Finance Minister Peter Robinson has unveiled plans to create a new watchdog body whose role will be to make Government departments more efficient and cost-effective.
Mr Robinson said his proposed Performance and Efficiency Unit (PEDU) would comprise a small number of "respected individuals" from the public and private sectors.
He told the Chartered Institute of Public Finance and Accountancy conference in Newcastle that the body would seek out efficiency savings throughout the public sector.
Mr Robinson warned delegates that the Executive expected that Treasury cutbacks meant the public sector budget in Northern Ireland would grow by just 1% per annum.
This compared with the annual increases of 4% per annum which have taken place since 2000.
But he said the 1% figure would be augmented by "cash-releasing efficiency savings" of 3% per year across central government.
This strategy, the Minister said, would produce revenues of £700m by 2010/11, money which would be ploughed back into the Executive's public expenditure priorities.
Mr Robinson said the role of PEDU, the composition of which has yet to be finalised, would be to scrutinise and review public spending in all areas.
He said: "I believe we need to become more radical in our approach to identifying ways of improving the efficiency, performance and delivery of the public sector in Northern Ireland.
"I am particularly keen that PEDU should look at how we spend our money at present and what we achieve in terms of quality public services.
"It should be prepared to challenge even the most widely accepted assumptions about how we are organised and how we go about the business of delivering services."
Mr Robinson said civil service reform was a priority for the Executive, including the reduction of administrative costs and absenteeism.