6
The Departments Of State

In The Adventure of the Bruce-Partington Plans, Sherlock Holmes briefly and for the only time held aside the veil which, to the great impoverishment of posterity, has hidden the activities of Mycroft, his eccentric but prodigious brother. 'Mycroft,' said Holmes, 'draws £450 a year, remains a subordinate, has no ambitions of any kind, will receive neither honour nor title, but remains the most indispensable man in the country.… The conclusions of every department are passed on to him, and he is the central exchange, the clearing-house, which makes out the balance. All other men are specialists, but his specialism is omniscience. We will suppose that a Minister needs information as to a point which involves the Navy, India, Canada, and the bimetallic question; he could get his separate advices from various departments upon each, but only Mycroft can focus them all, and say off-hand how each factor would affect the other.' That the mention of Mycroft could produce in Holmes a semblance of modesty is not surprising; page break

Government House, Auckland, In The Early Forties

page 93for neither before nor since has any State possessed so valuable a servant or so perfectly articulated the advisory functions of its departments.

That Mycroft should have remained unhonoured and unknown to the public is, however, understandable, because the problem of which he was the solution is normally outside the range of public knowledge about government. The modern State, like the modern motor car, has a deceptive simplicity for those who use it. A button touched, a lever moved, and the motor car is in motion; of what lies between his actions and their result the driver knows nothing and can know nothing. On those rare occasions when something goes wrong, he may lift the bonnet and gaze appalled and uncomprehending at the maze of wires, pipes, rods, and valves which make simplicity possible. Similarly, most citizens have only the dimmest comprehension of what lies between the will of their government and its enforcement upon the individual or of the intricate mechanisms they set in motion by posting a letter or turning a water tap. It could hardly be otherwise. Even in a small country like New Zealand, the network of departments and statutory authorities by means of which the State maintains order, supplies the primary material needs of its citizens, and regulates economic life can be understood in its details and its unity only by a few experts.^*

In Great Britain and the Dominions the functions of the State are exercised through two main types of authorities—those which act in the name of the Crown and those which do not. A borough council possesses such powers and privileges, and such only, as are conferred upon it by acts of Parliament or regulations made under those acts. A state department—the Post Office or the Treasury—possesses, in addition to powers and privileges conferred upon it specifically by acts and regulations, the powers and privileges of the Crown. A citizen who is knocked down by a borough council's motor lorry has the right to sue the council for damages; a citizen who is knocked down by a Post Office van has not the right to sue the Post Office directly because it is the Crown in one of its many disguises. The distinction is not mere antiquarianism; for it is the Crown, that 'convenient working hypothesis', which has enabled the British peoples to secure the advantages of democratic government without dangerously weakening the executive power. 'The leaders of the English people,' says Dicey, 'in their contests with the Royal power never attempted, except in periods of revolutionary violence, to destroy or dissipate the authority of the Crown as head of the State.' The Crown is, in effect, a reservoir of powers and privileges available to the central government and those who act directly under its instructions; it prevents the executive power from being completely hoppled page 95by the written law, and ensures that the public interest will always have precedence over private interests. It would clearly be unwise to confer the very wide powers of the Crown upon authorities which, though part of the machinery of the State, are not under the immediate control of the general government. Thus, the State Advances Department, controlled directly by a cabinet minister, was the Crown; changed into the State Advances Corporation and controlled directly by a board and only indirectly by a minister, it ceases to be the Crown.

Government by statutory authorities not identified with the Crown is resorted to when it is desired to remove a service or a group of services from the direct control of the central government in order either to give autonomy to a local community or to enable the management of a public utility to be insulated from the effects of the party system on the quality of administration. In New Zealand, the vogue of this type of authority depends on the prevailing political temper; governments of the left normally prefer to have state services and utilities under their direct control, governments of the right to delegate control to boards of managers. The reason for delegation is usually the need for economy, though sometimes, as in the case of broadcasting, it is the desire to prevent a state service becoming the instrument of a political party. The business community in New Zealand regards 'non-political' control as a sovereign page 96remedy for uneconomical and inefficient administration. What is too often forgotten is that every delegation of power to statutory authorities creates a problem of co-ordination. Thus, to remove the railway system from the immediate control of the central government is to make it more difficult to harmonise railway policy with road transport policy.

It is convenient, for descriptive purposes, to deal separately with that part of the government which functions in the name of the Crown and which consists, with certain exceptions and qualifications, of the state departments. For these departments, having both formal unity and uniformity, constitute one system. Their formal unity arises from the fact that each has at its head a minister of the Crown who is also a member of the Cabinet. Their uniformity arises from a measure of central control over staffing, the keeping of accounts, and the purchase of stores. In popular discussion, the charge most frequently made against the state departments is that they lack co-ordination and in fact are not a system. The word co-ordination is used in two senses; in one, it implies the elimination of unnecessary and expensive diversities of practice; in the other, the harmonious participation of several units in one process. It can be said with confidence that co-ordination in this first sense among state departments in New Zealand is remarkably complete. The three agencies mainly responsible for eliminating unnecessary diversity are the Treasury, page 97the Public Service Commissioner, and the Stores Control Board. The Treasury, being responsible for the national accounts as a whole, has a paramountcy among the departments sufficient to enable it to enforce uniformity in the keeping of accounts and in methods of receiving and paying money. In Great Britain, the Treasury's financial control over the departments has developed into a general control over staffing. In New Zealand, staffing is controlled by the Public Service Commissioner, who has also a general supervisory power over the conduct of public servants and office methods. Uniformity of staffing arrangements, introduced as a means of shutting out political influence and of eliminating those discontents which arise from anomalies in payment and working conditions, has the further benefit of increasing the internal mobility of the public service. Transfer of officers between departments is very much more frequent than in the British civil service. The Public Service Commissioner's powers do not, however, extend to all departments. The two largest departments—the Railways Department with nearly 22,000 employees, and the Post Office with about 11,600 employees—have their own systems of classification, partly because they evolved these systems before the public service as a whole was classified and partly because their functions require a different classification from that in force in the other departments. The Treasury regulations provide that 'the function of page 98co-ordinating and supervising the purchase, distribution, use and inter-departmental transfer of stores shall be vested in the Stores Control Board', an interdepartmental committee consisting of the permanent heads of the Treasury, the Railways Department, the Public Works Department, and the Post and Telegraph Department. All purchases of stores must be made through one or other of the three last-named departments.

This triple co-ordination in the interests of economy and uniformity by the Treasury, the Public Service Commissioner, and the Stores Control Board is as efficient and as complete as anything of its sort in the British Commonwealth. Co-ordination to prevent duplication of work and to secure the harmonious participation of several departments in the one administrative process is less complete. The authority which, in theory, enforces this type of co-ordination is the Cabinet in its capacity as a committee of ministers in charge of departments. For reasons discussed in the section on the executive, the Cabinet does not in practice function as a co-ordinating authority except when some urgent problem of co-ordination is brought to its notice. Those who drew up the Public Service Act of 1912 intended that the Public Service Commissioner should be the authority for functional co-ordination, since the act instructs the commissioner to investigate the working of every department 'both separately and in its relation page 99to other departments' and empowers him to dismiss or transfer to another department public servants not usefully or profitably employed. But the disadvantages of the commissioner as an authority for this purpose are, first, that he does not control all the departments and, second, that he is responsible to Parliament and not to the executive. The relationship between policy and administrative methods is so close that control of administrative methods will not be effectual unless vested in an authority working under the general direction of the Cabinet. Though the Public Service Commissioner is consulted regularly by the Cabinet on administrative problems, it remains true that his power to enforce co-operation among departments has not been developed and consolidated as his other powers have.

The interesting experiment of the Executive Commission of Agriculture throws much light on this problem. In 1934 the New Zealand Government assumed an obligation to assist the dairy industry, which had been hard hit by the disorganisation of foreign markets owing to the economic depression and was in addition beset by serious defects of internal organisation. It was soon found that to devise a scheme of assistance was less difficult than to devise the means to apply it; for the affairs of the industry were of concern, not to one department, but to a group of departments and semi-official authorities, each more or less independent. Inspection of dairy herds was page 100carried out by the Department of Agriculture; external marketing was controlled by a Dairy Produce Board with statutory powers, elected by producers; operations of a similarly-constituted Meat Board affected the dairy industry to the extent that they involved regulation of shipments of calves and pork; the Department of Scientific and Industrial Research was interesting itself in the scientific problems of the industry; and the State Advances Corporation was concerned with its finances. In order to co-ordinate the work of these administrative agencies and to enable the problems of the farming industries generally to be continuously investigated, the Government set up, by the Agriculture (Emergency Powers) Act of 1934, an Executive Commission of Agriculture consisting of three members with a wide reserve of powers in relation both to the farming industries and to state departments and primary produce boards. The purpose behind the act was to create an authority to advise the Cabinet on agricultural problems and to co-ordinate the activities of the administrative agencies which were carrying out the Government's agricultural policy. That the purpose, owing mainly to a change of government, never became more than a purpose must be regretted, because the general problem which the Executive Commission of Agriculture was intended to solve is still a problem, and grows more acute with every extension of the economic activities of the State.

It is fair to add that, since the State's powers over industry, finance, and commerce are limited, there can be no final and complete solution of the problem of co-ordination. There is perhaps no great difficulty in ensuring that state departments work together harmoniously. The real difficulty arises when the carrying out of a policy involves co-operation among state departments, which are directly under executive control, organs of the State which are only indirectly under executive control, and economic organisations of a more or less private nature. This point is well illustrated by the difficulties recently encountered in enforcing a policy of import and exchange control, a policy which required close co-operation among the Treasury, the Customs Department, the Reserve Bank, the trading banks, and organisations of manufacturers. Because co-operation was imperfect, a policy designed to reduce imports resulted, during the first six months of its operation, in an increase of imports.

The methods by which the work of administrative agencies is co-ordinated have some bearing on the problem of organising the work of the State by departments. The commissions which from time to time enquire into the machinery of government in New Zealand in order to find ways of economising invariably recommend reduction of the number of departments by amalgamation, the assumption being page 102that a few departments are more efficient and economical than many small departments. This is not necessarily true. When the 1912 Commission on the Public Service presented its able report, there were sixteen state departments; to-day there are more than forty. But it would be wrong to infer from this that in 1912 administration was more economically and efficiently organised than it is now; for, according to the commission's report, each of the large departments had under it sub-departments which were virtually independent. Since then, most of these sub-departments have become independent; but the increase in the number of units has been accompanied by a development of the co-ordinating functions of the Treasury and the Public Service Commissioner, with the result that administration is in every way more unified and better co-ordinated now than it was in 1912. General efficiency of administration, it is clear, depends far more on the effectiveness of the central co-ordinating agencies than on the number and size of departments. Indeed, recent experience in New Zealand has shown that the large department sometimes becomes so strong and independent that it is an obstacle to co-ordination. Nevertheless, two considerations make it undesirable to create small departments unless there are the strongest reasons for doing so. One is that small departments can seldom give the younger officers sufficient variety of administrative experience. The other and more important considera-page 103tion is that the more departments there are the larger is the number of officials who have direct access to ministers. Since the Cabinet is heavily overloaded with work, the number of portfolios ought not to be increased unnecessarily.

It is unfortunate that in New Zealand public interest in the mechanics of government is active only when economies are, or appear to be, imperative. In times of prosperity and expanding state activity, the rapid and therefore imperfectly regulated growth in public service personnel and the number of state departments passes almost unnoticed. When the ensuing depression sets in, there is inevitably an outcry against 'overlapping and waste' in the departments; the government of the day will probably appoint a Royal Commission consisting of business men to discover how the administrative overhead in government can be reduced; and on the basis of its recommendations staffs and services will be reduced with panic ruthlessness. Nothing impairs the efficiency of government in New Zealand more than these alternating periods of unregulated growth and crude surgery.