Question Tag: New Public Management

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  • 10 Marks

PSAF – May 2017 – L2 – Q1a – Public sector fiscal planning and budgeting

This question examines the fundamental differences between public and private sector entities, the concept of outsourcing, and factors to consider when outsourcing in the public sector.

a) The current medium-term strategic plan of Dumko Municipal Assembly (DMA) has the overall objective of improving the performance of the Assembly. One critical strategy towards the attainment of this goal is the adoption of a new public management strategy to increase participation of the private sector in the provision of public services without losing sight of the differences between the public sector and the private sector. In fact, some of these differences are so fundamental that they cannot be washed away anytime soon.

The Chief Executive suggested outsourcing as a key strategy in improving the delivery of public services at the local level through the private sector. DMA is currently bedevilled with poor revenue mobilization, lack of proper data on the Assembly’s activities, and poor infrastructure provision. Other supporting activities like cleaning and security are not well performed or are performed at a very high cost by internal staff. These issues have been tabled at the first strategy meeting convened by the Chief Executive.

Required:

i) Describe THREE fundamental differences between public sector and private sector entities that DMA should take cognizance of in pursuance of the new public management strategy. (3 marks)

ii) Explain the term ‘outsourcing’ in the public sector context and advance TWO arguments for the use of outsourcing by DMA in its operations. (4 marks)

iii) Explain THREE factors that the management of DMA should consider in making the decision to outsource some of its functions. (3 marks)

i) Differences between public sector and private sector entities:

  • Objectives: Public sector entities aim to deliver public goods and services to maximize welfare, whereas private sector entities aim to make a profit.
  • Funding: Public sector entities are financed by public resources like taxes, while private sector entities are funded through owners’ capital contributions, such as shares.
  • Accountability: Public sector entities are accountable to citizens through Parliament, whereas private sector entities are accountable to shareholders through the board of directors.

ii) Outsourcing in the public sector context refers to contracting out non-essential services to private vendors. Arguments for outsourcing:

  • Improves public service delivery due to private sector efficiency.
  • Allows DMA to focus on core functions by outsourcing supporting services.

iii) Factors to consider in outsourcing:

  • Legal Requirements: Ensure outsourcing aligns with the enabling law and government policy.
  • Cost Savings: Evaluate if outsourcing is cost-effective compared to internal provision.
  • Internal Capabilities: Assess whether DMA has adequate internal capabilities to perform the service internally.
  • 5 Marks

PSAF – May 2016 – L2 – Q2d – The Context of Public Financial Management

Discuss methods proposed by New Public Management for public financial management and explain the objectives and challenges of government regulatory and financial reporting frameworks.

The New Public Management concept in the public sector aims at structural, organisational, and managerial changes in public financial management.

Required:
Identify TWO methods proposed by this new management system to improve public financial management. (2 marks)

ii) The intention, methods, and procedures of the regulatory and financial reporting framework of government are meant to ensure that the objectives of public institutions and the government are achieved.

Required:
Explain TWO objectives of the government regulatory and financial reporting framework. (2 marks)

iii) Explain ONE major challenge that may affect the implementation of the objectives of effective financial reporting. (1 mark)

i) Methods Proposed by New Public Management to Improve Public Financial Management:

  1. Decentralization of Management: This involves the decentralization of decision-making processes, giving more autonomy to local managers, and reducing the concentration of power at the central level.
  2. Performance Measurement and Results-Oriented Management: This includes setting clear performance targets and using performance indicators to measure and manage the effectiveness of public services, ensuring that public entities achieve their objectives efficiently.

ii) Objectives of the Government Regulatory and Financial Reporting Framework:

  1. Ensure Financial Resources Are Used in Accordance with the Budget: The framework is designed to ensure that all financial resources are obtained and spent as per the national budget, maintaining transparency and accountability in financial management.
  2. Monitor the Effectiveness of Public Spending: The framework helps to monitor whether public spending achieves the intended results, providing insights into the effectiveness of government programs and initiatives.

iii) Challenge Affecting Effective Financial Reporting:

  • Timeliness of Reporting: Delays in financial reporting can make the information less relevant and useful for decision-making, thereby affecting the overall effectiveness of the financial reporting framework.

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