New Zealand PFI

With more than 12,000 employees, New Zealand's Ministry of Public Works used to be one of the country's largest departments. The 125-year-old ministry built most of the island nation's infrastructure-its airports, bridges, power stations, roads, canals, dams and railways. Functions ranging from maintaining military bases to land use planning were also under the ministry's auspices.

Now it no longer exists.

In 1990, the ministry was split up. All policy advice functions were transferred to other departments. Commercially oriented agencies-property services, computer services, architectural and engineering consulting, construction and maintenance and road sign production-were converted into state-owned enterprises (SOEs) and reorganized along business lines. Each was required to pay taxes, raise capital on the market (with no government backing-explicit or implicit) and operate according to commercial principles. At the same time, the SOEs were freed from civil service, procurement and financial management regulations.