Government Reform: The New Zealand Example (Part 2)

New Zealand’s government reform efforts over the past quarter century have yielded both positive results as well as cautionary tales. Its proposed next steps, however, are worth examining.

At the World Bank’s series of forums on performance management, I found John Whitehead’s insights particularly interesting. Whitehead is a former secretary of the Treasury in New Zealand, which has been touted as the most advanced in performance-oriented government reform. He looked back on what worked and what did not in their reform efforts over the past 25 years. New Zealand’s efforts centering around four key elements:

• Instituting the elements of performance management (strategic planning, performance measurement, performance reporting, performance pay).
• Providing greater transparency in financial reporting, budgeting, and spending controls.
• Separating regulatory vs. service delivery roles.
• Separating commercial vs. non-commercial services provided by government.

In looking back over the past 25 years, governmental systems improved overall but there were some limitations to the New Zealand approach:

• Managers had more discretion to manage, but their focus on their performance contracts led them to lose sight of the bigger picture
• There was better staff retention, but greater internal competition for talent
• There was improved accountability, better fiscal and debt performance
• There were more silos and weaker collective action, leading to weak customer focus
• There were poor incentives to innovate and capture economies of scale; agencies were slower to adopt new technologies.

Based on what was learned, Whitehead sees the following next steps in New Zealand’s “performance journey:”

• Create a performance improvement framework with joint reviews (like the UK model) and focus on key governmental priorities.
• Institute biennial citizen surveys on governmental performance.
• Create an investment statement of the government – not just financial statements but performance statements, including how agencies plan to manage risk across their portfolios. Create a “results to citizens” report.
• Create a better public services initiative – improve government interactions with citizens and businesses (e.g.., a single business-facing agency, single natural resources agency)
• Encourage more cross-agency sharing of support services via the central agencies
• Move to 4-year budget plans with incentives to collaborate across agencies; consolidate appropriations.
• Increase use of public-private partnerships, joint ventures, “policy hubs.”

Other Blogs in Series on Government Reform:

Part 1: An International Snapshot of Progress on Performance Management

Part 3: Inspirations from Developing Countries

Part 4: Insights for the Future of the Movement

Graphic Credit: Creative Commons