The Government is quietly shifting huge areas of its activities out of the public sector.

 In short it is privatising by stealth.

The approach is led by Finance Minister Bill English and is one of the most radical moves made yet by this Government.

It confirms English’s role as the intellectual  and poltical force that drives much of what the Government does.

In that context it is therefore not surpriosing that that some of the social spinoffs from this approach are expected to be big features of the May 21 Budget.

The report this week of the Productivity Commission on welfare provision underlines English’s approach which avoids  the wholesale big headline sales of entities like electricity generators and instead quietly sees the private or non profit sector take over what were previously core Government activities.

This month alone should see the confirmation of the transfer of the laboratories from Wellington, Hutt and Wairarapa Hospitals to a private provider, Southern Community Laboratories.

The 960 bed South Auckland prison owned and run by Serco is expected to open this weekend with the concurrent closure of Corrections Department owned and run units at Waikeria, Rangipo and Rimutuka prisons.

And today Housing Minister Nick Smith and Finance Minister Bill English announced the handover of 2800 state houses in Glen Innes to the Tamaki Redevelopment Company which is jointly owned by the Government and the Auckland Council.

The way the Government is doing this is very much influenced by English’s private philosophy which was forged during the tumultuous days of the Bolger Government in the 1990s when people like Ruth Richardson, Simon Upton and Jenny Shipley advocated the crash through approach to economic change.


Instead English believes that economic change needs to be made sustainable otherwise the next Government simply reverses it.

But here is another element to the English approach to reform which is the so-called “investment approach”.

As the Productivity Commission describes it:  “The Investment Approach adopts investment and insurance tools to prioritise clients and select interventions based on the expected reduction in future welfare liability.”

At a meeting during the Northland by-election campaign cited the success of reducing the number of teenage solo mothers and how that impacted down through various branches of the education, health, social welfare and corrections services.

Linked to the “investment approach” is as belief within the National Government that competition among various non Government sector providers for funding to deliver what were previously Government provided services can unleash creative solutions to deal with problems.

And the other dimension to what is being done is the increasing use of big and complex data sets by the various Government departments involved in the changes.

Expect to hear more about all this on Budget day.