In June 1964, as The Beatles made their triumphant tour of the four main centres, the post war economic boom began slowing. By 1966, wool prices had collapsed, heralding a turning point in the country’s economic fortunes.
By 1967, the service workforce totalled 46,670 permanent and 22,172 temporary staff, numbers ballooning by the year. From Auckland, increasingly the nation’s economic powerhouse, came a growing chorus of grumbles about ‘inefficiency’ in the capital where most public servants worked.
In 1968, the Holyoake administration worked to appease the public mood by asking departments to prepare for cutting budgets by a tenth. But the Public Service was required to administer a growing State agenda and the government failed to follow through on the cuts.
The State Services Commission (SSC) remained above the fray, unobtrusively carrying out its core business: pay-fixing and departmental auditing. As the 1960s ended, it was being called ‘the largest employer in the country’. 20 And despite talk of restraint, Holyoake predicted at a PSA conference that the Public Service would add 13,000 additional staff in the decade ahead, with particular emphasis on social services. 21
New roles and responsibilities made the 1960s a demanding one for the commission. Allan Atkinson, Bolt’s replacement and former deputy, spent his early years in the job huddled with State sector unions, devising a byzantine system of occupational classes for pay-fixing to provide more uniformity across the State sector. By 1966, commission staff totalled 188.
In 1967, Adrian Rodda, deputy commissioner since 1946, replaced Atkinson as chair. As his position was confirmed, the NZ Herald called the service ‘a closed shop’. 22 The Auckland paper speculated that the Holyoake administration was considering giving the commissioner’s role to a candidate from private enterprise. This never eventuated, but a signal was passed that SSC’s performance was coming under scrutiny.
In 1968, the need to overhaul pay-fixing at a time of strong wage inflationary pressures from the private sector, culminated in a second McCarthy royal commission. The State Services Co-ordinating Committee (SSCC) was beefed up as the ‘official negotiating body’ in disputes affecting the wider State sector, including teachers, nurses, postal workers and railway workers.
At the end of 1970, an exhausted Rodda resigned early. His successor, the more media savvy Ian Lythgoe, rejected the term ‘bureaucrat’, despite having been a public servant since 1933, chiefly at The Treasury.
His reputation for careful scrutiny of departmental spending had earned him the name ‘Cash Register’. Lythgoe brushed aside criticisms of SSC insularity, pointing out the commission was using ‘outside consultants’ in departments such as social security, defence and internal affairs. 23 The idea of employing consultants at this time was highly novel. Nor would Lythgoe accept criticism that SSC was ‘nosy and insensitive’, in its departmental auditing activity. 24 He soon moved to boost autonomy within the health, transport, defence and agriculture departments in areas such as staff deployment and promotion. After half a century of rigid commission control, departments were finally allowed to manage some of their own affairs.