Finance Minister Bill English has shared the dire state of New Zealand's government books with the Aussies - and dropped tips on public sector reform."Although our economy has now been growing for a year, we are still looking down the barrel of five
Finance Minister Bill English has shared the dire state of New Zealand’s government books with the Aussies - and dropped tips on public sector reform.
"Although our economy has now been growing for a year, we are still looking down the barrel of five more years of deficits," Mr English said in a speech to the Australia New Zealand School of Government in Melbourne today.
"Even when we get back to surplus, there will be strong competing demands on government spending – high government debt will need to be repaid and, when surpluses permit, we will resume contributions to the NZ Super Fund.”
Mr English said that the government was likely to require surpluses of at least 2% of GDP before it could even consider significantly increasing public spending.
“That is still many years away and may not occur in the professional lives of a large group of middle to senior civil servants.”
Global shift
Mr English predicted a global public sector management revolution, as Western governments grapple with the aftershocks of the global recession and developing economies grow wealth and increase public sector demand.
Australia and New Zealand are unlikely to be at the leading edge of either trend.
“Our role may be to sell our frameworks for accountability and transparency to the emerging economies developing their public services, while borrowing some of the cost-crunching innovations that are developed in the UK, United States and Europe.”
Challenges in NZ
Within NZ, Mr English identified three key challenges facing reform: public sector stalling in the hope that spending constraints will change; working within existing public management systems; and balancing collective and individual interests among ministers.
"This is more of a challenge in a centre right government, where ministers tend to come from self-employed or business backgrounds", he said.
He praised the open policy development used in the Tax Working Group process, which he expects to become increasingly popular.
"We did not prescribe what they could and couldn't look at and we allowed them to publish their work – in real time - as they covered a wide range of topics over several months."
This open discussion, Mr English said, helped the government implement its major tax reforms without causing a public backlash.
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