Problems with modern mechanistic management - introduction

The Australian state of Queensland is presently in the middle of an election. Here I heard the leader of the Liberal National Party opposition say that he expected to be able to help pay for his election promises by enforcing a "productivity dividend" on the Queensland public sector.

This is exactly the same approach that Prime Minister Rudd announced before the last Federal election and then enforced. Now the Commonwealth is struggling to deliver on its programs and policies.

NSW, too, has the approach in place, in this case further compounded by a freeze on new appointments. Again, the State is struggling to deliver.

The concept of a productivity or efficiency dividend sounds so sensible.

Competition improves efficiency. The public sector is not subject to competition, therefore use small rolling budget cuts on agencies to provide a proxy for the type of efficiency gains achieved through competition.

The problem is that it does not work in the long term. It is in fact an example of what I call mechanistic management.

As a bit of a break from economics, I plan to explore this issue over coming posts. You will still get some economics, but I feel the need for change.