Kerre Woodham: The RNZ blowout epitomises the public service's problems

Well, isn't the taxpayer funded radio station the absolute epitome of all that is wrong with the public service? I'm not talking about their journos or producers. There are some excellent journos down the road trying to do some excellent work in extremely trying times. But boy, have they been let down by their masters, their paymasters in particular. 

Radio New Zealand's posted an unexpected and unbudgeted deficit of almost $12 million and is preparing to cut almost 60 roles instead of the 25 to 30 previously signalled. They're also expected to make another loss, another deficit of $7.8 million this year before they hope to return a balanced annual financial result in 2027/28. 

The board announced an independent review into its shock $11.8 million deficit after it said financial reporting during the year did not accurately reflect the true position of the books. In other words, the books bore no relation to the financial reality. Apparently, there is no evidence of criminality or fraud, which I think in a way is even worse. How on earth can you womble your way into a $12 million hole? How can you possibly be spending a million dollars more a month than you're taking in and not know? 

Again, everything that's wrong with the public service. Their CFO, Hilary Parker, made an abrupt exit from the building last month and that's when it was all uncovered. There'll be more on that down the track. RNZ board chair Brent Impey sounded brassed off and incredulous when he did the media rounds yesterday and this morning. 

IMPEY: Some of what I've witnessed here is inexplicable. I just cannot understand some of the issues around accounting treatment, the difference between personnel expenses being explained one way and being inconsistent with the payroll. It's, I've never seen anything like it before. 

HOSKING: Is it an accounting cock up, basically? 

IMPEY: It's two things. One is an accounting cock up, which can be fixed. They're one offs, they're not consistent. The second thing is the personnel costs, which are ongoing. 

That was Brent Impey talking to Mike Hosking this morning. How on earth does this happen? It's bad enough to have one numpty in charge of the books, but to have multiple numpties who don't know enough to ask questions or to recognise that they're spending more than they're getting. Is that a system failure? I am extremely concerned that there might be systems failures in other government departments. 

Remember the previous Auditor General John Ryan saying about the Covid spend up that some government department schemes might be good value for money, but there simply wasn't enough paperwork or information about the budgeting and the outcomes to determine that. There was no paper trail, so he couldn't offer an opinion as to whether it had been public money well spent or not. Look at the immigration disaster where people lie, where people cover up, where people keep wombling until they hope it gets better. Magically, somehow, they wake up and this disaster of their creation has magically disappeared. It's the equivalent of a three-year-old closing their eyes and saying, "You can't see me." Yeah, eventually you can. 

I don't set the alarm for 6am to go into work, earn my keep, pay my taxes for the fiscal philistines to squander it. There are some people who clearly should not be in charge of budgets of millions of dollars. I'd put myself at the top of the list. After that would be most members of the previous Labour government and right now RNZ's national's CFO. 

Do we have the resources, and do we need to do a check of other government departments? The only reason I'm perhaps being alarmist is that $12 million is a lot to lose in a year without even knowing you've lost it. And if it was just a one off, if you hadn't had the previous Auditor General going, "I don't know, the systems and the paperwork are so bad I cannot determine whether this was good value for taxpayer dollar." 

The RNZ result made me think of that. Then you've got immigration where you've got layers upon layers upon layers of numpties who either don't want to bring the minister bad news or don't even know that there is bad news until it's all too late. All of these departments are funded by you and me. You and me doing what we're doing now. It's our taxes. 

And the thing, one of the things that used to really ruck me up with the previous government was that there was no accountability for the money. It was just, "Oh well, bugger it, you know. Let's just, let's just get more taxpayer dollars. Doesn't matter. We don't have to earn it. We'll just get more." And you've had the bosses, the outgoing bosses at RNZ complaining about cuts to their budget. They shouldn't have even been in charge of the morning tea kitty when they didn't know where it was going. How dare they ask for more money when they don't even know how much they've got or haven't got. 

Those of you with understanding of running a business will be able to answer this question more than I, because is it a systems failure? Is it particular to one government department or is it a warning sign that perhaps we need to look at other government departments and make sure that their systems and accounting doesn't have any holes that suddenly appear when it's tens of millions of dollars too late? If you can pick it up in time, that's fine. If you can see that there's something wrong in the way you report or the way you account or the way you put one figure into one box and another into another. 

And I also just wonder if when I look at some really successful companies in New Zealand, hugely successful, they've started with one person or one husband and wife team. And then they've grown and grown and grown. And they've tended to stick with the people that they started off in business with, same accountants, same bookkeepers who grew into accountants. They stick with family. And is that because you can trust one another? You can march in and have a look at the books without having to go to HR and explain yourself or I don't know. And are there some businesses that don't want to grow? You could, but you choose not to because you want to maintain oversight over your business. Once you start having to trust that people are doing their job, then you really are dependent on them knowing what they're doing. 

So I'd be really interested to hear from those of you who run businesses. Is there any possible way to explain how you could not know that you were $12 million out of whack? Should there be at least a cursory look at the books in other government departments to make sure it's not systemic failure across government? And what do you do in your business? Once you get really big, how do you keep the oversight that's got you into the successful position you're in now?