This case has been proposed and commissioned by Philipp Weckherlin, to showcase best practices
in policy making from around the world
IN BRIEF:Facing increasing fiscal pressures, soaring interest rates and a falling dollar, New Zealand introduced ground-breaking reforms to its entire public sector management in a wave of farreaching
economic and public sector transformation in the 1980s and early 1990s. One critical component was the financial
management reforms, which had the aim of improving public sector performance through establishing effective accountability arrangements including clear specification of outputs, contractual agreements, and the disaggregation of government Departments into smaller, more sharply business-oriented agencies. New Zealand’s government departments could no longer be the organisational cocoons many once were.
The financial management reforms transformed the government’s fiscal performance at an unexpected speed and eased fiscal pressures through transparent accounting and by reducing public sector bills. New Zealand was thus able to escape a financial as well as a political crisis and reach triple-A rating within four years.