to want resources devoted to early-years intervention to break the cycle of intergenerational dependence on welfare.

That is all well and good. The report, however, goes wider than that. It offered a rare opportunity for a serious public debate which might have seen the main protagonists take a less blinkered view. That opportunity now appears to have been lost. Blame that on the Christchurch fault-line.

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