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Ten years ago, the provision of government funding for the social and welfare services delivered by voluntary sector service providers was a simple process. In evidence presented to the Waitangi Tribunal in support of a claim by a Charitable Trust against the actions of the New Zealand Community Funding Agency heard last year, a witness who was employed by the Department of Social Welfare from early in 1988 describes the process at that time thus: The Department of Social Welfare has operated funding programmes for many years...these programmes were grant funding. That is there was no contracting nor reporting as presently known. Also they were operated on a Head Ofiice Wellington decision on the recommendation of a small team (3 or 4 people based in a Regional OfiBce Auckland).(Crown Law Office, 1994 c, 6) This simple process has, in the last decade, been replaced by a funding relationship between government and the voluntary sector which owes its origins primarily to theory emanating from the study ofthe operation of private markets and the internal organisation of firms within the marketplace. Agency theory and Transaction costs analysis, along with other theoretical perspectives from the world ofthe private business sector, have had a substantial influence upon the restructuring ofthe public sector in New Zealand during the last decade and in particular have provided the theoretical basis for the transformation of the relationship between government and the voluntary sector into one of principal and agents, bound by contractual terms and a regulatory framework for the monitoring of quantity and quality of social and welfare service outputs.

Contracting for social and welfare services : the changing relationship between government and the voluntary sector in New Zealand