Akio Sugai (Moriguchi City Office, General Affairs Dept., Contract Section)
Yoshio Ninagawa (Osaka Prefectural Government, General Affairs Dept., Personnel
Division)
Koichi Kawamura (Osaka Cityl Office, General Affairs Bureau., Administrative
Dept.)
Introduction
The purpose of this GSE study tour was to survey and study the actual administrative reform situation that exists in New Zealand, which is famous as "a country that has successfully implemented administrative reforms." In order to do this, our team consisted of four civil servants--three office workers and one technical employee. This report has been written jointly by the three office workers on the team, with the goal of describing the things we learned about New Zealand's administrative reforms.
New Zealand is an island nation consisting of the North Island and the South Island. Its land mass is about the same as that of Japan minus Shikoku and Kyushu, and its population is about 3.5 million.
We visited the southern region of the South Island during our trip, and the seven places we visited to research local government were as follows:
Dunedin City Hall (City Council)
Invercargill City Hall (City Council)
Oamaru City Hall (District Council)
Timaru City Hall (District Council)
Central Otago City Hall (District Council)
Gore City Hall (District Council)
Southland Regional Office (Regional Council)
The content and results of our research follow.
An overview of New Zealand's administrative reforms
In 1984, the Labor Party carried out a number of reforms on the national level --liberalization of the financial markets, abolition of government assistance and a variety of regulations, and tax reform -- and from 1987, they undertook educational, health, welfare and local government reform.
Regarding local government reform, the government carried out restructuring in all areas from the structure of these governing bodies to their function and revenue sources. And in 1989, the government enacted the Local Government Amemdment Act and started to tackle the task of local government administrative reform.
Besides visiting a number of city halls, we also visited private companies, schools, and large farm owners, obtaining a wide variety information and knowledge concerning the reality of these administrative reforms in New Zealand.
(1) At the local government level
1. There are two types of local governing bodies in New Zealand -- regional council and city council (or district council). The first one corresponds to prefectural government, and the latter to city and town government. Before the 1989 administrative reforms, there were 22 regional councils and 205 local councils consisting of about 400 specific-purpose governing bodies that were in charge of the ports, hospitals, electricity distribution, etc., but as a result of the administrative reforms, these were restructured into 13 regional councils and 74 local councils, with almost all of the specific-purpose bodies abolished. The regional councils have jurisdiction over flood prevention, rabbit (and other types of pests) control, port management, resource management, environmental protection, etc., and the local councils have jurisdiction over things that are closely related to urban life such as roads, sewers and drains, waste treatment, park management, city planning, etc. In New Zealand, the word "council" is used in a slightly different way. The word "city council" means "city hall" or "city office."
2. Before 1988, the Harbour Board was in charge of operating the ports, but labor unions were quite strong and the ports were not running efficiently. In 1988, a Port Enterprise Law was enacted, and the operation of the ports by business enterprises was promoted, and private companies began to operate and manage the ports. For example, Timaru port is presently operated by the Port of Timaru Company (POT Co.). The board of directors contains some members of the Timaru District Council, but the remainder are all private citizens, with the total number of board members also being reduced. The city of Timaru holds 71% of the POT Company's stock, but port operation has been liberalized under the competition (regarding the port fee and other things) with other port management companies.
3. Local governing bodies must prepare annual budget and office operation drafts which are made open to the public, and citizens are able to voice their opinions and express their hopes regarding these drafts. The local governing bodies organize these comments, consider them, come up with a budget, receive approval from the parliament, and in the end make an annual plan. In addition, at the end of the fiscal year, an annual report is put together about the settling of accounts for all the activities carried out in that year, and this report is also made open to the public. In this way, all the information about local administration is made available to the public, and a governing system has been created that allows the average citizen participate and to directly voice his or her opinion.
4. The remuneration for council members is rather low compared with what such people receive here in Japan, and members are not prohibited from working at other jobs. We got the impression that serving as a council member was an honor.
(2) At the national level
At the national level, New Zealand's administrative reforms have been discussed in many books, journals, etc., so we will only share here about the things we learned from what we saw and heard personally.
1. We were given many opportunities to talk with farmers and ranchers. It goes without saying that the largest industry in New Zealand is agriculture, mainly sheep and dairy farming. From 1984, government aid and loans for farmers and ranchers were abolished, and all types of controls were relaxed. As a result, it became possible for the agriculture industry to operate freely.
2. Many state-run enterprises became government-owned and privately owned. We visited Contact Hydro Co. (a hydroelectric power company), which operates the Clyde Dam, for our vocational study. The electric power industry was originally state-run, but today it has become government-owned.
3. Since 1989, the board of education was abolished, and public schools are now operated mainly by family-run boards of directors, but the method of running these schools is left to the discernment of each individual school. There is a curriculum of sorts, but it covers the minimum basic standards. The operating expenses of the schools are born by both the government and the families.
4. In addition to an income tax with the highest rate being 33% (the maximum rate used to be 66%), a 12.5% government sales tax was introduced, and all other indirect taxation has been abolished. As a result, it is said that tax revenues increased.
The administrative reforms of Dunedin City
The administrative institution we visited first was the Dunedin City Council. Dunedin is the second largest city in the South Island, after Christchurch, with a population of about 120,000. Many Scottish people immigrated to this town.
We were able to get the frank opinions of those in the upper level of city government regarding the administrative reforms which have taken place in local governing bodies since 1989.
First, as part of the administrative reforms that took place based upon the 1989 Local Government Amendment Act, six local governing bodies were consolidated and restructured into one large body, and this has become the city of Dunedin.
The city has an elected mayor and councilpersons, and the administrative department of the city is made up of a chief executive (based upon this person's job responsibilities, the position is similar to that of a mayor in Japan) and this person's staff (general employees). The chief executive, who is in charge of all the general staff, is appointed by the elected mayor and given a 5-year contract. But since the working relationship is only bound by this contract, if the chief executive does a poor job, the contract can be cancelled. The same goes for the general staff workers.
The most characteristic feature of the reforms can be said to be the privatization. Based on the way of thinking that "those sections of which operation the civilian structures are familiar with should be operated by private operating methods," some portion of the city organization was converted into companies. The result of this move was that only 500 of the original 1,500 public employees remained, and the rest 1,000 entered private sector companies whose stock is 100% city-owned. Unlike the situation in Japan, where civil servants maintain their status and are simply sent to the private sector, the New Zealand public employees became completely private sector employees. In order to make the switch to such private sector companies, the government had to negotiate with the labor unions for a long time, but the transition went relatively smoothly. The reasons for this smooth transition can be inferred to be the following:
1. New Zealand is not a "life-time employment system" society
like in Japan.
2. New Zealand lacks a firm guaranteed status system like local government
employees have in Japan.
3. In order to transfer the entire department over to a private company,
the employees jobs were basically guaranteed.
Also, according to the Employment Contract Act (see note at the end of this article), workers were not forced to join labor unions. Since employees are free to choose between an individual employment contract or a collective bargaining contract, the power of the labor unions has been weakened. This, too, has contributed greatly to help the administrative reforms proceed smoothly.
We have some doubts whether one can call the transfer of a portion of the public employees to the private sector a reduction in the number of employees in the true sense of the word, but it does seem that things are running more efficiently now that the departments which have been privatized are operating under a principle of competition and are seeking to make a profit just like any other private sector company. These new companies must tender bids for the city's public works projects just like any other private company does.
Under the slogan "smaller public setor, bigger private sector", the city is still seeking to reduce the number of public employees. By promoting even greater privatization, the city of Dunedin is implementing plans to cut the present 500 government workers down to 200. Also, at present there are 18 city council members, but they are considering reducing this number, and just before we left Dunedin, there was an article in the newspaper about the city's plan to slim down to 15 council members.
According to upper level officials in Dunedin, city employees had been receiving a 5% annual pay increase before the administrative reforms, but due to public scrutiny and a desire to be more profitable, workers receive just a 1% annual pay increase.
Evaluating the administrative reforms
While New Zealand's administrative reforms have received positive evaluations in regard to its economic achievements, we also heard negative opinions regarding the impact these reforms have had on society. We would like to give a few examples now. These are opinions that we heard directly from those we talked to (including Rotarians), and since there may be some doubt if we can generalize these opinions, there is a need to get another opinion of New Zealand's administrative reforms. However, we should say here that the most common opinion we heard during our GSE tour was something like, "We needed some kind of administrative reform, and I don't want to return to the way things were before the reforms."
1. The government sold off all its telecommunications and railroad holdings, and as a result, many people lost their jobs. These workers are receiving unemployment compensation, and idling away their days aimlessly at home. It is a bit frightening to think of the influence this must have on the children of these workers who see them at home like this. Without thinking of the consequences, the buyers thought only about cutting their personnel costs.
2. Telecommunications, railroads and airlines are rapidly being bought up by foreign enterprises, and one wonders just what the future holds for New Zealand's industry and characteristic culture.
3. The government has set the repayment of New Zealand's debts as top priority, and it is pursuing a policy of a strong N.Z. dollar. This policy has hit the export industry hard. New Zealand depends largely on its exports of sheep-related products and lumber, and with its small population, there is a limit to its ability to spur domestic demand for these things. As a result, there is apprehension that if things continue the way they are going now, New Zealand's industries will decay.
4. Up through 1988, university and technical school tuition was free, but from 1989 this changed. In 1992, costs rose to above $1,000 per year, and now university fees are running about $10,000 per year. Scholarships have also been reduced. (By the way, the New Zealand dollar is generally worth about 80 yen.) Today, if you don't have technical skill or knowledge, companies won't hire you. Thus, while this may help to create a highly-educated society, these reforms will also cause more people to lose their jobs.
5. As a result of the reforms and the reduction in workers, medical standards have dropped. Smaller towns no longer have a surgeon, so in emergencies, patients must take the time to go to a hospital in a large city which is equipped to handle them. It is common for people to have to wait a year for their operation.
6. In 1987, health-, education-, and welfare-related programs accounted for more than half of the government's annual budget. In 1989, however, the Labor Party raised the age for pension recipients from 60 to 65, and the amount of payment was reduced from 80% to 70% of the person's salary at retirement.
7. Hospital medical costs are no longer free, so the elderly have begun to worry about whether or not they can afford the treatment they may need.
In conclusion
There are many big differences between the social systems of Japan and that of New Zealand, including culture, history, and public employee system. It is quite difficult to directly implement the reforms undertaken in New Zealand here in Japan, but the mindset of "those sections of which operation the civilian structures are familiar with should be operated by private operating methods" is the way of thinking that could be quite popular to those desiring to bring about administrative reform of Japan's local governing bodies. It has become one important point of reference for us in regard to reconsidering Japan's present administrative system.
As those who are involved in public administration, we feel it would be good if we could see even just a tiny bit of what we learned in New Zealand reflected in the administration of local governing bodies here in Japan.
(Note)
In the past, workers were represented by labor unions, but today workers now have the choice of whether they want to sign a contract individually or if they want to be part of a collective bargaining contract.
As a result of the enactment of this new law, both individual contracts and collective bargaining contracts have increased in number, and a common national labor consensus no longer exists (thus this cannot be compared the annual spring labor offensive which we have in Japan). The government in New Zealand has absolutely nothing to do with the labor/management relationship. Gentler labor customs have developed, employment has grown, and productivity has increased (especially in the manufacturing and service industries). Business hours are no longer regulated, so supermarkets, restaurants, and all business establishments are free to be open for business any hour they choose. As a result, not only has employment been promoted, but life in New Zealand has improved greatly.
