Key and Shearer go head-to-head with major speeches

BUSINESSDESK: Prime Minister John Key and Labour Party leader David Shearer will effectively go head to head on Thursday with each leader scheduled to give a major speech in Auckland.

Key will address an Auckland Chamber of Commerce lunch on Thursday in a long-foreshadowed detailing of the government’s expectations for a modern, efficient public service that costs less to run, employs fewer people, and does a better job than it does now.

Shearer is scheduled to address a breakfast function in Auckland, sponsored by a law firm, to make his first substantive policy speech since becoming Leader of the Opposition late last year.

Key told his post-Cabinet press conference there was only one major proposal for amalgamation of existing government agencies. He would not be drawn on speculation it will be a merger of skills training functions across the state sector, including parts of the Department of Labour, Ministry of Economic Development, the Ministry of Social Development and the Tertiary Education Commission.

Stressing the “tight financial constraints” the government now works under and the fact the state sector comprises about a quarter of the whole economy, Key said he wants a “results-focused public service”, which was able to be innovative to deliver more with existing resources.

The government had signalled its intention to move in this direction two years ago in the 2010 Budget, and state sector chief executives had been preparing for this phase of reforms during that time, said Key, who repeatedly spoke of New Zealanders’ “expectation about the quality of the services they receive” in areas such as education and the justice system.

“Rather than make savage cuts, we have given time for public service chief executives to prepare for little or no new money,” he said. “We’re now focusing on better results, being more flexible and innovative.”

Treasury Secretary Gabriel Makhlouf revealed in a precursor speech last week that only $20 million of annual savings had been identifiably achieved across the state sector so far, against a stated target of $1 billion over time.

He stressed that “$1 billion won’t come from (reducing) head count”, and that every government department should be looking at its needs. “It’s not driven by a knee-jerk number.”

Key acknowledged, however, that proposed changes at the Ministry of Foreign Affairs may be a step too far, and that it was likely some elements of the package put forward by MFAT head John Allen would be wound back. He nominated spousal allowances as one area of concern, given spouses of diplomats were often unable to work while on offshore assignment.