public administration reform in New Zealand
Outline: Introduction I-New Zealand before the reform: a brief preview of the country A) Country profile B) The structure of the public service C) New Zealand before 1984 D) The 1984 Economic crisis: a turning point II- The reform of the public sector A) Introduction B) Reforming the ‘Core’ public sector 1. ... Reporting, monitoring, and Coordination a) Ex Post reporting b) Ex Ante budgeting c) Capital charge d) Strategic policy coordination C) The Theoretical underpinning of the New Zealand reform 1. Public choice theory 2. ... The New public Management III- The Reform in perspective A) The progress and results of the reform B) Relevance of the reform to developing countries Conclusion Introduction Public administration is a dynamic field of study; it never was and never will be static. Throughout centuries, Public Administration has encountered many changes, developments, and reforms in many countries around the world. Many popular theories, principles, as well as schools of thought were developed over the years in attempt to explain the nature of public service, to emphasize the importance of public administration, and to formulate the best possible organization of public agencies. ... New Zealand is one of the most prominent examples of countries in which public administration has been greatly reformed. ... This paper studies this reform that occurred in the public sector of New Zealand, including the state of the country before the reform, the principles underlying the reform itself, and the results of such reform and its relevance to developing countries. I-New Zealand Before the reform: a brief preview of the country A-Country profile: • Location: Oceania, islands in the South Pacific Ocean, south east of Australia. ... ) • Ethnic groups: New Zealand European 74. ... ) • Government type: parliamentary democracy • Capital: Wellington • Administrative divisions: 16 regions; Auckland, Bay of Plenty, Canterbury, Gisborne, Hawkes Bay, Marlborough, Nelson, Northland, Otago, Southland, Taranaki, Tasman, Waikato, Manawatu-Wanganui, Wellington, West Coast • Constitution: consists of a series of legal documents, including certain acts of the UK and New Zealand Parliaments and The Constitution Act 1986 which is the principal formal charter • Legal system: based on English law, with special land legislation and land courts for the Maori; accepts compulsory ICJ jurisdiction, with reservations • Executive branch: chief of state: Queen ELIZABETH II (since 6 February 1952), represented by Governor General Dame Silvia CARTWRIGHT (since 4 April 2001) head of government: Prime Minister Helen CLARK (since 10 December 1999) and Deputy Prime Minister Michael CULLEN (since NA July 2002) cabinet: Executive Council appointed by the governor general on the recommendation of the prime minister elections: none; the monarch is hereditary; governor general appointed by the monarch; following legislative elections, the leader of the majority party or the leader of a majority coalition is usually appointed prime minister by the governor general; deputy prime minister appointed by the governor general • Legislative branch: unicameral House of Representatives - commonly called Parliament (120 seats; 67 members elected by popular vote in single-member constituencies including 7 Maori constituencies, and 53 proportional seats chosen from party lists, all to serve three-year terms) • Judicial branch: High Court; Court of Appeal • Political parties and leaders: ACT New Zealand [Richard PREBBLE]; Alliance (a coalition of the New Labour Party, Democratic Party, New Zealand Liberal Party, and Mana Motuhake) [James (Jim) ANDERTON]; Green Party [Jeanette FITZSIMONS and Rod DONALD]; National Party or NP [William (Bill) ENGLISH]; New Zealand First Party or NZFP [Winston PETERS]; New Zealand Labour Party or NZLP [Helen CLARK]; United Future or UF [leader NA]; United New Zealand or UNZ [Peter DUNNE] • International disputes: territorial claim in Antarctica (Ross Dependency) B- The Structure of the Public Service The following points outline the present structure and institutional framework of the New Zealand public service: (a) The basic pattern, common to Westminster systems, is a politically neutral public service, accountable to the political executive and open on a competitive basis to suitably qualified persons who are recruited and promoted on the basis of merit. (b) The organization, structure and functions of the public service are determined by legislation, namely the State Sector Act (1988) and the Public Finance Act (1989). (c) At 31 December 1993, the public service was made up of three central departments and 32 other departments, divided between policy and operational functions. Under the State Sector Act (1988), the public service includes departments collectively referred to as the "core public service". ... The treasury consists of seven branches: social policy and government services; regulatory and tax policy; industries; budget management; financial management; the New Zealand Debt Management Office; and corporate services. The Treasury has played the lead role in the design of public sector reforms and an important role in their implementation. ... Among the Commissions management services is providing policy advice on the development, payment and other conditions of employment of senior public service managers, and on issues of management and performance within the public service. ... (h) The major public service union is the Public Service Association. In 1987, public sector unions joined most of their private sector counterparts in one national umbrella organization, the New Zealand Council of Trade Unions. C-New Zealand before 1984 From the late nineteenth century, the New Zealand government played an active role in developing and regulating the economy - a more active role than many other Western governments. ... And by the early 1980s, the resources used by the public sector amounted to around 25 percent of Gross Domestic Product. ... 11) New Zealand developed an extensive social safety net. Public old-age pensions date from 1898; in 1938 the government introduced an extensive Medicare system that included free hospital treatment, free pharmaceutical service and heavily subsidized medical treatment by doctors. ... From the 1960s to the 1980s, however, there was a notable decline in the performance of the New Zealand economy compared with those of other OECD countries. ... Although New Zealand, as an exporter of a small range of pastoral products, was particularly vulnerable to the uncertainties of international markets, including oil shocks and the United Kingdoms entry into the European Union, there is a widely held view that the policies designed to meet these external circumstances were themselves, over time, major factors in the poor performance of the New Zealand economy. ... Moreover, the level of service to the public was also poor. ... The immediate cause of the crisis was extensive speculation against the value of the New Zealand dollar in anticipation of a major devaluation following the change in government. New Zealand was forced to suspend foreign currency trading, having very nearly exhausted its reserves of foreign exchange; the country was in real danger of defaulting on its overseas borrowing. ... The exchange rate for the New Zealand dollar had been maintained around the 1972 level, despite a decline of approximately 30 percent in the country’s terms of trade - that is, the quantity of exports that have to be sold to pay for a particular level of imports. This major crisis involving a stagnant economy, high national debt, 20% devaluation, and an exchange rate crisis led to a search for ways to reduce public spending and eventually stimulated the reform in the public administration of New Zealand. II-The reform of the public sector A-Introduction In 1984, New Zealand’s newly elected labor government set in a macroeconomic stabilization plan and broad structural reforms to correct the core problems, and to create an efficient public sector that is highly responsive to the strategic policy direction of the government.