Inside Story

What happened to reform “on steroids”?

Are Labor’s efforts to fix a damaged public service losing momentum?

Paddy Gourley 14 June 2023 1694 words

Interest and sensitivity: finance and public service minister Katy Gallagher during Senate estimates last month. Lukas Coch/AAP Image

Politicians’ nonchalance about public administration can be explained if not excused. Lacking the political allure of economic, welfare and foreign affairs policies, it is tedious territory in which few votes are garnered.

Yet the quality of government and the wellbeing of citizens depend critically on the effectiveness and integrity of the Australian public service, or APS. As that wise old owl Adlai Stevenson once said, “Public confidence in the integrity of government is indispensable to faith in democracy; and when we lose faith in the system, we have lost faith in everything we fight and pay for.”

It’s true that Australian governments have shown bursts of interest in the condition of the APS. At the federal level, the Whitlam and Fraser governments commissioned significant reports, with Whitlam’s (a royal commission headed by H.C. Coombs) reporting to Fraser and Fraser’s (a review headed by J.B. Reid) reporting to Hawke. These reports were taken seriously by the governments of the day and most of their recommendations were implemented.

But federal government interest has waned since the mid 1990s. Major reports during the Rudd and Turnbull governments were largely ignored, and many of the changes made as a result of the Coombs and Reid reports have been abandoned.

More than that, governments have made life progressively harder for the APS:

• They have levied an “efficiency dividend” uniformly across all agencies regardless of circumstances — a lazy way of saving that has slyly reduced service standards and probably reduced efficiency.

• They have increasingly used consultants, contractors and labour hire to perform public service jobs. While some of these engagements have been reasonable, others have not. Thus, the merit appointment provisions of the Public Service Act have been worked around and swathes of capability have been outsourced. In 2020–21, this “external labour force” equalled around 54,000 staff at a cost of $21 billion.

• They have reduced the tenure of heads of departments to zero and sacked many of them arbitrarily. As a consequence, there is widespread concern that departmental advice is consequently being tempered to avoid giving offence that would lead to dismissal. (Do robodebt, sports rorts and car-park rorts ring a bell?) At the same time governments now rely much more for policy advice on ministerial staff — who know everything about politics and little about policy development — rather than officials.

• Appointments to statutory positions have been politicised and the importance of the appearance and reality of independence forgotten. The AAT might be an egregious example but it isn’t the only one.

• Central management of the APS has been degraded. The Public Service Commission is essentially powerless, no apparent mechanism exists to coordinate the activities of the other central agencies, and much goes into the Secretaries Board — composed of all departmental heads and a few others — but little comes out. The board’s most notable achievement is its advice to the Morrison government to knock back important recommendations of David Thodey’s public service review, commissioned by Malcolm Turnbull.

• Devolved fixing of pay and conditions has created wide disparities in remuneration between departments based on the dishonest pretence that pay rates reflect individual agencies’ productivity, something that can’t be measured. This has debased classifications, damaged staff transfers and promotions, and disconnected levels of remuneration from the outside market. Recruitment has consequently become a hit-or-miss affair.

• Senior management structures in departments have become grossly top-heavy while bureaucratic and political empire building — divorced from sensible principles about the machinery of government — flourishes. The most notable example is the unwieldy Department of Home Affairs, which appears to have been designed to fail and continues heroically to do so.

There’s more, but that list gives a good sense of what has gone wrong and how governments have contributed.

Will this change under Labor? Anthony Albanese’s public service minister is senator Katy Gallagher, a former ACT chief minister who has shown an interest in and sensitivity about public administration. As well as her commentary in the budget papers, she has made several important speeches setting out her aim of getting the APS into better shape.

Useful steps taken by the new federal government include:

• removing the Federal Police from the Home Affairs portfolio — although, regrettably, it left ASIO there and didn’t reconstitute a standalone immigration department

• setting up a National Anti-Corruption Commission

• abolishing and reconstituting the Administrative Appeals Tribunal to negate the malign effects of politicised appointments

• significantly cutting back the use of external consultants and contractors

• removing arbitrary staff ceilings (although the so-called “efficiency dividend” has been retained)

• reintroducing reviews of agency capability and evaluations of the effectiveness of programs

• taking tentative steps to clean up the remuneration and job classification mess (although the underlying policy remains markedly deficient)

• investing significantly in data and digital.

The government also created a position of secretary for public sector reform and appointed former senior public servant Gordon de Brouwer to the job. He was given the support of an APS Reform Office headed by a deputy secretary in the prime minister’s department. Like de Brouwer, that department’s head, Glyn Davis, was a member of the public service review initiated by Malcolm Turnbull.

These early signs were so promising that Peter Woolcott, public service commissioner at the time, forecast public service reform “on steroids.” That rhetorical enthusiasm has been so little matched by reality that the steroid dealer should be asked for a refund. When de Brouwer recently took over Woolcott’s job, the position of secretary for public sector reform was left vacant.

Some of APS Reform’s proposals — described in a four-and-a-half-page “consultation paper” and an “exposure” bill to give effect to five changes to the Public Service Act — are bafflingly wrongheaded, risky or trivial. Although they took a year to prepare, little time was allowed for consultation (eight days on the bill), which amounted to nothing more than the posting of the papers on a website with a request for comment.

First, “stewardship” is to be included in the Public Service Act as a public service “value.” Leaving aside the fact that stewardship is a function rather than a value, the exposure draft bill defines stewardship by declaring that the APS “builds its capability and institutional knowledge and supports the public interest now and into the future, by understanding the long-term impacts of what it does.” That’s all well and good, but capability and institutional memory are essentially secured by providing appropriate resources, structures and procedures. A mere “understanding of long-term impacts” guarantees nothing.

Second, the paper proposes an “inspiring” public service “purpose statement” which, it is claimed, “will provide a common vision through which to view problems, develop solutions and make difficult decisions.” This statement is to be settled by a deliberative committee of forty people, with the minister relegated to observer status. Can it reasonably be imagined that the product of this insular thinking will make the slightest difference to the hardworking staff managing social security counters, collecting taxes or slaving away in naval stores, other than perhaps to demoralise them?

The paper’s other proposals include requiring that decisions be taken at the lowest possible levels and proposing agency capability reviews, published staff census data and “long-term insight reports” are generally unobjectionable, although why legal heads of power are required for any of them is neither explained nor obvious. It’s also a pity that the “long-term insight reports” are not defined, though it is claimed they can “build the capability of the APS as a whole to consider cross-cutting issues in a linked-up way.”

But the fundamental disappointment of these proposals is that they ignore the big things that need to be done. For example:

• improve the central management of the APS as a whole by bolstering the power of the Public Service Commission, restricting the role of the Secretaries Board and providing a mechanism for better coordination between the central agencies

• make the Public Service Commissioner the primary adviser on the appointment and tenure of departmental heads

• abolish fixed-period appointments for departmental heads and put them in a position where they are more likely to believe they can provide full and frank advice without the risk of being sacked

• make it legislatively clear that the merit appointment provisions of the Public Service Act should not be avoided by placing consultants and contractors in APS positions

• give legislative effect to the oft-proclaimed desire for greater diversity and inclusiveness in public service employment

• require the publication of surveys on issues — such as agencies’ adherence to service standards — in which citizens have a genuine interest

• legislate procedures for appointments to statutory offices that would minimise the risk of public confidence being undermined by political association

• tighten the regulation of community development grants so they serve the public interest rather than the interests of those in marginal or government-held electorates

• legislate rules to avoid conflicts of interest in the post-separation employment of public officials

• legislate a code of conduct for ministerial staff.

There is much more to be done, but any one of the above is more important than the whole of the legislative proposals presently on offer.

So why are the proposed legislative changes for the APS so confused, illogical and insipid?

There is probably no simple answer to that question, although a lack of stomach and imagination is evident. It may also be said that big changes would shift relative powers at the official and, to a lesser extent, ministerial levels. When that happens, it is all too common for the losers to circle their wagons and protect their territory. Could that be happening here? It’s hard to tell, but it would be nice to know.

Meanwhile, the reform cart moves slowly on with so lightweight a cargo that a former public service commissioner, Andrew Podger, has suggested that it should be parked until the report of the robodebt royal commission is available. That’s not a bad idea: it’s short odds that the commission’s report will show up the present legislative proposals as wholly inadequate and provide the grounds for a fresh, useful and more courageous attempt to raise the integrity and effectiveness of the federal public service. •