International Handbook of Public Management Reform

INTERNATIONAL HANDBOOK OF PUBLIC MANAGEMENT REFORM

International Handbook of Public Management Reform

Edited by

Shaun F. Goldfinch Nottingham University Business School, UK and

Joe L. Wallis School of Business and Management, American University of Sharjah, Sharjah, United Arab Emirates

Edward Elgar Cheltenham, UK • Northampton, MA, USA

© Shaun F. Goldfinch and Joe L. Wallis 2009 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA

A catalogue record for this book is available from the British Library Library of Congress Control Number: 2009930431

ISBN 978 1 84720 404 2

02

Printed and bound by MPG Books Group, UK

Contents List of figures List of tables and boxes List of contributors Preface

vii viii ix xv

1

Introduction Shaun F. Goldfinch

1

2

The influence of economic theories of government failure on public management reform Brian Dollery

18

3

HRM in the public sector: is it enough? Marie-France Waxin and Robert Bateman

41

4

New public management and the politics of accountability Robert Gregory

66

5

Public value-seeking leadership: its nature, rationale and development in the context of public management reform Joe L. Wallis and Linda McLoughlin

88

6

‘E-government’: is it the next big public sector trend? Robin Gauld

7

Dangerous enthusiasms and information systems development in the public sector Shaun F. Goldfinch

121

Public management reform in the United Kingdom: great leaps, small steps and policies as their own cause Kai Wegrich

137

8

9

105

New Zealand: reforming a new public management exemplar? Shaun F. Goldfinch

155

10

New public management in Australia Marian Simms

173

11

The challenge of renewing governance in Canada Stephen Tomblin

187

12

The United States: the political context of administrative reform Bert A. Rockman and Thierno Thiam

200

13

French administrative reform: change and resistance Glyn Jones and Alistair Cole

220

v

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Contents

14

Senior Civil Servants and bureaucratic change in Belgium Guido Dierickx

15

Dynamic conservatism: the rise and evolution of public management reforms in the Netherlands Mirko Noordegraaf

235

262

16

Danish public management reform before and after NPM Jørgen Christensen

279

17

Public management reform in Norway: reluctance and tensions Tom Christensen and Per Lægreid

300

18

Public management reform in Hong Kong Anthony B.L. Cheung

317

19

Public sector management reform in Japan Kiyoshi Yamamoto

336

20

Conclusion: is there a common thread? Joe L. Wallis

351

Index

371

Figures 3.1

Delegation and individualization approaches to HR practices in central governments of OECD countries 4.1 Political and managerial accountability 7.1 Dangerous enthusiasms: the four enthusiasms of IS failure 7.2 Culture clashes in public sector IS developments 9.1 Examples of outputs, results and outcomes from the Treasury 14.1a Belgian policy-making networks, without staffers 14.1b Belgian policy-making networks, with staffers 14.2 Left–right index 14.3 Ideology and technocratism 14.4 Ideology and political aversion 18.1 Framework of public management in Hong Kong 18.2 Financial management reforms in Hong Kong, 1980s–90s 18.3 An illustration of programme plan 19.1 Development of public management reforms in Japan 19.2 Development of public management reforms

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43 69 127 128 167 241 241 245 245 246 318 323 328 337 348

Tables and boxes Tables 3.1 Characteristics of traditional versus new pay systems 7.1 Critical failure factors in IS failures 8.1 Major reform initiatives, 1979 to 2006 10.1 Stages of NPM: Australia 13.1 Summary of French administrative reforms from the 1980s to the present day 15.1 Waves of reform 16.1 Public employment and the structure of the Danish public sector, 1980–2006 16.2 Structural reforms in the Danish public sector 16.3 Micro-reforms in the Danish public sector 16.4 The political basis for management reforms 18.1 Significant public sector reforms in Hong Kong since the 1980s 19.1 Grade of general staff by entry examination (as of 15 January 2006) 19.2 Performance before and after privatization 19.3 Finance and scale of IAIs 19.4 Practice of market testing Boxes 3.1 Minority recruitment efforts in public sector organizations in Canada 4.1 The Liam Ashley case 5.1 The Leadership Effectiveness AnalysisTM Model

viii

56 124 142 178 226 264 280 285 291 296 321 344 346 346 347

47 76 99

Contributors Robert Bateman is an assistant professor teaching public administration, international business and human resource management at the American University of Sharjah. He has served in the US foreign service, on two city councils, and as mayor of a newly formed community. His consulting experience includes work with governments and businesses in more than 60 nations. Anthony B.L. Cheung is President of the Hong Kong Institute of Education, with the concurrent title of Chair Professor of Public Administration. He writes extensively on privatization, public sector reforms, Hong Kong governance and Asian administrative reforms. His recent books are Governance and Public Sector Reform in Asia: Paradigm Shift or Business As Usual? (RoutledgeCurzon, 2003) and Public Service Reform in East Asia (Chinese University Press, 2005). Professor Cheung is active in public service. He is currently member of the Executive Council of Hong Kong and Chairman of the Hong Kong Consumer Council. Jørgen Christensen is Professor in Public Administration at the Department of Political Science, University of Aarhus. His research covers Danish public administration, comparative administration, regulatory reform and administration, the impact of the European Union (EU) on national public policy and administration. Tom Christensen is Professor in Public Administration and Organization Theory at Department of Political Science, University of Oslo, and Adjunct Professor at the Rokkan Centre, University of Bergen. Has worked over several decades with studies of central public administration and comparative public sector reform. Published extensively in a number of the most important international journals in the field. Of his latest books, where he is editor and author, could be mentioned: Autonomy and Regulation. Coping with Agencies in the Modern State (Elgar, 2006), Transcending New Public Management (Ashgate, 2007), Organization Theory and the Public Sector (Routledge, 2007). Alistair Cole is Professor in European Politics at Cardiff University. He is Member of the French CNRS Political Science Committee (section 40), the executive committee of the GRALE (Groupement de recherche sur les administrations locales en Europe), Paris, and the (ESRC) Economic and Social Research Council’s Politics, Economics and Geography College. He has published a number of books including François Mitterrand: A Study in Political Leadership (Routledge, 1997), and Governing and Governance in France (Cambridge University Press, 2008) as well as many articles in journals such as Comparative Political Studies, Regional Studies, International Journal of Urban and Regional Research and French Politics. Guido Dierickx is Professor of Political Science at the University of Antwerp and has held a range of visiting positions. He has promoted, or participated, in research projects about ‘The role of European Parliaments in Managing Social Conflict’, ‘The Political Culture of Senior Civil Servants’, ‘The Ideological Factor in Macro-Economic Policy ix

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Making’, ‘European and National Civil Servants. A study of their formal and informal networks of communication’, ‘Cultural Deprivation’, ‘Interest Groups and European Policy-making’, ‘The Implementation of EU Directives in Belgium’ and ‘Administrative Reform in Belgium’ and has published widely on the subjects of political culture, ideology, participation and decision-making. Brian Dollery is Professor of Economics and Director of the Centre for Local Government at the University of New England in Armidale, New South Wales, Australia. Professor Dollery has taught in universities in Australia, Japan, South Africa and the USA. Brian has published extensively in the area of local government reform inter alia The Political Economics of Local Government (Edward Elgar, 2001), Australian Local Government Economics (UNSW Press, 2006), Reform and Leadership in the Public Sector (Edward Elgar, 2007), Local Government Reform: A Comparative Analysis of Advanced Anglo-American Countries (Edward Elgar, 2008), Reshaping Australian Local Government: Finance, Governance and Reform (Peking University Press, 2008) (translated into Mandarin) and The Theory and Practice of Local Government Reform (Edward Elgar, 2008). Robin Gauld is Associate Professor of Health Policy, Department of Preventive and Social Medicine, University of Otago, Dunedin, New Zealand. He has a master’s degree in politics and public administration from Victoria University of Wellington and a PhD from the University of Hong Kong. His research interests are in comparative health policy, primary care reform and healthcare quality. In 2006–07, with Shaun Goldfinch, he conducted a series of studies into e-government in New Zealand. His articles have appeared in journals such as the British Medical Journal, Journal of Health Politics, Policy and Law, and Health Policy. His books include Revolving Doors: New Zealand’s Health Reforms (2001), The Hong Kong Health Sector: Development and Change (2002, with Derek Gould), Comparative Health Policy in the Asia Pacific (2005, ed.), Dangerous Enthusiasms: E-Government, Computer Failure and Information Systems Development (2006, with Shaun Goldfinch) and the forthcoming The New Health Policy (2009, Open University Press). Shaun F. Goldfinch is Associate Professor at Nottingham University Business School and was formerly a senior lecturer in the Department of Politics at the University of Otago, New Zealand and an associate professor in public administration at the American University of Sharjah. He is author of Remaking New Zealand and Australian Economic Policy (Georgetown University Press, 2000), and co-author of Dangerous Enthusiasms: E-Government, Computer Failure and Information Systems Development (Otago University Press, 2006) and Remaking the Tasman World (Canterbury University Press, 2008). Recent articles have appeared in Public Administration Review, Governance, Journal of Policy History, Journal of Sociology and Australian Journal of Politics and History. Robert Gregory is Professor of Political Science in the School of Government, Victoria University of Wellington, New Zealand. He has published widely on public administration and state sector reform and public policy-making theory. Glyn Jones is Head of Student Affairs Office in the Student Services and Administration department at Kingston University. His PhD completed in 2004 was on the effects of the

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1989–97 administrative reforms on the French Ministries and field services. In addition to publications in this field, he has also written articles on student behaviour and complaints in higher education. Per Lægreid is Professor at the Department of Administration and Organization Theory, University of Bergen, and adjunct professor at the Rokkan Centre, University of Bergen. He has published numerous articles in international journals in the fields of public sector reform, institutional change, comparative public administration and central government. His latest books include Europeanization and Transnational States (Routledge 2004), Autonomy and Regulation. Coping with Agencies in the Modern State (Elgar 2006), Transcending New Public Management (Ashgate, 2007), Organization Theory and the Public Sector (Routledge, 2007). Linda McLoughlin is the founder of LeadershipWorks – an Irish-based public management consultancy providing leadership and organization development in Ireland, the EU, South America and Africa. Linda conducts research into leadership styles among senior Irish public servants and has analysed the links between these management behaviours and the capacity to lead change and reform. She is co-author of the recently published Reform and Leadership in the Public Sector (Edward Elgar, 2007) and has written a number of articles on leadership for public administration journals. Mirko Noordegraaf is a full professor of public management, at the University of Utrecht (Utrecht School of Governance). He focuses on public management reform, public managers, managerial work, and professionalism. Together with R.A.W. Rhodes and Paul ’t Hart, he published Observing Government Elites. Up Close and Personal (Palgrave, 2007). He also published in journals such as Administration & Society, Public Administration, Public Management Review and Journal of Management Studies. Bert A. Rockman is currently Professor and Head of the Department of Political Science at Purdue University. He was previously Director of the School of Public Policy and Management (now the John Glenn School of Public Affairs) at Ohio State University. He has also been University Professor at the University of Pittsburgh and a Senior Fellow in the Governmental Studies Program at the Brookings Institution in Washington. He has been a Fellow at the Swedish Collegium for Advanced Study in the Social Sciences (SCASS), a Visiting Professor at National Taipei University, Hebrew University, the University of Sao Paulo, and a Visiting Fellow at Nuffield College, Oxford. Rockman’s areas of specialization are political leadership, especially the US Presidency), executive politics and bureaucracy, and political institutions. He has received the Neustadt Prize for best book on the US Presidency and has been the recipient of the Herbert A. Simon Award for ‘significant contributions to the scientific study of bureaucracy’. He also served as an editor of the international journal Governance for eight years. His most recent books are Presidential Leadership: The Vortex of Power (Oxford) co-edited with Richard W. Waterman, and The George W. Bush Legacy (CQ Press) co-edited with Colin Campbell and Andrew Rudalevige, each published in 2008. Marian Simms is Professor in Political Studies, and served as Chair of the Politics Department, University of Otago, New Zealand from 2002 to 2007. She also recently held a visiting fellowship in the Politics Program, Australian National University Canberra,

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where this chapter was written. She has recently published an article and a book on Australian and New Zealand politics: ‘Australia and New Zealand: separate paths but path dependent’, The Round Table, vol. 95, issue 387, 2006, pp. 679–92 and From the Hustings to Harbour Views; Electoral Administration in New South Wales, 1856–2006 University of NSW Press, Sydney 2006 (Distributed by University of Washington Press, USA). Her edited book Kevin07: The 2007 Australian Election was published in 2008. Thierno Thiam is a PhD candidate at Purdue University specializing in International Politics with minors in Comparative Politics and Political Institutions and Behavior. He is currently working on a dissertation in which he attempts to measure the explanatory power of three major paradigms of International Politics (Liberalism, Constructivism and Realism) to explain the rise of African regional organizations. Stephen Tomblin is a full professor in the Department of Political Science and Medicine (Community Health) at Memorial University of Newfoundland. He has published widely on the issue of regional integration. In 1995, he authored Ottawa and the Outer Provinces: The Challenges of Regional Integration in Canada, published by Lorimer Press. This year, he co-edited and contributed to Regionalism in a Global Society: Persistence and Change in Atlantic Canada and New England, published by Broadview Press. He has been a frequent media contributor and produced discussion papers for the Romanow Commission and the Newfoundland and Labrador Royal Commission on Renewing and Strengthening Our Place in Canada. He has benefited from participating in various collaborative/interdisciplinary research projects, each of which has a restructuring/ regionalization component. Joe L. Wallis is Professor of Economics and Public Administration at the School of Business and Management and Head of the Department of Management, Marketing and Public Administration at the American University of Sharjah. His research interests mainly focus on the political economy of reform, leadership and public sector economics. He has co-authored four books, the most recent being Reform and Leadership in the Public Sector (with Brian Dollery and Linda McLoughlin, Edward Elgar, 2007), and has written over 60 articles including some that have appeared in Public Administration, Governance, World Development and the Australian Journal of Political Science. Marie-France Waxin is currently Associate Professor of Human Resource Management (HRM) at the School of Business and Management, American University of Sharjah, in the United Arab Emirates (UAE). She has earned a European PhD in International HRM at Aix-Marseille University, France in 2000. She researches and publishes in the areas of international, comparative, and strategic HRM. Currently, she focuses on the congruence between individual, organizational and cultural values. She teaches HRM, Strategic HRM and Organizational Behaviour (OB) in Undergraduate and MBA programmes. She worked and lived in France, Denmark, Germany, India, Canada, UAE. Kai Wegrich is Professor for Public Management and teaches public management at the Hertie School of Governance in Berlin, Germany. He studied Political Science and Economics at Hamburg University and Free University Berlin and worked as Research Fellow at Humboldt University Berlin and Potsdam University. He completed his PhD in political science and public administration at the University of Potsdam in 2003. In

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2005, he joined RAND Corporation as Senior Researcher, working in their Berlin and Cambridge offices. He also taught public policy and regulation at the Department of Government, London School of Economics during the academic year 2006/07. Kiyoshi Yamamoto, PhD, is Professor of Financial Management at the Center for National University Finance and Management and the University of Tokyo. He has published widely on issues of financial management and public administration particularly as they relate to Japan.

Preface What public sector reform means, why it occurs, whose interests it serves, whether it makes the world a better place, even whether some supposed reforms are much more than shadow play – these are things about which we continue to disagree. The word ‘reform’ often has positive connotations of course. When I claim my proposed policy change is a reform, I am claiming an improvement in the state of affairs – and surely only the insane would justify their proposed reforms by saying they are making their world a worse one. A claim to reform also implies discontinuity, rather than steady natural evolution or piecemeal tinkering on the edges. Something substantial happens in a reform. We are often claiming big changes, looking at fundamental re-orderings, significant reworkings and bold steps. Claiming to reform also suggests there is something wrong to begin with. There is some failure, some problem, some crisis, that needs to be addressed and needs to be fixed – and my proposed reform is often the best solution. On the other hand, for a social scientist, reform might not mean any of these things. It might refer to a process of change, but whether change is for the good, the bad or neither, is a question for evidence and analysis to answer. Studies of reform can look to how this process of change comes about, or at reform movement involvement. ‘Reform’ might simply be a useful shorthand for political, management or social trends, or smaller or bigger changes. Scholarship can show the problems that the reform is supposed to fix can often be contested, socially constructed, post hoc justifications, or entirely invented. The link between proposed reforms and these problems, if any is given at all, can sometimes be difficult to find. In sum, reform is a highly politicized, highly ideological, and often highly contested process. It is seldom the tidy, technical problem-solving activity often portrayed in undergraduate textbooks and by the reformers themselves. We use ‘reform’ to capture a variety of changes to public sector management over the past few decades or so. We accept that reform usually refers to deliberate and sustained attempts at non-incremental change in the process of government, and indeed some of these reforms have led to substantial re-orderings of state structures. Some may have been small changes at the edges. Some may have taken on the rhetoric and staged political battles over reform, but resulted in little significant change – more ‘rituals of reform’ than substantive transformation. Many reforms programmes fail, either in achieving their restructuring aims or, when these are achieved, new structures do not deliver the benefits promised. Of course, many reforms may be carried out for uncertain and contested aims, or with no clear aim in mind or problem to be solved. As such success or otherwise can be difficult to determine. To greater understand the difficult issue of reform, this collection provides a broad overview of public management reform across the world and across the last three decades. It has come together at a time when some writers are describing the New Public Management (NPM) movement as being ‘middle-aged’ while others are noting the emergence of a ‘post-NPM’ movement. Questions are not just being raised about whether NPM doctrines will continue to provide impetus for future reform but about the extent to which it actually provided a sharp break from the past. Quite clearly these questions xv

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are best addressed through a careful study of the impact of NPM on particular countries and of those themes that continue to remain problematic from an NPM perspective. Drawing on leading writers from across Europe, Asia, North America and Australasia, we first embark on a series of theme chapters examining the role of economic ideas, human resources, leadership, accountability and e-government issues. We then move to a series of country studies, first with the Anglo-American democracies, then Western Europe, Scandinavia and Asia. Our studies show the sheer diversity of reform processes – and how perhaps the argument for a NPM consensus is somewhat exaggerated. As co-editors, Shaun Goldfinch and Joe Wallis would like to take this opportunity to make a number of personal acknowledgments. Shaun Goldfinch would like to thank his co-author Joe Wallis for a fruitful collaboration and warm friendship. He would also like to thank the American University of Sharjah for providing a supportive environment for research and for employing him for two fascinating and enjoyable years. He would like to dedicate this book to his committed colleagues and friends in the School of Business and Management and across the American University of Sharjah, particularly Jessica, who made his stay such an enjoyable one. Joe Wallis would like to thank Shaun Goldfinch for his friendship and a stimulating and enjoyable research collaboration during his two-year visit at the American University of Sharjah. He would also like to thank the School of Business and Management at the American University of Sharjah, and particularly Dean Malcolm Richards, for providing a supportive research environment. He would like to dedicate this book to his loved ones: his daughters, Caitlin and Jessica; his mother and sister, Molly and Vivien; and to Linda, his beloved soulmate. Both Shaun and Joe would like to thank Edward Elgar for their support of this project and for the expert editorial assistance they have provided during its genesis.

1

Introduction Shaun F. Goldfinch

Reform and change are never inevitable. Guy Peters (1996: vii) claims ‘change in the public sector is the rule rather than the exception’, but it is not smooth, continuous and incremental. It is disjointed, varies in intensity, and sharp episodes of reform are often followed by periods of relative tranquillity. Change might proceed through a series of ‘punctuated equilibriums’ where long eras of stability alternate with short-lived periods of uncertainty and conflict (Baumgartner and Jones 1993). Indeed, a wealth of studies suggest a considerable degree of stability of policies, public organizations and governance structures. There are numerous terms that describe the durability of institutions arrangements: inheritance, lock-in, stickiness, deadlock, path-dependency, reform impasse and reform paradox (cf. Peters et al. 1999). Policies and structures are often protected by dominant coalitions, embedded in laws and constitutions, and sustained by habit and inertia. Reforms may be ‘smuggled in’ through a series of cumulative and incremental adjustments, but this can be a time-consuming, reversible and possibly drifting process. Yet, reforms and significant changes do occur. Within the literature on public sector management, there are often seen to be two major periods of reform. The first is a revolution in public administration – sometimes referred to as ‘progressive-era’ public administration (PPA) (Hood 1994) or the Weberian, bureaucratic or traditional model. Originating in Great Britain and particularly associated with the Northcote and Trevelyan Report of 1854 – but with precursors from Prussia and the Indian Civil Service – it spread in the later nineteenth and early twentieth centuries to other industrialized and colonialized nations to become the orthodoxy across the world; or at least that is what is often portrayed. The second major reform trend is generally termed ‘new public management’ (NPM), a term, although it is not without faults, often used in the chapters in this book. In some accounts, albeit contested ones, NPM arose in the 1980s and 1990s in the face of the failure of the previous model. It is to NPM that we now turn. New public management Drawing to some extent on theoretical economics, market models and (sometimes putative) lessons from the private sector, NPM claimed to correct the inefficiencies and stultifying effects of the traditional model. It claimed to emancipate public sector managers from rigid adherence to civil service rules by giving them ‘freedom to manage’ to better utilize their skills and innovative flair in the face of a changing environment. It also attempted to change the focus of the civil service away from its supposed emphasis on procedural rectitude, towards the achievement of outcomes, outputs or ‘getting results’. And it has been repeatedly portrayed as the new orthodoxy, influencing public sector reform across the world. Views on what constitutes NPM differ, and there is difficulty in finding common patterns across what has been shown to be sometimes divergent patterns of reform. Dunleavy et al. (2006: 470) see NPM as having ‘three chief integrating themes’ focused on: 1

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International handbook of public management reform ●

●

●

Disaggregation – splitting up large public sector hierarchies . . . achieving wider, flatter hierarchies internally; and respecifying information and managerial systems to facilitate this different pattern of control. In the public sector this theme implied a strong flexibilization of previous government-wide practices in personnel, information technology (IT), procurement, and other functions, plus the construction of management information systems needed to sustain different practices. Competition – introducing purchaser/provider separation into public structures so as to allow multiple different forms of provision to be developed and to create (more) competition among potential providers. Increasing internal use was made of competition processes to allocate resources (in place of hierarchical decision making). The ‘core’ areas of state administration and public provision were shrunk, and suppliers were diversified. Incentivization – shifting away from involving managers and staffs and rewarding performance in terms of a diffuse public service or professional ethos, and moving instead towards a greater emphasis on pecuniary-based, specific performance incentives. Its impact has been particularly marked for professional groups.

Others have noted the importance of ‘managerialism’ – ‘let managers manage’ being a catchphrase – where top management is given greater autonomy and where management is seen as a generic, ‘rational’ and ‘scientific’ discipline with similar demands and practices across both the public and private sectors (Boston et al. 1996; Hood 1994). The New Zealand version of NPM also focused on the widespread use of contracts – particularly written ones – for transactions between state agencies, between state agencies and private sector providers, within agencies themselves, and in employment of state servants. Privatization and contracting-out of government services to private providers also became a core component. For Pollitt (2002) reformed public organizations possessed common characteristics across national borders, including a customer focus, and a focus on performance and quality improvement. They adopted commercial-type accounting systems, and internal market or quasi-market mechanisms to imitate market competition. Decentralized structures with putatively flexible and innovative staff replaced highly centralized bureaucracies. Politicians took a back seat to the day-to-day operations, preferring to set the broad parameters of policy or ‘strategy’ and leave the messy day-to-day business to professional managers – to ‘steer’ not ‘row’ – in a later twentieth-century revival of the ‘policy-administration’ split (Boston et al. 1996; Hood 1994; Kettl 2000). Pollitt (2002: 26) argues that ‘everyone is doing more or less the same thing, because they have little choice’ since ‘powerful forces in the environment are obliging governments to change’. If all the world’s public administration systems are or have converged around a set of NPM prescriptions as often claimed (and which we doubt), what was the so-called traditional model that NPM putatively replaced? The traditional model Accounts differ as to what the ‘traditional’ model actually was; whether the model was anything beyond an ideal type; if one can distinguish between a ‘traditional model’ and a ‘bureaucratic paradigm’; or indeed if one can even talk of a coherent paradigm. We can start with the so-called ‘bureaucratic model’. For the great sociologist Max Weber and

Introduction

3

his followers, a trend in modern society was towards ‘rationalization,’ measurement and control (Gerth and Mills 1974). And bureaucracy was seen as an efficient organization for the rational pursuit of goals. There were basic features in an ideal-type bureaucracy seen as common to large organizations in the modern ‘legal/rational’ era – that is, one characterized by the rule of law. These included defined hierarchies within organizations and between officials within bureaus, and between bureaus, with clearly delimited areas of jurisdiction, command and responsibility for both the bureau and for officials within bureaus. These jurisdictions were often codified in law. Administration was often based on written documents, with precedents and developing rules to refer to in decision-making. Knowledge of these rules represents a technical language which officials possessed (Gerth and Mills 1974). Further, the existence of a (learnable) body of rules allows the office to continue apart from the person, with new appointments easily slotting into the machine and acquiring these rules. These factors gave bureaucratic structures a degree of permanence and stability. The client or citizen was to be treated as equal under the law, and reference to rules and precedent was argued to decrease the likelihood of arbitrary and unjust decisions by officials, and increased the transparency, stability and predictability of decision-making itself. Officials were specialized and recruitment (not election) was on technical ability and expertise, often by written examination. This was in direct contrast to previous bureaucracies where recruitment was often based on patronage and/or nepotism and where merit and/or competency for the job at hand was sometimes a secondary concern, or not a concern at all. In return for faithful service, the officer faced a long-term ‘career’ employment, with security of tenure, and advancement based on seniority and merit, a fixed salary, a pension and a considerable degree of status. Private and official income and property were separated; again in contrast to other models where the personal income of the monarch or the official may have been drawn from and dependent on official income, and as such open to manipulation and corruption. In addition, security of tenure and the removal of the fear of arbitrary dismissals, secure pay and pensions, allowed officers to carry out their roles without fear or favour it was claimed, and relatively free from undue pressure. The office existed as a form of vocation, with a distinctive ethos and status, and strong notions of duty. Officials were a high-status group, somewhat apart, and with strong value systems and esprit de corps. Impersonal relationships existed between members or organizations and clients/ citizens. Officials were to submit ego and personal interests to rules and goals of the organization. Service and loyalty were not to a person, but to an abstract idea or organization, and office itself was a creation of rules and laws with authority existing in the office, not the person. This gave some degree of independence to officials, as their role did not depend on personal loyalties. Impersonal relationships with citizens, it was argued, and treatment of them as equal under the law, also reduced the influence of personality, race, religion, tribe and so on in decision-making (cf. Du Gay 2000; Gerth and Mills 1974; Pollitt and Bouckaert 2004). The traditional model was also seen to be founded on the notion of an ‘apolitical’ public service characterized by a dichotomy between policy on one hand (which was the concern of elected politicians) and administration on the other (a technical task left to the professional official, which put the policy into operation). This is commonly known

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as the policy–administration split. Former US President Woodrow Wilson was often cited as the originator of this concept. ‘Neutral competence’ on the part of public officials was expected – that is, they would put their expertise to serve whatever political masters were in control. In sum, arguments for bureaucracy often represented it as the best form of organization in providing consistency, continuity, predictability, stability, efficacious and easily replicable performance of repetitive activities, equity and professionalism (Shafritz and Ott 1996). Bureaucracy was seen to minimize the potential influence of politics and personality on organizational decisions, particularly the case of political patronage in appointment and treatment of citizens. It is seen to foster accountability to higher authorities through a clear chain of command to public representatives elected by citizens. Clear responsibilities and rules, long-term and secure employments and pensions, clearly established remuneration, the vocational values and ethos, and the elite status given to officials and degree of independence from societal and internal pressure, were seen to be significant checks on corruption and other forms of undue influence. Efficiency was not simply seen in technical efficiency terms, but also included precision, stability, reliability, predictability and quality of performance – and it was often contrasted with the patronage and corruptionridden state agencies of before, against which it seemed a vast improvement. Bureaucracy is still with us of course and remains a widely used method of organization in some Fordist manufacturing and many aspects of the state – particularly in police and military services, but also in much of the day-to-day business of government. Indeed, much of the working life of public officials remains steadfastly bureaucratic (Parker and Bradley 2004). E-government initiatives sometime exhibit rather Weberian traits, for good or ill (see Gauld chapter in this volume). The de-bureaucratization of the state sector putatively seen under NPM might be an attractive mirage, with a move away from input and process controls to a ‘new red tape’ of accountability mechanisms, performance measures, invasive monitoring of personal behaviour, output and outcome measures and controls, and so on. That NPM was focused on the de-bureaucratization of government at all is disputed by Gregory (2007: 6) who claims It can be better understood not so much as an attempt to abolish the bureaucratic form of governmental organization so much as a means of refining it, of enhancing the precision of its processes and the calculability of its results. And it has stressed operational, managerial, rather than democratic improvements.

Of course, Weberian bureaucracy’s virtues are often most apparent when much of its now largely taken for granted legal/rational derived assumptions are violated – such things as equality under the law, roles and responsibility clearly established, merit-based appointment and the reduction of patronage, separation of public and private income, and controls on corruption (cf. Du Gay 2000; Olsen 2006). Unfortunately this still describes much of the world. Critiques of the bureaucratic model and the NPM challenge Despite its seeming success through much of the late nineteenth century and twentieth century, there is a vast literature on the failings of ‘bureaucratic’ model. In their influential NPM tract, Reinventing Government, Osborne and Gaebler (1992: 11–12) portray bureaucracy as a failed model:

Introduction

5

The kind of governments that developed during the industrial era, with their sluggish centralized bureaucracies, their preoccupation with rules and regulations, and their hierarchical structures, no longer work well . . . They became bloated, wasteful, and ineffective. And when the world began to change, they failed to change with it. Hierarchical, centralized bureaucracies designed in the 1930s or 1940s simply do not function well in the rapidly changing, informationrich, knowledge-intensive society and economy of the 1990s.

Indeed the bureaucratic model saw sustained attack throughout the 1970s, 1980s and 1990s. The crisis language used to usher in the era of economic liberalization of the 1980s and 1990s was also used to justify the creation of lean, mean bureaucracies along NPM grounds (cf. Butcher 2003: 2). Structural explanations for economic and other policy change have limited explanatory power as noted elsewhere (Goldfinch 2000; Goldfinch and ’t Hart 2003). However, the explicit link between NPM and broader economic reform gave the reform movement a considerable rhetorical advantage, even if, as Peters (1996: 13) notes, the ‘economic explanation for the advance of governmental and administrative reforms is . . . facile [as] in the recent past such problems might have been addressed by expanding the role of the public sector rather than reducing it.’ Of course, there was more traction to NPM debates than claims that changes to the world economy have forced governments to adopt market-like models. Weberian bureaucracy had, it was argued, sought to foster predictability, probity and universality. But the virtues of permanence and stability traditionally imputed to public organizations were questioned in a period of rapid economic, social and technological change (Beetham 1996). Indeed, permanence and stability might have as corollaries resistance to change and lack of innovation and, it was claimed, ‘permanence and stability tend to ossify policy lines and to make the coordination of policies more difficult’ to the detriment of organizational outcomes (Peters 1996, 9). Rules can become fossilized and sanctified, taking on lives of their own and clogging up the wheels of government – in contrast to market mechanisms that seemed to promise greater flexibility and responsiveness. Rules added to constrain the failing of other rules just added further layers of ossification. Indeed, the pressures of responding to changing circumstances, according to some, saw the formation of alternative, frequently temporary, organizational arrangements, including task forces, interdepartmental and intergovernmental committees, public–private partnerships and ‘virtual organizations’, and the like. This called into question the centrality of permanent bureaucracies to government operations, and, it was argued, pushed governments to embrace decentralization and agencification. These more flexible and more tightly focused agencies, it was argued, were better able to respond to societal demands. Of course, the experience since the 1990s where disaggregation, decentralization and the lack of permanent employment contributed to difficulties in policy co-ordination and maintaining state capacity, and possibly lapses in ethical probity and professional expertise, suggest the dangers of permanence along these lines may have been overstated, while the dangers of decentralization and informal organization may well have been underplayed (Goldfinch, Chapter 7 in this volume; Gregory 2007). Permanent and merit-based appointment and a professional civil service may reduce the problems of personal patronage and nepotistic appointments of the past. Permanence of employment can provide a shield against undue influence over public servants. A lifetime of service within an organization or public service can develop important experience

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International handbook of public management reform

and a professional commitment to the service. Advancement through grades, and payment on such, can build transparency and a perception of equity. On the other hand, the desire for more ‘activist’, ‘entrepreneurial’ and ‘committed’ public services can be thwarted, it was argued, and the capacity of public organizations to employ specialized skills reduced, if uniform personnel policies, pay scales and ‘lifetime’ tenure remain central to public employment despite differences in performance, and if the capacity to recruit outside the organization, particularly from the private sector, is reduced. Advancement based on seniority can simply reward time-servers rather than excellence and performance, while protection of tenure to shield from arbitrary influence can also mean protection from disciplinary and other action for lack of performance, and lack of responsiveness to political and/or social demands. Seniority, of course, is not the same as merit and it is possible some bureaucratic models have confused the two – being old does not necessarily make you good and experience might just mean making the same mistakes for longer – as many a younger official on the make has probably noted. Similarly, the concept of merit itself as defined by passing an entry examination, or even examinations to pass through grades, or doing well in particular universities and/or tests at entry level into a position, is a highly problematic one. It should not necessarily be confused with performance, and there is a considerable body of research that suggests the two may not be closely linked (see Waxin chapter in this volume). Similarly, ossifying one’s future life chances by an examination taken early in life, or basing career prospects on the appropriate university or polytechnic attended, seems to discount the possibility that one might get better with age, and that one might grow out of, or learn from, youthful failure at examinations or university. Those entering the top universities and doing well in examinations are likely to have already had a fortunate start in life, and their achievement in examinations may just further cement this. And examinations and tests are only as good as those designing and marking them, of course. Keynes’s much quoted quip that his poor performance in the Civil Service Examination in Economics was because ‘I evidently knew more about Economics than my examiners’, is a case in point. In any event, the claims of merit-based appointment or advancement could act to mystify the influence of politics and personality in these processes, which still persisted despite the best efforts of technocratically inclined reformers. On the other hand, the recruitment outside the public service, and the focus on more risk-taking, ‘entrepreneurial’ and ‘business-like’ public servants, can have downsides of its own. Some of the ‘activist’, risk-taking and entrepreneurial activity – even cost-cutting and attempts at improving technical efficiency – of public servants have contributed to some decisions of questionable wisdom, serious policy failures, behaviour seen as inappropriate to a public service and some ethical lapses (Dunleavy et al. 2006; Gauld and Goldfinch 2006). The lack of permanent employment and a focus on short-term contracts may have contributed to a lack of capacity and expertise in public services. Recruitment outside the public service for some senior executive roles may have led to the appointment of some not entirely suited to the public service and its culture. And, somewhat ironically, the benefits of stability and permanence in the face of rapid change should not be overlooked. Rapid technological change can be associated with an assumption that new is

Introduction

7

always better and that change is something to be embraced almost for its own sake – seen somewhat in the ‘idolization’ of information technology and the adoption of managerial fads in the public sector. Some old-fashioned suspicion of change and focus on precedent may indeed provide an antidote to such ‘dangerous enthusiasms’ and their often highly questionable empirical basis, and, particularly in the case of information and communications technology (ICT), their propensity to fail (Goldfinch 2007). The traditional model of public administration was often seen to place great emphasis on securing horizontal and vertical equality of outcomes in the sense that people with the same attributes should be treated equally, and those with different attributes treated differently. This, it was argued, had a downside, and negated the possibility of discretion on the part of public officials that could enhance operating efficiency, save scarce resources, and tailor the services of government to the diverse needs of clients. Of course, discretion creates problems of its own and in many countries is simply patronage, influencepeddling, nepotism and corruption. Like much of the NPM agenda, attention to and support for greater discretion for public officials has waxed and waned. Support for discretion can be replaced for greater bureaucratization in the face of policy failure – and vice versa. As Brodkin (2006: 12) noted in her study of US social policy: Bureaucratic discretion is both the hallmark and the horror of social welfare provision. It is necessary in providing social policies that require responsiveness to complex, individual circumstances and considered judgments. But discretion also can horrify because it concedes control to street-level agents whose variations in practice can do more harm than good . . . the contradiction between promise and practice has produced episodes of management reform, propelled by swings in political sentiment.

The seemingly greater choice through market transactions provided a useful counterexample to rule-based bureaucracies, and a means to move towards a more customerfocused and responsive public sector. The vision of a dynamic ‘post-Fordist’ market economy providing customized products to a diverse group of clients, seemed rather more compelling than grey, inflexible Orwellian bureaucracies supposedly providing the same standardized product or service to all. Market-driven outcomes provided an apparently different measure or benchmark of achievement than following a standardized set of rules – with customer preferences clearly established by market exchange, and agency performance by the meeting of the ‘bottom line’. Markets and private firms too seemed less rule and process bound, exhibiting greater degrees of technical efficiency and flexibility – and critics looked to private sector firms as models for management practice, and for its focus on responding and the fulfilling the desires of customers and clients (Butcher 2003). Of course, once adopted, this client focus has in turn been criticized for reducing the interactions between state and citizen to increasingly one of a purchasing arrangement, in turn curtailing the role of democracy and the role of citizen vis-à-vis customer. A further attack on the bureaucratic model was seen in a desire to improve political control of central government bureaucracies since ‘in a number of western liberal democratic countries, the higher civil service has been seen as an obstacle to change by elected politicians’ (Butcher 2003: 4). Especially in Anglo-American countries, commentators dwelt on the purported inability of senior civil servants to offer unbiased policy advice. It was perceived by some that the public service was insulated from the broader society

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International handbook of public management reform

and the demands of democracy, and become a ‘law unto itself’ serving to thwart reformist initiatives by duly elected politicians. Accordingly, a need was seen to restore political control to the bureaucratic apparatus. However, that some reforms were driven by groups within the public services itself – such as New Zealand – suggests that such claims can be overstated. Public servants and the policy communities of which they are a part – which may or may not include politicians – can seize on such rhetoric to advance their reform aims against other parts of the public sector bureaucracy, and possibly against other segments of the government. Butcher (2003: 3) has observed another force for reform was ‘growing awareness of the potential of information technology (IT) in helping to improve the efficiency and effectiveness of public service operations’. Hood (1991) designated IT as one of four ‘mega-trends’ in public management through the computerization of government departments, synthesizing with other factors including the ‘reinvention of government’ under the Clinton administration in the USA, and ‘joined up’ government in the UK. As chapters 6 and 7 in this collection stress however, the enthusiasm with which governments have adopted information and communications technology has not always led to the hoped-for benefits nor the promised transformations (Gauld and Goldfinch 2006; Goldfinch 2007). Nor is the link between NPM and ICT always that apparent, with some e-government initiatives possibly an attempt to mitigate some of the negative effects of NPM reforms – such as the focus on ‘joined-up’ government. Indeed, Dunleavy et al. (2006) claim that a new digital governance has effectively killed NPM. Other e-government initiatives might actually be a return to more standardized, bureaucratic forms. Underpinning reform efforts and the attack on the traditional model was a strong ideational component, particularly in the Anglo-American democracies, which to some extent reflected broader shifts in the economics profession. The revitalization of neoclassical economics, and related schools of public choice and new institutional economics, from the late 1960s on, and its spread to public bureaucracies in the late 1970s and early 1980s, has been documented elsewhere (cf. Boston et al. 1996; Goldfinch 2000; Goldfinch and Roper 1993; Wallis and Dollery 1999). The rapidly growing economics literature on ‘government failure’ became increasingly influential – a theme developed in more detail in Chapter 2. Public choice theorists questioned whether public officials were in fact motivated purely by considerations of the public interest or duty and replaced this assumption with alternative behavioural objectives, such as ‘budget maximization’, ‘slack maximization’ and ‘risk avoidance’ (Mueller 2003). Similarly, a literature in public economics sought to measure the performance of public agencies and private for-profit organizations right across the spectrum of economic activity and saw private firms as being superior in terms of technical efficiency and minimizing costs; although much of the empirical foundations of the literature were certainly open to challenge. Moreover, a literature on the growth of government, often involving vivid images of a ‘Leviathan’ government gorging itself on national income, struck an ideological chord in some policy communities. As such, the NPM reform agenda was somewhat cobbled together from various strands of a supporting structure of neoclassical economics, approaches from new institutional economics, and public choice, as well as drawing on putative private sector models. One can be faced, of course, with a somewhat ironic situation of public officials strongly advocating approaches that characterized public officials as opportunistic optimizers. In sum, some accounts suggest a consensus about a failed bureaucratic model. A

Introduction

9

new reform agenda partly assembled from these critiques: a mixture of economic imperatives and desires to cut costs and reduce the state sector; inherent failures in the bureaucratic model; the unresponsiveness of the public service to political and social demands and attempts to reassert political and social control; the revitalizations of market and neoclassical economics; and the attractiveness of a flexible and dynamic private sector and its management models; seemed to become a new orthodoxy, driving reform across the world and seeing the abandonment of the traditional model and the de-bureaucratization of state sectors. New public management agendas were diffused through the world through ‘policy transfer’ and ‘policy learning’ particularly as pushed by the International Monetary Fund (IMF), the World Bank and the Organisation for Economic Co-operation (OECD) (cf. Goldfinch 2006). Compelling as it is, there are a number of problems with this picture. First, many of the attacks on the bureaucratic model were not entirely new, and had been repeated through the twentieth century and before, and may well have been taken for granted. Second, the existence of a bureaucratic model, either as an orthodoxy in the minds of academics and practitioners, and as a worldwide system of public management, is questioned in some accounts. There were certainly a wide variety of public management systems in existence across the world. As such, it is possible that some critiques were of a system that did not actually exist. Third, that the world has seen a convergence around a set of NPM prescriptions is also called into question, with a resilience of existing institutions, and a diversity of public management systems across countries, including some that seem not entirely dissimilar to the putatively abandoned bureaucratic model. These issues are discussed in greater detail below. Was there anything new about NPM and did the bureaucratic model exist? Critiques of the bureaucratic model go back well before the 1980s and 1990s. Merton (1940) and others were writing in the mid-twentieth century and before of the failings of bureaucracy (cf. Lynn 2001). Merton (1940) noted the trained incapacity bred in public servants, where rules became an end in themselves and took on a rarefied and sanctified air; where impartiality and impersonal service became inflexibility, inhumanity and brusqueness; and where esprit de corps becomes arrogance and distance from a population that in the end is that which was supposed to be served. Members of bureaucratic structures can have the tendency to follow commands even if they are misguided, and responsibility and initiative can be discouraged (Merton 1957). The bureaucratic model was also criticized for, amongst other things, its focus on procedure rather than the achievement of results, the tension between bureaucratic and democratic control, while the policy administration split seen as an inherent part of the model still in introductory textbooks, was noted as something naive and unworkable (cf. Lynn 2001). All these criticisms would be reiterated by new public management and other critics of the bureaucratic model, and indeed Hood (1994) argues that the various strands comprising the NPM-style model itself, some of which draw on these attacks, are neither new nor novel. Even the appeal for government to be more ‘business-like’ finds echoes in progressive-era reform rhetoric. Weber and the often cited originator of the policy–administration split, Woodrow Wilson, are often caricatured in any event. Weber was ambivalent about the role of bureaucracy in modern life; the threat that powerful bureaucracies could hold to democracy, individual freedom and personal autonomy; and

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International handbook of public management reform

the stripping of individuality and the dehumanization that the ‘iron cage’ of increasing rationalization and control involved (Gerth and Mills 1974). He noted the importance of countervailing powers within society in constraining an overly powerful bureaucracy. Perhaps some (non-)readers of Weber confused his heuristic and abstract ‘ideal type’ with a normative agenda. Going even further than pointing out the constant debate regarding the model, Lynn (2001) notes the continual questioning of the bureaucratic model throughout its life and possible abandonment by the mid-twentieth century – and indeed raises the question whether the ‘bureaucratic paradigm’ is something of a post hoc invention, and even whether it existed among academic writers. Weber, for example, one of the supposed founders of the model, was not translated into English until well into the mid-twentieth century, nor was Wilson widely read or cited until 1941.1 Many of the criticisms made of the bureaucratic model were accepted by the public administration discipline, suggesting a distinction between a ‘bureaucratic model’ and a ‘traditional model’. As Lynn notes: beginning with Wilson, a professional reasoning process . . . took for granted (and thus did not always explicate) the interrelationships among the values of democracy, the dangers of an uncontrolled, politically corrupted, or irresponsible bureaucracy, the instruments of popular control of administration, and judicial and executive institutions that can balance capacity with control in a constitutionally appropriate manner. (Lynn 2001: 154)

As such, one can perhaps draw overly sharp distinctions between the ‘old’ PPA style of public administration and the ‘new’ NPM-type of public administration (Howlett 2002; McCourt and Minogue 2001; Peters 2000), with aspects of both shading into practice in the past and in the present. Hood (1998: 5) argues this game can be played by both sides of the debate too, with an outmoded ‘traditional model’ of public administration ‘portrayed as fairly homogenous . . . fairly uniform . . . typically characterized as rule-bound and process-driven’ replaced by a ‘results-driven, managerially orientated approaches to public service provision with a particular stress on efficient least-cost provision’. Indeed, this view can be taken by ‘traditionalist critics of “modern” public management ideas’ and NPM advocates who both share the ‘assumption of a radical break with all past ideas’. The only substantive ‘difference between the traditionalists and the modernizers’ might be that the ‘former use rose-tinted spectacles to view the past and grey-tinted glasses to look at the present, while for the latter the lens tints are reversed’. As well as a possible lack of an entirely dominant paradigm within the public administration discipline, one should also not overstate the existence of one ‘traditional’ model in practice across the world. As Pollitt and Bouckaert (2004: 62) point out, an examination of older civil service systems in the OECD shows no single system actually existed. Rather, there was a complex amalgam of different administrative forms, attuned to specific historical and institutional circumstances (Howlett 2004). While some parts of a given public administrative structure might conform to a ‘traditional model’, substantial sections might depart from it, especially in areas dominated by highly skilled labour such as economic advisory institutions and health systems. If the existence of a single ‘traditional’ or ‘bureaucratic model’ might be open to question, similarly the portrayal of a whole-scale and worldwide adoption of NPM practice overstates the case. Howlett (2004: 14) notes ‘multiple efforts at reform in different countries, the patchy record of success and failure, and the contradictory efforts’. Rhodes

Introduction

11

and Weller (2003: 22) argue ‘the seeming coherence of the NPM program prompted the observation that reform was global’, but ‘new public management now covers all types of reform: it excludes nothing’, with this ‘common language of management’ doing little more than obscuring deep national differences. Indeed, the apparent adoption of NPM rhetoric and other aspects of NPM practice might simply obscure political and other battles over reform, with questionable substantive change (Goldfinch 2006). Similarly, while some like Shields and Evans (1998) tend to attribute all reforms in public administration to the conceptual framework of NPM, the role of ideas in administrative reform is one of only several contributing factors (Aucoin 1990; Christensen and Lægreid 2001; Goldfinch 2006). The intellectual coherence of the NPM policy paradigm and its capacity to ‘drive’ reform is open to question in any event (cf. Boston et al. 1996; Dunleavy and Hood 1994; Hood 1991). Finally, as the chapters in this collection show, there is a great diversity of public administration systems in existence, different time-lines and trajectories of reform, and considerable resilience of existing institutions. This is supported by numerous studies: cf. Savoie (1994), Campbell and Wilson (1995), Naschold (1995), Peters and Savoie (1998) and Pollitt and Bouckaert (2004). For example, Naschold (1995: 11) compared administrative developments in 11 western democracies and argues ‘contrary to the official view taken by the OECD as an organization, there is no evidence of a linear homogenous trend in public sector development [and] convergence seems less likely than centrifugal trends within regulatory models’. Even between the UK, New Zealand and Australia – often seen as the exemplars of NPM reform – there are significant differences, as well as similarities. The US adoption of NPM ideas imported from the UK and New Zealand has been patchy at best (Moynihan 2006). This, we argue, puts to rest the idea of a worldwide convergence around a simple set of NPM prescriptions. It is to the rest of this collection that we now turn. Public sector reform Dollery begins this collection in the first of the ‘theme’ chapters by outlining the theoretical basis of the NPM agenda. Particularly in its New Zealand form, new public management drew heavily on a ‘generic managerialism’ and an economics derived ‘government failure’ paradigm. The latter drew on heavily on ‘public choice’ and ‘new institutional economics’, with NPM reforms relying on economic theory generally to a ‘unique extent in the history of modern public administration’. None of these approaches are beyond challenge, as Dollery shows, and debate continues to their utility. Waxin and Bateman show the strong diversity of human resource practices across the world. In their comprehensive coverage, they distinguish broadly ‘career-based’ systems where candidates are hired at the beginning of their career and proceed through grades and ranks within their working life within a public service – very much along the lines of the ‘traditional model’. Position-based systems focus on selecting the ‘best’ person for the job, with great access to the system from outside and with lateral entry. Departmentalbased systems exist where civil servants develop a career within a single line department. The authors chart continuing developments in recruitment and selection practices across the world, and note, while it is easy to overstate the case, there is evidence of the movement of human resources management practice from the private to the public sector. They caution against an unreflective adoption of private sector approaches, however. In his comprehensive survey, Gregory examines the complex morass that is

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International handbook of public management reform

accountability. It remains a core characteristic of liberal political systems, where the people own the government and expect it to work in their interests. However, the competing demands and procedural requirements to ensure accountability can have as their downside stultifying red tape, where to do things the right way becomes more important than doing things right. Indeed, an increasing preoccupation with accountability has accentuated a ‘gotcha’ mentality where retrospective sanctioning has become the focus. Nor is it clear that the introduction of NPM with its principal–agency relationships supposedly clarified, necessarily resulted in clearer accountability relationships. The authors focus on story-telling as an aspect of accountability – in an environment where truth is contested and actions and responsibilities are difficult to unravel – giving account through public debate, the tos and fros of politics, explaining and arguing may be the best some can hope for. Wallis and McLoughlin in their study of leadership examine ‘public value-seeking leadership’, which seeks to find ways of adding to public value beyond the cost-cutting and outputs focus of NPM and the ‘safe pair of hands’ of the traditional model. While noting it would be an overstatement to see this as a new paradigm, the authors advocate a leadership that mobilizes networks to create public value. Such leadership could be encouraged, they argue, through a leadership development policy they outline, plus the appropriate incentives. Gauld’s chapter asks whether ‘e-government’ is simply the next big trend in public management. Noting that the term can be vague and used in multiple ways, he notes three key uses: managerial; government co-ordination and transformation; and participation. The first sees e-government contributing to increasing technical efficiency and information flows, and in some cases, focuses on cost-cutting. The second is to some extent an attempt to reconnect a government fragmented by NPM reforms where agencies are reconnected through new information and communications technology, although some transformational rhetoric sees fundamental changes to work practices. Participation in policy and politics generally is seen to be facilitated by new information technology, even to the extent of an increasing ‘e-democracy’ and electronic forms of voting. After examining e-government initiatives in a number of countries, Gauld cautions against accepting some of the overblown rhetoric. Few initiatives have yet to deliver on their promised benefits, and the success and use of some systems remains well below projections. Goldfinch looks further at ICT developments in the public sector and notes the alarming degree of project failure, with some studies finding by far the majority of projects are unsuccessful. Hundreds of billions of dollars a year are spent on systems that do not work at all, or do not work as promised. Despite decades of development there are still no reliable methods of controlling projects and guaranteeing success. The author argues that many of the problems with ICT stem from the overblown expectations regarding technology. These he terms ‘dangerous enthusiams’, each linked to a particular group within ICT developments. Combined with the difficulties of control, these problems of enthusiasm mean the likelihood of failure of large ICT projects remains. Goldfinch suggests a pessimism when it comes to adopting ICT in the public sector, and suggests ways of operationalizing this pessimism when making ICT decisions. From the theme chapters, we move to examining a number of reform processes in particular countries. In the first of our four Anglo-American chapters, Wegrich’s examines the UK – often seen as an NPM exemplar – and challenges some orthodox accounts of

Introduction

13

reform. He questions the standard accounts of a coherent NPM programme laid out by the Thatcher government, noting instead that spending actually increased in the early years of the regime; that modifications of the reforms changed the original content of the reform process and reforms often evolved in response to events; and there was always a lack of coherence in the original reforms with a vacillation between the competing demands of markets and top-down management control. And continuous change is often seen, with British public management ‘regarded as an experiment in hyper-innovation relying on an ever changing pattern of managerial ideas and central control’. The New Zealand reforms of the 1980s and 1990s and their subsequent modification after 1999 are examined by Goldfinch. In a period of reform remarkable for its speed, coherency, comprehensiveness and derivation from theoretical ideas, New Zealand adopted what is probably the purest NPM model, encapsulated in two not entirely reconcilable trends – ‘managerialism’ and ‘contractualism’. New Zealand possibly differed from other reform programmes, with its focus on written contracts and largely quantitative ‘output’ measures of performance – although perhaps the difference was one of degree, not of kind. Critiques of the reforms were quick to eventuate, and the Labour government elected in 1999 sought to reintegrate a highly decentralized government and strengthen central control of government agencies, reintroduce a focus on public sector values and ethics, renationalize some assets, and move from short-term reporting of outputs to also look at ‘outcomes’ – the ‘results’ of government actions. Such changes have led to questions whether there is a ‘new’ New Zealand model and an abandonment of NPM. Simm’s examination of that other apparent NPM exemplar – Australia – discusses the long debate in Australia regarding public sector reform. Within Australia’s federal system there was ample scope for policy learning, but reform accelerated after the election of the Labour government in 1983. Soon the buzzwords of NPM became part of the Australian landscape, and like New Zealand, there was an abandonment of permanent heads, the use of contracting out and privatization, programme budgeting and performance indicators, and so on – but there were Australian differences with the creation of mega-departments during the Hawke government, and the creation of a senior executive service. More recent reforms have seen an attempt to reconnect and ‘join-up’ government. In Canada, as Tomblin documents, the provinces were also important in modifying and sometimes resisting NPM-type reforms, and Canadian traditions and collectivist notions channelled NPM-type reforms in certain directions. Indeed, reform was largely incremental, varied from province to province, and existing institutions showed considerable resilience. If Australia and Canada’s federal systems complicate matters of reform, these pale into comparison with the USA, which, above all, is distinguished by its complexity. The USA has also differed from other Anglo-American nations by the degree of politicization of its public service, with ongoing attempts by various presidencies to exert control. Rockman and Thiam outline in detail the reform proposal of various regimes, the creation of a senior executive service under Carter; attempts to politicize the public service under Reagan; the reinventing government rhetoric of Clinton, and contracting and privatization of recent times. As the authors conclude, two powerful ideologies have intermingled in the American public sector – a business model emphasizing the government ought to be run like a business, and the politicization of the public service, drawing on the long

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International handbook of public management reform

history of the spoils system and fought over from various parts of the US polity. Indeed, Rockman and Thiam suggests a little less politicization and a degree more independent professional public service would lead to a better run government – but acknowledge the small probability of this happening. Jones and Cole’s chapter outlines in detail the structure of the French state and the public service. Their chapter is particularly important to this collection as it shows the considerable resilience of institutions in the face of pressure and rhetoric for reform. The authors outline a series of administrative reforms including the Quality Agenda of the Chirac government which introduced, among other things, performance targets; the mid-1990s reforms that delegated greater autonomy to field services through a contractual regime; and budgetary reforms, pension reforms and other reforms into the 2000s. As they conclude, however, resistance from the unions and tensions between the centre and field services saw minimal impact of reform attempts, particularly pertaining to the NPM agenda. As such, perhaps, the French state sector remains ‘unreformed’. Belgium, too, exhibits a large degree of stability of existing institutions, with a classic Weberian bureaucracy existing until 1993 when decentralization of the Belgian state and fiscal pressure caused the new federal system to look towards NPM models, including performance contracts and employing ‘contractuals’ (persons employed on limited term contracts and without the same protection as core public servants). However, as Dierickx notes, reform has been piecemeal and some reform initiatives have slowed and/ or halted since the 1990s. The Dutch state, too, has undergone considerable reform from the 1980s on – with civil service reform aimed at smaller and more efficient government and greater organizational control. In the 1990s ‘service reform’ focused on improved accountability and better service delivery. More recent times have seen the government direct its attention to building greater ties with civil society, ‘empowering’ citizens and developing organizational co-operation. Rhetoric too has evolved from ‘efficiency’, to ‘innovation’ to ‘accountability’ at the turn of the twenty-first century, and more recently ‘joined-up’ government. However, as Noordegraaf notes, even as the Netherlands adopted much of the rhetoric found in NPM, actual reform has been channelled through the institutions of the Dutch polity, which have shown considerable robustness. Indeed, in some cases the reforms have had the paradoxical effects of reinforcing aspects of the Dutch system. Denmark’s case is fascinating in that some of what was later termed the ‘NPM agenda’ was implemented in the 1960s and 1970s. Even then, as Jørgen Christensen notes, reform has continued, with more recent moves to individual contract employment in 1990s particularly for senior executives, contracting-out (albeit relatively limited in scope) and the adoption of private sector accounting practises (including accrual accounting) in 2007. Corporatization and privatization also occurred, beginning in the 1990s, although Denmark had a smaller state sector than some of its neighbours, meaning programmes lacked the scale sometimes found elsewhere. The use of ‘quasi-markets’ was also introduced, particularly in the delivery of welfare services, with this trend continuing into the mid-2000s. However, the author plays down the intellectual coherence of the reforms and their derivation from overseas experience – instead seeing their development evolving through complex interactions between ideas, interests and actors. In our second Scandinavian chapter, Tom Christensen and Per Lægreid examine the ‘reluctant’ NPM reformer that is Norway. The authors outline the features of the

Introduction

15

Norwegian polity, and note how NPM rhetoric and reform programmes adopted from overseas have been channelled and reformulated through Norwegian institutions and political traditions. Reforms included granting greater flexibility and autonomy to agencies, and some privatization, particularly during the mid-2000s. In the mid-1990s a trend towards a ‘super-market’ state became apparent, including the use of market orientation and contracting out, service decelerations and ‘one-stop’ shops, among other things. University and health became more market focused, adopting a ‘money follows client’ approach, although, as the authors note, these are assembled in a particularly Norwegian way. However, the change of government and the election of a Red–Green coalition in 2005 saw an explicit post-NPM agenda of strengthening the centre and reintegrating the state, although there is considerable resilience of NPM features – more a ‘re-balancing’ than a ‘roll-back’. We conclude this study by looking at Japan and Hong Kong (HK), our two Asian studies. Hong Kong is that unique mix of British colonial heritage and indirect Chinese rule, with the state built upon the robust institutions – including a bureaucracy – left by the retreating British. As Cheung documents, reform began in the British era when devolution, public sector reform, customer focuses and corporatization, and ‘managing for results’, among other things, were introduced. However, given the success of the HK economy, even with the change over to Chinese rule pressure for reform was not great and the power of the bureaucracy was maintained. Nor were HK reform processes simply aping NPM agendas, but drew on a long process of modernization going back to 1970s. The Asian crisis saw further reform and some degree of delegitimization of the bureaucracy, and measures focusing on productivity, some amalgamations, and some privatizations in the 2000s and mid-2000s were introduced. What was of particular importance was the rise of ministerial appointments into the senior public service after 2002. However, resistance of the bureaucracy to some austerity measures, and a change of regime in 2005, saw senior career public servants again take a central role in the state, and public sector salaries again started to rise. The HK experience shows the resilience and adaptability of strong institutions – even in the face of fundamental regime change. Japan has often been seen as a reform laggard, with a powerful Weberian-type bureaucracy highly resistant to change. Yamamoto, however, outlines the increasing influence of NPM ideas by the 2000s, and notes that privatization has roots going back to the 1980s. New public management ideas were in currency in Japan from the early 1990s, and NPM-type reforms were being proposed by the mid-1990s. By the early 2000s, NPM techniques such as performance evaluation were introduced, while in 2006 the Kozumi regime required competitive tendering in some areas, although implementation of this initiative remains tentative. Corporate-type and accrual accounting practices were introduced in 2007. A particular aspect of Japanese reform has been agentification and decentralization, with the establishment of a large number of autonomous agencies after 2001. New public management proposals continue to hold an attraction for Japanese governments. As such, the Japanese experience is a suitable place to conclude our country studies. What was often considered a ‘hold-out’ against the NPM tide, has now seemingly adopted NPM practices. This is somewhat ironic, perhaps, if we accept that the NPM ‘early initiators’ have somewhat turned their back on NPM and entered a post-NPM phase, as some suggest. Nor should it be forgotten that there is a very Japanese take on NPM – and there is some doubt whether the adoption of NPM rhetoric

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has seen a substantive change in practice in some cases (cf. Goldfinch 2006). Japan highlights that those looking for a simple transition from the ‘traditional model’ to ‘NPM’ and then to a post-NPM world, are going to find their views challenged by the messiness of the real world, where some jurisdictions have seemingly adopted NPM while others have not, and where NPM rhetoric and techniques have been filtered and heavily adapted through robust domestic institutions, while early NPM adopters have modified, reversed or even abandoned NPM techniques. Adoption of reforms have varied across countries in a temporal sense, as have techniques and rhetorics introduced. It is to these issues we return in the conclusion. Note 1. Of course, one could describe what was happening without directly influencing events.

References Aucoin, P. (1990), ‘Administrative reform in public management: paradigms, principles, paradoxes and pendulums’, Governance, 3 (1): 115–37. Baumgartner, F. and B. Jones (1993), Agendas and Instability in American Politics, Chicago, IL: Chicago University Press. Beetham, D. (1996), Bureaucracy, 2nd edn, Minneapolis, MN: University of Minnesota Press. Boston, J., J. Martin, J. Pallot and P. Walsh (1996), Public Management: The New Zealand Model, Auckland: Oxford University Press. Brodkin, E.Z. (2006), ‘Bureaucracy redux: management reformism and the welfare state’, Journal of Public Administration Research and Theory, 17: 1–17. Butcher, T. (2003), ‘Modernizing civil services: an era of reform’, in T. Butcher and A. Massey (eds), Modernizing Civil Services, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 1–15. Campbell, C. and G. Wilson (1995), The End of Whitehall: A Comparative Approach, Oxford: Blackwell. Christensen, T. and P. Lægreid (eds) (2001), New Public Management: The Transformation of Ideas and Practices, Aldershot: Ashgate. Du Gay, P. (2000), In Praise of Bureaucracy: Weber, Organization, Ethics, London: Sage. Dunleavy, P. and C. Hood (1994), ‘From old public administration to new public management’, Public Money and Management, 14 (1): 9–16. Dunleavy, P., H. Margetts, S. Bastow and J. Tinkler (2006), ‘New public management is dead – long live digital-era governance’, Journal of Public Administration Research and Theory, 16: 467–94. Gauld, R. and S.F. Goldfinch (2006), Dangerous Enthusiasms: E-Government, Computer failure and Information System Development, Dunedin: University of Otago Press. Gerth, H. and C. Mills (1974), From Max Weber: Essays in Sociology, New York: Oxford University Press. Goldfinch, S.F. (2000), Remaking New Zealand and Australian Economic Policy. Ideas, Institutions, and Policy Communities, Wellington: Victoria University Press. Goldfinch, S.F. (2006), ‘Rituals of reform, policy transfer, and the national university corporation reforms of Japan’, Governance, 19(4): 585–604. Goldfinch, S.F. (2007), ‘Pessimism, computer failure, and information systems development in the public sector’, Public Administration Review, 67: 917–29. Goldfinch, S.F. and P. ’t Hart (2003), ‘Leadership and institutional reform: engineering macroeconomic policy change in Australia’, Governance, 16 (2): 235–70. Goldfinch, S.F. and B. Roper (1993), ‘Treasury’s role in state policy formulation during the post-war era’, in B. Roper and C. Rudd (eds), State and Economy in New Zealand, Oxford: Oxford University Press, pp. 50–73. Gregory, R. (2007), ‘New public management and the ghost of Max Weber: exorcised or still haunting?’, in T. Christensen and P. Lægreid (eds), Transcending New Public Management, Aldershot: Ashgate, pp. 221–43. Hood, C. (1991), ‘A public management for all seasons’, Public Administration, 69 (1): 3–19. Hood, C. (1994), Explaining Economic Policy Reversals, Buckingham: Open University Press. Hood, C. (1998), The Art of the State: Culture, Rhetoric, and Public Management, London: Oxford University Press. Howlett, M. (2002), ‘Understanding national administrative cultures and their impact upon administrative reform: a neo-institutional model and analysis’, Canadian Public Administration, 46 (3): 412–31. Howlett, M. (2004), ‘Administrative styles and regulatory reform: institutional arrangements and their effects on administrative behavior’, International Public Management Review, 5 (2): 13–35.

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Kettl, D. (2000), The Global Public Management Revolution: A Report on the Transformation of Governance, Washington, DC: Brookings Institution. Lynn, L.E. (2001), ‘The myth of the bureaucratic paradigm: what traditional public administration really stood for’, Public Administration Review, 61 (2): 144–60. McCourt, W. and M. Minogue (2001), The Internationalization of Public Management: Reinventing the Third World State, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Merton, R.K. (1940), ‘Bureaucratic structure and personality’, Social Forces, 17: 560–68. Merton, R.K. (1957), Social Theory and Social Structure, New York: Free Press of Glencoe Moynihan, D.P. (2006), ‘Managing for results in state government: evaluating a decade of reform’, Public Administration Review, 66: 77–90. Mueller, D. (2003), Public Choice III, Cambridge: Cambridge University Press. Naschold, F. (1995), The Modernization of the Public Sector in Europe: A Comparative Perspective on the Scandinavian Experience, Helsinki: Ministry of Labour. Olsen, J. (2006), ‘Maybe it is time to rediscover bureaucracy’, Journal of Public Administration Research and Theory, 16: 1–24. Osborne, D. and T. Gaebler (1992), Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector, Reading, MA: Addison Wesley Publishing. Parker, R. and L. Bradley (2004), ‘Bureaucracy or post-bureaucracy? Public sector organisations in a changing context’, The Asia Pacific Journal of Public Administration, 26: 197–215. Peters, B.G. (1996), The Future of Governing: Four Emerging Models, Lawrence, KS: University Press of Kansas. Peters, B.G. (2000), ‘Public-service reform: comparative perspectives’, in E. Lindquist (ed.), Government Restructuring and Career Public Services, Toronto: Institute of Public Administration of Canada, pp. 27–40. Peters, B.G. and D.J. Savoie (eds) (1998), Taking Stock: Assessing Public Sector Reforms, Montreal and Kingston: McGill-Queen’s University Press. Peters, B., J. Heese and C. Hood (1999), Paradoxes in Public Sector Reform, Berlin: Druckner and Humblot. Pollitt, C. (2002), ‘The new public management in international perspective: an analysis of impacts and effects’, in K. McLaughlin, S.P. Osborne and E. Ferlie (eds), New Public Management: Current Trends and Future Prospects, London: Routledge, pp. 12–35. Pollitt, C. and G. Bouckaert (2004), Public Management Reform: A Comparative Analysis, 2nd edn, Oxford: Oxford University Press. Rhodes, R.A.W. and P. Weller (2003), ‘Localism and exceptionalism: comparing public sector reforms in European and Westminster systems’, in T. Butcher and A. Massey (eds), Modernizing Civil Services, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 16–36. Shafritz, J.M. and J.S. Ott (eds.) (2005), Classics of Organization Theory, 4th edn, Belmont, CA: Wadsworth. Savoie, D.J. (1994), Thatcher, Reagan, Mulroney. In Search of a New Bureaucracy, Pittsburgh, PA: University of Pittsburgh. Shields, J. and M.B. Evans (1998), Shrinking the State: Globalization and Public Administration ‘Reform’, Halifax: Nova Scotia. Wallis, J. and B.E. Dollery (1999), Market Failure, Government Failure, Leadership and Public Policy, Basingstoke: Macmillan.

2

The influence of economic theories of government failure on public management reform Brian Dollery

Introduction In contrast to much previous change in public administration, NPM-inspired reform is consciously derived from contemporary discourse in the policy sciences, particularly economic theory. Furthermore, while ‘an anti-state and pro-market normative leaning and individually orientated ideas generally characterize this body of theory’, the concrete reality is that ‘these ideas are rather abstract and general and must be “translated” in order to provide a specific roadmap and driving force for a reform program and accompanying practical changes’ (Aberbach and Christensen 2003: 497). This translation process usually involves a high degree of simplification and interpretation thereby often decreasing the logical correspondence of theory with policy. It also provides ample latitude to political elites and policy-makers in different countries to transform intellectual concepts into different kinds of reformist policies and can thus partly account for the observed heterogeneity in the pattern of public sector reform across the developed world. Whereas various writers, including Peters (1996), Hood (1998) and Pollitt and Bouckaert (2004), have been able to identify coherent policy paradigms underpinning this shift in practice, each policy paradigm typically consisted of several strands or sub-policy paradigms not always entirely consistent with each other. In this chapter, I argue that if an archetypical NPM-type model can be identified, then it has two major intellectual foundations. On the one hand, what may be called ‘generic managerialism’ (Wallis and Dollery 1999) has strongly influenced the shape of NPMstyle reform models. On the other hand, from the perspective of economic theory the overarching policy paradigm driving public sector reform over the past three decades derives from the theory of government failure. However, this broad intellectual tradition contains particular theoretical strands that are emphasized to different degrees in different sub-policy paradigms and this can partly help explain differences between and within these sub-policy paradigms. Of course, this is not to deny the importance of other influences on the shape of public sector reform drawn from outside of economic theory and the managerialist paradigm. For example, intellectual developments in other social disciplines also play a very significant role, not least social capital theory (Quibria 2003) and the concept of networks and co-ordination (Pollitt 2003). By the same token, political factors are obviously pivotal in the process of shaping public policy in public administration. Despite the importance of these and other influences on the shape of public sector reform, there is no denying that NPM-style reform programs rely on economic theory generally, and the government failure paradigm in particular, to a unique extent in the history of modern public administration. Moreover, even where other factors predominated in determining the nature of public sector reform processes, leaders of interest 18

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groups often presented their arguments in the language of contemporary economic discourse as a rhetorical technique designed to display a mastery of the economic ideas underpinning NPM-type reform programs and thus disarm their opponents (Burton et al. 2002). It is therefore essential to understand these economic arguments to appreciate their influence on the policy debates that always surround modern public sector reform. This forms the central objective of the present chapter. The chapter itself is divided into five main sections. In order to set the background for the later discussion in the chapter, the first section provides a brief description of a stylized conceptual model of the NPM-type approach. The next section discusses the ‘generic managerialism’ strand inherent in this generalized NPM-style model. The third section presents a synoptic review of the theory of government failure and the various typologies of positive and normative government failure that have been developed. The fourth section expands the discussion of government failure to include public choice theory. It then examines those aspects of new institutional economics that have had a strong influence on NPM-type reform programs. The chapter ends with some brief concluding remarks. Stylized model of new public administration The term NPM came into common currency in the literature on public administration in the early 1990s and essentially refers to the ‘distinctive themes, styles, and patterns of public service management that have come to the fore within the past two decades’ (Barzelay 2001: 7). In effect, NPM represents a heuristic device constructed for the explicit aim of explaining changes in the organization and management of government. In the present context, it is argued that the NPM-type model is based on an amalgamation of two different sets of ideas: ‘Generic managerialism’ (Wallis and Dollery 1999: 77) and recent developments in economics. Christopher Hood (1991: 5–6) has described NPM-style reform as a ‘marriage of two different streams of ideas – economics, and especially new institutional economics and public choice theory, and “managerialism”, with its emphasis on “professional management”, which is “portable”, “paramount”, “discretionary”, “central”, and “indispensable”’. Other writers have also agreed with this method of conceptualizing NPM in theoretical terms. For example, Yamamoto (2003: 6) has observed that ‘NPM is a fusion of the contractual elements in the field of new institutional economics’, like competition and performance measurement, and ‘management by objective in the field of business administration’, including managerial discretion (‘letting managers manage’) and managerial oversight (‘making managers manage’). Put differently, ‘NPM unites the new institutional economics and managerialism from business management thought’ and the ‘strategy of NPM should thus be one of a balanced effort involving both the use of contractual arrangements as a tool of output controls and managerial freedom’. Various methods of describing the characteristics of the traditional bureaucratic structure have been advanced in the literature. In this section of the chapter, we provide a synoptic description of the ‘old’ PPA mode of public administration. This brief resume of traditional public administration is followed by a discussion of the Peters and Wright (1996) model – as reinterpreted by Peters (1996) – that focuses on the manner in which the conventional pillars of the Weberian bureaucratic organization have come into question.

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Perhaps the best way of providing a stylized model of NPM-type reform is the theoretical description advanced by Hood (1991) in his classic paper on NPM. According to Hood (1991: 4–5), NPM-style reform comprises seven fundamental doctrines: ●

● ● ●

●

●

●

‘Hands-on professional management’ that allows ‘managers to manage’ and is characterized by the ‘active, visible, discretionary control of organizations’ with an emphasis on concentrating power and accountability rather than the diffusion of power propagated by PPA-type public administration; ‘Explicit standards and measures of performance’ achieved by means of the ‘clarification of goals, targets, and indicators of success’; a reversal in focus from ‘input controls and bureaucratic procedures to rules relying on output controls measured by quantitative performance indicators’; a move from ‘unified management systems to disaggregation or decentralization of units in the public sector’, particularly in the separation of policy implementation from policy-making; the introduction of more competition into the operations of public agencies through increased use of contracts in order to reduce costs and achieve higher standards, both between agencies in the public sector and between public organizations and private firms; an emphasis on ‘private-sector-style management practices’ that include ‘short-term labour contracts, the development of corporate plans, performance agreements, and mission statements’; and a ‘stress on cost-cutting, efficiency, parsimony in resource use, and “doing more with less”’.

In addition to these seven core doctrines of NPM-type management models, some writers, such as Pollitt (1995: 134) with his ‘customer responsiveness’, have appended the principle of consumerism that stipulates the need for multiple choices in public services analogous to the wide array of alternative products available in private markets. These attributes of a stylized model of NPM-type reform have seldom been simultaneously present in real-world public sector reform. However, the reform programs introduced in New Zealand have perhaps come closest to this ‘pure’ form of NPM-style reform model. Boston (1985: x–xi) has argued that the New Zealand program relied on three central elements that all stem directly from the Hood (1991) conception. First, it placed a heavy emphasis on competitive tendering, contracting out publicly funded services, and the privatization of public organizations. Secondly, the program focused on reducing agency costs to a minimum by rejecting accountability to multiple principals in favour of a single principal–agent relationship that concentrated accountability and responsibility. Finally, it adopted the widespread use of contracts and a wide array of service providers shaped to suit the particular service in question. Generic managerialism It has been argued that a stylized NPM-type model is consciously derived from intellectual developments in the managerial and social sciences. In particular, it is based on recent scholarship in economics and what has been termed ‘generic managerialism’ (Wallis and Dollery 1999). In this section, we explore the nature of generic managerialism

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(GM), before devoting later parts of the chapter to the economic foundations of NPMstyle reform. General managerialism parades under several different, but synonymous names, variously designated as ‘corporate management’, ‘managerialism’ and ‘new managerialism’ (see, for example, Aucoin 1990; Barzelay 2001; Wallis and Dollery 1999). In effect, GM represents an attempt to distil the principles of management that have evolved in the private sector and transplant these principles into a public sector context. Put differently, Painter (1988: 1) has observed that the essential characteristic of GM is its assumption that ‘there is something called “management” which is a generic, purely instrumental activity, embodying a set of principles that can be applied to a public business, as well as in private business’. By the same token, the major difficulties involved in this exercise seem to originate in precisely the differences between private firms and public organizations. This perception of management is neither new nor novel. Indeed, its roots can be traced at least as far back as the seminal work on ‘scientific management’ pioneered by Taylor in the late nineteenth century (Lane 1997). In this sense, management forms part of the overall claims accompanying modernization; the application of rational thought to organizational problems inherent in scientific management is akin to technological improvement in production in its effects. This view of GM in public administration is not without controversy. On the one hand, it is argued that public management is entirely unique and separate from GM and private sector techniques cannot be applied to public administration and cannot be reconciled with the notion of citizenship. On the other hand, exponents of GM maintain that the general principles of management originating in larger-scale private sector organizations are universally suited to all types of organizational activity. A middle position suggests that, while at the micro-level GM can be used in all contexts, at the macro-level, public sector management is sui generis (Pollitt and Bouckaert 2004: 14). According to Hood (1994), the key aspects of GM can discerned by grasping how this managerial philosophy departs from traditional bureaucratic practice by distinguishing between ‘public service distinctiveness’ and ‘rules versus discretion’. For instance, GM rejects the procedurally based methods of PPA and instead stresses the need for ‘handson’ professional management and the ‘freedom to manage’. It also shifts the focus of management attention away from inputs and processes towards outputs and outcomes, and attempts to introduce benchmarking through explicit performance management to monitor results. Wallis and Dollery (1999: 79) have argued that ‘implicit in these strategies is a specific view on the nature of management which is held to be generic, portable and capable of reacting decisively to environmental change in a positive manner’. Theories of government failure Market failure and government failure The phenomenon of government failure can be defined as the inability of a public agency or public agencies at any level of government to secure desired economic, social or other policy objectives. The development of the concept of government failure must be seen in the broader context of the history of economic thought. In his magnus opus the Economics of Welfare, Arthur Pigou (1920) laid the foundations of modern welfare

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economics by specifying the conditions under which markets failed to generate socially beneficial outcomes. The identification of market failure led to the presumption that if private markets yielded economically inefficient outcomes or socially inequitable outcomes, then government intervention was justified to remedy the situation. However, no countervailing analysis arose to provide an analogous theoretical apparatus to consider the efficacy of government intervention and the attendant possibility of government failure. An intellectual orthodoxy thus developed in which the world was characterized by imperfect markets and perfect governments based on the asymmetrical behavioural assumption that individuals as consumers and producers were motivated exclusively by self-interest whereas the same people in government were driven only by altruism, despite the obvious fact that in or out of government people ‘are more interested in their own well-being than in the public interest’ (Tullock et al. 2002: 53). After a reign of almost 50 years as the dominant orthodoxy, the market failure paradigm came under prolonged attack in the economics literature. Three main lines of criticism emerged. In the first place, the market failure theory has been accused of implicitly adopting an idealized conception of the state. For example, Chang (1994: 25) acerbically noted that in this world view ‘it is (implicitly) assumed the state knows everything and can do everything’. Three heroic assumptions are subsumed under this rubric: policymakers can accurately assess the degree of market failure; government agencies can intervene efficiently; and those involved in public policy are motivated by altruism rather than self-interest. All of these assumptions have been questioned and the subsequent rejection of the descriptive accuracy of the market failure paradigm has led to the development of an alternative government failure approach. Secondly, a more recent critique of the market failure paradigm has focused on the significance of transaction costs. Zerbe and McCurdy (1999: 561) have argued that ‘a fundamental problem with the concept of market failure, as economists occasionally recognize, is that it describes a situation that exists everywhere’ since all market exchanges always involve transactions costs and these costs are typically not priced. It follows that ‘since unpriced transaction costs are ubiquitous, this gives rise to a situation in which externalities and hence market failures can be found wherever transactions occur’ (Zerbe and McCurdy 1999: 563). Government intervention on the basis of market failure is thus misplaced. Finally, the market failure model has been attacked on the basis of its methodological underpinnings. This line of criticism contends that the market failure paradigm embodies a methodology that compares actual economic arrangements against some idealized theoretical norm thereby violating the concept of opportunity cost, which constrains economists to evaluating existing situations against the next best alternative, and not some abstract idealized hypothetical norm. Harold Demsetz (1969: 1) called this methodological error the ‘nirvana problem’ and contrasted it with an alternative ‘comparative institutions’ approach. Genesis of the government failure paradigm The earliest contemporary theory of government failure is the ‘Chicago School’ or ‘capture theory of regulation’ developed by Stigler (1971) and extended by Peltzman (1976), both scholars resident at the University of Chicago. According to this view, state regulation of private economic activity is subject to ‘capture’ by the industries under

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regulation and the process of regulation simply becomes an exercise in the distribution of monopoly profits between politicians, bureaucrats overseeing regulation and the regulated industries themselves. However, the most important theory of government failure resides in public choice theory. Given its pre-eminent status in the literature on government failure, a separate subsection of this chapter is devoted exclusively to a discussion of the public choice tradition. As we shall see, public choice theory seeks to apply the tools of economics to non-market or political processes underlying public policy formulation and implementation, and in so doing has developed a comprehensive critique of government behaviour. In stark contrast to the market failure paradigm, public choice theorists have rejected the ‘common good doctrine’ (Breton 1995) implicit in this approach and instead have developed models of decision-making in advanced representative democracies on the assumption ‘that people should be treated as rational utility maximisers in all of their behavioural capacities’ (Buchanan 1978: 17). In other words, politicians, public servants, voters and members of special interest groups involved in public policy formulation and implementation are presumed to use the resources and opportunities available to them to pursue their own objectives rather than the ‘common good’. It is helpful to place the theory of government failure in the broader context of economic thought concerning the relative strengths of markets and governments. According to Caplan (2005: 2), the political economy literature on the comparative social efficiency of competitive markets and democratic polities may be classified into four major schools of thought on the relative efficacy of ‘markets’ (as exchange processes) and ‘governments’ (as hierarchies) as alternative methods of organizing economic and social activity. As perhaps best exemplified by the work of Milton Friedman, James Buchanan, Gordon Tullock and others, both the Chicago School and public choice theory see markets as relatively efficient institutions compared with public agencies and political processes. By contrast, the socialist tradition, represented by Karl Marx and Lenin, sees market activity as not only economically wasteful, but also inevitably inequitable, with public ownership and control of resources a superior method of social decision-making. Moreover, this view on markets is echoed in the Leninist perception that a single dictatorial proletarian party is preferable to competing political parties in the political arena. The conventional welfare economics market failure approach and the Keynesian school, epitomized by the views of Arthur Pigou and American economist Kenneth Galbraith respectively, sees markets as inherently unstable and in constant need of the ‘visible hand’ of government intervention to prevent periodic depressions and to correct perceived market failures. Positive taxonomies of government failure The application of the homo economicus behavioural postulate to the public sector has generated various taxonomic systems of generic government failure that can be applied to any level of government in a democratic market economy. In essence, scholars have tried to identify ubiquitous sources or categories of government failure and combine these in typological models of generic government failure that can be used to shed light on actual public sector systems. Two kinds of taxonomic systems of this type have been developed. First, ‘positive’ models of government failure simply try to capture the essential causes of government failure and thereby may assist in explaining how observed organizational failure occurs

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in real-world civil service systems. While most models in this genre are purposefully general in the sense that they are designed to accommodate public organizations in any sphere of government, a subset of writers in this tradition have focused exclusively on local government failure. However, since this approach is a positive and not a normative theory of government processes, ‘it cannot provide an idealized or optimal vision of policy intervention against which actual government behaviour can be compared, in the same way as welfare economics furnishes the theory of market failure with a yardstick to evaluate real-world markets’ (Dollery and Worthington 1996: 28). Accordingly, a second strand of normative taxonomic models has been constructed to fulfil this need in modern policy analysis. We briefly outline the main features of both positive and normative theories of government failure, including local government failure. Generic taxonomic positive models of government failure South African economist Michael O’Dowd (1978: 360) created the first contemporary typology of government failure. In essence, he argued that all forms of government failure fell into a generic tripartite classification containing ‘inherent impossibilities’, ‘political failures’ and ‘bureaucratic failures’. ‘Inherent impossibilities’ covered cases where the state sought ‘to do something which simply cannot be done’. By contrast, ‘political failures’ described instances where the objectives of governments are conceptually feasible but ‘the political constraints under which the government operates make it impossible in practice that they should follow the necessary policies with the necessary degree of consistency and persistence to achieve their stated aims’. Thirdly, ‘bureaucratic failure’ covered examples of government activity in which ‘the administrative machinery at their disposal is fundamentally incapable of implementing it in accordance with their intentions’. Dollery and Wallis (1997) developed a more recent taxonomy of government failure. They argued that three main forms of government failure were evident in real-world policy-making: legislative failure, bureaucratic failure and rent-seeking. Legislative failure refers to the economic inefficiency that derives from the excessive provision of public goods as politicians seek to maximize their chances of re-election by ‘buying’ votes from the public. Secondly, bureaucratic failure will ensure that government policies are not efficiently implemented because public servants lack the necessary incentives. Finally, rent-seeking inevitably attending government activity creates wealth transfers and ‘people thus devote scarce resources which could have been employed in wealth creation towards redistributing existing wealth in their favour’ (Dollery and Wallis 1997: 360). Finally, Burton Weisbrod (1978: 36) advanced a more comprehensive typology of generic government failure containing four categories: ‘Legislative failure’ refers to excessive public expenditure attendant upon the vote-maximizing behaviour of politicians; ‘administrative failure’ derives from the observation that the ‘administration of any law inevitably requires discretion, and the combination of information and incentives acts to affect the manner in which the discretion is exercised’; ‘judicial failure’ occurs when the legal system does not generate economically optimal outcomes; and ‘enforcement failure’ is defined as the suboptimal enforcement and non-enforcement of judicial, legislative and administrative directives. Taxonomic positive models of local government failure In addition to these generic models of government failure, the literature also contains three models of local govern-

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ment failure. It is useful to briefly review these typologies not only insofar as they shed light on the causes of government failure in general, but also because these models lead to diametrically opposing views on the degree of local government failure relative to the same phenomenon at higher tiers of government. In his Public Choice Theory and Local Government, Boyne (1998) developed a taxonomic model based on competitive categories in local government that can affect the acuteness of government failure manifest in municipal government. He distinguished between ‘three distinct forms of competition’ in the local government sphere. First, there is ‘competition between public organisations for a share of tax revenues and service responsibilities’ (1998: 1). Secondly, political parties should compete for the power to determine policy choices in local government jurisdictions. Finally, there is ‘competition between governmental and private organizations for control over the production of public services’. Boyne argued that for effective Tiebout-style competition to occur in a local government various conditions must be met to ensure that this competition results in efficient outcomes. These conditions include ‘horizontal fragmentation’ involving a large number of local governments at a given level of government, ‘vertical fragmentation’ in which several tiers of government compete, and ‘substantial local autonomy’, where ‘local communities should have the discretion to innovate, experiment and develop distinctive policies’ (1998: 22). If these conditions are met in practice, then government failure will be less acute in local government relative to comparable agencies at higher levels of local government. In Local Government Economics, Stephen Bailey (1999) tackled the question of government failure at the municipal level from a somewhat different perspective by building on the concepts of ‘exit’ and ‘voice’ first advanced by Albert Hirschman (1970). Exit and voice in this context refer to alternative means through which consumers of public services can influence the provision of these services and thereby decrease the degree of government failure they experience. Exit signifies the capacity of citizens to choose between alternative producers of some specified service, whereas voice refers to the ability of consumers to express their preferences for public services through various political mechanisms, without migrating away from their municipal jurisdictions. As methods by which citizens can influence the extent of government failure at the local government level, both exit and voice have various limitations. Bailey (1999: 47–8) identifies five main characteristics of local public services that can inhibit the effectiveness of voice: legal and institutional barriers to preference revelation; information asymmetries between public bureaucrats and citizens; the socioeconomic characteristics of the population in a jurisdiction; and the greater the relative importance of some public service to the welfare of a population. Exit is also subject to a number of constraints that are spelt out by Bailey (1999: 48), including non-excludability, natural monopolies and imperfect information. In the four emerging models or sub-policy paradigms constructed by Peters (1996: 18), he is concerned with tracing the ‘implications and prescriptions of each vision for several aspects of governing’. Four main dimensions of the alternative models are explored in detail. In the first place, diagnosis of the problem is examined since ‘reform efforts imply a desire for change, and each of the four alternatives contains a clear idea about the source that is producing problems in the public sector’. Secondly, the thorny issue of how best to organize the public sector is important and this brings into question the typical hierarchical structures comprising large departments headed by cabinet ministers. The

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third dimension embraces management; that is, ‘how should the members of the public sector be recruited, motivated, and managed and how should financial resources be controlled?’ The final dimension of the Peters system considers the role of government in the policy process and the way in which it should try to influence the private sector. The Bailey (1999) and Boyne (1998) models both predict that the problem of government failure will be less acute at the local government level compared with state and central governments. By contrast, working in the institutional milieu of modern Australian local government, Dollery and Wallis (2001) have argued that the phenomenon of government failure is likely to be more widespread in local governance. They developed a quadrilateral taxonomic classification of local government failure based on the argument that ‘voter apathy’, ‘asymmetric information and councillor capture’, ‘iron triangles’ and ‘fiscal illusion’ are all more problematic in the municipal context. Byrnes and Dollery (2002) extended this typology by adding ‘political entrepreneurship’ to the sources of local government failure. Normative taxonomies of government failure Several attempts have been made to construct a generic normative theory of government failure. Although the Wolf (1979; 1983; 1987; 1989) taxonomy of non-market failure is perhaps the most comprehensive of these new theories, criticism of his typology has led to the development of alternative theories of government failure by Le Grand (1991) and Vining and Weimer (1991). We briefly discuss the chief features of each of these models below. Theory of non-market failure In a series of pioneering publications, Charles Wolf (1979; 1983; 1987; 1989) fashioned a theoretical framework to serve as a conceptual analogue to the established theory of market failure. The purpose of his model is ‘to redress the asymmetry in the standard economic treatment of the shortcomings to markets and governments by developing and applying a theory of “non-market” failure so that the comparison between markets and governments can be made more systematically, and choice between them arrived at more intelligently’ (Wolf 1987: 43). The Wolf model mirrors the orthodox methodology of the theory of market failure by seeking to attribute various kinds of non-market failure to peculiarities in underlying ‘demand’ and ‘supply’ conditions. Wolf (1989) identified four basic attributes of nonmarket supply. First, he maintained that ‘non-market outputs are often hard to define in principle, ill-defined in practice, and extremely difficult to measure as to quantity or to evaluate as quality’ (1989: 51) and inputs thus become a proxy measure for output. Secondly, non-market outputs are usually produced by a single public agency often operating as a legally constituted monopoly, with the resulting lack of competition obscuring meaningful estimates of economic efficiency. Thirdly, Wolf (1989: 52) argued that the ‘technology of producing non-market outputs is frequently unknown, or if known, is associated with considerable uncertainty and ambiguity’, and consequently may exacerbate economic inefficiencies. Finally, Wolf proposed that non-market production activity is typically characterized by the lack of any ‘bottom-line’ evaluation mechanism equivalent to profit or loss for appraising success and there is often no specified procedure for terminating unsuccessful production. Similarly, Wolf (1989) specified five basic ‘conditions’ of non-market demand. In the

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first instance Wolf (1987: 55) postulates that ‘an increased public awareness of market shortcomings’ has heightened public desire for government intervention. Secondly, ‘political organization and enfranchisement’ (1987: 40) has increased the effectiveness of special interest groups in the political process. Thirdly, maximizing politicians and bureaucrats are rewarded for proposing interventionist ‘solutions’ to perceived social ‘problems’ without regard to the costs of policy implementation. Fourthly, relatively electoral cycles of office produce a higher rate of time discounting among politicians as compared with society at large, with an emphasis on current rather than future costs and benefits. Finally, a ‘decoupling’ has occurred between people who receive benefits and taxpayers who pay the costs of government programs. Decoupling takes two different forms: ‘micro-decoupling’ arises when the benefits of collective action accrue to a particular group and the costs of such action are dispersed among all groups, whereas ‘macrodecoupling’ occurs where the benefits of collective action are shared by all groups, but the costs of this action are concentrated on some particular group. These supply and demand characteristics of the non-market activity provide the foundations for non-market failure and ‘failure’ itself judged against criteria of economic efficiency and distributional equity. The net result is a taxonomic model comprised of four sources of non-market failure. First, ‘internalities and private goals’ refer to intra-organizational allocation procedures that determine distributional outcomes for agencies and agency personnel alike. Although both market and non-market firms must employ ‘an internal version of the price system’ for intra-firm resource allocation, market pressures ensure that the ‘internal standards’ used by market organizations conform to the ‘external price system’, while non-market organizations have internalities largely unrelated to agency performance. Secondly, ‘redundant and rising costs’ refer to the proposition that whereas market processes impose a relationship between production costs and output prices, this is often absent in non-market activity since revenues derive from non-market sources, especially government tax income. ‘Derived externalities’ are the unintended side effects of government intervention designed to ameliorate perceived instances of market failure and thus parallel externalities generated in market relationships. Finally, ‘distributional equity’ is invoked on the assumption that non-market inequities characteristically occur in terms of power and privilege, whereas distributional market failures typically appear in income and wealth differences. Le Grand theory of government failure Le Grand (1991) argued that although the Wolf model represented an innovative step in the right direction, various problems remained. In essence, Le Grand’s ‘alternative’ theory of government failure is premised on the proposition that government can involve itself in an area of social and economic activity in three main ways: provision, taxation or subsidy, and regulation. Government provision of public goods and services can be economically inefficient in two general instances: where a government has a monopoly in the provision of goods and services; and where government provision occurs in competitive circumstances, but competition derives from non-profit agencies. Secondly, through taxes or subsidies, governments can respectively increase commodity prices above competitive levels, or subsidize commodity prices below the market levels. In both cases prices will diverge from marginal social costs and induce allocative efficiency. Finally, the state ‘can regulate the production and distribution of the commodity, prescribing the structure of the markets

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or the quantity, quality or price of the commodity concerned’ (Le Grand 1991: 431). However, it is often difficult to acquire the information necessary for successful regulation and the danger of regulatory capture means producer groups can often control the process of regulation. Theory of government production failure Vining and Weimer (1991: 1) argued that while ‘Charles Wolf has made an important start by attempting to draw parallels between market failures and the manifestations of government supply failures’, his taxonomy of non-market failure has two significant shortcomings. First, since it is neither explicitly normative nor positive, its role as an analytical tool in public policy analysis is limited. Secondly, ‘although Wolf draws loose parallels with market failures, he does not take advantage of many of the well-developed implications that can be directly applied to diagnosing problems of government supply’ (1991: 2). The Vining and Weimer (1991) model draws on the theory of contestable markets in which a market is perfectly contestable if no barriers to entry or exit exist (Baumol et al. 1982). Contestability can thus act as a surrogate for competition in markets dominated by one or a few firms. However, in government production, it is possible to identify additional forms of contestability. In the first place, Vining and Weimer (1991) postulate that the existence of contestability of supply refers to actual or potential competition faced by a public agency in the market for its output. Given difficulties in monitoring government output, ‘trust that the organization producing the good will not engage in “opportunism”’ (1991: 6) becomes an important element in contestability of supply. Public agencies rather than private firms represent an appropriate organizational arrangement when the risk of opportunism is high. A second attribute of the contestability of government production resides in contestability of ownership that signifies ‘the credibility of the threat of transfer of ownership of the organization’ (1991: 6). Although transfer of ownership of some public agency may occur between agencies or departments within the broad public sector, privatization is important in this context. The efficiency characteristics of these two forms of contestability are straightforward; where both supply and ownership are highly contestable, contracting out to private firms is the most socially efficient mode of provision. Conversely, where contestability is low, government production will be more socially efficient, provided the ex ante rules limiting managerial discretion are effective. Criticism of the government failure paradigm The government failure paradigm has attracted not only considerable interest from both scholars and practitioners, but also strong criticism (see, for instance, Dollery and Worthington 1996; Wallis and Dollery 1999). While much of this criticism has been directed at specific models of government failure, some writers have attacked the generic concept of government failure as an intellectual tool in the analysis of alternative institutional methods of arranging economic and social affairs. It is instructive in the present context to examine some of the more important of these criticisms. In the first place, it has been argued that the attempt to construct a theoretical edifice to counterbalance the market failure paradigm has been misplaced since what is really required is a general theory of organizational failure that can be used to analyze all possible institutional arrangements, including markets, governments, non-profit organizations

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and the family. For example, Coase (1964: 795) has observed that ‘until we realize that we are choosing between social arrangements that are more or less all failures, we are not likely to make much headway’, and policy-makers must be made aware that all public policy instruments are significantly less than perfect. Since the formulation of public policy often involves selecting the most appropriate policy instrument from a range of market and non-market alternatives, policy-makers require a comprehensive theory that facilitates comparison of the relative efficiency of different institutions. In other words, effective policy implementation requires a general theory of organizational failure rather than conceptually distinct paradigms of market failure and government failure. Other scholars have also recognized this need. For instance, Williamson (1989: 92) has argued that ‘all forms of organization, not just markets, need to be assessed comparatively’. Accordingly, common evaluative criteria are required that can be applied to market organizations, government agencies, non-profit groups and all other conceivable institutional arrangements. Put differently, ‘whether “x” is called a comparative efficiency of the market or a comparative inefficiency of the non-market is arbitrary if all that matters is that market and non-market differ in this respect’ (Williamson 1989: 93). A second line of criticism directed at the theory of government failure as a theoretical distinctive genre is centred on methodological grounds. In this vein, some writers have argued that the entire exercise aimed at developing a normative government failure paradigm as a conceptual analogue to the traditional theory of market failure is misbegotten. This argument holds that the Paretian welfare underpinnings of the market failure paradigm are flawed, and accordingly attempts to simulate this model in the context of government behaviour simply compound these problems. For example, Peacock (1981: 41) contends that this simply encourages confusion between ‘the actual incidence of “collective failure” with the incidence which would obtain were government to follow the strict dictates of welfare economics’. In some respects, this argument is a derivative of the larger ‘nirvana fallacy’ identified by Harold Demsetz (1969: 1) and alluded to earlier. In a nutshell, it is not rational to compare some existing state of affairs with an idealized state and conclude on this basis that reality is flawed since it does not coincide perfectly with a nirvana situation. Finally, in an argument directed specifically at the theory of voluntary sector failure, but nonetheless capable of generalization to all ‘failure’ theories developed by economists, including the government failure paradigm, Roger Lohmann (2001) contends that this method of conceptualizing social institutions is no more than a rhetorical device designed to bring all organizations within the analytical range of economic analysis. In essence, ‘classifying lettuce as a mammal produces approximately the same effect’ as regarding all social institutions as akin to market firms since ‘lettuce is non-fur-bearing, non-milkproducing, non-child-bearing, and non-warm-blooded-non-animal’ (2001: 198). Intrinsically unlike social organizations are thus artificially treated in a like manner simply to render them amenable to techniques developed to explain market behaviour. Following this argument, public agencies cannot be compared with the standards applied to private firms because they are fundamentally different in both process and orientation. Public choice theory We indicated earlier that although public choice theory represents the major theoretical foundation of the government failure paradigm, its significance for NPM-type reform is

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so pronounced that it warrants a separate section of this chapter. In his seminal Public Choice III, Mueller (2003: 1) defined public choice as ‘the economic study of non-market decision making or simply the application of economics to political science’. In essence, public choice theory applies the standard homo economicus behavioural postulate to nonmarket or political processes. This fictive assumption about human motivation holds that people are egoistic rational maximizers of their own welfare. Put differently, just as consumers seek to maximize utility in consumption or firms attempt to maximize profits in production, so too people are presumed to maximize welfare in other institutional settings, including the public sector. Politicians thus strive to maximize votes, bureaucrats seek to maximize personal utility in public organizations and citizens attempt to maximize the receipt of government outlays. The upshot of this behaviour is that public policies, bureaucratic implementation of these policies, and public manipulation of these policies are directed at private gain rather than the public interest. In other words, ‘political markets’ operate along analogous lines to economic markets. Thus: Voters can be likened to consumers; pressure groups can be seen as political consumer groups or sometimes as co-operatives; political parties become entrepreneurs who offer competing packages of services and taxes in exchange for votes; political propaganda equates with commercial advertising; and government agencies are public firms dependent upon receiving or drumming up adequate political support to cover their costs. (Self 1985: 51)

Instead of the traditional assumption of conventional public economics that government processes are essentially benevolent, public choice theory thus introduces the possibility that the outcome of political activity may be malevolent. Given its economic perspective on political processes, it is hardly surprising that in the realm of public sector reform, public choice theory prescribes remedies for government failure that rely on the ubiquity of the homo economicus behavioural postulate and depend either on constitutional and other limitations on the power of politicians and bureaucrats or the introduction of market mechanisms and competition into public administration. In the first place, the notion that political actors and civil servants are inevitably and essentially self-interested has important ramifications for the design not only of national, state and local constitutions, but also for the architecture of public institutions, including public agencies and public firms. The public choice approach to ameliorating the adverse consequences of this self-interested behaviour through constitutional and institutional reform centres on the erection of legal and organizational barriers. For instance, at the national political level, the problem of excessive public expenditure could be addressed by placing constitutional limits on the level of government expenditure or on the level of government debt. Following this line of logic, public choice theorists, like James Buchanan (Buchanan and Musgrave 1999: 239), have called for balanced budget amendments, sometimes set at some upper level of national income, such as 25 per cent. At the level of the individual public bureau, the argument generally focuses on the structural separation of policy advice from policy implementation by public service departments. The basic idea is to prevent self-serving behaviour where policy advice can be shaped to ensure the budget growth of public agencies rather than to secure bona fide policy objectives. Structural separation may thus prevent or at least ameliorate ‘empire building’ aimed at public servant job security and perquisite

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enlargement. It is also argued that there should be a clear separation between major administrative functions in the civil services, such as revenue raising, delivery of services, purchasing of services and regulatory activity. In particular, the funding of services and the delivery of services should be structurally separated in terms of a purchaser–provider split to facilitate the independent monitoring and evaluation of service delivery as well as to ferment competition between potential and actual service providers. The second important implication of public choice theory stresses the beneficial effects of the introduction of competition into public service provision. According to this view, it is important to distinguish between private and public production on the one hand, and private and public finance of services on the other hand. The public choice paradigm advocates private production wherever possible using competitive tendering processes in order to reap the benefits of competition in terms of price and quality. Where private finance of public services is not possible through prices or other forms of user charges, or where private production is not feasible, then public choice economists prescribe the construction of artificial or quasi-markets to simulate competitive market processes. In circumstances where government funding is deemed essential, like public school systems, quasi-markets separate the distribution of income in society from the distribution of the service and thus facilitate equal access to the service in question. For example, in a public school system, parents can be given an unrestricted choice of schools to enrol their children, schools given budgetary independence, and encouraged to compete for pupils through a formula based on the numbers of children enrolled. A quasi-market of this kind thus simulates both consumer choice and producer competition to try to secure the advantages that usually flow from market arrangements (Le Grand 2003). Criticism of public choice theory The public choice approach has been attacked on a number of points (see Self 1993; Stretton and Orchard 1994). For instance, Self (1993: 48) has identified several major criticisms: ‘The truth and testability of the theories; the assumption of rational egoist motivation; the hostility to ideas of public interest; the fitness of market models of political activity; and the nature and concealment of the theorists’ values’. In a similar vein, Stretton and Orchard (1994: 253–6) have argued that the public choice model is ‘flawed’ in three main respects: It has ‘no understanding of the public interest’; it exhibits a ‘confusion of political liberty with market freedom’; and it contains a ‘confusion between wants and needs’. Boston et al. (1996) have developed a more recent two-pronged critique of public choice theory. First, they argue that the homo economicus behavioural postulate is intrinsically implausible since ‘human beings are not merely economic beings, but also political, cultural, and moral beings who inhabit an economic system that is profoundly influenced by, and in a sense dependent upon, the attitudes, habits, beliefs, aspirations, ideals, and ethical standards of its members’. Accordingly, because public choice theory deliberately ‘downplays or ignores these broader contextual factors, social relations, and normative commitments’, it is ‘at best incomplete, and at worst misleading and damaging’ (1996: 30). Secondly, Boston et al. (1996) contend that public choice theory has shown ‘limited predictive power’ and point to its conspicuous failure to anticipate radical policy reform of the kind experienced in several western countries, most notably New Zealand.

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These considerations have led Boston et al. (1996: 32) to draw several broad conclusions concerning the weaknesses of public choice theory as an engine of inquiry in public administration. In the first place, a satisfactory theory must ‘take into account a wider range of considerations, particularly the importance of ideas and values, in explaining human behaviour and policy choices’ (ibid.). Moreover, ‘once the assumption that politicians, bureaucrats, and voters are wholly or exclusively self-interested is abandoned, the problem of provider capture need no longer occupy centre stage’ (ibid.). It follows that ‘rather than focusing primarily on how to immunize the political system against the dangers posed by vested interests, more attention should be given to ensuring that the decision-making arrangements are open, democratic, and fair (i.e. that they provide an opportunity for all interests to be adequately represented)’ (ibid.). This would have significant analytical repercussions for ‘constitutional arrangements, the machinery of government, and the role of pressure groups in the policy-making process’ (ibid.). New institutional economics Perhaps the most important effect of the literature on government failure has been to undermine the pre-eminent position of the once unchallenged market failure paradigm in public policy formulation and this has obliged both policy elites and policy-makers to re-examine the role of government in industrialized economies. However, uncertainty still surrounds the implications of this literature for public sector reform. With relatively few exceptions, like the economic theory of bureaucracy (Breton and Wintrobe 1982; Mueller 2003) and derivative work on bureaucratic failure, most notably Wolf (1989), until recently economists have ignored public sector organizations. If the core assumptions of economic analysis consist of rational maximizing behaviour, stable preferences and comparative static equilibrium analysis, and if neoclassical economics adds heuristic concepts like perfect information and costless market exchange to the conventional tool kit (Vandenberg 2002), then it is understandable that economists would resist any temptation to analyse the hierarchical organizational structures of public agencies. After all, for more than a century neoclassical economics was content to treat the firm as an institutional ‘black box’ and represent it simply as a technological relation between inputs and outputs. However, the development of new institutional economics (NIE), with its focus on institutional realism, has changed the nature of economic inquiry considerably and served to ‘open the black box’ of public sector institutions to the scrutiny of economists (Rutherford 1996; Hodgson 1988). Malcolm Rutherford (2001: 186) has ascribed the rise of NIE to ‘the lack of institutional content at the core of neoclassical theory [that] eventually became an issue both on a theoretical level, particularly as new concepts and analytical tools were developed, and on the more applied level of the comparison of market outcomes with regulatory outcomes’. A long tradition of institutionalism exists in economic thought centred mainly on the earlier American school of institutionalism associated with the work of Clarence Ayres, John R. Commons, Thorstein Veblen and many others, including some latter-day exponents of this tradition, like William Dugger. Early institutionalism eschewed the deductive reasoning characteristic of mainstream economic methodology in favour of an inductive approach. Ingrid Rima (1986: 388) has observed that the old institutional technique was marked by a pragmatism that began with ‘observations of current experience, followed by hypothesis formulation and, finally, the testing of those hypotheses’ that is

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‘an essentially different methodology from that used to establish classical (and neoclassical) generalizations or laws’. By contrast, NIE has embraced the deductive methodology of neoclassical economics and as a consequence augmented existing theory in ways not possible with its ancestor. Furubotn and Richter (1992: 1) have noted that the new form of institutionalism has not sought to ‘set up a new and distinct type of doctrine in conflict with conventional theory’, but instead ‘the tendency to introduce greater institutional detail into economic models has come about gradually over time because of the recognition that standard neoclassical analysis is overly abstract and incapable of dealing effectively with many current problems of interest to theorists and policy makers’. One result of this development has been that NIE has been incorporated into received theory to a degree never experienced by the older tradition. Despite the fact that NIE has broadly embraced the methodology of neoclassical economics, it nonetheless does modify the orthodox approach. For instance, building on the central insight of bounded rationality (rather than complete rationality) offered by Simon (1975), NIE is based on the proposition that individuals possess an inherently limited capacity to process information and thus do not take into account all information on any given transaction. Decisions are thus rational insofar as the calculations made by individuals accommodate only known and readily accessible information. The concept of bounded rationality implies that the complexities of economic interaction cannot be fully captured by hierarchical contracts or market mechanisms. In a similar vein, because bounded rationality prevents the construction of complete contracts between agents and principals, ‘opportunistic behaviour’ can occur in which economic agents conceal their preferences and actions from those with whom they contract (Williamson 1979). Put differently, bounded rationality and the associated problem of incomplete contracts mean that economic activities are conducted in an inherently uncertain environment characterized by asymmetric information and costly transactions. These dimensions of real-world exchange processes give institutions a special significance. However, in common with old institutionalism, NIE represents a comparatively heterogeneous collection of ideas that do not yet form an integrated whole. This is apparent from the relatively disparate foundations of modern NIE. Frant (1991) has argued that it is built on three seminal contributions to economic thought over the past century. In the first place, in a famous paper, Nobel laureate Ronald Coase (1937) emphasized the importance of transactions costs in the choice of whether a firm should produce an input itself or purchase the production factor through the market. In a second pioneering contribution, Coase (1960) initiated a new way of theorizing about the optimal assignment of property rights between different parties that would maximize social welfare in the presence of externalities. The third pillar consisted of the Alchian and Demsetz (1972) property rights approach to the analysis of ‘team production’ within the firm. Property rights New institutional economics distinguishes between three main categories of property rights. First, the right to use any given asset is known as a user right; this defines the universe of potential ways in which an asset can be employed and places restrictions on its use that will reduce its economic value. Secondly, there is the right to derive income from an asset and determine its contractual use with other economic agents. Finally, there exists

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the right to alienate an asset by sale or some other means (De Alessi 1983). However, the term ‘property rights’ in NIE is far broader than its customary legal meaning and includes social norms. For example, Alchian (1977: 131) has observed that ‘the rights of individuals to the use of resources (i.e. property rights) in any society are to be construed as supported by the force of etiquette, social custom, ostracism, and formally enacted laws supported by the states’ power of violence of punishment’. Property rights must be measured, delineated, maintained and enforced and this ongoing process absorbs scarce resources. These costs can be reduced where social norms protecting property coincide with legally defined rights, and thus social institutions that reinforce the recognition of property rights are welfare enhancing since they decrease these costs. Conventional neoclassical economics is based on at least four implicit assumptions concerning property rights: all property rights are privately held; these rights are not attenuated; it is costless to maintain, protect and transfer these rights; and perfect information exists on the nature of all property rights (Eggertsson 1990). This enables individuals to engage in trading property rights and ensures that all resources are used so as to maximize their economic value in accordance with the Coase Theorem (Coase 1960). By emphasizing that in the real world, property rights are not fully delineated, may be alienated by the state and are typically costly to transfer, the NIE property rights approach focuses attention on the effects of imperfect property rights that are subject to unpredictable change. These changes can have a significant impact on the performance of an economic system. For example, theorists have demonstrated that the incentive problems stemming from non-tradable, insecure or unassigned property rights can result in what is known as the ‘tragedy of the commons’, where resources are used inefficiently. Conversely, when property rights are imperfect, people often develop ingenious institutional arrangements that seek to minimize or even completely avoid the associated economic costs. In other words, once it is recognized that actual property rights depart from an idealized neoclassical conception, then the importance of institutions designed to accommodate imperfect property rights becomes apparent (Milgrom and Roberts 1992). All complex productive activity involves the combination of various productive inputs to generate output and this typically means employing assets owned by different people under different conditions. In a market system, the permanent or temporary transfer of property rights over consumer goods and productive assets is handled by means of contracts that stipulate the conditions attached to the specific transfer in question. Contracts occupy a central role in NIE generally and the economics of property rights in particular. Stephen Cheung (1970: 51) has observed that ‘combining resources of several owners for production involves partial or outright transfers of property rights through a contract’. Each contract has a specific structure that stipulates how revenues will accrue to the different parties and how resources will be employed. In a competitive market, these stipulations are shaped by economic forces and all parties to try to minimize the costs of transacting. The economic effects of innovation in contracting are analogous to technological breakthroughs in other dimensions of production and increase the wealthgenerating potential of an economic system. But since the legal foundations of contracting are defined by the state, this means that innovation is constrained by legal rules and can be modified through policy change. Unlike the standard neoclassical model, in which the firm is represented as an

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organizational ‘black box’ and described in terms of a production function relationship between inputs and outputs, recognition of the importance of property rights and the problem of optimal contracting has meant that in the NIE paradigm the firm is represented as a constellation or nexus of contracts. A Coasian distinction is invoked between resources allocated within the organizational hierarchy of the firm and acquired from other firms through market exchange. In both cases, contracts govern the relationship between parties. As a firm grows through time, it often increases the proportion of input used ‘in-house’ relative to resources accessed through the market and this means that the significance of price signalling diminishes compared with hierarchical decision-making. Contracting can combine the cost minimizing strengths of market pricing with the need to make centralized decisions within the firm. In other words, the economic organization of firms (and public agencies) can be altered through the replacement of hierarchical decision-making by the firm with contracting with resource suppliers. Eggertsson (1990: 52) has observed that whereas ‘co-operative production involves various contractual structures’, only some of these possible structures correspond with the neoclassical definition of the firm and ‘in other instances the web of contracts among input owners does not match conventional conceptions of the firm’. Given the importance of contractual relations in determining the nature of economic organization, NIE places considerable emphasis on the economic logic of contractual arrangements (Cheung 1983). This has also assumed a central place in NPM-style contractualism. Transaction costs The property rights strand of the NIE literature is intimately related to transactions cost economics. A transaction can be defined as an agreed exchange or transfer of goods and services across technologically separable boundaries. The costs surrounding an agreement of this kind are aggregated together as transaction costs (Williamson 1985). While Coase (1937: 390) has described these costs as the ‘costs of using the price system’, Kenneth Arrow (1969: 48) has referred to them as the costs associated with ‘running the economic system’. Both writers thereby imply that transaction costs represent the costs of conducting economic exchange. In the literature, transaction costs are contrasted with production costs or transformation costs that constitute the costs involved in translating inputs into outputs. Two generic ways of specifying transaction costs have been developed. An earlier and rather narrow view conceived of transaction costs as inextricably intertwined with the notion of property rights. Thus Eggertsson (1990: 14) described transaction costs as those costs that ‘arise when individuals exchange property rights to economic assets and enforce their exclusive rights’. Along similar lines, both Barzel (1982) and McManus (1972) have defined transactions costs in terms of the costs of negotiating, enforcing and maintaining property rights. A broader and more recent view of transaction costs conceptualizes these costs as the resources absorbed in creating and maintaining the exchange enhancing institutions of market economies. Put differently, Furubotn and Richter (1992: 8) have depicted the contemporary approach as encompassing all costs subsumed in ‘(i) the creation or change of an institution or organization, and (ii) the use of the institution or organization’. The genesis of the theory of transaction costs may be found in Coase’s (1937) famous question: since firms and markets perform essentially the same basic functions, why do

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they continue to coexist? In answer to this question, Coase argued that these two alternative institutional approaches of co-ordinating economic activities operate alongside each other because there are transaction costs associated with using the price mechanism. In attempting to reduce the costs of conducting economic activity, people will seek to minimize transaction costs by using either markets or hierarchies, whichever represents the cheapest option. For instance, whether a firm decides to hire its own secretarial staff or use labour hire companies or lease a particular machine will depend on the transaction costs involved. If the costs of frequently dealing with temporary staff agencies outweigh the costs of employing permanent personnel, then the firm will follow the latter course of action. This logic is generalized by the theory of transaction costs that stresses the importance of the institutions facilitating economic relationships: markets, contracts and firms in private sector settings and government organizations, contracts and markets in the public sphere. Transaction costs theory attempts to determine the nature of transactions so as to specify which institution is optimal in any particular instance. According to this paradigm, the most important aspects of transactions reside in transactional uncertainty, transactional frequency, and the degree to which parties to given transactions must make investments in transaction-specific assets. Thus, for example, if parties commit themselves to a specialized transaction involving substantial investments in specific assets (that is, high ‘asset specificity’), then this will induce ongoing bilateral bargaining between the two parties (Williamson 1985). In an analogous vein, pervasive uncertainty in the absence of perfect information will tend to inhibit the use of long-term contracts. Similar arguments are brought to bear on transactional frequency. For example, in the absence of asset specificity, infrequent transactions will not usually require contracts and can be undertaken through the normal market mechanism. These arguments have obvious significance in the public sector as well. Agency theory Agency theory analyzes the manner in which a principal in a contractual relationship can design a contractual system to motivate an agent to behave in harmony with the economic interests of the principal. Agency theory is thus squarely focused on the problem of economic incentives. In common with the economics of property rights and the theory of transactions costs, agency theory also departs from conventional theory by introducing greater descriptive realism. In this instance, standard neoclassical economics simply assumed away principal–agent problems and the question of compatible incentives since, in the orthodox tradition, principals are perfectly informed on the tasks agents are contractually required to perform and can monitor the subsequent conduct of agents at no cost. By focusing on the problems posed by limited information and the inability to adequately monitor the behaviour of agents, agency theory adds realism to the neoclassical theory of markets. A principal–agent relationship arises when a principal delegates tasks to a contracted agent whose conduct directly affects the welfare of the principal agent. All complex societies rely on principal–agent relationships across almost the entire spectrum of economic, political and social activity. For example, in the realm of the public sector, Moe (1984: 765) has observed that ‘the whole of politics can be seen as a chain of principal–agent relationships, from citizen to politician to bureaucratic superior to bureaucratic subordinate

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and on down the hierarchy of government to the lowest level bureaucrats who actually deliver services directly to citizens’. All principal–agent relationships’ involve trade-offs on the part of the principal. For instance, if a principal decides to delegate a given range of tasks to a contracted agent, then the principal can economize on scarce resources if the specialized agent can adequately perform these tasks. However, this approach invites risks since the interests of the principal and agent will never be identical, and the prospects of ‘agency failure’ loom large if the agent fails to maximize the wealth of the principal. Because the interests of principals and agents are likely to diverge in most real-world relationships, agency theory concentrates on the costs attached to agency relationships and efforts to economize on these costs. Jensen and Meckling (1976) identified three main types of agency costs. In the first place, monitoring costs derive from the need to scrutinize the behaviour of agents and develop incentives to secure desirable behaviour. Secondly, bonding costs will arise from agents investing resources to guarantee successful outcomes to principals. Finally, ‘residual loss’ costs fall on principals owing to a divergence between their interests and those of their agents. Total agency costs thus consist of monitoring costs, bonding costs and residual loss costs. The empirical magnitude of total agency costs depends on the characteristics of particular agency relationships. In an agency relationship, specialized agents usually possess more information about both the task assigned and the relative efficacy of their own performance. This asymmetry of information opens the way for agents to exploit principals by engaging in shirking or opportunistic behaviour directly contrary to the interests of principals; the greater the extent of this behaviour, the greater will be total agency costs. While agency theory was originally designed to analyze the modem corporation, typically characterized by a separation of ownership (that is, principal) from control (that is, agent), it was soon applied more generally to economic organization, including public sector entities. In particular, two dimensions of the literature on agency theory shed considerable light on the generic problem of agency failure. First, adverse selection refers to the difficulties stemming from informational asymmetries in principal–agent relationships as a result of pre-contractual opportunism. By way of example, large franchise operations often possess more knowledge concerning the market potential of prospective franchises they wish to sell and can thus negotiate a contractual arrangement with the franchisee reflecting this knowledge to their benefit. A second and related concept is moral hazard that arises from post-contractual opportunism. In this case, actions desired or required under the contract that are not directly observable may be shirked (Gibbons 1998). More recent work in agency theory has broadened its focus to include sources of employee motivation beyond simply material remuneration, such as organizational identity. Conventional neoclassical economics is based on fixed individual preferences with utility dependent only on pecuniary incentives. However, in real-world organizations, considerable resources are often devoted to inculcating non-economic motives into employees – with military training a quintessential example – in the hope of modifying the identity of workers to incorporate organizational goals. Among other things, successful indoctrination of employees can ameliorate moral hazard where behaviour is impossible to monitor effectively. For instance, Akerlof and Kranton (2005: 10) have developed an agency model embodying identity ‘where employees may have identities

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that lead them to behave more or less in concert with the goals of their organization’ so that ‘workers are willing to put in high effort rather than low effort with little wage variations’. Various methods of successfully changing employee identity have been identified, not least good organizational leadership. Although still in its infancy, this line of inquiry holds great promise for public organizations. Concluding remarks It has been argued that NPM-type public sector reform programs have been influenced by intellectual developments in management science and the economics discipline to a degree not previously seen in public administration. This chapter has sought to explore the theoretical foundations of a highly stylized model of NPM. While numerous caveats have been attached to the extent to which any OECD Civil Service system actually employed anything closely resembling this model, with the possible exception of New Zealand, it nonetheless served to illustrate the critical reliance of the model on generic managerialism on the one hand, and NIE and public choice theory on the other hand. Needless to add, demonstrating the existence of a well-defined theoretical model of NPM and finding its roots in abstract conceptual arguments in the scholarly literature is a long way from establishing that its intellectual coherence is alone responsible for its attractiveness in the wave of public sector reform that has swept the western democracies over the past 30 years. Indeed, as I indicated at the beginning of this chapter, while the NPM-type model has intrinsic intellectual merit as well as some empirical support, and this undoubtedly conveys rhetorical advantages to its advocates in public debate over the optimal form of public administration renewal, other forces have clearly been at work in determining the degree to which it has been adopted as the basis for public sector reform in individual countries. References Aberbach, Joel D. and Tom Christensen (2003), ‘Translating theoretical ideas into modern state reform: economics-inspired reforms and competing models of governance’, Administration and Society, 35 (5): 491–509. Akerlof, George A. and Kranton, Rachel E. (2005), ‘Identity and the economics of organizations’, Journal of Economic Perspectives, 19 (1): 9–32. Alchian, Armen (1977), Economic Forces at Work, Indianapolis, IN: Liberty Press. Alchian, Armen and Harold Demsetz (1972), ‘Production, information costs, and economic organization’, American Economic Review, 62 (4): 777–95. Arrow, Kenneth (1969), ‘The organization of economic activity: issues pertinent to the choice of markets versus non-market allocation’, in R.H. Haverman and J. Margolis (eds), Public Expenditure and Policy Analysis, Chicago, IL: Markham, pp. 43–51. Aucoin, Peter (1990), ‘Administrative reform in public management: paradigms, principles, paradoxes and pendulums’, Governance, 3 (2): 115–37. Bailey, Stephen J. (1999), Local Government Economics, Basingstoke: Macmillian. Barzel, Yoram (1982), ‘Measurement costs and the organization of markets’, Journal of Law and Economics, 25 (1): 27–48. Barzelay, Michael (2001), New Public Management: Improving Research and Policy Dialogue, Berkeley, CA: University of California Press. Baumol, William J., John C. Panzar and Robert D. Willig (1982), Contestable Markets and the Theory of Industrial Structure, New York: Harcourt Brace. Boston, Jonathan (1985), The State Under Contract, Wellington: Bridget Williams. Boston, Jonathan, John Martin, June Pallot and Pat Walsh (1996), Public Management: The New Zealand Model, Auckland: Oxford University Press. Boyne, George A. (1998), Public Choice Theory and Local Government, Basingstoke: Macmillan. Breton, Albert (1995), Competitive Governments, Cambridge: Cambridge University Press.

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Breton, Albert and Ronald Wintrobe (1982), The Logic of Bureaucratic Conduct, New York: Cambridge University Press. Buchanan, James M. (1978), ‘From private preferences to public philosophy: the development of public choice’, in Institute of Economic Affairs, The Economics of Politics, London: Institute of Economic Affairs, pp. 15–25. Buchanan, James M. and Musgrave, Richard A. (1999), Public Finance and Public Choice: Two Contrasting Visions of the State, London: MIT Press. Burton, Therese A., Brian E. Dollery and Joe Wallis (2002), ‘A note on the debate over “economic rationalism” in Australia: an application of Albert Hirschman’s Rhetoric of Reaction’, History of Economics Review, 36: 1–9. Byrnes, Joel D. and Brian E. Dollery (2002), ‘Local government failure in Australia: an empirical analysis of New South Wales’, Australian Journal of Public Administration, 61 (3): 54–64. Caplan, B. (2005), ‘From Friedman to Wittman: the transformation of Chicago political economy.’ Econ Journal Watch, 2 (1): 1–21. Chang, H.J. (1994), The Political Economy of Industry Policy, London: Macmillan. Cheung, Steven N.S. (1970), ‘The structure of a contract and the theory of a non-exclusive resource’, Journal of Law and Economics, 13 (1): 49–70. Cheung, Steven N.S. (1983), ‘The contractual nature of the firm’, Journal of Law and Economics, 26 (1): 1–21. Coase, Ronald H. (1937), ‘The nature of the firm’, Economica, 4: 386–405. Coase, Ronald H. (1960), ‘The problem of social cost’, Journal of Law and Economics, 3 (1): 1–44. Coase, Ronald H. (1964), ‘The regulated industries: Discussion’, American Economic Review: Papers and Proceedings, 62 (4): 777–95. De Alessi, Louis (1983), ‘The role of property rights and transactions costs: a new perspective in economic theory’, Social Science Journal, 20 (3): 59–70. Demsetz, Harold (1969), ‘Information and efficiency: another viewpoint’, Journal of Law and Economics, 82 (4): 713–19. Dollery, Brian E. and Joe Wallis (1997), ‘Market failure, government failure, leadership and public policy’, Journal of Interdisciplinary Economics, 8 (2): 113–26. Dollery, Brian E. and Joe Wallis (2001), The Political Economy of Local Government: Leadership Reform and Market Failure, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Dollery, Brian E. and Andrew C. Worthington (1996), ‘The evaluation of public policy: normative economic theories of government failure’, Journal of Interdisciplinary Economics, 7 (1): 27–39. Eggertsson, Thrain (1990), Economic Behavior and Institutions, Cambridge: Cambridge University Press. Frant, Howard (1991), ‘The new institutional economics: implications for policy analysis’, in D.L. Weimer (ed.), Policy Analysis and Economics, London: Kluwer, pp. 111–25. Furubotn, Eirik G. and R. Richter (1992), ‘The new institutional economics: an assessment’, in E.G. Furubotn (ed.), New Institutional Economics, Aldershot, UK and Brookfield, US: Edward Elgar, pp. 1–32. Gibbons, Robert (1998), ‘Incentives in organizations’, Journal of Economic Perspectives, 12 (4): 115–32. Hirschman, Albert O. (1970), Exit, Voice and Loyalty, Cambridge: Cambridge University Press. Hodgson, G. (1988), Economics and Institutions, Cambridge: Polity Press. Hood, Christopher (1991), ‘A public management for all seasons’, Public Administration, 69 (1): 3–19. Hood, Christopher (1994), Explaining Economic Policy Reversals, Buckingham: Open University Press. Hood, Christopher (1998), The Art of the State: Culture, Rhetoric, and Public Management, London: Oxford University Press. Jensen, M.C. and W.H. Meckling (1976), ‘Theory of the firm: managerial behavior, agency costs, and ownership structure’, Journal of Financial Economics, 3 (3): 305–60. Lane, Jan-Erik (ed.) (1997), Public Sector Reform: Rationale, Trends and Problems, London: Sage. Le Grand, Julian (1991), ‘The theory of government failure’, British Journal of Political Science, 21 (4): 739–407. Le Grand, Julian (2003), Motivation, Agency, and Public Policy, Oxford: Oxford University Press. Lohmann, Roger A. (2001), ‘And lettuce is non-animal: towards a positive economics of voluntary action’, in S.J. Ott (ed.), The Nature of the Nonprofit Sector, Boulder, CO: Westview Press, pp. 197–204. McManus, John C. (1972), ‘The theory of the multinational firm’, in G. Pacquet (ed.), The Multinational Firm and the National State, London: Collier-Macmillan, pp. 63–72. Milgrom, Paul R. and John Roberts (1992), Economic, Organization and Management, Englewood Cliffs, NJ: Prentice Hall. Moe, T.M. (1984), ‘The new economics of organization’, American Journal of Political Science, 28 (4): 739–77. Mueller, Dennis (2003), Public Choice III, Cambridge: Cambridge University Press. O’Dowd, Michael C. (1978), ‘The problem of government failure in mixed economies.’ South African Journal of Economics, 46 (3): 360–70.

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Painter, Martin (1988), ‘Public management: fad or fallacy?’, Australian Journal of Public Administration, 47 (1): 1–3. Peacock, Alan T. (1981), The Economic Analysis of Government, Oxford: Martin Robertson. Peltzman, Samuel (1976), ‘Towards a more general theory of regulation’, Journal of Law and Economics, 19 (2): 211–40. Peters, B. Guy (1996), The Future of Governing: Four Emerging Models, Lawrence, KS: University Press of Kansas. Peters, B.G. and V. Wright (1996), ‘The public bureaucracy’, in R.E. Goodin and H.D. Klingerman (ed.), A New Handbook of Political Science, Oxford: Oxford University Press, pp. 628–39. Pigou, Arthur (1920), The Economics of Welfare, London: Macmillan. Pollitt, Christopher (1995), ‘Justification by works or by faith: evaluating the new public management’, Evaluation, 1 (2): 133–54. Pollitt, Christopher (2003), The Essential Public Manager, Buckingham: Open University Press/McGrawHill. Pollitt, Christopher and Geert Bouckaert (2004), Public Management Reform: A Comparative Analysis, 2 edn, Oxford: Oxford University Press. Quibria, M.G. (2003), ‘The puzzle of social capital: a critical review’, Asian Development Review, 20 (2): 19–39. Rima, Ingrid H. (1986), Development of Economic Analysis, 4th edn, Homewood, IL: Irwin. Rutherford, Malcolm (1996), Institutions in Economics: The Old and the New Institutionalism, Cambridge: Cambridge University Press. Rutherford, Malcolm (2001), ‘Institutional economics: then and now’, Journal of Economic Perspectives, 15 (3): 173–94. Self, Peter (1985), Political Theories of Modern Government: Its Role and Reform, London: Allen and Unwin. Self, Peter (1993), Government by the Market? The Politics of Public Choice, London: Macmillan. Simon, Herbert (1975), Reason in Human Affairs, Oxford: Basil Blackwell. Stigler, George (1971), ‘The economic theory of regulation’, Bell Journal of Economics, 2 (1): 137–46. Stretton, Hugh and Lionel Orchard (1994), Public Goods, Public Enterprise, Public Choice, New York: St. Martin’s Press. Tullock, Gordon, Arthur Seldon and Gordon L. Brady (2002), Government Failure, Washington, DC: Cato Institute. Vandenberg, Paul (2002), ‘North’s institutionalism and the prospect of combining theoretical approaches’, Cambridge Journal of Economics, 26 (1): 217–35. Vining, Adrian R. and David L. Weimer (1991), ‘Government supply and government production failure: a framework based on contestability’, Journal of Public Policy, 10 (1): 1–22. Wallis, Joe and Brian E. Dollery (1999), Market Failure, Government Failure, Leadership and Public Policy, London: Macmillan. Weisbrod, Burton (1978), ‘Problems of enhancing in the public interest: towards a model of government failures’, in B.A. Weisbrod, J.F. Handler and N.K. Komesar (eds), Public Interest Law, London: University of California Press, pp. 30–41. Williamson, Oliver E. (1979), ‘Transactions cost economics: the governance of contractual relations’, Journal of Law and Economics, 22: 233–61. Williamson, Oliver E. (1985), The Economic Institutions of Capitalism, New York: Free Press. Williamson, Oliver E. (1989), ‘Review of markets or governments: choosing between imperfect alternatives’, Journal of Economic Literature, 27 (1): 92–3. Wolf, Charles (1979), ‘A theory of non-market failure: framework for implementation analysis’, Journal of Law and Economics, 22 (1): 107–39. Wolf, Charles (1983), ‘“Non-market failure” revisited: the anatomy and physiology of government deficiencies’, in H. Hanusch (ed.), Anatomy of Government Deficiencies, New York: Springer-Verlag, pp. 138–51. Wolf, Charles (1987), ‘Market and non-market failures: comparison and assessment’, Journal of Public Policy, 6 (1): 43–70. Wolf, Charles (1989), Markets or Governments: Choosing Between Imperfect Alternatives, Cambridge, MA: MIT Press. Yamamoto, H. (2003), New Public Management: Japan’s Practice, Institute for International Policy Studies Policy Paper 293E, January, Tokyo: IIPS. Zerbe, R.O. and H.E. McCurdy (1999), ‘The failure of market failure’, Journal of Policy Analysis and Management, 18 (4): 558–78.

3

HRM in the public sector: is it enough? Marie-France Waxin and Robert Bateman

Introduction Two decades of administrative reforms have seen governments around the world initiating changes ranging from the bold in some nations to the rhetorical in others. New human resource management (HRM) practices have perhaps not received the same public attention devoted to contracted service delivery or performance-based budgeting, but the drive to make government more businesslike has had significant impacts on public sector employment. Batal (1997) suggests that increased attention to HRM in government can be attributed to the large numbers of public sector employees in many nations, their resulting impact on government budgets, and the essential role that employees must play in improving organizational efficiency and customer service. Though these same arguments may be made for many private sector enterprises, lower entry and departure rates for employees in the public service place increased importance on effective HRM and the ongoing internal renewal and upgrading of competencies and capabilities. Although government organizations in many nations have adopted some elements of HRM ‘best practice’ in an attempt to improve competence-based performance, this adoption has been less than complete (Morris and Farrell 2007). Based on a study of ten public organizations in the UK, these authors also argue that those reforms that have been implemented often result in significant adverse outcomes, such as longer working hours, reduced job satisfaction and added complexity. Perhaps more important from a strategic perspective, a focus on borrowing technical improvements from industry may – perhaps unintentionally – shift attention away from the need for a fundamental rethinking of how public employees are viewed (Risher 2003). In spite of the efforts of former US Comptroller General David Walker and others who have promoted a human capital approach to HRM, few government employers treat employees as a strategic asset. Although each country pursuing new public management (NPM) reforms has followed its own path drawing on its unique culture and history, several common HRM trends have emerged. Increasingly, governments have subjected internal capabilities to competition with private sector alternatives, in many cases forcing public organizations to take on business-oriented or market-driven perspectives. In some cases, line organizations and managers have been given greater flexibility and freedom through various decentralization and devolution policies, and in return, political leaders have tried to secure accountability and highlight their own commitment to improving public services by stressing performance against agreed service goals or defined indicators. With this accountability, however, have often come reductions in the job security that was a key attraction for many civil servants in the past. The prospect of less secure employment comes, however, at a time in which public organizations face growing difficulty in attracting new employees. Governments in many societies have traditionally provided public sector compensation below that of private 41

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enterprises, but Shim (2001) suggests that recognition of the need to attract capable employees has led some organizations to also acknowledge the need to become model employers. In addition to the traditional public sector values of neutrality, justice, equity, representation, responsibility and integrity, employees are now expected to embody professionalism, teamwork, innovation and quality (Kernaghan 1997). Because these new values are similar to those sought by employers in business enterprises, government leaders in progressive societies must compete more actively for the best and brightest workers. Fortunately, public organizations do have some unique appeal to individuals interested in specific causes or issues, a factor that contributes to both motivation and stability (Batal 1997; Gouvernement du Canada 2000). The discipline of government human resource management is too broad to be covered in a single chapter. Our objective here is to describe and discuss changes in HRM practice as they have emerged in public organizations undertaking new management reforms. In the first section, we present a conceptual framework that will allow us to point out key elements of change in the public sector. The following sections will review specific changes that have appeared in four major fields of HRM: recruitment and selection, training and development, performance management, and compensation. The conceptual framework of public HRM Career-based, position-based and department-based management systems Although public employment or civil-service systems may be characterized in several different ways, an Organisation for Economic Co-operation and Development (OECD 2004) report on strategic HRM in the public sector identifies three general approaches used by central governments in member countries: career based, position based and department based. In Figure 3.1, individualization refers to the degree to which management rules and practices vary according to the situation of specific departments or individuals and less according to the idea of a unified service. Delegation levels are measured by the locus of decision-making power, from central HRM bodies to line departments and lower administrative levels. Within each of the systems identified, HRM practices vary. In career-based systems, civil servants are usually hired at the beginning of their professional career and may be expected to remain in the public service for their entire working life. Initial entry is based primarily on academic credentials and/or a civil service entry examination. Promotion is based on a system of grades or ranks attached to the individual rather than to a specific position. Mid-level entry possibilities are usually limited. There is a strong emphasis on career development. Collective values are promoted at entry into specific subgroups of the civil service (for example, the notion of ‘corps’ in France), with relatively weaker cross-hierarchical and cross-corps values. The emphasis is often less on individual performance and accountability than on group cohesion and co-operation. Position-based systems focus on selecting the best-suited candidate for each position, whether by external recruitment or internal promotion or mobility. These systems allow more open access, with lateral entry relatively common. Position-based services tend to have weaker cross-government values at entry than career-based systems but may create stronger links across levels of hierarchy and status.

High

HRM in the public sector

43

Degree of individualization of HRM practices

Position-based systems Sweden, New Zealand, Australia, UK, USA, Germany, Denmark, Switzerland

Department-based systems Belgium, Portugal, Netherlands, Italy, Mexico Czech Republic

Low

Career-based systems Luxembourg, Greece, Japan, France, Spain

Low Source:

Degree of delegation of HRM practices

High

Adapted from OECD (2004).

Figure 3.1

Delegation and individualization approaches to HR practices in central governments of OECD countries

The OECD report identifies a third approach, department-based systems, to characterize hybrids with relatively high levels of delegation and a relatively low level of individualization. These systems give responsibilities for HRM policies and practices to the line ministries, with civil servants usually making a career in a single ministry. A few countries have attempted to apply new public management reforms in making system-level changes, perhaps moving from one category to another; but overall, the three forms of civil service systems remain relatively intact. In making changes, most nations may be expected to take into account the inherent strengths and weaknesses of their respective civil service. Because department-based systems may be considered a relatively new category, it is still difficult to fully identify their inherent benefits and failings: these systems will require more study in the future. According to the OECD 2004 report, the underlying issue is how to provide the flexibility necessary to improve responsiveness to changing needs and focus on local or sectoral demands while at the same time maintaining a sense of collectivity and coherence. As will be discussed later, the degree to which political leaders and senior managers are willing to provide such flexibility varies by nation. The question of decentralization has significant consequences for the capacity to implement reforms; having a coherent, collective and centralized HRM system allows us to think broadly about human resource (HR) challenges and implement global reforms,

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while a more flexible system might help create the incentive for reform and better adapt to local and sector-specific needs. The OECD report concludes that a more complete analysis and understanding of issues at stake will require governments to look more closely at two specific issues: the evolution of industrial relations and the evaluation of the structure of public service. How many staff should be employed under what types of contracts, and what types of accountability structures will work most effectively, given the unique challenges in government organizations? Three models of public administration, as basis of a new HRM reform model The World Public Sector Report (WPSR) (UN/DESA 2005) offers governments a number of HRM reform ideas and suggests guidelines for realizing continuous innovation and recovery of trust in the public sector (Kim and Hong 2006; UN/DESA 2005). As part of the process of evolutionary reform, many governments are currently looking for a new synthesis of traditional and modern principles and techniques of public administration and management. The WPSR 2005 advocates striking a balance between three broad models/schools in public administration (PA): traditional PA, (new) public management, and the emerging model of responsive governance. The last of these refers to an emphasis on greater openness and the creation of partnerships with civil society and the private sector. Each of these models has particular strengths and highlights core values that are relevant in addressing contemporary HRM challenges in the public sector. Traditional PA relies on the values of obedience, merit and impartiality. In contrast, NPM approaches favor efficiency, responsiveness to the citizen as customer, and professionalism. The governance perspective also values responsiveness but claims to empower the citizen through enhancing participation. The HRM framework advocated in the report proposes a public service that is impartial, professional and responsive, drawing where appropriate on the skills and resources of the private sector. It argues that countries should first establish an effective institutional framework for human resource management as an underlying infrastructure to achieve high performance in the public sector. A strategic HRM system should then build on this base using the fundamental values of impartiality, professionalism and responsiveness. Of course, HRM professionals in the public sector, as well as the private, have long advocated the need for input in the strategic decision processes of their respective organizations, but these calls have now taken on the language of NPM. In addition to calls for the upgrading of their own influence in these discussions, public HR managers increasingly point to the need for merit-based appointment; competence-based development; competence-based appraisal and performance management; equity vis-à-vis the private sector; the embrace of a total pay approach; and, in the retention field, rightsizing and effective labor management. Some of these values have been advocated in PA for many years, yet they remain consistent with the tenets of NPM. For more details on the WPSR model of public HRM, see UN/DESA (2005) or Kim and Hong (2006). The notion of a new HRM model has been subject to criticism, however. Champions of the NPM movement point to a new administrative paradigm, whereas skeptics argue that it represents little more than incremental evolution from established traditions in HRM (Page 2005). In contrast, Thompson (2006) argues that the creation of separate strategic agency-specific human resource systems represents a real threat to the institution of a unified civil service, the viability of which is contingent on its inherently collective

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nature. Kim and Hong (2006) argue – on similar grounds as with NPM generally – that the WPSR 2005 model lacks both a practical and a theoretical basis. These authors propose a contingent HRM reform model, taking into account indigenous factors such as political governance styles (presidential or parliamentary systems); socio-institutional maturity (institutionalization versus actual power or nepotism, or compliance with democratic processes across society); regional or cultural blocs; economic development stages; and other situational considerations. These authors warn that governments need to start HRM reforms on the basis of their current needs, developing and adjusting them gradually to meet the requirements of the day rather than adopting a blueprint model drawn from a notion of international best practice, often associated with NPM. According to David (2000), though the trend of convergence may be accelerating in government policy networks, we may actually see new public HRM moving toward divergence, because cultures and path-dependent policies that have been historically developed become embedded in people’s values and behaviors. Even the generally accepted values in public HRM theory will be challenged if they conflict with the sociocultural norms of a given country. Lavelle (2006) also argues that effective public sector HRM practice is situational: adoption of particular management practices and HRM tools hinges on an understanding of local culture and organizational forms. HR practices not grounded in local mores cannot be expected to work effectively. Changes in recruitment and selection processes We turn now to changes that have taken place in both recruitment and selection practices. Because permanence and job security are still more common in the public sector than in the private sector (Lemire and Gagnon 2004), attracting and selecting capable public employees is all the more important. The adoption of merit-oriented, career-based civil service systems is generally accepted as a key factor in explaining public sector performance in both developed and less developed countries (Rauch and Evans 2000). The WPSR 2005 defines merit as ‘the appointment of the best-suited person for any given job’. Yet, governments worldwide are increasingly unable to find qualified staff (Soni 2004). Recruitment Recruitment is the process by which an employer seeks qualified applicants for vacant positions. Public sector recruitment in many nations has had a notorious reputation for being slow, unresponsive, bureaucratic and passive. Perhaps recognizing the need to attract more qualified applicants, some public organizations are trying to make their entry procedures more user-friendly and transparent by introducing procedural, process and technological changes intended to enhance their attractiveness to applicants (Lavigna and Hays 2004). Many public organizations have introduced more flexibility in their recruitment efforts. Some countries have eliminated arbitrary rules, adopted more appealing hiring procedures, created flexible job descriptions (Center for the Study of Social Policy 2002), and instituted worker-friendly personnel policies (Reichenberg 2002). Public agencies increasingly use internal and external recruitment methods that have long been exploited in the private sector. Several of these techniques are discussed below. Employee referrals are generally recognized as a highly effective internal recruitment

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method, in which current workers are asked to recommend qualified candidates. In some cases, referral bonuses are paid to employees who help recruit successful candidates for high-demand or high-skill positions. Due to long-standing concerns about propriety and the desired neutrality of the civil service, public organizations have only recently involved their employees in the search for new talent. Systematic internal and external job posting increases the quality of recruitment practices by enlarging the pool of candidates, but it may also enhance retention rates and employee motivation. From the manager’s perspective, electronic posting helps to identify and track qualified candidates for different positions simultaneously. Many large public organizations now use computer bulletin boards, toll-free automated telephone systems and electronic mail to publicize their job vacancies. Lavigna (2002) and Lavigna and Hays (2004) describe aggressive outreach efforts and more active media advertising on the part of public organizations along with the growing use of full-time government recruiters who directly and regularly communicate with multiple organizations that are potential sources of job candidates. Some public employers pursue aggressive outreach strategies at job fairs, college campuses and in local communities; use aggressive media advertising in print and electronic formats; and distribute marketing and recruitment materials that promote public sector careers. Increased use of information technology has also attracted much attention among recruiters in the public sector (Marchack 2002). Résumé databases serve as national and international repositories of information on individuals with professional credentials that can be used to pre-screen thousands of applications simultaneously. Automated systems are now used to match résumés with skill sets for particular jobs (Selden and Jacobson 2003). Applicant tracking systems ensure that no candidate falls through the cracks or misinterprets a lack of communication as a sign that the employer is no longer interested. Public organizations are casting a wider net for job applicants and then cultivating them more systematically as they move through the selection process. Public organizations have also increased their use of temporary workers and interns. This practice presents at least three major advantages: first, it allows the organization to evaluate the competencies and potential of the short-term employee before offering permanent positions to the best of them; second, the recruits are operational from their first day; and third, retention rates increase because the workers have experienced the organization before accepting the job (Doverspike et al. 2000). For example, at one US social service agency, paid interns are placed in the most challenging jobs for two or three years before receiving an offer for a permanent position. However, the use of temporary or agency workers may also result in management problems and reduced quality of some public services (Hoque and Kirkpatrick 2008). More effort has also been devoted to recruitment of minorities. Public employers eager to provide effective service to growing numbers of minority customers may find that members of a demographic group are best able to relate to the specific needs of others from the same subpopulation. As the number of minority individuals increases within the populations of many developed nations, ignoring potential minority candidates becomes increasingly untenable. Organizations may also be recognizing that diverse viewpoints could lead to innovative approaches to accomplishing the organizational mission. Box 3.1 illustrates minority recruitment efforts by two public sector organizations in Canada.

HRM in the public sector

BOX 3.1

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MINORITY RECRUITMENT EFFORTS IN PUBLIC SECTOR ORGANIZATIONS IN CANADA

The Montreal Police Department publishes their recruiting advertisements in community journals such as the ‘Magasin Égyptien’ (Egyptian Journal), the ‘Journal Arménien’ (Armenian Journal) and the ‘Laz Voz’ (Latino-American journal). They also broadcast them on a community radio station (‘Radio Centre-Ville’). Moreover, the department uses promotional posters and leaflets to attract youth in targeted minority communities that feature photos and interviews with minority employees. Finally, they regularly organize conferences and meetings with cultural associations and community groups and they also participate in radio and TV programs whose audiences are primarily composed of ethnic minorities. Postes Canada recently started using the services of the company ‘Equitek’ which has established an on-line recruiting system allowing potential employers to post job advertisements to targeted minorities through Equitek’s network of minority organizations. Source:

Waxin and Panaccio (2004).

Selection Selection is the process by which an organization chooses from a list of applicants those individuals whom it believes best meet the selection criteria and will be able to succeed in the available position. Here again, some public organizations have dramatically modernized their practices in the last decade. To some degree, these changes have been forced by the increasing difficulty of finding qualified employees. An important advance has been rapid applicant screening, supplanting long and often complex procedures that previously discouraged many qualified candidates. Some jurisdictions now require applicants to submit nothing more than a résumé; qualified candidates are then promptly interviewed by telephone (Lavigna 2002). Another trend is to automatically certify applicants as eligible for appointment if they meet certain conditions, such as holding a professional license or credential (Lavigna 2002). Some employers even permit immediate hiring of applicants whose college grades are sufficiently high. Public employers have also modified their selection criteria. Many organizations find that candidates are simply over-qualified educationally, which contributes to credentialism. A recent trend is to de-emphasize experience and education as job requirements. Criteria that artificially limit the applicant pool, hinder efforts to diversify the workforce, and unnecessarily exclude candidates who might be excellent performers are eliminated (Sullivan 2002). Instead, the selection process is refocused on job-related criteria. The key standard for a minimum qualification is that a factor is actually essential to job performance and does not arbitrarily deny persons who might be able to do the job a chance to compete. Currently the trend is to remove requirements that cannot be validated and then add flexibility by allowing for substitution of education for experience (and vice versa) up to a certain point (Nigro et al. 2007).

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Competency frameworks have allowed public sector organizations to move away from narrow and unique job specifications toward the use of broader, more behavioral attributes (Page et al. 2005). For example, the Irish Civil Service Competence Framework defines competence as ‘the necessary behaviors and attributes as well as knowledge and skills required to do our jobs well and in a way in which we realize our potential and provide the highest quality service to our customers’ (CMOD 2003). Selection on the basis of competencies in Belgium allowed the Flemish and federal administrations to look more attractive as an employer on the labor market by breaking through the highly formalized and rigid career system (Brans and Hondeghem, 2005). However, Page et al. (2005) argue that nations often specify different competencies for similar positions, attributing this to attempts to imitate the local private sector or simply an effort to repackage existing agendas through hiring practices. Public organizations have also modified the way they conduct tests and interviews. The WPSR 2005 sums up the intent as follows: ‘Merit is not self evident, and justice must be seen to be done’ (UN/DESA 2005: 82). Administrative organizations often select candidates using a university-style competitive examination (sometimes called assembled examinations), such as in Pakistan and the Republic of Korea, or by scrutinizing educational qualifications, experience and references (unassembled examinations), such as in Singapore. Information comes from the application and other documentation required in the application process. However, one meta-analysis found very weak statistical relationships between qualifications and job performance (UN/DESA 2005: 82). On the other hand, sophisticated selection tests commonly used in the West are not available in most developing countries and transition economies, would be too expensive to develop and would likely not be justified for the bulk of public appointments (UN/DESA 2005). In developed countries, the pressure to devise valid and non-discriminatory tests has led to the growing adoption of performance-based tests and assessment center examinations. Performance tests ask the applicant to accomplish essential tasks related to job responsibilities. As computer technologies and software become more sophisticated, more complex mixes of knowledge, skills and abilities will be evaluated using these instruments. Such tests have high face validity and are generally perceived as fair and objective, although concerns about ethnic or racial biases remain. A major limitation is cost because expensive equipment must often be purchased and maintained (Nigro et al. 2007). Assessment centers, frequently using several selection methods (different types of tests, interviews, group exercises, work samples and simulations as appropriate), remain a gold standard in the public sector and are used in several countries that have borrowed from the UK model (UN/DESA 2005: 83). Their major advantages are transparency and high acceptance of results by the applicants. According to a study by Brewster et al. (2004), average predictive validity of assessment centers is about 0.6, with 1.0 representing complete validity. The major disadvantage is their high cost. However, research shows that the validity of panel interviews can match that of an assessment center, provided that sessions are structured, based on job analysis, conducted by trained interviewers, and culminate in an appointment that reflects panel members’ independent scores (UN/ DESA 2005). Acquiring the right people is increasingly recognized as a condition for public sector effectiveness, as is the need to compete with private employers for capable staff. Although

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recruitment and selection practices in many public organizations have undergone significant changes that reflect best practice in industry, these shifts are neither drastic nor complete. Many small agencies simply lack the resources and expertise to take advantage of new technologies and approaches. Nor are government and industry requirements identical: rushing to adopt private sector approaches without recognizing fundamental differences can be a high-risk strategy. A challenge for governments is to select the reforms most suitable to their own settings and adapt them to local needs, particularly in hiring individuals who will meet citizen service expectations (Lavigna and Hays 2004). Whether leaders will support the more fundamental rethinking necessary to change the nature and perception of public service is an open question (General Accounting Office 2001). Changes in training and development practices In recent years, training and development (T&D) have been viewed as crucial management tools in responding to the increased need for skills requisite to a knowledge economy and to the need for ongoing organizational change and adaptation. Training and development is also important for public organizations in improving performance and in motivating and retaining staff. In some highly individualized position-based systems, training is increasingly used as a way to provide a common culture and an opportunity to meet and discuss professional issues across the civil service (OECD 2004). In the following paragraphs, we offer some comparative information on training practices in OECD countries, explore the major difficulties encountered by public sector employers in the training process and consider the concept of competency-based development. Training Training is the systematic process of altering the behavior of employees in a direction that will achieve organization goals. It has a current orientation related to present job skills with the purpose of helping employees master specific abilities needed to be successful in their existing positions. Development prepares individuals for the future and focuses on learning and personal growth. The OECD (2004) report allows us to provide a broad picture of training practices. In 13 developed countries, civil servants spend between 5 and 10 days in training per year; in four countries they spend between 11 and 15 days in training per year; and in seven countries, they spend less than 5 days in training per year. Training policy is defined at the level of central HRM bodies in 20 OECD countries, and its implementation is left to line departments or even lower management levels in all but eight countries. A number of nations with position-based systems tend to use private sector companies or universities for training, while most countries still insist on the use of a specific training institute for civil servants. Some countries, such as the USA and Sweden, have set up special institutions to recruit and develop their managers and leaders (Shim 2001). Consistent with private sector practice, training and development has become a shared responsibility in some public service systems. Employees are increasingly responsible for self-development and successfully completing and applying authorized training. In addition, they share with their agencies the responsibility to identify T&D needed to improve individual and organizational performance (Clardy 2008). That said, it appears that lifelong training has yet to become a reality in most OECD countries. A few nations, including Germany, Iceland, Japan, Mexico, Sweden and the USA, claim to have developed

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coherent lifelong learning strategies. In the most advanced cases, ongoing education has been integrated with the staff performance management system, as in Australia. Sweden and the UK have made the establishment of business plans contingent on reflections about needed competencies and skills, another practice consistent with a strategic approach to HRM. Public organizations encounter difficulties in the training process principally related to training needs assessments, training transfer and training effectiveness evaluation. Training needs assessment (TNA) is the first step in the development of a training program, in that it helps determine whether training is necessary. A needs assessment usually involves organizational analysis, person analysis and task analysis. A TNA determines first where the organization is and where it should be in the foreseeable future. Next, a determination is made to consider the appropriate mix of technical, clerical and managerial skills necessary to achieve the desired ends. Research indicates that state agencies conduct substantially less formal assessment of employee training needs than the private sector (Patton and Pratt 2002). Bjornberg (2002) identified an example of needs assessment best practices at Broward County in the US state of Florida, where training needs are continually assessed through annual department meetings and plan reviews, feedback from training partners, feedback from customers, summary data from countywide development planning efforts, and performance analysis. Training transfer refers to whether the trainee or learner can actually perform the new skills or use the new knowledge on the job. According to Bjornberg’s (2002) benchmarking survey, learning transfer occurs best through action planning or learning, peer coaching circles, job aids and regular email communication between managers and the training staff. Finally, the evaluation of training effectiveness should be an integral part of the overall learning program. Evaluative review is essential to deciding whether training should be continued in its current form, modified or eliminated all together. Training outcomes to be evaluated can be classified into four broad categories: affective (employees’ satisfaction with trainer, training’s content and utility); cognitive (actual participant learning); skill-based (behavior change); and results (organizational benefits, such as less absenteeism, more productivity and return on investment). However, according to Bjornberg (2002), results-level training evaluation is seldom implemented in the public sector. Competence-based development Competency-based models have become an important component of learning organizations and are necessary to provide high quality public services that support today’s knowledge-based economy. By promoting a consistent approach across all HRM activities, the competency framework ensures that HRM will contribute to achieving the government’s objectives (vertical integration) and that the HRM whole is greater than the sum of the individual activities (horizontal integration) (UN/DESA 2005). Indeed, for the competency approach to be successful, identified core competencies should both inform and be integrated into the different HRM practices: recruitment and selection of future employees, managers and leaders; performance appraisal; promotion; training and development processes; compensation; rightsizing activities; succession planning; and career management. Many governments (for example, in the UK, Ireland, Malaysia, Belgium, the Netherlands, Germany, and the USA) already use competency

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approaches in diverse HRM practices. The formation of senior executive services in the USA, the UK and some other nations may be considered in part as an effort to identify and promote high-level managerial competencies and spread them throughout the public service (OECD 2004; Shim 2001). The use of competency frameworks in managerial development has been criticized, however, because this approach does not capture the diversity and qualitative nature of managers’ tasks and roles in public organizations. The list of competencies required to be a good public manager might seem to be endless. However, the use of competency frameworks presents strong advantages in that they help organizations communicate their intentions and needs, enhance collaboration as all employees come to understand their part in the big picture, and give the managers a common language in which to discuss training and development. Moreover, since they are systematic, these frameworks offer a degree of sophistication and legitimacy to practices such as succession planning and career management. They also give T&D experts guidelines for prioritizing competencies for development purposes. Additionally, a competency-based development program assimilates learning activities into the daily business processes, leading to more efficient results than a traditional training approach by ensuring that all training programs are integrated. For example, Naquin and Holton (2003) have redesigned the management development program and processes of the Louisiana State government in the USA. Through a lengthy sequence, the authors conceptualized, developed and implemented an integrated system of supervisory and managerial training, seeking to transform learning experiences into performance-based outcomes. The resulting system uses a competency or skill-based model.1 Nevertheless, the bureaucratic structure of many public organizations continues to be an impediment to training effectiveness. Critics cite as examples rigid classification systems, rewards not tied to skill acquisition, poor development of subordinates, an overemphasis on technical rather than managerial qualifications for advancement, and pension systems that discourage the movement of uniformed personnel into civilian management positions (Heisel 1980). However, many of these problems can be dealt with if the organization’s leadership is willing to fund training programs based on a careful analysis of organizational goals and integrate training practices with other elements of HRM practice (for example, performance management, rewards management and promotions) (Nigro et al. 2007). Unfortunately, training is still viewed by some political leaders as an expense that can be deferred in times of fiscal shortfall. As Mentz (1997) stresses, training and development needs to be approached as a sustained process within an overall capacity-building program. However, in many countries – especially those considered to be developing or less developed – T&D programs are still organized to deliver inputs according to relatively short timescales (12–24 months), where program budgets have to be spent and certain quantifiable indicators of success must be produced within the lifetime of a program. These efforts and their outcomes are all too often considered in isolation from other preceding and parallel activities (Healy 2001). From performance measuring to performance steering New public management approaches have directed increased attention to performance measurement, accountability and the use of data to direct organizational efforts (Osborne and Gaebler 1992). On an individual level, performance appraisal (PA) is the

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process through which an organization gathers information on how well an employee is doing his or her job. Performance management (PM) is an integrated process used to ensure that employee activities and outputs are congruent with the organization’s goals, enabling evaluation to improve the effectiveness of employees and the organization. In a PM system, employee performance provides the basis for training and development decisions, compensation, career progression, budget authority, autonomy, and so on. Performance steering occurs when performance data is used to strategically manage the entire organization. Historically, the appraisal systems used by public organizations have been technically crude and relatively ineffective as performance management tools, where performance appraisal was merely an annual review exercise traditionally carried out by a single rater, with each supervisor completing appraisals for his or her immediate subordinates. Operating independently, the performance appraisal system was rarely linked to the mission and strategy of the organization or to other HRM and management practices designed to maximize human efforts and intellectual capital. In contrast, the NPM movement has promoted a results-based organizational culture in the public sector. Performance measurement and management is expected to play a central role in this process, helping officials and analysts assess achievements against key targets and creating results-based accountability mechanisms (Ospina et al. 2004). At the organizational level, more emphasis has been placed on missions and objectives than in the past. At the individual level, performance has become a very important aspect of HR management. The process of performance management is usually an annual cycle, in which the line manager identifies key performance indicators (objectives, standards and competencies) for the year with his or her employee(s). At the end of the period the manager assesses, discusses and recognizes or rewards the employee’s performance. Throughout the year, the supervisor should provide feedback, guidance and support. We review some of the most common changes and challenges related to PA/PM in public organizations below, particularly focusing on the changes related to new performance management approaches, performance standards, evaluators and performance rating methods in public organizations. Finally, we discuss the degree to which public organizations have actually accomplished the transition from PA to PM. New performance approaches A search of the literature on developments in PM in public organizations highlights three relatively new perspectives. These might be called the results, TQM and competency approaches. The results approach draws on principles of management by objectives (MBO) used in the private sector and involves having the employee meet with his or her immediate supervisor prior to the time period for which performance is to be assessed. The purpose of this meeting is to review organizational goals, consider the employee’s expected contribution, and set individual performance goals for the coming period. These goals should be aligned with the strategic objectives of the organization. Although the agreed goals are often moderately more demanding than under traditional approaches, employee participation in their development should result in higher levels of commitment and motivation leading to increased performance (Roberts 2003). However, cascading performance objectives is also considered to be an inhibitor of the exercise of individual judgment that reinforces existing hierarchies (Thompson 2006).

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The second approach draws on the concepts of total quality management (TQM). Clardy (1998) suggests that appraisal systems incorporate TQM principles by including systems factors and considering individual performance in a team or work unit context. Two fundamental characteristics of this quality approach are a customer orientation (defining quality in customer terms) and a prevention approach to errors (Roberts 2003). The TQM approach to performance management suggests that the major focus should be on providing feedback in areas over which employees have control. It is a co-operative form of working that relies on the talents and capabilities of both labor and management to continually improve quality and productivity together. Appraisal forms reflecting TQM principles promote a flexible approach, focus on effective efforts and solicit citizen input to identify and deal effectively with local problems (Cederblom and Pemerl 2002). A competency approach emphasizes core capabilities. Grote (2000) cites this perspective, focusing on critically important behaviors, together with the skills and attributes needed by all employees of the organization, as one of the most significant recent developments of performance management in public sector organizations. He suggests that competencies can be identified fairly easily in an agency and can be highlighted, communicated and reinforced via the organization’s performance management system. For example, the Malaysian public sector model, which placed emphasis both on respect for citizens as customers and on continuous knowledge acquisition, introduced a competency-based merit component to reinforce these characteristics in contrast to a more narrow performance-based system (Lavelle 2006). Cerderblom and Pemerl (2002) report how the integration of TQM and competency principles, the linking of individual performance to organization goals, and the integration of appraisals with other management and HRM processes have helped move the state police agency in the American state of Washington from performance appraisal to performance management. These authors argue that the principles on which the reforms were based seem applicable to other agencies wanting to move in new directions or energize ongoing performance. Performance management standards A first step in the development of a PM system should be the identification of performance standards/objectives based upon a comprehensive job analysis. The dimensions of work that are evaluated should be the most important for effective job performance (Roberts 1998) and its ultimate contribution to the mission of the organization. These standards should be clear, specific, measurable and communicated explicitly both orally and in writing. Both raters and ratees should participate in developing performance standards and the structure of the rating form. The standards and objectives can and should include mastery or development of essential competencies. Overall, the most important evaluation criteria categories used for assessing civil servants’ performance in most OECD countries are the following: outputs achieved, including pre-identified objectives; competencies and technical skills; and interpersonal, teamwork, leadership and management skills. Other criteria mentioned by individual countries include ethics (Canada) and innovation (Denmark) (OECD 2005). Setting quantitative performance measures has long been considered problematic in the public sector, where organizations must often respond to competing interests, work with vague or conflicting directions from political leaders, and tailor services to

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meet a variety of circumstances in ways that undermine efficiency in service provision. Nevertheless, setting clear organizational objectives is essential for implementing PM effectively at all levels and is especially important for middle managers who must have a clear perception of what they need to achieve in order to effectively assess their own staff (OECD 2005). Pollitt (2005) studied the implementation of PM in four European countries (Finland, the Netherlands, Sweden and the UK) and observes that PM has addressed some of these concerns by acquiring greater multidimensionality, incorporating not only producer concerns such as efficiency and cost-effectiveness but also user elements such as service quality and customer satisfaction. Agencies in all four countries were using or developing versions of balanced scorecards, suggesting that performance needs to be conceived and measured multidimensionally. The author concludes that this kind of measurement approach seems capable of spanning national and sectoral differences. Of course, the desire of political leaders to respond to multiple interests can result in a multitude of expectations that are contradictory or conflicting. Still, the balanced scorecard approach is becoming increasingly popular. Some public sector organizations have been moving away from traditional means of single-rater appraisals and are increasingly using self-evaluations, peer reviews and 360degree evaluation. These methods facilitate broader employee participation in the design and implementation of PM, which in turn appears to increase their trust in the evaluation systems (Bowman 1999). Peer review fosters a problem-solving partnership between employees and managers, enhances employee respect for management, and promotes appreciation for the tough decisions managers are often required to make as well as demonstrating management’s commitment to the notion of employees as trusted partners. With 360-degree evaluation, feedback is obtained from supervisors, colleagues, clientele and subordinates. However, not all employees have direct contact with the public, and those who do often lack the sort of repeated interaction with clients that would make assessment feasible. Evolution of rating instruments Experience indicates that raters are reluctant to use the full scale in their evaluations, no matter how complex and formal the criteria might be. For example, in the USA more than 95 percent of managers are rated as ‘fully satisfactory or better’ under traditional performance review schemes (OECD 2005). Considering these limitations, there have been two notable trends in the last decade. First, centralized and scientific methods have been slowly replaced by more relaxed performance management tools designed at a lower level (OECD 2005: 4). Rating systems have become less detailed, focusing mainly on the distinction between best and worst performers – since performance can be more easily assessed for the extremes – based on a 3-point scale rather than on a 5-, 10- or 20-point scale. Second, there has been increased use of quota and forced ranking methods to specify the proportion of employees placed in the higher categories of the rating scale (for example, in Canada, Germany, Korea, Switzerland, the UK and the USA). However, Lawler (2003) warns against forced distribution methods, arguing that that this evaluation method quickly starts attacking the middle of the bell curve where there may be few stars but equally few, if any, poor performers. Skill-based approaches make particular sense when work is heavily interdependent and outcomes derive from strong teamwork, as is often the case in public organizations. Emphasis on individual performance is, in

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such circumstances, increasingly recognized as counterproductive. Lavelle (2006) concludes that public service relies on high levels of collaboration and does not lend itself to the leveraging of competitive instincts (within work groups or between colleagues). Human resource management tools must be fashioned to take into account this reality. Use of performance information in performance steering To make the transition from performance measurement to active management, information on outcomes must be an input to an organization’s strategies and tactics (Kettl 1997). Pollitt (2005) has shown that both task characteristics (for example, measurability, standardizability, political salience and budget weight) and cultural characteristics (for example, institutional patterns and cultural norms) influence performance management practices in public organizations. Two general tendencies appear across countries: the incremental growth of more sophisticated performance-indicator systems on the one hand, and the relative feebleness of ministries in developing performance-based strategic steering on the other. In a variety of forms, performance appraisal has become quite common in the public sector worldwide, but the information produced through these mechanisms is not always used effectively (Ospina et al. 2004). Several studies have examined the extent to which performance indicators influence the top management of governmental agencies and the degree to which performance data is used by ministries as steering instruments in different parts of the world: Latin America (Ospina et al. 2004), Europe (Pollitt 2005) and the USA (Ingraham et al. 2003). Pollitt (2005) concludes that although appraisal has become all but universal and PM is growing steadily but varies in form and force among different countries and tasks, performance steering of agencies by ministries is still a rarity and may never become particularly common. Although balanced scorecards are increasingly used in ministry/ agency relationships, the link between performance and budgets frequently remains weak or unclear, at least when there is competition with political priorities. European findings align closely with recent large-scale research in the USA, concluding that many governments are definitively identifying and measuring outcomes and progress but that using that information to create change remains a challenge (Ingraham et al. 2003). One significant attempt to tie performance to organizational direction has been the use of performance contracts, particularly for senior officials. Pollitt and Bouckaert (2004: 77) point out that many executives now work on fixed-term agreements, increasingly with specific targets. In some respects, the business chief executive officer (CEO) has become the model – even in name – for the expectation that this individual will be accountable for organizational performance. Indeed, in some nations these individuals are increasingly moving back and forth between the public and private spheres. Evolving pay systems in the public sector Public sector employees in many nations traditionally enjoyed some protection from political caprice, but forms of tenure have become decidedly less secure as governments have emphasized performance and accountability. No longer offering a job for life and often burdened by lower pay scales, public organizations continue to experience difficulty attracting sufficient numbers of employees, much less the best performers. This challenge is particularly worrisome in nations where the demographic balance is shifting and a high proportion of civil service workers will be eligible for retirement in the near term.

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The question of how to reward civil servants is therefore both thorny and important for the future delivery of public services. Compensation is obviously central to the employment relationship and to the recruitment, motivation, satisfaction, commitment and retention of employees. Moreover, pay is often expressive of management style and of symbolic importance. Thus, the development of a compensation policy is an integral part of strategic HRM in the public sector. In a political environment in which governments face significant resource constraints, remuneration decisions must balance the twin goals of motivation and equity with the ability of governments to pay. The goal should be to pay public servants enough to attract and retain the most competent people (UN/DESA 2005). Freibert (1997) sums up the main features of traditional pay management in the public sector: In the past, most public service systems, in spite of national and regional variations, shared certain common features, including centrally determined pay structure, across the board increases, pay scales based on grades rather than job content, occupational category or individual merit, and progress up the scale according to seniority rather than performance.

In contrast, new pay systems attempt to place value on flexibility, decentralization and individualization of compensation, the organization’s strategy and needs, external equity, and market compatibility. In new compensation systems, pay structure is ideally based on individual or team performance and competence, pay determination is individual (instead of collective), and individual employees can choose from a diverse range of benefits (Risher 1997; 1999; White 2000). Table 3.1 shows the values associated with traditional and more recent compensation plans. Performance-related pay Performance-related pay (PRP) refers to the variable part of compensation awarded – on an individual or on a team/group basis – depending on performance as measured in Table 3.1

Characteristics of traditional versus new pay systems Traditional pay

New pay

Central value Design based on Equity Degree of centralization

Consistency General principles/values Internal equity Central HRM system

Pay structure based on

Job classification (grade), job evaluation (job content) Length of service (seniority)

Flexibility and individualization Organizational needs, strategy External market compatibility Decentralized management system Labor market value and ind. competences Ind. or team performance, competence Individual Flexible, ind. choice between diverse range of benefits

Pay increase Pay determination Fringe benefits

Source:

Collective Job security is important, + other benefits

Adapted from Risher (1999: 340).

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terms of either qualitative or quantitative criteria or both. The spread of PRP relates both to the number of people involved and to the range of grades covered, extending from top management to managerial to non-managerial to manual employees. Until about 20 years ago, nearly all civil servants in OECD countries were given pay increases primarily based on length of service, regardless of how well they did their jobs. Governments have turned to PRP for at least four reasons. First, in the quest for flexibility and individualization of HRM practices, PRP is expected to foster individual motivation by recognizing effort and achievement in a concrete way. Second, at a managerial level, PRP also helps attract dynamic and risk-taking individuals who are confident of their ability to perform. This perspective is particularly important in attracting people from the private sector. Third, governments may see PRP as a way of containing salary costs by reducing automatic progression through salary levels or as a way of lifting an overall salary ceiling, with non-pensionable financial rewards. The increase in salary allowed by PRP may also be seen as compensating for the loss of security entailed in introducing fixed-term contracts, as in New Zealand. And fourth, PRP refutes any idea that civil service employees are unaccountable and overpaid by showing that their level of performance is monitored and their compensation is contingent (OECD 2004; 2005). In 2005, more than two-thirds of OECD countries had introduced some form of PRP for at least part of their civil service, but the design and application of such systems varies considerably across countries. Nevertheless, we distinguish three trends (OECD 2005). First, until recently, the few OECD countries with the most extended, formalized PRP policies were those with position-based systems and a high degree of delegated responsibility for human resources and budget management. These include Denmark, Italy, New Zealand, the UK and the USA. However, this trend has started to change, with PRP policies having been introduced into career-based systems in countries such as Hungary and Korea. Second, in countries such as Canada, Ireland and Norway, PRP is applied only at the management level. In Ireland, Norway and France, it has been applied in six pilot ministries, though only for the most senior officials. However, a notable development in recent years has been the extension of PRP from senior management to non-managerial staff. Third, several countries have strongly encouraged the move toward a more collective approach to PRP over the past five years. The OECD (2005) reports several positive examples of this. In the UK, a number of departments made the transition from individual to team-based systems in 2004, and preliminary results of this new policy encouraged the government to promote the extension of collective PRP systems. In Finland, results-based rewards applied at the team level are considered the most effective method of reward allocation. The Spanish National Institute of Social Security introduced collective PRP and reports highly positive effects: the average time to complete procedures related to social security benefits dropped from six months at the end of the 1980s to less than seven days by 2000, primarily due to management changes linked to PRP and improved use of information and communication technologies. In career-based systems, the resulting accountability structure is more collective than in position-based systems, so it is possible that collective pay rewards might be appropriate in these circumstances (OECD 2004). A final element of variation concerns the significance of PRP in the typical financial

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reward package. Monetary incentives for good performance are relatively stronger in position-based systems, while the emphasis on promotion is relatively stronger in careerbased systems. Performance-related pay rewards can be given as permanent additions to the recipient’s basic pay (merit increments) or as one-time payments that have to be reearned during each appraisal period (bonuses). In the last decade, the use of bonuses has become more common because they provide greater flexibility and do not add to fixed payroll or pension costs. The size of payments varies greatly across OECD countries, but it is generally a fairly modest percentage of the base salary, especially among nonmanagerial employees. Performance-related pay merit increments are in general below a maximum of 5 percent of the base salary. Performance-related pay bonuses tend to be higher, but overall, maximum rewards usually represent less than 10 percent of the base salary for civil servants. For managers, the size of performance payments is often larger and represents, on average, 20 percent of the base salary for maximum rewards. In some countries, performance-related pay must be cost-neutral. For example, this can be achieved by decreasing the salaries of the worst-performing staff. In Switzerland, for a public employee rated ‘B’ (partially satisfies requirements), the wage is reduced to 94 percent of the pay band ceiling after a two-year period. Other countries share cost savings with their employees, though productivity in the public sector is notoriously difficult to measure. For example, in Finland, one-third of any improvement in results is to be devoted to staff rewards. Overall, however, in public organizations as in the private realm, the proportion of income that an employee experiences as being at risk under PRP typically tends to be low in principle and still lower in practice. The larger question may be whether PRP actually works as a motivational tool. Many government organizations claim to have PRP, but in practice there is often a gap between the existence of a so-called ‘performance-related pay scheme’ and its concrete functioning, which may be barely linked to performance. Marsden (1997) mentions that only a very small minority of personnel actually receive unfavorable scores. Willems et al. (2004b) show that line managers still encounter difficulties rewarding only a portion of their employees with performance-related pay and have a tendency to distribute bonuses to the entire staff to avoid jealousy and conflict, thereby undermining the motivational aspect (OCED 2004). Irrespective of its design, PRP appears to motivate only a minority of staff in the public sector because the large majority do not see it as an incentive to work more efficiently. Extensive staff surveys, conducted notably in the UK and the USA, show that despite broad support for the principle of linking pay to performance, only a small percentage of employees thought their existing performance pay schemes provided them with a sufficient incentive to work beyond minimum job requirements. Many commented that they found PRP divisive (OECD 2005). Evidence from the government of one industrialized country suggests that PRP can actually damage performance and motivation (Marsden and Richardson 1994). Measures implemented in public organizations with the goal of increasing individual and collective performance in Switzerland led to an increase in organizational fragmentation and internal competitiveness (Bolgiani 2002). Why should this be true? Most government workers, particularly those in non-managerial roles, consider basic pay and how it compares to the wider job market far more important than supplementary pay increases for performance. Moreover, performance rewards are often limited in the public sector, and public employees are perhaps more inclined to be motivated by job content and career

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development prospects than by PRP payments (OECD 2005). This concept is explored in more depth below. Despite these important limitations, PRP appears to create windows of opportunity for wider management and organizational changes. First, PRP gives managers an added incentive to manage effectively and encourages them to fully endorse a goal-setting approach. Second, PRP allows the linking of broader organizational objectives to those of individual employees. Third, PRP facilitates wide-ranging organizational changes by linking pay bonuses to new objectives at the individual and the departmental levels. Performance-related pay may be used as a lever to introduce more flexible working methods (working hours for instance), encourage teamwork, reinforce information and communication flows, and emphasize the implementation of new behaviors associated with training. Finally, PRP also has a positive effect on recruitment, as demonstrated particularly in the Scandinavian countries. In Denmark, 57 percent of managers indicated that PRP leads to better opportunities for recruitment. Similar outcomes have occurred in attracting and retaining top-quality school teachers in England and Wales (OECD 2005). Moving toward modern pay systems Many studies on pay systems in the context of new public management focus on PRP, but their implementation has been inconsistent across countries. Willems et al. (2006) have examined the occurrence of new pay systems and the extent to which the central governments of six European countries (Belgium, Denmark, Germany, Finland, Sweden and the UK) are following the new pay trends related to (1) structure; (2) bases for pay increase; (3) pay determination and degree of centralization; and (4) fringe benefits, allowances and other extras. They find that although PRP is becoming popular and although there have been changes in the six pay systems studied, a new pay model has not been fully adopted, and traditional rewards systems are still strong, with the exception of Sweden and to a lesser extent the UK and Denmark. In Belgium and in Germany, federal pay systems are still predominantly traditional, although the former uses competence-based pay and the latter plans to change to more performance-related compensation. The Netherlands still has mainly traditional pay system features, like pay scales with fixed increments, but civil servants there can also expect in the future more use of performance-based pay and individual choice concerning benefits. The degree of decentralization is also an increasingly visible issue. In the UK and Denmark, pay systems lean toward more innovative forms, with decentralized responsibility for compensation decisions and performance-related pay. The UK also uses pay bands as a basis for pay structure, which some US organizations have also employed in an effort to move to competence-based pay systems. Only the Swedish system could be characterized as completely new, with a highly decentralized and individualized pay system largely based on performance. In the area of reward management, however, most central governments have not yet adopted the full range of private sector practices. An OECD (2004) survey reports that in career-based systems, the overall pay bill is set centrally for ten countries;2 but in another set of eleven countries,3 the funds allocated for personnel are decentralized to the departmental or agency levels. In the remaining ten countries,4 some departments are free to manage their own workforce accounts. In conclusion, overall funds for compensation are still quite controlled, but many

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flexible pay arrangements exist. Decentralization occurs but is often limited to the implementation of decisions while at the same time being restricted by central guidelines and regulations. These rigidities can be partially explained by the importance that civil servants attach to their psychological contract, in which equity and collectivism remain central values (Willems et al. 2006). Moreover, the OECD (2004) report highlights the fact that unions continue to play an important role in determining working conditions and pay levels of public servants, in many cases striving to maintain the rigidities of existing civil service systems. Psychological contract Public sector employees often have a strong sense of psychological contract, consisting of a delicate balance of expectations between the employer and the employed (Willems et al. 2006). Loyalty is a principle element, with anticipation of long-term involvement, job security (Janssens et al. 2003), fair treatment and quality of opportunity (Willems et al. 2004a). In return, public servants are typically willing to offer a high degree of loyalty (Janssens et al. 2003) and commitment. Compared to employees in the private sector, public workers have been motivated more by intrinsic rather than extrinsic rewards (Brown and Heywood 2002). Loyalty, job security and fair treatment are characteristics of the ‘old’ psychological contract that fit well with career-based systems and the traditional pay model (Schuster and Zingheim 1992). In contrast, however, Thompson (2006) suggests that newer innovations such as pay banding and PRP exacerbate the tensions between enhancing performance and acting pursuant to a public service ethic. Willems et al. (2006) suggest that new pay practices in the public sector may be based on an ‘investing psychological contract’, in which employees do not have high expectations but are willing to offer personal investment and flexibility. The old psychological contract might be so deeply rooted that it makes radical change quite difficult (Willem et al. 2006). The ability to change may be hindered by unions (OECD 2004) and, in countries like Germany and Belgium, by strong legalistic norms that promote an entitlement culture. Altering pay systems that rely to a lesser degree on laws and decrees is probably less problematic, as evidenced by the Swedish model (Willem et al. 2006). However, it is not entirely clear that all public services could manage to motivate their staff better by offering them individualized performance- or competence-related pay. To be singled out – even for positive recognition – is not considered desirable in some collectivist cultures. Changing a civil service pay system from collective pay grades to individual pay setting is a big step that could jeopardize notions of pay equity in the old psychological contract, particularly in societies that place high value on respect for seniority and experience (Risher 1999). It seems clear that in the absence of increased funding, traditional compensation systems are no longer able to provide sufficient rewards to adequate numbers of individuals in order to staff a modern public service. Performance pay and other forms of recognition, as well as personal growth and fulfillment, may be more important to a new generation of public employees less concerned with security and tenure. Although popular in some nations, however, PRP and other new HRM approaches should certainly not be considered a panacea: implementation is riddled with difficulties; organizations encounter major methodological and measurement problems; evidence is often inconclusive and ambiguous; and the experience of OECD countries has not

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been altogether satisfactory (UN/DESA 2005). However, PRP and related changes can help improve performance when applied properly in the right managerial context, if not because of the financial rewards then indirectly through the changes in work and management organization needed for their implementation (OECD 2005). Challenges for the future Although government organizations in many nations are adopting HR practices used by progressive companies in the private sector, these reforms may be driven as much by political considerations as by the desire to ensure a vibrant and capable public service. Politicians want to be seen to be fixing performance problems and improving public services available to their constituents, but their rhetoric often reinforces the perception of public employment as the refuge of workers simply marking time until retirement. This image will not allow public service to attract a younger generation of workers who are less concerned with job security relative to the prospects of challenging work and empowered decision-making. Winchell and Risher (cf. Risher 2003) agree that giving employees more participation and decision authority will be essential to the future of the US civil service, though they disagree about the likelihood of empowerment efforts actually overcoming existing obstacles. Past reforms have usually been conducted using a ‘top-down’ approach, with very limited participation from the employees themselves. Human resource management professionals in several nations have also found their own input to be limited. That this lack of employee or professional involvement in human resource decisions has a parallel in many private companies may provide some small consolation, but it will not make public service more attractive. Consistent with their perceptions of underperforming organizations, few political leaders have been willing to advocate significant increases in the overall compensation of public employees, though some have acknowledged an impending crisis in the ability to attract new workers (Voinovich 2000). As mentioned above, amounts allocated for performance pay must often be ‘cost neutral’, with incentives paid out of savings due to staff reductions or lower pay for some workers, as in the Swiss case. The size of the overall compensation pie has generally not increased; it is simply sliced differently. Talk of performance pay, especially in small increments, will not attract the best employees when base salaries are substantially below those in the private sector. In spite of a deepening crisis in the ability of some nations to attract new workers, the political will does not yet exist to resolve the pay disparity between public and private employees. Of course, there are exceptions, notably in Singapore and Hong Kong where public workers are well rewarded and government work attracts the top graduates from local universities. As the US General Accounting Office (2001: 159) has pointed out, public employees are often viewed as ‘costs to be cut rather than assets to be valued’. Notwithstanding payfor-performance and more attention devoted to competency building, public service will not be attractive to innovative and committed employees until they are convinced that the organization (and public leaders) view them as a strategic asset. General conclusions Human resource management claims to be an important management tool for achieving better efficiency and higher performance in public sector organizations, provided

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it is integrated with appropriate institutional arrangements, budgeting authority and accountability. However, Shim (2001) suggests that these links have been slow to emerge and are quite tenuous. Nevertheless, he also stresses the multiple and positive effects of HRM reform across countries, including more efficient management of public organizations, improvement of overall service quality for the public, improvement of employee motivation and performance, greater results orientation in organizations, and increases in managerial accountability. Thompson (2006) is more skeptical, pointing out that performance shortcomings in public sector organizations are more likely the result of interaction with the political system than with managerial issues. Although incomplete, we see evidence of reform based on the increasing use of HRM practices applied in some private sector enterprises. Nevertheless, Giauque and Caron (2004) underline the fiscal motivation for these changes, noting that some governments see employees (that is, human resources) merely seen as an ‘adjustment variable’ and not as an asset in which to invest. New HRM practices are too often used after major changes, such as downsizing, have been completed in order to alleviate the negative effects of financially motivated reforms: poor morale, lower productivity and lower job satisfaction, Without new HRM practices these negative effects could potentially cancel out the intended gains. A better strategy is to start integrating new HRM practices in the first stages of the reform plan. In the absence of a new perception of public service and rewards commensurate with private sector employment, however, we wonder whether the reforms mentioned above may be likened to simply rearranging the proverbial deck chairs on the Titanic. They give the appearance of performance-oriented change, but do little to attract capable employees and leaders for the future. The boundary between public and private is becoming more porous, and the temptation is often to import ‘best practices’ from the private sector to the public sector. As was the case during the shift to a professional civil service in the USA, public authorities have tried to find the ‘one best way’ to approach HRM reform. However, extreme and non-critical adoption of management principles and tools borrowed from the private sector has in some cases fostered a shift to an ideologically based and mechanical vision of change in the public sector (Giauque and Caron 2004), without addressing the fundamental problems. Indeed, judicious adaptation and learning from the private sector can be beneficial, but care is needed in crafting practices and approaches that respect the unique character of the public sector, its workforce, spirit and values (Lavelle 2006). As in the private sector, the best public employees have more options and alternatives than ever before. Notes 1. These authors describe the steps of the process (competency model development, training needs assessment, curriculum development, course design and delivery) they followed so that other organizations seeking to update their management development programs might be able to learn from the Louisiana experience. 2. Such as France, Italy, Spain and Japan. 3. Such as Australia, New Zealand, Sweden and the USA. 4. Such as the UK, Canada, Belgium and Switzerland.

References Batal, C. (1997), La gestion des ressources humaines dans le secteur public (Human Resource Management in the Public Sector), Tome 1, L’analyse des métiers, des emplois et des compétences (Jobs and Competencies Analysis), Paris: Editions d’Organisation.

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Bjornberg, L. (2002), ‘Training and development: best practices’, Public Personnel Management, 31 (4): 507–16. Bolgiani, I. (2002), L’application des nouvelles méthodes de gestion publique dans les secteurs sanitaire et hospitalier: Risques et opportunités (Application of the New Public Management Methods in the Public Health and Hospital Sectors: Risks and Opportunities), Muri: Société suisse pour la politique de la santé. Bowman, J.S. (1999), ‘Performance Appraisal: Varisimilitudes Trumps Veracity’, Public Personnel Management, 28 (4): 557–76. Brans, M. and A. Hondeghem (2005), ‘Competency frameworks in the Belgian governments: causes, construction and contents’, Public Administration, 83 (4): 823–37. Brewster, C., W. Mayrhofer and M. Morley (2004), Human Resource Management in Europe: Evidence of Convergence?, London: Butterworth Heinemann. Brown, M. and J. Heywood (eds) (2002), Paying for Performance: An International Comparison, New York: Sharpe. Cederblom, D. and D.E. Pemerl (2002), ‘From performance appraisal to performance management: one agency’s experience’, Public Personnel Management, 31 (2): 131–40. Center for the Study of Social Policy (2002), Human Resource Management INNOVATION, Washington, DC: Center for the Study of Social Policy. Centre for Management and Organization Development (CMOD) (2003), A Guide to Competency Development in the Civil Service, available online at http//finance.gov.ie/cstc/cstcresources/cmod_report.pdf. Clardy, A. (2008), ‘Policies for managing the training and development function: lessons from the Federal Government’, Public Personnel Management, 37 (1): 27–54. David, P. A. (2000), ‘Path dependence, its critics and the quest for “historical economics”’, working paper, All Souls College, Oxford University, available online at www.econ.stanford.edu/faculty/workshop/swp0011. htlm. Doverspike, D., M.A. Taylor, K.S. Shultz and P.F. McKay (2000), ‘Responding to the challenge of a changing workforce: recruiting nontraditional demographic groups’, Public Personnel Management, 29 (4): 445–59. Freibert, A. (1997), ‘Public Pay Programs in OECD Countries’, in H. Risher and C. Fay (eds), New Strategies for Public Pay: Rethinking Government Compensation Programs, San Francisco, CA: Jossey-Bass, pp. 294–311. General Accounting Office (2001), High Risk: An Update, report GAO-01-263. Washington, DC. Giauque D., and Caron, D.J. (2004), ‘Réformes administratives et gestion des ressources humaines: Comparaison de la Suisse et du Canada.’ (‘Administrative reforms and HRM: comparisons between Switzerland and Canada’), Revue internationale de Politique Comparée, 11 (2): 225–40. Gouvernement du Canada (2000), Une organisation apprenante, d’un océan à l’autre: Sur la voie de l’avenir. Rapport du comité sur l’apprentissage et le développement, juin (A learning organization, from one ocean to the other. Report of the Committee on Learning and Development, June), Ottawa: Canadian Centre for Management Development. Grote, D. (2000), ‘Public sector organizations: today’s innovative leaders in performance management’, Public Personnel Management, 29 (1): 1–20. Healy, P. (2001), Training and public sector reform: an integrated approach, Public Administration and Development, 21 (4): 309–19. Heisel, W.D. (1980), ‘A non-bureaucratic view of management development’, Public Personnel Management, 9 (2): 94–8. Hoque, K. and Kirkpatrick I. (2008), ‘Making the core contingent: professional agency work and its consequences in UK social services’, Public Administration, 86 (2):331–44. Ingraham, P., P. Joyce and A. Doonahue (2003), Government Performance: Why Management Matters, Baltimore, MD: Johns Hopkins University Press. Janssens, M., L. Sels and I. Van den Brande (2003), ‘Multiple types of psychological contracts: a six-cluster solution’, Human Relations, 56 (11): 1349–78. Kernaghan, K. (1997), ‘Valeurs, éthique et fonction publique’, in Administration publique et management public: Experiences canadiennes (‘Values, ethics and public service’, in Public Administration and Management: Canadian Experiences), eds J. Bourgault, M. Demers and C. Williams, Sainte-foy: Les Publications Du Quebec, ch. 7. Kettl, D.F. (1997), ‘The global revolution in public management: driving themes, missing links’, Journal of Policy Analysis and Management, 16 (3): 446–62. Kim, P.S. and K.P. Hong (2006), ‘Searching for effective HRM reform strategy in the public sector: critical review of WPSR 2005 and suggestions’, Public Personnel Management, 35 (3): 199–216. Lavelle, J. (2006), ‘It’s all about context and implementation; some thoughts prompted by: unlocking the human potential for public sector performance – the United Nations World Public Sector Report 2005’, Public Personnel Management, 35 (3): 217–28. Lavigna, R. (2002), ‘Timely hiring in public sector organizations’, in International Recruitment and Selection

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Strategies, Washington, DC: International Public Management Association for Human Resources, US, available at: http://unpan1.un.org/intradoc/groups/public/documents/UN/UNPAN021818.pdf. Lavigna, R.J. and S.W. Hays (20040, ‘Recruitment and selection of public workers: an international compendium of modern trends and practices’, Public Personnel Management, 33 (3): 237–53. Lawler, E.E. (2003), Treat People Right. San Francisco: Jossey-Bass. Lemire, L. and Y.-C. Gagnon (2004), La gestion des ressources humaines dans les organisations publiques (Human Resource Management in Public Organizations), Montréal: Les Presses De L’Université De Montréal. Marchack, S. (2002), ‘Alternative recruitment strategies: case study on contract employment in the public service of Trinidad and Tobago’, in International Recruitment and Selection Strategies, Washington, DC: International Public Management Association for Human Resources, US, available at: http://unpan1. un.org/intradoc/groups/public/documents/UN/UNPAN021826.pdf. Marsden, D. (1997), ‘Public service pay reforms in European countries’, Transfer, 3 (1): 62–85. Marsden, D. and R. Richardson (1994), ‘Performing for pay? The effects of merit pay on motivation in a public service’, British Journal of Industrial Relations, 32 (2): 243–61. Mentz, J.N. (1997), ‘Personal and institutional factors in capacity building and institutional development’, working paper 14, European Centre for Development Policy Management. Morris, J. and C. Farrell (2007), ‘The post-bureaucratic public sector: new organizational forms and HRM in ten UK public sector organizations’, International Journal of Human Resource Management, 18 (9):1575–88. Naquin, S. and E.F. Holton (2003), ‘Redefining state government leadership and management development: a process for competency-based development’, Public Personnel Management, 32 (1): 23–46. Nigro, L., F. Nigro and J.E. Kellough (2007), ‘Recruitment and selection’, in L. Nigro, F. Nigro and J.E. Kellough, The New Public Personnel Administration, 6th edn, Belmont, CA: Wadsworth, pp. 85–123. Organisation for Economic Co-operation and Development (OECD) (2004), ‘Trends in HRM policies in OECD countries: an analysis of the results of the OECD Survey on Strategic HRM’, Paris: OECD. Organisation for Economic Co-operation and Development (OECD) (2005), ‘Performance-related pay policies for government employees’, Paris: OECD. Osborne, D. and T. Gaebler (1992), Reinventing Government, Boston, MA: Addison Wesley. Ospina, S., N.G. Cunill and A. Zaltsman (2004), ‘Performance evaluation, public management, improvement and democratic accountability’, Public Management Review, 6 (2): 229–51. Page, S. (2005), ‘What’s new about the new public management? Administrative change in the human services’, Public Administration Review, 65 (6): 713–28. Page, E.C., C. Hood and M. Lodge (2005), ‘Conclusion: is competency management a passing fad?’, Public Administration, 83 (4): 853–60. Patton, D. and C. Pratt (2002), ‘Assessing the training needs to high-potential managers’, Public Personnel Management, 31 (4): 465–85. Pollitt, C. (2005), ‘Performance management in practice: a comparative study of executive agencies’, Journal of Public Administration Research and Theory, 16: 25–44. Pollitt, C. and G. Bouckaert (2004), Public Management Reform: A Comparative Analysis, 2d edn, Oxford: Oxford University Press. Rauch, J. and P. Evans (2000), ‘Bureaucratic structure and performance in less developed countries’, Journal of Public Economics, 75 (1): 49–71. Reichenberg, N. (2002), ‘Branding the government as an employer of choice’, in International Recruitment and Selection Strategies, Washington, DC: International Public Management Association for Human Resources, US, available at: http://unpan1.un.org/intradoc/groups/public/documents/UN/UNPAN021819.pdf. Risher, H. (1997), ‘Competency base pay: the next model for salary management’, in H. Risher and C. Fay (eds), New Strategies for Public Pay: Rethinking Government Compensation Programs, San Francisco, CA: Jossey-Bass, pp. 145–58. Risher, H. (1999), ‘Are public employers ready for a new pay program?’, Public Personnel Management, 28 (3): 323–43. Risher, H. (2003), ‘Point-counterpoint on empowerment’, The Public Manager, 32 (3): 3–6. Roberts, G. (1998), ‘Perspectives on enduring and emerging issues in performance appraisal’, Public Personnel Management, 27 (3): 301–20. Roberts, G. (2003), ‘Employee performance appraisal system participation: A technique that works’, Public Personnel Management, 32 (1): 89–98. Schuster, J. and P. Zingheim (1992), The New Pay: Linking Employee and Organizational Performance, New York: Impressum Lexington Books. Selden, S. and W. Jacobson (2003), ‘Human resource management’, in A. Colonna and J. Puma (eds), Paths to Performance in State and Local Government A Final Assessment from the Maxwell School of Citizenship and Public Affairs, Syracuse, NY: Campbell Public Affairs Institute.

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Shim, D.-S. (2001), ‘Recent human resources developments in OECD member countries’, Public Personal Management, 30 (3): 323–47. Soni, V. (2004), ‘From crisis to opportunity: human resource challenges for the public sector in the twenty-first century’, Review of Policy Research, 21 (2): 157–78. Sullivan, J. (2002), ‘Experience – “it ain’t what it used to be”’, in International Recruitment and Selection Strategies, Washington, DC: International Public Management Association for Human Resources, US, available at: http://unpan1.un.org/intradoc/groups/public/documents/UN/UNPAN021824.pdf. Thompson, J.R. (2006), ‘The Federal Civil Service: the demise of an institution’, Public Administration Review, 66 (4): 496–504. United Nations, Department of Economic and Social Affairs (UN/DESA) (2005), World Public Sector Report (WPSR)2005: Unlocking the Human Potential for Public Sector Performance, New York: United Nations. Voinovich, G. (2000), Report to the President: The Crisis in Human Capital, US Senate Sub-committee on Oversight of Government Management, Washington, DC: Government Printing Office. Waxin, M.F. and A.J. Panaccio (2004), ‘Le recrutement et l’intégration des minorités visibles dans les entreprises Québecoises’ (‘Recruitment and integration of minority employees in Quebec companies’), Congrès AGRH, Montréal. White, G. (2000), ‘Pay Flexibility in European services: a comparative analysis’, in D. Farnham and S. Horton (eds.), Human Resources Flexibilities in the Public Services: International Perspectives, London: Macmillan, pp. 255–79. Willems, I., R. Janvier and E. Henderickx (2004a), ‘The unique nature of psychological contracts in the public sector: an exploration’, paper presented at the EGPA conference, Ljubljana, September, available online at http://soc.kuleuven.be/io/egpa/HRM/index.html. Willems, I., R. Janvier and E. Henderickx (2004b), ‘Beter beloond bij de buren? Het beloningsbeleid in de UK Civil Service en de Nederlandse Rijksoverheid doorgelicht’ (‘Better paid in neighboring countries? Research into the pay policy in the UK civil service and the Dutch state sector’), SBOV, working paper, Leuven. Willems, I., R. Janvier and E. Henderickx (2006), ‘New pay in European civil services: is the psychological contract changing?’, International Journal of Public Sector Management, 19 (6): 609–21.

4

New public management and the politics of accountability Robert Gregory

The 3rd of July 1863 was a critical point in the American Civil War. That afternoon, at Gettysburg, Pennsylvania, the strategic military tide began to turn in the Union’s favour, as a result of a disastrous decision by the Confederate Commander, General Robert E. Lee. Rejecting the strongly dissenting advice of his principal associate, General James Longstreet, Lee had ordered a frontal infantry attack, across a mile of open field, against the centre point of the Union lines on the higher ground of Cemetery Ridge, and in the face of deadly artillery bombardment. The Confederate troops were decimated. As the survivors regrouped in retreat, a distraught Lee, rode out to them on his beloved steed, ‘Traveller’. ‘Men’, he implored, ‘it’s all my fault, it’s all my fault!’ Introduction Today, in the main news media outlets of western democracies few words are likely to be used more frequently in regard to governmental activity than the word ‘accountability’. This widespread usage of the term reflects a strong desire that when something goes wrong, someone, somewhere in government, should be ‘held to account’. What is normally intended is that some person or some persons should be required to provide the public with a full and honest account of why it happened, and that appropriate sanctions should be invoked against those causally responsible. This is largely because there is in all liberal-democratic systems of government a foundational expectation, manifest in complex legal and constitutional arrangements, that public power and authority will not be abused by those who wield it. In Mulgan’s (2003: 36) words: Citizens in a liberal society need the power of government to protect them from each other but, at the same time, they need to be protected from the government itself . . . Members of the citizen body have unique rights to call their government to account simply because it is theirs and should therefore be pursuing their interests.

These arrangements are intended to ensure both the constitutionally appropriate use of elective political power itself, and the co-ordinated, systematic, and planned bureaucratic implementation of the policy purposes defined through the exercise of that power. For these sorts of reasons public agencies in western democracies are subject to a plethora of externally imposed institutional and statutory arrangements, in the name of accountability. These include legislative processes and committees, constitutional and other foundational statutory requirements (such as a Bill of Rights), official information and privacy enactments, ombudsmen, parliamentary auditing offices, not to mention the news media’s ‘watchdog’ role in public affairs. All such mechanisms and processes are premised upon key questions of accountability – namely, who is accountable, to whom, for what, and how? (Mulgan 2003) Those calling for the account through these processes 66

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have the right to be given answers and to require rectification, while those giving the accounts must respond and (if necessary) accept the imposition of sanctions or rewards. (As will be argued later, however, ‘holding to account’ usually implies the invocation of sanctions rather than the dispensing of rewards: society does not demand that ‘someone be held accountable’, when all goes well.) However, the progressive burgeoning of procedural requirements that are meant to ensure that public officials are accountable for their decisions and actions, has also given rise to popular concerns over excessive ‘red tape’ in governmental administration (Kaufman 1977; Wilson 1989), to claims that governmental action is too ‘bureaucratic’, in that following the rules has become an end in itself, and that effective and innovative action is stymied too often by a preoccupation with ‘doing the thing right’ rather than ‘doing the right thing’. The emergence during the 1980s and 1990s of large-scale and often radical reforms in many western democracies, later loosely identified as ‘new public management’ (NPM), reflected in large part a desire to render public organizations much less bureaucratic in their operations, more willing and able to produce desirable policy outcomes and results, rather than being overly concerned with procedural propriety as an end in itself. Especially in those countries commonly seen to be ‘leaders’ in the implementation of NPM-styled changes, like Britain and New Zealand, the aim was simultaneously to enhance both efficiency and accountability in service delivery. Yet it remains uncertain, and a matter for continuing academic debate and analysis, as to whether or not NPM has resulted in greater or less accountability in government. In considering this question this chapter first outlines core meanings of accountability, and the ways in which it differs from a term – responsibility – that is often used synonymously with it. It argues that while certain key features of NPM have undoubtedly enhanced accountability in government, other dimensions of it have attenuated it, resulting in an increasingly popular preoccupation with the idea of accountability as retrospective sanctioning – what has been called the ‘gotcha’ variety of accountability. This overweening concern has arisen from the greater complexity of governmental service delivery under NPM approaches, and renders the formal distinction between political and managerial accountability almost irrelevant in the wider political narratives that are central to the elusive search for accountability when things go wrong. Instead, such story-telling is central to the politics of blame-shifting, which in turn tends to undermine levels of public trust in governmental institutions and processes. An example from New Zealand is briefly outlined, which illustrates the general impressionistic interpretation provided in this discussion. Readers, however, are invited to judge for themselves its typicality, or lack of it, across other jurisdictions subjected to the sort of structural and institutional changes that can be subsumed under the NPM label. Accountability and responsibility The word ‘accountability’ embraces a number of different meanings, and is commonly used in close association with other ideas, particularly responsiveness, responsibility, answerability, fault and blame. However, in the governmental context, the term is used in regard to two different, but related, domains. The first is the idea of political accountability in a liberal-democratic system; and the second is the notion of managerial accountability within state agencies within those systems (Day and Klein 1987; Hughes 1998).

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The former focuses attention on the ways in which those who exercise the authority of the state are prevented from abusing that authority. While legal-rational authority – generally speaking, the rule of law – is the legitimate form of authority in the modern liberal-democratic state, the authority wielded by any office-holder, whether elective or appointive, may be supplemented and enhanced by the personal characteristics and skills of that office-holder. Neustadt’s (1990) classic work on the American presidency, for example, shows why some presidents – all of them exercising the same formal powers of office – have been more effective presidents than others. Nevertheless, political accountability is in all cases about how the legitimacy of public authority can be maintained over time, in a stable, largely predictable, and impersonal way. It is derived from the fundamental idea that state sovereignty ultimately resides with the citizenry at large. Managerial accountability, on the other hand, is less about ensuring that public officials, whether elected or appointed, behave in ways that do not exceed or abuse their legitimate authority, than it is about ensuring that governmental organizations actually operate in the pursuit of key values like humaneness, fairness, impartiality, efficiency, economy and effectiveness. The quest for accountability as organizational control is embedded in the progressive refinement of performance management systems, and in the ‘thermostatic’ metaphor and imagery which was central to much state sector reform that was subsumed under the label of NPM (Christensen and Lægreid 2001; Hood and Lodge 2006; Norman 2003). The core meaning of accountability is, literally, providing an account of something – individual or collective decisions and actions – to others, the so-called ‘accountability holders’ (Mulgan 2000; 2003). When one is ‘accountable’ one is ‘answerable’, to others. Literally, one is required to tell a story to another – in organizational terms, to one’s superiors in the hierarchy. This essential meaning is common to both dimensions of governmental accountability. In the case of political accountability, the trustees for public authority are answerable to the people for their exercise of that authority. In the case of managerial accountability, public employees are answerable through their organizational hierarchies for their decisions and actions, so that the organization as a rational control system functions in effective pursuit of the purposes defined by its owners. The two are linked, of course, in that the elected members of the government of the day are answerable to the citizenry for how executive authority is exercised by the bureaucratic apparatus of the state, mandated to implement the policies decided by the political executive. Answerability can be both prospective and retrospective, in both its liberal-democratic and managerial manifestations (see Figure 4.1). In the former, it is the duty of obligation incumbent on politicians to state their intentions, particularly when they are competing for the public’s votes during election campaigns. They do so largely by way of promises and election manifestos. Managerial accountability is prospective when it focuses on all the paraphernalia of rational action as expressed in strategic and corporate planning. Political accountability is retrospective when it requires politicians to explain and justify policy decisions taken, why promises have or have not been kept, and especially when the consequences of those decisions have become publicly apparent. For bureaucratic executives, managers, and operators it often means the ex post reporting and recording of the ways in which discretionary authority was exercised. It is about what Hummel (1994) called, making work ‘visible’.

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Domain

Prospective

Political

Managerial

Election promises and manifestos

Strategic and corporate plans

Explanation and justification

Reporting and recording

Temporal mode

Retrospective

Figure 4.1

Political and managerial accountability

The two words, ‘accountability’ and ‘responsibility’, are frequently used as if they were synonymous. While this conflation is generally acceptable in common parlance, it nevertheless obscures some important differences between the two, especially in regard to governmental action. The etymology of accountability in government is traceable to the requirement that the expenditure of public money be verifiable and controllable (Uhr 1993). Expenditure of taxpayers’ money should be rigorously accounted for. The formal procedures of government financial accounting arose out of this requirement. The notion of accounting, however, applied not just to control over the use of money, but also over the consumption of time, energy and other official resources, and discretionary authority. Aucoin and Heintzman (2000) refer to this as ‘accountability as assurance’. In all this, the central idea of accountability has been that of answerability, in both the political and bureaucratic domains, to secure control and provide assurance. Someone is required to be answerable to someone else for the carrying out of specified tasks with commensurate authority and resources. Agents (politicians or bureaucrats) must give an account of their actions to specified others, who have the right and capacity to monitor performance and to invoke sanctions and rewards, and to answer to these with an account of how and why decisions were made, discretion exercised, and actions taken. What Mosher (1968) called ‘objective responsibility’ is facilitated by the formal institutional framework within which those who exercise public authority operate. An organization chart depicts the constitutional and organizational lines of answerability; or, in the terminology of agency theory, the chain of principal–agent relationships that constitutes the formal structure of constitutional and organizational authority. In Westminster parliamentary systems, the theory of ministerial responsibility depicts a formal arrangement whereby bureaucratic officials are answerable to their ministers, who in turn are answerable to Parliament and thus (but not solely through this formal channel) to the sovereign citizenry. In the American presidential system, where the political executive

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is institutionally separable from the legislature, the federal bureaucracy is answerable to the President (through the cabinet) and thence to the public, while members of the Congress are directly answerable to the public. Romzek and Ingraham (2000) and deLeon (2003) examine several different types of accountability, including hierarchical, legal, professional and political forms. Respectively, these emphasize the values of efficiency, the rule of law, expertise and responsiveness. Hierarchical accountability relationships are characterized by close supervision of individuals who have little work autonomy; legal relationships entail detailed oversight from external bodies such as legislatures and courts; professional relationships are marked by high levels of operating autonomy on the part of those who have internalized norms of appropriate practice; and the political type gives managers the choice of responsiveness primarily to key stakeholders, such as elected officials, the public at large or client groups. The last form, sometimes referred to as ‘dual accountability’, speaks to the answerability of officials to particular ‘client’ groups as well as their formal accountability to hierarchical superiors. Similarly, Stone (1995) suggests that in Westminster systems ministerial responsibility sits uneasily with five ‘subordinate’ conceptions of accountability: parliamentary control, managerialism, judicial/ quasi judicial review, constituency relations and market. These have arisen out of several interrelated and long-standing impulses for administrative change, and there is considerable potential for conflict among them. Parliamentary control is the traditional Westminster understanding of accountability, as provided for in the doctrine of ministerial responsibility. In recent years, ‘managerialist’ conceptions of accountability have gained prominence in parliamentary democracies such as Britain, Australia and New Zealand. Processes of judicial review of public administration have been increasing markedly in parliamentary democracies, and have historically been a central feature of Western European jurisdictions. Accountability as constituency relations is close to the ‘dual accountability’ referred to above, embodying not just ‘upward’ accountability to ministers and parliament but ‘downwards’ and ‘horizontal’ accountability to peers and other reference groups. Market accountability emerges from reformist moves in recent years to render many public agencies more ‘customer-driven’ (that is, more ‘responsive’) in the ways they deliver goods and services, as with the Citizen’s Charter introduced in Britain in the early 1990s (Pierre 1998). It is also central to ‘third party’ government, involving the increasingly widespread contracting-out of public services, a development which is central to NPM. The need for veracity presents a major challenge in securing accountability as answerability. It is often very difficult, sometimes impossible, for superiors (principals) to be certain about the truthfulness of the accounts given by their subordinates (agents), especially when supervision is not immediate and direct and when answerability is exercised after the event. This is especially the case where ‘street-level’ bureaucrats exercise a great deal of discretionary authority, given the nature of the tasks they are required to fulfil (Lipsky 1980; Wilson 1989). For example, police officers on duty in patrol cars necessarily exercise discretion in how they spend their time on the job. They often cannot be directly monitored by their superiors, who must rely on ex post accounts given by the officers of what they have been doing. Accountability as answerability through formally prescribed channels is crucial, but in itself too restrictive. Instead, Mosher’s (1968) notion of subjective responsibility focuses

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attention not on the external, formal, procedures through which politicians and officials answer for their actions, but on the moral dimensions of those actions. It is a psychologically oriented idea, focusing on moral conflict and choice among the subjectively felt duties of obligation pressing upon politicians and administrators. It can be argued then that accountability as formal answerability is a necessary but insufficient component of responsibility, in that there is a moral obligation on the individual to answer for (explain, justify), both honestly and openly, his or her decisions and actions (Gregory 2003). But answerability per se says little about the morally responsible exercise of discretionary choice among conflicting obligations (including, some might argue, the choice to dissemble to protect values other than truthfulness). This idea of responsibility does not assume the veracity of accounts offered under formal accountability processes. Rather, it acknowledges what everyone knows to be so: the opportunistic desire to hide the truth, to put the best complexion on bad outcomes, to engage in the deceptive practices which often characterize the unending pursuit of political advantage. Such behaviour is characteristically displayed in the blame-shifting games played by politicians and officials (Hood 2002; Hood and Lodge 2006), which affirm that truthful answerability depends ultimately on the moral character of those who are required to be accountable, that accountability obligations need to be fulfilled responsibly. Politicians and administrators can at once be fully accountable and utterly irresponsible. Nazi officials, for example, may have been fully and openly accountable, behaving with full procedural regularity, reporting honestly, yet at the same time profoundly irresponsible in their perpetration of crimes against humanity. Individuals might answer for their actions fairly and truthfully, yet be irresponsible in their incompetence or unreliability. Or they might be trustworthy in doing the job competently and reliably, yet be irresponsible in their inability or unwillingness to exercise individual reflective judgement about the moral legitimacy of their work. Whereas accountability is primarily concerned with making bureaucratic organizations function efficiently and effectively, the moral dimensions of responsible individual and group action can be inherently subversive of bureaucratic control. Organization members are generally rewarded for obedient conformity rather than critical dissent. As C.P. Snow (1961) put it: When you think of the long and gloomy history of man you will find far more, and far more hideous, crimes have been committed in the name of obedience than have ever been committed in the name of rebellion . . . Yet the duty to question is not much of a support when you are living in the middle of an organised society.

In short, accountability may be better understood as an integral element in organizational and systemic ‘housekeeping’, whereas responsibility is far more likely to direct critical attention to matters of life and death. Finally, a useful – though not uncontestable – perspective is to see accountability and responsibility as two sides of the same coin, one fettering performance, the other enhancing it. According to Uhr (1993: 4): ‘Accountability is about compliance with authority, whereas responsibility is about empowerment and independence. Accountability is the negative end of the same band in which responsibility is the positive end. If accountability is about minimising misgovernment, responsibility is about

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maximising good government.’ In other words, responsible proactive commitment, based on justifiably high levels of trust, is at least as desirable as accountable reactive control, which assumes and even breeds mistrust. In effect, if not in immediate intent, much governmental reorganization can be understood as a quest to strike new balances between these two imperatives. Accountability and new public management The advent of NPM in the latter part of the twentieth century has raised the level of public and academic debate on issues of accountability (and responsibility). Issues of accountability were – alongside those relating to efficiency – central to the justificatory rhetoric that surrounded the state sector reforms that occurred in those countries – the USA, Britain, Australia and New Zealand – that were at the forefront of the movement. The overriding aim was to free governmental executives and managers from the deadweight of bureaucratic excess, to give them the freedom to manage, and to re-energize public employees in a quest for greater effectiveness. However, they would at the same time be made more directly and clearly accountable for their ability to produce results, in running their organizations efficiently and in producing public value that would be increasingly measurable and tangible. They would be ‘free to manage’ but also ‘made to manage’, in this attempt to strike a new equilibrium between the effective pursuit of organizational purpose, on the one hand, and the imperatives of organizational control, on the other (Hummel 1994). In general, the outcomes of these endeavours have been rather paradoxical, producing some important unintended consequences and even reverse effects (Aucoin 1990; Gregory 2007; Hood and Peters 2004; Maor 1999; Norman 2003). New public management saw the introduction of a raft of managerial techniques, ostensibly emulating those used in the private sector, with the aim of rendering public administration and management more ‘businesslike’. Human resource management grew exponentially in governmental agencies worldwide, especially as the heads of government organizations were delegated the powers to hire and fire their own agency staff, largely free from the constraints previously enforced by unified career services; systems of performance management and appraisal burgeoned; as did the introduction of performance pay systems, intended as incentivized ‘carrots’ to complement if not supplant the ‘sticks’ of direct procedural control. In the parliamentary democracies, the reforms emerged amid growing concerns over the continuing efficacy of the doctrine of ministerial responsibility, what it does and does not mean, with much of the discussion focusing on the circumstances under which ministers might be required to resign (Barker 1988; Chapman 2000; Page 1990; Sutherland 1991; Thompson and Tillotsen 1999; Woodhouse 1993). A leading New Zealand reformer claimed that the doctrine had become surrounded by an ‘enveloping haze’ (Palmer 1987: 56), increasingly manifest in a lack of responsiveness by bureaucratic leaders towards their political executives, and a lack of clarity in the respective roles and responsibilities of ministers and officials. The replacement of permanent tenure for top departmental officials, first in Britain and New Zealand and later in Australia, and its replacement by fixed-term contracts, was seen as a means of sharpening a more dutiful obeisance towards the will of the political executive (Hood 1998). Yet at the same time, departmental heads were delegated clearer responsibilities for the production of the services and resources that were essential in the pursuit of the

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government’s policy aims. This in turn left ministers freer to focus their attentions on strategic concerns (‘steering’) rather than be too preoccupied with bureaucratic minutiae (‘rowing’). This attempt to seek managerial clarity in the midst of political ambiguity was manifest most resolutely in New Zealand, where a clear statutory distinction was drawn between ‘outputs’ and ‘outcomes’ – the former constituting the goods and services produced by government agencies and the latter the effects of these on the community at large. Departmental heads were held to be responsible for the former, while the political executive, individually and collectively, were responsible for the latter. The advent of NPM cannot be understood as simply or even primarily an exercise in administrative reform. It was also a component of a wider ideological agenda – the socalled ‘Washington Consensus’ – aimed at curbing and ‘rolling back’ the role of government in society, and giving a much stronger role to the market and civil society in the production and delivery of those goods and services previously provided by the bureaucratic apparatus of the state (Stiglitz 2002; Williamson 2002). Thus, contracting-out, or ‘outsourcing’, has been central to NPM, as goods and services previously provided by largely monopolistic governmental agencies were increasingly provided by private business or by community not-for-profit organizations funded by and working under contracts to government funding agencies. On top of this, the quest for enhanced efficiency and accountability has been seen in the process of what has generically been labelled ‘agencification’, whereby large conglomerate government agencies have been disaggregated into smaller policy, regulatory and service delivery organizations, each with a clear and dedicated single purpose. In Britain, the ‘Next Steps’ process saw agencies established at arm’s length from, but still accountable to, larger parent ministries, while in New Zealand (and to a lesser extent in Australia) more independent agencies were created under governing boards appointed by the government of the day and ultimately, though not immediately, responsible to it (Pollitt and Bouckaert 2004). Accountability as political story-telling There has emerged something of a consensus that NPM has indeed enhanced the efficiency of governmental activity, especially in those countries which have most comprehensively and effectively embraced its central ideas. Nevertheless, such claims are extremely difficult to demonstrate conclusively as the challenges to any rigorous – as distinct from rhetorical – evaluation are almost certainly prohibitive (Boston 2000; Pollitt and Bouckaert 2004; Savoie and Peters 1998; Skelley 2002). But at least it is not difficult to understand what is meant by efficiency, and when it is being measured or assessed input:output ratios can be calculated in monetary terms. Nothing similar is possible in regard to assessments of enhanced accountability. This is not only because the meaning of the term itself is infinitely more contestable, and overlaps with other concepts – like responsibility, and responsiveness – which are central to the rhetoric of public management and administration. It is also because accountability is gauged less by forensic calculation, as is efficiency, and much more by politically disputatious story-telling. Paradoxically perhaps, NPM’s preoccupation with accountability has, following the doctrine of unintended consequences, resulted in both an accountability deficit and in

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an accountability surplus. There is a deficit to the extent that the outsourcing of governmental goods and services means that external providers, though funded through government agencies, may legitimately withhold some forms of information that were previously in the public domain (Mulgan 2006). Similarly, Hodge and Coghill (2007) find from their case studies in the Australian state of Victoria that, perhaps paradoxically, the privatization of state utilities requires stronger public accountability mechanisms. Research in New Zealand indicates that many in the community organizations that deliver services under contract to the government feel a much stronger sense of accountability to the beneficiaries of those services than they do to the funding agencies, and suggests that ‘stewardship theory’ rather than agency theory would enhance the working relationship among funders, providers and recipients (Cribb 2006; Stace and Cumming 2006). In Britain, according to Rhodes (2005: 26), ‘There is a clear perception of an accountability gap’, a situation which most probably applies in many other western democracies. However, there is a surplus in the sense that there are more voices now telling more partial, fragmentary and often conflicting stories about salient events as they are seen to unfold, in circumstances where there are strongly voiced claims that someone, somewhere, should be ‘held to account’. ‘Holding to account’ involves a search for someone or some people, somewhere in the political and bureaucratic jungle, who are deemed to be culpable because of their acts of omission or commission in relation to their official responsibilities. Bovens (1998: 28–31) calls this ‘responsibility-as-accountability’ or ‘passive responsibility’. As he puts it, to be responsible in this sense means that every one of four elements must be present: human conduct (action or inaction) leading to a harmful or shameful event or situation; a causal connection between individual conduct and damage done; personal liability; and a relationship with the agent, particularly in cases where one is held to account for the (in)actions of another. New public management reforms of apparently inefficient and cumbersome bureaucracies aspired to make these searches easier, by clearly allocating roles and responsibilities, especially as between elected politicians and appointed officials. It has been a central tenet of NPM that no one can or should be held accountable for outcomes for which he or she has been inadequately delegated authority and resources. Unfortunately, experience since the 1980s does not demonstrate that NPM-styled reforms have in fact been able to enhance the capacity of governmental systems to clearly and unambiguously hold people to account when something goes wrong. Instead, NPM itself has rendered governmental systems more complex, especially through new combinations of hierarchies and markets in the delivery of goods and services, a factor which not only has often defeated public calls for people to be held to account, but has also led to the concept of accountability itself being expanded well beyond the core meaning of controlling the exercise of governmental authority through externally imposed, institutionalized, checks and constraints. Mulgan (2000: 555) argues: A word which a few decades or so ago was used only rarely and with relatively restricted meaning (and which, interestingly, has no obvious equivalent in other European languages (Dubnick, 1998, pp. 69–70) now crops up everywhere performing all manner of analytical and rhetorical tasks and carrying most of the major burdens of democratic “governance” (itself another conceptual newcomer).

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As he suggests, much of this conceptual expansion has resulted from the interests of academics rather than from the concerns of practitioners; but it is an open question as to whether it would have happened at all had it not been for the advent of NPM, which has been a central element in the emergence of ‘new governance’ – as distinct from ‘old government’. The former depends less on hierarchical (bureaucratic) means of ensuring co-ordination in service delivery, and much more on ‘softer’, more voluntarily collaborative, means of doing so. According to Peters (2006: 108): ‘Overall, the task of public administration in this increasingly complex internal structure of the public sector, as well as in confronting a seemingly more complex policy environment, is to knit together packages of instruments and procedures to produce effective public action.’ There is no doubt that the complexity of modern government confronts many bureaucrats with multiple accountability demands (Hupe and Hill 2007), and that these exert what Dubnick (1998) calls ‘moral pulls’ and ‘moral pushes’ on politicians and bureaucrats, strongly constraining how they carry out their functions. However, it has to be asked whether the rather seductive idea of ‘360-degree accountability for performance’ (Behn 2001) is too reminiscent of the words of Gilbert and Sullivan, in ‘The Gondoliers’: ‘If everybody’s somebody, nobody’s anybody’. In the context of current interpretations of governmental accountability they might say that, ‘If everybody’s accountable to everybody, nobody’s accountable to anyone’. The effectiveness of rational systems of control is dependent on an ability to know what the ‘facts’ are. But governmental systems are also intensely political ones, in which the inevitable babble of competing and conflicting voices means that the ‘facts’ are simply not just out there, waiting to be discovered, measured and calculated. Instead, they are invariably in dispute. In most cases of governmental failures of high public salience, information about what occurred and why, and who might properly and fairly be required to accept blame and pay the price, emerges from many different sources. The truth is highly contestable, to say the least, especially in circumstances of complex collaborative action where it is difficult to clearly trace causes and effects, and where virtually all involved are able to plausibly deny responsibility. The ‘facts’ may often only become authoritative to the extent that competing political interests are able to have them accepted as such. In this process ‘the public’ does not play the role of some sort of independent and impartial jury, careful weighing the various claims to truth, and then arriving at some collective political verdict, even at the ballot box (although on occasion this may appear to be so). This idea of ‘the public’ is itself a reification, useful and convenient in political discourse, but suggesting unity where there usually is none, and overlooking how ‘the public’ is itself not a disinterested arbiter but the social medium of collective story-telling. As Rhodes (2007: 1257) says: An interpretive approach encourages us to give up management techniques and strategies for a practice of learning by telling stories and listening to them. While statistics, models and claims to expertise all have their place within such stories, we should not become too preoccupied with them. On the contrary, we should recognise that they too are narratives about how people have acted or will react given their beliefs and desires. No matter what rigour or expertise we bring to bear, all we can do is tell a story and judge what the future might bring.

Accountability as answerability has always rested on a duty of obligation for public officials to speak truthfully of their intentions and actions, as trustees of public authority

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and of the public interest. However, there has been no ‘golden age’ when politicians or bureaucrats could be totally relied on not to be ‘economical with the truth’, in circumstances when truth-telling might adversely affect their own personal, party or organizational interests. Today, however, NPM and other influences have seen a shift away from the overwhelming reality of ‘government’ as Weberian bureaucratic structures, in which lines of hierarchical accountability are generally clear, to the emerging paradigm of ‘governance’ – the differentiated polity of the ‘hollowed out’ state, characterized less by state bureaucracies and more by managed networks involving marketized or quasimarketized contractual relationships (Christensen and Lægreid 2007; Peters and Pierre 2000; Rhodes 1997). In this latter scenario, accountability relationships are far more complex, multilateral, conflicting and uncertain. They are also likely to have an independent effect on distributional outcomes, in ways that may not be sanctioned by formal political institutions (O’Toole and Meier 2004). If it were ever the case that a governmental system dominated by bureaucratic hierarchies could ensure clearly delineated and unambiguous accountability relationships in fulfilment of both liberal-democratic and managerial needs, it is certainly not so today. Yet this has not meant that the discursive public demand for accountability has also been weakened, and has become less important. If anything, the reverse is the case. Despite the aspirations of those who promoted the ‘rolling back of the state’ over the past two decades, governments remain deeply engaged in the fulfilment of public purposes, from more menial functions of state house-keeping to those which are deemed necessary to ensure the ultimate survival of the planet. There is as much scope today as there ever was for government to make mistakes, to create ‘policy fiascoes’, to make egregious errors in the management of all sorts of risks, and to engage in the blame-shifting games at the very time they are expected to be even more open and transparent (Flinders and Buller 2006; Hood 2002, 2007; Hood and Lodge 2006; Marcussen 2007). At this point, a brief summary of a New Zealand case is illustrative (Box 4.1).

BOX 4.1

THE LIAM ASHLEY CASE

In Auckland, New Zealand, on 24 August 2006, a 17-year-old youth, Liam Ashley, was beaten and strangled in a prison van, while being transported between the North Shore District Court and the Auckland Central Remand Prison. He had just been remanded on a charge of car conversion, taking his mother’s car without her permission. His parents had decided to adopt a ‘tough love’ approach to his recent misbehaviour, believing this would stop him getting into further trouble, and that ‘the safest place for Liam was in the care of the New Zealand justice system’. Department of Corrections officers in the van said they did not hear any kicking or banging in the back of the vehicle, and were not aware anything was amiss until they pulled into the prison and opened the van. Ashley was taken to hospital, where he died the next day. His assailant, George Baker, was another prisoner in the van, to whom Ashley was handcuffed while in the vehicle. Baker had more than 70 convictions, and had earlier in the year been released from prison after serving a seven-year

New public management and the politics of accountability sentence for the violent robbery of an elderly woman. According to a psychological assessment, he ‘could resort to extreme violence in order to obtain fame’. At the time of his attack on Ashley he was in custody because he had stabbed another North Shore youth, to which charges he later in the year pleaded guilty in the Auckland High Court. In December 2006 Baker was sentenced to life imprisonment for Ashley’s killing, with an 18-year non-parole requirement. The van was owned and operated by a private firm, Chubb Security, with whom the Department of Corrections had contracted in 1998 for the provision of such prisoner transportation. Since that year there had been 220 000 transfers, 7600 of them involving youths, and no similar deaths. However, late in 2006 the department confirmed five other incidents of prison van violence in the previous 18 months. And in April 2007 a 34-year-old remand prisoner in a Chubb van was seriously assaulted while being transported to court in Auckland. The victim, who had asked to be segregated, was put in a cage with four other prisoners and subjected to a prolonged attack. A Department of Corrections review cleared its staff and Chubb Security of any wrongdoing. In December 2006, a departmental report into the events found that both the department and Chubb were unable to prevent Ashley’s death because they failed to apply their own regulations and did not keep him apart from older prisoners while being transported. The department did not provide key information to Chubb Security. The department’s regulations state that those under the age of 18 and adult prisoners should not be transported together ‘where practicable’. But the report laid no blame on any particular individual. A subsequent investigation by the Ombudsman found that Ashley’s death resulted from mistakes made by the department, by Chubb Security and by the Auckland Central Remand Prison. The Ombudsman found that the department had failed in its fundamental responsibility to keep Ashley safe, and that the state had a duty of care towards prisoners, which in this case it failed to fulfil. The Ombudsman also found managerial failure and inconsistencies in the procedures used in different Department of Corrections regions in New Zealand. According to his report, the prisoner transport system ‘was often inhumane’. ‘You go to prison for punishment, not to be punished.’ The report revealed that concerns about prisoners’ inability to communicate with staff in vans in a medical emergency or an assault had been raised with the department in 2005 by Chubb Security itself, by the department’s own security monitor who was required to oversee Chubb’s contract and who reported the matter twice to the chief executive. In 2004, the Ombusdman had expressed concerns about the safety of prisoner transport, and had been told by the department that it had developed national standards for prisoner transport and upgraded its vans (when it had not done so). There were calls for the minister and the chief executive to resign, from opposition Members of Parliament (MPs), and from newspaper editorial writers. For example, Wellington’s The Dominion Post, 15 January 2007, asked, ‘when does a Cabinet minister of any hue deem it appropriate to give up the perquisites of office because of actions taken in his name?’ Citing the 1982 resignation of

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car, in an effort to stem his escalating bad behaviour. This decision put Liam on the path to a fatal outcome. However, ‘We have the CEO of the Department of Corrections saying they are not accountable, we have the Minister of Corrections saying he is not ultimately accountable and we even have the prime minister of our Government saying that no-one is specifically accountable. They all blame “the system”, but surely the Government has to accept the fact that they are ultimately accountable for the system’ (The Dominion Post, 16 December 2006). The Ashley family is taking legal action against the Department of Corrections and Chubb Security over the death of their son. And late in October 2007, a new minister took over the corrections portfolio, as part of a major Cabinet reshuffle.

Such buck-passing games by politicians and bureaucrats as are apparent in the Liam Ashley case may or may not be increasingly apparent in New Zealand and other jurisdictions. Readers are invited to consider whether or not this is the case. On the face of it at least, they may be expected in circumstances increasingly shaped by governmentally managed networks and partnerships (Mulgan 2003; Rhodes 2005). They are exacerbated by the fact that, increasingly, accountability has come to mean that when something goes wrong someone, somewhere, should be ‘held to account’, should be sanctioned in some way, depending on the severity of the malign outcome. Romzek and Ingraham (2000) call this the ‘gotcha’ mentality, whereby accountability is synonymous with a ‘witch hunt’ for those who are culpable and punishable. Thus, when it comes to finding out what ‘really’ happened, and why, and who should be held to account, and by whom and for what (Mulgan 2003), we can distinguish – broadly following Dubnick and Romzek (1991) and deLeon (1998) – between loose accountability, or a low degree of control, and tight accountability, or a high degree of control. Many of the issues that excite public demands for people to be held to account when something goes wrong involve matters of loose rather than tight accountability. Seldom is there any single, objective, explanatory truth waiting to be revealed. Instead, there are invariably many differing viewpoints, the stuff of public debate and controversy carried out in public accountability domains such as the legislature and in the news media. In the end, the ‘truth’ that emerges is a politically determined outcome. It is political because it embodies a selection of perspectives and perceptual lenses through which to ‘appreciate’ – evaluate and judge – the ambiguity of events and circumstances, and because there is no tabula rasa on which the truth can be written. ‘Miles Law’ – ‘where you stand depends on where you sit’ – tells us not only about the way in which perceptions and judgements are shaped by an individual’s organizational role, but it also speaks to the ways in which all people – as organization members, politicians and citizens – filter and assess information through their own perceptual screens. As Schön (1971) pointed out, the ‘Rashomon Effect’ renders highly problematic the belief that in politics, as in life generally, anyone’s capacity to know the truth can be anything but fragmentary and partial. In particular, loose accountability characterizes governmental situations in which various agencies must work collaboratively, ‘co-productively’, in pursuit of highly contingent policy purposes.

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This is not to say that some interpretations are not more reasonable than others, that when things go bad judicial forums cannot make accountability judgements that are better than those proposed by observers with political axes to grind. Judicial or quasijudicial investigations are often necessary to determine causality and culpability, and to help ensure that things are put right. (In some circumstances, they are mandatory, as in the case of coroners’ courts.) But the forensic reports of formal inquiries may not necessarily evade the reach of partisan politics, as New Zealand’s Cave Creek tragedy demonstrated (see Gregory 1998a; 1998b). Thus, with loose accountability the apportioning of blame when things go wrong, when trouble arises, is done politically, in the broadest sense of the term. It is manifest in the invocation of sanctions, such as those that are expressed ultimately through the ballot box, or by gestures like individual resignations. This view of loose accountability is broadly consistent with the stance of the pragmatist philosopher, Richard Rorty, who believed that people are always dealing with multiple and conflicting claims to truth, none of which can be conclusively established, and that this is why liberal democracy itself is so important. In his words: A liberal democratic utopia, on the pragmatists’ view, is no truer to human nature or the demands of an ahistorical moral law than is a fascist tyranny. But it is much more likely to produce greater human happiness. A perfected society will not live up to a pre-existent standard, but will be an artistic achievement, produced by the same long and difficult process of trial and error as is required by any other creative effort. (Rorty 1999: 270)

Politics is essentially a function of beliefs – sound or unsound, evidentially or ideological based – but always constitutive of what people understand as being ‘real’. As Mulgan argues (2007: 573–6), postmodern and anti-positivist epistemological positions are highly contestable, but even if one rejects them there remains the problem that, ‘Disagreement is particularly likely once assertion moves beyond statements of bare, uncontrovertible facts to matters of judgment in the assessment of doubtful evidence’. Tight accountability is much more consistent with managerial than with liberaldemocratic accountability, as it is required to ensure that organizations function effectively. It is synonymous with organizational hierarchy as the means of ensuring the coordinated and systematic control of a complex division of labour (a key defining feature of Weberian bureaucracy). In effect, tight accountability is another term for control. It is more easily achievable in some organizations than in others, depending on the nature of their central task. It is more readily ensured when there is clear and certain alignment between the purposes determined by the organization’s owners and managers, and the activities actually carried out by operators down to the ‘street level’. This is the situation found most commonly in business corporations, and in what Wilson (1989) calls ‘production organizations’ in the public domain. In these types of organizations, duties and responsibilities can be clearly delineated, performance can be measured, and so rewards and sanctions can be fairly imposed.1 The contradiction inherent in NPM’s attempt to enhance tight accountability, on the one hand, and to give managers renewed freedom to manage, on the other, has almost universally – and predictably – been resolved in favour of enhanced control. In many public organizations, because of the nature of the central task, managers are dependent on retrospective accounts of the ways in which their subordinates exercise the discretion which is central to their jobs – for example, police on the streets, probation and

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social workers, teachers in classrooms, and so on. In such cases organization members are necessarily answerable after the event, and their superiors cannot readily be assured that they are not simply being told by their subordinates what they (the superiors) wish to hear. This is one manifestation of the perennial problem of organizational hierarchy distorting information flows to the upper reaches, leaving those nominally in ‘control’ much less than fully aware of the realities and experiences of those at the street level, where public policy ‘rubber’ meets the ‘road’ of actual implementation (Hupe and Hill 2007; Lipsky 1980). For these reasons one can see that organizational ‘sense-making’ involves an ongoing tension between the hopes and expectations of those who are supposed to be in control and the ways in which people lower down the hierarchy struggle to simultaneously cope with the ‘situational imperatives’ that confront them on the job (Wilson 1989). They need to represent their actions and decisions – their use of discretionary authority – in ways that will be congruent with the beliefs and expectations of those above (and, for that matter, in a wider public audience). Under these conditions, truth-telling by organizational subordinates is essential to effective organizational control. But individuals may themselves engage in defensive, self-protective behaviour and story-telling, thereby not only inhibiting effective control but also the collective learning capacity that Argyris and Schön (1978; 1996) have addressed. This is true of all organizations, whether in the so-called private or public sectors, but it is especially so in the case of governmental organizations, not only because they are trustees of the public interest exercising the powers of the state, but also because the sorts of tasks required to be undertaken in so many of these organizations demand high learning capacity. As already noted, this tension between the organization’s need to know and its members’ desire to conceal or fabricate, informs one of the important differences between the concepts of accountability, on the one hand, and responsibility, on the other. Accountability as answerability places no moral obligation on the ‘accounters’ to tell the truth to the ‘accountees’, whereas they will be acting responsibly if they do so. This is why accountability in Wilson’s ‘production’ and ‘procedural’ functions will generally suffice for effective operational purposes (since behaviour can be easily observed by managers), whereas in ‘craft’ and ‘coping’ organizations managers must depend on subordinates to act responsibly, to be honest and truthful in answering to superiors, and to exercise their discretionary authority in the properly mandated manner. One problem is that NPM-styled ‘reforms’ of the state sector have involved the abolition of the unified career service and its replacement by an open-ended jobs-based system. The values of the market have increasingly supplanted those associated with the values of public service. Economistic assumptions about the self-interested, utility-maximizing behaviour of bureaucrats have tended to become self-fulfilling, public servants have come to behave more as ‘knaves’ than ‘knights’, and responsible and trustworthy behaviour has arguably been put at greater risk (Gregory 1999; Gregory and Hicks 1999; Le Grand 2003; Moynihan 2007). The usual response when things go wrong has been to tighten up control systems in the quest for ever greater precision and certainty in government administration. However, this drive for ever greater precision, certainty and control is rendered at the same time increasingly difficult as the paradigm of bureaucratic government has been supplanted by that of differentiated and networked governance.

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The bureaucratic state was – and continues to be – a major tool in the social construction of official reality, but today those bureaucratic structures are less well insulated against the conflicting perspectives, interpretations, that arise out of the networked processes that characterize the differentiated, decentralized and devolved system of government and which – through a babble of contesting voices – undermines any claim to a single official version of the truth. The scope of change in the governmental organization and processes over the past 20 years has outstripped the capacity to collective authority to a key concept like accountability. What accountability does and should mean is up for grabs today, which is why we hear so much said about it, and why in the past so little needed to be said about it. New justifications for political and bureaucratic behaviour are not fashioned in academic ivory towers, as much as they are beaten into shape on the hard anvil of intense new media attention. As Rhodes (2005: 27) has commented: ‘It is hard to comprehend the maelstrom the media can unleash on the unwary.’ Ostensibly driven by the search for the truth, such frenzies are in fact instrumental in shaping the ‘truth’, at least as it becomes manifest in acts of collective political judgement such as those expressed through the ballot box. Calls for ‘accountability’ for ‘malign’ outcomes from a ‘vindictive’ public (Hood 2002) are often frustrated by the blame-shifting games that can be played in a governmental context characterized less (though still dominantly) by organizational hierarchies and more by networks. The truth surrounding organizational and policy failures is likely to be complex and ambiguous, shaped by the confluence of a babble of different voices, interpreting ‘the facts’ through a variety of institutional, professional, ideological and social prisms. It is little wonder if governments today are influenced by a so-called ‘negativity bias’ (Hood 2002; Weaver 1986), whereby efforts are focused more on the management of risk and the avoidance of bad outcomes, than on the positive achievement of good ones. Blame-avoidance is preferred to credit-seeking. This is the negative image of accountability identified by Lucas (1976: 84): ‘Accountability is a form of quality control. We avoid the really bad, but have to forego the really good.’ A Canadian report, for example, argues that ‘Today’s accountability dynamic – exacerbated by the Federal Accountability Act – is stifling the ability of the public service to innovate, work efficiently, build relationships, reach out to Canadians, and attract future talent’ (Public Policy Forum 2007).2 It can be argued that, in Westminster-styled systems – like New Zealand’s, for example – ‘permanent heads’ of departments were valued more for their political and policy advisory capabilities than for their managerial skills. They were less exposed to public scrutiny than they are today, and not only managed to keep their careers intact when things went badly wrong on their watch, but also survived disasters at least as bad, and sometimes, worse than those of recent times. Probably some of them should not have been able to do so. Today, by contrast, top state sector officials pursue their careers in circumstances that are often laden with high political and policy risk. And they no longer have anything like a monopoly on the provision of policy advice to the political executive (Eichbaum and Shaw 2007; Mulgan 2007). One rationale for abolishing unified career services and moving to position-based personnel systems was to open up the top reaches of government departments to high-quality executive and managerial talent drawn from the private sector. This did not really occur, in large part because of the inability to close the remuneration gap between the two sectors. But given the often politically fraught

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circumstances in which departmental chief executives may now more often find themselves, it may be proving even more difficult to attract top-quality people into these vital positions, not only from outside but from within the public service as well. Conclusion: recovering honour and trust? In such a politically fraught environment, characterized by vociferous calls for heads to roll when something goes wrong, in which levels of public trust in politicians and political processes are low, accountability (or what passes for it) is purchased at the expense of creative innovation. Shaming and blaming has its place, but when it undermines the capacity of individuals and organizations to learn from their mistakes, it needs to be kept in its place. After all, if it is true that a bureaucracy is – as Michel Crozier (1964) argued – an organization that is incapable of learning from its mistakes, then the supreme irony must be that NPM’s drive to ‘de-bureaucratize’ public organizations has, in fact, rendered them even more so. In trying to transform governmental organizations in the image of business corporations, NPM tried to insulate them from politics. Thus was the politics/administration dichotomy – long since largely abandoned by public administration scholars – ‘rediscovered’ by architects of reforms who interpreted political and bureaucratic behaviour through economic lenses. In New Zealand, for example, the reassertion of the old dichotomy was foundational in the decoupling of policy ministries from their relevant operational agencies, a theoretical error which in recent years has been increasingly corrected by a pragmatic process of recoupling (Boston and Eichbaum 2005; Gregory 2006). Political accountability and managerial accountability are certainly secured by institutional and organizational means. That much is obvious. What should have been just as clear is that the two are inextricably woven together. It is almost a truism that political lightning strikes anywhere, at any time, but what has been less well recognized is that attempts by politicians to use governmental officials as lightning rods when things go awry are just as likely to ‘boomerang’ back on them (Hood 2002). Cheating by both parties on the ‘Schafferian’ bargain operating at the politicalbureaucratic nexus leaves both lower in public esteem, since today senior officials – once more shielded by the convention of anonymity – are today more exposed to public scrutiny. Whereas elected politicians have always laboured on the burden of public distrust, this is now increasingly the fate of top governmental bureaucrats. It was always true that in the business of government there are two types of politician – those elected and those appointed – but now this reality is more apparent than hidden. In the practical politics of retrospective story-telling the desire to hold political institutions and actors accountable for the ways they wield power and authority is hardly fulfilled by recourse to immutable conceptual distinctions between political and managerial accountability. Political sense-making emerges from an iterative, ambiguous, seamless and mutually constitutive process rather than from formal reference to sets of neatly structured dualities, whether political and managerial accountability, policy and management, outputs and outcomes, or purchasers and owners. In the end these turn out to be largely rhetorical devices, though by no means without their own real effects on political and managerial behaviour. In the endeavour to fulfil highly challenging public policy purposes, things inevitably go wrong. When they do, and when the processes of public debate and scrutiny play

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themselves out in the quest for heads to roll, impressions are formed and judgements are made, before time and events move on. Some principals may later retell their stories, or tell new ones – ‘to put the record straight’ – in the mistaken belief or the vain hope that somehow history will be kinder to them. (Though few may have Winston Churchill’s self-proclaimed capacity to shape the judgement of history by writing it themselves.) The best that they may hope for is that they can be seen to be reasonable people, telling a reasonable story, to a reasonably receptive audience, in an arena which allows reasonable contestability in the open-ended politics of argumentation, contestation and (mis) representation. If in the face of failure, or amid opportunistic political gamesmanship, inexorable demands that politicians and officials be held to account result in greater levels of public distrust and cynicism. So what can be done? Very little, from a constitutional perspective, and perhaps little more from a behavioural one. When things go wrong and people demand ‘accountability’, politicians and officials must be more often seen to be capable of responding in ways that are manifestly public-serving rather than covertly self-serving. Perhaps only a sense of honour in the breasts of politicians and bureaucrats can inhibit the cheating conducted by both parties to Hood and Lodge’s (2006) ‘public service bargains’. Without it, doctrines like that of ‘ministerial responsibility’ – and the conventions that are central to it – will not only evolve over time, as they must, but will also become manifestly mythical rather than implicitly so. Individual and organizational reputations may in fact be enhanced rather than diminished, when mistakes are made, to the extent that honourable behaviour becomes increasingly real and apparent.3 Politicians and bureaucrats might learn some lessons from history, such as the epigraphic story about General Robert E. Lee. Yet we are a long way from 1863. To talk of honour today is to risk sounding a bit high-minded or romantic – as if there were ever a time when honour was a saving grace in the corridors of governmental power. Nevertheless, those in public sector positions are stewards and trustees of an evolving system of representative and responsible government. As central participants in processes of retrospective story-telling, especially those which generate high public expectations of accountability, what they say and how they say it will be as influential in shaping the future of that system as it is in determining the truth of past events. Notes 1. New public management embodied a ‘one size fits all’ approach and failed to recognize that accountability systems must inevitably be less tight, even loose, in organizations where it is much more difficult to establish a coherent sense of mission through different hierarchical levels, and where much discretion has to be exercised in carrying out the task, especially at operational levels. Cases such as these are less often, if ever, found among business corporations, but are commonplace in the public sector, where many agencies (or functions) are what Wilson calls ‘craft’ or ‘coping’ organizations. In a craft organization the work done (the outputs) is not readily observable by managers but the outcomes of it – that is, its effects on the community – are observable. In a coping organization neither the outputs nor the outcomes are easily observable (or measurable). See Gregory (1995). 2. See also Thomas (2007), for a discussion of the relationship between trust and accountability, and of the impact of Canada’s Federal Accountability Act (2006), 3. In 2007, the New Zealand State Services Commission conducted public survey research to identify the most important factors that shape New Zealanders’ trust in their public services. It found that only a small majority (aged 15+) express trust in the public service, and while most people had confidence that public servants do a good job, 52 per cent disagreed that the public service admits responsibility when it makes

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mistakes, and 42 per cent disagreed that the service learns from the mistakes it makes. These were the most negative among the main perceptions identified. See www.ssc.govt.nz/drivers-report.

References Argyris, C. and D. Schön (1978), Organizational Learning: A Theory of Action Perspective, Reading, MA: Addison Wesley. Argyris, C. and D. Schön (1996), Organizational Learning II: Theory, Method and Practice, Reading, MA: Addison Wesley. Aucoin, P. (1990), ‘Administrative reform in public management: paradigms, principles, paradoxes and pendulums’, Governance, 3: 115–37. Aucoin, P. and R. Heintzman (2000), ‘The dialectics of accountability for performance in public management reform’, International Review of Administrative Sciences, 66: 45–55. Barker, A. (1988), ‘Political responsibility for UK prison security – ministers escape again’, Public Administration, 76: 1–23. Behn, R. (2001), Rethinking Democratic Accountability, Washington, DC: Brookings Institution Press. Boston, J. (2000), ‘The challenge of evaluating systemic change: the case of public management reform’, International Public Management Journal, 3: 23–46. Boston, J. and C. Eichbaum (2005), ‘State sector reform and renewal in New Zealand: lessons for governance’, paper prepared for the conference on ‘Repositioning of Public Governance – Global Experiences and Challenges’, Taipei, 18–19 November. Bovens, M. (1998), The Quest for Responsibility: Accountability and Citizenship in Complex Organisations, Cambridge: Cambridge University Press. Chapman, R. (2000), ‘Accountability: is Westminster the problem?’, Australian Journal of Public Administration, 59: 116–23. Christensen, Tom and Per Lægreid (eds) (2001), New Public Management: The Transformation of Ideas and Practice, Aldershot: Ashgate. Christensen, Tom and Per Lægreid (eds) (2007), Transcending New Public Management: The Transformation of Public Sector Reforms, Aldershot: Ashgate. Cribb, Jo (2006), Being Accountable: Voluntary Organisations, Government Agencies and Contracted Social Services in New Zealand, Wellington: Institute of Policy Studies. Crozier, Michel (1964), The Bureaucratic Phenomenon, Chicago, IL: University of Chicago Press. Day, Patricia and Rudolf Klein (1987), Accountabilities: Five Public Services, London: Tavistock. DeLeon, Linda (1998), ‘Accountability in a “Reinvented” government’, Public Administration, 76: 539–58. DeLeon, Linda (2003), ‘On acting responsibly in a disorderly world: individual ethics and administrative responsibility’, in B.G. Peters and J. Pierre (eds), Handbook of Public Administration, London: Sage Publications. Dubnick, Melvin (1998), ‘Clarifying accountability: an ethical theory framework’, in C. Sampford, N. Preston and C.-A. Bois (eds), Public Sector Ethics: Finding and Implementing Values, London: Routledge. Dubnick, Melvin and Barbara Romzek (1991), American Public Administration: Politics and the Management of Expectations, New York: Macmillan. Eichbaum, Chris and Richard Shaw (2007), ‘Ministerial advisers, politicisation and the retreat from Westminster: the case of New Zealand’, Public Administration, 85: 609–40. Flinders, Matthew and Jim Buller (2006), ‘Depoliticization, democracy and arena shifting’, in T. Christensen and P. Lægreid (eds), Autonomy and Regulation: Coping with Agencies in the Modern State, London: Edward Elgar, pp. 53–81. Gregory, Robert (1995), ‘The peculiar tasks of public management: toward conceptual discrimination’, Australian Journal of Public Administration, 54: 171–83. Gregory, Robert (1998b), ‘Political responsibility for bureaucratic incompetence: tragedy at Cave Creek’, Public Administration, 76: 519–38. Gregory, Robert (1998a), ‘A New Zealand tragedy: problems of political responsibility’, Governance, 11: 231–40. Gregory, Robert (1999), ‘Social capital theory and administrative reform: maintaining ethical probity in public service’, Public Administration Review, 59: 63–75. Gregory, Robert (2003), ‘Accountability in modern government’, in B.G. Peters and J. Pierre (eds), Handbook of Public Administration, London: Sage Publications. Gregory, Robert (2006), ‘Theoretical faith and practical works: de-autonomizing and joining-up in the New Zealand state sector’, in T. Christensen and P. Lægreid (eds), Autonomy and Regulation: Coping with Agencies in the Modern State, London: Edward Elgar, pp. 137–61. Gregory, Robert (2007), ‘New public management and the ghost of Max Weber: exorcised or still haunting?’,

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in T. Christensen and P. Lægreid (eds), Transcending New Public Management: The Transformation of Public Sector Reforms, Aldershot: Ashgate, pp. 221–43. Gregory, Robert and Colin Hicks (1999), ‘Promoting public service integrity: a case for responsible accountability’, Australian Journal of Public Administration, 58: 3–15. Hodge, Graeme, and Ken Coghill (2007), ‘Accountability in the privatized state’, Governance, 20: 675–702. Hood, Christopher (1998), ‘Individualized contracts for top public servants: copying business, path-dependent political re-engineering – or trobriand cricket?’, Governance, 11: 443–62. Hood, Christopher (2002), ‘The risk game and the blame game’, Government and Opposition, 37: 15–37. Hood, Christopher (2007), ‘What happens when transparency meets blame-avoidance?’, Public Management Review, 9: 191–210. Hood, Christopher and Martin Lodge (2006), The Politics of Public Service Bargains: Reward, Competency, Loyalty – and Blame, New York: Oxford University Press. Hood, Christopher and B. Guy Peters (2004), ‘The middle aging of new public management: into the age of paradox?’, Journal of Public Administration Research and Theory, 14: 267–82. Hughes, Owen (1998), Public Management and Administration: An Introduction, 2nd edn, New York: St. Martins Press. Hummel, Ralph (1994), The Bureaucratic Experience: A Critique of Life in the Modern Organization, New York: St. Martins Press. Hupe, Peter and Michael Hill (2007), ‘Street-level bureaucracy and public accountability’, Public Administration, 85: 279–99. Kaufman, Herbert (1977), Red Tape: Its Origins, Uses, and Abuses, Washington, DC: Brookings Institution. Le Grand, Julian (2003), Motivation, Agency and Public Policy: Of Knights and Knaves, Pawns and Queens, New York: Oxford University Press. Lipsky, Michael (1980), Street-Level Bureaucracy: Dilemmas of the Individual in Public Services, New York: Russell Sage Foundation. Lucas, John (1976), Democracy and Participation, Harmondsworth: Penguin. Maor, Moshe (1999), ‘The paradox of managerialism’, Public Administration Review, 59: 5–18. Marcussen, Martin (2007), ‘Central banking reform across the world: only by night are all cats grey’, in T. Christensen and P. Lægreid.(eds), Transcending New Public Management: The Transformation of Public Sector Reforms, Aldershot: Ashgate, pp. 135–54. Mosher, Frederick (1968), Democracy and the Public Service, New York: Oxford University Press. Moynihan, Donald (2007), The Normative Model in Decline? Public Service Motivation in the Age of Governance, La Follette School Working Paper No. 2007-021. Madison, WI: Robert M La Follette School of Public Affairs. Mulgan, Richard (2000), ‘“Accountability”: an ever-expanding concept?’, Public Administration, 78: 555–74. Mulgan, Richard (2003), Holding Power to Account: Accountability in Modern Democracies, New York: Palgrave Macmillan. Mulgan, Richard (2006), ‘Government accountability for outsourced services’, Australian Journal of Public Administration, 65: 48–58. Mulgan, Richard (2007), ‘Truth in government and the politicization of public service advice’, Public Administration, 85: 569–86. Neustadt, Richard (1990), Presidential Power and the Modern Presidents: The Politics of Leadership from Roosevelt to Reagan, New York: Free Press. Norman, Richard (2003), Obedient Servants: Management Freedoms and Accountabilities in the New Zealand Public Sector, Wellington: Victoria University Press. O’Toole, Laurence and Kenneth Meier (2004), ‘Desperately seeking Selznick: cooptation and the dark side of public management networks’, Public Administration Review, 64: 681–93. Page, B. (1990), ‘Ministerial resignation and individual ministerial responsibility in Australia’, Journal of Commonwealth and Comparative Politics, 28: 141–61. Palmer, Geoffrey (1987), Unbridled Power: An Interpretation of New Zealand’s Constitution and Government, 2nd edn, Auckland: Oxford University Press. Peters, B. Guy, (2006), ‘Understanding the public sector: the significance of size and complexity?’, The Asia Pacific Journal of Public Administration, 28: 99–116. Peters, B. Guy and Jon Pierre (2000), Governance, Politics and the State, New York: St. Martins Press. Pierre, Jon (1998), ‘Public consultation and citizen participation: dilemmas of policy advice’, in B.G. Peters and D. Savoie (eds), Taking Stock: Assessing Public Sector Reforms, Montreal and Kingston: Canadian Centre for Management Development/McGill-Queen’s University Press. Pollitt, Christopher and Geert Bouckaert (2004), Public Management Reform: A Comparative Analysis, 2nd edn, New York: Oxford University Press. Public Policy Forum (2007), Leading By Example, Ottawa: Public Policy Forum.

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Rhodes, Rod (1997), Understanding Governance: Policy Networks, Governance, Reflexivity and Accountability, Buckingham: Open University Press. Rhodes, Rod (2005), ‘Is Westminster dead in Westminster (and why should we care)?’, inaugural lecture in the ANZSOG-ANU Public Lecture Series, The Shine Dome, Academy of Science, Canberra, 23 February. Rhodes, Rod (2007), ‘Understanding governance: ten years on’, Organization Studies 28: 1243–1264. Romzek, Barbara and Patricia Ingraham (2000), ‘Cross pressures of accountability: initiative, command, and failure in the Ron Brown plane crash’, Public Administration Review, 60: 240–53. Rorty, Richard (1999), Philosophy and Social Hope, London: Penguin Books. Savoie, Donald and B. Guy Peters (eds) (1998), Taking Stock: Assessing Public Sector Reforms, Montreal and Kingston: Canadian Centre for Management Development/McGill-Queen’s University Press. Schön, Donald (1971), Beyond the Stable State, London: Temple Smith. Skelley, Douglas (2002), ‘The ambiguity of results: assessments of the new public management’, Public Administration and Management, 7: 168–87. Snow, Charles Percy (1961), ‘The moral un-neutrality of science’, Science, 133 (3448): 255–62. Stace, Hilary and Jacqueline Cumming (2006), ‘Contracting between government and the voluntary sector: where to from here?’, Policy Quarterly, 2: 13–20. Stiglitz, Joseph (2002), Globalization and its Discontents, New York: Norton. Stone, Bruce (1995), ‘Administrative accountability in the “Westminster” democracies: towards a new conceptual framework’, Governance, 8: 505–26. Sutherland, Sharon (1991), ‘Responsible government and ministerial responsibility: every reform is its own problem’, Canadian Journal of Political Science, 24: 91–120. Thomas, Paul (2007), ‘Trust, leadership and accountability in Canada’s public sector’, paper prepared for the conference, ‘Canadian public administration in transition: from administration to management to governance’, Guelph University, 21–22 September. Thompson, Elaine and Greg Tillotsen (1999), ‘Caught in the act: the smoking gun view of ministerial responsibility’, Australian Journal of Public Administration, 58: 48–57. Uhr, John (1993), ‘Redesigning accountability: from muddles to maps’, Australian Quarterly, (Winter): 1–16. Weaver, Kent (1986), ‘The politics of blame avoidance’, Journal of Public Policy, 6: 371–98. Williamson, John. 2002. ‘Did the Washington Consensus Fail?’, Outline of Speech at the Center for Strategic & International Studies, Washington DC, 6 November. Wilson, James Q. (1989), Bureaucracy: What Government Agencies Do and Why They Do It, New York: Basic Books. Woodhouse, Diana (1993), ‘Ministerial responsibility in the 1990s: when do ministers resign?’, Parliamentary Affairs, 46: 277–92.

5

Public value-seeking leadership: its nature, rationale and development in the context of public management reform Joe L. Wallis and Linda McLoughlin

Introduction Theories of leadership have been formulated and developed in a number of disciplines in the humanities and allied social sciences. In many cases these theories conceive leadership as a response to dilemmas or issues that are of particular relevance to scholars working in a particular discipline or field of inquiry. Thus historians have long been interested in whether leadership is a significant causative factor in explaining historical change. For example, can significant historical changes be attributed to specific leaders as Carlyle’s (1841) ‘great man theory’ suggests or is leadership a response to situational factors that function as the main determinants of change? Or is it a combination of the two? Contemporary explanations of ‘the political economy of policy reform’ (Rodrik 1996; Wallis 1999) see leadership as a trait-dependent response by identifiable policy leaders to the ‘window of opportunity’ provided by a perceived economic crisis. In an exhaustive survey of leadership theories Bass (1990) notes that the debate between trait and situational theorists dominated the literature right up to the 1940s. After the Second World War there was a burgeoning of empirical and experimental work by psychologists and sociologists into the emergence of leadership in small groups (Fiedler 1967; Hersey and Blanchard 1967; House 1971; Vroom and Yetton 1973) that was integrated into theories of management and organizational behaviour. Bryman (1986) pointed out that this work tended to generate as many definitions as there were theories of leadership. However, its small group focus is reflected in his proposal that most of the theories were converging on the notion of leadership as a social influence process in which an identifiable leader steered the members of a group toward the achievement of a particular goal. Van Wart (2003) argues that the seminal distinction Burns (1978: 5) made between transactional leaders who ‘approach followers with an eye to exchanging one thing for another’ and ‘transformational’ leaders who seek to satisfy higher needs, in terms of Maslow’s need hierarchy, and engage the full person of the follower dramatically changed the focus of the management literature on leadership. Prior to 1978, its attention was mainly directed toward the study of transactional leadership ‘at lower levels which was amenable to small group and experimental methods and simplified variable models’ (Van Wart 2003: 217) while in the subsequent period there has been a greater emphasis on transformational leaders who can create ‘change in deep structures, major processes or overall structure’ (ibid.: 218). Transformational theories of organizational leadership that explored the connection between personal and organizational transformation (see Bennis and Nanus 1985; Tichy and Devanna 1986) clearly struck a responsive chord in an era when management theorists and practitioners sought to come to terms with the 88

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adaptive challenges (Heifetz 1994; Heifetz and Linsky 2002) posed by globalization, economic reform and rapid technological change. It should be borne in mind, though, that Burns (1978) originally conceived transformational leadership as a response to the issues of sectionalism and parochialism that have concerned pluralist thinkers in political studies. Thus the indeterminacy of politics on those occasions where ‘some action of public consequence becomes necessary and when men must thus make a public choice that is reasonable in the face of conflict despite the absence of an independent ground’ (Barber 1984: 122, original emphasis) may be addressed by the emergence of a transformational leader who though ‘closely influenced by particular local, parochial, regional, and cultural forces’ is able to ‘find a broadening and deepening base’ from which ‘to reach out to widening social collectivities to establish and embrace “higher” principles and values’ (Burns 1978: 429). One discipline that traditionally has not had much interest in leadership is economics. Economists typically shied away from a phenomenon that was difficult to pin down definitionally and that involved a type of preference change that difficult to frame in terms acceptable to mainstream economists who subscribe to the convention that economic analysis should either (1) take the preferences of individuals as given and not look inside the ‘black box’ within which they are formed and transformed; or (2) assume that they are stable and explain apparent preference change in terms of adjustments in the shadow prices of inputs in household production functions (Stigler and Becker 1977). Since the 1990s, however, a number of economists have become interested in leadership as a solution to problems of agency failure (see, for example, Casson 1991; Goldfinch and ’t Hart 2003; Hermalin 1998; Wallis and Dollery 1999). They have thus made a small contribution to the broad literature on agency theory and the economics of organizations that has been identified by writers such as Boston et al. (1996), Hood (1991) and Goldfinch (2000) as an important influence on the more contractualist approaches to the ‘new public management’ adopted in countries like Britain and New Zealand. This chapter seeks to show how leadership can also be conceived as a response to the accountability issues that appear to be an important concern in the field of public administration. This would seem to be a promising line of inquiry since both leadership and accountability impinge on the concerns policy actors have with the question of who is to be given credit and assigned blame for the outcomes of public programs and policy initiatives. In essence they are both attributional phenomena. The perspective from which accountability is evaluated is, however, typically more negative. The widespread usage of the term reflects a strong desire that when something goes wrong, someone, somewhere in government, should be ‘held to account’. What is normally intended is that some person or some persons should be required to provide the public with a full and honest account of why it happened, and that appropriate sanctions should be invoked against those causally responsible. By contrast, the attribution of ‘leadership’ typically involves the more positive process of giving credit where it is due. Followers can therefore not only be distinguished by their willingness to be influenced by a leader, but also by their willingness to give this person credit for positive outcomes even where these could not be achieved without the co-operation and commitment of the leader’s following. Such credit-giving can be conceived as being part of a ‘social exchange’. It constitutes part of the reward followers are prepared to bestow on leaders in return for

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the willingness of these leaders to expose themselves to the risk of being blamed for negative outcomes. Understanding the relationship between accountability and leadership is somewhat complicated by the way leadership is typically conceived in a way that is distinct from management. To be given credit for exercising leadership, managers should add two important dimensions to the set of behaviours in respect of which they could reasonably be held to account. In the first place, they should take responsibility for ‘doing the right thing’ in addition to being held accountable for ‘doing things right’ (Nanus and Dobbs 1999). There is thus a dimension of responsible judgment to leadership. The difference between responsibility and accountability was explored by Bob Gregory in Chapter 4. In contrast to accountability, responsibility focuses attention not on the external, formal, procedures through which politicians and officials answer for their actions, but on the morally responsible exercise of judgment among conflicting obligations and values. There is also an inspirational dimension to leadership that requires leaders to draw on sources informal authority to induce commitment in a way that goes beyond whatever formal authority they may have as managers. Once again they can only be made accountable for how they use formal authority to manage rather than informal authority to exercise leadership. These distinctions have become relevant within the context of the ‘new governance’ that has emerged in the countries that experienced the large-scale and often radical reforms loosely identified as the ‘new public management’ (NPM) during the 1980s and 1990s. On the one hand, the reforms sought to remove institutional constraints on managerial discretion. A greater emphasis was therefore given to enhancing managerial accountability so that public managers would not only be freed to manage but made accountable for management in terms of the results or outcomes they could achieve rather than the probity or procedural compliance they were able to demonstrate. In freeing managers to manage, the reforms also freed them to take responsibility for exercising leadership by mobilizing networks in pursuit of initiatives that they judged to create public value. However, accountability becomes more difficult to achieve in the emerging context of new governance where, as Gregory was able to show, the dispersal and shifting of blame among different actors in the network is relatively easy to achieve. This chapter seeks to examine how what could be called a public value-seeking leadership can be expected to address these accountability issues before going on to examine issues surrounding the development of this type of leadership. Public value-seeking leadership A number of writers have argued that in an era of networked governance public managers should seek to demonstrate what we will call ‘public value-seeking leadership’ (PVSL) (for example, Kelly and Muers 2002; Moore 1995; Smith 2004; Stoker 2003). We propose that, to do this, these public managers must take responsibility for mobilizing networks in pursuit of initiatives that in their judgment will create public value. In this section various aspects of this proposition will be explored, before the question how such leadership can mitigate the accountability dilemmas described in the previous section is addressed. To start with, it should be emphasized that PVSL is essentially exercised through networks. These may take the form of both vertical networks that penetrate down through

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hierarchies as public managers develop a following within their own organization. They may also span horizontally across organizations and sectors as these managers seek to engage other actors in deliberation and delivery networks. Public managers may not always play a leadership role in these horizontal networks. They may alternate in this regard with other actors. As Bryson and Crosby (1992: 32) have pointed out: In a world where shared power is more effective than individual power, the tasks of leadership must be widely shared. No one person can embody all the needed qualities or perform all the tasks. People will pass into and out of leadership roles; a person may be a leader on one issue and a follower on others. This year’s leader on a particular issue may even be next year’s follower on the same issue.

The developing literature on networks in the field of public administration tend to view them as being primarily interest based. From this perspective, they function to co-ordinate actors by mobilizing and pooling their dispersed resources in the face of ‘structures of resource dependency’ (Hindmoor 1998; Rhodes 1988; Thompson et al. 1991). A complementarity of interests can thus arise from a relatively balanced structure of resource dependencies so that access to the network is limited to those members who can make significant resource contributions in the context of an ongoing policy issue, or series of interconnected issues. Their need to engage in ‘frequent, high-quality interaction’ with respect to this issue or issues would have the effect of transforming a ‘one-off’ game into an iterated relationship. As negotiations become embedded within other negotiations, trust and co-operation can develop since actors will realize that defection in any one area can lead to the unraveling of co-operation in other areas. However, in addition to the instrumental motivation associated with such a complementarity of interests, the commitment of resources members make to public value-seeking networks may also arise from an expressive motivation (Hargreaves-Heap 1989). They may thus also make and sustain their commitments to these networks as an expression of their belief in the public value of the initiatives they are undertaking together. Moore (1995) has suggested that for someone to judge an initiative to be publicly valuable, it must, in their judgment, have three characteristics. First, it must be ‘substantively valuable’ in the sense of being ‘worth the cost of private consumption and unrestrained liberty forgone in producing the desirable results’ (Moore 1995: 77). Stoker (2003: 6) argues that the substance of public value can only be defined and redefined through political interaction that involves politicians, officials and communities. This implies that public value-seeking networks must, at least in part, be deliberative with members being giving an opportunity to participate in the process of making a judgment about the substantive value or worth of the initiative under consideration. Secondly, the initiative must be judged to be ‘organizationally and administratively feasible’ (Moore 1995: 71). This implies an ‘open-minded approach’ to the procurement of services (Stoker 2003: 9–10) through a mix of hierarchy, market and network mechanisms, and to the possibilities of managing co-production and behavioural change in addressing ‘adaptive’ or ‘wicked’ problems’ (Harmon and Meyer 1986; Heifetz and Linsky 2002). The feasibility of the initiative may therefore depend crucially on whether the members of the network believe that the commitments required of its members are sustainable.

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Thirdly, the initiative must be judged to be ‘legitimate and politically sustainable’ (Moore 1995: 71). This implies that those members of the network who are public servants must be confident that the commitments required of them do not breach the mutual understandings and expectations that shape prevailing ‘public service bargains’ (Hood and Lodge 2006) between themselves and those they serve. Member commitments may thus be based on responsible judgments that give rise to a core belief in the worth and possibility of the initiative being undertaken. As Hirschman (1982) has observed, sustaining such commitments may involve an ‘intimate contest of self command’ that occasionally involves the person concerned in a struggle to impose a ‘second order meta-preference’ to keep them over a ‘first order’ temptation to ‘cheat’ by breaking them. These meta-preferences that are shaped by beliefs in the worth and possibility of the initiative may, however, be eroded by disappointments that can accumulate above a threshold at which they can provide a rationalization for breaking the commitment. In a public value-seeking network these disappointments can relate to the behaviour of the leader and other members as well as setbacks, reversals and failures experienced in the course of seeking to advance a particular initiative (Wallis et al. 2007: 81). By exposing members to potential disappointments, commitments can be a source of cognitive dissonance that predispose them look to someone to provide them with ‘good reasons’ to sustain them (Elster 1998; Wallis and Dollery 1999). How then can public managers supply leadership to public value-seeking networks? Perhaps the crucial step is for them to personally take responsibility for the leadership of the initiative. This may address the major accountability issues with network governance discussed in the previous section. It should be emphasized here that by accepting responsibility for the outcomes of the initiative, by ‘putting their leadership on the line’ (Heifetz and Linsky 2002), public managers can obviate the blame-shifting that can occur due to the dispersal of accountability through the interstices of the webs of institutions and actors that make up networks (Rhodes 2000: 77). Moreover, to the degree that public managers do seek to eschew blame-shifting, they can avert the pressure on their political principals to tighten managerial accountability in response to the erosion of trust in public institutions that such behaviour can produce. This does not imply that public managers should be willing to offer themselves as a ‘scapegoat’ or ‘lightning rod’ to attract blame in every situation. It may, for example actually be irresponsible to do this where their principals do not give them the minimum resources and formal authority necessary to mobilize a network in pursuit of an initiative or where, in their judgment, the propensity of these actors to engage in ad hoc or backdoor interference undermines their capacity to provide it with leadership. Moreover, by accepting responsibility, public managers are, at the very least, signaling a commitment to learn from the outcomes of the initiative. As a result they may reasonably expect that their principals would not withdraw their support and leave them ‘hanging out to dry’ where such commitments to learning are credible and can actually enhance the capacity of these public managers to provide public value-seeking leadership in the future. It should be also be reiterated that ‘accepting responsibility’ for an initiative goes beyond making oneself accountable for its outcomes. It may, for example, involve engaging other actors in the network in the deliberative processes through which a judgment is made that a proposed initiative may actually create public value. To provide leadership to such processes, a public manager will have to try strike a balance between, on the one

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hand, opening them up to a deeper and more prolonged discussion about whether we ‘are really trying to do the right thing’ and steering them toward resolution in the form of the judgment that the initiative is worth committing to on the basis of a shared belief that it will actually create public value. Once such a responsible judgment has been made, the public manager can signal their willingness to accept responsibility for negative, disappointing or controversial outcomes from the initiative. This may be interpreted as a signal of the public manager’s own commitment to the initiative. In addition to the expressive satisfaction they derive from signaling how much the initiative means to them in this way, they may be rewarded by the other members of the network in two important ways. First, these members may be willing to give the public manager credit for favorable outcomes to compensate them for bearing the risk of accepting responsibility for failures or disappointments that may arise from the initiative. Secondly, the informal authority of public manager in the group may be enhanced by the courage they demonstrate through their willingness to accept responsibility in this way. Their capacity to inspire and persuade network members will thus not only depend on the ability to command attention associated with the formal authority attached to their position in the hierarchy of government. It also depends on the informal authority associated with their personal credibility that can be enhanced by their willingness to take responsibility for the network’s initiatives. As Wallis et al. (2007) have observed this may present them with a difficult choice after the successful conclusion of a particular initiative. They may thus have to decide between (1) ‘cashing up’ the credit given them by using it to advance their own career in a way that enhances their formal authority; or (2) conserving their enhanced informal authority as a form of ‘social capital’ that can be used to mobilize and expand the network to undertake further public value-seeking initiatives. Whatever the level of formal and informal authority of public managers, their ability to actually effectively use this authority will, of course, depend on personal traits such as their ‘emotional intelligence’. A consensus appears to be emerging in this literature on this subject that the primary components of emotional intelligence are ‘self-awareness’, ‘self-management’, ‘social awareness’ and ‘social influence’ (Goleman et al. 2002). These capacities can enable a leader to observe and interpret the emotional climate of a group and intervene to influence the commitments of its members. There is often a close link between language and inspirational leadership so that an emotionally intelligent intervention may simply consist of the leader giving other members good reasons to sustain their commitments by amplifying the worth and possibility of what they are striving to achieve together, and by interpreting setbacks and reversals in a positive way as ‘learning opportunities’ rather than disappointments that can accumulate to undermine their commitments. A central argument of emotional intelligence theorists is that, in overall terms and with regard to its components, this quality that can both vary between individuals at any point in time and be developed within individuals over time. In other words individuals can learn to overcome deficiencies in their emotional intelligence. This may, however, be perceived to be an excessively protracted process. Cognitive dissonance theory may thus explain why the members of a group may look to emotionally intelligent leaders to influence the emotions that affect the dissonance they experience in relation to their commitments (Elster 1998; Festinger 1957; Wallis and Dollery 1999).

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In general the leadership behaviours demonstrated by public value-seeking leaders would differ in a number of important respects from those that have been demanded in public service bargains where public servants are expected to provide ‘a safe pair of hands’ in their relationship with their political masters. The latter form of risk-averse behaviour is likely to be most strongly encouraged under what Hood and Lodge (2006) called ‘serial loyalist bargains’. Under these public servants typically undertake to be loyal to whoever holds elected office at any time in exchange ‘for access to the confidential counsels of those politicians and a measure of anonymity when it comes to public praise or blame’ (ibid.: 53). From the perspective of political principals, there are two major risks with this type of arrangement. The first is that a public servant may become so loyal to a particular political master or committed to a set of policy goals that subsequent principals may question their ‘neutrality’. The second is that public servants may precipitately undertake initiatives without the approval or even knowledge of their masters that subsequently have negative outcomes in respect of which politicians bear the burden of public blame. To minimize the ‘risk-taking in relationship’ that a growing literature has come to associate with interpersonal trust (for a review of this literature see Mayer et al. 1999), principals may deny access to their personal counsels to those public servants who they cannot trust to be neutral, discrete and cautious in the sense of being careful not to do anything that may cause them political trouble. Under serial loyalist bargains the types of risk-taking leadership behaviours associated with public value-seeking leadership may remain relatively undeveloped. With regard to the deliberative aspect of leadership, they may avoid the risk of being too innovative or exploratory. They may thus tend to seek predictability and preserve the status quo rather than look at issues from a fresh perspective and seek out new ideas. They are unlikely to think outside the frame of the shared paradigms and institutionary memory that have historically bounded their deliberations, since these may cause other policy actors to question their ‘soundness’. Also, in forming their deliberative networks they may avoid the risk of moving outside the types of relatively ‘stable policy communities’ described by Rhodes and Marsh (1992). Rather than seeking to engage outsider groups with new and potentially conflicting interests and perspectives, they may continue to interact with a relatively narrow group comprising their political principals, officials in their own departments and representatives of insider interest groups that they have routinely consulted with in working out the details of policy implementation. With regard to the expressive dimension leadership, they are more likely to be observed to be restrained and discreet than inspirational or persuasive. They will place their relationship of trust with successive political principals at risk by being too closely identified with their advocacy of a particular policy initiative or position. Relying on inspiration or persuasion to develop a following within their organizations is also inherently risky since whatever commitments followers make can be subject to erosion through the accumulation of disappointment. Finally, risk-averse public managers may prefer a process to an outcome orientation. This tendency is particularly strong under serial loyalist bargains where it is easier for political principals to publicly support and defend the actions of public servants where their compliance with procedures rather than achievement of results can be demonstrated. If it is accepted that public value-seeking leadership should be encouraged under the

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emerging new governance, questions must arise as to what policy-makers should do to develop the more exploratory, inspirational and outcome-oriented behaviours associated with this type of leadership. The policy conditions for encouraging public value-seeking leadership The starting point for any policy package that seeks to encourage public value-seeking leadership behaviours would seem to be the implementation of reforms that shift public managers from a serial loyalist to what Hood and Lodge (2006) call a ‘delegated agency bargain’. According to these writers the essential feature of delegated agency bargains is that ‘the political principal and the public servant agree on a framework, set by the principal, within which a zone of discretion is obtained by the public servant, in exchange for direct responsibility for outcomes within that zone of discretion’ (ibid.: 56). Such a delegation of responsibility would seem to be a core element of NPM-style reforms, although the issue of whether or not it is sufficient to encourage public value-seeking leadership would seem to depend on a number of factors. In the first place the delegation of responsibility should be both reasonable and credible. Public managers may view it as unreasonable if its primary objective is to ensure that they bear the full burden of public blame and attendant sanctions associated with negative outcomes without being given the opportunity to demonstrate their commitment to learn from them. They may also view the delegation as lacking credibility if they are exposed to various forms of ‘cheating’ by their principals that involve breaking some of the commitment and understandings that sustain this type of bargain. For example, politicians may continue to take credit for successful initiatives while, at the same time, seeking to shift blame for failures ‘downward’ on to public managers. They may also, from time to time, engage in unacknowledged or backdoor interference in the operational details of departmental or agency activities. They may ignore formal performance information or use covert political criteria rather than published targets as the basis for reward and punishment. This may give rise to a perception among public managers that they are subject to a kind of ‘double-bind control’ so that supposedly transparent targets turn out not to be the real standards by which they are judged. In general, it would seem that at the root of these factors that undermine the credibility of political commitment to develop public value-seeking leadership is the perception that politicians will go as far possible to reduce the risk involved in the delegation of responsibility. Blame-shifting, backdoor interference and excessive monitoring by ‘setting up overseers and progress chasers that reduce public managers discretion to vanishing point’ (Hood and Lodge 2006: 184–5) are all symptoms of such risk-avoidance behaviour. They can, however, be highly counterproductive in terms of encouraging public managers to develop and demonstrate riskier forms of leadership behaviour. Rather, they may induce public mangers to ‘act in highly defensive ways to avoid blame – concentrating on achieving audit-proof political correctness and tightly controlling damaging information rather than bold and open initiatives’ (Hood and Lodge 2006: 187). Secondly, central government control agencies should be given the capacity to provide strategic direction for public value-seeking leadership among line departments and other government agencies in the public sector. This may require the empowerment of the central control agency responsible for overseeing public service capacity relative to the control agency that functions as controller of the government’s finances. Finance

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ministries have typically been heavily involved in the implementation of NPM-style reforms but their emphasis has usually been on strengthening managerial accountability by redesigning systems in the areas of financial, performance and human resource management rather than developing and providing direction to multiple sources of leadership in the public sector. The need to restore some balance at the center of government and provide a strategic framework within which a public value-seeking leadership can emerge is discussed in a number of the country studies set out in later chapters of this book. This is, perhaps, most clearly reflected in recent New Zealand experience where the Treasury’s once dominant role in driving an extreme contractualist form of NPM has to some degree receded, as the State Services Commission has assumed a more central role in developing leadership capacity in the public services and promoting a public service ethos from a ‘whole of government’ perspective (see Goldfinch chapter in this book). Thirdly, public managers need to be given more incentive to develop public valueseeking leadership behaviours. A distinction can be made, in this regard, between ‘leader development’ and ‘leadership development’ (Day 2001). Leader development treats individual-leader level competencies as a form of human capital. To provide individuals with the incentive to develop them, an assessment of leadership effectiveness could be incorporated into a competency framework so that performance evaluation and promotions could depend, in part, on public managers demonstrating those individual-based knowledge, skills and abilities associated with formal leadership roles. The financial incentive for managers to invest time, effort and resources in the development of these competencies could, in turn, be enhanced by raising the value of promotions and bonuses and making the senior management positions that require them more open and contestable. However, as is the case with other forms of human capital, they may be the source of external benefits that are not completely captured by the individual concerned. The resulting divergence between its private and social return may provide the rationale for some state funding of programs designed to develop it. By contrast, leadership development seeks to build social capital and multiple, often alternating sources of leadership, within and across organizations with the emphasis on building networked relationships among individuals that enhance co-operation, trust and shared commitment (Tsai and Goshal 1998). In terms of this view, social capital is described by its function rather than by its structure (Coleman 1988) and is based on relationships that are established as networks are mobilized in pursuit of public value-creating initiatives. The challenge of leadership development is to cultivate the virtues associated with a community of practice (MacIntyre 1981) in which a public value-seeking leadership that is both entrepreneurial and appreciative, that combines the courage to take responsibility with the wisdom to appreciate what is politically sustainable, is a valued mode of operating throughout the public services (Fulmer and Keys 1998). A ‘leadership ecology’ (Dunoon 2002) that promotes these virtues will support and enhance the expressive rewards network members derive from commitments that demonstrate the value they place on their collective, public value-seeking initiatives. The establishment of a Senior Executive Service that comprises selected public servants whose talent is nurtured intensively over time to develop a cadre of senior public sector leaders with common values and vision may provide the environment in which such an ecology can develop. In a cross-country study the OECD (2001) identified France, Japan and Korea as countries where this type of institution played a central role in leadership

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development policy, although it did warn of empowering a minority at the expense of the motivation of the majority and recommended that government efforts to promote leadership should be less a technical or knowledge transfer than a wholehearted effort at facing hard issues, promoting values and stimulating robust action. Interestingly a more recent study by this organization that was commissioned by the Irish government (OECD 2008) made the establishment of a single, integrated public service leadership cadre, through the creation of a Senior Public Service with a membership drawn from elements of the broader Public Service the basis for its long-term strategy to promote an ‘Integrated Public Service’ based on ‘core public service values’ that would be reflected in networking initiatives that would, over time, increase ‘connectivity’ between the different parts of what has been a highly segmented public service structure. Fourthly, governments should be committed to funding programs that both enhance human capital through leader development and social capital through leadership development. The nature of these programs and how they can facilitate the development of a public value-seeking leadership, in particular, must now be examined in more detail. Leadership development programs and public value-seeking leadership Wallis et al. (2007) suggest that there will be a different emphasis inherent in the learning strategies associated with leader and leadership development. The overarching learning strategy for leader development is to build the intrapersonal competence needed to form an accurate model of oneself (Gardner 1993). Specific competences relate to those aspects of emotional intelligence that include self-awareness (for example, self-confidence), selfregulation (for example, trustworthiness, adaptability) and self-motivation (for example, initiative, optimism) in order to enhance the individual knowledge, trust and personal power required to lead. By contrast, the emphasis in leadership development is on building and using interpersonal competence, defined by Gardner (1993) in terms of the ability to understand people and the ability to build trust, commitment and respect in work relationships. The aspects of emotional intelligence that are emphasized include social awareness (for example, empathy, service orientation, developing others) and social skills (for example, collaboration and co-operation, building bonds, conflict management). Given the social nature of this competence, development will best occur in an interpersonal-social context. This has implications for the design of leadership development interventions. Day (2001: 587) observes in this regard that: ‘Leadership development can be thought of as an integration strategy by helping people to understand how to relate to others, co-ordinate their efforts, build commitments, and develop extended social networks by applying self understanding to social and organizational imperatives.’ In practice, the interventions that are typically included in state-of-the-art leadership development packages can be used to attend to both individual leader development and leader development. These interventions include 360-degree feedback, executive coaching, action learning and mentoring. It is worth noting that they were all originally evolved for purposes other than leadership development. Most typically, they were used to manage performance (360-degree feedback), to enhance productivity (action learning) and to promote corporate socialization (mentoring). We consider each of these in more detail, focusing first on the 360-degree feedback and executive coaching components that typically have the individual-skill focus associated with leader development, before going

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on to argue that they can be combined in a package with action learning and mentoring that also promotes a deeper and broader leadership development. 360-degree feedback The terms 360-degree feedback, multi-rater feedback and multi-source feedback are all used to describe the systematic collection of perceptions of an individual from an entire circle of viewpoints (Warech et al. 1998). Raters or ‘observers’ are typically drawn from peers, direct reports and supervisors to provide an all-round view of an individual’s leadership performance. These perceptions can be related to the frequency with which individuals are observed to demonstrate a set of leadership behaviours specified by a diagnostic instrument. Leslie and Feenor (1998) evaluate a wide range of such instruments and select a group of 14 that have both a solid theoretical and empirical grounding and have been subjected by their vendors to a range of reliability tests including those for short-term stability (test-retest), agreement within rater groups (inter-rater reliability) and whether the instrument measures what it intended to measure (construct validity). This group includes Leadership Effectiveness Analysis™ (LEA), an instrument that one of the authors of this chapter has chosen to use in providing leadership development services to the Irish public sector. Standard LEA questionnaires consist of 84 questions, the responses to which can be summed up to produce a raw score for 22 dimensions of leadership behaviour that, as Box 5.1 shows, can, in turn, be categorized in terms of their contribution they make to the six main functions LEA identifies for the leadership role. These raw scales are typically transformed into normed scores drawing from a large norm base that includes public and private managers in both Ireland and the UK. Frequency distributions and median scores can provide an indication of the behaviours that are most frequently used by respondents to perform the various functions of their leadership role. In reviewing these scores with the purpose of ascertaining which behaviours should be targeted for intervention, particular attention is given to both ‘low’ and ‘high’ scores. Low scores on an LEA set imply that the behaviours associated with this set are used infrequently and may be targeted for development particularly if this helps moderate and offset the unintended and negative consequences of the overuse of behaviours that are found to have high scores in terms of their frequency of use. The failure of particular leaders to demonstrate the three dimensions of public valueseeking leadership behaviour described in the previous section would be highlighted by a LEA ‘scorecard’. In terms of ‘creating a vision’, such a person would tend to have significantly lower scores recorded for the ‘innovative’ set than for the ‘conservative’ set. With respect to ‘developing followers’, their scores for ‘persuasion’ and ‘excitement’ would be lower than for ‘restraint’, while their lack of outcome-orientation would be exhibited by low scores in the three behaviour sets associated with the function of ‘achieving results’ particularly when these are compared with those recorded with the ‘structuring’, and ‘authority’ behaviour sets. There may, of course, be significant variance between individuals’ self-assessment of their leadership behaviour according these dimensions and those of their peers, reports and supervisors. Alimo-Metcalfe (1998) reports on a number of themes that have emerged from research using 360-degree feedback. First, managers tend to rate themselves higher in leadership effectiveness than do their colleagues who act as their

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BOX 5.1

THE LEADERSHIP EFFECTIVENESS ANALYSIS™ MODEL

Leadership Function 1: Creating a Vision Traditional: Studying problems in the light of past practices. Innovative: Being willing to take risks and to consider new and untested approaches. Technical: Acquiring and maintaining in-depth knowledge in the field of expertise. Self: Emphasizing the importance of making decisions independently. Strategic: Taking a long-range, broad approach to problem-solving Leadership Function 2: Developing Followers Persuasive: Building commitment by convincing others. Outgoing: Acting in an extroverted, friendly and informal manner. Excitement: Operating with energy, intensity and emotional expression. Restraint: Working to control emotions and maintain an understated personal demeanour Leadership Function 3: Implementing the Vision Structuring: Adopting systematic and organized approaches. Tactical: Focusing on short-range, hands-on, practical strategies. Communication: Clarifying what is expected and maintaining the flow of information. Delegation: Enlisting the talents of others and allowing them to exercise their judgment. Leadership Function 4: Following Through Control: Monitoring progress to ensure tasks are completed on schedule. Feedback: Letting others know how they have performed and met expectations. Leadership Function 5: Achieving Results Management Focus: Seeking to exert influence by being in positions of authority. Dominant: Pushing vigorously to achieve results by being assertive and competitive. Production: Adopting a strong orientation toward achievement and setting standards. Leadership Function 6: Team Playing Co-operation: Accommodating the needs and interests of others. Consensual: Valuing the ideas and opinions of others. Authority: Showing organizational loyalty and respecting superiors. Empathy: Demonstrating an active concern for people and their needs.

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‘observers’ and rate them. Secondly, managers’ self-ratings are less accurate than others’ ratings when compared to objective criterion measures. Thirdly, staff are more satisfied with their managers and their jobs when their perception of their managers matched the managers’ perceptions. More ‘successful’ managers appear (as rated by their staff and boss) less likely to overestimate their own effectiveness. Finally, the stronger the relationship between a manager’s self-perception with that of their staff, the more likely they are to be perceived as inspirational (Bass and Avolio, 1994). Given the inherent challenge for managers of understanding, accepting and interpreting observer feedback, particularly when this differs markedly from their own selfassessment, the effectiveness of the 360-degree feedback would seem to depend significantly on the extent to which it is linked to executive coaching. This component of both leader and leadership development packages must now be considered. Executive coaching The International Coach Federation (2008) defines coaching as ‘an ongoing partnership designed to help clients produce fulfilling results in their personal and professional lives. Coaches help people improve their performances and enhance the quality of their lives.’ The process involves practical, goal-focused forms of one-to-one learning and behavioural change in which the coach is trained to ‘hear’ between the lines – to listen for fears, self-doubts and limiting beliefs that get in the way of successful change. A trained coach would be expected to be adept at a range of interpersonal skills, such as acknowledging, validating, clarifying, focusing, questioning, prioritizing, reframing and empowering. In a survey of executives and coaches involved these relationships, Hall et. al. (1999) found that while most agreed that the best coaches are those who give honest, realistic and challenging feedback, are good listeners, and suggest and encourage useful action steps, they emphasized that the success of the coaching process depends greatly on the degree of fit between the coach and the client. They also found that coaching worked particularly well when linked to 360-degree feedback where clients can work with their coach over a series of sessions to interpret, plan and execute developmental actions. In this way coaching can integrate assessment, challenge and support in the name of development (Day 2001). Mentoring The coaching of ‘high-potential’ leaders can also be supplemented by their mentoring by senior, experienced executives. Mentoring typically involves a longer term, more openended, less goal-focused relationship than coaching. Mentors can provide individuals with career planning advice, professional development guidelines, personal development suggestions and useful insight into organizational politics. Mentoring is most effective when there is high trust and a clear and mutual understanding of the expectations of the mentoring relationship (Field 2001). The opportunity to interact with senior management is a critical part of mentoring because it enhances mentees’ strategic view of the role the organization plays in the policy process and may promote shared mental representations of important concerns so as to influence the cognitive dimension of social capital. High-functioning mentoring relationships can add much to the capacity of aspiring leaders to implement change and reform, especially when the mentor has prior experience of major change efforts.

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However, where the dominant culture in the public services is relatively risk-averse, mentoring may merely function to reinforce this culture. The catalyst for a leadership development process based on learning public value-seeking leadership behaviours may thus be provided by action learning initiatives that can be subsequently reinforced by a combination of assessment, challenge and support activities that will involve 360-degree feedback, coaching and mentoring. Action learning Over the past 15 years, more and more leadership development has taken place in the context of an action learning approach whereby organization-based projects serve as the primary learning vehicle. The projects themselves generally centre on important strategic challenges facing the organization and so ensure that the learning experience serves both the organization and the individual (Conger and Benjamin 1999). The philosophy of action learning was pioneered in the 1940s by Reg Revans, a Cambridge physicist. It was based on the assumption that people learn most effectively when working in teams on live organizational problems. The goal is to harness the individual experiences of the members of the team to bear, share, reflect and learn about a challenging and unfamiliar issue of strategic importance to the organization. While action learning may sound deceptively straightforward (Pedler 1997: 248), to be effective in practice, the approach requires careful and detailed design in relation to the selection of projects, the definition of outcomes and objectives, active commitment by senior management, expert coaching and facilitation, and multiple opportunities for reflection and feedback throughout the process. Internationally, perhaps one of the best-known and successful action learning initiatives is General Electric’s ‘Work Out’ programme, pioneered by chief executive officer (CEO), Jack Welch, as the centrepiece to his cultural transformation strategy while Citibank is a further example of an organization that has successfully used action learning to address a lack of capacity at top management level to think at a broad systems level (Conger and Benjamin 1999). Whether they are applied in the private or public sector, a common catalyst for the success of action learning programs is the creation of what Senge (1990) called a ‘micro-world’ to enable learning by doing. This is a temporary and parallel system, designed to be safe yet realistic for the learners, where they are empowered to try new things and to trust themselves and others to stretch their thinking and behaviours. Within a public sector context, this catalyst could be provided by the engagement of the participants in leadership development programs in action learning projects where they are held accountable not for outcomes but for their failure to learn public valueseeking behaviours from these projects. A number of important lessons emerge from one of the authors’ experience in using this methodology in a range of public sector organizations. First, the project itself should be carefully selected. It should seek to create public value along the three dimensions discussed earlier and learning for the individuals, their organizations and the system as a whole. Also it should be characterized as a situation where current approaches are insufficient to deal with the problem and it should be actively ‘owned’ by a sponsor. Secondly, there must be adequate opportunities created for reflection and feedback and they need to be carefully managed by an experienced team coach and facilitator as there can be a tendency for teams to become overly task

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focused. Thirdly, attention to team dynamics and open communication are crucial to both the process and the quality of the final outcome. Finally, follow-up and implementation is crucial to the overall success of the programme. If these lessons are applied, action learning as an approach to leadership development has much to offer the process of public sector reform in terms of addressing the adaptive challenges facing governments and their agencies (Heifetz 1994), building interpersonal competence and social capital (Tsai and Goshal 1998) as a vehicle for organizational leadership, and encouraging the development of new mental models in terms of problem solving (Senge 1990). Most importantly, the networks that are established among action learning teams may be reproduced in future networking initiatives or at least provide a source of emotional and political support for aspirant leaders as they seek to exercise public value-seeking leadership in an environment in which they are more exposed to political blame than in the relatively ‘safe’ micro-worlds created by leadership development programs. Conclusion Public value management has been hailed as a new paradigm that constitutes something of a ‘third way’ between traditional public administration and the new public management (Stoker 2003). ‘Explorers after public value’ (Moore 1995) are portrayed as being both more entrepreneurial than the traditional image of public servants seeking to provide a ‘safe pair of hands’ and more entrepreneurial than ‘new public managers’ seeking to provide clearly specified outputs at minimum cost. We would suggest that to claim this change in the image of an ideal leader in a public sector context constitutes a paradigm shift is to claim too much. Rather it would seem that, intimated within public value management, is the type of leadership theory discussed in this chapter. In particular a leadership that addresses the accountability issues associated with the emerging ‘new governance’ by taking responsibility for mobilizing networks in pursuit of public value-creating initiatives could be encouraged within the context of credible framework for delegated agency bargains and a leadership development policy designed to provide the incentives and generate the opportunities to learn more entrepreneurial leadership behaviours. References Alimo-Metcalfe, B. (1998), ‘360-degree feedback and leadership development’, International Journal of Selection and Assessment, 6: 35–44. Barber, B. (1984), Strong Democracy: Participatory Politics for a New Age, Berkeley, CA: University of California Press. Bass, B.M. (1990), Bass and Stogdill’s Handbook of Leadership, New York: Free Press. Bass, B.M. and B.J. Avolio (1994), ‘Shatter the glass ceiling: women may make better managers’, Human Resource Management Journal, 33: 549–60. Bennis, W. and Nanus, B. (1985) Leaders, New York: Harper and Row. Boston, J., J. Martin, J. Pallot, and P. Walsh (1996), Public Management: The New Zealand Model, Auckland: Oxford University Press. Bryman, A.I. ( 1986), Leadership and Organization, London: Routledge and Kegan Paul. Bryson, J. and B. Crosby (1992), Leadership for the Common Good: Tackling Problems in a Shared Power World, San Francisco, CA: Jossey-Bass. Burns, J.M. (1978), Leadership, New York: Harper and Row. Carlyle, T. (1841), Heroes and Hero Worship, Boston, MA: Adams. Casson, M.C. (1991) Economics of Business Culture: Game Theory, Transactions Costs and Economic Performance, Oxford: Clarendon Press.

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Coleman, J.S. (1998), ‘Social capital is the creation of human capital’, American Journal of Sociology, 94: S95–S120. Conger, J. and B. Benjamin (1999), Building Leaders, San Francisco, CA: Jossey Bass. Day, D. (2001), ‘Leadership development: a review in context’, Leadership Quarterly, 11: 581–613. Dunoon, D. (2002), ‘Rethinking leadership for the public sector’, Australian Journal of Public Administration, 61: 3–18. Elster, J. (1998) ‘Emotions and economic theory’, Journal of Economic Literature, 36: 47–74. Festinger, L. (1957) A Theory of Cognitive Dissonance, Stanford, CA: Stanford University Press. Fiedler, F.E. (1967) A Theory of Leadership Effectiveness, New York: McGraw-Hill. Field, J. (2001), ‘Mentoring: a natural act for information professionals?’, New Library World, 102: 269–73. Fulmer, R. and J.B. Keys (1998), ‘A conversation with Peter Senge: new developments in organisational learning’, Organisational Dynamics, 27: 33–42. Gardner, H. (1993), Multiple Intelligences: The Theory in Practice, New York: Basic Books. Goldfinch, S.F. (2000), Remaking New Zealand and Australian Economic Policy, Wellington: Victoria University Press. Goldfinch, S.F. and P. ’t Hart (2003), ‘Leadership and institutional reform: engineering macroeconomic policy change in Australia’, Governance, 16 (2): 235–70. Goleman, D., R. Boyatzis and A. McKee (2002), The New Leaders, London: Time-Warner. Hall, D., K. Otazo and G. Hollenbeck (1999), ‘Behind closed doors: what really happens in executive coaching’, Organizational Dynamics, 29 (winter): 39–53. Hargreaves-Heap, S. (1989), Rationality in Economics, Oxford: Blackwell. Harmon, M. and R. Meyer (1986), Organisation Theory for Public Administration, Boston: Little Brown. Heifetz, R. (1994), Leadership Without Easy Answers, Cambridge, MA: Belknap Press of Harvard University Press. Heifetz, R.A and M. Linsky (2002), Leadership on the Line, Boston, MA: Harvard University Press. Hermalin, B.E. (1998), ‘An economic theory of leadership’, American Economic Review, 88: 1188–206. Hersey, P. and K.H. Blanchard (1967) ‘Life-cycle theory of leadership’, Training and Development Journal, 23: 26–34. Hindmoor, A. (1998), ‘The importance of being trusted: transaction costs and policy network theory’, Public Administration, 76: 25–43. Hirschman, A.O. (1982), Shifting Involvements: Private Interests and Public Action Princeton, NJ: Princeton University Press. Hood, C. (1991), ‘A public management for all seasons’, Public Administration, 69: 3–19. Hood, C. and Lodge M. (2006), The Politics of Public Service Bargains, Oxford: Oxford University Press. House, R.J. (1971), ‘A path-goal theory of leader effectiveness’, Administrative Science Quarterly, 16 (3): 321–39. International Coach Federation (2008), ‘What is coaching’, available at: http://www.coachfederation.com/ find%2Da%2Dcoach/what%2Dis%2Dcoaching/, accessed 13 March 2008. Kelly, G. and S. Muers (2002), Creating Public Value. An Analytical Framework for Public Service Reform, London: Cabinet Office Strategy Unit. Leslie, J.B. and J.W. Feenor (1998), Feedback to Managers: A Review and Comparison of Multi-Rater Instruments for Management Development, Greensboro, NC: Center for Creative Leadership. MacIntyre, A. (1981), After Virtue: A Study in Moral Theory, London: Duckworth. Mayer, R.C, J.H. Davis and F. Schoorman (1999), ‘An integration model of organizational trust.’, The Academy of Management Review, 20: 709–35. Moore, M.H. (1995), Creating Public Value – Strategic Management in Government, Cambridge, MA: Harvard University Press. Nanus, B. and S. Dobbs (1999), Leaders Who Make a Difference, San Francisco, CA : Jossey-Bass. Organisation for Economic Co-operation and Development (OECD) (2001), Public Sector Leadership for the 21st Century, Paris: Organisation for Economic Co-operation and Development. Organisation for Economic Co-operation and Development (OECD (2008), ‘Ireland: toward an integrated public management service’, Paris: Organisation for Economic Co-operation and Development. Pedler, M. (1997), ‘Interpreting action learning’, in J. Burgoyne and M. Reynolds (eds), Management Learning: Integrating Perspective in Theory and Practice, London: Sage, pp. 248–64. Rhodes, R. (1988), Beyond Westminster and Whitehall, London: Unwin Hyman. Rhodes, R. (2000), ‘Governance and public administration’, in J. Pierre (ed.), Debating Governance, Oxford: Oxford University Press. Rhodes, R.A.W. and Marsh, D. (1992), ‘New directions in the study of policy networks’, European Journal of Political Research, 21: 181–205. Rodrik, D. (1996), ‘Understanding economic policy reform’, Journal of Economic Literature, 34: 9–41.

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Senge, P.M. (1990), The Fifth Discipline: The Art and Practice of the Learning Organisation, New York: Doubleday. Smith, R. (2004), ‘Focusing on public value: something new and something old’, Australian Journal of Public Administration, 63: 68–79. Stigler, G.J. and G.S. Becker (1977) ‘De Gustibus Non Est Disputandum’, American Economic Review, 67: 76–90. Stoker, G. (2003), Public Value Management (PVM): A New Resolution of the Democracy/Efficiency Tradeoff, Manchester: Institute for Political and Economic Governance. Thompson, G., J. Frances, R. Levacic and J. Mitchell (eds) (1991), Markets, Hierarchies and Networks: The Co-ordination of Social Life, London: Sage. Tichy, N. and M. Devanna (1986), The Transformational Leader, New York: John Wiley and Sons. Tsai, W. and S. Goshal, (1998), ‘Social capital and value creation: the role of intrafirm networks’, Academy of Management Journal, 41: 464–76. Van Wart, M. (2003), ‘Public-sector leadership theory: an assessment’, Public Administration Review, 63: 214–28. Vroom, V.H. and P.W. Yetton (1973), Leadership and Decision Making, Pittsburgh, PA: University of Pittsburgh Press. Wallis, J.L. (1999), ‘Understanding the role of leadership in economic policy reform’, World Development, 27 (1): 39–53. Wallis, J. and B.E. Dollery (1999), Market Failure, Government Failure, Leadership and Public Policy, Basingstoke: Macmillan. Wallis, J., B.E. Dollery and L. Mcloughlin (2007), Reform and Leadership in the Public Sector, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Warech, M., J. Smither, R. Reilly, R. Millsap and S. Reilly (1998), ‘Self-monitoring and 360-degree ratings’, Leadership Quarterly, 9: 619–36.

6

‘E-government’: is it the next big public sector trend? Robin Gauld

‘E-government’, like many trends that influence public policy and administration, is a multifaceted and nebulous idea, easily applied to a range of different situations, across the entire gamut of government and society, and with differing intentions. There are wide ranging claims made for e-government, considerable hopes pinned on it and substantial commitments – financial and otherwise – made to it. The concept has been embraced by political leaders. It is being used to drive changes to public sector organization and service delivery, and to legitimize investment of public money in information and communication technology (ICT). E-government is also core to the strategies and business of many private sector information technology companies for whom government is an important and lucrative income source (Dunleavy et al. 2007). ‘E-government’ continues to evolve as ICT progresses and becomes embedded in government and society. In response, governments are constantly altering their e-government strategies in keeping with new policy initiatives and technology. This chapter considers the following questions: ● ● ●

What is ‘e-government’, what is expected of it, what is driving it and what are the implications for the structure and functions of the public sector? As an evolving concept, what are the developmental phases of e-government? What e-government strategies have governments in different parts of the world developed, and what challenges do they face?

The key conclusions of the chapter are that it is early days in the development of e-government. There are great expectations for ICT driving government transformation, yet e-government developments could mean a complex future. This may be one in which traditional bureaucratic structures remain, but function alongside new ICT-driven networks and other arrangements. There may also be multiple channels through which citizens and government interact. If so, this will create considerable challenges for policymakers as to how to best manage and steer the changes taking place. What is e-government? This section overviews the wide-ranging concept of ‘e-government’. The term ‘e-government’ encapsulates the government and public sector response to the rise of ICT and its centrality to everyday life. It is seen as a key to the future shape of government with ICT driving networks, co-ordination and a new relationship with the public. Broadly speaking, e-government might be defined as ICT and, specifically, Internet and web-enabled public service activity. This is because the Internet has tended, at least in the last few years, to be the primary focus of government investment and policy attention. Following this, any ICT activity within individual government departments or local authority 105

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offices might be deemed e-government. Thus, ICT is a tool of administration and policymaking but also of interactions between government and the public. E-government also refers to the explicit co-ordination and oversight by central government of ICT activity, strategy and policy development. This includes government and public services facilitated via the Internet and related technologies. Depending upon how broad a definition one uses, e-government may extend to the private sector in terms of how government changes the way it interacts with business (for example, via websites) or works to develop policy that promotes a better business environment (for example, regulatory changes or funding injections that improve the ICT infrastructure of a country). Governments around the world have embraced the notion of e-government for a range of reasons. These include the desire to lead the way in development of the ‘information economy’, and to keep up with increasing computerization in the private sector and the corresponding pressure this places on government to match such developments. Related to this is the concept of ‘competitive advantage’. In a globalized world, where capital flows freely between economies, governments place great importance on providing infrastructure that is attractive to foreign investors, including efficient public service systems and general ‘wiredness’, and presumably responsiveness, of the economy. Indeed, international business environment surveys routinely compare factors such as broadband penetration (see for example International Telecommunication Union 2007; OECD 2007), while international organizations such as the Organisation for Economic Co-operation and Development (OECD) disseminate reports on the importance of e-government for improved public service and government performance (OECD 2005) placing additional pressure on governments to perform in this area. E-government expectations There are varying expectations for e-government. These are both practical and theoretical and are driven by governments themselves as well as by academic theorists and the public. Broadly speaking, the expectation may be categorized as ‘managerial’, ‘government co-ordination and transformation’ and ‘participatory’ as discussed in the following sections. Managerial As Chadwick and May (2003) note, the managerial conceptualization of e-government views ICT as a tool of efficient administration, responsive to the needs of the ‘new [knowledge] economy’, and faster delivery of services and information. Information flows are two-way, between government and consumers, and service centred, although the primary focus is on improving intra-government information exchange and capacity to deliver on predetermined government objectives. The logic of the system is ‘service delivery’, and policy and information presentation. Following this, a key e-government expectation – of politicians and government departments – is that it will produce more efficient communications and public service management through accelerating information flows, integrating information from disparate sources, and reducing public service staff numbers. Government departments traditionally collect information for their own use. Information and communication technologies give rise to information sharing via email networks and interdepartmental websites. Moreover, the Web facilitates increased information gathering capacity.

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In tandem, the need for paper communications is reduced, as is the need for physical presence as website information replaces front-counter officials. Around the globe, for example, government departments are progressively placing service information and official forms for services, such as business registrations and tax assessments, on their websites to be downloaded and then resubmitted from any networked device. A related expectation is that availability of government information and services will intensify; that government, in an environment increasingly concerned with transparency and contributing to development of the knowledge economy, will make documentation available on websites. Such material may include discussion documents, policy statements and archival matter, as well as information about government services, and will be readily available to those with Internet access. A collateral of this is the increasing prevalence of ‘virtual’ government, where policy implementation and public interactions take place via email, websites and other ICT-enabled forums. Of course, the ever-increasing volume of online information available means that navigating ‘e-government’ and locating desired information could become a considerable challenge: governments need to pay attention to consistent information delivery formats, development of user-friendly interfaces and ensuring that online information is relevant to the public. Government co-ordination and transformation A second set of e-government expectations revolves around the notion of government co-ordination and transformation – that ICT will reverse ‘fragmentation’ across government, while centralizing control of information and policy activity. Since the 1980s, public policy in the developed world has been concerned with devolving responsibilities to government agencies and developing incentives for them to pursue individual goals and outputs (Boston et al. 1996; Self 1993; Walsh 1995). Often termed ‘managerialism’, this has led to insular behaviour and problems with co-ordination of government administration and policy (6 et al. 2002). The hope is that ICT will break down walls between the many agencies often involved in delivering services as they become interconnected. In so doing, the public sector and its services will become increasingly integrated and ‘reconnected’. For the public, confusion over which agency to approach will be reduced. In keeping with this, the relevance of individual government departments will come under scrutiny, particularly where websites become the focus of, and point of interaction by, users of specific services. For example, in any developed country, children, the elderly and welfare recipients will each obtain services from a range of agencies such as education, welfare, employment, social work, health and other services. Similarly, agencies involved in providing such services will each collect relevant information on clients and generate policy advice. Web ‘portals’ that integrate information about and provide links to services for specific groups from disparate agencies promise to provide ‘one-stop’ service and a focus for government agencies. In turn, government agencies will have incentives to work more closely with one another. In line with the above, a further expectation is that public administration and policymaking will undergo a fundamental transformation from the traditional bureaucratic form, in which technocratically oriented officials are closely aligned with individual government departments, to the ‘e-government paradigm’ (Ho 2002). It is assumed that ICT facilitates and therefore shifts the emphasis towards building co-ordinated policy and service delivery networks. In an e-government world, work is routinely conducted

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beyond the physical boundaries of individual agencies. Networks of policy-makers from across and beyond government with relevant expertise around policy issues are assembled and function in cyberspace. The result, in theory, is increased collaboration, improved policy capacity and a heightened customer service focus, as well as reductions in the ‘gap’ between high-level central government policy-makers and those implementing policy at the front line of service delivery. The e-government paradigm, of course, challenges the institutional and physical foundations of government as the focus shifts towards information and services available via a single web-based contact point and away from individual government agencies. In accordance with this, governments need to examine how their agencies and policy work should be structured, funded and monitored (Fountain 2001). For instance, should agencies remain independent administrative units, or should mergers and downsizings that align with web-based and electronic service delivery be pursued? Participation Drawing upon democratic theory, the notion of participation frames a third set of e-government expectations. There are two variations on this theme. First, the idea of consultation in which e-government is viewed as a tool for developing better policy responses to electronically articulated public needs. A core aim is to boost public education and involvement in policy and public service design. In contrast with the managerial model, the consultative model sees interest groups providing an important input into government policy (Chadwick and May 2003). In accordance with this, interest groups, agencies, associations and individuals may all interact and develop advocacy coalitions within ‘cyberspace’ and use information in the quest to influence government. E-government may also extend to the development of electronic democratic arrangements such as voting and referenda systems, opinion polling, advisory groups, electronic public meetings and other feedback mechanisms that augment the representative process. The second participation variant stems from theories of ‘deliberative’ or ‘direct’ democracy (Norris 2003), capturing ideals of free speech and rights of expression. From this perspective, an e-government aim is enhanced deliberation, participation and, ultimately, democracy. Unlike the consultative (and the managerial) model, where the state maintains a position of control, in the deliberative model government’s role is minimized to that of regulating infrastructure and mediating public exchange. Deliberation, in its purest form (or ‘Habermasian’ form after the social theorist Jurgen Habermas), conceives of political processes as governed by a shared aim of achieving a consensus, with no one interest or player exerting undue pressure or influence on proceedings. Information flows are complex and across an array of forums including discussion groups, email list servers, interactive websites, mobile devices, and so forth. Researchers have found that the existence of the ‘digital divide’, between those who do and do not have email and Internet access, undermines the potential for deliberative democracy (Thomas and Streib 2005; Wicklund 2005). Universal computer access and capacity to contribute are, therefore, crucial to the deliberative democracy concept. Fulfilling the expectations Can the range of expectations outlined in the previous sections be fulfilled? E-government clearly has elements that are relevant to both internal (within and across government and

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its agencies) and external (interactions between government and society) public sector functions, with widespread implications for the structure of the state. Of course, the expectations outlined above are simply that, and no country in the world is presently anywhere near fulfilling all of them. Furthermore, as noted, meeting these expectations hinges on the preferences and priorities of politicians and the public, as well as a variety of other factors the evidence for which is mixed. These include: first, that ICTs and the information made available via them are user-friendly; second, that the information that agencies might encounter in their data gathering is readily accessible and digestible; and, third, that the public and businesses have access to computers and prefer to interact with government services in this way. Research in the USA shows that its citizens actively use email and the Internet for ‘informational’ services such as recreation and tourism. However, ‘transactional’ e-government services are much less used with, for example, only 15 per cent of tax forms submitted online (Reddick 2005; Thomas and Streib 2003). In addition, those who visit government websites are more likely to be university educated and well-off, confirming a digital divide between those who do and do not engage with e-government (Goldfinch et al. 2009; Thomas and Streib 2005). Promises such as reducing fragmentation rely not only on robust ICT development and availability of technologies that will assist inter-agency collaboration. Also required is the building of good working relationships between groups and agencies involved in service delivery, as well as the identification of issues and services conducive to interagency delivery. Without tight inter-agency co-ordination, service users may be led to believe they are being provided a seamless service, only to find that, if difficulties arise, they still have to deal with individual agencies. Similarly, there is no example yet in the world of ICTs driving a genuinely integrated government whose separate agencies are not identifiable. Whether transparency will increase is also questionable: it may be that only information deemed relevant or tailored for public consumption will be placed on websites; that much of the internal email communication and work that feeds into policy will not be placed in agency archives, therefore defying scrutiny; and that the increased volume of available information will actually serve to confuse the public. The everexpanding volume of information could pose particular problems. In response, it may be that members of the public (or even government officials) will develop search engines, blogs and wikipedia-type information services that provide assistance to those seeking to navigate their way around government websites. Naturally, in keeping with ICT advances, procurement and application, and the development of public policy, e-government is an evolutionary process. Some parts of government will be more digitized than others, and some expectations will be easier to achieve than others. The factors affecting this include strategic commitment to ICT procurement strategies and website development, financial and human resources and, of course, the nature of activity (some departments, such as immigration and tax collection, will have more public interaction than others such as finance and statistics that work at a higher data generation and policy advisory level). E-government development also relies on the commitment of government and its agencies, the extent to which the ‘e’ means simply computerizing of existing government functions as opposed to transforming organization, as well as public trust and satisfaction with electronic systems. Finally, political leaders may promote some dimensions of e-government more than others. Researchers in Austria found that politicians there readily promoted ‘e-government’ for improving

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administration, but showed minimal interest in developing ‘e-democracy’ for the reason that this would reduce their power and control (Mahrer and Krimmer 2005). E-government developmental phases The evolving nature of technology and its application to government activities means e-government is a developmental process. Various writers (for example, Layne and Lee 2001; Norris 2001; Silcock 2001; Torres et al. 2005) have discussed the ‘phases’ of e-government development, providing a framework for understanding the advancement of ICT. In the first phase, attention is on electronic cataloguing of information to be presented in online form. This phase involves government agencies creating websites containing basic information about their services, downloadable forms and documents, and contact details. In this model communication is ‘one way’, from government to client. The second phase, moving towards ‘two-way’ communication, involves development of more sophisticated websites that link internal government systems with online presence, allowing citizens to interact with government electronically. For example, many transactions, such as paying of fines, registering for services and completing tax returns, will be conducted electronically. In this phase, attention must be paid to security issues and technical detail. Systems for online transactions, for instance, need to be designed to ensure that the public have confidence in them. Furthermore, data obtained from the public should be automatically transferred to the correct internal systems, as opposed to manually redirected or re-entered by data entry personnel. In the third phase, which might be termed ‘vertical integration’, individual local agencies and their services become connected with central systems. This phase has particular relevance in countries with federal systems of government, such as Australia and the USA, where state and central government agencies are often disconnected, despite the fact that each ‘level’ of government is responsible for implementing federal government policy. In countries such as New Zealand, this phase would see local government and the many regional agencies contracted to provide government services linked together so that any interaction with a local service would be automatically relayed to relevant central agencies. This third phase sees the development of ‘portal’ websites that bring together in a structured fashion a range of services in one website that is the vehicle for a number of agencies, both central and local, largely developed around function. Thus, portals facilitate the ‘clustering’ and integration of common services. Examples include portals for financial and business services (featuring both government and the private sector), welfare and health services, and customs and immigration services. The public would also be able to build their own customized portals that link the desired services of different agencies. The fourth phase sees genuine ‘horizontal integration’ of government services. To clients, any walls between services and agencies will not be apparent as systems have become fully integrated, interactive and interoperable. Instead of the public having to navigate their way around agencies (or portals) to obtain or transact with various services, these take on an apparent seamless quality. Clients would have ‘one stop’ access to government services. This, of course, may have implications for the structure of government, as Silcock (2001: 90) suggests: ‘in some cases, new departments will have formed from the remains of predecessors. Others will have the same names, but their interiors will look nothing like they did before e-Government’.

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Most of the world’s governments have reached at least the first phase. Many have moved into the second phase. The first three phases can be seen as ‘add ons’ to existing public sector structures and work processes and do not in themselves demand institutional adaptation. The third and fourth phases require much more sophisticated ICT, while the fourth, in particular, necessitates substantial public sector work redesign, organizational re-engineering and government restructuring. The hurdles to achievement of vertical and horizontal integration are, therefore, much greater than the simple email and web-presence required of the first two phases. Implicit in phases three and four is also an assumption that the technology and technical personnel implementing these are available, capable and reliable and able to fulfil the promises of e-government. A further assumption is that governments are capable of moving beyond the traditional silo structure of parallel bureaucracies. Indeed, the idea of ‘joined-up’ government has long been on the agenda of policy-makers, and yet seemingly unattainable (6 2004; Bogdanor 2005). Myriad problems – some stemming from budgetary or institutional issues, others the consequence of inadequate project monitoring, overconfidence in the capabilities of ICT systems, and the complexity of service provision and organization – are likely to pose significant challenges on the way to phases three and four (Gauld and Goldfinch 2006). The lesson here is that policy-makers should exercise caution in the planning, advocacy for and adoption of new technologies. International e-government developments ‘E-government’ is the latest in a long line of trends in public administration that have swept the globe and influenced the focus and shape of government and public policy. Most nations have implemented elements of e-government to varying degrees (Norris 2001; Waseda University Institute of E-Government 2007; West 2005). Many governments have embarked upon wide-ranging and ambitious advancement programmes. This section reviews developments in Australia, New Zealand, Britain and the USA. Australia Australia was an early and swift e-government convert. In 1997, as part of his Investing for Growth policy statement, Prime Minister John Howard highlighted the importance of ICT as a driver of national prosperity. In line with this, he announced a series of initiatives including: first, that all Commonwealth government agencies aim to have appropriate services available online by December 2001; second, a Government Information Centre be established through the Office for Government Online as a main access point for information about government services; third, electronic payments become the normal means for the Commonwealth by 2000; and, fourth, a governmentwide intranet be created for communication between government departments. This was followed up, in 1998, by Strategic Framework for the Information Economy, which outlined ten priority areas for the information economy including skills, infrastructure, e-commerce, industry development, health, culture and regulation (National Office for the Information Economy 1998). In 2000, in response to the rapidly growing numbers of Australians using the Internet, the Commonwealth government unveiled its Government Online strategy (National Office for the Information Economy 2000). This was aimed at readying government for the expected demand for online services, but also at ensuring a common framework for

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government online service development. Essentially, the strategy was to allow government departments to plan and deliver their own online presence against a backdrop of cross-government co-ordination and governance by the Office of Government Online. This cross-government approach is commonplace, in keeping with the e-government aim of ensuring interoperability, and has been widely adopted elsewhere. Government Online outlined eight high-level ‘strategic priorities’, but also listed ‘specific actions’ required of government agencies. For example, Priority 1, to ‘take full advantage of opportunities provided by the internet’, stipulated that agencies each develop: an Online Action Plan derived from an audit of all services; an analysis of e-services that might be delivered in collaboration with other agencies; a time frame for placing functions online; and an inventory of impediments to be overcome to achieve the Prime Minister’s 2001 target for online services. Government Online also provided information on data standards and information exchange protocols that agencies were expected to comply with, as well as outlining the expectation that agencies identify and consult with stakeholders. Since Government Online, the pace of ‘strategic policy’ and e-government service development has increased. An updated strategy was issued in 2002 (National Office for the Information Economy 2002), reinforcing the desire for secure and trustworthy cross-government service integration. Meanwhile, the Office of Government Online was renamed the National Office for the Information Economy and then, in 2004, the Australian Government Information Management Office (Agimo – see www.agimo. gov.au). Agimo continues to produce policy documents on e-government issues such as security, information infrastructure, and national guidelines for developments within Australia’s seven state-level governments. Notably, each state government has its own e-government office, leading to several state differences. This complicates administration of e-government development and counters interoperability goals. Moreover, a recent Audit Office report noted that, due to the lack of evaluation built into e-government development, key agencies were failing to measure the effectiveness of their ICT advancements and, thus, were unable to determine whether services had improved or whether the government was getting good value for money (Australian National Audit Office 2005). The government’s 2006 e-Government Strategy, Responsive Government: A New Service Agenda charts the path to 2010, emphasizing improved co-ordination through increased use of ICT and, therefore, greater efficiency as the future of Australian government (Australian Government Information Management Office 2006). While international studies have consistently ranked Australia among the world leaders in terms of e-government and Internet usage (for example, United Nations Public Administration Network 2005; Waseda University Institute of E-Government 2007), it is fair to suggest that Australian developments are still in their infancy. While most Australian Commonwealth and state government departments have achieved the first two developmental phases outlined above, movement into the next two stages – vertical and horizontal integration – remains largely in the planning and piloting phases. This reflects the difficulties and magnitude (and perhaps even impossibility) of re-engineering the policy and practical initiatives of multiple organizations to ensure integration. Recognizing this, Agimo commissioned the Institute of Public Administration Australia to produce a series of papers around the challenges ahead. These noted the promise of e-government, but also the considerable number of issues to be surmounted if

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e-government aims are to be achieved (Halligan and Moore 2004). A particular issue, given the isolation and disadvantages that many Australian communities face, is how to realize the promise of creating access for all to online services (Dugdale et al. 2005). New Zealand Since 2000, there has been strong political commitment to e-government in New Zealand. Underpinning this has been the approach of the Labour-led government, elected in 1999, the policies of which share characteristics with Britain’s New Labour. Thus, the government has implemented policies that devolve decision-making and resources to agencies and local communities, combined with strong central direction via prescriptive policy strategies and accountability structures. It has also sought greater cross-governmental co-ordination and ‘joined-up’ government. E-government is seen as a means to achievement of such goals. Somewhat behind its Australian, British and American counterparts, New Zealand’s first e-government strategy was released in April 2001. A year earlier the government announced its e-government ‘vision’ that: ‘New Zealanders will be able to gain access to government information and services and participate in democracy using the Internet and ICTs as they emerge’. This stated, New Zealand e-government policy and developments have been firmly within the ‘managerial’ paradigm. Although there appears to have been genuine interest in engaging the public this has extended to no more than the provision of interactive e-services. The April 2001 strategy outlined a variety of aims (Mallard 2001) including that, by 2004, the Internet would be the dominant means by which the public (and government itself) accesses government services and information. Behind this was a series of objectives including: better and more convenient service via a ‘one-stop shop’ portal; more cost-effective and efficient government; leadership through supporting development of a knowledge economy through public sector innovation; an improved reputation for New Zealand as an information age economy; and greater public participation in government. In terms of public sector structure, the strategy envisaged both ‘seamless’ service access and a ‘seamless back office’ (or reduced fragmentation among government departments) built through a common technology infrastructure. The 2001 strategy listed a series of policy development and infrastructure milestones for completion by June 2002. These involved establishing a Secure Electronic Environment (SEE) to enable safe information exchange; a ‘metadata’ framework to ensure standard information cataloguing to make public access straightforward; a web portal strategy and standards; a framework (later called ‘e-GIF’ – e-government interoperability framework) for common data policies and standards to ensure that government services can be connected; and a National Information Infrastructure Protection Strategy (NIIPS) to protect against hacking. The achievement of these goals was seen as the collective responsibility of government agencies. A 2003 strategy update confirmed previous policy directions and was primarily an exercise in promoting the government’s approach: essentially that central frameworks, protocols and goals were established that needed to be adhered to. For instance, the update overviewed the government’s ‘service delivery architecture’ which ‘shows how the government expects agencies to use and be a part of the government information, technology, and standards environment in the future’ (Mallard 2003: 16). The update

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also noted that the e-government strategy applied not just to central but also local government. Of particular significance, the update timetabled two important milestones: ● ●

by 2007, ICT will be integral to delivery of government services, and by 2010, the operation of government will have been transformed by the Internet.

A 2004 e-government progress report produced various findings. It noted that the Internet had become a dominant means of accessing government services, particularly for those working in government, but that only around 28 per cent of the public regularly used the Internet for engaging with government. Sixty-seven per cent of agency websites were found to be of a high or good standard, while the quality of ‘metadata’ (high-level data for cataloguing information) was generally high. In terms of reducing fragmentation in government, the report found that most online services remained rooted in individual agencies, requiring users to contact several agencies in order to complete government transactions. Finally, the report noted that, while there appeared to be public demand for e-government, there was a lack of public knowledge about the information and services that government agencies supply online (State Services Commission 2004). In 2005, the government launched a new draft Digital Strategy document. This aims at pushing forward an agenda to use ICT to bring together government, business and communities ‘to the benefit of all New Zealanders’. The Strategy lists range of initiatives from increasing broadband uptake (New Zealand is at the bottom of the OECD member countries in terms of broadband penetration), to improving business and government productivity (Ministry of Economic Development 2005). The 2007 and 2010 goals listed above were subsequently made a core focus for public services, namely to ‘use technology to transform the provision of services for New Zealanders’ (State Services Commission 2005). In 2006, via the fourth iteration of the e-government strategy, a further goal to transform the way people interact with government with use of new technologies by 2020 was added (State Services Commission 2006). The government has since started to consider how e-government services are being used by the public (State Services Commission 2007). Britain E-government came to the centre of the British government agenda in 1996 with the release by the Conservative government of Government Direct (Central Information Technology Unit 1996). Through harnessing ICT, this aimed for better and more efficient government services, improved transparency and cost savings. Government Direct failed to attract much political attention, but presaged developments propelled by the subsequent New Labour government. The vision and strategy for e-government was outlined in a series of papers (Cabinet Office 1998; 1999) that form part of New Labour’s ‘modernization’ programme. This has objectives to centralize and better co-ordinate policy-making, build more responsive and collaborative government, and engage with the public. Key elements of the e-government initiative included a commitment to make 25 per cent of government services available online by 2002 and 100 per cent by 2008. In 2000, a more detailed e-government plan was released (Cabinet Office 2000). This advanced to 2005 the deadline for all government services to be electronically available. Reflecting the scope of e-government and range of issues to be worked through,

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literally dozens of papers and press releases have since been issued. These include policy papers along with policy announcements in the attempt to increase use of technology in government, collaboration with private agencies, and movement from paper to electronically-based information and communication systems. In addition, a succession of new institutional arrangements has been introduced. These include creation of an e-minister, an Office of the e-Envoy (replaced in 2004 by the Office of E-Government), and individual departmental ‘information age government champions’ charged with advancing change at the agency level. Such initiatives have launched an industry of further policy papers, goal setting, progress reports and press releases. Furthermore, e-government development has required considerable co-ordination across a range of implicated government policy units, agencies and other institutions such as the central Performance Innovation Unit, Central Information Technology Unit, Policy Action Team, Parliament, industry and non-government groups. By late-2004, 75 per cent of services (largely informational and some transaction services) identified as capable of being e-enabled had been made available online, with the prediction that the target set in 2000 would be 96 percent achieved by the end of 2005 (Cabinet Office 2004). However, the Head of the E-Government Office suggested this was only a start; that key future priorities include: developing a national identification framework; ensuring that every government agency has a Chief Information Officer; making sure that online services are accessible and used by all people (three-quarters of UK citizens had never visited a government website); and that web-enabled services alter the way people interact with government (European E-Government Observatory 2004). There is much hinging on future British e-government developments as, in 2004, the government directly linked e-government investment to reductions, by 2008, of over 84 000 people in the size of the civil service. This was predicted to result from reducing administrative costs and ‘back-office’ functions (Brown 2004). Reflecting this, in mid2005, the government announced its intention to establish an ‘IT Academy’ aimed at nurturing public sector ICT experts (European E-Government Observatory 2004). In tandem with e-government, the New Labour government has also put considerable effort into developing ‘joined-up government’ (JUG), another strand of the modernization programme. Joined-up government corresponds with and is in part driven by e-government developments. Joined-up government essentially refers to the achievement of horizontally and vertically integrated public sector activity. It seeks to alleviate contradictions between different government policies and agency work, reduce duplication, increase the flow of ideas and co-operation across government and create ‘seamless’ public services (6 et al. 2002; Bogdanor 2005; Pollitt 2003). Themes of JUG, improved efficiency, co-ordination of ICT architecture and improving the public sector ICT workforce were at the forefront of Prime Minister, Tony Blair’s, 2005 strategy document Transformational Government: Enabled by Technology which widespread consultation was sought upon (Cabinet Office 2005). A mix of the assumptions about e-government, discussed earlier in this chapter, underpin developments in Britain; namely, that ICT will sharpen efficiency, advance government and make it more accessible, and increase citizen participation. Various observers have noted the strong managerial focus implicit in British e-government developments (for example, Bekkers and Homburg 2007; Chadwick and May 2003; Holliday 2001; Hudson 2002).

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The USA With the 1993 launch of the National Performance Review (NPR), the USA was an early convert to the notion of ICT-driven government. Co-ordinated out of then Vice President Al Gore’s office, the NPR viewed ICT as an essential factor in the ‘reinvention’ of government, and that through its application the relationship between government and citizens would be ‘re-engineered’. The NPR focus was unashamedly managerial. An initial expectation was that ICT would result in significant savings as paperwork, administrative and staffing costs were reduced through computerization. By 1998, when the NPR was renamed the National Partnership for Reinventing Government, ICT application was claimed to have reduced the federal workforce by 351 000 people and saved $US137 billion in public spending (Fountain 2001: 21). From 1998, e-government work was more service oriented and focused on developing ‘virtual agencies’, that bring together disparate services, and interagency e-government initiatives. There are similarities here with British developments. By 2000, a wide range of virtual agencies (with services ranging from those relevant to elderly and children, to those for business, state services and education) had established web presence via the federal FirstGov portal (Chadwick and May 2003). Considerable effort has gone into creating virtual agencies and networks. For example, the International Trade Data System integrates and facilitates the work of around 63 agencies with involvement in trade; the ‘US Business Advisor’ portal, through which small business online loans can be approved, regulations checked and opportunities listed, is an interactive interorganizational network for six federal agencies (Fountain 2001). Developments have intensified since 2002, when President George W. Bush unveiled his ‘Presidential E-Government Strategy’ which resulted in the E-Government Act 2002. This outlined the aims of ICT as a driver of inter-agency collaboration and ‘resultsoriented’ citizen engagement, various standards for e-government, as well as initiatives such as allowing private ICT providers to take a share in savings achieved through services provided to government agencies. E-government development across the USA is currently presided over by the Office of Electronic Government and Information Technology, based in the Federal Office of Management and Budget. The Office oversees the government’s approximately $US60 billion invested annually in ICT. Progress since the 2002 act was highlighted in a 2005 report. This noted that only 81 per cent of federal agencies had established acceptable business cases for all their systems, and that 88 percent had properly secured systems. The report also highlighted the growing numbers of people using online services to pay taxes, establish businesses and so forth (Office of Management and Budget 2006). In the 2005 scorecard on progress in implementing the President’s Management Agenda, only 9 out of 26 executive agencies achieved a ‘green’ result which indicates success, as measured by the President’s Office, in e-government implementation (see www.whitehouse.gov/results/agenda/scorecard. html). The 2006 scorecard featured only 6 ‘green’ results. Despite this, the USA continues to be ranked near the top in international e-government studies (United Nations Public Administration Network 2005; Waseda University Institute of E-Government 2007; West 2007). Of course, the individual North American states, each with their own government, also have e-government offices and strategies, further complicating interoperability and consistent country-wide development. Compared with Britain, with its

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government controlled and funded National Health Service, areas such as health care pose particular problems for US e-government. Considerable effort is required to bring together the numerous insurers, payers and service providers – both public and private. Understandably, portals presently only provide information that assists health system navigation. In 2005, recognizing the potential gains of ICT enabled health care, a bipartisan group of Senators, backed by calls from the President, announced their intention to introduce legislation to create a nationwide electronic health records system (Commonwealth Fund 2005). However, at the time of writing (early 2008), there had been limited progress on this. The increasing incidence of computer hacking, spam email and viruses, which pose substantial costs to industry (and private computer users) in terms of lost productivity and damage, has incited calls within the USA for government oversight of the Internet. To date, government has relied on the voluntary efforts of industry to produce virus resistant software and more secure systems; by contrast, automobile industry standards are subject to stringent government regulation. There are widespread views about what sort of central controls are needed, and which agency (for example, the new Department of Homeland Security) should provide oversight, which the government is carefully considering. The government itself is a major Internet user and has concerns about the Internet as a vehicle of terrorist groups. It is highly likely, therefore, that the US federal government will eventually move into some form of regulatory role. Conclusion ‘E-government’ is presently in an embryonic state. It promises radical shifts in the way the public sector is organized and conducts its work, and in how the public navigates and accesses services. Numerous expectations and strategies are espoused by political and technology leaders, multiple initiatives are in progress and considerable gains are anticipated. Furthermore, it is clear that there is an element of sloganeering attached to ‘e-government’ as a useful rhetorical device meaning all things to all people. It can be a managerial tool for creating efficiencies and cost-cutting; a lever for better co-ordination of policy, administration and the organization of government; and a vessel for enhanced participation, deliberation and democracy. There are numerous unknowns, however, about the practice of e-government. It remains unclear, for instance, whether the promises of e-government will transpire or, as noted above, ICT will simply be an ‘add on’ to existing institutional arrangements with substantial additional costs. The issues surrounding implementation of e-government strategies and projects are complex and depend on many overlaying and interconnected factors: resources, expectations, social, organizational, legal and, of course, technical. Moreover, e-government is a mammoth project in its own right for the simple fact that it applies to the entire public sector and extends to the interface between government and society. When considered against the fact that the great majority of public sector ICT projects fail in one way or another, there may be cause for pessimism about whether the much broader e-government project can be achieved or, if it is, whether its shape, functioning and costs match with predictions (Goldfinch 2007). International experience with public sector ICT projects demonstrates that problems with governance, project implementation and cost overruns are endemic (Royal Academy of Engineering and British Computer Society 2004; Standish Group 2001). The cause of such problems

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may be attributed to overzealousness on behalf of ICT consultants and public officials responsible for implementing ICT policy, the application of technologies designed for purposes other than public work or the specific project they have been procured for, drastic miscalculations of the costs of ICT projects and challenges to their completion, mistaken beliefs about user acceptability, and inadequate project monitoring (Gauld and Goldfinch 2006). Thus, there are grounds for scepticism about the benefits e-government will deliver. Rather than benefits, what is more likely is that as technology and its use evolves, particularly Internet-based applications, the methods for interaction with government and within services will simply change. There will increasingly be multiple channels for accessing services and information and interacting with officials and these will create new challenges for information management. The greatest unknown, therefore, may be how governments in this highly pluralistic emerging environment might best steer and manage the changes taking place. References 6, Perri (2004), ‘Joined-up government in the western world in comparative perspective: a preliminary literature review and exploration’, Journal of Public Administration Research and Theory, 14: 103–38. 6, Perri, D. Leat, K. Seltzer and G. Stoker (2002), Towards Holistic Governance: The New Reform Agenda, Houndmills: Palgrave. Australian Government Information Management Office (2006), e-Government Strategy, Responsive Government: A New Service Agenda, Canberra: Australian Government Information Management Office. Australian National Audit Office (2005), Measuring the Efficiency and Effectiveness of E-Government, Canberra: Australian National Audit Office. Bekkers, V. and V. Homburg (2007), ‘The myths of e-government: looking beyond the assumptions of a new and better government’, Information Society, 23: 373–82. Bogdanor, V. (ed.) (2005), Joined-Up Government, Oxford: The British Academy and Oxford University Press. Boston, J., J. Martin, J. Pallot and P. Walsh (1996), Public Management: The New Zealand Model, Auckland: Oxford University Press. Brown, G. (2004), Statement by the Chancellor of the Exchequer on the 2004 Spending Review. 12 July, London: HM Treasury, Chancellor of the Exchequer. Cabinet Office (1998), Our Information Age: The Government’s Vision, London: Cabinet Office. Cabinet Office (1999), Modernising Government, London: Cabinet Office. Cabinet Office (2000), E-Government: A Strategic Framework for Government. London: Cabinet Office. Cabinet Office (2004), Autumn Performance Report (2004), London: Cabinet Office. Cabinet Office (2005), Transformational Government: Enabled by Technology, London: Cabinet Office. Central Information Technology Unit (1996), Government Direct: A Prospectus for the Electronic Delivery of Government Services, London: Central Information Technology Unit/Office of Public Service. Chadwick, A. and C. May (2003), ‘Interaction between states and citizens in the age of the Internet: “E-government” in the United States, Britain and the European Union’, Governance, 16: 271–300. Commonwealth Fund (2005), ‘Frist, Clinton pledge health care IT push’, The Commonwealth Fund: Washington Health Policy Week in Review, 16 June. Dugdale, A., A. Daly, F. Papandrea and M. Maley (2005), ‘Accessing e-government: challenges for citizens and organizations’, International Review of Administrative Sciences, 71: 109–18. Dunleavy, P., H. Margetts, S. Bastow and J. Tinkler (2007), Digital Era Governance: IT Corporations, the State, and e-Government, Oxford: Oxford University Press. European E-Government Observatory (2004), New Head of UK E-Government Outlines Key Priorities, European Union. Available at: http://europa.eu.int/idabc/en/document/3271/345. Fountain, J. (2001), Building the Virtual State: Information Technology and Institutional Change, Washington, DC: Brookings Institute Press. Gauld, R, and S.F. Goldfinch (2006), Dangerous Enthusiasms: E-Government, Computer Failure and Information System Development, Dunedin: Otago University Press. Goldfinch, S.F. (2007), ‘Pessimism, computer failure, and information systems development in the public sector’, Public Administration Review, 67: 917–29. Goldfinch, S.F., R. Gauld and P. Herbison (2009), ‘The participation divide? E-government, political participation and trust in government in Australia and New Zealand’, Australian Journal of Public Administration, forthcoming.

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Halligan, J. and T. Moore (2004), Future Challenges for E-Government, Canberra: Australian Government Information Management Office and Institute of Public Administration Australia ACT Division. Ho, A.T.K. (2002), ‘Reinventing local governments and the e-government initiative’, Public Administration Review, 64: 434–44. Holliday, I. (2001), ‘Steering the British state in the information age’, Government and Opposition, 36: 314–29. Hudson, J. (2002), ‘Digitising the structures of government: the UK’s information age government agenda’, Policy and Politics, 30: 515–31. International Telecommunication Union (2007), Economies by Broadband Penetration, (2007), Geneva: International Telecommunication Union. Layne, K. and J. Lee (2001), ‘Developing fully functional e-government: a four stage model’, Government Information Quarterly, 18: 22–136. Mahrer, H. and K. Krimmer (2005), ‘Towards the enhancement of e-democracy: identifying the notion of the “middleman paradox”’, Information Systems Journal, 15, 27–42. Mallard, T. (2001), New Zealand E-Government Strategy – April 2001, Wellington: Minister of State Services. Mallard, T. (2003), New Zealand E-Government Strategy – June 2003 – Update, Wellington: Minister of State Services. Ministry of Economic Development (2005), Digital Strategy: A Draft New Zealand Digital Strategy for Consultation, Wellington: Ministry of Economic Development. National Office for the Information Economy (1998), Strategic Framework for the Information Economy, Canberra: National Office for the Information Economy. National Office for the Information Economy (2000), Government Online. The Commonwealth Government’s Strategy, April (2000), Canberra: National Office for the Information Economy. National Office for the Information Economy (2002), Better Services, Better Government, Canberra: National Office for the Information Economy. Norris, P. (2001), Digital Divide: Civic Engagement, Information Poverty, and the Internet Worldwide, Cambridge: Cambridge University Press. Norris, P. (2003), ‘Deepening democracy via e-governance’, draft paper for the UN World Public Sector Report, Available at: www.pippanorris.com Office of Management and Budget (2006), Expanding E-Government: Making a Difference for the American People Using Information Technology, Washington, DC: Executive Office of the President, Office of Management and Budget. Organisation for Economic Co-operation and Development (OECD) (2005), e-Government for Better Government, Paris: Organisation for Economic Co-operation and Development. Organisation for Economic Co-operation and Development (OECD) (2007), OECD Broadband Statistics to June (2007), Paris: Organisation for Economic Co-operation and Development. Pollitt, C. (2003), ‘Joined-up government: a survey’, Political Studies Review, 1: 34–49. Reddick, C.G. (2005), ‘Citizen interaction with e-government: from the streets to servers?’, Government Information Quarterly, 22: 38–57. Royal Academy of Engineering and British Computer Society (2004), The Challenges of Complex IT Projects, London: Royal Academy of Engineering. Self, P. (1993), Government by the Market? The Politics of Public Choice, Boulder, CO: Westview Press. Silcock, R. (2001), ‘What is e-government?’, Parliamentary Affairs, 54: 88–101. Standish Group (2001), Extreme Chaos, The Standish Group International, Inc. State Services Commission (2004), Achieving E-Government 2004: A Report on Progress Towards the New Zealand E-Government Strategy, Wellington: State Services Commission. State Services Commission (2005), Development Goals for the State Services, Wellington: State Services Commission. State Services Commission (2006), Enabling Transformation: A Strategy for E-Government (2006), Wellington: State Services Commission. State Services Commission (2007), Delivering E-Government 2007: Real People, Real Stories, Wellington: State Services Commission. Thomas, J.C. and G. Streib (2003), ‘The new face of government: citizen-initiated contacts in the era of e-government’, Journal of Public Administration Research and Theory, 13: 83–101. Thomas, J.C. and G. Streib (2005), ‘E-democracy, e-commerce and e-research: examining the electronic ties between citizens and government’, Administration and Society, 37: 259–80. Torres, L., V. Pina and B. Acerete (2005), ‘E-government developments on delivering public services among EU cities’, Government Information Quarterly, 22: 217–38. United Nations Public Administration Network (2005), UN Global E-Government Readiness Report (2005), New York: United Nations. Walsh, K. (1995), Public Services and Market Mechanisms: Competition, Contracting and the New Public Management, London: Macmillan.

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Waseda University Institute of E-Government. (2007), 2007 Waseda University E-Government Ranking, Tokyo: Waseda University Institute of E-Government. West, D. (2005), Digital Government: Technology and Public Sector Performance, Princeton, NJ: Princeton University Press. West, D.M. (2007), Global E-Government, (2007), Providence, RI: Center for Public Policy, Brown University. Wicklund, H. (2005), ‘A Habermasian analysis of the deliberative democratic potential of ICT-enabled services in Swedish municipalities’, New Media and Society, 7: 247–70.

7

Dangerous enthusiasms1 and information systems development in the public sector Shaun F. Goldfinch

The ubiquity of failure of information systems developments (ISDs) has only recently started to receive the attention it deserves (Economist 2008). This degree of failure is indeed rather frightening, with the majority of developments unsuccessful.2 The bigger the development, the more likely it will be unsuccessful. While exact numbers are uncertain, and depend to some extent on how success is measured, something like 20 to 30 percent of developments in the public and private sectors are total failures with projects abandoned. Around 30–60 percent are ‘partial failures’ where there are time and cost overruns and/or other problems. The remainder are those counted as successes (Collins and Bicknell 1997; Corner and Hinton 2002; Grenny et al. 2007; Heeks 2002; 2004; Heeks and Bhatnagar 1999; James 1997; Korac-Boisvert and Kouzmin 1995; Standish Group 2004). The Royal Academy of Engineering and the British Computer Society (2004) found that 84 percent of public sector ISDs resulted in failure of some sort. A US survey of IS developments in the public and private sectors by the Standish Group (2004) estimated success rates at 29 percent, problems with 53 percent of projects and 18 percent failure rates. Cost overruns averaged 56 percent, while time overruns averaged 84 percent. A New Zealand government study judged 38 percent of government projects a success, 59 percent involved problems, and 3 percent were a complete failure or were cancelled. Government success rates were slightly higher than private sector success rates (at 31 percent). At the over NZ$10 million mark however, the success rate for both was zero (SIMPL/NZIER 2000). The sums involved can be staggering. In 1994 the US General Accounting Office reported the spending of over $200 billion in the previous 12 years had led to few meaningful returns. In the 2000s, the UK spent £2 billion on cancelled public sector projects. An already obsolete air-traffic support system opened in Swanson, UK, in 2002, six years late and £180 million over budget (Economist 2002). In January 2008, the UK government scaled back a criminal-justice system ISD initially costed at £234 million. Even the scaled back project had an estimated cost more than double the original project – at £512 million (Economist 2008). The largest non-military ISD in the world initiated in 2002 in the UK National Health Service (NHS), more than doubled from its initial costings with estimates to complete the project reaching a remarkable $US23 billion by 2006, and with the project facing continual problems and delays into 2008. The Canadian Firearms Program blew out from initial estimates of $CAN113 million to over $1 billion, an overrun of almost 900 percent (Auditor General of Canada 2002). Vast sums of money, mostly provided by aid agencies, have been spent on health and other information systems in South Africa, on donor-funded IS projects in China and on World Bank funded projects in Africa – nearly all of which have been total or partial failures (Heeks 121

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2002; 2004). It is estimated around $US150 billion is wasted per annum on ICT failures in the public and private sectors in the USA and $US140 billion in the European Union (Dalcher and Genus 2003). Despite the catalogue of continuing failures, and despite decades of attempts to deal with the problem, there is little evidence that ISD failures are decreasing in the public sector. Indeed, the current enthusiasm for e-government suggests failure will be with us for some time. Given its ubiquity and the vast sums involved, until recently computer failure has received surprisingly limited coverage in the public administration literature. Indeed, notwithstanding their centrality to the public sector and to e-government initiatives generally, information technology issues themselves sometimes receive surprisingly little attention. When public administration writers do focus on technology issues such as in e-government studies, it is sometimes hard to distinguish their published research from industry hype. This chapter departs from the positive view of ICT that has existed in much of the public administration literature and underpins much of the hype-ridden writing on e-government. In the face of persistent and pervasive failure and this enthusiasm for ICT, I instead argue for a pessimism in information system development. Failure of large and complex ISDs is largely unavoidable. Even systems that work in a technical sense often do not deliver all that is expected of them. This is not a problem simply to be solved by a new management or software engineering technique or some other silver bullet, as much of the literature suggests. Rather, the central problem is the overblown and unrealistic expectations that many have regarding information technology. A model of the four enthusiasms that encourages these overblown expectations is outlined. Once begun, highly complex projects are extremely difficult to monitor and control and prevent from failing. When projects fail, it is difficult to find and hold to account those responsible. As such, investments in technology should be approached with great caution in the public sector and complex and large developments in information technology, particularly if new technology is involved, should be avoided if at all possible. If investments are to be made at all, these should have modest aims and use proven technology. In many cases, it may be better to avoid an investment altogether and continue with existing systems, at least until technology improves. In sum, rather than the entrepreneurial risk-taking public manager often found in some new public management (NPM) literature, this chapter argues for a public official as a recalcitrant, suspicious and skeptical adopter of ICT. Information systems failure Failure is a social construct and perceptions of what is and is not failure can vary between persons, and over time (Bovens and ’t Hart 1996). Opinions differ to what extent failure is a normal part of public policy, or whether it is an unusual, if sometimes spectacular, event seized on by the media for the sake of eye-catching headlines (Bovens et al. 2001). What distinguishes IS failure from other failures in the public sector, however, is its overwhelming ubiquity. Indeed, while some writers might claim failure in IS development is overstated, the bulk of the research suggests failure might even be the norm. As Mahaney and Lederer (1999: 291) note, ‘because this problem has endured for three decades, many IS professionals have accepted failure as inevitable’. Baccarini (1999: 25) notes ‘a standardized definition of project success does not exist, nor [is there] an accepted methodology for measuring it’. Indeed, what is counted as

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failure ‘depends on who you ask’ and perceptions of success and failure may change over time (Larsen and Myers 1999; Wilson and Howcroft 2002). The Standish Group sees success in narrow terms if a project is delivered on time and on budget, with functions and features delivered as originally specified. KPMG has defined ‘runaway projects’ to be those that overrun their projected budget or completion date by more than 30 percent, while others have proposed an overrun on budget or timeframe of 100 percent as a measure of failure (Cole 1995; Glass 1998). However, failure does not necessarily imply only technical failure – that is, even if a system performs as its designers intend, it may not be used as intended, or used at all, and so still be considered as a failure (Dutton et al. 1995; Gauld and Goldfinch 2006; Laudon and Laudon 1998). Even projects that meet design specifications may not increase worker productivity or deliver other gains expected – productivity may even decrease. Indeed there is considerable debate regarding productivity and other benefits of IS in the last three decades, in both the public and private sectors and in the economy generally, and whether some of the large investments in e-government have delivered promised benefits (Brown and Brudney 2003; Coltman et al. 2001; Economist 2008; Gauld and Goldfinch 2006; Holden 2003; Norris and Moon 2005). Benefits may not offset the costs of development; indeed a long project can cause years of serious and costly disruption to operations that may never be recovered (Norris and Moon 2005; Teega Associates Ltd 2003). Alternatively, despite technical flaws such as project overruns, over-spending, design questions and so on, some systems may be deemed a success (Wilson and Howcroft 2002). A project may be considered to be a failure, only to be later re-evaluated as a success for reasons quite outside the technical success of project (Huang et al. 2003). Drawing on Wilson and Howcroft, a number of types of failure can be summarized: 1. 2.

3.

Project failure: the project does not meet the standards agreed, including the functions provided, budget, or completion deadlines (Wilson and Howcroft 2002: 237). System failure: the system does not work properly, including not performing as expected, not being operational at the specified time or not being used in the way intended (Wilson and Howcroft 2002: 237). Even when used as intended, the project may not generate productivity gains or deliver the benefits expected. User failure: the system is not used in the face of user resistance, due to such things as recalcitrance, lack of training and ability of staff and/or intended users, and often the sheer complexity and difficulty of use of the new system. Indeed, a number of apparently technically successful e-government systems have been used by only tiny fraction of intended users, severely undermining their projected financial and other benefits (Gauld and Goldfinch 2006). As Chapter 6 in this volume notes, users may be happy to use simple searching functions on e-government projects, but have so far been often reluctant to use more complex transactional functions.

Why do information system projects fail? There is a considerable literature on the causes of IS failure, and the solutions to this ongoing problem, largely reflecting the latest management fad. None has been particularly successful in preventing failures; all have soon been abandoned for new solutions. Of the more promising, Heeks proposed a checklist of ‘critical failure factors’ (Heeks 1999; Heeks and Bhatnagar 1999). These include data inadequacies; technical problems;

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Table 7.1

Critical failure factors in IS failures

Factor

Description

Factor

Description

Information

Information and data inadequacies Problems with ICT such as incompatibility across agencies Lack of staff with sufficient training, skills or inclination to handle or develop ICT Lack of management skills, knowledge and training Processes are inadequate to integrate community or channel relevant information

Cultural

Clashes with national/ local culture IS clashes with organizational and/or management structures IS not co-ordinated across different agencies or divisions

Technical

People

Management

Process

Source:

Structural

Strategic

Political

Political infighting derails project

Environmental

Factors outside the organization disrupt project

Heeks and Bhatnagar (1999).

management, process and technical skill shortages; cultural clashes and political infighting; and external environmental factors (Table 7.1). While possibly useful in explaining in retrospect why failure may have occurred, the checklist provides little guidance how to avoid it. Indeed, if anything, the approach highlights the remarkable complexity of ISDs, the myriad problems that can occur and the difficulty that exists in addressing them. And it does not adequately address why large projects continue to be initiated, as I do below. Unfortunately, despite decades of research there is no easy answer to the problems of failure and no generally accepted explanation of why it occurs. Nor is there agreement on what software development methodologies, latest management or monitoring system is effective in preventing failure. None has been particularly successful so far. A number of critics note how management is characterized by the adoption of ‘fads’, with popularity little to do with actual evidence of effectiveness, and with the fad usually abandoned after a few years in the face of less than fantastic results, before a new fad is embraced equally as enthusiastically (Birnum 2000; Brindle and Stearns 2001; Connor 1997). Systems for government information technology management show some of the same tendencies (cf. Holden 2003). Software development is similarly afflicted. As Georgiadou notes: Researchers and practitioners endeavoured to find ways of improving the productivity and quality of products. New languages were often believed to have almost magical powers of getting over the crisis. Automated tools, formal methods and, more recently, the objectorientated approach were proposed as alternative ‘religions’ [with] Software Engineers becoming ardent followers of one approach or another. (Georgiadou 2003: 125) Computer science, information systems, and software engineering created a large number of lifecycle models, methodologies, and metrics designed for solving problems of quality of both software products and software processes. Unfortunately, only few of them were subjected to

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careful experimentation and were often adopted with limited empirical evidence of their correctness or effectiveness. (Ibid.: 139)

Despite decades of development, there are still no reliable methods of estimating project size or costs and no software development process that guarantees good results (Georgiadou 2003). Software and project estimation is reliant on the judgement of skilled individuals for success, and even the best can be wrong (Evans and Reynolds 2001). This has been the case even when projects are well specified and use experienced people and well-proven technology (Fenton and Pfleeger 1997; Gauld and Goldfinch 2006; Jacobson 1998: 354). Government agencies are often dependent on external consultants to advise on IS developments, and for large ICT companies to develop and supply software and hardware. This has dangers of its own. A consultancy company can learn that advising proceeding with a large IS project guarantees a flow of income in the future, quite apart from the value of this IS project to the purchaser, and with little risk that poor quality of advice will affect financial rewards then and in the future. Information and communication technology companies and their salesman can find that promising largely unachievable results from highly expensive IS projects is a good way to subsidize their software and hardware research and add to the company’s profits, with little risk that contracts, however many pages they might run to, will be able to hold them to account. There is little evidence that consultants, ICT companies, public agencies or many practitioners and academics have learnt one of the key lessons of IS failure – that large and ambitious projects should be treated with great caution or avoided altogether. Problems of enthusiasms and the dangerous enthusiasms of is failure Enthusiasm for large and complex investments in IS continues unabated, despite decades of failure. To explain why large and ambitious projects continue to be initiated I propose a model containing four pathological enthusiasms – the dangerous enthusiasms of the title. Each enthusiasm is linked to a key player or group within public sector ISDs. The first enthusiasm is ‘idolization’ or ‘technological infatuation’ where public officials ‘use computers and are over-aware of [ICT’s] potential. They believe that [ICT] can transform the business of government. The public sector becomes awash with [ICT] driven reform projects, which place technology at the heart of the change process’ (Heeks and Davies 1999: 27). Indeed, public servants can be ‘carried away’ with the excitement of it all, providing reports and projections for the benefits of new developments that verge on the fantastic (Dale and Goldfinch 2002). The current enthusiasm for e-government in particular often shows strong characteristic of ‘idolization’. The second is technophilia or ‘the myth of the technological fix’ where ‘the entire IS profession perpetuates the myth that better technology, and more of it, are the remedies for practical problems’ (Lyytinen and Robey 1999: 95). Many of those entering the ICT industries are, in common parlance, ‘geeks’; they are ‘enthusiasts’ for computers and technology, excited by the possibilities new technologies offer and by the challenging intellectual puzzles that developing new technology brings. Technological development can become an end in itself. And as noted, programmers are also subject to bouts of enthusiasm for the new programming methodologies that come along every few years, again despite little evidence of their efficacy (Georgiadou 2003).

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The third enthusiasm is what I call ‘Lomanism’, drawing on Arthur Miller’s archetypal salesman Willie Loman in the Death of a Salesman. Lomanism is the enthusiasm, feigned or genuine, that sales representatives and other employees develop for their company’s products and skills, and that company’s ability to develop new products and technologies, whatever the objections or questions put forward by potential and actual purchasers and others involved in purchasing and developing the technology. Information and communication technology salespersons can be faced by an unusually responsive audience; often those involved in finally deciding on what systems to buy are those responsible for promoting new developments in the first place. Those salepersons or company employees with the temerity to suggest purchasers’ expectations might be somewhat overblown are likely to find purchasers will simply go to a company that promises expectations will be met. The fourth is managerial faddism. This is the tendency for consultants and managers to eagerly embrace the newest management fad, methodology or utterings of the management guru of the moment and to see problems as largely solvable (or prevented) through better or more ‘rational’ management, and the appointment of skilled managers. Indeed, problems are often framed as fundamentally a failure of management or management systems – success is similarly framed as due to successful management and/or management system. Such managerial faddism is also reflected in the belief that most problems can be fixed or prevented, and benefits created, by improving management structures along the lines of the new fad, with new IS projects often a key element. New public management, its inherent belief in the supremacy of the private over the public sector, and its innovative, ‘entrepreneurial’ focus, provided a ready ground for such faddism. The public sector can now be expected to compete with the private in terms of its adoption of new technologies, including management ones, or face being seen as behind the times and resistant to change. Indeed, one of the benefits of pre-NPM Weberian models may have been undermined – the much maligned preference for precedent, stability and tradition (du Gay 2000). Together these four enthusiasms feed off and mutually reinforce each other, in a vicious cycle, creating a strongly held belief that new and large IS projects will be a good idea. Doubters and skeptics can be portrayed as ‘negative’ ‘not team players’, ‘not helpful’ or, particularly in some public sectors influenced by NPM and economic models of behavior such as public choice, as ‘vested’ or ‘rent-seeking’ interest groups. Indeed, it seems a near heretical belief to question some of the benefits of the current enthusiasm for e-government found across the world. Together these pathologies make up the four enthusiasms of IS failure seen in Figure 7.1. When a project does enter difficulties, these four enthusiasms can also undermine attempts to curtail or abandon the project – a project can always be fixed with better management, or more technology, hardware or better programming; or just a reassuring ‘it’ll be right on the night’. Problems of control Rational models of management and decision-making seek to impose order and control on a complex and turbulent world that (it is believed) can be more or less understood (cf. Brown and Brudney 2003; Lindblom 1959). However, rather than showing aspects of ‘linear logic,’ where cause and effect are known and can be controlled, ISDs are complex systems where the ability to predict events is limited and where even small events can lead to unpredictable outcomes. Much of the writing on ISD and IS failure suffers from

Dangerous enthusiasms and information systems development in the public sector

Idolization Public servants idolise ICT and see it as leading to great benefits

Technophilia More and better technology prevents or fixes problems

Managerial faddism New management or structures bring benefits and prevent or fix problems

Lomanism Feigned or genuine belief of ICT suppliers andsales staff in their company's products

Figure 7.1

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Dangerous enthusiasms: the four enthusiasms of IS failure

a hubristic belief that once the correct information is available, the right management system and programming methodology adopted, and rational optimizing individuals given the right incentives, the problem of failure will largely be solved. In contrast to this belief, I argue that due to problems of agency, immense complexity and the interaction of human beings of, at best, only bounded or even limited rationality, it is difficult to understand and control large ISDs. It is difficult to monitor and be aware of problems, to find solutions to these problems and to hold those accountable for failures. The sheer complexity of ISDs means humans with not unlimited abilities are faced with informational overload. Public agencies also work within a sometimes unstable legislative environment, with computer requirements subject to change in the face of changing laws, only further adding to complexity and cost (Small 2000). I expand on these issues below. Problems of agency and information There can be considerable problem of agency in ISDs. Agency theory focuses on the problems faced by the principal (such as the manager or CE) in controlling an optimizing agent (such as a programmer or IS developer or project manager) in a situation of information asymmetry, and problems of monitoring where the agent may have greater knowledge of problems and an incentive to conceal them. In many cases, reliable information is simply not available on the actual progress of projects (as opposed to reported progress) due to the intangible nature of software development, the often dynamic and changeable nature of the project itself, the large number of diverse participants involved in the projects who may well be working in different parts of the world, and the sheer complexity and information overload faced in a large project (Smith et al. 2001). Reflecting this, in many cases progress and audit reports are largely exercises in hope and

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fantasy (Dale and Goldfinch 2002). Where problems are apparent, these may not become made known to management or monitoring agencies. That members of organizations are reluctant to be the bearers of bad news is a well-reported phenomenon (Tesser and Rosen 1972). Information system developments are no different, with bad news often under-reported, concealed and sometimes falsified (Collins and Bicknell 1997; Dale and Goldfinch 2002; Gauld and Goldfinch 2006; Heeks 1999; Smith et al. 2001). In some cases, public agencies have been reluctant to give information to monitoring agencies due to claims of ‘commercial sensitivity’ (Small 2000). Even if bad news is reported, it may not be listened too; indeed, bearers of bad news can suffer sanctions themselves (Keil and Robey 2001). Where a senior manager or chief executive (CE) is tightly linked to the project and identified with its success there can be a reluctance to admit to bad news or to curtail the project in the face of difficulties (Collins and Bicknell 1997; Gauld and Goldfinch 2006; Heeks 1999; Keil and Robey 2001; Smith et al. 2001). In any event, line managers can lack the ability to evaluate projects and there may be a tension between authority from expertise and authority from position, particularly in a highly complex field as IS development where line management may be supervising people with highly specialist skills, which these managers do not necessarily understand (Beetham 1996). Appointment in bureaucracies is often made on seniority and successful political behavior rather than simply merit, which again can be dangerous in highly complex specialist fields as IS development. Management may simply be afraid of asking ‘stupid’ questions for fear of losing face (Collins and Bicknell 1997). Even without deliberate distortion, there can be miscommunication and misunderstandings and a considerable degree of tension between different players in public sector ISDs. Professional groups have their own languages, their own ways of doing things, their own understanding of the world – what is generally called a ‘culture’. Bureaucratic culture can sit uncomfortably with the individualistic, heroic culture of the programmer and the faddish culture of the management consultant and NPM-influenced managers (Figure 7.2). For example, while some writers on ICT have alluded to the conservatism Bureaucratic • Rule based • Conservative • Hierarchical with deference to superiors

Managerial • Management as generalizable technique • Faddism and idealization of private sector • ‘Entrepreneurial’

Figure 7.2

Culture clashes in public sector IS developments

Programmer • Individualistic and resistant to authority • ICT as heroic challenge • Technophilia

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of ICT engineers and their willingness to downplay what they can achieve (Glass 1999), most note the individualistic and heroic nature of programming culture, where difficulties and possible failure are just further challenges to be solved by hugely talented programmers (Bronson 1999; Swanson 1988). This particular technological focus of many ICT and IS specialists adds to inattentiveness to problems of failure and appropriateness of technology to the organization, and, indeed, resentment of and resistance to management, personal and political factors, and reporting requirements that might interfere with the technological puzzle at hand. As Lyytinen and Robey (1999: 94) note The profession of ISD is characterized by specialized training and circumscribed theorizing. Since the dawn of business computing, training in IS has meant ‘computer training’, and IS professionals remain technologists at heart. Unfortunately, a technologist’s perspective does not encourage an accurate diagnosis of the role of computing in business strategy and operations.

Indeed, the different professional values, modes of behavior, language and belief systems of different participants in ISDs can lead to some confusion, incommensurability and a degree of ‘talking past’ each other. The risk-taking ‘entrepreneurial’ culture of managers and managerial consultants, and their often baffling jargon, may add to confusion and danger of failure, especially as NPM models and NPM-influenced managers and consultants often sit atop or beside largely traditional bureaucracies. Line management may find simply ordering about an individualistic, highly skilled and somewhat recalcitrant programmer may not have the desired effects. There can be considerable professional jealousies and ‘turf protection,’ where attempts to curtail and direct other players is seen as unwarranted interference and as such resisted in various ways, including the restriction of information. Indeed, like any situation involving humans, ISDs involve political battles, struggles for individual autonomy, power and value dominance, career advancement, personality clashes and so on (Grover et al. 1988; Knights and Murray 1994). The complexities of technological development are only further complicated by the complexities of human relations. Even when problems are acknowledged, projects may continue because the forces encouraging abandonment are overpowered by the forces encouraging continuance – including a strong belief that ‘it will be right on the night’. In particular, what is called the completion effect – which is the nearness to the successful completion of the project – is a strong driving force. In IS development, this is particularly relevant due to the ‘90 percent completion’ syndrome where the proportion of the completed project increases readily to where it is estimated to be 90 percent completed, whereafter it increases very slowly (Abel-Hamid 1988). In some cases, projects are reported to be 90 percent complete for half the duration of the project; an obvious impossibility. In a survey of ICT auditors, it was found that the completion effect classified over 70 percent of runaway projects (Keil et al. 2000). Other studies of IS failures report how even in the face of overwhelming evidence to the contrary, those involved in projects will continue to report the project is nearing completion (Gauld and Goldfinch 2006). Front-line staff can provide a ‘reality check’ on the overreaching ambitions of IS developers and management. However, critiques of bureaucratic structures have noted the tendencies of members to follow commands even if they are misguided, and for responsibility and initiative to be discouraged (Merton 1957). In any event, ‘front-line’ grumbles may not be treated as carefully as they should, especially if the hierarchical

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culture sits (however uneasily) with public choice and NPM notions of management superiority and the treatment of professional groups as rent-seeking interest groups. Management hostility to even mild, and in retrospect, highly justified, reservations front-line staff have expressed in IS developments has been noted in failures (Dale and Goldfinch 2002; Gauld and Goldfinch 2006). On the other hand, a factor in failures can be the reluctance or inability of end-users to adopt and adapt to the new technology, where the benefits of using the system are not seen as justifying the efforts in relearning skills so as to use the system, or in some cases, where end-users actively subvert the computerization process (Al-Gahtani and King 1999; Collins and Bicknell 1997; Gauld and Goldfinch 2006; Rocheleau 2003; Wilson and Howcroft 2002). As such, developing systems without the involvement and, at very least, tacit approval of staff and intended users, can be a high-risk proposition. Contracting-out The popularity of NPM models in the last decades has partly been in response to perceived failings and rigidity of the bureaucratic model, as has the related growth of ‘contracting-out’. In many, and possibly most, cases, public sector ISDs are outsourced to private companies rather than developed in-house. Management and other consultancies are often hired to advise on ICT and management system requirements, on purchasing arrangements, and to monitor and audit ISDs. However, there is considerable evidence that contracts are not effective in controlling projects and providing sanctions when IS projects fail, and that outsourcing has costs and dangers of its own. In the highly complex and changing environment of IS development, no contract, even if it runs for thousands of pages, can hope to foresee and control all aspects of an ISD (Collins and Bicknell 1997; Dale and Goldfinch 2002; Gauld and Goldfinch 2006). The complexity and uncertain causes of failure if and when it does appear, and the often remarkably complex contracts that have been developed in (a usually vain) attempt to control the development and provide sanctions, mean that in the face of failure, litigation can be costly with results uncertain. In some cases, it is even suspected that ICT companies will build penalty payments for late delivery of applications into their costings when tendering for contracts (Teegar Associates Ltd 2003). A number of studies caution against an over-reliance on external consultants and information technology outsourcing (Rottman and Lacity 2008). As Grant (2003, 173) notes: intended to save costs and develop competencies, I. T. outsourcing can be a double-edged sword if there is sufficient internal capacity for performing effective due diligence in I. T. systems procurement, designing and managing the outsourcing relationship and capturing and embedding new knowledge gained into the organisation.

Indeed, as Brown and Brudney (1998: 341) found, local governments with ‘higher levels of contracting . . . were less likely to have the project delivered on time and within budget and achieved less benefit from the technology in productivity and performance, organization decision making, and customer service’ (emphasis added). In many cases, public sectors do not have the capacity, resources and personnel to adequately develop and monitor outsourced projects, particularly as during privatization drives of the 1980s and 1990s government-owned computer and information technology agencies were often sold off. Higher levels of contracting can also impede the development of this capacity

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(Brown and Brudney 1998). In a number of countries, particularly developing ones, this lack of state capacity can be pronounced. This leaves potential for consultant and/or producer capture and for exploitative relationships between often extremely large and powerful multinational ICT and consultancy companies and comparatively less powerful and less competent governments (Gauld and Goldfinch 2006): again, the risk of this is comparatively greater in developing countries with limited state capacity. Nor does competition provide a solution. In a marketplace there may be only a few large ICT and consultancy companies. As such, contestability may not be sufficient to provide a check on potential capture by allowing competition during tendering of contracts and by allowing different companies to advise on purchasing; to develop, implement and maintain different parts of the system; and to monitor and audit projects. In some cases, companies have absorbed rivals involved in developing different parts of a system during the process of ISD, further reducing competition and contestability and increasing the dangers of producer capture (Teega Associates Ltd 2003). In any event, external consultants and suppliers are prone to the enthusiasms outlined above. Problems of control: conclusion In sum, large IS projects are extremely difficult to monitor. It is difficult to know if things are going well or badly until ultimate abandonment and failure. When things go wrong it is difficult to find those responsible and hold them to account, even in the unlikely event that any one identifiable person or group is responsible. Even when problems are known, participants may be reluctant to curtail or abandon failing projects and may continue to throw good money after bad. At best, clearer lines of accountability, better managers, tighter milestones for delivery of applications, or other management innovations may make it easier for senior management to find out if a project is off the tracks. But even then, this bad news may not be wanted or ‘heard’ and may not lead to termination or modification of the project. No one has yet designed a contract that can control and contain all projects, and the danger of producer and consultancy capture remains great, particularly as there may be little contestability of advice and supply, and a dearth of ISD skills in the public sector. Management improvements will not necessarily stop, for the reasons outlined, ambitious and largely unachievable projects being initiated and large amounts of money being spent before a project’s ultimate failure and abandonment. Pessimism as an ISD tool What then is to be done? Much of the writing on IS failure suffers from what Oakeshott (1962) might term ‘rationalism’, that is, a belief that there is some ‘technique’ that can be applied to IS developments that will fix them once and for all. That failure is so common still is because that right technique – a new programming method, a better designed contract, better accountability regimes, a new management fad, a new consultancy template or whatever – has not been discovered yet. Or if it has, it has not yet been applied. In the face of such optimism, and the problems of enthusiasm and control I outline, I suggest a pessimism when it comes to IS development. This is a belief that the processes involved in IS development are not fully understood, that their complexity makes them difficult if not impossible to control and that large IS developments are likely to fail. Rather than simply a technical exercise of software engineering, the application of a rational ‘management science’ and the talents of brilliant managers, or the bringing-in of highly skilled

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consultants and private companies, or even just some healthy combination of all of these, IS developments in the public sector are a potent mix of dangerous enthusiasms; unclear aims and technical specifications; highly challenging technical problems; problems of agency; frailties of humans and management systems; personality and other conflicts; immensely complex contracts; producer and consultancy capture; legislative instability; and clashes of cultures between public servants, software developers, consultants and salesmen and their respective organizations, among other things. If one thing characterizes large IS developments, it is this incredible complexity. That these developments are often combined with other large-scale reorganizations, and that technical and other specification changes are sometimes made during the development process, only compounds this complexity. It is not likely for the foreseeable future that some technique or techniques will be able to manage this complexity. Indeed, as expectations continue to grow regarding ICT and IS – particularly with the current enthusiasm for e-government – it may be that any improvements made in ‘techniques’ will be outpaced by the increasing demands made by complexity on all-too-human managers, public servants, software designers and other members of the IS industry. At its most basic level, pessimism raises the question whether some IS developments are actually of benefit. In the garbage can of public management decision-making, it is often the solution – which might be restructuring or investment in IS or both – that exists quite separate from any identified problem (Cohen et al. 1972). If the first step then is to ask what is to be achieved and what problem is to be solved, the next question becomes: can this problem be solved without investment in further IS? Can some minor adjustment to current systems of management or IS deliver benefits without great costs and great disruption? Can some upgrade to present systems be carried out? If the costs, uncertainties and risks of change and failure are great, do they potentially outweigh the inconveniences, costs and difficulties of continuing with the way things are already done? If the decision is made to proceed with some ISD, then the question becomes how this can be done with the least disruption and the least cost, and with the least risk and uncertainty. The most dangerous course would be to invest in high-risk, highly ambitious ‘bleeding-edge’ large developments, with long development timeframes, and very high probabilities of failure.3 A more sensible solution is to examine what is currently working in the market place and buy something off the shelf that can be demonstrated to work. However, once adaptations are attempted on an existing system, however well it might work in its home country or public sector, the probability of failure again becomes large (Collins and Bicknell 1997; Gauld and Goldfinch 2006; Heeks 1999). If a system is not in existence anywhere else, then the question should be asked again: are the expectations held for ISD too high? Can expectations be scaled back to what does exist, or can the organization get by without further ISD, at least until the technology improves? In many cases a few years longer with an obsolete system will not make much of a perceivable difference. It is unlikely that the public sector is going to be competed out of existence by some ‘first mover’ in technology, even if this is the case in the private sector. If the answer is still that an ISD is needed, then, and only then, should an ISD be considered. Once the decision is made to proceed towards an ISD, then again pessimism should be the guiding principle. As such, when facing ISD and e-government developments the following should be considered:

Dangerous enthusiasms and information systems development in the public sector ● ● ● ● ● ● ●

●

●

● ●

●

●

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Be skeptical about what can be achieved by ISDs and approach the hype-driven current enthusiasm for e-government with great caution. Small and modest is often best. Benefits and success may be more likely where only routine applications are automated (Northrop et al. 1990; Teega Associates Ltd 2003). Be aware of the dangers of producer and consultancy capture and of the undermining of public sector capacity in ICT. If there has to be restructuring of the organization, this should not be tied to the ISD, but carried out separately and before. It is unwise to increase complexity by changing specifications during the development. Projects with long development timeframes are likely to be overtaken by technology improvements and be obsolete by the time they become operational, and are more likely to face legislative changes during their lifetime (Teega Associates Ltd 2003). There is no reason to believe – without very good evidence – that current contracts, managers and developers, or management, software and accountability systems, are somehow superior to those that have failed repeatedly in the past. Believe that developments will work only when they can be shown to work. The promises and enthusiasms of internal and external IS people, salespeople, consultants, management gurus, technicians and software engineers are unlikely to be worth much when a system fails, nor will any contract, even if it runs to thousands of pages. Projects may cause considerable and costly disruption to business that might never be recovered, but is often forgotten in projected costs. The system, if it does work, may not lead to huge job or cost savings in the short term – despite the many promises and projections otherwise – and there may be a loss of productivity until staff become used to its idiosyncrasies. Do not assume that intended end-users share the developers’ enthusiasm for new technology, and treat financial projections based on high use rates of the system with great caution. As such, excluding front-line staff and intended users from development is risky and they might undermine the system even if it does work in a technical sense. Be prepared to terminate the development if cost overruns, delays or non-delivery become apparent, despite claims it ‘is almost there’ or ‘it will be right on the night’.

In sum, be pessimistic about information technology. Notes 1. This title is borrowed from Robin Gauld’s and my 2006 book, as cited in the text. This chapter draws from this and Goldfinch, S. (2007), ‘Pessimism, computer failure, and information systems development in the public sector’, Public Administration Review 67 (5): 917–29. 2. An information system (IS) is a computer system combined with the organization and personnel to (hopefully) produce useful outcomes, as opposed to information technology (IT) and the largely interchangeable information and communication technology (ICT) which is a general term for computers, networking and software used in an information system. 3. A ‘bleeding-edge’ development is where new technology is being developed – the ‘blood is on the floor’.

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Grover, V., Lederer, A. and Sabherwal, R. (1988), ‘Recognizing the Politics of MIS’, Information & Management, 14, 145-156. Heeks, R. (ed.) (1999), Reinventing Government in the Information Age, London and New York: Routledge. Heeks, R. (2002), Failure, Success and Improvisation of Information System Projects in Developing Countries, Manchester: Institute for Development Policy and Management. Heeks, R. (2004), ‘iGovernment Working Paper Series. Paper no. 15. eGovernment as a carrier of context’, Manchester: Institute for Development Policy and Management, University of Manchester. Heeks, R. and S. Bhatnagar (1999), ‘Understanding success and failure in information age reform’, in R. Heeks (ed.), Reinventing Government in the Information Age, London and New York: Routledge, pp. 49–74. Heeks, R. and A. Davies (1999), ‘Different approaches to information age reform’, in R. Heeks (ed.), Reinventing Government in the Information Age, London and New York: Routledge, pp. 22–48. Holden, S. (2003), ‘The evolution of information technology management at the federal level: implications for public administration’, in G. David Garson (ed.), Public Information Technology: Policy and Management Issues, Hershey, PA, London and Melbourne: Idea Group. Huang, J., E. Makoju, S. Newel and R. Galliers (2003), ‘Opportunities to learn from “failure” with electronic commerce: a case study of electronic banking’, Journal of Information Technology, 18: 17–26. Jacobson, I., J. Rumbaugh and G. Booch (1998), The Unified Software Development Process, Object Technology, Harlow: Addison Wesley Longman. James, G. (1997), ‘ICT fiascoes and how to avoid them’, Datamation, November: 84–8. Keil, M. and D. Robey (2001), ‘Blowing the whistle on troubled software projects’, Communications of the ACM, 44: 87–93. Keil, M., J. Mann and A. Rai (2000), ‘Why software projects escalate: an empirical analysis and test of four theoretical models’, MIS Quarterly, 24: 631–64. Knights, D. and F. Murray (1994), Managers Divided: Organization, Politics and Information Technology Management, Chichester and New York: John Wiley. Korac-Boisvert, N. and A. Kouzmin (1995), ‘Transcending soft-core ICT disasters in public sector organizations’, Information Infrastructure and Policy, 4: 131–61. Larsen, M. and M. Myers (1999), ‘When success turns to failure: a package-driven process re-engineering project in the financial services industry’, Journal of Stategic Information Systems, 8: 395–417. Laudon, K.C. and J. Laudon (1998), Management Information Systems: New Approaches Organization and Technology, Englewood Cliffs, NJ: Prentice-Hall. Lindblom, C. (1959), ‘The Science of “muddling through”’, Public Administration Review, 19: 79–88. Lyytinen, K. and D. Robey (1999), ‘Learning failure in information systems development’, Information Systems Journal, 9: 85–101. Mahaney, R. and A. Lederer (1999), ‘Runaway information system projects and escalating commitment’, SIGCPR ’99: 291–6. March, J.G. and J. Olsen (1996), ‘Institutional perspectives on political institutions’, Governance, 9: 247– 64. Merton, R. (1957), Social Theory and Social Structure, New York: Free Press. Norris, D.F. and M.J. Moon (2005), ‘Advancing e-government at the grassroots: tortoise or hare?’, Public Administration Review, 65: 64–75. Northrop, A., K. Kraemer, D. Dunkle and J. King (1990), ‘Payoffs from computerization – lessons over time’, Public Administration Review, 50: 505–14. Oakeshott, M.J. (1962), Rationalism in Politics, and Other Essays, London: Methuen. Rocheleau, B. (2003), ‘Politics, accountability, and governmental information systems’, in G. David Garson (ed.), Public Information Technology: Policy and Management Issues, Hershey, PA, London and Melbourne: Idea Group. Rottman, J. and M. Lacity (2008), ‘A US client’s learning from outsourcing IT work offshore’, Information Systems Frontiers, 10: 259–75. Royal Academy of Engineering and the British Computing Society (2004), The Challenges of Complex ICT Projects, London: Royal Academy of Engineering. SIMPL/NZIER. (2000), ‘Information technology projects: performance of the New Zealand public sector in performance’, report to the Department of the Prime Minister and Cabinet, Wellington: The SIMPL Group and New Zealand Institute of Economic Research (INC). Small, F. (2000), Ministerial inquiry into INCIS. Wellington. Smith, H.J., M. Keil and G. Depledge (2001), ‘Keeping mum as the project goes under: toward an explanatory model’, Journal of Management Information Systems, 18: 189–227. Swanson, E.B. (1988), Information System Implementation: Bridging the Gap between Design and Implementation, Henley-on-Thames: Alfred Waller. Standish Group (2004), Third Quarter Report (2004), available at. www.standishgroup.com/sample_research/ PDFpages/q3-spotlight.pdf.

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Teega Associates Ltd (2003), Automation Program Evaluation. Wellington: LINZ. Tesser, A. and S. Rosen, (1972), ‘Fear of negative evaluation and the reluctance to transmit bad news’, Journal of Communication, 22: 124–41. Wilson, M. and D. Howcroft (2002), ‘Reconceptualising failure: social shaping meets IS research’, European Journal of Information Systems, 11: 236–50.

8

Public management reform in the United Kingdom: great leaps, small steps and policies as their own cause Kai Wegrich

The United Kingdom (UK) is frequently referred to as the textbook case of new public management (NPM). This country was, of course, not alone in adopting a reform programme devoted to the introduction of managerial techniques and economic incentives to guide the design and operation of public services and executive government since the late 1970s. It is widely claimed, however, that the UK was one of the few countries to full-heartedly adopt most of the elements associated with the NPM. In the emerging ‘industry’ of international policy ‘learning’, the UK has been among the first ports of call. The story of how NPM was ‘successfully’ introduced into the public service and executive government has been told many times and is quickly recollected: a uniquely strong leader with an equally strong distaste for an inefficient and complacent public sector pushed through major reforms against initial resistance, and her successors continued along the ‘trajectory’ laid out by Mrs Thatcher. While not denying that this storyline captures core elements of public management reforms in the UK, the starting point of this chapter is that the ‘conventional’ or ‘textbook’ story portrays an at least incomplete and to some extent misleading image. For developing a more complete, and differentiated, picture of public management reforms in the UK, there are at least three additional dimensions to be taken into account. The first dimension is time, in the sense of management reforms having developed since the ‘heyday’ of the NPM in the late 1980s and early 1990s, and shifts in approaches suggest a blurring of the sharpness of the ‘textbook’ case. Related to the wider ‘time dimension’ is the observation that many public management reforms are reactions to earlier reforms and their effects (in particular unintended side effects or even reverse effects) rather than original design ideas put into practice. In the public policy context, such a reactive pattern has been captured by the notion of ‘policy succession’, and more recent accounts of public management reform in Britain (and elsewhere) have stressed this dimension and diagnosed a ‘middle ageing of New Public Management’ (Hood and Peters 2004). The second dimension focused on the doctrines that drive the design of public management reforms and relates to the recognition that the NPM ‘shopping basket’ includes to some extent contradictory recipes and doctrines, that is, those related to ‘managerial freedom’ and ‘decentralization’ on the one hand and ‘performance accountability’ and increasing top-down control on the other hand (Aucoin 1990; Hood 1991; Pollitt and Bouckaert 2004). Others have suggested that NPM can be defined as one set of reform ideas, to which a successor – post-NPM reforms – has developed that stresses co-ordination and integration of various ‘stakeholders’ and mutual trust. Finally, results and the related aspect of criteria for assessing results constitute a third dimension for any assessment of public management reforms, though it is arguably the most difficult one. 137

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With these caveats in mind, this chapter draws a picture of public management reforms in the UK using three conceptual lenses to capture the development and results of public management reforms since the late 1970s. The next section first recalls the ‘conventional story’ of the UK as the textbook case that has been driven by a combination of ‘high on motives’ for political engagement in public management reforms and ‘high on opportunities’ for putting will and ideas into practice. Thereby, the section also outlines the drivers and factors that are usually said to account for the ‘British exceptionalism’ in public management reforms as well as landmark reform measures. The second section discusses public management reforms that are following ‘managerial control’, performance measurement and auditing as animating reform ideas. The third ‘cut’ builds on the first two sections in discussing the ‘pendulum swings’ between reforms following contrasting doctrines. This section also shows the expansion of the public management reform agenda as well as the increasing speed of agenda change. These three ‘cuts’ overlap in terms of the time span covered, instead of following a strictly chronological order, though the emphasis in the later sections is on more recent developments. These narratives of public management reform seek to capture the variety of reform approaches pursued in the UK, with the goal an overall characterization of the public management, British style. The final section of this chapter offers three interpretations of public management reform in Britain that integrate evidence from the three perspectives presented and could therefore count as an overall characterization. That, again, three interpretations are offered, shows that public management reform in Britain is a much more controversial field of analysis – and of politics – than is conveyed in the textbook storyline. Two further notes of caution are in order. First, this chapter has to be selective and it selects by giving an overview of the reform themes and approaches, and then emphasizes (and elaborates on) dominant reform programmes singled out for the different phases of the development since the late 1970s. While such a selection will always be contested, ‘dominant reform programmes’ relate to both practical relevance and prominence in debate and analysis of the character of British public management reforms. Since the chapter seeks to provide an overview and capture the character of public management reform in the UK, it is not an account or evaluation of individual public management reform initiatives and their ‘success’ (see Flynn 2007; Massey and Pyper 2005). Second, the start of Mrs Thatcher’s first term as Prime Minister (in 1979) is widely accepted as an appropriate starting point for an account of NPM in the UK, and this chapter is no exception in that respect. Among the other landmarks that are usually cited in order to place recent reforms into the broader historical development of public administration reform is the Northcote–Trevelyan report (1854), which lays the foundation for a modern Civil Service that relies on permanent and impartial Civil Servants who are selected and promoted on merit basis. A further landmark is the report of the Fulton Commission of 1968 that developed recommendations concerning the professionalization of Civil Service, that is, by strengthening specialist professionals relative to Civil Servants with a generalist educational basis, and the organization of service provision and policy implementation. While the Northcote–Trevelyan report was an important point of reference for the Fulton Commission, this report and the underlying debates foreshadowed some of those themes dominating the later NPM agenda, that is, the separation of delivery bodies from ministerial departments (see Fulton Commission 1968, which includes a reprint of the Northcote–Trevelyan report).

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The conventional story: high on motive and opportunity Together with New Zealand and Australia, Britain is regarded as one of the ‘benchmark’ cases from which other countries could learn in order to develop their own public management reform programmes (Barzeley 2001). The various elements of the broad package of reforms associated with NPM are usually regarded as being derived from the dominant doctrine of the incoming Conservative government in 1979 and adopted as a political reform ‘from outside’ with little or no involvement of Civil Servants (other than those of the top level units in the British core executive, that is, No 10 Downing Street (the Prime Minister’s office), the Cabinet Office and the Treasury). According to that doctrine, markets are inherently more efficient than other institutional forms of service provision or co-ordination. While private sector organizations are exposed to the performance enhancing mechanisms of market competition, the Civil Service lacks those incentives and develops a complacent behaviour to demands for change on the basis of established but outdated privileges. This doctrine gained support against the background of the extensive economic crises of the 1970s; high inflation was seen to be shaped by the public sector borrowing requirement and an overtly interventionist approach to welfare and economic policy (macroeconomic management) as a major impediment for economic growth and innovation. Humiliating experiences, such as the International Monetary Fund (IMF) intervention in 1976, provided the ‘evocative moment’ for the rise of that doctrine and the window of opportunity for a new type of Conservative leader’s ascendancy to power. Hence, the various elements of the reform programme are seen as the application of market principles, where possible, or the use of market mechanisms, where a market as an institution is not feasible. From this follows a hierarchy of reform measures, starting with privatization of services (and enterprises) at the top, moving next to the exposition of public services to market competition through contracting out and competitive tendering and the establishment of ‘quasi-markets’ based on the split of purchaser and provider roles. The turn to market mechanisms as a key governance principle for the public and Civil Service could be regarded as a substantial – if not radical – break with the past in Britain. Prior to the 1970s, a low level of ‘politicization’ of the Civil Service and its generalist tradition, as well as elitist self-selecting recruiting mechanisms leading to a close-knit policy community, were among the most important features of ‘village life’ in Whitehall (Heclo and Wildavsky 1974). Policy formulation and appraisal as well as communication with politicians were regarded as key traditional competencies of senior Civil Servants in the ministries. The lack of any specifically ‘managerialist’ administrative tradition in the British Civil Service and administrative tradition makes the shift towards the ‘prototypical example of managerial, client-oriented, competitive public service since Margaret Thatcher became prime minister in 1979’ (Kickert 1997: 20) perhaps more surprising. The traditional, so-called ‘Whitehall model’ (Wilson and Barker 2003) of the Civil Service in Britain (named after the London street in which most central government buildings are located) relied on permanent and impartial bureaucrats selected strictly according to merit, exercised by a mix of competitive examinations, interviews and group exercises. The educational background of higher Civil Servants was more frequently that of the classics or the humanities than economics or social sciences, and formed the basis for the famous ‘generalists’ tradition in the British Civil Service. Organizationally, the Civil Service was a single body ranging from central departments to remote field office. In

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particular large departments such as the Home Office united policy-making with service delivery function, though in practice delivery offices such as the Passport Office were fairly detached from policy activities in the ministries. This puzzle of why the traditional ‘Whitehall model’ was so open, or vulnerable, to the market model of governance has been addressed many times, and the answer is hardly surprising to anyone familiar with comparative research in public management reforms (Pollitt and Bouckaert 2004). In accounting for this remarkable development, two factors are most important. The first was already mentioned – the determination of a political leader who is willing to invest her political capital into an ambitious and radical economic reform programme, of which a new and reduced role of the state as a service provider and ‘governor’ of societal affairs is a defining if complementary element. Enthusiasm for business-style managerialism in that sense is a component of a wider political-economic reform programme that is about reducing the role of the state in society and economy. The perceived need for such an economic policy reform programme falls together with the exhaustion of old governing models, such as public ownership of enterprises and redistributive intervention into economic affairs, all of which make the adoption of farreaching public management reforms politically more appealing. A specific institutional setting is required for a risk-taking political leader to succeed in becoming a ‘transformational leader’, one that does not present major obstacles for adopting and implementing radical changes. The UK’s institutional setting enables a determined elected government to implement public management reforms so extensive as to change the constitutional arrangement itself. These institutional conditions are widely regarded as the second major factor in accounting for the track record of Britain in public management reform. Generally, two different levels of the institutional setting are said to be particularly favourable for adopting far-reaching reforms. First, on the constitutional level the absence of an integrated single written constitution allows constitutional changes to be adopted through simple legislation supported by the majority party in the House of Commons and without a guardian of the constitution (a supreme court) checking those changes ex post. While the idea of an unwritten constitution is to some extent misleading, the specific character of the British constitution is that it consists of a range of written documents plus established traditional conventions. Acts of Parliament, principles of common law as well as major scholarly contributions and laws that relate to the working of the Parliament and its members are regarded as parts of the British constitution, with some elements being more at the core than others (sometimes discussed as efficient and dignified parts of the constitution, following Bagehot 2001). But also informal conventions and ‘ways of doing things’ are regarded as part of the constitution, such as the principle of ministerial responsibility. While this character of the constitution plays witness to the importance of tradition and culture in British governance, it is nevertheless evident that constitutional change is much easier than in other countries. At the same time, the institutional (let alone operational) set-up of public services and the Civil Service are not regulated at the level of the constitution, and sometimes not regulated by law at all. For example, the executive agencies ‘revolution’ was adopted and implemented without legislation or even a formal decision of Parliament. The relatively low constitutional and regulatory constraints for changes in the structure and operation of government institutions is one key component of the ‘high

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on opportunities’ argument explaining British exceptionalism in public management reforms. The other is the capacity of central government to make such choices. Whereas in other countries, public management reforms need the consent of various ‘vetoplayers’, British government faces far fewer constraints. The voting system allows stable single-party majorities in Parliament (and hence single-party government) and the parliamentary system secures the support of this majority for the party leader (and hence Prime Minister). The absence of a second chamber of Parliament and a federal level of government with decision-making power matching those of fully fledged bi-cameral and devolved systems (at least in England, see below on the role of regional devolution since the 1990s) are further elements of a governmental system providing central government with enormous reform capacity. The comparatively high number of Members of Parliament (MPs) with positions in government, such as junior ministers and their personal secretaries, is an additional important factor of loyalty of MPs to government. The ‘high on opportunities’ argument also refers to the role of the Civil Service in political decision-making. The British Civil Service is sometimes regarded as coming close to an ideal type of a political neutral public service that is ‘instrumental’ to the political will of elected politicians (Knill 2001). While the popular image of the Civil Service has been one of limited political responsiveness (an image conveyed by the famous BBC television series, Yes, Minister), empirical analysis of the bureaucrats’ ‘policy work’ (in that case middle ranking) supports the view of high responsiveness to the ministerial guidance and leadership (Page and Jenkins 2005). Having outlined major elements of the ‘high on motives, high on opportunities’ claim, the rest of this section outlines landmark reform measures in the core policy levers usually associated with new public management reforms (Table 8.1). Public management reforms from the early to mid-1980s to the mid-1990s covered all those elements that became the chapters of the emerging NPM ‘textbook’. The privatization of state-owned enterprises was one of the first major reform measures, a reform that transformed the UK from a country with a relatively high proportion of public ownership in the economy to one of a comparatively low (Hood 1994). Major privatization of utilities started in 1984 with British Telecom, followed by the gas supply (1986), electricity generation and supply in 1989, water (1991) and the railways (1996). Privatization was the main driver of the decline of public employment from 7 million to about 5 million in the period between the mid-1970s and 1998. The core Civil Service (central and local government bodies) was reduced from about 750 000 in the mid 1970s to 500 000 in 1998 (with no major reduction being realized until 1991). Contracting out local services was the next element of the reform package that comes closest to the free market ideal. The exposition of local service to the compulsory competitive tendering process fits with the idea of exposing a complacent public sector (and one dominated by socialist politicians, in the views of Mrs Thatcher) to performanceenhancing competition with the private sector. John Major expanded this approach to central government in the 1990s. The governmental provision of public services was challenged in ‘market test’ procedures, an approach that went to the point of favouring the private sector provision even in the absence of clear evidence of efficiency gains (Burnham and Pyper 2008: 134–5). Artificially constructed market relationships were created in fields where neither outsourcing nor tendering was applicable. A core area of application was the National Health Service, where an allocation of purchaser and

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Table 8.1

Major reform initiatives, 1979 to 2006

Year

Initiative

Prime Minister

Description

1979

Efficiency (‘Rayner’) scrutinies

Thatcher

1982

Financial Management Initiative

Thatcher

1984–94

Privatization of state owned enterprises

Thatcher (Major)

1987

Performance-Related Pay

Thatcher

1988

Next Steps programme (Ibbs report)

Thatcher

1991

Citizen’s Charter

Major

1991

Market testing

Major

1994

Private Finance Initiative

Major

Scrutinies to detect organizational slack as a baseline for simplification of administrative procedures and workforce reduce Setting of output measures for all departments, delegation of financial and personnel responsibility to line managers British Airways (1981), British Telecom (1984), British Gas (1986), British Airports Authority (1987), Electricity (1987), Water (1989/91), British Rail (1993/94) Introduction of performance related pay (in agreement with unions) after pilot schemes started in 1985 Establishment of plus 100 Executive Agencies (1998: 116; 2004: 106) responsible for delivery of public services and policy implementation; Separation of policy design and implementation: departments focus on ‘strategic’ policy issues and setting of performance targets, agencies have autonomy over implementation and management; agency head (director) on fix-termed contract and performance-related (and competitive) pay Service delivery units develop performance indicators and report on performance, increase of transparency and access to information; departments monitor achievement Departments compare the cost of in-house tasks with market price by external providers to facilitate contracting-out Reform of public investment and procurement to encourage private investment and PPPs in infrastructure and maintenance

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(continued)

Year

Initiative

Prime Minister

Description

1994

White Papers: Resource Accounting and Budgeting; Civil Service: Continuity and Change Comprehensive Spending Review/Public Service Agreements (PSA)

Major

Implementation of new standards of accounting (accrual accounting); introduction of senior civil service

Blair

1999

White Paper: Modernizing Government

Blair

1999

Civil Service Reform Report

Blair

2004

Gershon Review

Blair

2006

Capability Reviews

Blair

2006

UK government’s approach to public service reform

Blair

Performance targets for departments linked to budget allocations; targets set in the process of bi-annual spending reviews; high priority targets in five areas monitored by the Prime Minister’s Delivery Unit from 2001 to 2005 Overall reform programme stressing the need for coordination and integration (joining-up) across governmental departments and agencies and between public sector and private sector organisations; also stressing e-government Reform of pay and performance assessment system by 2002; strengthening of external recruitment Review on efficiency of public sector working procedures, initiating major reduction of public sector workforce since 2005, stresses use of ICT and automatization of administrative procedures Review of departments capabilities in three managerial areas (leadership, strategy, delivery) Report recognizes user choice of public service provider as a key component of the wider reform agenda alongside performance management, competition and capability

1998

provider roles was introduced in the relation between general practitioners and hospitals. Within the Civil Service, reforms were directed at reducing its distinctiveness not only in terms of employment relations but also regarding management techniques. The introduction of performance related pay (first suggested by the Megaw Inquiry in 1982 and finally introduced in 1987), increasing use of part-time and fixed-termed positions

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as well as opening up Civil Service posts for candidates from the private sector (‘lateral entry’), were among the most important measures in Civil Service reform. By combining the post of Cabinet Secretary and Head of the Home Civil Service (a choice that has been made and undone several times since the Second World War), Mrs Thatcher also sought to increase the grip on Civil Servants and introduce more explicit regulation and control of senior Civil Servants in particular. In terms of financial management techniques, the Financial Management Initiative (FMI) was the starting point of a ‘slow burning’ but sustainable reform theme in the British government. While responsibilities for financial management and personnel were decentralized (and the Civil Service Department abolished), the initiative also began to define objectives and output measures for all departments, an approach that should become a dominant theme in later reforms of the Blair administration. The financial management dimension of the FMI developed over time; delegation of personnel and pay policies at the departmental level and the White Paper on Resource Accounting and Budgeting in Government (HM Treasury 1995) proved important landmarks a decade later (1994 and 95). The new budgetary rules put forward in the White Paper, in particular accrual accounting, were introduced in government during the next ten years (NAO 2008). Changing budgetary rules and downsizing the public sector workforce went hand in hand in the mid 1990s, at a time when ideas of public private partnership in infrastructure investment and maintenance became an important theme (Private Finance Initiative). As such, the mid-1990s can be regarded as the height of core NPM reforms. The FMI programme included a strong element of performance measurement and management, which was received at best with lukewarm enthusiasm within the higher Civil Service. Performance management was perceived as belonging to administrative work that was regarded as less relevant and interesting than policy work (cf. James 2003: 44–52). The programme was never officially abandoned, but lost momentum over time. The Efficiency Unit was responsible for driving the agenda forward, which was installed early during Margaret Thatcher’s first term and gained some reputation after several quick wins in terms of detecting bureaucratic slack in ministries through ‘efficiency scrutinies’ (also known as the ‘Rayner Raids’ after the first head of the Efficiency Unit, a former chief executive officer (CEO) of a large retailer). The Efficiency Unit further explored the idea of performance management in the context of a different organizational design solution, the so-called executive agencies. The creation of about 120 executive agencies (employing 77 per cent of the ‘nonindustrial’ home Civil Service) within ten years since 1988 was the most important government reform initiated by Thatcher. Massive reorganization had to be carried out to create the executive agencies, a reorganization that changed a system that (exceptionally) relied on direct service provision by ministerial departments. The idea of the executive agencies and the underlying rationale, as it was presented in the report of the Efficiency Unit Improving Management in Government: The Next Steps (1988), was in line with the market idea of creating adversarial roles of purchasers and providers of services. Market mechanisms were introduced through systems of contract management and performance agreements combined with the establishment of a CEO as agency head, who is personally responsible for meeting transparent performance targets. Open competition and competitive salaries was part of the bargain for the position. Another animating idea for the creation of executive agencies was the split between

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policy-making and service delivery responsibilities. Based on the experiences with the FMI, departments were criticized for limited ability to set strategic targets and for mediocre management of administrative delivery. Under the new framework, departments could develop strategic priorities and set clear targets for the delivery organizations that could in turn be monitored against these targets ex post. Executive agencies could develop expertise in delivering against these targets in a professional and economic way. In that sense the executive agencies were born out of a hybridization of two doctrines that both shaped public management reform in Britain, market mechanisms and performance control. The business model of large corporations with a range of different profit centres that are monitored and steered through the use of key performance indicators provided the doctrinal legitimacy for ‘selling’ the idea as one that is completely in line with standards of modern private business administration (see James 2001). The ‘Ibbs Report’ of the Efficiency Unit (1988) made explicit references to BP and British Rail, which both heavily relied on performance control by numbers (recently adopted at that time in the case of British Rail). While official reports claimed that the executive agency revolution substantially improved service delivery, the available academic evidence is more mixed. James (2003) stresses the budget maximizing mechanism undermining the overall economy of the reforms. He also claims that performance management has undermined inter-agency co-operation, since the most important incentive is to achieve the individual agencies’ targets. At the same time, the performance management regime was not successful in drawing a clear line between politics/ministry and management/agency. It is impossible to generalize given the vast range of existing executive agencies ranging from small-scale offices dealing with administrative details to highly political sensitive agencies. But there is strong evidence that the separation of politics and administration breaks down when issues become politically relevant (see Moran 2003). The other doctrine: managerial grip This conventional story of British public management resonates particularly in crossnational comparative analysis (Lynn 2006; Pollitt and Bouckaert 2004). However, this image is being increasingly challenged, partly on the basis of more recent developments since the first Blair government, but also partly concerning the initial assumptions and claims conveyed in the conventional storyline. Points of criticism in the latter respect include the accuracy of the dominant narrative of Mrs Thatcher in the role of freemarket revolutionary. To start with spending, Mrs Thatcher’s first term was actually characterized by rising spending levels. The budgetary effects of increased spending were mediated by sales of shares and privatizations. But also privatization itself was less of a well-planned, ideologically driven reform programme. Michael Moran (2003) has analysed how Britain ‘stumbled’ into privatization and Simon Jenkins (2006) provides additional evidence on the initial reluctance of Mrs Thatcher to engage in privatization. Policy templates for price-setting mechanisms by economic regulators and institutional design for privatized industries developed on the basis of subsequent experiences with privatization and played a key role in later privatizations, such as the railways in the 1990s (Lodge 2002). While the economic policy reversal from Keynesian intervention is evident and uncontested, the story of public management reform is more nuanced. During Mrs Thatcher’s first term, market-oriented reforms were mainly directed at the

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local level. Beyond some initial ‘shake-up’ activities, such as the ‘Rayner Raids’ already mentioned, the Civil Service machinery was not at the centre of these reforms, or they were at least far less radical than in wider economic policy. It was not until 1988 that the ‘Next Steps’ report initiated the most important reform of government organization. And privatization of government services (rather than state-owned enterprises) became a key focus of public management reform in the early to mid-1990s. The gained wisdom concerning the underlying institutional set-up which allowed far reaching reforms remains unchallenged. In that respect, the impact of the Thatcher reign is actually underestimated. The British administrative culture and law tradition might be regarded as more open to managerial reforms than continental European systems, given the absence of separate bodies of law for the public and the private sector or a related idea of ‘the state’ as arbiter of the common good that is separate from ‘society’ (something that fits with wider notions of ‘civic culture’). At the same time, the administrative and political culture and decision-making style has long been characterized as an informal, closed and consensus-seeking ‘club government’ type of culture – and it is here that the effects of the Thatcher revolution are most profound. The governing style of low consensus, top-down implementation of public sector reform has replaced more consensusbased decision-making styles that characterized public sector reform until the 1970s, that is, the reliance on Royal Commissions to develop policy recommendations on contested and high-relevance issues (a practice that is echoed in the widespread initiation of new policy lines on the basis of ‘independent’ reviews). Today, top-down implementation is taken for granted as the standard operating style of British reforms, but it disregards the changes since the late 1970s when claiming that this has been a long-standing feature of public sector governance in Britain. Some have based explanation of this change on the effects of initial economic policy reforms on the underlying governance structure. Moran (2003) in particular develops the argument that early reforms have freed social forces that exerted pressure on subsequent policy and public sector reforms, that is, replacing ‘club government’ type of self-regulations in the professions with state-directed audit and supervision mechanisms. In the context of public management reforms, these changes have manifested in developments such as ‘audit explosion’ and ‘regulation inside government’ as well as the increasing salience of target-setting and performance management regimes. To start with target-setting and performance management, it is obvious that there is a tradition of ‘governing by numbers’ in Britain that pre-dates the Thatcher – let alone the Blair – governments. During the 1960s the Treasury monitored the performance of state-owned enterprises using performance indicators, and the Financial Management Initiative was the most important incubator of performance management in the age of the NPM (see NAO 2005 for an overview of the main initiatives since the FMI). With the executive agency revolution, performance management and target-setting became widely established within the government for the first time. The subsequent years saw an incremental development and expansion of the performance management regimes. The ‘Citizen’s Charter’ of 1991 was John Major’s attempt to explore performance measurement and target-setting as an issue with popular appeal by requiring those government units that deliver services to the public to publish targets and report on achievement. Performance management and target-setting was at the centre of public management reforms of the successive Blair/Brown governments, and the set-up of a system of ‘Public

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Service Agreements’ (PSAs) early in the first term of the New Labour governments (1998) is a strong manifestation of this priority. Public Service Agreements became the key tool of the core executive, that is, the Treasury and the Cabinet Office to govern policy implementation and public service delivery in departments and subordinate delivery organizations (James 2004). Public Service Agreements are three-year agreements that are negotiated every two years between each main department and the Treasury during the so-called Spending Review Process. Each PSA sets out the departments’ central aim, priority objectives and key performance targets under most of these objectives. The 1998 Comprehensive Spending Review set around 600 performance targets for about 35 areas of government (Comprehensive Spending Review 1998). Departments had to set more detailed performance indicators vis-à-vis the delivery organizations within their responsibilities. To give an example of PSAs set in the 2004 Comprehensive Spending Review, the targets directed at raising standards in English and math are: by ‘2004, 85% of 11 year olds achieve level 4 or above and 35% achieve level 5 or above with this level of performance sustained to 2006’ (cited in NAO 2005: 5). School education and health care are two areas where performance targets are combined with ranking and rating systems. The star rating system was applied to hospitals to inform patient choice as well as evaluation of managerial performance of hospital managers. Generally, the Spending Review is a mechanism that combined the evaluation of departmental performance against targets and allows for adjustment of resource allocation to changing political priorities or strategies within an expanded (three-year) budgeting cycle. The subsequent spending review cycles since 1998 saw various adjustments of the PSA regime, such as the reduction of the overall number of targets or the introduction of supplementary templates for targetsetting, such as the ‘Departmental Strategic Objectives’ (geared at a few central objectives) (cf. Treasury Committee 2007). The next level of what Christopher Hood (2006) has called a system of ‘target and terror’ was initiated in 2001 with the establishment of the Prime Minister’s Delivery Unit (PMDU). The decision to install such a unit was based on the public dissatisfaction of Tony Blair with the Civil Service’s track record in putting policy reforms into real-world improvements of public service performance (the famous ‘scars on my back’ speech). The unit focused on a selection of about 20 high-priority targets in the areas of crime, schools, transport and health and established a system of continuous monitoring of related performance indicators (hospital waiting times, street crime, examination results, delays in railway services, congestion). The responsible departments were integrated in a cycle of meetings, which Blair personally attended on a regular basis. When performance indicators showed a decline in performance against targets, the Delivery Unit initiated immediate measures in the form of joint task forces with the ministries. This system established an unprecedented level of monitoring, control and intervention of the government in the work of line ministries, at least on a temporary basis. The remit of the PMDU changed in 2005, when it became responsible for carrying out the ‘capability reviews’ under the leadership of the new Cabinet Secretary, Gus O’Donnell. In these reviews departments were rated according to various criteria related to the delivery of public services. The underlying idea is to facilitate the development of skills, capacities and internal governing mechanisms that are regarded as preconditions for ‘delivery’ (Cabinet Office 2007). However, with this re-focus the Delivery Unit has ceased to exist as an important player

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in the core executive (evident in the absence of an Internet presentation). The relevance of target-setting and performance measurement, if possible combined with ranking exercises, remained high; and areas of application in 2008 include genuinely local tasks, such as children’s playgrounds (for which a strategic plan and a performance measurement regime is being developed). The effects and effectiveness of the target system are a highly contested issue in Whitehall as well as in the academic world. Aficionados of the approach can refer to substantial improvements against specifically important targets, such as hospital waiting lists or educational achievements (or better, examination results) (Barber 2007). Others point to various unintended consequences of strong reliance on numeral targets. These range from incorrect data reporting and other ‘gaming’ exercises to various distortion effects that occur when target achievement is linked to rewards and sanctions (such as threshold and ratchet effects). Examples of ‘gaming’ range from ambulances circling hospitals to match the time limit from entering the hospital to treatment in accident and emergency wards to teaching to the test in schools. A broader argument refers to the potential motivational effects of ‘target terror’, that is, the undermining of professional values and intrinsic motivation. A related line of reforms that can be linked to ideas of managerial grip and control is frequently discussed under labels such as ‘audit explosion’ and ‘regulation inside government’. They refer to the increasing salience of formal procedures of control and audit that go beyond the checking of legality or integrity, traditional ‘auditing’ functions. Since the 1980s, Britain has witnessed the advent of a novel concept of audit – value for money audits (VFM) – that goes much beyond formal account checking and link notions of efficient service delivery with policy evaluation functions of auditing. While the National Audit Office (NAO) as the spearhead of the VFM audits has developed out of the traditional position of Comptroller and Auditor General (now the head of the NAO), the Audit Commission responsible for local and health services has been established under the Local Government Finance Act in 1982. Since the 1980s, a range of additional sectoral audit bodies or regulators have been established. Hood et al. (1999) have traced the organizational demography of regulators, auditors and ‘quality police’ inside government. From 1975 to 1995, they estimated an increase of 60 per cent in the staffing of these regulators and a 106 per cent increase in their real-terms funding. With the organizational changes of ‘regulation inside government’ comes a new style of regulation and control. The regulatory style of the new internal regulators formerly relied on close co-operation between supervisory and delivery organizations but is now much more formal and adversarial. School inspections by the Office for Standards in Education (Ofsted), established in 1992, rely on performance targets and standardized attainment tests. The number of inspections has also vastly increased over time. Achievements in attainment tests were combined with elements of ‘naming and shaming’ those who failed to achieve the targets. ‘Naming and shaming’ is also applied by the Audit Commission to local government under the ‘Comprehensive Performance Assessment’ regime, which uses a traffic-light system for the rating of individual councils in broad areas of services and resource management. Overall, performance management, audit and inspections have been at the core of the New Labour public management reforms. This emphasis relies on hierarchical control from the centre and on summary quantitative indicators. Hierarchical control

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and performance targets have, however, not marginalized market-oriented reform ideas. British public management reform is rather characterized by recurring alterations between different doctrines as well as a general acceleration of policy initiation and agenda change in that field. These themes are further discussed in the following section. Policy succession, pendulum swing and agenda change Public management reform in Britain is characterized by an increasing speed of ‘policy succession’ and ‘reversals’, that is, the application of contrasting if not contradictory solutions to recurring issues of governing public services. These changes are tangible at the level of broad agenda changes, with new governments and individual leaders proclaiming a renewed agenda for public service reform. But patterns of ‘pendulum swing’ can also be detected at the managerial and operational levels of public management. Various analyses have observed pendulum swings in a range of public management reform fields, and several of those have witnessed recurring alterations between opposite design solutions. Four areas of ‘pendulum swing’ are particularly striking: ● ● ● ●

From ‘marketization’ to performance management in local government. From reduction of public sector workforce to investment in public service and back to an increasing emphasis on efficiency. From fragmentation to reintegration at various levels of organizational design. From controlling individual organizations to emphasizing co-operation across organizational boundaries.

The first two examples of ‘policy succession’ relate to the balance between the private and the public sectors. The shift away from ‘marketization’ and outsourcing of local government services is associated with the termination of the ‘Compulsory Competitive Tendering’ system and the introduction of the ‘Best Value’ regime for auditing (and ranking) local councils. The Best Value and the related Comprehensive Performance Assessment regimes have ended the reliance on the market as an institutional provider of governmental services as first choice. Similar shifts have been marked for central government, though outsourcing remained a wide spread practice for facilities in particular. Since 2005, ‘marketization’ was again reinforced by the ‘choice’ agenda of the third Blair government that was mainly directed at public services such as schools and hospitals (cf. Le Grand 2007; Public Administration Select Committee 2005). Concerning the public sector workforce, the change following 1998 was based on a clear political decision to invest in public services that had been subject to ‘squeezing’ and ‘market pressure’ since 1979. Under the Blair administration, the Civil Service grew from less than 500 000 in 1998 to 524 000 in 2004. However, the Gershon Review (2004) initiated another pendulum swing towards workforce reduction. The report recommended restructuring of back office and support functions through extensive use of information technology. Efficiency gains could be used to reduce the Civil Service, and along those lines (then) Chancellor Brown committed the government to a reduction of 80 000 by 2008. The third and fourth examples of ‘pendulum swing’ refer to a widely perceived and discussed unintended consequence of the earlier NPM reform, the fragmentation of organizations, service delivery and the resulting ‘egocentricity’ of individual organizations

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leading to co-ordination problems. The ‘joined-up government’ agenda of the early Blair government was based on this problem definition and directed at boundaryspanning co-operation across departments, agencies and private sector organizations (see Comprehensive Spending Review 1998; HM Treasury 1998; 2000; Minister for the Cabinet Office 1999). Cross-cutting PSAs have been introduced within the performance management regime to change the incentive structure of individual agencies and departments in order to facilitate cross-boundary cooperation (James 2004). The more salient ‘pendulum swing’ is, however, to be found at the organizational level. Talbot and Johnson (2007) show that the trend has swung away from single-purpose organizations towards reintegration and merger. Mergers and reintegration affect not only executive agencies created since the Next Steps report but also the world of economic regulators (that is, the creation of Ofcom as a multipurpose ‘network regulator’). In the context of inspectorates and internal regulators, the explosion of these functions has raised concerns about administrative burden, in particular for business. The Hampton Review (2005) of the Treasury has initiated a substantial ‘streamlining’ of inspection and enforcement. The ‘consolidation’ of 31 regulators into seven new or expanded bodies is at the core of the reforms which have followed the Hampton Review, in addition to various approaches to changes in the regulatory style of regulators, including risk-based enforcement. Three interpretations can be differentiated in the literature which account for this trend. Some have claimed that the change in government to New Labour also marks a change in public management reform policy (Burnham and Pyper 2008: 122). The ‘third way’ in public management was supposed to stress co-ordination and reintegration of a system that has been fragmented by reforms targeted at creating single-purpose organizations to better control them. A second view suggests that policy succession and pendulum swing are mainly a reaction to unintended, and unforeseen, consequences of earlier reforms, that is, strong incentives for individual organizations undermining co-operation and integration of services (Hood and Peters 2004). A third perspective regards constant agenda change and pendulum swings as an inherent, if not defining, feature of public management reform, British style (Pollitt 2007). These interpretations are not mutually exclusive, but there is some additional evidence that supports the idea that acceleration of agenda change and pendulum swing are inherent features of contemporary public management reform in Britain rather than just an expression of changed political priorities. The first set of evidence relates to the constant re-branding of initiatives and relabelling of those ‘units’, ‘task forces and ‘offices’ responsible for design and implementation of reforms. Burnham and Pyper (2008: 143–4) account for the most important changes concerning these units and task forces under Blair. Here it suffices to say that the frequency of changes and the related ‘short-termism’ is unmatched in Western European governments. Moreover, changes at the units’ level are matched by an ever-expanding agenda in terms of the subjects of public management reform. While financial and performance management as well as organizational change remain on the agenda, new items have been introduced since the end of the 1990s (some of them ‘old fiends’ admittedly). To name just a few, ‘risk management’ and ‘skills’ and ‘innovation’ have all been new approaches to public management and Civil Service reform. Second, the frequency of changes is not matched by coherence concerning underlying ideas of reforms. A coherent reform would be based on small but frequent changes in the same direction. Pollitt (2007) provides a compelling narrative of organizational change in the National Health Service

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(NHS) that shows a constant alteration between centralization and decentralization. Changes were frequent during the Conservative reign but have increased since 1997. And no preference for a particular organizational solution could be identified during the successive terms of the Blair governments. Rather than small changes in the same direction, the NHS has been subject to frequent large-scale reforms in opposing directions, according to Pollitt. ‘By almost any standards this serial re-structuring counts as pathological’ (Pollitt 2007: 531). While the NHS and schools are public services, which are particularly heavily affected by those frequent changes, other examples show that they are extreme cases of a broader pattern. The implications of this evidence for the overall character of public management reform will be discussed in the final section of this chapter. Conclusion What kind of overall characterization of public management reform can be derived from these three ‘cuts’? Certainly many observers would agree to the notion of ‘British exceptionalism’ in public management reform. But it remains contested as to what exactly the traits are that define British exceptionalism. The chapter does not intend to ‘solve’ or take sides in these debates, rather it offers three interpretations of an overall narrative that could fit with the three ‘cuts’ presented here. Each of these interpretations relate to some degree to one of the ‘cuts’ presented here, but seeks to take the other perspectives into account. One of the claims of this chapter is that the original ‘textbook’ story of public management in UK is incomplete, if not misleading. There has been a tension among two partially competing doctrines (markets and managerial control) and reforms have been characterized by vacillation between the two. More generally, short cycles between contrasting design solutions to recurring public management problems and the overall expansion of the agenda have characterized the development since the mid-1990s. The first interpretation of this development relates to the textbook story of NPM in the UK. It claims that the core elements of the NPM template as a mix of free market, economic incentives and new managerial control tools have been so deeply embedded into the working of executive government and public services that any analysis of the developing reform agenda would naturally detect approaches that are not included in the core NPM toolbox. New Public Management is so deeply embedded that it is no longer high on the public and political agenda. Personnel and financial management in executive government has already gone so far in decreasing public sector distinctiveness that the focus these days is either on incremental reforms in these domains or shifts to other aspects, such as ‘skills’ or ‘delivery’. While the reform agenda shifted over time, the basic direction remained on track with the core NPM doctrines ‘because both Conservative and New Labour administration have embraced the basic NPM doctrines, even if they have wanted to change the labels on particular reforms’ (Pollitt 2006: 38). Re-branding of reform initiatives does not change the basic trajectory of reforms that continues along the path of deepening basic NPM reforms. Any in-depth cross-national ‘benchmarking’ of public management reforms in core areas, such as financial management and Civil Service reform, would therefore reveal that the UK could still be considered a ‘benchmark’ case. Such an image is conveyed in international comparative analysis from the Organisation for Co-operation and Development (OECD), that is, on budgeting and performance pay.

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A second interpretation would observe that some of the reforms introduced since the mid or late 1990s were exactly about correcting those unintended consequences or reverse effects that are brought about by those reforms associated with the core NPM agenda. Therefore, a substantial part of reforms since the late 1990s were ‘policy successions’ dealing with unintended effects of earlier reforms. In that sense, the character of public management in Britain is that of a strong ‘modernizer’ – to use the language of Pollitt and Bouckaert (2004) – that engages in post-NPM style reforms in order to facilitate inter-agency co-ordination and re-establish trust in public services and public managers. Such an interpretation could label the current public management reforms in Britain as an ‘attenuated new public management’ type of reform. Such a view could point at the divergent developments in various areas of public management reform. For example, in the area of financial management, the incremental development towards performance-oriented budgeting and business-type accounting standards has not been interrupted by major alterations. But in areas where reform undermined public service values or emphasized the wrong incentives, policy reversals were introduced. Such an interpretation would also be in line with ‘governance narratives’ that stressed the need and reality of working across a range of public and private sector organizations in order to design and deliver public policies. Finally, it could draw on aggregate data showing that Britain is not particularly exceptional any more when it comes to the size of the public sector and related data. A counter-argument against the second interpretation is that it conveys an image that does not impart the zeal with which recent reforms, and those in the past, have been carried out. This critique leads to the third interpretation, which regards public management reform, British style, as not characterized by a specific content but by the method of reforms. Such an interpretation would stress the recurring changes and reverse trends that have been pertinent in the reform of the NHS but also the executive agencies or the design of the target regime. In some ways, this is the most critical interpretation of public management reforms in the UK, since it claims that the reforms have either been so ‘wrong’ that they increasingly need later adjustments or that initiating reforms has become a cause of its own. This interpretation can be linked to the broader analysis of the British regulatory state by Michael Moran (2003). He claims that institutional reform in Britain is characterized by ‘high modernism’ and ‘hyper-innovation’. Such an interpretation bridges the three ‘cuts’ of public management reforms in the following way. First, the Thatcher and Major governments were important in breaking up the old ‘club government’ style of informality and opening up the trajectory for further reforms. While marketization played and continues to play an important role in that context, central control has become ever more important over time. Quantitative performance indicators are core ingredients of these developments, since they have been regarded as the key to controlling a range of public and private institutions from the centre. Accelerated agenda change in that interpretation is facilitated by two mutually reinforcing mechanisms. First, central control comes with decreasing autonomy of organizations further down the line, and professional autonomy is regarded as an important aspect for managing large-scale projects, particularly in technically complex domains. Second, failures and unintended consequences create additional need for central intervention, since the centre has shifted into the centre of accountability of ‘results’. While the positive effects of far-reaching managerial reforms in government

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have long been emphasized, any further learning from the British exceptionalism should take into account the potential consequences of such a high-modernist and hyperinnovative approach. The future of British exceptionalism itself is not difficult to foresee in the short term. In the short to medium term, no detachment from the hyper-innovative approach to public management reform is likely. The community of interest in reform – including governmental units, audit institutions, academics and consultants – is currently so developed that the perpetual cycle (and recycling) of initiatives and their assessment will continue. In the long-term perspective, the developments initiated by devolution and Europeanization could have a mediating impact on British exceptionalism. Both factors would not change the motivational case for reform but they could impact on the opportunity side. Tendencies towards increasing formalization of the constitution have been already marked as a result of Europeanization. And while devolution in England does not seem to be an option under New Labour, it could develop into one under changing governmental conditions. But for the first decade of the twenty-first century, public management in Britain should be regarded as an experiment in hyper-innovation relying on an ever-changing pattern of managerial ideas and central control. References Aucoin, P. (1990), ‘Administrative reform in public management’, Governance, 3: 115–37. Bagehot, W. (2001), The English Constitution, ed. P. Smith Cambridge: Cambridge University Press. First published 1867. Barber, M. (2007), Instruction to Deliver. Tony Blair, Public Services and the Challenge of Achieving Target, London: Politico’s. Barzeley, M. (2001), The New Public Management: Improving Research and Policy Dialogue, Berkeley, CA: University of California Press. Burnham, J. and R. Pyper (2008), Britain’s Modernised Civil Service, Houndmills: Palgrave Macmillan. Cabinet Office (2007), Capability Reviews: Progress and Next Steps, London: Capability Reviews Team, Cabinet Office. Comprehensive Spending Review (1998), Public Service Agreement 1999–2002, Cm 4181, London: The Stationery Office, December. Efficiency Unit (1988), Improving Management in Government: The Next Steps, London: HMSO. Flynn, N. (2007) Public Sector Management, 5th edn, London Sage. Fulton Commission (1968), ‘The Civil Service. Vol 1 Report of the Committee 1966–68’, Cmnd. 3638, Chairman: Lord Fulton, London: Her Majesty’s Stationery Office. Gershon Review (2004), Releasing Resources for the Frontline (Independent Review of Public Sector Efficiency in the UK), Chairman: Sir Peter Gershon, HM Treasury, London: Stationery Office. Hampton Review (2005), Reducing Administrative Burden. Effective Inspection and Enforcement, Philip Hampton, March, London: HM Treasury. Heclo, H. and A. Wildavsky (1974), The Private Government of Public Money. Community and Policy Inside British Politics, London: Macmillan. HM Treasury (1995), White Paper on Resource Accounting and Budgeting in Government, CM 2929, London: Stationery Office. HM Treasury (1998), Modern Public Services for Britain: Investing in Reform. Comprehensive Spending Review. New Spending Plans (1999–2002), C. 4011, London: Stationery Office. HM Treasury (2000), Prudent for a Purpose: Building Opportunity and Security for All, 2000 Spending Review: New Public Spending Plans 2001–2004, CM 4807, London: Stationery Office. Hood, C. (1991), ‘A public management for all seasons?’, Public Administration, 69: 3–19. Hood, C. (1994), Explaining Economic Policy Reversals, Buckingham: Open University Press. Hood, C. (2006), ‘Gaming in targetworld: the targets approach to managing British public services’, Public Administration Review (July/August): 515–21. Hood, C. and B. Peters, P. (2004), ‘The middle aging of new public management: into the age of paradox?’, Journal of Public Administration Research and Theory, 14: 267–82. Hood, C., C. Scott, O. James, G. Jones and T. Travers (1999), Regulation Inside Government: Waste Watchers, Quality Police and Sleazebusters, Oxford: Oxford University Press.

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James, O. (2001), ‘Business models and the transfer of business-like central government agencies’, Governance, 14: 233–52. James, O. (2003), The Executive Agency Revolution in Whitehall. Public Interest and Bureau Shaping Perspectives, Houndmills: Palgrave Macmillan. James, O. (2004), ‘The UK core executive’s use of Public Service Agreements as a tool of governance’, Public Administration, 82: 397–419. Jenkins, S. (2006), Thatcher and Sons. A Revolution in Three Acts, London: Penguin Books. Kickert, W. (1997), ‘Public management in the United States and Europe’, in W. Kickert (ed.), Public Management and Administrative Reform in Western Europe, Cheltenham UK and Northampton, MA, USA: Edward Elgar, pp. 15–38. Knill, C. (2001), The Europeanisation of National Administrations, Cambridge: Cambridge University. Legrand, J. (2007), The Other Invisible Hand: Delivering Public Services through Choice and Competition, Princeton, NJ and Oxford: Princeton University Press. Lodge, M. (2002), On Different Tracks: Designing Railway Regulation in Britain and Germany, Westport, CT: Praeger. Lynn, L.E. Jr (2006), Public Management: Old and New, New York and London: Routledge. Massey, A. and R. Pyper (2005), Public Management and Modernisation in Britain, Houndsmill: Palgrave. Minister for the Cabinet Office (1999), Next Steps Report 1998, Cm 4273. London: Stationery Office. Moran, M. (2003), The British Regulatory State: High Modernism and Hyper Innovation, Oxford: Oxford University Press. National Audit Office (NAO) (2005), Public Service Agreements: Managing Data Quality. Compendium Report, Report by the Comptroller and Auditor General, HC 476 Session 2004–2005, 23 March. National Audit Office (NAO) (2008), Managing Financial Resources to Deliver Better Public Services, Report by the Comptroller and Auditor General, HC 240 Session 2007–2008, 20 February. Page, E.C. and W.I. Jenkins (2005), Policy Bureaucracy: Government with a Cast of Thousands, Oxford: Oxford University Press. Pollitt, C. (2006), ‘Performance management in practice: a comparative study of executive agencies’, Journal of Public Administration Research and Theory, 16: 25–44. Pollitt, C. (2007), ‘New Labour’s re-disorganization. Hyper-modernism and the cost of reform’, Public Management Review, 9: 529–43. Pollitt, C. and G. Bouckaert (2004), Public Management Reform: A Comparative Analysis, 2nd edn, Oxford: Oxford University Press. Public Administration Select Committee (2005), Choice, Voice and Public Service, House of Commons Public Administration Select Committee, Fourth Report of Session 2004–2005, HC 49-I. Talbot, C. and C. Johnson (2007), ‘Seasonal cycles in public management: disaggregation and re-aggregation’, Public Management and Money (February): 53–60. Treasury Committee. (2007), The 2007 Comprehensive Spending Review: Prospects and Process, House of Commons Treasury Committee, Sixth Report of Session 2006-07, HC 279. Wilson, G.K. and A. Barker (2003), ‘Bureaucrats and politicians in Britain’, Governance, 16 (3): 349–72.

9

New Zealand: reforming a new public management exemplar? Shaun F. Goldfinch1

New Zealand is a small, unitary, constitutional monarchy in the South Pacific, with a Westminster system of government and a single house of Parliament. Like the UK, it lacks a single written constitution, which is instead set out in a series of statutes, common law, rules, regulations and conventions. In the case of the public sector, much of its management structures and machinery can be found in recent amendments to statute, which codified and somewhat modified much of the legislation-driven new public management (NPM) reforms of the 1980s and 1990s, to which I will refer in this chapter. The Executive Council is composed of ministers and associate ministers – who must be members of Parliament – who hold particular areas of responsibility; in some cases several. The Cabinet – a subset of these ministers, headed by the Prime Minister2 – is the power house of government. The introduction of proportional representation from the 1996 election has made coalition and/or minority governments the usual state of affairs. Departments are headed by chief executives who report to the minister(s) responsible. In turn, conventions of ministerial responsibility hold that ministers are responsible to Parliament and the people for the actions and omissions of their departments, as well as their own actions; although this is sometimes honoured more in the breach. A distinction is made between the ‘public service’, the ‘state sector’ and the ‘public sector’. The first consists of 35 public service departments. There are four ‘non-public service’ departments in the executive branch: the Defence Force, Security Intelligence, Parliamentary Counsel and the Police, which have a greater degree of independence from the responsible minister(s). In the wider state sector exists a large variety of agencies, including what are called ‘Crown Entities’ – which can take various forms and names,3 depending on governance structures and degree of direct ministerial control. The 12 Crown Entity Companies are government owned companies with a variety of economic and social aims, while the 18 State Owned Enterprises are government-owned companies whose focus is largely profit. Other agencies, including tertiary education organizations, Offices of Parliament and various trusts, have a greater degree of independence, but are still monitored under the requirements of the Public Finance Act. The Reserve Bank – which controls the money supply and whose Governor is contracted to maintain price inflation within a band set by the government – is established under its own Act, as are a number of other state sector agencies. The public sector includes all of the public service and the state sector, plus local government agencies. Within the public service, the central agencies – that is, the Treasury, the State Services Commission, and the Department of Prime Minister and Cabinet – are dominant. The State Services Commissioner is responsible for recommending the appointment of chief executives of departments and some agencies to the government, and over-seeing and rewarding their performance, while the State Service Commission (SSC) holds a 155

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watching brief over the entire public service and much of the state sector – with this brief extended in 2005 to include minimum standards of conduct across most Crown Entities. The Treasury, responsible for keeping the government’s books as well as being the main economic advisory body, is generally considered the most powerful department, with a watching brief over almost all aspects of policy. At times it has been more powerful than the SCC, even in public management areas, with a central role in driving the public sector reforms of the 1980s and 1990s. The SSC regained greater influence by the end of the 1990s and into the 2000s. Individual state servants are hired by their respective agencies, ostensibly by merit, and conditions and payment vary across agencies; although the SSC regained some degree of guidance in 2005. The New Zealand state sector is generally well regarded by international measures, with it ranked in the ninety-sixth percentile on the World Bank’s Government Effectiveness Index (Kaufmann et al. 2007),4 and as the least corrupt country in 2007 by Transparency International, along with Finland and Iceland. New Zealand’s public sector reform process – beginning with the election of a Labour Government in 1984 – is interesting in itself for its rapidity and comprehensiveness. Indeed, the speed of the reforms and the remarkable influence of new institutional economics, public choice and neoclassical economics, have been noted at length elsewhere (cf. Boston et al 1996; Goldfinch 1998; 2000; Goldfinch and Roper 1993). New Zealand’s reform process has also been held up – not least by some of the originators of the reforms – as a NPM exemplar for other countries wishing to remake their state sectors. Schick (cited in Gregory 2004) argues the New Zealand reforms often generated ‘more fascination than emulation’, but in some cases, such as the Australian state of Victoria, New Zealand’s reforms were indeed directly influential, to the extent that parts of the New Zealand legislation were simply copied (Roberts 2005). The reforms have also been cited at length by various studies including the NPM tract Reinventing Government (Osborne and Gaebler 1992), and by studies from the Organisation for Economic Co-operation and Development (OECD) and the Canadian Attorney General. One aspect of the state sector re-ordering – a focus on fiscal responsibility and budget transparency – has been widely emulated. What then were these reforms? Situated within a broader remaking of the state and economy, itself heavily influenced by neoclassical economic thought and an accompanying and pervasive view of the market as the exemplary form of social and economic organization, the ‘New Zealand model’ as it existed by the mid-1990s had, among other things, the following characteristics: ●

● ● ●

the adoption of putative private sector management practices, including the treatment of management as a generic skill applicable across both public and private sectors. This took a sometimes extreme form where professional groups – such as medical doctors, police, scientists, academics and others – were treated as rentseeking interest groups to be excluded from management decision-making relatedly, an increase in managerial autonomy, including investing in departmental and other chief executives the ability to hire and compensate their own staff the introduction of performance-related individual and fixed-term employment contracts for senior staff, and the use of individual contracts for other staff changing financial management and reporting requirements, including moving from input-based to ‘output’ based reporting

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the adoption of private-sector style accrual accounting and the use of generally accepted accounting practice policy–operations and funder–provider splits, with accompanying departmental decoupling and decentralization corporatizing and selling of state-owned agencies, and increased other forms of privatization such as contracting out the use of written contracts and purchasing arrangements in a variety of aspects of public sector organization: including the purchase by the minister of goods and services, including policy advice; in the internal organization of units; and coordination with other government and non-governmental agencies.

Broadly these reforms could be seen as encompassed within two major and not necessarily compatible strands: ‘managerialism’ as encapsulated in the phrase ‘let managers manage’, and ‘contractualism’. As I outline in this chapter, the New Zealand reforms quickly generated a critique – both internal to the government and external – and certain aspects of the reforms have been modified since 1999, so that the ‘New Zealand model’ of public sector reform might be under some threat. Indeed the question has been asked if there is a ‘new’ New Zealand model (Chapman and Duncan 2007). Decentralization, departmental decoupling and the policy-operations split have been challenged and somewhat reversed by the Labour government elected in 1999. There have been attempts to reconnect departments and agencies somewhat Balkanized by the reforms, including through various interdepartmental mechanisms. There was a modest, and possibly mainly rhetorical, rejection, and some reversal of the sale of state assets. Some aspects of ‘managerialism’ – particularly its replication of the glitz, managerial jargon and ‘consequential logic’ of private sector managers – were seen to be increasingly inappropriate by the end of the 1990s (Wallis 2002). Monitoring of much of the wider state sector by the central agencies, including in information technology procurement and setting minimum standards, has been progressively strengthened. Focus has shifted from measuring short-term and achievement of largely quantitative outputs, to a medium-term focus on ‘outcomes’ and results. However, it would be an overstatement to say the model has been entirely abandoned, and key parts of the reforms remain fundamental to the management of the public sector. Contracting out and private–public partnerships remain central methods of service delivery. Output measurement and monitoring – something much critiqued both from within and without the state sector – remains, albeit in a modified form. Indeed, some of the original architecture of the reforms was re-incorporated in recent legislation, introduced as the Public Finance (State Sector Management) Bill in 2003 which, when passed, amended the Public Finance Act and the State Sector Act, and introduced the Crown Entities Act 2004. The reform process Before the reforming Labour government came to power in 1984, the New Zealand public sector more or less fitted within the ‘traditional’ and Whitehall model. The public service was a career one with strong traditions of political neutrality, with the Public Service Commissioner (from 1962, the State Services Commission) responsible for appointing public servants across the state sector. Chief executives were known as Permanent Heads

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and had a degree of protection of tenure. There was fiscal pressure and a general desire to make the New Zealand economy more competitive among some policy elites – although the poor performance of both the New Zealand economy and of the public sector has perhaps been overstated (Goldfinch and Malpass 2007). There was some suspicion of the public service and of the powerful Permanent Heads by the incoming government, and some desire to make them more accommodating to the wishes of ministers. However, to a large extent the main drive for reform for the post-1984 reforms was ideational. The Treasury, an enthusiastic proponent of neoclassical economics and neo-liberal thought, was most important in designing and advising on the changes. Their vision was adopted in several key pieces of legislation. Strong Cabinet support where Parliament was limited in its ability to constrain the executive, saw this legislation passed with little modification. Consultation was perfunctory, with the formerly powerful public sector union – the Public Service Association – largely presented with a fait accompli (Goldfinch 1998; 2000). Corporatization and privatization Corporatization was first announced in the Economic Statement of December 1985 and formalized in the State Owned Enterprises (SOE) Act 1986. This moved governmentowned enterprises that traded in goods and services from traditional departmental management structures to ones that attempted to make them behave more like commercial enterprises and with a focus largely on financial returns, rather than other social or economic benefits. Full cost pricing for government services had been introduced in 1985. Corporatization quickly evolved into privatization, with the initial drive again coming from the Treasury, and with the first sale in 1987. Privatization continued in earnest under the National government after 1990. New Zealand had the largest privatization programme as percentage of gross domestic product (GDP) in the OECD in the 1990s (Goldfinch 2000). Organizational change The State Sector Act 1988 redefined the role of the departmental chief executives. Rather than being Permanent Heads, they became chief executives appointed on three- to fiveyear contracts, with the possibility of renewal. Appointments are made by the State Service Commissioner, but recommendations must be approved by the Governor General in Council (that is, the government). This recommendation is mostly, but not always, followed, with a veto of the appointment of Gerald Hensley for Secretary of Defence by the Labour government in 1990 being one exception. Chief executive performance and remuneration is the concern of the State Services Commissioner. While chief executives can be removed for ‘just cause or excuse’ by the State Service Commission with the agreement of the Governor General in Council, this has never happened – although contracts have not always been renewed. The State Sector Act gave chief executives the responsibility for appointing and paying their staff, a responsibility that was previously held by the State Services Commission. The Act also tried (unsuccessfully) to create a senior executive service in the public sector who were to be employed on individual contracts, with the aim of developing a collegial management class. The Employment Contracts Act 1991, introduced by the National government elected in 1990, introduced individual contracts of employment between employer and employee, moving away from the active state involvement and

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sponsorship of collective bargaining that had persisted since the late nineteenth century. This was a factor that drove a large growth in individual contracts in the state sector below the senior executive level. Despite the repeal of the Employment Contracts Act and its replacement by the Employment Relations Act 2000 that was seen to encourage collective bargaining, by late 2007, only half (49 percent) of public service employees were employed on collective agreements, while almost as many (44 percent) were on individual contracts – the rest on expired ones (SSC 2007a). Financial management The Public Finance Act 1989 put in place arrangements to monitor the performance of departments and introduced important changes to financial management, including clarifying the responsibility of chief executives for the financial management of their departments. Chief executives are required to sign a statement of responsibility for financial statements for the department asserting they reflect the financial position of the agency. A key feature of the Public Finance Act was performance measurement being moved from input controls to output controls, outputs being the goods and services (including policy advice) produced by the department. The original model was replete with structures and languages of the market, and although much of the language has evolved, much of this system remains, although its contractual edge has been softened. The minister became the purchaser of agreed outputs from the department, and chief executives were held accountable for their production in (from 1993) purchase agreements signed by the chief executive and the minister. Outputs were defined and specified in the annual estimates and purchase agreements. ‘Outcomes’ – that is, actual results of the actions of departments – were not seen as easily attributable to chief executives and therefore not conducive to measurement. The focus on production of outputs also meant that ministers became better able (in theory) to purchase them from other (including non-departmental and non-government) sources, such as in the case of policy advice or health services provided by voluntary groups. Outputs are still a central part of the system, despite continual debate over their utility. Purchase agreements however, were replaced by ‘Output Plans’ from 2003/04. Outputs are currently grouped into various classes. A statement of service provision – signed by the chief executive – is currently required to reflect the department’s ‘standard of delivery’ for these output classes. However, since 2001 departments are also required to report on managing for outcomes – that is, the steps taken to achieve these outcomes. By 2005, Crown Entities were also included in the outcomes framework. The Public Finance Act introduced accrual accounting into the public sector. Cash accounting, where payments received and made are recorded for the year, was supplemented by a system where the resources used in the production of goods or services were matched with the revenue or services produced in the same period. This, it was argued, allows the cost of the production of outputs to be better calculated allowing for better information for purchasing and ownership decisions, particularly when comparing with alternative provision – that is, private sector – of outputs. The Act also stipulated that financial statements be prepared in accordance with generally accepted accounting practice (GAAP) in the private sector, and introduced a capital charge for agencies, reflecting the opportunity costs of capital. Financial reporting standards are set by the independent Accounting Standards Review Board for both the private and public sector (Treasury

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2005a). The comparability of accounts between the public and private sectors has been challenged, due to the different interpretations that can be applied to accounting terms use and because ‘some financial reporting standards contain modifying paragraphs that either add requirements for the public sector or release the public sector from some requirements’ (Ellwood and Newberry 2007: 561). Fiscal responsibility The National government passed the Fiscal Responsibility Act in 1994. This required the government to formulate and then report its fiscal policy objectives to Parliament. Responsible fiscal management was defined as: ● ● ● ● ●

debt reduced to ‘prudent’ levels operating expenses not exceeding operating revenues over a reasonable period Crown net worth at sufficient levels to counter adverse events fiscal risks managed ‘prudently’ policies consistent with predictable stable tax rates.

What was considered ‘prudent’ or ‘consistent’ was a government decision. The government was required to report to Parliament how it would comply with these fiscal principles, justify any departure from them and give an explanation when they would be complied with. The Act also required disclosure of the fiscal consequences of economic policy decisions. This included publishing three-year forecasts every half year and four to six weeks prior to a general election. These forecasts include the usual financial statements, as well as a statement of fiscal risks and contingent liabilities which describes and (if possible) quantifies the fiscal risks associated with the forecasts. The Minister of Finance and the Secretary to the Treasury sign statements of responsibility declaring that all policy decisions have been included in accordance with the Act, and that the Treasury has used its best professional judgment in preparing the fiscal impacts of the policy decisions. The reports were also subject to Parliamentary scrutiny, and the relevant Parliamentary select committee could and did call witnesses, including the minister and senior public servants. The Fiscal Responsibility Act was incorporated into the Public Finance Act by the 2004 amendments. While the principles remained, amendments included a requirement to disclose the time period to which long-term fiscal objectives referred – in this case ten years. The yearly fiscal update was abandoned as the information was already provided in the monthly statements. The Treasury is also required to produce a 40-year assessment of long-term fiscal issues (Treasury 2005a; 2005b). Restructuring Further changes included considerable reorganization and disaggregation of departments, including the separation of funder and provider services and of policy and operations. As noted, large parts of the state sector were sold off. The restructuring and sale of agencies, was a seemingly never-ending process through the 1980s and 1990s, with some agencies restructured two or more times. The entire health system was restructured four times from 1990 to 1999 (Gauld 2003). Restructuring was accompanied by a large number of redundancies with the state sector employees falling from 85 738 in 1984 to

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31 810 as at 31 December 1996 (including 14 244 staff employed in Crown Entities). Examples of agency restructuring included: ●

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The division of the then multi-function Department of Health into the Ministry of Health which provided policy advice and regulatory functions; a health authority funded by the department; and hospitals which (along with private providers) sold health services to the health authority. Some parts of the health system were integrated with the Crown Research Institutes (see below). The disaggregation of the multi-function Department of Scientific and Industrial Research specialist into a variety of policy, funding and operational/research units. This included nine limited liability companies – the Crown Research Institutes – which competed for funding from the government-owned Foundation for Research, Science and Technology, for contract research from departments and other agencies, and for private and non-governmental organization (NGO) funding. The Ministry for Science, Research and Technology became the main science policy advisory body. The division of departments into separate policy divisions and operational divisions under one chief executive, such as in the one-time Department of Social Welfare (which itself was split in 1999) and the Department of Labour. The splitting of multi-function departments into policy ministries and operational departments or non-departmental Crown Entities. For example, the Department of Justice was divided into a policy ministry and operational departments such as Corrections and Courts. For state housing, this involved splitting off the provision of state housing into a Crown-owned limited liability company operating on a commercial basis, with policy advice provided by a Ministry of Housing. The Department of Transport, employing 5000 people in 1984, was split into a 60-person policy ministry and a number of Crown Entities, while traffic officers were absorbed by the police force. Contracting out such things as financial record keeping and auditing, support services, consultancy services and policy advice. Private sector consultants became an important source of service provision and even policy advice, a source of considerable (and ongoing) controversy.

Critiques of the reforms Critiques of the NPM-inspired restructuring were quick to eventuate, particularly from academia (cf. Mascarenhas 1990), and there were concerns held by the National government elected in 1990 and by some senior public servants. The 1991 Review of State Sector Reforms noted lack of collective strategies for the state sector; and difficulties in specifying performance standards and measures and rewards for chief executives and others, and in the development, attraction and retention of managers of sufficient quality. Other concerns were held regarding the lack of policy co-ordination and insufficient attention being given to the collective and longer-term interests of government. These led to the development of a new system of strategic management. Key result areas (KRAs) outlined yearly objectives for departments and held chief executives accountable for their achievement. Key results areas were seen to assist each department to deliver policies and services to aid the government in meeting its strategic result areas (SRAs). Strategic

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results areas outlined the long-term policy visions of the government. With questionable success, the KRA and SRA framework was abandoned by the Labour government elected in 1999. Debate on the merits of the reforms continued. Such evidence that existed pointed to efficiency gains, at least in technical efficiency terms. However, there were caveats to this due to a scarcity of detailed empirical studies; the lack of baselines for before-and-after reforms comparisons; and the difficulty of establishing the causes of efficiency gains due to a range of other economic, political, regulatory and social changes (Goldfinch 1998). Others have noted: ‘improvements in the quality of certain services, better expenditure control, better management of departmental budgets, greater managerial accountability, and major improvements in the quality of information available to policy makers’ (Boston and Eichbaum 2005: 9). Concerns, however, were raised regarding: ●

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increases in reporting costs of measures of questionable usefulness, and particularly the focus on largely quantitative, ‘countable’ and short-term measures such as outputs. Such focus on outputs was seen to encourage a ‘checklist mentality’ where departments focused on fulfilling their purchase agreements rather than a broader government vision relatedly, a Balkanization of the state sector, leading to problems of co-ordination, achieving broader government visions, and the undermining of previously existing networks vital for the business of government continual problems in specifying and pricing outputs – including finding nonpublic sector equivalents – and of linking them to ‘outcomes’ or actual results concern over the policy–operations split and the reintroduction of the policy– administration dichotomy this entailed. There was a naivety regarding the ability and inclination of a supposedly autonomous Minister to purchase from departments, when departments themselves were key in designing and advising on outputs, outcome and other performance measures transitional costs associated with the changes, such as the considerable cost of redundancies and disruption of government business that continual restructuring entailed. This may have led to the undermining of capacity, skill shortages and loss of organizational knowledge. In some cases, lack of state capacity may have contributed to large policy failures (particularly in information technology) concerns with the entire theoretical underpinnings of the reform, particularly the new institutional economics and public choice derived model of public servants as opportunistic optimizers driven primarily by financial concerns, which, some feared, could become a self-fulfilling prophecy the poor management and often rushed sale of state assets, and the poor prices sometimes received concerns regarding ‘ownership’ where the government was both the owner and purchaser from an agency. These led to apprehension that the government could undermine the long-term capacity of the state sector by focusing on its short-term interests as purchaser an almost fetishistic focus on written contracts, with a naivety regarding their ability to specify and control a complex world, and to reward/sanction good/poor performance

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accountability issues, particularly with regard to an increasingly complex and disaggregated state sector and a confusing array of outputs, outcomes, contracts and agencies that were often insufficiently specified and monitored. Lack of central agency monitoring of the public sector became a particular concern during a number of large computer failures the undervaluing and undermining of professional expertise and values inherent in some aspects of managerialism and public choice, and the similar undermining of front-line staff also to some extent inherent in the policy–operations split. Indeed, there was some suspicion that managerialism served the interests and increased the power, status and wealth of the managerial ‘class’ against the professional and operational ones an almost slavish regard for private sector management practices and often jargon-ridden management language – including management fads of questionable empirical verisimilitude – and for the well-paid management consultants proposing such approaches a possible undermining of social capital and ethical standards, particularly in the wake of a number of corruption and fraud scandals (cf. Boston et al 1996; Gauld and Goldfinch 2006; Goldfinch 1998; 2000; Gregory 1998; Wallis and Dollery 2001).

The Labour-led government and a ‘“new” New Zealand model’ The 1999 election year saw a wave of scandals in the public sector, with large payouts to officials above and beyond their contracts, concerns over managerial excesses, the use of private sector consultants to write important policy briefing papers, some ethical lapses and some large computer failures. Soon after its election, the Labour-led government announced it was looking to ‘rebuild the capacity’ of the public sector. Despite making threatening noises towards some chief executives while in opposition, none were removed on Labour taking office, although by September 2000 seven state service chief executives had resigned or not had their contract renewed. The government promised to stop asset sales, abolished the previous government’s ‘market rentals’ for state housing and introduced income-related rents. The government-owned Accident Compensation Commission was reinstated as the sole provider of injury assistance from 1 July 2000, overturning the decision made in 1998 to open the accident insurance market to competition. A commission of inquiry was begun into a large computer failure – costing something over $NZ100 million – in the Police force. This was soon replaced by a ministerial inquiry. Police Commissioner Peter Doone subsequently retired (Gauld and Goldfinch 2006). Continual debacles and policy failures at Work and Income New Zealand (WINZ) saw an inquiry into the department directed by the former State Service Commissioner Don Hunn, with his August 2000 report critical of management culture and systems. In the aftermath, the WINZ chief executive did not have her contract renewed, and WINZ absorbed the Ministry of Social Policy and was renamed the Ministry of Social Development in October 2001. In the following years, the Labour government introduced a series of measures to ‘join-up’ government including: extending SSC leadership in a number of areas across the state sector; rebuilding state capacity and public sector values; and a focus on ‘outcomes’, rather than simply output reporting. Some of this was formalized in amendments to the Public Finance Act and the State Sector Act, and the new Crown Entities Act 2004.

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Symptomatic of the consultation rhetoric adopted by the new government was the Partnership for Quality Agreement between the Minister of State Services and the Public Service Association (the leading public sector union) released on 1 May 2000. This promoted a consultative relationship between departments and unions and gave a greater involvement of the union in decision-making of departments, within the limits of ‘the Chief Executive’s ultimate responsibility for management’. It was reaffirmed in 2003 and 2007. Union representation was included on the State Sector Standards Board (see below). Departmental chief executives were also required by the Cabinet to ‘build good practice relationships into their policy development and service planning . . . with key community, voluntary and [Maori] organizations (Cabinet 2003)’. E-government initiatives also had a consultative aspect, although possibly not as important as their managerial aspects. Such consultation was in marked contrast to the previous Labour government’s marked hostility to consultation, particularly with the public sector unions, and particularly as seen in the top-down introduction of the public sector reforms of the 1980s. Such a focus also saw a broader notion of citizen, which some feared had been reduced to a ‘customer’ or ‘client’ dealing with state agencies primarily through market mechanisms. A focus on public service and its values was a rhetorical theme through the years of Labour government. Public broadcasting (in this case Television New Zealand) was ostensibly refocused towards public service away from its purely commercial focus, with a draft Charter introduced in September 2000, although as some would subsequently note, little seemed to change. In November 2000, a State Sector Standard Board was established, as its name suggests, to set state sector standards – including ‘values’ and expectations’, with representation from leading public and private sector executives and senior union officials. It submitted its first report in January of the next year, and the government responded in March with the Statement of Government Expectations of the State Sector and the Statement of Commitment by the Government to the State Sector. Expectations included ‘integrity,’ ‘responsibility’ both personal, professional and with regard to consequences; ‘respect’ to people as citizens and clients; a performance orientation’, accountability; requirements to be a good employer; and a ‘whole of government commitment.’ The importance of free, frank and comprehensive advice was reiterated. In September 2000, citing the existence of ‘isolated little empires’ among agencies, the short-term focus and lack of long-term planning, and the lack of ‘clarity and consistency in the relationship between the Government and its agencies’, the government announced that it would introduce changes to state sector legislation, ultimately introduced in the Public Finance (State Sector Management) Bill (Edwards 2000: 1). The Review of Centre, begun by the government in July 2001, reported in November and noted that reintegrating the public sector and reversing some policy–operations splits might be appropriate, and that the culture and values of the public service needed to be strengthened. With the proviso that a degree of fatigue with restructuring existed, there was some reintegration of agencies, and some reversals of the policy–operations split. The Ministry of Housing, renamed the Department of Building and Housing, was expanded in November 2004 to incorporate building, housing regulation and dispute resolution, and some building and related functions were transferred from other government agencies. The Ministry of Social Development was formed through the merger of Ministry of Social Policy and the Department of Work and Income in October 2001 in the aftermath

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of the WINZ case, as noted. The troubled Department of Child, Youth and Family was also absorbed by the Ministry of Social Development in July 2006, almost seven years after it was separated from the then Department of Social Welfare and established as a stand-alone agency. The Ministry of Education absorbed the Special Education Service. The mid-1990s division of the Department of Justice was somewhat reversed, when the Ministry of Justice reabsorbed the Department of Courts in 2004. Clusters between departments to work on policy areas for which there are shared responsibilities were also formed; an example being the Social Services Cluster, which worked with departments focused on social issues, including housing, social development and child, youth and family services. E-government measures have been explicitly aimed at joining-up government, as noted in Chapter 7, but skepticism remains to how successful these efforts have been. In December 2001 the Cabinet announced that Departments would need to adopt a more ‘strategic’ and ‘outcomes-focused’ approach to management and reporting, echoing comments already made over a number of years. This was known as the ‘Managing for Outcomes’ approach. It claimed this approach would ‘lead to a more responsive public service that is better able to identify the interventions that best contribute to the outcomes the government is seeking [and to] better align resources to the most effective and efficient outcomes (Steering Group for the Management of Outcomes Roll-out 2004/(2005) 2003: 3).’ Departments are required to deliver Statements of Intent (SOI) with a medium (three- to five-year) focus, beginning in 2003. Statements of Intent are intended to ‘improve alignment’ with government objectives and the linkage between outputs, outcomes and ‘capability’ – that is, to outline what the department was doing to achieve outcomes. It also specifies how results will be measured, and the ‘capability needed to achieve them’. Statements of Intent include annual statements required under the Public Finance Act. Progress according to expectations is reported in the departmental annual reports. Output Plans, required from 2003, describe the expected outputs and their performance measures with ministers making ‘trade-offs between quantity, quality, timeliness, location and costs of outputs . . . within a given budget (Steering Group for the Management of Outcomes Roll-out 2004/(2005) 2003: 10)’ Managing for Outcomes was possibly a significant departure and seems to be an acceptance of some critiques of original output measures, and of the ambiguous and qualitative nature of governmental business – and the need for judgment and ‘storytelling’ in the evaluation of departmental performance. However, the issue still remains how the performance of departments can be ‘fairly’ held to account for achievement of outcomes when according to the earlier output doctrine, they may have little control over their achievement (Baehler 2003)5 – with the issue of another layer of accountability and measurement, and the continued, albeit somewhat modified, and problematic use of output measurement and how it is linked to outcomes. Managing for Outcomes also introduced further layers of jargon – ‘impact’: the ‘contribution made to an outcome’ by outputs and/or actions; and ‘objectives’: a recognition that not all outputs were focused on achieving outcomes but were still important ‘in shaping some . . . results based planning (SSC 2005a: 14).’ ‘Results’ was now seen to include impacts, objectives and outcomes. Crown Entities were incorporated into the outcomes framework with the Crown Entities Act, including the requirement to produce SOIs (SSC 2005a). One perhaps feels for a minister faced with an array of once largely synonymous but now possibly different

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terms, and numerous layers of measurement and evaluation, with a variety of different qualitative and quantitative measures. Work on the outcomes framework continues. Figure 9.1 outlines examples of outputs, outcomes and results, drawing from the New Zealand Treasury. The State Sector Amendment Act 2004 and the Crown Entity Act 2004 saw further reintegration of the state sector. The State Services Commissioner was given the power to review machinery of government issues across much of the state sector, as well as to providing overall guidance and leadership. It also provided for some roll-back of the ‘letmanagers-manage’ ethos of decentralization, with chief executives required to co-operate with the commissioner, while the Commissioner was also empowered to issue ‘guidance’ to chief executives of public service departments. The Development Goals – ‘aspirations for how the State Service will be arranged and perform’ – were launched in March 2005. These set out yet another set of ‘apple-pie’ ambitions and a ‘whole-of-government’ approach, with the overarching goal being a ‘system of world class professional State Services serving the government of the day and meeting the needs of New Zealand’. This included the state being the ‘employer of choice’; building a strong culture of ‘constant learning’; ‘(electronically) networked state services’; ‘co-ordinated state agencies’; and ‘accessible’ and ‘trusted’ state services (SSC 2005b). The Goals had a three- to five-year focus. In late 2007, an ‘all-of-government brand identity’ came into effect for the state services to: ● ● ●

improve the visibility and accessibility of government services through increased public recognition to provide more unity across diverse agencies to improve the transparency of government funding of services.

However, it remains to be seen how a brand will achieve all this. Monitoring by the central agencies of the core and wider state sector has been progressively strengthened since the late 1990s, with the SSC able to set minimum standards across much of the wider state sector from 2005.6 Central monitoring of information and communication technology (ICT) was strengthened after a number of spectacular computer failures and the 2000 ministerial inquiry into the Police INCIS computer failure, with Central Agencies from 2001 responsible for approving and monitoring ‘large’ computer projects, as well as setting standards for procurement and management of projects. Such control was a significant reassertion of control and a limit on chief executive ‘freedom to manage’ – although in some cases the new requirements were ignored (Gauld and Goldfinch 2006). The Crown Entities Act 2004 also changed the status of some Crown Entities – making more explicit the degree of independence from direct ministerial control and reasserting central guidance in a number of cases, including giving the government an ability to direct some agencies to comply with ‘whole of government requirements’ and ‘have regard to’ or ‘give effect to’ government policies, depending on the degree of independence. Agencies are also required to consult with and have ‘regard to’ the recommendations of the SSC on executive salaries and conditions. Reporting requirement for the wider state sector was also strengthened and standardized with the legislative changes, with the move to the ‘outcomes’ framework, as noted. Governance structures for the different classes of Crown Entities were also

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Government’s vision An inclusive New Zealand where all people enjoy the opportunity to fulfil their potential, prosper and participate in the social, economic, political and cultural life of their communities and nation. Government’s priorities (themes) Economic transformation

Families - young and old

National identity

The Treasury’s vision A world-class Treasury working for higher living standards for New Zealanders. The Treasury’s goal The Treasury is a highly engaged, relevant and respected economic and financial policy advisor, making an impact on the issues that are important to New Zealand’s economic performance and State sector performance.

The Treasury’s outcomes Improving New Zealand’s economic performance

A stable and sustainable macroeconomic environment

Improving State sector performance

The Treasury brings an overall perspective that includes analysis on institutions, macroeconomics and microeconomics and how it all fits together, to advise on what really matters for New Zealand’s economic performance – with a principal focus on sustainable growth.

The Treasury provides advice on macroeconomic conditions and fiscal policy and on the performance of monetary and financial policy. We also provide timely and accurate economic and fiscal data through economic and fiscal forecasts and reporting through the Crown accounts.

The Treasury provides advice to ensure the work of the State sector represents value for money in achieving the Government’s aims and objectives. This includes advice on policy and regulatory settings, the public management system, and the management, and return on, the Crown’s assets and liabilities.

Central agency leadership Together with the Department of the Prime Minister and Cabinet and the State Services Commission, the Treasury has an interest in a high-performing, trusted and accessible State sector. Central agencies have a key leadership role to play in aligning the activities of the State services with Government’s priorities and making sure that Ministers receive the best possible advice before making decisions.

Results focus Through the results focus we are being more explicit about the areas we think will make the greatest contribution to achieving our outcomes, the impact we are seeking in these areas, and what we are going to do to achieve this.

Treasury output classes • Budget management • Debt and related financial asset management • Economic and fiscal forecasting and reporting

• Policy advice: regulation and Vote purchase, ownership and performance issues • Policy advice: tax CCMAU – Crown company monitoring advice to:

• Management of claims against the Crown, contractual liabilities and Crown properties

• The Minister for Crown Research Institutes

• Policy advice: financial and public sector management systems

• The Minister for State-Owned Enterprises and other Responsible Ministers

• Policy advice: general economic and fiscal strategies • Policy advice: ownership and performance of Crown companies and financial institutions

Source:

Treasury (2007).

Figure 9.1

Examples of outputs, results and outcomes from the Treasury

standardized. In 2006 various reviews led to further central control over ICT and capital asset management. The Central Agencies were reviewed and greater efforts made to co-ordinate their efforts, including the creation of a Central Agencies Group and a Deputy Secretary

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Central Agencies in the Treasury. Through 2006/07 the Central Agencies worked together to strengthen the performance and monitoring of Crown Entities. Improvements aimed for include: ● ● ● ●

effective ministerial engagement with Crown Entities responsive boards giving effect to and reflecting government policy monitoring departments providing timely and effective advice to responsible ministers on Crown Entity performance central agencies supporting ministers, monitoring departments and boards of Crown Entities to attain higher levels of performance (Treasury 2007: 18).

According to the Treasury, such issues were still being worked on at the time of writing. The 2004 legislative changes allowed the SSC to develop and apply standards of ‘integrity and conduct’ across agencies under its mandate. This was released in 2007 (SSC 2007b). In 2007 a survey was carried out to examine trust and integrity issues in employees within the state sector, finding that there was limited awareness of integrity training, some reporting of misconduct and some concerns over ethical practices in the state sector, suggesting there was still some work to be done, although New Zealand generally did better than the US benchmark (SSC and Ethics Resource Center 2007). Privatization – both in its speed and comprehensiveness – was often seen as a key factor of the New Zealand model. While Labour rhetoric before and after the 1999 election was against further assets sales, the government has not been adverse to sales when it suited, with the sale of the SOE mapping organization Terralink in 2001, after it went into receivership. There has been some reinvestment in trading assets by the government, however. Possibly one of the more significant was the government approval of the establishment of the state-owned savings bank, Kiwibank, in February 2001, with its first branch opening a year later. Somewhat ironically, Kiwibank is under the aegis of the SOE, New Zealand Post, which had previously operated the Post Office Savings Bank privatized in 1989. Kiwibank has run a modest profit since inception. After the impending collapse of the formerly government-owned airline Air New Zealand in 2001, the New Zealand government made a significant capital injection into the business in October 2001. The government continued with a majority ownership, at around 77 percent by late 2007, and expressed reluctance to sell. The increasing value of the airline saw paper capital gains for the government reach three-quarters of a $NZbillion by early 2007, and since Air New Zealand had also maintained profitability since 2002, significant dividends were paid to the government – suggesting the investment decision was a wise (or lucky) one. The poor performance of the privatized railways and considerable under-investment in rolling stock and infrastructure, saw the government purchase the rail network for the nominal sum of $NZ1. The government faced the prospect of investment of millions to rebuild the rail system after a decade of neglect. In early 2008, the government was negotiating to buy the rest of the rail system from Toll NZ, after disagreement over the price of access to the government-owned rail track network, with the government seeking to charge Toll the full price of maintaining the rail tracks. On 5 May, a price of $665 million was agreed for the network, with settlement on 30 June 2008. The Labour government also delivered on its promise to remove private prisons, when the Corrections Act 2004 returned the Auckland Remand Prison to public hands.

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Capacity issues were something much discussed before and immediately after the 1999 election, as noted. While staff numbers are a blunt measure of state capacity, employment increased in public service departments under Labour from 1999 to 2005 by 27 percent, compared to 19 percent in the private sector; although employment in the wider state sector grew at much the same rate as the private sector (Treasury 2005b). As at June 2007, the full-time equivalent employment in the public service was 42 047, from 31 587 in 2002 (SSC 2007a). Much of the increase was in front line service staff that had often borne the brunt of the cuts in the 1980s and 1990s. Expansion of the state sector saw the increased use of office space, accounting for almost 40 percent of Wellington rental office space in 2007, compared to 20 percent 20 years before. There was also a move away from temporary staff – short-term contracts being a feature of the hard contractualism of the 1990s – with an increase in permanent staff of 15 percent between 2000 and 2004, and a reduction in temporary staff by a third during the same period (Edlin 2004). A countervailing trend however, is seen in some aspects of E-government, with projected financial benefits often delivered by cuts to staff numbers and front offices (Gauld and Goldfinch 2006). The Treasury in 2007 confirmed a growth in government assets – seen as an outcome of government attempts to increase capacity – but noted there was a lack of visibility in some asset performance over time; some indication of a short-term focus on capital spending; a lack of longer-term management; and poor oversight from the centre (NBR 2007). Despite this capacity building, the New Zealand public sector is not comparatively large, with government spending as percentage of GDP the second lowest in the OECD in 2004 at 34.1 percent of GDP, and the tax take the seventh lowest (Statistics New Zealand 2008).7 Conclusion: pendulum swings and the ‘new’ New Zealand model? Debate continues as to whether the changes to the New Zealand public sector since 1999 amount to a substantial reversal of earlier NPM reforms; and whether one can even speak of what Chapman and Duncan (2007: 17) ask is a ‘new’ New Zealand model. Significant changes include the reversal of a number of policy–operations splits; and the reassertion of ‘whole of government approaches’, central control and common standards across much of the wider state sector – although some earlier efforts regarding integration of the public sector were made in the 1990s. Together these could be seen as reining in some of managerialism’s ‘let managers manage’. Also significant is the rejection of the anti-statist ideology of the 1980s and 1990s, re-nationalizations, and a generally more positive view of public servants. Some of the contestability and market replicating mechanisms in university and research funding were being revised into 2008. Some of the managerialism of the 1990s has been softened, with a focus on values, culture and the particular demands of the public sector (as opposed to a generalized management skill). This includes specially focused postgraduate training for public servants in the government-subsidized School of Government. In health, medical doctors, sometimes treated as a rent-seeking interest group that needed to be kept in line by professional managers in the worst excesses of the 1990s, were being re-engaged in management of the health system in early 2008. Indeed, there seems to be a return to almost Weberian notions of professionalism, competency and public service as a vocation – concepts seen as decidedly quaint in the early 1990s when the job of a state employee became largely to fulfill contractual obligations.

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It may be, of course, that the changes outlined are simply attention paid to the some of the unintended (although sometimes predicted) outcomes of the reforms – they are an adaption of NPM rather than a reversal of it. Indeed, they might be cosmetic or rhetorical changes only, with the NPM core largely untouched. Along these lines, Ellwood and Newberry (2007: 566) argue that rules such as fiscal responsibility, accrual accounting and the capital charge reasserted in recent legislation, have institutionalized particular neo-liberal principles – particularly pro-privatization ones, because: The more detailed accrual accounting requirements, especially revaluation requirements and the imposition of charges based on the revalued assets (depreciation and capital charge) which load the full-costs required for comparison with potential alternative suppliers [and] are used in the various review processes, are biased against continued public sector provision, and thus support and encourage business activity by suggesting public sector services are inefficient . . . which advance[s] the privatization aspect of the neo-liberal agenda.

It may be that structures of NPM are so deeply embedded that even attempts to rectify problems will be undermined. As Gregory (2006) argues, attempts to increase collaborative efforts between agencies run up against existing logics still contained in the output and purchasing system, while tensions remain between output and outcomes measurement. Appropriations (the authority given by Parliament to incur expenses or capital expenditure) are made to outputs, not to outcomes. Attempts following the Review of Centre to create ‘super-networks’ among agencies were generally not successful, and the current broader focus on inter-agency collaboration: depends on high levels of mutual trust, shared risk-taking and good will among the top executives and managers of governmental agencies . . . But because the public finance statute continues to underpin a performance regime based on the need to produce outputs it is hard to see how exhortations to collaborate will override incentives which discourage . . . such action. Collaboration, like ‘coordination’, is more easily spoken of than achieved . . . (Gregory 2006: 144)

Just as genetic codes give potentialities however, not deterministic outcomes – rules do the same. They can be overridden and reinterpreted by people; they can be ignored or worked around, and they can be treated as elements in decision-making – not decision themselves. Genuine political will and the professionalism and judgment of top public servants may be as important as legislative constraints, and it remains to be seen how successful these collaborative efforts and genuine change to the public sector management systems will be. Similarly, even if it is true that fiscal and other rules bias a pro-privatization agenda, this has not always led to privatizations – with instead a number of nationalizations. Strong rhetoric towards rebuilding state capacity seems to be reflected in actual growth of the public sector. On other hand, despite the strong statements made against the use of private sector consultants by Labour before and immediately after the election of 1999, they remained a key part of the public sector and their use may have increased during the mid-2000s (New Zealand Herald 2007). Contracting out of other services remains a well-used option, as does public–private partnerships. In sum, Labour’s nine-year tenure saw modification of the NPM model of the 1980s and 1990s, although questions remain whether change is something beyond rhetorical.

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Future prospects In February 2008, the Treasury Secretary John Whitehead was talking of improving performance, the need for ‘performance incentives,’ putting performance in a ‘longerterm frame’ and giving ‘greater effect to a whole-of-government collective approach, and leadership within the public sector’. He noted that the public service still has some ‘service quality problems [and] we all have a responsibility to achieve a better performance and value for money in service provision (NZPA 2008). However, as New Zealand progressed through the 2008 election year, the National opposition, well ahead in the polls, was revisiting the language of the 1990s. The public sector had become too large it was claimed, and it was promised to cap the number of those in the core public service at 36 000. Further privatization and public–private partnerships in schools and hospitals were being discussed, and opposition to the buy-back of the New Zealand railways was made known – although further assets sales were discounted by National leader John Key within the first term of an elected National government. A change of government at the election might yet see another pendulum swing – one back towards the neo-liberal heart of NPM. Notes 1. Thanks to Bob Gregory and the SSC for their comments and suggestions. Omissions and errors are mine. 2. The government must maintain the confidence of Parliament to continue in power. Both the Prime Minister and Cabinet are creatures of convention, while the Executive Council has an existence provided under Letters Patent. The Governor-General is de facto head of state and represents the Queen of New Zealand, Elizabeth II, when she is not present in New Zealand. 3. Such as Crown Agents, Autonomous Crown Entities and Independent Crown Entities. 4. As such, it ranks higher than 96 percent of the world. 5. Although CEs are accountable for the process of achieving outcomes – ‘managing’ – rather than necessarily the outcomes themselves. 6. Excluded are some Crown Entities, SOEs, Offices of Parliament, the Reserve Bank, the other four nonpublic service departments (Police, Defence, Security Intelligence, Office of the Clerk) and Trusts and other agencies listed on the fourth Schedule of the Public Finance Act. 7. The NZ economy has performed well since 1999, with the longest period of uninterrupted economic growth – consistently above the OECD average – since the early 1960s, unemployment amongst the lowest in the OECD, and a consistent fiscal surplus. Much of this success may be due to unusually high export commodity prices, rather than the management of the state sector, however.

References Baehler, K. (2003), ‘Managing for outcomes: accountability and thrust’, Australian Journal of Public Administration, 62: 23–34. Boston, J. and C. Eichbaum (2005), ‘State sector reform and renewal in New Zealand: lessons for governance’, paper read at Repositioning of Public Governance – Global Experiences and Challenges, sponsored by the Department of Political Science, National Taiwan University, the Civil Services Development Institute and the NSFG Foundation Taipei, Taiwan, 18–19 November. Boston, J., J. Martin, J. Pallot and P. Walsh (1996), Public Management: The New Zealand Model, Auckland: Oxford University Press. Cabinet (2003), Cabinet Minute (03) 21/3E, 23 June. Chapman, J. and G. Duncan (2007), ‘Is there now a new “New Zealand” model?’, Public Management Review, 9: 1–25. Edlin, B. (2004), ‘State sector expansion as government “thinks big”’, The Independent Business Weekly, 14 July. (From Factiva, no page number.) Edwards, B. (2000), ‘WINZ inquiry just the start’, The Evening Post, 15 February: 1. Ellwood, S. and S. Newberry (2007), ‘Public sector accrual accounting: institutionalising neo-liberal principles’, Accounting, Auditing & Accountability Journal, 20: 549–73. Gauld, R. (2003), Continuity Amid Chaos, Dunedin: University Of Otago Press. Gauld, R. and S.F. Goldfinch (2006), Dangerous Enthusiasms: E-government, Computer Failure and Information System Development, Dunedin: Otago University Press.

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Goldfinch, S.F. (1998), ‘Evaluating public sector reform in New Zealand: have the benefits been oversold?’, Asian Journal of Public Administration, 20: 203–32. Goldfinch, S.F. (2000), Remaking New Zealand and Australian Economic Policy. Ideas, Institutions, and Policy Communities, Washington, DC: Georgetown University Press. Goldfinch, S.F. and D. Malpass (2007), ‘The Polish shipyard: myth, economic history and economic policy reform in New Zealand’, Australian Journal of Politics and History, 53: 119–38. Goldfinch, S.F. and B. Roper (1993), ‘Treasury’s role in state policy formation during the post-war era’, in B. Roper and C. Rudd (eds), State and economy in New Zealand, Auckland: Oxford University Press. Gregory, R. (1998), ‘Country report. A New Zealand tragedy: problems of political responsibility’, Governance, 11: 231–40. Gregory, R. (2004), ‘Hollowing and hardening New Zealand’s homely state’, in P. Dibben, G. Wood and I. Roper (eds), Contesting Public Sector Reforms: Critical Perspectives; International Debates, Basingstoke: Palgrave Macmillan. Gregory, R. (2006), ‘Theoretical faith and practical works: de-autonomizing and joining-up in the New Zealand state sector’, in T. Christensen and P. Lægreid (eds) Autonomy and Regulation: Coping with Agencies in the Modern State, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 137–61. Kaufmann, D., A. Kraay and M. Mastruzzi (2007), ‘Governance matters VI: governance indicators for 1996–(2006)’, World Bank Policy Research Working Paper No. 4280, available at SSRN: http://ssrn.com/ abstract=999979 Mascarenhas, R. (1990), ‘Reform of the public service in Australia and New Zealand’, Governance, 3: 75–95. National Business Review (NBR) (2007), ‘Review slams spending as state sector balloons’, National BusinessReview, 26 January: no page number, accessed from http://www.factiva.com. New Zealand Herald (2007), ‘$180m – the price of advice’, The New Zealand Herald 8 April: no page number, accessed from http://www.factiva.com. NZPA (2008), ‘In pursuit of State Sector Performance’, media release – NZPA 28 February: no page number. Electronic media release. Osborne, D. and T. Gaebler (1992), Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector, Reading, MA: Addison-Wesley. Roberts, V. (2005), ‘The origin of Victoria’s public sector reforms: policy transfer from New Zealand?’, MA thesis, Department of Political Science, University of Canterbury, Christchurch. State Service Commission (SSC) and Ethics Resource Center (2007), New Zealand State Services Integrity and Conduct Survey 07 Summary of Findings, Wellington: SSC. State Service Commission (SSC) (2005a), Planning and Managing for Results, Wellington: The Treasury, SSC and DPMC. State Service Commission (SSC) (2005b), ‘Development goals for the State Services Commission’, March, Available from www.ssc.govt.nz/display/document.asp?DocID=5439. State Service Commission (SSC) (2007a), Human Resource Capability Survey of Public Sector Departments as at 30 June (2007), Wellington: SSC. State Service Commission (SSC) (2007b), State Services Commission Annual Report (2007), for the year ended 30 June (2007), Wellington: New Zealand Government. Statistics New Zealand (2008), Government Spending and Receipts, available from www.stats.govt.nz/productsand-services/nz-in-the-oecd/government-spending-receipts.htm. Steering Group for the Managing of Outcomes Roll-out 2004/(2005), (2003), Managing for Outcomes. Guidance for Departments, September, Steering Group for the Managing of Outcomes Roll-out 2004/(2005). Treasury (2005a), A Guide to the Public Finance Act, Wellington: The Treasury. Treasury (2005b), Sustaining Growth. Briefing to the Incoming Government Treasury, Wellington: The Treasury. Treasury (2007), The Treasury Annual Report. For the Year Ended June (2007), Wellington: The Treasury Wallis, J. (2002), ‘Evaluating organizational leadership in the New Zealand public sector in the aftermath of the Rankin judgement’, International Review of Administrative Sciences, 68: 61–72. Wallis, J. and B. Dollery (2001), ‘Government, failure, social capital and the appropriateness of the NZ model for public sector reform in developing countries’, World Development, 245: 263.

10 New public management in Australia Marian Simms

Why does public sector reform matter? It is argued in this chapter that a proper understanding of the role and place of the public sector has been an integral part of the democratization process in the Westminster democracies and will continue to be so linked. Modern Westminster theory has long recognized that the public service must not only be independent, but also be seen to be free of ‘political interest’ and ‘patronage’, and be ‘subordinate’ to the minister (who in turn is responsible to the Parliament). This chapter references the Northcote–Trevelyan Report (1854) as a foundational document for Westminster-style parliamentary systems. Needless to say times have changed over the past 150 years, yet like a Constitution the report still figures in current academic and political debates and was recently utilised by the former British Prime Minister Mr Tony Blair (2004) to defend a plan of action making the public sector more ‘relevant’ by removing any job security and by championing public service partnerships with the private, local and voluntary sectors in a problemsolving approach. What Blair fails to note is the close historic and ideological connection between liberal democracy and the desire and need to promote a Civil Service open to all talents. The ideas of meritocracy and equality of opportunity also flourished as part of the climate of liberalism. As a foundational document the report functions as an ideal type and was not fully implemented in Britain until 1914 (the Home Office and the Foreign Office being the main laggards here). The war saw the implementation of competitive examinations for entry-level positions for ‘bright young men’ and for promotion based on ‘merit’ not seniority. Overall the Report displayed a keen eye for the human resource style problems of favouritism based on ‘family or political interest’, and the perception of favouritism as creating ‘jealousy’ and poor morale in a department. The Northcote–Trevelyan Report remains a core reference point for modern public service values, creating and sanctifying the core values of neutrality, integrity and efficiency. In fact the report places a premium on ‘efficiency’ in its service to ministers, as such, the core values were to be ‘independence’, ‘character’ and ‘ability’. The report also noted that the public service’s role was to ‘advise, assist and at times, influence’. This was always contextualized by the public service department’s ‘subordinate’ role to the responsible Ministers.1 These values provide a touchstone upon which to evaluate the strengths and the weaknesses of the post-1970s wave of reforms, in spite of the fact that Australia updated its public sector largely by reference to North American models, where under the US Constitution senior appointments were always party political, and local and even statelevel officials often elected. Largely because of the influence of the USA, politicization of the public service has been considerably greater in Australia than in other Westminster democracies such as New Zealand. Australian policy-makers have chosen to emphasize the need for public sector ‘responsiveness’ to government – which comes in under the ‘subordination’ clauses of Northcote–Trevelyan. 173

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New Public Management has had three main faces: the removal of permanency in top public service jobs (the human resources face); the devolution of decision-making to agency heads (the bureaucratic face); and, overall the shrinking size of government (the governance face), often accompanied by re-regulation. R.A.W. Rhodes has summarized NPM as follows: A focus on management, not policy, and on performance appraisal and efficiency; the disaggregation of public bureaucracies into agencies which deal with each other on a user-pay basis; the use of quasi-markets and contracting out to foster competition; cost cutting; and a style of management which emphasizes, amongst other things, output targets, limited term contracts, monetary incentives, and the freedom to manage. (Rhodes 1991: 1)

These features are necessarily interconnected. For example, it may be argued that decentralized decision-making was followed precisely because it was more efficient and also likely to change the previous power culture of the traditional civil public service. It would have lasting effects and create a permanent new governance culture, whereby ‘Once ministers had assumed greater political control over the apparatus of the state, the structures were in place to devolve authority from central departments to departments and then down the line of departmental hierarchies’ (Aucoin 1997: 189). Major challenges to the traditional Westminster model of the public service have come from three interrelated sources: globalization (including of ideas); the immense growth in the size and complexity of government: and the large-scale employment of women. One response to increased complexity has been the move towards re-regulation and the search for greater governmental control over the public sector and citizens more generally. On the other side of the ledger, the demands for formal, written accountability by leaders and those in positions of trust has been considerable. The stock market crashes of the 1980s prompted an avalanche of new rules and procedures. In the political arena financial disclosures were another by-product. The employment of women has had profound – and still to be charted – impacts upon politics and public administration. Whereas, the twoperson political career was the norm, that is, one partner, normally the wife, would act as the unpaid electorate secretary), increasingly both partners are active in public life. Normally they have similar politics, but there are colourful exceptions, for example, Ms Mary Matalin and Mr James Carville in the USA, who were on opposing sides during the 1992 Presidential election campaign. The gender dimension has become complicated by the growth of a specialized caste of political advisers, and a noticeable increase in bitter partisanship. For example, once upon a time some ministers would consciously hire people of the opposite political persuasion as advisers, not to bring in information from ‘the other side’ but to provide a useful counterbalance, or reality check. Originally in Great Britain and the colonies the idea that the public service should be free from corruption and based on principles of ‘merit’ was seen as radical. Concern about corruption in public appointments – mainly nepotism – had four main wellsprings. First, good old British pragmatism meant that common sense dictated that ineffectual ‘time-servers’ should not be on the public purse.2 Second, to the frugal eyes and ears of British leader William Gladstone, who inaugurated the first major review of Her Majesty’s Civil Service, such waste was ‘ungodly’. Third, to others, especially the emerging Utilitarians, such Jeremy Bentham, poor and inadequate appointments were a huge

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barrier to modern efficiency. Fourth, there was pent-up popular demand created by emerging democratization, and the spread of public education meant that well-qualified people were not only available, but also demanding a say in public policy. Popular demand was also to be a factor in the implementation of Civil Service reforms. Australia is an interesting case for analysis because it does form part of the so-called Anglo-American group of countries that introduced major public sector reforms starting in the 1970s (see Larbi 1999). As well as indicating the times when Australia was part of a broad trend, this chapter also highlights important differences. The differences between Australia and the other group members have generally related to the impact of Australian federalism. Australia was federated as a nation in 1901 and comprises six states and two internal territories. The six original states had previously adopted the Northcote–Trevelyan principles, and other aspects of ministerial appointments and parliamentary responsibility, while also experimenting with governance ideas from other systems. Such ideas were mainly concerned with electoral models, for example, the use of referenda, and elected upper houses. Under the Constitution financial matters, such as taxation are divided between the two levels of government (see Commonwealth of Australia 1901). Welfare and infrastructure matters, such as education, health, transport and communication, are directly governed by the states, or through local government, which is a creature of the states. Historically, state differences in standards of living have been partially ironed out by institutional innovations, notably the Commonwealth Grants Commission established in the 1930s. The principle of fiscal equalization reflected ideas of equity as well as strong states rights activism by the smaller states. More recently, the Council of Australian Governments (COAG) has provided an arena for government leaders to hammer out consensus. The Ministerial Councils have also involved New Zealand representatives. Consequently, states and territories have seen both policy diffusion, and reaction against innovation, or policy individualism as the balance between co-operation and independence has changed over time. This chapter utilizes both models of policy diffusion, and independence, to track new public management (NPM) policies through the Australian federation. In this chapter NPM is defined as having three main goals or aspirations; financial responsibility, economic growth and performance, and accountability. Policies have focused on the size of the public sector, including issues such as the size of the public debt, the size and efficiency of the public service, and the overall accountability of the public service to the government of the day. Accountability, following the World Bank model, is also used as a synonym for financial transparency. New public management has significant international currency and is one policy area where Australia, along with New Zealand, is promoted as an international leader. This chapter fleshes out the meaning of NPM and chart its course through the Australian federation. The first section examines the political and intellectual precursors. The second, sets out the stages of reform, arguing that it fanned out from the heart of government through to relations with citizens, and then into relations between the tiers of government. The movement was a top-down process rather than driven by the grass roots. The third section lays out the Australian debates over NPM. While these debates were often adversarial, and derivative of British debates, the role of practitioners in these debates was significant. Key practitioners, such as John Patterson at the state level, and

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Michael Keating at the Commonwealth level indicate the activist role of senior bureaucrats in promoting reform. The final section assesses the overall impact of NPM and asks whether it is simply old wine in new bottles and whether it still falls within a broadly defined Westminster paradigm. The precursors A pivotal Australian source book is the Report of the Royal Commission into Australian Government Administration (RCAGA), chaired by Dr H.C. Coombs, a public servant of high standing who had worked under governments of different political colours. Consequently, the Commission was thereafter known as the ‘Coombs’ Inquiry. Commissioned in 1974 by the reforming Labor government under Prime Minister E.G. Whitlam, the inquiry possessed a broad brief. Underpinning Whitlam’s initiative was a frustration with the existing public service and constitutional arrangements more generally, which were seen as ossified and protecting existing networks and hierarchies. The RCAGA’s analysis of the Commonwealth public service and its agencies was brutal. It told stories of rule-bound organizations which stifled talent and were active barriers to change. In particular, from a human capital perspective, the formal division of the public service into the administrative/clerical and clerical assistant/secretarial divisions potentially was seen as wasteful and rigid. The Report (RCASA 1976) recommended greater management accountability with greater alignment between performance goals and budgetary processes. One of the ‘brains’ involved in Whitlam’s reforms more generally was Dr Peter Wilenski, who after the fall of the Whitlam government in November 1975 went to work for the New South Wales (NSW) state Labor government of Neville Wran. Wilenski subsequently chaired the review of New South Wales government administration which reported in 1977. The ‘Wilenski’ report (Directions for Change) (Wilenski, 1977) called for root and branch changes, and most significantly called for a North American style Senior Executive Service (SES). The SES was finally established in the 1980s under a centre-right coalition government of Premier Nicholas Greiner, and connotes the key elements of NPM, notably the centrality of ‘management’ rather than administration, the decentralization of financial decision-making (with strict monetary controls) and the importance of ‘efficiency’ as well as ‘effectiveness’. The Greiner government went on to privatize the state bank and corporatize areas such as railways and electricity (Smith 2003: 55). Thus the role of human agency in implementing change was crucial, whether it was the role of intellectuals such as Wilenski or political leaders such as Whitlam, Wran and Greiner. The first faltering steps in the introduction of NPM provide a classic case study in innovation. One salient theory is Pusey’s (1991) idea of the bureaucrat as ideologue; he examined the views of senior Australian government officials and argued that ‘economic rationalism’, or neo-liberalism as it is more often called, influenced their thinking. Key elements were a belief in the virtue of economic ‘efficiency’ and its concomitant, that the private sector was the bearer of market rationality. Hence, by implication, the public sector with its non-market goals such as social consensus was ‘irrational’. Policy implications for the government were to prove considerable. Government was to be downsized via the strategies of privatization, and corporatization. Public choice ideals such as the

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purchaser – provider split were to make the public sector more transparent, accountable and efficient. ‘Efficiency’ has nineteenth-century liberal roots and resurfaces from time to time, often as part of an individualist moment. The pre-eminence of efficiency for the past 25 years was foretold by Aaron Wildavsky: ‘If economic efficiency turns out to be the one true religion, maybe it is because its prophets could so easily conquer’ (Wildavsky 1966: 308, quoted in Schachter 2007: 800). The role of political parties was important, although political parties have an ambiguous role in liberalism. On the one hand, they created government and, on the other, partisan excesses could lead to patronage and nepotism. Shifts in party policy were important too. In the lead-up to the 1983 election, for example, the federal Labor Party has been characterized as one of the best prepared oppositions, with a blue print for government. Shadow ministers were determined to avoid the so-called excesses and short-lived character of the Whitlam Labor government (1972–75). A new Labor administration would keep its head down, be prudent and efficient, while reforming basic institutional arrangements especially those dealing with industrial relations (see ALP 1982b; Kelly 1994). Borrowing from the British and Swedish models, Labor when in opposition in the early 1980s had developed a formal agreement between the Labor Party and the peak union body the Australian Council of Trade Unions (ACTU). In terms of governance models, the Australian Labor Party (ALP) (1982a) embraced a commitment to strong cabinet government, bolstered by cabinet committees to ensure orderly processes of government. The ALP was also committed to reforming the public service which had been wracked with industrial turmoil during the Fraser (coalition government) years (1975–83). After its election in March 1983 the Labor government released the White Paper, Reforming the Australian Public Service, which went further than many traditional Labor supporters envisaged, by challenging the norms of the career service (see Commonwealth of Australia Government 1983). Papers on public sector reorganization – the ‘super departments’ – and privatization, were subsequently released, and mostly implemented. After its election in March 1996 the coalition government set up a far-reaching inquiry into the pace of microeconomic reform with the view to abolish ‘roadblocks’ in the way of further reform (Costello 1996). The resultant report targeted intergovernmental relations, local government and health/human services as unreformed areas that were inhibiting efficiency gains (Productivity Commission 1996). A third element is the role of federal system in the diffusion of policy innovations. The NSW reforms of the Wran and Greiner governments were taken up by the other States with varying degrees of enthusiasm and success. As in New South Wales, changes were occurring irrespective of the complexion of the party in office. In Victoria, for example, the Labor government of John Cain (1982–90) introduced the SES, and the centre-right Jeffrey Kennett government (1992–90) introduced sweeping changes to the size and shape of the state public sector (Alford and O’Neill 1994). A Labor government in Queensland introduced the SES in 1991. The introduction of contract employment in place of lifelong careers for public servants was pivotal to the Kennett reforms in Victoria. Kennett also ‘reduced’ the size of the public service and privatized considerable proportions of the public sector (Economou et al. 2003: 179). A combination of factors was at work elsewhere in the federation. In the Western

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Australian (WA) case, for example, successive Labor governments under Premiers Brian Burke and Peter Dowding (1983–1990) developed very close relations with business and the tendency to avoid traditional red tape, which were justified by reference to the corporatization of government that was occurring in the other states (Stone 1997). Then, the centre-right Liberal Party government of Richard Court (1993–2001) borrowed existing models from the other Australian states, and ostensibly used free-market ideology to differentiate his team from the previous Labor administrations that was associated with the development of WA Inc. – a close partnership between big government and big business – and its collapse into corruption scandals (Moon and Sharman 2003: 205). Stages of reform At the national level, reform has occurred in overlapping clusters around three issues: (1) the relations between elected governments and the public service (see Keating 1999); (2) the relations between governments and the community (see Yeatman 1998); and (3) the relations between the commonwealth and the state governments (see Productivity Commission 1996). This chapter takes an institutional approach in tracking change; as compared with functional models adopted elsewhere (for example, Yesilkagit and De Vries 2004). It is argued here that NPM has changed power relations particularly those between ministers and senior public servants, and also those between the government (including public servants) and actual and potential welfare claimants. Reading the works of the designers of the new policies (see Keating 1999) confirms this interpretation. The Australian case, therefore, is particularly interesting precisely because so many Table 10.1

Stages of NPM: Australia

Party government

Ministers and bureaucrats

Whitlam (ALP) 1972–75 Hawke (ALP) 1983–91

Coombs Inquiry

Government and citizens

Creation of SES ‘Super’ ministries Performance pay

Keating (ALP) 1991–96 Howard (coalition) 1996–2007

Removal of ‘merit’ requirement for departmental secretaries

Rudd (ALP) 2007–

Reaffirming role of the Public Service Commission Cutting number of ministerial advisers

Commonwealth and states

New federalism

White Paper on unemployment The ‘active’ worker Creation of Centrelink (joined-up government) Mutual obligation for all transfer payments (except middle class welfare) Reviewing middle-class welfare

Creation of COAG national competition policy Further development of competition policy

Working through and strengthening COAG

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senior policy-makers have outlined their motivations and philosophies, and their writings supplement ministerial statements and party policy documents. From the perspective of many academics (for a summary see Mulgan 1995), however, NPM has been depicted as providing challenges to traditional Westminster governance norms. First, the creation of the Commonwealth Senior Executive Service (SES) and then further reforms concerning methods of appointment and performance pay started during the Hawke years with the establishment of the SES in 1984. This was part and parcel of the desire to create a more ‘responsive’ public service (Keating 1999). Over time senior appointment matters were removed from the independent Public Service Commission (formerly the Public Service Board) and into the hands of the government of the day (see Keating 1999; Podger 2007). Podger (2007: 131) notes that while ‘merit’ is essential for appointments below the level of departmental secretary, it is not essential for departmental secretaries themselves under the terms of the Public Service Act 1999.3 Performance pay has proven a controversial issue with only very brave souls genuinely believing that it promotes frank and fearless advice by public service managers. Many express skepticism in private.4 An overlapping trend was the emergence of significant numbers of ministerial advisers often complicating relationships with government departments (see Tiernan 2007). In particular legislative changes passed in 1999 meant that the Prime Minister alone was responsible for ministerial advisers as opposed to the previous situation where the Public Service Commission made determinations. Their role has complicated traditional Westminster models of accountability as it is not clear who is responsible to whom and for what. The new rubric was ‘letting managers manage’. In human resource terms this meant that management skills became defined as ‘generic’ and superseded the traditional distinctions between administration, clerical and professional work. Of course, NPM reforms occurred hard on the heels of technological and sociological changes, notably the development of the microprocessor and the large scale movement of educated women into the workforce. Australian studies have indicated that so-called management ideology created new stressors as work roles were ‘deskilled, reskilled, or upgraded, sometimes simultaneously’ (Niaconachie 2003: 221). NPM expected managers to develop the types of skills often associated with successful sales workers. Often workers were ill-trained or even unsuited for such work. Others felt being super communicators and people workers undercut the knowledge-based training they had gained in their specialized fields. Mirroring this, the Public Service Commission perspective (Ives 1995: 197) saw three themes were important, ‘performance’, ‘leadership’ and ‘continuous improvement’. Sub-themes were ‘flexibility’ and ‘mobility’ (Ives 1995: 198). These were a far cry from the traditional Westminster perspective of job security and policy ‘incrementalism’ (see Parker 1948). In fiscal terms, the development of program budgeting was both part of the ‘managers who manage’ approach which dovetailed with the new political responsiveness requirement. Program budgeting was designed to provide better information to senior policymakers and politicians alike. It was a logical concomitant of creating senior managers rather than neutral administrators. Some have emphasized the cost saving aspect (see Wanna 1997). Certainly some of the reforms were based on the drive for fiscal efficiency. An

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important early example was the Hawke government’s creation of 18 ‘super’ ministries in a major reorganization of the Australian public service in 1987 (Rogers 1995: 129). The changes were consistent with the government’s Financial Management Improvement Plan (FMIP) which was designed ‘to devolve authority and create greater budgetary flexibility’ (quoted in Rogers 1995: 129), and to create a distinction between ‘outputs’ (managers as responsible) and ‘outcomes’ (politicians as responsible). The next stage was the Management Advisory Board/Management Improvement Advisory Committee (MAB-MIAC) strategy paper. The second strand, the changing relations between the government and the community, has two aspects: reforming relations with the public, who were recast as clients, and enabling better community consultation. The aims of public services reforms around client services are summarized by one of their framers (Keating 1999: 41) as follows: devolution within agencies so that staff are given greater discretion in determining the amount and type of service which would best meet the needs of individual clients; and greater client choice from among a group of different providers, as in the case of employment services, so that clients can choose the provider who is best able to respond to their particular need.

Keating (1999: 41) argued that such separation between ‘policy’ and ‘administration’ could best occur in fields where policy was ‘settled’. Others have convincingly argued that such restructures have excluded advocacy groups from policy-making (Muetzelfeldt 2000: 78). The theory behind such moves is two-fold, the purchaser–provider model which introduces the market model to the public sector, and the related idea of ‘steering not rowing’ made famous by the widely read US study by Osbourne and Gabler (1992).5 The White Paper on unemployment set out the terms of a new ‘social contract’ between the government and Australia’s long-term unemployed. Journalist Paul Kelly (1994: xxiii) notes: ‘The grim reality in 1993 was that 350,000 people had been jobless for more than a year and that recovery would by-pass most of the long-term jobless.’ The White Paper incorporated the new ‘Working Nation’ strategy that was officially launched in Prime Minister Paul Keating’s May 1994 Economic Statement. The new policy was to encourage the unemployed to seek work and to accept any ‘reasonable’ job (Harris 2007: 550). With the election of a coalition government in 1996 the activities of the Commonwealth Employment Service (CES), which had been corporatized under Labor, were privatized. The CES was replaced with a government agency called Employment National, and its service activities were transferred to the Job Network, comprising several hundred community, government and private providers. The shift was from a ‘social security’ approach under the post-Second World War welfare state to a mutual obligation model (see Goodin 2000; Macintyre 1998; Yeatman 1998).6 The community consultation aspect was partly ideologically driven and partly a reflection of symbolic politics, whereby governments are driven to maximize voting support by appearing to be concerned with public opinion and local concerns. The community cabinets were famously pioneered by Queensland state Labor Premier Peter Beattie, and were subsequently picked up by state Labor governments in Tasmania and Victoria. Such activities are also defended by public choice writers Thomas Dietz, Elinor Ostrom and Paul C. Stern (Dietz et al. 2003: 912):

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Delegating authority . . . does not always resolve conflicts satisfactorily, so governments are experimenting with various governance approaches to complement managerial ones. They range from ballots and polls, where engagement is passive and participants interact minimally, to adversarial processes that allow parties to redress grievances through formal legal procedures, to various experiments with intense interaction and deliberation aimed at negotiating decisions or allowing parties in potential conflict to provide structured input to them through participatory processes.

The reform of intergovernmental relations has been correctly cast as the last frontier of microeconomic reform (Productivity Commission 1996). There was concern that the ‘performance gaps’ identified in the management of infrastructure – largely a state/ territory/local government responsibility – were holding Australia back and did not meet the world’s best practice for efficiency. Vertical fiscal imbalance was, again, identified as a concern, and problems were seen in how to assess efficiency in social policy areas like ‘hospitals, school(s), policing, corrective services’ (Productivity Commission 1996: 164). Overall the ‘Stock take’ report (Productivity Commission 1996) argued that the new federalism and competition reforms introduced by the Hawke and Keating governments in the early 1990s were a good start but had not gone far enough. The Keating government had established the Inquiry into National Competition Policy in 1992, and the subsequent ‘Hilmer’ Report’s findings were adopted by the new Council of Australian Governments (COAG) in 1994. The upshot was that the activities of all Australian governments, national and state, were to be subject to the same anti-monopoly thrust as the private sector – unless specifically exempted (for example, natural monopolies). The policy was designed to increase productivity and growth. Australian debates The idea of NPM as transmitted via policy diffusion is contested. It has been suggested that economic forces, specifically the pace of globalization, which was requiring greater efficiency from national economies in order to compete on the wider global stage, was an important factor. Hence it has been argued that the changed economic context dictated the broad response. Others, such as Michael Pusey (1991) and Christopher Pollitt (1993), have maintained that economic cutbacks, privatization and corporatization were dictated by right-wing ideology. Neither explanation – globalization or conservative ideology – covers the fact that the processes were embraced by the Anglo-American democracies to a greater extent than Europe and Scandinavia. The Australia debate over ‘managerialism’ peaked in the late 1980s and early 1990s. Critics such as Mark Considine (1988) tended to run the line that it was created by ideologues. Others, notably John Paterson (1988), suggested that the changes were necessary, overdue and were related to the traditional public administration concern with ‘efficiency’. According to Owen Hughes (2007: 331) the language was crucial. ‘Managerialism’ itself was a term that emerged in the UK in the late 1980s, and was then picked up in Australia in the 1990s, and generally had negative connotations, suggesting that managers had inappropriately replaced administrators. The term ‘manager’ also referred to someone with generic rather than area-specific skills and also implied a ‘dumbing down’ of public policy, as well as a focus on cutting back rather than providing good policy. The fact that in some Australian jurisdictions managers received performance pay based partly on economic efficiency was cited as evidence of managerialism being a negative trend.

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New public management (NPM) was the term preferred by supporters and/or those scholars adopting a more neutral stance towards the trend. Ironically the debates over managerialism tended to die down around the time the approach had spread throughout the federation, and across non-public areas such as the university and welfare sectors. The ability to look back on an era to classify and analyse is a sure sign that the process has come to an end – so says Mulgan (1995: 6), paraphrasing Hegel’s ‘Minerva’s Owl only flies at dusk’. The jury is still out over whether devolution (the Australian term) or decentralization (the British term) has achieved better management. Aucoin (1997: 192) cites the report of the Task Force on Management Improvement as indicating mixed views on the part of senior Australian public servants, with equal numbers saying it had not achieved the desired outcomes and others calling for further devolution, both relating to the independence of agency heads, and the greater independence of those further down the line within agencies (Campbell and Halligan 1992). An early critic, R.A.W. Rhodes (1992: 75) argued that devolution had opened up a coordination nightmare, creating ‘fragmentation’ and ‘neglecting’ inter-agency co-ordination. He predicted that co-ordination would be the next mantra and there would be a new need for governance structures to respond to major challenges. New public management had thrown out the public service baby – the public servant as savant – with the bath water. While in New Zealand the discussion about the inter-agency co-ordination problem has been extremely public, involving public servants, official discussion papers and academic articles (Advisory Group on the Review of the Centre 2001; Norman, 2002) the Australian discussion has been more muted and likely to occur behind closed doors. Common procurement and whole of agency purchasing contract strategies remain largely in the private domain of behind the scenes public service action. Another concern has been the shift from citizen to client or customer that has taken place with public service terminology. Rhodes (1992: 74) suggests that the new approach has created ‘large scale bureaucracies and red tape’ in spite of, or perhaps because of, the shift in language. In the Australian case, relatively new agencies such as the Office of the Ombudsman have been bedeviled with problems of seemingly callous and inappropriate treatment of individuals treated as customers under a one-size fits all policy. Problems involved cancer patients being treated as able-bodied persons under the semi-privatized Jobs Network (The Canberra Times 20 October 2007: 1). In the Australian case there has been less evident concern over the implications of recasting citizens as customers for the health of the democracy. Rare exceptions are Yeatman (1990) and Muetzelfeldt (2000); whereas in the USA major concerns are expressed about the impact of NPM on ‘substantive democracy’ (Box et al. 2001: 608), who claim that NPM has created a ‘hyper-rationalized world in which democracy is equated with consumer choice’ (Box et al. 2001: 615). There is debate too over whether NPM was designed to cut costs. Wanna (1997: 150–51) has argued that the budgetary streamlining undertaken by most Organisation for Economic Co-operation and Development (OECD) countries – including Australia – post-1987 (Wall Street Crash) was not necessarily part of a NPM strategy. In some cases, for example Canada, grand strategic reforms backfired. Yet in the Australian case, it is arguable that plans such as the Financial Management Improvement Plan (FMIP) undertaken in the early 1990s were seen as the next phase of the devolutionary strategies started in the mid-1980s. Spencer Zifcak (1995: 13) argues that they were separate but operated in tandem. Mulgan’s (1995: 6) analysis is similar:

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The period since the end of the first Hawke Government in 1983 has seen considerable changes in the principles and processes of public administration . . . The end of permanent heads and the Public Service Board, the establishment of the Senior Executive Service (SES), the Financial Management Improvement Plan (FMIP), program budgeting, program evaluation and performance indicators, user-pays and contracting out, the creation of ‘mega-departments’ such as DEET and DFAT, commercialization of government departments and privatization of government assets – all add to a thorough shake up of the public service.

Fine-tuning occurred in the early 1990s with the creation of the Management Advisory Board (MAB) and the Management Improvement Advisory Committee (MIAC). These refining tools were espoused by those in the senior echelons of the bureaucracy, such as Michael Keating, who wished to continue the process of rationalization and cost-cutting. There is evidence that the Finance Department was imbued with a belief in the superior efficiency of the private sector. Government, although with a clearly separate and important role, had to become more like the private sector (Keating and Homes 1990). Keating’s (1999) view was that the public sector must be accountable to the government of the day by being ‘responsive’ to its policy levers. Overarching accountability was achieved via the ballot box with the electorate deciding whether to re-elect a government. There is the sense too in Keating’s work that responsibility had fiscal and political meanings. He took pains to interpret NPM in terms of the Westminster tradition of responsible government rather than as a public choice challenge. On the welfare side, reforms – such as the establishment of Centrelink – were presented as providing one stop shopping for welfare consumers, encompassing the unemployed, the chronically ill and the elderly, or as a refinement to the traditional welfare state. The norms of competition and contestability were also applied to the public service itself. Not only did the sheer numbers of ministerial advisers grow throughout the reform period (since 1983) but also their roles at times challenged that of the public service. According to some studies (Maley 2002: 83–88; Tiernan 2007: 24) Ministerial staff were involved in policy steering often as an alternative voice to the public service. Famously, during the Hawke years, one ministerial resignation was prompted by the inappropriate nature of ministerial staff advice and lack of proper record-keeping – Mrs Kelly’s infamous ‘whiteboard’ case where financial appropriations, which disproportionally favoured ALP seats, were decided on a whiteboard. Others, notably Dr Peter Shergold (2003: 4, cited in Tiernan 2007: 25), the Secretary of the Department of Prime Minister and Cabinet, argue that the roles are distinct and complementary. Academics (Yeatman 1990) have thus referred to the 1980s as the decade of the contract. The contract now extended to workplace relations with the introduction by Prime Minister Paul Keating of enterprise bargaining, involving contracts between all employees and employers. Unions could still be involved and employees could opt for the unionnegotiated collective agreement. The justification was based on foresight, namely, that a future coalition government would move away from centralized wage-fixing – it was inevitable – hence the Labor government would ‘fire proof’ a better version. Interpreting NPM in its broadest sense, it is clear that while the Hawke–Keating governments (1983–96) had shifted the style, size and direction of the public sector, in terms of privatizations, budgetary reforms, public service reorganization and the like, the Howard coalition governments (1996–) had continued the reshaping in radical ways. The partial privatization of Telstra, the main telecommunications provider was

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important, but it was in the social policy domain that radical reforms have occurred. Building on Centrelink as the policy core, the Howard government introduced ‘workfor-the dole’ schemes to develop a sense of mutual responsibility or a contract between citizens and government. Of greater significance was the establishment of JobNet in 1998 whereby employment services were contracted out to the private sector, which in turn had contracts with its client or customers. Then, soon after gaining control of the Senate in July 2005, the Howard coalition government introduced controversial workplace relations reform – the ‘Work Choices’ scheme – individual-level workplace contracts with few benefits. Designed to increase workplace flexibility the scheme – in its original form – gave few guarantees to workers. In the November 2007 election the public’s disaffection with Work Choices as well as the widespread perception that the coalition government was out of touch with the concerns of voters led to a landslide against it, and the election of the self-consciously modern and reforming Labor government of Kevin Rudd. The post-NPM world There is some evidence that NPM, through its multiple agencies, created co-ordination problems, generating political disaffection and electoral backlash by consumers and that intergovernmental relations have become ‘politicized’ (Rhodes 1992: 75). Without explicitly embracing kinder and gentler Third Way type policies, Labor parties in Australia and New Zealand have opted for better services and a ‘whole of government’ approach. New Zealand speaks of the search for ‘effectiveness’ as well as ‘efficiency’, ‘improved service quality’ and a ‘shared services approach’ (New Zealand Government 2007: 5). Australian State Labor governments strive to promote civic engagement and regional Cabinet meetings. The national Labor government (2007–) has indicated it will adopt community Cabinet meetings, in order to re-engage with the community. Informal networks of advice and policy sharing have sprung up involving Australia and New Zealand. Opinion polls suggest that Australian citizens want better services in education, health and welfare rather than taxation cuts. These data suggest that the public choice model of liberalism has gone too far for the Australian public. In academic circles, the renewed interest in social network theory (see Agranoff 2006) as a better way to understand the nature of bureaucratic culture, rather than simple one-by-one exchange relations is another possible indication of changing climate. Above all the idea of developing an overarching model of ‘collaboration’ (O’Leary et al. 2006) suggests the pendulum has swung away from a simple public choice model of incentives, towards a more community-oriented one. The striving for efficiency of NPM and its search for public service responsiveness are firmly within the broad Westminster tradition of Northcote–Trevelyan. More questionable, however, are NPM’s recasting of the citizen as a client or customer, and the patronage problems caused by the proliferation of ministerial advisers. Notes 1. In nineteenth- and early twentieth-century British and colonial practice, newly appointed ministers were required to face a by-election to ensure that the electors supported their new role. It was an early form of anti-party hopping legislation. See Simms (2006: chap. 2).

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2. In the post-Napoleonic era it was often the case that the ‘infirm’ younger sons of departmental chiefs had monopolized placements as junior clerks or ‘copiers’ in the permanent Civil Service 3. Australian practice differs from New Zealand and the UK, which have retained more independent processes for top appointments. 4. Based on private comments from former members of the Commonwealth SES. 5. See for example the special Australian public administration conference around that theme, in 1994. See ‘Reinventing government’ (1994). 6. In 1997 the ‘work for the dole’ scheme was introduced.

References Advisory Group on the Review of the Centre (2001), Report of the Advisory Group on the Review of the Centre: Presented to the Minister of State Services and Finance, November, Wellington: The Treasury. Agranoff, R. (2006), ‘Inside collaborative networks: ten lessons for public managers’, Public Administration Review, 66: 56–65. Alford, J. and D. O’Neill (1994), The Contract State: Public Management and the Kennett Government, Geelong: Deakin University Press. Aucoin, P. (1997), ‘Decentralization and public management reform’, in P. Weller, H. Bakvis and R.A.W. Rhodes (eds), The Hollow Crown: Counterveiling Trends in Core Executives, London: Macmillan Press. Australian Labor Party (ALP) (1982a), Labor and the Quality of Government, Canberra: ALP. Australian Labor Party (ALP) (1982b), A Statement of Accord with the Australian Council of Trade Unions, Canberra: ALP Blair, T. (2004), ‘Speech on modernization of the civil service’, available at: www.number-10.gov.uk, accessed 11 November 2007. Box, R.C., G.S. Marshall, B.J. Reed and C.M. Reed (2001), ‘New public management and substantive democracy’, Public Administration Review, 61: 608–19. Campbell, C. and J. Halligan (1992), Political Leadership in an Age of Constraint: Bureaucratic Politics Under Hawke and Keating, Sydney: Allen and Unwin. Commonwealth of Australia (1901), Constitution. Commonwealth of Australia (1983), Reforming the Australian Public Service: A Statement of the Government’s Intentions, Canberra: Australian Government Publishing Service. Considine, M. (1988), ‘The corporate management framework as administrative science: a critique’, Australian Journal of Public Administration, 47: 4–18. Costello, P. (1996), Letter to Chair of Industry Commission, printed as attachment A2, available at: www. pc.gov.au/ic/research/independent/stocktake/finalreport, accessed 11 November 2007. Dietz, T., E. Ostrom and P. Stern (2003), ‘The struggle to govern the commons’, Science, 302: 907–12. Economou, N., B. Costar and P. Strangio (2003), ‘Victoria’, in J. Moon and C. Sharman (eds), Australian Politics and Government. The Commonwealth, the States and the Territories, Cambridge: Cambridge University Press, pp. 154–83. Goodin, R.E. (2002), ‘Structures of mutual obligation’, Journal of Social Policy, 32 (4): 579–96. Harris, T. (2007), ‘Social security’, in B. Galligan and W. Roberts (eds), The Oxford Companion to Australian Politics, South Melbourne: Oxford University Press, pp. 549–52. Hughes, O. (2007), ‘Managerialism’, in B. Galligan and W. Roberts (eds), The Oxford Companion to Australian Politics, South Melbourne: Oxford University Press, p. 331. Ives, D. (1995), ‘The selection and development of senior administrators and managers’, Australian Journal of Public Administration, 54 (4): 584–92. Keating, M. (1999), ‘The public service: independence, responsibility and responsiveness’, Australian Journal of Public Administration, 58 (1): 39–47. Keating, M. and M. Holmes (1990), ‘Australia’s budgetary and financial management reforms’, Governance, 49 (1): 168–85. Kelly, P. (1994), The End of Certainty: Power, Politics & Business in Australia, new edn, Sydney: George Allen and Unwin. Larbi, G.A. (1999), Public Sector Reform and Crisis-Ridden States, Geneva: United Nations Research Institute for Social Development (UNRISD). Macintyre, C. (1998), ‘From entitlement to obligation in the Australian welfare state’, Australian Journal of Social Issues, 34: 103–19. Maley, M. (2002), ‘Too many or too few? The increase in federal ministerial advisers 1972–1999’, Australian Journal of Public Administration, 59: 48–53. Moon, J. and C. Sharman (2003), ‘Western Australia’, in J. Moon and C. Sharman (eds), Australian Politics and Government. The Commonwealth, the States and the Territories, Cambridge: Cambridge University Press, pp. 183–208.

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Mulgan, R. (1995), ‘Academics, public servants and managerialism’, The Canberra Bulletin of Public Administration, 78: 6–13. Muetzelfeldt, M. (2000), ‘The changing state and changing citizenship’, in A. Vandenberg (ed.), Citizenship and Democracy in a Global Era, New York: St. Martin’s Press, pp. 77–93. New Zealand Government (2007), Shared Services in the Public Sector, available at: www.ssc.govt.nz/cabpaper-shared-services-public-sector, accessed 11 November 2007. Niaconachie, G. (2003), ‘From bureaucrat to professional: work in the commonwealth employment service’, Journal of Industrial Relations, 35: 221–41. Norman, R. (2002), ‘At the centre or in control? Central agencies in search of new roles in a decentralised public service’, unpublished paper. Northcote, S. and C. Trevelyan (1854), Report on the Organisation of the Permanent Civil Service, submitted to Parliament February. Parliamentary Paper 1713. O’Leary, R., C. Gerard and L.B. Bingham (2006), ‘Introduction to the symposium on collaborative public management’, Public Administration Review, December: 6–9. Osbourne, D. and T. Gaebler (1992), Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector, New York: Plume. Parker, R.S. (1948), Public Service Recruitment in Australia, Melbourne: Melbourne University Press. Paterson, J. (1988), ‘A managerialist strikes back’, Australian Journal of Public Administration, 47: 287–95. Pollitt, C. (1993), Managerialism and the Public Services: Cuts or Cultural Change in the 1990s, Oxford and London: Basil Blackwell. Podger, A. (2007), ‘What really happens: departmental secretary appointments, contracts and performance pay in the Australian public service’, The Australian Journal of Public Administration, 66: 131–47. Productivity Commission (1996), ‘Stock take of Progress in Microeconomic Reform’, available at: http://www. pc.gov.au/ic/research/independent/stocktake/finalreport, accessed 11 November 2007. Pusey, M. (19991), Economic Rationalism in Australia: A Nation-Building State Changes its Mind, Cambridge: Cambridge University Press. ‘Reinventing government’ (1994), special issue of the Canberra Bulletin of Public Administration, 77: 43–114. Rhodes, R.A.W. (1991), ‘Introduction to the new public management’, Public Administration: An International Quarterly, 69: 1–3. Rhodes, R.A.W. (1992), ‘The Europeanisation of sub-central government: the case of the United Kingdom’, in C. Fletcher and C. Walsh (eds) The Impact of Federalism on Metropolitan Strategies in Australia, Canberra: Federalism Research Centre, pp. 72–89. Rogers, V. (1995), ‘Review of Patrick Weller, John Forster & Glyn Davis (eds), Reforming the Public Service: Lessons from Recent Experience’, Canberra Bulletin of Public Administration, 78: 129–31. Royal Commission into Australian Government Administration (RCAGA) (1976), Report, 5 vols, Canberra: Australian Government Publishing Service. Schachter, H.L. (2007), ‘Does Frederick Taylor’s ghost still haunt the halls of government? A look at the concept of governmental efficiency in our time’, Public Administration Review, 67: 800–810. Shergold, P. (2003), ‘Two cheers for the bureaucracy: public service, political advice and network governance’, APSC Seminar, Canberra, 13 June. Simms, M. (2006), From the Hustings to Harbour Views: Electoral Institutions in New South Wales, 1856–2006, Sydney: UNSW Press. Smith, R. (2003), ‘New South Wales’, in J. Moon and C. Sharman (eds), Australian Politics and Government. The Commonwealth, the States and the Territories, Cambridge: Cambridge University Press. Stone, B. (1997), ‘Taking ‘WA Inc’ seriously: an analysis of the idea and its application to Western Australian politics’, Australian Journal of Public Administration, 56: 71–81. Tiernan, A. (2007), Power without Responsibility, Sydney: University of NSW Press and ANZSOG. Wanna, J. (1997), ‘Managing budgets’, in P. Weller, H. Bakvis and R.A.W. Rhodes (eds), The Hollow Crown: Counterveiling Trends in Core Executives, London: Macmillan Press. Wilenski, P. (1977), Directions for Change: Review of the NSW Public Sector, Sydney: Government Printer. Yeatman, A. (1990), Bureaucrats, Technocrats, Femocrats: Essays on the Contemporary Australian State, Sydney: Allen and Unwin. Yeatman, A. (1998), ‘Interpreting contemporary contractualism’, in M. Dean and B. Hindess (eds), Governing Australia: Studies in Contemporary Rationalities of Government, Melbourne: Cambridge University Press. Yesilkagit, K. and J. De Vries (2004), ‘Reform styles of political and administrative elites in majoritarian and consensus democracies: public management in New Zealand and the Netherlands’, Public Administration: An International Quarterly, 82: 951–74. Zifcak, S. (1995), ‘Administrative reform in Whitehall and Canberra’, The Canberra Bulletin of Public Administration, 78: 13–16.

11 The challenge of renewing governance in Canada Stephen Tomblin

Canada is federal system, containing ten provinces and three territories, with a written constitution, and considerable decentralized power. A constitutional monarchy, it exhibits the characteristics of a Westminster system, with an elected House of Representatives, an appointed Senate, a Prime Minister-led Cabinet and conventions of ministerial responsibility. Since the 1990s Canada has faced a number of new policy and public policy challenges. With globalization, declining citizen trust, a national unity crisis and increasing public debt, there has been pressure by critics to rethink state–society relationships and values. However, partly constrained by the demands of its decentralized federalism and strong institutional limits, it has lacked the widespread NPM-inspired and other public sector reform found in the ‘sister’ Westminster systems of the UK, Australia and New Zealand. Indeed, while other countries are responding by developing more cohesive national policies and frameworks, provincial and the national governments in Canada have failed to either achieve a consensus, or co-ordinate policy responses. It appears that in the Canadian political game, decentralization and incrementalism are more likely responses to new interdependent problems than ‘big bang’ changes. What sets Canada somewhat apart from other countries influenced by new public management (NPM), particularly New Zealand and the UK, is its history of provincebuilding and decentralization. Such structures have exhibited remarkable resilience in the face of challenge. As argued by Cairns, critics of federalism underestimated the defenders of the status quo. Passivity, indifference, or the absence of strong opposition from their environment may be all that provincial governments need in order to thrive and grow. The significant question after all, is the survival of provincial governments, not of provincial societies, and it is not self-evident that the existing and support of the latter is necessary to the functioning of the aggrandisement of the former. Their sources of survival, renewal, and vitality may well lie within themselves and in their capacity to mould their environment in accordance with their own governmental purposes (Cairns 1988: 145). The rise of a regionalized party system, and reliance on intergovernmental mechanisms and processes made it easier for political elites to control the public agenda, and the pace and direction of reform. Indeed, these tendencies have only strengthened in recent years. With the abandonment of national policies in the early 1980s, rise of free trade, and more regionalized party structure, rise of cities and municipalities into the intergovernmental mix, institutional-political traditions have become even more competitive, decentralized and complicated (see Bradford 1998; Young and Leuprecht, 2006). The 1990s were a period of NPM expansion and numerous NPM commissioned federal-provincial-municipal studies appeared to launch new ideas, frame questions, reduce and build new partnerships, but in a way that reflected the needs and priorities of each government and the diverse audiences they played for. There were also unilateral cuts in federal transfers that were justified as being necessary and inevitable in a new 187

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era. These were not appreciated or welcomed by the provinces, nor did municipalities appreciate the provinces cutting of funds and downloading responsibility and blame. All of this helped to intensify territorial-ideological conflicts among provinces and regional parties. This lack of consensus made it more difficult to steer the ship in a common direction. For example, in the mid-1990s there were major cuts in medical schools, nursing training and tax relief, and strategies designed to roll back the role of the welfare state. It was all justified by NPM but both levels of government try to avoid the blame and public backlash of a public health crisis. In a competitive and territorially fragmented political system nothing was inevitable, and supporters of NPM were not only divided but also forced to compete with other embedded frameworks and priorities, including pan-Canadian, Needs-based Human Resource Strategy that was more focused on equity as opposed to efficiency problems. Canada was not Britain, Australia, or New Zealand. There were clear winners and losers in the struggle to promote NPM, and the combination of poor provinces, and supporters of a complex, interconnected welfare state helped to challenge and engage NPM assumptions with alternative agendas of resistance. In the health policy field, especially, defenders of the old regime were very effective in employing NPM techniques of framing (evidence-based, measuring outcomes such as waiting lists) in a way that actually helped to defend against future cuts to medicare or bio-medical interests/institutions. Ironically, the end result has been compromise, pragmatism and more confusion over accountability. In the late 1990s and the twenty-first century, both the left and right have tried to put money back into medical training, public sector maintenance, recruitment and capacity-building in an attempt a strike a new balance among citizen rights, provincial rights, greater economic efficiency and the federal safety net. There are a couple of reasons for the lack of change. First, part of the reason for the lack of different response may be the product of culture and different perceptions Canadians have of themselves and the context around them. For example, in the late 1990s, Canadian citizens turned their attention to common health issues, especially medicare, and there was much public opinion pressure across the country to reinvest in public health services. In that policy field, at least, privatization and the efficiency objective remained unpopular. Second, institutions matter when it comes to reform or lack thereof and the extent to which the combination of the Cabinet-parliamentary system and the rise of executive federalism complicated the task of reaching a consensus, mobilizing public support, promoting policy learning and building NPM capacity. Within such a compartmentalized and competitive institutional context, there were few opportunities or incentives to reinforce common NPM values, objectives and agendas either across jurisdictions or policy fields. Nor was there a common database linking NPM experiments across jurisdictions and policy fields to properly analyse different outcomes. National government reinvented New public management offers a comprehensive theoretical framework and vision for defining problems and implementing solutions across old lines, institutions and cultures. These reforms are designed to rethink ideas, institutions and interests associated with the old regime, and especially the role of the state. Regime changes are not normally smooth processes and do not occur unless there is a perceived crisis. Despite common challenges

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with economic globalization and social pluralism, Canada never fully embraced NPM ideas, processes or mechanisms in the same way New Zealand, or the UK did (Aucoin 2002; Pal, 2006; Savoie, 1998). Embedded priorities and policy preferences, as well as strategies never radically changed. Rather, new experiments in NPM were deeply embedded within existing competitive national, provincial, municipal structures, processes and cultures. The embedded Canadian policy regime was government-centred and tended to ignore citizen perspectives on the role of the state, needs for different approaches to state– society relations, or delivery systems or measuring outcomes. Since governments dominated these debates, NPM discourse came to reflect the competing needs of state elites who competed in a complex political game. Indeed, the debate over NPM has much in common with other popular policy frameworks that have been prominent in terms of rhetoric, but never went very far in practice. In an era of intense international debate over the merits of NPM, Canada has not witnessed the same intense reaffirmation of the primacy of the marketplace at the expense of the state seen elsewhere. In the area of research and knowledge construction, new initiatives such as the Canadian Health Services Research Foundation, Policy Research Initiative and the Canadian Institutes of Health Research, the federal government has invested heavily in building partnerships within and across both the state and society. These were designed to address problems of efficiency but in a way that did not ignore equity. The strengthening of research capacity has occurred in a bid to strengthen the role of the public sector. In Canada, there was less appetite for reducing the policy advice received by senior bureaucrats, in part, because political executives remained very powerful (see Aucoin 2002: 42–3). In addition, traditions of central bureaucratic and political power, have placed clear limits on the rise of new independent NPM ideas, institutions and networks. The process was guided by a clear set of questions which ensured that federalism, public– private partnership, and improving efficiencies were part of the mix. For example, the process of Program Review was designed to deal with the problem of public debt, but in a way that did not simply embrace NPM doctrine (Aucoin 2002; Pal 2006). It was a clear attempt to construct a made-in-Canada solution that was informed but not dominated by any single NPM vision. Despite much discussion about the inevitable decline of the state, the national government assumed a dominant role in the period of NPM transformation. The federal government began first pushing NPM ideas in 1993 when the new Liberal government undertook a process of Program Review. Part of the exercise was to convince the public and key stakeholders that the system could be sustained and improved. The 1995 federal budget highlighted the lessons of the review and need to address the deficit problem. The review was rather straightforward, lacked ideological conviction, but at the same time, did a good job in asking simple questions and addressing them in a way that could be easily understood by the public. In the context of a new majority government with a divided opposition, and a national unity crisis, ‘Canada’s federal public reform effort was first primarily fiscally driven’ (Pal 2006: 81). In the past, historical policy shifts were normally the product of crisis and consequent commissioned studies. In the 1930s, the depression created a sense of despair and crisis in every jurisdiction and policy field in the country. This made it much easier to build support for the Second National Policy and the Social Welfare State. The call to eliminate public debt in Canada in the 1990s was not interpreted the same way. Canada has tended to rely more upon Royal Commissions

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than political parties in the process of reconstructing new regimes to define problems and implement solutions (Bradford 1998; Tomblin 1995). The job of implementing public sector reform became the responsibility of Treasury Board and the program for carrying out reform was outlined in the Getting Government Right document (Government of Canada 1997). The document highlighted key issues and problems that could be resolved through various NPM initiatives, including strategic planning, alternative service delivery, deregulation and new systems of accountability. It was a clear attempt to gain control over the NPM discourse, describe the framework, but in a way that reflected the needs of the centre. The framing document provided a discussion of key concepts, and new strategies for measuring policy outcomes, while also ensuring higher-quality services and transparency. Emphasis was placed on finding ways of improving standards of public policy with fewer resources. The next important plank in the push to transform and improve problem-solving techniques of the state came in the 2000 report of the Treasury Board called ‘Results for Canadians’ (Aucoin 2002: 43). It was a document that carefully highlighted core values and priorities of public sector reform. These included: making sure that services and programs were focused on citizen needs, promoting core values of public service; bringing about better outcomes (doing more with less), while improving accountability and policy learning. The new report did not highlight the need for structural changes that appeared earlier and the tone of the report was more diplomatic than those found in places like Alberta, Ontario, the UK or New Zealand Rethinking government in Canada was more difficult without a crisis or opportunity to push new frameworks and challenge the status quo. Problems with Health Human Resources (HHR) and pressure to strengthen medicare, for example, resulted in putting resources back into medical and nursing schools, and by 2003, employment in the civil service was now higher than before the cutbacks (see Pal 2006: 84). By 2003, the Treasury Board was no longer keen about structural change and the status quo remained strong. According to Pal (2006: 85): The irony is that in practice, perhaps more at the federal level than at the provincial (certainly in places like Alberta), the bark of NPM may be worse than its bite. The holy grail of Getting Government Right has been pursued for more than a decade, and yet by 2003–2004, there was a sense of malaise in the service. Various scandals and reports kept hitting the news that made it appear that government was not very streamlined, or efficient.

Change or lack of change is greatly influenced by the extent to which there are competing forces in play. In the case of NPM, only the federal government was capable of promoting and implementing a coherent plan for eliminating the public debt. But there were various institutional constraints that made it difficult to build a consensus and coordinate actions across systems. New public management was more a smorgasbord than a well planned meal. To a great extent, the Canadian national political context changed a great deal in the early 1980s with the collapse of the Third National Policy, the appointment of the Macdonald Commission on Free Trade, and the implementation of a new trading agreement with the USA. Faced with a massive debt problem and collapse of the National Energy Program, even the Trudeau administration came to conclude there was no choice but to adopt a new more market-friendly economic approach to governance. Most of these changes, however, came about under the Mulroney Conservatives.

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However, this ‘Reinventing Canada’ based on a common economic-constitutional vision has proven difficult. In the 1990s, governance based on NPM principles has required moving cautiously and finding new ways to effect change through complex and competitive executive-dominated, intergovernmental systems which lack both legitimacy and formal constitutional status. The federal and provincial governments have provided quite different mental maps and models for making sense of the world. While the national state has lost some of its power to set conditions in other provincial jurisdictions, new ways have been found to push NPM remedies and deal with interdependent problems and overlapping responsibilities. However, to complicate matters even further, the federal government itself is not monolithic. There are various departments, agencies, and partnerships with aboriginals, other provinces and municipalities. As with any large organization, the federal government may have departments and partnerships that have quite different agendas, objectives and approaches. While it is clear that NPM has altered processes of public administration at least to some extent in Canada, decentralized patterns of state–society and intergovernmental relations have shaped different policy experiences and pathways. Regionalization means different things in health, municipal restructuring, or economic development. Alberta’s NPM policy-making traditions, for example, are very different from other provinces. Such diversity has worked against the rise of a common NPM vision. While some provinces (Ontario, Alberta) have gone further than the others in incorporating new reforms, certain NPM techniques have proven to be more popular in certain policy fields (infrastructure programs, urban Aboriginal policy, emergency planning) than others. In Alberta, privatization, for example, might be a possible alternative due to market conditions. In Newfoundland and Labrador or other jurisdictions, lack of market capacity might make privatization a non-starter. In the 1990s, only the Ontario and Alberta governments pushed for radical change, and the Harris revolution in Ontario quickly lost momentum. In the case of Alberta, there was a Deficit Elimination Act passed and other policy reforms introduced which indicated the province was more open to fundamental economic restructuring. Ottawa launched a number of significant NPM initiatives. These new priorities were reflected in various federal programs (such as the Program Review in 1994, Getting Government Right in 1997, and changes in fiscal federalism (CHST) in 1995) which saw the rise of a more decentralized form of intergovernmental relations in certain policy fields (health, social welfare and post-secondary education). In an era of free trade and increased global trade, these programs sent a clear message that public debt was a problem and needed to be fixed. The Reform party under the leadership of Preston Manning hoped that he could build coalition support for a new neo-liberal vision and have it institutionalized. However, the party failed to attract sufficient voters in Ontario. Voters in Ontario quickly lost interest in the new NPM wave. In some provinces, especially Alberta and Ontario, debt reduction became seen as a major problem that required dramatic action. In the health field there were various reforms along NPM lines, although, as noted, rhetoric often outstripped reality. Regionalization has often been connected with needsbased planning and targeting resources for communities in decline. The idea was to prevent future health care costs. Yet, regional economic zones and municipal regions (which generally overlap health regions) tend not to share information, and further,

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normally have competitive agendas, values and objectives. Unfortunately, even though these policy experiments are influenced by NPM frameworks, these sub-provincial regions often work at cross-purposes. In practice, popular concepts and theories are often exploited to defend very different ideas, interests and institutions, and this is by no means a new policy trend in Canada. Regionalization has been used to justify privatizing in Alberta, and primary health care reform in Saskatchewan and Newfoundland. Waiting lists have provided a convenient way to sell essential bio-medical services and justify new investments in a way that seemed more evidence-based and less political. While this has helped support the diseased-based bio-medical model, it also had a profound impact on general public debates over other health priorities (such as health promotion). For the most part, public debates over assessing outcomes and needs-based planning have worked, in practice, to limit public participation and to increase experts’ and decision-makers’ control over the public agenda. It has also increased the power and capacity of powerful sectors. For example, cardiac care and knee replacements are more a priority in waiting list reforms (addressed at federal-provincial meetings), despite the fact that mental health has bigger waiting lists. Rhetoric and practice are not always the same thing. In the 1990s, there was more openness to tax reform, deregulation, decentralization, privatization and eliminating debt. Even the New Democratic Party (NDP) government in Saskatchewan began closing rural hospitals and regionalizing health services. With Ontario Premier Harris’s common sense revolution, and the push by Alberta Premier Ralph Klein to eliminate debt, there was more and more focus on tax relief, privatization and decentralization. Seen this way, NPM values and principles helped stimulate new debates and a regionalized party structure. National struggle to reinvent The Canadian reform model never had the kind of political momentum or consensus found in other countries for implementing private-sector decision-making practices. But globalization and debt did create pressure for reform. As outlined by Pal (2006), the Bourgon report (Clerk of the Privy Council and Secretary to Cabinet) argued that critical Canadian policy decisions always start with the assumption that government is important and that policy capacity and systems of delivery need to be upgraded and reformed in a way that will not undermine the state or reinforce private sector action and power. Such a framing document for launching public debate would not have emerged in the USA where there is a weaker commitment to building social policy capacity and no equalization program. In the 1980s and first part of the 1990s, the combination of the fiscal imperative, rise of populism, and globalization helped spark new interest in improving efficiencies, building new partnerships, reforming bureaucracy and managing the public debt. On the other hand, these efforts were complicated by territorial conflicts, a confederal party system, and a highly centralized, executive-dominated political system at both levels of government. Without a crisis, institutional support or strong political leadership to sustain it, the NPM movement produced only a limited, scattered response. Indeed, much of the national literature on NPM reforms describes Canada more as laggard than leader. With key stakeholders, the public and even legislators shut out of most intergovernmental arenas, the combination of a regionalized party structure, and

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interstate federalism has made it difficult to create the necessary institutional or political conditions required for ‘big bang’ regime changes (Aucoin, 2002; Savoie 1998). There have been clear attempts to create greater efficiencies and improve outcomes in a way that better reflect core Canadian values and institutions. In Getting Government Right (Government of Canada 1997) much emphasis was placed by the federal government on improving transparency, increasing effectiveness, experimenting with new forms of delivery, public–private partnerships, and building new linkages across departments and policy fields (Dunn 2002; Pal 2006). It was partly an NPM vision, but also provided more balance between efficiency and equity issues. Jocelyne Bourgon (Clerk of the Privy Council and Secretary to Cabinet) in her 1998 report made the case that government mattered in Canada (Aucoin 2002; Pal 2006). It was her view that most Canadians respect the role of public policy and the need for proper balance and reform. It sent a clear message that in Canada, at least, there would be limits on the pace and direction of NPM reforms. In contrast to such ideational, inspired and blueprint-like approaches particularly found in the New Zealand model, tracing the roots of NPM has been difficult in Canada because the framework and approach emerged gradually and incrementally in different jurisdictions and policy fields. New ways of framing issues, building partnerships or delivering services emerged gradually across three levels of government, and across party lines. Nor were there political champions comparable to Ronald Reagan or Margaret Thatcher at the national level. As indicated by Aucoin, none of the national political leaders was willing to embrace the new powerful neo-conservative vision (2002: 39). In Canada, interest in NPM and the new framework paled in comparison with grand experiments being carried out in places like Britain and New Zealand (Dunn 2002; Savoie 1998). In the UK, ‘over 75% of British government has been transformed into executive agencies’ (Savoie 2003: 58). According to Savoie, Canadian officials looked to Britain for inspiration when they created Special Operating Agencies (SOAs). However, SOAs are only a pale imitation of British executive agencies. In Canada, the agencies remain subordinate to their parent departments. In addition, their heads report to the deputy minister of their department, rather than directly to the minister, as in Britain. Accordingly, the impact on the Civil Service has been insignificant (Savoie 2003: 58). Originally, it was a coalition of poor provinces that was mostly responsible for mobilizing support and embedding social welfare and equalization traditions in Canada. The slogan or pan-Canadian vision used to build national support for change came from the federal Conservative and Liberal parties during a period of two and a half party rule. It was a concept designed to work across boundaries and challenge provincial regimes. Only in Ontario, British Columbia and Alberta had there been much interest in reinventing government and reducing the role of the national state in redistributing wealth. From their perspective at least, there would have been advantages from allowing Ontario, British Columbia and Alberta to become even more independent and autonomous. In the past, these provinces were less supportive of equalization and redistribution. Quebec has been keen about increasing autonomy but never rejected the concepts of equalization and redistribution. Pierre Trudeau’s National Energy Policy and gunslinger style of leadership was based on confronting the forces of regionalism. The gamble never worked, and there emerged an even more regionalized party structure. By design, the pan-Canadian reform model

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was incremental, designed by pragmatic political parties to sustain or invent new state– society forms of integration and interaction and challenges provincialism. In an era of globalization, free trade, Quebec nationalism, Newfoundland nationalism and an era even when political competitors in Ontario were pushing for a region state, NPM evoked quite different political and party responses across the country. Indeed, the panCanadian notion that Canada is more than provincial communities has clearly complicated any calls by reformers to further roll back national state capacity. Within Canada, each provincial system operates in an independent orbit, and provincial governments enjoy a high level of autonomy and fiscal capacity. With a generous system of fiscal equalization across provinces, even poor provinces have incentives and the opportunity to ‘bash’ the federal government and make their own policy choices. Unconditional grants are more common than conditional ones. In such a context, it has been difficult to bring about change, interconnect, and construct common perceptions and solutions across boundaries. Both levels of government in Canada feature a Cabinetparliamentary system. Within these systems, new policy debates, NPM or otherwise, are presented and controlled by the executive branch of government. In such a context, it is really not surprising that there would be different perspectives on the advantages of a new policy framework. While Ontario and Alberta were strong proponents of NPM reforms, other levels of government were less enthusiastic and more reserved. According to Simeon, the Canadian system of province-building, and executive federalism has much in common with sovereign states competing for power in an international system (Simeon 1972). Not surprisingly, intergovernmental relations have become more and more prominent as vehicles for promoting new forms of integration, interaction, policy learning across jurisdictions and policy fields. However, these forums have been criticized for their lack of legitimacy, executive dominance (elitism), lack of effectiveness, territorial competitiveness, and failure to effectively represent citizens and regions of the country at the centre. Since 1957, pan-Canadianism, equalization, medicare and other social welfare initiatives were deliberately constructed to focus more attention on equity issues and the need to promote social cohesion and regional equality. With underdeveloped and ineffective territorial representation at the centre, it has been difficult to achieve a consensus or accommodate NPM changes through informal intergovernmental structures and divided party systems. In a federal system without effective forms of representation – most notably the lack of an elected Senate – it has been difficult to build or embed common national policy visions (such as NPM). The tendency has been for these kinds of debates to take place at intergovernmental forums. With a regionalized party system and ineffective Senate however, Parliament is not well positioned to represent key interests. In the Canadian context, even Margaret Thatcher would find it difficult to sell her message of market efficiency to different audiences. In the past, institutionalists and incrementalists questioned the theoretical assumptions of powerful universal theories (whether modernization or globalization) that the state was impotent and incapable of constructing or implementing new shared mental maps (Cairns 1988; Pierson 1994; Weis 1998). Debates about the inevitability of universal changes have occurred in the past. For example, modernization theorists argued that federalism was obsolete, and it was assumed that centralization was inevitable. In Canada, federalism gained strength despite modernization, and centralization was not

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the only option. The province-building literature focused much attention on provincial state autonomy, political actors, embedded ideas and interests, and how these factors worked against the push for central transformation (Cairns 1988; Tomblin 1995). Within any society there are pressures for change but also historical-institutional constraints that complicate new calls for reinvention. Canada’s culture, political institutions and political legacies have complicated ‘big bang’ changes and the country has a well deserved reputation for pragmatism, fragmented federal structure and con-federal party system. For better or worse, there are few places for staging common debates, bringing different interests together, building new coalitions and reconstructing new visions or agendas. There is no national newspaper for launching new ideas and there is a highly regionalized party structure. Interest groups are highly fragmented and tend to work behind the scenes. Citizens are more spectators than actors. The rhetoric of NPM was sometimes used to smuggle in policies and to externalize blame for their effects. In a complex system of federalism that was very competitive and adversarial, it was remarkable the extent to which both federal and provincial governments went out of their way to exploit NPM techniques of framing issues to change the political discourse. Being more accountable to citizens based on measures of efficiency proved to be a popular notion, somewhat akin to offering support for health promotion in an era when obesity remained a huge health problem. In a period of public cynicism and lack of public trust, there was much incentive to divert attention and create new popular slogans. In politics, avoiding blame and gaining credit are always important considerations. New public management provided ways for politicians to defend themselves and gain more control over expectations and the public agenda. Regionalization, for example, made it easier to devolve power, reduce citizen expectations, but without the politicians being blamed for cutbacks. Federal politicians cut money for services that the provinces would now be more responsible for. The provinces, in turn, were in a position to increase power while downloading the problem to the municipalities and regions. Even in Canada, there were clear advantages in adopting certain NPM practices that either help avoid blame or gain credit. Hence, NPM emerged gradually, incrementally at the national state level, and there was not much passion shown for rethinking the role of the state and bureaucracy except on the right. Rather, the intent has been to upgrade, improve, facilitate institutional change, but in a way that respected diversity. That being said, it was a difficult balancing act even with divided provinces and opposition. However, the combination of federalism with British-style parliamentary government created challenges for both democracy and policy. Within such a context, it has never been easy for politicians hoping to strike a balance in a constantly changing environment, and the best strategy was pragmatism. NPM and intergovernmentalism Since 1867, there have been three national plans to co-ordinate activity across jurisdictional and policy boundaries. Each of these was highly controversial and pitted rich provinces against poor. In more recent times, NPM created other problems for the federal government. Rethinking fiscal federalism and intergovernmental relations based on NPM assumptions, required revisiting old questions, and intellectual fashions. Since multiple nationalisms and historical memories continue to exist in the country, any attempt to change the definition of state responsibilities was bound to inflame old

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divisions and competing identities. Operating in a complex tax-sharing system has never been easy in any event. Nor has the challenge of getting a consensus on how best to share scarce resources. Historically speaking, richer provinces (Alberta, British Columbia and Ontario) have been critical of how Canadian federalism ignores and siphons money out of rich regions and spends them in poor. Now big cities are playing this game. Others are stronger supporters of redistribution but there are different perspectives on whether resources for poor provinces should be based on a per capita basis (Quebec’s position), provincial equality or need. There are also different positions on the increasing costs of health care, and other social policies, and who should pay for these. The massive decline of rural communities in poor provinces has added much fuel to this debate. From their perspective, the prospect of refusing to redistribute wealth will ultimately result in even more population outflow to cities and the West. Within a generous federal system that provides the federal government with ‘spending power’ and other ways for promoting social cohesion and new forms of integration across complex functional-jurisdictional lines, and even despite the challenges of debt and globalization, no federal government has ever shown much enthusiasm for fundamental market reforms. State power and autonomy, whether at the national or provincial level, has always depended on the capacity to defend or promote embedded ideas, interests and institutions against external forces and critics. In the end, power is about effecting outcomes based on controlling public agendas and the way problems are conceptualized and resolved. Power also involves altering or reinforcing embedded structures and processes. New public management debates have been greatly influenced by these other historical federal and economic development debates and traditions. The lack of consensus on what causes development and underdevelopment has complicated the task of mobilizing public and stakeholder support for a framework based on the development experiences of the UK, Australia or New Zealand. Historical-institutional context matters especially in a highly competitive, executive dominated federal system where there is much incentive for bashing other governments, building separate political coalitions and avoiding blame by dividing citizens on a territorial basis. The NPM drive to build more flexible, interactive mechanisms of civil engagement, accountability and transparency certainly produced some positive developments, but it also posed threats for redistributive, federal-parliamentary traditions. From the start, executive federalism and intergovernmentalism has never been democratic and highly combative. Predictably, NPM initiatives in such a forum have always reinforced the politics of territoriality, such as Newfoundland nationalism, Quebec independence, Ontario regionalism and Western alienation. Only territorial differences are institutionalized and part of the Canadian intergovernmental game. As suggested by Simeon, even the language used in these NPM accords has clearly reflected the rhetoric of NPM (Simeon and Nugent 2008). It was an approach to accountability that is focused on results, not who made the unilateral cuts. These cuts in federal transfers for health, welfare and post-secondary education, have had a devastating impact not only on provincial programs, but levels of trust within the federation. These political battles over the fiscal imperative and the push for greater efficiency (not equity) have fuelled much territorial competition among cities, rural districts, and politicians. The fact these agreements are not legally enforceable and tend to be debated behind

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closed doors, clearly undermines public confidence and accountability. Indeed, the fact the Canada Health Act has not been enforced and that provincial compliance has not been reported to Parliament is another sign that the implementation of NPM principles through intergovernmental agreements has not improved transparency or accountability. Such divide and rule strategies have been justified by NPM principles, yet, unfortunately, ‘Few if any principles or rules govern the process. There is little permanency, predictability, or consistency when intergovernmental agreements, many of which are achieved only with great difficulty, can be cancelled or altered unilaterally’ (Simeon and Nugent 2008: 100). Perhaps the biggest challenge with the NPM approach to intergovernmental fiscal relations is that the federal government played a unilateral territorial game in a way that further reinforced old territorial-ideological fault-lines. Since the 1990s, conflicts between rich and poor provinces have increased, in part, because of Ottawa trying to equalize social policy cuts across provinces. Ironically, the combination of the collapse of the fishery and transformation of a generous Unemployment Insurance program and rise of Employment Insurance (based on NPM principles) resulted in much angst and frustration over the collapse and resettling of rural communities. While richer provinces have more poor people than do poorer provinces, the unilateral picking of winners and losers raised old concerns about equalization. On the other hand, increasingly over time, new economic efficiencies meant out-migration. As a result, both rich and poor provinces were frustrated and they squared off in a major battle over equalization and the social welfare state. This battle continues in the twenty-first century. Conclusion In an era of globalization, and public debt, there are calls for inevitable changes based on NPM. In countries like New Zealand and the UK there was much opportunity to renew governance, build coalition support and develop new structures and processes. In Canada, these new innovations operated in a very different political context and advocates of convergence were isolated and lacked the kind of political resources and autonomy that would have made it possible to challenge the status quo. All of this suggests that state institutions and the design of the political game should not be underestimated. New public management reforms in Canada occurred incrementally and they were debated, implemented and influenced by existing structures and processes. In the end, new reform approaches were adopted but these were designed to both improve efficiencies and increase both stakeholder and public support for the status quo. From this perspective, national cohesion and traditions of pan-Canadianism prevented the dismantling of old institutions and handing over of power to the private sector. At the same time, new approaches to delivery, budgets, partnering and governance helped to reverse challenges of debt and underdevelopment. But this was done in a way that reflected provincial diversity. As such, NPM restructuring in Canada was never simply the result of outside pressure and the collapse of the status quo. Rather, the new framework was borrowed to strengthen and reform existing discourses, structures and processes. With the exception of Alberta, incrementalism was the preferred choice, not ‘big bang’ change. The fact that the 1990s was also a period of constitutional malaise, division and discontentment, further complicated the push for radical economic change. Public sector reform has

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occurred on a number of fronts in Canada. But these were generally designed to improve performance, not reinvent government. There have been limited attempts to introduce new market reforms. For the most part, these have tended to be ‘in-shop’ without much public consultation or fanfare. Within the context of federalism and historical support for collectivism, the NPM discourse could not simply be imposed by ideologues. Rather, it had to be massaged and repositioned to reflect traditional Canadian political and institutional realities. In the same way, the federal and provincial governments both operated in a context where there was much division within civil society. Any hope of building new partnerships, or enhancing new movements or networks depended on the language (rhetoric) and restructuring the way groups or their representatives interacted within political-institutional spaces. According to Cohn, the federal government would have reinforced an even more dangerous game if it had simply gone down the path of neo-liberalism. In a federal country with much diversity, there is a strong political tradition of pragmatism. Cohn argues that what was perceived as a neoliberal budget in Quebec ‘helped to boost the sovereigntist vote in the referendum’ (2003: 72). As time passed, the Liberal government managed to strike an appropriate balance between economic and political forces. Viewed this way, the history of NPM management reforms occurred but these were filtered through established formal channels and processes. As a result, NPM techniques, definitions and strategies were the product of Canadian compromise not convergence. It was an approach that did not witness radical transformation. In more recent times, despite the claims of critics, the Canadian state seemed flexible and capable of developing creative responses to new problems. In fact, rather than making further cuts in state subsidies, as witnessed in the health-care system and equalization, there were clear attempts in the late 1990s to rethink government again, but based on more balanced and generous redistributive notions and formulas. Indeed, in recent times of surplus, levels of expenditure (especially in health transfers) have increased substantially. By the early twenty-first century, the national unity crisis had passed, and Canada had not only managed problems of debt, but had one of the best economic records among industrial countries. In the end, the sudden turnaround of oil and gas prices did more to fix the debt problem than did consolidating schools, closing hospitals or opening up private liquor stores based on NPM principles. From a global perspective, Canada’s trade position improved and more people found employment. As for the challenge of public cynicism, new innovations inspired by NPM principles, helped to make decisionmaking and knowledge construction more transparent, community and evidenced based. As illustrated by our analysis, future research on policy change or lack thereof should not ignore or assume political context does not matter. References Aucoin, P. (2002), ‘Beyond the “new” in public management reform in Canada: catching the next wave?’, in C. Dunn (ed.), The Handbook of Canadian Public Administration, Don Mills: Oxford University Press, pp. 37–52. Bradford, N. (1998), Commissioning Ideas: Canadian National Policy Innovation in Comparative Perspective, Toronto: Oxford University Press. Cairns, A. (1988), Constitution, Government and Society, Toronto: McClelland and Stewart. Cohn, D. (2003), ‘Changing conceptions of the public interest’, in L. Trimble and J. Brodie (eds), Reinventing Canada: Politics of the 21st Century, Toronto: Pearson Education Canada. Dunn, C. (ed.) (2002), The Handbook of Canadian Public Administration, Don Mills: Oxford University Press.

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Government of Canada (1997), Getting Government Right, Minister of Public Works and Government Services Canada, Ottawa: Queen’s Printer. Pal, L. (2006), Beyond Policy Analysis: Public Issue Management in Turbulent Times, 3rd edn, Toronto: Nelson. Pierson, P. (1994), Dismantling the Welfare State? Reagan, Thatcher and the Politics of Retrenchment, New York: Cambridge University Press. Savoie, D. (1998), Taking Stock: Assessing Public Sector Reforms, Montreal and Kingston: McGill-Queens University Press. Savoie, D.J. (2003), Breaking the Bargain: Public Servants, Ministers, and Parliament, Toronto: University of Toronto Press. Simeon, R. (1972), Federal-Provincial Diplomacy: The Making of Recent Policy in Canada, Toronto: University of Toronto Press, Introduction. Simeon, R. and A. Nugent (2008), ‘Parliamentary Canada and intergovernmental Canada exploring tensions’, in H. Bakvis and G. Skogstad (eds), Canadian Federalism: Performance, Effectiveness, and Legitimacy, Don Mills, Ont. and Oxford: Oxford University Press, Chapter 5. Tomblin, S. (1995), Ottawa and the Outer Provinces, Toronto: Lorimer Press. Weis, L. (1998), The Myth of the Powerless State, Ithaca, NY: Cornell University Press. Young, R. and C. Leuprecht (eds) (2006), Canada: The State of the Federation 2004: Municipal-FederalProvincial Relations in Canada, Kingston: Institute of Intergovernmental Relations, Queen’s University.

12 The United States: the political context of administrative reform Bert A. Rockman and Thierno Thiam

The political context of administration in the United States of America By design the US system of government is exceedingly convoluted. More than two centuries of practice has produced a system of even greater complexity than perhaps was initially envisioned. This basic reality is fundamental to an appreciation of the political context in which administrative reforms in the USA and the political context are proposed and implemented. The political context of public administration in the USA is characterized structurally by federalism (often of a competitive nature) and the separation of powers (or, more properly, separate institutions often competing for power). Historically, the USA has featured political patronage in the bureaucracy and the late arrival of the Civil Service. In recent decades, strong differences between the political parties especially regarding the distinctive nature of their political constituencies and their ideas about the regulatory role of the state have fed into an increased struggle for political control and direction of the bureaucracy. The combination of the institutional and political factors place great emphasis on this struggle for control of the executive and is reflected in the idea of ‘the administrative presidency’ (Moe, 1985; Nathan, 1983). The ‘administrative presidency’ is a shorthand label for describing efforts on the part of presidents to make all aspects of the executive – people, programs and laws, and finances – exclusively responsive to them. The term was coined by Richard Nathan (1983), an official in the administration of President Richard Nixon, and an astute observer of its strategies and efforts to create an executive more compliant with its interests. An obvious and important feature about the USA is its sheer size. Large countries are usually not easily administered from the center, and the USA is no exception. Size usually also creates diversity. Although, the USA was considerably smaller at the time more than 220 years ago of its current constitutional founding, it still stretched through most of the current Atlantic seaboard. Even then, the diversity of interests created considerable obstacles to an acceptable national union and ultimately forced compromises in the provisions of the second, but currently governing, constitution of the USA in 1787. The 1787 constitution reflected a union of state governments and required of them a voluntary concession of some of their powers to a new federal government to allow for the free flow of commerce across the states. It did not, however, provide for much else in the way of federal authority other than the national defense and regulation of the currency. Regional diversity of interests has been augmented over time by considerable ethnic variety and, most important here, by diverse cultures of governance and levels of professionalization in government. Although there has been a general growth of Civil Service professionalism and a decline in the worst practices of political patronage, states and local communities still differ greatly in their governing resources, in their commitment to professionalism, and in expectations about corruption and good governance. These 200

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differences reflect various regional characteristics, cultures and histories in the USA. As the profile of the federal government remained small until the twentieth century, the vast portion of whatever governments did (and still do) is to be found at the local and state levels. States and municipalities continue to govern most of the day-to-day functions of life where government intrudes despite the great growth in resources, scope, and regulatory powers that have accrued at the federal level of government over much of the past century. From the standpoint of administrative reform, the states and municipalities often provide laboratories for the federal government. At the same time, the US federal government has relatively few instruments by which to standardize administrative performance across the states, though it can enforce some uniformity by threats to withhold federal money. It is fair to say, however, that there is little consistency in political view as to precisely what the powers of the federal government are vis-à-vis the states. Whichever party has a shot at getting the policy outcomes they like at the federal level will tend to support federal authority more. Those wishing to evade federal policies or treat them as floors rather than ceilings are apt to emphasize the autonomy of the states to make their own policies. These issues remain alive in constitutional debates in the USA, but party politicians tend to think in terms of substantive outcomes and not of institutions or consistency of application. Unlike parliamentary systems that fuse power between the executive and legislative functions (usually to the disadvantage of the legislature), the US constitution separates institutional powers in a so-called ‘checks and balances’ system. This institutional separation is replicated in form throughout nearly all of the states and municipalities in the USA and tends to make administration complicated. Traditionally, administration depends on order and clear authority. Ambiguity of authority complicates matters considerably. Reforms predicated on precepts of managerialism would require a fundamentally different kind of political system – one in which authority is much more clear and certain than it is in the USA. At the federal level, the president is given the responsibility ‘to take care that the laws be faithfully executed’ in Article 2, Section 3 of the constitution. Yet, the legislature is given the power to appropriate funds, to consent or not to many appointments within the executive, and to oversee the functions of the executive branch. Without even considering the important role of the third branch of the US government – the courts – one can see that there often is apt to be a struggle between the legislative authority and that of the president when it comes to the functioning of the executive branch. The unanswered question for American administration, as Norton Long (1949) proclaimed over a half-century ago, is ‘Who is boss?’ Typically, effective administration requires some clarity to that question. But that is difficult to achieve in the context of American institutions and politics. The struggle for authority over administration in the USA intensifies when different parties are in control of the executive and legislative branches of government and when policy differences between the parties are great. It is precisely those conditions that have frequently characterized the American system over the past three decades. This has provided an environment in which ‘reforms’ come to be perceived as an extension of ‘politics by other means’ (Rockman 2001). The division of governing authority is extremely important to understanding the fate of administrative reform in the USA. Imagine a company whose chief executive official

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(CEO) and board of directors have different agendas, strategies and visions for their company. The board, however, does not have the ability to oust the CEO. So, they continue to struggle for control. In addition, the courts may wind up arbitrating the meaning of legislative intent and the political executive’s interpretation of it. Administrative reform proposals, consequently, are often perceived less as a means to improve the quality and effectiveness of administration than as efforts to alter the balance of power in government. The institutional structure of American government makes the bureaucracy into contested turf and it helps account for why so much proposed reform is controversial. All proposed changes are looked at in terms of winners and losers. The Civil Service itself more often than not is wary of change disguised as reform partly because the Civil Service often regards itself to be a likely loser in the political struggle that will ensue from reforms being pushed by politicians. Civil Servants frequently see the need for change, but they often find the cures that are proposed by politicians to be worse than the disease. As noted, political patronage plays a significant role in the American administrative system. To be sure, a good many external appointees are highly qualified and are both ‘red and expert’ as the slogan went in 1950s China. Different presidents have shown different tendencies in this regard and, to some extent, Democratic administrations have greater access to academic experts since they are among their party’s core constituencies. The American system has often been characterized as an ‘in and out’ system in which appointees move in, leave, and frequently return in a different position in a new administration usually of the same party. This probably is too simple. First, there is a Civil Service system of pure ‘ins’ but with a distinctive ceiling which career officials cannot get past without losing their career standing. Second, unless they have been associated with scandal, political appointees, consistent with the ‘in and out’ characterization, form a pool of experienced candidates for future presidential administrations of the same party. Third, and of more recent vintage, is the development of a substantial White House staff and organization from which policy originates. Few White House staff personnel, except for those in the Executive Office of the President (EOP) agencies, are Civil Servants. Most are especially loyal to the administration they helped put in power or personally committed to the president they had advised. Especially important, however, is that presidents increasingly have tried to operate the executive branch through the White House thus reducing both departmental and Civil Service independence. Patronage has played such a large role historically in the USA because as a new nation it had no pre-existing administrative apparatus or Civil Service. Hence, the ‘spoils system’ came into being in which outsiders with political ties assumed positions that in most other modern systems would eventually be held by Civil Servants. Sporadically, Civil Servants and foreign service officers and other career officers ascend past the glass ceiling of career appointments to higher positions but once they do, they lose their career-protected status. The continuation of the system of patronage is sustained simultaneously by the desire of presidential administrations to assure that their policy visions will be faithfully executed (Moe 1985; Nathan 1983) and by the need to award high-end contributors and activists to their election campaigns and to their party. There is a good bit of controversy as to whether outside political appointees actually help presidential administrations achieve their goals (Light 1995; 2008). Nevertheless, it is widely believed by incoming presidents and their partisans that they can. Furthermore, the extended and

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very expensive nature of the American electoral process provides incentives to reward activists and donors and policy entrepreneurs, many of whom are looking for a continuing role. There is as well substantial path dependence to the ongoing system that makes it difficult to alter regardless of whatever dysfunctions it may have. The very different views of the two major political parties especially regarding economic, business and social regulation make it inevitable that control of the executive branch and the administrative regulations it issues are going to be matters of great controversy and importance to each party’s political constituencies. Who gets to control what an agency actually does is no minor matter from a political and policy standpoint. Therefore, the parties and the presidential administration have a vested interest in ‘responsive competence’ and little obvious incentive for ‘neutral competence’ (Campbell 1998). Neutral competence is understood to mean a high level of professionalism and a commitment to the law and to fairness of procedure but not a commitment to the incumbent or any particular presidential administration. Responsive competence is understood to mean that officials should be concerned exclusively with being faithful to the presidential administration in power. Except as a way to find jobs for the seekers of the spoils, relatively little of the patronage system mattered much in regard to policy until the Franklin Roosevelt administration of 1933–45, mainly because the federal government had a relatively low profile until then, performing only the basic state maintenance functions. A merit Civil Service system at the federal level did not come into being until 1883 in the aftermath of a president (James Garfield) having been recently assassinated in 1881 by a disappointed job-seeker. The merit system was grafted onto an already burgeoning patronage system of political appointments at the federal level. Typically patronage was even worse in many cities and states at that time. But the federal government remained relatively unimportant until the Democratic presidential administration of Franklin Roosevelt. Roosevelt came into office during the Great Depression and remained president until dying in office in April 1945 toward the end of the Second World War. In seeking to build a durable coalition that would keep his party in power for the long term, Roosevelt committed his presidency to the positive state in ways that would build new and favorable constituencies for a long-term realignment of political forces. The welfare-warfare state increased the growth of government substantially through the emergence of new programs and agencies, and inevitably generated a bureaucracy that came to be identified with the positive state policies of the Democrats. Unlike older and established bureaucracies in other countries, the federal bureaucracy was identified with, and thought to be more sympathetic to, the agendas of the left more than those of the right and, accordingly, more to the Democrats than to the Republicans. One of the main features of the US administrative system at the federal level is the overwhelming effort over the past several decades to politicize it on behalf of the presidential administration that happens to be in office. This process of politicization has come to be known as ‘the administrative presidency’ and is predicated on the idea that presidents need to gain exclusive control of the tools of governance be they personnel, laws or finances. The preconditions of this politicization are threefold. First, there must exist a belief on the part of an incoming administration that the deck has been stacked against them, whether because the career officials are unsympathetic to the new administration’s agenda or because prevailing agency-clientele ties are resistant to changes

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desired by the new administration (Aberbach and Rockman 1976). Second, the federal government must be seen to be important so that controlling it has important consequences for policy and for which political constituents are favored and which are not. Third, there must exist a belief that agents of the executive should be exclusively responsible and accountable to the president and that responsiveness is more important than neutrality or professional competence. These conditions began to arise during the presidential administration of Richard Nixon (1969–74) sometime during the second year of his presidency. Nixon became convinced at some point that the career bureaucracy was an enemy of his presidency, leaking information embarrassing to the White House to the administration’s political adversaries in Congress. Worse, he became convinced that, as his domestic policy adviser, John Ehrlichman put it, his own appointees in the departments had come ‘to marry the natives’ (Aberbach and Rockman 1976). Consequently, Nixon grew a parallel government inside the Office of the Presidency. However, it lacked operational capability, so Nixon then proceeded to nominate cabinet officials after his re-election in 1972 who had no independent political base of their own and ensure the monitoring of departments by dispatching loyalist political emissaries to them. Nixon’s fears had surface validity. Less than one-fifth of high-ranking career officials during the second year of his administration identified with his (Republican) political party, though these data would become more favorable to the Republicans over time (Aberbach and Rockman 1976; 2000a). After Nixon’s presidency fell as a result of the Watergate scandal, the next elected president, Jimmy Carter, campaigned as an outsider critical of Washington’s ways and of the permanent government. Career officialdom greeted his presidency with skepticism and anxiety, especially as Carter offered a comprehensive personnel reform that would put the career service at greater risk while emphasizing individual performance. Subsequent administrations, especially those of Ronald Reagan (1981–89) and George W. Bush (2001–09) have pressed the responsive competence button very hard and through their own legal interpretations have tried to define the executive branch as exclusively theirs. Similarly, the first President Bush (1989–1993), while more kindly disposed toward career officials and the institutions of government, also had an expansive view of presidential authority. Overall, the professional services – whether the Civil Service, the foreign service, intelligence officers or military officers – have been pushed deeper into the background and have been expected to be loyal soldiers. The Reagan administration, being especially ideologically driven in its first term, sought to disconnect administrative agencies from what its fervent supporters believed were interest clienteles of the opposition party and to connect them to new Republican clienteles. It, and the Bush administration that succeeded it, were cheered on and instructed in this effort by a series of Mandate for Leadership books issued by the conservative Heritage Foundation think tank beginning in 1984. The political atmospherics in which US public administration at the federal level works are, thus, characterized by uncertainty and ambiguity of authority, by hyperpoliticization of the administrative apparatus of government, especially through an extensive political appointments system, by strong differences between the parties that reflect their very different political constituencies and their highly distinctive views concerning regulatory policies – policies that are especially subject to administrative interpretation. It is through this prism that Civil Servants view reform proposals, most of

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which tend to heighten their anxieties because reform tends to be interpreted as greater managerial control by political overseers for whom the Civil Servants, at best, have mixed views (Aberbach and Rockman 2000a: 123). Reforms of recent decades Since 1978 four major reform tendencies have influenced the operations of the federal bureaucracy. The major reforms that have been instituted – and to some extent also later neglected – have been the Civil Service Reform Act of 1978, the Reinventing Government syndrome, brought forth with much fanfare in 1993, and the focus on privatization and program assessment ratings. Reforms all have cumulative histories, the latter two especially. Privatization and assessment, however, have been particularly given attention during the administration of President George W. Bush. The Federal Activities and Inventory Reform Act of 1998 (OMB 1998), known more popularly as the FAIR Act, and passed during the Clinton administration, compelled agencies to undergo competitive procedures with private providers for other than ‘essential governmental functions’. It required them to provide inventories of activities that could be regarded as commercial in nature, with the idea of out-sourcing them and significantly reducing the number of Civil Service personnel. In addition, there has been a growing tendency to demand assessment measures of agencies as a form of accountability. This too has a cumulative past going back to the effort to apply Program Planning Budgeting Systems (PPBS) criteria across all federal agencies during the Lyndon Johnson administration (1963–69), the Nixon administration’s efforts to track agencies’ progress toward their goals through Management by Objectives (MbO) (Rose 1976), and the Carter administration’s application of ZeroBased Budgeting (ZBB). Congress also passed the Government Performance Review Act (GPRA) in 1993 that, oddly enough, mandated that agencies define their goals, something that politicians are supposed to do. The most recent incarnation of assessment and tracking procedures has been the Program Assessment Rating Tool (PART) that was implemented during the George W. Bush administration to rate agencies on their progress along various managerial dimensions. Unlike PPBS and ZBB, however, PART was not immediately or directly tied into budgetary decisions. However, it is likely that there are budgetary implications from the PART ratings. Reforms rarely die out completely, though they often become enervated. And, alternatively, few if any reforms are entirely novel. Often, the latest reforms are merely ‘old wine in new bottles’. Two of the major themes that had been sustained during the past 25–30 years of reform are accountability and lightening the governmental load. Accountability could be assessed in different ways – through responsiveness to agency users, responsiveness to political authority, and through performance assessments based on standardized measures of progress and achievement. Lightening the governmental load presumably could be expedited through privatization and deregulation. Skeptical observers, of course, might say that the latter, in particular, was part of an ideological agenda. That observation was certainly in part true as the precepts of neo-liberal economics seemed to take hold in the Anglo systems from the 1980s onward. If the movement toward privatization was ideological, it was not, however, always starkly partisan. Reforms proposed by Democratic administrations as well as by Republican administrations emphasized the importance of competition and private sector best practices. Republicans, however,

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naturally embraced privatization with more gusto. Nevertheless, it was during the Carter administration that the airline system and the surface carrier motor system were each deregulated. In so doing, it also set the stage for the later abolition of two regulatory commissions – the Civil Aeronautics Board (CAB), terminated in 1984, and the Interstate Commerce Commission (ICC), terminated in 1995. At least to some degree, the history of the last decades of the twentieth and first part of the twenty-first centuries emphasizes a common set of reform themes invoking the values of accountability, efficiency, competition, flexibility and the comparative advantages of private sector practices. If the first three-quarters or so of the twentieth century in the US was devoted to the build up of state capacity (Skowronek 1982) and to a growing federal role (Lunch 1987), the current era has emphasized – at least in rhetoric – a build down of that capacity as defined through traditional bureaucratic monopolies, rules and regulatory regimes. The Civil Service reforms of 1978 During the long political campaign that brought a relatively obscure one-term governor to the White House, Jimmy Carter tried to position himself as the anti-establishment candidate who, if elected, would bring reform to Washington. These tactics were designed to appeal to three different strands of opinion: (1) an anti-establishment temperament that was partially the result of the cynicism about government that followed upon the Watergate affair associated with the Nixon administration and its abuses of executive authority; (2) a management-oriented good government reform view that proclaimed better management to be the key to better government; and (3) a longstanding perspective that government in Washington had become too remote and unresponsive, too heavy-handed and excessively regulatory. Carter’s campaign appealed to sentiments across the ideological spectrum, though for different reasons. Government was perceived to be overbearing and costly and a deadweight on promoting efficiency. The bureaucracy became a target for those with strong ideological inclinations against big government. But it also became a target of opportunity for those with a reform agenda such as the previously unheralded candidate for president in 1976, Jimmy Carter. In his speeches, Carter frequently liked to contrast the ‘goodness’ of the American people with the indolence and ineptitude of their government. Politically, of course, that was a safe gesture since only the people vote, and flattery has a chance of getting a politician somewhere. After his election, Carter emphasized government reform among his priorities in an administration notable for a large number of priorities. Carter’s big reform proposal, which resulted in the Civil Service Reform Act of 1978 (CSRA), focused on personnel and had two key elements (plus a number of secondary ones). There was an emphasis on individual performance. These required assessments of Civil Servants’ performance and provided carrots such as merit-based bonuses. The second emphasis was to create a structure roughly equivalent to the British administrative class – a corps of elite Civil Servants able to float from department to department and provide a generalist’s perspective to the agencies to which its members were assigned. It was also thought – possibly sincerely – that the creation of this top corps of senior Civil Servants would bolster an esprit de corps and renew an interest in professional careers in government. A decade after the CSRA was passed, however, one scholar of the process noted that the only

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Senior Civil Servants who were satisfied with the new creation had few expectations to begin with (Huddleston 1992: 165). Carter’s Civil Service reform proposals became an omnibus bill with many provisions (Ingraham and Ban 1984). At its core, though, was the idea of moving a Civil Servant’s status from being tied to a position to being held by a person. Those personnel holding the highest civil service status would then form a corps of Senior Executive Servants (SES). The idea was to be able to shift people around from one agency to another and even from one location to another. The idea of a flexible and resilient system was not, at least in principle, easy to argue against. From the perspective of the Civil Servants, however, they often saw this new, more flexible personnel system as threatening rather than hopeful (Lewis 2008: 43–6). One observer noted that ‘the SES became a lightening rod for feelings and frustrations about compensation, respect in the workplace, and the treatment of government employees’ (Harper 1992: 267). Civil Servants saw a set of proposals that were likely to make them more vulnerable, subject to political purges, and removed from their well-cultivated networks. The sticks loomed larger to them in this bargain than did the carrots. In the tapes of the Watergate episode of the Nixon presidency, the President is heard to badger his then Labor Secretary, George Schultz, about a particularly unreliable Civil Servant whom he wanted to be shipped off to Guam and obviously removed from his networks in Washington (Aberbach and Rockman 2000b: 34). With the personnel system then in existence, Schultz humored the President. But with the onset of the SES, a president’s wish to be rid of a troublesome Civil Servant (literally by sending him or her off to Guam), could become reality – and Civil Servants recognized that. For them, this was another management tool that would likely turn into a political tool to control them and limit their independence. While entry into the SES was not mandatory, to not become part of the SES would inhibit a Civil Servant from rising higher. At the same time, not becoming a member of the SES helped to insulate a Civil Servant from the vicissitudes of politics. Ultimately, only a small number of those eligible chose not to enter the pool for SES selection (Harper 1992: 270). Approximately 7000 to 8000 Civil Service positions were made available to SES, although Congress allowed a ceiling of 10 777 (Harper 1992: 273). In practice, the actual numbers have averaged just shy of 7000 that were actually filled. About half of the allocated positions were placed on career reserve status and could not be used for political appointment purposes. The vast majority of these ‘reserved positions’ were located in the Defense department and other national security agencies. Of the remaining SES positions, 10 percent were allowed to go to political appointees and up to 25 percent in any given department or agency. A great deal of gamesmanship went into the process of defining whether vacancies could be counted or not as part of the allocation. Presidential administrations typically were interested in filling up all the positions they possibly could get their hands on with their own appointees. The Reagan administration, following upon that of Carter, seemed to be particularly adept at manipulating the system to strategically place as many of their appointees as they could in agencies that mattered most to them (Aberbach and Rockman 1995). The Reagan White House also carefully vetted those who would serve directly under those appointees (Weko 1995). Entry into the SES itself was based upon a departmental committee review of applicants’ credentials. These credentials were subject to multiple criteria but obviously among these criteria was team-playing. Loyalty to the administration being served was clearly valued.

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The Reagan administration was especially consumed with ensuring the appointment of loyalists to the Reagan agenda and the compliance of Civil Servants to that agenda. During the earlier Nixon administration, the White House was confronted with a Civil Service that was largely unsympathetic to the president’s agenda. Above all, the Nixon presidency faced a senior Civil Service especially antipathetic to the Nixon policies in areas that Republicans very much wanted to get control over, namely, the agencies that dealt with social assistance, education and regulation. A snapshot of the senior Civil Service in the social welfare departments under the more rigid personnel system in operation at the time of the Nixon administration showed these departments to be especially out of sympathy with the administration’s policy preferences (Aberbach and Rockman 1976). By the time the Reagan administration had an opportunity to remold the top layers of the Civil Service as a consequence of the CSRA, however, the senior Civil Servants in these same agencies who reported to a political official were now predominantly Republican (Reagan’s party) and more compatible with the President’s policy objectives (Aberbach and Rockman 1995). The SES officials who were at odds with the presidential administration’s policies found themselves at least once removed from reporting to political officials. Possibly this was coincidence but more likely it was evidence of how the new personnel system created by the CSRA could be used to serve political ends. Aside from the creation of the Senior Executive Service with its attendant opportunities and risks for Civil Servants, the Act produced two new agencies to deal with personnel matters. Whereas previously the Civil Service Commission (CSC), whose chief administrative officer was often recruited from among the Civil Service, operated without much attention being paid to it, the CSRA replaced the CSC and set up the Office of Personnel Management (OPM, the bigger of the two new agencies) and the Merit Systems Protection Board (MSPB, the smaller of the two agencies). The OPM was subsequently politicized by the presidential administration, particularly during the first two years of the Reagan administration. Its first director, a political scientist by the name of Donald Devine, was an ardent Reaganite and intense skeptic of the Civil Service. He defined the mission of the new agency under his watch to infuse personnel sympathetic to the Reagan agenda into critical positions. Devine was essentially so political, abrasive, and controversial that future directors handled the personnel issues that fell under the OPM more cautiously (Lane 1992). Still, what had happened was that an agency (CSC) that had been mainly a data-gathering, personnel-classifying and rather sleepy organization was replaced by an agency that was much more closely aligned with the aspirations of presidential administrations and their personnel needs rather than the institutional needs of the Civil Service system and the government. The MSPB was mainly set up as a quasi-judicial commission to deal with issues involving protection of federal employee rights under circumstances where actions were taken to separate the individual from the federal service or to sanction an individual. The MSPB mainly adjudicated personnel issues that were at the intersection of managerial prerogative and the merit protections of the career service. The MSPB, unlike the OPM, was not a controversial overhead agency mainly because exceedingly few federal workers were actually dismissed from the workforce (Harper 1992: 278). The costs of removing dysfunctional Civil Servants are often prohibitively high, especially at higher levels. In an interview in 1986 that one of us had with a high-ranking Civil Servant, the

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official indicated that political appointees are rarely in office long enough to see through a process that requires an immense amount of paperwork. Moreover, it is unlikely that they will be around to reap the benefits. He strongly implied that more career officials at higher levels and with greater authority would more likely result in more demanding expectations of other Civil Servants and a greater willingness to sanction and bring proceedings against those who were problem cases. Despite President Carter’s desire to make it easier to release incompetent or selfserving individuals from federal employment, the process remained cumbersome because the federal employees unions and associations had weighed in heavily during the legislative process that produced the CSRA. Democrats then controlled the Congress, and they were sensitive to the entreaties of the public service unions. Perhaps even more important, especially in the House of Representatives, the committee reporting on the legislation, not too surprisingly, was loaded with members who had significant Civil Service constituencies in their districts. In fact, there are multiple ways for a presidential administration to rid itself of troublesome officials. Some such as reductions in force (RIFs) are blunt instruments. Reductions in force are not directed at particular individuals as much as they are at agencies that an administration (most especially during the Reagan administration) wanted to be less active or troublesome from its point of view. It could do this by imposing significant discretionary budget cuts, which the Reagan administration was able to achieve through legislation in its first year in office. When programs are cut, Civil Servants can be ‘RIFfed’ out. Furthermore, with the advent of the SES, it also was now possible to send a career official off to Guam as a figurative expression or perhaps to another agency. Of course, veteran career officials often knew how to use their networks to prevent their being shipped elsewhere or even transferred from their present jobs. One such official, who was a rather controversial figure in Washington, revealed in an interview with one of us that he was designated to be shipped off to Atlanta, and proudly recited how he was able to use his connections to prevent that. The MSPB also had a small planning and evaluation unit charged with finding criteria that could be applied system-wide regarding performance appraisal. This was no easy task. In fact, the new language of employee accountability was in the process of presumably transforming public institutions and government. Assessing performance in non-production organizations, that is, ones that do not produce a tangible product, is quite difficult, and providing performance appraisal criteria across the board is perhaps impossible without trivializing it (Rose 1976). Moreover, the CSRA’s principal focus regarding performance appraisals was at the individual level. But that emphasis plausibly could be collectively dysfunctional. An aspect of this performance incentives approach was the bonus system that was supposed to be a part of the SES reward structure for top-level SES officials. In practice, Congress rarely provided sufficient funds for the bonuses as they originally had been envisioned. Furthermore, the process for awarding the bonuses was often unclear or varied depending upon a department or agency’s committee responsible for this process. In addition, some of the bonus money wound up going to non-career members of the SES. While the bonus carrot remained less than was originally designed, Distinguished and Presidential Rank Awards supplemented the bonuses, and together the total payout increased.

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In sum, the Civil Service Reform Act of 1978 was a major alteration of the upper reaches of the personnel system of the federal government. It also had as its purpose to improve the efficiency and quality of administration at the federal level by making Civil Servants more accountable through performance appraisals and bonuses. Another of its goals certainly was to create a more flexible (and hence manageable) federal workforce especially at the upper levels of administration and, at the same time, produce a form of cohesion among senior Civil Servants through the introduction of the SES. Injecting that cohesion was deemed necessary given the enormous range of professional functions, educational and regional backgrounds, and relative agency insulation that had characterized the US Civil Service. The senior career officials of the federal government were more a collection than a collective. It has been observed, though with no clear attribution, that the only thing federal Civil Servants had in common was the source of their paycheck. And finally, the Carter administration emphasized the need to eliminate the unresponsive and unaccountable members of the federal workforce – an emphasis that greatly annoyed federal employees and federal employee unions. Over the longer term, however, at least two decades from its inception, Civil Servants tended to adapt to the provisions of the Act and, though they were not wildly enthusiastic about it, they had at least learned to live with it and did not find its effects overall to be particularly deleterious (Aberbach and Rockman 2000b). The administrative presidency under Reagan The CSRA provided opportunities for the Carter administration to make more political appointments, and it did (Lewis 2008: 100–101). However, these opportunities may have been capitalized on by the succeeding Reagan administration that seemed to be more distinctly purposive from both a policy and political standpoint than its predecessor had been. In the hands of an administration that chose to use the new flexibilities in the system to cement its political control of the executive branch, the fears of many Civil Servants were fulfilled. The Reagan administration was fueled by a strong goal orientation. In order to achieve its goals, the Reagan presidency needed to have a highly directed political command of the executive branch that would be very distinctly partisan and place great emphasis on responsiveness to its directions. The administration wanted to ensure strong political direction of the agencies. Accordingly, the Civil Servants were merely to follow orders loyally and otherwise be quiet (Rockman, 1993). In this sense, the Reaganites believed in a strong separation between the political arm of the executive and the Civil Servants. The main source of conflict with this vision is that Civil Servants swear loyalty to the constitution and not specifically to an administration. Executive decisions may or may not be consistent with legislative provisions or judicial determination. But the doctrine known as the unified executive and promulgated by the Federalist Society – a conservative legal group – emphasized that the executive branch was exclusively responsible to the president. This was a legal interpretation designed to bolster the administrative presidency. The assistant attorney general for legal counsel in the Justice department, Charles Cooper, was prominent in interpreting this doctrine to fit the needs of the Reagan administration, although presumably it could be applied to fit the needs of any administration and thereby permanently tip the institutional balance of power to the president (Shane 2008). The Reagan administration’s interest in the Civil Service, aside from working to ensure

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that Civil Servants were to be compliant tools of the administration, seemed to be quite limited. It introduced little in the way of major reforms as such but it did have several tendencies. One was to emphasize that Civil Servants should be passive rather than active. A second was to ensure that those most likely to be loyal to Reagan’s ideology got to the most critical positions. A third was to dislodge clienteles of agencies associated with the Democrats and their policies and replace them with clienteles more favorable to the Reagan presidency, the Republican party, and the goals of the administration (Butler and Holmes 1997, passim). A fourth, as noted, was to extend the administrative presidency with the theory of the unified executive. A fifth was to ensure central clearance over the issuance of agency administrative regulations. The administration issued Executive Order 12999 requiring all regulatory agencies accountable to the executive branch – some regulatory agencies are also directly accountable to Congress – to subject proposed administrative regulations that would extend existing regulatory commitments to a cost–benefit analysis (Friedman, 1995). The idea behind this, of course, was to tie the hands of the regulatory agencies. Finally, the ideology of privatization and out-sourcing of federal functions began to play a very important role during the Reagan administration. Privatization and competition would become a theme from the Reagan administration on to the present. Indeed, one of the administration’s political appointees, E.S. Savas, claimed in a book extolling the virtues of privatization that ‘privatization helps restore government to its fundamental purpose’ (1987: 290) What the fundamental purpose of government is might be considered to be debatable. It is, after all, a matter of political judgment. However, controversies about privatization and out-sourcing tend to focus less on whether there will be some measure of privatization than on what sets of activities will be encompassed by it and whether privatization will be more efficient, less costly, more accountable and actually lead to less government than if the functions were performed directly by the government. A major article in the New York Times notes that ‘On the rise for decades, spending on federal contracts has soared during the Bush administration’ and that ‘the contracting explosion raises questions about propriety, cost and accountability that have long troubled government watchdogs’ (Shane 2007: A1). While the Reagan administration was not notable for its emphasis on administrative reform, it clearly took advantage of the greater flexibilities in the personnel system provided by the CSRA. Mainly, the Reagan presidency was concerned to ensure that the bureaucracy would follow its directions. To that end, it employed both central clearance procedures and recruited fervent partisans of the Reagan agenda for many of its political appointments. Ultimately, of course, the Reagan White House was deeply committed to an agenda that would decrease the government’s profile and, accordingly, it was obviously quite sympathetic to privatization and out-sourcing. The Reagan administration fundamentally was less interested in reforming the bureaucracy than in making it toothless. It did not come up with a splashy agenda for reform other than that government’s reach should be contracted – except for national security and criminal justice functions and the regulation of personal morality. Reinventing government Toward the end of its first year in office (1993), the Clinton administration rolled out its major administrative reform via a commission headed by the Vice-President, Al Gore,

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whose name became the shorthand for the report issued by the commission which formally was called, the National Performance Review (NPR). The Gore Commission’s report was known popularly as ‘Reinventing government’, though its formal title was the National Performance Review (2003), From Red Tape to Results: Creating a Government that Works Better and Costs Less. The subtitle, of course, could be read as the true political subtext of the report. The NPR found the problems of the federal government’s bureaucratic apparatus to be largely a mismatch between the government’s industrial age structures and the highspeed and flexible nature of the information age in which people were now living. Not wishing to stir up the hornet’s nest of opposition that the Carter administration had with its personnel-based reform, the Gore Commission clearly stated that the problems of the federal government lay with its rule-based structures rather than its personnel, whom it went out of the way to praise. The Clinton administration may have been motivated by the need to demonstrate that the Democrats cared about the good management of government. It needed to demonstrate that management proficiency was not solely a concern of Republicans and that it could appeal to the more youthful advocates of new information age government. To yet other constituencies, the Clinton–Gore proposal promised a government that would not only be more effective but also less costly – a particularly appealing combination. To those who had followed the dissemination of new public management (NPM) ideas around the world, especially in the English-speaking world, reinvention seemed quite familiar as it incorporated many of the elements of NPM. Reinvention emphasized several streams of reform. One was the idea that government needed to be more flexible and closer to those it served. It needed to be more responsive – a familiar, but more nuanced, theme from the arguments made by the proponents of the Carter Civil Service reform. Government needed to be sensitive to the information age as a way of building that responsiveness and it needed to treat citizens as though they were customers. A second element was the notion that competition was a good and that the private sector provided models of best practices for the federal government. A third element was that government needed to be less rules oriented and less encumbered with regulations. This was, of course, a part of the flexibility syndrome and also a part of streamlining government. It follows from these ideas that a fourth element of the reinvention syndrome was to enhance the discretionary decision-making capabilities of field level officials. Fewer rules and more common sense was the central idea. Finally, reinvention emphasized a need for government to get back to basics. Getting back to basics implies that government is doing too much although, to be sure, that is less purely a matter of management reform than of politics. The Clinton administration followed through its reform proposals with an effort to oversee their implementation. But it lacked an enforcement mechanism. By focusing on ends, it had come to neglect means (Kettl 1994: 56). And, in fact, it thereby came to focus much of its attention on downsizing – and, indeed, there was a drop-off of 368 000 federal employees under the Clinton administration from the preceding George H.W. Bush administration (Kettl 1994: 56). There is no doubt, however, that government began to follow the technological trends that made it easier for people to access government through the Internet. Agencies also began to emphasize what in the parlance has been called ‘one-stop shopping’ by linking

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together multiple services in one location. The reinvention effort also enlisted a number of professional public administration scholars to advise in its implementation. In the areas in which government was performing a potentially marketable service, it had significantly transformed its operations from the lethargy often associated with old Sovietmodel bureaucracies to a newer more user-friendly style. It also became more accessible through the Internet. Such user-friendly practices already had been introduced at state and local government levels in part because it also could reduce the costs of staffing. Still, governmental and quasi-governmental agencies lacked many of the flexibilities of the private sector because, while the unionized labor force of the private sector was in steep decline, unions in government at all levels were not. In addition, the political overseers of the agencies have motives that compete with, and even displace, efficiency concerns. Partly because ‘Reinventing government’ was more aspirational than statutory, it is hard to know precisely what its independent impact has been aside from trends already occurring most obviously in the English-speaking world and from the results of a global revolution in information technology. Peter Aucoin (1995) noted that the latecomers to NPM, in which he included Canada and the USA, were less likely to embrace thoroughly the precepts of NPM than were those of the initiating countries such as the UK and the antipodal states of New Zealand and Australia. Perhaps, the first-mover states were driven to reforms either by crises or by perceptions that the administrative status quo was deeply flawed, whereas the latter were influenced by the first movers. Although Americans dislike bureaucracy as much as anyone else, perhaps more, they actually tend to have rather positive reviews of those who work for government and of how they have been treated by agencies (Pew Research Center for the People and the Press 1998). Despite the widespread stereotypes of Americans as holding distinctly anti-bureaucratic and anti-Civil Service attitudes, they tend to think much better of Civil Servants than they do of politicians (Pew Research Center for the People and the Press 1998). That perspective probably is widespread internationally. Administrative reform models may fit awkwardly with the political systems in which they are to operate. Reforms that presuppose a form of managerialism are often at odds with political systems in which authority is dispersed. And they may be at odds with laws requiring strict procedures of financial and legal accountability. This clash was particularly evident with regard to aspects of the reinvention syndrome in the USA. There are several ways in which reinvention tends to clash with the existing institutional arrangements or prevailing laws of the federal government. For example, NPR’s central idea of reducing the mound of red tape and the stifling regulations internal to, as well as those issued from, the government is obviously sensible, at least in the abstract. The problem is that most of the red tape derives from laws made by Congress rather than from the activities of bureaucrats (Aberbach and Rockman 2000a: 172–88). Regulations are the byproduct of accountability and are accounting procedures designed to eliminate or reduce fraud, as Herbert Kaufman (1977), pointed out. Sometimes they also define thresholds of risk such as what constitutes a carcinogen, or allowable extraneous matter in processed foods, and so forth. Everyone at some point has been frustrated by bureaucracy and its rules, especially when the rules seem foolish as applied to particular situations. We all want discretion to override rules we do not like or in cases where the rules seem to inhibit more flexible procedures. But what bureaucrat minus the legal authority to do so will choose to defy existing regulations? If the bureaucrat exercises this

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discretion, she or he may be in violation of the law. Further, an error sensitive environment is always likely to come down harder on judgments that have been made outside of the existing rules and procedures and are, thus, irregular. Bureaucrats will likely be risk averse toward making errors for which they, rather than the system that they are operating under, may be found culpable. The bureaucracy itself is rarely the sole or even major instigator of the complex and restrictive rules it must enforce. Rather, it is more frequently the instructed agent of executive directives, legislation or court rulings. The complex and competitive structure of the US government makes for especially restrictive rules. When the executive and legislature are more or less in agreement, the legislature will tend to give a wider berth to the executive. However, when the two institutions are controlled by different parties or have strong policy disagreements, Congress often fears that discretion given to the executive will be used in ways that were unintended. Consequently, under conditions of disagreement, Congress is likely to provide restrictive rules to limit executive discretion. Typically, the target that Congress is aiming at is not the Civil Service but the presidential administration and its political appointees. Related to the problem of rule-boundedness that reinvention sought to address was the idea that agencies should think of the public as customers. This is a pattern characteristic of the NPM reforms elsewhere. Most agencies that serve the public directly, however, are at the local and state level in the USA. Aside from those agencies that deal with universalized benefits provided directly to citizens, most federal agencies deal with intermediary groups. A continuing ambiguity in reinvention is whether clientele groups should be kept at arm’s length based on traditional procedural fairness ideas embedded in the Administrative Procedures Act (APA) of 1946 or be closely consulted by the agencies they deal with. This issue is important everywhere but because of the legal formalisms attached to conflicts of interest in the USA, there has been an extensive debate about the degree to which interest groups should be close to or distant from administrative decision-making (Lowi 1967; 1969; McConnell 1970; Schubert 1960). Here, American practice tends to be much more legalistic than is the case in Europe where bureaucrats and affected interest groups frequently negotiate implementation as they go along (Lundquist 1980). Such practices, common in Europe, would be regarded as illegal in the USA, possibly contravening the underlying statutory basis of the law as well as overriding the APA and the expectation embedded in the US Constitution that all citizens be granted due process. These practices of clientele negotiation nonetheless do occur, but unless they do so under carefully bounded conditions, the actors involved could be (and have been) charged with legal violations. The PART and FAIR reforms and the George W. Bush presidency Competition and getting back to basics are themes that have leached into the administration of George W. Bush that followed the Clinton presidency. The idea, implicit in reinvention, to improve the performance of government by evaluating agencies rather than just people also became a key element of the Bush administration’s management agenda. Two key elements of reform during the George W. Bush administration have resulted in a major effort to assess the managerial proficiencies of agencies through PART scores. The PART criteria were the product of consultations between the Office of Management and Budget (OMB), which is a key agency lodged in the Executive Office of

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the Presidency, the National Academy of Public Administration (NAPA), various other advisory bodies, the Congress and non-profit public interest organizations. The PART criteria justifiably, if imperfectly, could be characterized as defining vintage managerial qualities dealing with such organizational elements as strategic planning, procedures for holding personnel accountable, clarity of purpose, program management, and results (Lewis 2008: 174). Doubtlessly, one could quibble with the criteria, the scoring system, the innate nature of the programs (some of which admit to greater clarity than others), and the question of the relevance of available resources (a political matter) to results. However, when supplemented by other independent data inventories, the PART scores appear to do rough justice to agencies that are performing well and not. Unlike the personnel assessments that were given of Civil Servants by their superiors through the provisions of the CSRA, and which showed little variation since very few Civil Servants failed to score on the high end, the PART scores of agencies showed a greater range. It may be true, of course, that agencies that are given inherently ambiguous tasks and which are responsible for programs or policies that stir controversy might come out lower for two reasons. First, it is hard to define strategic purpose and even harder to find mechanisms for implementing that purpose when goals are controversial and unsettled. And second, the very fact that programs are controversial probably means that they will be managed by people who have been selected more for their point of view and political loyalties than for their professionalism or competence. One very important study that recognizes the ambiguities of the PART measurements nonetheless shows that agencies with more Civil Servants and fewer political appointees tend to do better on the PART criteria than the agencies that have been more politicized (Lewis 2008). The FAIR Act of 1998 requires competition between agencies and contractors over the performance of functions that are not inherently governmental. Agencies are required to provide inventories of their personnel and their programs as to which of them fall under criteria for inherent governmental functions (non-competitive) and which are available to be considered for competition as a commercial function of government, and thus are not inherently governmental. The idea was to inventory those federal jobs for which there might be a commercial counterpart and, not at all subtly, eliminate them. The figure of jobs open for competition – and thus for elimination – has been estimated at over 425 000 federal employees (Lee 2008). An obvious illustration of this is the extensive use of contractors in Iraq to perform jobs – including providing security for American civilian officials – that a shrunken army can no longer do on its own. The shadow government of contractors that Paul Light (1999; 2008) describes has grown proportionately larger over the federal government whose functions it has been supplanting. The shadow government, however, is not held to the same rules and codes that apply to Civil Servants – or, for that matter, to the military. Moreover, it remains unclear whether there is an efficiency gain or whether out-sourcing causes costs to increase. And it certainly is unclear whether government has the capability to monitor and enforce contractors’ obligations (Krugman 2007; Shane 2007). A series of OMB circulars – all known as OMB Circular A-76 with the most recent version issued in 2003 (Executive Office of the President 2003) – set forth the specific conditions for which competition is to take place. An OMB letter issued in September 1992 during the end stages of the George H.W. Bush presidency, tries without much

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success to precisely define what is an inherently governmental function. Language like ‘the totality of circumstances’ creeps into the accompanying explanatory letter – a sure sign of an inability to clearly define an inherent governmental function from one that is not. Two years earlier in 1990, the General Accounting Office (GAO – now known as the General Accountability Office) held two public forums inviting a subset of participants to assess a series of cases and, from them, try to distinguish inherently governmental or non-governmental (that is, commercial) activities. The GAO is an arm of Congress and at that time (1990), there was divided government, with the Democrats controlling Congress and the Republicans the executive branch. One of the authors participated in one of the two GAO forums. In preparing for it he came across an apparently hypothetical (but actually real) case in which a private contractor (unnamed) reported directly to a department secretary as a consultant providing advice to the secretary on a policy matter. Was that an inherently governmental function? As matters turned out, it had not been so defined, at least in practice. The obvious conclusion to be drawn is that the word ‘inherent’ is a function of varying tolerances for mixing together the public and private spheres. It could, after all, be said that a cabinet member has the option to get the best possible advice from wherever it may come. On the other hand, who is accountable for reviewing that advice and asking questions about how its conclusions were arrived at? One thing is certain. No answers to the ‘inherent function’ question are engraved in stone. To a considerable extent, the issues involved have both a text and a subtext. The main text is whether off-loading more governmental activities creates greater efficiencies and cost savings or merely front-loads those benefits while it ultimately erodes the capacity of government. The subtext, however, is what fundamentally is government’s role? That question moves us more into the realm of political ideology than of managerial efficiency. The division is really based on different definitions of ‘what is an inherent governmental function?’ The ability to define that in a way that everyone would find appealing is highly unlikely. States and cities have been out-sourcing many of their activities for some time. They also have been leasing on a long-term basis assets such as highways to international companies that will in effect own them, not merely manage them. To the state that sells off its toll road, for example, comes an upfront windfall of revenue. Usually a condition of these sales is that costs to the users are shielded in the early years but not in the later ones when that will become some other politician’s problem to deal with. In fact, that hypothetical future politician will have no levers available to deal with it as the public good will now be in the private sector. Aggressive out-sourcing has especially been characteristic of the George W. Bush administration. It is very much a part of what the OMB calls the President’s Management Agenda that operates from the precept that ‘government should be market-based’ (OMB 2002). Interestingly, a governor who recently sold the toll road in his state (Governor Mitch Daniels of Indiana) was the Director of the OMB during the last revision of OMB Circular A-76 in 2003 (Executive Office of the President 2003) and during the issuance of President Bush’s management agenda in 2001. Although only competition is mandated and out-sourcing is not, the compulsory character of competition means that much of what is placed into competition will be subject to out-sourcing. If the goal is to cut the upfront costs of government, out-sourcing replaces a permanent army of public servants with what Paul Light (1999) has called the shadow government. The government need

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not be obligated to the pensions, the health insurance and, above all, the potentially nettlesome tendencies of Civil Servants to defend turf or precedent. Although the administration proclaimed substantial savings based on competition, a lengthy article appearing in the New York Times (2007) noted that competitive bidding dramatically declined between 2001 and 2005 from 79 percent of bids to 48 percent and that estimated savings were considerably overstated (Shane 2007). Privatization has supporters from both parties because it is, after all, a form of pork barrel for members of Congress who can point to the business they have helped to procure for a local firm and its employees. However, privatization is especially popular among Republicans since they find in it the hope of reducing government. From a critical perspective, out-sourcing, which is in some measure inevitable, is a source of circumventing the merit system while also shrinking the formal government and expanding its shadow. Conclusion Two powerful ideologies tend to intermingle in the world of American public administration. One is the idea of the business model emphasizing that government ought properly to be run like a business, focused on managerial flexibility, cost-efficiencies, streamlining and out-sourcing to reduce the costs of doing the government’s business. The other idea – even more longstanding – is that of the politicization of government. The history of the spoils system is a long one in the USA. It has never gone away. It coexists in some fashion with the merit system that first arose with the Pendleton Act of 1883 establishing the professional career service in the federal government. The system has competing political forces – members of Congress, interest groups and the president – all of whom want to colonize the bureaucracy, or parts of it, and bend it to their will. The consequence is a fierce struggle among the various actors. Presidents, to varying degrees, seek to gain control of the entire executive – or at least those parts of it that they care most about. They premise this ambition on the notion that the president is meant to be the operative head of the executive branch – a responsibility perhaps implied by the popular conception of the president as chief executive. Above all, presidents typically want the executive to be responsive to their policy and political goals. Presidents particularly wish not to be embarrassed by decisions made within agencies that might irritate one or another of their political constituencies. The broader political culture is also highly sensitized to whiffs of political corruption and appearances of political favoritism. At the same time, American politics has become highly partisan with the parties wrestling for advantage and seeking to find favor with their supporters by throwing favors to them to the extent that they can and to cater to their parties’ embedded interests. It is true that such a system often leads to a government that fails tests of efficiency and competence, and it is true that much of the public complains about this in the abstract. This makes for fertile territory for the idea of reform – until, of course, reform threatens existing interests or appears to give more tools to one or another of the branches of government thereby threatening to disequilibrate the existing institutional balance. Like a board of directors, Congress often wants reforms that emphasize more accountability from the executive leadership team. But the executive usually wants reforms that strengthen its managerial prerogatives (Light 1997). Unfurled with great expectations, reforms are frequenty greeted with skepticism by many of the relevant actors. The career officials of government are often among the

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skeptics. That is because, on the one hand, excesses of accountability lead to red tape, paperwork, complication and delay. On the other hand, the business model of executive cohesion is perceived by career officialdom as just another way of unifying the executive through the White House and placing the bureaucracy under its thumb, thus reducing the independence of the career officials. Reforms often come down to vacuous political talking points about how much government is being reduced. But, as Paul Light (1995; 1999; 2008) correctly notes, such contentions tend to result in the substitution of a shadow government of irregulars in place of a traditionally accountable form of government. There is little doubt that administrative reforms of the past 25–30 years have coexisted with one of the most politically contentious eras of American government and politics during which presidents have tried to build more responsiveness into their agendas and their constituencies. This has come at the cost of the independence of career officials and in some cases – as with competitive out-sourcing – even their continued existence in government. To put it as succinctly as possible, the reform process tends to be overshadowed by the quest for political control of the executive in a system in which there is limited trust between political and career officials. Beginning with the Carter era reforms designed to create a new Civil Service and ending with the G.W. Bush administration’s plans to bring to bear a business model that included organizational assessment, personnel shrinkage, out-sourcing and firm executive control over the agencies, the net effect of reform co-mingled with politics has been mainly to enervate the capacity of government. The biggest reform, on the other hand, is one that no one will touch. That would be to strengthen the professional independence of career officials by reducing the political staffing that sits above them and that serves mainly to throttle their voice and to deprive government of its competence (Light 2008). But that would require reforms of the political system and those are exceedingly improbable. References Aberbach, Joel D. and Bert A. Rockman (1976), ‘Clashing beliefs within the executive branch: the Nixon administration Bureaucracy’, American Political Science Review, 70: 456–72. Aberbach, Joel D. and Bert A. Rockman (1995), ‘The political views of U.S. senior federal executives, 1970– 1992’, Journal of Politics, 57: 838–52. Aberbach, Joel D. and Bert A. Rockman (2000a), In the Web of Politics: Three Decades of the U.S. Federal Executive, Washington, DC: Brookings Institution Press. Aberbach, Joel D. and Bert A. Rockman (2000b), ‘Senior executives in a changing political environment’, in James P. Pfiffner and Douglas A. Brook (eds), The Future of Merit: Twenty Years After the Civil Service Reform Act Washington, DC and Baltimore, MD: Woodrow Wilson Center Press and the Johns Hopkins University Press. Aucoin, Peter (1995), The New Public Management: Canada in Comparative Perspective, Montreal: Institute for Research on Public Policy. Barr, Stephen (2008), ‘Senior executives to weigh in on performance-based pay’, Washington Post, 16 January, available at: http://www.washingtonpost.com/wp-dyn/content/article/2008/01/15/AR2008011503462. Butler, Stuart M. and Kim R. Holmes (1997), Mandate for Leadership IV: Turning Ideas into Actions, Washington, DC: Heritage Foundation. Campbell Colin (1998), The US Presidency in Crisis: A Comparative Perspective, Oxford: Oxford University Press. Executive Office of the President (2003), Circular No. A-76 Revised, Office of Management and Budget, 29 May, available at: http://www.whitehouse.gov/omb/circulars/a076/a76. Friedman, Barry D. (1995), Regulation in the Reagan–Bush Era: The Eruption of Presidential Influence, Pittsburgh, PA: University of Pittsburgh Press. Harper, Kirke (1992), ‘The Senior Executive Service after one decade’, in Patricia W. Ingraham and David H. Rosenbloom (eds), The Promise and Paradox of Civil Service Reform, Pittsburgh, PA: University of Pittsburgh Press. Huddleston, Mark W. (1992), ‘To the threshold of reform: the Senior Executive Service and America’s search

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for a higher Civil Service’, in Patricia W. Ingraham and David H. Rosenbloom (eds), The Promise and Paradox of Civil Service Reform, Pittsburgh, PA: University of Pittsburgh Press. Ingraham, Patricia W. and Carolyn Ban (eds) (1984), Legislating Bureaucratic Change: The Civil Service Reform Act of 1978, Albany, NY: State University of New York Press. Kaufman, Herbert (1977), Red Tape: Its Origins, Uses, and Abuses, Washington, DC: Brookings Institution. Kettl, Donald F. (1994), Reinventing Government? Appraising the National Performance Review, Washington, DC: Brookings Institution Center for Public Management. Krugman, Paul (2007), ‘The green-zoning of America’, New York Times, national edn, 25 February: A25. Lane, Larry M. (1992), ‘The Office of Personnel Management: values, policies, and consequences’, in Patricia W. Ingraham and David H. Rosenbloom (eds), The Promise and Paradox of Civil Service Reform, Pittsburgh, PA: University of Pittsburgh Press. Lee, Christopher (2008), ‘Bush plan to contract federal jobs falls short: scope and savings have not met goals’, Washington Post, 25 April, available at: http://www.washingtonpost.com/wp-dyn/content/article/2008/04/24/ AR2008042403457. Lewis, David E. (2008), The Politics of Presidential Appointments: Political Control and Bureaucratic Performance, Princeton, NJ: Princeton University Press. Light, Paul C. (1995), Thickening Government: Federal Hierarchy and the Diffusion of Accountability, Washington, DC: Brookings Institution. Light, Paul C. (1997), The Tides of Reform: Making Government Work, 1945–1995, New Haven, CT: Yale University Press. Light, Paul C. (1999), The True Size of Government, Washington, DC: Brookings Institution Press. Light, Paul C. (2008), ‘A Government ill-executed: The 2007 Elmer Staats Lecture’. Public Administration Review, 68 (3), May/June: 413–19. Long, Norton (1949), ‘Power and administration’, Public Administration Review, 9 (4): 257–64. Lowi, Theodore J. (1967), ‘The public philosophy: interest group liberalism’, American Political Science Review, 61: 5–24. Lowi, Theodore J. (1969), The End of Liberalism: Ideology, Policy, and the Crisis of Public Authority. New York: W.W. Norton. Lunch, William M. (1987), The Nationalization of American Politics, Berkeley, CA: University of California Press. Lundquist, Lennart (1980), The Hare and the Tortoise: Clean Air Policies in Sweden and the United States, Ann Arbor, MI: University of Michigan Press. McConnell, Grant (1970), Private Power and American Democracy, New York: Vintage. Moe, Terry M. (1985), ‘The Politicized Presidency’, in John E. Chubb and Paul E. Peterson (eds), The New Direction in American Politics, Washington, DC: Brookings Institution. Nathan, Richard P. (1983), The Administrative Presidency, New York: John Wiley. National Performance Review (1993), From Red Tape to Results: Creating a Government that Works Better and Costs Less, Washington, DC: Government Printing Office. Office of Management and Budget (OMB) (1998) Federal Activities and Inventory Reform Act of 1998, available at: http://www.whitehouse.gov/omb/procurement/fairact.html. Office of Management and Budget (OMB) (2002) President’s Management Agenda, available at: http://www. whitehouse.gov./omb/budget/fy2002/mgmt./pdf. Pew Research Center for the People and the Press (1998), ‘Deconstructing distrust: how Americans view government’, available at: http://www.people-press.org/trustrpt.htm. Rockman, Bert A. (1993), ‘Tightening the reins: the federal executive and the management philosophy of the Reagan presidency’, Presidential Studies Quarterly, 23: 103–14. Rockman, Bert A. (2001), ‘Politics by other means: administrative reform in the United States’, International Review of Public Administration, 6: 1–14. Rose, Richard (1976), Managing Presidential Objectives, New York: Free Press. Savas, Emmanuel S. (1987), Privatization: The Key to Better Government, Chatham, NJ: Chatham House. Schubert, Glendon (1960), The Public Interest: A Critique of the Theory of a Political Concept, Glencoe, IL: Free Press. Shane, Peter (2008), Madison’s Nightmare: How Executive Power Threatens American Democracy, Chicago, IL: University of Chicago Press. Shane, Scott (2007), ‘In Washington, contractors take on biggest role ever: questions of propriety and accountability as outside workers flood agencies’, New York Times, national edition, 4 February: A1, A24. Skowronek, Stephen (1982), Building A New American State: The Expansion of National Administrative Capacities, 1877–1920, Cambridge: Cambridge University Press. Weko, Thomas J. (1995), The Politicizing Presidency: The White House Personnel Office, 1948–1994, Lawrence, KS: University Press of Kansas.

13 French administrative reform: change and resistance Glyn Jones and Alistair Cole

Background to the French politico-administrative system France has a curious hybrid structure of executive authority, a system sometimes known as semi-presidentialism. The 1958 constitution affirmed the bases of a normal parliamentary system, creating a government responsible to Parliament (Article 20), headed by a prime minister (Article 21). But the constitution also strengthened the President of the Republic, in practice the key executive leader for most of the 50 years of the Fifth Republic. Directly elected since 1965, the President of the Republic has usually been able to rely upon a supportive parliamentary majority. The President has hired and fired not only the Prime Minister, but all the leading ministers as well. Interventionist Presidents, backed by a supportive majority in the National Assembly, have defined the main parameters of domestic, European and foreign policy. The present incumbent, Nicolas Sarkozy, has gone so far as to nominate personally advisers to ministers, as well as closely supervising the selection and dismissal of the key executive personnel. Ministers and the Prime Minister owe their survival to presidential favour and can easily be dismissed if they fall out of favour. The President of the Republic also names the leading civil servants. The top 300 or so Civil Servants are political appointees, named in the Council of Ministers on proposal of the President. The lead ministries are: the Prime Minister and the Prime Minister’s office; the Ministry of Finances; and the main spending ministries comprising Education, Health, Transport, and Defence. In a formal sense, political co-ordination is the province of the Prime Minister and governmental coordination is carried out by the General Secretariat of the Government formally attached to the Prime Minister’s office. The Prime Minister is formally charged with political co-ordination, but the effectiveness of such coordination is highly contingent: depending upon the actors present; the prestige of the premier; the support of public opinion; the strength of other ministers; and, especially, the view of his role adopted by the President himself. The Elysée Palace (the home of the President) offers a form of macro co-ordination and political leadership, with some presidents (Giscard d’Estaing, Mitterrand, Sarkozy) reserving for themselves the arbitration of the most divisive issues and ensuring that their staffs were present at all key inter-ministerial meetings. The influence of the presidential staff has been stronger at some times in recent French history than at others. The General Secretary of the Elysée can perform a co-ordinating role of the foremost importance, the case of Védrine under Mitterrand (1981–95) or Villepin under Chirac (1995–2002), both of whom went on to to occupy major ministerial portfolios. Under President Sarkozy, the General Secretary of the Elysée, Claude Guéant, has adopted a far more active profile than any of his predecessors. There are no cast iron-rules for procedural hierarchy between the core Ministries. For 220

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instance, though the Finance Ministry usually figures in prominent position, this is not always the case. The prestige of the Finance Ministry has been lessened by the rapid turnover of ministers – six since 2002. President Sarkozy divided the Finance Ministry into two upon his election: alongside the Finance Minister (Christine Largarde) President Sarkozy named a Minister for Public Accounts – Erik Woerth – with control over the budget. Other key ministries are kept in a position of subordination by the rapid turnover of personnel; the case of Education (five ministers since 2002) being particularly apposite. Above all, the Prime Minister is nearly always in a subordinate positioning relation to the President. The present incumbent (at the time of writing) Francois Fillon has made his loyalty to President Sarkozy a touchstone of his own success. But past experience suggests that there will be conflict sooner or later between the elected President and the nominated Prime Minister – and that this will turn to the advantage of the former. President Sarkozy has pushed the personal presidential control over political nominations farther than any of his predecessors. The role of co-ordination and governmental leadership that is, in theory, that of the Prime Minister in the 1958 constitution is now vested in Sarkozy, who maintains a close relationship with his advisers and ‘his’ ministers. Sarkozy personally determined the composition of the first two Fillon governments. The policy of opening up the presidential majority to include prominent figures from the Socialist opposition (notably Bernard Kouchner as Foreign Affairs Minister) proved a political masterstroke, destabilizing the Socialist Party, keeping the right-wing Union for a Popular Majority at a distance and strengthening the claim to govern in the name of all of the French. Opening up the majority was not limited to political opponents, but also to representatives of civil society, to businesspeople and recognized experts in their own domain. The French administration The French administration has traditionally been characterized as a centralized and hierarchical system that embodied the power and legitimacy of the French state and the general interest of the nation as whole (Stevens 1996). It had its origins in the Napoleonic model of administration which intervened in all aspects of the socio-economic life of the French nation (Knapp and Wright 2001). The organizational structure of the French administration is primarily constituted of the central ministries in Paris and their field services situated in the 22 regions and 96 départements. The traditional mode of operation was for the central ministries to prescribe the policy objectives and the means by which these were to be achieved whilst the field services were expected to apply these centrally devised directives to their respective local environments (Jones 2006). This hierarchical mode of relations is informed by senior Civil Servants who view their elitist education at training schools such as the École Nationale de l’Administration (ENA) and the elite engineering schools, notably the École Polytechnique, as exclusively qualifying them to define the general interest that provides the basis for state activity (Rouban 1995). Such an elitist perspective makes senior Civil Servants distrustful of and distant from officials working in the field services (Cole 2005). The centralized and hierarchical character of the French administration is underpinned by a strong legalistic tradition which is informed by a distinctive French notion of service public. It is this concept of French public service that forms the basis of the operational principles of the French administrative system (Clark 2000a; Cole 2000).

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From a legal perspective, French public service requires its services to be comparable and of equal standard, irrespective of the locality in which they are delivered (Clark 1998). Regulatory controls are applied to ensure public services are delivered accordingly through a dual process of regulation carried out by inspectorates and a system of administrative and financial jurisdiction, overseen by the Court of Accounts and the Council of State (Oberdorff 1998). Two of the most prestigious inspectorates are the General Finance Inspectorate which audits the expenditure of public monies in any administrative body and the General Inspectorate for the Administration which is charged with monitoring the activities of the central ministries and prefectures. The Court of Accounts is responsible for verifying the expenditure of public funds and for ensuring that public bodies are working in accordance with financial and accounting procedures. The Council of State lies at the apex of France’s system of public law where both French citizens and public officials are able to seek the right of redress against any administrative decision. A further regulatory control imposed on a ministry and its field services is the scrutinizing of its budgetary expenditure and spending plans by the Finance Ministry. Any expenditure within a ministry requires the authorization of a Finance Ministry official, one of whom is located in each ministry. In this way, the Finance Ministry has traditionally been able to exercise control over the spending ministries through vigorously scrutinizing the latter’s spending plans (Quermonne 1991). This has the consequence of minimizing a ministry’s room for manoeuvre in its operational management. Nevertheless, regulatory controls have served more to ensure compliance with administrative procedures rather than contributing to any assessment of performance of the French administrative system in terms of its productivity and cost-effectiveness (Stevens 1996). The French notion of service public also informs the terms and conditions of public officials as set out in the Civil Service code created in 1946. The statute seeks to ensure that the terms and conditions of service for officials are equal and comparable across the French administrative system. In terms of their obligations, four key principles underpin the status and public duty of an official (Delblond 1994; Rouban 1996): the requirement for officials to carry out those responsibilities assigned to their post; an expectation to comply with the orders of their managers unless such orders are perceived as illegal or contrary to the public interest; a prohibition from holding more than one public sector post or from holding any position in the private sector; and ensuring that their behaviour away from work does not undermine the reputation of their administration. From this perspective, the notion of public service provides a ‘logic of appropriateness’ for the organizational behaviour of officials in discharging their responsibilities (Clark 2000b). For public officials, career structure is characterized by the separation between the rank held and the post that (s)he occupies within the administration. The basic principle of the Civil Service is one of career management through the corps. The term is used to describe the different state grades to which all public officials must belong. Membership of a corps will entitle an official to carry out a range of roles at different hierarchical levels. As an official is recruited to a particular rank within the corps rather than a specific post, promotion is based on rank held and seniority. The career path of a public official will, therefore, involve movement between the different hierarchical ranks within a corps structure. Promotion prospects are dependent on the standing within the corps structure rather than actual role occupied, this induces a greater commitment to the corps among

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officials rather than to their respective government departments (Quermonne 1991). Such a system lends itself towards conservatism and constitutes an obstacle towards any move towards performance related pay or targets (Cole 2005). Such a strong corporate identity is more pronounced further up the administrative hierarchy, particularly among members of the grands corps which comprise the most prestigious administrative grades (Kessler 1994). The grands corps are traditionally classified as the Council of State, the Finance Inspectorate, the Court of Accounts (the three administrative grands corps), the Mining Corps and Bridges and Highways Corps (the technical corps). To these traditional five can be added the Prefectoral and the Diplomatic Corps. Its members will normally constitute the top graduates from ENA for the administrative grands corps and the École Polytechnique for the technical grands corps. As evidenced by the roles undertaken by the Council of State and the Court of Accounts, the grands corps exercise controlling and supervisory functions over the rest of the French administration (Stevens 1996). The grands corps derive authority from their assertion to have the technical competence and expertise to define the collective national interest in relation to particular policy domains (Ridley 1966). The authority and prestigious standing of the grands corps enables them to exert disproportionate influence over the rest of the administrative system and to ensure its compliance with their rulings1 (Kessler 1994). The outlook of a particular corps will also condition a senior Civil Servant’s perspective and commitment to a process of change (Bezes 2000; Rouban 1994). For instance, the Mining and Bridges Corps are more receptive to modernization due to the technical and business nature of their work whereas the Council of State and Court of Accounts have been more negative due to concerns about the compatibility of managerial-type reforms with existing administrative procedures (Rouban 1994). The terms and conditions of service of public officials, as reflected by their corps membership, have been vigorously defended by the public sector trade unions. There exists a higher level of unionization within the French public service than the private sector with levels of membership at over 20 per cent in the education and finance sectors (Cole 2005; Siwek-Pouydesseau 1996). The respective public sector trade unions2 are officially viewed as social partners of the government and, as such, expect to be involved in discussions concerning conditions of service including recruitment and promotion. However, the problem for reform-inclined governments has been the determination of the unions to defend the Civil Service statute, the French notion of service public and the professional interests of public officials. A consequence has been that successive French governments have had to proceed cautiously when considering proposals to revise public officials’ terms and conditions of employment which has tended to act as a constraint on their reforming zeal (Claisse 1993; Chevallier 1996). Pressures for reform Since the 1980s, the French administration has been subject to a variety of pressures which have presented challenges to its structures and procedures. The effects of Europeanization and closer European integration have led to the European Union (EU) emerging as a key reference point in policy-making, to the detriment of senior public officials. With subnational levels being viewed as appropriate distributive points for EU funding, momentum has been generated for additional autonomy to be transferred to local levels, particularly the regions (Oberdorff 1992). Furthermore, the drive to achieve

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the convergence criteria for European Monetary Union (EMU) necessitated cost-saving measures across the French administration to reduce public expenditure. The overall impact of Europeanization has, therefore, been to pose a serious challenge to the French public policy model (Muller 1992). The 1982–83 decentralization reforms constituted a second key pressure on the French administrative system. The reforms delegated greater autonomy to the respective tiers of French local government – the regions, départements and communes – through removing the Prefect’s executive authority over the localities and conferring on them the following responsibilities: communes gained powers in town planning, construction and maintenance of buildings and equipment for primary education; the départements acquired responsibilities in transport, buildings, equipment for lower secondary schools and social services; and the regions assumed similar responsibilities in relation to upper secondary schools in addition to vocational training and regional planning. As a result, the local policy-making system became a more pluralistic system with local authorities now having greater initiative and more autonomy regarding policy making at this level (Duran and Thœnig 1996; Négrier 2000). The decentralization reforms, therefore, constituted a change in the French administrative tradition whereby state representatives in the field services and the prefectures could no longer claim a monopoly over the provision of technical expertise and the implementation of public policies (de Montricher 1995). Local authorities were now afforded the means to develop their own expertise and to establish their own structures capable of delivering policies in accordance with the expectations of the local populace. The effect on the field services was that they now constituted one of several actors within a local policy network (Cole and John 1995). This meant their influence would be largely determined by whether local authorities chose to involve them as policy partners or decided to seek alternative sources of expertise (Grémion 1992). Ministries such as the Infrastructure Ministry sought to respond to this challenge through delegating greater managerial autonomy to its field services in order to enable them to adapt to a more pluralistic system of local policy-making (Duran 1993; Pavé 1992). The significance of these measures was to introduce the notion of contractualization into the relationship between a ministry and its field service, thereby laying the foundations for the managerial-type reforms introduced in the 1990s (Barouch and Chavas 1993). A further pressure for change was a widespread malaise felt among public officials. Officials perceived a decline in their socio-professional status due to limited opportunities for social mobility (Bodiguel and Rouban 1991; De Montricher 1991) and the private sector being seen as a more attractive template to imitate (Chevallier 1988). Career management structures were viewed as offering minimum incentives to improve work productivity with promotion prospects based on seniority and rank held within the corps rather than actual work performance. Promotion opportunities were also restricted by a combination of ENA’s monopoly on senior posts and greater competition from an overqualified staff base particularly at middle and lower grades (Rouban 1993). The rigidity of the Civil Service statute was viewed as contributing to low morale due to its operation often resulting in officials acquiring additional responsibilities but still remaining at the same pay-scale point (Claisse 1993). However, changes to the Civil Service statute or revisions to appraisal that move away from the principle of equality towards one of rewarding individual merit are likely to incur the wrath of the public sector trade unions

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(Chevallier 1996). This has probably accounted for why such an item has not featured in administrative reform programmes (ibid.). A final pressure has been the influence of managerial ideas and practices associated with the new public management (NPM) paradigm on the administrative reform agendas of Organisation for Economic Co-operation and Development (OECD) countries since the 1980s (Aucoin 1990; Ridley 1996; Wright 1994). The attraction of such managerial concepts has been attributed to the financial constraints incurred as a result of the economic downturn in Western Europe since the 1970s and the subsequent need to contain expenditure (Ridley 1996). New Public Management advocates the deployment of private sector practices to improve the efficiency of public administration with a greater emphasis on output and attainment of results rather than an adherence to general rules of procedure, characteristic of the traditional approach (Hood 1994). The influence of NPM on the respective reform agendas of OECD countries has led to claims of a new global paradigm in public management in terms of a shift towards a more entrepreneurial model of government (Aucoin 1990; Osborne and Gaebler 1992). However, such predictions have been criticized on the grounds that they do not take into consideration a country’s institutional traditions which will determine a country’s receptivity to managerial reform (Ridley 1996; Wright 1994). The French administrative reform process: from the 1980s to the present day In response to the aforementioned pressures, successive French governments have embarked on administrative reform programmes. Due to a combination of inherent conservatism at senior politico-administrative levels, the public sector unions’ resistance to change and operational levels not being afforded the means to initiate change, the respective reform programmes have overall had a limited impact on the functioning of the French administrative system. A summary of the key reform measures is provided in Table 13.1 with the respective reform programmes and their impact discussed below. Administrative reform in the 1980s The period 1983–84 marked a watershed in the French administrative reform process. It symbolized a move away from the traditional quantitative approach of seeking growth in the public sector to a more qualitative strategy that emphasized efficient use of existing resources in the face of budgetary constraints (Albertini 2000; Barouch and Chevas 1993; Chevallier 1988; Stevens 1988). The change in strategy had been necessitated by the economic austerity measures introduced in response to the economic downturn in France of the early 1980s. The move towards a more qualitative approach was evidenced by the advocation of private sector practices – including techniques in human resource management, quality circles and auditing tools – to services to enable them to adapt to reduction in resources and to induce staff motivation. During this period, reform measures aimed to improve administrative efficiency through increasing computerization to improve working practices and the simplification of administrative texts. An additional influence on the reform process was the growing expectations of French citizens in respect of the quality and delivery of public services (Albertini 2000). This informed schemes such as the ‘Administration at Your Service’ introduced in 1983 that sought to improve reception

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Table 13.1

Summary of French administrative reforms from the 1980s to the present day

Time period

Key administrative reforms and themes

1980s

1983 Administration at Your Service Improvement in reception facilities 1986–88 Chirac Government ‘Quality Agenda’ Introduction of performance targets Simplification of administrative procedures Establishment of quality circles to empower officials 1989–97 Public Service Renewal/1995–97 Reform of the State Delegation of greater managerial and budgetary responsibility to field services through contractual arrangements between field services and Ministry 1997–2002 Jospin government Clearer differentiation between roles of central and local administrative levels Reform of budgetary procedures Improvement in quality of service delivery 2006 Organic Law relative to the Finance Laws Introduction of a new budgetary regime Sarkozy’s Reform Programme Reform of public sector pension regime Greater university autonomy

1990s

Twenty-first century Future – 2007 onwards

facilities in Prefectures and provided French citizens with the name of an official who would be dealing with their enquiry (Stevens 1988). The 1986–88 Chirac government built on these initiatives in prioritizing a drive for quality within the public sector. Its ‘Quality’ agenda was informed by a changing socioeconomic context, characterized by technical development, growing consumer power, international competition and the proliferation of services (Chevallier 1988). Reform measures aimed to improve the efficiency and quality of services through introducing performance targets and the simplification of administrative procedures. In addition, services were delegated greater budgetary flexibility through being allocated globalized operating budgets.3 A key strategy in enhancing quality was to make public officials responsible for improving the quality of services under their remit. This meant that quality initiatives were focused on the implementation stage of the policy-making process which denoted a departure from the traditional top-down approach to initiating administrative reforms (Rouban 1989). Improvements in human resource management were seen as integral to this process in order to encourage the commitment and participation of officials to reform. The Chirac Circular of April 1988, therefore, recommended improved training for personnel managers and highlighted the need for enhanced staff development in order that officials could be better equipped to deal with the challenges of reform (Barouch and Chevas 1993). The establishment of quality circles also endeavoured to involve staff more closely in decisions affecting the operation of their respective services as well as to improve intradepartmental communication. The purpose was to foster a greater sense of ownership

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and commitment of officials towards their service. However, the quality circles achieved mixed results with many circles reduced to the role of discussing minor operational issues such as car parking, often in the absence of senior management (Rouban 1989). Furthermore, the nature of participation in quality circles tended to re-emphasize the traditional compartmentalization found within services with officials aligning with their respective departments. The limited impact of these reforms can be attributed to the process of change taking place within the confines of existing institutional arrangements, a fact Stevens (1988) attributes to the administrative elite wishing to retain existing structures and procedures. Nevertheless, a diversity of reform experiences was found among the various ministries (Barouch and Chevas 1993). Managerial reforms made more progress in those ministries engaged in commercial or industrial activities and in those field services that provided services to local government clients (Clark 1998). A notable example was the Infrastructure Ministry whose field services were delegated greater managerial autonomy within the framework of a contractual agreement agreed with the central ministry (Duran 1993; Pavé 1992). Under this arrangement, the field services agreed to achieve targets drawn up in consultation with the central ministry and were provided with greater control over their operations to help attain these targets. The regional field services of the Education Ministry, the rectorates, were delegated increased budgetary autonomy, more flexible human resource management and more control over pedagogical direction as a response to the 1982–83 decentralization measures (Cole 1997). However, the centre retained control of key policy areas including allocation of staff, overall pedagogical orientation and the distribution of resources which limited the field services’ room for manoeuvre (Champagne et al. 1993; Cole 1997). In summary, the period 1981–88 marked the growing influence of private sector practices associated with the NPM agenda within the French administration. This was evidenced by reform measures to improve administration–users relations, the drive to enhance the quality and efficiency of services and an empowerment of operational levels which were increasingly viewed as key instigators for change. However, the diversity in the reform experiences of the respective ministries was indicative of the influence of institutional arrangements. Nevertheless, the reforms introduced during this period symbolized a shift in strategy from the traditional top-down approach to instigating change to one in which officials in field services were seen as having an active role to play in the reform process (de Montricher 1996; Rouban 1989). French administrative reform in the 1990s The two key administrative reform programmes introduced during this period were the Public Service Renewal reforms introduced by Michel Rocard’s government in February 1989 and the Reform of the State programme brought in by Alain Juppé’s government in July 1995. Both the Public Service Renewal and Reform of the State programmes viewed the field services as comprising the main impetus to change in a process of innovation at the periphery (Chevallier 1993; Guyomarch 1999). Such a process was to be facilitated through the field services having greater control in determining the means by which policy objectives would be achieved within a policy and resources framework determined by the centre (Cole and Jones 2005; Jones 2006). Increased financial autonomy was conferred through the block allocation of operational budgets with increased responsibilities

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in real estate and human resource management. Schemes such as service plans, cost centres and service contracts provided the mechanisms through which greater autonomy was to be delegated to the field services and, as such, began to establish the notion of contractual agreements to define the relationship between a central ministry and its field services (Ryckeboër 1992). As the involvement of public officials was a prerequisite to the success of the reforms, it was recognized that officials would need to be given an incentive to actively engage in the process, a challenge compounded by the apparent lack of inducements in existing career management structures (Trosa 1996). Accordingly, a key theme of both programmes was to improve human resource management through the provision of appropriate training to enable officials to contend with their new responsibilities in addition to greater account being taken of work performance in appraisals (Jones 2006). The success of the reforms would, therefore, be determined by the capacity of the field services to move from a traditional perception of their role as hierarchical subordinates towards a more ‘logic of appropriateness’ (March and Olsen 1996). Fieldwork investigations into the effects of the Public Sector Renewal and the Reform of the State programmes at the field service level4 revealed that minimal change took place due to a variety of factors (Cole and Jones 2005; Jones 2006). Although the delegation of greater budgetary autonomy through the cost centre and service plan schemes was found to have afforded field services more financial control over their finances, this was minimized by the regulatory controls imposed by the local paymaster of the Finance Ministry. Such controls included a continuing justification for all items of expenditure and a requirement to submit accurate forecasts on predicted expenditure for operational costs. The field services’ capacity for financial room for manoeuvre was further compounded by budgetary cutbacks instigated by the need to reduce public expenditure in order to meet the convergence criteria for European Monetary Union. These financial restrictions made it problematic for field services to discharge even their core responsibilities which contributed to low morale in those services most severely affected. There were also minimal incentives for staff to actively engage with the reform process due to the respective programmes being associated with budgetary cutbacks and corresponding increased workloads due to retired and promoted staff not being replaced. The result was that the primary focus of staff was to maintain existing levels of service, particularly important for field services such as the Infrastructure Ministry which undertook work for local businesses. A further disincentive was length of service and grade remaining the main criteria for promotion which meant that actual work performance was unlikely to entail any benefit for officials. Finally, the combination of the field services’ continued dependency on the central ministry for guidance in applying directives and the latter’s persistent interference in the field services’ operational management served to reinforce the status quo. The fieldwork findings concurred with other empirical research conducted into the effect of the 1989–97 reform programmes. The benefits of schemes such as the cost centres, service plans and service contracts were seen as instilling in officials a greater sense of responsibility for their actions (Ryckeboër 1994). These initiatives were also recognized for enhancing internal communication channels through officials being involved in defining performance-related targets for their services to attain (Ryckeboër 1994; Serieyx 1994). However, the overall finding was that the reforms had minimal impact

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due to the centralized nature of financial procedures (Fialaire 1993) and the persistence of a hierarchical model of relations between the central ministries and the field services (Cluzel 2001; Fialaire 1993). Budgetary cutbacks and shortcomings in managerial training also served to minimize any room for manoeuvre in the field services’ operational management (Ryckeboër 1994; Serieyx 1994) with officials not being motivated to participate due to a lack of career and financial benefits (Cluzel 2001; Ryckeboër 1994; Serieyx 1994). A critique of the Public Sector Renewal and the Reform of the State programmes was, therefore, the incompatibility between the managerial nature of the reforms and the existing institutional arrangements (Chevallier 1996; Rouban and Ziller 1995). This led Rouban (1997: 143) to refer to the French administrative reform process as ‘a search for a third way between neo-liberalism and administrative conservatism’. Research into the impact of the 1989–97 reforms, therefore, confirm Clark’s (2000a) assessment that institutional and cultural variables limit the capacity of the French administrative system to move towards a more managerial model of modernization. Into the twenty-first century The administrative reforms introduced by the 1997–2002 Socialist government of Lionel Jospin continued with the main themes of the Public Sector Renewal and the Reform of the State programmes (Machin 2001). A package of measures – the simplification of administrative procedures, enhancement of internal and external communication channels, the development of e-government initiatives and the definition of quality thresholds for each ministry – sought to improve the quality of service to users. The measures undertaken by each ministry were overseen by a Commission pour les simplifications administratives (COSA) which by 2002, reported an abolition of forms and a reduction in the amount of documentation required to access state benefits or services (COSA 2002). There was also a drive to reform budgetary procedures in order to provide field services with greater control over their resources. Measures including a reduction in the number of budgetary chapter and an increased capacity for services to transfer unused funds to the next financial year were enshrined in ‘target contracts’ (contrats d’objectifs) (Service Public 2000). Under these contracts, field services agreed to attain specified performance objectives in return for having greater control over their resources and pay. Other reforms aimed to provide the field services with greater control over their operational management through seeking a greater differentiation between central and local roles. Under the local project (le projet territorial) and national directives of orientation (les directives nationals d’orientation), it was envisaged that the central ministries would assume a more strategic role in articulating the general policy orientation. The field services, in collaboration with their counterparts in other ministries, were then expected to translate the strategic vision into actual policy detail in response to the needs of the local community (CIRE 2000). However, a 2003 report by the Court of Accounts revealed that these measures had a limited impact on the managerial autonomy of field services owing to the degree of financial and centralized control still being exercised on their operations (Cour des Comptes 2003). Reforms also aimed to improve human resource management through a greater emphasis on personnel management training, proposed revisions to the appraisal scheme

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to recognize work performance and an increased awareness of training and education opportunities for officials (CIRE 2000). The rationale behind such measures was to try and provide public officials with an incentive to fully engage in the reform process. However, the actual impact of the reforms was minimized by the absence of any proposals to reform the Civil Service code which stipulated the terms and conditions of public officials. Government reticence to reform the code could be largely attributed to the opposition of the public sector trade unions. Indeed, the influence of the trade unions on the reforming zeal of the Jospin government was evidenced by three ministers losing their posts in March 2000 due to an inability to push through reforms in their respective ministries (L’Express 2000). In both the Education and the Finance Ministries, reform proposals had either to be watered down or shelved in the face of union opposition that sought to defend a traditional concept of public service.5 These reform themes were continued in the administrative programmes undertaken by the 2002–05 Jean Pierre Raffarin and 2005–07 Dominique de Villepin governments. Attempts to improve human resource management were undertaken through a delegation of responsibilities in the recruitment, appraisal, training and promotion of staff to field service managers (Ministère de la Fonction Publique et de la Réforme de l’Etat 2005). A reform to the appraisal system was also advocated, with greater recognition for high-performing officials. This was to be complemented by the introduction of a pilot scheme for performance-related pay for directors of central administrative departments in some ministries. Measures to simplify administrative procedures and to improve accessibility for public service users included an investment in electronic communication and a greater number of officials being delegated authorized signing authority (ibid.). The most significant reform was the introduction of a new budgetary regime, Organic Law relative to the finance laws (LOLF) – loi organique relative aux lois des finance – which came into operation on 1 January 2006. This repealed the ordinance of 1959 which had contributed to budgetary rigidity whereby parliamentary deputies were required to approve the recurrent expenditure of all ministries in one vote with little evaluation of either policy objectives or expenditure incurred (Feller 2006). Under the new regime, budgetary means are allocated to missions and programmes rather than ministries. As a result, the 850 separate budgetary lines which generally corresponded to divisions within ministries have been replaced by 40 missions and 132 programmes which cut across departments. The missions are designed to cover a distinct public policy (for example, Higher Education) with the programme constituting the core unit of budgetary accounting, replacing the traditional budgetary chapters. Whereas the boundaries between budgetary chapters used to be watertight, there is now greater latitude to transfer funds between categories of expenditure within programmes (for example, operations, investment and intervention). The LOLF was also accompanied by the introduction of a new accountancy procedure designed to bring the management of the state’s budget much closer to the norms operated in the private sector. The LOLF, therefore, implies a move towards more standardized definitions of performance indicators and new forms of central monitoring that ministries have previously been successful in resisting. Nevertheless, the reforming zeal of the governments during this period remained constrained by the prospect of unionist opposition and the potential for strikes. The government of Jean-Pierre Raffarin faced a wave of demonstrations and a general strike in May

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2003 in response to his plans to make public sector workers pay pension contributions over 40 years instead of 37.5 years. The proposed reforms were not even applicable to railwaymen and employees of the electricity and gas utilities who were covered by special schemes (The Economist 2003b). Addressing the pension crisis was seen as essential to reducing the public sector deficit which had already breached the limit of 3 per cent of gross domestic product, a requirement of the euro-zone’s stability and growth pact (The Economist 2003a). The difficulty in introducing reform was further demonstrated by Dominique de Villepin’s government’s withdrawal of a labour reform in April 2006 in the face of public and union protest.6 The future The new French President, Nicolas Sarkozy, has promised to introduce a radical and immediate reform programme, maintaining that the French people are looking for change and for a break with the past. Proposed administrative reforms include the following (The Economist 2007a): measures to force state workers to provide minimum public service during strikes; a more in-depth reform of public sector pension regimes; granting universities greater autonomy from the state; and reducing the number of public officials through one in two retiring civil servants not being replaced. Nevertheless, despite the reformist rhetoric, Sarkozy still accepts the need for an interventionist state, particularly in relation to industrial policy, and advocates maintaining a large public sector (The Times 2007). An additional brake on Sarkozy’s reforming zeal is the resistance of the public sector trade unions to his reform programme as evidenced by the strike action in November 2007 (The Economist 2007b). It, therefore, remains to be seen whether Sarkozy’s administrative reforms will constitute radical change or merely reflect the traditional reformist approach of change taking place within existing institutional structures. Conclusion A report by the Court of Accounts in 2003 drew attention to the variable reform experiences of the respective ministries over the past ten years and a minimal impact at field service level (Cour des Comptes 2003). The report noted how central administrative departments experienced difficulties in adapting to their field services exercising greater managerial responsibility, due to a lack of expertise and a rigidity in the institutional framework. Similarly, the report commented how the allocation of block budgets to the field services had been minimal in their effect, due to the multitude of budgetary categories and the variety of criteria employed by central departments for allocating funds. The findings of the report served to highlight the resilience of traditional institutional features of the French administrative system to change. It also highlighted the path-dependent nature of a reform process taking place within existing structures. Such institutional variables account for the minimalist impact of managerial reforms, particularly pertaining to the NPM agenda, on the French administrative system (Guyomarch 1999; Knapp and Wright 2001). Nevertheless, it remains to be seen whether Knapp and Wright’s (2001) observation of political and socio-economic conditions not being conducive to effecting radical reform to the French administrative system remains applicable in the future. The electoral mandate afforded to Nicolas Sarkozy’s government for reform combined with the recognized detrimental effect that a bloated public sector is having on French

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economic competitiveness (The Economist, 2006) constitutes an opportunity for real change. Notes 1. The Council of State and Court of Accounts publish annual reports that highlight areas of maladministration with administrative departments expected to comply with any recommendations. 2. The three main public sector unions are the Confederation Générale du Travail (CGT), the Confederation Française Démocratique du Travail (CFDT) and the Force Ouvrière (FO) with the latter union being especially attached to the traditional systems of recruitment and promotion. 3. The term ‘globalized budgets’ is a translation of globalisation des credits which referred to the allocation of budgets in a block form rather than being compartmentalised into individual budgetary chapters. 4. Glyn Jones carried out 13 interviews in the regional field services of the Infrastructure, Agriculture and Education Ministries in the Champagne-Ardennes region during May 1996 and January/February 1997. In the Reims rectorate, interviews were conducted with the secretary general, heads from the Financial Affairs and Examinations sections and staff in the division for inspectors and administrative staff. For the regional directorate of the Agriculture Ministry, the regional director and his deputy were interviewed as well as administrative staff in the directorate. At the regional directorate of the Infrastructure Ministry, interviews were carried out with regional director, a technician from the Unit for Technical Policy and Assistance to Businesses and an official seconded to the directorate from the National Institute for Statistics. All interviewees were asked about their experiences of the administrative reform process and its impact on their respective field service. Alistair Cole carried out 20 interviews with officials in the Education and Infrastructure ministries in 1999, 2000 and 2004. Most were carried out in the Parisian headquarters of the education ministry in 1999, 2000 and 2004, dealing specifically with the themes of contractualization, evaluation, political and administrative decentralization and management reform. In 2004, Alistair Cole also carried out elite interviews in the Infrastructure and Culture ministries on the same themes. The 2004 fieldwork formed part of the ‘Governing and Governance in France’ large research project financed by the British Academy from 2004 to 2006 (LRG-37213). The 1999 and 2000 interviews formed part of the project entitled ‘The Governance of Educational Change in England and France’ financed by the Nuffield Foundation (SGS/LB/0278). 5. In the case of the Finance Ministry, unions opposed the merging of two administrative departments as part of a measure to streamline France’s tax system with a key objection being that the proposals threatened a public sector presence in the localities. 6. The labour reform aimed to encourage job creation by providing employers with the flexibility to terminate contracts within the first two years of taking on young people under 26.

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Clark, D. (2000a), ‘Public service reform: a comparative West European perspective’, European Politics, 23: 25–44. Clark, D. (2000b), ‘Citizens, charters and public service reform in France and Britain’, Government and Opposition, 35: 152–69. Cluzel, L. (2001), ‘De la responsabilité à la responsabilité: l’exemple des contrats de service dans les service publics en France’, Politiques et Management Public, 19: 1–23. Cole, A. (1997), ‘Governing the academies: sub-central secondary education policy making in France’, West European Politics, 20: 137–56. Cole, A. (2000), ‘The service public under stress’, in R. Elgie (ed.), The Changing French Political System, London: Frank Cass, pp. 166–84. Cole, A. (2005), French Politics and Society, Harlow: Pearson Education. Cole, A., and John, P. (1995), ‘Local policy networks in France and Britain: policy co-ordination in fragmented political sub-systems’, West European Politics, 18: 89–109. Cole, A., and G. Jones (2005), ‘Reshaping the state: administrative reform and the new public management in France’, Governance, 18: 567–88. COSA (2002), 1997–2002: cinq ans de simplifications – le bilan des measures en direction des particuliers, Paris: La Documentation française. Cour des Comptes (2003), La Déconcentration des administrations et la réforme de l’Etat, Paris: La Documentation française. De Montricher, N. (1991), ‘The career public service in France: problems and prospects’, International Review of Administrative Sciences, 57: 373–84. De Montricher, N. (1995), ‘Decentralisation in France’, Governance, 8: 405–18. De Montricher, N. (1996), ‘France in search of relevant changes’, in J.P. Olsen and G. Peters (eds), Learning from Experience: Experiential Learning in Administrative Reforms in Eight Bureaucracies, Oxford: Scandinavian University Press, pp. 243–77. Delblond, A. (1994), L’essentiel sur la function publique, Paris: l’Hermès. Duran, P. (1993), ‘Moderniser l’Etat ou le service public? Les chantiers de l’Equipement’, Revue Politique et Management Public, 11: 69–86. Duran, P., and Thœnig, J.C. (1996), ‘L’Etat et la gestion publique territoriale’, Revue Française de Science Publique, 46: 580–623. Feller, V. (2006), ‘De l’ordonnance du 2 janvier 1959 à la loi organique relative aux lois de finances’, Les Cahiers de la Fonction Publique et de l’Administration, 255: 4–7. Fialaire, J. (1993), ‘Les stratégies de la mise en œuvre des centres de responsabilité’, Politiques et Management Public, 11: 33–49. Grémion, C. (1992), ‘Que reste-t-il des administrations déconcentrés’, in P. Muller (ed.), L’Administration française est-elle en crise?, Paris: L’Harmattan, pp. 187–94. Guyomarch, A. (1999), ‘Public service, public management and the modernisation of the French public administration’, Public Administration, 77: 171–93. Hood, C. (1994), Explaining Economic Policy Reversals, Buckingham: Open University Press. Jones, G. (2006), ‘Why public sector reform does not transform: a processual explanation of the 1989–1997 French experience’, International Journal of Public Sector Management, 19: 79–94. Kessler, M.C. (1994), Les Grands Corps de l’État. Paris: La Documentation française. Knapp, A. and V. Wright (2001), The Government and Politics of France, 4th edn, New York: Routledge. L’Express (2000), ‘Fonctionnaires: comment-ils ont fait céder Jospin?’, 30 March: 67–74. Machin, H. (2001), ‘Retooling the state machine’, in A. Guyomarch, P.A. Hall and J Hayward (eds), Developments in French Politics 2, Basingstoke: Palgrave, pp. 137–55. March, J.G. and J.P. Olsen (1996), ‘Institutional perspectives on political institutions’, Governance, 9: 247–64. Ministère de la Fonction Publique et de la Réforme de l’Etat (2005), Rapport d’activité ministerial (2004), Paris: La Documentation française. Muller, P. (1992), ‘Entre le local et l’Europe – la crise du modèle français de politiques publiques’, Revue Française du Science Publique, 40: 275–97. Négrier, E. (2000), ‘The changing role of French local government’, in R. Elgie (ed.), The Changing French Political System, London: Frank Cass, pp. 120–40. Oberdorff, H. (1992), ‘L’administration face aux enjeux de la construction communautaire’, in P. Muller (ed.), L’Administration française est-elle en crise?, Paris: L’Harmattan, pp. 129–45. Oberdorff, H. (1998), Les institutions administratives, Paris: Armand Colin. Osborne, D. and T. Gaebler (1992), Reinventing Government, Reading, MA: Addison-Wesley. Pavé, P. (1992), ‘La gestion à l’assaut de l’Etat: la modernisation des Directions départementales de l’Equipement’, in P. Muller (ed.), L’Administration française est-elle en crise?, Paris: L’Harmattan, pp. 239–49. Quermonne, J.L. (1991), L’appareil administrative de l’Etat, Paris: Editions du Seuil.

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Ridley, F.F. (1966), ‘French technocracy and comparative government’, Political Studies, 14: 34–52. Ridley, F.F. (1996), ‘The new public management in Europe: comparative perspectives’, Public Policy and Administration, 11: 16–29. Rouban, L. (1989), ‘The civil service and the policy of administrative modernisation’, International Review of Administrative Science, 55: 445–65. Rouban, L. (1993), ‘France in search of a new administrative order’, International Political Science Review, 14: 403–18. Rouban, L. (1994), ‘ Des cadres supérieurs en devenir’, Revue Française d’Administration Publique, 70: 181–95. Rouban, L. (1995), ‘Public administration at the crossroads: the end of the French specificity?’, in J. Pierre (ed.), Bureaucracy in the Modern State, Aldershot UK and Brookfield, US: Edward Elgar, pp. 39–63. Rouban, L. (1996), La function publique, Paris: Editions La Découverte. Rouban, L. (1997), ‘The administrative modernisation policy in France’, in W. Kickert (ed.), Public Management and Administrative Reform in Western Europe, Cheltenham UK and Northampton, MA, USA: Edward Elgar, pp. 143–58. Rouban, L. and J. Ziller (1995), ‘De la modernisation de l’administration à la réforme de l’Etat’, Revue Française d’Administration Publique, 75: 345–54. Ryckeboër, F. (1992), ‘Les centres de responsabilité’, La Revue Administrative, 269: 433–4. Ryckeboër, F. (1994), Centres de Responsabilité: Bilan d’une expérimentation 1990–1993 (rapport), Paris: DGAFP. Serieyx, H. (1994), L’Etat dans tous ses projets: Une bilan des projets de service dans l’Administration, Paris: La Documentation Française. Service Public (2000), Réforme de l’Etat: Une triple exigence, Dossier 76. Siwek-Pouydesseau, J. (1996), ‘Les syndicats de fonctionnaires’, Revue Française d’Administration Publique, 80: 609–20. Stevens, A. (1988), ‘The Mitterand government and the French Civil Service’, in J. Haworth, and G. Ross (eds), Contemporary France, vol. 2, London: Pinter. Stevens, A. (1996), The Government and Politics of France, 2nd edn, Basingstoke: Macmillan. The Economist (2003a), ‘Testing Raffarin’s resolve’, 3 June, available at: http://www.economist.com/agenda/ displayStory.cfm?story_id=1824030, accessed 22 February 2007. The Economist (2003b), ‘Is it a turning point?’, 26 June, available at: http://www.economist.com/displayStory. cfm?story_id=1880195, accessed 22 February 2007. The Economist (2006), ‘The unbearable lightness of being overtaken’, 2 February, available at: http: www. economist.com/displayStory.cfm?story_id=5471712, accessed 22 February 2007. The Economist (2007a), ‘The Gaullist revolutionary’, 12 May: 36–8. The Economist. 2007b. ‘Let battle commence’, 17 November: 39–40. The Times (2007), ‘There’ll be a new, hands on style of presidency . . . and a fair bit of pain’, 7 May: 6. Trosa, Sylvie (1996), ‘Services publics: les voies du renouveau’, in M. Crozier and S. Trosa (eds), La Décentralisation et la Réforme de l’Etat, Paris: Éditions Pouvoirs Locaux, pp. 163–72. Wright, V. (1994), ‘Reshaping the state: the implications for public administration’, West European Politics, 17: 102–34.

14 Senior Civil Servants and bureaucratic change in Belgium Guido Dierickx

Slow starters, fast runners? The last fundamental overhaul of the Belgian Civil Service occurred in 1937. This ‘Camu reform’, so called after its principal author, shaped the Belgium Civil Service up to the 1990s (Molitor 1974). Its (not entirely deserved) prestige as the paragon of administrative, Weberian rationality can explain its staying power to some extent. And yet, why was this reform more or less successful, while many later attempts were not? In the late 1930s, the Belgian political system had to face the rise of an extreme right that sympathized with the new regime in neighboring Germany. Reforming the Civil Service, on which the daily lives of so many citizens (and voters) depended, seemed a good way to cope with the rise of voter dissatisfaction and, consequently, of undemocratic forces. If extensive reform proposals were taken seriously once again in the 1990s, it is largely for similar reasons. Trust in government and in the governing elites appeared to have sunk exceptionally low. Perhaps a greater degree of Civil Service friendliness towards customers could contribute to disarming their hostility to the political elites and their inclination to vote for extremist parties. Of course, to fully explain the recent breakthrough of the reform movement, other factors have to be taken into account as well. The fiscal crisis of the state was particularly pressing in a country eager to join the European Monetary Union but burdened with the highest accumulated public debt per capita of all the member states of the European Union (EU). The call to do more with less and less costly personnel rang loud and clear. Moreover, the performance of the civil service had to be strengthened, as the economic competition between member states of the EU was being settled at least partly by the services its administrations could offer to the private sector. First, however, we should try to explain why these reform efforts were so slow in coming, considering that by then reforms inspired by ideas such as new public management were well under way in other countries. The causes of this time lag are to be found in some of the peculiarities of the Belgian system of governance. The Civil Service was never a ‘loud issue’ (Aberbach and Rockman, 2000) in a political system headed by coalition governments and by a rather stable set of government elites. An electoral system of proportional representation ensured that dramatic shifts in power were quite exceptional and that, until recently, the Christian Democrats remained the linchpin of governmental power. Therefore, the Civil Service has never been regarded as totally unresponsive to a new coalition government, which would then have a strong partisan motive to launch a major attack – disguised as a reform – against the existing Civil Service system. Why, then, did the breakthrough of reform finally come about in the 1990s? The most important factor was probably the constitutional reform of 1993, which transformed 235

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unitary, centralized Belgium into a federal state. The royal decree of 26 September 1994 laid down the general premises of both the federal and regional Civil Services in the new Belgium but left it to the federal and the regional governments to further specify the rules of their own Civil Service. The new Flemish government has taken advantage of this opportunity more promptly and more thoroughly than the federal government, and certainly more than the governments of the Walloon region, of the Francophone Community (‘la Communauté Française’), and of the Brussels region. Thus, the process of constitutional reform has provided us with an almost experimental situation. Before the reform, Belgium had a single central administration that was a rather close embodiment of the principles of the Weberian bureaucratic model (Brans and Hondeghem 1999). Then, in a rather short time span, four new regional governments sprang up beside the federal government. One of these, Flanders, embraced the new ideas fully; the others remained reticent. Why? The Flemish government was more exposed to the new ideas in the science of public administration: for cultural and linguistic reasons, the Flemish used the Anglo-Saxons (and the Dutch) as their prime reference groups, while the francophones of the other regional governments turned more to French-speaking experts (Bouckaert and Auwers 1999). However, reference-group theory cannot explain everything. Here we should say something more about Belgium, a country of about 10.2 million inhabitants, composed of 58 percent Dutch-speaking Flemish, 32.6 percent French-speaking Walloons and 9.4 percent (mostly French-speaking) inhabitants of the capital region of Brussels. The once ‘poor’ Flemish now form not only a demographic but also a socioeconomic majority. In 1955, Wallonia had a 34.2 percent share of the gross domestic product, Brussels had 17.3 percent and Flanders had 48.5 percent. The corresponding figures of 1997 are 25 percent, 14.3 percent and 60.7 percent. As Flanders is the largest and wealthiest of the three regions and as the administrative reforms require considerable investments, the Flemish government was more inclined to come to audacious reformist conclusions when subjecting reform proposals to a cost-effectiveness analysis.1 Another factor was an organizational one. From the start, the new Flemish government opted for a single ministry composed of six (later seven) departments. This centralized approach departed considerably from the traditional division of Belgian administration into separate fiefdoms called ministries. It had the potential to provide the opportunity to impose a top-down reform, if only the right ministers and the right Senior Civil Servants (SCS) were put in charge.2 This fortunate state of affairs came about in the early 1990s, when the new Flemish Civil Service was entrusted to some energetic ministers who were able to mobilize the support of their colleagues for their grand design of administrative reform. Perhaps even more important was the appointment of a new set of secretaries-general. Most of them had been ‘chiefs of cabinet’ of ministers in the former government and therefore among the best and brightest of the governing elites. Together, they formed a board of strong personalities bent on claiming more responsibility for themselves and for the SCS in general. They wanted to be more than mere implementers of the policies designed by the ministers. The same conjunction of factors did not occur in the federal government. The administration remained divided into many autonomous ministries. Also, this problem with the administration looked rather esoteric to most politicians and did not enjoy a high priority in the 1970s and the 1980s, the political class being more fascinated by the

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constitutional debates and the fiscal crisis of the state. The ministers assigned to the task of modernizing the Civil Service did not get the necessary backing from the top political leaders, who were otherwise engaged (Stenmans 1999). The federal SCS were unable to launch reform proposals of their own. They were divided over many ministries and services; they often guessed correctly that any reform during a fiscal crisis would end up cutting their personnel; and the technocratic culture and legalistic overregulation of the Civil Service did not welcome major reform initiatives. True, in the 1980s a board of secretaries-general was set up whose responsibilities were expanded and officialized in 1993. However, its advice was confined to administrative matters and exclusively given to the minister who had the Civil Service among his several responsibilities. True, in 1994 a separate ministry was created which was to promote administrative reform – but the expert service (the Bureau-conseil en Organisation et Gestion, dubbed ABC) that was charged with this task was understaffed and could offer advice but not impose reforms.3 The new Walloon administration, especially, has generally been slow in responding to the impetus of the reform movement. Fiscal resources have been and still are rather scarce in Wallonia. Also, the Walloon authorities have not welcomed the reformist ideas, because they fear the insecurity, stress and job losses they would entail. This caution might, in addition, stem from the strong impact of the socialist party (and of the socialist labor unions?) on their administrations. In short, the aspirations to reform – not just the resources – have been weaker in Wallonia.4 The ancien régime of Belgian bureaucracy In 1989–90, a series of extensive interviews was conducted with 157 SCS: 14 secretariesgeneral (63 percent of the total), 77 directors-general (58 percent) and 66 inspectors- or administrators-general (22 percent).5 Samples of politicians (51 members of the House of Representatives) and ministerial staffers (28 chiefs or adjunct-chiefs of Cabinet) were added to enable us to compare the political cultures of these major actors in the Belgian governance system. The evolution since then has been tracked with the help of interviews of privileged witnesses and by consulting the by-now-burgeoning literature on the subject. The period of the survey was one of political turmoil. Constitutional reform was high on the agenda of politicians, creating much confusion and uncertainty among the SCS of both the national and the embryonic regional administrations. Moreover, this was a time of budgetary curtailment, to which the civil service was naturally very much exposed. In principle, the reduction of the number of public servants should have been compensated for by more careful recruitment and better human resources management.6 In practice, the latter series of measures proved more difficult to implement than the former. These were not happy times for the SCS, and we could have interpreted our data in the light of this historical setting. However, we soon discovered that it was better to interpret them as symptomatic of a long bureaucratic tradition. The Belgian Civil Service was characterized by a strict division of labor between civil servants and politicians, strong hierarchy, a strong compartmentalization of ministries and services, long careers based both on seniority and, paradoxically, partisan patronage, a very technocratic culture, and a surprising degree of alienation from politics and political actors. The domination of ministers over Civil Servants was accepted by all as

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both a fact and a principle. References to the reverse situation in the Netherlands were met with a mixture of envy, disbelief and horror. The SCS proved marginal to the policymaking process and reacted to this marginalization with a blend of acquiescence and frustration. In those years (1989–90), our data show, most of the SCS had been recruited at an early age, were about 60 years old, and were nearing the end of a long administrative career (Hondeghem, 1990).7 Some had chosen this career because of a call to serve the public interest, but most had stumbled into it by chance (34 percent) or because of a lack of valid alternatives (28 percent) in the reconstruction years after the Second World War. Remarkably, 25 percent did not have a university degree at all: they had entered (the highest) level 1 from level 2 by taking the internal examination.8 This, together with the fact that very few had had previous experience with professional life in the private or public sector (or in another ministry), shows the extent to which the career system was a closed one. The only common departure from the routine of a closed career was provided, for 39 percent of them, by the possibility of spending some time as a staffer in the Cabinet of a minister. That this kind of career was accepted as normal can be partially explained by the socialization of those who later rose to the administrative top. Most of them had fathers who clearly belonged to the lower or lower-middle classes. Only 30 percent of our respondents had fathers with a university or higher education degree. Their social background was clearly a modest one. Something similar can be said about their early political socialization. Only 18 percent had a father who at one time occupied a political position (and then only at the local level). Only 35 percent reported that political matters were the topic of conversation ‘regularly’ or ‘frequently’ at home. Clearly, the Belgian SCS had not been recruited from a social, political or cultural elite. Did these ‘homines novi’ feel at ease in their administrative occupation, once they had been recruited and socialized? Most of them (60 percent) saw their responsibilities as quite different from those of politicians and appeared not very eager to weaken this sharp compartmentalization of functions within the governance system. The SCS insisted on seeing themselves as representatives of the state or as experts – certainly not as advocates of political causes and political programs, the favorite self-definitions of the Belgian Members of Parliament (MPs). This did not stop many of them (43 percent) from feeling superior to the political policy-makers. It should be added that many of the politicians reciprocated by feeling superior to the Civil Servants. Here we find the first trace of trouble in the bureaucratic paradise. The SCS were not on good terms with the politicians. Their views on the changes in the political elites were completely (45 percent) or mostly (13 percent) negative. They realized, however, that their principal enemy was not the politician but ‘us’ – that is, the administration, its punctilious regulations and its lack of resources. In sum, the situation of Belgian administration was less than satisfactory for its senior personnel. At the time, few administrators could have foreseen that in the near future, some of them would be offered the opportunity to adapt the structures to their wishes, instead of the reverse. Technocratism Civil Servants owe it to their profession to be more sensitive to questions of feasibility in policy-making and to have a more technocratic cast of mind than their political masters.

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However, technocratism is a matter of degree. Belgian SCS are more technocratic than their colleagues in the USA and clearly more than those in Germany.9 Is this peculiarity due to the composition of the Belgian sample – that is, to one or several of the social background variables mentioned earlier? As far as we can see, this is hardly the case. Every subsample we take of the Belgian Civil Servants is more technocratic than the comparable subsample of either the German or the American SCS. Even a multivariate analysis adding together the net effects of all these background variables cannot explain much of the international variation in technocratism10 (Dierickx and Majersdorf 1993). Obviously, the marked technocratism of Belgian Civil Servants has to be explained by either organizational or cultural factors, or by both. Our educated guess is that their technocratism is an element of a cultural tradition that goes back to a distant past and is passed on from generation to generation through socialization on the job. One should keep in mind that the Belgian bureaucracy is an heir to a French Napoleonic tradition that was not interrupted by the crisis of the Second World War, as was the case in Germany. At the same time, it is plausible to assume – though nearly impossible to ascertain with the help of our data – that organizational position plays a role of its own. As mere implementers of public policies, the Belgian SCS did not have the same responsibilities for designing and proposing public policies as did their colleagues in the federal administration of Germany. We can safely assume that SCS who function almost exclusively as the implementers of government policies tend to adapt psychologically by developing a technocratic culture.11 Political alienation A surprisingly high level of political alienation was the single most striking characteristic of the political culture of the Belgian SCS in 1990. ‘Political alienation’ is a variable obtained by aggregating the scores on four closed items (Dierickx and Majersdorf 1993). These items measured the degree of aversion to four different political actors: interest groups, parties, Parliament and politicians.12 The political alienation of the Belgian SCS does not follow from their early socialization or recruitment. Most other variables exogenous to the politico-administrative subsystem do not seem to matter, either. Only two need be retained for a multivariate analysis. An index of materialism-postmaterialism and another of egalitarianism both yielded a rather suggestive intercorrelation of 0.37 with aversion. The Belgian SCS are considerably less postmaterialistic than, for example, their German colleagues (because they do not have the same social elite background?) and distinctly less egalitarian. This might help to explain why they are less immune to the siren song of political alienation. A second series of variables is derived from the organizational position of the Belgian SCS. Belgian SCS felt that their rightful influence on policy design was being undercut by the arrogance of the ministerial staffers, a feeling that was more than subjective envy. The paradox is that many Belgian SCS actually resented their marginal status, but were unwilling to admit this. In principle, our SCS liked to present themselves as the most bureaucratic of bureaucrats and as content to implement the decisions of whoever happened to be in power. In fact, their attitude was less straightforward. The troubled relationship between these most bureaucratic of bureaucrats and these most political of politicians turned out to be a source of many frustrations. Alas, most indicators of marginalization had only weak first-order correlations with

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political alienation. The most promising indicator was ‘Cabinet experience’, a variable that has an inverse relationship with political alienation. The longer SCS had worked as ministerial staffers, the more they liked the political aspects of their work and the more they respected politicians (r = 0.20). For the Belgian SCS, familiarity apparently does not breed contempt. Here, then, is an organizational variable to keep in store for a multivariate analysis. The most potent correlates, though, come under the heading of ‘political culture’. The first one is ‘Willingness to compromise’ and is based on a single item: ‘It is dangerous to strike a compromise with political opponents because this easily leads to the betrayal of one’s cause.’ In spite of the rudimentary operationalization of this variable, we obtained a surprisingly strong correlation with ‘Aversion from political actors’ (r = .41). Respondents wanting to remain faithful to their cause preferred to keep looking for the single correct solution and tended to loathe the political give and take of politicians, one of whose essential callings is to make compromises. This interpretation suggests that technocratism, too, should be related to alienation. This is indeed the case, and to an amazing degree: the correlation coefficient amounts to 0.49. If technocracy leads to alienation, this means that the political alienation of the Belgian SCS is based on a belief in expertise that postulates a single correct solution to policy problems and that appreciates neither the solutions reached by politicians nor the way they reach them. What, then, is the verdict of the multivariate analysis? Together, five of the potential factors – Cabinet experience, (post)materialism, egalitarianism, willingness to compromise and technocratism – explain as much as 42 percent of the variance of ‘political aversion’. The most important factors prove to be willingness to compromise and technocratism. This should give us pause for thought. Surely the conventional wisdom about the political alienation of our Civil Servants is in need of some serious revision. Their alienation cannot be entirely blamed on their difficult, politicized work situation. It is mainly the consequence of the subjective perceptions that are part of their professional culture. To the extent that their mentality is imbued with technocratism, their relationship with political actors is bound to a troubled one. Political marginalization A third essential feature of the Belgian governance system was the marginalization of the SCS in policy-making networks. This is itself a paradox. How can a modern state afford to do without the manpower and the expertise of its civil servants? The government, the parties and the Parliament cannot possibly do the job on their own. And indeed, they do not. The Belgian answer to the requirements of modern policy-making has been the development of large ‘cabinets’ – that is, of a set of up to (or even more than) 50 personal staffers assisting each minister. They are recruited for the period of ministerial duty of their master from the academic world, from interest groups, and also, to a certain extent, from among the Civil Servants who are known to be loyal to the minister on personal and, especially, partisan grounds. These Cabinet staffers are the system’s remedy for politicians seeking partisan loyalty against the alleged and sometimes genuine unreliability of their Civil Servants. There can be little doubt that these Cabinet staffers formed the hub of wide-ranging policy-making networks, while our SCS had communication networks that rarely reached out beyond the confines of their own ministries. Figures 14.1a and 14.1b display

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Minister 67%

Parliament

41%

10%

21%

Civil Servants

Figure 14.1a

Belgian policy-making networks, without staffers Minister

93% 75% Ministerial staff

Parliament 67%

86% 85%

Civil Servants

Figure 14.1b

Belgian policy-making networks, with staffers

the networks between the major political actors, the first without the Cabinet staffers, the second with them. The figures indicate the percentages of respondents (MPs, SCS, staffers) having (fairly) frequent contacts with other participants in the policy-making processes (MPs, SCS, staffers and ministers). For instance, among our SCS, 41 percent have (fairly) frequent contacts with ministers, 10 percent with MPs (Figure 14.1a) and 86 percent with staffers of their own ministry (Figure 14.1b). It is easy to see that without the staffers, the networks would suffer from a fatal lack of density. Figure 14.1b suggests that the cabinet staffers have stepped in, so it seems, to fill the void left by the SCS, establishing relationships with Parliament, ministers and SCS. Other data show that they have more frequent contacts with just about every potential partner in the policy-making process: with the premier and his Cabinet, with the

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government as such, with their own and other ministers, with Cabinet staffers of other ministers, with all kinds of politicians, even with SCS of other ministries. Marginalization was experienced as painful by many SCS. However, was it a serious problem for the Belgian governance system as a whole? After all, a system based on Cabinet staffers, rather than on Civil Servants, may function rather well (Walgrave and Suetens 2001). Cabinet staffers are, on average, younger, more energetic, fiercely loyal to their minister, and able to tap more sources of information in the society at large, as they can be recruited from all kinds or organizations. To this it has been replied that the Cabinet staffers are available only for short-term appointments, that they cannot build up the same specialized expertise, that they cannot provide the necessary ‘organizational memory’, and that they are surely too few in number to cope with all the complexities of contemporary society. Nowadays, a government simply can no longer afford not to tap the reservoir of manpower and expertise of the Civil Service. This paragraph leads to the following conclusion. In 1991, the Belgian governance system had a hub of about 3500 ministerial staffers. They were the cause but also, to some extent, the result of the marginalization of the Civil Servants. However, in those years, the system simply could not function without them. The Cabinets derived their functional necessity from the outspoken desire of the ministers to be supported by collaborators who were loyal to their cause and, if possible, to their person. Getting a job from one’s minister and losing it when he or she steps down is indeed a very strong incentive to stay loyal. It is easy to see why a minister would prefer a staffer loyal to himself or herself over a Civil Servant loyal to the state. What tactic could the SCS use to offset the comparative advantages of the Cabinet staffers? They opted for an all-too-obvious alternative: in contrast to the high minded intentions of the Camu reform they resorted to wearing partisan labels, too. Actually, they frequently did not have much of a choice in this respect. Almost all SCS used to wear a partisan tag on their back, whether they wanted it or not, whether they knew it or not. Our data show that this partisan tagging was more than just a parlor game. The partisan labels of the SCS mattered when it came to networking with politicians. However, this tactic was not fully effective: even for those with the correct labels, success was modest (as they could be suspected of opportunism) and, sometimes, short-lived. A Civil Servant can never be seen as more loyal than a Cabinet staffer, and when the ‘wrong’ ministers come to wield power in the ministry, the Civil Servant risks being side-tracked as completely unreliable. There were, then, two vicious circles at work here. Civil Servants were competing with each other to obtain the right political label. If some joined this game, the others were forced to follow suit. However, some ministers thought even a correct label too weak a guarantee of loyalty and preferred to work with staffers whose loyalties were beyond any doubt. To this, many SCS reacted by emphasizing their technocratic impartiality as ‘servants of the state’. Alas, this was not likely to make them equally reliable as the staffers in the eyes of their ministers, political animals as most of them were. Politicization Belgian governments are built on the coalition between the political leaders of distinct and sometimes opposed subcultures: francophones and Flemish, economic right and left, Catholics and non-Catholics. This is another reason for the politicization of the SCS.

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For party leaders and partisans, it is reassuring to know that you have some of your own people in the ministry. Some day they might be useful as advisors or informants to your political party. Here we intend to tackle two questions: How is the tradition of politicization of the Civil Service being maintained? And to what extent and how does it matter? Officially, many measures have been taken to stop the vicious circle of politicization. Its dysfunctions are well known. A loss of expertise is to be expected when the recruitment and the promotion of Civil Servants are open to partisan patronage. Even if it is not in the partisan interest to patronize low-quality candidates and therefore the loss of quality should not be exaggerated, the effects on the morale of Civil Servants are real enough. And if a promotion happens not to have been based on partisan sponsoring, it is hard to convince the losing candidates that such has not been the case. Actual or suspected politicization is the breeding ground for much envy and discontent. Some have tried to legitimize the phenomenon of politicization with the noble concept of ‘representative bureaucracy’. This notion presumes a lack of equilibrium in the partisan composition of the senior Civil Service and supports the claim that ‘This equilibrium should be restored by promoting more of our own people’.13 However, this theoretical legitimation is only rarely and timidly used. Most of our respondents heartily deplored the politicization phenomenon. Both politicians and SCS shared this dim view of the situation, but more SCS were inclined to see it as getting worse (65 percent). Clearly, they disliked the game they were forced to play, and they would have preferred depoliticization, as required by the principles of bureaucratic technocratism. Meanwhile, most of them must have thought that it was better to carry on with the game than to lose it. Camu created a central Permanent Recruitment Secretariate (PRS) in charge of organizing objective examinations. This highly respected recruitment procedure did not succeed in closing all loopholes, however. The government was still allowed to recruit Civil Servants at its own discretion when new offices were created for which no duly recruited career Civil Servants were available. It could recruit temporary collaborators (‘contractuals’) who would later, under the pressure of the labor unions, be upgraded to the status of career Civil Servants. And, last but not least, it was at liberty to recruit Civil Servants to the very highest ranks of the ministries. A government about to leave office would be eager to reward its faithful Cabinet staffers with some senior position in the Civil Service. While recruitment could be said to be based largely on objective, non-partisan criteria, such was not the case with promotions. Promotions within level 1 were to be based on a rating by superiors (which rapidly became perfunctory), on the advice of a board of superiors who could propose a shortlist of candidates from among whom the minister could chose, and on ‘experience’ – that is, on length of career. In spite of all these provisions, those with the correct labels, whose parties (Christian Democrats and, to a lesser degree, Socialists) had participated in many governments, enjoyed better career prospects. The meritocratic advice of the board of directors should have limited the drive towards politicization, but it did not yield the expected results because the minister was not held to its advice unless it was unanimous, among other things. Even then, he or she could deviate from it and promote another candidate by invoking a special motivation. With respect to the highest promotions (and appointments), the use of political motivations had been allowed even by Camu. Here, the advice of the board of directors was not required. For the position of secretary-general and also for other Senior Civil Service

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positions, the appointment of a relative outsider such as a chief of Cabinet or a Civil Servant of lower rank was considered to be the rule, rather than the exception. It must be said that many of these political appointees later proved to be rather successful. Chiefs of Cabinet are rightly seen as the best and the brightest among the Belgian political elites in general. Politicization threatened to become a vicious spiral and a nuisance, not only for many Civil Servants, but also for the governing coalitions. As these coalitions rested on delicate compromises between coalition partners about both policies and appointments (‘the spoils of political war’), they could easily be upset by disputes about ‘unfair’ partisan appointments in the Civil Service. Some formula had to be found for defining the share of appointments that each of the coalition partners could claim. In the 1960s, therefore, the governing parties decided to regulate the process of politicization, which they could and would not abolish in its entirety. They entrusted the political appointments in the central administration to a special committee of representatives of the coalition parties, known by the names of their successive chairmen Dekens, Mangeleer, and Missant. This move was intended, first, to centralize all political appointments in the hands of party representatives, thus avoiding various kinds of personal and interest-group patronizing, and second, to work out a carefully negotiated settlement between the parties. At one point in time, printed scoring cards were used on which the position of a secretary-general was given a value of five points, that of director-general three points, and so on.14 The conventional wisdom that politicization of the (Senior) Civil Service matters greatly for policy-making requires some closer scrutiny. Does ideological commitment indeed lead to partisan activism? Survey data cannot give a definitive answer to this question. What we can examine is, first, whether these ‘politicized’ Senior Civil Servants have developed a consistent ideology, and second, whether this ideology has an influence on their other attitudes and activities both within and outside the confines of the public administration. Since Campbell, Converse, Miller, and Stokes published The American Voter in 1960, we know that rather few common citizens have organized their political opinions in a system with sufficient consistency to deserve the epithet of ‘ideologues’. Political elites, however, have the motivation and the opportunity to do so. Therefore, SCS should have a well-elaborated ideology. However, the rules of administrative propriety require them to use this partisan ideology only as private citizens and to proceed as Civil Servants solely on the basis of non-partisan administrative culture. It might even be the case that their non-partisan administrative culture obliterates, or at least transforms, the partisan ideology they would have developed as individuals. We thus face several questions. Do our SCS indeed have a consistent ideology, does it reflect the influence of their professional experience, and does it influence their professional culture? If the last were true, partisan ideology would really matter. Political scientists agree that in most locales, the political ideologies of individuals can be compared on a left–right dimension. In what follows, we focus mainly on the (socioeconomic) left-right dimension because it is salient and comparable in all countries, and not because it would be the only or even the most important one in Belgium.15 An examination of the scores on a six-item scale reveals that the SCS are indeed ideologues as defined above. In general, their political opinions are only slightly less well structured than those of the MPs we interviewed. On the other hand, the SCS were clearly less radical than the politicians (Figure 14.2).

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35 30 25 20 15 10 Politicians Civil Servants

5 0 Left

Figure 14.2

Right

Left–right index % technocratism 100

Politicians Civil Servants

80

66

60 40 20 0

53

7

0 left

Figure 14.3

50

40

center

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Ideology and technocratism

Ironically, one explanation for the ideological centrism of the SCS in Belgium arises from the politicization of promotions. The Christian Democrats, for example, have stayed longer in government and have had more opportunities to patronize their loyalists. That is why they, and their ideology of the socioeconomic center, were overrepresented among the SCS. However, partisan patronizing is only part of the explanation. The centrism of the SCS is the consequence not only of the overrepresentation of the Christian Democrats, but also of the moderation of both the socialists and the liberals. Socialist SCS are less to the left and liberal SCS less to the right than, respectively, the socialist and liberal MPs. A centrist tendency seems to exist among civil servants in general. Aberbach et al. (1981) reported similar findings for other West European countries. This bureaucratic centrism hinges on the job experience of the Civil Servants. They are confronted more often with the feasibility problems of political projects than are politicians, who mostly debate about principles and long-term objectives. The SCS, therefore, tend to be wary of proposals coming from either the radical right or left.16 The next question is whether private ideological commitments matter for professional culture. As a first indicator of professional culture, we return to the technocratism index.17 Figure 14.3 displays the percentage of strong technocrats among respondents (politicians and SCS) of the ideological left, center, and right. Among both politicians and Civil Servants, those of the right lean more strongly towards technocratism than

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Politicians Civil Servants

100 80

69

66

60 40 20

38

32 16

21

0 left

Figure 14.4

center

right

Ideology and political aversion

those of the left. Of the leftist Civil Servants, 40 percent are strong technocrats, versus 53 percent of the rightist civil servants. Actually, the relationship is curvilinear: the highest percentage (66 percent) of technocrats can be found in the center. Apparently these (mostly Christian Democrat) centrists have been persuaded that, as the true champions of the general interest, they ought always to be in search of the single correct solution. A similar relationship can be observed between ideology and political alienation. The percentages of the very ‘politically alienated’ on the scale labeled ‘aversion from political actors’ are shown in Figure 14.4. Again, the relationship among the SCS is not a completely linear one: centrists are almost as often averse to political actors as are rightists. However, the contrast between leftists and rightists amounts to no less than 37 percentage points. A repetitive pattern begins to emerge: ideology does matter for administrative culture. Our final question is whether ideology also has an effect on political activism in a professional setting where such activism is not deemed appropriate. Unfortunately, our survey only measured the perceptions and the evaluations of the respondents, not their activities. The best we can do is to look for perceptions and evaluations that reveal a readiness to engage in partisan activities. We shall discuss two such ‘proxy’ indicators of partisan activities. The first of these is an ‘index of political radicalism’ that estimates the willingness of the respondents to pay the price of conflict as they try to reach their political objectives. This index contrasts ‘hard’ and ‘soft’ political styles.18 Those who favor moderation in political debates, the stability of government, the reconciliation of interests, and feasibility in the short run foster a soft political style. The data show that SCS of the left tend to be harder than those of the right and certainly than those of the center: the relationship is real, but curvilinear instead of linear, with a difference of 25 percent percentage points between leftist and centrist civil servants.19 This is a suggestive finding, if we can plausibly assume that civil servants fostering a hard political style will be more open to partisan-ideological commitments in the policy-making processes. In their professional life, the SCS erect a wall against the political logic of power, conflict and utopia. But rightist and centrist Civil Servants erect a higher wall than do their leftist colleagues. If this interpretation is correct, leftists are more prone to engage in partisan activities within and without their professional sphere. This would correspond well with the conventional wisdom. A second proxy indicator is that of ‘subjective partisan sympathy’. During interviews,

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the respondents were asked to give a score, ranging from very positive to very negative, to each of the political parties. This crude general measure worked surprisingly well. Several features of the results may be instructive. First, leftist Civil Servants find it less difficult to differentiate between the good and the bad guys. They also like their own party more and other parties less than their colleagues of the right and the center. In contrast, the rightists tend to keep their distances from all political parties, to have only moderate confidence in their favorite party, and to differentiate only vaguely between political parties. It is hardly surprising that they feel less inclined to transform their ideology into partisan action. Our general conclusion is that the Belgian SCS have formed an ideology that is as well elaborated as that of politicians. This ideology has features of its own: it tends to be moderate, because of specific job experience, and somewhat center-right, because of the politicization of promotions among SCS. This ideology does matter for their professional culture. Socioeconomic leftism tends to foster less technocratism and less political alienation. This ideology also matters for partisan commitment outside and, probably, inside the administration, as leftists are more inclined to engage in partisan politics. The new age of administrative reform In the 1990s, the pressures to introduce administrative reforms finally produced a major breakthrough. Among the reformers, the various measures are commonly advertised under the headings of cost-effectiveness, flexible personnel policy and customer friendliness. I prefer to use three concepts borrowed from organization sociology that point to the perennial fault lines of all organizations: the definition of objectives, the definition of functions and the co-ordination of functions. Not surprisingly, the direction taken by the (attempts at) reform in Belgium is very much like those in neighboring countries. In Belgium, a small country with little expertise of its own in this domain, the ideas of reform cannot be drawn from domestic sources (Pollitt and Bouckaert 1999). All administrations have to look for advice to more or less the same international consultation agencies. At the same time, the influence of NPM is mediated by the example of NPM as practiced in other countries. Senior Civil Servants (SCS) are no less fond of fact-finding missions than are other political elites. The example most frequently mentioned – largely but not wholly with approval – was that of the Netherlands, particularly in the new Flemish administration. In retrospect, we can now (2003) distinguish two waves of reform. The first took hold, as was mentioned before, in the Flemish administration in the second half of the 1990s. The second is in the process of being introduced (with little resistance) in the Flemish (Stroobant and Victor 2000) and (with tough opposition) in the federal administrations. As the Flemish administration is going through a new and different wave of reform, it must be a sobering thought for reformers that the achievements of earlier reforms can be questioned so soon. Clearly, there are several strands of reform that tend to destabilize one another. Defining the function of the Civil Servant On paper, at least, the most effort has been spent (in all administrations) on a redefinition of the function of Civil Servants in their relationship with customers/citizens. The traditional bureaucratic definition required an emotional neutrality towards the customer,

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which rapidly threatened to degenerate into indifference and condescension. The reformers intended to counter this trend by issuing the Charter of the Customer of the Public Services (Charte de l’ utilisateur de services publics) and several other measures. The citizen should be seen not as the subject of the state, but as its customer. Following the principle of the transparency of public service, the citizens would, for example, have the right to request information about their case. They also would have the right to inspect other government documents. All administrations, on both the federal and regional levels, have taken this innovation to heart. The sincerity of their reform efforts is demonstrated by the investments made in specialized personnel and services. Have these good intentions led to satisfying results in the field? How many customers can be expected to effectuate their right to inspect government documents if they lack the organizational backing or juridical expertise to press their claims?20 Far more controversial has been the redefinition of the Civil Servant’s relationship with his administrative superiors. Here, we come to an essential human resources management (HRM) aspect of the NPM movement. In the old bureaucratic regime, the first concern was the protection of Civil Servants and their expertise against the inconsiderate pressure of their superiors. This resulted in an emphasis on the security of job, pay and career. The new principle proclaims that the superiors should have the ability to reward good Civil Servants and penalize bad ones. Examinations in a distant past and long careers can no longer safeguard them against the HRM ambitions of their administrative superiors. As a result, the old procedure of the signalement – a crude quantitative grading procedure that almost always produced suspiciously good grades – is being replaced with permanent evaluation. This more extensive, more qualitative procedure includes advice, first, about the desirable functioning of the Civil Servant, and second, about their actual performance. Permanent evaluation is complemented by permanent education. In the federal administration, this innovation was at first entrusted to a small but dynamic agency (ABC) in the new Ministry of the Civil Service. However, this proved to be too modest an investment: these advocates of administrative reform were few (about 20) and had little authority. During the second wave, HRM officials are to be installed in each of the federal ministries, with larger resources at their disposal. In the departments of the Flemish ministry, the renewal has come earlier. During the first wave, the HRM reform was entrusted to the board of secretaries-general, who could count on a staff of their own and on expert personnel in all the departments of their ministry. During the second wave, with the original (single) Flemish ministry split up in 13 separate ministries, each will get a HRM cell of its own. From early on, these HRM officials had a good amount of resources at their disposal and could propose a whole array of training programs. In the Flemish administration, HRM is of the ‘carrot and stick’ variety. Superiors have a quiver of positive and negative incentives at their disposal. They can speed up promotions for the fast learners and slow them down for the laggards. They can promise financial premiums. They can threaten dismissals. In the francophone and Walloon ministries, this exacting system has received a cool welcome. Especially in Wallonia, so observers tell us, the main concern appears to be about keeping a spirit of conviviality among the Civil Servants and therefore about avoiding rivalry between ‘deserving’ and ‘less deserving’ colleagues.21

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Human resource management transforms the SCS into managers who devise and implement personnel policies and receive the autonomy, the resources and the incentives to do so. Among the latter, the primary one is, of course, the simple fact that a good personnel policy is required for a successful execution of management contracts (see below). Even then, the question is whether SCS will risk confrontation with their subordinates and their unions, a risk they have cautiously avoided in the past. Only the future can tell: the new evaluation system has been fully put to the test only in the Flemish ministries, and only since 1997–98. On the whole, and certainly in Flanders, the management capacities of the SCS have been strengthened considerably. Nevertheless, one should not mistake good intentions for actual facts. In the late 1990s Flemish SCS, so some of them complained, still needed a year to clear all the hurdles before replacing a single Civil Servant of lower rank. The old legalism has not yet been banished entirely from the administrative realm. Indeed, the discretion granted to the regional governments was limited by the (federal) Royal Decree of 26 September 1994 (but expanded again in 2000). Fortunately for them, the new federal minister in charge of administrative reform announced in January 2000 that the venerable PRS was to be replaced with a new Recruitment Office of the Federal Government (Selectiebureau van de Federale Overheid, dubbed SELOR) that would operate faster and propose a shortlist of suitable candidates from which the responsible SCS should then make their pick. This means that both the federal and regional ministries will be allowed to define a more precise ‘profile’ for the personnel they want to recruit. The ministries have not failed to explore other ways to enhance the flexibility of their recruiting process. For short-term and/or specialized projects, they have recruited large numbers of ‘contractuals’, a category of Civil Servants without the usual statutory rights – that is, without tenure and career prospects. In the late 1990s, more than 20 percent of the personnel of the federal ministries consisted of contractuals (Stenmans 1990: 502). Contractuals provide the SCS with personnel they can recruit and dismiss at short notice, thus adding much to the flexibility of their personnel management. Of course, the contractuals themselves, and their labor unions, are not equally appreciative of their precarious professional status. The new personnel management led, in the early months of 2001, to strikes and demonstrations in the streets of Brussels. The unions feared that the new policy would privilege the higher ranked and better paid. A larger part of the budget would be spent on the new managers, and little would remain for the lower ranks. If the minister went ahead with his plan to hire (very expensive) managers from the private sector and not from among the statutory Civil Servants, the salary gap would increase even more, to the dismay of the lower ranks of the Civil Service. Defining the objectives of the Civil Service In the Belgian bureaucratic tradition, the definition of policy objectives was reserved for ministers and their staffers. Only the implementation of these policies was left to the Civil Servants. However, in an ever more complex societal environment, so much manpower and expertise is required for the designing of policies that one is forced to appeal to the underemployed Civil Servants. Indeed, it has been the explicit intention of the reformers, initially in Flanders and presently also on the federal level, to speed up this spontaneous

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evolution by limiting the number of cabinet staffers allotted to each minister. However, foremost among the measures to ‘responsibilize’ the SCS is probably the mandate system. In a mandate system, the SCS must negotiate a ‘performance contract’ regarding the outcomes they have to produce. They will then be granted a temporary mandate (of about six years) that does not have to be prolonged, thus giving the minister or the top SCS the ability to sanction his or her managers for non-performance. However, mandate systems come in degrees. In its moderate variety – for example, in the francophone community – a mandate system entails horizontal mobility of mandate holders, rather than vertical mobility. There exists a ‘pool’ of SCS who can be allocated for a limited period of time to a specific position. Thus, one can change the responsibilities of the SCS, but not their rank, which allows the use of the veteran strategy of artful side-tracking but makes it difficult to create vacancies for new, better-performing managers. In its more radical variety – for example, in the Flemish ministry – mandate holders can be chosen from all the Civil Servants of level 1 with the necessary management capacities, without much regard for rank or seniority. If his mandate is not prolonged, the Civil Servant returns to his more modest former position. In the recent Copernicus plan of federal minister Van den Bossche, an even more radical variety has been proposed. Mandate holders (close to 450 in total) would replace the SCS and, eventually, be recruited from the private sector, no previous career in the Civil Service being required. This proposal has run into fierce opposition, because it doubts the abilities of the present generation of SCS and because such high-ranking ‘contractuals’ would be overly dependent on the whims of the minister. Their precarious position would reinforce, not the autonomy of the administrators but, rather, the political control of partisan politicians. To these political objections, more general ones have been added. Some opponents say that policy objectives cannot always be defined in the performance contracts with the precision needed, that success in reaching these objectives is likely to be assessed on the basis of subjective/partisan criteria and that politicians can withhold the resources required to reach them.22 What else can be done to draft the SCS into the process of policy-making? Obviously, one has to alleviate their marginalization by the Cabinet staffers. In Flanders, the board of secretaries-general apparently succeeded in obtaining a strong institutional position and in adding policy design (and not just Civil Service reform) to its agenda. Reality was slow to follow the official good intentions, though. In fact, the board hardly functioned effectively as a partner to its government in matters outside its management concerns. What else can be attempted? An obvious proposal is to limit the size of the ministerial cabinets, thus forcing the minister to call more on his civil servants during the phase of policy design (Stenmans 1999: 351). The Flemish government took some measures to this effect during its first wave of reform. However, their effectiveness remains somewhat doubtful. Some Flemish ministers are reputed to have responded by cutting less useful Cabinet staffers from their payrolls and keeping their more essential political advisors. More recent proposals (2000) intended to reduce the ministerial cabinets to five or so personal assistants. The SCS certainly would be able to strengthen their position when they had to contend only with a few part-time, short-term advisors, rather than with the presently numerous fulltime Cabinet staffers.

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This proposal has received much public applause (it has even been submitted to a quasi-referendum), but also surprisingly strong political opposition. In the federal government, a number of (mainly francophone and Socialist) ministers have rejected it outright. The resulting compromise seems to have been that some ministers would be allowed to keep their Cabinet staffers until the end of the legislature, when they would no longer need them anyway, and that the others would, in principle, have dismissed their cabinet staffers at the end of 2001. From 2003, only two federal ministers had actually done so. The new, more modest objective was to replace the old cabinets with a slimmed-down version under another heading: a small ‘political secretariat’ of six senior and eight junior personal assistants under a powerful chief of staff. Moreover, each ministry (or ‘federal public service’) would enjoy the support of a cell of policy designers, to be recruited by the minister from within or outside the Civil Service. If one adds up these two features of the new ministries, it becomes clear why the opposition claimed that the number of ministerial staffers will be reduced by only half, if not less. A little later, under the government Verhofstadt II, the project was abandoned altogether and the Cabinets restored to their old glory. Another, more informal, but perhaps equally effective reform would consist of the obligatory negotiation, deliberation and co-operation between Cabinet staffers and SCS. The psychological effect of this informal change should not be underestimated. Civil Servants are delighted to make even a modest contribution to policy-making. In certain situations, this contribution can become quite substantial – for example, when mixed working groups of Cabinet staffers and expert Civil Servants have been set up. Such mixed working groups are becoming a new tradition, at least in the Flemish administration. Will the new breed of SCS be kept satisfied with this revalorization of their profession? Even in the best of scenarios, their contribution, however gratifying, will remain modest. The SCS simply do not have sufficient think-tank capacities at their disposal, while, in this neocorporatist country, many politicians can rely on the services of the think tanks of their party and its affiliated interest groups. As a result, the contributions of the SCS to policy design will remain limited to remarks about the importance of problem areas, possible implementation alternatives, feasibility, and the like. A second condition for the empowerment of the SCS is their depoliticization. As we have seen, SCS will tend to be underemployed when they wear the wrong partisan tag. The phenomenon of partisan appointments has been limited by granting the SCS more authority to recruit and promote their own subordinates. Presently, different boards of SCS have the right – indeed, the obligation – to give their advice on these matters, and ministers are obliged to follow this advice, especially if it is unanimous. Because the SCS are eager to have their best people promoted, they tend to give unanimous advice as often as possible.23 Consequently, only the top appointments, such as secretary-general (now to be called ‘chairman of the direction committee of the federal government service’) or director-general, are still the privilege of the government. However, the candidates for these senior positions will first be screened by SELOR and independent consultation agencies. The minister will be allowed to make his pick only from the resulting short-list. True, the evaluation of the mandate-holders will depend on his discretion. This could result, so some observers fear, in more politicization, rather than less. They point to the precarious position of mandate-holders who happen to have been appointed by a previous government in the semi-autonomous state enterprises.

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The question of why depoliticization does not seem to have been a major concern in Wallonia is a puzzle for political scientists. As late as 2001, promotions of SCS were still being allocated to clients of the coalition parties on the basis of their respective electoral strength. The old bypass of recruiting contractuals still appears to be in full swing. Moreover, the politicization drive has found a new outlet in the creation of many semipublic agencies ‘of public utility’. Political opponents like to point out that the Socialists have been dominant in the successive Walloon governments and that they are traditionally not unsympathetic to the politicization of the Civil Service. Perhaps Socialist politicians feel a greater need for Civil Servants they can trust as a countervailing power to a private sector they do not trust. Whatever the future may have in store, the fact remains that from now on, the expertise of the candidates will be taken into greater account. Political appointments will be fewer, less visible, better argued, and less demoralizing for Civil Servants in general. The problem of co-ordination The new definition of the functions and objectives of the SCS could have a dysfunctional effect on the co-ordination of their activities. Surprisingly enough, this problem does not seem to have been taken very seriously in the second wave of reforms, even though it was the leitmotiv of the first wave in Flanders. The first aspect of this problem is co-ordination between Civil Servants themselves. Of course, co-ordination, at least between ministries and departments, was already deficient in the old bureaucratic regime. The arduous task of co-ordinating the policies was entrusted, as in many other countries, to the Ministry of Finance and, more specifically, to its highly regarded corps of inspectors of finance. However, the information available through this channel remained poor as long as it was based on the line items of an input budget. Its quality should have improved with the introduction of the new general expenditure budget, since the budgetary process was now more focused on output and performance data. However, this innovation has been pursued in a half-hearted way. As the objective was the centralization of the budgetary debates (to speed up the process), rather than the control of effectiveness, the forthcoming information has been less than satisfactory. The one reform measure on which everyone agreed and that has been taken in about all administrations, federal and regional, has consisted in limiting the number of hierarchical layers and in flattening the administrative pyramid to shorten the vertical lines of communication (and co-ordination) and to increase the opportunities for horizontal communication. Co-ordination has become the primary assignment of many SCS board meetings at different levels of authority, the prototype being that of the secretariesgeneral in charge of the co-ordination of the departments of the Flemish ministry. Loosening hierarchical constraints and making more room for collegiality is an aim facilitated by the introduction of informational networks across ministries and departments (for example, Fedenet at the federal level) and by the building of central databanks. But even here, progress has been slower than many anticipated. In the federal administration, with its juxtaposition of ministries, the newly introduced information systems often differ between and within ministries, with the dismal results one would expect. Such was not the case in the centralized Flemish ministry, which outsourced its informational requirements to a single expert firm.

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In the Flemish government, efforts at co-ordination initially went farther. Co-operation between equals and team spirit were emphasized. The formation of working groups across the formerly impenetrable boundaries of ministries and departments was encouraged. Informal contacts between SCS were stimulated by the organization of residential seminars with the explicit purpose of sensitizing them to the merits of the reforms and the implicit purpose of developing a good team spirit among them. The new Flemish ministry was organized in such a way that this co-operation would become a matter, not of willingness, but of necessity. Its ‘matrix structure’ would force the Civil Servants of horizontal departments, such as Finance, and vertical departments, such as Education, to work together to achieve common objectives, one department actually being in charge of promoting co-ordination. Much was expected from a voluntary (or gently forced) mobility from one department or service to another: this would contribute to turn Civil Servants, once firmly set in their bureaucratic rut, into flexible and versatile policy designers. The change in networking proposed by the first wave of reform was a very drastic one and did not agree well with the technocratic culture that still prevails among many SCS. Apparently, the skeptics have been proved right. In the proposals of the second wave of reform, the single ministry of the Flemish ministry was replaced with no fewer than 13 ministries ‘with clear and distinct competencies’. Also gone is the board of secretaries-general that allowed the top Civil Servants to do collectively what they could not do separately: to design and co-ordinate their policies almost independently from – and sometimes in opposition to – some of their ministers.24 Horizontal, administrative co-ordination has once again been pushed aside by vertical, politically controlled coordination. In the Netherlands, a recent (1995) reform integrated the top Civil Servants into a single elite corps, De Algemene Bestuursdienst, from which members are dispatched to assignments in different ministries for limited periods of time (Nomden). In Belgium, the most recent reforms have carefully avoided such administrative integration and its corollary, the emphasis on horizontal co-ordination, thus reminding us of the political wisdom of the ancient Romans: Divide ut imperes. Conclusion: running out of steam? The ultimate aim of the reform attempts still is and should be to bring about a new, more equilibrated relationship between Civil Servants and politicians. On this most delicate of points, the projects of the reformers have remained rather vague and the results rather disappointing. Crucial importance has been given to the negotiation phase at which the top Civil Servants and their ministers discuss the performance contracts of the former. Here, however, it is impossible not to raise a few questions. Is it indeed possible to contain the tension between both elites to a single phase in the entire policy-making process? The advantage of such negotiations is that they are discreet and do not tend to make political waves. But blood is thicker than water. Politicians will inevitably seek to renegotiate these contracts as soon as they are seen as ill adapted to ‘new developments’. Negotiating the multiple and often contradictory objectives of a Civil Service department is very unlike setting the objectives of a private firm. A compromise appears to have been reached by reducing the ambition of these objectives to a rather modest level that would not be too risky for the manager but that would not grant him or her too much autonomy and power either.

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The first experiences with these and other negotiations between top Civil Servants and ministers in the Flemish governance system were mixed. They showed that the SCS did not always go to meet their minister totally unarmed. As they now enjoy a certain discretion in budgetary and personnel matters they can reserve a small staff of collaborators for their own management purposes. Moreover they know how to anticipate the wishes of their minister and how to incorporate these in their proposals. In some cases, their proposals have been the fruit of deliberations with fellow Civil Servants and with other interested parties, making it more difficult for the minister to disregard them. Contentious matters are likely to be settled through negotiations, rather than commands, even though it is accepted that the minister will have the final word. How things will actually develop, is everybody’s guess. Observers realize that the old technocratic and alienated administrative culture is still largely in place and not very receptive to the culture heralded by the NPM reformers. Probably much could be changed by replacing the old guard of the SCS with a new breed of managers/mandate-holders. This has actually been achieved and is seen by many as a major success in the effort to upgrade the quality of the SCS. However, even then much will depend on the establishment of a new cultural tradition as stable and powerful as the old bureaucratic culture once was. And even more will depend on the goodwill of the minister and the mutual understanding between him/her and his or her top Civil Servants. This very mundane rule applies as well in the federal, and in the Flemish administration, so inside observers tell us. The bottom line is that the position of the mandate holders is and will remain precarious. With the benefit of hindsight, we now know that some of the misgivings about the future evolution were not completely misguided. The recent developments tend to confirm the doubts of the skeptics and most clearly so in the Flemish administration where reforms had made the most headway. There the (second) wave of reforms still enjoys the official backing of the legislators, but actual implementation is slow and piecemeal. The required decrees were voted as late as 2003 and 2004. The vote had been prepared by some informal negotiations with the major opposition party, the Christian Democrats. From the reformers’ point of view this was a smart move as the Christian Democrats were likely to take over the leadership of the next government. And indeed, the present government has decided to continue the reform. It has agreed with its basic principles and installed a ministerial committee to monitor their implementation. In spite of all that, things already had started to go wrong. The monitoring committee was composed of ministers and senior Cabinet staffers who were not keen on strengthening the position of the SCS. The latter were allowed to form, within their own ministry, a board of SCS in order to co-ordinate the activities of the various services within that ministry. As a result they soon were bogged down in the tension-laden negotiations between the central departments and the decentralized agencies, the latter wishing to keep as much autonomy as possible. Against all odds, however, the negotiations succeeded and arrived at the formulation of acceptable statutes for both departments and agencies. The departments would take charge of the preparation phase of the policy-making process, the agencies of the execution phase. One of the main issues was the financial autonomy of the agencies. At first they claimed a global envelope to be spent at their own discretion, while the departments received separate envelopes for their personnel, policy, operation, and so on. The agencies finished by accepting the financial regime of the departments, from 2007 or 2008 onward.

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While this bickering went on between department and agency officials, the politicians (and their ministerial monitoring committee) remained aloof and did little or nothing to bridge the gap with the SCS. The (Flemish) MPs were hardly interested in these administrative matters and neither were the ministers of the new coalition government of President Leterme. Most of them came from the federal Parliament and knew little about the inner workings of the Flemish administration. They were generally content to be smugly embedded in a circle of Cabinet staffers who kept them at a safe distance from the SCS. Co-ordination between the ministries, which might have been a responsibility (and a power base) of a board of SCS, was now accaparated by an inter-ministry board of ministerial staffers. Most of the policies are being designed in this board and only the unresolved issues are percolated upward to the council of ministers. In the policy-making process the SCS are nowhere in the picture, neither as a board, nor as individuals. With some exceptions they have been marginalized once again. This may seem inconsistent with other elements of the reform that have been maintained more vigorously. The mandate system is indeed being introduced, giving many of the SCS the precarious status of contractuals with a limited tenure (six years or, at most, two terms of six years), beginning with a management contract and ending with an evaluation. One would expect that such demands would be compensated by a great autonomy, a highly selective recruitment and a higher level of remuneration. It must be said that these managers, at least if they have been recruited from within the administration, are assured to receive another more or less equivalent position in the administration. As managers, though, they do not have a very enviable position. In principle partisan influences should have been filtered out by the independent recruitment bureaus. However, these bureaus have contractual relationships with the senior politicians, and have learned to please them by anticipating their wishes. Care is taken to maintain a well-equilibrated mix of partisan nominations, at least on the superior levels of the administration. So politicization is rampant once again. Back to the old days before the reform efforts, one would say. Blood is indeed thicker than water. It should be added that not all the elements of reform have been scaled down. The agency heads do indeed enjoy more autonomy than SCS ever had and quite a few of then have been recruited outside of the career Civil Service. Moreover, all the (costly) measures pertaining to the new HRM policy appear to have been anchored firmly in the new Flemish administration. But this proves only that reforms can be realized more easily the less they endanger the position of the politicians: among the lower ranks of the departments and in the agencies in the periphery of that administration. Is the present state of reform any better in the federal administration? Perhaps surprisingly, it is. With respect to the HRM policies the federal administration has now pulled abreast with the Flemish administration. Much is being invested in the further schooling of the Civil Servants. Indeed, the evaluation of the latter will be based less on their actual performance, which proves hard to measure anyway, and more on the portfolio of the courses they have attended during the period under review. This means that evaluation has become less strict and that the superiors have taken notice of a certain ‘evaluation fatigue’ that has set in, especially among the older members of the Civil Service, as a result of the meandering reforms of the evaluation procedures. So the evaluation procedure, that linchpin of the reform efforts in the HRM area,

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is not based on actual performance, as the overambitious reformers had hoped. Even worse, from their perspective, is the fact that the authority to evaluate the Civil Servants has largely been taken away from the managers and returned to a more centralized procedure and authority. Initially evaluation should have become an instrument in the hands of the managers and adapted to the specific needs of their management and personnel policies. But too many outsiders, such as the unions and various (mostly francophone and Socialist) politicians feared that this would leave too much room for subjective and unpredictable assessments. A more cautious, more centralized and bureaucratic approach was to be preferred. After all Belgium is a country where laws and regulations are abundant and offer a good protection against the pretensions of the new managers. In sum, the position of the top Civil Servants has become more precarious; that of the lower Civil Servants has not. The net effect has been that the management capacities of the new managers has been downscaled considerably, at least in comparison with the original ambitions of the reformers. The federal administration has, in the eyes of the reformers, taken over the lead where it comes to strengthening the position of the SCS. This does not result from the new recruiting procedure. The most senior Civil Servants can in principle be recruited among outsiders to the administration but in fact they rarely are. Being unfamiliar with the mores of the Civil Service often proves too much of a handicap. Moreover, the promise of astonishing income hikes for the new managing mandarins has been downscaled considerably. In short, most of the new SCS still are career Civil Servants who for a limited time period agree to accept the status of a contractual mandate-holder. So, why would they be more influential than before the reform? The Cabinet staffers are still there, slightly slimmed down in numbers but nevertheless very much in charge of policy-making, leaving the implementation to the SCS, their departments and agencies. At the same time the SCS have the possibility of gaining ground by submitting preparatory documents to the actual policy-makers. When more autonomy is granted to departments and agencies, that is what one should expect. The Cabinet staffers cannot review the entire bottom-up flow of information provided by the SCS. The strength of the leading civil servant in each ministry, the successor to the former secretary-general, has been bolstered by the fact that he is now the chairman of the intraministry co-ordinating committee which comprises representatives of the ministerial cabinet, the department and the agencies. He is in charge of co-ordination where coordination is badly needed. Of course, this chairman should have the personal resources and talents that are required for such a demanding function. But if he has, and quite often he has, his cannot but be a formidable presence. The limit to the strength of these chairmen is that they are in charge of co-ordination within the ministry only. The external co-ordination between ministries is left to the Cabinet staffers of the ministers and weakly institutionalized. The contacts and cooperation between them depend on personal initiatives and have more often than not an ad hoc character. Whether SCS get involved depends likewise on the initiatives and the perceived needs of the leading Cabinet staffers. That is exactly what the politicians wanted when they redesigned the boundaries of the new ministries (henceforward called ‘Federal Public Services’). They wanted ministries clearly demarcated from other ministries, so as to make inter-ministry co-ordination as rarely needed as possible and intra-ministry co-ordination as easy as possible. If, nevertheless, some inter-ministry

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co-ordination should prove necessary, this would be done by several horizontal ministries, such as the Finance Ministry, and by ad hoc committees manned largely by Cabinet staffers and by Civil Servants they deemed useful to invite. Inter-ministry co-ordination should not become a power base for the new top Civil Servants. The latter, of course, have informal social contacts across the boundaries of their specific ministries but these contacts are far and few between. The bottom line of these recent evolutions is that even the most acclaimed reform effort tends to run out steam without powerful backing. The HRM reforms have been aimed largely at the intermediate and lower ranks of Civil Servants and could therefore count on the backing of their superiors, the SCS. The reforms pertaining to the relationship between politicians and SCS could not count on the backing of the superiors, that is, of the politicians. The politicians should have reformed themselves in the process, a difficult feat which reminds us of the old adage ‘Quis custodiat custodes?’ To stimulate leading politicians to support, and to keep supporting the reform over a long period of time, is asking for too much in a country like Belgium. Here the members of the regional governments (for example, Flanders) come from the federal Parliament and, as a consequence, are not well acquainted with regional administrative matters. Here the ministers of both federal and regional governments are members of shifting coalitions and tend to neglect what their predecessors tried to accomplish. And in any case there is little political ‘bread’ to be found in administrative reforms. These are issues that are not highly salient among the public at large and that require a kind of expertise that is in short supply. It takes powerful and highly motivated politicians to tackle this kind of problems. Not surprisingly they are hard to find. Sometimes the political situation opens a window of opportunity as was the case when the Flemish regional government had to establish a new administration of its own or when, in 1999, the federal government was taken over by a new coalition with money to spend and with a voluntaristic minister of administrative affairs. However, this window was closed in 2003, when new, less ambitious and flamboyant ministers (first Marie Arena and then Christian Dupont) with more affinity with bureaucratic thinking, took over. It appears now that it has let this chance of a lifetime slip away, perhaps by being overambitious. This is not to say that the reform efforts have been halted completely. Some of them have achieved a certain staying power, others keep trickling down, although with far less publicity. For the moment we can conclude that something has been achieved, but by no means everything the reformers hoped for. It has since then become clear that the next attempt at reform will require several years to gather steam. In any case the stream of publications that expressed the high hopes of the 1990s has almost dried up. Reform activity is for the moment largely limited to the local authorities and their public service. Acknowledgements I owe much gratitude to my former research assistant, Philippe Majersdorf, who bore much of the burden of the first phase of this research project, which was funded by the Belgian Fonds voor Kollektief Fundamenteel Onderzoek. I should, of course, also mention Joel D. Aberbach and Bert Rockman, who took the initiative for this second stage of the comparative project, and I do not want to forget Hans-Ulrich Derlien (Universität Bamberg) and Renate Mayntz (Max Planck Institut, Köln), who contributed greatly to my research design. Finally, I wish to express my appreciation for the

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logistic backing I enjoyed from the Departement Politieke en Sociale Wetenschappen (UIA) and the Faculteit Politieke en Sociale Wetenschappen (UFSIA) of the Universiteit Antwerpen. I should mention here the help of my colleague, Ria Janvier, who contributed to the revision and the updating of the final draft of this chapter. Notes 1.

2. 3.

4.

5. 6. 7. 8.

9.

10.

On 1 January 1999, the Flemish government had 10 856 (ministerial) Civil Servants on its payroll, the Communauté Française 4131, and the Région Wallonne 9326. This means that the Flemish government had to pay comparatively fewer Civil Servants while having more money at its disposal. At that time, the federal ministries employed about 61 000 persons, more than half of whom were in the Ministry of Finance. It is true that the Walloon Region also began with a single ministry (it now has two) and that the francophone community consolidated its two initial ministries into a single one in December 1996. Their cases show that centralization is a necessary but not a sufficient condition for the facilitation of reform. The former minister of this ministry was a somewhat colorless figure. The fact that the very able Van den Bossche, who used to be in charge of the reform of the Flemish Civil Service, was given the less than glamorous federal Ministry of the Civil Service meant that the new (1999) federal government attached a high priority to this policy area. The regional government of Wallonia finally adopted an administrative reform plan of its own on 24 October 2002. This plan incorporates a number of the measures already implemented by the Flemish and federal governments. It introduces, amongst others, the mandate system for its senior Civil Servants, the recruitment of Civil Servants by a committee composed of in- and outsiders of the Walloon administration, a focus on management skills, and permanent evaluation of performance. The reform is to be applied within both the two ministries and the 15 public enterprises of the region, with effects on a total of about 15 000 Civil Servants. Originally, we called on 170 SCS for an interview. Of these, 58 could or would not respond for various reasons – for example, retirement. Only ten refused outright. The ‘missing respondents’ were then replaced with 45 held in reserve. In the 1970s, the Civil Service was forced to recruit many superfluous employees in order to reduce the rising unemployment figures. Between 1971 and 1981, the number of employees on the payroll of the government increased by 30 percent. In our SCS sample, 32.5 percent of respondents were between 51 and 60 years old, and 56.1 percent between 60 and 65 years old. As in the countries reported on by Aberbach et al. (1981), the SCS in Belgium constituted a male bastion: just 4.5 percent of our sample were female. Aberbach et al. (1981) reported an average of between 95 and 100 percent of university graduates in five of their six countries. Britain had only 83 percent, coming close to the Belgian level. We should add, though, that in Belgium a distinction is made between a university degree (75 percent of the sample) and a higher education degree (5 percent). Lawyers were not as dominant as in most of the other countries (only 32 percent): we also found 21 percent to be engineers, 21 percent to be social scientists, and 14 percent to be economists. In my 1991 article, a table is displayed showing that the Belgian SCS are more technocratic than their German colleagues on all of the four items mentioned in note 10 and than their American colleagues on two out of four (with a draw on a third item). On the overall Technocratism Index, the Belgians have an average of 9.0, the Americans of 9.6, and the Germans of 10.8, a lower figure pointing to a higher level of technocratism. The same data are used, in French, in chapter 3 of Dierickx and Majersdorf (1993). To give a more precise idea of the semantics of this concept we mention here the four items that went into the construction of our (first) technocratism scale: 1. 2. 3. 4.

11.

In social and economic matters technical considerations today deserve more attention than political ones. In order to rationally assess government policy one should abstract from political considerations. The government should be judged with regard to the effectiveness of its policies and nothing else. The Parliament interferes too frequently in the operation of the administration.

This organizational explanation can be substantiated by empirical evidence from a study of the Belgian Civil Servants in the working groups of the European Council of Ministers (Dierickx and Beyers 1999). The ‘Euro-Belgian’ Civil Servants who are involved as part-timers in what are essentially negotiation processes with colleagues from other EU member states display a degree of technocratism that is not sensibly different from that of the SCS in our 1993 report. Working within the horizontal negotiation

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networks of the EU is not salient enough to them to disturb a political culture that originates in the vertical, hierarchical networks of a Belgian ministry. However, the Euro-Belgian full-timers who are members of the Permanent Representation with the EU or the European section of the Ministry of Foreign Affairs present us with an entirely different picture. Their degree of technocratism is much lower than that of the regular Belgian Civil Servants. A factor analysis suggested that these items could be seen as derived from a single underlying dimension and that aversion to one of these political actors went together with aversion to the other political actors. To give a feel of the semantic content of this scale, we reproduce here the original items: 1.

The public interest of our country is under serious threat of the continuous bickering between special interest groups. 2. Political parties do play an important role in a democracy. However, they tend to unnecessarily exacerbate conflicts. 3. Not so much the parties or the parliament, but rather the administrative apparatus provides our country with a satisfactory government. 4. People who enter a political career often think more about their own interests or that of their party than about the interests of their fellow citizens. 13. 14.

15.

Of course, opinions about that correct equilibrium differ, and the wrangles about nominations and promotions go on forever. It has been asserted that this was a fine example of Belgian consociationalism at work. It was nothing of the kind. Rather, it was an example of the art of dividing the spoils of war. Only the representatives of the coalition parties participated in the negotiations, and only on their own behalf. The longer a party had been a member of the governing coalition, the stronger was its overrepresentation among the SCS. Only many years later did the committee decide to reserve a (minor) share of the appointments for opposition and nonaffiliated Civil Servants, realizing that minority parties should not be provoked into retaliation when they joined a later coalition. A scale of left–right attitudes was constructed on the basis of six items in the questionnaire. A principal component analysis based on the three subsamples of our study yielded a single factor with factor loadings ranging from 58.4 to 77.0. The average intercorrelation between these items was 0.44 for the MPs, 0.28 for the SCS, and 0.39 for the cabinet staffers. The lower average of the SCS does not mean that their ideology was less coherent than that of the MPs. Using the same technique as the one in Aberbach et al. (1981: 128), we found that the ideological consistency of the SCS was only slightly weaker than that of the MPs. To gauge the socioeconomic flavor of the resulting scale, it is useful to reproduce these items here. 1. To the social conflicts we owe the progress made in our society. 2. Only by taking from the rich is it possible to help the poor. 3. To decrease the inequalities in income has correctly been viewed as a task of the government 4. Much of the doubt and fear of an ever-increasing state intervention in social and economic matters is entirely justified. 5. This scale allows you to express your opinion on economic matters. It varies from an economic system in which the state dominates to an economic system where free competition dominates. Where would you situate yourself? 6. This scale represents the political spectrum from left to right. Where would you situate yourself?

16.

17. 18.

The Belgian data make this ‘bureaucratic experience’ hypothesis even more plausible. The respondents were also questioned about the other major cleavages in Belgium. The sociolinguistic opposition between Flemish and francophones led to fierce debates among the political elites on the occasion of the federalization of the country. This central issue was put to our respondents, with the request to situate themselves on an 11-point scale ranging from unionism to confederalism. The results are striking. The SCS of each single party clearly tend more to unionism than the MPs of their own party. Again, job experience was obviously the major factor here. For our SCS, most of whom were active in the federal administration, the devolvement of power to the regions and the distribution of authority over several levels of government meant lots of trouble. Complaints about the ensuing confusion were to be heard in the corridors of all the ministries. Since we are no longer constrained by the necessity to compare the Belgian level of technocratism with the American level, we propose an amended version of the index used above. Two items remained the same; two were replaced to obtain statistically more satisfactory results. The index comes close to the Index of Programmatic Commitment in Aberbach et al. (1981: 147). It is statistically not very powerful, but a principal component analysis succeeds in finding a factor explaining 41 percent of the total variance, and the factor loadings are good enough for a first exploration of the

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19. 20.

21.

22.

23. 24.

International handbook of public management reform data. In Belgium, such an index has a special significance, since many observers want us to believe that the political elites act as pacificators in a consociational democracy and therefore favor a (very) soft political style. These findings correspond remarkably well with those in Aberbach et al. (1981). Another question is how the Civil Service can manage the stress that goes with this new eagerness to please the customers. A psychologist found out that the level of stress in the Flemish Department of Education, which happens to be a pioneer in the new human-relations approach to customers, was the second highest he ever came across in any organization, public or private. Apparently, there is an as yet unpublicized cost that comes with these reforms. In the ministry of the Francophone Community, a similar evaluation system was introduced in 1996. Alas, this system remains somewhat ineffective because, as a senior government official of this ministry once put it, ‘We have the stick, but not the carrot’, meaning that the ministry could not afford the incentives, such as premiums, to reward the more deserving Civil Servants. Insofar as such precise objectives exist, why do the Belgians not entrust them to privatized enterprises? Why are there no loud claims for further privatization? A first reason is that the co-ordination between too many autonomous enterprises could prove difficult for a coalition government and the very complex governance system of the newly federalized country. Second, in neocorporatist Belgium, there is not that much left to privatize. The country has a tradition of using various associations as subcontractors for tasks that in most other countries would be the privilege of the state. In many areas of the elaborate social-security system and most notably in the field of education, the services to the population are being provided by private but regulated and subsidized free associations. In this way, so critics say, partisan appointments will not be excluded, only made less visible, as the (still somewhat partisan) SCS in charge of recruiting and promoting are expected to make deals among themselves. What caused the sudden disappearance of this board? Apparently it had two fatal flaws. The incoming government regarded several of its members as creatures of the outgoing government led by the Christian Democrats. Also its members failed to form a united front in several sensitive matters.

Bibliography Aberbach, J. and B. Rockman (2000), In the Web of Politics: Three Decades of the U.S. Federal Executive, Washington, DC: Brookings Institution. Aberbach, J., R. Putnam and A. Rockman (1981), Bureaucrats and Politicians in Western Democracies, Cambridge, MA: Harvard University Press. Bouckaert, G. and T. Auwers (1999), De Modernisering van de Vlaamse Overheid (The Modernization of the Flemish Government), Brugge: Die Keure. Bouckaert, G. and N. Thijs (2003), Kwaliteit in de Overheid: Een Handoek voor Kwaliteitsmanagement in de Publieke Sector op Basis van een Internationaal Comparatieve Studie (Quality in the Public Service: A Handbook for Quality Management in the Public sector Based on an International Comparative Study), Gent: Academia Press. Brans, M. and A. Hondeghem (1999), ‘The Senior Civil Service in Belgium’, in E.C. Page and V. Wright (eds), Bureaucratic Elites in Western European States, A Comparative Analysis of Top Officials, Oxford: Oxford University Press, pp. 121–46. Brans, M. and Steen, T. (2007), ‘From incremental to Copernican reform? Changes to the position and role of Senior Civil Servants in the Belgian federal administration’, in E.C. Page and V. Wright (eds), The Changing Role of Top Officials in European Nations, Basingstoke: Palgrave, pp. 63–80. Brans, M., C. de Visscher and D. Vancoppenolle (2006), ‘Administrative reform in Belgium: maintenance or modernization?’, West European Politics, 29: 979–98. Campbell, A., P.E. Converse, W.E. Miller and D.E. Stokes (1960), The American Voter, New York: Wiley. Dierickx, G. (1991), ‘Hogere Ambtenaren in de Verenigde Staten, de Duitse Bondsrepubliek en België: Tendensen naar Technocratie’ (‘Senior Civil Servants in the United States, the Federal Republic of Germany, and Belgium: tendencies towards technocratism’), Tijdschrift voor Bestuurswetenschappen en Publiekrecht (Journal for Administrative Sciences and Public Law), 46: 5–12. Dierickx, G. and J. Beyers (1999), ‘Belgian Civil Servants in the European Union: a tale of two cultures’, West European Politics, 22: 198–222. Dierickx, G. and P. Majersdorf (1993), La Culture Politique des Fonctionnaires et des Hommes Politiques en Belgique (The Political Culture of Civil Servants and Politicians in Belgium), Brugge: Vanden Broele. Hondeghem, A. (1990), De Loopbaan van de Ambtenaar (The Career of the Civil Servant), Leuven: Vervolmakingcentrum voor Overheidsbeleid en Bestuur, K.U. Leuven. Hondegem, A. and R. Depré (eds.) (2005), De Copernicushervorming in Perspectief Veranderingsmanagement in

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de Federale Overheid (The Copernicus Reform in the Perspective of the Management of Change in the Federal Government), Brugge: Vanden Broele. Molitor, A. (1974), L’Administration de la Belgique (The Administration of Belgium), Bruxelles: CRISP. Nomden, K. (2000), ‘De Copernicusnota: het Mandaatsysteem voor Federale Ambtenaren bekeken vanuit een Internationaal Perspectief’ (‘The Copernicus White Paper: the mandate system for the federal Civil Servants in an international perspective’), Vlaams Tijdschrift voor Overheidsmanagement (Flemish Journal for Government Management), 5: 4–14. Pollitt, C. and G. Bouckaert (1999), Public Management Reforms: A Comparative Analysis, Oxford: Oxford University Press. Stenmans, A. (1999), La Transformation de la Fonction Administrative en Belgique (The Transformation of the Civil Service in Belgium), Bruxelles: CRISP. Stroobants, E. and L. Victor (2000), Beter Bestuur: Een Visie op een Transparant Organisatiemodel voor de Vlaamse Administratie. Voorstellen van de Bijzondere Commissarissen voor de Reorganisatie van het Vlaamse Overheidsapparaat (Better Governance: A Perspective on a Model for the Transparant Organization of the Flemish Administration. Proposals of the Special Commissioners for the Reorganization of the Flemish Administration), Brussel: Ministerie van de Vlaamse Gemeenschap (Ministry of the Flemish Community). Walgrave, S. and M. Suetens (2001), ‘Belgian politics without ministerial Cabinets? On the possibilities and limitations of a new political culture’, Acta Politica, 36: 180–205.

15 Dynamic conservatism: the rise and evolution of public management reforms in the Netherlands Mirko Noordegraaf 1

Introduction Since 1982 Dutch public administration and public service organizations have been continually reformed. Because of Dutch traditions and systems, however, this did not always produce ‘real’ change. In this chapter, reforms and effects are analysed. First, the ‘objects’ of reform will be highlighted, that is, the basic structures, processes and features of Dutch political and public domains. Because Dutch political and public domains are ‘de-centered’, they are difficult to control. Second, the nature and evolution of reform will be described by giving a rough chronological overview of different waves of reform. Although most reforms affected government, they also ‘spilled over’ to non-profit service delivery. Third, the means and mechanisms of reform are analysed. Because of the decentered state of the state, reform waves called for ‘control through consent’. Fourth, the interweaving of change and continuity is analysed. Although certain new trends and lasting changes can be traced, specific political and administrative features are stable, almost unalterable. Finally, reform consequences are traced, by exploring outcomes and impacts. Although certain ‘performances’ are hard to deny, they were not always caused by public management reforms, and reforms, moreover, have started to bite their own tails. Increasingly, people start to complain about ‘reform mania’. In the last paragraph, conclusions are drawn. Reform context It is important to highlight features of the Dutch state and its intricate links with civil society, because these features are the context and ‘objects’ of reform. Public management reform aims at changing political decision-making, policy processes and organizational behavior, but is affected – and often constrained – by these very same reform objects. The Dutch state is a ‘decentralized unitary state’ (for example, Toonen 1990), which means it is one, centrally governed state, but with strong decentralized regional and local powers. This also means, not unimportantly for reform, that it is one welfare state, with centrally formulated parameters, but with regional and local responsibilities for implementing welfare policies, such as municipal social services. De jure the Dutch state has a three-tier system, with a national government, situated in the administrative capital The Hague, 13 provinces, often with much historical meaning, and around 400 municipalities. Each of these layers has its own form of representative democracy. The national layer has bi-cameral Parliamentary system, with a directly elected Second Chamber – 150 seats – and an indirectly elected Senate – 75 seats. Both chambers consist of multiple political parties (in 2008: 10); a few big parties that represent classic ideological (Christian Democrats, Social Democrats, Socialists, Liberals) and a number of smaller 262

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parties that represent certain ideological movements (such as right-wing Christians or Populist parties) or themes (such as a party for Animal Welfare). In order to form a Cabinet, political parties have to form a coalition (normally with two or three parties), so that a majority of 75 or more seats is reached. The Cabinet – with appointed Cabinet members – is headed by a Prime Minister who is ‘first among equals’, and consists of around 12 ministers and around 15 deputyministers who, as political executives, head government ministries. Each ministry is led by a Secretary-General (and a deputy Secretary-General), and two, three or four Director-Generals who are in charge of policy-making. Each Director-General is responsible for a few units (directies), which are led by directors (and units within directies are led by unit heads). Provincial and municipal governments have more collegial forms of government, although reforms have introduced more political opposition between elected and executive politicians. At both layers there is a directly elected Council, and an Executive Body, the Council of Mayor and Aldermen at municipal level, and the Council of Deputies at provincial level. The latter council is chaired by an appointed Commissioner of the Queen. At municipal level, both executive council members are appointed locally; previously from within elected councils, but more recently from outside the councils. Mayors are appointed as well, by the Cabinet. The municipal executive council is in charge of policy-making, implementation and administration. The elected council sets the framework and holds executive councils accountable. Administrative capacities at provincial and local levels can be organized in different ways, but generally, there is a ‘governing service’ close to executive politics, and there are executive agencies that make things happen. In all municipalities, a ‘municipal administrator’, a kind of ‘city manager’, heads the administrative machinery. At provincial level, a provincial administrator is responsible for administrative services and processes. All of this means that the Dutch state has democratic and executive centers, but taken together, it is de-centered. In case of many issues, administrative layers are mutually dependent. This is strengthened by the fact that in-between layers ‘support layers’ are visible, like inter-municipal arrangements or territorial regions, for example, in the case of policing. In addition, the ‘unitary’ nature of the Dutch state is also affected ‘from above’, most importantly by the European Union (for example, Geuijen et al. 2007). Last but not least, Dutch public administration is de-centered, because of strong links between state and civil society. Traditionally, the Dutch state depends on private not-for-profit organizations, such as health care organizations, schools and public housing corporations for governing issues like health, education and housing (for example, Brandsen et al. 2005). It also depends on non-state ‘stakeholders’ in fields like environmental protection, urban governance and infrastructure (for example, Denters et al. 2003; Glasbergen 1998). Although these organizations and fields have been encapsulated by state-based financing and accountability regimes, they are and remain private non-profit. Because civil society cannot be controlled directly, and because public sector reform spills over to non-profit spheres, many scholars of public management study reform processes in sectors like health care, as well as negotiations between public organizations and ‘policy fields’. Dutch society is characterized by an emphasis on ‘covenants’ with stakeholders (Glasbergen 1998), ‘public-private’ partnerships (Klijn and Teisman 2003) and ‘interactive’ or deliberative processes (Denters et al. 2003), also when it comes to policy content.

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For many socio-economic issues, the government has to deal with ‘social partners’ in order to make decisions (for example, Visser and Hemerijck 1997). Waves of reform In the early 1980s, when political climates in countries like the USA and UK became neoliberal and Keynesian economic policies gave way to monetarist outlooks, neo-liberalism also struck the Netherlands. Since the early 1980s, Dutch government responded to economic downturn by attacking ‘big’ and ‘bureaucratic’ government. Since then all well-known terms and tools (for example, Ferlie et al. 2005; Pollitt and Bouckaert 2000) have been introduced, imported and used: ● ● ● ●

Strategy: visions, missions, SWOT (strengths, weaknesses, opportunities, threats) analyses. Structures: multidivisional structures, business units, agencies. Systems: planning and control, management contracts, monitoring, outcome based budgeting, service level agreements (SLAs). Cultures: entrepreneurship, empowerment, competencies.

Over time, moreover, like elsewhere emphases shifted: ‘efficiency’ in the 1980s, ‘innovation’ in the early 1990s, ‘quality’ in the late 1990s, ‘accountability’ around the turn of the century, ‘joined-up government’ after the turn of the century (for example, Ferlie et al. 1996; Noordegraaf 2004). At the same time, however, the Netherlands followed its own course, both because of its specific historical and socio-political context, and because specific combinations of politics, processes and people resulted in distinctive reform practices (for overviews, see for example, De Vries 2001; Hendriks and Tops 2003; Kickert 1997; Van der Meer and Raadschelders 1999). Reforms will be summarized by distinguishing three waves of reform, as is shown in Table 15.1. 1980s: Civil Service reform In the 1970s, things started to change, at least economically, especially when The Netherlands was hit by an Organization of Petroleum-Exporting Countries (OPEC) decision to reduce oil supply and increase oil prices (October 1973), after Western countries like the Netherlands took pro-Israel stances during the Yom Kippur War (6–26 October 1973). Dutch economic policies did not immediately change, however. The Cabinet, led by Prime Minister Den Uyl, stuck to its Keynesian outlook, and continued to spend money in order to control stagnation and inflation and unemployment. Only Table 15.1

Waves of reform

Reform wave

Period

Reform ambitions and aims

Civil service reform Service reform Civil reform

1980s, after 1982

Smaller and efficient government; rational organizational control; mobile employees and managers Improved and more accountable public service delivery Different government; new ties with civil society; empowered citizens; organizational co-operation

1990s, until 2001 After 2001

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when economic problems increased, also after a second oil crisis in 1979, and when the government, employers and unions agreed to lower loans (in the so-called ‘Wassenaar Agreement’, 1982), real political change happened. A new right-wing Cabinet, led by Prime Minister Lubbers, left Keynesianism, and turned towards neo-liberal politics. The Dutch version of Reagonomics and Thatcherism was symbolized by Lubbers’s ‘no nonsense’ policies. Shortly after his appointment, Lubbers announced several ‘grand operations’, which included privatization, personnel reduction, cutbacks and government reorganization, aimed at reducing the size of government, as well as to make government more businesslike (Van Nispen and Noordhoek 1986). The so-called Vonhoff-committee produced reports on governmental structures, cultures and procedures at the end of the 1970s – culminating in a final report in 1980. The committee advocated better means to co-ordinate governmental operations, such as a ‘core Cabinet’ and ‘main policy areas’. In following years drastic changes did not occur, although incremental reforms were initiated. Reform projects started spreading throughout central government, backed by reform reports coming from the ministries of Home Affairs and Finance, which – inter alia – focused on the adaptation of departmental structures. ‘Contract management’ was introduced to rationalize politico-administrative interaction and to create performancebased incentives. ‘Integral management’ was introduced in order to tackle line-staff problems, and ‘efficiency operations’ were executed, also by the more left-wing cabinet that succeeded the second Lubbers Cabinet in 1989. Managerialist outlooks also spilled over into policy sectors like health care and social security, stressing cost reductions and rationing (Van der Veen and Trommel 1999). A managerialist turn also occurred in many Dutch municipalities (for example, Hendriks and Tops 1999). The most famous example, also known in countries like Germany, was the so-called ‘Tilburg model’ in the city of Tilburg (for example, Hendriks and Tops 2003). Forced by severe economic problems, the city rationalized political steering and administrative procedures, by introducing a corporate control model. Planning and control cycles, and performance monitoring were introduced to implement the model. At the end of the 1980s, such organizing by planning and control was introduced in municipalities on a broader scale, when the so-called BBI-operation initiated. ‘Policy and management instruments’ rationalized budgetary control (see Van Helden 1998; Van Helden and Ter Bogt 2001). 1990s: service reform In the first half of the 1990s, the emphasis on efficiency and control started to shift. Influenced by political change, especially after 1994 when a new ‘Purple’ Cabinet was installed (Liberals, Liberal Democrats and Social Democrats), a kind of ‘Third Way politics’ was practiced, emphasizing better and less bureaucratic service provision. After 70 years of continuous Cabinet membership, the Christian Democrats became members of the opposition, and a fresh reform wind started to blow. Influenced by Osborne and Gaebler’s (1992) best-selling Reinventing Government, government organizations started to foster ‘entrepreneurial spirits’; stimulated by quality initiatives, public managers started to focus on ‘quality’. Planning and control became much more tied to strategic outlooks, and ‘multidivisional’ models were introduced. The latter reform is best illustrated by the transformation of government ministries into ‘core departments’, and rise of the so-called ‘Governance Council’ model at

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several ministries. Policy-making and policy implementation were separated; government units were ‘hived off’ or ‘autonomized’ and turned into ‘agencies’ and ‘quango’s’; policy ‘cores’ were turned into ‘core departments’. Some of these policy departments, moreover, radically changed their organizational structures, by installing ‘collegial’ Governance Councils (for example, Noordegraaf 2004). Theses councils consisted of traditional functionaries – a secretary-general and several director-generals, cast in new roles. The organizational units they headed before, so-called ‘directorate generals’, were abolished, and departmental building blocks were turned into ‘divisions’ that would ‘deliver’ agreed-upon outputs (see, for example, Van Thiel 2004). In other words, the businesslike standardization of work processes of the 1980s was complemented by the standardization of outputs. Such management reform was accompanied by budgetary reform, not in the least by a major new ‘outcome-based’ budgetary system, called VBTB, ‘From policy budgeting to policy accounting’, formally introduced in 2001 (for example, Bac 2002; De Vries and Yesilkagit 2003). Budgetary articles were turned into ‘policy articles’, consisting of a ‘SMART’ (specific, measurable, attainable, realistic, timely) listing of policy objectives, targets, activities, financial means, so that budgetary allocation could be rationalized, and de facto outputs/outcomes could be monitored and accounted for. The latter emphasis was reflected in a new parliamentary ‘event’ that complements traditional policy planning events (especially on the so-called ‘third Tuesday in September’), and once a year, on ‘3 May’, the cabinet clarifies and accounts for its performances, backed by an ‘audit report’ from the General Accounting Office. There was little media or political attention paid to it, as it remained highly technical (cf. De Vries and Yesilkagit 2003). Output-based performance orientations were also supported by manager reform. Administrators-with-positions were turned into ‘managers’, who possess the right ‘competencies’. Most importantly, a Senior Public Service (SPS) was established in 1995, aimed at improving managerial work in central government. Comparable changes happened elsewhere. In the second half of the 1990s, municipalities started to invest in ‘front office/back office’ concepts, in order to deliver better services to citizens-as-customers. Organizations, varying from municipalities to police forces, started to ‘benchmark’ service delivery. Health care organizations started to invest in methods for making health care delivery more ‘demand based’. They also adapted structures – they ‘turned over’ structures – in order to serve customers as smoothly, that is, as non-bureaucratically as possible (for example, Putters 2001). Such adaptations were backed by policy changes. In health care, for instance, the Ministry for Health Care started to work towards more market- and demand-based policy systems that would enable organizations to deliver quality. This was reinforced by a new system for governing and financing health care productions, the so-called Diagnosis Treatment Combinations (DBC) system, a diagnosis-related treatment system. 2000 and beyond: civil reform In 2001 a new Cabinet was appointed, consisting of Christian-Democrats and Liberals, led by the Christian Democrat Balkenende, bound together by a Cabinet agreement that strongly focused on ‘civil society’ and ‘empowering’ citizens. This political change, however, cannot be isolated from the abrupt rise of populist politician Pim Fortuyn (see Van Holsteyn and Irwin 2003), who suddenly captured the hearts and minds of many

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Dutchmen, almost out of the blue. Helped by his charming and obstinate media performances, and his ability to tackle the ‘right’ issues – waiting lists in health care, Islam and immigration – he became a serious political competitor in two elections: local elections in the city of Rotterdam (leading the new party ‘Livable Rotterdam’), and national elections (leading his own brand new party ‘List Pim Fortuyn’). After the Rotterdam elections, which he won convincingly (17 seats out of 45), and a few days before the national elections, he was assassinated. His party won 22 seats out of 150 seats, causing a political landslide in Dutch politics, echoing anti-Purple sentiments and a new societal awareness. This societal awareness was strengthened by 9/11, one year earlier, and by the murder of a Dutch film-maker, Theo van Gogh, two years later.2 More than ever, politicians started to focus on ‘alienated’ and ‘angry’ citizens who had lost confidence in politics, if not society. This focus was reflected in numerous programs and projects initiated by the new and subsequent cabinets, including: Balkenende II (2002–2006), III (2006) and IV (since 2006). During Balkenende II and III, the major reform program ‘Different Government’ focused on government itself. Governmental structures and relations had to be readjusted to (civil) society and citizen demands. Bureaucracy, ‘red tape’ and administrative ‘burdens’ had to be reduced. Secretary-Generals started working together more closely, producing plans to offer more ‘quality’. ‘Program management’ was used to get things done, for example, in case of urban and regional governance. Ministries like the Ministry for Education were transformed into flexible ‘thematic’ structures. In sectors like education and health care, mechanisms for organizing ‘governance’ were advocated, such as ‘governance codes’. This was continued after 2006, when a new Cabinet was appointed, consisting of Christian-Democrats and Social Democrats (and right-wing Christians). Ironically, the Social Democrats tried to restructure central government by reintroducing ideas about ‘core policy areas’ and a ‘core Cabinet’ that were also advocated by the Vonhoffcommittee 20 years before. Things also changed, however. Instead of big reform projects like ‘Different Government’ and multiple projects, governmental reform was streamlined by appointing a project Secretary-General for ‘Renewal Central Government’, who has to reduce the number of civil servants, and turn central government into a policy ‘corporation’. Reform mechanisms Dutch political and administrative systems have special features that legitimate reform ambitions; amid precarious multi-party coalitions, it is difficult to ‘perform’, so it is tempting to change coalitions. These features also inhibit quick and easy changes, as multi-party negotiations, decentralized powers, relatively weak positions of Prime Ministers, and intricate links between public and non-profit spheres, imply that no one is ‘in charge’. ‘Control through consent’ was realized by playing creative language games, using associations, and relying on existing institutional systems. Discursive flexibility In all reform waves, parties involved used the ‘right’ vocabularies and terms, in order to propagate practical reforms. During the first wave of reform, parties emphasized anti-ideological ‘no nonsense’ vocabularies that fitted wider, international perceptions

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of problematic and ‘bureaucratic’ government. ‘Operations’ were initiated to cure the patient. Later, when service delivery was reformed, discursive ingenuity became all the more important as non-state but state-dependent service sectors like health care and education had to be reformed. Words like ‘entrepreneurial’ fitted longings for clientoriented, more competitive forms of service delivery. Within government, such entrepreneurial longings were marketized by heavily relying on terms like ‘flexibility’, ‘strategy’, and ‘interactive’ and ‘outward looking’ behavior. Ministries became strategic ‘cores’, a discursive move that has been described earlier as ‘verbal renewal’ (Van Twist 1995). When ‘leadership’ discourses developed, to pave the way for strategic forms of control, reforms started to absorb leadership terms. Later, ‘civil society’ was re-discovered, especially by Christian Democrats, and ‘governance’ strategies were proposed. Policy managers were no longer seen as policy-makers, but as public ‘leaders’ responsible for governance ‘systems’. Associational governance Discursive moves were not sufficient, of course, to implement changes, because a distinctive usage of words also had to be dispersed, legitimated and turned into new practices. Mere legal changes were also insufficient, however, to change things, because de-centered surroundings work against ‘unfiltered’ adaptations of instructions. Even when state organizations are forced to comply with state-initiated legal norms, implementation is far from certain. One of the best examples is the legal obligation for police forces to offer quality by applying the so-called INK3 quality model. Because such a model is not designed for police services, and because police forces have little experience in working with such quality models, significant reforms only started began when police associations started to promote quality reforms. A so-called ‘Quality Bureau’ started to support police forces in implementing the model by organizing conferences, meetings and projects. The Dutch Police Academy, moreover, started to pay attention to quality care and quality models, for instance in its Strategic Leaders Course. Associations of managers and specialists spread businesslike management. Outside state spheres, such associational governance is even more important. The large-scale introduction of the Diagnosis-related Treatment Systems, for example, and market-oriented changes in health care, could only be realized after winning sectoral consent. Only when medical doctors’ associations accepted DBC’s, and when relevant stakeholders were convinced of the new health care system, could reforms be realized. Institutional enforcement Sometimes changes are (legally) enforced, by using institutional systems, but then – paradoxically – existing institutional systems are reproduced. The split between policymaking, implementation and inspection, for example, and the creation of policy ‘cores’, depended on Cabinet decisions, backed by Members of Parliament. The Cabinet could take these decisions, and reposition Civil Servants, because ministerial and managerial systems offer fully circumscribed positional regimes that can be redesigned. New positions of high-ranking managers could be established because the Cabinet is at the helm of the ministerial system. By repositioning Civil Servants, and also policy-making units and executive agencies, it does not fundamentally alter the system; however, it reinforces the politics at the helm of the system.

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When Cabinet is not at the helm of positional systems, like health care or educational systems, the absence of political control is reinforced when the Cabinet attempts to regulate state-independent features, like executive salaries in health care. The same happens in other administrative surroundings, as in municipalities. The city of Tilburg could adapt its administrative machinery and produce the ‘Tilburg model’, but it cannot control its societal partners. Even then, however, there are margins of institutional ‘enforcement’. Especially when societal partners like welfare organizations depend on government, not least because they need subsidies, governments can enforce partners to comply with strict budgeting standards and accountability mechanisms. Change Whether reforms ‘really’ changed Dutch administrative systems and the workings of public organizations is difficult to say. Many changes turned out to be mainly rhetorical and symbolic, and some things remain unaltered. Budgetary processes have been accompanied by output and outcome rhetoric, but they have maintained a strong de facto focus on input and throughput logic. Organizational structures have been modernized, for instance, but they have also kept their hierarchical logic. The absence of ‘real’ change is most obvious when it comes to the basics of political and administrative systems. Before such continuities will be explored, the most important changes will be summarized. Transparency In many respects, the various waves of reform discussed above depend on information and communication technologies (ICTs) that enable public organizations to keep track, to measure things, to inform citizens, and to optimize organizational transactions (for example, Snellen and Van de Donk 1998; Bekkers and Homburg 2007). Information and communication technologies are used to install and run concrete performance systems, for example, by building databases, monitoring systems and ‘dashboards’, to support ‘management by measurement’ (cf. Noordegraaf and Abma 2003), by installing management information systems and ‘Safety indices’. Information and communication technologies are used to list and ‘rank’ public performances, such as school and health care performances, and to inform the public about good and bad performances. Information and communication technologies are used to improve ‘help desks’ for citizens, links between front and back offices, and related public service systems, and are used to establish web-based interfaces between citizens, organizations and politicians. All of these techniques for enhancing targeted transparency (cf. Fung et al. 2007) have altered the face of Dutch government and (semi)public organizations. Owing to the use of monitoring methods, measurement systems, indices and websites, policy-making and service delivery have become much more transparent than 20 or 30 years ago. Whether the effects of these techniques turn out as expected, and whether their promises have been met, are different questions. Indeed, most means for enhancing transparency have had quite disappointing consequences (for example, Bekkers and Homburg 2007). In many instances, new information systems have failed; in other instances, information systems have started to produce facts and figures, but they have not produced ‘meaningful’ facts and figures (Noordegraaf and Abma 2003). In other instances, systems have started to ‘discipline’ managers and work floors, who feel captured by massive informational demands and accountability pressures (WRR 2004).

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Institutional fragmentation The Dutch state has never been ‘pure’. State-based institutions such as ministries and police forces have always been mingled with supervisory institutes and ‘government companies’. In past decades, however, the less-than-pure Dutch state has been highly fragmented and its institutional landscape has changed dramatically. Newly erected autonomies agencies, quangos, regulatory agencies, public–private companies and partnerships, and ‘loose’ couplings within between organizations and administrative levels, have created an organizational mosaic. Such institutional fragmentation has affected capacities to control budgets and hold governments accountable, and has fuelled the dispersal of political powers. Powerful quangos with large budgets and strong executives, for example, have become important ‘political’ players vis-à-vis real politicians in Parliament and the Cabinet (for example, Van Thiel 2004). In addition, although clear boundaries between state, civil society (and market) have never been drawn easily, especially in a ‘hybrid’ social order as the Dutch social order, these boundaries have become fuzzier than ever. Hybrid arrangements between public and private have been growing, for example, in the fields of health care, education and public housing, fields that have been crucial for public perceptions of government (Brandsen et al. 2005). On the one hand, autonomies of organizations in such semi-public fields have really been enlarged, which has evidently been accompanied by organizational scaling-up, more managers and staff, more entrepreneurialism and quasimarket surroundings (for example, Brandsen 2004). On the other hand, central government has continued to set policy and performance parameters, supervise organizational action, and respond to ‘incidents’ and ‘crises’, reinforced by the media. Professional practices The rise and evolution of managerialism in Dutch government and semi-public fields has also been accompanied by an emphasis on managers, leaders, competencies, schooling and the like. This has evolved into widespread professionalization projects, aimed at improving occupational practices and ‘making’ professional public managers (for example, Noordegraaf 2006). Linguistically, Dutch administrators turned into ‘managers’ in the 1980s; managers became ‘strategists’ and ‘public entrepreneurs’ in the 1990s; and they turned into ‘leaders’ around the turn of the century. Managers-asleaders were encouraged or forced to become members of professional associations, which define competencies, set-up educational programs, organized conferences, and publish codes. The best example is the Dutch Senior Public Service (ABD) in central government, comprising around 900 high-ranking managers, who fill scale 15+ positions (policy director and higher). In addition, municipal secretaries or ‘city managers’ are members of a Municipal Secretary Association (VGS), police managers are regulated by a central MD (management development) unit, and judicial managers in law courts are obliged to follow professional (managerial) education. Other examples are Associations for health care executives, social services managers and school managers. Continuity Compared with pre-reform eras (before 1982) several continuities are apparent. Constitutional ground rules, politics and administrative cultures have constrained

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(other) reforms. This is paradoxical, as reformers have hindered the outcomes of reform by not reforming ground rules and cultures. Constitutional grounds Despite attempts to rewrite parts of the constitution in order to formalize new political and administrative realities, little has changed. First, the Dutch three-tier politico-administrative system, with national, provincial and municipal levels, remained unaltered, although this system has become highly confusing. In addition to European influences ‘from above’ and institutional fragmentation ‘from the side’, all kinds of functional, regional and inter-municipal structures and alliances have been formed, often ‘from below’, in order to cope with various tasks. This has confused reform movements, as reform projects in policy fields like policing, social security and education have been not so much been about reform objectives, but about how reform objectives can be implemented in unreformed administrative systems. The regional nature of Dutch police, for instance, has complicated discussions about formal roles and responsibilities in case of police co-operation and ‘information based policing’. Secondly, constitutional ground rules that influence relations between state and market have remained unaltered. This has especially affected discussions about Dutch health care institutions, school, and public housing corporations, which are neither state nor market based, but instead deeply rooted in civil society. Although this has resulted in a widespread awareness of ‘hybridity’ and value clashes (for example, Brandsen et al. 2005) as well as ‘provision’ and ‘institutional logics’ (for example, WRR 2004), practical reform has remained difficult. During the latest cabinet Balkenende IV (installed in 2007) this might change, as coalition parties have agreed to create a new judicial form, the socalled ‘societal company’. Politics and political authority Not only constitutionally, but also ideologically and ideationally, the phenomenon of politics is perceived in classic terms. Politics is considered to be of a ‘higher’ and ‘ultimate’ order. When the ‘authoritative allocation of values to society’ has to occur, politics is responsible, and its representatives – that is, politicians – are hegemonic. When public action occurs, there is the ‘primacy of politics’ (for example, Bovens 1998). Consequently, there is no politics outside politics. Civil Servants cannot be held accountable in political circles (for example, Bovens 1998). In addition, politicians are considered to represent the citizenry, directly or indirectly, which means that politics is about ‘mimetic representation’ (cf. Ankersmit 1996), whereby elected politicians re-present what is present elsewhere. This is an ‘idea’ with large practical consequences; classic representative ideals imply that hierarchical relations and structures are reproduced on a day-to-day basis. When political executives are ‘on top’, administrative organizations must make sure politicians decide, and implement political decisions. Such organizations will work with clear hierarchical lines of instructing and reporting (Noordegraaf 2007). The ‘stickiness’ of political institutions does not only affect government and its related agencies, such as police forces. It also affects agencies ‘at a distance’, such as health care organizations and schools, which have been encapsulated in complex state-based budgetary and accountability regimes that legitimate parliamentary or ministerial action. When incidents happen, ministers are quickly held responsible.

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Administrative cultures Cultures are still really ‘administrative’, despite attempts to make them more entrepreneurial, outward oriented and flexible. This is not so much a matter of unwilling administrators, but of meeting- and paper-based routines that determine how administrators should work, and also embody deeply ingrained values, such as predictability, uniformity and integrity. Numerous incidents and cases show the effects of non-predictable or non-uniform action. Enlarged by media exposure, they have reinforced classic routines. One example concerns the province of South Holland, where Osborne and Gaebler’s best-selling Reinventing Government inspired political executives and administrators to become more ‘entrepreneurial’ (for example, Yesilkagit and De Vries 2002). They started to lend (public) money to private parties, including one company – Ceteco – that went bankrupt. This resulted in big financial losses for the province. The most important executive (the Commissioner of the Queen) and the provincial controller were sent away, and tight discipline was re-installed. When administrative cultures become the object of reform, for example, reforms turn out to be either unsuccessful, or rather meaningless. Departmental projects aimed at ‘breaking through bureaucracy’ do not really produce lasting effects. In one instance, rather unorthodox reform of the Directorate-General for Housing of the Ministry of Spatial Planning, Housing and the Environment, led to media coverage and parliamentary questions, and the consultants were sacked. Reports on cultural change, such as a report by the Advisory Council for Public Administration – embraced by the Cabinet – did not really affect cultural patterns. In the report, new, desirable cultures are described – rather meaninglessly – as FORS (‘BIG’ in English), which stands for: Flexible, Outward-looking, Result-oriented and Co-operative (ROB 2004). In addition, Dutch government ministries and agencies are characterized by a ‘culture of fear’ (cf. Noordegraaf 2002; 2007), also reinforced by incidents. First and foremost, this ‘fear’ comes from the pervasiveness of politics. High-ranking Civil Servants are taught not to damage their minister or alderman, because a ‘damaged’ and thus ‘weakened’ political executive damages personal prestige, departmental positions, and possibilities to get things done in or around the Cabinet. Although this has always been the case, such fear is strengthened in a media-driven climate, where success and failure count, and ‘small losses’ can have ‘large consequences’ (Weick 2001). Although this often relates to policy issues, it has cultural effects. Civil Servants tend to avoid innovative moves in or around specific policy processes. Outspoken or ‘entrepreneurial’ policy managers are not really appreciated. Effects and impacts It is impossible to judge the consequences of reforms. Formal objectives might deviate from real objectives, and formal or real objectives might be contested. The growth of autonomous agencies, for example, has happened for various reasons, so evaluation is confused. Activities, moreover, might deviate from intended activities, activities’ direct consequences (output) might differ from indirect consequences (outcome), and consequences might not have been caused by activities. Policy success in complex fields like social security, for instance, not only depends on government action, but also on – inter alia – economic climates. So, when reforms need to be judged, the multifaceted and contested nature of reforms must be taken into account.

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Policy and service performance It is difficult to draw clear conclusions on policy and service performance, despite the fact that performances are measured constantly. It might be difficult to compare old and new performances, because of the lack of historical data, or because measurement systems change frequently. In addition, it is difficult to measure performance as performance measurements contribute to rising expectations. Despite rather stable crime figures, performance-oriented police and judicial services, for example, are increasingly criticized by citizens (for example, SCP 2007b; 2007c). Nevertheless, all kinds of service performances have improved. Measurements on municipal (for example, SCP 2007b) and national (for example, SCP 2007c) levels show that municipalities have been successful in reducing the use of welfare benefits, and they show that citizens (increasingly) value the quality of specific services like health care and higher education. They also show that health care providers, schools, police organizations and judicial systems perform above average when they are compared to service performances in other countries. In other instances, ‘success stories’ and examples of ‘best practices’ are presented, not only showing improvement, but also showing improvement as a reform consequence. Well-known Dutch examples are the Internal Revenue Service (until recently, when new tasks caused major troubles), the IB-Group (an executive agency that hands out student loans), and the Amsterdam public transport company GVB, after 1996 (see, for example, Noordegraaf 2004). These very same cases, especially the Revenue Service, and other cases, such as the Immigration and Naturalization Service, IND, or the Employment Benefit Agency, UWV (for example, Berendsen 2007), however, also show performances might experience ‘ebb and flow’ movements. The Revenue Service faces severe troubles (2007/08), after new tasks in the field of housing and health care allowances (spending money) have been added to traditional revenue tasks (receiving money), and complex digital systems do not work properly. The IND or UWV, on the other hand, have improved their functioning, after many years of political and organizational turbulence (for example, Berendsen 2007). Budgetary and economic performance Although an explicit focus on efficiency, cost control, cutbacks and financial-economic targets dominated the 1980s, budgetary and economic reform remained important, and many reforms after the 1980s – such as the VBTB – explicitly aimed at improving budgetary control. In a general sense this contributed to budgetary success. At least in bottom-line terms, the central government’s Budget has become sound, although this cannot directly be attributed to budgetary reforms as such. Much more than techniques, tools and structures, it was related to strict financial-economic policies, legitimated by a ‘culture of frugality’. Backed by strong norms, such as the so-called ‘Zalm norm’ – which decoupled revenues and financial windfalls from government expenses – budgetary deficits and the national debt were reduced (De Vries and Yesilkagit 2003). The outcomebased budgetary system (VBTB) that was introduced by Minister Zalm did not directly produce better or more cost-effective policies, but it made budgets more accessible, and put more emphasis on results (IOFEZ 2004). The VBTB and comparable budgetary reforms also hindered policy-making, as it disciplines policy processes in ways that do not fit most policy processes. In a more technical sense, the VBTB does not provide ‘sufficient insight into policy effects that

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ministries aim at into activities they want to undertake, whereas the relationship between expenditures and goals, performance, and means is insufficiently clear’ (Van der Hoek 2005: 45; see also IOFEZ 2004: 24). It is difficult to prioritize objectives, it is difficult to make objectives operational, activities are often mentioned as goals, and exogenous or ‘critical factors’ that influence policy outcomes are hard to define (IOFEZ 2004: 12–17). In addition, evaluations of policy outcomes are weak (ibid.: 38–9). In a less technical sense, the VBTB falls short in capturing complex policy realities (also Noordegraaf and Abma 2003). Increasingly, this is also acknowledged by VBTB specialists (for example, IOFEZ 2004: 44): ‘More important than measurable general objectives, is a convincing story, explaining how operational targets and instruments contribute to general objectives’ (italics added). From a less financial and more economic and even macroeconomic perspective, reform effects are even less clear. Budgetary and financial-economic rationing certainly had macroeconomic effects, and contributed to Dutch economic success after the turn of the century (see www.oecd.org). In a more general sense, the ‘state of the economy’ counts. The same happened in earlier periods of reform. Economic performances were loosely linked to central government actions. And when they were tightly linked, such as in the early 1980s when Prime Minister Lubbers ‘no nonsense’ policies were set in motion, it proved to be conditional. A social pact between government, employers and employees was necessary to produce ‘the Dutch miracle’ (cf. Visser and Hemerijck 1997). System and regime performance Because systems have a life of their own – because they affect the nature of public sector work and trust in public organizations – they must be judged separately. At first sight, public sector organizations have become better managed organizations, with well-trained ‘human resources’, flexible working conditions, and more career perspectives. In many organizations, such as government ministries, absenteeism and sick leave declined (for example, BZK 2007a), and through management trainee programs, qualified (young) people are attracted. New professional associations in government, such as central government’s Senior Civil Service (ABD) add to more ‘reflexive’ organizations, as public managers become more aware of their positions and capabilities. This positive state of affairs must not be exaggerated. Increasingly, Dutch public debates and academic analyses indicate that Civil Servants and professionals are ‘suffering’ from managerialism (for example, De Bruijn 2003; Van de Brink et al. 2005; WRR 2004). Because quality of work and services is said to be harmed by disciplinary businesslike regimes, management reforms are increasingly criticized. Backed by recent political programs and organizational projects, professionals are ‘freed’ from ‘inflexible’ and ‘bureaucratic’ production formats. Interestingly, managers themselves also feel disciplined by managerialism (Noordegraaf 2006). Although they are expected to use businesslike instruments, such as planning and control, performance management, quality models, and the like, they are not really using such instruments (for example, Ter Bogt 2005: 30–34; Noordegraaf 2006). They feel that managerialism is hindering instead of helping day-to-day work. Managerial tools and techniques have produced organizational ‘regimes’ that manage managers – instead of the other way around. It is also caused by the fact that such regimes with ‘plan-do-checkact’ rationales are difficult to relate to ‘real’ content, such as policy content. Increasingly,

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Dutch experts and leading public sector representatives, such as the Vice-President of the State Council (Tjeenk Willink), express worries about the ‘lack of content’ in public administration (RvS 2005; also WRR 2006). These critiques against managerialization are reinforced by worries about public sector legitimacy (for example, BZK 2007b) and declining levels of trust (for example, SCP 2005; 2007a). More than ever, managerialist production pressures become part of widespread ‘narratives of failure’ that highlight organizational gaps. Public agencies are said to have opted for quick and narrow approaches to complex issues. Production pressures in and around judicial agencies or health care organizations, for example, are blamed for increasing judicial and medical ‘mistakes’. Plans and experiments for redesigning performance systems tend to focus on ‘legitimacy’, and terms like ‘trust’, ‘proximity’, ‘normative professionalism’ and ‘ethics of care’ have become omnipresent. Conclusions At first sight, Dutch public management reforms look like managerial reforms in other countries. New businesslike terms and tools, new organizational design principles and more entrepreneurial cultures have started to constitute the ‘objects’ of reform, that is, policy processes, public organizations and even non-profit service providers. Planning and control, quality models, strategic plans, production targets, customers, benchmarking and the like have altered Dutch public administration. Businesslike tools and systems have created normal managerial ‘regimes’, which is not only proven by their omnipresence, but also by the resistance and complaints they increasingly produce. The fact that many people complain about the ‘inflexible’ and ‘bureaucratic’ nature of budgetary and accountability demands also proves, by the way, that so-called ‘post-bureaucratic’ reform projects have a certain irony. At the same time, however, Dutch reforms are distinctive. Although they appear to be organizational, they are heavily influenced by historical and institutional conditions that affect how reform is interpreted, worked out and used. Historical features of the Dutch state, politics and administrative systems are difficult to overcome and have a lasting influence on how reforms turn out. Multi-party politics and constitutional specifics limit possibilities for reform. Daily reproductions of the ‘primacy of politics’ imply that most reforms have a hierarchical and a-political twist. The fact that politics itself remained ‘untouchable’ implies that real or ‘breakthrough’ reforms are illusory, not in the least because reform projects serve political ambitions of setting national parameters for collective action. Despite the fact that educational or health care reform has been realized, with budgetary control, ‘quality cards’, diagnosis-related treatment systems, and the like, does not mean that classic political principles like solidarity, equity and justice, or ‘freedom of education’ are rejected. Institutionally, such ‘split’ or ambivalent reforms are also affected by the fact that much public action happens ‘in between’ public and private spheres. This means that public sector reform unavoidably calls for deliberative and interactive processes. It also means that service providers continue to have a certain leeway in finding their own ways for managing service provision, which is backed by regional and local spaces for making policies and changing services. Increasingly, this is also recognized by political decisionmakers, not in the least of Christian Democratic origin, who stress the importance of ‘civil society’ and seek means for institutionalizing ‘social entrepreneurship’.

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Although most public management reforms were presented as technical solutions for effective problem-solving, efficient service delivery and rationalized policy-making, Dutch management reforms cannot be detached from broader socio-political circumstances that influence how reforms turn out. Although organizational reforms, signifying changing times, have foregrounded the importance of better performances, they also show that changing social and political orders confuse the meaning of ‘better’ performances. Although businesslike management has reigned since the early 1980s, it did not become hegemonic. On the contrary – and paradoxically – businesslike reform has reinforced many traditional features and has resulted in much stability. Reinforced by recent criticisms of excessive businesslike control – not least at and around work floors – Dutch public management reforms have become a matter of dynamic conservatism. Notes 1. Mirko Noordegraaf thanks Ruben Spelier for his editorial and research support. 2. After Van Gogh collaborated with Hirshi Ali in criticizing Islamic ‘ideologies’ in Western countries like the Netherlands, especially by way of the short film Submission. 3. Instituut Nederlandse Kwaliteit/Dutch Quality Institute.

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16 Danish public management reform before and after NPM Jørgen Christensen

In 1983 the Danish government launched an ambitious program for modernization of the public sector. The program was comprehensive. It covered the entire public sector, including the strong local governments. It also covered all aspects of public sector management with one important exception: in 1983 there was no demand for a major structural reform relocating tasks within the public sector. Nor was there any mention of large-scale reorganization and structural reform. The pervasive tone was one of managerialism, combined with a quest for stronger responsiveness to users. There are several reasons to begin this account of Danish public management reform here. First, the program reads as vintage new public management (NPM) but note the date of launch: 30 November 1983. At that time nobody talked about new public management. The later canons of NPM and reinventing government were still to come (Barzelay 1992; Osborne and Gaebler 1992; cf. also Wilson 1994). New Zealand had not conceived, much less initiated its radical transformation of the state. Second, the 1983 program rapidly acquired almost mythological status in the local discourse over public sector and public management reform. A quarter of a century later it is still referred to as the turning point in the thinking about public sector management. Here it is useful to consider a third point. The program for modernizing the public sector was hardly razor sharp in its approach. Analysis and presentation was longwinded, the rationale vague and the prescriptions far from operational. No wonder that a few days after the program was launched a leading member of the Social Democratic opposition declared that it was difficult to find something in the document to really disagree with. Fourth, this is not surprising in a political perspective. The Liberal– Conservative government had come into power in September 1982 when Denmark faced severe economic crisis. It immediately confronted these problems with a staunch austerity program accompanied by two far-reaching but, as it soon turned out, extremely controversial, strategies for public sector reform. One was to ‘make it easier to be a Dane’, that is, to deregulate both the private sector and local government. The other was to let the market play a much more prominent role in the handling of public sector tasks, that is, to outsource or contract-out tasks to private entrepreneurs who could win contracts after competitive tender rather than to just routinely leave tasks to in-service providers. Yet here the austerity program had a year later shown not only its beneficial effects but also the political costs involved. In addition, the ambitious and by their very nature longterm programs for public sector reform had met unexpected opposition. Therefore the government felt a strong impulse to relax and show its softer side. The modernization program was eminently suited to this purpose. The international literature has a strong propensity to equate public management and public sector reform with NPM. The implicit claim is that there were no or, at best, weak 279

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and inconsistent attempts to reform public management. It also implies that the NPM movement represents a paradigmatic move away from traditional thinking about public sector governance. Finally, the reforms launched since the 1980s implement, or are at least consistent with, the intent and content of the movement’s program for NPM. This chapter challenges this claim. It is definitely wrong for Denmark, as I shall demonstrate. It is probably also wrong for other countries. Some were eager, others reluctant to modernize but, as in the case of Denmark, it is inappropriate to limit management reform in time and content to the NPM epoch beginning at some point in the 1980s. The following section presents the basic traits of Danish public sector governance. Then the framework for the analysis is briefly set out. This leads to an analysis of the institutions of managerial reform and the political and strategic context within which they operate. In the fourth section focus is on substantive reforms. The analysis distinguishes between structural reform and managerial reform. By structural reform I mean reforms where the principal component is formal reorganization and reallocation of tasks and responsibilities, while I define managerial reforms as measures intended to influence behavior within the public sector through changes in procedures and incentives. The final section takes stock of the impact and political importance of several decades of Danish public management reform. The Danish baseline Danish public sector governance is marked by several characteristics. One way or another it sets its public sector out from other Organisation for Economic Co-operation and Development (OECD) countries. First, a large public sector goes together with strong decentralization. Table 16.1 demonstrates this. A third of the total labor force is employed in the public sector. But equally conspicuous is that two-thirds of public sector employees have local and regional governments as their employers, and that over time this share has increased. The local government reform of 2007 does not change this, but the combined effect of privatizations within the utility sectors and the creation of a new form of self-governing institutions (for example universities and secondary schools) have to a certain extent made its mark on the allocation of resources and staff. Still, it remains a fact that the provision of welfare services is a public sector responsibility with local government (primary schools, social welfare) and the regions (hospitals) as the prime providers and big employers. Table 16.1

Public employment and the structure of the Danish public sector, 1980–2006

Central government Local and regional government* Public enterprise/subsidized institutions Totals (N 5 1000s) Percentage of total labor force Percentage of population

1980

1995

2006

214 562 112 888 34 17

182 599 130 911 33 17

158 608 74 840 30 16

Note: * Pre-2007 structure. Data not available for the structure resulting from the 2007 local government reform. Source:

Andersen et al. (2008) and payroll statistics, Statistics Denmark.

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Second, decentralization implies that central governance systems are relatively weak. One implication is that local government raises it own taxes and is as free to set its own service levels as it is to design its political and administrative organization according to local needs. Another implication is that in central government departmental ministers enjoy a constitutional status as political executives that endow them with wide-ranging powers when it comes to setting the pace within their portfolio and when it comes to developing departmental organization and managerial practices. These characteristics go together with a third trait that relies on entrenched norms and hereditary custom. It is extreme pragmatism that guides both the execution of political authority and managerial practice. The implications are manifold, but two especially are important in this context. First, mutual negotiations and reciprocal bargaining are more important to finding solutions and preparing reforms than formal procedures laid down by law. Second, managerial reform has rarely been anchored in the import of blueprints of the day. But this has not blocked changes that in retrospect turned out to be radical. Analytical framework A basic distinction is drawn between two different aspects of institutions. One is institutions as collective actors, that is, organizations playing a consistent part as initiators of public management reform. They may even see the promotion of reform as an integral part of their mission, acting as reform entrepreneurs. But they do not operate freely in this capacity. There are constraints that must be observed. The other aspect is therefore the formal and informal rules of the game within which the reform entrepreneurs operate. The principal point here is that there are few and not very constraining formal procedures to be observed. The implication is that successful reform does not so much depend on analysis and design, as on the ability to overcome political transaction costs. These transaction costs are political opportunity costs where the actors involved evaluate prospective reforms in terms of votes gained or lost and affected interests turning their thumbs up or down. This makes public management reform a matter of political strategy and bargaining, although two important points must be added. First, even if reform depends on policy-makers’ calculation of political costs and benefits the initiation of reform presupposes the existence of ideas and paradigms that present alternative ways to organize the public sector or to perform public management. Therefore, new ideas being placed on the reform agenda, for example, ideas derived from the NPM program, are general prerequisites for reform (Christensen and Pallesen 2001b). Second, prescriptions for public management reform are not always strongly politicized. Sometimes political parties and executives take little interest, which may render some reforms rather technocratic in flavor. Even this simple framework is open to considerable variation in direction and scope of public management reform. The potential ranges from reforms with a strong political basis to technocratic reform. On another dimension the range stretches from fundamental changes in public sector organization and managerial behavior to reforms that may seem spectacular at first glance but turn out to be mainly symbolic. In this view public management reform is possibly facilitated through the international diffusion of ideas and experience, but even here success finally hinges on specific reforms showing a positive balance between political costs and benefits.

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Reform institutions Two basic facts are central to understanding management reform within the Danish public sector. One is that the Danish public sector is characterized by dual decentralization, that is strong local government combined with a weak executive core at the central level. In one respect this is obvious because local government is responsible for the delivery of most welfare services, and plays an important role in the administration of social and labor market policies and environmental protection. Local government rests on strong democratic foundations with directly elected councils, giving them a strong platform. The other form of decentralization is found at the national level because central government rests on a similarly strong foundation of portfolio autonomy. In formal terms, the departmental ministers’ status as political executive is the constitutional expression of this. In political terms portfolio autonomy implies that individual ministers are members of a political team, the Cabinet. Still, individual ministers are only subject to central direction from the Prime Minister and, for instance, the Minister of Finance to the extent that the latter has a political platform within the government and the parties behind it to set a government-wide reform agenda. The second basic fact is that Danish governments are usually minority governments. They always have to negotiate their policy with other parties. The implication for public management reform is that reforms at the sub-national level have to be driven either by initiatives brought into play within local government, or by the government. A minority government, wanting to reform local government management, has a strong incentive to negotiate with local government spokesmen. The third option, the government decreeing a solution, is reserved for the few occasions where the incumbent government either commands a majority or can take the support of another party as given. The conditions for this latter option are rare, but not unknown. Two organizations can be identified as collective reform entrepreneurs over a very long period. One is the Ministry of Finance. Even if its departmental organization has been changed dramatically, it remains a persistent driver of public management reform. The ministry was formerly split into several specialized departments (the budget, public management, personnel and pensions), but it has since the 1990s been consolidated in one department to which three agencies report. Among them is the State Employer’s Authority, whose responsibility for negotiating collective agreements is combined with tasks related to personnel management and consultancies for other departments and agencies. Another Ministry of Finance body is the Agency for Government Management, which combines the operation of purely routine financial administration with consultancies for other branches of central government. Over a very long period, in fact dating back to the 19th century, the Ministry of Finance has played a very active role in promoting change and managerial reform (Østergaard 1998). In modern times it has spread its activities to cover virtually any instance of policy reform and it is backed up by a strong sense of mission and a self-conscious image of the department’s key position (Jensen 2003; forthcoming). It has without doubt played an active and important role in all the reforms discussed in the next section. This is increasingly also the case with public management reforms aimed at local government. Central government is not in a position to reform local government by fiat. Local governments, be it the municipalities or the regions (until 2006 the counties) have considerable freedom to organize themselves. Local Government Denmark, an association

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comprising the municipalities (earlier some 270, now 98), has been an active reform entrepreneur. It has done so in two ways. Its most important task is to represent its members in negotiations with the central government. In this capacity, Local Government Denmark has been a key actor in all networks involving the Ministry of Finance, the Ministry of the Interior and Health, as well as all departmental ministries with policy portfolios giving local governments the responsibility for service delivery. At the same time, Local Government Denmark has engaged in the provision of advice and consultative services to individual municipalities. By combining both strategies the association has been able to act as the intermediate link between local and central government in the conception and negotiation of reform ideas, as well as in their implementation (BlomHansen 2002). Neither organization can do a lot on its own. They have to negotiate. What is more, they also have to include many other actors in these negotiations, with their identities depending on the specific issue at hand. The forum in which these negotiations take place depends on a mixture of ad hoc strategic choices and temporal changes in the preferred procedures for central government policy-making. Historically the typical forum for preparing any change in policy of some range was the committee, commission or task force. Their members were drawn from the Civil Service, interest groups and, to some extent, independent experts, typically academics. Over time both Local Government Denmark and Danish Regions (until 2006 the Association of Danish Counties) increased their representation in these policy preparing committees. That was also the case for public employee unions. However, since the 1990s successive governments use this form of policy preparation less and less. Instead they rely on a procedure where the government prepares a policy draft, which is then negotiated on an ad hoc basis with various interests according to the circumstances, parties in parliament, or a combination thereof (Christiansen and Nørgaard 2003). Given the central position of the Ministry of Finance and Local Government Denmark, special procedures have evolved around them. So the Ministry of Finance has year after year engaged in policy analysis, which to a large extent deals with one or another aspect of public management reform (Jensen 2003). The resulting reports are published in the name of the ministry, but in most cases they have involved close cooperation and negotiations with departmental ministries and, if relevant, Local Government Denmark. One example is a 2006 Ministry of Finance report on the organization of the central administration. While the report is the responsibility of the Ministry of Finance, close deliberations took place within the entire college of permanent secretaries (Ministry of Finance 2006a). Similarly, since the early 1980s the Ministry of Finance has been the driving force in increasing the role of private business in public service delivery. This strategy has been anchored in an advisory board, Udliciteringsraadet. Its task is to advise government and Parliament on the use of contracting out and competitive tenders in the entire public sector (Udliciteringsraadet 2007). Finally, Local Government Denmark and Danish Regions take part in an annual round of negotiations with the Ministry of Finance. The negotiations end up in an agreement setting the conditions for local and regional government finances in the coming budgetary year. These agreements are lengthy and detailed and contain a considerable body of policy specific clauses, including directions and proposals for managerial reform (Blom-Hansen 1997). For instance, it is through these negotiations that the Ministry of

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Finance has moved the regions to rely increasingly on economic incentives in resource allocation in the hospital sector and vehemently striven to commit local governments to subject their own services to competitive exposure through increased reliance on competitive tendering and contracting out. The bricks of reform As set out in the introduction, public management reform has two principal components. One is structural reform, the other managerial reform. Structural reform involves formal reorganizations and reallocation of tasks and responsibilities. Whatever their rationales they imply a reallocation of control and authority within the public sector. The other component, managerial reform, may also be based on very different rationales but the implication is changes in procedures determining who is to be involved in administrative decision-making, in which capacity, and in which order this should happen. They often also specify the type of political and/or technical information on which decisions should be based. Both structural and managerial reform change the incentives faced by Civil Servants and public sector managers. In either case, changes in their favor or disfavor give them an incentive to reconsider their own strategies. But managerial reform may also influence incentives more directly, namely, if the Civil Service or the budgetary system is changed. In the former situation, it is the individual incentives of the Civil Servants that are manipulated; in the latter it is the incentives faced by the heads of administrative authorities and service providing institutions when preparing next year’s budget or spending this year’s appropriations. All these types of reform have been initiated and implemented. Reorganization and structural reform Table 16.2 gives an overview of five different types of large-scale reorganization and structural reform. They are devolution, agency reform, unitary management in local government, corporatization and privatization and, finally, quasi-market reform. Together, they have been directed towards and, if implemented, have had implications at all levels of government and for virtually all parts of the public sector. Devolution Among reforms the most far-reaching concerned the tasks and structure of local and regional government. At the same time this is the only field where, within four decades, two radical and comprehensive reforms were initiated and implemented. Superficially, the local government reforms of 1970 and 2007 were very similar. They both led to a drastic reduction in the number of local governments and to a transformation of the regional level of government. In 1970 the number of municipalities was reduced through large-scale mergers from some 1200 to 278; 14 new counties were created simultaneously and given responsibility for important tasks in health policy, roads, and social institutions serving people with physical and mental handicaps. In 2007 the number of municipalities, again through a series of mergers, was reduced to 98, while the counties were abolished and transformed into five regions. The similarity between these two sets of reform is superficial in three important respects. First, the 1970 reform was developed following a step-wise strategy where the mergers were the first in a series of reforms. In contrast, the 2007 reform was a one-off reform decided in 2005 and implemented from 2007. Second, the 1970 reform applied

Danish public management reform before and after NPM Table 16.2

285

Structural reforms in the Danish public sector

Fields

Pre-1982

Post-1982

Status

Devolution

From 1970 large-scale local government reform Delegation from ministerial departments to agencies proposed as generic model to strengthen policyplanning capacity

From 2007 large-scale local government reform Model has lost its generic status. Still, the rationale is to strengthen policy-making and ministerial advice rather than delegation to independent regulators Since 1990s, Local Government Denmark has worked for adoption of a unitary management model with city manager chairing college of directors Privatization wave starts in the early 1990s under CentreLeft government and continued since

Both reforms duly implemented.

Agency reform

Introduction of unitary management models in local government

Model applied from 1970 onwards relied on the coexistence of city manager and sector chiefs for example schools, social services, roads and utilities

Corporatization and privatization

As extremely few nationalized industries, privatization never a reform option on political agenda

Self-governing institutions as service providers within quasi-markets

Tradition for private schools since nineteenth century and non-profit social institutions Only private schools survived the 1970 local government reform

Since late 1980s enduring debate over users’ right to choose providers (schools, social care, hospitals Universities (2004) and secondary schools (2007) now self-governing institutions

From 1990s the twolevel model broadly implemented in central government

Either of the two models, in shifting variants, have been implemented in about half the municipalities

Several state-owned enterprises/utilities (railways, postal services, airports) corporatized, leading to partial or full privatization Utilities controlled by local governments have started out along the same road Revival of selfgoverning institutions offering services within quasi-markets Modern variant of selfgoverning institutions strictly regulated and embedded in central government

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an explicit rationale according to which ‘tasks and responsibility’ were to match each other. This catchphrase meant that the authorities managing a certain task, for instance running schools or hospitals, were also to be responsible for raising the financial resources required to do so. In other words, municipalities were to collect their own taxes to finance their own activities. Moreover, if central government was to support local and regional government, the only instrument allowed was block grants. The argument was that this was the only way to avoid overspending and distorted resource allocations (Pallesen 2003). The 2007 reform still relies on these principles for local government. For the regions the situation is very different. The reform has stripped them of previously important tasks such as secondary schools, roads, social services and environmental protection. Now they are mainly health authorities responsible for hospitals and for doctors in private practice. Further, they no longer raise their own taxes but depend on a combination of central government funds and transfers and payments from municipalities within each region. Finally, health sector finances are separated from the funds financing their few remaining tasks. Third, the 1970 reform was a purely local government reform. Over the years it involved the transfer of tasks from central government to local and regional government, that is, a unidirectional task reallocation from central to local government. The 2007 reform is different. All tax administration is now concentrated in a central government agency. Similarly, up to the reform, food regulation and food inspection were removed from the municipalities and placed with a central agency. With the dissolution of the counties central government has finally assumed tasks related to the municipal administration of environmental protection and social services to handicapped persons. Agency reform The central administration has for decades been constructed around two different types of organizations, the department reporting directly to its minister, and the agency reporting to the minister through the department. A committee of Civil Servants and academics was in 1960 commissioned to look critically at the organization of central administration. Its self-defined task was to improve ministers’ capacity to focus on long-term policy planning issues. To achieve this end, the committee presented a general model with the department and the agency as the principal components. The department was to be a minor organization serving as the minister’s secretariat. Its prime tasks were to develop and plan new policy and to advise the minister on any issue of political concern. Therefore, the committee’s second proposal was to delegate implementation to one or more agencies for each of the departmental ministries. The model is a forerunner of later NPM ideas and, like the canons of NPM, it resonates with the never-dying ruminations of the politics–administration dichotomy. However, it is equally important that the proposed two-layer model in no way implied that agencies be granted autonomous status, which would have kept them outside ministerial control. This idea, even though an integral part of the NPM package and modern normative theory of regulatory governance, was neither then nor later part of Danish reform thinking (Christensen and Yesilkagit 2006; Yesilkagit and Christensen forthcoming). Throughout the 1960s and 1970s the model was promoted by several committees on which the Ministry of Finance assumed a key position, hailing it as the only and best way to organize central administration. But it met considerable opposition in departmental ministries, where management and staff cleaved to both the principle of portfolio

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autonomy and the position that there is no single best solution. As a result implementation was at no point fully accomplished, and over time some ministries switched back and forth between the two-layer model and a unitary hierarchy (Christensen 1997; Jørgensen and Hansen 1995). However, since the 1990s the central administration has gone through a remarkable development and now all ministries, with a couple of notable exceptions, have implemented their own versions of the two-layer model. In this recent development each ministry has reorganized on its own, and the interface between the departmental and the agency levels varies from ministry to ministry, in some cases even from agency to agency within the same ministry (Binderkrantz and Christensen 2008a; 2008b; Ministry of Finance 2006b). Unitary management in local government The 1970 reform of local government paid scant attention to the internal organization of the municipalities and the counties. The general understanding was that their political and administrative organization should mirror their respective policy responsibilities. The resulting model was the committeeleader form, where executive powers were shared between the mayor and standing committees, that is, at the municipal level a social affairs as well as an education committee, and at the county level a hospitals as well as a technical affairs committee. The political committee structure was mirrored by the administrative organization (Mouritzen and Svara 2002: 56, 60). This overlapping political and administrative organization was for many years defined by law, but in the 1980s deregulation campaign some of these legal prescriptions were eased. During the same period there was much speculation on the negative consequences of sectorization. It was thought that the traditional committee structure both weakened the political and administrative center, the mayor and the city (county) manager, thus paving the way for provider capture, for example teachers holding the education administration and the education committee as political hostages. Throughout the 1990s this led to experiments with an alternative model, which has been implemented in many variants. The purpose of it is to strengthen the political and administrative center. Therefore, sector managers are integrated into a board of corporate directors with the city (county) manager as chief executive officer. Even though standing committees are upheld, their portfolios have in this model often been reshuffled to break any predefined alliances with the one and only provider group within the policy field. After the 2007 reform some 40 percent of the municipalities, in one or another variant, use the unitary model, while the remaining municipalities stick to the classic model. The political structure of regions that from 2007 succeeded the counties is strictly regulated by law, apparently to break away from an assumed sectorization. However, in spite of these legal provisions regional councils have created a political and administrative structure that replicates the pre-reform organization (Christensen et al. 2006: 121–2). Corporatization and privatization Historically, Denmark has never had major nationalized industries. Here it differed from its Scandinavian neighbors as well as from countries such as Britain and France. The exception was the old telecom companies in which the state had 51 percent of the shares, the remainder controlled by private investors. Other utilities were organized in two principal ways. The postal services and the railways were stated-owned enterprises organized as directorates-general. As such they were integrated

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into the central administration even though they enjoyed certain freedoms due to their businesslike activities. So, their operational expenditure and personnel management were not subjected to the same central constraints as other government institutions (Christensen 1992). Electricity, district heating, waste management and water treatment were all local government responsibilities. They were organized in one of three ways, namely, as municipal utilities run by individual municipalities, as consumer cooperatives, or as inter-municipal corporations where two or more local governments set up a partnership to, for example, run the bus service, dispose refuse and set up incinerators and collective heating plants. The latter form still is quite common in north-western Europe (Frey and Eichenberger 1999). For many years this organization was not questioned. When in 1982–83 the Liberal– Conservative government launched its deregulation and modernization campaign, corporatization and privatization were not on the reform agenda. They seemed irrelevant, even to professed liberal reformers. Then during the 1990s a new coalition led by the Social Democrats initiated a wave of corporatizations and privatizations. They were in the early phase directed towards state-owned enterprises, but in recent years, especially after a regulatory reform of the energy sector, the municipalities have started to reorganize and sell their assets to external investors. The corporatization and privatization wave that began after the mid-1990s is interesting from several perspectives. It is unthinkable without the acceptance of a new way of thinking about the regulation and management of public service utilities. But, as in other European countries, this new idea also made it evident to policy-makers that through these reforms, first the central government and later the municipalities, would be able to capitalize their enormous hidden assets (Feigenbaum et al. 1998). This fiscal concern has led to non-dogmatic takeovers by the state-owned natural gas utility of both intermunicipal gas companies and most Danish power plants. The stated goal by the government is to fatten up the corporation to make it more attractive to external investors when the government goes public with the corporation. Corporatization may be a first step towards privatization, but in some cases it is simply a new form of organization that, among other things, removes its accounts from the government budget and renders the corporations subject to regulation by corporate law. This move is often accompanied by an NPM-like rhetoric emphasizing the virtues of the market and professional business management. A close analysis of the recruitment of executive directors and chairmen of the boards of directors has demonstrated that they remain close to central government. Their key officials are well acquainted with life in politics and administration, and their governance structures in no way block administrative and political intervention (Christensen and Pallesen 2001b). Quasi-markets The considerable size of the Danish public sector is due to the strength of its welfare state. What is more, the Danish welfare state to a very large extent relies on the provision of services in kind to its citizens. This makes Denmark different from many countries in continental Europe. They too have strong welfare states, but they are to a much greater extent based on social transfers that go directly to citizens or to service providers organized on a non-profit basis. The contrast with the Danish model is not historically rooted. First, the Danish welfare state did not expand until the 1960s and 1970s. Second, historically there was a tradition for third sector provision of welfare

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services. This was the case for both the health and the social services sectors. However, the 1970 reform of local government led to a systematic rationalization of the provision of welfare service where the expansion of welfare services took place within the public sector. Further, non-profit providers were streamlined to operate at the exact same conditions as municipal institutions, which in the end led to them being taken over by the municipalities and the counties. The exception was the private school sector with nineteenth-century roots. Their position was guaranteed by the constitution and bolstered by strong legal and financial provisions. Together this provided parents the option to send their children to a private school, which the government was obliged to subsidize, covering most of the cost through a voucher-like mechanism. Neither the traditional use of non-profit institutions in the health and social services sectors, nor private schools owed their organizational and institutional status to managerial and public governance concerns. The former were originally founded on a philanthropic platform, while the latter had their roots in the liberal-democratic movement among nineteenth-century farmers. However, the absorption of hospitals and social institutions by the public sector and the later revival of the non-profit – in public management language, self-governing – institution, have been given a managerial rationale. The integration and ensuing dissolution of private non-profit institutions into the public sector was justified because this would contribute to streamlining the respective sectors, thus making it easier to integrate them into long-term planning and, in the end, improve effectiveness and efficiency. Similarly, since the late 1980s there have been voices, especially in circles around the Liberal Party, claiming that a combination of institutional self-governance, vouchers and output-purchase budgeting in combination with users’ free choice of provider will open up competition. Such quasi-markets, according to the same reasoning, are beneficial to the quality of services and to cost-efficiency. This thinking made little headway for a long period. The counties and municipalities resisted it; so did the public sector unions. Even politicians representing the Liberal Party at the local and regional levels were outspoken skeptics. But since 2000 the winds have changed. The most important event is the 2007 local government reform and a whole series of legislative reforms politically related to it. To this comes the implementation of a far-reaching university reform. Together the reforms are extremely complex, and hence, difficult to present in a simple formula, and as they are quite recent their impact is difficult to evaluate. The reforms are generally based on a quasi-market rationale where users/consumers have a free choice of provider, be it unconditionally or in cases where public providers cannot deliver within a preset time limit, for instance within one or two months for planned surgery. Provider choice may be limited to the public sector or extended to private sector providers, including private business. This creates a tension with the model developed since the 1970s with public providers fully integrated into the executive hierarchy. However, recent reforms have rendered self-governing institutions a favorite form of organization. They are public sector organizations in the dual sense of being regulated by law and being funded by government. But according to the official reasoning they are removed from the hierarchy. Formally, this happens in three ways: (1) they have appointed boards of directors, who again appoint the manager; (2) they are financed not by a government appropriation, but by transfers and subsidies determined by their level of activities or, in the official jargon, their delivery of services; and (3) their financial

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management and accounts follow the rules in corporate legislation. Competition for quality and efficiency are important keywords to these reforms. So is the professionalization of their management that is claimed to have resulted because management is no longer under traditional government regulation and intervention, and because new organizations have been designed to facilitate learning from private management. As was the case with the new government corporations, there are some caveats. They are important because the new self-governing institutions do not have full discretionary power over their assets. Their property rights, for instance, are not legally ensured. Here they are very unlike private schools with their strong constitutional and historical roots. Another caveat, which from an administrative perspective is even more constraining, is hidden in the many and tight procedures that have been set up, for example, to ensure sector planning and inter-institutional co-ordination. Finally, the central government, at least up to now, monitors the self-governing institutions quite closely, and it does not seem to refrain from interfering through specific decisions, for instance through procedures foreseeing the ex ante submissions of planned decisions to an agency or the departmental minister. Managerial reform Table 16.3 lists five types of reforms. They are civil service reform, budgetary reform, financial management reform, performance management and contracting-out. Their common trait is the focus on changes in procedures and incentives aimed at influencing, in some cases even manipulating, the decisions made by politicians and Civil Servants. The reforms in part involve well-defined changes in formal procedures or the introduction of tangible incentives. This aspect of the reforms is easy to unravel to estimate their potential reach. In other cases the reforms are much talked about, but it is difficult to pinpoint their specific contribution to change. Their impact on administrative behavior remains uncertain, and answers to questions as to their importance are gone with the wind. Civil Service reform Historically, the Danish public sector rests on distinct Civil Service principles. Employees at any level as a rule had Civil Service status with lifelong tenure, government-paid pensions and economic guarantees against being fired or transferred to a position that was inappropriate compared to the present position. For all practical purposes careers were presumed to follow a pre-programmed path, and even if salaries were comparatively low, this was compensated for by high job security and pension rights that very few working in the private labor market enjoyed. The system worked close to perfection in a stable society with moderate growth rates. During the 1950s the Danish economy started growing. Industrialization took off and it was soon clear that the public sector had difficulty in attracting young people, especially people with higher education, to Civil Service careers. As public sector growth increased during the same period, the stiff legal and political regulation of the number of Civil Service positions proved less viable. In this situation supply-driven reforms were set in motion because the government had to accommodate Civil Service unions. The principal element in the changes was the creation of positions filled by people appointed according to a collective agreement rather than the legislation governing the Civil Service. This practice developed through the 1960s and the Civil Service legislation was reformed in

Danish public management reform before and after NPM Table 16.3

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Micro-reforms in the Danish public sector

Fields

Pre-1982

Post-1982

Status

Civil Service reform

1. During the 1950s contract employment gradually replaces Civil Service employment. Collective agreements replacing Civil Service employment leads to general Civil Service reform in 1969 2. From 1972, option for fixed-term appointments to managerial positions in central government

1. Civil Service status is now the exception for all parts of the public sector except the judiciary, the police and the military services

1. Traditional Civil Service gradually replaced by employees with rights and obligations regulated by collective agreements

2. First step towards individualization of pay taken in 1987; since gradual reliance on individual pay differentiation (New Payschedule)

2. Performance pay through New Pay remains controversial, marginal and is not applied for all groups 3. Managers hired on fixed-term contracts Duly implemented

Budgetary reform

Financial management reform

1. 1964–65 budgetary reform replaces lineitem budgets with envelope budgets and budgetary caps within central government

2. Local governments follow suit during the 1980s and 1980s No basic changes – system cost accounting based

1. New budgetary reform implemented 1985 as part of modernization program. Introduces comprehensive spending caps for each portfolio and replaces gross budgeting with net budgeting 2. Tax stop introduced in 2001

Accrual budgeting introduced in the entire public sector in 2006

Duly implemented

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Table 16.3

(continued)

Fields

Pre-1982

Post-1982

Status

Performance management

Several initiatives to strengthen policy planning and to link it to budgets and forecasts

1. Persistent emphasis on target setting and framework control with ex post performance reporting 2. Introduction of performance contracts in large parts of the public sector

1. Several initiatives and efforts, but evaluation difficult because of diffuse nature

Contracting-out

Not an issue, but widespread within public works

1. Launched in 1982 to put parts of public sector operations on competitive tender without lifting government control 2. Now expanded to some social services

2. Still, performance contracts broadly applied in public sector and near universal in central government 1. Experience shows little progress in use of contracting-out

2. Opposition very strong in municipalities and regions

1968. At this time practice had already been changed so that all new appointments of people with an academic background were based on contracts negotiated in collective agreements (Bruun 2000). Very soon after that reform yet another step was taken. In order to increase flexibility a law was passed opening up fixed-term appointments to managerial positions in the central administration. Initially the reform was without practical importance, but since the 1990s virtually all appointments to top executive positions in both central and local government have been based on fixed-term contracts formulated in co-operation with the relevant union. The result is that today most bureaucrats and employees in the professions, regardless of hierarchical level, work on contracts outside the Civil Service system. Only the judiciary, the police and the public prosecutor still stick to the classic Civil Service system. The Civil Service reforms begun in the 1960s did not change the principle of fixed pay scales with no or little individualization. This was increasingly questioned in the mid1980s. The first step away from established practice was taken in 1987 when new collective agreements opened for individualized pay to managerial staff. Again the first step did not have much practical impact. But in the following years two further steps were

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taken. One was the introduction of individually negotiated increases to managers in all parts of the public sector. These increases are negotiated together with the individual and fixed-term employment contract (Christensen 1994; Gregory and Christensen 2004). The other was the introduction of the ‘New Pay’ scheme. Contrary to individualized pay to managers, ‘New Pay’ is a highly controversial scheme that aims at some, although in practice limited, performance-related differentiation of rank and file salaries, for example to clerical staff, school teachers and nurses. But because of its controversial nature the ‘New Pay’ scheme is marginal, weakly linked to performance and not universally implemented within the public sector. In an agreement with Local Government Denmark, Danish Regions and the public sector unions the government in 2007 has taken steps towards supplementing ‘New Pay’ with team bonuses that take into account the fact that typical public sector tasks are often the result of teamwork rather than individual effort (Kvalitetsreform – trepartsaftaler 2007). Budgetary reform During the 1960s and the early 1970s the American government started an ambitious budgetary reform. The idea was to link the budgetary cycle to longer-term policy planning through program budgeting and later on zero-base budgeting in order to free budgetary decision-making from a presumed incrementalism. The rationalistic reform was very demanding and not attuned to political and administrative decision-making. As a result the reform was aborted or at least heavily modified in its country of origin as well as in the countries that had embraced rational budgeting (Meyers 1996). In the early 1960s a series of budgetary reforms began in the Danish central government. After the 1970 local government reform they were expanded to cover municipalities and counties. Similarly, in 1985 they were brought a step further when a modernized version of the 1960s-system was implemented at the central level. Common characteristics of the reforms are their relative simplicity, their pragmatic approach and the intended fit with political decision-making. The reforms are, in other words, designed to meet practical administrative and political needs rather than standards set through international emulation. Among the key designers and pivotal entrepreneurs in these reforms we find the Ministry of Finance and Local Government Denmark. Because of long-term continuity the basic components of budgetary reform are easy to describe (Christensen 1982; 1992; Jørgensen and Mouritzen 2001). One component dating back to the first reform steps is the move from line-item budgets to framework or envelope budgets; the latter have done away with binding specifications and allow managers to allocate the appropriations received with their budget (Christensen 1992). The intended and actual effect was to free managers at any level to allocate budgetary resources as they judge appropriate, given the tasks of their organization and the needs of the day. The main constraint that applies to central government and state institutions, which has also been adopted in some municipalities and regions, concerns the management of staff resources and the matching financial means. While transfer of savings on salaries to cover, for example, investment in information technology (IT) is allowed, total spending on salaries has to be kept within a preset cap. The second component is spending caps. The early version of the system, introduced in 1964–65 in central government, had at least one cap for operational expenditure and one for investments for each ministry. At the same time, the spending caps excluded any

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expenditure mandated by legislation, for instance social transfers. This was changed in the 1985 reform through the introduction of comprehensive caps. They were introduced to present an incentive to spending ministers to set priorities within their portfolio that considered any type of expenditure. This system is still used. Third, the early reforms were based on gross budgets. Expenditure and income from sales and fees went into separate budgets, the idea being that it was necessary to focus specifically on expenditure to keep costs under control. The problem was, of course, that this eliminated any incentive to raise money through sales of goods and services as well as through fees. Therefore the 1985 reform introduced net budgets, which were already used by local government. The effect has been tremendous as state institutions now raise considerable funds, especially from administrative fees and the sale of services. A fourth important element in the 1985 reform is the loosening of periodicity, which has also been followed fairly generally at the local government level. Transfer of savings to the following year is now allowed, and so is passing on of overspending to next year’s budget. Has budgetary reform been successful? The answer very much depends on the perspective. If the question is whether the introduction of spending caps has been a credible and effective instrument in keeping public expenditure under control, the answer is not clear. They have certainly not eliminated the political and administrative temptation to exploit the rules of games in highly creative ways (Christiansen 1999). Neither have spending caps put an end to the practice of applying for supplementary funds during the budgetary period, nor have they broken a traditionally weak correlation between activities and spending (Pallesen 1997; Serritzlew 2006). Still, the change in government in 2001 brought with it an important political innovation, the tax stop. Its operational mechanism is that no tax rate is allowed to increase unless a compensatory reduction of another rate is undertaken. Indirectly, this political mechanism has created a spending cap. However, if the question is whether the introduction of envelope budgets and net budgeting has had a behavioral effect, then the answer is positive. Micro-level reform has made budget management less bureaucratic and provided incentives that appear effective at the organizational level. Financial management As in other countries the traditional system of financial management was based on classic cost-accounting principles. The virtues of this system were questioned elsewhere, and a critical review was undertaken in Denmark as well. The general idea was to replace the traditional system with accrual budgeting in order to strengthen incentives among public managers to apply longer-term considerations based on real costs rather than immediate expenditure. Accrual budgeting has been introduced gradually in both central and local government, and became fully operational in 2007 (Ministry of Finance 2006a; Ministry of the Interior and Health 2004). Performance management Since the first stage of budgetary reform was undertaken in 1964–65 several initiatives have been set in motion to strengthen policy planning and to link plans and implementation to budgets, efficiency and effectiveness. The early initiatives placed considerable emphasis on policy planning, while since the 1990s the focus has been on the development of management techniques to improve managerial monitoring of organizational performance and to ensure ex post reporting in annual accounts and reports. Despite this apparent change it is difficult to distinguish present perform-

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ance management from past policy planning, especially when a renewed quest for strategic planning encountered public managers. Similarly, it is very difficult to unravel just how an agreement between the government and Local Government Denmark to rely on decentralized implementation of negotiated goals followed by ex post performance reporting fits with high national sensitivity to local and regional decisions attracting critical media and parliamentary attention (The Government – Local Government Denmark 2007). Still, it remains a fact that managerial thinking and terminology permeates governmental and administrative circles to an extent never seen before. Alas, Danish managerial discourse is elusive and documentation going beyond the declaration of intents is rare. This makes it extremely difficult to determine whether performance management endeavors are pure rhetoric. This also holds for the introduction of performance contracting, one of the more specific measures implemented to strengthen performance management. It began in the early 1990s as an experimental exercise in central government, but has spread to both municipalities and regions (Ejersbo and Greve 2002; Greve and Ejersbo 2005). Today, it is also applied to other institutions. So, according to the law the universities negotiate contracts with the Ministry of Science, Technology and Innovation. The performance contracts are incomplete and relational contracts. There is no ambition to cover every contingency, nor do they protect the authorities and institutions that have entered into a contract with their mother departments against ad hoc interference during the contract period. As contracts have no legal status their strength is entirely dependent on the strength of the bonds between the parties at the top and bottom of the hierarchy. This might result in contracts with symbolic rather than substantial content. There are no studies systematically analysing the use and impact of performance contracts within the public sector in general. However, according to a first analysis of departmental contracts with some 50 ministerial agencies, contracts have relatively substantive content, especially those for agencies with heavy routine tasks designed to serve well-defined target groups. For agencies with tasks that are not precisely defined by law, performance contracts focus on listing projects to be carried out during the contract period. Finally, despite their name performance contracts rarely formulate costefficiency and financial demands (Binderkrantz and Christensen 2009). Contracting-out When the program for large-scale modernization of public management was launched in 1982–83, contracting-out was high on the reform agenda. The idea was to contract-out the delivery of services to private entrepreneurs, while retaining full governmental control of service provision. The general feeling was that contracting-out was a less sensitive step than proper privatization. A previous analysis of Danish fire protection – which in many municipalities is contracted out to a private provider, but provided by a municipal fire brigade in others – had already demonstrated the potential of achieving substantial cost reductions if competitive tendering was used more extensively (Kristensen 1983). This political calculation turned out to be completely wrong. Contracting-out was from the very onset controversial in the eyes of public sector unions. Nor did it win support in local government where both municipalities and counties (regions) have a number of tasks that, at least according to the official reasoning, were suitable candidates

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for contracting-out to private providers. Interestingly, this was also the dominant view among Liberal and Conservative politicians. Despite the political reluctance to engage in contracting out, the issue has been kept on the agenda. The Liberal–Conservative government that come into power in 2006 still has as part of its program that contracted-out services should be increased as a share of total government expenditure. While this target has to some extent been implemented in central government, little change is observed at the economically much more important local and regional level. The average level oscillates between privately delivered services making up 10 and 12 percent of total local government expenditure (Pallesen, 2004; Udliciteringsraadet 2005). The politics and bureaucracy of managerial reform Public management reform in Denmark is not a novel phenomenon. If the reform perspective is narrowed down to reforms normally associated with the NPM movement, managerial reforms now ascribed to the NPM toolbox were developed and to a large extent implemented in the 1960s and the 1970s, well before NPM initiates elsewhere and possibly before the movement’s genesis and labeling. Local government and agency reform as well as Civil Service and budgetary reform were all conceived and to some extent successfully implemented in this period. That is not to say that changes in reform thinking has not occurred since then. Contracting-out, corporatization and privatization closely connected with reforms of utility regulation and the idea of introducing a dose of competition in the provision of welfare services through quasi-markets, are all innovations initiated in the 1980s and onwards. Yet they hardly belong to one coherent and analytically founded reform paradigm. Nor is there a direct causal link between international trends and experience and the successful introduction of these types of managerial reform in the Danish public sector. It is much more illuminating to see the changes in general as a result of complex interactions between ideas, interests, and actors that over a long period have led to the initiation of reforms. Whether these reforms have been entirely successful or abortive throughout the period depended on the balance between actors’ perceived costs and benefits. The conclusion implies that the fate of managerial reform is a political issue. But as Table 16.4 shows, this does not mean that managerial reform is normally subject to Table 16.4

The political basis for managerial reforms

Political

Partisan Non-partisan

Bureaucratic politics Institutional interests

Technocratic analysis

Local government reform 2007 Tax stop 2001 Local government reform 1970–1985 Civil Service reform Agency reform Unitary management models in local government Corporatization and privatization Contracting-out

Self-governing institutions and quasi-markets Budgetary reform Financial management reform Performance management

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partisan conflict. Most of the reforms gave rise to little or no partisan conflict, neither at the central, nor at the local level. That also goes for contracting-out, which has not gained pace, in part because a non-partisan coalition of parties in local government has rejected the idea. The exceptions are the local government reform of 2007 that split government and opposition, and to some extent the reforms aimed at the transformation of the former public institutions providing welfare services to citizens, into self-governing institutions competing in quasi-markets. Another important exception is the tax stop introduced in 2001. Despite their non-partisan basis most reforms have involved strongly affected interests. But they are internal to the public sector because the clash is sometimes between the material and institutional interests, while at other times the ideas of governance and management that are characteristic for Civil Servants and other public officers with varying hierarchical, organizational or professional affiliations within the public sector. Therefore, seemingly technical reforms devised to improve public management like Civil Service reform, agency reform and unitary management in local government all involve quite hot distributional issues. However, their sensitive character has not spilled over into partisan politics. It is even more conspicuous that privatizations, although hardly technical transformations of public enterprises into private corporations, have never led to serious partisan splits. The political benefits to political parties have been so big that they outweighed other concerns, including the potential short-term gains of politicization. In a few instances technocratic analyses have played an important role in the conception and design of reform, for instance, the budgetary and financial management reforms implemented in consecutive steps since the early 1960s, and the much more vaguely defined idea of performance management. In these cases neither partisan politics nor institutional interests were involved. The exception is the idea of relying on quasi-markets and self-governing institutions. This largely originated among Civil Servants in the ministries of finance, education and health. What is more, it is promoted as the result of strict economic and institutional analysis. But even if the quasi-market model is presented as institutional economics or rational choice institutionalism at work, it has a hard time when confronted with the world of partisan politics. References Andersen, L.B., J.G. Christensen and T. Pallesen (2008), ‘The political allocation of incessant growth in the Danish public service’, in H. Derlien and B.G. Peters (eds), The State at Work, Volume 1: Public Sector Employment in Ten Western Countries, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 249–67. Barzelay, M. (1992), Breaking through Bureaucracy, Berkeley, CA: University of California Press. Binderkrantz, A. and J.G. Christensen (2008), ‘Governing agencies: the establishment and development of performance contracts in Denmark’, draft paper, Aarhus: Department of Political Science. Binderkrantz, A. and J.G. Christensen (2009), ‘Delegation without agency loss? The use of performance contracts in Danish central government’, Governance, 22 (2), 263–93. Blom-Hansen, J. (1997), ‘A “new institutional” perspective on policy networks’, Public Administration, 75: 669–93. Blom-Hansen, J. (2002), Den fjerde statsmagt, Århus: Aarhus Universitetsforlag. Bruun, F. (2000), ‘Den professionelle forvaltning: Fra embede til direktør’, in P. Bogason (ed.), Stat, forvaltning og samfund efter 1950, Copenhagen: Jurist- og Økonomforbundets Forlag, pp. 193–220. Christensen, J.G. (1982), ‘Growth by exception: or the vain attempt to impose resource scarcity on the Danish public sector’, Journal of Public Policy, 2: 117–44.

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Christensen, J.G. (1992), ‘Hierarchical and contractual approaches to budgetary reform’, Journal of Theoretical Politics, 4: 67–91. Christensen, J.G. (1994), ‘Denmark. Institutional constraint and the advancement of individual self-Interest in HPO’, in C. Hood and B.G. Peters (eds), Rewards at the Top, London: Sage, pp. 70–89. Christensen, J.G. (1997), ‘Interpreting administrative change. Bureaucratic self-interest and institutional inheritance in government’, Governance, 10: 143–76. Christensen, J.G. and T. Pallesen (2001a), ‘Institutions, distributional concerns, and public sector reform’, European Journal of Political Research, 39: 179–202. Christensen, J.G. and T. Pallesen (2001b), ‘The political benefits of corporatization and privatization’, Journal of Public Policy, 21: 283–309. Christensen, J.G. and K. Yesilkagit (2006), ‘Delegation and specialization in regulatory administration: a comparative analysis of Denmark, Sweden and the Netherlands’, in T. Christensen and P. Lægreid (eds), Autonomy and Regulation: Coping with Agencies in the Modern State, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 203–34. Christensen, J.G., P.M. Christiansen and M. Ibsen (2006), Politik og forvaltning, Aarhus: Academica. Christiansen, P.M. (1999), Ej blot til pynt? Om budgetters politik og politikernes budgette, Aalborg: Aalborg Universitetsforlag. Christiansen, P.M. and A.S. Nørgaard (2003), Faste forhold – løse forbindelser, Århus: Aarhus Universitetsforlag. Ejersbo, N. and C. Greve (ed.) (2002), Den offentlige sektor på kontrakt, Copenhagen: Børsen. Feigenbaum, H., J. Henig and C. Hamnett (1998), Shrinking the State. The Political Underpinnings of Privatization, New York: Cambridge University Press. Frey, B. and R. Eichenberger (1999), The New Democratic Federalism for Europe, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Gregory, R. and J.G. Christensen (2004), ‘Similar ends, differing means: contractualism and Civil Service reform in Denmark and New Zealand’, Governance, 17: 59–82. Greve, C. and N. Ejersbo (2005), Contracts as Reinvented Institutions in the Public Sector, New York: Praeger. Jensen, L. (2003), Den store koordinator, Copenhagen: Jurist- og Økonomforbundets Forlag. Jensen, L. (forthcoming), Væk fra afgrunden. Finansministeriet som økonomisk styringsaktør, Odense: Syddansk Universitetsforlag. Jørgensen, T.B. and C. Hansen (1995), ‘Agencification and de-agencification in Danish central government’, International Review of the Administrative Sciences, 61: 549–63. Jørgensen, T.B. and P.E. Mouritzen (2001), Udgiftspolitik og budgetlægning, Aarhus: Systime. Kristensen, O.P. (1983) ‘Public vs. private provision of governmental services: the case of Danish fire protection,’ Urban Studies, 20: 1–9. Kvalitetsreform – trepartsaftaler (2007), available at: http://www.kvalitetsreform.dk/page.dsp?area=88, accessed 15 November 2007. Meyers, R.T. (1996), Strategic Budgeting, Ann Arbor, MI: University of Michigan Press. Ministry of Finance (2006a), Centraladministrationens organisering – status og perspektiver, Copenhagen: Schultz Distribution. Ministry of Finance (2006b), Budgetvejledning (2006), Copenhagen: Schultz Distribution. Ministry of Interior and Health (2004), Anvendelse af omkostningsbaserede bevillinger i kommuner og amter, Copenhagen: Ministry of the Interior and Health. Mouritzen, P.E. and J. Svara (2002), Leadership at the Apex, Pittsburgh, PA: University of Pittsburgh Press. Osborne, D. and T. Gaebler (1992), Reinventing Government, Reading, MA: Addison-Wesley. Østergaard, H.H. (1998), At tjene og forme den nye tid. Finansministeriet 1848–(1998), Copenhagen: Finansministeriet. Pallesen, T. (1997), Health Care Reforms in Britain and Denmark: The Politics of Economic Success and Failure, Aarhus: Forlaget Politica. Pallesen, T. (2003), Den vellykkede kommunalreform og decentraliseringen af den politiske magt i Danmark, Aarhus: Aarhus Universitetsforlag. Pallesen, T. (2004), ‘A political perspective on contracting out: the politics of good times, experiences from Danish local governments.’ Governance, 17: 573–87. Serritzlew, S. (2006), ‘Linking budgets to activity: a test of the effect of output-purchase budgeting’, Public Budgeting & Finance, 26: 101–20. The Government – Local Government Denmark (2007), Aftale om kommuernes økonomi for 2008, available at: http://www.kl.dk/_bin/e9880e88-97f7-4576-8601-1051068f8994.pdf, accessed 15 November 2007. Udliciteringsraadet (2005), Drivkræfter og barrierer for udlicitering i kommunerne, Copenhagen: Finansministeriet.

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Udliciteringsraadet (2007), available at: http://www.udliciteringsraad.dk/visForside.asp?artikelID=1558, accessed 15 November 2007. Wilson, J.Q. (1994), ‘Reinventing public administration’, PS: Political Science and Politics, 27: 667–73. Yesilkagit, K. and J.G. Christensen (forthcoming), ‘Institutional design and formal autonomy: political versus historical and cultural explanations’, Journal of Public Administration Research and Theory.

17 Public management reform in Norway: reluctance and tensions Tom Christensen and Per Lægreid

Introduction Like most other Scandinavian countries Norway has been a reluctant new public management (NPM) reformer (Olsen 1996). This is attributable to a combination of several factors: historically, Norway’s political-administrative culture has been rather collectively oriented, attaching great importance to Rechtsstaat values and equality and rather less to the individualism and efficiency that have been prominent features of modern reforms (Christensen 2003). During recent decades the environmental pressure on Norway to engage in public reform has increased slightly but altogether remained rather low, reflecting a healthy economic situation and a well-functioning public apparatus. In addition, nearly three decades of minority government have not created favorable conditions for furthering reform. Taken together, these factors produce a context that is not conducive to any strong public management reform path. Even though Norway has been a reluctant NPM reformer, it has nonetheless been influenced by international reform waves. In the mid-1980s, when the NPM reform wave was already under way in New Zealand and Australia, Norway introduced two reform programs that at least reflected NPM rhetoric, while the 1990s brought gradual reforms in the central government apparatus (Christensen and Lægreid 2001b). The non-socialist parties pushed for public reform rather early in the 1980s, but not very aggressively. The Labour Party moved to the right on questions of administrative policy, accepting a gradual NPM course, but was unable to capitalize on this in the polls. The Organisation for Economic Co-operation and Development (OECD) increasingly put pressure on Norway to adopt more radical reforms from the 1990s, which eventually led to regulatory reform. Political polarization over public management reform has increased over the last five to ten years, starting with some active moves towards reform by the Conservative–Center government that was in office from 2001 to 2005, while the Red–Green government that succeeded it is currently trying to amend or reverse some of the NPM measures installed. In this chapter we start by outlining some of the historical background and context of the Norwegian central Civil Service, followed by some main perspectives that we use to understand the development of the central public apparatus in Norway and the main features of public management reform lasting recent decades. Second, some main reform trends of the past two or three decades are discussed, followed by an analysis and evaluation of the effects of those reforms. The main focus is on central government, so we do not address the rather comprehensive local government reforms that have taken place over the past two decades (Tranvik and Fimreite 2006).

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Historical background The centralized and hierarchical state, or what Olsen (1988) labels ‘the sovereign, rationality-bounded state’ was established in Norway in 1814, when 400 years of subordination to Denmark ended and a union with Sweden was established (which lasted until 1905). Developments over the next 190 years were very much an elaboration of this state model (Christensen 2003; Christensen and Lægreid 2007b). The period 1814–84 is often labeled ‘the Civil Servants’ state’, reflecting the domination of the central administrative apparatus by a group of top Civil Servants educated in law. The first major challenge to their power came around 1850 when professional groups began to demand more professional autonomous administrative bodies. This led to the establishment in two waves of independent central agencies. The second challenge came in 1884 with the introduction of parliamentarism. This decreased the power of the Civil Servants, strengthened the control of the agencies and reduced willingness to establish new ones, in order to avoid undermining the political leadership and its democratically based control. After the Second World War the centralized state was supplemented by the introduction of integrated organizational participation in government, whereby several strong interest groups received formal participation rights in public decision-making process (Olsen 1983). A negotiation or corporative state emerged. This can be seen both as an increase in the influence of the interest groups and as an enhancement of democracy in the sense that the interest groups not only furthered their own interests but participated in a collective public effort to develop the welfare state. This period was also characterized by new efforts to separate the agencies from the ministries, but this time initiated by the political leadership not the professional groups, with the aim of furthering strategic steering and avoiding capacity problems (Christensen 2003). This line of thinking, introduced in 1955, is very similar to the one introduced in NPM in recent decades. The new administrative doctrine led to the establishment of several new independent agencies in the period leading up to the early 1970s, when the growth of agencies became more restricted again. The development of the administrative apparatus in Norway after the Second World War was characterized internally by strong and increasing vertical and horizontal differentiation, meaning that new hierarchical levels and positions were established and the structure became horizontally more divided. The agencies increased their personnel much more than the ministries did. After the war, lawyers dominated the Civil Service. In the 1950s economists started to make an impact, while the 1970s saw the advent of social scientists, who are now the largest group. In the 1980s business economists were also recruited. Hence the Civil Service now consists of people with a variety of educational backgrounds. Olsen (1988) labels one of his state models ‘the state as a moral community’ or an institutional state. The history of the Norwegian institutional state tradition is characterized by the gradual development of identities, loyalties and informal norms and values in political and administrative institutions (Christensen and Peters 1999; March and Olsen 1989; 1995; Peters 1999; Selznick 1957; Thelen and Steinmo 1992). It furthers integration by emphasizing collectivity, a common heritage and a shared future. Politicians, Civil Servants and citizens are aware of their obligations and rights and they learn what is ‘appropriate’ behavior (Christensen and Røvik 1999; March 1994).

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Some general cultural features are evident. Norway is historically a homogeneous society with many shared norms and values and a low level of conflict, and this is reflected in the political-administrative system (Christensen and Peters 1999). The Cabinet in Norway has comparatively strong collegial features, meeting frequently, favoring consensus and working as a team (Christensen and Lægreid 2002a; Eriksen 1988). Politicians and central Civil Servants share norms and values and trust one another. The Storting has strong norms of consensus and collectivity, and its relationship with the executive has traditionally been good and built on trust. Most citizens trust both central political and administrative institutions and individual political and administrative actors (Listhaug and Wiberg 1996) and the system is traditionally characterized more by ‘meta-rules’, strong norm-building and socializing institutions than by detailed formal rules and incentive systems (Christensen and Peters 1999). Administrative changes, reorganizations and reforms are not new activities in the Norwegian government. In the post-Second World War period the government apparatus has been characterized by growth and continuous reorganization processes. Since the mid-1980s a more comprehensive administrative policy has been developed and this policy field has been institutionalized through the establishment of specific administered bodies accompanied by the publication of a number of central policy documents (Lægreid and Roness 2003). By administrative policy we mean conscious initiatives by political or administrative executives to change public policy by designing or redesigning organizational structures, processes or personnel. Until 1972 administrative policy issues had a rather peripheral position in the Ministry of Finance. The establishment of the Ministry of Consumer Affairs and Government Administration that year was meant to place administrative policy higher on the political agenda. A separate division for administrative policy was set up within the ministry in 1990. Over the years the ministry has been reorganized and changed its name several times and its current (2007) name is Ministry of Government Administration and Reform. This ministry has been responsible for the formulation of wage and personnel policy and organizational structure as well as the government’s general administrative policy documents (Lægreid et al. 2003). The Directorate for Rationalization was established as a central agency in 1972 and was subordinated to the Ministry of Government Administration. It changed its name to Statskonsult – the Directorate for Public Management in 1988 and it was reorganized by the Center-Right government into a state-owned company in 2004. From 2008 it will be brought back into the government administration as a central agency, a move with a post-NPM flavor initiated by the current government. Statskonsult’s job is to enhance the administration’s capacity to implement public policy and manage public resources. It assesses the need for change, including the progress and quality of previous reform efforts and gives advice on how to implement readjustments and new reforms. The Ministry of Finance also has responsibility for several important parts of administrative policy, such as the state budget system and financial regulations, which in recent years have increasingly been based on the principles of performance budgeting and performance management systems. A subordinate agency for financial management was set up in 2004 to strengthen financial management and improve the efficiency of public sector activities. The Ministry of Local Government and Regional Development also shares responsibility for important administrative policy matters.

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Theoretical approach Three perspectives – the environmental, the cultural and the structural perspectives – are combined in a transformative approach to explain public management reform features in Norway (Christensen and Lægreid 2001a; 2007a; 2007b; Christensen et al. 2007c). The environmental perspective takes as a point of departure the notion that national reforms are driven primarily by environmental pressure, whether from the international or the national environment. There are two different types of environment that can influence the reforms process in a country – the technical or the institutional environment (Meyer and Rowan 1977). When we talk about the technical environment we perceive public organizations as instrumental systems that provide specific services or products. When problems arise in this respect, for example, with the efficiency of service provision, there will be strong pressure on the public apparatus to reform and restructure. So there is a clear relationship between technical elements in the environment and technical elements inside public organizations. The technical environment includes both national and international actors and institutions, like the European Union (EU). The institutional environment is connected more with the evolution of myths (Meyer and Rowan 1977). The complexity of the public sector combined with the need for simple guidelines on how to act leads to the evolution of myths in the environment that spread easily and rapidly between the public and the private sector, between and inside countries and between and inside public organizations (Sahlin-Andersson 2001). These myths consist of ideology, ideas and symbols that take it for granted that there are certain optimal ways to organize the structure of a public apparatus and that there are certain best procedures, rules, personnel, and so on. Countries and national public organizations imitate and import these myths because they increase their legitimacy (Brunsson 1989). Adopting myths is a way for countries or organizations to be seen as modern or rational, without actually changing their structures or activities very much. Myths are generally quite superficial and will not have much influence on the day-to-day workings of organizations. This is what Brunsson (1989) labels hypocrisy or ‘double-talk’ – political leaders talk in certain and symbolic ways, but act in other ways that are only loosely coupled to the talk. The second set of perspectives comes under the heading cultural perspective (Selznick 1957). The basic logic here is that political-administrative systems in different countries evolve gradually over time through a process of adaptation to internal and external pressure, that is, they are institutionalized or they become institutionalized organizations. Through this process they develop specific and unique informal norms and values – they acquire a distinctive culture or ‘soul’ in addition to their formal structure. Thus cultural context matters and an organization’s historical-institutional tradition constrain the scope of reforms that can be implemented. Administrative culture in public organizations develops gradually through so-called path dependency, meaning that the context or situation in which it was established – the roots – will later have an impact on the traditions they develop – that is, the routes they take (Krasner 1988). This perspective holds that different political-administrative systems in different countries develop different cultures. According to the cultural perspective, reforms like NPM have to face a kind of compatibility test (Brunsson and Olsen 1993; Christensen and Lægreid 2001a). A crucial question is whether the norms and values of the reforms are compatible with the norms

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and values of the cultural traditions of the public apparatus in a country or not. If they are incompatible, the reforms are likely to encounter cultural resistance and be rejected. If they are compatible, they will in most cases be implemented quite easily. If they are partly compatible, only those elements that are compatible will be implemented or some elements will be implemented in a pragmatic way. In other words, cultural norms and values filter reforms. A third perspective is the structural perspective, which addresses some major polity features (Egeberg 2003; Weaver and Rockman 1993). Crucial questions here are whether a country has strong constitutional constraints that can hinder reforms or not. Another is whether the political system generally is characterized by several strong powers and actors engaged in a tug-of-war involving a number of checks and balances, or whether there is a simpler and more homogeneous system where one of the powers dominates. A third is whether a country has a presidential system, a Westminster parliamentarian system or some other type of parliamentarian system, and whether the Cabinet is a majority or minority one. A fourth question is whether the public apparatus is characterized by structural homogeneity or heterogeneity, that is, whether it is fragmented or not. Thus polity matters and the relevance of these structural features is rather obvious. Countries with weak constitutional constraints, a dominant executive with a dominant party – often labeled ‘elective dictatorship’ – and structural homogeneity, which is the case for several Anglo-Saxon countries, may rather easily implement radical reforms (Hood 1996). A fragmented presidential system, or parliamentary systems with minority coalition governments, like the Scandinavian ones, on the other hand, may have much more difficulty in implementing reforms of this kind (Christensen and Lægreid 2001b). The transformative approach combines the three single perspectives and emphasizes that they represent different contexts which often interact in a dynamic way in determining how much leeway political and administrative leaders have to introduce reforms and implement them (Christensen and Lægreid 2007a). These dynamic processes lead to the creation of new and hybrid structures and cultures, and are generally more common than extreme situations; the latter tend to arise either when countries are subjected to a high degree of environmental pressure and when their culture and instrumental structure are compatible with reforms – leading to implementation – or, conversely, when external pressure is low and a country’s structure is heterogeneous and incompatible with reforms, leading either to no reforms at all or to weak implementation of reforms. Reform trends Some main features The central actors in Norwegian administrative policy are the ministries and the government in interaction with the Storting (Parliament). White Papers from the government on administrative policy and reforms are discussed in Parliament and since 1999 the ministers of government administration have given separate statements and accounts of the government’s administrative policy to the Storting. The Storting’s role in the administrative policy process is, however, not as central as that of the government and the Cabinet, and public commissions have also played a significant role in developing administrative policy. Such commissions include experts and representatives from the

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Civil Service unions. Over time, however, the role of public commissions in this policy field has decreased and the trend has been towards separate units and organizations with special responsibility for administrative policy issues. In contrast to more radical NPM reformers such as the UK and New Zealand, the Norwegian Civil Service unions have been given the right to participate actively in the development of administrative policies and public sector reform, but this involvement has generally been stronger when the Labour Party was in power (13 of the last 20 years) than under governments dominated by the Conservatives (2001–05). A main principle of the reform process is dialogue with employee organizations, but the strength of this dialogue has varied over time and from one reform to another (Roness 2001). One lesson from the past 30 years of building up administrative capacity in this policy area is that it has proven difficult to establish the Ministry of Government Administration as an overarching super-ministry for administrative policy. One reason for this is that the sectoral ministries have a strong footing in Norway owing to the principle of ministerial responsibility and it has been very difficult to build up ministries with horizontal coordination responsibilities across ministerial areas. Another reason is that the Ministry of Government Administration lacks strong steering tools and has to rely on soft regulations such as advice, training and consulting. The Ministry of Government Administration has been responsible for the development of the various governments’ modernization and renewal programs, starting with the Modernization Program of the Willoch (Conservative) government (1986) and the Renewal Program of the Brundtland (Labour) government (1987) and followed by a White Paper on administrative and personnel policy (1992), the Jagland (Labour) government’s ‘The Norwegian House’ (1996), the program on a ‘Simplified Norway’ of the Bondevik I (Center–Conservative) government (1999), the Stoltenberg I (Labour) government’s program for innovation in the public sector (2000), the program of the Bondevik II government labeled ‘From words to action’ (2002) and the program ‘Renewal of the Public Sector’ of the Stoltenberg II government (2005). These reform programs have been more a loose collection of ongoing reform measures and new reform ideas than a consistent, co-ordinated and unified strategic plan for changing the administrative apparatus. They have, however, played an important role as symbols and affected public discourse on administrative policy and public sector reforms. Generally there has been a rather high consensus on administrative policy and there have not been big differences in the reform programs from one government to the next. One exception is the issue of privatization, which tends to follow the ideological cleavages between the Right and the Left in Norwegian politics. The Norwegian policy style is, however, characterized by compromises and this has produced reform programs focused on maintenance, modernization and efficiency measures aimed at retaining a big public sector rather than on marketization, privatization and downsizing the state (see Pollitt and Bouckaert 2004; Wright 1994). The big specific reforms have normally been implemented by strong sectoral ministries and not by the Ministry of Government Administration. Typical examples of this are the Budget Reform (Ministry of Finance), the Hospital Reform (Ministry of Health), the Welfare Administration Reform (Ministry of Labor and Social Inclusion) and the Quality Reform for universities and higher education (Ministry of Education and Research). The main impression is that a sector-based central government has carried

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out sector-oriented reforms (Lægreid and Roness 2003), producing structured pluralism (Premfors 2006) rather than uniformity and universality. Structural reform measures Structural devolution is a concept encompassing structural reorganization in the central administrative apparatus whereby the structural levers of control held by politicaladministrative leaders are formally weakened and the ‘distance’ to central agencies and state-owned enterprises increases (Christensen and Lægreid 2001b). In the 1970s devolution or vertical specialization or disintegration came about in Norway mainly as a response to the capacity problems posed by new tasks and policies at the central level. Decentralization to the regional level was re-established, and some tasks were assigned to the local level. In the 1980s, however, devolution went a step further, with the introduction of structural devolution inside the central administrative apparatus. The first element was internal structural devolution. This was brought about partly by making administrative rules and regulations more flexible. Ordinary agencies were given more autonomy in personnel and financial matters and to some extent in substantial policy issues as well. A central tool was the introduction of a performance management system, called management by objectives and results. This system was introduced in 1990 and has since then gradually been institutionalized as part of the budgetary system, the pay system and the activity planning system (Lægreid et al. 2006a). One important feature of internal structural devolution in the central administrative apparatus has been the gradual autonomization of ordinary agencies over the last decade or so. This has consisted chiefly of internal delegation of authority to agencies, accompanied by a more formalized performance-assessment regime. This development has not aroused much controversy among political and administrative leaders, even though some of them think the ministries still exercise too much control over the agencies while others believe the role of agency directors has become too politicized (Christensen and Lægreid 2002). Another feature has been the autonomization of regulatory agencies, combined with an increase in horizontal differentiation of roles and tasks, according to the principle of ‘single purpose organizations’ used extensively in New Zealand (Gregory 2001). This has been more controversial and ambiguous. Until the mid-1990s there was no particular focus on regulatory agencies in Norway. The policy of the Center–Conservative government (2001–05) was first to give the regulatory authorities more autonomy from the government and to decrease political control over the agencies by means of structural reorganization (St.meld.nr 17 (2002–2003)). This was to be accomplished through greater delegation (making it formally more difficult for the government to interfere in individual cases); by establishing independent, court-like appeal boards; and by moving some of the authorities out of the capital. The government wanted to define roles more clearly by organizationally separating the roles of inspector, purchaser, provider, owner, regulator and consultant. The central authorities were to be streamlined as controllers, overseers and inspectors. The government also wanted to strengthen professional competence and expertise within the supervisory authorities and to change the oversight philosophy in the direction of less detailed regulation. A majority in the Storting rejected the proposal for a new system of appeals and complaints and favored keeping this function in the ministries. A compromise was

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also reached on the autonomy question, allowing the proposals for some single agencies to go through, but not making this an overall system, meaning that the agency solution became a hybrid one (Christensen and Lægreid 2007c). The second main element of structural devolution was external structural devolution – comprising the establishment of new, autonomous state-owned companies (SOCs) or the reorganization of public enterprises (traditionally with the same formal status as agencies) into such companies. Since the late 1980s about 60 units have changed their organizational status in the direction of more structural devolution and many of them now represent new forms of state-owned corporations oriented more towards markets and commercial freedom and less subject to political control (Christensen and Lægreid 2003). Until 1992, major public domains like the railways, telecommunications, the power supply, postal services, forestry, grain sales, public broadcasting, road construction and airport administration were organized as central agencies or more integrated government-administrated enterprises. Since then, the commercial parts of these enterprises have been corporatized, that is, established as various types of SOCs, while the regulatory parts have retained their agency form. This development began when the Labour Party, which had traditionally exercised tight control over public enterprises and service-providing companies, reluctantly changed its views in a neo-liberal direction (Christensen and Lægreid 2003) – that is, attending more to market forces. The last and most controversial development in this direction – the partial privatization of Telenor, the public telecommunications company, and Statoil, the dominant state oil company in 2000–2001 – created much conflict within the Labour Party. Features of a supermarket state Olsen (1988) defines the supermarket state as a service-providing state built on market principles where the government is very attentive to the needs and demands of citizens in their roles as consumers or customers. Historically speaking, Norway has adopted few features of this model. Economic norms and values have traditionally counted for less than political control, professional expertise, institutional rights and participation by affected groups. Introducing pure rule of the market is therefore not compatible with the Norwegian public tradition, which emphasizes equality and standardization (Brunsson and Olsen 1993). On the contrary, for most of the twentieth century – and especially since the Second World War – Norway has been characterized by strong regulation of the private sector – the so-called ‘mixed or negotiated economy system’ (Christensen 2003). The supermarket state of the 1980s was introduced in Norway rather reluctantly and encompassed many different strands. The debate on these questions has a distinctly normative-political character. The main supporters of the supermarket state reforms have been liberal and conservative politicians, supported by business leaders, leaders of state companies and business economists. They have argued that a leaner state is more efficient and effective and offers better and more transparent political control. The supermarket state, in their view, must respond to environmental-deterministic pressures (Olsen 1992), such as economic globalization, adaptation to the EU and international institutional pressure from Anglo-American countries and the OECD, with technical adjustments. This adaptation implies acceptance of management and market principles as important symbols of a modern state.

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Traditionally, the socialist and social democratic parties in Norway have opposed the supermarket state reforms, and they have been supported in this opposition by the trade unions and Civil Servants unions connected with the labour parties. Their arguments have emphasized their determination to retain control over the economy and to resist market principles that undermine democracy and create inequality. The key element in the changes stemming from the supermarket state tradition has been the Labour Party’s gradual acceptance of some its elements. This is seen by some as controversial but by others as a political necessity. The supermarket reforms in the Norwegian Civil Service started slowly in the late 1980s and gained momentum from the mid-1990s onwards (Christensen and Lægreid 2001b; Olsen 1996). Besides the structural reform measures mentioned, the reform measures have been: management by objectives (MBO), made mandatory from 1990; increased market orientation and contracting-out; increased managerial autonomy and the use of leadership contracts; service declarations; and the introduction of one-stop shops. One major reform was the government takeover of the hospitals from the counties in 2002, combined with changing the hospitals from public administration units to health enterprises and the adoption of the ‘money follows the patient’ principle. Another was a partially market-oriented reform of the higher education system, which introduced a ‘money follows the student’ system. Whether these reforms symbolize the breakthrough of the supermarket state tradition in Norway is unclear, but it is interesting that they have come after some of the NPM trailblazers, like Australia and New Zealand, had already embarked on post-NPM reforms (Gregory 2003; Halligan 2007). If we look at the history of reforms it appears likely that the more radical changes will be modified and packaged in a ‘Norwegian’ way, just as MBO was adopted in an ‘edited’ version. Corporatist features are slowly weakened A typical feature of Scandinavian countries is their strong corporatist tradition, in which interest groups are an integral part of public decision-making processes (Olsen 1983). New public management can be seen as a reaction to the corporatist state model (Olsen 1988: 244), which is perceived by its critics as too rigid, sectorized, expansive and expensive; in addition, special interests are considered to be too powerful in public policy-making (Self 2000: 101). According to this view, the state needs to maintain a certain distance and independence from the various interests in order to govern. Integrated organizational representation in public decision-making is seen more as a threat to democratic governance than as an extension of democracy. A government consisting of multiple actors with strongly integrated participation from interest organizations may weaken democratic accountability. The corporate state implies a non-transparent process of negotiation in which responsibility for the final outcome is often unclear. There seems to be a general skepticism towards interest groups in some of the Anglo-American countries at the forefront of the NPM process (Kelsey 1997). This contrasts with practice in Scandinavian countries, for example, where interest groups traditionally have had a high standing in public decision-making processes and where Civil Service unions are seen as vital participants in reform processes (Lægreid and Roness 2004; Olsen 1983). This tradition is now coming under pressure. In the mid-1970s, when the political wind began to blow from the Right, critics started to argue that interest groups represented special interests that threatened democratic

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processes and had led to an increase in public expenditure. In 1982, for example, the Conservative government substantially cut the number of public committees (Nordby 1994). This decreased contact between the government and the Civil Service and slightly changed the role of interest groups (Christensen 2003). One effect of this change has been an increase in lobbying of the Storting by interest groups, which have experienced growing competition with ad hoc groups and professional lobbying firms, leading to more emphasis on single issues (Christiansen and Rommetvedt 1999). Again inspired by NPM reforms, the 1990s saw a discussion of the role of interest groups in public decision-making processes. As public policy in various areas began to follow NPM ideals, interest groups had to adjust their strategies. Some of the unions connected with the Labour Party continued to defend traditional values and opposed changes in the public sector inspired by an increased market orientation, increased wage inequality, contracting-out and privatization (Roness 2001). Others adjusted to the new values, or at least tried to reach some compromise with the modernizers. This reaction is to be found in some Civil Servants’ organizations, among academic groups and in teachers’ unions. Deregulation and re-regulation The NPM-inspired reforms of the 1990s in Norway strengthened the Office of the Auditor General, thus allowing the Storting to exert more control, power of scrutiny and oversight over the executive. While the Storting appoints its director, the Office of the Auditor General is usually an independent body. The increased emphasis on performance auditing and the revitalization of the Standing Committee on Scrutiny and Constitutional Affairs led to more focus on oversight (Gunvaldsen and Karlsen 1999). This also takes the form of open committee hearings, ‘spontaneous’ question time with ministers and more active parliamentary investigations. These changes stem from NPM ideas about defining clear goals for public policies, holding the executive to account for fulfilling these goals and creating long-term, responsible and co-ordinated planning and budgeting processes. This policy is new. Traditionally the Storting has been passive in its control of the executive (Christensen and Peters 1999). While politicians believe the changes will make the work of the Storting and its control function more effective and efficient, there will probably be some adverse consequences. Conflict between the legislature and the executive could become more apparent, because their relationship is now more formally and adversely defined, and no longer seen primarily as a close relationship based on a shared culture (Christensen and Lægreid 2002). There may also be more tension between political and administrative leaders inside the Civil Service, because there may be more blame-avoidance and risk-averse behavior (Christensen et al. 2002). An overview Summing up, since the 1980s the centralized state model in Norway has been challenged, primarily through structural devolution. The gradual creation of more independent agencies and state-owned companies meant that subordinate organizational units were moved further away from political executive leaders (Christensen and Lægreid 2003). Nevertheless, Norway for some time continued to be labelled a ‘reluctant reformer’ (Olsen and Peters 1996). In the period 2001–05 the Center–Conservative government

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adopted some ideas from the neo-liberalist doctrine and the supermarket state model (Self 2000) and implemented them in regulatory, health and education reforms. The institutional and corporatist models, which historically have supported the centralized state, have been gradually modified, particularly during the last decade. Effects and implications So what have been the effects and implications of gradually implementing NPM reform measures in Norway? The most well-established result of NPM, both internationally and nationally, is that the structural devolution of state-owned enterprises has undermined central political control (Pollitt and Bouckaert 2004; Spicer et al. 1996). The formal instruments of control have been weakened and the ownership and regulator roles made more passive (Christensen and Lægreid 2001b; Painter and Pierre 2005). The greater the structural separation of the companies from the political leadership and Civil Servants, the greater the importance of other decision-making signals – like cost-efficiency, professional norms and user and customer interests. The result is that actors in SOCs now pay less attention to political signals (Christensen and Lægreid 1998) and there is a tendency to define political involvement in public enterprises as ‘inappropriate’ interference in business matters. In other words, the political leadership often makes only passive use of its formal instruments of control (Christensen and Lægreid 2001b). The same type of undermining, but to a lesser extent, is evident concerning the reform of the regulatory agencies and the internal devolution of ordinary agencies (Christensen et al. 2007b). The regulatory reform has led to acceptance of the idea that institutional and professional autonomy should be more important than political control, with fewer questions about who should control the regulators. Internal structural devolution of ordinary agencies has also modified political control. Management by objectives and results has given subordinates more leeway and freedom in using allocated recourses and in selecting means to fulfill political goals. But it has also introduced a more comprehensive performance reporting and monitoring system, which potentially gives central actors greater opportunities for control and oversight (Lægreid et al. 2006b). Undermining executive political control and policy capacity through structural devolution raises the question of who gains power. The Parliament (Storting) seems eager to fill the gap by strengthening its scrutiny and control role, a development it welcomes as an enhancement of democracy (Christensen et al. 2002). However, the government sees the changes as undermining its formal prerogatives (Christensen and Lægreid 2002). Another possibility is that power in the executive will be reallocated from politicians to top Civil Servants, who stand to gain influence through devolution, management reforms and increased use of contracts (which they mostly control) (Christensen and Lægreid 2001b). The question is, though, whether they mainly control on behalf of and in agreement with the political leadership or whether they establish an independent power basis. The third group of actors who will potentially gain power are the directors of the new or reorganized state-owned companies (Christensen and Lægreid 2002). Obviously they now have more influence over their companies, but does this influence have wider political implications? Another problem is that the trend towards an undermining of political control has not been coupled with any redefinition of responsibility and accountability. The principle of ministerial responsibility is still firmly supported, even though the political leadership has less control than before (Brunsson 1989; Christensen and Lægreid

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2001b). At the same time, the actors gaining influence are not any more politically accountable than before, which may be seen as a challenge to democracy. In administrative reforms like NPM much attention has been paid to managerial accountability and very little to political responsibility on a cultural basis. By managerial accountability we mean the obligation to account for one’s actions to those in superior positions of authority. Responsibility, on the other hand, is accepted for the actions of oneself or others and is a more subjectively felt sense of obligation (Gregory 1995: 60). To be responsible connotes the ability to act as well as simply to report and implies a concern for the consequences of this action. There is a moral flavor missing from managerial accountability (Martin 1997). A major study of the reactions of Civil Servants to reforms, conducted in 1996 after five to ten years of NPM-like reforms, concludes that Norway is a reluctant reformer (Christensen and Lægreid 1998). Civil Servants tend to stick to traditional norms arising from political and professional considerations even though their role is gradually becoming more complex as they begin to accept some modern values. Less threatening reform elements, like management by objectives (MBO), are more widely accepted and used, but there is strong opposition to purely market-oriented reforms and these are therefore being used less. New public management is more widely accepted among administrative leaders than among Civil Servants, particularly those with judicial backgrounds working on individual cases. A more recent study of leading political, administrative and state commercial leaders in Norway, conducted in 2000 before the last radical reforms, shows that the political executive leaders of the Center government that was in power from 1997 to 2000 are traditionalists and reluctant to accept major parts of NPM, particularly the effects of structural devolution (Christensen and Lægreid 2002). They are more open to the less extreme parts of NPM-related reforms, like MBO and increased autonomy of regular agencies, but are worried about losing political control under the more extreme ones, like market-oriented reforms and increased autonomy for SOCs. The top administrative leaders are more cautious modernizers, that is, they accept central elements of the structural devolution reforms, but they are subject to cross pressure because they are aware of the political concerns and reluctance of the political executive. The top leaders of the SOCs are very keen modernizers. By focusing on performance management, single-purpose organizations and structural devolution the reforms tend to ignore the problems of horizontal co-ordination (Fimreite and Lægreid 2005). Performance management is mainly preoccupied with vertical co-ordination. The principle of ‘single-purpose organizations’, with many specialized and non-overlapping roles and functions, may have produced too much fragmentation, self-centered authorities and a lack of cooperation and co-ordination, hence hampering effectiveness and efficiency (Boston and Eichbaum 2005: 21). In spite of being one of the most pressing problems in the Norwegian political-administrative system, the issue of horizontal co-ordination has not been addressed in the reforms of the past decades. Current developments – modernized renewal? The Center-Conservative government that was in power from 2001 to 2005 had a rather typical neo-liberal agenda, but also pursued reforms that had a hybrid character or had obvious post-NPM features. One example was the hospital reform, which combined

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centralization, thus potentially increasing central political control, with devolution and marketization (Lægreid et al. 2005). Another was the attempt to strengthen control of the central immigration administration, which had gained institutional autonomy following its reorganization in 2001 (Christensen and Lægreid 2005). A third example is the largest central administrative reform ever – the merging of the central administrative sectors of employment administration and national insurance administration into a new agency for work and welfare, which collaborates with the social services run by local authorities in local one-stop shops (Christensen et al. 2007a). The current Red–Green coalition won the 2005 elections on an anti-NPM ticket. The question is, however, what it will be able to deliver. This is a matter both of political rhetoric and of the practical ability to implement measures that would modify or stop NPM-related reforms. As far as rhetoric is concerned the former government presented its program as one of modernization while the current one is focusing on renewal. But what is really the difference in rhetoric and in practice? One difference between the former and current government, at least at the level of talk, is that the Red–Green government is emphasizing the participation of employees, a feature that was atypical of the NPM reforms implemented under the previous, Center–Conservative government (Christensen and Lie 2007). Second, the current government is tending to stress collective features and societal solutions, is voicing support for a large public sector and is skeptical towards competitive tendering, outsourcing and privatization. Instead it advocates the renewal and development of the public sector, though just how this is to be done is not very clearly defined. Third, the Red–Green government is emphasizing the more classical post-NPM features of co-ordination and a holistic perspective and is skeptical about structural devolution. By contrast, the former government focused on specialization and fragmentation. Interestingly enough, there seems to be tension among the three parties in the governing coalition. The Socialist Left Party, which has the minister in charge for reforms, is keener on anti-NPM measures than the Labour Party to which the Prime Minister belongs. He has talked about ‘modernized renewal’, showing the ambiguity and symbols of reforms. But rhetoric aside, what has the current government actually done to follow up on its anti-NPM platform? It is probably fair to say that the answer is not much, at least concerning the main features of NPM. Instead it has rebalanced some NPM features by introducing many small changes. The largest reform, the work and welfare reform, was initiated by the former government, but is now being implemented by the current government, using quite a lot of resources (Christensen et al. 2007a). The government has also tried to scale down the importance of the competition law and the independent competition agency, and has said yes to private mergers that the competition authorities were skeptical about. Some privatization, cutback management and competitive tendering has also been stopped, as in the organization of the railways infrastructure. The law on private schools has been changed, making it less easy to establish and get public support for private schools. The government has established a new ownership policy for stateowned enterprises, saying no to options programs for directors and trying to control SOCs more, which has recently created a lot of conflict inside the political system. The government’s attempts to exert more control in partially privatized companies have been the source of considerable consternation among the non-socialist parties and private business leaders. Finally, the government is now trying to control the immigration

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administration even more by using written instructions. All these examples illustrate a move away from structural devolution and towards a strengthening of the center. Conclusion This chapter began by outlining the history of the Norwegian central government, describing how the strong centralized Norwegian state characterized by institutional and corporatist features has emerged over the past 100–150 years. Until the 1980s the development of the state and the way it resolved dilemmas of governance generally comprised some form of modification of the strong state tradition. The combination and mutual reinforcement of the centralized and institutional traditions explains some of the main and stable features of governance in Norway (Christensen and Peters 1999). They build on a socially centered and collective notion of democracy based on the sovereignty of the people (Christensen and Lægreid 2002; March and Olsen 1995). The centralized state traditionally guaranteed the existence of the institutional state, and the institutional state created the stability, integration, homogeneity and legitimacy that are preconditions for the centralized state. The corporatist state began to develop in the 1920s and has played a particularly important role after the Second World War. The centralized state ran the corporatist-pluralist state and established an elite partnership with and hierarchy among interest groups. It gave many groups important access to public decision-making processes. The corporatist-pluralist state created cultural integration and consensus while reflecting and furthering cultural variety. The idea of the supermarket state modifies some features of the other state traditions. It may potentially threaten the legitimacy of the centralized state, weaken political control, challenge the collective notion of democracy and undermine the traditional importance of the election channel. The main issues in the opposition between the two state traditions are the citizen and consumer roles, structural devolution, commercialization and public versus private ownership. Nevertheless, this development is seen by some as consolidating the core of the public sector, and advocates point to the fact that the majority of the people and parties favor this ‘modified modernity’ (Christensen and Lægreid 1998). The supermarket state undermines some of the integrative and collective features of Norwegian political culture. It redefines independent bodies, rights and leadership roles. The new independent bodies for regulation and scrutiny reflect skepticism about traditional political control and both undermine such control and create ambiguity. The new definition of rights makes them more individual than collective (Christensen and Lægreid 2002). Traditionally these rights have been part of a social contract – that is, people assign sovereignty, authority and support to politicians and in return receive guarantees of security, stability, freedom and protection of rights. The current government is riven with tensions between the two reform waves of NPM and post-NPM. Many of the changes made gradually over the years, like structural devolution, are not easy to reverse. In addition, it is not always easy to know what the government really wants, because there is disagreement within the coalition about what approach to take to reforms. The policy in practice has thus consisted more of rebalancing than transforming the NPM features introduced in the public sector (Christensen et al. 2007b). Going back to the theoretical perspectives we started out with, it becomes clear that

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they are highly relevant for explaining the development of public management reform in Norway. The structural-instrumental perspective explains well the establishment of the centralized state and its subsequent development (Christensen 2003) as an arrangement brought about intentionally and furthered by central political and administrative leaders. This perspective can also be used to explain Norway’s reluctance to adopt NPM, namely, that the instrumental conditions created by a series of minority governments did not favor reform (Christensen and Lægreid 2001b). The past ten years have seen greater polarization regarding reforms, with the Conservative Party and Progressive Party (far right) aggressively pursuing reforms, while the left-leaning parties have been more skeptical. In both its rhetoric and practice the current Red–Green government has tended more towards post-NPM reforms. A cultural-institutional perspective can explain how the political-administrative culture has supported the emergence of the centralized state by establishing collectivistic and egalitarian norms and values (Christensen 2003). With regard to NPM reforms, the non-compatible culture has participated in modifying NPM reforms, but has also gradually changed in an NPM direction. The environmental perspective explains the increasing pressure for efficiency and legitimacy that Norway managed to resist for a long time but also how the role of the national and international environment in furthering some NPM measures has gradually increased Summing up, what we see is a complex interplay between cultural, structural and environmental features, which both enable and constrain an active administrative policy in Norway. There is obviously a selection, editing and translation process going on in the administrative reform process designed to fit contemporary reform ideas and tools with the existing political-institutional context, polity structure and administrative culture. References Boston, J. and C. Eichbaum (2005), ‘State sector reform and renewal in New Zealand: lessons for governance’, paper presented at the Conference on Repositioning of Public Governance – Global Experiences and Challenges, Taipei, 18–19 November. Brunsson, N. (1989), The Organization of Hypocrisy. Talk, Decisions and Actions in Organizations, Chichester: Wiley. Brunsson, N. and J.P. Olsen (1993), The Reforming Organization, London: Routledge. Christensen, T. (2003), ‘Narrative of Norwegian governance: elaborating the strong state’, Public Administration, 81 (1): 163–90. Christensen, T. and A. Lie (2007), ‘Nyliberalisme og forvaltningspolitikk – Frå modernisering til fornying?’ (‘New liberalism and administrative policy – from modernization to renewal?’), in D.H. Claes, A. Lie and P.K. Mydske (eds), Politikkens vilkår i det nyliberale samfunn (The Preconditions of Politics in the NeoLiberal Society), Oslo: Universitetsforlaget, pp. 87–104. Christensen, T. and P. Lægreid (1998), ‘Administrative reform policy: the case of Norway’, International Review of Administrative Sciences, 64: 457–75. Christensen, T. and P. Lægreid (2001a), ‘A transformative perspective on administrative reforms’, in T. Christensen and P. Lægreid (eds), New Public Management. The Transformation of Ideas and Practice, Aldershot: Ashgate, pp. 13–42. Christensen, T. and P. Lægreid (2001b), ‘New public management – undermining political control?’, in T. Christensen and P. Lægreid (eds), New Public Management. The Transformation of Ideas and Practice, Aldershot: Ashgate, pp. 93–120. Christensen, T. and P. Lægreid (2002), Reform og lederskap (Reform and Leadership), Oslo: Universitetsforlaget. Christensen, T. and P. Lægreid (2003), ‘Coping with complex leadership roles: the problematic redefinition of government-owned enterprises’, Public Administration, 81 (4): 803–31. Christensen, T. and P. Lægreid (2005), ‘Blame-avoidance in central government? The pitfalls of organizing

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the regulatory side of immigration policy’, paper presented at Accountable Governance: An International Research Colloquium’ Queen’s University, Belfast, 20–22 October. Christensen, T. and P. Lægreid (2007a), ‘Introduction – theoretical approach and research questions’, in T. Christensen and P. Lægreid (eds), Transcending New Public Management Aldershot: Ashgate, pp. 1–16. Christensen, T. and P. Lægreid (2007b), ‘The study of public administration and management in Norway’, in W. Kickert (ed.), The Study of Public Management in Europe, London: Routledge, pp. 99–121. Christensen, T. and P. Lægreid (2007c), ‘Regulatory agencies – the challenge of balancing agency autonomy and political control’, Governance, 20 (3): 497–519. Christensen, T. and B.G. Peters (1999), Structure, Culture and Governance: A Comparative Analysis of Norway and the United States, Lanham, MD: Rowman and Littlefield. Christiansen, P.M. and H. Rommetvedt (1999), ‘From corporatism to lobbyism? Parliaments, executives, and organized interests in Denmark and Norway,’ Scandinavian Political Studies, 22 (3): 195–220. Christensen, T. and K.A. Røvik (1999), ‘The ambiguity of appropriateness’, in M. Egeberg and P. Lægreid (eds), Organizing Political Institutions, Oslo: Scandinavian University Press, pp. 159–80. Christensen, T., A.L. Fimreite and P. Lægreid (2007a), ‘Reform of employment and welfare administration – the challenge of coordinating diverse public organizations,’ International Review of Administrative Science, 73 (3): 389–408. Christensen, T., P. Lægreid and P.G. Roness (2002), ‘Increasing parliamentary control of the executive? New instruments and emerging effects’, The Journal of Legislative Studies, 8 (1): 37–62. Christensen, T., A. Lie and P. Lægreid (2007b), ‘Still fragmented government or reassertion of the centre?’, in T. Christensen and P. Lægreid (eds), Transcending New Public Management, Aldershot: Ashgate, pp. 17–42. Christensen, T., P. Lægreid, P.G. Roness and K.A. Røvik (2007c), Organization Theory and the Public Sector. Instrument, Culture and Myth, London: Routledge. Egeberg, M. (2003), ‘How bureaucratic structure matters: an organizational perspective’, in B.G. Peters and J. Pierre (eds), Handbook of Public Administration, London: Sage, pp. 116–26. Eriksen, S. (1988), ‘Norway: ministerial autonomy and collective responsibility’, in J. Blondel and F. MullerRommel (eds), Cabinets in Western Europe, London: Macmillan, pp. 210–24. Fimreite, A.L. and P. Lægreid (2005), ‘The regulatory state and the executing municipality – consequences of public sector reform in Norway’, Working Paper 7/2005, Bergen: Rokkan Centre. Gregory, R. (1995), ‘Accountability, responsibility and corruption: managing the public production process’, in J. Boston (ed.), The State under Contract, Wellington: Bridget Williams Books. Gregory, R. (2001), ‘Transforming governmental culture: a sceptical view of new public management’, in T. Christensen and P. Lægreid (eds), New Public Management. The Transformation of Ideas and Practice, Aldershot: Ashgate, pp. 231–60. Gregory, R. (2003), ‘All the king’s horses and all the king’s men: putting New Zealand’s public sector back together again’, International Public Management Review, 4 (2): 41–58. Gunvaldsen, J. and R. Karlsen (1999), ‘The auditor as an evaluator. How to remain an influential force in the political landscape’, Evaluation, 5 (4): 458–67. Halligan, J. (2007), ‘Reform design and performance in Australia and New Zealand’, in T. Christensen and P. Lægreid (eds), Transcending New Public Management, Aldershot: Ashgate, pp. 43–64. Hood, C. (1996), ‘Exploring variations in public management reform of the 1980s’, in H.A.G.M. Bekke, J.L. Perry and T.A.J. Toonen (eds), Civil Service Systems, Bloomington, IN: Indiana University Press. Kelsey, J. (1997), The New Zealand Experiment, Auckland: Auckland University Press. Krasner, S. D. (1988), ‘Sovereignty. An institutional perspective’, Comparative Political Studies, 21 (1): 66–94. Lægreid, P. and P.G. Roness (2003), ‘Administrative reform programmes and institutional response in Norwegian central government’, in J.J. Hesse, C. Hood and B.G. Peters (eds), Paradoxes in Public Sector Reform, Berlin: Duncker and Humblot, pp. 114–33. Lægreid, P., P.G. Roness, V.W. Rolland and J.E. Ågotnes (2003), ‘The structural anatomy of the Norwegian state 1947–2003’, Working Paper 21/2003, Bergen: Rokkan Centre. Lægreid, P., S. Opedal and I. Stigen (2005), ‘The Norwegian hospital reform – balancing political control and entreprise autonomy’, Journal of Health Politics, Policy and Law, 30 (6): 1035–72. Lægreid, P., P.G. Roness and K. Rubecksen (2006a), ‘Performance management in practice – The Norwegian way’, Financial Accountability and Management, 22 (3): 251–70. Lægreid, P., P.G. Roness and K. Rubecksen (2006b), ‘Autonomy and control in the Norwegian Civil Service. Does agency form matter?’, in T. Christensen and P. Lægreid (eds), Autonomy and Control. Controlling Central Agencies, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 235–67. Listhaug, O. and M. Wiberg (1996), ‘Confidence in political and private institutions’, in H.D. Klingemenn and D. Fusch (eds), Citizens and the State, Oxford: Oxford University Press, pp. 298–322. March, J.G. (1994), A Primer in Decision Making, New York: Free Press. March, J.G. and J.P. Olsen (1989), Rediscovering Institutions: The Organizational Basis of Politics, New York: Free Press.

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March, J.G. and J.P. Olsen (1995), Democratic Governance, New York: Free Press. Martin, J. (1997), ‘Changing accountability relations: politics, customers and the market’, PUMA/PAC (97) 1, Paris: OECD. Meyer, J.W. and B. Rowan (1977), ‘Institutionalized organizations: formal structure as myth and ceremony’, American Journal of Sociology, 83 (September): 340–63. Nordby, T. (1994), Korporatisme på norsk 1920–1990 (Norwegian Corporatism 1920–1990), Oslo: Universitetsforlaget. Olsen, J.P. (1983), ‘The dilemmas of organizational integration in government’, in J.P. Olsen, Organized Democracy. Political Institutions in a Welfare State – the Case of Norway’, Bergen: Universitetsforlaget, pp. 148–87. Olsen, J.P. (1988), ‘Administrative reform and theories of organization’, in C. Campbell and B.G. Peters (eds), Organizing Governance: Governing Organizations, Pittsburgh, PA: University of Pittsburgh Press, pp. 233–54. Olsen, J.P. (1992), ‘Analyzing institutional dynamics’, Staatswissenschaften und Staatspraxis, 2: 247–71. Olsen, J.P. (1996), ‘Norway: slow learner – or another triumph of the tortoise?’, in J.P. Olsen and B.G. Peters (eds), Lessons from Experience, Oslo: Scandinavian University Press, pp. 180–213. Olsen, J.P. and B.G. Peters (1996), Lessons from: Experiential Learning in Administrative Reform in Eight Democracies Experience, Oslo: Scandinavian University Press. Painter, M. and J. Pierre (eds) (2005), Challenges to State Policy Capacity, London: Palgrave. Peters, B.G. (1999), Institutional Theory in Political Science. The ‘New Institutionalism’, London and New York: Pinter. Pollitt, C. and G. Bouckaert (2004), Public Management Reform: A Comparative Analysis, 2nd edn; Oxford: Oxford University Press. Premfors, R. (1998), ‘Reshaping the democratic state: Swedish experiences in a comparative perspective’, Public Administration, 76 (1): 141–59. Roness, P.G. (2001), ‘Transforming state employees’ unions’, in T. Christensen and P. Lægreid (eds), New Public Management. The Transformation of Ideas and Practice, Aldershot: Ashgate, pp. 173–208. Sahlin-Andersson, K. (2001), ‘National, international and transnational construction of new public management’, in T. Christensen and P. Lægreid (eds), New Public Management. The Transformation of Ideas and Practice, Aldershot: Ashgate, pp. 43–72. Self, P. (2000), Rolling Back the State. Economic Dogma & Political Choice, New York: St. Martin’s Press. Selznick, P. (1957), Leadership in Administration, New York: Harper and Row Spicer, B., D. Emanuel and M. Powell (1996), ‘Transforming Government Enterprises’, St Leonards, Australia: Centre for Independent Studies. St. meld.nr. 17 (2002–2003), Om statlige tilsyn (On Regulatory Agencies), Oslo: Ministry of Renewal and Government Administration. Thelen, K. and S. Steinmo (1992), ‘Historical institutionalism in comparative politics’, in S. Steinmo, K. Thelen and F. Longstreth (eds), Structuring Politics: Historical Institutionalism in Comparative Analysis, Cambridge: Cambridge University Press, pp. 1–32. Tranvik, T. and A.L. Fimreite (2006), ‘Reform failure: the processes of devolution and centralization in Norway’, Local Government Studies, 32 (1): 89–107. Weaver, B.K. and B.A. Rockman (1993), ‘Assessing the effects of institutions’, in R.K. Weaver and B.A. Rockman (eds), Do Institutions Matter? Government Capabilities in the United States and Abroad, Washington DC: The Brookings Institution. Wright, V. (1994), ‘Reshaping the state. The implications for public administration’, West European Politics, 17: 102–37.

18 Public management reform in Hong Kong Anthony B.L. Cheung

Basic institutions of public management Hong Kong has a unique system of government. Before its reversion to China to become a highly autonomous special administrative region (SAR) on 1 July 1997, it was governed as a British colony. The colonial legacy left a Civil Service system based on the British model and a legal system based on English law. Some 150 years of colonial rule under a British governor with almost autocratic power had also established an administrative state dominated by bureaucrats (Harris 1978: 53–61), whose legitimacy hinged on the support of business and professional elites co-opted into government councils (the executive and legislative councils) and committees through a process of ‘administrative absorption of politics’ (King 1981). The immense powers enjoyed by the colonial governor characterized the nature of what was subsequently alluded to as the ‘executive-led’ system of governance. Since the 1970s, supported by consistent attempts at Civil Service improvement and modernization, the extension of administrative absorption to the district level, and the wider use of public consultation, the bureaucracy had become the main pioneer of policy and management reforms. Bureaucratic reformism, sustained by fiscal surplus during a long period of economic growth, helped secure some degree of conditional public acceptance. In the final years of British rule, the last Governor, Chris Patten, quickened the pace of politicization and made the government more open and responsive to the legislature and local public opinion. After the handover, the new SAR government, though not constituted on the basis of democratic election by universal suffrage and still claiming to be ‘executive led’, could only continue with the ongoing process of opening up and improving transparency and accountability. The fully elected legislature – though with only half of the seats directly elected by universal suffrage, and the other half returned by functional constituencies of mainly business and professional interests – has exerted increasing pressure on government to make it accountable. It has also continued with the process of public sector reform initiated by the colonial administration, including devolution of financial and human resource management responsibilities. The Chief Executive (succeeding the previous Governor) is at the apex of government and chairs the Executive Council which operates as a kind of government Cabinet in approving all major policy and legislative proposals before bills and requests for funds are sent to the Legislative Council. The two-tier government structure inherited from British administration – comprising policy bureaus (known as ‘branches’ in the colonial era) of Government Secretariat as policy-making and co-ordination bodies, and line departments and agencies largely as implementation bodies – is still retained, despite recent attempts to amalgamate the two layers within some policy portfolios.1 Heads of bureaus, classified as principal officials under the Basic Law, are nominated by the Chief Executive for appointment by the Central People’s Government of the People’s Republic of China. Among the bureaus, the Financial Services and the Treasury Bureau is 317

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Area of Responsibility

Policy Secretary (assisted by Permanent Secretary, a Civil Servant)

Head of Department

Policymaking

• Identify policy issues • Formulate and review policy and programme aims • Establish policy objectives

• Advise • Advise • Assist in developing precise objectives

Planning

• Assess resources required • Ensure plans and budgets are consistent with policy and resources available

• Assist in defining longer-term strategies • Prepare annual programme plans budgets and targets

• Obtain resources • Allocate resources and responsibilities • Monitor use of resources • Control public expenditure • Initiate value For money (VFM) improvements

• Head and manage the department • Implement programme plans • Manage budget

• Evaluate performance • Monitor VFM improvements

• Assess and report performance

Resource allocation

Review

Figure 18.1

Framework of public management in Hong Kong

responsible for financial policy and overall resource allocations; the Civil Service Bureau is responsible for Civil Service policy and service-wide human resource management systems, including pay policy and pay determination. Policy co-ordination is achieved through the Policy Committee, chaired by the Chief Secretary for Administration (or the Financial Secretary as appropriate), to clear policy proposals coming from bureaus. The public management framework and division of responsibilities are illustrated by Figure 18.1. Reform trends since the 1980s Hong Kong’s public sector reform is not just a passive response to, or convergence with, the new global trend to improve the efficiency of the public service through adopting new public management (NPM) methods (OECD 1995). It has its own long-standing trajectory of administrative reform since the 1970s to modernize its public service and to shore up the capacity of its administrative state (Cheung 1999). This trajectory of reform can be divided into three main phases: the colonial modernization phase; the 1990s reform phase; and the post-1997 reform phase. Most of the reforms, within the meaning of the new global public sector reform movement, have taken place since the late 1980s and have intensified from the 1990s onwards. Pre-1980s modernization reforms The first phase of administrative reform began in the mid-1970s upon the recommendation of the McKinsey consultants commissioned to review the core government structure, and the policy and resource management processes. New quasi-ministerial

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‘branches’ were set up in Government Secretariat, each handed by a ‘super-secretary’ to provide policy co-ordination among government departments (McKinsey & Co. 1973). The previous single-tier government structure became a two-tier one. The size of the Civil Service had grown in line with the rapid expansion in the range of government functions, public services and infrastructure development. During the 1970s and 1980s, government departments and quasi-governmental organizations also proliferated. Civil Service training became emphasized, in tandem with a pronounced localization policy. An Independent Commission Against Corruption (ICAC) was established in 1974 to eradicate corruption within the public sector. This was a period of administrative reform and expansion in favour of the bureaucracy’s growth and modernization. With improved salaries and conditions of service, and thanks to vigorous anti-corruption efforts, the Civil Service was able to attain an image as an efficient, clean and well-paid workforce able to attract the best calibre in society. Some saw these modernization reforms as being influenced by similar trends in Britain (such as the Fulton Reform of the Civil Service) (Harris 1988: 135–41).2 Public sector reform since 1980s The second phase of pre-1997 administrative reform began with the launch of the Public Sector Reform programme in February 1989 (Cheung 1992; Finance Branch 1989). A new Efficiency Unit was set up in 1992 under the Office of the Chief Secretary to spearhead reform initiatives and promote business-like operations within government, and to provide management advice to government departments and agencies. Apart from various managerial initiatives resonating NPM reforms in the West – such as budgetary devolution, contracting-out and trading funds, and customer-oriented initiatives – Hong Kong’s reform was also significant in reconstituting the centre of policy management, with the policy secretaries (that is, heads of policy branches) given the powers and resources to become full-fledged policy managers, able to hold various executive agencies under their respective jurisdiction (departments, trading funds, non-departmental public bodies and public corporations) accountable for performance and policy outcomes. The enhanced role of policy secretaries not only followed the NPM logic of redefining the principal–agent relationship between central policy agencies and line organizations, but also pushed further the process of ‘quasi-ministerialization’ first unleashed by the McKinsey reform of the 1970s. Public sector reform was geared up in the 1990s at a time when the bureaucracy was subject to rising challenges from newly emerging electoral politics and a more demanding and vocal population as Hong Kong entered the final stage of political transition to revert to Chinese sovereignty. Still, the government was run by bureaucrats who controlled agenda-setting, including that for public sector reform. The year 1997 marked the end of British rule and the establishment of the new SAR under China’s sovereignty. Partly a consequence of the 1997 Asian financial crisis which triggered the worst economic recession in Hong Kong since the Second World War, and partly due to rising expectations and political changes, the Civil Service had suffered both an efficiency and a political crisis. The efficiency crisis resulted from various administrative and policy failures – notably in the handling of the economy and unemployment, and crisis outbreaks like the bird flu and SARS (severe acute respiratory syndrome) epidemic. The relatively high level of Civil Servants’ pay, compared with rapidly falling private sector wages during

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the economic downturn, caused much public debate on whether the Civil Service was overpaid. Continuing budget deficits which lasted from 1998 to 2005 had induced the business sector and the public at large to point their fingers to the rigid pay structure of Civil Servants whose salaries and allowances took up some 70–80 per cent of recurrent government expenditure. Cases of Civil Servants’ sleaziness and misconduct, repeatedly exposed by Audit Commission reports, also painted a negative picture of a work force previously acclaimed to be efficient and effective. These deficiencies were linked by critics to the lack of accountability of a Civil Service institution that still dominated the government in an ‘executive-led’ system. Initially, the Civil Service responded by intensifying the public sector reform process. An ‘efficiency enhancement programme’ (EPP) was introduced. It required departments to achieve 5 per cent savings over three years from 1999. In 1999 a broad-range Civil Service reform package was proposed which included radical elements of contract employment and performance-related pay (Civil Service Bureau 1999). These managerial solutions, however, failed to deal with a looming political crisis that underpinned the growing public discontent with government’s overall performance. In fact the Civil Service reform backfired. The pay cut legislation in July 2002 triggered the largest ever protest by 50 000 Civil Servants, public sector employees and their supporters, unveiling serious tension between government and the staff side not witnessed before during colonial times. Meanwhile the senior Civil Service was also seen by the new Chief Executive, Tung Chee-hwa, as not providing sufficient support for his policy agenda. His answer was to introduce a new system of executive accountability for principal officials, essentially a system of political appointment to ministerial posts which previously were career Civil Service posts (Burns 2004: ch 5). Civil Servants were now expected to change in three directions (Efficiency Unit 2004): ● ●

●

Vision delivery – to play a crucial role to help deliver government’s vision. Productivity improvement – to improve public sector productivity to meet the community’s expanding needs and rising expectations at a time of real budget constraints. Supporting ministers – to adjust to the new ministerial system and to work in effective partnership with the politically appointed ministers.

Table 18.1 highlights the more significant reform initiatives introduced from the 1980s until the present. Financial management reform During the 1980s, a series of financial management reforms were introduced. The more notable ones included: increasing the delegation of authority from the Finance Branch (that is, the central budget agency, now renamed Financial Services and the Treasury Bureau) to departments; the amalgamation of line items in a move away from the traditional line-item budgeting control (where central permission had to be obtained for the movement of funds from one line item to another even within the same departmental budget); abolition of ‘block vote’ arrangements;3 introduction of inter-departmental charging; and a new output budgeting format where each department set out its policy objectives, programmes and performance targets, as part of the Controlling Officer

Public management reform in Hong Kong Table 18.1

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Significant public sector reforms in Hong Kong since the 1980s

Period

Reform measures

1980s

● ● ● ●

Early to mid1990s

● ● ● ● ● ● ● ● ● ● ● ●

From late 1990s

● ● ● ● ● ● ●

1997–2002 (Tung Chee-hwa administration, first-term) 2002–2005 (Tung Chee-hwa administration, second-term)

● ● ● ● ● ● ● ● ● ● ● ● ● ●

Devolution of authority to heads of departments to create nondirectorate posts subject to limits on staff numbers and salary value. Amalgamation of line items in budget Abolition of block vote arrangement for service supply departments Introduction of inter-departmental charging Launch of ‘Public Sector Reform’ (1989) Corporatization of public hospital services under new Hospital Authority (1990) Introduction of performance pledges and customer liaison/user groups (1992) Establishment of Efficiency Unit (1992) Monitoring customer satisfaction Contracting out Setting up trading funds ‘Serving the Community’ initiative (1995) Code of Access to Information Resource Assessment Exercise and Baseline Budgeting Devolution of financial resource authority to policy branches and enhancement of policy management function Devolution of some human resource management responsibilities to departments Managing for Results Performance Review system Improving Productivity Private Sector Participation (including contracting out, divestiture) Fundamental expenditure reviews New management frameworks Reinventing front-line services Target-based Management Process (TMP) (1997) Enhanced Productivity Programme (EPP) (1998) Civil Service Reform (1999) Step-by-Step Guide to Performance measurement New executive accountability system for principal officials (or ministers) (2002) Amalgamation of some policy bureaus and subordinate departments Civil Service pay reduction began by phases to 1997 level (2003) Review of Civil Service pay adjustment mechanism Voluntary retirement schemes for Civil Servants Target for reducing Civil Service establishment Use of non-Civil Service contracts Private Sector Involvement (PSI) – including outsourcing and public private partnerships (PPP) Envelope budgeting ‘3Rs + 1M’ (reprioritizing, reorganizing, reengineering, market-friendly) as the direction of public management reform

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Table 18.1

(continued)

Period

Reform measures ● ●

●

2005–present (Donald Tsang administration)

● ● ●

Partial privatization of the Mass Transit Railway Corporation (MTRC) (2000) Privatization of public housing estates retail and carparking facilities – in the form of the public listing of a real estate investment trust (REIT) (2004–05) Public consultation on partial privatization of the Airport Authority (2005) Merger of MTRC and KCRC (Kowloon-Canton Railway Corporation) (2007) Unfreezing of Civil Service recruitment in certain grades (2007) Completion of pay level survey and pay trend survey, as well as starting salaries review; Civil Servants received pay rise for the first time since 2001

(that is, Head of Department’s) Report. Reforms have been geared up following the official launch of a Public Sector Reform Programme (Finance Branch, 1989) which advocated more devolution, contracting out and private sector participation. A major innovation in the 1990s was to turn some departmental operations into self-accounting and self-financed ‘trading funds’, with full operational autonomy within financial and performance perimeters set by the relevant policy secretary in the form of a framework agreement (Cheung 1998).4 Departments have been increasingly encouraged to make greater use of private providers through contracting out of services and outsourcing (Hayllar 2005). Following the Finance Branch Review in 1994, heads of policy branches/bureaus were given concurrent responsibility both for policy control and resource allocation. The budgetary process was revamped in the form of a new-style ‘resource allocation exercise’ (Finance Branch 1995) operating along the lines of baseline budgeting (known as ‘baseline plus’). A new Star Chamber – chaired by the Chief Secretary and composed of the Financial Secretary, Secretary for the Treasury and Secretary for the Civil Service – was set up to scrutinize departments’ baseline performance and to determine the priority of new funding requests for the extension of services or introduction of new services. Figure 18.2 highlights the key elements of financial management reforms from the 1980s to 1990s within the overall setting of public sector reform. After the handover, ‘target-based management’ was emphasized, with the objective to ‘manage for results, by results’ (Tung 1997: para. 151). The new EPP aimed at achieving productivity gains through efficiency savings in operating expenditure, according to three principles: ● ● ●

To enhance productivity without affecting quality of service. To reinvest savings gained in areas of priority. To trigger rethinking of the mode and priority of existing services.

323

• Serving the Community (early 90s)

Customer Service Programme

Developing our culture of service

Financial management reforms in Hong Kong, 1980s–90s

• Improving Productivity (late 90s)

• Short term productivity gains • Fundamental Expenditure Review • Tailored management frameworks • Reinventing front-line services • Transforming support services • HR Flexibility

• Medium Range Forecast • Resource allocation • Budgetary guidelines

Enhanced Productivity Programme

Managing for performance

Allocate Resources

Living within our means

Financial Management Programme

• Managing for Results (late 90s)

Deliver Services

Plan

Target-based Management Process

Efficiency Unit (2007), http://www.eu.gov.hk/english/history/history_over/history_over.html.

Figure 18.2

Source:

• Early Reform (80s)

• Performances pledges • Call centres • Monitoring customer satisfaction • Trading funds • Helping business

Perfomance Measurement and Accountability Programme Being • Measuring performance accountable • Policy objectives • Departments • Performances Review System • Independent Commission Against Corruption Review • Code on access to information

• Policy objectives

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Departments were assisted by new flexibility measures in the procurement and movement of funds, and the setting up of ‘Save & Invest Accounts’ to keep part of the efficiency savings which they could use subsequently for innovation and development. To facilitate expenditure capping and fiscal discipline, budgeting of expenditure in money rather than real terms was enforced and a new ‘operating expenditure envelope’ system introduced from 2003–04. Policy secretaries are given flexibility ‘to deploy resources within their operating expenditure envelope, and may retain for future use part of the savings achieved’ (Leung 2003: para. 69). In the government-subvented social welfare sector, lump-sum grants (similar to the one-line vote concept) were introduced in 2001 to replace the previous system of earmarked fixed-item funding. ‘Doing more with less’ was the new catchword. Civil Service reform Following the human resources management review conducted by the Civil Service Branch in 1993, a steady process of devolution of personnel authorities from the Civil Service Branch, a central agency, to departments began, with emphasis on nurturing a performance-oriented culture. Such authorities cover recruitment, appointment, promotion, training and disciplinary decisions. In 1999, in response to the public outcry towards repeated policy blunders since the handover, and in line with the global NPM trends, the government launched a consultation document on Civil Service reform, under the title Civil Service into the 21st Century, stating at the outset that: ‘the public have not been happy with the handling of a number of specific incidents by the Government. There are also criticisms that the efficiency of certain departments has to be improved. We take public opinions seriously and are determined to look for ways to further improve the Civil Service’ (Civil Service Bureau 1999: para. 1.2). The reform aimed at three main directions of structural change (ibid.: para. 1.6): ●

● ●

An open, flexible, equitable and structured Civil Service framework, with more flexible entry and exit mechanisms to take in talent and remove non-performers at all levels. An enabling and motivating environment for Civil Servants, with a competitive but performance-based reward system to attract, retain and motivate Civil Servants. A proactive, accountable and responsible culture, enhancing efficiency and quality of service and nurturing a performance-based and service-oriented management culture.

A wide range of changes were contemplated – covering entry and exit arrangement, conduct and discipline, to pay and conditions, performance management and training and development. Though reaffirming the existing pay principles, the government undertook to conduct a starting salaries review; to consider how elements of performancebased reward systems could be progressively introduced into the Civil Service; and to consider if the pay trend survey5 mechanism could be modified and improved to allow for compatibility with a performance-based system (Civil Service Bureau 1999: ch. 3). Pay reform was at the centre of Civil Service reform. In October 1998 the Civil Service Bureau commissioned the Standing Commission on Civil Service Salaries and Conditions of Service to conduct a starting salaries review, resulting in drastic reductions of entry-point salaries for various staff grades. In 2002 the three advisory bodies on Civil

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Service pay6 set up a Task Force to review Civil Service pay policy and system (excluding judiciary salaries which were subject to a separate review). The Task Force’s final report, submitted to government in September 2002, recommended short-, medium- and long-term solutions (Task Force on Review of Civil Service Pay Policy and System 2002: paragraphs 9.14–9.16): In the short term – ● ●

To devise a practical framework and methodology for conducting a pay level survey, and to review the pay trend survey methodology; To consider appropriate interim measures for the annual Civil Service pay adjustment exercise pending the outcome of the above review;

In the medium term – ●

● ●

To consider the feasibility of introducing elements of performance pay and flexibility ‘pay ranges’ to Civil Servants, preferably in the senior tier (directorate level) initially; Should such initiatives prove feasible at the senior level, to consider further application of the new arrangements throughout the Civil Service; To consolidate job-related allowances, as part of a move towards a ‘clean wage’ policy in the long run (with all allowances and perks abolished or consolidated into basic salary);

In the long term – ●

To gradually decentralize pay administration to departmental managements, giving departments greater freedom to manage pay arrangements to suit their needs.

These recommendations are considered quite radical with far-reaching consequences to the Civil Service, and have yet to be fully accepted by the government. Meanwhile, pending the institution of proper pay adjustment mechanisms, to be worked out by a steering committee set up in April 2003, settlement was reached with the staff side to enable Civil Service salaries to be frozen in 2003 and then cut in two stages, by 3 per cent on average from 2004 and another 3 per cent from 2005 (the so-called ‘0-3-3’ package), so as to bring overall pay levels to those of 1997.7 In order to stop the practice of granting automatic annual salary increments to Civil Servants, departments were instructed to follow more strictly the requirement of the Civil Service Regulations, so that the annual salary increment (up to the maximum of the pay scale) would only be granted on the basis of a conscious assessment of staff performance (covering conduct, diligence and efficiency aspects) (Civil Service Bureau 2000a: 6–7). As a way to pursue the idea of progressively introducing some form of performancerelated pay, a pilot scheme of team-based performance reward was introduced in 2001. Departments joined the scheme voluntarily, upon agreement of the staff concerned. A team-based reward system helped to avoid the problem of subjectivity in appraisal and to promote team effort. Staff of selected outstanding teams of the departments on the scheme

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would receive a reward set at about half the monthly substantive salary. Participating departments designed their own schemes to suit their management needs, selected the units to participate in the scheme, formulated their own performance targets, and decided on the detailed assessment criteria for bonus allocation subject to meeting some broad parameters (Civil Service Bureau 2000b, 4). However, they had also to fund the reward scheme out of their own budget (for example, by utilizing EPP efficiency savings). Six departments joined the pilot scheme since October 2001, but the lack of wide interest within government in the idea has resulted in the scheme being subsequently shelved. Performance management reform Since the 1990s, for the purpose of managing for results, all government departments have been required to come up with performance targets and indicators, to show how well their operational objectives are being achieved and with what degree of costeffectiveness. Both qualitative and quantitative measures were designated, as follows: ●

●

Quality measures, used to monitor effectiveness – such as service trends and success rates to cover more strategic concerns, and response times and customer satisfaction levels to cover front-line service to the public. Quantity measures, used to monitor efficiency – such as workload, costs and productivity primarily of interest to managers responsible for service delivery, and indicating overall performance which is of interest to the community (Efficiency Unit 1995: 43).

Such performance information has to be provided in the Controlling Officer’s Reports submitted by heads of departments, as a mandatory document to accompany their annual estimates of expenditure, to the Finance Committee of Legislative Council for scrutiny each year. This is to enable both legislators and the public to pay attention not just to the amount of resources (inputs) consumed in programme delivery, but also the outputs and outcomes actually achieved by using these resources. ‘Managing for Performance’ has since become a key objective of the government, to be achieved by departments through various mechanisms: ● ● ● ● ● ● ● ●

refining performance measures managing by programme improving efficiency managing public finances managing human resources managing support services preparing departmental plans reviewing progress (Efficiency Unit 1995: 41).

A programme management system was instituted in 1993 to enable policy branches and departments to manage performance better (Efficiency Unit 1995: 45). Under this system each department develops its own programme structure, setting out the key programmes which deliver its aims and objectives. Larger programmes may be further broken down into activities. Specific officers are held responsible for each programme.

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This helps departments to focus on results in clearly defined areas of work, with clearly defined objectives and responsibilities. For each programme, departments prepare an annual programme plan to focus management attention on key objectives and on the performance measures to be used to ensure that such objectives are achieved. Resource allocation is to be linked to programme needs and objectives, as well as performance results which form part of the performance review – to check if key performance targets have been delivered and if spending is in accordance with plans. The standard process of performance management includes setting strategic objectives based on customer needs, identifying key result areas, formulating measurement criteria, gathering performance information and trying to bridge the performance gap (Efficiency Unit 2005). Information is developed and presented along the following lines: programme aims; objectives; performance measures; matters requiring attention; and financial data. Departments are expected to pay attention to the changing needs of the community; to shift from process-oriented approach to customer-oriented approach; and to development the management system needed to cater for continuous changes. An illustration of the programme plan is at Figure 18.3. Customer focus reforms The 1990s also saw the growing recognition of users of public services as consumers and customers. The adoption of ‘performance pledges’ in all government departments in 1992 (later extended to other public sector agencies and public corporations) was the most visible part of the customer focus reforms. It was the brainchild of the last British Governor, Chris Patten, who borrowed the concept from the British citizen’s charter movement and saw the need for a new ‘culture of service’ going beyond the provision of the bare minimum – a culture that recognizes the public as the paying customer: ‘An increasingly prosperous and sophisticated community quite rightly demands greater openness and accountability from the public sector which it pays for – and an official attitude of mind which regards the public as clients not supplicants’ (Patten 1992: para. 89, original emphasis). In practice, performance pledges had mainly served to strengthen managerial autonomy, helping to re-empower (and re-legitimate) bureaucratic managers (Cheung 1996a), and to de-politicize public services through a new logic that played up citizens as service consumers rather than political voters (Cheung 1996b). Under the ‘target-based management’ (TMP) introduced after the handover, all departments directly serving the public must produce performance pledges, to inform their customers what services are available, the standards set and how these standards are monitored. This is to ensure that the government provides the best possible services to the public. Specific objectives are set as follows: ● ● ● ● ●

Better manage relationships with customers. Impart a customer focus on staff. Act as a management tool in daily operations. Provide performance standards for staff. Provide a mechanism for reporting performance to customers and the community at large (Efficiency Unit 1998).

In addition to publishing performance pledges, departments with a significant public interface are also encouraged and assisted by the Efficiency Unit to set up ‘user

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Source:

Efficiency Unit (1995: 44).

Figure 18.3

An illustration of programme plan

committees’ and ‘customer liaison groups’, with the aim to involve representatives of the public in the monitoring of performance and performance standards. Corporatization and privatization Unlike many NPM reform jurisdictions, privatization and corporatization do not feature significantly on Hong Kong’s public sector reform agenda. Until the 1960s, government activities were predominantly carried out by departments staffed by Civil Servants.

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Most public utilities, including electricity, gas and public transport were operated by private companies under government franchise. The only exceptions were the railway, the airport and water which were managed by government departments. Statutory boards and authorities began to proliferate in the 1970s, such as the Housing Authority, Productivity Council, Consumer Council, Mass Transit Railway Corporation (MTRC) and Land Development Corporation. In 1981 the Railway Department was corporatized to become the Kowloon-Canton Railway Corporation (KCRC) based on the MTRC model. A new Hospital Authority was established in 1990 to manage all government and subvented hospitals within a unified institutional framework. In 1995 the Airport Authority was set up to operate the new Chek Lap Kok international airport that opened in 1998. All corporatized bodies remain under government control/ownership. Owing to the limited number of public enterprises, privatization in Hong Kong has taken place mainly in the form of contracting out of public services, through: ● ● ●

service contracts (for example, cleaning or security management contracts) and other types of outsourcing management contracts (for example, granting concession to a private company to manage car parks) build-own-operate (BOO) or build-own-operate-transfer (BOOT) schemes (for example, granting concession to a private company to build, finance and operate, or subsequently transfer to government, a new infrastructure project such as a bridge or tunnel).

After the handover, because of economic slowdown and increasing fiscal deficits, the government required departments to actively pursue contracting-out and private sector participation measures in order to ‘do more with less’ and to improve productivity. The 1999–2000 budget identified the ‘privatization of public corporations’ and ‘rethinking the mode of delivering public services, with more private sector involvement and contracting-out’ as major reform initiatives (Tsang 1999: paras. 72–94). In 2000, the Housing Authority began a phased service transfer of estate management and maintenance services to private firms or staff-initiated ‘management buy-out’ companies. Also that year, the first divestment of public assets started with the partial privatization of MTRC, involving the sale of up to 49 per cent of its shares by stages through public offering to local and overseas investors.8 In the 2003–04 budget, in order to make up the shortage of revenue, the government decided to sell and securitize a total of HK$112 billion worth of public assets in the next five years (Leung 2003: para. 106). A major exercise of privatization of government assets was the divestiture of the Housing Authority’s retail and car-parking facilities in public housing estates. This involved the government first setting up a new company, the Link Limited, and divesting 100 per cent of the government ownership by way of listing as a real estate investment fund (‘Link-REIT’) to both institutional and retail investors; and then injecting the retail and car-parking assets into the Link, which would own and manage the facilities. Because of some public housing tenants challenging the divestment through judicial review, the final listing of Link-REIT was delayed until mid-2005. In the 2004–05 budget, the Financial Secretary also announced the intention to implement the privatization of the Airport Authority and the merger of the two railway corporations (MTRC and

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KCRC) within 2005–06 (Tang 2004: para. 93). The legislation enabling the railways merger was eventually enacted in July 2007, but the plan to partially privatize the Airport Authority was not pursued further because of the improved fiscal condition. Evaluation Responding to crisis of legitimacy rather than efficiency The Hong Kong public sector reform experience did not strictly fit into the Western NPM route which spun off from an efficiency crisis of the state and related factors – such as government oversize, macroeconomic and fiscal crises, New Right ideology, or party-political incumbency in favour of cutbacks (Hood 1996a). Before the handover, Hong Kong had not experienced any prolonged economic or fiscal crisis. Government overloading was not a problem in view of the relatively small size of the public sector and the low level of public expenditure in relation to the economy (historically not more than 20 per cent of gross domestic product). On the contrary, there had been persistent demands for more public services provision and intervention over the years, despite the official ‘positive non-interventionist’ philosophy (Cheung 2000). Until repeated policy blunders and mismanagement and sleaze cases involving Civil Servants (high and low) in the post-1997 SAR tarnished the previous ‘infallible’ legacy of the Civil Service, the government had enjoyed a high reputation for being efficient and effective. The motive to reform was lacking because given the widely accepted perception of already having an efficient and effective Civil Service, the efficiency paradigm of public sector reform did not appeal much to the bureaucracy or the public at large. Neither was the urgency of reform strongly felt. The need for change was only given lip-service by Civil Service managers and there were many in government who were sceptical of reform. Hong Kong did not experience a collapse of the old public administration regime as observed in Western countries (Hood 1996b). Any trace of following the global NPM fashion could at best be regarded as policy ‘bandwagoning’ (Ikenberry 1990), that is, using methods popularized by external practice to help achieve domestic ends or legitimize an agenda that addressed a domestic problem. The domestic agenda of Hong Kong’s reforms in the 1990s had to do with macropolitical changes in the territory’s transition towards sovereign change in 1997, which resulted in the decline of the political authority and relative autonomy of the then British administration. It was imperative that the government be reformed in such a way as to shore up its leadership in transitional governance. Meanwhile, the expansion and growing organizational complexity of the public sector, within a more turbulent and pluralist context of public policy and public services, had also created problems of policy leadership and co-ordination within the old structure put in place since the government machinery was last reconfigured during the McKinsey reform of the 1970s. Public sector reform was thus an indigenous bureaucratic strategic response, appropriately informed by the Western NPM experience, to reshape the public sector’s institutional configuration in face of a looming crisis of external legitimacy and internal co-ordination. It helped to down play political tensions and to ‘managerialize’ otherwise politically loaded policy and administrative issues. Clinging on to the traditional mode of bureaucratic legitimation based on Weberian control and accountability would have largely constrained the bureaucrats’ power. A shift towards the microeconomic notion of efficiency in service provision as justified by NPM rhetoric helped to de-politicize performance evaluation

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of the public sector, and open the way to a reinvention of bureaucratic power under the new managerialist image. ‘Efficiency’ as a reform theme provided a ready and convenient platform for the reconfiguration of institutional relationships. On the one hand, departments had always sought to increase their operating autonomy under the supervision of their policy secretary, and to be free to deal with their clienteles and map out their own managerial strategies. Emerging professional power in some departments and statutory authorities also exerted demand for a power-sharing regime vis-à-vis their administrative officer counterparts who monopolized the policy centre. In a sense, public sector reform represented a bureau-shaping strategy à la Dunleavy (1991: chs 7–8), allowing policy bureaus to have their policy and resource-control powers fully legitimated as policy managers, in exchange for granting managerial and micro-budgetary autonomies to departmental managers as executive agents. The re-delineation of bureau-department relationship, though compatible with the principal–agent relationship under the NPM regime, could also be seen as a further development of the process of politicization and ministerialization of the administrative-class Civil Servants (Huque et al. 1998: 146–9). The politics of Civil Service reform At the time of the political handover, the Civil Service was very much cherished as an important legacy of British rule – a symbol of professionalism and meritocracy. The colonial government did not have the intention or political will to push for significant management changes, for fear of instigating resistance from Civil Servants and their unions, or from China which harboured immense suspicion about any British move to alter the status quo prior to the handover. A booming economy, huge fiscal surplus and the nature of pre-1997 politics together dictated that the Civil Service system be kept intact as far as possible. So despite NPM ideas having assumed global influence by the 1990s and Hong Kong already embracing a public sector reform agenda, reforms were prevented from moving forward for want of the necessary ‘politics’, or to view it from another angle, because of the constraints imposed by the politics of the time. The importance of politics was again witnessed when Civil Service reform was finally launched in 1999, though in a reverse fashion. After the handover, the Asian financial crisis had transformed the scenario of reform. Public scepticism of Civil Service performance and of its super-stable employment system and pay regime, made worse by various government setbacks and maladministration incidents, had quickly snowballed into a credibility crisis of the new SAR government that ironically was still being run by the same bureaucracy much praised previously. Post-1997 Civil Service reform could be conceived within the same administrative reform paradigm as that of the colonial period whereby, ‘through administrative restructuring and redefinition of institutional relationships, the role and power of the administrative bureaucracy can be reaffirmed within a changing and socially more politicized setting beyond the control of the old regime’ (Cheung 1999: 247). Such an understanding of the political agenda of Civil Service reform pursued by the bureaucratic elite to strengthen its crisis-weathering capacity was, to some extent, corroborated by accusations in some quarters, particularly the Civil Service staff unions, that the reform was an exercise targeted mostly at the bottom rather than the top. The reform created undue staff anxieties and misgivings, especially among rank-and-file

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and middle-levels Civil Servants, who saw it not as a source of rejuvenation and performance improvement, but a means to downsize and denigrate the Civil Service. Some alleged that the administrative elite had sacrificed their subordinates’ interests in order to contain the impact of a larger political crisis. Eventually, a ‘political’ tug of war was played out between staff and management, and politics was once again at the centre of reform. What was ironical was that while the government’s crisis of efficacy had opened up the window of opportunity for Civil Service reform, the controversies triggered by the reform proposals and the ways they were handled, had in turn fuelled anti-government actions, thereby deepening the legitimacy crisis already suffered by the government. The changing ‘public service bargain’ Hood (2002) argues that the politics of public sector reforms could be understood in terms of a ‘public service bargain’ (PSB) or a tug of war between politicians and bureaucrats, with the ultimate reform model being an outcome of political competition and negotiation. Hong Kong in the 1990s did not yet have a politics-bureaucracy bargain per se because its government was run by bureaucrats who controlled agenda-setting, including that for public sector reform. The bureaucrats-driven reform aimed at providing a new buffer of managerialism to shield bureaucrats from growing societal politicization. Post1997, however, public sector reform had contained some Civil Service-bashing connotations, with a concurrent move to downsize the bureaucracy through extensive contracting out, outsourcing, non-Civil Service contract employment, and voluntary retirement. The new SAR government’s determination to review or ‘modernize’ the Civil Service pay system, and to implement other NPM-like practices, marked the advent of a new era. The previous pro-Civil Service tradition had become gradually eroded by changing public sentiments, and the coming to power of a new administration perceived to distrust the loyalty of the British-groomed bureaucracy and to be eager to blame it for government failures. Instead of relying on bureaucratic excellence as the remedy for new political shortcomings, as in the colonial past, Tung Chee-hwa opted for a political solution after the bureaucratic solution failed during his first term. Public service reform was now used to legitimize both an overhaul of the Civil Service as well as a restructuring of government centre. In the new politics-driven phase of Civil Service reform and public sector reform since 2002, both the reform rhetoric and many of the proposed measures began to align more closely with the global NPM discourse. However, it is still clear that the impetus to change had come primarily from domestic problems of politics and administration rather than a simple wish to emulate what other countries were doing. Current developments If Civil Service reform implemented in economic adversity and amid a downsizing environment had harmed the welfare and morale of the bulk of the Civil Service, the new ‘ministerial’ system of political appointments implemented since mid-2002 had hit at the very heart of the Civil Service bureaucracy – namely, the interest and morale of the elite ‘administrative class’ (the Administrative Officers or AOs). This so-called ‘disempowerment’ of AOs had, however, proved to be short-lived. It came to a halt when Tung Chee-hwa resigned as Chief Executive in March 2005 and was replaced by former Chief Secretary for Administration, Donald Tsang, an ex-AO for over three decades rising to the rank of head of Civil Service. Tsang was keen to groom the Civil Service as

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the backbone of his new administration. Though accepting that political appointments were to stay and that some ‘outsiders’ should be invited to join the governing team, he encouraged some Civil Servants, who wanted to participate in politics, to leave the Civil Service to take up political appointment (Tsang 2005). Whereas Tung’s reform in 2002 was geared towards recruiting outsiders into government, and to only retain some former Civil Servants as ministers as a transitional arrangement, Tsang seemed to opt for a reverse direction – retaining a few ‘outsiders’ in his administration but relying on the Civil Service (in particular the AOs) as the principal source of ministerial talent from whom to recruit his future ministers and junior ministers. Tung’s new ministerial system of political appointments was now turned around to become a pro-Civil Service regime to help consolidate the AOs’ power politically. What would emerge is a form of government by ‘political bureaucrats’,9 more inclined to adopt a pro-Civil Service reform agenda as in the past. As the economy rebounds recently, the new Tsang administration has unfrozen Civil Service recruitment in certain grades. In mid-2007, following the completion of a pay level survey (which found Civil Service pay levels by and large not deviating from private sector levels by more than 5 per cent one way or the other), a newly conducted pay trend survey, and a starting salaries review, both serving Civil Servants and new recruits are accorded a pay rise for the first time in several years. What should be noted, though, is that this does not amount to a simple reversion to the self-preservation and reinvention mode of public sector reform prevalent in the 1990s. New thinking in the role and functions of government has meanwhile set in, which, sustained by a government of political bureaucrats prodded by rising public expectations and a self-imposed economic development agenda to go for more state interventions and expansion, would use public sector reform to facilitate the grooming of a more efficient and effective Civil Service to help achieve its broadening goals and targets. Notes 1. In 2004 the Education Department was abolished and its establishment fully integrated with that of the Education and Manpower Bureau, overseen by the permanent secretary of the bureau. In the Housing, Planning and Lands Bureau, the permanent secretary in charge of housing affairs now heads the Housing Department machinery. Similarly, while the Labour Department still exists, its directorship is concurrently held by the permanent secretary in charge of labour affairs in the Economic Development and Labour Bureau. 2. Britain, as Hong Kong’s sovereign power during colonial rule, provided models and practices for the colonial administration to emulate whether in policy or management. British government advisers were often invited to offer solutions to local problems. 3. In the past internal ‘provider’ departments (like Printing Department and Government Supplies Department) were allocated block budgets to cater for all needs for supply from user departments. The abolition had resulted in user departments being funded directly and having full control of their resources and purchase actions. 4. Six trading funds were set up before 1997: the Companies Registry Trading Fund, Land Registry Trading Fund, Post Office Trading Fund, Office of the Telecommunication Authority Trading Fund, Electrical and Mechanical Services Trading Fund, and Sewage Service Trading Fund. The Sewage Service Trading Fund was subsequently abolished in 1998 when it proved to be financially unsustainable and the services had then reverted to general revenue financing. No new trading fund has been set since the establishment of SAR in 1997. 5. The pay trend survey system in Hong Kong is a mechanism whereby the government makes adjustments to Civil Service pay scales on the basis of findings of an annual pay trend survey which establishes the extent of pay adjustments made by a representative sample of private sector companies to their employees over the year, under the principle of ‘fair comparison’ with the private sector.

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6. On civilian non-directorate civil servants, on directorate civil servants, and on disciplined services (including the police force) respectively. 7. Article 100 of Hong Kong’s Basic Law guarantees that the salaries and conditions of civil servants already serving in government prior to the handover should not be worse off than those prevailing at the time of handover. 8. So far, 24 per cent of the shares have been sold to private investors. The second phase of public offer has been delayed because of the unfavourable economic and investment climate which might not achieve a good selling price for the government. 9. In Tsang’s new administration commencing in July 2007, out of the ministerial team of three senior secretaries (chief secretary, financial secretary and secretary for justice) and 12 secretaries, only six are from non-Civil Service background. The rest were predominantly AOs.

References Burns, J. (2004), Government Capacity and the Hong Kong Civil Service, New York: Oxford University Press. Cheung, A.B.L. (1992), ‘Public sector reform in Hong Kong: perspectives and problems.’ Asian Journal of Public Administration, 14: 115–48. Cheung, A.B.L. (1996a), ‘Efficiency as the rhetoric: public-sector reform in Hong Kong explained’, International Review of Administrative Sciences, 62: 31–47. Cheung, A.B.L. (1996b), ‘Public sector reform and the re-legitimation of public bureaucratic power: the case of Hong Kong’, International Journal of Public Sector Management, 9: 37–50. Cheung, A.B.L. (1998), ‘The “Trading Fund” reform in Hong Kong: claims and performance’, Public Administration and Policy, 7: 105–23. Cheung, A.B.L. (1999), ‘Administrative development in Hong Kong: political questions, administrative answers’, in H.K. Wong and H.S. Chan (eds), Handbook of Comparative Public Administration in the AsiaPacific Basin, New York: Marcel Dekker, pp. 219–52. Cheung, A.B.L. (2000), ‘New interventionism in the making: interpreting state interventions in Hong Kong after the change of sovereignty’, Journal of Contemporary China, 9: 291–308. Civil Service Bureau, Hong Kong SAR Government (1999), Civil Service into the 21st Century: Civil Service Reform Consultation Document, Hong Kong: Printing Department. Civil Service Bureau, Hong Kong SAR Government (2000a), Civil Service Reform Newsletter, no. 11 (May), Hong Kong. Civil Service Bureau, Hong Kong SAR Government (2000b), Civil Service Reform Newsletter, no. 15 (December), Hong Kong. Dunleavy, P. (1991), Democracy, Bureaucracy and Public Choice: Economic Explanations in Political Science, London: Harvester Wheatsheaf. Efficiency Unit, Hong Kong Government (1995), Serving the Community, Hong Kong: Government Printer. Efficiency Unit, Hong Kong SAR Government (1998), Survey on Performance Pledge, August, Hong Kong, available at http://www.info.gov.hk/eu/english/pm/pm_ref/files/ppflyer.pdf (accessed 31 August 1998). Efficiency Unit, Hong Kong SAR Government (2004), available at: http://info.gov.hk/eu/english/history/ history_mf/history_mf(2002).html (accessed 19 May 2004). Efficiency Unit, Hong Kong SAR Government (2005), available at: http://www.info.gov.hk/eu/english/pm/ pm_pm/pm_pm.html (accessed 4 October 2005). Efficiency Unit, Hong Kong SAR Government (undated), available at: http://www.info.gov.hk/eu/eng/ahis/ hisfr1.htm, link updated: http://www.eu.gov.hk/english/history/history_over/history_over.html (accessed 18 September 2007). Finance Branch, Hong Kong Government (1989), Public Sector Reform, Hong Kong: Government Printer. Finance Branch, Hong Kong Government (1995), Practitioner’s Guide: Management of Public Finances, Hong Kong: Government Printer. Harris, P. (1978), Hong Kong: A Study in Bureaucratic Politics, Hong Kong: Heinemann Asia. Harris, P. (1988), Hong Kong: A Study in Bureaucracy and Politics, Hong Kong: Macmillan. Hayllar, M. (2005), ‘Outsourcing: enhancing private sector involvement in public sector services provision in Hong Kong’, in A.B.L. Cheung (ed.), Public Service Reform in East Asia: Reform Issues and Challenges in Japan, Korea, Singapore and Hong Kong, Hong Kong: Chinese University Press, pp. 193–230. Hood, C. (1996a), ‘Exploring variations in public management reform of the 1980s’, in H. Bekke, J.L. Perry and T.A.J. Toonen (eds), Civil Service Systems in Comparative Perspective, Bloomington, IN: Indiana University Press, pp. 268–87. Hood, C. (1996b), ‘Beyond “progressivism”: a new “global paradigm” in public management?’, International Journal of Public Administration, 19: 151–78. Hood, C. (2002), ‘Control, bargains, and cheating: the politics of public-service reform.’ Journal of Public Administration Research and Theory, 12: 309–32.

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Huque, S., Lee, G. and Cheung, A.B.L. (1998), The Civil Service in Hong Kong: Continuity and Change, Hong Kong: Hong Kong University Press. Ikenberry, G.J. (1990), ‘The international spread of privatization policies: inducements, learning and “Policy Bandwagoning”’, in E.N. Suleiman and J. Waterburry (eds), The Political Economy of Public Sector Reform and Privatization, Boulder, CO: Westview Press, pp. 88–110. King, A.Y.C. (1981), ‘Administrative absorption of politics in Hong Kong: emphasis on the grass roots level’, in A.Y.C. King and R.P.L. Lee (eds), Social Life and Development in Hong Kong, Hong Kong: Chinese University Press, pp. 127–46. Leung, A.K.C. (2003), The Budget 2003–04, speech by the Financial Secretary moving the second reading of the Appropriations Bill (2003), 5 March, Hong Kong: Printing Department. McKinsey & Co. (1973), The Machinery of Government: A New Framework for Expanding Services, Hong Kong: Government Printer. Organisation for Economic Co-operation and Development (OECD) (1995), Governance in Transition: Public Management Reforms in OECD Countries, Paris: OECD. Patten, C. (1992), Our Next Five Years: The Agenda for Hong Kong, address by the Governor at the opening of the 1992–93 session of the Legislative Council, 7 October, Hong Kong: Government Printer. Tang, H. (2004), ‘The budget 2004–05’, speech by the Financial Secretary moving the second reading of the Appropriations Bill 2004 at the Legislative Council, 10 March, Hong Kong. Task Force on Review of Civil Service Pay Policy and System (2002), Phase One Final Report, September, Hong Kong: Printing Department. Tsang, D. (1999), ‘The 1999–2000 budget: onward with new strengths’, speech by the Financial Secretary moving the Second Reading of the Appropriation Bill 1999 at the Legislative Council, 3 March, Hong Kong. Tsang, D. (2005), ‘Campaign speech for chief executive election’, 3 June, Hong Kong, available at: http://www. donald-yktsang.com/press_speeches_e.html (accessed 5 June 2005). Tung, C. (1997), Building Hong Kong for A New Era, address at the Provisional Legislative Council meeting, 8 October, Hong Kong: Printing Department.

19 Public sector management reform in Japan Kiyoshi Yamamoto

Introduction The Constitution of Japan stipulates the Parliament (Diet) as ‘the highest organ of state power’ and the ‘sole law-making organ of the state’ (Article 41). The legislative branch is a bicameral body, composed of the House of Representatives (lower house) and a somewhat less influential House of Councillors (upper house). Parliament selects the Prime Minister, to whom the Cabinet is collectively responsible, rather in the fashion of the British Parliament. Executive power is vested in the Cabinet, making the Cabinet, rather than the Diet as a whole, the dominant actor in the system. The Cabinet consists of the Prime Minister and Ministers of State appointed by the Prime Minister. In the exercise of executive power, the Cabinet is collectively responsible to the Diet. At present, there are 17 Ministers of State who are the heads of the respective ministries. The central departments charged with public sector reform are the Cabinet Office, the Ministry of Finance (MOF) and the Ministry of Internal Affairs and Communications (MIC). The Cabinet Office is responsible for planning and framing related to the basic principles, the MOF manages public finance, and the MIC is responsible for controlling the number of Civil Servants and evaluating the performance of all government agencies. The role of the Cabinet Office is to exercise control and supervision over the various government agencies, prepare the budget, conduct affairs of state, manage foreign affairs and conclude treaties with the Diet’s approval. The majority of bills passed by the legislature are formulated by the Cabinet. The Cabinet also appoints the Chief Justice and other judges of the Supreme Court (Article 79). The Emperor, whose position was the Head of State before the Second World War, now plays only a symbolic role in the parliamentary process. The postwar constitution accords extensive authority to local governments. Residents elect local assemblies and directly elect the chief officer through a process known as the ‘President system’ or the ‘Chief system’. However, central government is still able to exert considerable control over local authorities through the financial support system, although decentralization has been promoted by the government. Policymaking in Japan is dominated by the Cabinet consulting with a policy group of the majority party, the bureaucracy and industrial interests. Since 1955 the majority party in the lower house, with a single short exception between October 1993 and June 1994, has been the Liberal Democratic Party (LDP), a conservative party rather than a liberal party. The LDP ensures the continuance of the central policymaking triad, although this statement should be qualified by recognition of the considerable fragmentation of the bureaucracy into specific issue areas. Thus it has been said that alliances formed between LDP politicians specializing in certain policy areas and senior bureaucrats in the relevant ministries promoted the sectionalism of bureaucrats by ministry. These networks could be thought of almost as sub-governments (Hayao 1993).

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Development of public sector reforms Japan’s bureaucrats have played a crucial role in policymaking. They draft laws and programs, and implement policies. The bureaucracy’s influence has attracted the best and the brightest; including the graduates of the Faculty of Law at the University of Tokyo, the most prestigious university in Japan. Most of the top Civil Servants are graduates of this faculty, and it is closely linked to influential powers in policymaking. During the period of economic growth after the 1960s, policy development was left to the senior bureaucrats, enabling politicians to concentrate on distributing the fruits borne from the policies the bureaucrats created. In addition, the people’s needs have varied over time, making it difficult for politicians and Civil Servants to share common goals such as boosting the nation to match the level of the West. However, after the early 1980s, the separation in role in policymaking between politicians and bureaucrats was not seen to work well as previously due to a stagnant economy and stagnant tax revenues. The mutually advantageous system eventually collapsed, and from the late 1990s the relationship entered a new stage; politicians were now to play a central role in policymaking and eliminate the undesirable effects of ‘sectionalism.’ The movement of bureaucrats into less influential positions was also accelerated by economic mismanagement and then a succession of scandals in the 1990s. Ill-advised policies that first inflated the bubble economy and then deflated it, sparked a prolonged recession. Bureaucratic negligence and connivance with drug companies allowed HIV-tainted blood products to be released. The public sector reforms implemented in the last three decades may be divided into three stages (see Figure 19.1) according to the respective specific organs that promoted the reforms. The first stage was developed by the Second Provisional Commission on Administrative Reform (SPCAR), which was established in 1981 and was chaired by Mr Toshio Doko, a business leader. Following defeat in the general election in 1979, Component and scope

Full scope (finance, performance, organization)

Organizational

Privatization

Stage1

Stage 2

Stage 3 Time

Figure 19.1

Development of public management reforms in Japan

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the government’s aim was to reconstruct public finance without a tax hike or downsized government spending. In the election, Prime Minister Masayoshi Ohira advocated the introduction of consumption tax in efforts to balance the budget; Japan had the worst fiscal position among the Organisation for Economic Co-operation and Development (OECD) countries if measured by the accumulated deficits to gross domestic product (GDP), owing to two oil shocks in the 1970s. The SPCAR proposed several measures for administrative reform, including the basic reconsideration of systems, policies and spheres of administrative responsibility. Following a SPCAR report, the government created the Provisional Council for the Promotion of Administrative Reform (PCPAR). This was convened three times between 1983 and 1993. The SPCAR’s proposals implemented in the first and second stages of Figure 19.1 included privatizing three major public corporations, eliminating positions in the central government and strengthening overall co-ordination mechanism within the government. The third and biggest wave in public sector reforms was led in 1996 by Prime Minister Ryutaro Hashimoto. As Muramatsu and Matsunami (2003) remark, in the late 1980s and early 1990s during the bubble economy and a period of political fluidness in which the LDP did not command a majority seat in either house in the period, politicians were not forced to face up to fiscal issues and public management reforms. The 1990s in Japan are called the lost decade. In public finance, the ratio of national bond issuance to the budget dropped in the 1980s (32.6 percent in 1980 to 10.1 percent in 1989), before increasing again to 28.0 percent in 1995. The Administrative Reform Council (ARC) chaired by the Prime Minister was established in November 1996. The final report published in December 1997 proposed reforming state governance through strengthening Cabinet mandates, separating policy and execution, enhancing accountability and transparency, improving efficiency and reforming the Civil Service system. The power of the Cabinet, and in particularly that of the Prime Minister, had increased by having a larger number of staff in the Cabinet Secretariat and Cabinet Office, so reforms of the Civil Service system were aimed at, first, establishing an independent organization separated from the government aims that focused more on policymaking in the central government; second, more efficient implementation or execution brought about by competitive tendering; and third, promoting the competence and motivation of civil servants by instituting performancebased management. The contents of the report were comprehensive and many new public management (NPM) instruments and methods were introduced into the public sector, while customer orientation was little considered. The reform programs proposed in the final report were completely enacted into law between 1997 and 2000, a significant point of difference from the earlier programs. It is also noteworthy that Prime Minister Hashimoto had rich experience and knowledge of administrative reforms, which had included a visit to the UK to learn firsthand of the system there. He also held the chair of the LDP’s Policy Research Council. Some scholars insist that NPM emerged suddenly in Japan’s public administration, although it might rather be considered to have just taken some time to prepare the reform scenario. As Yamamoto (2004) mentions, Prime Minister Hashimoto is regarded as a ‘policy entrepreneur’ (Kingdom 1984) in deciding reforms. From the Hashimoto Administration to the present Abe Administration (since 2006), succeeding Cabinets, especially those under Prime Minister Junichiro Koizumi (2001 to 2006), progressed the restructuring reform in Hashimoto’s charismatic style. The

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larger part of the reforming policies was Hashimoto’s legacy, although Prime Minister Koizumi was first to use the term NPM in the basic policies of 2001. The reforming process of the past 30 years has three characteristics. The first is the development of reform from the periphery to the core of the government; public sector reform initially began in public corporations and agencies, then penetrated the central departments. This reform strategy is found in the area of financial management and is partly caused by shortages of skills in business management methods and of the necessary time to learn them. The second is supplementary adoption of the current management system. New public management postulates result-oriented control in exchange for granting greater autonomy in inputs or processes. However, performance-based budgeting or a performance evaluation system, a result-oriented policy tool has been introduced while still maintaining the input control system or line-item budgeting. This is partly caused by a fear of losing authority. In other words, there is little development thus far of a new accountability framework for results. The third characteristic is aimed at appealing to the public; organizational and personnel reforms such as abolishing or consolidating ministries or downsizing the Civil Service are evident to and easily understandable for the public. Management reforms Organizational management As mentioned earlier, the privatization of three public corporations was recommended by the SPCAR. The privatizing of the Japanese National Railways (JNR) was the main target for the reform, because JNR received many subsidies (1.4 percent of general budget for 1983) from the government and accumulated deficits, which was in contrast to the net surpluses accumulated by the other two corporations. The government established the JNR Reconstruction Supervision Committee in 1983 to prepare plans to divide and privatize it on the recommendation of the SPCAR. The Committee published a report in 1985 proposing the establishment of six regional passenger railway companies and one freight railway company. The necessary legislation was enacted in 1986, and in April 1987 JNR was reorganized into seven railway companies and other organizations. Similarly the Nippon Telegraph and Telephone Public Corporation was reorganized into a new company, the Nippon Telegraph and Telephone, Inc. (NTT) in April 1985. At the same time, as deregulation of telecommunications was enacted, NTT was shifted from its previous monopoly situation into a competitive market. The Japan Tobacco and Salt Public Corporation (JTS) was also reorganized into Japan Tobacco, Inc. (JT) in April 1985. In recent times, Prime Minister Koizumi sought to privatize postal services as part of the reforming of public sector financial institutions. The postal services comprised the postal mail, postal savings and postal life insurance services. The latter two services have been flowed into a trust fund controlled by the MOF that provides investments and loans to fund government activities. However, this privatization halted the automatic injection of fiscal and loan program funds and, therefore, led to fiscal investment and loan system reform. Before privatization, the majority of post offices were operated by specified postmasters, positions which have been abolished through privatization. The postmasters were traditionally influential persons in the local area and so exerted a great influence on the LDP’s decision-making. Consequently, the issue of whether or not the

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postal services should be privatized created division among LDP members. When the reforming plan on postal services was voted down in the House of Councillors (upper house), Prime Minister Koizumi dissolved the House of Representatives (lower house) in order to ask the people whether it should be privatized or not. This was brought about by the constitutional rule that dissolution of the House of Councillors shall not be allowed by the Constitution (Article 46). In September 2005, the LDP led by Mr Koizumi won a landslide victory in the general election. As a result, Japan Post, a public corporation for postal services, was privatized in October 2007. In ARC’s final report, the separation of execution from policy was legislated as an ‘outsourcing policy’1 in parallel with reorganization of the central government ministries whose number was reduced from 22 to 13. The new execution organization is called the Independent Administrative Institutions (IAIs). There were 57 IAIs at the starting point of April 2001. The IAIs are legally separated from the central government ministries and are modelled on the UK’s executive agencies, although the British agencies are part of the state administration. They operate under a law of General Rules for IAIs. Under this statute, the competent minister sets the IAI’s medium-term (three to five year) goals, comprising decisions concerning the budget, the financial plan, efficiency improvements and service quality. The IAI then drafts a medium-term plan, which is designed to achieve the goals it has been set, and submits the plan to the minister for approval. Within the terms of the plan, the IAI enjoys full discretion to manage its resources, although capital expenditures are subsidized by the government. The Evaluation Committee within each responsible ministry monitors the performance of the IAIs on a yearly basis. In addition, the Committee for Evaluating Policies and IAIs established in the Ministry of Internal Affairs and Communications examines the evaluation results and may recommend to the responsible minister the possible privatization or abolition of the IAI in question at the end of the medium term. In a similar vein, national universities, which were previously institutional branches of the Ministry of Education, were also corporatized into national university corporations (NUCs). The governance and management systems are similar to IAIs, although academic autonomy specific to universities is considered in the appointment of the president and the preparation of the draft medium-term goals. The academic and administrative staff of the national universities became non-Civil Servants in this move. In policymaking, the most important organizational reform proposed by Prime Minister Hashimoto was to set up the Cabinet Office which has strengthened the power of former Prime Minister’s Office in national policy formulation. The Council on Economic and Fiscal Policy (CEFP) in the Office, whose model is the US President’s Council of Economic Advisers composed of economists seconded from universities, plays a crucial role in policy making, rather than functioning as an advisory body. The CEFP is led by the Prime Minister and the State Minister of Economic and Fiscal Policy who is in charge of managing the Council. Other members are the Chief Cabinet Secretary, the Minister of Internal Affairs and Communications, the Minister of Finance, the Minister of Economy, Trade and Industry, the Governor of the Bank of Japan, two academics and two business executives. When Mr Koizumi was elected as Prime Minister in 2001, he utilized the CEFP in policymaking by appointing his non-official confidant, Professor Heizo Takenaka of Keio University, as the responsible minister alongside two business leaders and two economic scholars as the non-political members. The Koizumi Administration, whose supporters came not from the LDP but rather from the public,

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intended to formulate and implement policies through the CEFP. Practically, Prime Minister Koizumi promoted the NPM-based reform by having non-political members make a policy proposal and then have the Council authorize it. He successfully invented the system to formulate a basic framework of annual policies by determining ‘Basic Policies for Economic and Fiscal Policy for Structural Reform’ at the Cabinet council in June 2001. Since then, ‘Basic Policies’ has become the standard, shifting the functions of policymaking from bureaucrats to the Cabinet Office and CEFP. Performance management Before the ARC’s proposal for policy evaluation, there existed semi-external and external ex post evaluation institutions in the government system, although they were not comprehensive in their scope and perspectives. The former involved administrative inspections by the Management and Co-ordination Agency (MCA) which was established within the Prime Minister’s Office in 1984. Administrative inspections scrutinized the operation of government programs and evaluated them. The MCA could also make recommendations to the competent minister based on the results of investigations. The latter involved auditing by the Board of Audit (BOA). The BOA was independent of the Cabinet and therefore the auditor or evaluator was an external party, whereas the MCA was contained within the Cabinet. The BOA examined the accounts of government agencies in terms of compliance with law, economy, efficiency, and effectiveness. That is, the BOA conducted its audits from the viewpoints of (1) whether or not projects and programs were administered in conformity with the budget, laws and regulations, (2) whether or not they were implemented economically and efficiently, and (3) whether or not they achieved the intended outcomes. The first is known as a regularity audit and the second and third are performance or value for money audits. The BOA could also make recommendations regarding the programs to improve performance. On the other hand, each ministry had, to some extent, implemented ex ante evaluations for budget or planning proposals. In some public works such as road construction or flood prevention projects, cost–benefit analysis had been required to ensure that the expected benefits would be larger than the expected costs. However, from the perspective of the government management cycle, ex ante and ex post evaluations were isolated from the total process of the ‘Plan, Do, Check and Action (PDCA)’ cycle (Walton and Deming 1986). Although both the MCA and BOA checked the programs, there was no instrument to feed the results into the plan or budget. Likewise, in the implementation process, the actual performance or result was not compared to the ex ante evaluation once planning or the budget proposal was approved. In addition, ex ante evaluation fell short in its objectivity, since it involved an in-house evaluation and aimed at validating the proposals. Moreover, there was no systematic checking mechanism for the evaluations. Considering these constraints, the Policy Evaluation Act of 2001, which was proposed in Hashimoto’s final report, requires that every government ministry or agency conduct an evaluation of its policies and programs. Notably every government agency must implement an ex post evaluation on all programs on a yearly basis. This is a type of performance measurement which is peculiar to NPM and is similar to the Government Performance and Results Act of 1993 (GPRA) in the USA; performance indicators shall be shown against the targets by program. Also ex ante evaluations were expanded to official development assistance (ODA) and research and development (R&D) projects other than public

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works. Further, a comprehensive evaluation which is a kind of program evaluation (GAO 1989) was introduced into the government. In order to complete the PDCA cycle, the Act requires government agencies feed the evaluation results into policymaking. Another type of NPM instrument was recently introduced by the Koizumi Administration in 2006. The Reforming Act of Public Services requires government agencies and related organizations to open competitive tendering on public services to the public and private sectors. The provider shall be determined in terms of cost and quality of services. Evidently the tendering system adopts the concepts of market mechanism and result orientation, and consequently it might be considered as Japan’s version of market testing (Cabinet Office 2006). The targets for competitive tendering are the selected public services. An oversight body established in the Cabinet Office monitors the entire process of tendering. Financial management The SCPAR and the ARC little discussed financial management or budgeting systems, although fiscal policy was well studied. The one exception was the IAIs discussed by the ARC, whose final report proposed that the finance of IAIs should use corporate accounting or Generally Accepted Accounting Principles (GAAP) in the private sector. The NPM-based financial management reforms were developed by the Prime Minister and non-political members of the CEFC. The responsible minister, Takenaka, and two economic professors among the members knew of the reforms in other OECD countries. The Basic Policies for 2001 which was initially prepared by the Koizumi Cabinet clearly recognized NPM as an important vehicle for promoting public sector reform. In the statement, citizens are regarded as customers and NPM is defined as ‘an innovative idea on government management to provide more efficient and better quality of services through introducing business management methods’. Following the definition, it describes that the doctrine of NPM is based on the principles of competition, result-oriented evaluation, and separation of policy and execution. In addition, the CEFP stated the agenda of the public sector accounting reforms as follows: ● ● ●

scope of introducing corporate or accrual accounting into the public sector recognition and valuation of balance sheet items survey of accrual-based budgeting in other countries.

However, the progress of financial management reform did not occur quickly. The focus was on the budget formulation principles to balance the budget because of large accumulated deficits. In budget management, a trial of performance-based budgeting was introduced in 2004. The trial performance target is set in numerical measures, while flexibility in management – such as carrying the budget forward to the succeeding year – is enhanced. Although the trial was moved into the second stage in 2006, the amount of budget and the items it contained were still relatively few. In other words, the scheme is a special case of adopting NPM-based budgeting. Accrual-based financial reporting has been introduced steadily into the public sector. The consolidated financial reporting for the government that includes the General Account, Special Accounts and IAIs has been prepared since 2005. The 2007 Act for Special Account requires each ministry to prepare the financial statements for the Special

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Account in an accrual basis. By contrast to the previous accrual financial reporting as a supplement, the financial statements are placed in the financial management system, while budgets and accounts remain on a cash basis. Until 2007, even though accrualbased financial reporting was prepared, it constituted only supplementary information separated from the budget system. Accordingly it can be said that Japan’s financial management practices are being moved toward cash-based budgeting and accrual-based accounting. However, as seen in the area of performance management, the government has been seeking to complete the PDCA cycle, in particular by linking performance to budgeting. The Basic Policies for 2007 indicates that the relationship between the CEFP and policy evaluation shall be strengthened, and the unit for policy evaluations shall be harmonized with the item for budgets and accounts within 2007. Despite the plural system, accrual information provides stock data on assets and liabilities other than cash flow in monetary terms. Prime Minister Shinzo Abe, successor to Mr Koizumi, proposed to downsize state assets and debts through selling real assets. It was expected that the balance sheet could provide useful information on asset and debt management. Since accrual-based accounting has been adopted only in limited areas of the public sector, it is not easy to obtain information that is useful and timely for decision-making, such as for service cost and program cost, in an accrual basis. There are few connections between the financial accounting and management accounting systems. Personnel management For a long time Japanese bureaucrats have played a key role in policymaking and implementation. In addition, the civil service in Japan has been traditionally characterized as ‘career-based’ employment (OECD 2005). Civil Servants are expected to stay in the public sector throughout their working life. Promotions and salaries largely depend on personal experience and entry examination score. For non-industrial Civil Servants, there are three types of entry examination: Type 1, which is similar to the fast-track system in the UK Civil Service, Type 2 for college graduates, and Type 3 for high school graduates. Compared to the Type 2 and Type 3 examinations, those who pass the Type 1 examinations will experience promotion at faster speed and to higher ranking. For example, Civil Servants passing the Type 1 examination are likely to be promoted to director class (grades 8 to 10) by their early forties, while few Type 3 entrants could reach such a position. Of course the faster promotion is a direct result of being from the selected elite group. As shown in Table 19.1, the employees passing the Type 1 examination occupy a large percentage of the higher grades in the pay range, despite the small number of personnel. For example, in grade 11, Type 1 entrants account for 90.3 percent, while the number amounts to just 6.9 percent of the total number of general staff. The promotion speed differs little among Type 1 entrants by director position; the real difference appears in their late forties and early fifties. Accordingly, it is a late tournament game, as in the Japanese business sector, although there is no sorting system by examination operating in companies. This late game, however, requires an early retirement system to operate within the same type entrance group since those employees defeated in the promotion game must leave the organization. The second-job system or ‘parachuting’ of senior Civil Servants into related public organizations, such as the IAIs and public service corporations, or the private sector, is the complementary career

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Table 19.1 Grade

Grade of general staff by entry examination (as of 15 January 2006)

1

2

Type 1

–

Type 2

–

3 –

9 303 (75.0) Type 3 4 261 3 094 (100.0) (25.0) Total 4 261 12 397

1 657 (5.9) 13 605 (48.7) 12 651 (45.3) 27 913

4 492 (1.5) 11 967 (36.9) 19 913 (61.5) 32 372

5 823 (4.5) 5 912 (32.3) 11 553 (63.2) 18 288

6 919 (3.2) 8 129 (28.5) 19 428 (68.2) 28 476

7 787 (4.4) 4 050 (22.7) 12 976 (72.8) 17 813

8 2 704 (16.7) 3 779 (23.4) 9 678 (59.9) 16 161

9 1 233 (37.0) 765 (23.0) 1 330 (39.9) 3 328

10

11

Total

1 295 1 458 11 368 (63.9) (90.3) (6.9) 305 68 57 883 (15.1) (4.2) (35.2) 425 89 95 398 (21.0) (5.5) (57.9) 2 025 1 615 164 649

Note: Parentheses show the percentage of staff in the grade. Type 3 is for high school graduates, although the actual number of high school graduates amounts to 39 percent of the total staff. Source:

National Personnel Authority (2007), p. 92.

system that will secure them a job. When public employees would move into business sectors that have close relationships with the government agencies, they require the approval of the National Personnel Authority (NPA). There are, however, many problems associated with these Type 1 system practices. First, other Civil Servants are demotivated; Type 2 employees have same educational background and they might simply have been put aside for promotion due to the entrance examination type. Second, a second job in the private sector would create a collusive relationship between public administration and the business sector through mutual dependency; bureaucrats need a position in the business and the private sector wants favorable treatment in business in exchange for the post. In order to address such problems, the SPARC and the ARC proposed the introduction of a competence- and performancebased personnel management system into the Civil Service. Since the system would primarily work through the ‘objective’ and ‘fair’ assessment of performance or competence, the report stated that the assessment system should be established and regulation on early retirement be strengthened. In 2001, the basic scheme for Civil Service reform was determined in the Cabinet meeting. However, the details of the reform were not fleshed out, partly due to the strong opposition of bureaucrats who might lose their privileges. It was the repeated cases of corruption2 involving former and incumbent senior bureaucrats that had surfaced in the 1980s which stimulated politicians’ interest in Civil Service reforms in 2005 under the Koizumi administration. The refocus was promoted by cutting personnel costs, which was proposed by non-political CEFP members as a policy of ‘smaller government’ with performance-based management, despite Japan having a smaller number of public employees per capita than other developed countries.3 In 2007 Civil Service reform progressed through an amendment of the National Government Official Act. The amendment Act clearly stipulates that personnel management shall be based on competence and performance assessment. It also strengthens the regulations regarding a second job after retirement; each ministry or agency is prohibited from arranging for early retirement in exchange for establishing a new supporting organization for employment that will be established in the Cabinet Office. In addition, the government will submit a new bill for setting up a professional staff group and extending the retirement age.

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As mentioned, the CEFP has promoted NPM-inspired policies. In the case of personnel management, the performance-based system is in line with NPM whose focus is on results or outputs, not inputs. However, as in performance and financial management reforms, the regulations on salaries and number of employees are still maintained by input control. The salary levels by grade are recommended by the NPA every year after surveying the level for corresponding jobs in the private sector. This is an instrument for compensation about which Civil Servants are so far prohibited to strike. On the other hand, the number of Civil Servants is controlled by the Total Staff Number Act of 1969. The responsible ministry is the Ministry of Internal Affairs and Communications. The ministry also checks and determines the staff numbers of each ministry and agency. As a result, the downsizing of personnel costs demands a decrease not only in numbers but also in salary level, although NPM allows more flexibility regarding the wage and the numbers in exchange for strengthening accountability to achieve results. For instance, personnel costs can be saved by maintaining the quality of services through changing to a smaller staff structure exhibiting higher productivity, even if wages are higher. It is, however, noteworthy that the restriction is caused by the lifelong employment for Civil Servants, which is in conflict with the flexible employment policy in NPM. Outcomes of the reforms Scale of government The SCPAR, the ARC and succeeding administrations pursued the control of government spending in efforts to balance the budget. As discussed above, the SCPAR succeeded in recovering fiscal health in the 1980s. The successor of Mr Hashimoto, Mr Obuchi, took a power in 1998 and increased the expenditures for public works to promote economic growth. As a result, in 1999 government bond issuance amounted to 42.1 percent of the budget. In 2001 the Koizumi administration modified fiscal policy by cutting spending, in exchange for promoting deregulation and innovation. Since 2003, the fiscal balance has been improving. Government bond issuance decreased from 44.6 percent of the budget in 2003 to 30.7 percent in 2007. However, it is uncertain to what extent the significant improvement was caused by Koizumi’s structural reform, since the tax revenues in 2003 were at a similar level in 1987 (the increase from 2003 amounts to ¥10 billion) and spending has been maintained at approximately ¥80 trillion. On the other hand, the number of staff has been marginally decreased year on year. Since 1967 downsizing has, on average, been 0.2 percent of the public sector workforce. However, agencification and privatization of postal services undertaken by the Hashimoto and Koizumi Administrations, respectively, drastically reduced the number of Civil Servants. Before agencification in 2001, the total number of civil servants amounted to 840 000. In 2007, the number is approximately 40 percent that in 2000, standing at 328 000. The total decrease of 571 000 since 1967 is composed of 286 000 postal service workers, 200 400 for IAI and NUC employees, and 81 000 for others. When compared with the budget increase, this decrease in the number of staff is remarkable. However, we need to be conscious of the fact that downsizing of the Civil Service will not always result in reduced government spending or lowered tax level. In practice, postal services were operated without government subsidies. Although the IAIs and NUCs are legally separated from central government, financial support from the government has

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Table 19.2

Performance before and after privatization (units of ¥100 million)

Item

JNR/JR

NTT

JTS/JT

1986

1995

1984

1995

1984

1995

Total revenue Total costs Profit before tax Profit for the year

39 442 53 053 −13 611 –

47 971 45 780 2 197 1 066

47 971 44 285 3 276 –

63 583 59 819 3 764 2 175

28 858 28 858 495 –

27 508 26 267 1 241 693

Number of personnel

276 774

190 372

313 627

185 458

35 323

22 625

Note:

Privatizations for JNR, NTT and JTS were implemented in 1987, 1985 and 1985, respectively.

Table 19.3

Finance and scale of IAIs

Year

Operating grants (¥billion)

Number of employees*

2001 2002 2003 2004 2005

262.8 261.2 25.4 259.7 262.7

13 382 13 372 12 972 13 014 12 946

Note:

* Full-time employees as of 1 January.

been maintained. As such, even if staff in these organizations become non-Civil Servants, net government expenditure will change little. Efficiency According to some research (United Nations 1997), the privatization of the three public corporations produced many fruitful results, especially in terms of enhancing productivity or efficiency of their core services (see Table 19.2). Over a ten-year period, the deficit in the JNR age was changed into surplus in the JR age, and the profits of the other two organizations increased after privatization. In addition, the number of employees significantly reduced across all three organizations. Agencification also pursued efficiency improvements. However, each agency implements several functions, so it is not easy to measure productivity by function or service when the cost accounting system is not well developed. Accordingly, I analyse the timeseries data on the operating grants received and the number of employees for the 53 comparable IAIs that have continued operating since establishment in 2001. Table 19.3 shows the trends. Operating grants from the government have changed little, while staff numbers have marginally reduced. Of course, operating grants can fluctuate in cash amounts since retirement allowances are paid from them. To sum, in contrast to the privatization of public corporations, efficiency improvements are marginal as of yet. On the other hand, market testing is still at an early stage, even though the number of

Public sector management reform in Japan Table 19.4

347

Practice of market testing

Ministry Cabinet Office Ministry of Internal Affairs and Communications Ministry of Justice Ministry of Foreign Affairs Ministry of Finance Ministry of Education Ministry of Welfare and Labour Ministry of Economics, Trade & Industry Ministry of Land, Infrastructure and Transportation Ministry of Environment Ministry of Defense Total

Central government

IAIs

Local government

Total

0 1

– 0

1 5

1 6

1 – 0 4 0 0 0

– 2 – 3 2 2 0

2 1 – 3 – – 0

3 3 0 10 2 2 0

0

0

–

0

6

9

12

27

Note: Bar (–) indicates the case where the oversight committee has not yet discussed the introduction of market testing with the ministry.

IAIs grew from 57 in 2001 to 104 in 2006. The reason is opposition by the bureaucrats due to the fear of the job losses if the private sector makes a successful tender. As of March 2007, there were 16 market testing contracts in the government agencies including IAIs (see Table 19.4). In addition, all of the cases involved competitive tendering among private companies without bids from the public sector.4 Therefore, at present, competition or the market mechanism has been adopted least by Japan’s government sector. Effective management system The performance management system is a crucial part of public sector reforms. The policy evaluation system is expected to make government agencies not only more accountable for their results, but also to feedback these results to budgeting or planning. Ex post evaluation results are reviewed by the Ministry of Internal Affairs and Communications, although there has been no audit of the results to date. This Ministry finds that approximately half of the programs evaluated had improved, or at least as considered by the responsible ministry. It therefore seems that the evaluation system has been successfully implemented in terms of the PDCA cycle. However, a survey by Tanabe (2007) indicates that many Civil Servants felt a heavy burden of evaluation. There exist a few studies that have examined whether and how management system reforms improved performance. In case of agencification, Yamamoto (2006) revealed a somewhat causal relationship between organizational autonomy and performance. However, there are constraints on management autonomy. Although the chief executives have full discretionary power in management other than with regard to capital/infrastructure, the government requires IAIs to report on both personnel costs and number of employees, in addition to reducing the operating costs. Thus, in a practical sense, flexibility in management is substantially restricted.

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Talk

Decisions

Actions

Results

Organization Performance Financial Personnel

Figure 19.2

Development of public management reforms

Recently performance assessment in personnel management has been trialled in the government agencies. The first trial showed that more than half of the assessors and assessees found it to be useful. At the same time, however, some officials reported the burden and difficulties involved in setting goals and targets as required by the performance measurement system. Therefore, it will still take some considerable time to establish the performance-related personnel management system and to achieve successful outcomes, even though amendment legislation was enacted in 2007. Conclusion Analysis of public management reforms Contrary to the predictions of many scholars (Hood 1995; Naschold 1996), aspects of NPM were introduced into Japan in the late 1990s. However, when we observe the development of the NPM-inspired system in the area of management, there are clear differences in the progress and pace of reforms made. Figure 19.2 indicates the development level in each management area, using the framework of ‘talk, decisions and actions’ (Brunsson 1989) in addition to ‘results’ (Pollitt 2001). Organizational reform has pushed ahead the furthest and fastest among all management areas in Japan, which followed from the privatization efforts carried out in the 1980s, and has produced good results in enhancing efficiency. Performance management reforms in this area were not new because the external or quasi-external evaluation system had been in force for a long time. The Policy Evaluation Act of 2001, however, extended the scope to the full range and made the evaluation of government activities mandatory among all government ministries and agencies (Article 3). Traditionally evaluation was implemented in limited areas or in an ad hoc style. Accordingly, the performance management system might be placed somewhere in the progression between ‘actions’ and ‘results’ (see Figure 19.2). The financial and personnel management areas, on the other hand, are in the transition to the NPM-based management system. Both areas have been not only centrally controlled, but also adopt an input- or procedureoriented system. Some parts of financial management have reached the stage of ‘action’, for instance, where IAIs adopt corporate accounting in finance, while budgeting remains on a cash basis. Personnel management, which is at the heart of the career Civil Service, is the least developed area, because the concept of result-oriented and open-competitive management conflicts with the traditional career-based system.

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Characteristics of public management reform in Japan Japan’s government is a late adopter of NPM-inspired reforms, compared to those of the Anglo-Saxon countries. However, as Hood’s (1991) leading article was immediately reviewed by academics in a professional journal in Japan, there was already some ‘talk’, among academics and practitioners of public management reforms occurring in the early 1990s. And some bureaucrats in the government also knew of the reform situations in OECD countries through attendance at international conferences or meetings. Historically, Japan has intensively adopted foreign ideas through modification to a specific context (Rose 1993; Westney 1987). In this perspective, the second stage of ‘decisions’ is key in the reforming management system. Since the politicians are decision-makers in a democratic government, they need to exercise leadership or show entrepreneurship. In the late 1990s, Prime Minister Hashimoto successfully led and implemented public sector reforms through an ad hoc organ, the ARC. In the 2000s, Prime Minister Koizumi used a permanent advisory body, the CEFP, to streamline the public sector. In other words, the CEFP has played a role in the stage of ‘decisions’ under strong chairmanship by the Prime Minister. Consequently, we experienced the ‘sudden emergence’ of NPM just in this decision-making stage. Thus, the reform ideas proposed by economists and business executives at these meetings would greatly affect the contents of Basic Policies. They set efficiency above equity in policy-making in order to downsize the government in accordance with Prime Minister Koizumi’s policy. In fact, the statements of the Basic Policies contain few instances of the term ‘equity’ compared to those of ‘efficiency’.5 Future issues The Abe administration6 continued to promote the NPM-based reforms first developed under Prime Ministers Hashimoto and Koizumi. Under the NPM framework, politicians are required to make policy, and bureaucrats to offer policy advice to the minister and execute policies. Politicians have to master more knowledge of the policy itself, while bureaucrats must change their attitudes and behavior more toward that of professional managers or staff. This is not an easy task for most politicians, for whom the most important issue has been power rather than policy, because Japanese policies were traditionally developed by the bureaucrats. In addition, for bureaucrats the more limited influence in policy-making together with the vanishing of higher-grade bureaucracy positions has made the job less attractive and recruitment and retention of the talented younger generation has become more difficult. Moreover, the bureaucrats still share a traditional attitude toward public administration, focusing on compliance with regulations and input control. In addition, public attitudes toward result-oriented management are mixed. For example, 60.2 percent of respondents to a public poll stated that people who make a greater effort should be rewarded, although 50.3 percent stated that high performers already received greater rewards (Cabinet Office 2007). Consequently, it is unclear whether the NPM management system will be accepted by the public sector and produce successful outcomes in Japanese society – even if the populace supports the idea that efficiency shall be more respected than equity. Notes 1. The final report defines ‘outsourcing’ as a broad term including agencification and corporatization. The Administrative Reform Council (ARC) rather understood it as a tool of downsizing the central government. 2. The most notorious corruption case in the 1980s was the Recruit scandal. Recruit, a growing venture company, in 1986 offered unlisted shares in the company at low prices to influential governmental officials

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4. 5. 6.

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and politicians. Once the stock went public, share prices soared and enormous profits were salted away. In 1988, the former vice ministers of the Ministry of Education and Ministry of Labor were arrested. In 2001, massive malfeasance was found; a Foreign Ministry official embezzled some ¥800 million (approximately $6.9 million) between 1993 and 1999 by manipulating the overseas travelling costs. These cases of corruption are closely related to the early retirement system for senior bureaucrats that is supported by the Amakudari or ‘descent from heaven’ system, where senior bureaucrats retire ahead of time to move to well-paid, sinecure positions in firms or public corporations they dealt with in the course of their duties. The system has remained despite criticisms of collusion, corruption, and lax oversight created by mutual benefits; the bureaucracy probably maintains the high motivation of talented people by allowing such a career path after retirement, while the firms and corporations involved expect good things of the networks and connections of retired bureaucrats with former colleagues. According to the Ministry of Internal Affairs and Communications, the number of public employees composed of central government, local government and governmental corporations per thousand population is at a minimum of 33.1 among developed countries, and is 87.6 in France, 79.5 in the UK, 78.1 in the USA, and 55.8 in Germany. For example, the Ministry of Welfare and Labor started market testing of job training programs in 2007. However, this did not constitute a competition between the public and private sectors in the eight target areas, but a competitive tendering among the private sector (four to seven firms). Under the Koizumi Administration (2001–06), the Basic Policies included, on average, 5.8 instances of the word ‘equity’ compared with 45 instances of the word ‘efficiency’. After the sudden resignation of Prime Minister Shinzo Abe, Mr Takeo Fukuda, former Cabinet Secretariat of the Koizumi Administration assumed the position on 25 September 2007. Mr Fukuda and Mr Abe belong to the same faction of the LDP; therefore, while the policy itself will be little changed, the procedures and/or style of policy-making might well differ between them.

References Brunsson, N. (1989), The Organisation of Hypocrisy: Talk, Decisions and Actions in Organisations, Chichester: John Wiley. Cabinet Office (2006), Scorecard for Market Testing, Tokyo: Cabinet Office. Cabinet Office (2007), Public Opinion Survey on Social Attitudes, Tokyo: NPB. General Accounting Office (GAO) (1989), Performance Measurement and Evaluation: Definitions and Relationships, GGD-98-26, Washington, DC: GAO. Hayao, K. (1993), The Japanese Prime Minister and Public Policy, Pittsburgh, PA and London: University of Pittsburgh Press. Hood, C. (1991), ‘A public management for all seasons?’, Public Administration, 69: 3–19. Hood, C. (1995), ‘The new public management in the 1980s: variations on a theme’, Accounting, Organisation and Society, 20: 93–109. Kingdon, J.W. (1984), Agendas, Alternatives, and Public Policies, Boston, MA: Little Brown. Muramatsu, M. and J. Matsunami (2003), ‘The late and sudden emergence of new public management reforms in Japan’, in H. Wollman (ed.), Evaluation in Public-Sector Reform: Concepts and Practice in International Perspective, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 169–81. Naschold, F. (1996), New Frontiers in Public Sector Management, Berlin and New York: De Gruyter. National Personnel Authority (2007), Annual Report, Tokyo: Government of Japan. Organisation for Economic Co-operation and Development (OECD) (2005), Modernising Government: The Way Forward, Paris: OECD. Pollitt, C. (2001), ‘Convergence: the useful myth?’, Public Administration, 79: 933–47. Rose, R. (1993), Lesson-Drawing in Public Policy, Chatham, NJ: Chatham House. Tanabe, K. (2007), ‘Policy evaluation: status quo and future issues’, Evaluation Quarterly (in Japanese), 1: 14–28. United Nations (1997), ‘Administrative Reforms: Country Profiles of Five Asian countries’, New York: United Nations. Walton, M. and W.E. Deming (1986), The Deming Management Method, New York: Dodd. Westney, D.E. (1987), Imitation and Innovation: The Transfer of Western Organizational Patterns to Meiji Japan, Cambridge, MA: Harvard University Press. Yamamoto, K. (2004), ‘Agencification in Japan: renaming or revolution?’, in C. Pollitt and C. Talbot (eds), Unbundled Government, London: Routledge, pp. 215–26. Yamamoto, K. (2006), ‘Performance of semi-autonomous public bodies: linkage between autonomy and performance in Japanese agencies’, Public Administration and Development, 26: 35–44.

20 Conclusion: is there a common thread? Joe L. Wallis

In writing the conclusion to what has become a relatively large collection comprising both theme chapters and chapters providing a comprehensive account and assessment of recent public management reforms in particular countries, it is difficult to recapitulate and summarize their main observations and arguments in a way that does justice to their nuance and detail. But is it possible to identify a common thread running through these chapters? I suggest that what most of the chapters in this handbook share in common is a more or less critical response to what can be called the ‘convergence line’ advanced by the champions of NPM-style reforms. This line is reflected in the following four propositions: ● ● ●

●

There is a consensus on the package of measures that should be included in the public management reform agenda. This reform package is derived from a coherent policy paradigm. The observed divergence in the implementation of this reform agenda in different countries can be attributed to differences in the strength of policy leadership key players at the center of government exercise in implementing the reform. As the new public management (NPM) agenda is advanced toward completion in an increasing number of contexts, it will come to be consolidated as a stable dominant policy paradigm in the area of public management.

This concluding chapter examines each of these propositions and the critical responses they have elicited from the various contributors before going on to make some general comments about the pattern of rhetoric reflected in the arguments advanced by both the proponents and opponents of the convergence line on public management reform. Is there a consensus on the public management reform agenda? The proposition that there is a consensus on the package of measures that should be included in the public management reform agenda can be compared with the similar proposition made by the champions of the ‘Washington Consensus’ on the economic policy reforms that were implemented in a more or less comprehensive fashion by governments in both established English-speaking democracies and the developing and transitional nations of Latin America, Asia, Africa and eastern Europe in the last two decades of the twentieth century. In surveying the literature that rapidly burgeoned on these reforms, Rodrik (1996: 9) observed that ‘what is remarkable about current fashions in economic development policy is the extent of convergence that has developed on the broad outlines of what constitutes an appropriate economic strategy’. This strategy included the now familiar components of (1) ‘liberalization’ – microeconomic reforms designed to open and free up markets and reduce and rationalize the role of the state in the economy; and (2) ‘stabilization’ – macroeconomic policies designed to reduce debt 351

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and control inflation. Since NPM-style reforms were seen by the same international institutions who championed the Washington Consensus reforms as enhancing the capacity of governments to implement both liberalization and stabilization reform processes, it is hardly surprising that they also came to be associated with the advocacy of a similar convergence line in the area of public management reform. This book is thus located within the by now voluminous literature on NPM in which contributors have had to respond to the claim that a consensus now exists on the main components of a public management reform agenda. These components would be reflected in a comprehensive reform of public management in which: ●

●

●

●

Large-scale multiple public service organizations would be restructured to match resources with tasks through, for example, the separation of policy advice, regulatory, funding and service delivery functions. The bureaucratic monopoly over service provision would be removed so that supply is made more contestable, through the contracting out and, in some cases, privatization of services and functions that are not deemed to be ‘inherently governmental. Public managers in the residual core of the sector would be made both ‘free to manage’ by being released from compliance with procedures and input controls so that they could have discretion over input decisions including the ability to hire and fire staff and ‘made accountable for management’ by being placed on fixed term contracts with their rewards being made contingent on their contribution to organizational and policy goals specified in performance agreements with their political principals. The system of accounting and performance reporting would be comprehensively overhauled with, for example, the introduction of accrual accounting and capital charges and the development of a plethora of performance indicators for both individuals and organizations.

In the various country studies in this book, the contributors have sought to assess the ‘progress’ countries have made in moving toward the completion of this reform agenda. Countries such as New Zealand and the UK have thus stood out as ‘exemplars’ or ‘benchmark cases’ in which most elements of this reform agenda have been implemented. Similar ‘progress’ is evident in the USA, Australia, Denmark and the Netherlands despite significant differences in their institutions of policy-making. By contrast, France, Norway, Belgium and Canada have been identified as relative ‘laggards’, while Japan and Hong Kong are ‘late adopters’ in response to a number of financial and political events that called into question the powerful policy-making role played by their senior Civil Servants. A tendency in these countries to measure themselves against the benchmark cases is reflected in Yamomoto’s assessment that while Japan has recently embraced the rhetoric of NPM, and made considerable progress in organizational restructuring and performance measurement it still is something of a laggard in the areas of financial and personnel reforms. Such attempts to measure the progress countries have made in advancing reforms in a certain direction should not, however, be interpreted as an endorsement of this direction or the claim that a consensus now exists that it is generally appropriate and that attention

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should be focused on issues of implementation rather than formulation. Indeed, most of the contributors would appear to identify, or at least have some sympathy with, a line of criticism that has been directed at the claims of a NPM consensus by some of the most respected scholars in the field of public administration. Perhaps the most eminent critic of convergence is the British scholar, Christopher Hood. In his book The Art of the State, Hood (1998: 6) proposes that ‘variation in ideas about how to organize public services is a central and recurring theme in public management, and that such variation is unlikely to disappear, in spite of engineering metaphors and the prophets foreseeing convergence on a new stable form of “modernity”‘. Moreover, Hood argues that the various strands comprising the NPM-style model are neither new nor novel. Indeed, ‘far from being newly minted in the 1980s, most of the basic ideas about how to manage in government have a history’ (ibid.: 6). He goes on to predict that rather than genuine consensus being reached on a ‘one size fits all’, allpurpose model of public administration, a path-dependent process of pendulum swings and ‘policy successions’ can potentially raise to prominence any one of four alternative approaches. He characterizes these as ‘fatalist’, ‘hiearchist’, ‘individualist’ and ‘egalitarian’ approaches that can be distinguished according to the position they take on core ideas about ‘the degree to which our lives are circumscribed by conventions or rules’ and ‘the extent to which individual choice is constrained by group choice’ (ibid.: 8). Moreover, each contains ‘fatal flaws’ or ‘blind spots’ so that the dominance of any one approach is likely to be, at best temporary, and succeeded by a shift to a fundamentally different approach. Wegrich’s chapter in this book clearly reflects this perspective as it draws attention to the policy successions and pendulum swings that have occurred over the last two decades in the UK – a period where it has been frequently held up as an exemplar of NPM. There is now a body of empirical work that appears to back up the notion that a close comparative study of recent public management is as likely to provide as much evidence of heterogeneity as of convergence. For instance, drawing on the literature of comparative analysis of national administrative reform processes, Premfors (1998: 145) emphasized the ‘considerable variation that may be observed among nations with respect to reform ideas and strategies, concepts and impacts’ (original emphasis). Similarly, after an eight-nation comparative study, Olsen and Peters (1996: 13) go even further in rejecting a common motivation and pattern to public administration reform in the Western world over the past three decades. They categorically maintain that NPM-style reform was not ‘universally accepted and that there was no general wave of public sector reforms’ (ibid.). In their eight-country sample, ‘there were significant variations in the discontent with the public sector and in the perceived need for radical administrative reform’ and ‘whereas some governments were obsessed with the idea of comprehensive reform, others argued for the preservation of the status quo, or for incremental modifications of existing administrative arrangements’ (ibid.). In sum, ‘ideas about generic management, private business, and competitive markets as exemplary models for running public bureaucracies were not adopted with the same ease in the eight countries’ (ibid.). Indeed, ‘in some countries the rejection of the private sector exemplar of good management was outright’ (ibid.). In his introductory chapter, Goldfinch referred to numerous other recent comparative analyses that arrived at similar conclusions. For example, Naschold (1995: 11) compared administrative developments in 11 Western democracies

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and argued that ‘contrary to the official view taken by the OECD as an organization, there is no evidence of a linear homogenous trend in public sector development’. On the contrary, ‘as far as future developments are concerned, convergence seems less likely than centrifugal trends within regulatory models’ (ibid.). Indeed, ‘the plurality of regulatory regimes makes it impossible to derive and justify an immanent ranking of these regimes or to presuppose that one specific regime (particularly the Anglo-Saxon model) is necessarily more efficient than others’ (ibid.). Another stream in this comparative literature does, however, take more of a ‘middle road’ in this convergence–divergence debate. It emphasizes the ways in which a consensus on reform ideas can still work itself out in the form of considerable variation in implementation across different countries. For example, Peters (1996: 266) argued that the contemporary public management reform process ‘demonstrates the different reactions of a number of different political systems to a set of relatively common stimuli for change’ within a milieu in which ‘the ideas that have guided reform are nearly the same around the world’. Thus, ‘what is different is how political systems have interpreted the ideas and responded to the demands and/or opportunities for inducing administrative change’ (ibid.: 266). This theme appears to be picked up by Christopher Pollitt (2002: 27) who observes that while comparative studies of public management reforms tend to reflect that ‘the broad aims of producing more efficient, effective and responsive public services may have been widely shared’ they also provide evidence that ‘the mixtures of strategies, priorities, styles and methods adopted by different governments have varied very widely indeed’. He goes on to propose that the observed diversity in approaches could be explained on the basis that ‘countries have not started from the same point, either in terms of the make-up of their public sectors or in terms of the way they think about the role and character of the state’ (ibid.). Moreover, ‘governments have not all possessed the same capacities to implement reforms’ (ibid., original emphasis). In a subsequent collaboration with Gert Brouckaert (Pollitt and Brouckaert 2004), this scholar goes on to suggest why diverse administrations may have been drawn to a similar set of reforming ideas and policy prescriptions. Where political leaders face either fiscal problems or legitimacy problems, they can either change their own behaviour to rebuild trust ‘through moderate, consistent and transparent policy-making’ (ibid.: 184) and effective fiscal control or they can focus on enhancing the performance of the economy. A third possibility is to ‘distance themselves as politicians from the system of administration and law and then blame that system for either the expenditure problem and/or the legitimacy problem’ (ibid.: 184). Pollitt and Bouckaert contend that this third strategy has close links with the rise of NPM-style reform policies since it has been characterized by a ‘distancing and blaming strategy by political leaders’ (ibid.: 185). Once a distancing and blaming strategy has been embarked on, it can proceed in four directions characterized by Pollitt and Brouckaert as the ‘four Ms’ – ‘maintaining’, ‘modernizing’, ‘marketizing’ and ‘minimizing’. ‘Maintaining’ involves squeezing the resources employed in the public sector without altering the way it is administered. ‘Modernizing’ relies on ‘bringing in faster, more flexible ways of budgeting, managing, accounting, and delivering services to their users’, typically deploying techniques imported from the private sector, that seek to underline the need for public provision and serve to ‘strengthen rather than dilute the state’ (2004: 187). By contrast, ‘marketizing’ focuses on placing public services under more pressure to be efficient by increasing

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competition within the public sector and between public organizations and private firms while ‘minimizing’ downsizes the role of the state by transferring public finance and/or provision functions to the private sector through privatization and contracting out. Pollitt and Brouckaert’s (2004: 98 and 100–101) contention that while ‘the “four Ms” do not have to be taken in a particular order’, they cannot ‘all be convincingly pursued simultaneously’ so that ‘different regimes at different times appear to have leaned towards one or other of these strategies’ are borne out in the country studies in this book. For example, Rockman and Thiam trace the successive waves of administrative reforms in the US beginning with the Carter era modernizing strategy designed to create a new civil service. This was succeeded by the maintaining strategy of the Reagan administration and the modernizing emphasis on ‘reinventing government’ under Clinton and, most recently, the G.W. Bush administration’s plans to advance a minimizing approach that included organizational assessment, personnel shrinkage, outsourcing and firm executive control over the agencies. Rockman and Thiam point out in their chapter that these shifting strategies have coexisted with one of the most politically contentious eras of American government and politics during which presidents have tried to build more responsiveness to their agendas and their constituencies while ‘like a board of directors, Congress often wants reforms that emphasize more accountability from the executive leadership team’. Similar shifts are reported in the chapters on UK, New Zealand and Australia with Centre-Right governments appearing to give more emphasis to downsizing the role of the state through maintaining, marketizing or minimizing approaches while Centre-Left governments such as those of Blair in the UK and Clark in New Zealand have shifted to a more modernizing approach as they have sought to rebuild or strengthen state capacity. However, as has been the case in the USA, a consistent concern of the political leadership has been to enhance the strategic responsiveness and managerial accountability of the bureaucracy. This, of course, reflects the underlying motive of ‘distancing and blaming’ that, as Pollitt and Brouckaert (2004) argue, can underly all these strategies. The divergent reform strategies may thus spring from an underlying consensus shared by reformist political leaders that the type of trust-based ‘public service bargain’ that traditionally prevailed in their relationships with administrative elites has become unsustainable. Hood and Lodge (2006: 6–7) define ‘public service bargains’ as ‘explicit or implicit agreements between public servants . . . and those they serve’ that ‘identify what the various players gain and what they give up relative to one another’ with regard to rewards, competencies and responsibilities and ‘the written or unwritten understandings (or misunderstandings) that surround that relationship’. These British scholars emphasize that public service bargains can ‘vary widely on such matters across time and different state traditions, as well, within the respective systems across domains and position’ (ibid.: 7), but they make it clear that NPM reforms reflect a fundamental shift away from what they call a ‘serial loyalist bargain’. Under serial loyalist agency bargains public servants typically have no independent responsibility of their own. They undertake to be loyal to whoever holds elected office at any time in exchange ‘for access to the confidential counsels of those politicians and a measure of anonymity when it comes to public praise or blame’ (Hood and Lodge 2006: 53). From the perspective of political principals, there are two major risks with this type of arrangement. The first is that a public servant may become so loyal to a particular political master

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or committed to a set of policy goals that subsequent principals may question their neutrality. The second is that public servants may precipitately undertake initiatives without the approval or even knowledge of their masters that subsequently have negative outcomes in respect of which politicians bear the burden of public blame. However, if public servants aspire to become policy partners with a capacity to discreetly influence policy behind the scenes as invisible actors who neither take credit nor receive blame for its outcomes, they will assiduously cultivate the impression of being a ‘safe pair of hands’ who avoid risky behaviours that could jeopardize the trust placed in them by successive principals. From the perspective of NPM reformers, the incentive serial loyalists have to maintain the trust placed in them is insufficient to protect them from the risks of potential ‘agency failure’. At the very minimum, they have been drawn to reforms that make it easier to shift the blame on Civil Servants for policy failures. This would seem to provide one explanation for why the reform strategies pursued in most of the countries studied in this collection seem to include an element of organizational restructuring and performance monitoring. The attraction of such measures is that they give political leaders the opportunity to break up the established policy communities that accrete around government departments, promote like-minded ‘change agents’ into positions of executive responsibility over new agencies, and make both these agents and their successors more accountable for agency performance. Such measures would thus seem to be logical ‘next step’ after a maintaining approach of cutting spending across the board has failed to give public managers sufficient incentive to strive for greater operational efficiency rather than waiting for (or even tacitly assisting) political pressures for reversing the cutbacks. They can also be viewed as the ‘first step’ in enhancing the capacity of the political leadership to advance both marketizing and minimizing strategies. Christensen’s chapter on Denmark makes it clear that the organizational restructuring and decentralization processes that were set in motion in 1983 paved the way for local authorities in this country to ‘subject their own services to competitive exposure through increased reliance on competitive tendering and contracting out’. It also appears that in countries like New Zealand, the UK, the USA and Australia, these reforms enabled state agencies to hive off and open to competitive bidding service delivery functions while, at the same time, giving their principals the information they needed to evaluate the efficiency and effectiveness relative to alternative institutions. Goldfinch’s chapter on New Zealand draws particular attention in this regard to the way the ‘corporatization’ process through which large government departments were restructured so that their commercial functions could be assumed by new state-owned enterprises (SOEs) required to operate on a commercial basis laid the foundation for the eventual privatization of these SOEs. However, even when the emphasis in these countries shifted toward a modernizing approach of renewing state capacity, strengthening and developing performance monitoring remained a core component of the reform process. Wegrich’s chapter makes this evident in its description of the ‘target and terror’ approach followed by the Blair administration. In different contexts, Yamomoto’s chapter on Japan and Cheung’s chapter on Hong Kong describe how legitimacy problems in both these countries led their political leaders to move from public service bargains, in which senior Civil Servants functioned as trusted partners, to embrace these core modernizing measures as part of a drive to make them more politically ‘responsive’ and accountable.

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As has been noted, the other aspects of the NPM package have been subject to greater divergence. Waxin and Bateman’s chapter on human resource management reforms highlights a divergence that is also referred to in the different country studies. This arises from the persistence of three quite different public employment systems in countries where political leaders have to a greater degree embraced the rhetoric of NPM. Some countries such as Japan and France have maintained a career-based system in which entry is determined by examination or university qualification, and Civil Servants remain in the system over the course of their career during which they aspire to advance to senior positions in which they can draw on their experience to have significant influence over policy. The persistence of such a system would indicate that despite some reform around the edges, the traditional serial loyalist bargain largely remains intact. In other countries such as New Zealand, Australia, the UK, the USA and Denmark, the break-up of this bargain has been more thoroughgoing with the career system giving way to a more position-based focus on ‘selecting the best-suited (most politically responsive) candidate for each position, whether by external recruitment or internal promotion or mobility’. Pay structures tend to be more individualized in these systems with performance-based remuneration being linked to performance management. Finally, a hybrid-type ‘department-based’ approach characterized by high levels of delegation but low levels of individualization, particularly in terms of remuneration and lateral mobility, is apparent in the country chapters on Belgium and the Netherlands and, according to Waxin and Bateman, would also seem to prevail in Portugal, Italy, Mexico and the Czech Republic. The question of whether such divergence is symptomatic of a fundamental incoherence in the NPM policy paradigm that underlies its failure to replace serial loyalism with a credible and sustainable ‘delegated agency bargain’ arises from criticisms many of the contributors to this book have directed toward the second component of the convergence line. Is the NPM reform package derived from a coherent policy paradigm? In arguing for the coherence of the NPM policy paradigm, its advocates will often draw attention to the important influence a related stream of economic theories have had on its formulation. In assessing this claim it is important to bear in mind the relationship between theoretical and policy paradigms. In this regard, Wallis and Dollery (1999: 5) argue that theoretical paradigms refer to ‘the social science variant of the Kuhnian paradigm: that is, a conceptual framework or intellectual map to guide researchers and practitioners alike’. By contrast, policy paradigms that derive from theoretical paradigms are much less coherent and logically consistent mainly because they are formulated by ideological intermediaries who typically screen out the ambiguities and blur the fine distinctions characteristic of theoretical paradigms to make them more palatable to reform entrepreneurs with a taste for decisive action. Thus in his account in this book of the economic foundations of the NPM policy paradigm, Dollery shows that it is possible to penetrate through the fine distinctions between public choice, agency theory and the new institutional economics to discern a fundamental economic rationalism that relates many of the symptoms of governmental dysfunction to underlying incentive problems that call into question the trust political leaders are prepared to place in public servants. A major influence of this economic rationalist perspective has been to cast doubt on the reliability of the trust-based serial loyalist bargains. As Chang (1994: 9) has pointed out:

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These models saw the root of many problems of the contemporary capitalist countries – for example, the over-extension of the bureaucracy, the waste of resources in government administration, the inefficiency of the public enterprises – in the inability of the principals (the public) to monitor the self-seeking behaviour of their agents in public affairs (the bureaucrats). These models were usually presented as neutral efficiency arguments, but have had much deeper political impacts. By arguing that the same assumption of self-centred behaviour should be applied both to the private sector agents and the public sector agents, they not only questioned the public’s trust in the benign paternalism of the welfare state but also undermined the selfconfidence of government officials and their commitment to a public service ethos.

Quite clearly such economic rationalism is founded on a presumption of mistrust in which the incentive public servants have to use their experience and expertise in a ‘repeated game’ that seeks to sustain the trust of successive principals is seen as insufficient to restrain them from exploiting such sources of ‘information asymmetry’ to pursue ‘empire-building’, ‘bureau-shaping’ or whatever other strategy they calculate to be to their personal advantage. However, while such a perspective can provide a consistent rationale for a shift away from a serial loyalist bargain, it does not make clear how a credible and sustainable alternative can be established. To some degree this can be attributed to the policy scepticism inherent in many of the theories that shared a common economic rationalism. More specifically, a sceptical theoretical perspective would be anticipated to lead to a more cautious, conservative approach to the formulation, implementation and evaluation of actual reforms in practice. This was certainly expected by many of the leading writers on government failure. They appear to have taken the view that the old certainties about the effectiveness of governments and markets in resolving social problems are likely to give way to a less rigid and more pragmatic approach to policy-making in which ‘the actual choice is some compromise between imperfect markets and imperfect governments’ (Wolf, 1989: 11). According to this view, both the formulation of reform proposals and the evaluation of extant reforms are likely to be more cautious and careful when they are based on a balanced evaluation of both market and government failure. Much would appear to have been ‘lost’ and ‘added’ in the translation of these theories into the NPM policy paradigm that is typically advocated with a zeal and optimism that would have been foreign to the economic theorists of government failure. Indeed it might be argued that the coherence of the NPM policy paradigm would appear to have been fragmented by a type of ‘garbage can process’ where a fairly coherent diagnosis of underlying incentive problems with the traditional bargain have attracted a diverse range of solutions. In The Future of Governing, Peters (1996) has identified the emergence of four alternative and not perfectly complementary ‘models of government’ in the move many countries have undertaken from a traditional serial loyalist ‘Progressive Era’ system. More specifically he distinguishes (1) a ‘market model’ whose advocates premise their rejection of traditional public administration on a ‘basic belief in the virtues of competition and an idealized pattern of exchange and incentives’ (Peters 1996: 22) presumed to exist in the private sector of modern market economies; (2) a ‘participatory model’ based on the assumption that ‘government organizations will function better if the lower levels of the organizations, and perhaps the clients of the organization, are included more directly in managerial decisions’ (ibid.: 63) presumably because individuals are motivated by social incentives, such as participation, rather than by material incentives, like

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pay and perquisites; (3) a ‘flexible model’ that ‘seeks flexibility and frequent termination of existing organizations’ (ibid.: 79) because flexibility enables governments to respond more quickly to changing social and economic conditions and termination aids in the prevention of ossification that may afflict permanent organizations; and (4) a ‘deregulation model’ based on the notion that in a public sector that has become bureaucratized through its own rules and red tape, the removal of these constraints will empower public managers toward more efficient performance. An implication of this typology is that considerable caution should be exercised in interpreting the emergence of similar policy prescriptions in different jurisdictions as evidence of convergence driven by the logic of a coherent underlying policy paradigm. For example, the chapters by Wegrich on the UK and Christensen on Denmark comment on their respective adoption of decentralization and some transfer of power to the lower echelons of organizations as well as to the clients of the organizations, but also make it clear that, while in the UK, these prescriptions were primarily inspired by a market model, in Denmark they were probably based more upon an underlying participatory model. The potential emergence of multiple models of government along the lines set out by Peters does not, however, have to be interpreted as being symptomatic of an underlying incoherence in the NPM paradigm. These models may simply represent different ways of organizing and managing the public sector that can come to the fore after a more fundamental shift in public service bargains has occurred. Using Hood and Lodge’s (2006) terminology, this can be characterized as a shift from serial loyalism to what they would call a ‘delegated agency bargain’ in terms of which political principals and public servants typically ‘agree on a framework, set by the principal, within which a zone of discretion is obtained by the public servant, in exchange for direct responsibility for outcomes within that zone of discretion’ (Hood and Lodge 2006: 56). Certainly many of the champions of NPM find its coherence in the balance it achieves between its twin goals of ‘freeing managers to manage’, on the one hand, and ‘making them accountable for management’, on the other hand. Thus if public servants are giving up some of anonymity and protection from blame they enjoy under serial loyalist bargains, they can be rewarded with greater managerial discretion within pre-defined limits and, in some cases, the material incentives associated with making their bonuses and prospects for promotion more contingent of their performance in terms of achieving specified targets. From this perspective, agents will see themselves as being sufficiently compensated for the ‘distancing and blaming’ aspects of the new bargains that are primarily in the interests of their principals. Hood and Lodge (2006) do, however, argue that the credibility of such bargains will be weakened by their failure to provide sufficient safeguards against various forms of ‘principal cheating’ such as taking credit for successful initiatives while shifting blame for failures, multiplying monitoring mechanisms and engaging in backdoor interference in agent decision-making. In this book, the theme chapters by Gregory and Wallis more fundamentally question whether the twin goals of managerial discretion and managerial accountability may eventually come to be incompatible so that the committed pursuit of one may be to the detriment of the other. The empowerment of line managers in the public sector should, in principle, eventually encourage them to mobilize networks in pursuit of initiatives that they judge to create public value or at least advance the strategic goals set by their

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political and administrative leaders at the centre of government. However, the emergence of networked governance and public service delivery systems may, as Gregory so lucidly explains, increase the complexity of government and make the task of holding single agents accountable for policy outcomes, in general, particularly where they are disappointing and/or controversial even more problematic. Rather than providing the impetus for the development of ‘bottom-up’ or even ‘middle-out’ sources of leadership in the public sector, NPM reforms have more often involved a quest to strengthen the ‘top down’ control of the Centre by strengthening management accountability mechanisms in a way that disempowers managers down the line by effectively reducing the trust placed in them by their principals. This is evident in the country studies of France and Japan where it seems that the introduction of NPM-style performance management has simply increased the compliance costs of these agents in a system where a relatively inflexible system of input controls has been retained. However, even in the NPM exemplars such as New Zealand and the UK where public managers have been given greater discretion over inputs, the implicit political mistrust in bureaucrats that lies at the heart of NPM has led to an almost obsessive concern with managerial accountability. This has led, in the UK case, to the type of ‘pendulum swings’ from ‘marketization to performance management in local government’ and from ‘reduction of public sector workforce to investment in public service and back to an increasing emphasis on efficiency’ described by Wegrich. In the New Zealand case, it has meant that the Clark government’s espousal of public value leadership and a new public service ethos has become somewhat platitudinous in an environment where the types of public scandals described by Goldfinch and Gregory have led a reinforcement and strengthening of the accountability mechanisms through which public servants can be ‘scapegoated’ for such policy failures. Empowering public value leadership at the middle levels of the public service will always be problematic where the Centre views the level of government below them as being the locus of agency failure and resistance to change. From this perspective countries that espouse NPM reforms may still vary in the effectiveness with which they implement them due to a combination of factors that determine the relative ‘strength’ of the top down policy leadership exercised by the Centre relative to those institutional and cultural factors that shape the strength of the potential resistance it may have to overcome if it is to implement NPM reforms in a non-incremental fashion. The importance this view of policy leadership plays in the convergence line and the relative significance the contributors have attached to the role of actors relative to institutions must now be considered. Can divergence primarily be attributed to differences in the strength of policy leadership? The notion that ‘the observed divergence in the implementation of the NPM reform agenda in different countries can be attributed to differences in the strength of policy leadership key players at the centre of government exercise in implementing the reforms’ is perhaps the most challenging and provocative doctrine in what we have called the ‘convergence line’ of NPM advocacy. Its implication is not that structural or institutional factors are unimportant but that lessons can be drawn from those countries where policy leaders have taken advantage of the ‘windows of opportunity’ provided by structural factors to overcome the institutional impediments to non-incremental reform. As

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Goldfinch and ’t Hart (2003: 236) have pointed out, this emphasis on policy leadership went somewhat against the institutionalist stream in political science that tends to highlight the difficulties involved in effecting non-incremental reform: The literature contains many concepts and hypotheses that explain the durability of institutional arrangements: inheritance, immortality, stickiness, lock-in, deadlocks, path-dependency, appropriateness, permanent failure and so on. It is replete with empirical accounts of reform impasses . . . reform paradoxes . . . and reform backlashes. Overcoming the many barriers to institutional change in policy-making is indeed a daunting task. The current policies and institutional arrangements are embedded in laws, protected by dominant coalitions, sustained by habituation and organizational inertia . . . Although it may be possible to ‘smuggle in’ reform through a series of incremental policy adjustments, this is a time-consuming, reversible and potentially drifting process.

These writers go on to suggest that ‘successful reforms – those that are adopted as designed by their sponsors – constitute a major political achievement’. Considerable interest has therefore been directed toward those countries where reformers have succeeded in this regard. Both international agencies pushing the convergence line and reformers and ‘consultocrats’ eager to sell the ‘secrets of their success’ in advancing non-incremental reforms as well as scholars such as Moon (1995) Goldfinch and ’t Hart (2003), and Wallis et al. (2007) who, though questioning of this narrow definition of reform success, are nevertheless interested in the conditions under which a top-down style of policy leadership can be effective on its own terms, have drawn a number of lessons from the NPM reform achievements of countries such as the UK, New Zealand and Australia. These can be summed up by the following dicta: ‘rhetoric matters’; ‘credibility matters’; ‘cohesive teamwork matters’; and ‘procedural leverage matters’. I elaborate upon each of these in turn. First, to draw the lesson that ‘rhetoric matters’ may seem somewhat counter-intuitive since avowedly reformist political leaders are often castigated for their indulgence in ‘mere rhetoric’ or their failure to translate the rhetoric expressed in their policy manifestos into the reality of substantive policy change. Rhetoric is, however, simply the ‘art of persuasion’ and can serve effective policy leadership in a number of ways. In the first place, while structural factors may generate a demand for institutional reform by creating ‘windows of opportunity’ in the form of ‘critical junctures during which existing policy settings, goals and institutions are under pressure and lose their legitimacy, effective reformist leaders will use their rhetorical skills to dramatically ‘portray current events or issues as serious and acute crises’ (Goldfinch and ’t Hart 2003: 238). By amplifying the threat of inaction, such leaders will activate a propensity for loss aversion to legitimize their proposals’ radical and potentially risky change. In particular, they tend to simultaneously advance what Albert Hirschman (1991) has described as the three theses of reformist rhetoric. According to such rhetoric a non-incremental approach to reform is imperative since the accumulation of systematic structural problems or biases has placed a policy area in a ‘desperate predicament’ with the risk of postponing reform being rendered untenable by a turn of events that confronts it with ‘imminent danger’ against the background of a global wave of reform and change that provides mounting evidence of the ‘futility of resistance’. Wallis and Dollery (1999) found evidence of all three theses in the rhetoric of the advocates of NPM reforms

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and argue that the purpose of these arguments is not just to persuade sceptical publics but to influence both the hope and emotional dissonance ‘progressives’, ‘reactionaries’ and ‘pragmatists’ derive from the positions they take in the reform debate. As a result the rhetoric of reformist leaders can be become somewhat overblown with a tendency to over-determine the case for a non-incremental approach to reform and to oversell the benefits of the intended reforms. To varying degrees the contributors to this volume seem to adopt a sceptical (and appropriately scholarly) response to this rhetoric. The extent to which this response falls within the ‘reactionary’ pattern of ‘futility’, ‘jeopardy’ and ‘perversity’ theses described by Hirschman is considered in the final section of this chapter. The idea that ‘credibility matters’ is based on the notion that actors are more likely to focus on adjusting their behaviour and expectations rather than mobilizing resistance to reforms if they believe that the reforming government will be ‘time consistent’ and not reverse its reform direction. This idea is, of course, central to ‘new classical’ macroeconomic policy with the effectiveness of governments in bringing inflationary expectations under control being related to the credibility of their monetary and fiscal targets. It is also evident in Moon’s concept of ‘political will’ reflected in the personal commitment of leaders who are willing to take political risks to prevail against institutionalized resistance to advance policies ‘beyond those which arise by force of circumstance’. Credibility, of course, goes beyond a mere will to prevail. It is central to the sustainability of the public service bargains that can potentially govern and regulate the behaviour of politicians and civil servants. As has been pointed out NPM reforms may fail to establish a credible delegated agency bargain where there are expectations that either politicians or public servants will be unable to resist the temptations to ‘cheat’ on the mutual understandings of the risks and rewards of exercising managerial discretion within an overarching strategic framework. The effectiveness of policy leadership does not just depend on the rhetorical skills and commitment an individual policy entrepreneur brings to bear in taking advantage of a window of opportunity to push through reform. ‘Cohesive teamwork’ also matters with the prospects for reform success being enhanced if reformers enter into partnerships or hard core coalitions so that policy leadership can be collectively shared as like-minded committed policy entrepreneurs alternate in the leadership initiatives required to advance their reforms through the agenda-setting, formulation, decision-making, implementation and evaluation stages of a policy process. The members of such a coalition can provide one another with social support, tactical reality-testing and counter the dissonance that may inevitably be experienced as a result of disappointments and resistance encountered in pursuit of their reform ‘quest’ (Goldfinch and ’t Hart 2003: 239; Wallis and Dollery 1999: 154). Their shared commitment will not just be to a particular reform programme but to advancing one another into positions to exercise leverage over the policy process as it advances through its different stages. This suggests that ‘positional leverage’ also matters. This final dictum has been emphasized in Hall’s (1993) theory of paradigmatic policy change. According to this scholar the implementation of such a radical policy shift crucially depends on the ‘locus of authority’ shifting to advocates of a new policy paradigm. As they secure, or are recommended for positions of authority, they can alter existing organizational and decision-making arrangements to ensure that it is institutionalized. In this regard, Goldfinch and ’t Hart (2003: 241) comment that: ‘The literature on collective and collegial decision-making in

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government suggests that an important dimension of the political efficacy of presidents, prime ministers, and other leaders lies in their institutional ability to influence the organization of decision-making – that is, to exercise procedural leadership.’ Perhaps a major attraction to reformist political leaders of the kind of organizational restructuring associated with NPM is that it can break up the ‘policy communities’ through which the Civil Servants and vested interests exercise ‘behind the scenes’ influence on policy formulation in particular areas. As Rhodes and March (1992: 187) have observed these relatively stable, integrated, vertically interdependent and exclusive networks ‘do not necessarily seek to frustrate any and all change but to contain, redirect and ride-out such change, thereby materially affecting its speed and direction’. A process of ‘agencification’ can therefore help political leaders gain greater positional leverage over the change process by moving ‘change agents’ who share their commitment to the ‘efficiency values’ associated with NPM into executive positions in newly formed state agencies. All the country studies in this book contain at least some discussion of the interaction of actors, institutions and structural factors in tracing their recent path of public management reform. They identify the main sources of policy leadership in the major NPMtype initiatives and generally relate the effectiveness of this leadership to at least some of the above-mentioned factors while, all the time, emphasizing the way country-specific institutional and cultural factors constrain and shape their implementation. Wegrich’s chapter on the UK highlights the importance of the commitment and positional leverage factors. He traces the emergence of what could be seen as a tradition of strong leadership through which Thatcher and her successors as Prime Minister demonstrated a commitment to push through public sector reform proposals and overcome potential resistance from sceptics in both Cabinet and the senior Civil Service by using a power of appointment to secure the power base needed to assert their own leadership over the change process. This chapter provides an interesting comparison with the US case described by Rockman and Thiam since it appears that, despite the significant institutional differences between the UK’s parliamentary system and the USA’s presidential system with its constitutional separation of powers, the UK is moving away from the Whitehall tradition of a politically neutral, career-based Civil Service towards one where changes of government precipitate a turnover of senior advisers and agency heads so that the public service can be made more responsive to the strategic commitments of new Prime Ministers or Presidents. The chapters by Goldfinch on New Zealand and Simms on Australia provide some interesting counterpoints to the UK and US cases. While leader commitment and positional leverage also mattered, cohesive teamwork seemed to have loomed even larger in determining the effectiveness of policy leadership in these ‘Antipodean twins’. In his chapter Goldfinch has been able to make reference to the considerable global interest not just in the distinctly contractualist model of NPM followed in this country but also in the model of cohesive policy leadership that reformists in both political parties, who did not always enjoy the support of their Prime Ministers, were able to establish with officials at the New Zealand Treasury and a business elite that was brought together by the Business Roundtable to maintain pressure on governments to maintain its reform direction and who supplied many of the change agents appointed to head newly created agencies. Australia is, of course, not an ‘identical twin’ to New Zealand. However, despite significant institutional differences such as its federal constitution, the closer ties between its

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unions and the Labour Party and the fact that, since 1976, the Treasury monopoly on economic policy advice has been contested by the Department of the Prime Minister, the advocates of reforms like NPM have been able to look to the leadership collectively supplied by a coalition that crosses both political parties and like-minded groups of lobbyists and ‘economic rationalist’ Civil Servants who enjoy frequent, high-quality interaction in Canberra, the seat of the federal government in Canberra. They have paid close attention to the ‘New Zealand experiment’ and similar experiments followed by ‘first-mover’ state governments such as those in Victoria and New South Wales. In general it seems that federalism in Australia has generated more pressure for convergence than divergence in public management reform, particularly when its experience is compared with that of Canada where, as Tomblin describes in his chapter, provincial rivalry and the zero-sum games surrounding the attempts by the federal government to equalize the revenues of provincial governments, may make the establishment of a cohesive reform coalition that can advance its members into positions of leverage over the process of implementing NPM considerably more difficult. Unlike Canada, Australia has been able to ‘catch up’ with New Zealand over the past 15 years as it has advanced similar NPM reforms at most levels of government. This has partly been because anti-reformist factions in New Zealand have been able to secure a significant constitutional change in 1996 in the form of the adoption of a mixed member proportional representation electoral system that effectively raised the institutional barriers to advancing the type of ‘crash through’ approach to reform implementation followed over its 1984–93 reform episode. This slow-down (and in some cases marginal reversal in direction) of public management reform in New Zealand after a constitutional change of a scope that has not been followed in any of its Anglo-Saxon counterparts, underlines the importance of institutional factors in determining the relative difficulty political leaders face in advancing non-incremental reform. However, the extent to which countries like Belgium, Denmark, Norway, the Netherlands, France, Japan and Hong Kong have lagged behind or diverged from the lead provided by the Anglo-Saxon group in advancing NPM cannot just be related to institutional differences. To a much greater degree these countries have preserved the Civil Service cultures that prevailed prior to the NPM era. This has been particularly evident in those members of this group who have maintained career systems of public service employment. In such countries senior Civil Servants have had an interest in preserving a serial loyalist bargain that allows them to exercise considerable backroom influence over policy formation and effectively ride out the ‘waves’ of NPM initiatives promoted by aspiring reformist political leaders such as Chirac and Sarkozy in France, Hashimoto and Koizumi in Japan, and Chee-Hwa in Hong Kong. The changes implemented through such initiatives have thus been largely incremental in nature and not disturbed the top-down control over the policy formulation, implementation and evaluation process exercised by senior Civil Servants at the centre of government or, for that matter, the risk-averse focus on procedural compliance exhibited by the managers and staff of line departments. Considerably more experimentation and innovation in NPM-type public management reforms is reported by Christensen and Noordegraaf in their studies of Denmark and the Netherlands respectively. This is not surprising since the more decentralized systems of government in these countries has meant that public servants have the greater focus on improving performance in service delivery associated with a delegated agency bargains

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rather than the emphasis on maintaining principal trust that characterizes serial loyalism. However, these writers both question the extent to which success in innovating and experimenting with new approaches to management has led to fundamental changes in the culture and behaviour of public servants. Christensen thus finds in the Danish experience reforms that ‘may seem spectacular at first glance but turn out to be mainly symbolic’ while Noordegraaf discerns a trend of ‘dynamic conservatism’ in the Dutch experience. He explains this in terms of the routine, technocratic nature of much of the work that ‘street level’ public servants continue to do after reforms have taken place: Cultures are still really ‘administrative’, despite attempts to make them more entrepreneurial, outward oriented and flexible. This is not so much a matter of unwilling administrators, but of meeting- and paper-based routines that determine how administrators should work, and also embody deeply ingrained values, such as predictability, uniformity and integrity. Numerous incidents and cases show the effects of non-predictable or non-uniform action. Enlarged by media exposure, they have reinforced classic routines . . . Dutch government ministries and agencies are characterized by a ‘culture of fear’ . . . also reinforced by incidents. First and foremost, this ‘fear’ comes from the pervasiveness of politics. High-ranking Civil Servants are taught not to damage their minister or alderman, because a ‘damaged’ and thus ‘weakened’ political executive damages personal prestige, departmental positions, and possibilities to get things done in or around the Cabinet. Although this has always been the case, such fear is strengthened in a media-driven climate, where success and failure count, and ‘small losses’ can have ‘large consequences’ . . .

This somewhat sobering conclusion that the more scholars focus on ‘what bureaucrats do’, on their culture and behaviour in carrying out their core tasks and providing their services, rather than reform implemented in a top-down way by political and administrative elites, then ‘the more things change the more they stay the same’, is also reflected in the chapters on reforms in Anglo-Saxon countries. Goldfinch and Gregory, in particular, draw attention to the tendency of New Zealand public managers to continue to follow a ‘check-list mentality’ in the face of recent calls for them to exercise more judgement and responsibility in the provision of public services. However, since, apart from Canada, the Anglo-Saxon countries appear to have gone furthest in implementing the NPM reform agenda, the contention by its advocates that NPM has the potential to be ‘consolidated’ as a dominant new policy paradigm needs to be considered in relation to the experiences of these countries as described in this book. Does NPM have the potential to eventually become consolidated as a stable dominant policy paradigm? The extensive use (perhaps overuse) of the term ‘policy paradigm’ to describe NPM is indicative of the extent to which policy theorists have followed a Kuhnian perspective on public management reform. From this perspective, non-incremental reform can be seen as following a punctuated equilibrium pattern in which attention is focused on the relatively brief period (‘revolutionary punctuation’) during which one paradigm is replaced by another as the stable, largely unquestioned frame of reference, for policy deliberations. Despite its relative brevity, Hall (1993) conceives the process of paradigmatic policy change as necessarily going through three distinct phases: ‘fragmentation’, ‘implementation’ and ‘consolidation’. Fragmentation occurs after the authority of a dominant paradigm is eroded through the accumulation of anomalies and ad hoc interventions that stretch its

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coherence so that it loses its hegemonic hold on the policy community and a number of rival paradigms are pushed forward for consideration. As mentioned in the last section implementation is contingent on the effective supply of policy leadership required for the advocates of a new paradigm to advance a reform agenda derived from it to completion. This is the crucial phase as far as Hall is concerned. He would expect as actors adjust to the new paradigm, that it will eventually become consolidated as the dominant paradigm that will prevail during another relatively long period of paradigmatic stability. But has this occurred in the case of NPM? It would seem that this question is only addressed in the chapters on New Zealand and the UK, which is hardly surprising since a sufficient time period has elapsed since these countries embarked on comprehensively implementing NPM reforms for observers to assess whether a paradigmatic consolidation has occurred. Interestingly, Goldfinch and Wegrich appear to have reached different conclusions on this issue. One would expect consolidation to be a more likely development in New Zealand if only because the switch to an MMP (Mixed Member Proportional Representation) system had the effect of ‘locking in’ the far-reaching reforms implemented over the 1984–93 reform episode and making it more difficult to crash through further nonincremental reforms without protracted negotiation between the parties who win the most votes and the minority parties whose support they require to govern under this system. Goldfinch does, however, report in some detail the shifts away from the ‘New Zealand model’ of NPM that have occurred under the Clark-led Labour administration that has been able to govern since 1999. With the State Services Commission and its supporters in the Labour Cabinet seeking to increase its influence relative to the Treasury over the public management reform process, there have been shifts from fragmentation to consolidation of public organizations, from output accountability to outcome responsibility, some renationalization and a greater emphasis on a ‘new public service ethos’ that promotes the type of public value-seeking leadership described by Wallis and McLoughlin in their chapter. Goldfinch is, however, reluctant to draw the conclusion that these shifts herald the collapse of the NPM paradigm and its succession by a type of post-NPM ‘New New Zealand model of public management’ (Chapman and Duncan 2007). Instead he concludes that: they are an adaption of NPM rather than a reversal of it. Indeed, they might be cosmetic or rhetorical changes only, with the NPM core largely untouched . . . It may be that structures of NPM are so deeply embedded that even attempts to rectify problems will be undermined. As Gregory (2006) argues, attempts to increase collaborative efforts between agencies run up against existing logics still contained in the output and purchasing system, while tensions remain between output and outcomes measurement. Appropriations (the authority given by Parliament to incur expenses or capital expenditure) are made to outputs, not to outcomes. Attempts following the Review of Centre to create ‘super-networks’ among agencies were generally not successful, and the current broader focus on inter-agency collaboration: depends on high levels of mutual trust, shared risk-taking, and good will among the top executives and managers of governmental agencies . . . But because the public finance statute continues to underpin a performance regime based on the need to produce outputs it is hard to see how exhortations to collaborate will override incentives which discourage . . . such action. Collaboration, like ‘coordination’, is more easily spoken of than achieved . . . (Gregory 2006: 144)

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This is essentially an affirmation of the potential the comprehensive implementation of far-reaching NPM reforms along New Zealand lines has to establish the conditions for the consolidation of NPM as a new and relatively stable dominant policy paradigm. Wegrich finds a similar interpretation of ‘post-NPM’ reforms in the UK context: It claims that the core elements of the NPM template as a mix of free market, economic incentives and new managerial control tools have been so deeply embedded into the working of executive government and public services that any analysis of the developing reform agenda would naturally detect approaches that are not included in the core NPM toolbox. New Public Management is so deeply embedded that it is no longer high on the public and political agenda. Personnel and financial management in executive government has already gone so far in decreasing public sector distinctiveness that the focus these days is either on incremental reforms in these domains or shifts to other aspects, such as ‘skills’ or ‘delivery’. While the reform agenda shifted over time, the basic direction remained on track with the core NPM doctrines ‘because both Conservative and New Labour administration have embraced the basic NPM doctrines, even if they have wanted to change the labels on particular reforms’ (Pollitt 2006: 38). Re-branding of reform initiatives does not change the basic trajectory of reforms that continues along the path of deepening basic NPM reforms.

He does, however, seem to reject the paradigmatic consolidation claims implicit in this interpretation and, indeed, the whole Kuhnian perspective on policy change it presumes. In its place he finds more credence in ‘the policy succession’ approach followed by his mentor, Christopher Hood. From this perspective, the appearance of ‘paradigm stability’ in public management is essentially illusory since all administrative paradigms have ‘fatal flaws’ so that the dominance of any one is likely to be unsustainable since it will generate a stream of perverse and unintended consequences that induce a reactive ‘pendulum swing’ to an alternative paradigm that addresses these problems but has, of course, its own fatal flaw. He does, however, see the Thatcherist drive to restructure and change the culture of the public sector as being significant, since it broke up the clublike system of governance that prevailed between senior Civil Servants and ‘consensus’ politicians. Her shift to a strong, committed style of policy leadership effectively came to be institutionalized as her successors relied on the same combination of optimistic rhetoric, emphatic commitments, cohesive teamwork and positional leverage to drive through induced policy successions. It therefore had the effect of destabilizing public management reform and producing the ‘high modernism’ and ‘hyper-innovation’ that, according to Wegrich characterizes its subsequent trajectory. Like the other contributors to this volume, these writers couch their rhetoric in the detached, somewhat sceptical, terms that seem to characterize the dominant mode of scholarly discourse in the field of public administration. What does this signify? What is it opposed to? And is this the only appropriate response public administration scholars can take in response to the convergence line advocated by the champions of NPM-type reforms. These questions will be briefly considered by way of conclusion to this chapter. Conclusion: alternative directions for scholarly rhetoric To varying degrees, most of the contributors to this volume seem to find their rhetorical comfort zone in the generally detached, sceptical and critical tone that characterizes the discourse of scholarly outsiders who are able to maintain some distance from the heat of political debate and advocacy associated with the formulation and implementation of

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recent public management reforms. This is reflective of the way public administration scholars were excluded from the deliberations that surrounded their design. Reformers clearly drew from and were mainly influenced by sources outside the public administration ‘profession’ in constructing their models of NPM. As the chapter by Dollery makes clear, these mainly comprised economic rationalist theories of government failure and management experts promoting a ‘generic managerialist’ approach to solving incentive and organizational problems in the public sector. Both sources had no long tradition of involvement in the arena of public management reform. Their entry into this arena provided both an opportunity and a challenge to public administration scholars. Quite clearly there have been enormous opportunities to write critical responses to this development as evidenced by the voluminous literature in public administration books and journals on the subject of NPM. At the same time, the challenge was whether they should seek to preserve the scholarly credentials and critical edge of their discipline or fight back to regain its influence by exploiting those areas in which they enjoyed a comparative advantage in understanding the emerging context of government reform. Where public administration scholars have sought to maintain their critical distance from the reform process, their rhetoric often conforms to the ‘reactionary’ pattern described by Hirschman (1991) in which they seem to be persistently advancing either ‘futility’ or ‘perversity’ or ‘jeopardy’ arguments against reform. Wallis and Dollery (1999) found a wealth of examples of these arguments in the public administration at the time of writing their book. The country studies in this book also report numerous instances where particular reforms have either simply failed to make a significant difference to the behaviour of key actors in this area (‘the futility thesis’) or have damaged some unappreciated historical achievement (‘the jeopardy thesis’) or are generating unintended, perverse outcomes (‘the perversity thesis’). These arguments can also be founded in some of the theme chapters. Gregory’s chapter on accountability presents an extended discussion of the ways in which reformer efforts to enhance managerial discretion and accountability may have had the opposite ‘perverse’ effect by increasing the complexities of achieving accountability and increasing the incentive to avoid responsibility. Goldfinch’s chapter reflects a more Oakeshottian pessimism with respect to the ‘dangerous enthusiasms’ and potential jeopardy effects of large-scale information systems developments. However, as the emerging literature on ‘post-NPM reforms’, the ‘new governance’ or ‘public value management’, public administration need not always express this type of policy pessimism. The way an emerging literature explores the integrative, renewing possibilities of both ‘e-government’ and a networked, value-oriented type of public service leadership is discussed in the chapters by Gauld and Wallis and McLoughlin. An interesting aspect of this literature is the way it seems to drive a wedge between the economic rationalism and managerialism, excluding and largely ignoring the former while, at the same time, bringing ideas drawn from the governance stream in public administration together with those of systems theorists and management experts who are more appreciative of contextual factors than generic managerialists. As comments on this development by contributors such as Goldfinch indicate, this development may be prone to the same tendencies toward uncritical optimism and rhetorical ‘oversell’ that beset the convergence line in NPM. Its does, however, appear to portend an exciting future renewal of the public management reform debate and the publication opportunities in the public administration literature on this topic.

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References Chang, H.J. (1994), The Political Economy of Industry Policy, London: Macmillan. Chapman, J. and G. Duncan (2007), ‘Is there now a new ‘New Zealand’ model?’, Public Management Review, 9: 1–25. Goldfinch, S.F. and P. ’t Hart (2003), ‘Leadership and institutional reform: engineering macroeconomic policy change in Australia’, Governance, 16 (2): 235–70. Gregory, R. (2006), ‘Theoretical faith and practical works: de-autonomizing and joining-up in the New Zealand state sector’, in T. Christensen and P. Lægreid (eds), Autonomy and Regulation: Coping with Agencies in the Modern State, Cheltenham, UK and Northampton, MA, USA: Edward Elgar, pp. 137–61. Hall, P. (1993), ‘Policy paradigms, social learning and the state: the case of economic policymaking in Britain’, Comparative Politics, 25 (3): 275–96. Hirschman, A.O. (1991), The Rhetoric of Reaction, Princeton, NJ: Princeton University Press. Hood, C. (1998), The Art of the State: Culture, Rhetoric, and Public Management, London: Oxford University Press. Hood, C. and M. Lodge (2006), The Politics of Public Service Bargains, Oxford: Oxford University Press. Moon, J. (1995), ‘Innovative leadership and policy change: lessons from Thatcher’, Governance, 8: 1–25. Naschold, F. (1995), The Modernization of the Public Sector in Europe: A Comparative Perspective on the Scandinavian Experience, Helsinki: Ministry of Labour. Olsen, J.P. and B.G. Peters (eds) (1996), Lessons from Experience: Experiential Learning in Administrative Reform in Eight Democracies, Oslo: Scandinavian University Press. Peters, B.G. (1996), The Future of Governing: Four Emerging Models, Lawrence, KS: University Press of Kansas. Pollitt, C. (2002), ‘The new public management in international perspective: an analysis of impacts and effects’, in K. McLaughlin, S.P. Osborne and E. Ferlie (eds), New Public Management: Current Trends and Future Prospects, London: Routledge, pp. 12–35. Pollitt, C. (2006), ‘Performance management in practice: a comparative study of executive agencies’, Journal of Public Administration Research and Theory, 16: 25–44. Pollitt, C. and G. Bouckaert (2004), Public Management Reform: A Comparative Analysis, 2nd edn, Oxford: Oxford University Press. Premfors, R. (1998), ‘Reshaping the democratic state: Swedish experiences in a comparative perspective’, Public Administration, 76 (3): 141–59. Rhodes, R.A.W. and D. Marsh (1992), ‘New directions in the study of policy networks’, European Journal of Political Research, 21 (3): 181–205. Rodrik, D. (1996), ‘Understanding economic policy reform’, Journal of Economic Literature, 34 (1): 9–41. Wallis, J. and B.E. Dollery (1999), Market Failure, Government Failure, Leadership and Public Policy, Basingstoke: Macmillan. Wallis, J., B.E. Dollery and L. Mcloughlin (2007), Reform and Leadership in the Public Sector, Cheltenham, UK and Northampton, MA, USA: Edward Elgar. Wolf, C. (1989), Markets or Governments: Choosing Between Imperfect Alternatives, Cambridge, MA: MIT Press.

Index

Titles of publications are in italics. Aberbach, J. 18, 245 accountability 12, 66‒84, 359‒60 as assurance 69 and leadership 89‒90 and new public management 72‒3 as political story-telling 73‒83 and responsibility 67‒72 types of 70 United States 205 action learning 101‒2 administrative cultures and continuity, Netherlands 272 administrative presidency 200, 203 administrative reform, France 223‒32 administrative structure Denmark 280‒81 France 220‒23 Hong Kong 317‒18 Netherlands 262‒4 Norway 301‒2 agency costs 37 agency problems, information systems development 127‒30 agency reform, Denmark 286‒7 agency theory 36‒8 aggressive outreach (recruitment) 46 Akerlof, G.A. 37‒8 Alchian, A. 33, 34 Alimo-Metcalfe, B. 98 answerability 68‒9 Arrow, K. 35 Art of the State, The 353 Ashley, Liam 76‒9 assessment centres 48 assessment of agencies, US 205, 214‒15 associational governance, Netherlands 268 Aucoin, P. 69, 174, 193, 213 Australia e-government 111‒13 new public management 13, 173‒84 Baccarini, D. 122 Bailey, S.J. 25 Barber, B. 89 Barzel, Y. 35 Batal, C. 41

Belgium 14, 235‒57 administrative structure 235‒8 Bjornberg, L. 50 Blair, Tony 173 Board of Audit, Japan 341 Boston, J. 20, 31‒2 Bouckaert, G. 10, 55, 354‒5 bounded rationality 33 Bourgon, J. 193 Bourgon report 192, 193 Bovens, M. 74 Boyne, G.A. 25 Brewster, C. 48 Britain, see United Kingdom Brodkin, E.Z. 7 Brown, M. 130 Brudney, J. 130 Brunsson, N. 303 Bryman, A.I. 88 Bryson, J. 91 Buchanan, J.M. 23, 30 budgetary reform Denmark 293‒4 France 229 Netherlands 266, 273‒4 bureaucratic discretion 7 bureaucratic model 2‒4 critiques of 4‒11 Burnham, J. 150 Burns, J.M. 88, 89 Bush, George W. 204, 214‒17 business model ideology, United States 217 Butcher, T. 8 Byrnes, J.D. 26 Cairns, A. 187 Camu reform, Belgium 235 Canada 187‒98 minority recruitment 47 Caplan, B. 23 capture theory of regulation 22‒3 career-based management systems 42‒4 career structure, French civil servants 222‒3, 224 Caron, D.J. 62 Carter, Jimmy 204, 206‒7

371

372

Index

Cerdeblom, D. 53 Chadwick, A. 106 Chang, H.J. 22, 357‒8 Chapman, J. 169 Cheung, S.N.S. 34 Chicago School 22‒3 Chirac government 226 Christensen, T. 18 citizens as customers Australia 182 Hong Kong 327‒8 civil reform, Netherlands 266‒7 civil service Belgium 237‒57 France 221‒3 Japan 343‒5 reaction to reform, Norway 311 UK 139‒40, 41 civil service reform Belgium 247‒57 Denmark 290‒93 Hong Kong 324‒6 Japan 344‒5 Netherlands 264‒5 USA 206‒10 Clardy, A. 53 client services reform, Australia 180, 182 Clinton administration 211‒12 coaching 100 Coase, R.H. 29, 33, 35‒6 Coghill, K. 74 coherence of NPM policy 357‒60 cohesive teamwork 362 Cohn, D. 198 community consultation, Australia 180‒81 compensation systems, public sector 55‒61 competence-based development 50‒51 competency approach to performance 53 competency frameworks 48 competition 2 and local government 25 Considine, M. 181 constitution Britain 140 and continuity, Netherlands 271 Japan 336 consultation and e-government 108 continuity and reforms, Netherlands 270‒72 contracting out Denmark 295‒6 Hong Kong 329 and information system development failure 130‒31 UK 141

control problems and information system failure 126‒7 convergence of NPM reforms 351‒7 Coombs Inquiry 176 coordination, Belgium 252‒3, 256‒7 corporatist state, Norway 308‒9, 313 corporatization Denmark 287‒8 Hong Kong 328‒30 Japan 340 New Zealand 158 costs of information systems development failures 121‒2 Council on Economic and Fiscal Policy, Japan 340 credibility of NMP reform 362 Crosby, B. 91 Crown Entities Act, New Zealand 166 cultural perspective and reforms, Norway 303‒4 cultures, administrative, Netherlands 272 customer focus reforms Australia 182 Hong Kong 327‒8 David, P.A. 45 Davies, A. 125 Day, D. 97 decentralization Australia 182 Denmark 280‒81 France 224 Netherlands 263 pay systems 59 see also structural devolution deLeon, L. 70 democracy and e-government 108 Demsetz, H. 29, 33 Denmark 14, 279‒97 department-based management systems 43 deregulation, Norway 309 deregulation model of government 359 Devanna, M. 88 Devine, Donald 208 devolution, see structural devolution Dietz, T. 180‒81 Digital Strategy 114 disaggregation 2 discretion, bureaucratic 7 discursive flexibility, Netherlands 267‒8 distancing and blaming strategy 354 Dollery, B.E. 21, 24, 26, 357, 361‒2, 368 Dubnick, M. 75 Duncan, G. 169 Dunleavey, P. 1‒2, 8

Index e-government 12, 105‒18 Australia 111‒13 Britain 114‒15 development 110‒11 expectations 106‒10 definition 105‒6 international developments 111‒17 New Zealand 113‒14 United States 116‒17 economic effects of reforms, Netherlands 273‒4 economics and leadership 89 Economics of Welfare 21‒2 efficiency 177 effects of reforms, Japan 346‒7 as reform motivation, Hong Kong 330‒31, 320 Efficiency Unit, UK 144 Eggertsson, T. 35 Ehrlichman, John 204 Ellwood, S. 170 emotional intelligence and leadership 93 employee referrals 45‒6 Employment Contracts Act, New Zealand 158‒9 environmental perspective of reform, Norway 303 Europeanization as motivation for reform, France 223‒4 Evans, M.B. 11 executive agencies, UK 144‒5 executive coaching 100 exit, and local service provision 25 Federal Activities and Inventory Act (FAIR) 205, 215 federal administration reform, Belgium 255‒6 federal systems and reform Australia 177 United States 201 Feenor, J.W. 98 Finance, Ministry of, Denmark 282‒3 Financial Management Initiative (FMI) 144 financial management reform Denmark 294 Hong Kong 320‒34 Japan 342‒3, 348 New Zealand 159‒60 fiscal responsibility, New Zealand 160 flexible model of government 359 FMI (Financial Management Initiative) 144 Fortuyn, Pim 266‒7 four Ms 354‒5 France 14, 220‒32 administrative reform 223‒32

373

administrative structure 221‒23 politico-administrative system 220‒21 Frant, H. 33 Freibert, A. 56 From Red Tape to Results: Creating a Government that Works Better and Costs Less 212 Fulton Commission 138 Furubotn, E.G. 33, 35 Future of Governing, The 358 Gaebler, T. 4 Gardner, H. 97 generic managerialism 18, 20‒21 Georgiadou, E. 124‒5 Getting Government Right 190 Giauque, D. 62 Goldfinch, S.F. 89, 361, 362‒3 Goleman, D. 93 Gore, Al 211‒12 government co-ordination and transformation, and e-government 107‒8 models of 358‒9 Government Direct 114 government failure paradigm 21‒38 criticism of 28‒9 Le Grand theory 27‒8 and market failure 21‒2 normative taxonomies 26‒8 positive taxonomies 23‒6 and public choice theory 23, 29‒32 theories of 21‒38 Government Online 112 government production failure theory 28 grands corps, French civil service 223 Grant, G. 130 Gregory, R. 4, 170 Grote, D. 53 Hall, D. 100 Hall, P. 362, 365 Hampton Review 150 Harper, K. 207 Hashimoto, Ryutaro 338 Hays, S.W. 46 health service reforms, Canada 191‒2 Heeks, R. 123‒4, 125 Heintzman, R. 69 Hirschman, A.O. 25, 92, 361 Hodge, G. 74 holding to account 74 Holton, E.F. 51 Hong, K.P. 45

374

Index

Hong Kong, public management reform 15, 317‒33 Hood, C. 8, 9, 10, 19, 20, 21, 84, 89, 94, 147, 148, 332, 349, 353, 355, 359, 367 horizontal integration and e-government 110 Howcroft, D. 123 Howlett, M. 10 Hughes, O. 181 human resource management (HRM) 11, 41‒62, 357 Belgium 248‒9 France 229‒30 Hummel, R. 68 ICT, see information technology idolization and IS failure 125 Improving Management in Government: The Next Steps 144 incentives for public value-seeking leadership 96‒7 incentivization 2 Independent Administrative Institutions, Japan 340 information technology project failure 12, 121‒33 and recruitment 46 and reform 8 Ingraham, P. 70, 79 institutions fragmentation, Netherlands 270 as reform mechanism 268‒9, 281‒4 institutional environment and reform, Norway 303 interest groups in decision-making, Norway 308‒9 intergovernmentalism and NPM, Canada 195‒7 Japan 15‒16, 336‒49 Jenkins, S. 145 Jensen, M.C. 37 Johnson, C. 150 joined-up government 115 Kaufman, H. 213 Keating, M. 180, 183 Kelly, P. 180 Kim, P.S. 45 Knapp, A. 231 Kranton, R.E. 37‒8 Lavelle, J. 45, 55 Lavigna, R.J. 46 Lawler, E.E. 54 Le Grand theory of government failure 27‒8

LEA (Leadership Effectiveness Analysis) 98 leadership 88‒102 and accountability 89‒90 development programs 97‒102 and NPM implementation 360‒65 Leadership Effectiveness Analysis (LEA) 98 Lederer, A. 122 Lee, General Robert E. 66 Leslie, J.B. 98 Light, P.C. 216 local government and competition 25 Denmark 282‒6, 287 taxonomies of failure 24‒6 Local Government Denmark 282‒4 Local Government Economics 25 Lodge, M. 84, 94, 355, 359 Lohmann, R.A 29 loi organique relative aux lois des finance 230 ‘Lomanism’ and information system failure 126 Long, N. 201 loose accountability 79‒80 Lucas, J. 82 Lynn, L.E. 10 Lyytinen, K. 125, 129 Mahaney, R. 122 management reform Japan 339‒45 Netherlands 265‒6 managerial accountability 68, 359‒60 managerial expectations, e-government 106‒7 managerial faddism and information system 126 managerial reform, Denmark 290‒97 managerialism 181 Managing for Outcomes approach, New Zealand 165 mandate system, Belgium 250 March, D. 363 market failure and government failure 21‒2 market mechanisms as governance principle 139‒40 market model of government 358 Marsden, D. 58 Marsh, D. 94 Matsunami, J. 338 May, C. 106 McCurdy, H.E. 22 McManus, J.C. 35 Meckling, W.H. 37 mentoring 100‒101 Mentz, J.N. 51 merit-based appointment 6

Index

375

Merit Systems Protection Board, United States 208‒9 Merton, R.K. 9 Miles Law 79 minorities, recruitment of 46 models of government 358‒9 Moe, T.M. 36 Moore, M.H. 91, 102 Moran, M. 145, 146, 152 Mosher, F. 69, 70‒71 motivation and performance-related pay 58‒9 Mueller, D. 30 Mulgan, R. 66, 74, 182, 182‒3 multi-rater feedback 98‒100 Murumatsu, M. 338 myths and institutional environment 303

O’Dowd, M.C. 24 objective responsibility 69 Office of Personnel Management, United States 208 Olsen, J.P. 301, 353 Orchard, L. 31 Organic Law relative to finance laws (LOLF), France 230 organizational change, New Zealand 158‒9 organizational management reform, Japan 339‒41, 348 Osborne, D. 4 Ostrom, E. 180‒81 Ottawa, NPM initiatives 191 outsourcing Japan 340 United States 216

Naquin, S. 51 Naschold, F. 11, 353‒4 Nathan, R.P. 200 National Performance Review, From Red Tape to Results 212 Netherlands, public management reform 14, 262‒76 Neustadt, R. 68 neutral competence 203 new institutional economics (NIE) 32‒3 property rights 33‒5 transaction costs 35‒6 new public management (NPM) 1‒2, 9‒10 and accountability 72‒3 Australia 173‒84 Canada 187‒96 core doctrines 20 criticisms 161‒3 Denmark 279‒80 France 225 and intergovernmentalism, Canada 195‒7 New Zealand 156‒7 as policy paradigm 365‒7 New Zealand 13, 155‒71 accountability case 76‒9 e-government 113‒14 and NPM as policy paradigm 366‒7 public management reform 13, 155‒71 Newberry, S. 170 NIE, see new institutional economics Nixon, Richard 204, 208 normative taxonomies of government failure 26‒8 Northcote–Trevelyan Report 138, 173 Norway 14‒15, 300‒314 administrative structure 301‒2 NPM, see new public management

Page, E.C. 48 Painter, M. 21 Pal, L. 189, 190, 192 Palmer, G. 72 paradigmatic policy change 365‒6 PART criteria 214‒15 participation and e-government 108 participatory model of government 358‒9 partisan activity indicators, Belgium 246‒7 passive responsibility 74 Paterson, J. 181 patronage, United States 202‒3 Patten, C. 327 pay reform, Hong Kong 324‒6 pay systems 55‒61 Peacock, A.T. 29 Peltzman, S. 22 Pemerl, D.E. 53 pendulum swings New Zealand 169‒70 UK 149‒51 performance management 52‒4 Denmark 294‒5 Hong Kong 326‒8 Japan 341‒2, 347‒8 UK 146‒9 performance measurement 51‒5 performance-related pay 56‒9 Personnel Management, Office of, US 208 personnel management reform, Japan 343‒5, 348 personnel numbers, Japan 345‒6 pessimism and information system development 131‒3 Peters, B.G. 1, 5, 25‒6, 75, 353, 354, 358 Pigou, A. 21‒2 Podger, A. 179

376

Index

policy conditions for encouraging public value-seeking leadership 95‒7 policy effects of reforms, Netherlands 273 policy leadership and NPM reform 360‒65 policy succession, UK 149‒51 political alienation, Belgian SCS 239‒40, 246‒7 political control and structural devolution, Norway 310‒11 political radicalism index, Belgium 246‒7 political story-telling and accountability 73‒83 politicization of administrative system Belgium 242‒7 United States 203‒4, 217 politics and administrative reform, US 200‒218 and civil reform, Netherlands 266‒7 of civil service reform, Hong Kong 331‒2 and continuity, Netherlands 271 of managerial reform, Denmark 296‒7 and reform, Australia 177 Pollitt, C. 2, 10, 20, 54, 55, 150, 151, 181, 354‒5 position-based management systems 42 positional leverage 362‒3 positive taxonomies of government failure 23‒6 Premfors, R. 353 Prime Minister’s Delivery Unit (PMDU) 147‒8 principal–agent relationships 36‒7 privatization Denmark 287‒8 Hong Kong 328‒30 Japan 339‒40 New Zealand 158, 168 United Kingdom 141 United States 211, 217 professional practices, effects of reforms, Netherlands 270 programme management system, Hong Kong 326‒7 promotion and politicization, Belgium 243‒4 property rights 33‒5 psychological contracts 60‒61 Public Choice III 30 public choice theory 23, 29‒32 Public Choice Theory and Local Government 25 Public Service Agreements (PSAs) 146‒7 public service bargains 355 Hong Kong 332 Public Service Renewal reforms, France 227‒9

public value-seeking leadership 12, 88‒102 leadership development programs 97‒102 policy encouragement 95‒7 Pusey, M. 176, 181 Pyper, R. 150 quality circles, France 226‒7 quasi-markets, Denmark 288‒90 rapid applicant screening 47 Rashomon Effect 79 Reagan administration 204, 208, 210‒11 recruitment 45‒6 civil service, Belgium 243 Red–Green government, Norway 312 reductions in force (RIF), United States 209 reform effects Japan 345‒8 Netherlands 272‒5 Norway 310‒11 reform institutions, Denmark 282‒4 reform mechanisms, Netherlands 267‒9 reform motivations, Hong Kong 330 Reform of the State programme, France 227‒9 Reforming Act of Public Services, Japan 342 Reforming the Australian Public Service 177 regime performance effects of reforms, Netherlands 274‒5 regulation Norway 306‒7, 309 UK 148 Reinventing Government 4 reinventing government, United States 211‒14 responsibility and accountability 67‒72 responsibility-as-accountability 74 responsive competence 203 restructuring, New Zealand 160‒61 results approach to performance 52 Results for Canadians 190 Revans, R. 101 rhetoric of NPM reform 361‒2 Rhodes, R.A.W. 10‒11, 74, 75, 82, 94, 174, 182, 363 Richter, R. 33, 35 Rima, I.H. 32‒3 Risher, H. 61 Robey, D. 125, 129 Rodrik, D. 351 Rogers, V. 180 Romzek, B. 70, 79 Roosevelt, Franklin 203 Rutherford, M. 32 Sarkozy, Nicolas 231 Savoie, D. 193

Index Schick, A. 156 Schön, D. 79 selection process 47‒9 Self, P. 30, 31 Senior Executive Servants (SES), United States 207 seniority-based advancement 6 separation of powers, United States 201 serial loyalist bargains 355‒6 effect on leadership 94 service performance, effects of reforms, Netherlands 273 service reform, Netherlands 265‒6 Shane, P. 211 Shields, J. 11 Shim, D.-S. 42, 62 Silcock, R. 110 Simeon, R. 196 Simon, H. 33 Snow, C.P. 71 social policy reform, Australia 184 State Sector Act, New Zealand 158 State Sector Standard Board, New Zealand 164 Statements of Intent, New Zealand 165 Stern, P.C. 180‒81 Stevens, A. 227 Stigler, G. 22 Stoker, G. 91 Stone, B. 70 Stretton, H. 31 structural devolution Denmark 284‒6 Norway 306‒7, 310‒11 see also decentralization structural perspective and reforms, Norway 304 structural reform Denmark 284‒90 Norway 306‒7 subjective partisan sympathy, Belgium 246‒7 subjective responsibility 70‒71 supermarket state, Norway 307‒10, 313 system performance effects of reforms, Netherlands 274‒5 ’t Hart, P. 361, 362‒3 Talbot, C. 150 target-setting, UK 146‒9 technical environment and reform 303 technocratism, Belgian SCS 238‒9 technophilia and information system failure 125 temporary workers 46 Thatcher, Margaret 145‒6

377

Thompson, J.R. 44, 60, 62 360-degree feedback 98‒100 Tichy, N. 88 tight accountability 80 TNA (training needs assessment) 50 total quality management (TQM) approach to performance 53 traditional model 2‒4 training 49‒50 training needs assessment (TNA) 50 transaction costs 35‒6 transactional leadership 88 Transformational Government: Enabled by Technology 115 transformational leadership 88‒9 transparency effects of reforms, Netherlands 269 Tsang, D. 332‒3 Tullock, G. 22 Tung, C. 332‒3 Uhr, J. 71‒2 UK, see United Kingdom unions and administrative policy, Norway 305 unitary management in local government, Denmark 287 United Kingdom 12‒13, 137‒53, 367 United States 13‒14 administrative reform 205‒18, 355 e-government 116‒17 value for money audits (VFM) 148 Van Wart, M. 88 vertical integration and e-government 110 Vining, A.R. 28 vocabulary of reform 267‒8 voice, and local service provision 25 Wallis, J.L. 21, 24, 26, 93, 97, 357, 361‒2, 368 Wanna, J. 182 Weber, M. 2‒3, 9‒10 Weimer, D.L. 28 Weisbrod, B. 24 Weller, P. 11 Whitehall model 139 Whitehead, John 171 Wildavsky, A. 177 Wilenski, P. 176 Willems, I. 58, 59, 60 Williamson, O.E. 29 Wilson, J.Q. 80 Wilson, M. 123 Wilson, Woodrow 4, 9

378

Index

Winchell, T.E. 61 Wolf, C. 26‒7 World Public Sector Report (WPSR) 44, 48 Wright, V. 231

Yamamoto, H. 19 Yamamoto, K. 338, 347 Zerbe, R.O. 22 Zifcak, S. 182