Introducing NPM or New Public Management

I knew that there had to be a name for it. I was reading this report from the Australian Housing and Urban Research Institute - Assessing management costs and tenant outcomes in social housing: developing a framework – when I came across it. There it was, NPM or New Public Management. I had always just thought of it as corporatist models, if with a strong dash of New Zealand.

You have to remember, I only came back into a public sector environment in 2006. Prior to that, I had been working in the private sector. In my last period as a strategic and business improvement consultant, I was becoming increasingly concerned with what I saw as growing distortions in management created by some of the very things that I had promoted in the past.

Take professional services as an example. It was pretty easy to get better financial results in areas like accounting or law by simply introducing better time keeping methods. It was low hanging fruit. Do it, and profits increase. That made us all look good.

The problem was that this focus on a simple measurable variable, billable hours, had quite dangerous results.

In my last consulting assignments, my focus was business development. Another consultant was concerned with financial performance and profit maximisation. I was concerned with giving staff the space they needed to perform well. The firm had to grow, and that required staff to be enthusiastic, to enjoy their work, to sell the firm and its services. If that happened, we could refine our approach, look to improvements in financial performance at unit and individual level.

It didn’t work that way. I would talk to staff and partners, develop ideas, start to plan new things. Then staff would come back from their monthly performance review with the other consultant. Why are your billable hours down? How come your time write-offs have gone up? You must do better. There was a fundamental inconsistency between what I was doing and that approach. My approach failed. In the end, so did the firm in that it failed to achieve the objectives set.

  Coming back into the public sector environment in 2006 was a real culture shock. The people I was dealing with had become acculturated to the “new ways” of doing things. I had not. I still remembered the old ways, My problems were further compounded by my changing perspectives on management and management failures, for this made me very critical of the things that I saw were now built into public sector management, if in a somewhat distorted way.

On Monday, John Netheccote had a rather nostalgic piece in the Canberra Times, Forty years on: the Coombs royal commission on government administration. John was on the Commission’s staff. He makes the serious point that, to paraphrase, that the rise in the emphasis placed upon “evidence based” public policy has been inversely correlated with its practical application. Mind you, there is a certain irony here.

At the inquiry, the then public service mandarins expressed the traditional role of the government department with great clarity.

Asked about the objectives of his Department, Sir Lennox Hewitt replied:

I have not previously encountered the suggestion of objectives for a department of state. The Royal Commission will presumably not need anything more from the department than a copy of the administrative arrangements.

Sir Frederick Wheeler's response to the same question was:

The function of the Treasury is to advise and assist the Treasurer in the discharge of his responsibilities. The objectives of the Treasury are, in essence, to carry out this function as effectively and efficiently as possible.

One outcome from the inquiry and the subsequent changes over the next eight years was that all Government agencies suddenly had to have their own statements of roles and objectives, of visions and later values, their own plans, independent of their traditional roles. To take a relatively benign example, this is how the Commonwealth Treasury currently describes its role.      

Today, as a central policy agency, the Treasury is expected to anticipate and analyse policy issues with a whole-of-economy perspective, understand government and stakeholder circumstances, and respond rapidly to changing events and directions.

The Treasury is engaged in a range of issues from macroeconomic policy settings to microeconomic reform, climate change to social policy, as well as tax policy and international agreements and forums. The Treasury also has a program delivery role in supporting markets and business, and providing Commonwealth payments to the State and Territory governments.

Note that there is no reference in this statement to Treasury’s traditional role as defined by Sir Frederick Wheeler. However, if you dig in a little, it is still there, more or less.

In the Treasury’s Strategic framework 2012-13 you will find this statement:

The Treasury's mission is to improve the wellbeing of the Australian people by providing sound and timely advice to the government, based on objective and thorough analysis of options, and by assisting the Treasury ministers in the administration of their responsibilities and the implementation of government decisions.

This combines the traditional role with the idea that all this is being done to improve the wellbeing of the Australian people. Then follows an attempt to define what Treasury means by the wellbeing of the Australian people linked to what Treasury does.

In reality, the broad continuing role of Treasury is captured in the first sentence of Sir Frederick's’ definition: The function of the Treasury is to advise and assist the Treasurer in the discharge of his responsibilities. This is what Treasury does. Everything else is subordinate to that. To suggest that the Treasury’s primary mission is to improve the well-being of the Australian people is actually a breech of of the fundamental principles underlying the Westminster system.

Of course, Treasury does not provide advice in a vacuum. It is perfectly appropriate to debate how Treasury carries out its role, what is important in forming the advice provided. Not, mind you, that this is helped by the statement of outcomes attached to attached to the various Treasury groups. As an example, the outcome for the Fiscal Group is defined as Effective government spending and taxation arrangements. Do you know what this means? I don’t. Effective for what?

Linking all this back to my belated discovery of NPM or New Public Management, the practical effect of current approaches with their focus on jargon driven structures and processes is confusion and constipation in decision and delivery. It just doesn’t work very well.   

Postscript

Sometimes I just don’t feel strong enough. This is one of those time. I just just quote kvd’s comment:

NPM is not on the LOA maintained by PMC. Suggest you contact the functionary involved, who I'm guessing will be in either CABSEC or MSMLCG.

Then, of course, there's the question of whether the PMC LOA is appropriately interfaced, synchronised, with the equivalent functionality maintained by Treasury - for that, I'd suggest going through ECOTFSWR in the first instance.

And I didn't make any of those up:
https://www.dpmc.gov.au/accountability/filelist/acronyms_abbreviations.cfm
HAND *

kvd
* Have a nice day

m