ACT’s small-state pitch is a big-state con

Andrew Ketels wants a leaner public service. Follow the money and it is his own client base that keeps getting bigger.

  Andrew Ketels, former chief of staff to ACT and now head of government relations at lobbying firm Sherson Willis, used the NZ Herald this week to argue Christopher Luxon has already missed his window for “radical reform and restructure” of the state.

  His test for what survives that reform is simple: what functions can government, and only government, perform? New Zealand has already run that experiment, more than once, at scale.

  New Zealand disestablished the Ministry of Works and Development in 1988, handing engineering and construction work to competing consultancies.

  The promise was efficiency. What we got was a chain of separate consultants each with overlapping roles, each billing separately, each carrying its own margin.

  Energy minister Max Bradford ran the same test on the state's Electricity Corporation in 1999, splitting it into Meridian, Genesis and Mighty River Power, then selling it down.

  Three decades on, households have carried the cost of that privatisation while industry has not. The generators Bradford created now run as “gentailers”, built to return dividends, not to keep power affordable.

  Ketels wants the same test run today. Every efficiency drive like the ones he is calling for creates fresh billable work for firms like the one that now employs him.

  Core public service agencies spent $1.268 billion on contractors and consultants in the year to mid-2023, up from $914 million in 2018–19. That is not the cost of a bloated state. It is the cost of hollowing one out.

  By Ketels' own figure, the core public service employed 64,535 people in March, up 1825 in three years. Shrinking that headcount does not shrink the work. It just moves it onto an invoice.

  Ketels also wants the Government to sell assets such as NZ Post and Quotable Value, arguing there is no reason the state should own them.

  Quotable Value sets the property valuations that local councils rely on to set rates. Handing that function to a profit-seeking valuer puts the revenue base of every local authority in the country up for negotiation.

  NZ Post's social obligations, set out in a deed with the Crown, require it to deliver mail, including government documents, to every address in the country, profitable or not. A private courier has no reason to keep that promise.

  New Zealand has already run the experiment of selling assets like these on Ketels' own logic, and had to buy the pieces back.

  Kiwibank was set up in 2001 because the private banking market, left alone, would not give the big four Australian-owned banks real competition.

  KiwiRail and Air New Zealand were both taken back into government hands after private ownership left them close to collapse.

  Each was privatised on the same logic Ketels is applying now, that government should not own what the private sector could run. Each had to be un-privatised at public expense once the private sector failed to run it.

  Ketels' sharpest point is that once government commits to a programme, a constituency comes to depend on it, and no politician wants to be the one who cuts it.

  He is right. But the constituency he does not mention is his own. Consultancies and lobbying firms billing the state $1.268 billion a year are a bigger, more entrenched interest group than any welfare programme, and no one voted for it.

  The same pattern runs through ACT's other flagship reforms. Its Three Strikes law was first passed by a National-ACT government in 2010, modelled on California's 1994 sentencing law.

  Maori and Pacific defendants have received more than half the strikes handed down. Labour repealed the law in 2022. National and ACT reinstated it in 2024, campaigning on the same radical reform language Ketels uses now.

  A policy is not evidence of good government just because it survives one election cycle. Three Strikes has been passed, repealed and reinstated inside 15 years, which describes ideology more than it describes reform.

  America's private prison operators have spent millions lobbying for the tougher sentencing laws New Zealand copied. New Zealand ran its own trial of privatised incarceration too: Serco's contract to run Mt Eden was cancelled early after fight clubs, drug smuggling and a cover-up.

  Ketels frames government as bloated wherever he looks, but the numbers do not support that reading of welfare. A single adult over 25 on Jobseeker Support receives $372.55 a week after tax, against a gross weekly wage of $958 on the new minimum wage.

  That gap is already the widest lever available for restraint. There is no fat left to trim there, only people.

  None of this makes Ketels a liar. It makes him a lobbyist doing his job. He spent five years running ACT's office, then walked into a corporate affairs role at Sherson Willis, a firm paid by private clients to shape exactly the policy settings he is now urging in the Herald.

  His column reads as ideology. It functions as a client pitch.

Government does not need to be smaller. It needs to stop being auctioned off, one consultancy contract at a time, to the people writing the case for auctioning it off.