COM 0500.001 1996-1998 - Laserfiche WebLink

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J.K. Mcl~y Limited: Changing an Economy by Chang~.ng its ['ubfic jector Page 13 given greater control ov, resources (eg, discretion to adjus,..taffing levels). • Commercialisation: For instance, In addition to the process of corporatising departmental trading activities, government departments adopted operating guidelines based on financial criteria with the objective of emulating a commercial management environment in the provision of services, with cost-effectiveness and competition as the driving force. All government agencies were required to "realise the full potential for profitable trading". Specifically - - where departmental functions were removed or reduced, funding was reduced accordingly; - departments were given strong incentives to raise revenues to fund activities; - departments were required to recover costs from users; - incentives were put in place to improve departmental asset management; and - overall funding reductions were used where necessary to improve departmental efficiency. • Separation, into different agencies, of responsibility for provision of policy advice, regulatory and funding activities on the one hand and, operational activity on the other. This enabled the objectives of management to be specified a great deal more clearly than in the past and also enable the performance of agencies to be more readily assessed. Separation of policy advice from operational functions also means that those responsible for operations "have as their prime objective running their operations as efficiently as possible given the policy parameters established by the Government."17 This also avoids what is sometimes described as "producer capture"; a tendency for policy advice to serve specific interests (ie, being "captured") rather than the broader public interest. For instance, in the environmental sector, the Forest Service and Department of Lands and Survey both had a mixture of policy, regulatory, service delivery and commercial functions. Three new departments now undertake these functions: the Ministries of the Environment (policy advice) and Forestry (policy, regulatory and service delivery) and the Department of Survey and Land Information (service delivery); and two new SOEs, Forestry Corporation and Land Corporation, undertake the commercial operations. • Separation between funding and provision of service: For instance, previously, Regional Health Boards (which operated hospitals, etc) received what amounted to "block grants" to fund their activities. These Boards have been corporatised as Crown Health Enterprises Governmrnt Management: The Treasury's 1957 formal briefing to the incoming Government, p. 76.