Reform, hybridization, and revival: the status of new public management in Australia and New Zealand

ABSTRACT

This paper addresses the degree to which new public management (NPM) has continued to be an influential model for central government reform in Australia and New Zealand, two early adopters and exemplars of NPM. We analyse recent reform agendas and their impact on NPM in both countries. Several institutional and other types of explanations are provided for why NPM is retained, modified, or revived. NPM systems may resist or be diluted by new layers, or the incorporation of techniques and approaches from reform menus, producing revival, discontinuity and forms of hybridization.

KEYWORDS:

• New public management
• new public governance
• New Zealand
• Australia
• public administration reform

This article engages with questions about the continuing use and significance of new public management (NPM) by examining first generation adopters of the NPM framework. The two cases illustrate two types of NPM: the principles-based internal management version (NPM1); and the external focus on marketization and competition variant (NPM2) (Torfing et al. 2020). Australia and New Zealand adopted the two types, but in different ways. New Zealand has been notable for strong management devolution. Australia has been more prone to bouts of NPM2, but has also experienced ongoing management refinements.

New public management has been differently defined and differently applied, ranging from wholescale model adoption, to the grafting of ideas, techniques and rhetoric onto existing structures to differing degrees. It has faced debate as to its standing, longevity, and efficacy. Analysing reform agendas and their impact on NPM in New Zealand and Australia, we show that NPM systems both resist, and are diluted by new layers, and/or the incorporation of techniques and approaches from different reform menus. Since the height of NPM dominance in the 1980s and 1990s, both countries have undertaken incremental and sometimes significant change. These have reflected international trends in the twenty-first century: shifts from comprehensive to selective reforms; universal prescriptions to context-based reform; and from one orthodoxy to layered and/or hybridized frameworks, with sometimes seemingly contradictory logics (Goldfinch and Yamamoto 2019; Halligan 2022). New Zealand has demonstrated a degree of hybridization, continuity, and indeed revival of aspects of NPM. Australia has exhibited hybridizing tendencies, but has experienced more discontinuity due to pendulum swings between sometimes polarized governments with differing policy agendas.

Paradigms, layering, hybridization, and public administration reform

Some studies of public administration reform present it as a more-or less-linear process in the Kuhnian tradition, where a new paradigm with basic assumptions, new languages, ideologies, and differing conceptions of problems and solutions, becomes dominant and supplants the old. In this view, traditional public administration (TPA) had been replaced by NPM, and then variations on new public governance (NPG), with digital era governance also being proposed (Dunleavy et al. 2006; Torfing and Triantafillou 2013).

If we treat the social and government spheres as complex and contested, where differing and competing and contradictory paradigms, ideologies, doctrines, and techniques compete and co-exist, then more complex reform processes are possible. For example, others see recent public administration reform more a question of ‘layering’ (Mahoney and Thelen 2010); building on, but not fundamentally undermining or removing existing NPM or other structures (Christensen and Lægreid 2011). Pollitt and Bouckaert (2017) argue more for a pick-and-mix and hybridization of different doctrines and techniques – rather than a wholesale replacement – influenced by national, sectoral, or local contexts. Moreover, ideas, agendas, rhetoric, and policy talk are differently interpreted and implemented; and filtered and modified by contingent, historical, political, institutional, and cultural factors. Even if similar ideas, rhetoric, and management systems are adopted, degrees of implementation, operations, and outcomes, can differ (Goldfinch and Wallis 2010; Goldfinch, DeRouen, and Pospieszna 2012).

A ‘layering’ view of public management reform (Mahoney and Thelen 2010) entails new paradigms/approaches/models/techniques being layered on and over existing ones. Old models and paradigms do not cease to exist but survive and function in various forms. These different and possibly competing logics, different techniques, and different aims – coexist in varying degrees of tension. Old models are not removed in this account. They may lack the attention they once gained or have their importance largely forgotten, but still be functioning as part of the system. Or they can be relabelled and refocussed to fit sometimes largely rhetorical conceptions of the ‘new’. Indeed, one claim regarding so-called post-NPM or new governance/NPG is that it can be characterized as partly a reassertion of pre-NPM or TPA concerns and focus, albeit using different terms and rhetoric. Moreover, critics of a simple transferral from NPM to NPG note the persistence and even dominance of NPM structures, even in states supposedly moving to a post-NPM/new governance/new public governance world (Goldfinch and Wallis 2010; Goldfinch and Yamamoto 2019).

A more complex situation is where management reform can be characterized as a magpie-like adoption of rhetoric, techniques, logics and illogics, and rationales from within and outside the policy field (Pollitt and Bouckaert 2017). Approaches can be synthesized and hybridized to form new approaches. But ideas, language and labels can also float detached from techniques, and techniques from logics. They can be joined up in the garbage can of reform decision-making; and to a degree what coherency exists may be a post hoc construction, driven by organizational and political demands to demonstrate ‘transformation’ or ‘modernization’ or change management; or whatever jargon suits the times. Hybridization of course is not new but received greater attention in the 21^st century (Christensen and Lægreid 2011; Halligan 2021b).

In sum, some older literature was inclined to view change as a progression. But it is now well established that the position is more complicated. Moreover, the type of NPM can be pivotal, because a more radical variant can provoke counter agendas when government institutions are diminished and unintended consequences manifest. This raises the question of alternative patterns that show discontinuities and pendulum swings as well as hybridization, with reform processes reflecting multiple and countervailing directions.

Public administration in anglophone countries

New public management is particularly associated with three anglophone countries: Australia, New Zealand, and the United Kingdom; albeit with similar, differently-named and sometimes older reform strands found in other jurisdictions such as Hong Kong and northern Europe, and NPM variants adopted in anglophone countries outside these three (Goldfinch and Wallis 2009; OECD [2014] 2023). Australia, New Zealand, and the United Kingdom share a common tradition, historical and ongoing interactions, and a similar engagement with reform. They also share an administrative tradition focused on governments rather than the ‘state’, and an instrumental and pragmatic orientation (Halligan 2020). The basis of the anglophone tradition is the Westminster model, which provides the framework for the constitutional and governance attributes of the state. In terms of how questions have been posed and resolved, there has been a focus on organizational administration to achieve policy objectives rather than on their legal character as in Europe. This article focuses on two anglophone countries – Australia and New Zealand – which share a particularly close relationship, including institutional and cultural similarities, free flow of labour and trade, policy and legal harmonization, and a long history of policy learning and transfer, including in public administration. Structurally, Australia’s federal system (and the Commonwealth’s bicameral parliament) add significant complexity, but New Zealand’s unitary system of government covers a broader range of functions and delivery roles (Goldfinch and Roberts 2013).

New Zealand

New Zealand’s recent (2020) legislative changes have ostensibly continued a divergence of New Zealand from the NPM model established in the late 1980s and early 1990s, to one that harks back to earlier periods. This Public Service Act 2020, in the words of the head of the public service, generates better results and outcomes, introduces public service ‘unity’, with a greater focus on ‘public service’, and a ‘spirit of service’ a ‘fundamental characteristic’ (Hughes 2020, n.p.). This apparent shift is signified by renaming the State Services Commission and the State Services Commissioner – the agency and chief executive overseeing the public sector – as the Public Service Commission (a name previously abandoned in 1962) and the Public Service Commissioner, the head of the public service, respectively. A variety of mechanisms to (obstensibly) facilitate inter-departmental and inter-agency cooperation were established or reaffirmed. ‘Values’ and ‘principles’ required of the public service were enshrined in legislation. Indeed, the then responsible minister (and Prime Minister from January-November 2023), Chris Hipkins (2019b, n.p.) branded it the ‘biggest transformation of the Public Service in 30 years’.

Before 1984 New Zealand public administration fitted within a broad ‘traditional’ and Westminster model. The public service was a career one with a tradition of neutral competence, and the Public Service Commission responsible for appointing public servants across the state sector. Departmental chief executives were known as Permanent Heads and had protected tenure.

This was systematically revised in the 1980s and 1990s, largely through the State Sector Act 1988, the Public Finance Act 1989, and the Fiscal Responsibility Act 1994 (Table 1). While these reforms drew on precedents, particularly from the UK, there was enough particularity to talk of a ‘New Zealand model’; including its comprehensive and statutory nature, the influence of economic theory, and a strong contractual focus (Boston et al. 1996). With modifications over the years, a literature discussed the model’s possible demise (Chapman and Duncan 2007; Goldfinch and Wallis 2010).

Table 1. Selected public administrative reforms in New Zealand.

	Reform programme	Characterization	Government and PM	Reasons
1980s-90s	State Sector Act 1988 Public Finance Act 1989	Managerialism Decentralization Output funding Contractualism	Labor (1984–90) Lange, Palmer, Moore	Limitations of traditional public administration Economic theory Diffusion of NPM ideas
1990s	Fiscal Responsibility Act 1994 Strategic result areas and Key result areas	Budget transparency Debt management Link agencies to Government priorities (abandoned 1999)	National (1990–99) Bolger Shipley	Public choice theory Experience of previous governments International diffusion
2000s	State Sector Amendment Act 2004 Crown Entities Act 2004 Managing for results/outcomes (implementation unclear)	Limited recentralization to SSC Codification Linking outputs to outcomes	Labour-led coalition (1999–2008) Clark	Report of the Advisory Group on the Review of the Centre Reaction to decentralization and limited results focus International diffusion of centralization and results narrative
2010s	Better Public Services Results 2013 Amendments to State Sector Act, Public Finance Act, and the Crown Entities Act Performance Improvement Framework	Shared agency quantitative results focus Performance measures Improve central leadership Capability building and performance improvement	National (2008–2019) Bolger English	Better Public Services Advisory Group International diffusion Continuing focus on results and collaborative government
2020s	Public Service Act 2020	Codification and evolving agency forms Rhetoric of unity, results, and spirit of service Leadership focus Some decentralization	Labour-led coalition or Labour (2019–23)* Ardern Hipkins	Codification of previous debates

* National-led coalition elected November 2023, expected to challenge consensus.

This NPM-derived ‘New Zealand model’, as it existed in its most pure form by the mid-1990s had, amongst other things, the following characteristics:

• private sector management practices and an initial favouring of private sector-like and market-like practices in general;

• managerial autonomy, including investing in agency and departmental chief executives the ability to hire and compensate staff;

• performance related individual and fixed term employment contracts for senior staff, and the use of individual contracts for other staff;

• financial management and reporting requirements, including moving from (or more correctly supplementing) predominantly input-based to ‘output’ (introduced in the Public Finance Act 1989) and then ‘outcome’ based reporting;

• private sector style accrual accounting and the use of generally accepted accounting practice;

• policy-operations and funder-provider splits, accompanying departmental decoupling and decentralization, and a focus on single purpose agencies, resulting in their proliferation;

• corporatizing and selling of state-owned agencies and increased other forms of privatization such as contracting out. New Zealand had the largest privatization programme as percentage of GDP in the OECD in the 1990s and;

• written contracts and purchasing arrangements in a variety of aspects of public sector organization (Boston et al. 1996; Goldfinch 1998, 2009).

The New Zealand reforms quickly generated a critique – both internal and external to government – and faced modification over the decades. Efficiency and customer-focus of the public sector was widely perceived to have increased, despite (initial) falls in numbers of public sector employees. Concerns, however, were held regarding: the lack of policy coordination; the insufficient attention given to the collective interest of government; and the lack of focus on the achievement of positive results or outcomes. The output model where agencies focused on producing largely quantitative goods and services, initially by contractual arrangements, met with some scepticism as to utility, and a belief that they could undermine cooperation across the state sector. Some de-centralization, departmental decoupling and the policy-operations split were claimed to undermine collaboration and accountability in the state sector, particularly with the large number of new agencies in a small country, which were sometimes insufficiently monitored. There were concerns over leadership, ethical standards, and claims the culture and values of the public service needed to be strengthened, while a focus on public servants as primarily motivated by pecuniary and other self-interests was seen as empirically challenged (Goldfinch 2009).

There were some limited organizational changes, with some agencies re-integrated into the late 1990s. Over the next decades there were a series of largely failed initiatives to reconnect a state sector ostensibly split up by NPM, including groupings of agencies around sectoral issues (Scott and Boyd 2017). Attempts were made to improve central direction from the State Services Commission and the other central agencies. The use of contracts was softened somewhat. There were some re-nationalizations, and privatization went somewhat out of fashion. Rhetorical focus shifted from measuring short-term and largely quantitative outputs with questionable utility, although outputs continued to be measured. There was tinkering with various outcome and results measures, with mixed success. The process of linking outputs to outcomes was subsumed under the term ‘intervention logic’, but the process remained complex. A series of initiatives on leadership were introduced over the following years. Focus drifted to ‘electronic governance’ and e-government, with mixed initial results, although as technology and users matured, much government business moved online; albeit without the often-radical changes initially predicted, with ICT a useful tool and another layer to management models, and departmental and administrational structures continuing. Iterations saw a digital strategy developed by 2022 focusing on fostering ‘a productive, sustainable and inclusive economy’ to enable ‘innovation’, develop ‘government services and the efficiency of the economy’ and improve ‘resilience’ (Digital.govt.nz 2022).

The Better Services Advisory Group 2011 review of the public sector – which included chief executives and other senior public servants – concluded greater state unity/collaboration was desirable, a better outcomes/results focus was needed, and greater central leadership was required. There were further legislative changes to increase central direction from the State Services Commission. One consequent change was the adoption of quantitative targets with shared responsibility between agencies and multiple responsible ministers, and with dedicated secretariats. Termed Better Public Services Results Programme (commonly ‘Results Programme’) this targeted 10 areas, all of which required inter-agency cooperation to achieve. It met with some apparent success but was abandoned in 2018 by a Labour Government reluctant to be tied to measurable and quantitative targets (Goldfinch 2023). A Wellbeing budget was introduced in 2019, which sets out wellbeing objectives focused on supporting ‘long-term wellbeing’ in New Zealand. In 2022 these objectives including funding for specific initiatives across five broad areas of social and environmental policy.

A Performance Improvement Framework (PIF) was introduced in 2009 adapted from so-called capability reviews around the world, particularly the British model, albeit with the PIF adding a layer focussing on achievement of results. It was based on a more-or-less independent panel assessment of agency performance – or more broadly the ‘capacity’ and ‘capability’ of the organization – through a panel assessment by two independent reviewers, with secretariat support by the SSC, investigating 30 questions over 7 areas, largely through interviews with key staff and desk research. Agencies were rated on a ‘traffic light’ system. While some evaluations of the PIF were positive and it was seen to give agencies some ability to think about capacity and strategy issues, there was scepticism as to what degree this led to significant change or improvement in performance, or substantive effect on the day-to-day operations of agencies. Moreover, there was little facility for comparison between agencies and a lack of benchmarks, undermining its usefulness for public sector-wide assessments (Speagle, Goldfinch, and Dufficy 2021).

Steady growth of public sector employment after the initial layoffs of the late 1980s-1990s saw the public sector employ around 18.5% of the workforce by 2020. This was around 429,500 by headcount, with 88% in the state sector and the remainder in local government. The narrower public service had increased from a headcount of 30,000 in 2000, to 60, 381 full-time equivalents by 30 June 2022 (Public Service Commission, 2021). Outside contractors and consultants made up 13.4% of the government workforce by 2017/18, and spending on them continued to increase despite promises otherwise, reaching $NZ 1.244 billion in 2021/22. This generated claims of conflict of interest, waste, creeping privatization, and purported threats to democracy (Edwards 2023).

Public service act 2020

Debates over the perceived failures of the public administration model crystallized (or were repeated) in various State Services Commission and Cabinet papers in discussions about what was to be the Public Service Act 2020. These issues/problems included ‘narrowing of each department’s focus’; ‘closely related services provided by different agencies’; slow growth of collaboration mechanisms between agencies which made ‘it hard to address complex social issues’; lack of standard operating procedures; frequent structural change that undermined experience and institutional knowledge; an ‘erosion of the deep expert and technical expertise needed’; and lack of a ‘sufficiently strong centre’ that can guarantee adherence to the ‘values and ethics underpinning the … reputation of the public service and its constitutional role in servicing successive governments loyally and impartially’ (Hipkins 2019a, 4).

Passed in 2020, the new Act stated required values and principles of the public service, and clarified responsibility under the Treaty of Waitangi; the foundational treaty between the Crown and indigenous Maori tribes signed in 1840. A variety of mechanisms either to obstensibly faciliate inter-agency cooperation and leadership were introduced or re-affirmed, building on previous developments. Departmental agencies – an adaption and re-branding of the British executive agencies, associated with the First Steps programme of 1988 – were introduced, with seven established by late 2023. Other initiatives included the five (by late 2023) ‘interdepartmental executive boards’ hosted and serviced by five departments and ‘interdepartmental ventures’ (none found), both treated as chief executives responsible to the minister under the Act; as well as ‘joint operational agreements’ of uncertain existence. Leadership initiatives included a Public Service Leadership Team – consisting of all chief executives of public service departments, deputy service commissioners, and other agency heads by invitation – with a membership of 39 and focussing on ‘system leadership’. Other initiatives included ‘functional leads’ in a variety of areas, and five ‘Heads of Profession’, which convene ‘professional networks’ to build capacity.

The Act largely continued the public administration system established in the 1980s and 1990s however, albeit in a modified and hybridized form, with the 2020 Act codifying and crystallizing three decades of critique and tinkering. Chief executives of agencies are still the employers of their staff – albeit with minimum standards set by the Public Service Commissioner and other direction from the centre – and are responsible for the financial management of their agencies, continuing the ‘managerialism’ of NPM. Policy and operations splits, one of the more contested elements of NPM, continues to a considerable extent, and there seems to be no irresistible pressure towards reintegrating agencies. Indeed, the adoption of departmental agencies harks back to original NPM models, themselves criticized for dividing up the UK civil service. Nor is the panacea-like ‘Spirit of service’ rhetoric new; the phrase is found in the repealed State Sector Act of 1988 and the 1962 State Services Act before that, with mixed evidence of previous success (Scott and Macaulay 2020). Statements in the Act about the Treaty of Waitangi, values and principles, are exercises in codification and evolution – albeit useful ones – that could have been introduced without legislative change.

In sum, recent public administration reforms in New Zealand show hybridization and codification, not transformation or paradigmatic change. This reform has the characteristics of ‘garbage can’ decision-making with a surprising lack of connection between perceived problems in reports over the decades, and some solutions offered. Several ‘solutions’ are not new, but re-brandings and restated rhetoric, with mixed evidence of effectiveness in the past. Some, such as the departmental agencies, are likely to exacerbate the complexity, and lack of coherency in the public sector; despite the decades of rhetoric on the need for unity. And while leading reviews and leading public servants have noted issues with technical and other expertise in the New Zealand public sector, the Act will unlikely address these. Instead, there is a focus on leadership as panacea with myriad leadership and agency forms – new (sometimes collective) chief executives and leaders in a variety of agencies with complex relationships to their host departments, leadership teams, system leadership, functional, and ‘Head of Profession’ leadership – providing for a confusing array of possibly overlapping, competing, and unclear accountabilities, and potential for competition for influence and resources. Moreover, these build on a management/leadership focus that has been a characteristic of the New Zealand model since the early days of NPM and indeed so-called ‘post-NPM’, and perhaps shows a degree of continuity rather than novelty. The majority of public sector employees seem little touched by this leadership focus, and it remains to be seen whether substantive change manifests in the day-to-day of agency operations. Moreover, a change of government (a right-of-centre coalition) in November 2023 with different agendas to Labour will likely mean significant change, but with indeterminate impacts at this stage.

Australia

The Australian experience displays several patterns: model succession and oscillations between NPM2 and hybrid mixtures of NPM1 and NPG. The most striking swing occurred in 2022 when a politicized, consultant-dominated public service was replaced by a more benign combination of traditional values and public management and governance. The pattern can be summarized in large part with reference to three models of reform emerging within the decades, 1980s-2020s (Table 2). Managerialism best reflected the first phase in which management became the central concept and reshaped thinking. This was succeeded by a phase that for a time came close to a mainstream depiction of NPM (Hood 1991), in which the market element was favoured and features such as disaggregation, privatization and a private sector focus were at the forefront. In turn, recentring and reintegration of governance were superimposed on NPM in the 2000s (Halligan 2007, 2010) followed by further experiments with elements of new public governance, and a sustained NPM2 focus under governments 2013–2022.

Table 2. Public administrative reform programmes and pendulum swings in Australia*.

	Reform programme	Characterization	Governments & Prime Ministers	Reason
1980s-90s	Reforming Australian Public Service 1983 Financial Management Improvement Program 1984	Managerialism (NPM1): Management improvement	Labor, 1983–1996 Hawke; Keating	Limitations of TPA Diffusion of reform ideas internationally
1990s	National Commission of Audit 1996 Public Service Act 1999	NPM2: outsourcing, contestability, privatization. NPM1: decentring Public service regulation	LNP Coalition * 1996–2007 Howard	Smaller state, private sector agendas. Diffusion of smaller government ideas
2000s	Corporate governance, connecting government	Reintegration, Public governance	Coalition, Howard phase 2	Reaction to decentring and governance issues
2010s	Blueprint Report (AGRAGA 2010) Public Governance, Performance and Accountability Act 2013	Public governance & management Rationalised financial governance framework	Labor, 2007–2013 Rudd; Gillard	Reaction to fallout from GFC; governance issues
2010s	Commission of Audit 2014	Austerity, NPM2 contracting, cuts, contestability	Coalition, 2013–2015. Abbott	Deficit reduction; agendas private sector values and efficiency
2010s	Independent Review of APS 2019 (largely unimplemented)	Transformative aims: operations culture, capability	Coalition, 2015–8 Turnbull	Improve governance; united APS; cultural change, technology
2010		Austerity, contracting, contestability, staff cuts	Coalition, 2018–2022. Morrison	Small government ideology
2020s	Labor government reform agenda	Incorporates 2019 Independent Review. Integrity, public service strengthening	Labor, 2022- Albanese	Reactive to Morrison’s agenda

*Indications of primary activity, main reason, and characteristics of reform programme.

The initial period of reform displaced TPA with a package of reforms based on management. Over about a decade, a new management philosophy was developed and implemented which replaced the emphasis on inputs and processes with one on results. Unlike New Zealand’s theoretically driven approach, the management framework evolved pragmatically. The dominant theme was management improvement (Halligan and Power 1992).

The commitment to neo-liberal reforms under a conservative Coalition in the 1990s led to the public service becoming decentralized, marketized, contractualized and privatized.¹ The programme centred on competition and the contestability of service delivery, contracting out, client focus, and the application of the purchaser/provider principle. The agenda also covered a deregulated personnel system; a core public service focused on policy, regulation, and oversight of service delivery; and greater use of the private sector. A new financial management framework included the implementation of outputs and outcomes reporting and extending agency devolution to budget estimates and financial management. The devolution of responsibilities from central agencies to line departments and agencies was highly significant with a diminished role for central agencies being one consequence (Halligan 2007).

The recentring in the 2000s emphasized reintegrated governance with components embodying a relationship reflecting several themes: delivery and implementation, coherence and whole-of-government, and performance and responsiveness to government policy. Four dimensions drew together fundamental aspects of governance: resurrection of the central agency as a major actor with more direct influence over departments; whole-of-government as the expression of a range of forms of coordination; central monitoring of agency implementation and delivery; and departmentalization through absorbing statutory authorities and rationalizing the non-departmental sector. These increased the focus on the horizontal by emphasizing cross-agency programmes and collaborative relationships, and centralizing through central agencies driving policy directions systemically and across agencies. The result was a tempering of devolution through strategic steering and management from the centre and some rebalancing of centre and line agencies (Halligan 2007, 2010) (Table 1).

The Blueprint report (AGRAGA 2010) offered an ostensibly comprehensive reform programme, but many of the constituent elements were not significant. International trends now suggested a public governance approach with a more society-centric focus, with prominence given to citizen engagement; joined-up-government; shared outcomes; and sustaining cultural change (AGRAGA 2010). A notable rationalization was the Public Governance, Performance and Accountability Act 2013, which stipulated that government should operate as a coherent whole and public sector performance is more than financial, and engaging with risk was a necessary step in improving performance.

Several agencies embarked on pilots for citizen engagement, but there was no coherent approach. Horizontal management and joined-up government themes permeated the report, but there was yet to be an overall strategy either articulated or receiving high-profile leadership. Old agendas resurfaced with reassessment of the financial management and results foci of the 1980s. The focus on service delivery and citizens reflected the 1990s, while the reintegration wave of the 2000s received a new impetus. On the other hand, the emphasis on capability and leadership was more sustained. The centrality given to collaborative and cross-system solutions was striking. However, public servants responsible for introducing shared outcomes faced the issue of how they could work within parameters unsympathetic to agency sharing. Subsequently, Prime Minister Gillard cut implementation funding heavily after projecting fiscal rectitude in the election campaign.

A new Coalition government under Abbott reactivated NPM2 and this agenda was maintained under his successors. A National Commission of Audit (2014) identified and articulated the reform agenda with most key recommendations funnelled through the Department of Finance as components of a ‘transformation agenda’ (Halton 2015), which consisted of smaller government, efficiency through contestability, functional and efficiency reviews, and staffing caps and cutbacks. Several major agencies were abolished, with some contributing to saving costs. There was a reduction in the number of agencies in the outer public sector and an expansion of those in the core public service with a swing back to a more comprehensive ministerial department. Savings came from back-office mergers as a shared services programme commenced, but most terminations produced no savings, although integral to sustaining the semblance of a smaller government programme (Halligan 2016).

A second component was an ‘Efficiency through Contestability Programme’ for examining government activities and services with reference to contestability. A phased programme entailed stocktakes of portfolios (departments and agencies); contestability reviews of departmental functions; and functional and efficiency reviews which evaluated the alignment of functions with government priorities, and whether an activity or service could be delivered by alternative means at a higher quality and lower cost (Halton 2015).

Public service staff levels were reduced, and staffing ceilings introduced along with a commitment to holding average staffing at the 2006–07 level. Spending on labour contractors more than doubled over four years to 2016–17, while expenditure on consultants increased by more than 40%. The influence of specific aspects continued with shared services, the ceilings on employing Australia public service (APS) staff, and the externalization of public service work (the value of consultancy services increased from under $400 million to over $1.1 billion in the decade up to 2018–19: ANAO 2020, 45). The focus on reducing the deficit continued to be Coalition governments’ mantra until displaced by the exigencies of Covid-19.

Another reform programme the Independent Review of the Australian Public Service was established under Prime Minister Turnbull in 2018 to address capability, culture, and the operating model. The recommendations covered delivering improved outcomes, defining the elements of a ‘successful transformation’ (e.g. targets for measuring progress and ‘deep cultural change’); a united APS; external partnerships; embracing new technology; investing in people and capability; a more dynamic and responsive operational model; and improved leadership and governance (IRAPS 2019).

A subsequent Coalition government under Morrison ran its own reform agenda with guidelines produced to pre-empt the publication of the Review’s report and initiated a reduction in the number of departments that enabled the ‘sacking’ of five departmental secretaries. The unhappy co-existence of two reform agenda meant the Review process was constrained, its independence questioned, and core recommendations overridden or not accepted in full, including those pertaining to ministers’ (and their advisers’) roles and relationships with the public service, and strengthening the standing of APS (Halligan 2023b).

Implementation was disrupted by the onset of Covid-19, but several measures were pursued. The Secretaries Board was redefined as a corporate leader of the ‘enterprise’, which was to ‘operate as an APS enterprise management board’ with priorities that included support for the COVID-19 response and recovery and leading from the top in supporting cross-cutting government priorities. There was strengthening of central direction. The head of Prime Minister and Cabinet (DPMC) and the APS Commissioner became partners in oversighting the reform agenda through the Secretaries Board. The Commissioner’s role was enhanced through becoming the pivot for the emerging professional streams. It was recognized that the Commission should play a stronger role in standards and capability and craft development more generally. A central mechanism for this was an academy which was billed as a networked organization that fronted the Commission (APS Academy 2023). Professional streams were established to increase employees’ skills in critical areas and to address capability gaps. The Department of Finance developed a central evaluation function and maintained its focus on the performance framework, supporting shared services and whole-of-government service delivery in ICT. All this added up to stronger centralizing and corporate tendencies and a renewed focus on unifying APS standards.

At the same time, the condition of the Australian system of government deteriorated during the Morrison governments (2018–2022). The extensive use of outsourcing for undermining the fabric of the public service was extended more generally to institutions of government. Public governance declined as the use of corrupt practices multiplied, accountability deficits became rife and key precepts and conventions of responsible government were disregarded. These defects were exposed in official inquiries and reviews, reflected in public debate about the quality of government and integrity issues (Halligan 2023a). One example was the problematic condition of policy capability. Departments varied widely in terms of their policy capability, but were weak on policy development, strategy, analysis, implementation, stakeholder engagement and evaluation (Craft and Halligan 2020; Halligan 2020). The Coalition response was to deprecate the policy role and declare that the public service was to focus on implementing and delivering services. NPM2 was a centrepiece of an agenda underpinned by small government ideology, which had societal and democratic outcomes and exposed a dark side of public governance. This was epitomized by the Robodebt Scheme, an unlawful programme involving the misuse of automated data matching to recover debts that resulted in traumatized citizens and compromized public servants. The Commissioner of the Robodebt Royal Commission encapsulated the issues as: a lack of interest in ensuring the Scheme’s legality, rushed implementation, the lack of consideration for the impact on welfare recipients, and ‘the lengths to which public servants were prepared to go to oblige ministers on a quest for savings. Truly dismaying was the revelation of dishonesty and collusion to prevent the Scheme’s lack of legal foundation coming to light. Equally disheartening was the ineffectiveness of … institutional checks and balances’ (RC 2023, iii).

The Labor government’s programme (2022-) was partly an extension of the Independent Review process because of the continuity of key participants, but this was under a new agenda that addressed both the consequences of neo-liberal NPM2, and institutional strengthening. Principles, integrity and values were now a priority. The need to ‘reshape traditions that fall on hard times’ (Davis 2021) and the craft of public administration (Rhodes 2016; Shearer 2022) came to the fore. The overdue rebalancing of the system (Halligan 2020) was now explicit in official statements about rebuilding capability through ‘increasing the number of direct, permanent public sector jobs, reducing the use of consultants and outsourcing, abolishing the average staffing level cap, and restoring the independence of vital public sector institutions’ (APSC 2022). The government’s APS priorities covered integrity (a foremost objective being a National Anti-corruption Commission), capability, model employer and the centrality of people and businesses to policy and services (Gallagher 2022).

The Australian system in 2023 covers a mix of elements from several models. NPM1 elements continue, such as performance management (including results, outcomes, and evaluation). NPM2 elements, such as shrinking the state, outsourcing and staff caps, were in sharp decline, but consultants were still used to some extent but were more tightly controlled. There was a redux of ‘TPA’ elements: the APS policy role and expertise, capability development, craft skills, APS principles and values (integrity, accountability, responsibility), and the standing of the public service.

Australia is a system in transition as the government’s agenda proceeds. The new mix is becoming apparent in an emergent hybrid system. Of the several models, public governance ideas are present in horizontal relationships (Davis 2021), but it is difficult for a fully fledged network version to be a ‘big model’ in the federal level context. In the e-government era, Australia was regarded as an international leader, but by the 2010s, this was no longer the case. A Digital Transformation Office was created in 2015 to lead the government in transforming services and improving citizens’ experience. A data and digital agenda is being actively pursued through a central agency, and its salience will increase as an incipient strategy becomes operational. While ‘digital era governance’ reflects the times, digital government is not a ‘big model’, and will therefore co-exist as part of a hybrid system. The combination of TPA and managerialism is reminiscent of the 1980s with managerialism providing the basics for the operating system, while administrative verities are integral to the system of government. Some degree of hybridization can be argued to have been present in Australia throughout the reform era from the 1980s and earlier (Halligan 2024) but became more salient internationally in the twenty-first century (Christensen and Lægreid 2011; Halligan 2022). The current environment is unsympathetic to NPM2, although management (NPM1) remains embedded.

Comparing trajectories

The concern with explaining public administration change entails several theoretical perspectives, different foci, levels of analysis and the ‘dynamic interaction’ between cultural, structural, and environmental factors (Christensen and Lægreid 2011; Pollitt and Bouckaert 2017). International trends mentioned earlier indicates shifts from comprehensive to selective reforms, universal models to context-based reform, and one orthodoxy to hybridized frameworks (Halligan 2022). This assumes that ‘big models’ have lost their significance and that pendulum swings between them no longer apply. One position is that ‘reform movements are characterized by combining, complexity, layering and hybridization, rather than by dominance, substitution, and pendulum swings’ (Christensen and Lægreid 2013, 140). Recognition of the role of pendulums, such as swings between centralization and decentralization, have long been familiar to observers of public administration trends (Spann 1981). Reforms that are highly centralized, decentralized or politicized can be expected to beget responses because they fail to have traction over time. The swings between different organizational forms were starkly apparent in anglophone countries during the 1990s-2000s and were still being worked through in the 2020s. But most significant for this study is the relative standing of NPM and what role it plays in pendulum swings.

As reformist anglophone countries, Australia and New Zealand were seen as exemplars and early initiators of NPM and then as continuing experiments with governance and management reform. There has been common ground both centred on improved services and results, collaborative governance, and capability and leadership. The succession of reform agendas in Australia in recent decades has meant constant change for the public service, and contradictory directions. Tinkering with the New Zealand model has been common since the 1990s, reaching its culmination in the 2020 Public Services Act.

As outlined in this article, the argument that reform has been less about dominance, substitution and pendulum swings than combining, layering and hybridization is not supported by the Australian case (Christensen and Lægreid 2013). There have been constant swings between external NPM2 and internal NPM1. Several issues raised above produce pendulum swings if there is a change of government; otherwise, the efficacy of blending different elements remains to be tested. In New Zealand’s case, hybridization seems to have more explanatory power. The New Zealand model established at the height of NPM shows considerable resilience, and even in some cases, revival. Recent legislative changes are not, despite the rhetoric, a departure from previous models, but instead a codification and rebranding. Some innovations are a return to NPM type mechanisms, such as the departmental agencies. The link between some of these changes and problems noted over decades remains difficult to establish.

What can these cases tell us about public administration reform and its implementation? Initially, Australia had considerable success in converting public administration to a management approach and implementing aspects of NPM. However, sustaining effective reform over three decades faltered when it came to designing and implementing comprehensive reform for a ‘governance’ era, and when the fundamental principles of Westminster were challenged in the 2010s by excessive politicization (Halligan 2020). While politicization has been an international phenomenon (Peters and Pierre 2004), an unexpected aspect was that anglophone countries, long depicted as among the lowest (Halligan 2021b), were not immune. It reached a high level in Australia because of the interventions of ministers and their partisan staff in the roles of the public service, including policy development and management (Halligan 2020, 2023a).

When the conditions that facilitated implementation in previous phases of reform were not present, the reform agenda became vulnerable. Each country could freely design and promote reform agendas, but each had difficulty in implementing and sustaining them over time. Particularly in the realms of inter-agency collaboration and results focus, the reform landscape has been littered with failed and/or abandoned initiatives. Structures developed to facilitate inter-agency cooperation had resources and energy diverted from a focus on results as new bureaucratic processes were formed. Central oversight, external scrutiny and political micro-managing generated multiple accountabilities that contributed to red tape and risk aversion, and a focus on process rather than results (Belcher 2015; Goldfinch 2023; Halligan 2020).

Institutional factors have featured in three important respects that were influenced by path dependency. First, managerialism was conceived in terms of de-bureaucratization, the removal of features associated with rigid forms of organization. The ossification of traditional public administration and excessive bureaucratization were well established. It was superimposed on an existing TPA system. Management reform was meant to provide public servants the freedom to manage without being overly constrained by inflexible procedures and the red tape of TPA. There were difficulties with realizing this ideal because a single-minded focus on results had costs and unintended consequences. Bureaucratization became entrenched with an accumulation of rules and layers of regulation. Within two decades internal ‘red tape’ was diagnosed, and inquiries were conducted, with action occurring in 2016 after desultory responses to ‘creeping’ bureaucratization (Belcher 2015; Halligan 2020).

Second, the nature of public administration reforms is highly important in terms of registering change. Reorganisation such as sale of assets (privatization), change of agency status (corporatization or mergers) and outsourcing to private sector organizations were readily accomplished under a top-down government (Podger 2021). But reforms that required leadership over time, cultural change and inter-organizational cooperation were more difficult to achieve, and showed less success in both countries. Vertically centred financial arrangements were a barrier to greater collaboration, with the output model in New Zealand providing structures that worked, and continue to work, against agency collaboration. The joined-up agenda was an Australian priority in the 2000s, but this fundamental tension was difficult to overcome, and it was not sustained because of the ‘strong-willed focus on the operations of individual entities’ meaning that department heads’ responsibilities did not ‘directly consider concepts such as joint operations’ (DFD 2012, 36). The Finance Department recognized the need for dual and multiple accountabilities (DFD 2012), but legislation (the Public Governance, Performance and Accountability Act) dealt with collective responsibility and accountabilities in a limited manner, and inter-agency cooperation did not increase (Alexander and Thodey 2018). Shared accountability for system-wide results required a recasting of aspects of governance and institutionalizing principles and practices based on outcomes, but met with mixed success in both countries, and sometimes with a growth of bureaucracies focusing on process (not results), and in New Zealand’s case shared quantitative targets were abandoned despite some success (M. Edwards et al. 2012; Goldfinch 2023).

Finally, there are the contradictions existing in performance management (Halligan 2020, 2021a). One paradox of performance has been that the information generated for management frameworks has been largely unused. The tension between the managerial and the political purposes of performance management has been a continuing dynamic, which is one reason why the architecture of performance systems remained unresolved. Performance management is problematic in both countries according to their auditor-generals because departments go through the motions, but the quality of performance reporting remains inadequate (e.g. ANAO 2023).

Being able to sustain management reform involves developing competencies and capabilities for effecting change over the long term (Ingraham, Joyce, and Donahue 2003). The support for capacity development has been highly uneven overall and has been a perennial problem for both countries (Halligan 2020). Political priorities take precedent and in Australia budgetary cutbacks have bitten hard into organizational capacity. Capability review programmes have been initiated in both countries, but have produced contested benefits in New Zealand, although they continue to be investigated (Goldfinch 2023). Capacity issues and levels of technical expertise, particularly for those deemed not to be leaders, remain issues of concern.

Key reforms remain unimplemented. The Independent Review of the Australian Public Service (2019, 301) recommended implementing ‘APS transformation through strong leadership, clear targets, and appointment of a secretary-level transformation leader’. The Morrison government assigned the head of DPMC to the role assisted by the Public Service Commissioner. The secretary of DPMC has multiple roles, but the position became more political when it became identified with processes for defending the behaviour of political actors. The New Zealand version of Public Service Commissioner has offered a better model where the incumbent has greater independence and a broader brief (Goldfinch 2023; Podger 2021). Public service leaders acquired stewardship roles in New Zealand, but the extent to which they have been empowered to exercise them remains moot.²

Conclusion

In conclusion, both countries came from a common base and implemented radical reform. New Zealand went for a ‘big bang’ approach to NPM and has largely been concerned with addressing weaknesses in the arrangements over the last thirty years. Australia also undertook fundamental managerialist change with the externalizing aspects of NPM coming later, and has been subject to swings between two mixes: one with a dominating NPM2 component, the other an amalgam of management and governance.

Both countries experienced some reintegration from both NPM effects and the traditional silos of departments still operating in terms of vertical accountability under the ministerial responsibility of Westminster.

There has been common ground with reform themes, although New Zealand has been more innovative and produced perhaps a more credible and balanced system. The nature and future of the Australian public service was in contention under the Morrison government, but a new government’s programme for institution building and rebalancing the system by shedding radical outsourcing, and reducing politicization and the evasion of responsible government is expected to resuscitate it.

At this point there is a common denouement in both countries. Both have sought to limit the excesses of NPM and to enshrine the integrity and values of a traditional system. NPM is still alive and co-existing, but it is very much the public management variant rather than the smaller government type. But managerialism still presents significant challenges for governments where it reinforces hierarchies, does not deliver on results, and thwarts collaborative action.

Disclosure statement

No potential conflict of interest was reported by the author (s).

Notes

1. The Coalition has consisted of two parties, Liberal (urban centred) and National (rural based).

2. In New Zealand legislation, stewardship is defined as ‘proactively’ promoting the public service’s ‘longterm capability and its people’; ‘institutional knowledge and information’ systems and processes’; ‘assets’; and ‘legislation’.