Sir Brian Roche on reorientating the Public Service

Tēnā koutou katoa.

I appreciate the opportunity to talk to you about the Public Service's role, the economy and what we are going to do to navigate our way through these difficult times. 

I would like to acknowledge the former Governor-General and Chancellor of the University, Sir Anand Satyanand, and Vice Chancellor Neil Quigley. I would also like to acknowledge all the other current, former and past politicians and local dignitaries. There are too many to mention by name. I would also like to acknowledge and thank Matt. 

I have been in the role of Public Service Commissioner for 14 weeks. That's about a hundred days. 

I've come into the role at a time of huge challenge, constraining times if you like, but this also brings opportunity, especially if we can get some unconstrained thinking. I'll get to that in a minute but just to manage expectations, I don't have a shrink-wrapped answer or Gantt chart at this point about what we're going to do, but I've got a clear view about what we must address. Also, everything I'm about to say is completely challengeable and I'm quite relaxed about that. 

For context, when we talk about the Public Service, this is what we mean. We have got approximately 63,537 public servants, which is an increase of 30% over the last 6 years. Where do they all exist? Only a small proportion, 44% are in Wellington, the rest are distributed across the country with quite some concentration in Auckland. 

The overall workforce costs for the core Public Service have grown over the last 6 years to about $6.1 billion per annum. So they represent a significant part of the New Zealand economy and it's important that we understand it.

This is the public sector diagram and it'll give you a sense of where things are and to say it's complex is an understatement. There are 46 chief executives in the core Public Service. That doesn't include the wider public sector such as defence personnel, police, teachers, public healthcare workers. All 46 chief executives are employed by me and report to me. 

Observations

When I was appointed to the job, the overriding brief I was given was to improve the performance of the system.

So like all newcomers, I've started doing some diagnostics and I've talked to a whole lot of people. I've talked to a lot of people in the system, outside the system, in Wellington, outside Wellington. And that's what I’m going to share with you, those observations. 


But at the outset, I just want to state, I have a deep respect for the role of the Public Service and the work public servants do, often without any thanks. In the short time I have been in the job, I continue to be impressed by the quality, the commitment and the effort across the Public Service. 

My reflection, as a real public servant now, is you get this feeling of being squeezed like a sandwich from all sides. The historic mythology of gliding on is a mythology. People work hard and they are doing their best. But, the sector is under pressure and it needs to continue to perform and deliver for New Zealanders every day. And as we speak here, there will be people, public servants, doing things to make New Zealand and the economy better. 

But I'm also struck by the fact that a lot of things happen despite the system, not because people are enabled by it. There are often multiple workarounds to get things done. 

We have a range of sprint teams, taskforce type interventions, to speed up and work around the system. That is telling in itself. 


It's fair to say the observations I'm going to share with you represent challenges for all organisations across the world. The New Zealand Public Service is not unique in an organisational sense. 

At its core, we are a service business, and as the literature says, service businesses at their heart are responsive and adaptable to their environment and their customers. I would suggest that we have lost our way on that a little bit. 

So here are my thoughts and observations, as discussed with the chief executives, and somewhat encouragingly, they are acknowledged and supported by the group and by many public servants. So that's a great start.

We are operating within an outdated model

Firstly, we are operating within an outdated model. We need to simplify things and not accept that this is the way the system is. Accepting the sub-optimal is disempowering and it is conducive to poor talent management and growing and developing people. Being passive is a learned behaviour and we need to be reenergised within the public sector. 

The system has served us well and it has to be acknowledged that it's a huge credit to those in the system that they actually make it work. But it is not fit for purpose, in the context of a rapidly changing operating environment, in terms of the fiscal position we face, the economic growth focus we must adopt, and the increasing need to improve the quality and timeliness of decision making. 

We have a concept of the whole of government and we now, as a result, have very hard-wired elaborate systems and processes to ensure that a whole of government or system perspective is brought to bear. That is good, but I would suggest it is at enormous cost in terms of time and in terms of dollars. It has generated a lot of internally focused work and multiple meetings, the value of which is questionable and often very frustrating to those who are trying to make change and lead initiatives.

Whether we like it or not, the guise of collaboration has driven us towards a consensus-based model where we're essentially held ransom by the slowest participant or the poorest performer, and that has to be addressed. 


The balance between accountability and outcomes for individual agencies versus outcomes for the system as a whole, is a point of ongoing tension and discovery. Matrix management is unavoidable and we need to get better at it. There is a sense that consultation within the public sector is becoming a mechanism to avoid decision making. 

The system is inefficient

The Public Service has become weighted down, in my view, by risk considerations and gets lost in processes that don't add value. Risk has become the overly dominant feature of discussion. 

If we concentrated on creating value as much as we do on managing risk, what would that look like? What impact would it have on our productivity? 

Risk is an unavoidable fact of life. The issue is one of management and mitigation, not elimination. As we well know, the risk of doing nothing is often greater than the risk of action, so we need to go from avoiding risk to proactively managing it. 

As a result of the overweighting on risk, we have too many layers of management and meetings that can stifle and even kill action and progress. 

The scale of our entities. The size and scale matters. Our current model has a number of agencies that are subscale, and unable to capture the economic efficiencies of others, nor do they have the depth to provide resilience over time. 

We need to find a way around being able to create scale, remove the inefficiencies of subscale and duplication without stifling the benefits of individual focus around specific constituencies or issues. 

The reality is that we have a number of entities which are subscale, which involves a lot of fixed cost and a lot of duplication. The question remains about what the optimal size of a Public Service entity is. If we address the inefficiencies, what will we be stripping out? This is the conversation I am having with the chief executives. 

There is a trade-off between technology and people, but that optimal resourcing model has got to be worked through. We can't continually ask people to run faster. We need to change the way we do things. 

We need to improve our decision making

Decision making and responsiveness is something of a mystery in the public sector at times. We need to improve our decision making. 


I think there is a global trend of decentralisation and empowering communities and others to have more say in and control over decisions and delivery. Put another way, we need more community and a little less Wellington – but not at the expense of accountability and/or integrity. We already have evidence of that in our operating environment, so it's not new, but we need to change the pace and the scale of that devolution. We need to make it the norm and the way we do business. 

Our daily lives are increasingly dependent on data and technology. Business and operating models are the same. The rate of change will accelerate, and our operating model needs to reflect that. Data and information will be the asset and currency of our systems. It's got to be used to support decision making and will impact on how third parties and users of our systems engage with us – I’ll come back to the issue of data and AI later – but we have to address this. 

The ability to improve the quality and timeliness of decision making is of huge value to the public sector, and I would suggest the wider economy. 

We need to be more responsive as a system

At our core, as I've said, we are businesses delivering services to others. The Public Service needs to continue to focus more on citizens and less on the institutions. 

It sounds obvious, but we need to increasingly adopt an external, market focus that puts the citizens we serve at the centre. It can be done. The New South Wales Public Service has configured its operating model with a heavy focus on achieving outcomes, so we have examples to follow. 

All systems and businesses run to some degree of history and learned behaviour. What we do today, we did yesterday, last month and last year. This creates an easier and less challenging operating model, but I would suggest it also stifles innovation and disruptive thinking. We need a greater sense of curiosity within the public sector about why things are done the way they are, and where they could be better. The ability and willingness to disrupt yourself is a strength. 

We need to create a sense of urgency, a war time focus every day as it were, and leave the hardwired architecture behind. The Public Service is often at its best in times of crisis, and in those situations, the Public Service steps outside the traditional or orthodox way of operating. I'd like to take the best of what we learn from those situations and reverse engineer them into our orthodox or peace time way of operating. I think that would be more awarding for everybody, including the participants. 

As a result of where we are, I think there is too much focus on management in the Public Service and not enough focus on leadership. They are very different concepts.

What does leadership look like in a modern public management system, and what are the attributes of leadership that we need to have in a rapidly changing environment? 

We have fallen behind in that regard, and we need to create a culture and ways of working that empower frontline workers to work in communities, delivering services that are responsive to local need, and that will require an adjustment in our risk appetite and operating models. 

This goes to the heart of how we do business and the ability to stand in the shoes of those we serve. Empathy and respect and understanding are key. 

Reorientating the Public Service

We need to reorientate the Public Service and I'm feeling both intimidated and exhilarated by that challenge. And when I think about this, I'm not looking at rebooting from scratch – I see it more as adjusting our current models and aligning them and streamlining them. As I've said previously, our existing model has served us well, but it's now outdated, and it's not fit for purpose.

If we started today, we would not design a system as it's currently operating and we would not have 46 entities. We need to modify it, ultimately where we need to be is totally different to where we are now.

The market is changing and the machine isn't responding. It's not a criticism of anyone, by the way. It is just the reality of our operating environment.

The Public Service must set the highest standards. That means being competent at what we do, upholding political neutrality, free and frank advice, being efficient with taxpayers money, corruption, free, and delivering outcomes for the people we serve.

We also have an important stewardship role and responsibility to uphold, and that includes maintaining talent and capability across the Public Service for the future, all with the objective of retaining the trust and confidence of the public, ministers and successive governments.

So, some ideas. We've got three things we need to focus on immediately, all of which will actually secure change:

1. Social investment
2. Use of data and AI
3. Supporting economic growth

We need to gear the Public Service more towards results and outcomes. We have to get away from this notion that a reset is about one person such as myself coming in and changing a few things and then we go back to sleep.

Change and innovation are forever. This is very much at the heart of private sector service businesses, so why would it be different for the public sector? We need to be repositioning and reinventing all the time. We need pragmatic, data-driven policy solutions in real time. I believe it's a way of thinking. It's an attitude. And it's the essence of leadership in what I believe to be a contemporary environment. 


There are some areas of opportunity.

Social investment

The first one is social investment. A lot of thinking has been done on this and a social investment model designed to deliver better outcomes is currently under development.

It's a model that puts people and outcomes first and it's a model that will deliver for the community in the community – it won't be done necessarily out of Wellington.

We need to change the way services are delivered for people with high and complex needs that cut across our agency siloes. The idea is that for those people, those closest in the community to them are most likely to be successful in finding the solutions.

And to be effective in dealing with cross-cutting problems, providers need flexibility to bring solutions that put the person or family in the centre of the service delivery. This may not sound revolutionary to you, but it is to many.

I know there are different schools of thought about social investment and outcomes-based contracts. My question for those sceptics is: Is the current system working? Are they achieving the outcomes we want and this country needs? I would suggest they aren't. 


Our core focus must be on the citizens, not on the institutions. So that's what we're going to be doing. We also want to empower communities and public servants to be able to be decision makers and not micromanage them.

If it works, we can take a similar approach to other sectors. It's worth trying and we shouldn't be afraid of failing.

Data and AI

There is no doubt AI is going to transform the way public services are delivered in New Zealand. We have no choice but to embrace it, as we did the internet and smartphones, but we're going to have to be smart. It will allow the Public Service and government to work more effectively and make better decisions. But our unwavering purpose must be the use of technology in a way that benefits and helps citizens.

It's already happening within the public sector and there are already examples of it being used in New Zealand Customs. The challenge is how do we make it the norm and not the exception.

Hon Judith Collins, the Minister for the Public Service, said to the Public Service chief executives on Tuesday that we are on the cusp of a digital revolution that has the power to transform the way government serves New Zealand. I believe and support that. The Minister talked about the possibility of a centralised AI-powered platform that enables real-time sharing of insights and collaboration between agencies like health, education and housing. Our ability to do that is constrained, but the value if we were able to do it is very significant. But once again, we can't lose sight of the objective and that is that people and businesses get the services and information they need, whatever the time and wherever the place.

We will have to think through the privacy challenges. We take that seriously. It's a non-negotiable. But the challenges we are facing in the Public Service are, in my view, not unique. The disruptive potential of AI is one of the global trends every country, every government, every business is grappling with, and we have the ability to learn from others.

If we get it right, data and AI won't just help us develop world-class public services, it will create new jobs and stimulate the economy.

Economic growth

Government spending is a big part of the New Zealand economy. The Public Service is a very big part of the economy. Its performance is critical to the New Zealand economy and we're not actually performing to the levels that we need to.

We have an important role in economic growth. The public sector is not separate and distinct from the rest of the country, and I do get a sense that there is quite a divide between the private and public sector at this point. I don't think that's good for a small economy like ours.

I want the Public Service to have a reputation as a good place to do business. That doesn't mean we commercialise everything or compromise the delivery of social services, but efficiency and value for money is obviously a non-negotiable. We are under fiscal pressure and we have to discharge our responsibilities to use taxpayer money very wisely. The challenge is how do you do that when the Public Service is often the sole provider of a service. I'm really interested in how we proxy some market disciplines and demonstrate value for money.

The Public Service needs to see itself as an enabler of productivity and growth and we have to get better at working with businesses.
Both public and private sectors need to lift their game in terms of collaboration.

How we work as public servants can and will make a difference. We need to be looking at how we streamline processes, including our regulatory frameworks. We may even learn about how to communicate more clearly, that in itself would be helpful.

I believe business-friendly practices and strong relationships with the private sector can spur innovation in the public sector and improve the way we do our business.

The Public Service has an important job in supporting the government to foster entrepreneurship and attract investments. These things ultimately help create jobs and drive economic growth.

Conclusion

We are in a rapidly changing world. AI is going to move things faster, even more quickly than we've experienced in recent times. And the Public Service has to gear up just as fast, and I'm confident we will.

My immediate focus is prioritising efficiency and performance of the existing model. That needs to be done, and it needs to be stabilised as soon as possible, so that we can move to operating in a bigger, more technologically driven and customer-centric world.

I want to acknowledge that I've talked about my observations and then some of the ideas. I haven't quite got the middleware yet, but that will come.

To be clear, the New Zealand Public Service does perform. It does deliver. Public servants get out of bed every day and make a difference to people's lives. But like all businesses, we can always do better, and its incumbent on all of the Public Service to try and do better.

My job over the next short while is to position the Public Service so that it is fit for purpose to face the challenges and priorities that come our way.

Unconstrained thinking for constrained times couldn't be a more relevant theme.

We know the old ways of working in the Public Service won't work for the future. I want to see a Public Service that embraces innovation and thinks beyond what is conventional today. A Public Service that encourages original ideas and creative solutions while maintaining the non-negotiable values of integrity, ethics, and trust. I have particular confidence in our ability to do that.

Many of the issues highlighted this afternoon are not unique, they are experienced by other public administrations worldwide, plus, I think within the broader private sector, and that gives us a huge opportunity.

There is no public servant who does not want to deliver value. We just have to define what this means and make sure the taxpayer and the citizen is at the heart of what we do. 


I can't predict the future. No one can. What I am certain of is that public servants will rise to whatever challenge comes our way with courage, with innovation and the clear objective of serving the citizens of New Zealand.

Thank you.