Fear and Loathing in the Public Sector

Ben Jacobs, Wellington branch of the Workers Party

One aspect of the government’s spending that was not widely covered by the media at the time of this year’s budget announcements was the reduction in public sector spending by one billion dollars over the next three years. This comes on top of the sinking lid on the number of public servants and raft of more specific cuts made since the National party came to power.

The effect of these cuts has been an increase in the contracting out of public sector jobs, from operational to managerial functions. For example, when Bill English asked government departments to reduce spending by 10%, contractors became a much more attractive proposition – not only because they don’t have the same rights as permanent employees (such as sick leave, holiday pay and collective agreement coverage) but also because it’s much easier to hide this spending from the public eye. The impact of this is to increase the proportion of fixed term workers and reduce union coverage, whittling what remaining culture of solidarity exists in the head offices of government departments.

Contractors including temp agencies increasingly used in the public sector

There is also a steady increase in the privatisation of public services in the technocratic layers of government bureaucracy, also driven by a desire to hide the true costs of running an effective public service. Many will have seen the headlines that Inland Revenue is preparing to spend one billion dollars on the upgrade of their IT infrastructure.

What is not widely commented on is the reason for this situation – that the expensive (and successful, though ironically named) FIRST (Future Inland Revenue SysTem) introduced by Inland Revenue in the early 1990s had never been formally granted depreciation funding by Treasury. As a result, rather than being able to spend this to fund a team of workers to maintain and update the system incrementally over twenty-two years, Inland Revenue is in a situation where only a huge scale project is possible – too big for New Zealand IT firms but evidently just the right size for transnational corporations.

Of course, this situation predates the current government, but is driven by the same ideology – the new public management reforms instigated by the neoliberal fourth Labour government. This is not simply that the ruling class believes in a small “efficient” government , but that what money is spent on public services is increasingly being spent on private sector organisations.

But privatisation doesn’t end there – policy development and implementation are increasingly being ‘delivered’ by the private sector. The current welfare reforms are a classic case of crony capitalism – the Welfare Working Group drew from the corporate world to formulate predictably cruel and out of touch recommendations. Now Paula Rebstock and Kathryn McPherson – who were members of the working group – have been appointed to the Work and Income Board, which will oversee the implementation of these policies with the aid of an extra $1.1 million in funding. Apparently the Ministry of Social Development has been deemed to lack the private sector know-how to perform this task. Despite existing primarily to develop, implement and deliver such policy.

Key suggested New Zealanders want to use their iPad to apply for their passport and visas, so they were justified in greatly reducing the number of service staff

While the provision of public services is becoming increasingly dominated by the interests of the ruling class, unsurprisingly the delivery of this service is geared towards the wants of the haves, and away from the needs of the have-nots. When even Winston Peters calls out John Key for being out of step with modern times (“National’s idea of a modern public service is an 0800 number”) you know things have gotten bad. During the bungled MFaT restructure Key suggested that because most New Zealanders want to use their iPad to apply for their passport and visas, they were justified in greatly reducing the number of service staff here and overseas. Passports aren’t cheap to begin with, and we shouldn’t be required to possess a $1000 device to purchase one.

But then, it’s not just public sector cuts at issue. These events are just examples of the ongoing privatisation of the state and orientation of public services to meet the wants of the wealthy rather than the needs of the rest of us. None of this will be surprising. Workers Party supporters will be well aware that under capitalism the state acts in the interest of the ruling class.


  1. This is a very good article. In addition, one of the causes of privatisation is the need for capital to invest in new areas as predicted (or observed) by Karl Marx.

  2. Shouldn’t that be every state acts in the interest of the ruling class not just capitalist states.

%d bloggers like this: