The three key dimensions are:
1. Case for reform
Whether reform drivers are failures in the current system or shifts in the operating environment, the case for reform sets out compelling analysis of what is preventing the current system from working as it should, and a clear vision for what the future outcomes need to be.
2. Theory of change
A collective view on how sustainable reform will happen in the system. Who needs to change, what needs to change, what levers are most effective, and how will we know when that change is working effectively? This is often informed by history – a deep understanding of how change has happened before, or how it has not.
3. Successful delivery
A coherent programme of changes that create the future capabilities and system, and decommission the previous system. This requires a skilled team and strong, courageous leadership to go on the journey, as well as a method to engage and collaborate with system participants at all levels along the way.
Case study: Neoliberal reforms
The significance and breadth of reforms implemented during the 1980s-90s era, and their lasting impact, make for an interesting case study in the context of our reform framework. Within two decades, across Labour and successive National Government terms, Aotearoa experienced an overhaul of our economic and welfare systems. Noted by global media outlets at the time as the world’s most progressive reform agenda, the reforms resulted in a fundamental shift in our nation’s economic and social narrative.
During the long constitutional journey of New Zealand from a British dependency in 1840, a crown colony in 1841, a self-governing colony in 1852, a Dominion in 1903, and a constitutionally independent nation since 1986, the relationship of Māori to the state, like all real relationships, has been a matter of celebration, dispute and political inconsistency.
When major restructuring of the state and the economy commenced in 1984, there were a number of elements of the reformation process that supported both national economic objectives as well as Māori aspirations. As it happened, the major goals of the reforms — reduced state dependency, devolution, and deregulation — were also necessary preconditions for greater Māori independence, tribal redevelopment, and service delivery to Māori by Māori.
Ultimately, the notion of shared responsibility and importance of government intervention to support the social and economic health of many was replaced with a preference for the trickle down of wealth and citizens taking personal responsibility for their welfare. The nature of government intervention was forever changed, and the impacts are still felt today.
Case for reform
The catalyst for market radicalisation at the time is best explained in the context of Government policy and reform in the years prior. Between 1930 and 1980, the economy was highly controlled by finance and trade regulations, extensive social welfare support where Government intervention was available to most citizens, and a number of assets within the transport and energy sectors were state owned. By the 1970s, Aotearoa had one of the lowest unemployment rates in the world and most New Zealanders enjoyed high standards of living.
However, this era of great prosperity came to an end in the mid-1980s. Global economic shocks caused Aotearoa to fall into an economic recession, and the impacts were widespread. Unemployment hit record high levels, and debt and inflation were growing. This spurred a singular, widespread vision: improve economic outlook. Citizens and businesses witnessed a chronic failure by Government to deliver financial and welfare outcomes in a declining economy, and the Government saw an opportunity in the changing context and environment surrounding the economic and welfare systems – these were ultimately the drivers of change that created the backdrop for Government to pursue radical reform and begin to tell a different story about how a nation builds prosperity.
The basis of our economic and welfare systems prior to the recession, Keynesian-welfare theory, was deemed a root cause of failure to deliver outcomes. The paradigm was no longer considered a useful tool to enable economic growth. Financial aid and tax redistribution were no longer affordable or effective buffers against the impacts of recession, and economic protectionism through financial and trade regulation was seen to inhibit rather than enable markets. Equally, the Government’s control over wages, currency and trade was seen to disproportionately grant economic power and decision rights to the Government rather than Aotearoa businesses.
Theory of change
Perhaps the most effective vehicle for enabling dramatic change at the time was the narrative built on the root causes of failure at the time. Prior to the election of the fourth Labour Government in 1984, Labour politicians were particularly outspoken against the Government of the day’s welfare state and economic tinkering. This narrative sowed the seed for the Party’s election, drove its radical reform agenda, and was picked up by the successive National Government. Change was required at every level in order to bring economic reinvigoration to life – individuals, political and economic elites, narrative, and in time, economic results, drove a shift in mindsets and behaviours. Arguably, the consistent deployment of the neoliberal narrative, and overhaul of rules and incentives through amending market and tax regulations and reducing financial aid, allowed Government to implement punctuated change in a sustainable manner.
Opposition to the narrative was minimal. Notable at the time was Jim Anderton’s dissent against his own Party’s agenda. Despite his best efforts to gather a mass of political discord, he eventually resigned.5 Commentators suspect that citizens were too overwhelmed by the pace of change to propose much of an opposition, however, sources have suggested the Māori population was less passive and complacent about the neoliberal reforms than the Pakeha population.6 The narrative became so effective that it outlasted its original authors. For example, public support for economic protectionism and income and wealth distribution consistently declined between 1990-2005.7 Indeed, neoliberal theory is present in some party policy even today.
When considering the ingredients of successful reform implementation, the degree of coherence across the neoliberal reforms is significant. Leaders from both sides of the political spectrum hung their hat on a similar vision, set of drivers and root causes. Significant employment, health, trade, tax, welfare, and privatisation reforms were implemented, all in the name of improving Aotearoa’s economic outlook. Our neoliberal era is perhaps the strongest example of a coherent shared vision and narrative.
From the mid-1980s, alongside the various economic and social reforms, a restructuring of the public sector began. Gradual decentralisation occurred to create a more effective and efficient public sector, and in alignment with the broader narrative, was deemed necessary to appropriately manage public expenditure. The restructure marked the beginnings of New Public Management in Aotearoa. Intriguingly, when we reflect on the sheer volume of reform pushed through government as part of the neoliberal reform wave, it could be argued that the highly centralised structure of the public service prior to the introduction of New Public Management best allowed for rapid, punctuated change to be implemented. The centralised model enabled interdepartmental cooperation and coordination and shared resourcing: sustainability through an integrated approach to reform implementation. Indeed, complaints of the war on public sector talent may have their origin in the late 1990s when, after the restructures, competition between departments for staff was prevalent enough to trigger salary hikes across the public sector.8
Aotearoa’s neoliberal reforms have had a lasting impact on our economy and welfare system. Although they were successful in rejuvenating our economy at a time of global recession, the reforms are considered to have caused poor outcomes for our most vulnerable communities.9 Nonetheless, the reforms demonstrate the lasting impact a coherent reform narrative can have on political, social and economic outcomes.