179 – Some thoughts on local government and public value.

Posted by Parkinson                                                                       1400 words

common good

A number of posts written have been written about public value by others (see Why do we provide the services that we do in local government?, Customer, client, citizen, resident or ratepayer. Who are we dealing with?, Applying the public value scorecard in local government services. Part 1. , Applying the public value scorecard in local government services. Part 2., Public value gap analysis. A tool., Public value gap analysis. Some actions., Making high performance happen through value-led management., and Value-led management in local government. Some further thoughts). This post is an attempt to provide a context for further thinking about public value in local government.

Common good and public value

The political philosopher Michael Sandel has identified that rising social inequality is leading to a separation in ways of life between the rich and the poor. He believes that when this happens there is no longer a common way of life because “they don’t use the same public institutions, don’t inhabit the same civic spaces, and don’t avail themselves of the same public services”. As a result, Sandel believes that we can cease to think that we are ‘in it together’ enough to even deliberate together as members of a political community to determine common good.

The gap between the rich and poor is growing in Australia. According to the Oxfam report ‘Still the Lucky Country?’, the wealthiest Australian are disproportionately influential and the poor are at risk of being marginalised and unheard. Extreme wealth provides the power to influence government policies that favour those with wealth, regardless of what would work best for the whole of society.

The common good is the ‘large’ form of public value. If communities contain people experiencing different ways of life, with different ideas about what is the common good, they are also likely to have different ideas about what constitutes public value. This is apparent when processes such as gentrification or skilled migration occur.

Councils experience this when the new people moving in are more affluent and articulate than those who have been resident for a long time. They can also have different, often higher, expectations of public services and what they believe they should receive for the taxes they are paying. Frequently, they are successful in influencing the council to provide them with higher service levels in the areas that they live.

Public value and public services

Professor Mark Moore has pioneered the concept of public value, defined as the collective view of the public or community about what they regard as valuable with regard to the use of public money and authority. Public managers need to try and understand what constitutes public value for their citizens so that they can set out to deliver it through their operations and then be held accountable for their performance.

Moore has identified a fundamental conflict for public managers in delivering the public value expected by people who submit to the authority of the state and pay their taxes. Is it the individual or the collective who are the ultimate arbiter of value? Is it the satisfaction of clients or service recipients that is important or the achievement of social outcomes? Every day public servants deal with conflict between individuals and their expectations of value and the broader community value.

Typically, the community expects that their taxes will pay for standardised services that are cost-efficient and equitable. When individuals want customised services that provide them with additional benefit using community resources, what are public managers to do? If the individual expectations of value are not met it will be an unsatisfactory customer experience.

The 2020 Public Services trust report What do people want, need and expect from public services? identified five key priorities for public services. The first was the importance of fairness in service delivery, with uniform standards or outcomes and help being available for those in genuine need. The second was the need for services to be high quality and delivered effectively. Customer service is a key element of this.

The third priority is the ability to vary universal services in response to specific local needs.   The fourth is accountability for ensuring people can influence services to get what they need and improve delivery. The fifth priority is personalisation and choice. This includes ways to access services, the convenience of recipients, influencing how services are designed and delivered, and having choice in providers.

The report found that people initially focus on outputs, rather than outcomes, and that they do not place them in the context of broader social benefits. The outputs are often closer to the private value received by individuals (as described by Moore) than the public value benefitting the whole community.

Public services and community expectations

In Australia today a gap is growing between what governments are expected to do and what government is capable of doing. There is also a gap between what people want and what they are prepared to pay for. The head of Treasury, Dr Martin Parkinson, described this as a reality gap requiring a “community-wide discussion to re-set expectations”. The expectations of the value to be provided in return for the taxes paid are out of alignment. The underlying assumption is that people will not or cannot pay higher taxes. Instead, their expectations must be lowered and services cut.

Australia is currently top of the 34 nations in the OECD Better Life index with the highest ranking for health, safety, environmental care and civic engagement. Michael Short argues that the state of the nation is robust and that Australia has an opportunity to build on collective strengths. Instead of announcing the end of the ‘age of entitlement’ and cutting social services to reduce the structural deficit in the national budget, the argument could be mounted that Australia is uniquely placed to become on the of the greatest nations with a public sector providing great value for money in supporting all Australian in having a better life.

Economist Paul Krugman has identified a looming crisis in the United States because of a combination of ‘anti-tax ideology and deficit hysteria’ resulting in failure to raise sufficient taxes to maintain the nations road system. Indexing taxation on fuel or borrowing to supply the highway fund would ensure that roads can be maintained.  When the dominant political paradigm is that government must not increase taxes or borrow to fund public works or services, it may have long-term, negative consequences for public infrastructure and the services that depend on that infrastructure.

Public sector value for money

Despite political reluctance to increase taxes or borrow, and regular criticism of public sector performance, the Australian public sector provides value for money. Chris Stone from the Centre for Policy Development’s Public Service Research Program has analysed the relative efficiency of the public sector. In 2010 Australia was the ninth most efficient and fifth lowest taxing nation in the OECD (see chart below).

Christopher Stone tax and effectiveness chart

This is relevant to discussions about public sector reform because Stone believes “there is a large difference in the reforms needed to fundamentally restructure a very inefficient government, and those needed to refine the activities of an already highly efficient government”.

There is often an assumption that all government bureaucracies are inefficient and that Australia is simply the best of the worst. Stone cites international research on outsourcing which indicates that under similar conditions, the public sector performs similarly to the private sector. This complicates the comparison of public and private sectors. He says that “even where they may seem to be doing the same job, public sector providers of services often are expected to fulfil objects beyond simply providing the core service. As a result, they are actually doing a harder job”.

Creating public value can be more complicated than the equivalent private sector creation of shareholder value. This is partly to do with the inherent complexity of public value, although private sector concepts of value are also becoming more complex with introduction of the ‘triple bottom line’ and expectations regarding corporate social responsibility.

The recognition of public value is further complicated by the accountability for public sector performance. Moore has identified that demands for accountability in the public sector are continuous and come from several sources. Individuals complain or join forces with others to form interest groups. The media amplifies the complaints of individuals and groups. Councillors represent their constituents and demand accountability. The Ombudsman, Auditor General and Local Government Inspector are powerful external sources of accountability. The problem is that demands for accountability come from many different places and focus on different aspects of performance. Some are more disciplined and consistent than others.

Ideally, these four sources of accountability would integrate to form a compelling demand for performance focussed on an explicit public value account that would clarify expectations of public managers and create a context to record increased value creation. Instead, the auditing system focuses on cost controls and procedural compliance. The political system focuses on the issues of the day. The pluralist system focuses on whatever captures the interest of any individual or stakeholder. The complaint system focuses on the bad experiences of individual clients.

Determining whether or not public value has been provided is complex.

Moore, Mark H., 2013. ‘Recognising Public Value’.