ABSTRACT

Since 1984, New Zealand has implemented a radical series of economic and labor market structural and operational reforms, which have been designed to increase the efficiency and effectiveness of government agencies. These reforms were the most thorough in New Zealand’s history, and the changes were ranked as being among the most radical and comprehensive undertaken anywhere in the world. The scope and scale of change was significant and involved commercialization, corporatization, privatization, the restructuring of numerous government departments, the introduction of a new form of public financial management, and major changes to industrial relations. The reforms were implemented with a view to providing a more responsive public service and were implemented within an extremely short time frame. The key outcomes sought by the government were

• To have a competitive labor market • To reduce the amount of government spending

The machinery of government also underwent dramatic upheaval and change. A new public sector environment was created out of these reforms and was characterized by

• The separation of policy and advisor roles from administrative and operational roles

• Objectives that would be stated in such a way that all parties providing public goods and services would be absolutely clear as to their role

• Maximized accountability • Competitive neutrality that would ensure a level playing field to

minimize costs and provide appropriate incentives and sanctions to enhance efficiency

• Managers that would have the autonomy to manage • The implementation of accrual accounting and private-sector

accounting and audit principles throughout the public sector

• The shift in focus from inputs to outputs and outcomes • The privatization and outsourcing of some government services

(Boston, 1991; Deane, 1986)

Up until the mid-1980s, New Zealand had the most centrally controlled economy of all the member countries of the Organization for Economic Cooperation and Development (OECD) (Preston, 1996). The “entire economy was a network of controls and cross-subsidies, in which almost every sector did its best to live off every other sector” (Preston, 1996, p. 2). Prior to this period, New Zealand’s economy was growing at a rate considerably below the OECD average (McGrath, 2011). The main reason for the slow national growth rate was that the government sector absorbed approximately 12% of the country’s Gross Domestic Product (McGrath, 2011).