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Turn-of-the-Century Change in New Zealand’s Public Enterprises

PFM, Vol. 2 No. 1, (2002)

The New Zealand reform agenda of 1984-99 included a
significant redefinition of the role of the state. Many public sector
activities were restructured into corporate form; policy formulation and
operations were largely separated; and privatization was extensive.
The change of government at the end of 1999, to a center/left coalition,
has seen a major reappraisal. Privatization is out of favor; state-owned
enterprises (SOEs) are to be managed to enhance shareholder value,
with authority to grow their businesses; and the social objectives of
crown-owned companies in areas such as health, housing and public
broadcasting are being reasserted. This article explores the
implications of these shifts and indicates that New Zealand's SOE
model, as well as the rationale for using the company form more
generally in the public sector, are now under challenge. Reasons
include an apparent lack of understanding of the nature of the
corporate model and renewed political risk because of the difficulty of
separating out social, political and commercial interests in the
management of public affairs.

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