The ACT Party wants public service bosses to answer to ministers on key performance indicators and make performance reviews public.
It would also reintroduce performance-based pay for government department chief executives, and remove a cap on bonuses for them for "exceptional performance".
It's part of the party's public service policy, announced today.
A leading public service union says it could lead to "political interference" in the neutral public sector.
ACT leader David Seymour said it would mean government departments would no longer "get away with spending billions of dollars while failing to deliver meaningful outcomes for taxpayers".
"Any government ACT is part of will demand higher standards and greater accountability from chief executives and departments for the money they spend," he said.
"Government spending has grown from $80.6 billion a year in 2017 to $137 billion in 2023, a 70% increase in nominal terms."
Adjusted for inflation, it was an increase of about 40%.
Seymour said despite the increased spending, New Zealanders believed public services were worse than they were a few years ago, including in health, education and crime.
He said the mismatch could be addressed by improving measurement and accountability for the quality of day-to-day government services, as well as improving ministerial power over and incentives for public service chief executives, to "make sure their departments perform and deliver".
"ACT proposes three changes," he said.
"First, there's a growing disconnect between what government considers priorities and good performance, and the quality of services the public experiences. Large, expensive and poorly thought-out pet projects like restructuring the health or polytechnic systems are treated as goals in and of themselves.
"Ministers can be so focused on their pet projects that they lose sight of whether they will improve New Zealanders' lives.
"The problem is that performance reporting of public services is haphazard, measures can be cherry-picked, results can be reported in a way that isn't coherent, and it's difficult or impossible to track trends over time."
He said ACT, if part of a government, would set meaningful performance measures for key government services based on outputs and outcomes rather than inputs.
He gave the example of student performance in international assessments (outcomes) versus student-teacher ratios (inputs).
"Monitoring would be done by the Treasury and reported annually. Measuring the effectiveness of core public services should already be a basic Treasury function, but it has been distracted by dubious concepts like 'wellbeing' and the 'living standards framework', rather than ensuring investment in public services is making people better off."
Seymour said Australia, which had a similar system already in place, was "miles ahead", with a long-standing and de-politicised process.
It had a repository of long-run data which allowed meaningful comparisons across governments, and the public could trust it, he said.
"Second, ministers are accountable to New Zealanders for outcomes, but they don't have sufficient power over departments and chief executives to deliver those outcomes.
"What happens when bureaucrats are incompetent, or when a department doesn't have the same sense of urgency as the minister or has priorities of its own? Ministers can shift the blame onto departments, and plead ignorance or an inability to intervene, and then chief executives escape public accountability.
"This problem will only get worse under Labour's Public Service Act which concentrates power with the Public Service Commissioner rather than democratically elected ministers.
"The Public Service Commissioner oversees performance reviews for chief executives. But their key performance indicators (KPIs), and the results of performance reviews, are not public. The Public Service Commissioner's priorities or metrics for success are unlikely to be the same as the minister's.
"ACT will enable ministers to publicly issue their own KPIs for chief executives, conduct performance reviews against those metrics, and then publish them.
"One KPI all chief executives would have is recognising and stopping wasteful spending.
"Departmental budgets would be linked to KPIs to ensure activities that the Government prioritises are properly funded. It will also ensure that departments maintain a focus on high value activities."
Seymour said having excellent chief executives and incentives for excellent performance, mattered, but public service chief executives currently had "few incentives to cut waste, discover efficiencies or innovation, or deliver outcomes that the minister prioritises".
"Chief executives can lose focus by not adequately understanding how to manage activities and staff according to the minister's priorities. The culture of the public service means that poor-performing chief executives can simply shift from department to department.
"ACT would reintroduce performance-based pay, remove the cap on the 'exceptional performance' component, and enable this component to be determined by the minister."
He said the Public Service Commissioner would still be responsible for setting base salaries, but the discretionary component would be determined in line with the minister's assessment of how the chief executive has performed against their expectations and KPIs.
"Individual employment agreements would include a base salary, and ministers would have discretion to attach bonuses when agreeing on KPIs with the chief executive."
Seymour said the change would give ministers a further lever to drive performance from the public sector.
"While the Public Service Commissioner has a role to ensure salaries are in line with labour market rates to ensure recruitment, it is not in the best position to decide with chief executives are delivering on the Government's priorities."
Union hits back
The Public Service Association, which represents public service workers, said ACT's policy showed it had "no concept of why the public service needs to be independent of the whims of ministers".
National secretary Kerry Davies said ACT wanted to "allow our independent public service to be more susceptible to inappropriate political interference".
She said it was a "solution looking for a problem" as New Zealand's public sector was "already one of the most trusted and efficient in the world, according to the OECD".
The OECD's 2023 Drivers of Trust in Public Institutions in New Zealand stated "the high levels of institutional trust in New Zealand have been grounded in an effective and honest public service".
"Ministers already have considerable power to set the direction of travel for departments," Davies said.
"Now ACT wants to upset the balance between ministerial oversight and the independence of the public sector."
She said the public service needed resources and long-term planning, and work to address skills shortages.
Those were marred by the three-year Parliamentary term, she said.
"Of course, chief executives need to perform, and ministries need to be accountable - there are plenty of checks and balances in our system right now including rigorous oversight from Treasury, Select Committees, the Auditor-General and the Public Service Commission.
"A strong and independent public service got us through the pandemic, and Mr Seymour seems to now want a public service he can easily bend to his whims.
"ACT seems to be suggesting if chief executives are not performing according to their KPIs, they will have their pay docked or even worse, sacked.
"This is a slippery slope to political interference in the public sector. We decided in 1912 that we didn't want to go down that route where jobs went to the mates of MPs and the country has been better off for it."
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