Learning from International Public Management Reform Experience for Management Control Systems

Abstract

Internationally, the past two decades have seen considerable changes in the management and control of public sector organisations. Reform has been promoted on the grounds that the public sector was too large and cumbersome, organised on the wrong principles and in need of re-invention and institutional renewal. At least five different categories of change are apparent in this reform, referred to as 'new public financial management' (NPFM). These include changes to financial reporting systems; the development of commercially based, market oriented management systems and structures to deal with the pricing and provision of public services; the development of a performance measurement approach; the devolution of or delegation of budgets; changes to internal and external public sector audits, notably in terms of monitoring service delivery functions; and providing reviews of the efficiency and effectiveness.

A key issue to emerge is just how successful the reform movement has been. This article seeks to answer this question by suggesting via a posteriori reflection on international public management reform experiences in Australia and more specifically in the state of Victoria.

The fundamental elements of the financial management reforms to have been adopted in Victoria are a full accrual approach to planning, budgeting, resource allocation decisions and reporting; fully-costed service provision; a focus on the outputs departments provide; and a change in incentives underlying management of total resources available to departments. The recommendations relating to transforming institutional rules and relationships were intended to realign governance structures (organisation), and concomitant incentives underlying them, more closely with private sector arrangements (methods).

Mirroring concerns in the literature, there are considerable reservations regarding the Victorian reforms. The transparency of government decision making and the accountability of the executive to the parliament (VPAEC, 1998), particularly in an environment of increased contracting with private sector entities, is an area of particular concern. Other concerns relate to the government's tendency to outlaw public criticism and comment on policy issues, either directly by public employees, or indirectly by tightening freedom of information legislation, the use of 'commercial-in-confidence' contractual arrangements with private-sector service providers, and an attempt to muzzle the state's auditor-general.

Keywords: International Public Management, Experience, Management Control Systems, Victoria Parliament

JEL Classification: M4, M41, M42, M49