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Psr An International Overview
Psr An International Overview
Page 1




Introduction

This Brief has been commissioned by the Efficiency Unit to report on recent
developments in public sector reform around the world. It is based on secondary
rather than original research and the objective has been to focus on international
examples, so that Hong Kong examples have been deliberately excluded.

The purpose of this publication is to present "at a glance" the key developments
around the world on the public sector reform front. It is meant to inform and inspire
our public managers who are required to innovate in their service delivery.

Each country or organisation devises its own public sector reform agenda to suit its
social, resources and political circumstances. The wholesale transplant of one
reform initiative from one country to another seldom works. Nonetheless, knowing
what other public managers in jurisdications elsewhere are thinking, and how they
tackle their policy and implementation challenges should present food for thought
for us in Hong Kong.


Head, Efficiency Unit
July 2007




Public Sector Reform: An International Overview
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                           Executive Summary
Public
engagement
                           P    ublic sector reform is not new. But over
                                the past decade or two, there has
                            been an increase of reform activity, right
                                                                           the world, focusing on those that have
                                                                           been widely adopted, those that seem to
                                                                           have delivered significant improvement,
The challenge of public     around the world. While priorities have        and those that promise interesting new
engagement is to find       shifted over time, and there have been         directions in the reform agenda.
new ways of encour-         different emphases from country to
aging citizens to be        country, there have also been several          It is a sampler, a catalogue of short case
meaningfully involved       persistent themes: renewed attempts to         studies that readers can investigate more
in public policy-making,
                            engage citizens in the process of              closely on their own. This is the first in a
and in playing a role in
                            governance; a move to place customers          series of papers, and it is meant to serve
the institutions
through which they          and end-users at the heart of public           as a general introduction to some of the
are governed in their       services; a focus on delivery and imple-       outstanding themes that will be
local communities.          mentation as opposed to policy                 addressed in greater detail in future
                            formulation; managing for outcomes; an         papers.
                            increased reliance on market instruments
                            to improve value-for-money; and efforts        Public Engagement
                            to coordinate the complex variety of           The challenge of public engagement is to
Customer-                   different programmes across                    find new ways of encouraging citizens to
centric                     government.                                    be meaningfully involved in public policy-
government                                                                 making, and in playing a role in the
Customer-focused            It is difficult to find a precedent for such   institutions through which they are
public services             widespread and sustained interest in           governed in their local communities.
consider the public’s       public sector reform, even if we go back to
experiences as service      the progressive reformers of North             Right around the world, governments are
users. They seek to         America around the turn of the 19th            struggling with this challenge. Information
engage through short        century, a movement that was also
feedback loops – from
                                                                           technology can assist with the provision of
                            managerialist in tone.                         information to citizens and it can make
the service user direct
to the service provider                                                    consultation easier. But engagement
                            There are different views as to what           requires much more than formal
– rather than long
loops – which flow          underlies this transformation agenda, but      interaction, and governments are also
from user to provider       throughout the literature, one finds a         experimenting with more personal
via policymakers.           deep-seated belief that the business of        consultation, creating innovative new
                            government is fundamentally changing.          forums for deliberation.
                            Globalisation, technological innovation
                            and rising public expectations – and the
                                                                           Customer-centric government
                            speed with which these changes are
                                                                           Customer-focused public services con-
                            taking place – mean that the role of the
                                                                           sider the public’ experiences as service
                                                                                            s
                            public services in society and the manner
                                                                           users. They seek to engage through short
                            in which they are delivered must
                                                                           feedback loops – from the service user
                            fundamentally change.
                                                                           direct to the service provider – rather than
                                                                           long loops – which flow from user to
                            This brief discusses some of the cutting-
                                                                           provider via policymakers.
                            edge reforms to public services around



                           Public Sector Reform: An International Overview
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Executive Summary
In a number of governments, the pro-            mance-related pay, performance con-             Policy to delivery
ducer-led model of public services is           tracting and performance budgeting.             The traditional empha-
gradually giving way to a consumer-             Some governments are now experi-                sis on policy develop-
driven model. The range of options ex-          menting with purchasing outcomes and            ment in the senior ranks
tends from improving responsiveness to          not just outputs.                               of government is being
end-users, through to the personalisation                                                       replaced with a focus on
of public services, and policies directed to    Market Instruments                              management and
giving the consumers of public services         In the regulation of private activity, in the   service delivery.
some choice of provider.                        procurement of goods and in the delivery
                                                of public services under contract, govern-
Policy to delivery                              ments are using market instruments to
The traditional emphasis on policy devel-       deliver better outcomes.
opment in the senior ranks of government
                                                                                                Managing for
is being replaced with a focus on manage-       A variety of different market instruments       results
ment and service delivery.                      are now being employed by                       Performance manage-
                                                governments to assist them in meeting           ment is concerned with
                                                                                                the delivery of results
Many good ideas fail, not because the           public purposes, including online
                                                                                                rather than just
idea was wrong, but because the                 auctions, trading of environmental              compliance with rules.
execution was flawed. Governments are           permits, competition and contracting,
paying much greater attention to                and the creation of new markets for
strengthening the public sector’  s             public services.
competence in delivery. Initiatives have                                                        Market
included increased flexibility in the           Joined up government
recruitment of senior executives, greater       Governments are searching for new
                                                                                                instruments
                                                                                                In the regulation of
openness in attracting expertise from the       ways of overcoming the fragmentation
                                                                                                private activity, in the
private sector, and particularly commercial     and duplication in the public sector.
                                                                                                procurement of goods
expertise, the establishment of delivery                                                        and in the delivery of
units with cross-cutting responsibilities,      The lack of coordination in public              public services under
and the deregulation of the public services,    services remains a serious challenge in         contract, governments
by giving greater autonomy to service           the struggle to improve the quality of the      are using market
managers.                                       customer’ experience of government.
                                                           s                                    instruments to deliver
                                                Many of the traditional solutions, such as      better outcomes.
Managing for results                            merging departments and agencies and
Performance management is concerned             the use of case managers have limited
with the delivery of results rather than just   value. Web-based technologies are
                                                                                                Joined up
compliance with rules.                          opening up new possibilities for
                                                delivering joined up government, but            government
There have been a wide variety of perfor-       they are also raising entirely new              Governments are
mance-based initiatives, from perfor-           questions, such as the desirability of          searching for new ways
                                                                                                of overcoming the
mance measurement and reporting,                joining up related public and private
                                                                                                fragmentation and
performance accountability (based on a          services.                                       duplication in the public
cycle of management reforms), perfor-                                                           sector.



   Public Sector Reform: An International Overview
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                           1. Public Engagement

Public                      Engaging the citizenry is a challenge for        National Highway Traffic Safety
                            governments right around the world. It           Administration in the USA (www.nhtsa.
engagement                  continues to be a dilemma for a variety of       gov/ncsl/) tracks legislation on a range of
The challenge of public     reasons: the ongoing 'nationalisation' of        road safety issues across all jurisdictions.
engagement is to find
                            government, with decision-making
new ways of encour-
aging citizens to be        authority moving from the local to the           But intermediating government
meaningfully involved       national level; the growing significance of      information is no longer the exclusive
in public policy-making,    supra-national institutions, such as the         domain of government. Concerned citizens
and in playing a role in    European Union and the World Bank; the           are using the internet to provide fellow-
the institutions            technical complexity of modern                   citizens with a window into government. In
through which they          government; and the lack of interest on the      the US, legislation trackers are being
are governed in their       part of citizens, evidenced through low          offered by individuals - see, for example,
local communities.          voter-turnouts and declining party               GovTrack (www.govtrack.us). In the UK,
                            memberships.                                     TheyWorkForYou(www.theyworkforyou.
                                                                             com) enables citizens to track their local
                            Information                                      member's speeches and voting patterns,
                                                                             and to check details from their register of
                            At the most basic level, citizens need to        interests and members' expenses.
                            understand what government is doing and
                            how it impacts on them. Traditionally, this      Rules and regulations are more intrusive
                            has been difficult because of citizens'          than legislation, requiring close
                            diverse interests, and the different ways in     consultation with those affected. But rule-
                            which they interact with public services.        making has also become more complex
                                                                             due to requirements in some jurisdictions
                            However, information technology is               for regulatory impact statements and cost-
                            making it easier to track the progress of        benefit analysis. This makes it more difficult
                            legislation. Online bill tracking services are   for governments to attract meaningful
                            provided by most state legislatures in the       comment prior to the promulgation of new
                            USA - see, for example, that of the              rules. The US federal government now
                            Michigan Legislature (www.legislature.mi.        offers a web portal - Regulations.Gov
                            gov/(S(cwey1v555f1edr45fdw0nzfu))/               (www.regulations.gov) - dedicated to
                            mileg.aspx?page=home). And some offer            consultation on rule-making so that it is
                            personalised bill tracking so that after         easier for the public to track changes and
                            identifying legislation that is of particular    file comments.
                            interest, subscribers can be updated
                            regularly by email - Nevada (www.leg.            Governments are also able to provide their
                            state.nv.us/74th/subscriber) is one state        citizens with detailed information about
                            that offers this service.                        particular aspects of public administration.
                                                                             Best practice is to be found in the US
                            Individual departments, interest groups          federal government website, FedSpending
                            and commercial organisations also offer          (www.fedspending.org), which enables
                            services that focus on specific issues. The      citizens to obtain detailed (and user-




                           Public Sector Reform: An International Overview
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1. Public Engagement

friendly) information on federal                and online discussion forums, as well as
government grants and contracts, by             more traditional consultation
state, congressional district, contractor,      mechanisms. Some governments are
service type or level of competition.           tailoring discussion forums to particular
                                                sub-groups in the community.
Some governments provide highly-                HeadsUp (www.headsup.org.uk) is one
accessible ways of tracking new                 such service directed to young people.
infrastructure projects in the state or city.
See, for example, the New York City             Web 2.0 - the latest generation in
Economic Development Corporation                internet-based services - greatly
(www.nycedc.com/Web). On a smaller              expands the kind of contributions that
scale, the city of Seattle provides             can be made by citizens. These highly-
residents with detailed maps showing            democratic systems have sometimes
road construction works (www.seattle.           been described as 'peer-production'. A
gov/transportation/map/default.htm).            leading-edge example of how this new
                                                technology might be used in improving
Consultation                                    the quality of public engagement is
                                                Politicopia, a wiki established by a state
Citizens also want to be engaged in             politician from Utah (USA). In this case,
government decision-making, being               citizens are provided with neutral
consulted about forthcoming reforms and         statements of major policy initiatives,
enabled to feed back their views on             with supportive and critical
public services. Some government                argumentation. The public are then able
agencies and local authorities seek public      to make their own contributions online,
input on the quality of public services and     and the politician operating the site has
spending priorities, using surveys mailed       been able to take meaningful reforms to
out to local residents.                         the legislature based on these
                                                comments.
Some conduct annual surveys of a
sample of randomly selected citizens.           ComNET (www.fcny.org/cmgp/comnet.
The City of San Francisco, for example,         htm) represents a more active form of
publishes an annual 'City Survey'               public engagement. It was developed
summarising the government's                    by the Center on Municipal Government
performance across a range of measures,         in New York, and uses hand-held
comparing results over time (http://www.        computers (similar to PDAs), to enable
sfgov.org/site/controller_csa_index.asp?        community organisations to capture
id=59064).                                      information about local potholes or
                                                streetlight maintenance (along with
In 2006, the Singapore Government               photographs), and upload the data to
restructured its feedback unit into a new       government. The system is now being
service entitled REACH (http://app.reach.       used in a number of North American
gov.sg/reach/default.aspx) with e-polls         municipalities.




 Public Sector Reform: An International Overview
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1. Public Engagement

 One of the most closely-watched               Deliberative forums are large group
 consultation initiatives has been             discussions involving a representative
 'Participatory Budgeting' (http://www.        sample of citizens who have been
 participatorybudgeting.org/Whatis.            provided in advance with briefing
 htm), introduced by the city of Porto         materials, and are given access to
 Alegre in Brazil in 1990, and thereafter      subject-matter experts before
 adopted in some 250 municipalities            participating in a deliberative process.
 across South America and around the
 world. Participatory Budgeting works at
 the local level, where there are defined      Case Study 1: Deliberative
 geographic boundaries. It is based on
                                               Polling in Wenling City
 structured dialogue and debate about
 spending priorities over the course of the
                                               In 2005, Zeguo township in Wenling
 year, among local people elected by
                                               City, China, used 'Deliberative Polling'
 their fellow citizens.
                                               (http://cdd.stanford.edu/polls/china) to
                                               engage with around 250 randomly-
 Deliberation
                                               selected citizens to consult on priorities
                                               for local infrastructure projects. A
 Deliberation implies that citizens have
                                               scientific approach to the selection of
 been given the opportunity to make a
                                               participants was combined with
 thoughtful contribution to an issue after
                                               traditional methods of deliberation used
 consideration of the evidence. It
                                               in the local community. Among other
 suggests that a representative cross-
                                               benefits, deliberation encouraged
 section of the public has been provided
                                               participants to take into account the
 with the information and allowed the
                                               financial consequences of their choices.
 time and the forum within which to
 reach a considered judgement.
                                               Citizens' Juries typically involve smaller
                                               groups - 12 to 15 non-experts - to hear
 In British Columbia, Canada, the
                                               evidence from witnesses, deliberate and
 government established a Citizen's
                                               form a judgement on contentious policy
 Assembly (www.citizensassembly.bc.
                                               issues. They have been actively used by
 ca/public) in 2004, to review the
                                               governments and third party
 province's electoral system. 160
                                               organisations in the UK in recent years.
 representatives drawn from all electoral
 districts considered alternative reforms at
                                               Citizen-led reform
 a series of forums over a period of
 eleven months. Submissions were
                                               Some governments allow their citizens
 received by the Assembly from the
                                               to initiate reforms, if they are able to
 general public. The recommendations
                                               attract a sufficient level of community
 were put to the public in a popular
                                               support. In the UK, experiments are
 referendum.
                                               underway with a citizen-led initiative




Public Sector Reform: An International Overview
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1. Public Engagement

  known as 'community call to action'.         additional assessment on property
  Under the Police and Justice Act 2006,       taxes. The funds are allocated to the
  citizens can raise community safety          BID, which provides supplementary
  concerns with local councillors, who are     services in retail and commercial
  under a statutory obligation to address      precincts. In New York City, BIDs
  these matters and respond. Frontline         financed additional security personnel
  councillors in turn are able to insist on    and street cleaners, and worked with
  responsiveness from delivery agencies.       local shopkeepers to improve the visual
                                               appearance of the neighbourhood. BIDs
  Citizen initiatives - which allow citizens   have also been established more
  to vote on a proposed statutory or           recently in some UK municipalities.
  constitutional amendment - have been
  used in Switzerland for well over a          Another area where citizens have been
  century. They have been actively used        able to become involved in community
  in some of the western states of North       governance is in the management of
  America in recent decades. (www.             natural resources. Local fishing
  iandrinstitute.org). Votes or referenda      communities are sometimes
  are triggered by public petition,            administered in this way. In Australia,
  although issues are usually required to      there are around 4,000 volunteer
  have a high level of support before they     community landcare groups,
  can be submitted for consideration.          coordinated by government, that play
                                               an important role (for example) in
  Governance                                   helping to combat soil erosion (www.
  The most advanced form of                    landcareonline.com).
  engagement enables the public to be
  involved in the actual governance of         The UK government is also looking to
  organisations with responsibility for the    the directly-elected 'neighbourhood
  delivery of community services. The          councillors' who will have delegated
  most successful of these have been at        rights over spending on services within
  the sub-local level, where local citizens    the local neighbourhood. Local
  have a greater capacity to make a            councillors would have the option of
  contribution to the management of            raising additional funds by levying an
  neighbourhood services.                      extra charge on the local tax for specific
                                               neighbourhood services.
  One of the most successful initiatives of
  this sort have been Business
  Improvement Districts (BIDs), pioneered
  in Canada in the late 1960s, and
  adopted widely in the United States in
  the 1990s. BIDs are created on the
  initiative of local merchants and
  property owners, and financed by an



 Public Sector Reform: An International Overview
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                          2. Customer-centric Government

Customer-                  'Putting customers first' through voice    better understanding what matters to
                           and choice was a central element of Al     service users. At a more sophisticated
centric
                           Gore's 'National Performance Review' in    level, it involves rethinking public services
government                 the US federal government in the mid-      in terms of the customer experience -
Customer-focused           1990s, and subsequently by the Bush        seeking to understand government
public services            administration. More recently, the UK      programmes as a narrative told from the
consider the public’s
                           government has actively sought to focus    user's perspective.
experiences as service
users. They seek to
                           public service providers on the needs of
engage through short       end-users. In Singapore, ministers have    The soft issues - whether consumers
feedback loops – from      exhorted public servants to 'Start with    are treated with respect - matter as
the service user direct    the User in Mind', and other govern-       much to consumers as the hard issues -
to the service provider    ments around the world have adopted        the effectiveness of the service they
– rather than long         a similar approach, particularly in        finally receive. It is now commonplace
loops – which flow         relation to online services.               for government agencies to use 'mys-
from user to provider                                                 tery shoppers', a technique often used
via policymakers.
                           Service quality                            by private sector managers to test the
                                                                      quality of front-line service delivery.
                           The quality movement has served as a
                           companion to customer-centric              Once again, information technology has
                           government. 'Citizen's Charters' intro-    made it easier for governments to
                           duced by the UK government in the late     survey and to respond to the concerns of
                           1980s pioneered this approach, estab-      service-users. CivicRADAR (www.
                           lishing explicit performance standards     civicradar.com) - being piloted in
                           for customer service. This was followed    Connecticut - enables citizens to com-
                           by Quality Charters in Portugal, Client    municate information to the city
                           Charters in Malaysia, Service Users'       government, make service requests and
                           Charters in Australia and Customer         register complaints 24 hours a day.
                           Service Standards in the US federal        More importantly, the system allows
                           government.                                them to track the response of the various
                                                                      departments and agencies online and
                           Responsiveness                             when the requests are resolved, com-
                                                                      plete a satisfaction survey.
                           The Organisation for Economic Coop-
                           eration and Development (OECD)             In the private sector, price comparison
                           reports widespread interest in improving   websites now enable consumers to
                           the responsiveness of government,          search for the best prices for standard
                           although different governments pursue      goods and services such as airline flights.
                           the concept in different ways. At a        Websites have been launched enabling
                           simple level, this involves surveying      the public to compare the prices
                           customer satisfaction, with a view to      charged by competing public utilities




                          Public Sector Reform: An International Overview
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2. Customer-centric Government
 (such as electricity and gas). But many        of personalisation, some North Ameri-
 government services are heavily                can governments now allow drivers to
 subsidised or provided free of charge, so      order customised number plates online.
 that price comparison may be of little         The state of Virginia allows customers to
 assistance.                                    draw on any one of 180 different
                                                designs, some of which are sponsored
 On the other hand, a growing number of         by community organisations and social
 websites enable citizens to compare the        causes (www.dmv.virginia.gov/webdoc/
 quality of services. The US Department         citizen/vehicles/plate_search.asp).
 of Health and Human Services (www.
 hospitalcompare.hhs.gov) allows                Business Link (www.businesslink.gov.
 patients to compare the performance of         uk), an online information service for
 hospitals across the United States             small business in Britain, is an example
 according to a range of performance            of this new generation of customised
 measures. In the UK, an independent            services. For example, an individual
 guide to the performance of hospitals          wishing to start a new business can
 and medical consultants is provided by         input details on the kind of business
 a public-private partnership known as Dr       they are proposing to establish, and the
 Foster (www.drfoster.co.uk). In the            online service will provide them with a
 education sector, the UK government            start-up organiser, with all of the re-
 allows parents to compare the stan-            quired links, and (say) prompted assis-
 dards of neighbourhood schools (http://        tance and precedents for preparing a
 schoolsfinder.direct.gov.uk) and non-          business plan.
 government organisations offer similar
 services in the US (www.greatschools.          Increasingly, individuals are looking for
 net).                                          private services to be incorporated into
                                                these personalised online facilities. This
 Personalisation                                is leading to a debate about whether
                                                governments' electronic services should
 Personalisation suggests that the public       be opened up to third party intermedi-
 are provided with a customer-friendly          aries who would act more as the agent
 interface with government services.            of the citizen than as the agents of
 Developments in information technol-           government. Australian immigration
 ogy have opened up new ways of                 visas are managed through an interna-
 personalising public services, with            tional network of travel agents. In the
 facilities available 24/7 and the ability to   UK, banks have explored the possibility
 make appointments online. It is                of enabling customers to lodge their
 summed up in the 'MyGov' concept -             returns and pay their taxes through the
 tailoring government websites to               banks' websites, and insurance compa-
 individual need. As an extreme example         nies have suggested that motor vehicle




Public Sector Reform: An International Overview
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2. Customer-centric Government Government
            2. Customer-centric

             registration might be undertaken by          pioneered choice in education through
             them on their policyholders' behalf.         voucher arrangements. In Australia, this
                                                          has been accomplished simply by
             However, since many public services          allowing government funding to be
             involve personal care, case manage-          allocated across the public and inde-
             ment remains an important means of           pendent sectors according to student
             personalising public services to the         numbers.
             individual. It is resource-intensive and
             must be prioritised on those in greatest     Where public services are provided free
             need, but governments continue to            at the point of delivery, it is still possible
             explore new models. For example, the         for customers (or their agents) to choose
             UK government is introducing a na-           between alternative providers. Under
             tional scheme for case-managing              Australia's Job Network , job seekers can
             offenders through the criminal justice       register for assistance with any of a
             system.                                      range of approved service providers in
                                                          their area, drawn from the private and
             In the health sector, pilot schemes are      voluntary sectors.
             being introduced for managing the
             long-term health needs of the chroni-        Concerns have been expressed that
             cally ill, with the objective of improving   choice is not equally accessible for some
             quality of life and reducing                 disadvantaged groups. This can be
             hospitalisation rates. Health Mainte-        addressed partly through differential
             nance Organisations in the USA pio-          vouchers, which offer proportionately
             neered these models, with private            greater benefits to the disadvantaged.
             health insurers and state social insur-      In the UK, the government is appointing
             ance providers elsewhere in the world        'choice advisers' to assist families in
             adapting them to local need. South           making meaningful decisions about
             Africa introduced managed care in the        schools. Every local authority is to
             late 1990s, and Australia started con-       appoint a network of choice advisers
             ducting trials with 'coordinated care'       from 2008.
             shortly thereafter. The UK is also
             experimenting with integrated care
             models for the management of chronic
             disease.

             Choice

             It was long assumed that the concept of
             customer choice had only limited
             application to public services, but the
             United States and Australia have




            Public Sector Reform: An International Overview
Page 11




 2. Customer-centric GovernmentGovernment
             2. Customer-centric

  Case Study 2: Choice-based
  Letting in Public Housing
  In 2000, Harborough District Council (a
  UK local authority) launched a choice-
  based letting system for the allocation of
  public housing. It was based on the so-
  called Delft Model that had been widely
  adopted in the Netherlands.

  Instead of allocating housing to appli-
  cants with no alternatives and little
  explanation as to decisions, choice-based
  letting gave tenants the opportunity to
  register for and respond to advertise-
  ments for available properties. They were
  provided with information about the
  properties and neighbourhoods, and local
  market conditions. And simpler and more
  transparent selection criteria were
  introduced. Applicants who turned down
  offers were no longer automatically
  penalised. Choice-based lettings have
  since been adopted by many local
  authorities in the UK.




Public Sector Reform: An International Overview
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                         3. From Policy to Delivery

From Policy to             Most public servants are involved in           adopt this approach more often, al-
                           delivering services to citizens, and yet, in   though Sweden, Switzerland and
Delivery                   most governments around the                    Hungary have also been leaders.
The traditional empha-
                           industrialised world, the senior ranks of
sis on policy develop-
ment in the senior
                           the public service have been dominated         In many countries, chief executives and
ranks of government is     by policy generalists with only a few          senior civil servants are now hired on
being replaced with a      having a commercial or financial               term contracts, with performance-
focus on management        background. Governments have tended            related pay. Organisational structures
and service delivery.      to be driven by policy models rather           are determined and public servants are
                           than delivery models.                          recruited, employed and promoted by
                                                                          the chief executive of the individual
                           Politicians and public servants are now        department or agency, rather than a
                           paying much greater attention to               central public service board. And in an
                           questions of implementation, and the           attempt to avoid a fragmentation of the
                           structures, processes and capabilities         public service and encourage leadership
                           necessary to strengthen the public             development, a number of govern-
                           sector's competence in delivery. There         ments have established a 'senior
                           has been a growing recognition that            executive service'.
                           many good ideas fail, not because the
                           idea itself was wrong, but because the         The US federal government was the first
                           execution was flawed.                          to introduce such a service, followed in
                                                                          the late 1990s and early 1990s by
                           Transforming the senior civil service          Australia and New Zealand, and later
                                                                          by the Netherlands and the UK. South
                           Traditionally, the core public service was     Korea has a strong career-based
                           career-based, with civil servants re-          tradition, but in 1999 the government
                           cruited on the basis of examinations or        introduced the Open Competitive
                           academic credentials, and thereafter           Position System, with the objective of
                           enjoying lifelong tenure. They were            facilitating the transfer of skills from
                           transferred between positions as               outside government. Ministries were to
                           needed, which required them to be              designate 20% of senior positions for
                           generalists.                                   open competition.

                           In recent years, a number of countries         Even with a senior executive service,
                           have shifted to position-based systems,        these countries have experienced
                           where the focus is on finding the best         difficulty in attracting significant num-
                           candidate for the job in question, often       bers of external applicants for senior
                           by competitive recruitment amongst             positions, and governments have
                           internal and external candidates. Anglo-       sought to involve the private sector in
                           American governments have tended to            other ways.




                         Public Sector Reform: An International Overview
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3. From Policy to Delivery

  Private sector expertise                    government appointed an executive
                                              from the private sector as the new
  In 2004, the Japanese Prime Minister        Commercial Director in the Department
  appointed senior business leaders and       of Health. He was given a strong
  academics to a Council for the Promo-       mandate for reform and he, in turn,
  tion of Regulatory Reform (www.cao.         relied heavily on secondments from the
  go.jp/en/reform/previous_reform.html).      private sector to support the initiative.
  This expert committee was used to           The programme is regarded as having
  develop an important new initiative for     been a success, although the
  market-testing public services that has     sustainability of this model is uncertain
  since been implemented by the               as many of the staff have since returned
  government.                                 to the private sector (www.dh.gov.uk/
                                              en/Policyandguidance/
  North American governments have long        Organisationpolicy/Secondarycare/
  appointed senior business executives to     Treatmentcentres/DH_074351).
  high-level 'commissions' to design and
  then to oversee the implementation of       Driving delivery
  financial and operational reforms. The
  Governor of Georgia, Sonny Perdue           Another way in which governments
  recently appointed a 'Commission for a      have emphasised the primacy of
  New Georgia' (www.new-georgia.org),         delivery is through the creation of
  led by CEOs and senior executives from      specialist units at the centre of govern-
  the private sector, to harness innovation   ment to ensure that key targets are
  and technology to improve cost effi-        met. The New South Wales state
  ciency and customer responsiveness.         government in Sydney, Australia,
                                              established a Premier's Delivery Unit in
  In Virginia, Governor Mark Warner           2006, to drive improvement in the
  created a 'Council on Virginia's Future'    delivery of public services. A similar unit
  (www.future.virginia.gov) involving         was established by the UK government
  senior politicians, public officials and    in 2001, to oversee the government's
  private sector executives. The brief        performance management system.
  included providing a long-term focus on
  high priority issues, improving govern-     In 2006, the British government estab-
  ment performance, and engaging              lished a Delivery Council (www.
  citizens in a dialogue about Virginia's     cabinetoffice.gov.uk/
  future.                                     public_service_reform/delivery_council),
                                              made up of leaders in operational
  When it set about to create a new           delivery from across government 'to
  market for elective surgery in the Na-      share best practice (e.g. on commis-
  tional Health Service (NHS), the British    sioning models) and to provide expert




Public Sector Reform: An International Overview
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3. From Policy to Delivery

  practitioner input to the design and         Consistent with these developments,
  management of delivery models'. Key          when the new US Department of
  delivery departments in the UK have          Homeland Security was created in
  also been appointing 'Commercial             2002, it was exempted from provisions
  Directorates', staffed with personnel with   of the civil service law relating to hiring,
  a strong commercial background.              compensation and promotion.

  Deregulating public services
                                               Case Study 3: Iowa's Charter
  One of the most important reforms            Agencies
  identified for improving public service
  delivery has lain in the reduction of the    In 2003, Iowa launched its Charter
  bureaucratic red tape imposed on public      Agencies programme (http://charter.
  service managers. In order for managers      iowa.gov/default.htm). Agencies are
  to be given greater autonomy, it has         able to volunteer for charter status,
  also been necessary to make them             which ensures them greater financial
  more accountable - 'making the man-          and managerial freedom, in return for
  agers manage' as well as 'letting the        commitments to deliver measurable
  managers manage'. One of the four            service improvements and savings. Six
  pillars of Singapore's public sector         agencies stepped forward in 2004, and
  productivity reforms has been 'Maximise      together they represent more than half
  Discretion'.                                 of all state employees.

  Devolution of financial responsibility has   Charter Agencies are exempt from
  been central to these reforms. Typically,    across-the-board budget cuts for three
  governments have moved to three-year         years; they are able to retain half of
  forward estimates, output budgeting,         unspent appropriations and 80 percent
  accrual accounting and charging gen-         of all new revenue generated; they can
  eral government agencies for capital         actively market goods and services to
  assets. At the same time, chief execu-       the public; they are exempt from
  tives have been made responsible for         restrictions on staffing numbers and
  the financial performance of their           may award employee bonuses.
  agencies, with associated performance        However, they are subject to the state's
  pay.                                         collective bargaining arrangements.

  In human resource management, there          It has proven somewhat easier to give
  has been a trend towards assigning the       greater management autonomy to
  responsibility for recruitment and           service delivery agencies. Where
  promotion to the chief executive rather      governments felt that it was inappropri-
  than a central government board or           ate to privatise state trading enterprises,
  commission.




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3. From Policy to Delivery

they corporatised or commercialised
them, expanding their freedom to engage
in business activities, whilst also increasing
their financial and regulatory
accountability.

A great deal of work remains to be done in
ensuring that these reforms flow down to
the managers involved in the delivery of
front-line services - school principals,
hospital administrators, prison governors
and police commanders.

In the UK, there has been an attempt to
increase managerial autonomy at this
level. The most striking examples lie in the
creation of semi-autonomous 'trusts' out
of high-performing service units. The
earliest of these were foundation trust
hospitals (www.dh.gov.uk/en/
Policyandguidance/Organisationpolicy/
Secondarycare/NHSfoundationtrust/
index.htm), followed more recently by city
academies (www.standards.dfes.gov.uk/
academies/what_are_academies/?
version=1) and trust schools (http://
findoutmore.dfes.gov.uk/2006/09/
trust_schools.html), which enjoy greater
commercial freedom than traditional
public institutions.




Public Sector Reform: An International Overview
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                           4.4. Managing For Results
                              Managing For Results

Managing for               Over recent decades, many governments          number of high-level goals and detailed
                           around the world have adopted some             targets for improving the state's
results                    form of performance management. A              performance, under the title Tasmania
Performance man-                                                          Together (www.tasmaniatogether.tas.
                           recent survey among OECD nations found
agement is con-
                           that three-quarters included non-financial     gov.au). Performance assessment and
cerned with the
delivery of results        performance data in their budget               public reporting is overseen by a statutory
rather than just           documentation, although half neglected         Progress Board that is appointed on a
compliance with rules.     to link expenditure to targets or apply        bipartisan basis.
                           rewards or sanctions.
                                                                          The government of Virginia (USA) is
                           The trend is for governments to move           required by legislation to publish an
                           from simple and indirect forms of perfor-      annual scorecard reporting progress
                           mance management towards more                  against long-term objectives, current
                           demanding models where budgets are             service performance and productivity
                           directly linked to targets and governments     improvement. Performance against the
                           buy outcomes rather than just paying for       government's key targets is tracked
                           outputs.                                       online at 'Virginia Performs' (www.
                                                                          vaperforms.virginia.gov), and the public
                           Performance measurement                        are able to study the state's performance
                                                                          over time and against other states.
                           This is the most basic kind of performance     Citizens are able to search detailed results
                           management. It consists of monitoring          by agency and by locality.
                           and reporting accomplishments, usually
                           in comparison with some benchmark -            Performance accountability
                           past performance, some ideal notion of
                           best practice or external benchmarks           This implies the existence of a manage-
                           drawn from the public or private sectors.      ment cycle, in which performance objec-
                                                                          tives are agreed, achievements are
                           In one of the most comprehensive               measured and reported against those
                           national projects, the Australian Productiv-   objectives, reforms are made with a view
                           ity Commission publishes an annual             to accomplishing the targets, and there is
                           'Report on Government Services' (www.          a system of escalating interventions
                           pc.gov.au/gsp/reports/rogs/2006/index.         where agencies fail to respond
                           html), comparing the performance of a          adequately.
                           wide range of public services across the
                           various states.                                North America have been in the forefront
                                                                          of this movement, with state govern-
                           Following an extensive programme of            ments setting targets for local school
                           community consultation in 2000, the            districts and intervening in cases of
                           Australian state of Tasmania laid down a       persistent failure. Two of the early movers




                           Public Sector Reform: An International Overview
4. Managing for results
                                                                            Page 17




4. Managing For Results

 were North Carolina and Texas, where         agencies. The best-known example is
 significant gains in student performance     Compstat, a system introduced by the
 were observed by the mid-1990s. In           New York Commissioner of Police, Bill
 2000, the Bush administration introduced     Bratton, in 1994. It was designed to
 the 'No Child Left Behind' Act (www.         direct police resources into crime hot
 whitehouse.gov/news/reports/no-child-        spots and reliable and timely statistics
 left-behind.html), obliging states to        about policing outcomes lay at its heart,
 introduce annual report cards, with an       with front-line commanders meeting
 obligation to take corrective action where   regularly with senior management to
 progress is lacking.                         account for their performance. Compstat
                                              was seen as having made a major
 Case Study 4: Intervention in                contribution to the dramatic fall in New
                                              York's crime rates in the 1990s and
 Failing Schools                              within five years, more than a quarter of
                                              police departments across America
 The UK established an independent
                                              were imitating the initiative.
 inspections agency for schools in 1992,
 and published the first scorecards, based
                                              Following Compstat's success, Baltimore
 on public examination results, the same
                                              introduced CitiStat (www.ci.baltimore.
 year. For some years, parents have been
                                              md.us/news/citistat/reports.html) in
 able to check the performance of local
                                              2000, using a performance account-
 schools based on inspections by the Office
                                              ability model based on Compstat, to
 of Standards in Education (www.ofsted.
                                              manage severe problems with em-
 gov.uk/reports) or the examination
                                              ployee absences, sick leave, workers'
 scorecards (www.dfes.gov.uk/
                                              compensation and overtime. The
 performancetables) that are based on
                                              scheme was later broadened to include
 student performance.
                                              other performance criteria and it is now
                                              being rolled out across the entire state
 Starting in 2000, the government built on
                                              of Maryland.
 these foundations, developing a compre-
 hensive performance management
                                              Pay-for-Performance
 regime, with around 1,400 failing schools
 being placed in 'special measures', and a
                                              Since the 1980s, more than two-thirds
 further 200 closed for failure to reform.
                                              of OECD countries have introduced
 The evidence suggests that this
                                              performance related pay for at least
 programme was successful across the
                                              some of their public service, including
 targeted measures.
                                              the United Kingdom, the United States
                                              and Canada, Australia and New
 Performance accountability can also be
                                              Zealand, and a range of European
 used as an intensive management tool for
                                              countries including Germany, Italy, the
 turning around underperforming




 Public Sector Reform: An International Overview
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4. Managing For Results

  Netherlands and Sweden. Korea has also       through a legally-binding or a quasi-
  adopted performance pay in recent years.     contractual relationship. Competitive
                                               tendering and public private partner-
  In New Zealand, which was one of the         ships (PPPs) are dealt with later in this
  early adopters, the Public Service Com-      report, but performance contracting
  missioner determines the performance         deserves to be considered separately.
  incentive, limited to 15 percent of the
  remuneration package. The performance        Some countries have engaged in
  of the organisation and the public service   extensive competition of public services,
  as a whole is taken into account. In         and in the process, they have devel-
  Canada, a committee of departmental          oped sophisticated models of perfor-
  secretaries assesses performance, with       mance contracting. Several UK govern-
  the Prime Minister making the final          ment agencies, and local governments,
  determination. In the Australian federal     are now using contracting to procure
  government, ministers are consulted, but     better social outcomes (such as diversity
  the Prime Minister and the head of his       and sustainability outcomes), rather
  department play a central role.              than focusing just on value-for-money.

  Experts disagree as to whether perfor-       Governments have also employed
  mance bonuses are effective and appro-       quasi-contracts (or 'service level
  priate in motivating individual employees    agreements') between policy agencies
  in the public sector, and some have          and delivery units, in an attempt to
  cautioned at the danger of politicisation.   adapt the lessons of performance
  Some extend these reservations to the        contracting to public sector agencies. For
  use of financial penalties in the            example, Denmark employs perfor-
  incentivisation of underperforming           mance contracts between ministries
  organisations. While financial incentives    and line agencies, and between minis-
  may be of limited value where govern-        tries and chief executives, with associ-
  ment agencies are budget-funded, the         ated performance-related pay.
  success of performance sanctions in
  managing contracts for the delivery of       Performance budgeting
  public services by the private sector
  suggests that they can be used               At its simplest, performance budgeting
  successfully.                                may mean nothing more than present-
                                               ing performance data as part of budget
  Performance contracting                      documentation. A stricter version at-
                                               tempts to link funding to outputs and
  Performance contacting involves purchas-     outcomes specified in the budget
  ing outcomes or outputs from a public,       papers. The promoters of performance
  private or voluntary sector supplier,        budgeting hope to use these measures




Public Sector Reform: An International Overview
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4. Managing For Results

  to drive budgetary and management            In the United States, health insurance
  decisions.                                   funds and Health Maintenance
                                               Organisations have introduced pay-for-
  The US federal government introduced         performance (P4P) programmes for
  the Government Performance and               physicians and hospitals. At elsewhere,
  Results Act (GPRA) in 1993, requiring        there has been a movement in the past
  agencies to develop strategic plans,         three or four years towards paying for
  annual performance plans and perfor-         outcomes, although efforts are still
  mance reports. GPRA was regarded as          being made to improve the quality of
  somewhat groundbreaking in giving the        measures. The federal government's
  Congress a role in the process. In 2004,     Medicare and Medicaid programs are
  the GPRA was taken a step further,           also experimenting with outcome-
  moving to align performance informa-         based funding methods.
  tion with budgetary decisions, with the
  Office of Management and Budget              From inputs to outcomes
  (OMB) asking agencies to submit
  performance budgets. Since the mid-          There has been a distinct move from
  1990s, more than 30 US states have           the specification of inputs to the funding
  introduced performance measurement           of outputs, and while the shift to pur-
  legislation, but Texas and Maryland are      chasing outcomes has proven more
  in the forefront of moving to true perfor-   difficult, governments continue to
  mance budgeting.                             experiment. Several local authorities in
                                               the UK are now contracting for out-
  Some of the more rigorous forms of           comes in the cleanliness of their streets.
  performance budgeting are to be found        Part of the contractor's profit is at risk
  in the higher education sector (for          based on local citizens' perceptions of
  example in the Scandinavian countries),      cleanliness (as measured by indepen-
  where a proportion of the funding is         dent research).
  based on academic performance. In the
  UK, this approach is also used for           Australia's Job Network and the French
  research funding. Case-mix funding (or       equivalent partly reward welfare-to-
  'payment by results') in the health          work providers based on the success of
  system is yet another form of perfor-        their clients in retaining their jobs over
  mance budgeting. The United States,          the medium-term. And experiments
  Denmark, Norway, Chile and some of           are underway in Australia and the UK,
  the Australian states have been using        testing whether the risk of hospital
  case-mix funding for hospitals, and the      admission rates for the chronically-ill
  UK is part way through the introduction      can be shifted to private and voluntary
  of such a scheme.                            providers.




 Public Sector Reform: An International Overview
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4. Managing4. Managing For Results
            For Results

             In the UK, the Highways Agency has
             adopted an 'Active Management
             Payment Mechanism' (www.highways.
             gov.uk/roads/2998.aspx) in new
             tollroads delivered under PPPs. This
             includes financial bonuses and penalties
             for road congestion caused by
             breakdowns, road works and special
             events, as well as adjustments based on
             the number of accidents (benchmarked
             against comparable roads).




            Public Sector Reform: An International Overview
Page 21




5. Market Instruments

 Governments have always looked to the       Governments are also auctioning                 Market
 market to purchase some of their goods      restricted public services online. The
                                                                                             Instruments
 and services. But over recent decades,      Singapore Land Transport Authority
                                                                                             In the regulation of
 they have increasingly adopted market-      conducts online bidding for 'certificates of    private activity, in the
 type arrangements to assist them in         entitlement' for vehicle ownership (the         procurement of goods
 meeting public ends. Unlike the             numbers of which are capped) (www.lta.          and in the delivery of
 privatisation initiatives of the 1980s,     gov.sg/ocoe). Oklahoma allows real-             public services under
 market-oriented government seeks to         time electronic bidding on state bonds          contract, governments
 use the economic incentives created         (www.ok.gov/ostbid/index.php).                  are using market
 through these instruments to deliver                                                        instruments to deliver
 public purposes.                            Environmental markets                           better outcomes.


 e-Auctions                                  Carbon trading, popularised through the
                                             debate over global warming, is a kind of
 A simple example of a market instru-        environmental market designed to assist
 ment now widely used by governments         in the management of CO2 emissions.
 to deliver value-for-money are elec-        Also known as 'cap and trade', this form
 tronic auctions. e-Auctions assist in       of regulatory system relies on a statutory
 creating a more competitive                 ceiling on emissions within a defined
 environment, as well as saving on           geographic area, with companies
 procurement costs. Housing, medical,        assigned individual limits, which can be
 computing and other office supplies are     bought and sold. The benefit of such a
 just a few of the services being bought     system is that those companies capable
 through reverse e-Auctions, which           of reducing their emissions at the lowest
 intensify the competitive pressure for      cost are incentivised to do so through
 sellers.                                    buying entitlements.

 Online auctions are particularly valuable   The trading of environmental credits was
 for local governments that may not          pioneered by the US government with
 otherwise be able to attract significant    sulphur dioxide (SO2) trading introduced
 market interest. In the UK, consortia of    in 1990, and a variety of schemes have
 local authorities have formed regional      since been implemented around the
 purchasing organisations to increase        world (http://www.epa.gov/airmarkets/
 their commercial leverage. In the United    trading/index.html). The Australian state
 States, the federal government has          government of New South Wales
 created a single site, FedBid (www.         introduced salinity trading in the Hunter
 fedbid.com) to handle federal, state and    River in 1992, as a way of balancing the
 local government online procurement         interests of coal mines and vineyards,
 services.                                   both of which use the river. Trading is
                                             now undertaken online, with the public




  Public Sector Reform: An International Overview
Page 22




5. Market Instruments

 able to monitor trends (http://hrs1.epa.        sions and accounts), human resources
 nsw.gov.au).                                    administration, procurement and supply
                                                 chain management and help desks and
 Governments have also used tradable             customer information.
 rights for the management of water
 extraction from rivers and groundwater          A number of Asian countries, but most
 systems, and for regulating the exploita-       notably India, have developed a new
 tion of fishing resources. Australia is one     industry in supplying these services to
 of the world leaders in the use of water        overseas companies, and particularly in
 markets, with online trading (www.              the English-speaking world. Some
 waterfind.com.au). And the Great Barrier        governments struggle with the politics of
 Reef Marine Park Authority uses a trading       outsourcing public services to overseas
 scheme to control the number of tourist         countries, because of the perceived
 operators on the reef (www.gbrmpa.gov.          impact on local jobs.
 au/corp_site/permits/emc).
                                                 PPPs: Australian governments pioneered
 Competition and contracting                     the asset procurement model that has
                                                 come to be known as PPP or the private
 Contracting of public services has be-          finance initiative (PFI), in the late 1980s.
 come increasingly commonplace over              Until recently, they continued to be world
 recent decades, partly as a by-product of       leaders in PPP toll roads, although the US
 the information revolution, and partly          has recently overtaken them. The market
 because of the popularity of PPPs in the        leader in the PPP markets is the UK
 provision of infrastructure and the associ-     which has signed more than 800 PPPs
 ated services.                                  since the policy was first actively pursued
                                                 in 1996.
 IT-enabled change: Governments turned
 to the private sector for IT services largely   But the PPP model has now been
 because there was no in-house capabil-          adopted right around the world, with
 ity in this field and, given the pace of        some countries such as Spain and Japan
 change, there was little point in develop-      developing more sophisticated procure-
 ing it. What has changed in recent years        ment models than the UK. In many of
 is the expansion of the associated              these countries, the service element in
 support services which private sector           these contracts is largely confined to
 firms are capable of managing on behalf         facilities management, but there are
 of clients. The term most commonly              some important exceptions - prisons
 used is 'business process outsourcing',         (UK, USA, Japan), hospitals (Japan), and
 and the range of services variously             tollroads carrying market risk (Australia,
 includes asset management, financial            Canada, USA).
 management (including payroll, pen-




 Public Sector Reform: An International Overview
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5. Market Instruments Instruments
              5. Market

  Public service contracting: In addition to   included: the call centre, accounting,
  these developments, there has been           purchasing, human resources, informa-
  continuous expansion in the range of         tion technology and support for fire,
  public services delivered under contract,    police, water and sewerage, and gar-
  as governments have developed new            bage services, street design and
  models and private firms have devel-         maintenance, planning and zoning,
  oped new service capabilities. The           inspections and permits. Some town
  following are some of the leading-edge       councils in Singapore contract out the
  examples:                                    administration of all their common areas
                                               to managing agents.
  One of the most successful areas of
  public service contracting has been the      Contestability
  custodial sector, with private firms in
  some countries managing entire prisons,      'Contestability' is not another word for
  undertaking prisoner transportation and      'competition'. It refers to the reform of
  handling home detention with electronic      public services by using the threat of
  tagging. Both the US and the UK have         competition. It is not necessary that the
  worked with the private and voluntary        service in question actually be market-
  sectors in the provision of probation        tested: only that there is a pool of
  services.                                    alternative providers, and a mechanism
                                               for the injection of competition should
  In 1996, Mozambique contracted the           the incumbent fail to improve.
  management of its customs service to a
  private company originally established       The US federal government has been
  by the UK Customs Service, with a view       operating a contestability regime
  to reconstructing its systems and pro-       through its 'Most Efficient Operation'
  cesses and retraining its staff. More        (MEO) policy in procurements. Agencies
  recently, this firm has advised Bulgaria     are able to defer competition by dem-
  and other countries on the                   onstrating that they meet an acceptable
  modernisation of their customs               level of performance.
  programmes (http://www.crownagents.
  com).                                        In the UK, the government has used this
                                               approach in reforming elective surgery in
  In the USA, the state of Georgia has         public hospitals, and the management
  recently contracted out the manage-          of Local Education Authorities and
  ment of entire local authorities. Sandy      prisons, and there is a commitment to
  Springs (www.sandyspringsga.org) was         use it in reforming probation services. For
  the first of these, in December 2005,        example, the Prison Service undertakes
  appointing a private contractor to deliver   'performance tests' of underperforming
  all of its services. Contracted services     prisons, with the threat of market-testing




  Public Sector Reform: An International Overview
Page 24




5. Market Instruments

  if an acceptable standard is not reached.     Japan has recently adopted a some-
  Some Australian state governments             what different approach to introducing
  have also used this approach with their       public service markets. In May 2006,
  prisons, improving human resource             the Japanese Diet passed the 'Act
  management.                                   Regarding the Reform of Public Services
                                                Through the Introduction of
  Public service markets                        Competition', or the 'Market Testing
                                                Law' as it is popularly known. This was
  More recently, governments have               part of Prime Minister Koizumi's reform
  looked to the design and management           policy entitled, 'Leave to the private
  of entire public service markets. One of      sector what it can do'. In piloting the
  the most widely-studied examples is           programme, the government selected
  Australia's welfare-to-work market.           eight model projects in three fields.
                                                These were drawn from 119 proposals
  Case Study 5: Australia's Job                 made by the private sector in late 2004,
                                                when the government invited external
  Network                                       suggestions as to possible areas of
                                                reform.
  Under Australia's welfare-to-work
  market, assistance with job placement         The UK government has a formal policy
  for the unemployed - historically a           of developing a 'mixed economy'
  public sector monopoly - was changed          composed of public, private and volun-
  to a case management model and then           tary sector providers across a wide
  to performance-based contracts. Job           range of public services. Examples of
  Network is a managed market that has          markets under development include:
  reduced costs and significantly               managed health care for the chroni-
  strengthened performance                      cally-ill, elective surgery, secure mental
  accountability.                               health, offender management, the
                                                transition from welfare-to-work, foster
  Similar markets for job placement are         care and residential care for children,
  being created in France, Germany, the         parental support and local government.
  UK and Japan. In the UK, the govern-
  ment is investigating a market model          The creation of a mixed economy
  where the private and voluntary sector        involves much more than merely
  providers would finance the initial skills-   contracting out public services to private
  development and placement effort, and         companies. The government has
  payments would only be made to the            created new forms of public entities
  service provider once the beneficiary         capable of operating in these markets,
  had remained off unemployment                 and significant work is underway in
  benefits for a defined period of time         government in identifying and over-
  (www.dwp.gov.uk/publications/dwp/             coming the barriers to voluntary sector
  2007/welfarereview.pdf).




Public Sector Reform: An International Overview
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5. Market Instruments Instruments
               5. Market

 participation.

 One of the results has been the emer-
 gence in the UK of hybrid organisations
 consisting of joint ventures between
 public, private and/or voluntary providers.
 For example, Working Links (www.
 workinglinks.co.uk) is a joint venture
 involved in the UK job placement market,
 involving the government-owned
 Jobcentre Plus, two commercial
 organisations, and an Australian voluntary
 sector provider.




   Public Sector Reform: An International Overview
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                            6. Joined Up Government

                               Overlap, duplication, fragmentation,          Case Study 6: Australia's
Joined up                      balkanisation, 'turf protection',
                                                                             Centrelink
Government                     'stovepipes', the 'silo mentality' - a wide
Governments are                variety of terms have been used to
                                                                             Centrelink (www.centrelink.gov.au) was
searching for new              describe the challenge of trying to ensure
ways of overcoming                                                           established by the Australian federal
                               that government departments and
the fragmentation and                                                        government in 1997 as a one-stop shop
                               agencies work together. The solutions
duplication in the public                                                    for a variety of welfare services. It pro-
                               have variously been described as
sector.                                                                      vides services for two major policy
                               coordination, collaboration, service
                                                                             departments that purchase front-desk
                               integration, 'seamless government',
                                                                             services from Centrelink, so that welfare
                               'joined up government', 'holistic govern-
                                                                             beneficiaries only have to tell their story
                               ment' and the management of cross-
                                                                             to government once. Reorganising
                               cutting issues. Whatever the name, the
                                                                             social welfare transactions in this way
                               challenge of making public services
                                                                             enabled Centrelink to present
                               coherent for the customers and citizens
                                                                             government's services according to 'life
                               who interact with them remains one of
                                                                             events' such as 'looking for work' or
                               the most difficult areas of public
                                                                             'planning your retirement', rather than
                               administration.
                                                                             the categories that made sense to
                                                                             individual departments.
                               Structural Change
                                                                             It was established as an arms-length
                               One of the most common solutions to
                                                                             agency with its own board, and with
                               service integration lies in merging agen-
                                                                             quasi-contractual relationships with its
                               cies and creating super-departments,
                                                                             client departments. Centrelink was able
                               although this can shift the coordination
                                                                             to rationalise the number of service
                               problems elsewhere. New Zealand
                                                                             outlets, and create a single website and
                               developed a system with two different
                                                                             a central call centre. Over time, it has also
                               kinds of ministers - 'vote' ministers who
                                                                             been able to negotiate arrangements
                               negotiated outputs and secured budget
                                                                             with other departments to serve as their
                               allocations, and 'responsible' ministers
                                                                             'front desk'.
                               who represented government agencies
                               from a supply perspective. The distinction
                                                                             Centrelink is widely regarded as having
                               was sometimes made between the
                                                                             delivered its objectives, although it has
                               government's 'ownership' interest and its
                                                                             not been without its challenges. Aligning
                               'purchase' interest (the latter being
                                                                             file structures across departments and
                               concerned with the delivery of outputs).
                                                                             creating a centralised database raised
                                                                             privacy concerns. In some cases, gov-
                                                                             ernment wished to give new policy
                                                                             initiatives a distinctive brand, and in-
                                                                             sisted that Centrelink should not function




                             Public Sector Reform: An International Overview
Page 27




6. Joined Up Government

 as the one-stop shop. And the separation         Case Management
 of policy and delivery into separate
 agencies proved to be difficult to maintain.     Case management - coordinating the
                                                  delivery of multiple services to target
                                                  populations - is another long-estab-
 Cross-cutting Reviews                            lished method of joining up services,
                                                  particularly welfare-related services.
 In some policy areas, such as crime              Typically it is expensive, and so tends to
 reduction and children at risk, where a          be reserved for high priority services, or
 number of different departments and              where the costs of a lack of coordination
 agencies have a stake, the answers lie in        are high.
 cross-departmental reviews. Joint
 programmes can be established to target          This same approach of relying on a
 such issues on a collaborative basis, with       'service champion' can be adopted in
 integrated teams and 'joint budgets'             giving stakeholders a voice in
 financed out of a common fund. The UK            government. The UK government has
 has adopted this approach in recent years        recently announced that it will appoint
 in dealing with priority issues such as drug     'Customer Group Directors' to represent
 abuse and mental health.                         sectors of the community within
                                                  government, such as small businesses
 Place Management                                 and the aged.

 Place management solutions are based             Shared Services
 on devolving authority and spending
 responsibility to neighbourhoods and             Another form of joined up government
 communities. They focus on ends rather           where there is currently a great deal of
 than means, addressing the outcomes              interest is in 'shared services', particu-
 desired for a particular locality. In the more   larly in corporate support. In the UK, the
 radical proposals, budgets may be united         NHS has formed NHS Shared Business
 under a local 'place manager'.                   Services (www.sbs.nhs.uk), a joint
                                                  venture with a private company, to
 In the United States, place management           provide finance, accounting and payroll
 was often known as 'comprehensive                services to public healthcare
 community initiatives'. In Australia, 'single    organisations. The scheme is voluntary,
 area budgets' were developed as a way            but participating organisations are
 of integrating federal, state and local          guaranteed a 20% initial cost reduction
 government programmes that impacted              and ongoing savings of 2% a year, with
 on a single community.                           timely and high quality reports.




   Public Sector Reform: An International Overview
Page 28




6. Joined Up Government

  The concept can equally extend to               However, web-based technologies
  customer service centres and other              have created renewed interest in one-
  front-desk facilities. Australia's Centrelink   stop shops. The Singapore government
  is a shared service centre for customer-        broke new ground in 1999 in creating a
  facing transactions.                            single gateway to government informa-
                                                  tion and service, known as the eCitizen
  In 2006, the American states of Iowa,           Portal. It was quickly copied by other
  Maine and Vermont formed a drug-                governments around the world: Singov
  purchasing pool to negotiate collectively       (www.gov.sg) in Singapore, DirectGov
  for discounts in drug costs under the           (www.direct.gov.uk/en/index.htm) in
  Medicare and Medicaid. School districts         the UK, and USA.gov (www.usa.gov) in
  in the United States are creating shared        the US are the descendants of these
  service arrangements to take advantage          early initiatives.
  of scale economies whilst remaining
  grounded in the local community.                Over the past decade, many American
                                                  cities have developed 311 call systems -
  Police forces in Norfolk, Suffolk and           a single phone number to provide quick
  Cambridgeshire (in England) have been           access to non-emergency services -
  collaborating with a view to increasing         with callers directed to the appropriate
  effectiveness and reducing costs. A Joint       part of government within seconds.
  Governance Board was created, with the          Across America they have been tagged
  chair rotating between Chief Constables.        with the slogan, 'One call to city hall'.
  The original services targeted for study
  were call-handling, firearms-licensing,         No Wrong Door
  major investigations and scientific
  services. This was later extended to            Instead of joining up the front office or
  include custody, property, fleet and            the back office, government can join up
  procurement.                                    the intermediate systems so that
                                                  different departments function as a front
  One-stop shops                                  door to each other's services. This
                                                  approach recognises that the public
  One-stop shops were long discredited            may call upon government's services in
  as a solution, since without major              a variety of different ways, and seeks to
  restructuring, they place another layer         ensure that regardless of the way in
  between the public and the officials who        which the approach was first made,
  will eventually resolve their concerns.         services are provided in a coherent and
  These arrangements can to be known              coordinated manner.
  as 'first-stop shops' and, in France,
  'foyers'.                                       The idea appears to have been pio-
                                                  neered in the social welfare sector in




Public Sector Reform: An International Overview
Page 29




6. Joined Up Government

 Arizona in 1998, when it was recognised      Australia continues to enforce a strict
 that the need for welfare assistance         system of visas, but since 1996, visitors
 might manifest itself as an education        from many countries have been able to
 problem, a health problem, a housing         obtain electronic travel authorities (ETAs)
 problem or a law and order problem,          through a network of around 300,000
 and that the need for coordinated            travel agents worldwide. The govern-
 services remained the same no matter         ment has maintained its visa system,
 what the point of entry. The concept was     but it is invisible to the individual tourist.
 quickly adopted in other states, although
 it has proved difficult to implement.        In the United States, a voluntary
                                              organisation, Earth911, has brought
 In the United States, 'No Wrong Door'        together information on the state of the
 has been applied most often in social        environment from more than 10,000
 welfare services, but the London Devel-      communities across America, particu-
 opment Agency has recently adopted a         larly through its Beach Water Quality
 similar approach in serving small            service (www.earth911.org/
 business. Success depends heavily on         waterquality/index.asp?cluster=0).
 the development of common supporting         Earth911 has been able to convince
 informational, technological and policy      federal, state, local and voluntary
 architecture.                                organisations to share information,
                                              where government organisations like
 Alternative channels                         the Environmental Protection Agency
                                              had believed it was impossible.
 In many situations, citizens engage with
 public and private sector organisations in
 the same transaction. In renewing a
 motor vehicle registration, a driver will
 also need to renew his insurance. In
 submitting a return and paying her
 taxes, a taxpayer will need to interact
 with banks and accountants as well as
 government.

 Some citizens have asked why related
 public and private services cannot be
 joined up in a single, integrated service,
 and some private providers have chal-
 lenged the assumption that government
 needs to remain the sole channel for
 delivering such services.




  Public Sector Reform: An International Overview
Page 30




Further Reading

Public engagement                            OECD Journal of Budgeting, (2005) 5:1,
                                             pp.127-151.
'Power to the People', Joseph Rowntree
Reform Trust Ltd, March 2006 (http://        Market instruments
www.jrrt.org.uk/PowertothePeople_001.
pdf)                                         Stephen Goldsmith and William D.
                                             Eggers, Governing by Network: The New
Gerry Stoker, Why Politics Matter, London:   Shape of the Public Sector, Washington,
Palgrave Macmillan, 2006.                    DC: The Brookings Institution, 2004.

Customer-centric government                  'The UK Government's Approach to Public
                                             Service Reform', London: The Prime
Charles Leadbeater, 'Personalisation         Minister's Strategy Unit, 2006, Chapter 6,
through participation', London: Demos,
2004.                                        Joined up government

OECD, 'Responsive Government: Service        'Modernising Government', Cm 4310,
Quality Initiatives', OECD Publishing,       London: The Stationery Office Limited,
February 2006.                               1999; Performance and Innovation Unit,
                                             'Wiring It Up: Whitehall's Management of
On choice, see The Centre for Market and     Cross-Cutting Policies and Services',
Public Organisation at http://www.bris.ac.   London: Cabinet Office, 2000
uk/Depts/CMPO/research/choice/
choiceindex.htm                              Christopher Pollitt, 'Joined-Up
                                             Government: A Survey', Political Studies
From policy to delivery                      Review, 2003, Vol.1, pp.34-49.

'The UK Government's Approach to Public
Service Reform', London: The Prime
Minister's Strategy Unit, 2006, Chapter 5.

Managing for results

Dall Forsythe (ed.), Quicker, Better,
Cheaper? Managing Performance in
American Government, Albany, New York:
Rockefeller Institute Press, 2001.

Teresa Curristine, 'Government
Performance: Lessons and Challenges',




Public Sector Reform: An International Overview
Psr An International Overview
Psr An International Overview

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Psr An International Overview

  • 3. Page 1 Introduction This Brief has been commissioned by the Efficiency Unit to report on recent developments in public sector reform around the world. It is based on secondary rather than original research and the objective has been to focus on international examples, so that Hong Kong examples have been deliberately excluded. The purpose of this publication is to present "at a glance" the key developments around the world on the public sector reform front. It is meant to inform and inspire our public managers who are required to innovate in their service delivery. Each country or organisation devises its own public sector reform agenda to suit its social, resources and political circumstances. The wholesale transplant of one reform initiative from one country to another seldom works. Nonetheless, knowing what other public managers in jurisdications elsewhere are thinking, and how they tackle their policy and implementation challenges should present food for thought for us in Hong Kong. Head, Efficiency Unit July 2007 Public Sector Reform: An International Overview
  • 4. Page 2 Executive Summary Public engagement P ublic sector reform is not new. But over the past decade or two, there has been an increase of reform activity, right the world, focusing on those that have been widely adopted, those that seem to have delivered significant improvement, The challenge of public around the world. While priorities have and those that promise interesting new engagement is to find shifted over time, and there have been directions in the reform agenda. new ways of encour- different emphases from country to aging citizens to be country, there have also been several It is a sampler, a catalogue of short case meaningfully involved persistent themes: renewed attempts to studies that readers can investigate more in public policy-making, engage citizens in the process of closely on their own. This is the first in a and in playing a role in governance; a move to place customers series of papers, and it is meant to serve the institutions through which they and end-users at the heart of public as a general introduction to some of the are governed in their services; a focus on delivery and imple- outstanding themes that will be local communities. mentation as opposed to policy addressed in greater detail in future formulation; managing for outcomes; an papers. increased reliance on market instruments to improve value-for-money; and efforts Public Engagement to coordinate the complex variety of The challenge of public engagement is to Customer- different programmes across find new ways of encouraging citizens to centric government. be meaningfully involved in public policy- government making, and in playing a role in the Customer-focused It is difficult to find a precedent for such institutions through which they are public services widespread and sustained interest in governed in their local communities. consider the public’s public sector reform, even if we go back to experiences as service the progressive reformers of North Right around the world, governments are users. They seek to America around the turn of the 19th struggling with this challenge. Information engage through short century, a movement that was also feedback loops – from technology can assist with the provision of managerialist in tone. information to citizens and it can make the service user direct to the service provider consultation easier. But engagement There are different views as to what requires much more than formal – rather than long loops – which flow underlies this transformation agenda, but interaction, and governments are also from user to provider throughout the literature, one finds a experimenting with more personal via policymakers. deep-seated belief that the business of consultation, creating innovative new government is fundamentally changing. forums for deliberation. Globalisation, technological innovation and rising public expectations – and the Customer-centric government speed with which these changes are Customer-focused public services con- taking place – mean that the role of the sider the public’ experiences as service s public services in society and the manner users. They seek to engage through short in which they are delivered must feedback loops – from the service user fundamentally change. direct to the service provider – rather than long loops – which flow from user to This brief discusses some of the cutting- provider via policymakers. edge reforms to public services around Public Sector Reform: An International Overview
  • 5. Page 3 Executive Summary In a number of governments, the pro- mance-related pay, performance con- Policy to delivery ducer-led model of public services is tracting and performance budgeting. The traditional empha- gradually giving way to a consumer- Some governments are now experi- sis on policy develop- driven model. The range of options ex- menting with purchasing outcomes and ment in the senior ranks tends from improving responsiveness to not just outputs. of government is being end-users, through to the personalisation replaced with a focus on of public services, and policies directed to Market Instruments management and giving the consumers of public services In the regulation of private activity, in the service delivery. some choice of provider. procurement of goods and in the delivery of public services under contract, govern- Policy to delivery ments are using market instruments to The traditional emphasis on policy devel- deliver better outcomes. opment in the senior ranks of government Managing for is being replaced with a focus on manage- A variety of different market instruments results ment and service delivery. are now being employed by Performance manage- governments to assist them in meeting ment is concerned with the delivery of results Many good ideas fail, not because the public purposes, including online rather than just idea was wrong, but because the auctions, trading of environmental compliance with rules. execution was flawed. Governments are permits, competition and contracting, paying much greater attention to and the creation of new markets for strengthening the public sector’ s public services. competence in delivery. Initiatives have Market included increased flexibility in the Joined up government recruitment of senior executives, greater Governments are searching for new instruments In the regulation of openness in attracting expertise from the ways of overcoming the fragmentation private activity, in the private sector, and particularly commercial and duplication in the public sector. procurement of goods expertise, the establishment of delivery and in the delivery of units with cross-cutting responsibilities, The lack of coordination in public public services under and the deregulation of the public services, services remains a serious challenge in contract, governments by giving greater autonomy to service the struggle to improve the quality of the are using market managers. customer’ experience of government. s instruments to deliver Many of the traditional solutions, such as better outcomes. Managing for results merging departments and agencies and Performance management is concerned the use of case managers have limited with the delivery of results rather than just value. Web-based technologies are Joined up compliance with rules. opening up new possibilities for delivering joined up government, but government There have been a wide variety of perfor- they are also raising entirely new Governments are mance-based initiatives, from perfor- questions, such as the desirability of searching for new ways of overcoming the mance measurement and reporting, joining up related public and private fragmentation and performance accountability (based on a services. duplication in the public cycle of management reforms), perfor- sector. Public Sector Reform: An International Overview
  • 6. Page 4 1. Public Engagement Public Engaging the citizenry is a challenge for National Highway Traffic Safety governments right around the world. It Administration in the USA (www.nhtsa. engagement continues to be a dilemma for a variety of gov/ncsl/) tracks legislation on a range of The challenge of public reasons: the ongoing 'nationalisation' of road safety issues across all jurisdictions. engagement is to find government, with decision-making new ways of encour- aging citizens to be authority moving from the local to the But intermediating government meaningfully involved national level; the growing significance of information is no longer the exclusive in public policy-making, supra-national institutions, such as the domain of government. Concerned citizens and in playing a role in European Union and the World Bank; the are using the internet to provide fellow- the institutions technical complexity of modern citizens with a window into government. In through which they government; and the lack of interest on the the US, legislation trackers are being are governed in their part of citizens, evidenced through low offered by individuals - see, for example, local communities. voter-turnouts and declining party GovTrack (www.govtrack.us). In the UK, memberships. TheyWorkForYou(www.theyworkforyou. com) enables citizens to track their local Information member's speeches and voting patterns, and to check details from their register of At the most basic level, citizens need to interests and members' expenses. understand what government is doing and how it impacts on them. Traditionally, this Rules and regulations are more intrusive has been difficult because of citizens' than legislation, requiring close diverse interests, and the different ways in consultation with those affected. But rule- which they interact with public services. making has also become more complex due to requirements in some jurisdictions However, information technology is for regulatory impact statements and cost- making it easier to track the progress of benefit analysis. This makes it more difficult legislation. Online bill tracking services are for governments to attract meaningful provided by most state legislatures in the comment prior to the promulgation of new USA - see, for example, that of the rules. The US federal government now Michigan Legislature (www.legislature.mi. offers a web portal - Regulations.Gov gov/(S(cwey1v555f1edr45fdw0nzfu))/ (www.regulations.gov) - dedicated to mileg.aspx?page=home). And some offer consultation on rule-making so that it is personalised bill tracking so that after easier for the public to track changes and identifying legislation that is of particular file comments. interest, subscribers can be updated regularly by email - Nevada (www.leg. Governments are also able to provide their state.nv.us/74th/subscriber) is one state citizens with detailed information about that offers this service. particular aspects of public administration. Best practice is to be found in the US Individual departments, interest groups federal government website, FedSpending and commercial organisations also offer (www.fedspending.org), which enables services that focus on specific issues. The citizens to obtain detailed (and user- Public Sector Reform: An International Overview
  • 7. Page 5 1. Public Engagement friendly) information on federal and online discussion forums, as well as government grants and contracts, by more traditional consultation state, congressional district, contractor, mechanisms. Some governments are service type or level of competition. tailoring discussion forums to particular sub-groups in the community. Some governments provide highly- HeadsUp (www.headsup.org.uk) is one accessible ways of tracking new such service directed to young people. infrastructure projects in the state or city. See, for example, the New York City Web 2.0 - the latest generation in Economic Development Corporation internet-based services - greatly (www.nycedc.com/Web). On a smaller expands the kind of contributions that scale, the city of Seattle provides can be made by citizens. These highly- residents with detailed maps showing democratic systems have sometimes road construction works (www.seattle. been described as 'peer-production'. A gov/transportation/map/default.htm). leading-edge example of how this new technology might be used in improving Consultation the quality of public engagement is Politicopia, a wiki established by a state Citizens also want to be engaged in politician from Utah (USA). In this case, government decision-making, being citizens are provided with neutral consulted about forthcoming reforms and statements of major policy initiatives, enabled to feed back their views on with supportive and critical public services. Some government argumentation. The public are then able agencies and local authorities seek public to make their own contributions online, input on the quality of public services and and the politician operating the site has spending priorities, using surveys mailed been able to take meaningful reforms to out to local residents. the legislature based on these comments. Some conduct annual surveys of a sample of randomly selected citizens. ComNET (www.fcny.org/cmgp/comnet. The City of San Francisco, for example, htm) represents a more active form of publishes an annual 'City Survey' public engagement. It was developed summarising the government's by the Center on Municipal Government performance across a range of measures, in New York, and uses hand-held comparing results over time (http://www. computers (similar to PDAs), to enable sfgov.org/site/controller_csa_index.asp? community organisations to capture id=59064). information about local potholes or streetlight maintenance (along with In 2006, the Singapore Government photographs), and upload the data to restructured its feedback unit into a new government. The system is now being service entitled REACH (http://app.reach. used in a number of North American gov.sg/reach/default.aspx) with e-polls municipalities. Public Sector Reform: An International Overview
  • 8. Page 6 1. Public Engagement One of the most closely-watched Deliberative forums are large group consultation initiatives has been discussions involving a representative 'Participatory Budgeting' (http://www. sample of citizens who have been participatorybudgeting.org/Whatis. provided in advance with briefing htm), introduced by the city of Porto materials, and are given access to Alegre in Brazil in 1990, and thereafter subject-matter experts before adopted in some 250 municipalities participating in a deliberative process. across South America and around the world. Participatory Budgeting works at the local level, where there are defined Case Study 1: Deliberative geographic boundaries. It is based on Polling in Wenling City structured dialogue and debate about spending priorities over the course of the In 2005, Zeguo township in Wenling year, among local people elected by City, China, used 'Deliberative Polling' their fellow citizens. (http://cdd.stanford.edu/polls/china) to engage with around 250 randomly- Deliberation selected citizens to consult on priorities for local infrastructure projects. A Deliberation implies that citizens have scientific approach to the selection of been given the opportunity to make a participants was combined with thoughtful contribution to an issue after traditional methods of deliberation used consideration of the evidence. It in the local community. Among other suggests that a representative cross- benefits, deliberation encouraged section of the public has been provided participants to take into account the with the information and allowed the financial consequences of their choices. time and the forum within which to reach a considered judgement. Citizens' Juries typically involve smaller groups - 12 to 15 non-experts - to hear In British Columbia, Canada, the evidence from witnesses, deliberate and government established a Citizen's form a judgement on contentious policy Assembly (www.citizensassembly.bc. issues. They have been actively used by ca/public) in 2004, to review the governments and third party province's electoral system. 160 organisations in the UK in recent years. representatives drawn from all electoral districts considered alternative reforms at Citizen-led reform a series of forums over a period of eleven months. Submissions were Some governments allow their citizens received by the Assembly from the to initiate reforms, if they are able to general public. The recommendations attract a sufficient level of community were put to the public in a popular support. In the UK, experiments are referendum. underway with a citizen-led initiative Public Sector Reform: An International Overview
  • 9. Page 7 1. Public Engagement known as 'community call to action'. additional assessment on property Under the Police and Justice Act 2006, taxes. The funds are allocated to the citizens can raise community safety BID, which provides supplementary concerns with local councillors, who are services in retail and commercial under a statutory obligation to address precincts. In New York City, BIDs these matters and respond. Frontline financed additional security personnel councillors in turn are able to insist on and street cleaners, and worked with responsiveness from delivery agencies. local shopkeepers to improve the visual appearance of the neighbourhood. BIDs Citizen initiatives - which allow citizens have also been established more to vote on a proposed statutory or recently in some UK municipalities. constitutional amendment - have been used in Switzerland for well over a Another area where citizens have been century. They have been actively used able to become involved in community in some of the western states of North governance is in the management of America in recent decades. (www. natural resources. Local fishing iandrinstitute.org). Votes or referenda communities are sometimes are triggered by public petition, administered in this way. In Australia, although issues are usually required to there are around 4,000 volunteer have a high level of support before they community landcare groups, can be submitted for consideration. coordinated by government, that play an important role (for example) in Governance helping to combat soil erosion (www. The most advanced form of landcareonline.com). engagement enables the public to be involved in the actual governance of The UK government is also looking to organisations with responsibility for the the directly-elected 'neighbourhood delivery of community services. The councillors' who will have delegated most successful of these have been at rights over spending on services within the sub-local level, where local citizens the local neighbourhood. Local have a greater capacity to make a councillors would have the option of contribution to the management of raising additional funds by levying an neighbourhood services. extra charge on the local tax for specific neighbourhood services. One of the most successful initiatives of this sort have been Business Improvement Districts (BIDs), pioneered in Canada in the late 1960s, and adopted widely in the United States in the 1990s. BIDs are created on the initiative of local merchants and property owners, and financed by an Public Sector Reform: An International Overview
  • 10. Page 8 2. Customer-centric Government Customer- 'Putting customers first' through voice better understanding what matters to and choice was a central element of Al service users. At a more sophisticated centric Gore's 'National Performance Review' in level, it involves rethinking public services government the US federal government in the mid- in terms of the customer experience - Customer-focused 1990s, and subsequently by the Bush seeking to understand government public services administration. More recently, the UK programmes as a narrative told from the consider the public’s government has actively sought to focus user's perspective. experiences as service users. They seek to public service providers on the needs of engage through short end-users. In Singapore, ministers have The soft issues - whether consumers feedback loops – from exhorted public servants to 'Start with are treated with respect - matter as the service user direct the User in Mind', and other govern- much to consumers as the hard issues - to the service provider ments around the world have adopted the effectiveness of the service they – rather than long a similar approach, particularly in finally receive. It is now commonplace loops – which flow relation to online services. for government agencies to use 'mys- from user to provider tery shoppers', a technique often used via policymakers. Service quality by private sector managers to test the quality of front-line service delivery. The quality movement has served as a companion to customer-centric Once again, information technology has government. 'Citizen's Charters' intro- made it easier for governments to duced by the UK government in the late survey and to respond to the concerns of 1980s pioneered this approach, estab- service-users. CivicRADAR (www. lishing explicit performance standards civicradar.com) - being piloted in for customer service. This was followed Connecticut - enables citizens to com- by Quality Charters in Portugal, Client municate information to the city Charters in Malaysia, Service Users' government, make service requests and Charters in Australia and Customer register complaints 24 hours a day. Service Standards in the US federal More importantly, the system allows government. them to track the response of the various departments and agencies online and Responsiveness when the requests are resolved, com- plete a satisfaction survey. The Organisation for Economic Coop- eration and Development (OECD) In the private sector, price comparison reports widespread interest in improving websites now enable consumers to the responsiveness of government, search for the best prices for standard although different governments pursue goods and services such as airline flights. the concept in different ways. At a Websites have been launched enabling simple level, this involves surveying the public to compare the prices customer satisfaction, with a view to charged by competing public utilities Public Sector Reform: An International Overview
  • 11. Page 9 2. Customer-centric Government (such as electricity and gas). But many of personalisation, some North Ameri- government services are heavily can governments now allow drivers to subsidised or provided free of charge, so order customised number plates online. that price comparison may be of little The state of Virginia allows customers to assistance. draw on any one of 180 different designs, some of which are sponsored On the other hand, a growing number of by community organisations and social websites enable citizens to compare the causes (www.dmv.virginia.gov/webdoc/ quality of services. The US Department citizen/vehicles/plate_search.asp). of Health and Human Services (www. hospitalcompare.hhs.gov) allows Business Link (www.businesslink.gov. patients to compare the performance of uk), an online information service for hospitals across the United States small business in Britain, is an example according to a range of performance of this new generation of customised measures. In the UK, an independent services. For example, an individual guide to the performance of hospitals wishing to start a new business can and medical consultants is provided by input details on the kind of business a public-private partnership known as Dr they are proposing to establish, and the Foster (www.drfoster.co.uk). In the online service will provide them with a education sector, the UK government start-up organiser, with all of the re- allows parents to compare the stan- quired links, and (say) prompted assis- dards of neighbourhood schools (http:// tance and precedents for preparing a schoolsfinder.direct.gov.uk) and non- business plan. government organisations offer similar services in the US (www.greatschools. Increasingly, individuals are looking for net). private services to be incorporated into these personalised online facilities. This Personalisation is leading to a debate about whether governments' electronic services should Personalisation suggests that the public be opened up to third party intermedi- are provided with a customer-friendly aries who would act more as the agent interface with government services. of the citizen than as the agents of Developments in information technol- government. Australian immigration ogy have opened up new ways of visas are managed through an interna- personalising public services, with tional network of travel agents. In the facilities available 24/7 and the ability to UK, banks have explored the possibility make appointments online. It is of enabling customers to lodge their summed up in the 'MyGov' concept - returns and pay their taxes through the tailoring government websites to banks' websites, and insurance compa- individual need. As an extreme example nies have suggested that motor vehicle Public Sector Reform: An International Overview
  • 12. Page 10 2. Customer-centric Government Government 2. Customer-centric registration might be undertaken by pioneered choice in education through them on their policyholders' behalf. voucher arrangements. In Australia, this has been accomplished simply by However, since many public services allowing government funding to be involve personal care, case manage- allocated across the public and inde- ment remains an important means of pendent sectors according to student personalising public services to the numbers. individual. It is resource-intensive and must be prioritised on those in greatest Where public services are provided free need, but governments continue to at the point of delivery, it is still possible explore new models. For example, the for customers (or their agents) to choose UK government is introducing a na- between alternative providers. Under tional scheme for case-managing Australia's Job Network , job seekers can offenders through the criminal justice register for assistance with any of a system. range of approved service providers in their area, drawn from the private and In the health sector, pilot schemes are voluntary sectors. being introduced for managing the long-term health needs of the chroni- Concerns have been expressed that cally ill, with the objective of improving choice is not equally accessible for some quality of life and reducing disadvantaged groups. This can be hospitalisation rates. Health Mainte- addressed partly through differential nance Organisations in the USA pio- vouchers, which offer proportionately neered these models, with private greater benefits to the disadvantaged. health insurers and state social insur- In the UK, the government is appointing ance providers elsewhere in the world 'choice advisers' to assist families in adapting them to local need. South making meaningful decisions about Africa introduced managed care in the schools. Every local authority is to late 1990s, and Australia started con- appoint a network of choice advisers ducting trials with 'coordinated care' from 2008. shortly thereafter. The UK is also experimenting with integrated care models for the management of chronic disease. Choice It was long assumed that the concept of customer choice had only limited application to public services, but the United States and Australia have Public Sector Reform: An International Overview
  • 13. Page 11 2. Customer-centric GovernmentGovernment 2. Customer-centric Case Study 2: Choice-based Letting in Public Housing In 2000, Harborough District Council (a UK local authority) launched a choice- based letting system for the allocation of public housing. It was based on the so- called Delft Model that had been widely adopted in the Netherlands. Instead of allocating housing to appli- cants with no alternatives and little explanation as to decisions, choice-based letting gave tenants the opportunity to register for and respond to advertise- ments for available properties. They were provided with information about the properties and neighbourhoods, and local market conditions. And simpler and more transparent selection criteria were introduced. Applicants who turned down offers were no longer automatically penalised. Choice-based lettings have since been adopted by many local authorities in the UK. Public Sector Reform: An International Overview
  • 14. Page 12 3. From Policy to Delivery From Policy to Most public servants are involved in adopt this approach more often, al- delivering services to citizens, and yet, in though Sweden, Switzerland and Delivery most governments around the Hungary have also been leaders. The traditional empha- industrialised world, the senior ranks of sis on policy develop- ment in the senior the public service have been dominated In many countries, chief executives and ranks of government is by policy generalists with only a few senior civil servants are now hired on being replaced with a having a commercial or financial term contracts, with performance- focus on management background. Governments have tended related pay. Organisational structures and service delivery. to be driven by policy models rather are determined and public servants are than delivery models. recruited, employed and promoted by the chief executive of the individual Politicians and public servants are now department or agency, rather than a paying much greater attention to central public service board. And in an questions of implementation, and the attempt to avoid a fragmentation of the structures, processes and capabilities public service and encourage leadership necessary to strengthen the public development, a number of govern- sector's competence in delivery. There ments have established a 'senior has been a growing recognition that executive service'. many good ideas fail, not because the idea itself was wrong, but because the The US federal government was the first execution was flawed. to introduce such a service, followed in the late 1990s and early 1990s by Transforming the senior civil service Australia and New Zealand, and later by the Netherlands and the UK. South Traditionally, the core public service was Korea has a strong career-based career-based, with civil servants re- tradition, but in 1999 the government cruited on the basis of examinations or introduced the Open Competitive academic credentials, and thereafter Position System, with the objective of enjoying lifelong tenure. They were facilitating the transfer of skills from transferred between positions as outside government. Ministries were to needed, which required them to be designate 20% of senior positions for generalists. open competition. In recent years, a number of countries Even with a senior executive service, have shifted to position-based systems, these countries have experienced where the focus is on finding the best difficulty in attracting significant num- candidate for the job in question, often bers of external applicants for senior by competitive recruitment amongst positions, and governments have internal and external candidates. Anglo- sought to involve the private sector in American governments have tended to other ways. Public Sector Reform: An International Overview
  • 15. Page 13 3. From Policy to Delivery Private sector expertise government appointed an executive from the private sector as the new In 2004, the Japanese Prime Minister Commercial Director in the Department appointed senior business leaders and of Health. He was given a strong academics to a Council for the Promo- mandate for reform and he, in turn, tion of Regulatory Reform (www.cao. relied heavily on secondments from the go.jp/en/reform/previous_reform.html). private sector to support the initiative. This expert committee was used to The programme is regarded as having develop an important new initiative for been a success, although the market-testing public services that has sustainability of this model is uncertain since been implemented by the as many of the staff have since returned government. to the private sector (www.dh.gov.uk/ en/Policyandguidance/ North American governments have long Organisationpolicy/Secondarycare/ appointed senior business executives to Treatmentcentres/DH_074351). high-level 'commissions' to design and then to oversee the implementation of Driving delivery financial and operational reforms. The Governor of Georgia, Sonny Perdue Another way in which governments recently appointed a 'Commission for a have emphasised the primacy of New Georgia' (www.new-georgia.org), delivery is through the creation of led by CEOs and senior executives from specialist units at the centre of govern- the private sector, to harness innovation ment to ensure that key targets are and technology to improve cost effi- met. The New South Wales state ciency and customer responsiveness. government in Sydney, Australia, established a Premier's Delivery Unit in In Virginia, Governor Mark Warner 2006, to drive improvement in the created a 'Council on Virginia's Future' delivery of public services. A similar unit (www.future.virginia.gov) involving was established by the UK government senior politicians, public officials and in 2001, to oversee the government's private sector executives. The brief performance management system. included providing a long-term focus on high priority issues, improving govern- In 2006, the British government estab- ment performance, and engaging lished a Delivery Council (www. citizens in a dialogue about Virginia's cabinetoffice.gov.uk/ future. public_service_reform/delivery_council), made up of leaders in operational When it set about to create a new delivery from across government 'to market for elective surgery in the Na- share best practice (e.g. on commis- tional Health Service (NHS), the British sioning models) and to provide expert Public Sector Reform: An International Overview
  • 16. Page 14 3. From Policy to Delivery practitioner input to the design and Consistent with these developments, management of delivery models'. Key when the new US Department of delivery departments in the UK have Homeland Security was created in also been appointing 'Commercial 2002, it was exempted from provisions Directorates', staffed with personnel with of the civil service law relating to hiring, a strong commercial background. compensation and promotion. Deregulating public services Case Study 3: Iowa's Charter One of the most important reforms Agencies identified for improving public service delivery has lain in the reduction of the In 2003, Iowa launched its Charter bureaucratic red tape imposed on public Agencies programme (http://charter. service managers. In order for managers iowa.gov/default.htm). Agencies are to be given greater autonomy, it has able to volunteer for charter status, also been necessary to make them which ensures them greater financial more accountable - 'making the man- and managerial freedom, in return for agers manage' as well as 'letting the commitments to deliver measurable managers manage'. One of the four service improvements and savings. Six pillars of Singapore's public sector agencies stepped forward in 2004, and productivity reforms has been 'Maximise together they represent more than half Discretion'. of all state employees. Devolution of financial responsibility has Charter Agencies are exempt from been central to these reforms. Typically, across-the-board budget cuts for three governments have moved to three-year years; they are able to retain half of forward estimates, output budgeting, unspent appropriations and 80 percent accrual accounting and charging gen- of all new revenue generated; they can eral government agencies for capital actively market goods and services to assets. At the same time, chief execu- the public; they are exempt from tives have been made responsible for restrictions on staffing numbers and the financial performance of their may award employee bonuses. agencies, with associated performance However, they are subject to the state's pay. collective bargaining arrangements. In human resource management, there It has proven somewhat easier to give has been a trend towards assigning the greater management autonomy to responsibility for recruitment and service delivery agencies. Where promotion to the chief executive rather governments felt that it was inappropri- than a central government board or ate to privatise state trading enterprises, commission. Public Sector Reform: An International Overview
  • 17. Page 15 3. From Policy to Delivery they corporatised or commercialised them, expanding their freedom to engage in business activities, whilst also increasing their financial and regulatory accountability. A great deal of work remains to be done in ensuring that these reforms flow down to the managers involved in the delivery of front-line services - school principals, hospital administrators, prison governors and police commanders. In the UK, there has been an attempt to increase managerial autonomy at this level. The most striking examples lie in the creation of semi-autonomous 'trusts' out of high-performing service units. The earliest of these were foundation trust hospitals (www.dh.gov.uk/en/ Policyandguidance/Organisationpolicy/ Secondarycare/NHSfoundationtrust/ index.htm), followed more recently by city academies (www.standards.dfes.gov.uk/ academies/what_are_academies/? version=1) and trust schools (http:// findoutmore.dfes.gov.uk/2006/09/ trust_schools.html), which enjoy greater commercial freedom than traditional public institutions. Public Sector Reform: An International Overview
  • 18. Page 16 4.4. Managing For Results Managing For Results Managing for Over recent decades, many governments number of high-level goals and detailed around the world have adopted some targets for improving the state's results form of performance management. A performance, under the title Tasmania Performance man- Together (www.tasmaniatogether.tas. recent survey among OECD nations found agement is con- that three-quarters included non-financial gov.au). Performance assessment and cerned with the delivery of results performance data in their budget public reporting is overseen by a statutory rather than just documentation, although half neglected Progress Board that is appointed on a compliance with rules. to link expenditure to targets or apply bipartisan basis. rewards or sanctions. The government of Virginia (USA) is The trend is for governments to move required by legislation to publish an from simple and indirect forms of perfor- annual scorecard reporting progress mance management towards more against long-term objectives, current demanding models where budgets are service performance and productivity directly linked to targets and governments improvement. Performance against the buy outcomes rather than just paying for government's key targets is tracked outputs. online at 'Virginia Performs' (www. vaperforms.virginia.gov), and the public Performance measurement are able to study the state's performance over time and against other states. This is the most basic kind of performance Citizens are able to search detailed results management. It consists of monitoring by agency and by locality. and reporting accomplishments, usually in comparison with some benchmark - Performance accountability past performance, some ideal notion of best practice or external benchmarks This implies the existence of a manage- drawn from the public or private sectors. ment cycle, in which performance objec- tives are agreed, achievements are In one of the most comprehensive measured and reported against those national projects, the Australian Productiv- objectives, reforms are made with a view ity Commission publishes an annual to accomplishing the targets, and there is 'Report on Government Services' (www. a system of escalating interventions pc.gov.au/gsp/reports/rogs/2006/index. where agencies fail to respond html), comparing the performance of a adequately. wide range of public services across the various states. North America have been in the forefront of this movement, with state govern- Following an extensive programme of ments setting targets for local school community consultation in 2000, the districts and intervening in cases of Australian state of Tasmania laid down a persistent failure. Two of the early movers Public Sector Reform: An International Overview
  • 19. 4. Managing for results Page 17 4. Managing For Results were North Carolina and Texas, where agencies. The best-known example is significant gains in student performance Compstat, a system introduced by the were observed by the mid-1990s. In New York Commissioner of Police, Bill 2000, the Bush administration introduced Bratton, in 1994. It was designed to the 'No Child Left Behind' Act (www. direct police resources into crime hot whitehouse.gov/news/reports/no-child- spots and reliable and timely statistics left-behind.html), obliging states to about policing outcomes lay at its heart, introduce annual report cards, with an with front-line commanders meeting obligation to take corrective action where regularly with senior management to progress is lacking. account for their performance. Compstat was seen as having made a major Case Study 4: Intervention in contribution to the dramatic fall in New York's crime rates in the 1990s and Failing Schools within five years, more than a quarter of police departments across America The UK established an independent were imitating the initiative. inspections agency for schools in 1992, and published the first scorecards, based Following Compstat's success, Baltimore on public examination results, the same introduced CitiStat (www.ci.baltimore. year. For some years, parents have been md.us/news/citistat/reports.html) in able to check the performance of local 2000, using a performance account- schools based on inspections by the Office ability model based on Compstat, to of Standards in Education (www.ofsted. manage severe problems with em- gov.uk/reports) or the examination ployee absences, sick leave, workers' scorecards (www.dfes.gov.uk/ compensation and overtime. The performancetables) that are based on scheme was later broadened to include student performance. other performance criteria and it is now being rolled out across the entire state Starting in 2000, the government built on of Maryland. these foundations, developing a compre- hensive performance management Pay-for-Performance regime, with around 1,400 failing schools being placed in 'special measures', and a Since the 1980s, more than two-thirds further 200 closed for failure to reform. of OECD countries have introduced The evidence suggests that this performance related pay for at least programme was successful across the some of their public service, including targeted measures. the United Kingdom, the United States and Canada, Australia and New Performance accountability can also be Zealand, and a range of European used as an intensive management tool for countries including Germany, Italy, the turning around underperforming Public Sector Reform: An International Overview
  • 20. Page 18 4. Managing For Results Netherlands and Sweden. Korea has also through a legally-binding or a quasi- adopted performance pay in recent years. contractual relationship. Competitive tendering and public private partner- In New Zealand, which was one of the ships (PPPs) are dealt with later in this early adopters, the Public Service Com- report, but performance contracting missioner determines the performance deserves to be considered separately. incentive, limited to 15 percent of the remuneration package. The performance Some countries have engaged in of the organisation and the public service extensive competition of public services, as a whole is taken into account. In and in the process, they have devel- Canada, a committee of departmental oped sophisticated models of perfor- secretaries assesses performance, with mance contracting. Several UK govern- the Prime Minister making the final ment agencies, and local governments, determination. In the Australian federal are now using contracting to procure government, ministers are consulted, but better social outcomes (such as diversity the Prime Minister and the head of his and sustainability outcomes), rather department play a central role. than focusing just on value-for-money. Experts disagree as to whether perfor- Governments have also employed mance bonuses are effective and appro- quasi-contracts (or 'service level priate in motivating individual employees agreements') between policy agencies in the public sector, and some have and delivery units, in an attempt to cautioned at the danger of politicisation. adapt the lessons of performance Some extend these reservations to the contracting to public sector agencies. For use of financial penalties in the example, Denmark employs perfor- incentivisation of underperforming mance contracts between ministries organisations. While financial incentives and line agencies, and between minis- may be of limited value where govern- tries and chief executives, with associ- ment agencies are budget-funded, the ated performance-related pay. success of performance sanctions in managing contracts for the delivery of Performance budgeting public services by the private sector suggests that they can be used At its simplest, performance budgeting successfully. may mean nothing more than present- ing performance data as part of budget Performance contracting documentation. A stricter version at- tempts to link funding to outputs and Performance contacting involves purchas- outcomes specified in the budget ing outcomes or outputs from a public, papers. The promoters of performance private or voluntary sector supplier, budgeting hope to use these measures Public Sector Reform: An International Overview
  • 21. Page 19 4. Managing For Results to drive budgetary and management In the United States, health insurance decisions. funds and Health Maintenance Organisations have introduced pay-for- The US federal government introduced performance (P4P) programmes for the Government Performance and physicians and hospitals. At elsewhere, Results Act (GPRA) in 1993, requiring there has been a movement in the past agencies to develop strategic plans, three or four years towards paying for annual performance plans and perfor- outcomes, although efforts are still mance reports. GPRA was regarded as being made to improve the quality of somewhat groundbreaking in giving the measures. The federal government's Congress a role in the process. In 2004, Medicare and Medicaid programs are the GPRA was taken a step further, also experimenting with outcome- moving to align performance informa- based funding methods. tion with budgetary decisions, with the Office of Management and Budget From inputs to outcomes (OMB) asking agencies to submit performance budgets. Since the mid- There has been a distinct move from 1990s, more than 30 US states have the specification of inputs to the funding introduced performance measurement of outputs, and while the shift to pur- legislation, but Texas and Maryland are chasing outcomes has proven more in the forefront of moving to true perfor- difficult, governments continue to mance budgeting. experiment. Several local authorities in the UK are now contracting for out- Some of the more rigorous forms of comes in the cleanliness of their streets. performance budgeting are to be found Part of the contractor's profit is at risk in the higher education sector (for based on local citizens' perceptions of example in the Scandinavian countries), cleanliness (as measured by indepen- where a proportion of the funding is dent research). based on academic performance. In the UK, this approach is also used for Australia's Job Network and the French research funding. Case-mix funding (or equivalent partly reward welfare-to- 'payment by results') in the health work providers based on the success of system is yet another form of perfor- their clients in retaining their jobs over mance budgeting. The United States, the medium-term. And experiments Denmark, Norway, Chile and some of are underway in Australia and the UK, the Australian states have been using testing whether the risk of hospital case-mix funding for hospitals, and the admission rates for the chronically-ill UK is part way through the introduction can be shifted to private and voluntary of such a scheme. providers. Public Sector Reform: An International Overview
  • 22. Page 20 4. Managing4. Managing For Results For Results In the UK, the Highways Agency has adopted an 'Active Management Payment Mechanism' (www.highways. gov.uk/roads/2998.aspx) in new tollroads delivered under PPPs. This includes financial bonuses and penalties for road congestion caused by breakdowns, road works and special events, as well as adjustments based on the number of accidents (benchmarked against comparable roads). Public Sector Reform: An International Overview
  • 23. Page 21 5. Market Instruments Governments have always looked to the Governments are also auctioning Market market to purchase some of their goods restricted public services online. The Instruments and services. But over recent decades, Singapore Land Transport Authority In the regulation of they have increasingly adopted market- conducts online bidding for 'certificates of private activity, in the type arrangements to assist them in entitlement' for vehicle ownership (the procurement of goods meeting public ends. Unlike the numbers of which are capped) (www.lta. and in the delivery of privatisation initiatives of the 1980s, gov.sg/ocoe). Oklahoma allows real- public services under market-oriented government seeks to time electronic bidding on state bonds contract, governments use the economic incentives created (www.ok.gov/ostbid/index.php). are using market through these instruments to deliver instruments to deliver public purposes. Environmental markets better outcomes. e-Auctions Carbon trading, popularised through the debate over global warming, is a kind of A simple example of a market instru- environmental market designed to assist ment now widely used by governments in the management of CO2 emissions. to deliver value-for-money are elec- Also known as 'cap and trade', this form tronic auctions. e-Auctions assist in of regulatory system relies on a statutory creating a more competitive ceiling on emissions within a defined environment, as well as saving on geographic area, with companies procurement costs. Housing, medical, assigned individual limits, which can be computing and other office supplies are bought and sold. The benefit of such a just a few of the services being bought system is that those companies capable through reverse e-Auctions, which of reducing their emissions at the lowest intensify the competitive pressure for cost are incentivised to do so through sellers. buying entitlements. Online auctions are particularly valuable The trading of environmental credits was for local governments that may not pioneered by the US government with otherwise be able to attract significant sulphur dioxide (SO2) trading introduced market interest. In the UK, consortia of in 1990, and a variety of schemes have local authorities have formed regional since been implemented around the purchasing organisations to increase world (http://www.epa.gov/airmarkets/ their commercial leverage. In the United trading/index.html). The Australian state States, the federal government has government of New South Wales created a single site, FedBid (www. introduced salinity trading in the Hunter fedbid.com) to handle federal, state and River in 1992, as a way of balancing the local government online procurement interests of coal mines and vineyards, services. both of which use the river. Trading is now undertaken online, with the public Public Sector Reform: An International Overview
  • 24. Page 22 5. Market Instruments able to monitor trends (http://hrs1.epa. sions and accounts), human resources nsw.gov.au). administration, procurement and supply chain management and help desks and Governments have also used tradable customer information. rights for the management of water extraction from rivers and groundwater A number of Asian countries, but most systems, and for regulating the exploita- notably India, have developed a new tion of fishing resources. Australia is one industry in supplying these services to of the world leaders in the use of water overseas companies, and particularly in markets, with online trading (www. the English-speaking world. Some waterfind.com.au). And the Great Barrier governments struggle with the politics of Reef Marine Park Authority uses a trading outsourcing public services to overseas scheme to control the number of tourist countries, because of the perceived operators on the reef (www.gbrmpa.gov. impact on local jobs. au/corp_site/permits/emc). PPPs: Australian governments pioneered Competition and contracting the asset procurement model that has come to be known as PPP or the private Contracting of public services has be- finance initiative (PFI), in the late 1980s. come increasingly commonplace over Until recently, they continued to be world recent decades, partly as a by-product of leaders in PPP toll roads, although the US the information revolution, and partly has recently overtaken them. The market because of the popularity of PPPs in the leader in the PPP markets is the UK provision of infrastructure and the associ- which has signed more than 800 PPPs ated services. since the policy was first actively pursued in 1996. IT-enabled change: Governments turned to the private sector for IT services largely But the PPP model has now been because there was no in-house capabil- adopted right around the world, with ity in this field and, given the pace of some countries such as Spain and Japan change, there was little point in develop- developing more sophisticated procure- ing it. What has changed in recent years ment models than the UK. In many of is the expansion of the associated these countries, the service element in support services which private sector these contracts is largely confined to firms are capable of managing on behalf facilities management, but there are of clients. The term most commonly some important exceptions - prisons used is 'business process outsourcing', (UK, USA, Japan), hospitals (Japan), and and the range of services variously tollroads carrying market risk (Australia, includes asset management, financial Canada, USA). management (including payroll, pen- Public Sector Reform: An International Overview
  • 25. Page 23 5. Market Instruments Instruments 5. Market Public service contracting: In addition to included: the call centre, accounting, these developments, there has been purchasing, human resources, informa- continuous expansion in the range of tion technology and support for fire, public services delivered under contract, police, water and sewerage, and gar- as governments have developed new bage services, street design and models and private firms have devel- maintenance, planning and zoning, oped new service capabilities. The inspections and permits. Some town following are some of the leading-edge councils in Singapore contract out the examples: administration of all their common areas to managing agents. One of the most successful areas of public service contracting has been the Contestability custodial sector, with private firms in some countries managing entire prisons, 'Contestability' is not another word for undertaking prisoner transportation and 'competition'. It refers to the reform of handling home detention with electronic public services by using the threat of tagging. Both the US and the UK have competition. It is not necessary that the worked with the private and voluntary service in question actually be market- sectors in the provision of probation tested: only that there is a pool of services. alternative providers, and a mechanism for the injection of competition should In 1996, Mozambique contracted the the incumbent fail to improve. management of its customs service to a private company originally established The US federal government has been by the UK Customs Service, with a view operating a contestability regime to reconstructing its systems and pro- through its 'Most Efficient Operation' cesses and retraining its staff. More (MEO) policy in procurements. Agencies recently, this firm has advised Bulgaria are able to defer competition by dem- and other countries on the onstrating that they meet an acceptable modernisation of their customs level of performance. programmes (http://www.crownagents. com). In the UK, the government has used this approach in reforming elective surgery in In the USA, the state of Georgia has public hospitals, and the management recently contracted out the manage- of Local Education Authorities and ment of entire local authorities. Sandy prisons, and there is a commitment to Springs (www.sandyspringsga.org) was use it in reforming probation services. For the first of these, in December 2005, example, the Prison Service undertakes appointing a private contractor to deliver 'performance tests' of underperforming all of its services. Contracted services prisons, with the threat of market-testing Public Sector Reform: An International Overview
  • 26. Page 24 5. Market Instruments if an acceptable standard is not reached. Japan has recently adopted a some- Some Australian state governments what different approach to introducing have also used this approach with their public service markets. In May 2006, prisons, improving human resource the Japanese Diet passed the 'Act management. Regarding the Reform of Public Services Through the Introduction of Public service markets Competition', or the 'Market Testing Law' as it is popularly known. This was More recently, governments have part of Prime Minister Koizumi's reform looked to the design and management policy entitled, 'Leave to the private of entire public service markets. One of sector what it can do'. In piloting the the most widely-studied examples is programme, the government selected Australia's welfare-to-work market. eight model projects in three fields. These were drawn from 119 proposals Case Study 5: Australia's Job made by the private sector in late 2004, when the government invited external Network suggestions as to possible areas of reform. Under Australia's welfare-to-work market, assistance with job placement The UK government has a formal policy for the unemployed - historically a of developing a 'mixed economy' public sector monopoly - was changed composed of public, private and volun- to a case management model and then tary sector providers across a wide to performance-based contracts. Job range of public services. Examples of Network is a managed market that has markets under development include: reduced costs and significantly managed health care for the chroni- strengthened performance cally-ill, elective surgery, secure mental accountability. health, offender management, the transition from welfare-to-work, foster Similar markets for job placement are care and residential care for children, being created in France, Germany, the parental support and local government. UK and Japan. In the UK, the govern- ment is investigating a market model The creation of a mixed economy where the private and voluntary sector involves much more than merely providers would finance the initial skills- contracting out public services to private development and placement effort, and companies. The government has payments would only be made to the created new forms of public entities service provider once the beneficiary capable of operating in these markets, had remained off unemployment and significant work is underway in benefits for a defined period of time government in identifying and over- (www.dwp.gov.uk/publications/dwp/ coming the barriers to voluntary sector 2007/welfarereview.pdf). Public Sector Reform: An International Overview
  • 27. Page 25 5. Market Instruments Instruments 5. Market participation. One of the results has been the emer- gence in the UK of hybrid organisations consisting of joint ventures between public, private and/or voluntary providers. For example, Working Links (www. workinglinks.co.uk) is a joint venture involved in the UK job placement market, involving the government-owned Jobcentre Plus, two commercial organisations, and an Australian voluntary sector provider. Public Sector Reform: An International Overview
  • 28. Page 26 6. Joined Up Government Overlap, duplication, fragmentation, Case Study 6: Australia's Joined up balkanisation, 'turf protection', Centrelink Government 'stovepipes', the 'silo mentality' - a wide Governments are variety of terms have been used to Centrelink (www.centrelink.gov.au) was searching for new describe the challenge of trying to ensure ways of overcoming established by the Australian federal that government departments and the fragmentation and government in 1997 as a one-stop shop agencies work together. The solutions duplication in the public for a variety of welfare services. It pro- have variously been described as sector. vides services for two major policy coordination, collaboration, service departments that purchase front-desk integration, 'seamless government', services from Centrelink, so that welfare 'joined up government', 'holistic govern- beneficiaries only have to tell their story ment' and the management of cross- to government once. Reorganising cutting issues. Whatever the name, the social welfare transactions in this way challenge of making public services enabled Centrelink to present coherent for the customers and citizens government's services according to 'life who interact with them remains one of events' such as 'looking for work' or the most difficult areas of public 'planning your retirement', rather than administration. the categories that made sense to individual departments. Structural Change It was established as an arms-length One of the most common solutions to agency with its own board, and with service integration lies in merging agen- quasi-contractual relationships with its cies and creating super-departments, client departments. Centrelink was able although this can shift the coordination to rationalise the number of service problems elsewhere. New Zealand outlets, and create a single website and developed a system with two different a central call centre. Over time, it has also kinds of ministers - 'vote' ministers who been able to negotiate arrangements negotiated outputs and secured budget with other departments to serve as their allocations, and 'responsible' ministers 'front desk'. who represented government agencies from a supply perspective. The distinction Centrelink is widely regarded as having was sometimes made between the delivered its objectives, although it has government's 'ownership' interest and its not been without its challenges. Aligning 'purchase' interest (the latter being file structures across departments and concerned with the delivery of outputs). creating a centralised database raised privacy concerns. In some cases, gov- ernment wished to give new policy initiatives a distinctive brand, and in- sisted that Centrelink should not function Public Sector Reform: An International Overview
  • 29. Page 27 6. Joined Up Government as the one-stop shop. And the separation Case Management of policy and delivery into separate agencies proved to be difficult to maintain. Case management - coordinating the delivery of multiple services to target populations - is another long-estab- Cross-cutting Reviews lished method of joining up services, particularly welfare-related services. In some policy areas, such as crime Typically it is expensive, and so tends to reduction and children at risk, where a be reserved for high priority services, or number of different departments and where the costs of a lack of coordination agencies have a stake, the answers lie in are high. cross-departmental reviews. Joint programmes can be established to target This same approach of relying on a such issues on a collaborative basis, with 'service champion' can be adopted in integrated teams and 'joint budgets' giving stakeholders a voice in financed out of a common fund. The UK government. The UK government has has adopted this approach in recent years recently announced that it will appoint in dealing with priority issues such as drug 'Customer Group Directors' to represent abuse and mental health. sectors of the community within government, such as small businesses Place Management and the aged. Place management solutions are based Shared Services on devolving authority and spending responsibility to neighbourhoods and Another form of joined up government communities. They focus on ends rather where there is currently a great deal of than means, addressing the outcomes interest is in 'shared services', particu- desired for a particular locality. In the more larly in corporate support. In the UK, the radical proposals, budgets may be united NHS has formed NHS Shared Business under a local 'place manager'. Services (www.sbs.nhs.uk), a joint venture with a private company, to In the United States, place management provide finance, accounting and payroll was often known as 'comprehensive services to public healthcare community initiatives'. In Australia, 'single organisations. The scheme is voluntary, area budgets' were developed as a way but participating organisations are of integrating federal, state and local guaranteed a 20% initial cost reduction government programmes that impacted and ongoing savings of 2% a year, with on a single community. timely and high quality reports. Public Sector Reform: An International Overview
  • 30. Page 28 6. Joined Up Government The concept can equally extend to However, web-based technologies customer service centres and other have created renewed interest in one- front-desk facilities. Australia's Centrelink stop shops. The Singapore government is a shared service centre for customer- broke new ground in 1999 in creating a facing transactions. single gateway to government informa- tion and service, known as the eCitizen In 2006, the American states of Iowa, Portal. It was quickly copied by other Maine and Vermont formed a drug- governments around the world: Singov purchasing pool to negotiate collectively (www.gov.sg) in Singapore, DirectGov for discounts in drug costs under the (www.direct.gov.uk/en/index.htm) in Medicare and Medicaid. School districts the UK, and USA.gov (www.usa.gov) in in the United States are creating shared the US are the descendants of these service arrangements to take advantage early initiatives. of scale economies whilst remaining grounded in the local community. Over the past decade, many American cities have developed 311 call systems - Police forces in Norfolk, Suffolk and a single phone number to provide quick Cambridgeshire (in England) have been access to non-emergency services - collaborating with a view to increasing with callers directed to the appropriate effectiveness and reducing costs. A Joint part of government within seconds. Governance Board was created, with the Across America they have been tagged chair rotating between Chief Constables. with the slogan, 'One call to city hall'. The original services targeted for study were call-handling, firearms-licensing, No Wrong Door major investigations and scientific services. This was later extended to Instead of joining up the front office or include custody, property, fleet and the back office, government can join up procurement. the intermediate systems so that different departments function as a front One-stop shops door to each other's services. This approach recognises that the public One-stop shops were long discredited may call upon government's services in as a solution, since without major a variety of different ways, and seeks to restructuring, they place another layer ensure that regardless of the way in between the public and the officials who which the approach was first made, will eventually resolve their concerns. services are provided in a coherent and These arrangements can to be known coordinated manner. as 'first-stop shops' and, in France, 'foyers'. The idea appears to have been pio- neered in the social welfare sector in Public Sector Reform: An International Overview
  • 31. Page 29 6. Joined Up Government Arizona in 1998, when it was recognised Australia continues to enforce a strict that the need for welfare assistance system of visas, but since 1996, visitors might manifest itself as an education from many countries have been able to problem, a health problem, a housing obtain electronic travel authorities (ETAs) problem or a law and order problem, through a network of around 300,000 and that the need for coordinated travel agents worldwide. The govern- services remained the same no matter ment has maintained its visa system, what the point of entry. The concept was but it is invisible to the individual tourist. quickly adopted in other states, although it has proved difficult to implement. In the United States, a voluntary organisation, Earth911, has brought In the United States, 'No Wrong Door' together information on the state of the has been applied most often in social environment from more than 10,000 welfare services, but the London Devel- communities across America, particu- opment Agency has recently adopted a larly through its Beach Water Quality similar approach in serving small service (www.earth911.org/ business. Success depends heavily on waterquality/index.asp?cluster=0). the development of common supporting Earth911 has been able to convince informational, technological and policy federal, state, local and voluntary architecture. organisations to share information, where government organisations like Alternative channels the Environmental Protection Agency had believed it was impossible. In many situations, citizens engage with public and private sector organisations in the same transaction. In renewing a motor vehicle registration, a driver will also need to renew his insurance. In submitting a return and paying her taxes, a taxpayer will need to interact with banks and accountants as well as government. Some citizens have asked why related public and private services cannot be joined up in a single, integrated service, and some private providers have chal- lenged the assumption that government needs to remain the sole channel for delivering such services. Public Sector Reform: An International Overview
  • 32. Page 30 Further Reading Public engagement OECD Journal of Budgeting, (2005) 5:1, pp.127-151. 'Power to the People', Joseph Rowntree Reform Trust Ltd, March 2006 (http:// Market instruments www.jrrt.org.uk/PowertothePeople_001. pdf) Stephen Goldsmith and William D. Eggers, Governing by Network: The New Gerry Stoker, Why Politics Matter, London: Shape of the Public Sector, Washington, Palgrave Macmillan, 2006. DC: The Brookings Institution, 2004. Customer-centric government 'The UK Government's Approach to Public Service Reform', London: The Prime Charles Leadbeater, 'Personalisation Minister's Strategy Unit, 2006, Chapter 6, through participation', London: Demos, 2004. Joined up government OECD, 'Responsive Government: Service 'Modernising Government', Cm 4310, Quality Initiatives', OECD Publishing, London: The Stationery Office Limited, February 2006. 1999; Performance and Innovation Unit, 'Wiring It Up: Whitehall's Management of On choice, see The Centre for Market and Cross-Cutting Policies and Services', Public Organisation at http://www.bris.ac. London: Cabinet Office, 2000 uk/Depts/CMPO/research/choice/ choiceindex.htm Christopher Pollitt, 'Joined-Up Government: A Survey', Political Studies From policy to delivery Review, 2003, Vol.1, pp.34-49. 'The UK Government's Approach to Public Service Reform', London: The Prime Minister's Strategy Unit, 2006, Chapter 5. Managing for results Dall Forsythe (ed.), Quicker, Better, Cheaper? Managing Performance in American Government, Albany, New York: Rockefeller Institute Press, 2001. Teresa Curristine, 'Government Performance: Lessons and Challenges', Public Sector Reform: An International Overview