It's rare that we pause to acknowledge the work of our public servants, but 2020, more than any other year in recent memory, showed us the sector’s ability to put people first and deliver results on behalf of the country.

Our frontline health professionals worked around the clock, and tax and social welfare officials re-engineered their systems to ensure financial assistance reaches people in need during this difficult time.

Virtually every area of the public sector, including our emergency services and local and regional authorities, have been affected by the pandemic.

But, while New Zealand has handled the pandemic well up until now, that success has temporarily masked some deep and systemic issues our public sector faces. If left unchecked, these will hamper our progress as a nation in the coming years.

Our productivity problem

The productivity of our public sector has been “persistently low or has lagged growth in the wider economy,” according to the Productivity Commission. As the commission points out, our nation increasingly has a services-based economy, with the service sector making up two-thirds of our gross domestic product (GDP).

Within that sector, government plays an oversized role in many areas. According to Statistics New Zealand, the state is responsible for providing 55.6 per cent of healthcare and social assistance services, 85.8 per cent of education and training, and 92.4 per cent of public administration and safety.

That’s not an argument for the private sector to assume more responsibility for key social and community services. New Zealand’s track record with privatising state-run services has been mixed at best, despite the private sector's higher overall labour productivity.

Instead, the data shows that if we don’t address lagging productivity in the public sector, the ramifications for the economy and society will be massive. The reality is that we are facing escalating costs in some areas of government spending that the Treasury has indicated could become unsustainable.

By 2068, 28 per cent of the population is projected to be aged 65 or over, up from 15 per cent in 2016. This demographic shift will drive escalating healthcare costs. The Treasury estimates healthcare will consume nearly 11 per cent of GDP in 2060, up from around seven per cent in 2012.

More retirees mean our superannuation costs will balloon too to account for eight per cent of GDP in 2060, up from five per cent in 2015.

We are also spending more than ever in other areas of government. For instance, since 1972, our criminal justice costs have grown twice as fast as any other category of government spending and three times faster than GDP.

The NZ$50 billion opportunity

Even worse, when we do make progress too often we leave some of the population behind. Te Puni Kōkiri’s (the Ministry of Māori Development) Better Public Services Results for Māori report, published in 2017, found that when it comes to progress towards key public sector goals, “achievements are not being made for Māori to the same extent as for the total population”.

In May 2020, the government announced its budget, including a NZ$50 billion COVID-19 Response and Recovery Fund (CRRF) – the biggest government spending initiative in our nation’s history. Spending at this level will have ongoing effects on the public purse and we should take care to tread carefully

We simply have to make this programme of work deliver for the country in the long term. It will require a level of long-term planning and a collaborative approach that is all too rare in the public sector. The Public Service Act 2020 recognises that and encourages the sort of joined-up decision making that will allow us to make the most of that stimulus package.

But what can we do now, across the public sector, to make the most of the precious tax dollars that fund our public services and deliver more effectively on our national goals?

A plan and an appetite for innovation

The Productivity Commission has suggested a greater focus on innovation. As a technology partner to government agencies, Datacom has a role to play in advising on the use of new technologies and innovative approaches.

In the next blog of our public sector series, we explore what is holding us back – the systemic issues that prevent our public sector from delivering maximum value for citizens.

Mark is an associate director, advisory and consulting, in Wellington. He is a technologist at heart and keen to see how tech can evolve and play a greater role in making the world more open, fair, and sustainable.

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