2.3 What issues need to be considered moving forward?
New Zealand is not alone in finding that efficiency has been easier to promote than effectiveness within the new public management model. In a recent paper on the new agenda of public sector modernisation, the OECD (2002) suggests that internationally the first-generation reforms have been efficient but insufficient – i.e. that whilst the reforms have provided for more efficient government many of the reforms have created unintended perverse effects on service delivery and governance.
Related issues to be considered in determining how to provide for an increased focus on outcomes within the public management system include: the contractual culture that developed over the 1990s; a weakened understanding of the collective interest; the strategic environment within which public service managers operate; and the public’s expectations of the public service. An underlying theme related to each of these issues is the extent to which public servants should and can be held to account for their activities.
2.3.1 A contractualist culture?
In 1996 Schick suggested that the reliance on contracts in the New Zealand model was leading to a checklist mentality, where managers only delivered those things that were specified in the formal contracts that supported the performance management system. This concern was highlighted again in the terms of reference for the Review of the Centre (2001) where the review team was asked to consider: whether the division of the State sector into a large number of departments and agencies, including the division between policy and delivery, is leading to an excessively narrow focus by managers and a loss of co-ordination across the public sector (p.39).
The focus on the use of performance indicators as an accountability tool – as they tend to become in a contractualist culture – and the ability to use them to shape the culture of organisations and clearly specify expectations of public servants, potentially creates difficulties as the public management system moves to provide for the specification of outcomes. These difficulties arise for two reasons.
Firstly, because outcomes are not easily specified, nor is it simple to attribute “successful” achievement of outcomes to any particular intervention, the ability to hold individuals to account for the achievement of specified outcomes is reduced. In turn, this potentially undermines current processes utilised to support performance management components of the wider system.
Secondly, the focus on performance indicators supporting accountability systems can limit an organisation’s ability to provide for a learning environment – where indicators can be used to evaluate the effectiveness of programmes with the goal of identifying whether it is appropriate to change the mix of interventions used in pursuit of those outcomes.
2.3.2 The collective interest
The collective interest can best be described as an understanding that the agencies within which public servants work are not separate entities in and of themselves. Rather, government can be perceived as a corporation where the agencies that make up the corporation need to work together – whether in the development of policy or the delivery of services – to efficiently and effectively achieve the goals of the government.
The “silo” effect on the culture of the New Zealand public management system, which arguably resulted from the contractual nature of the State sector reforms and the implementation of machinery of government principles focused on the separation of activities, may not have been anticipated by the architects of the reforms. Nevertheless, it is clear that implementation of systems and processes based on these principles did have a fragmentation effect on the collective, or whole of government, perspectives of the public sector.
The nature of outcomes means that more often than not the key goals of government will only be achieved if agencies coordinate their activities. This suggests that a managing for outcomes environment will need to be supported by a culture that allows for improved alignment of resources and “joined-up” delivery of services. One obvious response to this need could be to provide for some agglomeration of the structures of the public management system. However, structural change is often insufficient in itself for promoting cultural change.
It could be argued, therefore, that the cultural change sought will only be developed if the component systems of the public management model all support: joint specification of the outcomes sought by government; flexible use of resources across structural divides (whether organisational or less concrete structures such as the use of Votes and portfolios); and unified delivery of services.
2.3.3 The strategic environment
The strategic environment within which the public service operates will have an important bearing upon the institutional design decisions that can be made. Most often discussed in terms of differences between the public and private sectors, the strategic environment of the public service has been characterised by theorists (Yates, 1991; Alford, 1993; Ring and Perry, 1985; Johnson and Scholes, 2002; Kelly and Muers, 2002; and Norman, 2003) as needing to take into account different concepts of value; competition for resources; different strategic timeframes; exposure to public scrutiny; different legislative frameworks; and managerial constraints.
In essence, the “political” nature of the public sector provides an environment where a number of goals need to be worked towards at any one time, and the public expectations of accountability can be strict. In considering how the New Zealand public management system can be reshaped to support a managing for outcomes environment all of these environmental issues will need to be taken into account.
2.3.4 Public expectations - Participatory governance and direct accountability
Internationally public expectations of governments, and the ways in which they consult with their constituencies have tended to undergo a paradigm shift which tends to be expressed as a desire for greater citizen involvement in decision-making, and an interest in greater direct accountability to citizens, i.e. without Parliament acting as an intermediary. This is most obviously evidenced by growing media interest in the performance of agencies delivery services for the government, and calls for representative groups to have greater levels of participation in policy formulation and implementation [Wyman, (2001)]. This creates some tensions around ensuring that appropriate targets are utilised.
Difficulties tend to arise, however, when it comes to the targets that will be utilised to provide a framework within which this accountability will be provided – largely because of the difficulties associated with setting outcome focussed targets and assessing performance against them.
Looking towards a managing for outcomes environment it could be expected that calls for direct accountability will continue to increase and that the systems and processes developed will need to be able to respond to increasing public demands.
2.4 Conclusion
The challenges facing the New Zealand public management system have developed for a variety of reasons. Many appear to be relatively long-standing, reflecting the need to finalise the reforms of the late 1980s, whilst others seem to reflect environmental shifts – either as a result of the system degrading over time, or as a result of responses to ongoing tensions between the principles of “freedom to manage” and “accountability’. Responding to the identified challenges will require some (re)balancing of the various tensions that exist within a public management system.
As calls for an increased focus on outcomes in the New Zealand model become more demanding it is clear that new ways of identifying and supporting the values to be given precedence are required. Mechanistic systems have been, and will be, identified but these will only be effective if the hearts and minds of the public managers are brought to an implicit and explicit understanding of why the systems have been introduced and what they are trying to achieve. The following chapters canvass the how, what and why of potential changes to the system.
Initially, however, chapter three provides a discussion of how the principles and values that underlie the current system may be reassessed to support these changes.
