sign up log in
Want to go ad-free? Find out how, here.

BusinessDesk: Treasury Secretary Makhlouf urges public servants to revolt if they see processes which make no sense

BusinessDesk: Treasury Secretary Makhlouf urges public servants to revolt if they see processes which make no sense

By Pattrick Smellie

Treasury Secretary Gabriel Makhlouf has used his first major public speech to call on public servants to speak up and seek change where it’s needed, as the government challenges its agencies to do more with less for the foreseeable future.

“I call on … public servants: if you see a process that makes no sense, that could be improved, then speak up, say so,” he said in the closing speech to a public sector leaders’ conference held in Wellington by the New Zealand Institute of Chartered Accountants.

“Let us unleash a revolution of innovation,” he said. “This isn’t just about managers and staff. It’s about everyone who has an interest in the public service,” including the bureaucracy’s main union, the Public Service Association.

Makhlouf invoked the spirit of public sector reforms of the 1980’s, which attracted international admiration, but said a revamp of the once ground-breaking Public Finance Act was now needed, along with better measurement of results to ensure they met New Zealanders’ needs.

Makhlouf effectively accused the Helen Clark-led Labour administration of skewing social welfare spending to wealthier New Zealanders.

“The Treasury’s fiscal incidence work shows that, over the last 12 years, households in the top half of the income distribution enjoyed increases in social spending of almost 20 percent more than households in the bottom half,” he said.

Elsewhere, he cited the trebling of assets in the justice system and doubling of total spending on the sector in the decade to 2010 as an example of results often not matching growth in the government’s investment.

“As another example, we spend more of our GDP on health than most OECD countries, but our health outcomes haven’t improved as rapidly as our spending has grown,” he said. Three in 10 children left school ill-equipped for today’s economy.

On the other hand, the Christchurch earthquake had unleashed many new ways to make best use of available resources.

“The sharing of school facilities is an innovation that would have been inconceivable in the past,” said Makhlouf. “A number of these ideas are now being implemented nationwide.”

It should be an open question whether the best provider was in the public, private or voluntary sector.

“While some people may value public sector provision for its own sake, it is the quality of the service that matters to most people rather than its provider.”

With the second annual release of comparative benchmarking between government agencies due next Wednesday, Makhlouf said results from efforts to improve public sector so far had proven modest, with a total value of around $20 million.

“But we know mindsets are shifting. The gains from bringing performance up to the median across agencies are in the hundreds of millions of dollars annually.”

Constant attention to the quality of the government’s assets was also important.

“But we still need better information about the assets that are currently available, what assets are needed to provide services, and whether the Crown is the best owner of those assets.”

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.


Should be revolting?


I think civil servants are absolutely revolting - more interested in enriching themselves than saving money.  (Remember Humphrey, from Yes Prime Minister).




Hugh, I apologise if my rants on here displease you, however I am just trying to focus some discussion on the ridiculousness of whats been going on here in Christchurch for the past 18 months.


At this point in time, I'm on the final leg of settling the first quarter of our insurance claims (which amount to probably 2/3 of the value of our claims).  Once that first part (over $5m) is finalised (which will be replacement outside of Christchurch), I will refocus on whether we want to be part of the current circus or not.


At this stage we are seriously considering leaving because everything has gone so badly, and everyone I speak to is so incredibly noncommittal on whether they want to stay or not. 


I mentioned a couple of projects that we were planning at the end of last year - these are now off the table and we'll just sit on the land.


I will happily meet with you in the next few weeks sometime, but my first priority at the moment is to get this settlement sorted.


I don't share your view on "retribution" from planners.  I know that many years ago we forced a non-complying project through with the help of some City Councillors of the day, the planner involved actually quit because of it and one of his colleagues stuck his toes in on every application we did after that for a couple of years.  Although I must say I am on good terms with a Senior Planner, which helps when the underlings misinterpret the City Plan (a number of times I have had to explain the junior planners the rules in the City Plan!).


I will have a look at your website, but I'm not sure we quite have the same goals.  I want to see:

  • Less demolition more heritage retention
  • Better use of existing resources, including building relocation and salvage where possible (red zone houses)
  • Getting EQC sorted on severely and moderately damaged buildings which have been in limbo for 18 months
  • Getting private insurers to pay up more quickly
  • Sorting new build insurance issues
  • Getting EQ resistant construction as standard.  Less reliance on concrete slab on ground and tilt slabs.
  • Adopting "repairable" buildings as standard
  • I don't support mass rezoning of rural land, however there should be reasonable rezoning where required including allowance for larger sites with perhaps less services (such as unkerbed roads).  There is actually no shortage of land as many 1000s of sites will become vacant around the city once insurance is sorted and tens of 1000s of people have left the city too.

Hugh, you seem to be using the earthquake as an opportunity to get your very closed minded views about development looked at.


The only other important thing to get ChCh moving is scraping the huge development contributions that are currently charged.


A cleanup of council processes is required, but it's not the council holding things up it is predominantly the insurers and CERA.


Your ideas seem quite out of touch with what is needed if you think getting cheaper sections will do anything at all.


A fantastic 750m2 in what is/was a sought after street in Richmond, sold last week for $120,000.  The site had a double brick dwelling on it which was demolished, there was no liquifaction in that particular street although there was in nearby streets.  Pre EQ that section would be worth $250,000.


There are good 400-500m2 front sites (demolished old homes) in good liquifaction free areas that have sold or are for sale at $90-120,000.


Lowering section prices will acheive absolutely nothing for ChCh, and to be honest current development costs mean they new sections can not be created for less than the price of existing ones created from sites where homes have been demolished (often demolished only because of their construction and age).


Turning the CCC upside down isn't going to acheive anything.  A specific change of processes and selected management is needed.  Everything needs streamlined and regulations need tightened on some buildings and relaxed on others, it's a delicate process that a nuclear approach won't likely fix.


The CEO probably needs to go, but those sort of changes are often only symbolic and acheive little.


If you want change you need specifics and to identify the outcomes.  Mumbo jumbo about median multiples is not only nonsense, it's entirely irrelevant to what needs to happen in ChCh.


Why not focus on affordable housing by relocating some of the 6000 red zone properties (which could be done at as little as $50k per house if shifted to say Templeton for wooden floor houses or perhaps $100k for concrete floored ones)?  New supply of homes at under $250k could be acheived this way and no other.


Stemming the exodus should be the other main concern.  I've viewed dozens of homes for sale (looking at the possiblity of replacing 1 or 2 in ChCh) in the last few days, literally 2 out 3 for sale (in the North West) are vacant (I've never struck that before in places like Avonhead and Burnside).


Hugh you need to be productive and ease up on the rhetoric.


Hugh, what exactly are you hoping to acheive?  Firing all the planning staff?  Sacking all the councillors?


It's the processes and a few rules that need sorted.  And a few management changes only.


We don't have time to start from scratch, AND you are entirely out of touch if you think we need a great number more sections in ChCh.


Most of the opportunistic subdividers and developers are about to face the reality of poor sales very soon.  (I know one of the larger subdividers in town has put one of his big undeveloped blocks on the market partly because two of his other big developments aren't moving quickly at all).


Pegasus sections aren't moving at all either with the developer offering massive discounts and builders terms which involve not ever having to pay for the section until you sell the finished house no matter how long it takes.


The residential issues are only an aside to the real issue which is the CBD, insurance and saving something of ChCh's image and heritage.


Hugh, you don't appear interested in any of those real issues facing Christchurch and appear to be on a self serving crusade to get your views on the agenda at the expense of those suffering from the earthquake.


There are lots of affordable opportunities in ChCh right now.


Over 1000 sections are listed on trademe in ChCh, Selwyn, Waimak and the Peninsula.  That's despite well over half the redzoners already having moved on (probably over 2/3 of those that intend to move).  (Remember over a third of the red zone was landlords who (from those I've spoken with) seem to have almost all either taken the cash or settled for replacement with existing property).


A perfectly fine (totally liveable but on a slight slope (about 80mm over 15m) so written off) near new 3 bdrm house in Wainoni sold last week for $90,000 (pre EQ worth $330k).

A villa in average condition with no earthquake damage sold in Woolston for $116,000 2 weeks ago.  Older houses in liveable condition are selling for $120-140k regularly.

Sections have sold for as little as $60,000 in the east.  Many, many sales of good sections on pretty good land have been in the $100-140 range.

Affordability is not the main issue to be addressed right now.

We need real action on real issues.


What a fantastic idea to address affordable housing by moving some of the red zone buildings (that we the taxpayer bought!) onto better ground.  The waste associated with the destructive way they are going about 'the recovery' is ludicrous.


Capital flight would be my No 1 concern if I lived there - and they've got to retain the commercial capital first and foremost...  and I'm with you Chris, people need to see building recovery going on - NOW.       


Okay - read it.  So you're starting a local body political party, called "Cantabrians Unite", and you want a snap election.


Good grief, who would vote for Hugh?


Kate: Hugh seems intent on divisive politics rather than real action.


There are so many sensible straight forward things that would turn ChCh around, and Hugh's fixated one irrelevant policy that would not achieve anything useful - least of all his deluded ambitions for median multiples.


Christchurch has too many houses right now.  It's only because many damaged (but soon to be repaired) homes are not on the market and many ex red zone buyers (which we'll soon run out of) that the market is kept hot.


It's all about to die quickly once the red zone evacuations are over and the continuous streams leave ChCh.


Most properties I've viewed this week are for sale by people leaving town or estate sales (either way they are dead end sales not chains).  Although we are only looking to buy to realise the insurance, (after coming to the realisation that huge numbers just want out of ChCh) we are tonight reconsidering even buying just 1 house in ChCh as it looks like a real exodus is on and the only buyers are the soon to be extinct red zoners.


Anyone pushing huge new land developments of small town sections is set for bankruptcy.  I am amazed at the fly by nighters jumping in, when the established players are being very very cautious.


(On that note, it appears that the "developers" of the two of the huge subdivision proposals on the table at the moment (1000s of proposed sections around ChCh) has a myriad of companies (akin to Henderson and Hubbard) and even used to use Hubbard Churcher as accountants!  Also he has not owned nor any of his current companies own any property except his own home (since the land registry was digitalised!).  How these people constantly get funding and backing from the officials, I do not know.  Henderson, Hubbard and Hanover style failures are almost guarranteed amongst these fly by nighters - is another H.. going to be added to the list?)




The capital has already well and truly flown Kate.


If this was France, public servants would be padlocking their management in their offices.

Here, the PSA has unfortunately gotten cold feet in the face of cut-and-run-ism.


ChrisJ - but folk who buy exisitng buildings, then expect to milk a stream of 'wealth' from them ad infinitum, are not more interested in enriching themselves? Very dirty pot calling kettle, methinks.

Makhlouf is right and wrong. Right in calling for innovation, and lateral thought.


Wrong in expecting efficiencies to be able to give unlimited returns. T'aint linear, nor limitless. Medicine, like everything, is gonna get more expensive, relative to....... and the more efficient you become, the less left between where you are, and 100%. It's a diminishing return, something perhaps not taught in Econ101.


Now, now PDK, that's a complete misunderstanding of how property works.  When I buy a property and keep it maintained etc, I'm providing something that's actually worth something.  I'm not just extracting money from a company for twiddleling my thumbs! 


If I'm enriching myself in the process it's because I'm doing something productive and useful. 


Clearly you understand the advantage of property ownership over other investments (income linked to inflation, capital linked to inflation and a strong income stream), which is why I can't understand why you berate it.


I'm certainly not ripping anyone off.  I probably charge well below market rents on average, and am very accommodating of people if their circumstances change.


I don't berate it, but I don't rate it. I don't berate Bernard's income from here either, but I don't rate it. Those folk could own the building they are in, look after it at least as well as you, and if there weren't landlordery drivin up prices, they'd get ti cheaper.


You're not actually doing something productive - it'd happen via their ownership without you - so you're doing something parasitic. Sorry to be the burster of your bubble. You do have a point however, in that it makes more sense to end up with something real - and buildings are that - than a series of 1's and 0's in a bank computer.


Hope you're on the right side of debt-load, the ability of tenants to 'pay' has to reduce sequentially from here on, nothing to do with the quake...