Brian Easton asks whether we need bigger multipurpose government mega-departments

This is a re-post of an article originally published on pundit.co.nz. It is here with permission.

Restructuring seems to be the fashionable management practice whenever faced with a challenge. (Eminent health economist Alan Maynard’s called it ‘redisorganising’ citing Petronius Arbiter in Satyricon: ‘we tend to meet any new situation by reorganising, and what a wonderful method it can be for creating the illusion of progress while actually producing confusion, inefficiency, and demoralisation.’)

Yet the restructurings continue (until the demoralisation ends?). They are reminiscent of a cargo culture, with the expectation that eventually a magic spell will succeed. It every new senior generic manager commences with a restructuring it surely implies that the structure which the outgoing chief executive left behind was inadequate. In turn, their structure will suffer an upheaval, presumably with the same implication.

Currently the Public Service Commission is considering reducing the number of government departments by merging them. But what is the evidence of the effectiveness of the mega-departments which bring a diversity of activities under the same chief executive?

Anecdote there is. The Lambton Quay view – the term for the discussions by Wellington insiders – rarely has a generous word to say about the Ministry of Business, Innovation and Employment – a department of diverse miscellaneous affairs (it has twenty ministers). Promised synergies have not appeared. For instance, the various divisions of what was once the Department of Labour have not articulated a coherent approach to labour market policy.

The other great example of a miscellaneous affairs agency is the Department of Internal Affairs (DIA). It also gets few plaudits from Lambton Quay. We have one study, which I report in chapter 17 of In Open Seas, of what happened when Archives New Zealand and the National Library were forced to rejoin the DIA in 2010.

No justification was given for the mergers. The most likely one was that the State Services Commissioner thought he had too many chief executives reporting to him – about forty. There may be a similar reason for the current proposals to reduce the number of government agencies.

The DIA’s subsequent stewardship of Archives New Zealand has been far from impressive. (Nor has it treated the National Library well.) Following the amalgamation, Don Gilling, a retired professor of accounting with considerable public sector accounting experience, found that the DIA was raiding the funds allocated by Parliament to the two to prop up its other activities. One understands the challenges faced by an underfunded department but this was thwarting Parliament’s intentions. How did the department respond to Gilling? It rejigged its accounts, making them less transparent so it is no longer possible to do a Gilling analysis.

You may think that the public record is a trivial part of overall government, but it is central to accountability. Without protecting it, the Official Information Act (OIA) would be neutered. A requested document which the executive did not want to be revealed could be legally destroyed.

That accountability of government is but also true for past ones. When legislation was first passed to provide for investigating Treaty of Waitangi grievances, it applied only to contemporary issues. Later it was extended back to 1840 and has worked well because of what is available in the public record, even though the record is not perfect as the tattered remnant of the document of what was agreed at Waitangi reminds us.

The executive loathes accountability and, as we saw with the DIA accounts, will do its best to neuter attempts to apply it. A nice illustration, reported in In Open Seas, was that in 2019 the DIA deliberately manipulated the official information process to prevent the public obtaining a document before their policy decision was made so the public assessment could be ignored. (pp.214-8)

(The DIA manipulations enabled it to overrule the three ministers directly involved – the Minister of Internal Affairs, and the associate ministers, the Prime Minister and the Minister of Finance – a reminder on how powerful a department can be against weak ministers.)

So how to downgrade the use of the public record for accountability purposes? The DIA is increasingly merging management of Archives New Zealand with the National Library’s, claiming that they are both heritage institutions. (I leave you to explain why they are not in the Ministry of Culture and Heritage.)

The consequence is that the constitutional role of the public record is downplayed. We should not undervalue the significance of the state’s heritage responsibilities but accountability must be the priority in a democracy. After all, dictatorships are jealous of their heritage too; they distort them to reinforce their authority.

Whatever the intrinsic constitutional interest in this example – for democrats it must be high – the illustration shows that mergers do not always work. As mega-departments become multipurpose it becomes easier for managers to avoid a purpose they don’t like or find too difficult. If they don’t like accountability, they redirect the activity towards heritage; if labour market policy is too difficult then fragment those who ought to be dealing with it.

One of the major reasons we have separate departments despite their appearing to be in the same area is that they have different roles and purposes. Merge them and the roles and purposes get fudged. It was right to separate out the Ministry of the Environment, which is a policy agency, from the Department of Conservation, which manages the state’s environmental assets. Fuse them and both jobs will be done badly.

MPs have often been supine when their ability to maintain accountability is threatened. Recall how they happily passed the 2020 Public Service Act even though it reduced their ability to hold government agencies accountable. Will they be as complacent this time?

Reducing the number of the chief executives is not the only option. Before the 1989 State Sector Act, there was a panel of commissioners each of whom were responsible for a set of departments.

Without evidence to demonstrate that mega-departments work. It’s all unthinking reaction. Almost certainty the proposed mergers will further reduce the executive’s accountability to the public. The confusion, inefficiency, and demoralisation will continue.

*Brian Easton, an independent scholar, is an economist, social statistician, public policy analyst and historian. He was the Listener economic columnist from 1978 to 2014. This is a re-post of an article originally published on pundit.co.nz. It is here with permission.