PROBLEMS OF RUNNING BUSINESS OF THE STATE

Press, Volume XCIX, Issue 29220, 2 June 1960, Page 18

PROBLEMS OF RUNNING BUSINESS OF THE STATE

"The Press’ Special Service

AUCKLAND, June 1.

Problems in the administration of the country’s largest business —the State services—were outlined by Mr L. A. Atkinson, chairman of the Public Service Commission, in a luncheon address to the Auckland Rotary Club. “As taxpayers you are all shareholders in the State business,” he said. “The Government, or directors, make regular and substantial calls for capital and the dividends are somewhat elusive. As active shareholders you have the opportunity only once every three years to change the directors. But all should take a real interest in the biggest business of our country.” One of the current .problems was keeping State, services in perspective, said .Mr? Atkinson. In a country little bigger than many municipalities overseas were services that operated in countries of many millions of people. “Are we keeping our State services in the proper perspective?” he said. “Can we afford the fullscale Army, Air Force and naval services that others have?” A' senior naval officer had recently been reported as saying that professional sailors should not be frustrated by accountants over what the service was going to do. “Catting Oar Suit” “We can sympathise with that officer in his complaint about accountants," he said, “but would you as shareholders be prepared to let a professional officer tell you what navy you are going to have without you having some say in the matter? I do not think ' you would. We have to cut our 'suit to fit the cloth. “As shareholders we must be constantly critical of any activities that are new or that are being expanded before the expansion takes place. We have to see that it fits our pattern for New Zealand." Other problems outlined by Mr Atkinson were:—

Management: Departments had grown in the traditional pattern of the “string of sausages.” There was the Minister, the head of the department, his deputy, the deputy’s deputy, and so on. This was contrary to the big American business practice of horizontal structure in which there was a manager with divisional managers with equal responsibility: Some departments were so big that they needed a new division of executive responsibility. The system of public corporation control was not much favoured at present but a way had to be found to alter the “string of sausages” system. Top people in the Public Service had to be trained in management. Only with the co-operation of business could the business of State services be improved.

Operation of Parkinson’s Law: A rough definition was that when two or three public servants were together it would not be long before there were many more. All business men knew how easy it was to expand and how difficult it was to cut staff to the

right size for the job to be done. Overstaffed businesses were generally unhappy while those understaffed usually had good morale and worked better. One of the greatest problems of the Public Service was how to control numbers. There were all sorts of methods and devices to try to control numbers but they were never entirely successful. Cost consciousness: Many State activities could not put over their work the rule of profit and loss. How could one put this rule over social service departments that were spending money? The Public Service tried to develop a system of charge per capita for some operations.

Efficiency experts had said that if certain .operations were eiit out there would be savings. Mr Atkinson feared. that too many paper operations had been cut out so that public servants did not know the cost of running the business.

There were advantages of cutting out inter-departmental transactions but the stage had been reached where. he would rather see what it coSt. Presentation of Public Accounts: Could anyone interpret the Public Accounts? Although there had been criticism of the presentation they were still very difficult to understand. Remuneration and conditions: The “fair relativity theory” of relating salaries in the Public Service to salaries for similar work in business and trade was basically a fair assessment. But it was difficult to assess “other factors” —superannuation privileges, sick leave, the alleged security of the service.

Mr Atkinson said he could never understand why local body administration was paid on a different basis from Government administration. There should be closer co-ordination over what the public as taxpayers and ratepayers paid for their State and local businesses. Code of ethics: The role of the Public Service Commission was to try to develop in departments a code of ethics acceptable not only to the departments but also to the shareholders, the taxpayers. It was most important to have State services that were impartial.