Secretary to the Treasury Gabriel Makhlouf on changing the public's perception of Treasury, changes within the bureaucracy and NZ's 'fantastic opportunity'

By Gareth Vaughan

A bunch of neo-liberal ideologues, white men in grey suits with a beige mindset, and a pack of pencil-heads living in an ivory tower.

Secretary to the Treasury Gabriel Makhlouf has heard these and numerous other not always flattering descriptions of the Government's lead advisor on economic, financial and regulatory policy which he leads.

So he openly acknowledges wanting to change the public's perception of Treasury, which has broadly been along the lines of a conveyor belt churning out Rogernomics type policy and ideas since the 1980s.

"I'm absolutely looking to change the public's perception of the Treasury," Makhlouf told interest.co.nz in a Double Shot interview.

"Mainly to make it fit the reality of the Treasury that I lead. I lead a bunch of fantastic people who are absolutely committed to doing a really good job for New Zealand."

"We have a lot of internal debate on all the issues. We're absolutely focused on delivering quality policy advice based on really good analysis and based on evidence," he added.

"It's our job to help people understand that we are different to what they think we are."

Looking to change public perceptions of Treasury, and changes within the bureaucracy, are two themes Makhlouf has pushed since taking Treasury's helm from John Whitehead in June 2011. He joined Treasury in 2010 after arriving from Britain where a civil service career took in the Inland Revenue Department, Treasury and Revenue and Customs. He also served as Principal Private Secretary to Gordon Brown when he was the Chancellor of the Exchequer.

In a speech last November Makhlouf highlighted a comment posted on interest.co.nz describing Treasury as "a pack of pencil-heads living in an ivory tower," and said Treasury "wasn't a bunch of white men in grey suits with a beige mindset." He also said his ambition was for Treasury to be "an exciting and energetic hothouse of ideas."

Then later in November he told a Parliamentary Select Committee in response to comments from Winston Peters: “We’re not neo-liberal orthodoxists. I’m happy to put it on the record now." 

And in a speech in April this year Makhlouf said a “knock down walls, re-wire and put in new plumbing” transformation was underway in the state service, which could see New Zealand's bureaucrats as "an exemplar for the world again as they were in the 1980s."

'Irritated' by being described as a neo-liberal

Makhlouf said the world is more complicated than it has ever been and Treasury therefore needs to work more collaboratively with others, both from inside and outside government, and to be "more outward facing" so its staff can understand the issues people and businesses face.

"There are two things in play; The Treasury looking to become much more outward facing, and I've personally spent quite a bit of time travelling around the country talking to business people and others. But there's also the challenge of helping the wider public understand what the Treasury's about, how we think, and why we think what we think," Makhlouf said.

"I always feel irritated about being described as a neo-liberal. Not least because I don't understand what it means and I'm not sure the people who do say that necessarily understand what it means."

"There is a lot more to Treasury than that. (But) we do have to prove it, absolutely," he added.

"I suppose one of the things that might indicate a different perspective than one we may have had in the past is the fact that we've made very clear, and you can read all about this on our website, that the way we look at policy is through what we call a living standards framework."

"We see our job as about improving the living standards of New Zealanders," Makhlouf added. "That's what we're about. And if someone asks us 'what are the living standards, how do you define that,' we've got a framework which says you do need to look at things like economic growth."

"Economic growth is an absolutely key foundation of living standards but it's not the only one. We do have to think about how we manage risks as a country, sustainability, the environmental sort of issues and equity. Equity (economic equality) is a factor that we think about in analysing our policy," Makhlouf added.

'I'd rather not be labelled in any particular way'

"If that makes us neo-liberals then I suppose I've got to put my hand up and say 'I'm a neo-liberal.' But I'd rather not be labelled in any particular way. I'd rather be judged, and have my people judged, on the quality of our advise, the quality of our analysis, and on the quality of the engagement that we have with the outside world."

In terms of changes going on within the civil service, Makhlouf said these need to be made because the world is changing, along with people's expectations of the public service. 

"We designed a public service in the late 80s and through the 90s which was absolutely fit for purpose for the time. And at its core was making sure that agencies were accountable for what they had to deliver and did the best possible thing," said Makhlouf.

"And essentially what we're doing now is saying 'that was great but the issues that the country faces and the world faces (now) are much more complex and they require agencies to work in a much more horizontal way.' So essentially in a nutshell the changes that are now being put in place are about getting (government) agencies to work much more closely together so that the collective impact of the public service is what the public actually sees."

Asked to what extent changes in the public service were a cost cutting exercise Makhlouf said efficiency was certainly important in a "fiscally constrained" world.

"We need to look after our finances so we've always got to look at making sure that the public's money is used in the most effective and efficient way. But it absolutely is not the main story," Makhlouf said.

"The main story is that we need to make sure the public service is delivering the sorts of services the public wants."

This meant things being worked on include making sure government departments focus on results, that the back office is as efficient as possible especially given all arms of government use IT.

"So absolutely, efficiency's important but I would say that getting the public service to be fit for purpose is the most important thing," Makhlouf said.

Putting the NZ bureaucracy 'back in a place where the rest of the world will pay attention'

In terms of his comment about New Zealand's public servants being "an exemplar for the world" in the 1980s, he said British public servants in that era looked to New Zealand to see what was best practice.

"The thinking in New Zealand around what was called at the time 'new public management' was really ahead of its time," said Makhlouf.

"It focused on making sure organisations were clearly accountable, clearly actually focused on delivering services and doing so in an efficient way...Other countries have copied us and some of them have overtaken us."

Changes underway now would put the New Zealand public service "back in a place where the rest of the world will pay attention."

Asked for examples of civil services doing things well in other countries Makhlouf cited the leadership development and training offered to civil servants in Singapore, and innovative thinking the British are doing around how to deliver services.

"But) I don't think it's right to say that there's one country who we should copy completely. There are ideas everywhere that we should reflect on and some of them, actually adopt."

How to judge your public servants

In terms of how the public should judge whether their public servants are serving them in an appropriate way, Makhlouf pointed to the quarterly "Kiwis Count" survey. This was one avenue for people to give their views. On top of this, a key question was whether people feel they're getting what they want quickly enough, at a price they think's reasonable, and at a service standard which they feel is acceptable.

"It is absolutely for the public to judge whether the public service is delivering what it should be delivering and not for us to make that judgement," Makhlouf added.

Another way to judge the bureaucrats was against 10 "challenging results" the Government has set for the public sector to achieve over the next five years.

"They cover a whole bunch of areas, - welfare reform, education, vulnerable children and others. So judging us against those I think will be one of the criteria," said Makhlouf.

The 10 are;

1. Reduce the number of people who have been on a working age benefit for more than 12 months

2. Increase participation in early childhood education.

3. Increase infant immunisation rates and reduce the incidence of rheumatic fever.

4. Reduce the number of assaults on children.

5. Increase the proportion of 18-year-olds with NCEA level 2 or equivalent qualification.

6. Increase the proportion of 25 to 34-year-olds with advanced trade qualifications, diplomas and degrees (at level 4 or above).

7. Reduce the rates of total crime, violent crime and youth crime.

8. Reduce reoffending.

9. New Zealand businesses have a one-stop online shop for all government advice and support they need to run and grow their business. And;

10. New Zealanders can complete their transactions with the Government easily in a digital environment.

'A fantastic moment in time'

Asked about the challenges facing New Zealand, Makhlouf said a key thing for him was how New Zealanders take advantage of the opportunities in front of them.

"We are finding ourselves in a fantastic moment in time. For the first time in our history we are in the part of the world that's actually going to be the centre of economic geography," said Makhlouf.

"The Asia-Pacific region is going to basically dominate the world's economy for the rest of the century. Secondly the growing middle classes in Asia, - we're going to see demand for our products continue to grow because they're growing. And thirdly, we're actually getting closer to the rest of the world through technology. Broadband is bringing us closer to the rest of the world."

"And I see those as opportunities which we've never had before," Makhlouf added.

"The biggest risk we face, I think, is not seizing those opportunities. Now what does that mean? That means making sure our economy's as productive as it could be, making sure our education system is actually delivering results for all the kids in the country, making sure our welfare system is actually supporting people who need it and helping people into work. It's about making sure that we're looking after our natural resources. It's about making sure that we protect ourselves against financial crises."

"It's about a whole bunch of things and each of these things in themselves are significant," Makhlouf said. "All of these things we can do, (But) none of them is small and easy. But we can do them and if we can do them, we've got a fantastic opportunity."

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