Depression has become a major workforce problem, especially in the professions. For that reason, we have been running a series on depression on our Managing the Professional Services Firm blog.
Those who are interested can find the initial post here.
The nature and extent of Government intervention required to address problems has become a major topic in business because of the increasing compliance burden. In our view, this burden has in fact become too great in part because Government is trying to control risks that really cannot be controlled via regulation.
While that is our general view, every so often we come across examples that demonstrate why such regulation is arguably inevitable and sometimes necessary.
The case in point was a major corporation working in a high risk area in occupational terms. They have long had occupational health and safety problems, but have been slow to address them, effectively treating them simply as a standard risk of doing business. Now they are being forced to address them.
The point of the story is that many of the new initiatives now being introduced make perfect sense in commercial terms in that the cost of corrective action is less than the direct costs associated with work force accidents. So the business case was there from the beginning, but was not identified.
Last November we carried a story on this blog about institutional and process issues in science commercialisation.There we said in part:
This remains our view. The issue has now become a popular topic of discussion in Australia as part of the overall changes being forced upon the university sector by the Australian Government.When some of us first became involved in science commercialisation more than twenty years ago, a core concern was the need to bring universities and other scientific research bodies more effectively into the commercialisation process, to break them out of the academic ghetto.
While this is still important, we now have concerns that the focus on commercialisation and the associated search for commercial funding has become too great and may in fact be distorting our academic structures.
Photo: Brassey House, Canberra
Note to readers: This is one of a series of posts discussing changes in public administration and their impact on public policy. Each post has a full list of posts at the end. You may care to start at the introductory post and then follow through.
In my last post in this series I spoke of the spread of the New Zealand model of public administration, starting with its adoption in New South Wales. I now want to take some current examples of the application of the model in practice. However, in doing so I face a problem.
The constructs and language built into the model have become so pervasive, so accepted, that it can be hard for people to see the sometimes subtle differences between current orthodoxy and past views. This can make it hard for them to see the ways in which current approaches to public administration affect the development of public policy for both better and worse.
I recently asked some NSW colleagues to define the difference between strategy and policy. They had some difficulty in doing so.
NSW public servants live in a world of strategies, plans and action items, a world of cascading performance agreements that are meant to specify what each person will do in the immediate future.
This is a very different world from that I found when I first joined the Commonwealth Public Service. For that reason, I thought that it might be helpful in this series if I described that past world to provide a counterpoint to discussions of the present. The material that follows is partially autobiographical because I am providing a personal perspective.
Recruitment
The Commonwealth Public Service recruiters arrived on campus at the University of New England (UNE) in the middle of 1966.
In my second post in this series I spoke of the expansion in the role of Government after the Second World War. To meet the people needs created by this expansion, the Commonwealth Public Service Board wanted to build up the number of graduates in the service. In doing so, it faced certain problems.
While universities had begun to expand, the number of graduates was still relatively small by today's standards, so there was a fair degree of competition for applicants. Further, Sydney and Melbourne graduates were very reluctant to accept jobs in Canberra. This meant that public service graduate recruitment had a special focus on universities outside those cities.
At that stage university students considering the Commonwealth Public Service option had five major choices.
The Department of External Affairs (now Foreign Affairs and Trade) had the highest pulling power because Australia's rapidly growing Diplomatic Service offered a variety of overseas positions and considerable prestige. Our diplomats were regarded as a special cadre that carefully selected and then grew its own. Stories about their selection techniques abounded, especially the cocktail parties put on for applicants during which behaviour was carefully tested. I had vaguely thought of applying, but then ruled this out largely because of my views on the Vietnam War.
The Department of Primary Industry and its research arm, the Bureau of Agricultural Economics, attracted UNE's agricultural economists and at that stage was almost a UNE club because of the number of UNE people. Alf Maiden, the Department's permanent head, had been one of Dad's first students at the New England University College. I was not interested having ruled economics out at that point.
The same argument applied to Treasury. One of the original departments set up at Federation, Treasury had developed from a core financial control and book keeping function into Canberra's most powerful policy Department, ranking in external prestige only second to the Department of External Affairs. Treasury tried to recruit only good honours economics graduates, so I might not in fact have got in even had I been prepared to consider this option.
Treasury's main Canberra rival, the Department of Trade and Industry, was the fourth possibility. Also a foundation Department on the trade side, DTI had become a very powerful Department under John McEwen as Minister, J G (Jack) Crawford as permanent head.
In retrospect, DTI would have been a logical choice for me if I was going to join the Commonwealth Public Service. I had linkages with the Country Party, the party McEwen headed, while Crawford was a friend of my father. I had aspirations to become a Country Party parliamentarian, so DTI experience might have provided an added base.
The DTI recruiter in fact tried very hard to get me to apply, but none of the potential advantages occurred to me because the Commonwealth Public Service Board recruiter had already interested me on an alternative option, the Administrative Trainee Program.
At that point the Board faced a major graduate recruitment problem. The Departments I have talked about had sufficient power to attract graduates, but the Board wanted to build graduate numbers across the whole Service and was struggling because of negative attitudes, not just about Canberra but about the Service itself. The Administrative Trainee Program had been developed to overcome this.
I saw the Board representative out of curiosity but with no clear intention of applying to join the Public Service. Although I did not know it at the time, I fitted the profile the Board was looking for. I was articulate and reasonably bright, had reasonable academic results, but had also been actively involved in student life including editing the student newspaper and holding office positions in a number of student societies. He therefore set out to sell me on the Program.
He explained that the scheme had been developed to train future Public Service leaders. If accepted, I would go through a year's training combining a mix of formal courses with job rotations. At the end of the year I would be placed with a mutually agreed Department. I was attracted to the concept and ended up applying and being accepted.
Training Program
Upon arrival at Canberra airport I was met by a white commonwealth car, one of those cars used to drive ministers, and driven to Brassey House.
Named after Sir Thomas Brassey, Governor of Victoria from 1885 to 1900 and first Earl of Brassey from 1911 until his death in in 1918, Brassey House was completed in 1927 to coincide with the establishment of the Federal Parliament in Canberra and used as a guest house for the exclusive use of members of parliament and mid-level government officials relocating to Canberra. It had been extended in the early sixties to include conference facilities.
I met most 0f my fellow trainees the following day.
The Board and Department of External Affairs had agreed to combine both the diplomatic and admin training programs for the initial six weeks, so we were quite a big group. Ages ranged from 19 (many people then finished their pass degree at 19) to the early twenties. Both groups were pretty bright and came from all over Australia.
One of the older people in the admin group was George Brouwer, now Victorian Ombudsman. A serious person, George had been born in the Dutch East Indies just prior to the Japanese invasion. We used to tease George simply because he was so serious. Others in the group included Alan Rose and Roger Beale, both of whom were to become department heads.
Life revolved around Brassey House. We worked reasonably hard during the day then socialised at night, drinking rum and coke and playing cards. There were also some social functions where we met previous admin trainees and diplomatic cadets.We also started finding our way round Canberra.
The city was then a period of rapid growth. The total population of the ACT in 1945 was just 13,000. By 1957 this had increased to 39,000, then to 50,000 in 1960 and to 96,000 in 1966. Australia was carefully but rapidly building a national capital that was intended to be a symbol for the nation. With rare exceptions, everyone in Canberra came from somewhere else, so it was very easy to make friends.
I think that there was another advantage in this emigrant mix as well. It made for a diverse public service that knew from first hand experience about attitudes and experiences across Australia. This tempered the natural arrogance that can come from being part of the central government.
I found the training program itself very interesting. I also find it interesting looking back because its structure and content tell us something about the changes that have taken place in Australia.
The public service was then seen as a career service in the Westminster tradition. This meant that it was meant to be a neutral, independent, anonymous, career service: neutral in the sense that we served the elected Government regardless of its party composition; independent in that the Government of the day did not control personnel matters (this was the responsibility of the Public Service Board), while Departmental heads held permanent appointments; anonymous in that while individual public servants might be well known, our advice to and discussions with Government were private to that Government; a career service in that people served for the long term, rising through the ranks.
Something of the flavour can be seen from the comments quoted by Patrick Weller of two senior and very well known public servants to the 1970's Royal Commission into the Commonwealth Public Service. Asked about the objectives of his Department, Sir Lennox Hewitt replied:
Sir Frederick Wheeler's response to the same question was:I have not previously encountered the suggestion of objectives for a department of state. The Royal Commission will presumably not need anything more from the department than a copy of the administrative arrangements.
The function of the Treasury is to advise and assist the Treasurer in the discharge of his responsibilities. The objectives of the Treasury are, in essence, to carry out this function as effectively and efficiently as possible.
Our training reflected this traditional view of the Public Service. So we learned at a nuts and bolts level about the structure of Government, about the roles of Parliament, Cabinet, the Executive Council and Departments of State. We also learned about personnel management in the Public Service including its history.
We spent a fair bit of time talking about what would now be called ethics and values hearing a variety of speakers including Wilfred Jarvis. A key issue was the role and preservation of individual ethics.
If our role was to help a Government define and carry out its policies, to use Sir Frederick's words, as effectively and efficiently as possible, what were we do if we disagreed? Clearly we should provide advice pointing to issues and problems the Government should consider, but once a decision was made our obligation was to carry it out. But what, then, if the decision was so badly flawed (at least in our view) that we could not (or should not) in all conscience implement it?
We discussed the case of Adolf Eichman as the supreme public servant. He had been given a task by Government, the extermination of the Jews, a task that he certainly carried out as effectively and efficiently as possible. We also talked about the techniques that the North Koreans had used in brainwashing prisoners during the Korean War, at the way in which individual values could be broken down. A key message was the way in which a series of small personal decisions/actions could progressively erode an ethical position or set of beliefs.
I am not sure that we reached a conclusion beyond the need to be aware of ethical issues and the necessity to resign should the conflict be too profound. However, I was to find the discussion very helpful later in handling specific ethical conflicts.
We also discussed Australian society. Professor Jerzy (George) Zubrzycki , for example, spoke to us on the migrant experience, outlining among other things the process of integration that the migrants had gone through over several generations. We also learned a range of technical skills.
Some knowledge of economics was regarded as critical. Professor Burgess Cameron told us that he intended to cover the entire undergraduate economics course in, from memory, fifteen sessions and indeed he tried very hard to do this. In response I had to ring my father, get him to dust off my economics text books and send them down to Canberra by train.
We also did some practical work including a major in-basket exercise running over a number of days in which we each took particular roles - I represented the Department of Shipping and Transport - undertaking research, writing minutes (correspondence within Departments) and memos and letters (correspondence between Departments) and participating in interdepartmental discussions. This was useful, although our trainers had underestimated the quantity of written material likely to be generated, so things started to collapse because there were not enough typing resources.
As part of all this, we also had a number of sessions on writing using, among other things, Gower's Plain Words. There was little of the sensitivity that now exists to the connotations attached to particular words, the term political correctness lay well in the future. Our focus lay in clear, simple, jargon free English.
Looking Forward
I have described the course at some length because I joined the Public Service at the start of a period of massive change and in writing want to give a feel for the old Service.
There are differing views about this change process.
In 2003 Patrick Weller quoted a then minister as saying:
Basically, the last 20 years has been a battle between the elected representatives and the imperial bureaucracy. And the elected representatives won.
That minister saw it as a continuing fight for influence and power between those who were elected and those who serve them.
I have a different view. While change was required, my feeling is that the Public Service today is neither as efficient nor effective as it was. I will look at some elements of this in coming posts.
Copyright and Citation Details
The material is this series is copyright Jim Belshaw. However, it may be copied or quoted with due acknowledgment.
The following should be used for citation purposes if referring to the overall series: Jim Belshaw, Changes in Public Administration and their Impact on the Development of Public Policy, Ndarala Group, 2007 with a link to the introductory post.
If citing this post, Jim Belshaw, "Changes in Public Administration and their Impact on the Development of Public Policy 6 - A View from the Past", in Jim Belshaw, Changes in Public Administration and their Impact on the Development of Public Policy, Ndarala Group, 2007 with a link to this post.
Series Posts
Changes in Public Administration and their Impact on the Development of Public Policy 1 - Introduction, 20 March 2007.
Changes in Public Administration and their Impact on the Development of Public Policy 2 - Notes on Major Trends, 26 March 2007.
Changes in Public Administration and their Impact on the Development of Public Policy 3 - Publish or Perish Case Study, 6 April 2007.
Changes in Public Administration and their Impact on the Development of Public Policy 4 - the New Zealand Model, 9 April 2007.
Changes in Public Administration and their Impact on the Development of Public Policy 5 - Application and Spread of the New Zealand Model, 10 April 2007.
The life of the independent can be very lonely. Many of us work from home offices. When on site we interact with other people, but are still outsiders. So many of us have secret places that we go to in our minds from time to time to gather strength.
This rather wonderful photo by Gordon Smith focuses on the horses. As Gordon notes, they have one of the most wonderful views in the world. This is just hinted at in the photograph. Gordon has in fact photographed one of my secret places, a place that I found when I was nineteen.
The dirt road travels through pretty grazing country before plunging into the bush. In places it runs near the edge of one of the New England gorges with its spectacular olive, blue, green views.
I used to stop here for lunch. Sometimes just a picnic, at other times a BBQ with the chops sizzling over the fire and the wonderful and evocative smell of burning gum leaves. And always with the view of the gorge.
Further on, the road ends at the start of a paddock, a small hill where the horses stand, with (as Gordon says) almost a 360 degree view of the wonderful gorge country. Gordon goes on from here by foot. I was content to look.
As a collective, we have a number of web sites as well as blogs that have become increasingly important in today's interactive world.
The Group itself runs two web sites, the Group and Regional Living Australia sites, as well as three blogs, this one, Managing the Professional Services Firm and the Regional Living Australia blog. Other blogs linked to member interests have been on the drawing board, but held pending resource issues.
As a networked organisation made up of independent professionals and professional practices, we do not have a lot of resources available for central activities. The busier our people, the smaller the pool of available resources. So we face a constant challenge in keeping our sites up to date.
To manage this, we are constantly looking for new ways to manage the process. Here accumulated content appears to be the absolutely critical issue.
Once past a certain minimum point, accumulated content starts to yield new publishing possibilities. At this stage, the effort involved in keeping things current starts to decline. We appear to be at this point, although it will still be some time before life really becomes easier.
Mind you, with increased content comes new ideas as to ways of using that content. So perhaps things will not become easier after all!
Ndarala Group professional Tim Russell is an international trainer and management consultant with leading clients on a number of contents.
Among other things, Tim is the developer of the microskillstm system of training in inter-personal communications. He is also an expert in working across cultures.
Tim has now launched a web site with a range of interesting material on management and training.
Note to readers: This is one of a series of posts discussing changes in public administration and their impact on public policy. Each post has a full list of posts at the end. You may care to start at the introductory post and then follow through.
In my last post in this series I outlined the key features of the new New Zealand model of public administration.
I know New Zealand very well and love the place. Dad was born in there, I still have family there, and have visited it many times over the year. Given this background as well as my professional interests, I was absolutely fascinated with the way the reform process unfolded in practice.
New Zealand's treasurer, Roger Douglas, knew that fundamental change - and it was fundamental - required fast and sustained action to drive things through. I was aware of the process while I was still working for the Commonwealth Public Service, but it was not until I set up my own consulting operation that I became directly involved.
In 1989 we decided to start selling services into New Zealand. This led me to make a number of marketing trips to New Zealand over 1989 and 1990.
Given that Government relations, Government policy advice and program evaluation were core business, from my first marketing trip I started to work my way through New Zealand ministries and agencies attempting to understand the New Zealand scene. In turn, this led us to set up what we called the Public Sector Reform Project to look at the revolution in public administration in New Zealand and then compare it to Australia at national level and in selected states. We also wanted to look at it at a Government wide level and then at its application in specific portfolios.
Application of the Model in Practice - New Zealand Scene
By the time of my first marketing visit in 1989, the revolution was four years old. There was an air of pervasive gloom in the general community.
Taxi drivers lectured me on the evils of a deregulated taxi industry, on the way in which competition had driven down both their income and the standard of service. Yet after visiting a number of agencies I was impressed by the coherence of vision and language. I started to become very positive about New Zealand's future, although I could also see some of problems starting to emerge in terms of the application of the model. These became clearer on subsequent trips.
I saw problems at two levels.
At national level, the Government and ministers were struggling to articulate the objectives, program structures and associated performance standards required to make the system work. There was a major clash between the day to day pressures associated with the Parliamentary system and the need to articulate longer term objectives.
There was also a major clash between the fundamental stance of the Government - deregulation and let the market flower - and the alternative more proactive stance.
This clash was encapsulated in the 1991 Porter Project report. Inspired by the ideas of and part authored by Michael Porter, the book was an incisive analysis on the causes of New Zealand's economic problems. However, its suggestions as to solutions were noticeably weak. It is very hard to define a pro-active development role for Government when your starting premise has ruled such a role out!
At agency level, agencies were struggling to introduce the new approach. This was partly due to technical problems, partly to interest conflicts.
The New Zealand Ministry of Defence and the New Zealand Defence Forces can be taken as an example of technical problems. They had to attach a value for balance sheet purposes to New Zealand's various military assets and then work out a depreciation schedule. One effect was to push the formal accounts into deficit because the New Zealand Government was not prepared to contribute enough money to defence.
The New Zealand Qualifications Authority can be taken as an example of interest conflicts.
The Authority defined a national competence based qualifications structure from primary through to the highest formal qualification. Consistent with standards based approaches, it should not matter how you acquired the necessary knowledge and skills. The only requirements were definition of the standard on one side, the test procedure on the other.
This posed a fundamental challenge to New Zealand's Higher Education system in that it meant that people could acquire a higher qualification independent of them or any other university. So the universities opposed this element of the changes.
Application of the Model in Practice - transmission to Australia
There are close links between Australia and New Zealand, and the New Zealand experiment had a significant Australian impact, although the transmission mechanisms were not always clear because so much contact was informal. In addition, because New Zealand itself was part of a broader global movement, it can be hard to distinguish between New Zealand and broader global impacts.
The NSW Greiner Government (elected 1988) is perhaps the clearest example of Australian impact. The Griener Government introduced many of the New Zealand approaches holus bolus. As a simple mechanical example, ministers were meant to agree their performance objectives with the Premier. Then the various departmental CEO's had to agree their performance objectives with the Premier's Department.
Again, as in the New Zealand case, we can see the way the application of the model was driven by the Government's ideological stance.
The Greiner Government saw itself as a market driven reform Government sweeping away the detritus of the past along the lines already pioneered in the UK and New Zealand. Mr Greiner himself defined the role of the Government in terms of economic and management efficiency. The role of Government was good management in financial terms and in the delivery of services.
That's fine, but it in fact left the Government in the same position as the New Zealand Government when it came to defining peak objectives.
On one side you had major changes intended to improve delivery efficiency as well as state economic performance, on the other a Government unable to articulate broader objectives beyond reform itself because the Government's role had been defined in such a way as to limit the scope of what could be done.
The Greiner Government fell in 1991. But the subsequent NSW Labor Party Governments in fact continued its basic thrust with all the consequent strengths and weaknesses. As we shall see in our next case study, this comes through clearly in the structure and content of the current NSW Ten Year Plan.
Copyright and Citation Details
The material is this series is copyright Jim Belshaw. However, it may be copied or quoted with due acknowledgment.
The following should be used for citation purposes if referring to the overall series: Jim Belshaw, Changes in Public Administration and their Impact on the Development of Public Policy, Ndarala Group, 2007 with a link to the introductory post.
If citing this post, Jim Belshaw, "Changes in Public Administration and their Impact on the Development of Public Policy 5 - Application and Spread of the New Zealand Model", in Jim Belshaw, Changes in Public Administration and their Impact on the Development of Public Policy, Ndarala Group, 2007 with a link to this post.
Series Posts
Changes in Public Administration and their Impact on the Development of Public Policy 1 - Introduction, 20 March 2007.
Changes in Public Administration and their Impact on the Development of Public Policy 2 - Notes on Major Trends, 26 March 2007.
Changes in Public Administration and their Impact on the Development of Public Policy 3 - Publish or Perish Case Study, 6 April 2007.
Changes in Public Administration and their Impact on the Development of Public Policy 4 - the New Zealand Model, 9 April 2007.
Changes in Public Administration and their Impact on the Development of Public Policy 5 - Application and Spread of the New Zealand Model, 10 April 2007.
Note to readers: This is one of a series of posts discussing changes in public administration and their impact on public policy. Each post has a full list of posts at the end. You may care to start at the introductory post and then follow through.
This post continues our discussion on changes in public administration and their impact on public policy.
In my Notes on Major Trends I began by looking at the rise of the welfare state at the end of the Second World War, then looked at the economic impact of the oil shocks during the seventies. This created global stagflation among developed countries (recession combined with inflation) that Governments struggled to deal with using previously successful policy instruments. This marked the end of the welfare state, setting the stage for new approaches to public administration.
I then went on to briefly discuss the development of the quality movement, standards based approaches and the associated rise in interest in measurement, things that were to become very important within public administration. In the following post, Publish or Perish, I looked at the development of citation indexes as a case study of the growing interest in, even obsession with, measurement.
This post continues our discussion, focused on the development of the New Zealand model, a model with global reach that typifies changing approaches to public administration.
The Rise of Thatcherism
The failure of previous policy approaches to address the problems of stagflation, continuing high interest rates and persistently high unemployment led to a search for new policy approaches.
In the Australian Treasury, for example, the persistent cry during the second half of the seventies was the need to "get the economic fundamentals right." Without this, we could do nothing else.
The revolution that was beginning to sweep away the old system of public administration including the welfare state is sometimes called Thatcherism.
Margaret Thatcher (and here) became Prime Minister of Great Britain in 1979, the first of a series of "conservative" (I have put conservative in inverted commas because the outcomes were far from conservative) world leaders including Ronald Reagan (1980) and Brian Mulroney in Canada (1984). Influenced by the ideas of Milton Friedman and a strong believer in free market forces, she began a process of winding back government involvement in the economy, of corporatisation and sale of Government business activities, of tight monetary and fiscal policy intended to destroy inflation.
The New Zealand Model: Introduction
While the overall change process is sometimes called Thatcherism, the purest expression of the overall approach - often called Rogernomics after the New Zealand Labour Party Finance Minister Roger Douglas -was to come in New Zealand. For a period, New Zealand was to become a major influence in global public administration, with New Zealand consultants fanning out to spead tha approach around the world.
New Zealand was an economic basket case when Labour came to power. Using ideas developed in the New Zealand Treasury Department, Douglas set out about a series of dramatic reforms. My concern here is not with the details of the reforms, but with the underlying model.
The Wikipedia article cited above suggests that a" major criticism of Rogernomics is that the reforms were undertaken without a detailed philosophical basis so it could be argued that the reforms were not fully completed."
It is true that the reforms were not fully completed, but I disagree that they lacked a detailed philosophical basis. In my view, the New Zealand model was by far the most clearly articulated reform model in the world. Further, while it did incorporate elements of what came to be known as neoconservative views, the model itself could be applied within a variety of idea sets.
Structure of the New Zealand Model
The most interesting thing about the New Zealand model was the way in which it drew together so many of the new elements in global thinking. To start with things that applied across the whole structure:
Accountability. Accountability was central. Government and ministers were responsible for overall policies and programs and were accountable to Parliament. CEOs of ministries and agencies were responsible to their minister. And so on.
Objectives. There should be clear and as much as possible measurable objectives. This applied to Government and ministers as well as those working for Government. If Government and ministers did not have clearly defined objectives, then how could agencies and CEOs have clearly defined objectives?
Inputs, outputs and outcomes. A clear distinction needed to be made between inputs, outputs and outcomes. Inputs were the resources required to deliver individual activities, outputs represented the immediate deliverables from those activities, outcomes the results from outputs. Government was concerned with outcomes. So a clear relationship needed to be established between inputs, outputs and outcomes.
Program approach. Because most outcomes (reduced crime, for example) required outputs from a variety of areas, there needed to be a program approach that integrated policies and programs across agencies. This was also required to accommodate the fact that while Government was responsible for outcomes, most minsters and agencies were really responsible for outputs that in combination determined outcomes.
Standards Based. Consistent with the emphasis on measurable objectives and outcomes, standards based approaches were central across all of Government and beyond. Where appropriate, Government mandated standards. However, the process to be followed in achieving those standards was a matter for those responsible for delivery.
Clear definition of roles. Government wore different hats that needed to be clearly defined. Government provided services to people that linked in turn to different needs and outcomes. In providing those services, Government purchased outputs from both public agencies and the private sector. Where Government acquired services from its own agencies, it was both an owner and a purchaser. As an owner it needed to get a return on the capital invested. As a purchaser, it wanted the best value for its money.
Service purchase contracts. Where the agency was providing services to Government, the Government entered into an agreement with that agency to purchase an agreed package of services for an agreed period. In short hand terms, this came to be known as the purchaser/provider model.
Agency independence. Consistent with standards based approaches, agencies had operational freedom to achieve their objectives, subject to achievement of financial performance targets (the ownership role) and any service delivery requirements as laid down in their service delivery contracts (Government as purchaser role). Previous central requirements such personnel administration or procurement were abolished. Agencies had control of their own funds including retention of interest on cash and of profits subject to any agreed dividend requirements.
Accrual accounting. Government agencies at all levels needed to report to Government on their operations in terms of Government's role as owner (profit & loss statement, balance sheet, cash flows) and as service provider (cost, value for money). To assist this, accrual accounting was made mandatory. In turn, this allowed for the creation of a total Government balance sheet listing all assets and liabilities.
Market focused. A key part of the model was the attempt to use market disciplines to encourage efficiency.
In applying the model all Government ministries and agencies were broken into three groups depending on their customers and market positions.
Contestable markets: Agencies supplying good or services to external markets for a market determined price were turned into state owned enterprises and ultimately sold.
External service provision, no market: Agencies supplying services, regulation of aviation for example, remained in Government ownership but became stand-alone entities and charged for their service so as to recover costs plus a return on capital. This was meant to be fully transparent to those being charged. In practice some element of subsidisation might still be required because of externalities. In this event, the subsidy in fact represented a Government purchase from the agency.
Government as customer. Where the Government was the sole purchaser, then the ministry or agency became a service provider with a single customer. In theory, this separation allowed Government to consider alternative purchases, introducing a degree of potential competition. For example, New Zealand might choose to outsource defence in whole or part to Australia, paying Australia for the service. Or buy economic advice from sources other than the New Zealand Treasury.
I said that the model could be applied in a variety of systems. The starting point here is Government values and objectives. This then determines the cascade effect through the whole Government system.
As a simple example, you might choose not to sell state owned enterprises because you classified them as strategically or socially significant. In that event, you might need to pay the enterprise an extra amount as a subsidy. This would be identified and treated as a purchase of a service linked to the strategic or social objective.
I will discuss the application and spread of the model in my next post in this series.
Copyright and Citation Details
The material is this series is copyright Jim Belshaw. However, it may be copied or quoted with due acknowledgment.
The following should be used for citation purposes if referring to the overall series: Jim Belshaw, Changes in Public Administration and their Impact on the Development of Public Policy, Ndarala Group, 2007 with a link to the introductory post.
If citing this post, Jim Belshaw, "Changes in Public Administration and their Impact on the Development of Public Policy 4 - the New Zealand Model", in Jim Belshaw, Changes in Public Administration and their Impact on the Development of Public Policy, Ndarala Group, 2007 with a link to this post.
Series Posts
Changes in Public Administration and their Impact on the Development of Public Policy 1 - Introduction, 20 March 2007.
Changes in Public Administration and their Impact on the Development of Public Policy 2 - Notes on Major Trends, 26 March 2007.
Changes in Public Administration and their Impact on the Development of Public Policy 3 - Publish or Perish Case Study, 6 April 2007.
Changes in Public Administration and their Impact on the Development of Public Policy 4 - the New Zealand Model, 9 April 2007.
Changes in Public Administration and their Impact on the Development of Public Policy 5 - Application and Spread of the New Zealand Model, 10 April 2007.
