New Zealand, in common with much of the developed world, spent a decade or so deconstructing its traditional public sector structures. Throughout the late 1980s and 1990s the New Zealand public sector entered a brave new world of public management. These reforms were derived from the United Kingdom experience during the Thatcher years, where neo-classical economic ideals dominated. The reforms were therefore typified by the theories of public choice, agency and transaction cost economics. The application of these theories in New Zealand radically altered the systems of institutional, organisational and management control within the public sector, with the aim of creating a more efficient, transparent and performance oriented public sector. The New Zealand reforms have been widely noted as remarkable for their clarity of vision, comprehensive coverage and ideologically driven nature.^[1] They catapulted ‘a small country in a peripheral geographical location’^[2] into a key destination on the public management visitors’ tourist circuit. The reforms have been subject to a range of evaluations and scrutiny highlighting their advantages, disadvantages and unintended consequences.^[3] Many commentators note that the reforms have resulted in major management and efficiency gains, but that they have not been without cost. Among those costs have been a number of downsides in the state sector employment environment. Given that the underlying structural reforms are now over a decade old, their longer-term consequences have become more apparent. Over recent years, and especially following the election of Labour governments in late 1999 and 2002, there has been an ongoing evaluation of the effects of reform and a move towards greater fine-tuning of the new system in the light of the lessons of that evaluation. This chapter is concerned primarily with the management and employment aspects of both the original reforms and of the current evaluation.