Abstracts Law

The impact of compulsory competitive tendering on the organisational culture of local government in Victoria

by Christopher Aulich

A central feature of public sector reform in Australia in the past decade or so has been the introduction of competition into service markets that were previously monopolised by public agencies. The adoption of more competitive strategies by these agencies has usually been accompanied by changes in their organisational culture - found in their structures, modes of operation and in internal and external relationships, as well as in the underlying values orientation of the organisation. The introduction of compulsory competitive tendering (CCT) in local government in the state of Victoria reflected criticisms of the performance of traditional local government bureaucracies and a determination by the state government to secure a change in local government culture. This study investigates the impact of CCT on local authorities in Victoria, and explores the changes to organisational culture that have occurred. It assesses the extent to which the changes are consistent with a 'post-bureaucratic' conception of public organisations. The study presents evidence that cultural change has occurred in Victorian local authorities, particularly in the establishment of new organisation structures, a more entrepreneurial or outward focused orientation, and the development of more market focused and customer oriented service delivery systems. While cultural changes may not have progressed as far as intended by the Victorian government, they represent a more radical approach to local government reform than in other Australian states - so radical that they present a serious challenge to long-held views of the role of local government in the community. The thesis reveals that the new competitive environment may itself generate new problems such as transactions costs and erosion of trust within local councils and enables senior managers to assert stronger control over the council. It is this control, together with the technocratic or top-down approach to reform taken by the state government, which has constrained the development of model post-bureaucratic local government organisations in Victoria. In particular, it seems that senior managers are more intent on reshaping their organisations than in encouraging the greater market responsiveness anticipated in the post-bureaucratic model.