Hon Trevor Mallard Speech Notes

PSA Delegates Conference

Thank you for the invitation to speak today.

I'm going to start off by re-iterating our objectives for a strong state sector that responds to the groups and individuals which it serves and to those who serve in it.

In one of my earliest speeches as State Services Minister I said: Government departments and other state agencies are critical elements of a functioning democracy. You have a vital contribution to make in creating an efficient, equitable and dynamic nation.

I also said effective public services are inherently fair. They are fair to the taxpaying public, fair to public service employees, fair to those who are regulated, and fair to those who receive services. The government expects government departments to build up an internal culture that applies tests of fairness to decisions about what is done, and how it is done. In a well functioning department, this should be virtually instinctive.

That concept of fairness will be at the forefront of our minds as we enter workplace negotiations. Negotiations where we are looking carefully at the long term viability and strength of the public sector. We aim to broaden the scope of negotiations and to expand the time horizon they focus on.

This is consistent with the underlying philosophy that sees employment as an evolving relationship of rights and obligations, not a contract for the purchase and sale of a series of labour services.

Broadening the scope of bargaining includes augmenting wage rates, scales and ranges with provisions on:

 Workforce planning, including identification of skills development and career paths, and access to training.

 Staffing levels, personal support, recognition of contribution, and reduction of stress.

 Health and safety procedures.

 Programmes for recruitment and retention of staff, and for early identification of emerging staff shortages, and similar non-wage components.

Extending the time horizon involves a recognition that a desirable set of employment rights will not be constructed in any one negotiation, but the negotiators identify pathways along which they seek to augment the content of agreements.

I'll expand on this later.

This year there have been two major milestones in the Government's relationship with the PSA.

Nearly seven months ago, I signed a partnership agreement with your former president Kathy Higgins. The agreement looked at how we can work together to secure public services through a partnership for quality.

It aimed to encourage employers, managers, and the PSA to establish co-operative and open relationships.

And it sought to enhance the effectiveness of departments and agencies and their ability to provide quality services and outcomes.

Since then the Government made good on one of our major election promises, to repeal the Employment Contracts Act and replace it with fairer labour relations laws. The Employment Relations Act was passed in August and came into effect last month and the World hasn’t fallen apart.

In fact there are many people wondering what all the fuss was about.

To me, these two milestones are intertwined.

The new law restores balance to workplace relationships.

It breaks through the old ideas of there being, always, a conflict between employers and employees. It recognises that such conflict will arise from time to time.

But it also recognises that the normal state of employer employee relationships is not conflict but cooperation.

And it recognises that the low-trust contract model is not the best for productive workplaces.

Instead the law now states clearly that workplace relationships are human relationships and should be based on good faith. And we say what good faith is, too: mutual trust and understanding.

The Partnership for Quality Agreement picks up these concepts and runs with them. Indeed, the PSA was consulted on the Commission’s ERA guidelines that were distributed to all State sector employers.

Through partnership for quality new protocols have been signed between PSA and the State Service Commission. Among other things, they provide for significant PSA involvement in projects like focusing upon the development of the Public Service.

The Commission and the PSA have prepared guidelines on Partnership for Quality. PSA organisers and departmental Human Resources managers have also been involved in this process. The important aspect of these is that they will assist both parties to tailor approaches to Partnership for Quality that suit the particular employment environment.

Four large departments have made significant progress in developing Partnership for Quality as part of their organisational culture. Others are in the process of converting agreements into action.

The development plan being worked upon by the Commission and the PSA concentrates on assisting departments with the initiation and development of Partnership for Quality. In some cases this will involve building upon what has already achieved, in others it will involve using the agreed guidelines to start the conversations. The focus is upon 14 departments employing about 75% of the workers in the Public Service.

There are areas of difficulty around the fact that the PSA has very low representation in some departments and just under 50% overall. There is emerging competition from some minor unions seeking to push for short-term gains over the longer-term benefits advocated by the PSA approach.

I know there is a bit of concern about this from your members when it comes to your bargaining position.

If particular unions or groups within parts of the state sector follow short-term wage maximising strategies, does that place at-risk the more “patient” vision of those with a longer-term focus?

My answer is an unequivocal 'No'.

Do we give in and respond to various IR pressures with rewards through the negotiation process and therefore encourage bad behaviour, by workers, unions, managers and Ministers?

My answer to that is an unequivocal 'No'.

If people are going to go on strike for a 7-10% pay increase, they may have to strike for 7-10% of the year. There would still be no guarantees that the funds saved through that would go towards pay increases for those individuals.

What we are interested in doing is working closely with unions, including the PSA to broaden the scope of negotiations and to expand the time horizon they focus on.

That is why the bargaining parameters that Cabinet has approved are quite philosophically different from those with which our predecessors worked with.

You will have read reports from the Labour Party conference with both Michael Cullen and Helen Clark stressing the need for this to be more than a one-term Government. As a social Minister, I work on initiatives every day that I know are going to take at least a generation before we feel the full positive impact. For example, some of the policies in the early childhood sector are aimed at ensuring that children not yet born will be able to make a valuable contribution to the labour market when they are adult – regardless of their family background. We cannot sacrifice policy initiatives for the sake of a one-term spending spree.

That is why we must all show constraint. But in the public sector, we have to be continually conscious of the need to improve capability and capacity. We have to continually meet the tests of fairness and to indicate that there will be long-term gains – both financially and in terms of job satisfaction and professional development.

It is within this context that Cabinet has developed approved bargaining parameters for public sector negotiations.

Let me summarise some of the core elements and how we envisage it will work.

First of all, the relevant department would consult with SSC on bargaining strategies. These would have to be formulated in a wider HR and business strategy context.

The primary benchmark will be fiscal neutrality.

In addition departments have to have due regard to the desire of the government to improve service quality and address career development and training requirements.

The Government recognises that in the context of the budget planning process, departments will be able to raise issues of conditions of employment and seek financial provisions to address them, through increases in baseline funding and/or reprioritisation within baselines.

This year, there will be a transitional facility for department to submit a case during the 2000/01 financial year as a component of bargaining strategies for the 2001/02 year.

However any “transitional” case will be assessed against the ability of the government to fund it.

It will also need to meet some other quite rigid criteria.

We would need to be convinced that specific fiscal provision would be needed to address serious recruitment and retention problems, differences in pay relativities, or to develop skills in line with the operational needs of the organisation.

Furthermore, the case will have to demonstrate how it fits into an overall plan for the development of human resource capability.

Departments will need to make clear any proposed trade-offs. We have also got to be careful to avoid adverse flow-on effects to other organisations.

Over the coming weeks, my Ministerial colleagues will be discussing the nature of these parameters with their departmental chief executives.

They'll be stressing the need for consultation and discussing:
 how to relate a bargaining strategy to a human resources and business strategy
 how to analyse risks
 how to avoid flow-ons
 how to document the nature of the staffing problem
 how to demonstrate inability to fund by other methods and so on.

This is just the first step on what I hope will be a long and fruitful journey. We need to keep channels of communication open, review, refine and update ways of improving our relationships.

I want to finish the formal part of my address with a push for the newly established State Sector Standards Board.

On Monday, the board met for the first time and I attended part of that first meeting. As you may be aware Kerry McDonald is chairing the board and he is joined by some high-calibre people who have years of practical experience in running organisations. They understand the dilemmas that organisations and workers face every day in trying to serve New Zealanders. I am confident that they will provide the Government with practical, workable proposals.”

One of the board's first jobs will be to draft a statement of the Government expectations of the State sector and the priorities that departments and agencies will observe in responding to citizens.

The standards will reflect the Government’s expectations about the careful use of resources. It will also underline the need for collaborative behaviour in the State sector. It will recognise that the State sector is a single entity dedicated to serving New Zealanders, not a disparate group of organisations that have a common ‘owner’.

I also expect the board to advise on ways in which government agencies can manage standards issues to meet Government’s expectations and it will provide me with an annual report on the ethos of the State sector. The report will review events and advise me potential measures to promote standards in the State sector.

In conclusion, I'd like to acknowledge the positive relationship that I have developed with your executive. I know it is something that has also filtered down to the State Services Commission. I think one of the biggest mistakes that our predecessors made was constant union bashing. They failed to comprehend the role that unions can play in making New Zealand a better place to live.

I've worked closely with members of your executive over the last year. We will not always agree, but we will always talk to and listen to each other. I'd like to thank them for their willingness to keep that relationship alive.

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