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Policy Leadership: Minding our Ps and Qs (and Rs and Ss)

Published 16 Jun 2009

The Treasury has released a speech delivered by John Whitehead, Secretary to the Treasury, on Thursday 7 May 2009 at the Policy Leaders Workshop, the Treasury, Wellington.

The speech is available in HTML and Adobe PDF format. Using PDF Files

Thank you Minister for those helpful thoughts on what the government wants from its policy leaders, and welcome to all of you. It’s good to see you here.

Policy advisers are not in fashion – in fact they very rarely are. We work behind the scenes, suffering occasional jibes such as ‘policy wonks’... a category which doesn’t seem yet to have followed ‘nerds’ into general social acclaim.

And yet the work we do is very important. We advise the government of the day of the course of action we think it should take, and then we help implement the policies that result. There aren’t many jobs which have a more direct bearing on people’s lives.

John Maynard Keynes spoke of practical people being the slaves of some defunct economist. The same could perhaps be said of policy advisers.

There is a case that we angst too much over how to do policy analysis well. Noel Coward famously advised on acting: “Just say the lines and don’t trip over the furniture.” At the same time there are some basic attributes and principles we would do well to bear in mind.

Today, I want to highlight some of those attributes and principles, because these are the values we should be instilling in our staff. I’ve called them the ‘Ps and Qs’ of policy advice for obvious reasons – although I haven’t been able to resist wandering further into the alphabet.  I’ll also give a few examples from my own experience of policy advice (successful and less so) and try to leave some time for questions and discussion.

Needless to say, giving sound and timely policy advice in the current economic situation is rather more difficult than usual. The depth and scope of the worldwide recession continue to exceed all expectations. The ground is constantly shifting under our feet, and that makes any kind of forecasting – and the advice associated with it - difficult tasks indeed.

At the same time, of course, the need for wise counsel to government is greater than ever. We must not only advise on ways to help the country out of the current recession: we must also position New Zealand in the best possible way for when the hard times ease off.  And we should look to our own house – with the fiscal constraints the country faces we need to provide better quality advice for less.  Personally, I believe there is plenty of scope for this.

Professionalism

First and perhaps most important, ‘P’ is for professionalism. This is a well-known and widely-used concept which has it its heard the idea of “duty of care” – in other words an expectation of acting in the interests of the client.  There are many different dimensions – not least for us being non-partisan politically – but fundamentally a good policy leader needs the confidence and trust of the people he or she is advising. In the positions you are in, or soon will be, that trust needs to work both up and down: up to the Minister and down to the teams you lead.

Occasionally – not often thank goodness – people do make the mistake of confusing political partisanship for trust.  I doubt that I need to say more on that matter here other than the need to remind ourselves of the need for advice to be free and frank and the need to implement decisions enthusiastically whether or not we argued in favour of those decisions.  I’ll say a little more on free and frank advice shortly.

Trust, of course, is not something which happens immediately. It has to be built up over a period. We have a new government, and new ministers. We at Treasury are lucky that our Minister is a familiar face but like all Ministers he works differently from his predecessor and we need to respond to that if we are to be effective advisors.

Many of you, though, will have new ministers, and will have been building up new relationships from scratch. And of course the way to win trust as a policy adviser is to provide – consistently - advice which is strategic, rigorous and compelling.

Persuasiveness

Which brings me to the next important ‘P’: persuasiveness. You may be offering the best advice in the world, but unless it’s clearly, logically and attractively presented it won’t have impact.  I’ve encountered a number of policy advisors who have simply regurgitated their thought processes and are left incredulous that anyone, let alone a Minister, can fail to be convinced.

There’s a great deal of conflicting advice out there, much of it from parties with vested interests. Your job is to make sure your advice is heard above the clamour of the throng, and help your Minister in their job of explaining the approach being taken.

Pitch

One important way of doing this is by making sure your advice is pitched right – the next in my list of “Ps”.  Advice needs to be written in language which makes sense. Incidentally, everyone gets it wrong sometimes. I take pride in the advice the Treasury gives, and think it generally reaches a very high standard. But not long ago we solemnly advised ministers that they need to pull some levers to get better value for money in a particular agency – without thinking to tell them what those levers were.

I could engage you here in a pedagogical exercise in the operationalistion of a reverse airflow pertaining to an ovoid structure. But I don’t want to teach you to suck eggs. We’re all aware, I hope, of the dangers of jargon.

Prioritised

There’s another ‘P’ which has assumed great importance in the last few months: prioritising work. The global recession has come at us with a ferocity that few were expecting, and that has quite significantly changed the priority we give to different work. At the Treasury, our main focus now is on getting through the economic downturn and helping position NZ to emerge from the worst recession since the 1930s in the best possible shape to perform well in the upturn. We are helping the government manage through the current situation, preparing for the risks ahead and helping to deliver the government’s 3-5 year fiscal strategy.

We are also focusing on making the State sector more efficient and effective through improved performance and better monitoring, among other measures.

This is an area which affects all of you. The government has made it very clear that the State sector needs to do more, with less. That understanding will need to be part of every piece of advice that you provide.

It’s very important, though, that while focussing on the task in hand – getting through the current downturn – we don’t lose sight of our medium and longer-term goals. As Hilary Clinton has famously said, ‘Don’t waste a good crisis’.

New Zealand in many ways is relatively well-positioned to weather this storm, even though it is proving to be more violent than most were expecting. As the IMF pointed out in its recent country report, we have sound macroeconomic policies, including a flexible exchange rate, low levels of public debt, flexible labour markets, and a healthy banking sector.

We need to make the most of these advantages, and make sure we’re as well-positioned as possible to emerge from this crisis. Obviously a lot of the work involved in doing this will be the economic and fiscal advice which we provide at the Treasury. But everyone in the State sector has a part to play, both in ensuring that their agencies are run as efficiently as they can be, and in looking ahead to what they should be doing in the somewhat different world we will face when the crisis is over.  And of course, there will be a range of other factors which will be relevant to prioritising your work.  Advice which reflects poor prioritisation is poor advice.

Pan-government

Which brings me nicely to another letter “P”: pan-government work - or in other words cooperation. To quote from a current tv campaign, ‘We’re all in this together’, and giving cross-government advice is becoming more and more important. John Key has referred to his “Cabinet of the self-employed”: entrepreneurial souls, many of them, and used to making decisions by themselves. As new ministers what they may not be used to is considering advice from several organisations – and that’s one area where policy leadership comes into play.  The point of course is that the best advice will rarely be found within silos.

Process

I’d like to make a point here about another ‘P’: the Cabinet process. There are some examples of what some might consider arcane guidelines that govern the Cabinet process.  These include the use of Cabinet Committees, defined periods for consultation, the ability for dissenting views to be placed in Cabinet papers, quality control measures (such as a Regulatory Impact Statement) and evidence of consultation.

All these things if not done properly can slow down the policy process and, done well or not, ministers can find them frustrating.  However, these controls have built over time and are an integral part of the integrity of the policy process.  They ensure that sufficient scrutiny is provided over policy advice, that relevant ministers and agencies have the ability to set out their views and that Ministers will have all relevant information in front of them when taking decisions.

Over recent years some of these standards have slipped and poor decisions have resulted.  In addition, there is always the tension that some agencies may have felt that their views have not been appreciated.  In these circumstances there is the risk that advice slips from being “free and frank”, and this is a danger to be avoided at all costs.

Central agencies - DPMC, the State Services Commission and Treasury – do believe that there is considerable scope to improve the quality of advice to ministers and we are working to ensure that the system contributes to lifting the quality of advice.

From time to time insistence on being “free and frank” will mean that some of this advice will sit uneasily with ministers and agencies.  For example, sometimes when the Treasury chooses to provide a comment or insert split recommendations this will be uncomfortable, but this is a core piece of the wider machinery. It’s not that we’re breathing down your necks for no reason.

Play the game

And finally, before we move on to the ‘Qs’, policy leaders – to use a sporting metaphor – have to learn to play the game. It’s hard not to feel competitive sometimes about the advice we’re offering: we’ve worked hard to prepare it and we want it to be accepted: to win, in other words.  That is a good thing.  As with sport, though, what’s really important is participation: providing the best advice you can, sometimes working closely with others, and accepting the referee’s decision – if one may think of Ministers in such a way.  The chances of good policy being the winner on the day are so much greater if all advisors have provided their best advice.  In such circumstances, we should all have cause to celebrate whether or not if was our advice that carried the day.

Quickness/Quality

You’ll be relieved to know that after that long list of ‘Ps” there’s only two “Qs” to mind, and they’re obvious: quickness and quality. Both are essential to good advice, though of course they are not easy bedfellows: one can often be used to push the other out of the way. It’s important to get the balance right: advice is only useful if it’s both timely and of high quality. That’s one of the hardest calls you’ll have to make, and you’ll find yourselves making it often: at what point do you stop your research, or your polishing of elegant cadenced sentences, in order to get advice to the Minister on time. The solution, of course, is to start in plenty of time, but as we all know that’s often a luxury we don’t have.  If you cannot be certain of the accuracy of your facts in the time available then you can maintain quality (including timeliness) in the broadest sense by making sure you qualify your advice appropriately.

Rigour

Still, the one thing that cannot be compromised is rigour – the first of my “Rs”.  Your advice must rest on depth of analysis, soundness of empirical methods and so on. Without the highest standards of analytical rigour, policy advice – and those who provide it – will not become trusted.

And there’s more to rigorous advice these days than there used to be. Certainly for us – and I suspect for many of you – providing good advice now involves going beyond our traditional sources and methods, and engaging more with the wider community. At the Treasury we call it “Stepping Up”, and you may well have your own names for it. 

This government has made it clear that it wants to know what other people are thinking, which is something that needs to be reflected in the policy advice we provide. In the Treasury’s case that has meant strengthening our relationships with the public and private sectors. In other words, we’re getting out and about more. That makes us better connected, better able to give advice which reflects what is going on in New Zealand, and – I hope – more influential.

A good example is the Infrastructure Unit which has recently been set up in the Treasury. Hard-wired into this Unit are arrangements to work closely with an Infrastructure Advisory Board made up of private sector and local government representatives.

Responsive/responsible

As well as rigorous, a good policy leader needs to be responsive. To my mind, responsiveness doesn’t consist just of telling ministers what they want to hear, when they want to hear it.

Sometimes responsiveness can mean the opposite: advocating a position which you know will not be popular with the government of the day.

As you’ve just heard [assuming Minister says this] the new government is keen to hear your first best advice, whether or not that advice is likely to be popular. You should be prepared to put up a robust argument - and sometimes to find yourself in engaged in a robust debate to defend it.

‘Responsiveness’ is sometimes interpreted to mean that advice is provided when it is sought and in a timely fashion, and here I’d like to quote my colleague Ken Henry, Secretary to the Australian Treasury.

“There is a risk that the responsive public servant will misunderstand this point, and provide advice only when it is called for; only on those things about which the minister has indicated that he or she ‘wants’ to be informed.

“In extreme cases, where the minister ‘wants’ advice on something, but doesn’t ‘need’ such advice, the risk presents as obsequiousness. But there is also a risk, at the other end of the spectrum, of the responsive public service adviser ignoring those things which, while not being at the forefront of the minister’s mind on any particular day, are nevertheless things about which the minister has a need to know.

“Good public policy advisers understand both of these risks. Their behaviour is both ‘responsive’ and ‘responsible’. Judging whether and when to initiate a conversation with a minister on something about which he or she has a need to know, but on which advice has not been requested, is among the most difficult parts of the public servant’s job. It is also among the most important capabilities of highly performing advisers.” (End of quote)

Strategic

Finally in my policy alphabet, it is on to the “Ss”! Good policy advice, as I said earlier, has to be strategic. That is particularly true now, as we grapple with world recession and the unpredictability it brings. But what strategy to follow? And how to give advice when so little seems certain?

Jane Austen makes a nice reference in her last novel to “one of those cases in which advice is good or bad only as the event decides.” This is the 2009 policy leader’s dilemma in a nutshell but the ability to anticipate well is always a key weapon in the policy advisor’s armoury. The novel, incidentally, is called Persuasion, which of course is what giving advice is all about.

But I’m conscious the word “strategic” has so many different meanings that at times using the term can convey only emptiness.  When I use the word, I think in terms of three dimensions:

  • First ‘height’: good strategic advice sees the big picture – the so called “helicopter view” if you like – and keeps the main objectives in front of us.
  • Secondly ‘depth’: good strategic advice looks below the surface into what is really driving the developments we more readily observe.
  • And finally ‘breadth’: good strategic advice sees the interconnections and points of leverage so that all consequences – intended or unintended – are considered.

I’d like to make one more point about strategy, and it is probably an obvious one: conditions don’t stand still, and neither does advice. As we square up to a deepening world crisis, we need to look at a fundamentally different world differently.  We have a government which by and large welcomes free, frank and imaginative advice: let’s take advantage of that.

From Theory to Practice

So much for the theory. How about a few examples? First, I’d like to talk about the recent review of the Resource Management Act. This is a good example of interagency cooperation and cross-government advice, and of working closely with the community.

As you’ll know, reviewing the RMA was one of the new government’s first priorities. The Treasury had already been looking for some time at changes we felt needed to be made to ensure effective resource management. Later we did some work with the Ministry for the Environment and the Ministry of Economic Development. This meant in November last year we were able to present a joint Briefing to the Incoming Minister on problem definitions and options, in which we could show a cross-agency consensus on problem definition and options. It didn’t mean that we agreed on every detail, but it did mean we agreed where we could agree, and ‘hit the ground running’ for the work the government wanted in its first 100 days.

The review itself was also a cooperative effort involving a core officials group of Ministry for the Environment, Treasury, and Ministry of Economic Development, as well as wider interdepartmental officials’ group developing proposals.

We also worked with a Technical Advisory Group made up of private sector and local body representatives, which provided independent advice and generated its own proposals.

It was a successful piece of policy work, which taught us some interesting lessons. Most of our influence came from working with MfE, not from advising the Minister of Finance directly. Our strategic perspective complemented MfE’s operational perspective, and we were able to use a collegial approach to inject our ideas into process.

Another example of lessons learned was our own BIM to Bill English last year. BIMs were something we didn’t always get right. They were wide-ranging, and not always welcome: you may recall the ‘ideological burp’. And so they were sometimes counterproductive in establishing a trusted working relationship with a new Minister. They had not changed in response to an MMP environment where policies had become much clearer in advance of elections.

We decided to focus less on the single document and more on ensuring that we were better prepared to advise on a new government’s priorities (whatever the government’s make-up).

At the same time we wanted to retain traditional BIM strengths – that is the need to be genuinely strategic – in the sense of focusing on underlying issues and medium-term policy issues.  We spent more effort getting out in advance talking to people inside and outside of government, and putting out broad analysis – for example around some of the factors influencing our productivity performance.

Thirdly, there’s some of the tax policy advice we developed over the last few years. You could argue that this was only a partial success. We had some difficulty getting the previous Minister’s ear for some of our proposals – for example a significant extension to upper thresholds.

However we were able to persuade the Minister not to create a tax-free income threshold, something he’d expressed a strong initial preference for as a way to deliver relief to low-income workers.

Our advice was that such a move would have only a minimal benefit for a very small number of low income earners. We presented the Minister with other options to maximise effective marginal tax rate reductions for key groups, for example, those receiving Working for Families.

This advice prevailed where other advice had not. Why? I think there were a number of reasons. We knew we had just one opportunity to advise on this issue, so we put a great deal of work into ensuring our analysis was incontrovertible, and compellingly presented.

We aimed to influence at multiple levels. We talked to ministers, political advisers, secondees or anyone else who would listen.

And we ran the fine line of political constraints, providing advice while remaining aware of ‘no-go’ areas: some things we knew were not up for discussion.

Finally, I’ve focused on Treasury examples because obviously that is something I know best.  But let me use a current example being led by another agency – our response to the swine ‘flu outbreak.  This is potentially high-stakes stuff and inevitably controversial, but in my view the Ministry of Health (and others involved) have performed very well.

Why?  Well, the previous bird ‘flu scare led to a lot of interagency work and lesson-learning that is proving its worth.  The pan-government approach means the different agencies involved know the roles they have to play.  Advice on formulating our approach has been based on high standards of professionalism.  A lot of attention has been given to pitching communication in a manner that will reach the intended audiences.  There’s a strong sense of prioritisation operating in a real-time environment.  And strategic advice and implementation have been well integrated.

To summarise the points I’ve just made, policy leadership is an essential component of government. Your advice needs to be respected, accurate, strategic and compelling. And it is needed now more than ever.

The opportunity facing policy leaders today really is one that comes along only once or twice in a lifetime. The downturn is alarming, but it also brings with it significant opportunities. New Zealand and the rest of the world will be substantially different when we emerge from the current situation and minding your Ps and Qs as a policy leader has never been more important – or potentially more rewarding.

We have some time now for any questions you may have, or points you’d like to discuss...

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