A Processual View of Institutional Change of the Budget Process within an Australian Government Owned Electricity Corporation

Purpose: Australian public sector organisations are faced with their greatest challenge in decades as public sector reforms essentially re-examine the role of the State in the economy. These changes have led to a shift away from a traditional administrative approach of public sector organisations to one that fosters managerialism and economic rationalism, the underlying philosophies of New Public Management. Queensland, the north-eastern state of Australia, has experienced a period of government committed to change and reform specifically related to corporatisation and a national competition policy. Methodology/Approach: To understand the effect of changes in budgeting, the researcher explores the processes of change over a period of time, as they occur through the use of a case study approach. The processual approach adopted for the study is consistent with Old Institutional Economic theory that is used to inform the findings. Findings: It was found that indiscriminate changes to the budgeting process together with the introduction of a transfer pricing system caused considerable resistance. Streamlining was introduced late in the study, which, for the most part, despite the embeddedness of the earlier system, overcame many of the obstacles identified with relation to the budgeting process, whilst the conflict as a result of the transfer pricing system remained an unresolved and thorny issue. Implications: The implications for organisational change management suggest the consideration of embedded institutions within an organisation whilst determining the processes and directions of change. The implications for reform setters and the Queensland Electricity Supply Industry are such that the short term goal of cost efficiency may not necessarily be in the best interest of the overall long term benefits to the community.