Abstract
The term ‘contract state’ can capture three different types of contractual arrangements:*employment contracts*intra public sector service contracts (often used in the health and education fields)*public‐private service contracts or outsourcing.Victoria, since the election of the Kennett government in 1992, has engaged in all three, but in particular, public sector change has been characterised by significant outsourcing. This article outlines the extent of outsourcing in Victorian state and local government, the managerial challenges of a contract state, and the need for continuous reflection on, and improvement of, the reform process.
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