There is a strong move in Australia (as well as in Britain, Canada, New Zealand and the USA) to adopt market and contractual approaches to restructuring public management. This is based on a separation of government as purchaser of goods and services from the public or private agencies that provide them. This chapter explores the radical changes in tenets, organisation, purposes and attitudes concerning public policy in general which have gathered pace since the early 1980s, and which have swept up health policy as part of that process. It does this by first describing the use of market and contractual models in the restructuring of organisations engaged in public management, then examining the impact of this restructuring on public interest, public accountability, and the understanding and reinterpretation of people's capacities as citizens within the market state. The chapter points towards ways in which health policy might overcome the negative impacts of the prevailing contractual model through proactively engaging with it.