Introduction

As I read about city managers taking new positions in various communities (including Keller) it is evident that this is a very important position (equivalent to CEO of COO of a large company). The approach used in the successful restructuring of the New Zealand government provides a rich set of lessons learned and useful practices for a new city manager.

Making Government Accountable in New Zealand

From his bio: Maurice McTigue, a former New Zealand Member of Parliament, Cabinet Minister and Ambassador has been part of George Mason University in Virginia since 1997. From 1984 to 1994 Mr. McTigue led an ambitious and extremely successful effort to restructure New Zealand’s public sector and to revitalize its stagnant economy. In a ceremony at Buckingham Palace in 1999, Queen Elizabeth II bestowed upon Mr. McTigue the prestigious Queen’s Service Order, in recognition of his public service. This is one of the highest honors attainable for civil service in New Zealand.

For several years Mr. McTigue has been making speeches around the country to Congressional leaders, state legislatures and other groups. I would encourage interested citizens and public servants to download a 48-minute speech by Mr. McTigue and a 24-minute Q&A session. During the Q&A session he answers specific questions on implementing the approach here in the States and has many insightful anecdotes.

During his speech Mr. McTigue recounts what he did in New Zealand to decrease costs and make government more efficient, while also protecting jobs. My Cliff Notes summary follows.

Three problems were identified in 1984 in New Zealand:

  • too much spending
  • too much taxing
  • too much government

Sound familiar?

They took a very pragmatic approach: what are you getting for the dollars spent? In other words, the metric for a government agency was changed from ‘how did you spend the money and did you spend it in accord with the appropriations?’ to ‘what benefit did the public get in exchange for spending the taxpayers’ money?’ For example, the focus should be on reducing the number of people on welfare not increasing the budget for more welfare recipients.

Many agencies had lost focus of their mission and could not remember what they were supposed to do. Several questions were asked to determine the cause of the three problems instead of just treating symptoms:

  1. What are you doing?
  2. Does it succeed in eliminating the problem?
  3. What should you be doing?
  4. Who should be paying: the taxpayer, the user, the consumer, or the industry? Many times taxpayers were paying for government services that provided no benefits to them and/or were duplicative of the private sector.

The answer to these questions from each agency provided the basis for downsizing or eliminating agencies that were not working well. Too often what happens in government [and I see it in business as well] is that something working well gets less money and somebody or some department screwing up gets more money. This rewards failure and punishes success.

“When we applied [the above approach] to the Ministry of Works, it had 28,000 employees. I used to be Minister of Works, and ended up being the only employee. In the latter case, most of what the department did was construction and engineering, and there are plenty of people who can do that without government involvement. And if you say to me, “But you killed all those jobs!”-well, that’s just not true. The government stopped employing people in those jobs, but the need for the jobs didn’t disappear. I visited some of the forestry workers some months after they’d lost their government jobs, and they were quite happy. They told me that they were now earning about three times what they used to earn-on top of which, they were surprised to learn that they could do about 60 percent more than they used to!” (McTigue, 2004)

Government does not exist to make jobs for people but in supplying services nobody else can do.

“Some of the things that government was doing simply didn’t belong in the government. So we sold off telecommunications, airlines, irrigation schemes, computing services, government printing offices, insurance companies, banks, securities, mortgages, railways, bus services, hotels, shipping lines, agricultural advisory services, etc. In the main, when we sold those things off, their productivity went up and the cost of their services went down, translating into major gains for the economy.” (McTigue, 2004)

New Zealand reduced the size of government by 66 percent over ten years.

Improving Education

The approach New Zealand used to improve the quality of education while reducing costs is very instructive. This could work here if enough concerned citizens demand it.

“New Zealand had an education system that was failing as well. It was failing about 30 percent of its children-especially those in lower socio-economic areas. We had put more and more money into education for 20 years, and achieved worse and worse results.

“It cost us twice as much to get a poorer result than we did 20 years previously with much less money. So we decided to rethink what we were doing here as well. The first thing we did was to identify where the dollars were going that we were pouring into education. We hired international consultants (because we didn’t trust our own departments to do it), and they reported that for every dollar we were spending on education, 70 cents was being swallowed up by administration. Once we heard this, we immediately eliminated all of the Boards of Education in the country. Every single school came under the control of a board of trustees elected by the parents of the children at that school, and by nobody else. We gave schools a block of money based on the number of students that went to them, with no strings attached. At the same time, we told the parents that they had an absolute right to choose where their children would go to school. It is absolutely obnoxious to me that anybody would tell parents that they must send their children to a bad school. We converted 4,500 schools to this new system all on the same day.

“But we went even further: We made it possible for privately owned schools to be funded in exactly the same way as publicly owned schools, giving parents the ability to spend their education dollars wherever they chose. Again, everybody predicted that there would be a major exodus of students from the public to the private schools, because the private schools showed an academic advantage of 14 to 15 percent. It didn’t happen, however, because the differential between schools disappeared in about 18-24 months. Why? Because all of a sudden teachers realized that if they lost their students, they would lose their funding; and if they lost their funding, they would lose their jobs. Eighty-five percent of our students went to public schools at the beginning of this process. That fell to only about 84 percent over the first year or so of our reforms. But three
years later, 87 percent of the students were going to public schools. More importantly, we moved from being about 14 or 15 percent below our international peers to being about 14 or 15 percent above our international peers in terms of educational attainment.”
(McTigue, 2004)

Competition (for students) made the difference. The Federal, unionized monopoly on government schools in the U.S. is in need of a systemic overhaul similar to what New Zealand did. Parents should run their respective neighborhood school (as a board of regents) as they did in the beginning of our country. They obviously have the greatest interest in the product produced by those schools.

Favorite quote: “There’s something sinister about subsidies. What subsidies do is create dependency. What dependency produces is an inability to be innovative and creative.” [The Clean Fleet money being dangled in front of Keller is a subsidy. It will remove any ability for Keller to be innovative and/or choose an improved technology that may be more effective. When the government, rather than the free market, picks technology winners and losers you shut out future innovation.]

Conclusion

As a new city manager my 90-day action plan would include a canvassing of each department with the following questions:

  1. What are you doing?
  2. Does it succeed in addressing, mitigating or eliminating the problem?
  3. What should you be doing?
  4. Who should be paying: the taxpayer, the user, the consumer, or industry for the service you provide?

These principles will work if leaders maintain focus and don’t back down. In the Q and A session McTigue mentions Ronald Reagan’s firing of the air traffic controllers in 1981 and Margaret Thatcher standing up to the coal unions in the U.K. as the sort of leadership that is needed.

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