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).K McLay Limited: Changing an Economy by Changing its Public Sector <br /> Pave 14 e <br /> In the past, Governments funded "inputs" to their departments. Now, as a result of these <br /> reforms they purchase "outputs" from those departments; and measure these "outputs" in <br /> terms of "outcomes". In other words - <br /> Outputs Outcomes <br /> Purchase Measure <br /> Accounting concepts <br /> Several important accounting concepts and features underlie the reforms - <br /> • Government departments are required to operate in accordance with generally accepted <br /> accounting principles. <br /> • The Government's balance sheet is structured in a similar manner to those of the private <br /> sector. <br /> • Departments are charged for the use of capital. <br /> • Cost accounting is now used in Government administration. <br /> Essential elements of public sector reform <br /> There were five essential elements of New Zealand's public sector reforms - <br /> • Structural reorganisation of government institutions. <br /> • Establishment of results-based management and financial frameworks. <br /> • Establishment of State Owned Enterprises (SOEs). <br /> • Privatisation of some of these SOEs. <br /> • Reduced government spending and consequential reductions in departmental budgets. <br /> <br /> More specifically, these have resulted in - <br /> • Separation of ownership and purchase responsibilities. <br /> • Decentralisation of decision making: For instance, Departmental CEOs were given greater <br /> managerial discretion over inputs, including staffing, as a means of improving the <br /> efficiency, adaptability and responsiveness of their departments. Senior managers were <br /> <br />