Public Management and Finance Law

| 05/07/2013

I closely followed the implementation of the the Public Management and Finance Law. I'm also familiar with what happened in New Zealand specifically and the push for a "Whole-of-Government" approach or "Reintegration of Government" on the heels of "New Public Management". NPM can potentially work in certain situations, but not here in Cayman.

Both the Cayman Islands Public Management and Finance Law (PFML) and Public Service Management Law (PSML) were based largely on similar laws in New Zealand and are part of what is referred to as "New Public Management" (NPM) reforms (the "new" is a bit outdated at this point, as the movement began in the early 80's and that term was coined in the early '90s, but the name stuck).

New Zealand was an early and enthusiastic adopter of NPM reforms, and to quote a speech by the Financial Secretary in May 2005 (linked below): "When we began this process there was very little experience within the Caribbean region for us to draw upon. We therefore looked at experiences elsewhere in the world – particularly the financial management approach adopted in New Zealand. From that we developed our own reform design – which we called the “Cayman Model”.

The Miller Shaw Report also notes: "Our attention has been drawn to a comparison with New Zealand in part because the Government‘s finance department studied that country‘s financial management reforms, and the Principles of Responsible Financial Management incorporated into Cayman law are based on their experience and systems."

Wikipedia sums up the ideas behind NPM quite well: "Some modern authors define NPM as a combination of splitting large bureaucraciesinto smaller, more fragmented ones, competition between different public agencies, and between public agencies and private firms and incentivization on more economic lines. […] A 2003 [OECD] paper described the characteristics of the new public management as decentralization, management by objectives, contracting out, competition within government and consumer orientation."

This is what we did here in Cayman, with the creation of many "new" units, agencies and statutory authorities to achieve specialisation in the delivery of goods and services that had previously been done at the department/ministry level; contracting out; strict rules for tendering; identifying "outputs" that are "purchased" in order to draw down funds that are budgeted; decentralising finance and accounting; decentralising human resources functions; introducing more competition in the hiring processes by requiring open recruitment for every post (with very few exceptions, sonow many posts are advertised even if they would have previously been considered promotions in line with succession plans, and many "advertisements" are not truly open because the post is already designated for a specific persion — not unlike some work permit advertisements …); introducing performance management; etc.

By adding new measures meant to promote efficiency and effectiveness, the size of the public service did, in fact, increase. By quite a lot. The creation of new agencies and decentralisation of finance and HR required many additional personnel. Not all of the 800 persons who were added to the civil service (most in the 2005-2008 time period) were a result of these changes, but the vast majority of them were.

New Zealand abandoned those reforms just as we were taking them up in the mid-2000's.

To quote a scholar who has studied New Zealand through NPM and beyond: "Public sector reform has persisted for a sufficient length of time in several countries to examine patterns over the longer term. Australia and New Zealand are both early and long-term reforming countries that display distinctive features as well as being Anglophone countries identified with new public management. As third generation reformers, the products of more than two decades of reform activity are becoming clearer: the starker manifestations of new public management have less prominence now and a set of distinctive trends has emerged with commonalities across the two countries. The synthesis of elements in the third generation suggests that system integration and performance are central to the prevailing approach and that an emergent model is best represented in the mid-2000s as integrating governance."

Another scholar on the same subject: "In the recent generation of modern public sector reforms — those following two decades of New Public Management (NPM) reforms — there has been a change in emphasis away from structural devolution, disaggregation, and single-purpose organizations and toward a whole-of-government (WG) approach. This trend is most evident in the Anglo-Saxon countries, such as the United Kingdom, Australia, and New Zealand, once seen as the trailblazers of NPM, but it is also occurring in other countries, such as the United States, under the heading of collaborative public management."

The fact is, our Government did not have much in common with the governments that explored NPM in the 80's and 90's. And we have stubbornly stuck with it despite being, really, the last bastion. It sounds great on paper, but it just doesn't work.

We need to have the courage to say we tried it, it didn't work in practice (and not just because our finance persons are not capable — though, to be frank, many are not), and we're going to change while still committing to the same objectives of efficiency, effectiveness, transparency and accountability. I think the Hon Deputy Governor has the right motivations, but I disagree with himon the future of these two laws.

Sources and further reading.

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  1. Rock Iguana says:

    The PFML has been a disaster for the Cayman Islands. The real litmus test of the new coalition govt will be whether they are brave enough to acknowledge the failure (many of them were directly responsible for bringing it in) and consider implementing a new system that actually works, or going back to the old system that served us well for so long. We have had no meaningful accounts for the better part of two administrations. It is unacceptable, unless you view the better way forward as a downward slide.

    • Anonymous says:

      The old cash based system did NOT serve us well. Just ask the private sector providers who waited up to a year to get Treasury to pay them. The notion everything was wonderful in the past is just uninformed rose tinted nostalgia. This is not a defence of the PFML -I don't give a damn if it goes. But I hope any new system is made to work by doing what should have been done with the PFML, namely, firing the lazy and incompetent finance staff when they grumble and complain about how much work they have to do for their hugeley inflated salaries. XXXX

    • Anonymous says:

      I agree this was not the proper fit for here — but it did create alot of jobs — totally blow up the CS count–

  2. Anonymous says:

    A good idea badly implemented becomes a bad idea.  This is the story of the PMFL, an excellent system to manage government's finances and operations accountably. However like Freedom of Information, Standards in Public Life Commission and Auditor General, many politicians and civil servants spend their time working to withhold information that should be in the public domain.  Information is power and these people do not want to empower the public who pays the taxes.  Wake up Caymanians, demand the full implementation of the PMFL, in time our taxes will be spent to benefit the public and not the chosen few in the private sector, politicians and senior civil servants.  Keep the PMFL!

  3. Anonymous says:

    The main problem here is that many public servant bookkeepers have no concept of the difference between accrual and cruel accounting.

     

    The corrupt political masters, of course, take full advantage of this incompetence.

     

    Slowly, things will get better as young educated and ethical Caymanians take over the reins of government.

    • Anonymous says:

      Thanks. That was an exceptionally impressive presentation indeed.

      • Anonymous says:

        Really – impressive – from what angle you looking?

        • Anonymous says:

          From the angle, 16:29, of someone in the private sector who would like government in the fifth most important offshore financial services industry in the world to be able to demonstrate that they have the intellectual vision and the civil servants with the diligence and competence to implement a financial management system that responds to the needs -transparency, fiscal prudence, best accounting practices etc- of the 21st century. The vision was there. The diligence and competence, especially of those at the top of Finance, who should have been leading the charge just wasn't there. But no consequences will accrue to them because oftheir uselessness. I just wish to God they were working in the accounting firm I work for.

    • Anonymous says:

      All looks good in theory, but clearly the commitment to actually achieving the goals laid forth was lacking. In particular, there appears to be a distinct failure in Financial Management and HR Management. Underperforming civil servants are not actually dismissed, and financial reports are not completed properly.

      The whole of this viewpoint isn't to say that the seed of the idea for the PMFL was bad, but that it just hasn't worked well in reality and it's time to consider new options that are not only manageable, but also will improve transparency and accountability.

      Similar goal, different method.

  4. Anonymous says:

    Peter gough in the middle of this whole mess. Though retired years ago , he is still a power player as he consultant for CIG …. Double dipping ….

    • Anonymous says:

      So why do his bosses employ him, 6:37? Are they forced to for some reason? Could it be that he works hard and delivers the performance they require of him? Wow, now there's an unusual possibility in the civil service.

      • Anonymous says:

        Funny how you only reach that conclusion when an expat is involved.

        • Anonymous says:

          Not true. There are Caymanians who work hard and perform well. As a result, they do very well in the civil service. But there are others who warm seats and complain about not getting ahead. Seat warming expats don't get their contracts renewed. Seat warming Caymanians continue to warm their seats. All civil servants should be on two year contracts. It would encourage better performance and those who are good workers and deliver well have nothing to fear.

  5. Anonymous says:

    Rules, procedures and transparency get in the way of saving the country money, such as on the Cohen deal and many other fabulous ideas which friends of Mac came up with.  The proper term for anyone who wants such standards is a "F****** Robber".

  6. Anonymous says:

    This makes me sputter and cough whenever I hear of this failed scheme!

    One aspect of this "development" alone has been singularly disastrous:

    The de-centralisation of services such as HR and Accounting services — which led tothe addition of probably hundreds of new jobs throughout government, but no enhancement of the actual services provided by such!

    It's not too late to reverse this mistake…

    • Anonymous says:

      I couldn't agree with you more. But you must understand that the Chief Officers and HoDs were given extreme power with the decentralization. They hired their friends and paid them what they felt like. All those young ones that are in top jobs in the civil service who has has little or no experience to manage the jobs they are in, would not have been there if we had maintained the Public Service Commission. The DG is the real power house now. He has ALL the power that was once in a collective body of persons referred to as the Public Service Commission. He loves power and will never agree with the AG or anyone else to relinquish that power that he has. The government of the day must stand up and do what it takes to recentralize the HR and Finance Operations of the civil service. Reappoint the Public Service Commission and I guarantee that we will fix our badly broken civil service.

      • Anonymous says:

        Total dinosaural rubbish.

      • Anonymous says:

        This is a nasty anti-Franz Manderson post probably from someone who did not get appointed to a post they thought they were entitled to. As to the Public Service Commission not, according to you, appointing young people to top jobs in the civil service, how come they appointed Ms Gloria McField Nixon to a deputy permanent secretary position in the early 2000s when she was not yet 30 and some of the other candidates were in their 40s and 50s? Could it have been because Ms McField (as she was then) was a brilliant young candidate who outperformed the other candidates and then went on to be appointed Permanent Secretary in her early 30s? My guess is you are an older discontented Caymanian who believes that hanging around in the civil service long enough should get you appointed to plumb jobs on high salaries, irregardless of any talent and ability you might (or might not) have. That was how it was done in the old days you think were so great but now candidates for senior positions have to pass a battery of tests and interviews and actually demonstrate they have the intellectual ability to perform high level jobs. My bet is this is where you fell down and you are taking it out in bitter anti-Manderson posts like this one. And by the way, when you write "all those young ones…..who has little or no experience etc", you are making a very elementary serious subject/verb error which could indicate many things to an interview panel. It should of course be "all those young ones ……who HAVE little or no experience etc".

  7. Anonymous says:

    One telling point is missing:

    Wasn't this embraced by Cayman's government to the extent that two local "Champions" of this failed model took it to Bermuda to try to "sell" them on it – but they smartly rejected it?

     

  8. Anonymous says:

    Question – New Zealand "abandoned" these reforms or greatly modified them based on experience based on ongoing and continual evaluation of their effectiveness and also costs (not necessarily financial)?? Reading through the accompanying literature which you very helpfully provide suggests it is much more "modification" than "abandonment".

    I do not agree with you about the so-called 800 extra posts beingoverwhelmingly caused by the reforms; you need to take account of the extra police (including helicopter crew!) Kernohan managed to get on the back of a serious violent crime wave that spooked the then PPM Government, the significant number of extra Immigration Officers that the then CIO Mr Manderson requested and got for the expanding role of that dept brought about by, inter alia, rollover, the extra teachers and other education staff brought on for the new schools and the "reformed" education model, Information Officer and staff, Protocol Office, FOI persons in ministries and a host of other persons appointed (in good faith) by Government doing what it has always done here -trying to solve societal problems and satisfying the "would like to have" impulses of the public.

    BUT…..you are correct in saying that new posts were created as a result of the reforms. Some of them were totally unnecessary-Public relations/press officers (because GIS was/is not fit for purpose), many minor HR posts (to reduce the operational load of the HR managers and give them management oversight and therefore more salary) and a whole slew of positions with dreadful job titles right out of modern management-speak I wont bore you with but whose functions were not brought about by "reforms" and did not contribute in any useful way to the reform movement.  Also evident was the moving of persons who were, say, Executive Officers, into, say, HR Officer posts (to reward them for faithful long service and get them out of dead end jobs) Reform did not CAUSE anything like all the posts that were created. But, unfortunately, it did RESULT in many of these posts. There's an important difference.

    Finally, thank you for a very well researched and highly literate Viewpoint with valuable references – one of the best I have read on CNS.

    • Anonymous says:

      You could add Commissions Secretariat and Hazard Management (which has its own PR person) to the list of "nice to have but don't need" departments created in the last few years.

      • Anonymous says:

        You could also add the extra lawyers added by the splitting of the Attorney General's Office into two departments: his Office and the Director of Public Prosecutions Office.

    • Anonymous says:

      Thank you for your feedback. When I wrote a quick reply to a poster who seemed to have incorrect information I was really just trying to point out that the person to whom he or she was replying was correct about our approach being similar to New Zealand, who were no longer champions of NPM by the time we picked up the mantle. To be fair, the "Cayman Model" is not made up of exact copies of New Zealand laws (as our starting point was so different), but the approach is very similar.

      Almost everything in this Viewpoint is quoted from other sources because it was specifically in reply to the following statement: My bet is you could not produce any empirical evidence whatsoever for us on CNS to back up your claim that it is "copied from New Zealand and even they abandoned it".  I certainly didn't expect it to be posted as a Viewpoint, but I believe it is important for us all to understand the history and context of our public service reforms and to learn from the experiences of others. Italso annoys me to no end when people anonymously comment with such authority and they are, in fact, dead wrong.

      To respond to your points specifically, I think it's debatable whether the shift from NPM to RG/WG could be refered to as "modification" or "abandonment". The central theme of NPM was decentralisation and competition, and the third generation reforms focused on reintegrating a fragmented public service and eliminating the unnecessary parts of competition that drove up costs for little benefit. Therefore, I don't believe it is inappropriate to call this abandonment of NPM as the means, though they certainly didn't abandon the end of ensuring greater efficiency and effectiveness of the public service.

      As for the growth in civil service numbers, the fact that everything is guesswork (and it is often difficult to even make an "educated" guess) is quite frustrating. We would certainly be able to better monitor and evaluate our strategies and policies if we actually tried to establish benchmarks and goals, collect data, and determine the actual impact of those efforts. Alas, we do not.

      To my knowledge, there has been no report on the reforms instituted in the mid-2000's that tries to calculate the costs and benefits (both material/financial and not). Even the Luck Report (http://centos6-httpd22-php56-mysql55.installer.magneticone.com/o_belozerov/31115drupal622/sites/default/files/FINAL%20LUCK%20REPORT%20WITH%20APPENDICES.PDF) – which sought to determine whether the reforms met their strategic objectives – does not attempt a comprehensive cost/benefit analysis. The methodology was largely interviews, and as far as I can tell no quantitative information was utilised. We certainly can't fault Mr. Luck for this, as I doubt it would have been available or useful for that kind of purpose and it was unnecessary based on his assignment.

      I do agree with you that there was an increase in the police force and Immigration unrelated to the reforms, but I'm not convinced that the new schools themselves added that many more personnel, seeing as GHHS and JGHS were essentially combined and then split into CHHS and JGHS, serving a similar number of students. I also understand that FOI duties were largely dumped on the desks of existing personnel, so the only "additional" staff necessary for the FOI Law would be those in the FOI Unit and in the ICO, which is perhaps 7 people?

      You are probably right that my claim that the "vast majority" of those 800 posts were the result of the PSML and PFML and other NPM reforms is an overreach. Unfortunately, we will never know for sure. And I certainly stand behind my claim that many new posts were created and that the added personnel cost has not been worth it.

      • Anonymous says:

        "It also annoys me no end when people anonymously comment with such authority and they are, in fact, dead wrong". You must, therefore, find CNS trying at times! There is a rich irony, however, in your comment, because you and I are both commenting anonymously "with such authority" and like it or not we could, according to CNS readers, be quite wrong!!

        You clearly have, like me, knowledge of the civil service but I think you don't have the down and dirty personnel facts, which I would say (and I acknowledge you can disagree) I have. However, I am not going to get into a long argument about this because I suspect few CNS readers really care. Many teachers were required because of the expansion in numbers of students brought on by the 2003 Gold Rush. It took time to manifest itself in the system. The PPM intended FOI to involve NO more posts, but that is not the way the civil service works. The workload (and it has been huge in some areas) was indeed passed to existing officers but when it got too much, new positions (NOT necessarily called FOI- management speak much in evidence) were created.

        The Portfolio of the Civil Service could, if it were ordered to do so, provide a breakdown, of civil service (not, remember, public service) of the appointments, resignations, retirements, growth, decline etc of positions in the Service for the last 10 years to give you some of the details you would like. All the facts are on record. But they would probably plead stress, lack of staff, ongoing demands on them etc.

        You are too generous about Mr Luck's efforts. He was paid very well. He spoke with many (I was one). He realised very early on there was a huge "human capacity" and lack of leadership problem in Finance (he started there, after all) and, not expecting that, he was stymied from the get go because it was hard for him to recommend  action that people he deemed 'lacking" could implement. He could have stated his views strongly but……….

        That's it from me. No more. i enjoyed reading your posts. Let them get on with doing whatever they decide they have to do.

    • Anonymous says:

      Thanks to the author for some very valid points. It was well known by the supporters of the NZ model that it had not worked well for them. They were determined to bring it in no matter how many other top management tried to put some logic or rationale into a reform system. It was wrong for Cayman and it will take a real genius a long time to turn things around to effect positive changes.

  9. Anonymous says:

    Two simple changes to the PSML regulations would go a long way to introducing some of the efficiencies of the private sector.

     

    First, change the mandatory gold-plated benefits packages for FUTURE civil servants.  While gold-plated benefits across the current civil service are irksome, the government cannot arbitrarily change existing employment contracts to reduce or eliminate them.

     

    However, there is no excuse for not changing the law to make the benefits less generous for all FUTURE civil servants.  This would be a "victimless change".  The only "losers" would be people who do not even know they are one day going to be civil servants.  Hardly likely to complain, are they?  

     

    Had the government made this change four years ago several hundred civil servants hired since then would have regular private sector benefits packages saving the government a few million a year.  Moreover, the government would be four years closer to the day the last civil servant with a gold plated contract retires.

     

    Secondly, it should be no more onerous to discipline or terminate an employee in the public sector than in the private sector.  Instead of the complex disciplinary rules the law should be amended for all civil servants to be aligned with the requirements of the labour law.  That should provide adequate protection for employees, government entities and managers.

    • Anonymous says:

      Excellent comment 14:54 but just try to get all that past Mr James Watler and his Civil Service Association.

      • Anonymous says:

        The CSA doesn't make laws.  They should be consulted and listened to but there is no good reason civil servants should enjoy more protection that employees in the private sector.  Having different rules only makes the case for privatisation all the more compelling.  How will JW and the CSA feel about that?

         

        • Anonymous says:

          Joel Walton should be the Deputy Governor of this country. He will train and support a first class Caymanian civil service. Just look at the folks around him. Think for a moment on how professionally he use to chair Finance Committee. I can also tell you that he managed this country finances prudently during some very difficult and challenging times. If there was ever a star civil servant, it was him. By the way, he didn't need an expat sitting next to him to advise him on a daily basis either. He was very decisive. Joel Walton is the man.

      • Anonymous says:

        What is this so-called Civil Service Association actually doing?

        They collect dues, but speak for very few! (that is, if and when they do pop up to say soemthing).

        Their general elections should be illegal, as less than 5-percent of the membership even bother to show up to vote for these clowns!

        That says how much respect they have in government…

        • Anonymous says:

          CIGovt staff need to grow a spine & stand up for themselves even if it means risking their jobs — those who arent cronies or on sweetheart contracts, that is!

          If only HE's office would offer them protection and encourage whistleblowers more agressively.

          – Or did Chickie's event kill that tactic?

    • Anonymous says:

      Somebody needs to be tarred and feathered for its introduction, well lets say it the then Financial Secretary, the x leader of the PPm and all of the elected members who then as now do not take a keen look at issues such as this. Coul it be that it was and is beyond their capabilities. Oh what a next 4 years.

      • Anonymous says:

        You can't lay this partially at the feet of the "x leader of the PPm" and forget the UDP and others that came before those two parties, seeing as these reforms began around 2000 and spanned multiple administrations (the PFML itself was first enacted in 2001 and both the PFML and PSML have been amended by various administrations).

        Also, prior to the implementation of the 2009 Constitution in November 2009, the Financial Secretary was the member of Cabinet (previously ExCo) responsible for Finance. George McCarthy was the first real driving force when he was Financial Secretary, passing the reigns to Ken Jefferson when he became Chief Secretary.

        Again, I believe their motivations were right, so there is no need for tarring and feathering. These were new and exciting ideas and Cayman was booming at the time and ready to advance. But some things went wrong, and we now need to get past this stubborn inertia and make the changes that we know need to be made. If we don't know what changes need to be made we certainly know we can't stay on this course, so we need to identify those changes quickly.

        • Anonymous says:

          Sorry ole boy, you don’t know what you’re talking bout. George Mcarthy andvKirk Tibbetts took the Governments first Transatlantic flight to bring back the asinine system we have. Please don’t talk what you don’t know or understand. As for exciting times then, yes indeed see where it put us now, after many millions of expenditure. Anyway I guess you’ll keep on talking the same ole defensive drapes four years fro now.

        • Anonymous says:

          12:32 No civil service welcomes changes/reforms. They would much rather sit in cosy ruts repeating the old mantra "if it aint broke, don't fix it", even although the world changes rapidly around us all the time and needs adapting to. Cayman's civil service is no different from others in resenting change efforts although it may be even more conservative and fearful of change than most. Before leaving for a better paid job in the private sector over ten years ago, I worked in th the civil service. There were some very good workers but if the truth be told, many of the ones at the top were uninspired, uninspiring and fiercely protective of doing things their way. A few were downright lazy and only out for themselves and their cronies. The management systems were very rusty too, desperately and frustratingly slow, not at all transparent (except to a tiny minority who held the "keys"), unaccountable and preventing managers from making their own decisions. One of the sad aspects of the apparent failure of the new system (which I agree with you was brought in with the right motivations), is that it may result in going back to these rusty management systems which will not benefit the government in 2013.

          There is ample scope for optimism, though. The Auditor General clearly knows what he is about and should be an invaluable resource to ensure this does not happen. And even more importantly, Minister Marco Archer (a smart individual) was in at the beginning of financial reform, supported it and knows the limitations of the old system and indeed used to lead training sessions on tthe reforms that I attended in the late 1990s before leaving for the private sector. He also knows the limitations of some of the finance staff and will realise he has to somehow deal with that if change is to take place.

        • Anonymous says:

          We should tarr and feather you. The people who I mentioned were in the system in 2000/2001, with the then LOGB x reader of the ppm remember the country was broke slogan. It was around that time that they went to New Zealand. Mama look a bubu there!

    • Anonymous says:

      Do you actually WORK for the CI Government?

      The only gold-plating there is the over-padded consultancies which result in failed schemes like the PMFL! 

      The ordinary peons do not see the 'gold'…