Labour Party - Speeches

public sector management -- two points of view

29.07.2008

David Cunliffe speaks to Public Sector Advanced Leadership Programme in Wellington

Speech notes for address to Public Sector Advanced Leadership Programme at the Michael Fowler Centre in Wellington: Lessons from the road: public sector management from a two portfolio perspective

It's a pleasure to speak to you today and share some ‘lessons from the road' - my experiences of the public sector from the perspective of my two current portfolios. Of course in politics there is always a fine line between traveling down your chosen road, and being spread all over it. So today is an opportunity to reflect on how Ministers and civil servants can work together to enjoy the ride.

I want to start off by stating that for a strong future we need to get the foundations right. It's great to see this leadership programme building a cadre of the best in the business.

My two current ministerial portfolios have given me two completely different perspectives of the public sector.

ICT is a small, sometimes technical portfolio that has seen its share of drama. Health is large and complex requiring a different mix of skills.

However while different governance models are required for both, in both cases logic and evidence form the basis of good policy advice. The use of clear pyramid logic and ‘scientific method' applied to analysis of the facts form the basis of good strategy. Experience indicates that while the public service is capable of excellent analysis, this is not always the case. A case can be made for strengthening these core skills throughout the public service.

Of course even the best strategy is worthless unless implemented in a timely and effective way. Implementation to clear timelines and deliverables, with a communications strategy to match, will continue to be the essential complement to the core strategic and analytical skills noted earlier.

For Ministers, whose lot in life is to operate at the intersection of departments, the wider Cabinet, and stakeholder and public interests - all of the above needs to be wrapped up in a workable and appropriate approach to public sector governance, and issues and media management.

New Zealand's recent history of ICT policy shows clear evidence of market failure; and of clear policy response that has successfully addressed that failure.

Telecom NZ was privatised with only the Kiwi Share, general competition law and information disclosure to protect the customer and the rest of the market.

Shareholders of course did well, but overall, consumers and the country did not. Interconnection pricing disputes lasted a decade and went to the Privy Council. Number portability was not solved in nearly two decades until last year.

Broadband penetration and investment levels had put New Zealand's ICT infrastructure into the bottom third of the OECD at 21st or 22nd out of 30 by 2005.

The incoming Labour-led government began tackling the issue with the Fletcher-led Ministerial Inquiry into Telecommunications in 2000.

The Inquiry identified significant shortcomings and its recommendations were subsequently incorporated into the Telecommunications Act 2001, for the first time putting in place an industry-specific regulatory regime to spur competition and investment.

Some improvements occurred but the shortcomings of a slow, largely bilateral and too easily "gainable" regulatory process were becoming evident by 2005.

These shortcomings were the subject of the 2005/6 Implementation and Stocktake reviews which decided to:

Operational Separation was comprehensively dealt with by the Finance and Expenditure Select Committee considering the Bill. I would like to acknowledge the work of two former Ministers of Communications, Hon Paul Swain and Hon Maurice Williamson on that committee.

Parliament passed the resulting Telecommunications Amendment Act in rapid time, implementing the reforms by an almost unanimous margin in December 2006.

Taken together, these changes represented a watershed in NZ telecommunications policy.

May 3 2006 - the day policy was famously leaked and announced - will always be etched in my memory.

At the time we had to make a fast decision to stick with the reforms and announce them early. We did so without hesitation.

The result was that, arguably for the first time since Telecom NZ was privatised, regulatory policy was able sufficiently to stand up to an apparently dominant incumbent.

The resulting changes have been far reaching. Industry cooperation has accelerated. The market has been opened up to competition and New Zealand consumers are reaping the results. Growth of broadband connections was the 6th fastest in the OECD last year. Per annum investment in telecommunications has already roughly doubled - exceeding the expectations of our review work and accelerating us on the pathway to a fast broadband future.

Management matters are for Chief Executives, not Ministers. I have never sought to interfere in that process and I'm very conscious that there are certain boundaries that should not be crossed.

However, as a Minister you have to identify a clear set of desired outcomes, and the outputs required to achieve end goals and these need to be identified from the beginning.

In the Ministry of Economic development I have had an extraordinary team to work with. We had around a dozen or so key officials working extremely hard to develop the strategy and implement it.

My observation is that a team of empowered, highly competent individuals are often far more effective than some huge organisations.

To build on this drive we added clear output planning processes, and use of SOIs just as the State Sector Act proposed. We did our best to "manage for outcomes" and work across departmental silos.

I want to take this opportunity to recognise some of your peers - Geoff Dangerfield, David Smol, Reg Hammond, Brad Ward and Brian Miller and their teams at MED.

Government Departments are, on the whole, excellent at what they do. However, I want to relay to you that not everything works best if it's done inhouse. Sometimes other forms of interaction with stakeholders have clear advantages.

It took us a couple of goes to get the ICT industry on board with aspects of the Government's Digital Strategy (Version 2.0 is to be released at the end of next month).

To give you some background, the government knew that its digital goals could not be realised by government alone. What we needed to make them work was buy in and input from a wider group of stakeholders and industry.

The HiGrowth Trust had been established to advocate on behalf of the sector. For the most part they did a good job, spurring the industry on and advocating best practice. Unfortunately, the Trust found it difficult to get industry support for its proposed "ICTNZ" umbrella organisation because other industry bodies didn't want to be subsumed.

In a similar way, the Digital Strategy Advisory Group or DSAG, which comprised business and IT sector representatives was set up to advise Ministers on the strategic direction and focus of the Digital Strategy.

Unfortunately while providing excellent individual insights, the DSAG didn't have clear representative processes set up back to stakeholders.

What we had to do was take a long look at what was working and what wasn't. We decided to replace both of those structures with the Digital Development Council and Forum.

This is effectively an ‘association of associations' that brings together a range of organisations with a common interest in digital development. It is truly independent of officials and its mandate contains explicit "non-subsumation" guarantees for its members. It has been launched with broad support from industry and sector groups.

What I'm getting at here is that if it doesn't work first time, be honest and start over again always with that end goal in mind. I call that rule of thumb the "3Fs" - Front it, Fix it and move it Forward.

It's worked in ICT and there's no reason why it shouldn't work for you in your own departments.

If ICT is small, relatively technical, and focused, then Health is big, multi-layered, geographically dispersed, multi-faceted and yet incredibly personal to every New Zealander and their families.

Health also requires different skills in a Minister. ICT requires a Minister to be analytical, have a clear strategic direction and build good relationships with key stakeholders. Health requires all of that and more.

The 2001 health reforms and the establishment of District Health Boards represented a marked change in the provision of New Zealand's health services. The previous model of health care delivery was hospital-centric and focussed on funding contracts, prices and volumes.

Our new model of health care delivery was to emphasise population health improvement, reducing inequalities in health status, better integration of services, and greater community involvement in health system governance.

The 2001 reforms aimed to provide a health system based on cooperation and a health system that puts people at the heart of health care. The objectives were clear. As a government we wanted to:

Since 2001 we have instigated a number of key initiatives and strategies to address historic challenges in New Zealand's health system

There is momentum across the entire spectrum of the health sector to realise the goals of the New Zealand Health Strategy.

The launch of the Primary Health Care Strategy in 2001 signalled the most significant changes to, and investment in, primary health care services in over 50 years. As many countries worldwide are now recognising, harnessing the potential of the primary health care sector is vital to improving health outcomes.

Other major initiatives include the Cancer Control Strategy which spans the continuum from prevention to palliative care; Healthy Eating - Health Action which is our strategic approach to improving nutrition, increasing physical activity and achieving a health weight for all New Zealanders, and He Korowai Oranga - our Maori Health Strategy sets the platform for action in reducing inequalities for Māori.

The momentum for action has not stopped, just last year ten Health Targets were introduced in areas where we need the greatest traction to achieve our goals. Already the attention the Health Targets have attracted have begun to deliver results.

However, when I spoke to Ministry of Health officials earlier in the year, I acknowledged that now is the time to again evolve the way the Ministry operates within the broader sector.

That is, to ensure system-wide cohesion and effectiveness and to reduce variations in DHB performance the Ministry needs to evolve from a primarily advisory and monitoring role; to one of stronger central leadership of the health sector as a whole.

Part of this is a change from thinking of the Ministry as primarily the Minister's advisor, to stepping up to the role as the Minister's and the government's leading agent of change within the system.

It follows that the government, and I as Minister, will increasingly hold the Ministry accountable, as appropriate, alongside the ongoing statutory accountabilities of DHBs and other health sector entities, for whole-of-system outcomes rather than just for the Ministry's own outputs.

I have come to the view that greater co-ordination throughout the entire system is essential to long term sustainability. As services become more complex and interdependent, planning at a district level will not be sufficient on its own to meet the medium to long-term needs of the system. Coordination of IT and workforce planning are two obvious examples where enhanced coordination is a ‘must-do'.

The continued success of the DHB system requires action across the sector: amongst DHBs themselves, providers, the Ministry of Health and its Ministers.

There are some excellent recent examples of partnership arrangements being developed, involving arrangements such as joint purchasing and regional clinical networks. I strongly encourage these types of collaborations to continue, especially where they enable better operational effectiveness.

The Ministry of Health, like other Ministries, has a key role in positively and actively leading the sector to achieve improvements, assessing the level of achievement, and taking the appropriate actions where performance is not to the agreed level.

The Ministry's role is to support and to lead DHB planning through the provision of strategic policy leadership, expert advice, tools and information, and to ensure that there are appropriate regional and national structures and processes to support this DHB planning. The Ministry is also responsible for monitoring and improving the performance of DHBs as Crown Entities.

The Ministry has a role in ensuring the integrity of the health system as a whole, and the Ministry is taking the lead in driving particular pieces of work to resolve obstacles that get in the way of the system operating effectively and efficiently as a system.

The successful implementation of any system takes more than simple exhortation or regulation. It takes strong leadership, good relationships, the development of expertise, as well as sound frameworks and financial resources.

We can't be complacent and must continually strive for improvements in services to improve health and independence for all New Zealanders. The role for the Ministry is to ensure that the strengths of a semi-devolved system are maximised in a way that focuses on improvements in care and services.

The Health Portfolio is huge and I came to the view early on that it is too big for one Minister. Accordingly, we have a large and able group of Associate Ministers. With their help, I have sought to build a flat, empowered Ministerial team to support health operations.

The delegations give Associate Health Ministers a wide scope for action. My aim is to have a co-ordinated health service where Associate Ministers play a vital role in helping plan and deliver effective and efficient health services to New Zealanders.

The delegations are broader than in previous years. Associates have specific policy areas of responsibility as well as each having direct responsibility for liaison with a set of DHBs. This not only increases ministerial contact with the sector but strengthens the sector as a whole. The Health Ministerial team meets weekly and the Ministerial team is in constant contact and dialogue with the Ministry, the sector and each other.

One of the main issues for both myself and Ministry officials is managing the many brushfires to leave enough time to drive positive strategic change.

In my view it is better to confront problems head on and be up front with the public about issues that arise. I like the analogy of sailing in rough seas (something as a former coastguard I've had a bit of practice at). When the waves come up it is almost always better to power into them than be caught side on wallowing in the trough. Trim the sales, or regulate the engine, but don't lose direction or momentum.

For instance, Wellingtonians will be aware of the recent challenge at Capital and Coast DHB and the intervention I took there to appoint a new Chair and Crown Monitor. With Sir John Anderson overseeing the Board and a new Chief Executive we are now seeing some positive changes.

The problems at the Hawkes Bay Board were focused squarely at the governance level. Confronted with growing evidence of board dysfunction, rapid financial deterioration and an unusual use of media by a Crown Entity, I took advice on options. In the circumstances, the best option was to replace the Board with a Commissioner and I stand by that decision.

The Commissioner, Sir John and his deputies Brian Roche and Ngahiwi Taumoana, are overseeing a credible recovery plan that will guarantee sustainable health services to the Bay area.

Sometimes decisions aren't popular but as I have said previously, the job of a Minister is to make decisions based on the best evidence and advice available.

I am reminded of a rugby analogy. When playing fullback and catching a high ball, with the opposing forward pack coming your way, you can either kick it, pass it or run with it. But for goodness sake make a timely decision.

It's not all bad news in health. We have our share of good news stories too. The same determination to make decisions, based on good evidence in a timely and decisive way, can help to achieve real upsides.

For example, the announcement to fast track the creation of a national Colorectal cancer screening programme is an example of good policy work. We've cut the red tape and moved the process as quickly as possible to enable an end 2011 rollout rather than a 2014 rollout.

End result: a clear focus and a determination to press ahead will save the lives of many (perhaps hundreds) of New Zealanders in the future.

We effectively shifted the balance between a consultative process involving a large and complex committee structure and a taskforce that was slimmed down and powered up using the Minister as a lever.

After some five years as a Minister and nine as an MP, my fundamental belief in the power of good government to be a force for positive change in our society is stronger than ever.

There is no doubt that the government's regulatory interventions in ICT, which were highly controversial at the time, have delivered, and are delivering, great results.

In some ways these changes transcended the "market vs state" dichotomy to one where the state supports the competitive market. In the end it is the outcome that matters - not the ideological construct. For social democrats, working with the market to align incentives to the public good is often a useful place to start.

The process also validated the use of rigorous analysis. As a management consultant I was trained in the use of ‘pyramid logic' - the systematic deconstruction of a problem into its constituent parts so that data can be used to objectively test solution options.

The same pyramid logic lies at the heart of good policy analysis. Define the goal (or to mathematicians - the "objective function"); identify the drivers of value; the constraints; rigorously evaluate the options to bridge the gap. Plan an approach to implement the best option. Execute against that plan. Measure and evaluate the results. Refine the strategy as you learn.

And in situations of high uncertainty and complexity, use tools like decision trees, scenario planning, option modelling and sensitivity testing to help refine the decision parameters.

Above all - begin with the end in mind. Good strategy is the antithesis of incrementalism. Good strategy often transcends ideology.

As Ministers and as public sector managers we should demand excellence. Our people deserve nothing less. Be a little driven. Dare to care deeply about the outcomes.

To this end I'd like to see higher standards of training across the public service in the use of logic and scientific method in the development of policy advice. Quality beats quantity every time - hands down.

The state sector should also be open to contestable advice. As Ministers know only too well, the views of the sector - or your stakeholders - are just as important as your own. This was something we learnt quickly in ICT and in health it's equally important. Listening to the clinicians, nurses, doctors and industry bodies as well as the CEs and Chairs is key to well-performing DHBs, and to getting good strategies implemented.

In the multi-layered and sub-specialised health system, which is not without its share of powerful commercial interests, balancing the need for inclusion with a determination to drive for timely results requires the wisdom of Solomon.

To conclude, we're heading into an election and soon the politicians will be scaling back the paperwork in order to wear out their shoe leather on the streets of their electorates.

As I do so, I know that the government has done what we said we'd do in this term. We've had a clear vision and with good planning I believe we've delivered. And working together, you as public servants can take pride in having made a difference.

The public sector can take credit for the good gains we've collectively made for New Zealand. With your contribution to your own Ministers and departments the country is on a pathway to a more flexible, innovative and sustainable economy, and a fairer and more decent society.

In both ICT and in Health, as a relatively new Minister who has learnt on the job, I am proud to be a part of that.

I look forward to the next three years on the job, and to working and learning alongside you.

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public sector management -- two points of view

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