Institute of Public Administration Australia
15 July 2009
The Institute of Public Administration has asked me to discuss the challenges of public service reform, and I am pleased to do so.
Reforming and reinvigorating the Australian Public Service is a priority of this Government, and it is a central priority of mine.
Today, I want to make some comments on the nature of the contemporary public service, how it is changing, and how it needs to change more.
I want to start by emphasising that it is my view that generally the public service performs well and stacks up favourably when we look at what is going on elsewhere. For example, a recent OECD efficiency study found that the APS’s proportion of the labour force – currently 1.5 per cent or 160,000 employees -- is relatively low compared to public services in other countries.
Yet despite its size, it appears to be well regarded by Australian citizens. In 2007, 87 per cent of Australians surveyed were satisfied with federal government service delivery, according to the report: International Comparisons of the United Kingdom's Public Administration. By contrast, 68 per cent of Canadians and citizens of the United States were satisfied with service delivery from their federal governments.
The same report ranked Australia third in a list of comparable nations -- ahead of Canada, New Zealand, the USA and the UK -- for the public service's independence from political interference and in its potential for giving impartial, evidence-based advice.
These figures are consistent with my impressions as Secretary of the Department of the Prime Minister and Cabinet. During 17 months in the job, I have met many dedicated, hard-working, ethical and capable public servants.
We are lucky to have them, because they work at a time when the pace of government decision-making is accelerating. When policy problems are ever more difficult, even as the expectations of ministers and of an informed public that these problems will be solved are increasing. When critical media scrutiny and the nature of the 24-hour media cycle make it hard to take risks and to embed programs that do not deliver instant results.
When government can draw on many competing sources of advice -- from ministerial advisers, public forums, the private sector, academics, think-tanks, consultants and Google. When the authority of the public service -- like all forms of authority -- is under challenge; when respect must be earned.
When -- to come to the precise challenges of the present moment -- the economic crisis and the likelihood of deficit budgets until 2015 mean that problems must be solved without large sums to spend on them.
When savings must be made just as the ageing of the population begins to impact on the federal budget, raising expenditure in health and pensions and reducing the tax base.
When the APS is also ageing, with nearly three in four Senior Executive Service employees eligible for retirement in the next 10 years. And when, as last year's Audit Office report pointed out, the APS faces considerable challenges to attract, retain and develop talented staff.
So, my simple message is this – The Australian Public Service is not broken. It is not a renovator’s opportunity.
However, we face big challenges in the period ahead. Historically, the public service has evolved to meet these challenges. I believe we are at the point of needing to think about the next step in our evolution.
Let me pause for a moment and take you to an example which highlights the kind of public service and the kind of thinking we need in the future. I want to take you back to February 3rd, when the Prime Minister announced the $42 billion Nation Building and Jobs plan.
The plan was and remains at the centre of the Government’s response to the global economic crisis. As such, it presented the public service with a historically unprecedented set of challenges.
With private sector activity in a slump, the Government elected to intervene in the economy more deeply and swiftly than an Australian Government had done for many years. It proposed a series of major investments designed to stimulate economic activity while at the same time meeting long-term policy objectives in education, economic development, housing and the environment.
It promised to build or upgrade a building in every Australian school; to invest in roads and community infrastructure; to build 20,000 new dwellings and to put insulation in up to 2.9 million homes.
These commitments included the largest single school and public housing building projects in the nation’s history. They required close collaboration with State and Territory governments and with the private sector. They had to comply with extremely high standards of probity. And, critically, to ensure they stimulated economic activity and protected jobs, they had to be done fast.
So there was no time for business as usual; no chance that agencies acting alone or under conventional decision-making structures could get this job done.
Two days after announcing the Plan, Mike Mrdak, then a deputy secretary in my Department, was appointed to the post of Commonwealth Co-ordinator General. Commonwealth Co-ordinators were also appointed from within the public service to manage the education, health, infrastructure and environment components of the Plan. Each State and Territory also appointed a Co-ordinator General and Co-ordinators for each part of the plan.
Since then the Co-ordinators General have met every fortnight -- and the Commonwealth Co-ordinators every week – to monitor progress of the Plan, share ideas and experiences, and take new decisions. They and the teams beneath them were thrown together and asked to find innovative solutions to unfamiliar problems.
Accordingly, the Co-ordinators General have worked on plans to exempt nation-building projects from some planning approval processes. They also amended the requirement that projects built with Commonwealth funds hire government-accredited builders for projects funded under the stimulus plan. They did so because there are few accredited builders, and new accreditations would have taken six to nine months to complete, reflecting the view of all governments that stimulus measures must flow quickly into areas of need to support jobs.
One especially innovative measure accompanied the plan to install energy efficient insulation in up to 2.9 million Australian homes.
If the plan had followed standard government practice, the homeowner would have paid the installer of the insulation then applied to a government department for the rebate. But the rebate would typically have taken up to two months or longer to arrive, thereby putting people out of pocket and discouraging sign-up to the scheme.
Instead, the Energy Efficient Homes Package requires installers to pay the cost of installation, but offers them swift reimbursement – the benchmark is 48 hours.
And they are reimbursed by Medicare.
Normally, Medicare has nothing to do with installing pink batts in homes, but it was chosen because it knows how to process payments fast. In effect, Medicare is treating insulation installers like doctors who bulk-bill.
So if you see a queue of blokes in dusty overalls at your local Medicare office, you’ll know why.
While the Nation Building and Jobs Plan is far from complete, the outcomes to date are outstanding. About 33,000 projects, worth $20 billion, have been approved. By March, 2011, every primary school in the country is scheduled to have a new building. Upgrades to more than 5000 schools are already underway. By the end of next year, 15,000 new homes are scheduled to be built, and construction of nearly 1000 has begun.
I have discussed the Nation Building plan at length because, while it is in some ways atypical -- we don't go onto a war footing every day -- it reveals the challenges modern public servants face.
They must respond swiftly – sometimes instantly -- to government demands for action. They must think in terms of outcomes, rather than processes. They must get out of their silos, abandon turf wars, and work collaboratively across departments, with State and Territory governments and with the private sector.
They must tackle challenges that are increasingly complex, often global in nature, and do not respect borders, let alone the demarcations of government departments. Think, for example, of climate change, the water shortage, the economic crisis, the swine flu pandemic, or the need to build an education system that ensures Australia's international competitiveness and strength.
Public servants must also take a responsible but bolder approach to risk, recognising that governing always involves choices between competing priorities – the merits of the planning process versus the need to get projects built quickly, for example.
And they must understand that imagination has to go hand in hand with implementation – that policy only works if it works on the ground.
I have to say that the fine work undertaken on the Nation Building and Jobs plan is not reflected consistently across the public service. While there is much we can be proud of, we still have far to go before we have the APS we need for the 21st century.
The taxpayer invests a lot in having a highly skilled, professional, creative, fair and responsive public service. In my view, we need to ensure they get better value for money.
In April of last year the Prime Minister spoke to the Senior Executive Service about the kind of APS he wants to see.
He said the Government sought to reinvigorate the Westminster tradition of an independent public service based on merit and committed to excellence. To enhance its strategic policy capability, and to strengthen integrity and accountability across government. To broaden public participation in government through inclusive policy processes. And to use evidence-based policy making in order to produce both efficiency and effectiveness in outcomes.
I agree with him, but I would like us to go further. I would like us to unashamedly aspire to be the best public service in the world. I think this is something we can do. But to do so, we will need to do better in four fundamental areas.
One, the quality of our policy advice to government must improve. Two, we must not only strengthen our focus on service delivery but enable public servants who create policy to learn from those who deliver it.
Three, we must work tirelessly to put the citizen at the centre of our programs and policies. And four, we must strive to attract and retain the highest quality people -- because if we do that, the right policies and solutions will follow.
There is a fifth area in which I believe the APS is strong, but which I want to underline because it is critical to the integrity of the public service and because it is relevant to the controversies of the past month.
In remarks at the Adelaide Festival of Ideas last week, my predecessor, Dr Peter Shergold, said that Australia has a professional public service that exists to serve the government of the day – and has done so well.
The public service, Dr Shergold said, provides ministers - that is the executive government - with frank, fearless and robust policy advice -- and it does so in a confidential manner.
I believe, as does Peter, that the confidentiality of advice is critical to our ability to be professional.
Ministers carry accountability for policy decisions. Our role is to assist them make good decisions, not launch alternative policy proposals into the public domain. We do not therefore advise the Opposition, backbench members of the Parliament or the media.
The public service only serves the Parliament in specified and limited ways.
I strongly endorse Dr Shergold’s conception of how a professional public service should operate. I believe the public service should always strive to be a professional and rational advocate to the government of the day of ideas that are in the best long-term interests of the nation.
So what is to be done to ensure that we are that advocate?
Let me turn to the issue of the quality of our policy advice. By and large, I believe the public service gives good advice on incremental policy improvement. Where we fall down is in long-term, transformational thinking; the big picture stuff.
We are still more reactive than proactive; more inward than outward looking. We are allergic to risk, sometimes infected by a culture of timidity. We should take the Prime Minister at his word when he said in his speech to the SES last year -- and I quote -- ``We cannot afford a public service culture where all you do is tell the government what you think the government wants to hear.''
I appreciate that encouraging public servants to think strategically, and with a whole-of-government mindset, must begin at the top.
The APS still generates too much policy within single departments and agencies to address challenges that span a range of departments and agencies. We need to shake up our old structures and practices by creating policy teams within and across departments -- both to increase the competition of ideas within the APS, and to ensure we have the right people for the right problem.
We are one-APS, and in my view we need to bring more meaning to that statement. The APS is not a collection of separate institutions. It is a mutually reinforcing and cohesive whole.
Public servants share core skills and techniques. We should see ourselves as a group of public service professionals and we should take pride in that profession.
We should also extend that professional connection across different public services. The APS is part of a broader professional family of public services across Australia which will need to work together to address modern challenges. In my view, part of giving real voice to the concept of ‘one-APS’ and building a broader professional ethos must involve knocking down barriers which prevent mobility.
We need to enhance the mobility of APS officers, enabling them to move across departments without sacrificing pay or conditions. We also need to make sure barriers do not prevent the transfer of knowledge, skill and people across different levels of government.
Beyond that, we also need to bring in more outside specialists, sometimes on short-term contracts. Together with a few other Secretaries, I am trialling a co-ordinated Senior Executive Service Band 2 recruitment process to lure high-performing specialists from a range of fields to the public sector.
We must work with people from the private and community sectors, think tanks, academics, stakeholders and members of the public. And we need to carve out time for thinkers within the APS to enable them to do long-term, creative work; and put them in touch with people who are up to date on the latest in public sector management.
In PMC we have begun some of these reforms through the creation of the Strategy and Delivery Division.
The division undertakes strategic thinking across most portfolio areas. It uses modern techniques to deliver innovative and timely advice to government, including the use of hypothesis-led and evidence rich analytical techniques. It places high value on collaborative work performed by teams that include officials seconded from within and outside the Department, and sometimes from the private sector.
As an APS we need to do more on all these dimensions.
The second area in which we must improve is in bridging the gap between policy formation and service delivery. Critically, we lack sufficient people at senior levels with a sophisticated understanding of service delivery.
That is partly because the public service is a victim of its own success. Over more than 30 years -- since the 1976 Coombs Commission recommended greater devolution of powers to where the action occurred -- the APS has steadily decentralised management authority, financial resources and recruitment.
As a result, frontline agencies such as Centrelink and Medicare have been freed to pursue innovations to the services they offer to citizens. That has been a great improvement -- but over time it has also created a gulf between the departments that decide policy and the statutory authorities and government businesses that deliver it.
This is exacerbated by confusion between the roles and responsibilities of the Commonwealth and the States and Territories in relation to service delivery.
For example, I doubt that the Health Department has many senior officials with a close understanding of how a hospital is run.
Therefore, we may need to give public servants -- including senior officials -- experiences of front-line policy implementation. If that means deputy secretaries spend a week staffing the Centrelink claims desk in Murray Bridge, or perhaps in a Medicare office, we will all benefit from their experiences.
But more importantly, we need to find ways to incorporate the insights of frontline workers into policy development. We need to create a loop so that good policy leads to good implementation, and the lessons of implementation feed back into policy. Today there are no coordinated mechanisms for sharing what we have learnt across the APS; we need to create them.
We also need to get better at managing for results. We are not good at measuring the effectiveness of our policy interventions. We don’t always measure the right things. We are not always good at asking citizens what they think about the quality of the services we provide and taking action to make them better.
To come to the third area of fundamental reform, we must deepen our focus on citizen-centred service delivery. Here, government is moving in the right direction, but it has a lot further to go.
The Centrelink drought bus shows how innovative service delivery -- in this case to communities in drought and flood-affected areas -- can reach out to larger numbers of citizens.
Over time the services the bus offers have expanded beyond specific drought and flood relief to include advice on tax, health issues and even depression. Centrelink understands that people in need rarely have problems that can be confined to the responsibilities of one service deliverer.
The bus has built a clientele among people who are traditionally reluctant to come to Centrelink for help. In the year to June last year, a large proportion of the 13,000 customers who visited the bus were new to Centrelink.
Similarly, QGap is a Queensland Government program that delivers 100 services through 70 outlets in rural and remote Queensland.
Services are offered at one counter in a community -- it might be a post office, a local clerk of the court, a newsagent or another small shop. The agent enters a franchise agreement with the state and is paid per referred query. The system is cheap, the public interacts with a local person not a faceless bureaucrat, and it gives a local business more work, thereby helping it to remain in the town.
I cannot overestimate the value of such citizen-centred approaches, and the need to expand them across the public sector. We need to put people at the heart of everything we do.
To give one more example, in February the government launched its economic stimulus plan website. It was launched quickly, with eight agencies coming together to create the first version of it in 26 days.
The website uses mapping technology to enable citizens to find local information on any one of 15,000 stimulus projects, simply by typing in their postcode. A number of ministers -- including Treasurer Wayne Swan -- have been online to answer questions from the public about the stimulus package.
It demonstrates once again how information technology is increasing the capacity of citizens to gain information from -- and connect with -- government.
Last year, for the first time, the Internet replaced contact in person as the most common means by which Australians contacted government. It is a profound shift, and helps to explain why the Government has established a Government Web 2.0 Taskforce to advise it on how public sector information can be made more accessible to, and usable by, Australian citizens online.
The Taskforce will advise on how to establish a public sector culture that favours openness. And how the government can use new Web technologies to hear the views of citizens, and to learn from their experience and knowledge.
This brings me to my final priority: getting the right people.
In 2006, McKinsey and Company asked Sir Michael Barber to analyse the reasons for the success of the world’s best-performing education systems. Sir Michael and his team studied 27 systems, took exhaustive data and literature surveys, and spoke to more than 100 experts, policy makers and practitioners. Having amassed all that evidence, they came to a conclusion that was stunning in its simplicity and power.
Being the best school, they found, was not primarily a matter of having the finest facilities or administrative practices or the smartest pedagogical theories.
Instead, the top education systems are the best because their teachers are the best. And these systems focus relentlessly on obtaining the right teachers and trainees, then investing heavily to help them be even better.
This research -- which has shaped the focus on teaching quality in the Australian Government’s education agenda -- holds important lessons for the public service. We must focus on attracting, retaining and developing the best people.
We have some very good people, but in my experience in the APS thus far, I have seen some critical weaknesses. We are not good at recruiting creative thinkers. We are also not good at bringing in some of the management skills and techniques that are used elsewhere. Project management skills, financial management skills and the ability to build a strong business case are skills we do not currently place enough importance on. This needs to change.
We also need to recognise that the qualities we need in a first-class public service are the qualities we look for in each of its members.
People who are competitive but also collaborative. Who are fiercely proud of their work but also prepared to share it. Who have no time for the trivia of turf wars. Who value a culture that is committed to independence, honesty and high ethical standards. Who understand that the best ideas always emerge from rigorous study of the evidence. Who, simply, have a passion for public policy.
For all the difficulties it faces, I believe that the APS will lead Australia's response to the challenges of the next decade and beyond and can continue to lead the world in good public service practice. And I believe that the public service remains the place where people of the highest intelligence and integrity can shape the future of their country.