In my post yesterday I noted briefly the dismal productivity record in New Zealand in recent years, nicely captured in this chart.
That poor record builds on decades or underperformance, dating back to the 1950s. In all the time since then, there has never more than a year or two at a time when New Zealand has outperformed other advanced countries, and mostly we’ve achieved less productivity growth than they have. As a result, we’ve moved from being among the very richest and most productive economies in the world to one where the top-tier of OECD countries have rates of labour productivity about two-thirds higher than those in New Zealand (and countries like Turkey and various former eastern-bloc countries – where market economies were unknown for decades – are nipping at our heels). This table is from a chapter on New Zealand economic performance in a forthcoming book (which I foolishly allowed myself to be persuaded to participate in)
|GDP per hour worked|
|USD, constant prices, 2010 PPPs|
|Median of six||25.1||44.1||62.8|
|NZ as per cent of median||85.4||64.9||59.2|
You might have hoped that this shockingly poor performance would worry someone in office – political or bureaucratic. But there is no sign it ever does, for long anyway. It occasionally provides a good line for Opposition parties (of whichever stripe), or even for incoming governments in the heady days when everything is the fault of the previous government and you’ve not yet been expected to produce results yourself. Our current Prime Minister and Minister of Finance were occasionally heard to refer to the problem in 2017, but hardly at all since then.
Once upon a time it was something one might have expected The Treasury to care about, have views about, and be offering rigorous advice to the government of the day (of whichever party) on. After all, productivity is the only secure foundation for material prosperity, and material prosperity allows societies to make all sorts of other choices with fewer constraints than otherwise. But that isn’t today’s Treasury. If there are people in the organisation who still think about these things, it certainly isn’t an issue that ever seems to trouble the senior management – the more so under the lamentable stewardship of Gabs Makhlouf over the last eight years. As I noted late last year, when Treasury is forced to write down its view on the productivity outlook, results make it clear they have the wrong model.
After my post yesterday, a commenter observed
The only hope on the horizon is the appointment of a new Secretary to the Treasury who is given or [secretly] works on a single goal of devising policy to genuinely increasing productivity…..
The Treasury has lost its sparkle over the last 30 years and it is time it regained some lustre, it’s ‘reason for being’ and grew some courage.
I couldn’t disagree with the sentiment, even if I wasn’t optimistic that there was any hope at all. But the comment prompted me to have a look at the documents on the SSC website supporting the current advertisement for a new Secretary to the Treasury.
The procedure for the appointment of public service chief executives is set out in the State Sector Act. Section 35 provides that when there is a vacancy the State Services Commissioner must
invite the Minister to inform the Commissioner of any matters that the Minister wishes the Commissioner to take into account in making an appointment to the position.
That is the Minister’s opportunity to scope the job, and identify his or her priorities. And although there is now a perception that appointments are made by the State Services Commissioner, in fact the law is clear that the Cabinet can not only reject a nomination, but can appoint their own preferred nominee. In other words, while Peter Hughes (the State Services Commissioner) has considerable influence, appointments ultimately reflect to a substantial degree the choices and priorities of ministers. Thus, under the previous government it was ministers who fast-tracked citizenship for Gabs Makhlouf to allow him to be appointed. (And thus Bill English – who later acquiesced in the reappointment of Makhlouf – bears responsibility for the failures of The Treasury this decade – including the complete absence now of any comprehensive analysis and advice on the productivity failure).
But what of the current search? The advert and supporting documents will reflect the Minister of Finance’s own priorities and views of what The Treasury should be doing.
Even the short advertisement itself starts in an unpromising way.
The Treasury is the Government’s principal economic and financial advisor. Its work improves the wellbeing and prosperity of all New Zealanders by ensuring the nation’s macroeconomy is stable,
In fact, if anyone does macroeconomic stabilisation at all well it would be the Reserve Bank – that is a key part of the Bank’s role. Sure, The Treasury advises the government on policy around the Reserve Bank, but the Bank is both operationally independent and has a direct line to the Minister on the policy issues. But not a mention of productivity – lifting the level of economic performance – or any of its cognates.
Later in the advert, I was briefly encouraged
The Secretary will be both an expert in financial and economic policy leadership and state sector management and strategy.
Good luck finding a person with both sets of qualities, but I don’t want to cavil just yet – an “expert in financial and economic policy leadership” would be good. An expert in financial and economic policy itself might be even better – someone who would command credibility among staff, ministers, and the wider policy community.
Three other documents accompany the advert. One is purely process oriented, and I’m not commenting any further on it.
The second is the position description. In the opening bumpf about the organisation there is finally some welcome reference to Treasury’s responsibility for things around the level of economic performance (emphasis added)
The three key outcomes the Treasury works towards are improved economic performance and prosperity for all New Zealanders, macroeconomic stability, and a higher performing State sector.
But that’s it. Once the document gets on to the specific position of Secretary to the Treasury, it is all lost once again. There are the specific accountabilities for the Secretary, moving beyond the generic statutory responsibilities:
The Secretary of the Treasury is also accountable for:
• Leading and overseeing New Zealand’s public finance system;
• Working collaboratively with the State Services Commissioner and the Chief Executive of the Department of the Prime Minister and Cabinet to ensure a consistent and aligned approach to State sector system leadership;
• Advising on, and implementing strategies for, managing the Crown’s balance sheet including debt; risks; contingent liabilities; and the government’s investment in companies and other entities;
• Advising and reporting on fiscal management for the Crown and monitoring departmental operating and capital expenditure; and
• Building succession for the Treasury’s leadership team and working with colleagues to leverage the Treasury’s talent for system benefit while building a diverse and inclusive organisation where staff have career pathways.
Nothing about economic performance (level or variability) – advice thereon – at all.
And these are policy-related “critical success priorities”
• Leading, organising and managing the Treasury so it delivers on the Government’s goal of a shared prosperity where all New Zealanders benefit from the wealth that growth in the economy provides;
• Refreshing the macroeconomic framework (fiscal, monetary and financial stability) to ensure it is fit for purpose for the next twenty years, including driving the further development of a wellbeing approach;
• Promoting greater transparency and understanding of the Government’s economic goals through supporting the embedding of wellbeing measures in the Public Finance Act and through the Secretary’s and other Treasury communications and engagements;
• Providing advice to assist the Government to meet its policy priorities within its Budget Responsibility Rules;
• Working collaboratively with others, including Māori, to collectively develop and deliver creative solutions to resolve long-term challenges including child poverty, housing, climate change, and freshwater;
The first of those is about distribution (not “growing the pie”), and the second is about some odd mix of stability and the wellbeing approach. The third is about transparency, the fourth about fiscal policy, and the fifth perhaps illustrates the government’s priorities. Productivity appears not to be one of them, from the agency styled as the government’s principal economic advisers. I’m not necesssarily suggesting there is much wrong with what is on the list – one can debate the vacuity of the wellbeing approach another day – but what isn’t there is telling.
The third document is the application form, which is useful because it sets out the capabilities SSC (on behalf of the Minister) says it will be assessing applicants on. These are the capabilities applicants are required to demonstrate (in writing)
Think, plan and act strategically; to engage others in the vision, and position teams, organisations and sectors to meet current and future needs.
Lead and communicate in a clear, persuasive, and impactful way; to convince others to embrace change and take action.
Work collectively across boundaries to deliver sustainable and long-term improvements to system and customer outcomes.
Drive innovation and continuous improvement to sustainably strengthen long-term organisational performance and improve outcomes for customers.
Bridge the interface between Government and the Public Sector to engage political representatives and shape and implement the Government’s policy priorities.
All probably fine and reasonable in their own way – if what you want is some generic public service manager – but again what is notable is the absences. Neither here, nor anywhere in any of the documents, is there any sense of wanting someone who might model excellence as a policy adviser, or lift the performance of the organisation in a way that might deliver credible and compelling answers to the appalling productivity underperformance of the New Zealand economy.
And why not? Presumably because neither Grant Robertson, nor his boss, nor his party, nor the parties they govern in league with, care. Nothing – in these documents, in speeches, interviews or anywhere – suggests otherwise.
To revert to my commenter’s hope, I guess there is nothing to stop the person who is eventually appointed choosing to make productivity a priority and foster work developing compelling analysis and recommendations. But it doesn’t seem very likely. Even if Treasury isn’t as resource-constrained as some government agencies, there won’t be lots of capable staff resources readily able to be diverted to something that just isn’t a government priority. But more importantly, what sort of person do we suppose is likely to get the job? And why would such a person, who got through the selection process (acceptable to both SSC and the Minister) be likely to change their spots once in office. What would be their incentive? And how likely is it that they’d be the sort of person who would even care much, or understand the issues well enough to know where to start.
As was the situation eight years ago, there are few obvious strong contenders for the role – at least among people with any serious economic or financial expertise. Looking through the list of current Treasury senior management, there are some capable people (although part of a leadership team that appears more interested in, say, diversity than in productivity), but really only one of those people could conceivably offer that level of expertise at this stage. Around the rest of the public sector, I wonder if Geoff Bascand (Deputy Governor at the Reserve Bank, who was open about the fact that he applied to be Governor and missed out) might be interested. Perhaps there are ambitious people at MBIE – an agency better known for delivering on ministers’ priorities than for serious analysis. One can’t help thinking that applicants who are female will, all else equal, have something of an edge. But none of the names that spring to mind seem any better than the likely underwhelming field of male applicants.
Then again, Grant Robertson isn’t serious about dealing with the country’s most important economic failing, so perhaps it doesn’t really matter much who oversees the playground where analysts divert themselves thinking about concepts of wellbeing, while New Zealand is likely to keep drifting further behind.