New Public Management and New Public Governance: Finding the Balance By Peter Aucoin

INTRODUCTION

There is a global trend where governments are focused on providing better services to the public. They have been constantly looking for better ways to increase the quality of the services provided and at the same time minimize the cost or the expenditure of the government. With the aim of improvement in the service delivery by the public service providers, governments took some steps which are known as ‘New Public Management’ (NPM). Most contemporary processes of government reform are inspired by the ideas, techniques, and methodologies postulated by the New Public Management trend. This wave of government reforms that has recently dominated the international scene, is based on the conviction that governments evaluated on results, that work on quasimarket situations, that are agile in performance, able to adopt private sector administrative techniques, and focused on client-citizen, are capable of obtaining better results and greater legitimacy (Cabrero, 2005).

Many countries in west like Britain, Canada, Australia, and others have adopted the concept of NPM and has been a success on achieving effective and efficient service delivery. The successful experience of adopting the concept of NPM has certainly influenced other countries in the world. Developing and under developing countries seems to be aspired and adopt the concept to find a faster and more effective path to build less expensive and more efficient governments. However, in recent years, with the experience of NPM and changes to it has contributed to the concept of New Public Governance.

In this article, I intend to discuss the article entitled “New Public Management and New Public Governance: Finding the Balance” by Peter Aucoin where  I will be explaining the emergence of NPM based on the article and will not be arguing if NPM is better in itself. In order to understand the concept of NPM, it is important to understand the context that led to the emergence of NPM and the question of what was before NPM has to be answered. I will use the examples of few countries to relate to the cases in the same manner as the writer has used in his article. Later on I will also attempt to relate the concept of NPM to the current scenario of Nepal.

1.    Emergence

The emergence of NPM can be traced back between 1960s to 1970s when the postwar ambitions coincided with the post war affluence. During this period, in countries like Australia, Britain, Canada, and New Zealand the Westminster model of poor management face an expanding number and range of public services as state intervention in the socioeconomic order increased significantly. Hence, increasing number of the diversified public services, with growing annual government deficits and mounting national debt was the result.

This problem had to be managed and someone had to lead it. In 1970s Margaret Thatcher’s Conservative government in Britain led the concept of “Rolling back the state” which meant:

·      Privatizing state enterprises,

·      Contracting out to the private sector the task of delivering those public services that had not been privatized,

·      Eliminating some public services, and

·      Reducing government spending (or at least slowing down the rate of its growth) through greater economies and efficiencies.

1.1 Privatizing

Under the concept of privatization, the public services provided by the state bureaucracies were transformed into private services under private ownership and provided in the market place. There were two grounds to justify privatization and contracting out: first, it would reduce budgetary requirements; and second, it would improve national economic productivity.

1.2 Contracting

Contracting introduced the idea the ‘market’ which provided a space for competition between competing potential providers (public sector and/or private sector providers) over contracts to deliver public services. Excerices of tender can be an example. The free and fair competition between the potential service providers reduced or eliminated the monopoly of the public service providers. The philosophy behind the concept of contracting is that, competition between potential providers is what spurs improvements in economy and efficiency; it is not the public or private status of the providers.  Hence, as long the public service provider does not have monopoly control over a service, and thus must compete periodically against private sector providers to maintain a contract, it should have every incentive to achieve all possible economies and efficiencies.

However, there were still other areas left to manage which were not privatized and contracted out. That means, NPM had to involve improving the management of those services which the public service would continue to provide directly.

1.3 Eliminating some public services and reducing government spending

These two concept can be discussed together with the examples of four different countries; Britain, New Zealand, Australia, and Canada. I will be looking at the steps or the approaches taken by these governments to reform.

1.3.1 British approach  

The British approach to reform initially stressed achieving greater economies and efficiencies by conducting wide ranging ‘efficiency scrutinies’ to search out those areas where efficiencies could be achieved and then by taking the necessary decision to realize them. Streamlining of central corporate management regulation and decentralization of financial and human resources administrative authorities were done. They also separated the ministerial departments from ‘executive agencies’ which were the division or branches of ministerial departments. Before the separation of the executive agencies they used to manage and deliver the public service. However, after the separation the only delivered public service.

1.3.2 New Zealanders approach

New Zealand introduced the idea of Agency theory as a tool to reform. Agency theory is directed at the ubiquitous agency relationship, in which one party (the principal) delegates work to another (the agent), who performs that work (Eisenhardt, 1989). The theory focuses on the relationship between employee and principal, in this context chief ministers are the employee and ministers are the employee. Hence, New Zealand focused on restructuring of the relationship between minister and their chief executives. Chief executives were now regarded as professional managers. The managers had the authority, discretion, and flexibility to deploy and manage the resources that were provided to them by their ministers for the production (output) of public services in the most economical and efficient manner. The British terminology of ‘executive agencies’ was not used, but the organizational design was similar.

1.3.3 Australian approach

Australia streamlined the number of ministerial department and made the capacity for ministerial direction even more important in the context of reform. They focused on managing ‘inputs’ to produce ‘outputs’ as economically and efficiently as possible but also achieving effective outcomes at the same time. Policy design was critical: no matter how good the management of programs, if the policy design was faulty then the intended effects would not be realized. Australian reformers criticized British and New Zealanders saying that they were focused first and foremost on economy and efficiency with too little attention paid to effectiveness.

1.3.4 Canadian approach

Canadian reformers initiated ‘program review’ headed by the deputy prime minister and assisted by the teams with equal number of public servants and private sector manager. The result was supposed to be a major streamlining of government services and operations. This effort was a failure in contrast to the British ‘efficiency scrutinies’. The consequence was cuts to the government administrative budgets but no major program reduction.

By mid-1990s, however, NPM had begun to give ground to reforms or initiatives that were not inspired primarily, or at all, by the theoretical or ideological underpinnings of NPM. At the same time, several initiatives that drew inspiration from traditional public services ideals or at last a mix of the new and traditional began to make their mark in late 1990s into 21^st century. The three general initiatives; citizen centered service delivery, result based management, and horizontal collaboration emerged in a period of significant public management reform. These initiatives did not contradict NPM reform; indeed, in several respects they assumed that public service managers had sufficient authority to realize these new initiatives.

2.     New Public Management in Nepal

Under the chairmanship of the then Prime Minister Girija Prasad Koirala after the restoration of democratic political regime, the government formed a high level Administrative Reform Commission (ARC) who recommended reform measures mainly in the areas of redefining the role of government, privatization, effectiveness of public service delivery, re-structuring public organizations, reduction of overstaffing and right sizing bureaucracy, decentralization/delegation of power and authority to the line agencies, and others which among these in large number are similar to NPM ideas. (Gautam, 2008)

There has been number of reform policies produced in the context of Nepal. However, the major problem seems to be in the implementation part. No matter how effective the policies might be, if it not implemented properly the expected result cannot be achieved.

Table 1: NPM Related Reforms and Implementation Status

Major Proposed Reforms		Main Focus of the Reforms	Implementation Status
1. Reviewing the role of government		Transfer of government activities to the non-government sectors.	The concept is partly  implemented
2. Restructuring public organizations		Merging Ministries, Departments and reducing the number of public organizations.	All most not-implemented
3. Rightsizing the number of employees		Reduction of number of employees working at the public sector.	Partly implemented in Civil Service but not in other sectors
4. Improving Public service delivery		Effective service delivery and prompt response to the  public needs	Not implemented
5. Procedural simplification		Reduction of decision making layers and paper works	Very few implemented
6. Managerial decentralization		Devolution and delegation of managerial authority to the line agencies	Not implemented
7. Human resource development		Increasing capacity of public employees and making them more efficient	Not-implemented
8. Privatization		Privatization of Public Enterprises	Partly implemented, 30 out 63
9. Developing internal capacity leading reform institution	To improve management structure of leading reform institutions and their monitoring capacity		Partly implemented (Only structures)
10. Improving efficiency of the civil service	To enhance performance of public employees.		Not-implemented
11. Enhancing over all competence	To increase motivation and improve skills of civil servants through modern human resource management		Not implemented
12. Improving governance and reduce corruption in government	To strength legal framework for combating corruption, Special Court for dealing cases of corruption		Partly-implemented
13. Iimproving  performance of the Ministries	To deliver better services to citizens based on NPM work culture- performance based management.		Not-implemented
14. Performance Contract	To make employees accountable to their jobs and make the performance of employees result oriented		Not- -implemented
15. Application of Citizens’ Charter	To provide public services promptly and smoothly to the citizens		Citizens’Charter boards are there but its spirit is not followed

Source: Report of the Administrative Reform Commission-1992, Policy Documents of Governance Reform Program, 2001-2005 and Its Road Map-2004, Report of the Vision Paper for Civil Service-2007, Civil Service Act and Rules-2007, and Economic Survey, 2006-7. (Gautam, 2008)

The above table shows that Nepal has not been able to implement its policies and those which are implemented are not implemented in a proper way. Improper or ineffective implementation of NPM reforms might not allow Nepal’s public sector to improve. It is important to look at the factors that are effecting the implementation of the reform policies. Nepal as a country in a situation of post conflict has its own limitation. There is a continuous challenge for the politician and bureaucrats in the situation when the country is going through the Constitution drafting process. However, the political instability is not only the problem that is hindering the implementation of policies related to the reforms in the public sector. Political, Bureaucratic, Policy process, Institutional and Economic factors are the most important factor for making application of NPM related reforms effective (Gautam, 2008).

REFERENCE

Cabrero, Enrique (2005) “Between New Public Management and New Public Governance: The Case of Mexican Municipalities”, in International Public Management Review, Vol. 6, Issue 1

http://www1.imp.unisg.ch/org/idt/ipmr.nsf/ac4c1079924cf935c1256c76004ba1a6/fa3281d83e1d2b25c1256fc50033725b/$FILE/IPMR_6_1_2005_CABRERO%20FINAL.pdf accessed on 29.01.204

Eisenhardt, Kathleen M. (1989) “Agency Theory: An Assessment and Review”, in The Academy of Management Review, Vol. 1, No.1, pp 57-74

http://www.jstor.org/stable/258191 accessed on 02.01.2014

Gautam, Bharat (2008) Factors Affecting Application of New Public Management Oriented Reforms in Nepal, presented at the international conference on Challenges of Governance in South Asia, Kathmandu, Nepal