Managing Well-being Outcomes-based Approach to Public Sector Accountability in New Zealand

Umesh Sbarma


The public sector around the globe has changed substantially with the initiation of New Public Management (NPM) principles around the 1980s which was driven by lessening or removing the differences between the private and public sector and transitioning from the process of accountability to accountability for results (Hood 1991, 1995). The rationale behind the reform was that the public sector needs to be more efficient and effective by following the private sector framework and practices (Rana et al. 2019; Sharma and Lawrence 2015; Gill 2011; Sharma and Hoque 2002). NPM emphasizes outputs and results, making the public sector more business-like and focuses on multiple performance measures, which are broader than financial measures (Talbot 2010; Modell 2009).

Internationally New Zealand has been labeled a leader in New Public Financial Management (NPFMs) reforms (Newberry 2002). In New Zealand, the Public Finance Act 1989 is the key legislation that underpins the financial management reforms. The Act delegates regulatory powers to the Treasury. Over time a considerable body of secondary regulations entailing accounting rules has emerged.

The NPM style of public sector reforms has been common and is justified as typically improving government performance (World Bank 1995; Dormer 2016). These reforms entail initiatives designed to minimize state intervention and increase the role of markets, with privatization deemed based on improved efficiency, effectiveness, and accountability that will result (Hood 1991, 1995).

New Zealand’s NPM-style public sector reforms received international attention for their consistency and speed, as well as for the adoption of a

In Hoque, Z. (ed) (2021), Public Sector Reform and Performance Management in Developed Economies: Outcomes-Based Approaches in Practice, New York: Routledge (Chapter 5).

world-leading NPFM system (Hood 1991). The NPFM system has provided a model for other financial management system reformers.

Public sector reforms in New Zealand commenced shortly after a snap election in 1984 which resulted in a change in government. The new Labor Government almost immediately faced a currency crisis and the need to devalue the dollar by 20% (Scott 1996). The high level of debt shaped concern within the country, over the manner in which the debt had grown. New Zealand’s public sector emphasis shifted from input/ output framework to well-being outcome-based approach. An integral part of this new structure was to effectively measure performance (Lonti and Gregory 2007).

This chapter presents an overview of the development of a well-being outcome-based approach to public sector accountability in New Zealand. Firstly, the chapter examines the various legislations that are in place within New Zealand’s public sector context. The chapter then examines the output and well-being outcome-oriented public sector accountability within New Zealand’s public sector using two case studies.

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