Obtaining the Levers of Power: the Treasury and the Introduction of New Zealand's Public Sector Financial Reforms

Abstract

New Zealand is widely recognised as extreme in its New Public Financial Management reforms. Scrutiny of the reformed financial management system reveals its consistency with a controversial political agenda: trade liberalisation of even core social services such as social welfare, health and education. Further, the detailed requirements are systematically biased towards withdrawing from government services (by running them down) and/or privatising them (by artificially inflating reported costs, thus projecting an appearance of inefficiency). The legislation underpinning the New Zealand model was shepherded through parliament by a Minister of Finance who publicly opposed exposing social services to market forces. Drawing on archival records, this article provides a historical account of how this legislation came into being. The legislation handed key levers of power to extend the reforms to the Treasury. Particular attention is paid to the friction within the government of the time over extending the reforms to social policy, and the role of the Treasury. Possibly, some ministers who drove the reforms through did not appreciate their nature. Alternatively, the handover of the levers of power could be perceived as an attempt to avoid blame.

Citation

Newberry, S. and Jacobs, K. (2007), "Obtaining the Levers of Power: the Treasury and the Introduction of New Zealand's Public Sector Financial Reforms", Lehman, C.R. (Ed.) Envisioning a New Accountability (Advances in Public Interest Accounting, Vol. 13), Emerald Group Publishing Limited, Leeds, pp. 115-150. https://doi.org/10.1016/S1041-7060(07)13006-6