Government Cuts and Spending – Three untapped areas for government cost reduction – Trend Analysis Network

Trend analysis from government data obtained over the past 18 months, including through several Official Information Act (OIA) requests, has identified three unique areas for substantial government cost reduction.

Analysis of Australian and United States policies and implementation for both government services and the health sector may validate these “low hanging fruits.” The areas identified for potential significant cost reduction appear to also improve overall outcomes for Health, Defence and public service operations.

In the Health sector, case studies and recent NIH (US National Institute of Health) reports indicate the use of INIRI or Penumbra Lightning Flash tools by Interventional Radiology teams has a direct positive impact to operating theatre availability and hospital stay durations.

Further investment in Penumbra Lightning Flash and Inari tools used in hospitals both in Australia and the United States have contributed to reduced operating theatre volumes and patient recovery timeframes, by shifting procedures to the Interventional Radiology teams. Moreover, at Te Toka Tumai Auckland the Penumbra Lightning Flash tool has proven its value, having been used for pulmonary thrombectomy (clot removal from arteries) and cardiothoracic surgeries. In other hospitals these procedures require invasive surgeries with longer recovery times.

The current cabinet is working on the new Defence Capability Plan, to be release in September 2024. The planning phase will initiate funding requirements for the Finance Minister amidst declining retention in the NZDF and in conjunction with changing requirements for defence to counteract new threats. Moreover, it will help to create improvements in coordination and interoperability with the Australian Defence Forces.

An additional potential for acquisition of military equipment is the United States Excess Defence Articles (EDA) programme, which supplies large scale military equipment transfers via grant to partner forces.

The NZDF may be a potential recipient of such grants that allow the transfer of excess military equipment directly from the Defence Security Cooperation Agency at significant cost savings. Equipment available through EDA includes: 2 1/2 TON M1078 Cargo Trucks, OH-58D Kiowa Helicopters, and field equipment such as Thermal Image Sensors (MilSpec).

In New Zealand the ratio of management to staff averages 1 manager to 4 employees (1:4). When applied to upper level management, the ratio averages 1:3 (one upper manager to three managers). New Zealand government organisations, compared with other governments such as those in Canberra (1:6) and Washington (1:10), retain among the highest manager to staff ratios.

The cursory requirement to cut public service expenditures by 6.5% may potentially be short lived, as trend analysis indicates far greater longevity for reducing public service spending is derived from flattening government structures to encourage improvements in manager to staff ratios.

Through the Official Information Act (OIA) request HNZ00019424, Trend Analysis obtained details regarding the successful use of the Penumbra Lightning Flash at Auckland hospital.

The Pulmonary Embolism Response Team (PERT) have successfully performed numerous Interventional Radiology (IR), Cardiothoracic and Vascular Intensive Care Unit (CVICU), Respiratory, Cardiology, and Cardiothoracic procedures. All of which were performed by their Interventional Radiology staff rather than the operating theatre teams, reducing costs and recovery times.

Cursory analysis shows that the use of the Penumbra Lightning Flash has reduced the requirement for more extensive operating procedures for the removal of clots from lungs and other procedures that often require the allocation of full operating theatre teams with anesthesiologists, surgeons and nursing staff at other hospitals.

The OIA response noted that although patients from other areas in the country do get referred to Auckland for procedures using Penumbra Lightning Flash, there are “no current investment plans for further equipment.”

In other countries, including Australia and the United States, use of such interventional tools like Penumbra Lightning Flash and Inari tools, have demonstrated: Reductions in overall pressures on the operating theatres and improvements in patient health outcomes for regional hospital patients.

By investing in several additional Penumbra Lightning Flash or Inari tools for other hospitals and investing in the Interventional Radiology staff, the government can potentially improve health outcomes while substantially reducing the costs associated with operating theatre procedures.

The United States Defense Security Cooperation Agency (DSCA) provides a tool which is available to allied nations such as New Zealand. The EXCESS DEFENSE ARTICLES (EDA) database tool [non-confidential] provides a list of equipment and military parts that are available including Armored Security Vehicles M1117, M2A2 ODS BRADLEY FIGHTING VEHICLES, REFRIDGERATION EQUIPMENT, and Electrical and Electronic Equipment Components.

Through direct communications channels between New Zealand defence and the DCSA in Washington, the DSCA may offer one additional method to obtain military equipment at reduced costs or through transfer by grants. The grants allow for the acquisition of potentially millions of dollars of equipment from the United States with the main cost to the NZDF being the logistics of transport.

The primary purpose of the EDA is to provide excess defence equipment to partner nations for modernization. The EDA verifies grants supplied included small arms such as RIFLES 5.56MM, as well as larger munitions and weapons systems and defence logistics equipment including Communications Equipment, Electrical & Electronic Equipment Components.

By applying directly to the DSCA for specific types of equipment grants, the NZDF may have the potential to reduce overall acquisition and modernization costs, while also releasing additional funds to address personnel and staffing requirements.

In Australia, the Australian Public Service Commission (APSC) assists agencies to implement the APS Framework for optimal management structures. In their guidance they indicate that optimal government service organisations that provide high level service delivery have a ratios of 1:6 – 1:9 managers to staff.

Similarly, the United States Department of Interior has specified the requirement to establish a minimum of one (1) first-level supervisor for every ten (10) employees (1:10). [OPM FedScope data]

In New Zealand the ratio of management to staff averages 1 manager to 4 employees (derived from cursory data available on the internet from government agencies based in Wellington).

This ratio of managers to staff when applied to second level management shifts to an average of 1:3 (one upper manager for three managers). Therefore, New Zealand government organisations appear to retain a much higher number of hierarchical government layers and lowest manager to staff ratios.

In May 2024, the Finance Minister Hon Nicolas Willis had requested that ministries and agencies cut expenditures by 6.5 – 7.5 percent as a method for reducing annual public service spending.

Trend Analysis shows that such high level cuts have little impact with regard to the hierarchical structures of many organisations, and nearly zero impact to existing management roles.

Moreover, long term trend analysis, including the 2011 public sector cuts under then Finance Minister Hon Bill English, indicate most of the roles would be re-established due to staffing burnout and attrition rates.

New Zealand government departments appear to follow a 20 year cyclic trend in dis-establishing then re-establishing the same roles, while most managers within government retained long term positions.

The management-centric structures of the New Zealand government, when compared to other governments departments in Australia and the United States, show a potential disparity between management functions.

Trend Analysis identified the potential for substantially greater longevity for reducing annual public service spending if the restructuring of department hierarchies to help flatten structures (higher staff to manager ratios) is integral to any expenditure cuts.

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