Perennial Tensions

Objectives Identify and discuss the remaining or perennial tensions in Kazakhstan’s system of public sector accounting and management.

The Big Questions of Public Management i.Micromanagement: How can public managers break the micromanagement cycle – an excess of procedural rules, which prevents public agencies from producing results, which leads to more procedural rules, which leads to ….?

The Big Questions of Public Management ii.Motivation: How can public managers motivate people (public employees as well as those outside the formal authority of government) to work energetically and intelligently towards achieving public purposes?

The Big Questions of Public Management iii.Measurement: How can public managers measure the achievement of their agencies in ways that help to increase those achievements?

Perennial Tensions i.increased management autonomy and enhanced central control; ii.control, accountability and ‘real work’; iii.short term efficiency versus long term capacity; and iv.measuring the immeasurable v.the ‘collaborative turn’ and residual responsibility.

Increased management autonomy and enhanced central control While the reforms of the late 1980s gave departmental chief executives “unprecedented degrees of managerial freedom” (Scott, 2001, p. 1), that freedom was not unencumbered and has been the subject of ongoing debate.

Increased management autonomy and enhanced central control In 2008, the Auditor-General’s critical review of performance reporting in the public sector concluded that the central agencies should play a more active role in both setting and monitoring performance reporting standards. In 2009 the new Government gave some form to this recommendation by requiring departments’ (normally) quarterly reports to their Minister to also be provided to the Treasury and State Services Commission who are then to, biannually, prepare a consolidated review for the Cabinet Expenditure Control Committee.

Control, accountability and ‘real work’ Departments’ external accountability requirements include reporting output measures in their Statement of Service Performance, the costs of outputs and output classes, and their contributions to targeted outcomes. Since 2004 they have also been required to report on organisational health and capability. However, these requirements may have more to do with making the activities of departments visible to Ministers, Parliament and the public than with effectively supporting managerial decision-making within those organisations.

Short term efficiency versus long term capacity The focus on increased efficiency in the production of public sector goods and services allowed little, if any, consideration to be given to the need to maintain organisational capacity and capability to produce goods and services in the future (Controller and Auditor- General, 1999). Note requirement of the public Finance Act 1989 to report on “the department’s organisational health and capability to perform its functions and conduct its operations effectively” (s. 40 (d) (iii))

Measuring the immeasurable Many of the functions retained in the core public service are there largely because they cannot be clearly specified in advance and subsequently monitored. If this had not been the case, they may well have been contracted out or corporatized.

Measuring the immeasurable While defining and (quantitatively) measuring outputs has not always proved to be straightforward, defining and measuring their contribution to government outcomes is even more problematic. The measurement of outcomes often requires a less quantitative and more values-based approach that involves the use of judgement in respect of the “performance story”. How can we demonstrate cause and effect relationships?

Measuring the immeasurable Unlike for financial reporting, little or no standards or guidance exist in respect of the reporting of non-financial performance information. How do we gain assurance as to the reliability of non- financial information?

What’s Measured vs. What’s Managed Do we measure what can be measured rather than what’s important? Does framework decoupling occur between internal and external performance reporting? How do we account for ‘performance dark matter’?

The ‘Collaborative Turn’ represents a shift in the role of government organisations from managing people and programmes to organising resources (often belonging to others) to produce value; involves a shift from hierarchical and contractual model of public sector governance based on principal-agent relationships and market-like mechanisms, to one of increasing involvement of citizens and community- based groups as participants in both the design and delivery of services.

The ‘Collaborative Turn’

Incremental vs. Substantive Rationality How do we do it? vs. Why do we do it? The correct solution as a result of the best way. vs. Differing solutions using alternative mechanisms.

Summary Since the ‘big bang’ of public sector reform in the late 1980s and early 1990s the New Zealand model of public sector management has evolved and continues to do so. However, there remains an underlying received wisdom, echoing like the background noise of the cosmic big bang. That wisdom concerns the instrumental logic of new institutional economics and a group of ideas drawn from private sector management practices and popular theories. Nonetheless, perhaps because of the model’s inherent contradictions, there also remain a number of ‘perennial tensions’.

Perennial Tensions What are the major challenges faced by Kazakhstan’s model of public management? What are the potential solutions?