Are discretionary public funding models for the Australian third sector an anomaly under the New Public Management regime?
Ken Crofts
Working Paper 17/06
November 2006
About the Author
Ken Crofts, Lecturer in Accounting, Charles Sturt University,
Panorama Avenue Bathurst NSW 2795
Charles Sturt University – Faculty of Business Working Paper Series
Managing Editor: Associate Professor Jayne Bisman, School of Accounting, Bathurst
Editors: Dr P. Mathews, School of Commerce, Wagga Wagga
Associate Professor M. O'Mullane, School of Business, Albury
Dr R. Tierney, School of Marketing and Management, Bathurst
The Faculty of Business Working Paper Series is intended to provide staff and students with a means of communicating new and evolving ideas in order to encourage academic debate. Working papers, as the title suggests, should not necessarily be taken as completed works or final expressions of opinion. All working papers are subject to review prior to publication by one or more editors or referees familiar with the discipline area. Normally, working papers may be freely quoted and/or reproduced provided proper reference to the author and source is given. When a working paper is published on a restricted basis, notice of such restriction will appear on this page.
Table of Contents
- Abstract
- Introduction
- Public choice theory
- New Public Management
- Performance Reporting and NPFM
- Third sector organisations and Organisational Form
- Accountability
- Multi –theoretical model
- Research Questions
- Conclusion
- References
Abstract
The application of public choice theory to the public sector has ushered in an era of public service reforms referred to in the literature as the New Public Management (NPM). These reforms have concentrated on efficiency, effectiveness and performance. One of the outcomes from the adoption of the NPM is the outsourcing of delivery of public services. As a result, many public sector organisations have downsized their own organisations and utilised mechanisms such as competitive tendering and service contracts to outsource services traditionally delivered by in-house public sector organisations. Beneficiaries of this outsourcing of services have included private sector contractors, as well as third sector organisations.
Concurrently with the adoption of NPM, government funding agencies in Australia have routinely reserved large amounts of grant funding for third sector organisations. There appears to be an implicit assumption that third sector behaviour is socially preferable due to altruistic motives. This judgement or assertion about the comparative behaviour of private firms and third sector organisations is one that abounds, and these beliefs “…give rise to conflicting behavioural predictions and public policy prescriptions” (Weisbrod 1998, p.70).
This paper argues that discretionary models of public funding, such as the government as philanthropist model, and the submission model, are inconsistent with the NPM conceptual framework. Public policy makers who choose to retain discretionary models of public funding to the third sector, despite operating in the NPM environment, face conflicting choices. In particular, accountability flows into a government funding agency from third sector beneficiaries, and upwards from the agency to parliament, are likely to be mismatched. Unlike the topics of NPM, competitive tendering and public service outsourcing, there is scant research concerning discretionary models of public funding. Further research needs to be undertaken to determine why public policy makers continue to adopt such discretionary models. If discretionary public funding models are considered necessary, then the NPM conceptual framework should either be modified accordingly, or its weaknesses fully exposed.