Sept 29, 2011

Reforms driven by cost-cutting will not reap best results

State sector reform must be driven by genuine need says the PSA.

It can be welcomed if it improves effectiveness and quality of service. It is not welcomed if it is merely used as a covert means of further public service cost-cutting.

The Crown Entities Reform Bill that was introduced to the house earlier today calls for changes across the health and charitable sectors. These include the disestablishment of the Charities Commission and the establishment of a new Health Promotion Agency that will take over the functions of the Alcohol Advisory Council of New Zealand (ALAC), the Health Sponsorship Council (HSC) and some functions of the Ministry of Health

“We fear that these changes may result in a loss of expertise and focus as smaller agencies are subsumed into larger ones,” says Acting National Secretary Jeff Osborne.

“The expected transition costs of these changes of over a million dollars will be taken from already tight service budgets.

“The PSA accepts that, in some cases, mergers of government departments and other such changes may be needed to tackle the fragmentation, duplication and waste created by the market-based reforms of the 1980s and 1990s.

“However, experience shows that restructuring is often expensive, disruptive and distressing to staff, and very often fails to achieve its objectives.

Overseas research estimates that restructuring may reduce productivity by 20 percent.

“For those reasons, we believe restructuring should always be a last resort when ministers are trying to get services to work together better.

"In addition, if there is to be a restructuring of government departments, staff need to be involved at every step of the way, and any savings made should be reinvested in new and improved services, not used to cut costs and jobs, “ says Jeff Osborne.

ENDS

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