Chapter 1: The Dynamics of Public Financial Management Change in an International Context: Progress or a Progression of Questions, Contradictions, and Challenges?

Over the past three decades, governments from all around the world and from right across the political spectrum have been implementing “new” public management (NPM) reforms. Reform has been promoted on the grounds that the public sector was too large and cumbersome, organized on the wrong principles, and in need of reinvention and institutional renewal. The “new” tag given to NPM is invariably shown in inverted commas in the academic literature to indicate that the reforms are seldom new and are based, in large part, on quite traditional notions and techniques of business management. Indeed, many of the reform ideas have been developed in the private sector (e.g., accrual accounting) and then translated into the public sector. When discussed in accounting circles, the reform movement (or aspects of it) is often also referred to as new public “financial” management (NPFM) reform to emphasize that the rationalities for, and technologies of, reform have significant financial dimensions. In the introduction to one of our earlier books on the subject of international NPFM reforms (Olson, Guthrie, & Humphrey, 1998b) we identified at least five different key elements or dimensions of “financial” reform, including changes to financial reporting systems; the development of commercially based, market-oriented management systems and structures to deal with the pricing and provision of public services; the development of a performance measurement approach; the devolution of, or delegation of, budgets; changes to internal and external public sector audits, notably in terms of monitoring service delivery functions and providing reviews of service efficiency and effectiveness.