Barry O’Farrell got one thing right in the lead-up to the NSW election – he stopped his Coalition team-mates from making a lot of big promises that they’d inevitably have to back away from once they were elected.

Of course, the lack of policy detail has come under attack. The Labor Party ran a scare campaign, warning voters that the Coalition had a reason for concealing its policies, and cautioning them not to give O’Farrell a "blank cheque” in the form of a massive parliamentary majority.

And former Coalition leader Peter Debnam – who is not recontesting his seat of Vaucluse – chimed in, questioning O’Farrell’s strategy in running a small-target campaign. But O’Farrell shrugs off the criticisms. His vision, he says, is for an honest, stable government that works competently in the interests of the people in the state.

And that, quite frankly, is probably about as good a vision statement as one can possibly expect from a future political leader.

Gone are the days when politicians could win office by making grandiose promises of new hospitals, schools and transport systems, and then could go off and borrow money to fund these opulent schemes. The global financial crisis put an end to all that.

At the same time, rapidly ageing populations means that governments around the world are faced with rising health, pensions and aged care costs, while the number of taxpaying workers is declining. And with public sector finances fraying, investors are showing an increasing reluctance to lend to big-spending governments.

Increasingly, the biggest challenge that politicians now face is to work out ways to manage their existing resources better. This requires them to devise strategies that enable them to improve the quality of government service, while spending even less money. And they also have to take the tough decision to scrap policies and services that they simply can’t afford.

The battle to improve public sector finances inevitably brings politicians into conflict with powerful union interests. In the United States, a slew of states are laying off staff, and trying to whittle back public servants’ pension entitlements.

In the case of NSW, O’Farrell will have to take on the unions, particularly the teachers, if he wants to boost productivity levels in the public sector. Interestingly, NSW was achieving – and publishing – huge gains in public sector productivity up until about a decade ago. But the numbers mysteriously stopped being published in 2003. The reason? Productivity levels had begun to slide.  

Efficiency is also improved by handing back a lot of decision-making power to local schools and hospitals. Under 16 years of Labor government, decision-making has become highly centralised. But O’Farrell will have to reverse this trend and allow hospital and school boards to have a greater role in hiring staff, and deciding how to allocate their resources.

He’ll also have to find cost-effective ways of improving public transport. For instance, Sydney’s abysmal public transport system could be improved by increasing the number of articulated (bendy) buses, and introducing clear bus-only lanes. And, with the state’s finances under pressure, we’re likely to see an increase in the number of major new infrastructure projects where the private sector role is given responsibility for financing and construction, in exchange for charging users a fee or toll.

In recent years, the rapid turnover of ministers combined with the tendency to award high-paying sinecures to Labor mates has sapped morale in the senior ranks of the NSW public service.

O’Farrell needs to take urgent steps to remedy this. Along with his cabinet team, he needs to set out clear strategic objectives. Senior public servants should be in little doubt as to their performance targets. What’s more, ministers should regularly review whether or not they are meeting their objectives.

Through the election campaign, O’Farrell has shown good sense. He knows that voters are deeply cynical about big spending promises from politicians. Instead, they’d prefer governments that are honest, stable and well-managed.

The big test now – both for O’Farrell and his Coalition team – is whether they can deliver.