Lessons on Reforming Government from New Zealand

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

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

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

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

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

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

More on government reform:

Part 1:  An International Snapshot of Progress on Performance Management

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