EXECUTIVE SUMMARY

1. The “Review of the Centre” is essentially a review of the public management system - of how well it responds to the needs and expectations of Ministers and of citizens, be they individuals, communities, businesses, or Maori.

2. The Review has not taken place in a vacuum. We have drawn on earlier reviews, interviewed many individuals both in and outside the State sector, and attempted to build on other developments in train.

3. Our major finding is that the public management system as it stands today provides a reasonable platform to work from, but some significant shifts in emphasis are needed to better respond to the needs of the future.

   Integrated service delivery

4. The first big issue requiring attention is the interface of Government with citizens, particularly on cross cutting issues where multiple agencies are involved – and where judgments need to be made at the front line. These are challenging issues posing difficulties to governments all around the world. New Zealand is no exception, but we believe we can do better.

5. Progress on cross cutting issues requires action on a number of fronts. We suggest a number of system level improvements as discussed further below. But these need to be combined with a bottom up testing of how government is working in the regions, followed by responses that reflect the circumstances of each region. We suggest a number of new ways of working , including:
   • inter-agency teams to tackle problems that have come to be regarded as intractable;
   • much better regional coordination; and
   • dealing with problems that have emerged in some areas through the separation of policy and operations.

   Tackling fragmentation / Improving alignment

6. A second important issue is fragmentation, and the loss of focus on the big picture that fragmentation can cause. This is caused by a proliferation of agencies; a proliferation of Ministerial portfolios leading to an excessive number of votes; and in some areas, by an over-emphasis on vertical accountabilities at the expense of whole of government approaches.

7. Fragmentation makes coordinated service delivery more complicated, adds to the costs of doing business, and blurs accountability for some issues. Structural fragmentation means many small agencies, spreading leadership talent and other skills more thinly and increasing the risk of weak capability. Fragmentation means Ministers need to build relationships with multiple agencies, and at times reconcile conflicting agency positions at an excessively detailed level. Fragmentation can make alignment more difficult.

8. We suggest tackling fragmentation and improving alignment in a range of ways:
   • establishing networks of related agencies to better integrate policy, delivery, and capability building;
   • an accountability and reporting system that puts more emphasis on outcomes and high level priorities, as well as output specification;
   • changes to vote structures to facilitate a greater outcome focus and better prioritisation across agencies; and
   • gradual structural consolidation targeting: small agencies; Crown entities required to give effect to Government policy; policy/operations splits, and sectors where there are Ministerial concerns about agency performance or alignment.

9. We believe that more widespread and proactive use of networks, some structural consolidation and a reoriented public accountability and reporting system will help address the problems of fragmentation. We also note the possibility of going much further, to formally group and manage Government agencies in 7-10 super-networks. This would represent a move towards substantial structural change.

10. Each of these proposals is only a partial solution. All are dependent on Ministerial support and active engagement with senior officials, including discussions of priorities, responding to evaluation, and actively managing risk in ways that make room for innovation.

    People and culture

11. We seek a culture shift in the State sector (more dynamism and innovation, more regional focus, more balance between outcomes, outputs and capability, and a longer term focus) and see staff and leadership development as an important part of the strategy, along with values and ethos work already underway. Whilst we do not propose any fundamental change from current employment arrangements - staff will continue to be employed by their own agencies - we do see a case for more active nurturing of the State sector workforce. Staff and managers who identify as public servants as well as employees of a specific agency will more readily carry a whole of government perspective into their interactions with other public servants and with citizens.

12. We endorse the more proactive role taken by the State Services Commission in recent times with respect to promoting public sector values and more active work force analysis, but think more steps can be taken by:
    • developing an over-arching human resources framework in the context of the Partnership for Quality Agreement with the PSA, and with the collective participation of staff;
    • working with individual agencies to develop the leaders of tomorrow; and
    • extending this oversight role into the Crown entity sector.

    Other issues

13. We have identified a number of other issues to consider:
    • Crown entity governance – even with fewer Crown entities in the future they will still need greater clarity around the nature of their relationships with Ministers. We suggest the deferred Crown entity reform package be revisited in light of the Review of the Centre.
    • Changes to the style and operation of Central Agencies.

14. The terms of reference focussed on the public management system in general, rather than its effectiveness for any group. We did, however, run two hui to test the performance of the public management system against the needs and aspirations of Maori, and heard a consistent view that the system was wanting in many respects. The emphasis of our proposals on more integrated front line services, including developing stronger relationships beyond the State sector, on tackling fragmentation and improving priority setting, and on more active oversight and nurturing of the State sector work force should all be steps towards improving the performance of the systemforMaori.