Implications of Commission of Audit for Competition Policy

Implications of the Commission's Proposals

A paper has been drafted which reviews the Report of the Commission of Audit. The Commission's major purpose was to suggest means for public sector management to deliver services at lower cost, in view of expected budget difficulties.

The report has many implications for competition policy because the Commission recommended: an approach which is generally compatible with NCP; some preferred competition policy outcomes and methods; and a review of central government functions connected with economic management (including microeconomic reform).

However there are other issues which might also usefully receive attention in evaluating (or implementing) the Commission's proposals, including: deeper consideration of the economic problem; and government's ability to deal with non-economic issues. Some technical aspects of the Commission's proposals also need to be refined. Furthermore, the Commission's proposals are designed to allow a more 'strategic' focus by government managers, an outcome which can be exploited in the State Strategic Planning process.

Evaluation and Implementation of Commission's Proposals

I am unsure what approach is being taken to evaluating and implementing the Commission's proposals, but there seems to be a strong case for a multi-disciplinary approach because of issues like those outlined above, and the need to ensure that whatever happens is integrated with other government priorities (with some of which there is a lack of consistency at present). Also broadening the issues considered, must not result in a loss of impact as some of the Commission's proposals appear useful.

As argued in the attachment to my NCP memo of 10/7/96, implementation of major policy goals often fails (yet there are ways to increase the prospects for success). Experience in effective public sector change (as well technical knowledge of the Commission's proposals) will be critical in any implementation of the Commission's proposals.

The State Strategic Planning process is being designed to mobilise practical government responses to key emerging issues (which is, in effect, what the Audit Commission's proposals are), and might provide a suitable framework for doing so in this case. At the very least, there is a need for close attention by the Division to the process whereby the Commission's proposals are evaluated and implemented.

24/7/96

SOME ISSUES ARISING FROM THE COMMISSION OF AUDIT (DRAFT #2)

The purpose of this paper is to examine what effect the proposals of the Commission of Audit would have on competition policy principles and practice.

1. THE COMMISSION'S REPORT

Notable issues raised by the Commission of Audit were:

· the deterioration of Queensland's budget position (and its expected future worsening) due to spending increases linked to economic growth which are not likely to be matched by income (given the state's narrow tax base, and the declining Commonwealth financial capacity to support the states).

· imbalances in the system of fiscal federalism, and consequent difficulties for states in effective management.

· a basis for rationalising funding by taxes and debt, and identification of scope for increased funding by releasing under-utilised assets, or by user charges.

· reducing government financing requirement by (2% pa) increased productivity

· options for public sector management involving: separating government's role as purchaser / provider; adoption of fiscal responsibility and accrual accounting; providing funding against outputs (not inputs); competition by service providers; and development of an overall strategic planning and budgeting framework

· options to change Queensland's approaches to various functions ie:

· health (better hospital utilisation; restructuring; use of external providers);

· education and training (flexible use of school resources; more training (perhaps privately provided); and more tertiary places);

· transport (better planning and intermodal integration; consistent investment assessment; removal of support for uneconomic services; user charges; application of competitive pressures (eg through third party access);

· energy and water (privatisation and structural reform aimed at achieving the efficiency of US investor owned utilities; competition in gas markets; reform of water management, investment and pricing)

· law, order and public safety (mechanisms for coordination; police infrastructure and resource management; improved fire system planning)

· local government (exposure to national competition policy environment, and overall structural review)

· economic management (rationalisation of central agencies with respect to economic policy, micro economic reform and industry assistance)

· public works (outsourcing services)

· regional management (increased coordination and regional management; innovative delivery mechanisms)

· other government businesses (market pricing of forests; privatisation of Brisbane Abattoirs and Market Trust; separation of marketing / regulatory roles of Sugar Corporation; review of home ownership assistance; ending provision of gaming machines; privatising travel agency services; privatisation of government financial institutions)

2. MAJOR IMPLICATIONS

The major purpose of the Commission's proposals were to suggest a means for public sector management which would deliver services at lower costs. Features of the proposal which would contribute to this goal include:

· adoption of a competitive approach to goods and services producers:

· creating the framework for an internal 'market' (by: providing autonomy and authority; producing the information required for commercial style decision making; and by the funding of outputs rather than inputs);

· a clearer approach to the questions of how government financing is arranged;

· techniques for efficiently managing and pricing of investments and capital assets

In general, the above are compatible with the microeconomic reform agenda which is the basis of National Competition Policy.

Furthermore the Commission's proposals also affect the implementation of competition policy because:

· specific recommendations have been made about how particular competition policy issues should be addressed (eg some privatisations; suggested methods for dealing with specific markets; and methods for regulatory reviews)

· a proposal was made for rationalising how all aspects of central government efforts related to the economy are dealt with.

3. OTHER ISSUES

However there are other issues which require consideration in evaluating (or implementing) the Commission's proposals, namely:

· the economic problem seems to need deeper consideration (eg because competition is not, in itself, sufficient to ensure competitiveness)

· the risk that government's ability to deal with non-economic issues could be eroded by a focus on efficiency in services delivery requires attention

· some technical aspects of the Commission's proposals appear to need refinement

Furthermore, the Commission argued that its suggested approach should (ultimately) free higher level managers from concern with mechanical issues of services' delivery and allow them to focus more on strategic matters of importance to Queensland's future. The same (of course) applies to the government itself. How this potential advantages could be translated into practical benefits for the community would also need early attention.

The above issues are outlined in more detail below.

(a) The Economic Problem Requires Deeper Consideration

The Commission has argued that the economic context is a key reason that its proposals need to be considered. For example, the Commission noted that similar proposals first arose (in the UK) after public spending had run well ahead of economic growth during the 1970s. Similarly Queensland's looming financing problems arise partly from an inability to sufficiently draw upon the state's tax base, and also from cuts to Commonwealth funding capabilities which have their origin in the need to boost national savings.

However there are a number of reasons that the economic problem may need deeper consideration than the Commission has yet done.

Firstly, the public sector funding constraint emerges as much from a slowdown in income generation, as from the level of spending. For example, during the 1970s public spending in OECD countries continued to grow at the same rate as previously. This became out of balance with economic growth only because the latter slowed dramatically (in the face of energy price increases, inflation, and much greater competition from NICs). Similarly Australia's current need to increase national savings is as much a consequence of a deficiency in earnings (productive capability) as it is of excessive spending. If government's financing problem is the consequence of economic weakness (rather than the cause) then accepting the consequences of those constraints will not be enough.

Secondly reasonable questions can be raised about the necessity of reform, unless it is clearly shown why the economic situation now requires this. For example, it is possible to argue that Australia's economic outcomes were far better prior to the 1970s (under a protective Keynesian regime) than they have been subsequently (with an attempt to become internationally competitive) (eg Santamaria B. 'Economic Irrationalism', Weekend Australian, 18-19/5/96). It is only by looking at changes in the international economic environment, that it becomes clear why a competitive approach has become necessary. Quoting micro economics' theory is not enough to satisfy thoughtful observers.

Very significant economic changes have occurred. Those changes include eroding the manufacturing basis on which affluent countries had enjoyed rapidly increasing wealth since the industrial revolution. High rates of growth are an historically new phenomenon (dating back only to the industrial revolution in the late 18th century). In the 19th century mechanisation was the major basis for productivity advance in industrial society, whilst after the 1920s mass production became the major factor in the high productivity of large segments of developed economies. Productivity advance through such technologies allows prices to fall, and demand to grow so that economic growth occurs.

However since the 1960s, the position of affluent countries has been challenged by newly industrialised countries (initially Japan) who rapidly increased their workforce skills and captured mass production industries (with the help of initially low wage rates). Recurring NIC competition has eroded the productivity of mass production (ie cut its ability to sustain high wages, taxes and returns on capital). This eliminated a major source of wealth creation for developed European and North American countires, and increased the standards required if those societies are still to support the high living standards they expect (eg it required creating knowledge and skill intensive industries which is difficult on a large scale).

Australia also faced an economic adjustment problem, but for different reasons (ie because of the poor export market prospects of its 'third world' commodity based economy). However in seeking alternatives Australia encountered the same difficulties as the developed economies.

New options do exist for high value added industries, but these generally require not just the deployment of capital for mass production. Rather an ability to use knowledge to achieve high rates of change in organisations and economic systems is now often a precondition for highly productive investment. It is probable that this requires the development of an entirely new system of economics, which has not yet been achieved.

Thirdly there is reason to believe that competition on its own is not sufficient to build adequate economic capability at present. This was addressed in a previous paper, Some Issues in Micro-Economic Reform (16/7/96) as follows:

· non competitive arrangements exist which originate outside Australian jurisdiction

'The private sector undertakes almost all commercial functions in Victorian and NSW ports at present ... major obstacles to achieving (efficiency) are beyond the scope of port authorities or port companies .... The conditions for ports to become competitive are driven not by internal, local or national forces but by global trends in shipping - the emergence of round the world shipping operations and the development and rapid growth of hub and feeder services' (Everett S., 'Privatisaion of Ports: The Victorian and NSW Experience', Australian Journal of Public Administration, Dec 1995). [And an informed observer alleged that some deficiencies in port operations in Brisbane have their origin in external agreements amongst foreign owned waterfront companies]

· there is a real difference between the incentive and the capability to compete (noting weaknesses in Queensland's private sector despite being exposed to competition);

'Some of Australia's most important deficiencies have little to do with governments and more to do with the performance of private sector management. Australia ranked 39th in the category of competent senior management and 37th for entrepreneurship and innovation. Instead of spending so much time lecturing governments, it seems that Australian managers would be better occupied lifting their own game. Unless they do so ... the opportunities created by opening Australia up to the global market place will be mostly squandered' (Toohey B. 'Economy slipping away', Sun Herald, 2/6/96) [For example in Queensland weaknesses include: absence of sophisticated strategies in business; financial institutions oriented towards real estate rather than business; and limited access to market intelligence - perhaps due to dominant role of multinationals]

· any firm's ability to compete in high value added sectors depends on the effectiveness of the economic system as a whole, which is beyond individual entities;

'An economic rationalist would tend to say: 'Lets have a market', and leave it at that. But it is a lot more complex as they discovered in Russia .... you need to evolve a whole set of institutional structures. In the Soviet Union they missed 100 years of evolution of institutional structures. As a result ...(they) did not have a body of case law on patents and needed to train a generation of accountants who could perform such tasks as independent evaluation of companies ... Ball argues that there is no sense in deregulating the economy and then trying to plan the institutional structures. It has to evolve ... and it takes time for that to happen ... the institutional framework he has in mind covers everything from families and the values they inculcate to the legal, political, educational, industrial relations and welfare systems.' (Stekete M. 'The Prophetic Professor', Australian, 22/7/96, quoting Professor Ray Ball) [And in USA, a highly competitive economic structure has resulted primarily in the growth of low value added, low wage industries over the past two decades]

· the key resource required for economic performance is now knowledge, rather than capital. While the market is one means to manage knowledge, other mechanisms can at times be even more efficient (which is the reason for having large organisations).

· competitors from East Asia's communitarian market economies (to which Queensland is exposed) operate under regimes which do far more than require competition (eg governments are partisan organisers of culturally specific commercial groups, rather than enforcers of competitive neutrality). In effect they mobilise knowledge to accelerate the evolution of economic 'institutions' (see quote of Professor Ball above).

Likewise competition is not sufficient to ensure that internal government operations are rationalised. One technique which has been used in recent years is 'business process re-engineering'. It is based on the idea that productivity now depends more on quality and focus, than it does on mass production (which had been of key importance until the 1970s). The organisation structures required for mass production involved specialisation (which fragmented functions in different segments of large organisations). The ideal of re-engineering was to improve the ability to focus on what was currently important by re-integrating fragments of key functions. Whilst the Commission's proposals would allow such adjustment to occur, catalysts to take the lead would also be required.

The above are issues which might be addressed in future years by a strategy for the development of Queensland's economy. The fact that the Commission of Audit did not suggest what contributions it expected from such a strategy is a cause for concern. However the Commission's proposals would be constructive in making transparent any government assistance which is provided to firms, because such assistance (while superficially helpful) does not reflect the complexity of creating a fully effective economic system.

(b) Effect of the Commission's Proposals on Governments' Non-economic Roles

In discussing options for service delivery (Section 2.2) the Commission assumed that efficiency / economic goals are most valued. However government's have other roles, including: governing (law and order; security; and leadership); and welfare (which relates mostly to equity). Unless the needs of these other roles are specifically considered then there would be a risk that they might be eroded in seeking to boost services' efficiency. For example, the Commission suggested ending government provision of gaming machines without mentioning the scope this might provide for organised crime penetration (given their reported involvement in this business elsewhere).

Government's non-economic roles need to be considered in evaluating / implementing the Commission's proposals for equity reasons also, because inequality of wealth has apparently increased along with other social problems in many countries (eg UK, NZ) which have applied reforms such as those which the Commission suggested.

Countries around the world are seeking to reform their welfare states and deregulate their economies in the face of intense competition. In most, success, where it has come has been brought only at the cost of considerable social disruption. ('Is the model broken', Economist, 4/5/96)

In the late 1970s, and throughout the earlier years of the 1980s, neo-liberalism was a compelling response to otherwise intractable dilemmas. The manifest failing of corporatist policy in Britain and the collapse of central planning throughout the Soviet bloc vindicated market institutions as the chief organising structure in any modern economy. The old 'systems debate', between 'planning' and 'markets' was resolved decisively on the terrain of history. By the late 1980s, however, that debate receded and a new debate began to emerge - a debate about the varieties and limitations of market institutions, and about their cultural and political preconditions .... In Western democracies such as Britain, Canada and New Zealand, conservative governments animated by free market ideology look, impotent and aghast, into and electoral abyss ...'' (Gray J., Enlightenment's Wake, 1995)

Furthermore, a US government official suggested recently the possibility of a global political shift towards 'demagoguery' because of increasing wealth imbalance (Kapstein E., 'The New Crisis of Capitalism, Weekend Australian, 8-9/6/96)

The Commission's proposals for achieving greater efficiency would do so by constraining political influence over government operations (eg by creating a commercial (customer) orientation, by reducing scope for transfer payments, and by limiting influence over GOEs to annual agreements). Such constraints on the political process may be necessary, but if so this should probably be recognised. Traditional approaches to public service delivery (through departments and statutory authorities) were developed as a means to achieve reasonable efficiency whilst being subject to political influence. In fact, our modern political process with its broadly based suffrage was arguably established in the 19th century partly to ensure that outcomes were different from those of a free market (where initial advantage tends to be amplified rather than attenuated).

Despite the fact that direct payments for welfare purposes are more efficient, elimination of scope for transfer pricing probably has the effect of reducing total welfare benefits provided (Aiken M. 'Accrual Accounting Valuation and Accountability in Government', Australian Journal of Public Administration, December 1995)

It might be that the political system itself should now be reformed so that representatives are not elected primarily on the basis of their ability to deliver benefits to interest groups. Alternately deeper consideration of the economic problem might lead to solutions which do not require such constraints on politics.

The public service's capability to support government would also seem to need attention. The Commission suggested that public sector's policy advice should be judged in terms of its acceptability to ministers (Section 3.4 on service agreements). Governments require support in terms of competent independent advice which is well informed, and based on experience of what is likely to work (rather than advice which is just acceptable) because:

there are few independent institutions in Queensland able to provide practical public policy 'raw material' for politics to use as its basis for assessing public service advice.

under a Westminster system the government executive and legislature are aligned and there are limited resources available to political oppositions to produce substantive policy. Thus a competent independent bureaucracy is needed to ensure that decisions are based on more balanced advice than that from any particular political source.

(c) Technical Questions about the Proposal

The Commission's report contains many detailed proposals some of which would need refinement. A few examples are outlined below.

Firstly the Commission has made a very elegant case to demonstrate that Queensland faces a future funding constraint (and a case which is probably correct). However it may not be adequate to be convincing to those who would expect more exploration of options. And Queensland's rapid population changes may be more significant to both the increase in spending, and the relativly limited tax base than the Commission has indicated.

Secondly the Commission proposes fiscal responsibility (which includes for example, maintaining public sector net worth). This goal is of value in general terms. But it is not clear how the goal of increasing government assets is to be related to other goals. Given the narrow tax base of states (where state income depends on economic 'turnover'), maximising state assets is not the same as maximising community welfare (which depends more on economic 'value added'). Arguably Queensland's attempt to maximise state assets over the past 15 years, is one reason that only limited support was devoted to developing the productive capabilities of Queensland's economy.

Thirdly there are uncertainties concerning the accrual accounting processes, which has been designed to encourage economic efficiency rather than avoiding deception, which was the traditional goal of accounting.

Estimation of current market values is only a guess, where no competitive markets actually exist. Equity issues arise: where a current value is assigned to assets (and a rate of return charged) though the asset has already been paid for on an historical cost basis; or where both depreciation and repairs are changed against assets which will never be replaced. And charging for assets on the basis of current (rather than historical) costs may significantly increase government revenues without Parliamentary debate (Aiken M. 'Accrual Accounting Valuation and Accountability in Government', Australian Journal of Public Administration, December 1995)

Thirdly the Commission proposes that government value and have plans to manage its physical assets. However it is probably that the government's intellectual assets (eg the knowledge base of its organisations) is now more valuable and important to its performance than its physical assets, and more in need to capable management, as some firms are beginning to do (Stewart T., 'Your Company's Most Valuable Asset: Intellectual Capital', Fortune, 10/10/94)

Fourthly the Commission stresses performance assessment. However:

assessment is envisaged mainly in terms in terms of quantitative measures of benefits related to financial costs (Sections 2.5, and 3.4), whereas a great deal of potential benefit of public sector action is qualitative (ie changing the nature of relationships within social / economic systems through leadership, dissemination of knowledge, legislation - which may have no direct 'outcomes', though such action changes the relationships between costs and benefits in the community as a whole). Traditional tools such as benefit / cost analysis are based on a 'mechanical' metaphor for an economy, whilst currently experts are debating the relevance of a more 'evolutionary' metaphor.

The Commission identified the need for qualitative assessment of services. However defining performance measures is hazardous because of the risk of achieving defined outcomes, but not what is wanted. For example, the Commission suggests that qualitative measures of education (student contact hours) should be complemented by a proxy for skills acquired (such as course completion rates). However a recent report (ref) criticised the lack of 'content' in Queensland education, a problem which arguably arises because participation (ie course competition rates) has been emphasised rather than whether real knowledge was acquired (which can't be assessed by simple measures). Also it was recently suggested that some firms are moving away from the concept of performance assessment, because (while a tool for assigning blame), such measures typically provided staff with no guide as to what to do which would be better.

the Commission suggested customer satisfaction as a measure of performance. However 'customers' of public sector services can also be organised as interest groups, who may only be 'satisfied' by obtaining large transfer payments from other sectors. And what weight should be placed on the satisfaction of 'customers' who are parents who battered a child?

Fifthly the Commission endorsed private provision of infrastructure, and private production of government provided services to gain efficiency. However in the USA the problem of contract management in political environment has been a considerable cause for concern (ie about so called 'iron triangles' - coalitions of contractors, bureaucracies and politicians whose control of specific functions has not always been in the public interest). Likewise in Japan, the construction industry (with strong gangster linkages) has been said to exert considerable political influence, and been able to corruptly influence what work is approved. Determined efforts to guard against abuses (eg by changes in the political system) may need to accompany private provision and production.

Sixth, the Commission endorses separation between provision and production of public goods and services. Considerable care would be required to ensure that those determining what would be provided remained 'in touch' with the quantity and quality of the goods and services required. It has recently been argued that the 1960s idea of strategic planning which 'involved separating thinking from doing, and created a new function staffed by specialists ... has long since fallen from its pedestal', because the actual strategy making process (as compared with the mechanical programming of existing strategies) requires an ability to synthesis diverse information which involves far more than the 'hard data' available to planners (Mintzberg H., 'The Fall and Rise of Strategic Planning', Harvard Business Review, Jan-Feb 1994)

Seventh, the Commission envisages that managers be engaged who would be able to run GOCs as businesses. However there are limits to the gains from doing this, because success in business requires not only management (doing the routine job efficiently) but also leadership (ie re-inventing the business when market conditions change).

'Strong leadership can disrupt an orderly planning system and undermine the management hierarchy, whilst strong management can discourage the risk taking and enthusiasm needed for leadership. But despite this potential conflict, both are necessary if an organisation is to prosper' (Professor John Kotter, Harvard University)

As GOC goals (ie deciding what business the GOC is in) are to be set by Ministers (on political rather than commercial criteria), such entities would be subject to a competitive handicap in the face of rapid market change. And if GOCs are to be exposed to a competitive environment, then they must be as free as their competitors to respond to changing demands if they are not to incur major losses at the government's expense. (Telstra ref).

Eigth, the Commission argued that GOCs are not subjected to the same conditions as private firms (eg GOCs borrow at lower rates) so that their performance needs rigorous and comprehensive monitoring by government. However the goal of the competitive neutrality provision of National Competition policy is to eliminate such differences, and if they are eliminated then there is no purpose in monitoring GOCs, except in terms of financial measures. Economists argue that the price mechanism is a way to collapse a diverse range of performance considerations (which can never be accurately identified) into a single measure (and that this is why a competitive market works better than a planned economy). The whole purpose of introducing competition is to eliminate the need for rigorous external monitoring and control, so that government functions can be responsive to customers rather than to central authorities (as such customer responsiveness is the main source of their potential productivity gain, and centralised control is a major obstacle to achieving it). Monitoring also requires (public) identification of production targets which would erode the competitive position of any commercial entity. Such intelligence would normally be 'commercial in confidence', because of the advantage which competitors could take of it.

Finally the Commission suggested that, in revising central government economic functions, the resulting arrangement must not contain duplication or overlap. Yet organisation theorists have long argued that such characteristics are essential for rapid organisational learning (ie this allows errors to be quickly challenged). Surely a more important defect would be a lack of cooperation and shared purpose.

The above are examples of matter which would require refinement if the Commission's proposals were to be implemented, rather than challenges to its core conclusions. .

(d) Focusing Government on Strategic Issues

At present Queensland faces a number of major emerging issues, such as:

ensuring effectiveness in government operations, and removal of immediate constraints on economic growth

rapidly improving the productive capabilities of the economy, noting its importance for relative wages and salaries, a high and sustainable long term rate of growth, employment opportunities, return on capital, international competitiveness, potential for savings, and the depth of the tax base for public goods and services

the achievement of real ecologically sustainable development, noting its increasing importance, its direct impact on Queensland's economy (eg via Greenhouse debate), and uncertainties about how it can be achieved.

effectively interfacing Queensland with the rapid development and growth which has occurred in East Asia, noting their significant differences in information and organising strategies from those of Western societies, and that Queensland is in the `front lines' of this interface.

dealing with the social challenges which have arisen as a consequence of demographic changes, and of past economic difficulties.

the achievement of real progress in development and growth of Queensland's decentralised regions

cooperating in building a more effective federal system of government, in the lead up to the centenary of the Australian constitution, noting the important issues raised about this by the Commission of Audit.

Addressing the first of these issues is the objective of the Commission of Audit, and the 1996 State Economic Development Strategy.

And the ultimate effect of the Commission's proposals could be to make many operational activities of government semi-automatic as far as senior managers (and the elected government) are concerned. Thus government (and its senior managers) could be freed to address major issues which the community now faces (such as those outlined above).

Even in the short term the Commission's proposal for funding service delivery on the basis of output rather than input would create a major (outward) shift in the knowledge and skill base required of senior managers, and thus in their ability to support government in addressing strategic issues. This will particularly apply in the Premier's Department which was seen by the Commission as taking a major role in policy planning.

Whilst the potential to deal more effectively with strategic issues would be implicit in the Commission's proposals, there is probably a need for early attention to how practical advantage might be taken of this. For example, it has been argued that it is now essential for organisations to move beyond responding with cutbacks to the difficult economic environment in which they exist, and that they must begin to envisage and create viable new future options (.... 'Competing for the Future', Harvard Business Review, July / August, 1993).

4. Evaluation and Implementation

The Commission's proposal would require considerable change in the public sector, whereas the Office of the Public Service recently argued that radical change of recent years now needs to be replaced by stability (Fisher L. 'Winding down the Change Juggernaut', Sector Wide, April 1996). These alternatives would need to be reconciled, for which a necessary basis may be that the Commission's case be presented more convincingly (because both the public sector and the broader community would need to be fully convinced before they are likely to accept radical change).

It is likely that something is needed to cope with the financial constraints which the Commission identified, and that something like the Commission suggestions will be part of that solution. But while the Commission's proposal contains many good ideas they also contain difficult / controversial elements, and relate to matters (like those mentioned in Section 3) which have not yet been considered or which require further refinement.

Queensland's experience with the PSMC shows the risk of allowing advocates of reform to unilaterally control its implementation (because, in that case, reform took account mainly of political science considerations, and eroded public sector effectiveness from many other viewpoints). However it is also desirable for advocates of reform to be encouraged to continue to develop and press a case.

An approach to evaluation and implementation of the Commission's proposals might be:

Identify (say) 1/3 of the Commission's proposals which are least difficult; obtain Cabinet endorsement for preparing an implementation plan for them; and enable agencies to prepare proposals for implementation (which method would allow the issues the Commission raised to be reconciled with the many the other priorities which agencies currently face);

conduct research into unresolved concerns such as those identified in Section 3.

review the Commission's proposals in 2 years time on the basis of such experience and further research; ask agencies to assess what would be involved in implementation; and seek cabinet agreement.

Evaluation and implementation could be through the State Strategic Planning process which is being established (and was endorsed by the Commission) as a means for enabling practical public sector responses to `strategic' requirements.