This paper builds on recent work in Australia and overseas that has considered the implications of New Public Management (NPM) policies for the relationship between governments and citizens. This work calls attention to the drastic reconceptualisation of 'citizenship' and 'citizen' that has been an inevitable consequence of the fundamental changes in the function of the state and purpose of public administration that are integral to NPM. Indeed, while the shape and direction of NPM reforms adopted in different countries have varied in accordance with national political, institutional and cultural priorities, an underlying trend has been the drive to reform the state and public administration in ways that enhance their capacity for emulating the practices and decision-making processes of market-based organisations. In keeping with this trend, the so-called 'contract state' and contractualism have emerged and become dominant in Australia and many other countries. This paper will explore these themes, examining whether a new mode of citizenship, compatible with the contract state, is displacing more traditional notions of citizenship that were associated with the welfare state.