Story: Public service

Page 4. Revolution, 1980s and 1990s

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Public service reformed

The election of the fourth Labour government in 1984 ushered in a revolution in the public service. Influenced by the idea that free markets were preferable to government intervention, and determined to make departments more responsive to citizens and ministers, the government set about overhauling the public service, especially departments involved in trading activities.

‘Glide time’

By the 1970s the public service had a reputation for being large and inefficient. This became the subject matter of a 1976 play, Glide time, by Roger Hall. It became the basis of a popular television series Gliding on, which screened from 1981 to 1985.

State-owned enterprises

The first significant reform involved corporatising many of the government’s trading activities. The State-Owned Enterprises Act 1986 turned a number of government departments – such as those involved in mining, rail, shipping, banking, electricity, post and telecommunications – into state-owned enterprises. Some, though not all, of these new organisations were later privatised.

The State Sector Act 1988

The State Sector Act 1988 was another crucial piece of legislation. Since 1912 all public servants had been employed by the Public Services Commission, and then the State Services Commission, and government departments had been managed by permanent heads. In 1988 the permanent heads made way for chief executives employed on fixed-term contracts. These chief executives then employed all staff in their departments, and took on responsibility for the efficient and effective management of their departments. The 1988 act also removed the career security of public service employment, abolished compulsory industrial arbitration in the public sector, and introduced labour relations law in the public sector that had previously applied only in the private sector.

The way departments managed their finances was also radically changed. Previously, each department had been funded for the cost of their inputs, such as overheads and salaries. The Public Finance Act 1989 turned that arrangement on its head, focusing on outputs and outcomes, meaning departments became funded according to the cost of the goods and services they produced.

Shrinkage and growth

In 1984 the public service employed 66,160 people. By the end of the 1990s that number had fallen to 30,000. It grew again over the 2000s and stood at 44,554 in 2010.

Devolving functions

Other reforms were also introduced. Some large departments were restructured and divided, with their different activities – such as providing policy advice, delivering services and monitoring the operations of other agencies – allocated to separate organisations. A lot of work previously done by the public service was devolved to organisations outside of the public service.

Merging functions and cuts

From the late 1990s the reform process changed course. In response to the 1996 Schick Report, which criticised some of the changes of the 1980s and early 1990s, attempts were made to coordinate the activities of different departments, respond to the different social and economic needs of regions and achieve more effective results for citizens. After the global recession of the early 2000s, jobs and other costs were cut in most, if not all government departments.

How to cite this page:

Richard Shaw, 'Public service - Revolution, 1980s and 1990s', Te Ara - the Encyclopedia of New Zealand, http://www.TeAra.govt.nz/en/public-service/page-4 (accessed 12 December 2019)

Story by Richard Shaw, published 20 Jun 2012