TRANSFORMING NEW ZEALAND'S PUBLIC SECTOR: LABOUR'S QUEST FOR IMPROVED EFFICIENCY AND ACCOUNTABILITY
| DOI | http://doi.org/10.1111/j.1467-9299.1987.tb00673.x |
| Author | JONATHAN BOSTON |
| Published date | 01 December 1987 |
| Date | 01 December 1987 |
TRANSFORMING
NEW
ZEALAND'S PUBLIC SECTOR:
LABOURS QUEST FOR IMPROVED EFFICIENCY
AND ACCOUNTABILITY
JONATHAN BOSTON
Since its election in July
1984
the fourth Labour government in New Zealand has embarked
upon the most radical and systematic reorganization of the state sector since the creation
of a unified, non-partisan, career-oriented service in
1912.
The reforms include the com-
mercialization of many of the goods and services provided by state agencies, the turning
of public trading enterprises into corporations, major administrative changes and the
overhauling of state pay-fixing arrangements. This article examines the theoretical assump-
tions underpinning Labour's strategy and assesses the extent
to
which the new arrangements
are likely to achieve their intended purpose of improving the efficiency, flexibility and
accountability of the public sector.
INTRODUCTION: TOWARDS A NEW ADMINISTRATIVE ORDER
Dissatisfaction with the operation of public bureaucracies has been common in
many countries during the past few decades.
Of
particular concern has been the
relativeIy poor economic performance and limited accountability
of
many state
tradmg enterprises. Policy-makers have responded to this situation in various ways.
At first, attention was directed primarily at the introduction of new organizational
forms, management systems, incentive structures and financial control mechanisms,
often based on private sector models, that were thought likely to enhance the
capacity of public enterprises to achieve their objectives effectively and efficiently.
As
Littlechild
(1983
p.
19)
notes, the limited achievements of these successive reform
programmes, coupled with various developments in economic theory
-
most
notably the influence of such concepts as rational choice, market and non-market
failure, property rights, contracting, contestability, and agent/principal relations
-
has led many to conclude that public enterprises are inherently inefficient and
the only solution lies in privatization (i.e. the transfer
of
state assets
or
functions
to the private sector). Currently this view is ascendant internationally, with
Jonathan Boston is a Lecturer in the Department of Political Science, University of Canterbury, New
Zealand. This article is based on a paper presented at the annual conference of the Political Studies
Association
of
the United Kingdom, at the University of Aberdeen in April 1987. The author wishes
to thank, among others, Geoff Butcher, Angus MacIntyre, Keith Jackson, and Reg Mascarenhas for
their comments and generous assistance.
Public Administration
Vol.
65
Winter
1987
(423-442)
0
Royal Institute of Public Administration
ISSN
0033-3298
$3.00
424
JONATHAN
BOSTON
governments in numerous countries (e.g. Britain, Canada, France, Japan, the United
States, West Germany, Bangladesh, Malaysia, Mexico and South Korea) committed
to market liberalization and the sale of public assets.
In New Zealand, policy-makers have been concerned about the inefficient use
of public resources and the lack of politic4 accountability of many state-owned
enterprises
(SOEs)
for some time (see Johnston and von Tunzelmann 1982). Until
recently reforms have been unsystematic and limited in scope. With the election
of the fourth Labour government in July 1984, however, the situation has altered
greatly. In a mere three years, Labour has transformed the management of the
economy and brought sweeping reforms in many fields of public policy including
exchange rate policy, monetary policy, wage fixing and industrial relations, taxation
policy, industry assistance, trade policy and foreign policy
(see
Boston and Holland
1987; James 1986). Its changes to the structure, organization and management of
the state sector have been particularly dramatic and are, without question, the
most significant reforms since the creation
of
a permanent, unified, politically
neutral, meritocratic career service in 1912 (Gregory 1987,
p.
119; Roberts 1987a,
p. 109). They must also rank as one of the most comprehensive reorganizations
of the public sector initiated anywhere in the West in the post-war period.
To date, three major initiatives have been announced (see Clark and Sinclair
1986; McKinlay 1987).
In
each case the stated
aim
has been to increase the efficiency
with which resources are used (both
in
operational and allocative terms) and/or to
improve the accountability
of
the public service to the political executive and Parlia-
ment. First, the government has commercialized many of the functions performed
by state organizations. Government departments and public enterprises are now
required to charge on
a
full
cost-recovery basis (includmg depreciation and a return
on capital) for a wide range of goods and services. Second, wherever possible the
commercial and non-commercial activities of departments have been separated and
the trading activities transferred to public corporations. In April 1987 nine new
SOEs
covering a wide range
of
commercial activities
-
banking, land management,
telecommunications, postal services, forestry,
mining
and
so
forth
-
were established
as statutory limited liability companies incorporated -under the Companies Act 1955
(see Table
1).
Each has a board of directors appointed by the government and
two
shareholders (the Minister of Finance and one other minister) who are respons-
ible to Parliament for monitoring the overall performance of the enterprise. In
addition, five existing corporations were brought under the same legislative umbrella
-
the State-Owned Enterprises Act 1986
-
thus creating a more uniform institu-
tional structure and framework
of
political control. These moves directly affected
some 60,000 public servants (about
25
per cent of the central government workforce)
and involved the transfer of public assets (from the state to the new corporations)
worth billions
of
dollars (see Douglas 1986, p.
11).
Finally, the government has
announced plans to introduce important changes to the system of wage fixing in
the public sector (Rodger 1986). The new policy moves away from the centralized
system of pay determination based on comparability with the private sector, annual
general adjustments, standardized conditions and fixed inter-agency relativities,
and ushers in a more flexible, decentralized, enterprise-based bargaining system.
To continue reading
Request your trial