The public sector: Swallowing the blue pill of neoliberalism

PSA workers on strike

PSA workers on strike

by Ben Jacobs (Fightback member and public servant).

Like many systems of thought, the theory and practice of neoliberalism don’t line up particularly well. In New Zealand, for example, the state plays a key role in propping up a system that preaches minimal state intervention. Public servants realised long ago that actually existing neoliberalism is a myth, but unfortunately, stating the obvious can make life awkward in public policy and management circles.

The fourth Labour government may have introduced neoliberalism to the public by stealth – they had not campaigned on the extreme policies they introduced – but neoliberalism was force-fed to the public service. With the introduction of neoliberal policies came new elites. Where previously trade unions, public servants and rank-and-file labour party members could have expected to be consulted and have input into such reforms, Roger Douglas and his associates heavily restricted access to the democratic process, and shifted their focus to a handful of Treasury officials and business organisations such as the then Business Roundtable (now the New Zealand Initiative).

The modern-day continuation of this approach by both Labour and National Parties can be seen in the marginalization and stigmatization of the union movement and the ongoing influence of captains of industry in various high-powered (and even more highly paid) so-called “Taskforces” and “Working Groups”.

Many readers will be familiar with the success enjoyed by the ruling class in undercutting unions and excluding them from positions of influence, and I won’t go into these here. I will focus instead on the methods employed by successive governments to coerce public servants at all levels into swallowing the “blue pill” of neoliberalism.

The funding environment

Neoliberals view economic outputs as the be-all and end-all of social success (because if the economy’s growing then the benefits will trickle down, right?). When government departments are funded based on readily measurable economic output, then the measurable stuff (such as revenue collection, shifting people off benefits, cutting costs) becomes the focus. Any of the nice-to-have stuff, such as reducing inequality, creating secure jobs and a living wage, or addressing climate change, is left to others such as NGOs and charities. What’s more, constant cutting and capping of funding means government agencies are fighting over the scraps, and are in no position to challenge the status quo as they’re constantly “firefighting”.

On top of this, Ministers play an increasing role in managing the departments and agencies that they oversee. For example, Steven Joyce is actually lauded by the mainstream media for his tendency to wade into territory that could rightly be seen as that of public sector managers1. Because pleasing the Minister brings the promise of extra discretionary funding, this breeds a culture of managers putting their career stocks into managing successive Ministers’ expectations rather than delivering on the stated aims of their own agency.

You’d think that because Ministers are actively reducing the role of government department CEOs, the role would lose some appeal and perhaps their remuneration would reflect this. But it seems that the market is mysteriously failing here, because there is no shortage of career CEOs and senior managers willing to use a short-term post in New Zealand as a stepping stone to bigger and better things elsewhere. Although some Senior Execs ride the gravy train for life, many take up short-term posts as a hatchet job to implement distasteful policy, or otherwise just collect their massive paycheque and don’t look to rock the boat.

This approach also shows up further down the management chain in the overuse of consultants. To some extent, consultants are a financial necessity, allowing fearful managers to disguise operating (personnel) costs and patch holes left by earlier cuts. The impact is that people in these contract roles are more driven by what will land them their next contract than by principle. The surprising amount of power wielded by consultants seems to reflect the dogma that voices and experiences from outside the public sector is better.

Consultants and contractors are also a harbinger of organisational instability in the public sector. The culture of constant change that is facilitated by hordes of HR advisors and managers looking to impress their Ministers leaves public servants always mindful of the shifting sands and distracted – if not outright fearful of the cuts that are still happening and are always at the back of public servants’ minds.

Overall, union membership is not dreadful in the public sector (the PSA has around 60,000 members). However, coverage is much lower in policy, analytic and strategic functions. My feeling is that this pattern reflects a blind belief among law and policy graduates in the doctrine that unions are an impediment to the individual freedom on offer from the market, similar to the way the public sector is still painted as bureaucratic and inefficient in popular myth. It is these functions within the public sector in which union delegates are in short supply, and increasingly burned out by non-stop organisational change and personal cases arising from the stress on workers.

It seems hopeless, but and maybe it is! But I’ll continue to organize, build union membership and demonstrate the importance of this to my colleagues (luckily HR gives lots of opportunities to do so). The public sector is still running on the capital created by its workers but it is unsustainable. This situation can’t persist and I’m counting on that. We public sector workers need to use what outlets we have to express alternative views of how society and the economy might be organized and be prepared to act.

1 See Werewolf’s excellent review of the myth of Joyce


  1. As a public servant I can relate to many of the points raised, although my colleagues don’t just meekly swallow the pill – they are well aware of what’s happening. However possible alternatives to the PSA and self-directed struggle are simply foreign to many, so their views don’t translate into action.

    This text is a little dated, but I’ve found it useful nonetheless:

  2. Early 1980’s, a retired public servant told me tales of the inducements he was offered as a government “buyer.” He would scrupulously reject all offers. Personal integrity and the Public Service ethic was paramount. I’m sure it still is, but wonder if that is getting eroded at the top, and in contracting arrangements?

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