The twin forces of globalisation and technology are changin our personal lives, dictating our economic opportunities and re-shaping how we function as a society and the way in which we are governed. In a world of the free flow of people and their ideas, of trade and capital, the sanctions for poor governance and poor quality policies are swift and they are severe. This paper casts performance in the broadest terms to encapsulate our ambitions as a nation and challenge the ability of the traditional State to achieve those objectives. The paper conteds that the status quo of the big State and the bureaucratcies hasn't worked and is no longer affordable. Governments that don't demonstrate strategic leadership, managers are not accountable for performance are productive of not one but three deficits: governance deficit; performance deficit; and fiscal deficit (of course). This paper is designed to :re-examine the basis for adn effectiveness of government interventions; diagnose the causes of failure in the traditional bureucratic model; identify the conceptual basis and key characteristics of a peformance management regime; describe and assess the new management tools that help ensure accountability for performance; focus on the big shifts that occour at both the political and official level when the system moves from rule-based to strategic control; identify the pressure and "choke" points for politicians in the performance management regimes; and draw some lessons from the3 New Zealand experience that will serve to enhance and sustain the reforms. The paper concludes that to secure further dividents from a public sector performance management regime, the next generation of reforms will require attention to institutional and management deficits. First, new institutional frameworks are necessary to "re-engineer" the politicians and the political process; second, a new culture of innovation in the ranks of public sector managers is necessary and will require greater attention to recruit and stimulate talented and professional people