Opinion: More funding for core public services – but are we just rearranging the chairs on the deck of the Titanic?

The 18 May budget from the Government will provide significantly more funding for core public services and these include especially health and education. And generally speaking most people would agree that extra funding is warranted, if only to catch up on the underfunding of the underpinning infrastructure which occurred under the previous Government and is illustrated (as one example) by the poor state of many hospital buildings and facilities.

This cycle of underfunding and catch-up is endemic in our system of government, and in large part reflects the different ideological basis for the two main parties – Labour and National – when it comes to public services.  It is also why 3 terms in government for any one of these parties is probably a good maximum.  There needs to be periodic refreshment to keep a good balance between funding policies which are oriented toward business growth and success (National) and policies which are aimed at supporting people (Labour).  Of course the parties would argue that they do both – but the balance is certainly quite different.  This can be seen for example in the fairly stark differences between National and Labour in prioritising the funding of the transport infrastructure between roads and public transport.

More funding is fine, but the question is whether it is just an expensive band-aid, ie fixing up the immediate problems, but continuing to leave underlying issues untouched.  The band-aid approach is like rearranging the chairs on the deck of the Titanic.  The question is particularly pertinent to health and education – putting extra money into these areas can seem to be like pouring money into a black hole.

The issue in many cases is that the “business model” for the activity is either badly flawed or, in some cases, non-existent in any coherent form.  Governments are generally aware of this – the present Governments commitment to a fundamental review of education is an example of the reaction – but too often action is stymied either by restricting the scope of the review or loading it down with pre-conceived and often ideologically based assumptions or constraints.  The best review – and the best type of business model – is one which is focussed on a high level outcome(s), which all of us can identify with and can be expressed as clear performance indicators so we can measure progress, and which is not loaded down with constraints.  I also consider that from an input point of view all such reviews should have a strong focus on cost-efficiency in meeting the desired outcomes.

In the case of education it would be great to see a model produced which was open to different solutions to education (including Charter schools) and which was open to implementing concepts such as performance pay.  I don’t necessarily support either of these, but would strongly support their inclusion in any review of the business model.

In the case of health an issue which is crying out for review is the current model of having many small and inefficient DHBs spread through the country, so that a local service can be provided, rather than consolidating into a much smaller number of larger DHBs with a consequent increase in cost-efficiency.  In health too a business model needs to be developed which deals with the very difficult issue of advancing medical technology and the extra costs this is continually loading on to the system. There are a host of other difficult issues in the health area.

Finally we need to take an holistic view of each service area, which considers both the needs being met (the outcomes) and the provision of the associated services, and which considers the operating parameters as well as the supporting infrastructure.  It all needs to be tied together as an integrated package.

The fly in the ointment is the understandable anxiety of governments to pander to public (ie voter) desires. This is seen most graphically in the approach to law and order.  The general view of the public is that criminals who are a threat to public safety should be locked up, and the longer the better.   The result, which is entirely predictable, is that prison populations have ballooned to the point of being out of control and out of line with other similar countries.  In this case the business model is well and truly broken, but re-setting it in a way that does not alienate voters is something which has eluded governments of all colours in New Zealand.


By Bas Walker

This is another of Bas Walker’s posts on GrownUps.  Please look out for his articles, containing his Beachside Ponderings.