Van Gramberg, Bernadine and Teicher, Julian (2002) Liberation Versus Market-Driven Management in Victorian Local Government. Working Paper. Victoria University, Melbourne, Australia.

Abstract

Government efforts to privatise public sector functions through the sale of state-owned assets and businesses, competitive tendering and contracting out (CTC), and build, own, operate and transfer (BOOT) schemes are premised on the belief that the private sector is able to manage service delivery more efficiently and effectively than government. The terms 'new public management' (NPM) and 'managerialism' have been associated with the development of these schemes and are much used in the public management literature, though generally with little precision. The specific features of the model vary, though in some versions NPM comes very close to a 'new right' project of a minimalist state with the public service confined to policy provision. The corollary is that government becomes less interventionist and smaller. Under the rubric of NPM, private sector management practices, underpinned by human resource management (HRM) concepts, and a focus on entrepreneurship, efficiency and quality are imported into the public sector (Ryan 1997). By allowing managers to manage and make 'hard' economic decisions according to technical and apolitical rules, governments seek to distance themselves from adverse outcomes (Box 1999, p. 21). However, there is emerging evidence of a reality gap both in terms of government remaining 'hands off' and the creation of empowered, liberated public sector managers (Pollitt 1990). In examining the implementation of managerialist reforms in local government in Victoria we utilise the wider international literature on managerialism and local government management in the UK. In Victoria, despite a 'hands off' rhetoric, a highly interventionist role was played by a Liberal-National government in implementing its municipal reform program between 1992 and 1999. In late 1999, a second phase of reform commenced with the election of a Labor government which had a policy of replacing CCT with Best Value and creating a consultative relationship between state and local governments and the community in place of the dead hand of government control. A central feature of the new relationship was the replacement of CCT with Best Value as occurred in the UK under the Blair government. The principal finding of this study is that during the first phase of reform the freedom of managers to form and implement strategy was more illusory than real. The liberation version of managerialism is appealing, but it does not provide a reliable guide to management practices in local government in either Victoria or, apparently, the United Kingdom. Adherence to the rhetoric of liberation management is, as Burnham (1999) has argued, part of a process of de-politicisation, of removing government accountability for decisions taken when the reality is that tight prescription is achieved through the choice of policy framework. The irony for Victorian local government is that despite the ideal of implementing private sector business practices within council management, the extent of government reporting requirements and intervention in council management thwarted any real notion of liberation management, particularly in the area of strategy formation during the period 1992 to 1999. There are signs that this has begun to change with the progressive implementation of Best Value.

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