THE NSW public sector is set for a major revamp, with middle management to be reduced by 20 per cent while the remaining executives are shifted onto contracts.
It's the first major overhaul of the sector in almost three decades and NSW Premier Barry O'Farrell admitted the changes would be "challenging".
"(They) will confront some long-held but outdated traditions and practices," he said.
Cabinet has accepted the reforms which include reducing layers of management - there are currently 3884 executive-level positions - and introducing performance incentives.
Announcing the shake-up in question time on Wednesday, the premier said the reforms would also improve accountability.
"These changes are going to reduce middle management by around 20 per cent and those savings, estimated to be up to $65 million, will be redirected into the frontline services," he said.
The government said it was up individual departments to decide if this would mean job cuts.
The reforms come from a report by NSW Public Service Commissioner Graeme Head, who decided "substantial reform" was needed after establishing, for the first time, a single picture of the sector's entire executive.
"A fundamental overhaul is needed in the size, form and operation of the NSW public service executive," Mr Head said in the report.
"Generally managerial performance is far from excellent."
Mr O'Farrell said public servants were currently working within "the organisational equivalent of the betacam era".
"I want a public service that rewards talent and not time," he said.
The public service currently operates two types of executive employment with some executives on five-year contracts and others on awards.
Under the reforms, there will be a single system with award and contract-based executives shifting to ongoing contracts.
There will also be performance provisions, and executives will be appointed to a band, not a position, and a role within the band.
"The new public service executive will provide a single structure and one set of arrangement for all," the report said.
The NSW Police Force, the teaching service and local health districts will have independent arrangements aligned with the new reforms.
A bill is currently being drafted to bring about the changes and the report said most of the new executive structure would be in place within two years.
"These reforms will create a more professional public service, operating along best-practice private and government-sector lines," Mr O'Farrell said.
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