Battered govt staggers from credibility blows

HIDESIGHT

It’s fashionable to say the wheels are flying off the government. That’s journalists talking to themselves.

But the government has suffered two blows.

The first blow is to policy credibility. I don’t know the correct class size for New Zealand schools. But I do know that a government can’t afford to announce policy half-cocked and then reverse it because it proves unpopular.

Policy credibility counts. The Auckland mayors and councillors were all stunned back in 2009 when I told them they were sacked. The delightful deputy mayor of Waitakere Penny Hulse shot her hand up to ask what it would take to make the government change its mind.

I replied that nothing would. Cabinet had decided there would be one council for Auckland and that was it. I explained it was a waste of time complaining and better to work with the reform process rather than against it. And so they did.

It never occurred to me that the government could change its mind.

It’s clear now, though, that if enough people kick up a fuss the government will reverse decisions, including Budget ones.

The mayors of Auckland would now organise protests and gain traction. They would easily force a back down. Penny Hulse would still be deputy mayor of Waitakere and not deputy mayor of Auckland.

Government ministers can no longer deliver policy momentum and stare-down special interests.

The loss of policy credibility is a serious problem for the government.

The second problem is people. It takes extremely talented people to drive change through government. Such people don’t grow on trees and they are not sitting at home twiddling their thumbs waiting for government to call.

There are talented people who can help and are prepared to do so for the country. But they need to know the politicians are serious in their intentions and that they won’t be made political fodder.

Bang goes the serious intentions with the government’s loss of policy credibility. And bang goes any assurance of not becoming political fodder with the shocking treatment of ACC chairman John Judge.

John Judge is the former CEO of Ernst & Young and has just been appointed chairman of ANZ Bank. People like him don’t need government work. But governments need them.

The hard thing for a government is to persuade the John Judges of the world to assist to make the country a better place.

ACC was financially belly-up in 2008. The risk wasn’t just that it would go under but that it would take the government with it.

ACC’s shortfall in 2007-08 was $2.4 billion. The following year it was $4.8 billion.

ACC was down the toilet. The government was lucky to persuade John Judge to step up to the plate. Along with a new talented board he turned ACC around.

By 2010-11 ACC was back in the black with a surplus of $3.5 billion and a balance sheet on the mend.

It was an extraordinary multi-billion dollar a year turnaround. We only have an ACC now because of the hard work of John Judge and his team. No one else has stepped up to save the government billions a year.

I don’t know the ins-and-outs of the Bronwyn Pullar affair. But what I do know is that people with John Judge’s ability are rare and very hard to attract to help with government. And now we have lost him.

Here’s the questions: would he do it now? And where would ACC be if he hadn’t.

There’s been two big hits to the government. But really the big hits have been to any serious reform process and policy quality. That’s been a hit to us all.