Bringing private sector pragmatism in government

By Dev Nadkarni

A few weeks ago an interesting advertisement for employment appeared in the mainstream New Zealand media. The advertiser was the New Zealand Government’s Ministry of Foreign Affairs and Trade and the advertisement was for the position of High Commissioner in the Micronesian Pacific Island state of Kiribati.

It is certainly not common for a position of a High Commissioner – perceived in most quarters as a sensitive Government position – to be thrown open for contest among the general public. Such positions are usually the exclusive preserve of a bunch of Government bureaucrats, who have long served in foreign affairs positions.

The reward for such long service is usually the top diplomatic position in a foreign nation, with all the high remuneration, the perquisites and the myriad trappings that come with it. So it certainly is out of character for any Government to open up such a position for contest among the general public.

At first, the impression was that this has been done – particularly in the case of Kiribati – as a last resort, on not finding an official within the system to take charge of this remote, Pacific outpost. One couldn’t find fault with ambitious officials perceiving a posting in isolated Kiribati as not challenging and relatively devoid of the excitement that would come with a posting in Singapore, Paris or Beijing.

But that does not appear to be the case and the idea of throwing open diplomatic positions outside the career diplomatic fraternity seems to be in line with a new line of thought in the ministry. In a speech delivered at the New Zealand Institute of International Affairs last month, Minister of Foreign Affairs Murray McCully elaborated on this new thinking.

His rationale for fresh thinking in the way New Zealand conducts its international affairs is a sea change from the decades old status quo that has only succeeded in bloating both staff numbers and expenses while achieving little incrementally through its diplomatic missions around the world.

In other words, the size and cost of the operation is not only difficult to justify in the midst of present realities, but the present dispensation is also clearly ill equipped to meet the challenges of a rapidly changing global environment.

McCully has recognised that New Zealand now plays in a vastly different world with new emerging economic powers appearing on the horizon. Over the next few years, New Zealand’s government will have no choice but to function in greatly constrained financial circumstances while hoping to step up achievements in geo-political and trade alignments.

The rationalisation of the foreign affairs ministry that he suggests is not the quintessential slash and burn action that politicians resort to in tough financial times but appear to have been the result of considered thought. He suggests taking ideas out of private sector best practice for optimising establishment and operating costs, infrastructure and for recalibrating achievement yardsticks.

The ideas he suggests are all about pragmatism and practicality to effectively meet the challenges of existent financial realities and emerging political ones in the international arena that will have a bearing on the manner in which New Zealand trades in future and who it will trade with.

New Zealand’s long felt comfort of western world alignments are changing because of a number of reasons and new countries emerging out of Asia, Africa and South America present as much of an unknown quantity as an opportunity.

Mr McCully raises the idea of more private participation in New Zealand’s missions abroad and asks why New Zealand expertise spread across the globe should not be harnessed to gain competitive advantages for Kiwi products and services to give the existing diplomatic system a sharper, more business and trade oriented edge.

Some of his suggestions are the stuff that could quite easily tick off entrenched bureaucratic thinking. In that sense, McCully has taken a huge political risk – for as the old adage goes, politicians come and go but bureaucrats go on forever. It needs to be seen in the right perspective, through the prism of pragmatism, not the rose tinted glasses of political populism and keeping bureaucracy happy.

The tone of his suggestions reflects the tough financial times the Government is facing after the triple whammy of the global financial crisis followed by the two Christchurch earthquakes and the Pike River mine disaster. It presages what the Government will be all but forced to do in the budget to be announced on the 20th of this month.

Study reports have already begun to make the rounds that hundreds of millions of dollars could be saved every year by rationalising government ministries, departments and their operations.

At the heart of all this is the concept that is now the flavour of the season almost all over the world: reduce the size of Government, rationlise operations, cut out duplication, share resources and cut costs where possible.

To avoid a decline in service standards because of such moves, the New Zealand minister’s ideas to bring in result oriented, private sector style best practice processes and achievement scales and standards makes supreme sense and is certainly worth a try, even if it rubs entrenched bureaucracy on the wrong side.

It is good to note that according to a new ADB study published in March this year, some Pacific Island Governments are beginning to make some efforts on taking on board such concepts of private sector operations as suggested by the New Zealand minister on board. The best performing state owned enterprises (SOEs) in the region are the ones that operate under competitive market pressures and work with private sector disciplines, the study says.

But the Asian Development Bank study points out that a lot needs to be achieved by the governments in the Pacific Islands in getting their SOEs – enterprises that receive budgetary support from the government such as electricity and other utilities companies – in line with private sector best practice.

The ADB study points out to some examples in Tonga and Samoa in the electricity and telecommunication sectors. But most importantly, the willingness of several island Governments to participate in the study shows their intent toward greater privatisation, which indeed is an encouraging sign for the growth of the Pacific Islands business and industry sector.

Though many of the McCully’s suggestions would sound radical, even heretical, to entrenched bureaucratic thinking, it will be difficult to argue against its need of the hour practicality and its forward looking pragmatism – something Pacific Island Governments would do well to take on board both in their internal operations and their foreign postings around the world. It is important to gain more bang for that huge bit precious foreign exchange outlays for those operations.

First appeared in Islands Business, May 2011