Sunday Star-Times

Cost-cutter’s cleaver leaves deep wounds

Defence project points to reasons for Govt’s Novopay mess

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Typically, when hurried, design is flawed, goals and savings overstated, warnings and advice ignored, and implementa­tion prosecuted with all the subtlety of the butcher’s cleaver.

NOT QUITE so fast, Minister.

To some, it might be convenient to dismiss a highly critical report into the civilianis­ation of the New Zealand Defence Force as ‘‘old news’’, as Minister of Defence Dr Jonathan Coleman did on the radio late last week; to others, the report and its revelation­s are viscerally instructiv­e.

If you want to know how this Government got itself into such a mess over the Novopay debacle, a system which even Minister of Everything Steven Joyce now describes as a dog ‘‘with a few fleas’’ – and which requires ministeria­l and technical inquiries to sort; if you want to know how it almost destroyed this country’s diplomatic culture and capabiliti­es; how it is routinely and determined­ly unpicking the weave of New Zealand social fabric with its continued restructur­ings and public sector cost-cutting – then the auditor-general’s report is a compelling case study.

But first, a little of the backstory. In September 2010, the Government told NZDF to reduce its costs so money could be redistribu­ted; more specifical­ly it sought to save $350 million to $400m in annually recurring savings by 2014-2015, enhance frontline capabiliti­es, and maintain specified outputs.

A significan­t initiative within this was the ‘‘civilianis­ation’’ project: it would convert soldiers in logistics, training and administra­tive functions into civilians to save money which would then, theoretica­lly, be put back into frontline staff and operations.

As the auditor-general’s report points out, the NZDF committed to converting 1400 military jobs into civilian positions. However its first mistake was doing so without knowing how many military positions it would need from 2015. NZDF projected the review would save $20.5m a year by 2014-2015. The auditor-general’s office estimated savings of $14.2m in total, considerab­ly less than planned.

All three arms of the Defence Force raised concerns at the proposed pace of the changes and the methodolog­y employed. For example, the army said that it was concerned that its reductions were going to ‘‘significan­tly impact on its ability to sustain operations . . . ’’

Military staff targeted for possible discharge were to be categorise­d as having ‘‘low, moderate or high commitment to service’’ regardless, one suspects, of what an objective assessment might show. The report cites an internal NZDF document quoting navy staff: ‘‘[We] tried to reword the [discharge] letters when we got them as we were shocked at their obviously controvers­ial and unfeeling tone. We were told in no uncertain terms we were not to alter the ‘template’ . . . ’’

In a 2011 briefing for the incoming minister of defence, NZDF stated: ‘‘The civilianis­ation process has inevitably impacted on morale, leading to staff retention issues and associated costs and risks from lost expertise.’’ The report cites that in 2011-2012, the navy’s inshore patrol vessels sailed 397 days instead of 534 to 590 sea days, essentiall­y because of a staff shortages.

In its conclusion­s the AG’s report not only says the savings of the civilianis­ation project were significan­tly overstated, it points to its poor design, stating: ‘‘NZDF did not know how many civilian staff it needed and lacked a workforce strategy.’’ It says that ‘‘in deciding quickly to implement the civilianis­ation project . . . the effects should have been addressed much earlier, when those who had been asked to comment on the design of the project expressed concerns’’.

In the restrained language of public sector officialdo­m, the report’s overall conclusion that the project ‘‘has had limited success in terms of the targets aimed for by NZDF’’, is a damning indictment.

What the report does not concern itself with, quite rightly, is the politics of all this. This is how it works: Government dictates the policy and instructs officials to make it work; neutral public sector analysts who raise objections are routinely sidelined or find themselves out of work.

In the politicall­y motivated drive to ‘‘cut through’’, and regardless of repeatedly flagged potential consequenc­es, the opinions of other experts are frequently dismissed. This is the arrogance of power and when allied to the ambition and zeal of that new class of bureaucrat­ic acolyte, the change manager, the consequenc­es can be disastrous.

As is the case of the civilianis­ation project – and most likely Novopay, not to mention the nearcalami­ty with the Ministry of Foreign Affairs and Trade restructur­ings – typically, when hurried, design is flawed, goals and savings overstated, warnings and advice ignored, and implementa­tion prosecuted with all the subtlety of the butcher’s cleaver.

The results: savings not achieved, other targets not met, destructio­n of morale, and the inevitable necessity for remedial ‘‘work’’ – costing millions – to undo the damage.

Old news? Enough already.

 ?? Photo: New Zealand Defence Force ?? In the firing line: The army complained that the ‘‘civilianis­ation’’ of the New Zealand Defence Force would ‘‘significan­tly impact on its ability to sustain operations . . . ’’
Photo: New Zealand Defence Force In the firing line: The army complained that the ‘‘civilianis­ation’’ of the New Zealand Defence Force would ‘‘significan­tly impact on its ability to sustain operations . . . ’’
 ??  ?? SIMON CUNLIFFE
simon.cunliffe@fairfaxmed­ia.co.nz
SIMON CUNLIFFE simon.cunliffe@fairfaxmed­ia.co.nz

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