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Ahead of the Game: Blueprint for Reform of Australian Government Administration

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Part 3 – How is the APS Performing?

The Advisory Group has identified a set of components that provide a framework for considering opportunities for reform. A high performing public service:

1. Meets the needs of citizens;
2. Provides strong leadership and strategic direction;
3. Contains a highly capable workforce; and
4. Operates efficiently at a consistently high standard.

Literature on organisational performance shows that these four components are hallmarks of effective organisations. A comprehensive review of 91 studies into high performing organisations produced a set of common characteristics that have been mapped onto the four components. These include strategy, process management, technology, leadership, individuals, culture and external orientation.³¹

As noted by the Corporate Leadership Council, a mix of organisational, managerial and employee factors are important for producing high performance.³²

A.  Meets the needs of citizens

A high performing public service engages with citizens and enables the delivery of services to meet their needs. The term “citizen” is used in this report in its broadest sense to describe all people residing in Australia (and Australians who are overseas), whether the government interacts with them as individuals or organisations. As well as enabling the delivery of services, government creates environments through direct and indirect regulation which provides mechanisms to improve the safety and prosperity of the country, now and into the future.

Engagement with citizens

Changes in information technology over the past ten years, including an explosion in internet use, have redefined the relationship between government and citizen. As a result, today’s citizens expect to engage differently with government as seen in Figure 4.

At the same time, the emerging concept of ‘co-production’ in service delivery encourages government to share the design and delivery of services in equal partnership with citizens. Citizens are seen as vital in driving change: “they are the basic building blocks of neighbourhood level support systems – families and communities – which underpin economic activity as well as social development”. ³⁴

A contemporary and relevant public sector is required to be part of the community, working in partnership with its members to help solutions emerge from within society, rather than imposing them upon it.³⁵ (Smith Family)

To encourage citizen feedback, consultation and engagement processes should be adaptable and diverse. Public services in Canada and Denmark, among other countries, are demonstrating the many ways technology can push boundaries and promote citizen communications with government. Engagement with the community through new tools such as blogs and wikis also enables the sharing of ideas and the further development of expertise through networks of knowledge.

Improving the quality and diversity of citizen feedback will help the public service to continually improve. Citizen feedback is particularly important to connect front line service delivery to policy designers. Without information on whether progress has been made, it is difficult to adjust or re-design policies and programs. Over time, citizen feedback also improves the data available for future evaluations of public service performance.

To improve outcomes for citizens, strong partnerships between agencies and across state, territory and local government boundaries are important. Systems should be able to communicate with each other to ensure that all services to the public are connected and citizens only have to tell government once.

As much as possible, programs should be designed to allow operational decision-making to be devolved to the frontline, opening up the possibility of adaptation and tailoring to local circumstances. Policy and programs that take a ‘one size fits all’ approach rarely meet citizens’ expectations and can produce unnecessary administrative burdens.³⁶

Government also sets frameworks to ensure a safe and productive environment for citizens, including through regulation and expenditure in areas such as national security, border protection, quarantine control and public infrastructure.

Some government interaction with citizens involves the use of coercive powers through the enforcement of laws. The exercise of coercive powers by the public sector has particular implications for citizen engagement. For example security objectives should be pursued within the bounds of Australia’s international human rights obligations. It is important that further law enforcement policy be developed in consultation with affected communities.

Business and Community Groups

It is also timely for government to re-examine the ways it engages with business and community groups.

The bottom line is that more and better private sector input is needed in the design and implementation of policies and regulations. Collaboration – among governments and with business – to help shape policy is essential. ³⁷ (PriceWaterhouseCoopers)

Smarter regulation and policy-making relies on open channels of dialogue between government and those to whom it is applying rules and regulations. Streamlining reporting and other requirements also promotes clarity, transparency and stability in rule making.³⁸

How are we going?

For Individuals

There is a genuine sense of excitement among members about finding new ways to engage clients and the community, and about ways to make services more responsive. ...At the heart of service delivery and communication there needs to be flexibility to meet the needs of the individual accessing services, not forcing the individual to fit agency requirements”. ³⁹ (Community and Public Sector Union)

In late 2009 the Department of Human Services, which covers agencies such as Centrelink and Medicare Australia, introduced reforms that:⁴⁰

• Establish Mobile Offices to bring payments and services directly to remote communities;
• Integrate of phone and online systems; and
• Move towards a single face-to-face point of service delivery.

More than a third of submissions to the Advisory Group, particularly those from APS service delivery agencies, community sector groups and individuals, discussed the need to further improve service delivery and embed a citizen-centred approach to both policy and service delivery. These improvements need to go to integration of delivery which is more than just co-location itself.

“Is it about time that all three levels of Government in Australia were able to get together and provide a one-stop shop to provide information and allow residents to update their information?” ⁴¹ (APS employee submission)

The Government 2.0 Taskforce also found that:

“...the existing public service culture of hierarchical control and direction must change sufficiently to encourage and reward engagement.”⁴²

Service delivery agencies know they need to work better for citizens. More than 70 per cent of agencies have a service charter to improve the quality of services they provide to the public.⁴³ There is no APS-wide charter that unites the various arms of service delivery.

Existing service platforms and systems have evolved over decades and it will take time and resources to align them. The Australian Government is at present without a whole of government strategy for service delivery, and agencies risk developing services in isolation which can affect citizens’ outcomes and government efficiency.

Better integrated service delivery is important for meeting the challenges outlined in Part 2. As the population ages there will be increasing demands for services and infrastructure, which will need to be funded by a proportionately smaller workforce. Better integrated services will help to ensure high service standards and value for money. The APS will need to make the most of technological advances to meet increasing citizen expectations.

For business and community groups

Commonwealth and State regulation in areas such as aviation safety, health, taxation and border security is crucial to the wellbeing of Australians. However, regulation should be simplified and better coordinated across jurisdictions to meet the needs of business and corporate citizens. The Australian Productivity Commission noted in its review of regulatory burden on business that ‘[m]any industries complained of overly burdensome, duplicative and redundant reporting requirements’.⁴⁴

Jobs Australia has remarked that the new public management approach to relationships between government and the non-profit sector, which seeks to minimise public sector risk and to maximise public sector control, is not conducive to effective “partnership approaches” and is in urgent need of reform.⁴⁵

The Standard Business Reporting (SBR) Program is developing harmonised reporting mechanisms, such as forms, pre-filled in business accounting software to reduce the regulatory burden for Australian businesses. SBR covers agencies such as the Australian Securities and Investment Commission, the Australian Tax Office and State Revenue Offices and the approach could well be extended to other sectors of reporting.

The Department of Innovation, Industry, Science and Research has identified at least 9,600 on-line forms for business to use in dealing with the three levels of government. The task of reducing the costs to business of poorly designed and unnecessary regulation is therefore significant and will take time to address.

Improving government’s interaction with the private and non-profit sectors will become increasingly important as the population ages. Centrelink is already reporting that an increasing proportion of seniors prefer to interact with Government through trusted intermediaries, such as financial planners or non-government organisations.

At the same time the task of reducing the regulatory burden on business must be balanced against challenges requiring new regulatory approaches, for example in the area of national security and carbon pollution reduction, as highlighted in Part 2.

B. Provides strong leadership and strategic direction

The public service seeks to deliver the highest quality outcomes to citizens and advice to government by making the best use of the workforce and resources at its disposal. This core strategic objective comprises two related elements.

1. Strategic policy, which focuses on the broader, long-term challenges facing government; and
2. Organisational strategy, which focuses on the policies, people and procedures needed to deliver outcomes on behalf of government.

Leaders in the APS need to deliver on both elements of strategy. Given the critical role of leaders in embedding the reforms within their organisations, their roles and expectations must be clear and accountable. Strong leaders devise effective strategic directions, enunciate them clearly, then build support for them within their organisations.

Much of this Blueprint focuses on organisational strategy, such as workforce capability and agency effectiveness. This section focuses on policy, both strategic policy and the operational design undertaken as part of the organisational strategy.

Strategic Policy

In the public sector, strategic policy advice assists to create a broader debate within government about complex problems in the economy, environment, society and international relations, on the back of robust data analysis. It seeks to identify new and creative ways to tackle these problems.

Developing strategic policy and delivery options is difficult. It involves problems that often span jurisdictional boundaries and may be long term in nature. It requires a range of specific skills and methods to generate innovative thinking.

Collaboration is important in this kind of work – combining different perspectives promotes innovation and can lead to new ideas. In the public sector, policy collaboration, both between agencies, and with external groups such as academia, business and the broader community, is essential.

Governments all over the world have begun experimenting with ‘new democratic processes’ to enable greater citizen involvement in collective decision-making⁴⁶

Strategic policy analysis requires specific skills, such as econometric modelling, statistical data analysis and stakeholder engagement to develop joined up solutions. Such skills need to be developed and maintained. Strategic policy also requires clear communication of ideas to government, particularly where policy options involve difficult trade-offs.

Operational design

There are a range of activities that support the delivery of policy, for example designing program guidelines, developing regulations and evaluating programs. Such activities focus less on the strategic direction setting and more on the details of program design and implementation.⁴⁷ They constitute the core business of many APS Departments and agencies. At all times these activities must be tested against the needs of citizens and how best to meet them.

Specific skills and mechanisms are required to implement programs and regulations in an efficient and effective way. As delivery options and mechanisms span multi-dimensional and interrelated activities, the APS needs to ensure it has the skills, knowledge and capacity to deliver. Best practice in delivery and expertise should be shared across the APS, for example, through testing the useability of proposed approaches with citizens before introduction.

High performing leaders

Secretaries and senior leaders are responsible for working together to establish a strategic direction and achieve the outcomes sought by government. This includes responsibility for maintaining productive relationships with Ministers and their private offices. Leadership behaviour trickles down to influence an agency’s culture and APS employees rely on their leaders to model by example. Leaders must clearly articulate and demonstrate organisational values to ensure they become part of the culture.

Leaders must support innovation by fostering creativity, and ideas – a culture of risk aversion may prevail if innovation is not rewarded. Leaders must promote APS values, and support a culture of performance, openness and trust. They must also demonstrate their ability to work as a united APS. As the custodians of the public sector, part of the Secretary’s stewardship role is to ensure the APS is always prepared to advise the government on challenging policy problems.

How are we going?

Strategic policy

Parts of the APS have demonstrated a high capacity to provide strategic policy advice. For example, the APS provided swift and effective advice on the strategy and implementation of measures addressing the 2008–09 financial crisis.

Further, some APS institutions have excellent reputations as leading examples for providing outward looking advice. KPMG noted that the Productivity Commission, with its focus on engaging with experts and the public, provides a variety of viewpoints and options that reflect ‘a strong analytical tradition, independent commissioners, skilled staff and transparent processes’.⁴⁸

The Advisory Group found a lack of comprehensive evidence for benchmarking current APS policy capacity.  It is clear however, that APS employees have concerns about the priority given to strategic work.  In 2009, when asked what actions would help them improve their efficiency and/or effectiveness, 45 per cent of employees and 73 per cent of SES members, indicated that one of the most important actions would be to spend less time on being reactive and more time on being strategic.⁴⁹

While employees are clear about their day to day tasks and their supervisors’ expectations, they feel no sense that their leaders are providing and making time for strategic direction.⁵⁰ Similarly, while operational goals may be clear, strategic goals are far less so. Without a clear strategic direction that is communicated to all employees, the public service risks being merely reactive.

Submissions to the Advisory Group also called for more evidence-based policy, including more rigorous research and data analysis.

Collaboration within the APS, a feature of strategic policy, is also limited. Only 53 per cent of employees believe that other APS agencies are willing to collaborate to achieve whole of government outcomes. Barriers to collaboration mean that there is no consistent approach to strategic policy across departments, with little sharing of lessons learnt or best practice.

The KPMG assessment suggested that the APS could do more to draw upon external policy and program ideas, and engage more systematically with stakeholders in policy formation.⁵¹

Internationally, public services are experimenting with new mechanisms to promote innovation and collaboration to strengthen strategic policy capability. In Denmark for example, the Mindlab unit links businesses and citizens with public servants to find fresh ideas to tackle policy challenges such as integration of immigrants and climate change.

Improving collaboration, innovation and strategic policy skills is critical to meeting the challenges outlined in Part 2. For example, globalisation is opening up a range of economic opportunities for Australia, which require a strategic approach. Similarly national security challenges will only be met through a coordinated strategy.

Operational design

A number of submissions suggested that there are opportunities to improve the link between policy and implementation through more engagement of frontline staff in policy design. PM&C monitors the implementation of government priorities. It has found that a number of agencies would benefit from better project and program management practices. There are a range of lessons and examples of best practices from across the APS that could be shared to improve the ability of the whole APS to meet demands for more rapid policy implementation.

The role of the Council of Australian Governments Reform Council (COAG Reform Council) will be important for improving the data available on performance of all governments across Australia. The COAG Reform Council aims to strengthen accountability through independent and evidenced-based monitoring, assessment and reporting of performance.⁵²

Leadership

Submissions cited the importance of the relationship between the APS and Ministers (and their offices) on the quality of strategic advice provided by the APS. It was argued that APS leaders should do more to embed a culture of open and frank advice within their agencies, as opposed to only providing advice based on what it is assumed (or the agency has been told) the Minister wants. This was seen as an important element in achieving greater creativity and innovation in the APS and enhancing true evidence-based policy.

Consultations also identified a need to improve senior leadership and management more broadly across the APS. In the State of the Service Report, employees identified several gaps in the performance and capability of their senior leaders. People management skills, the capacity to steer and implement change and the capacity to think strategically were the top three capability gaps identified within agencies for the key leadership groups – the SES and SES feeder group.⁵³

In practice, today’s Secretaries hold four competing roles that need to be more clearly articulated:

• As a principal official policy advisor to the Minister;⁵⁴
• As a manager, ensuring delivery of government programs and collaboration and coordination for whole of government outcomes within their portfolio;
• As a leader with a stewardship role for the Department; and
• Discharging a whole of service stewardship function in partnership with other Secretaries and the Australian Public Service Commissioner.

A unified APS-wide leadership group is required to support Secretaries. At present less than 40 per cent of nearly 3,000 SES members⁵⁵‘definitely see themselves as part of an APS-wide leadership cadre’ rather than as leaders only of their agency (see Figure 6).⁵⁶

The consultation process highlighted the importance of senior leaders, including Secretaries, in driving change across the APS. One online forum participant noted that “it is with the leaders of organisations that the need to be responsive to change first and foremost resides”.

The Australia and New Zealand School of Government Institute for Governance argued that “effective public service reform will require strategic leadership from the centre”, and called for the APSC to play an important role in overseeing the reform directions.⁵⁸

While the Advisory Group believes that reform must start with Secretaries and senior leaders, it is essential that leaders at all levels embrace the spirit of these reforms in order to meet the challenges outlined in Part 2. With a tightening labour market and continuing fiscal pressures, it is crucial that the development of new leaders start now. It is also crucial that the current APS leadership group foster the creative and collaborative culture required to meet emerging domestic and global challenges.

C. Contains a highly capable workforce

Workforce capability describes the skills, knowledge and abilities that employees of a high performing public service must possess.

In the private sector, it is recognised that “as much as 80 per cent of a company’s worth is now tied to its people”.⁵⁹ The private sector increasingly recognises human capital as a primary source of competitive advantage. It also recognises that investing in people provides significant productivity improvements. Most private sector organisations invest between three and six per cent of payroll on employee development, with an average expenditure of around four per cent.⁶⁰ This investment is in recruitment, retention, capability development and talent management. Strong organisations nurture their talent and encourage workforce collegiality. In the public sector, collegiality should extend across agency borders to promote a unified APS culture.

To ensure it has the capability to provide high quality support to government, the APS must attract high performing individuals from within and outside the public sector. It must also invest in learning and development and provide pathways for high performing employees to grow and develop, including through secondments to the private and not-for-profit sectors.

Attracting diverse talent will provide the APS with a wider range of experiences and skill sets. Diversity will become increasingly important as the population ages and the labour market tightens.

Mobility also provides for breadth of capability and builds adaptability in staff. Public servants who are mobile gain broader experience. Employees, particularly those who aspire to lead, should be encouraged to obtain a diverse range of work experiences, including exposure to policy development and service delivery roles. A broadened skill base and extensive professional networks enable employees to draw on a wider range of experiences and perspectives when tackling problems.

Careers are no longer in the form of ‘ladders’ but ‘lattices’ – criss-crossing between industries and organisations to gain experiences that depend on challenge and opportunity.⁶¹(Deloitte)

How are we going?

At present, human resource management is largely devolved to individual agencies. Agencies have been able to identify skills shortages but they have been unable to address them adequately. In 2008–09, 34 per cent of agencies reported a skills shortage in the area of ICT (see Figure 7). A further 29 per cent of agencies reported a shortage of high level policy and research skills.⁶² Skill shortages are also common in other areas such as project management which poses significant risks to policy implementation. These figures have remained relatively constant over the last five years.

The APS has ongoing skill gaps. Some of this may be explained by pay differentials between the public and the private sector⁶⁴ or it may be a result of other retention and attraction issues.

Consultation and submissions have expressed concern that over time, the APS has moved away from recognising the value of specialist and technical capabilities which has created skill gaps.

The APS should mirror the diversity of the broader population and reflect Australia’s diversity of cultural backgrounds, people with disability, women and the Indigenous population. Diversity should be reflected at all levels of the APS and not be confined to more junior positions. The APS has good gender balance at the lower levels for women, but as Figure 8 shows, this has not translated through to the senior executive service.

The APS also needs to improve in other areas of diversity. For example the percentage of Indigenous employees in the APS has declined steadily over time, from 2.6 per cent in 1995 to 2.1 per cent in 2009⁶⁶ and the proportion of APS employees who identified themselves as having a disability is well below the population overall.

The APS needs to make its recruitment processes more efficient and transparent. In 2008‑09, the average time it took for an agency to finalise an offer of employment ranged from four weeks to over 28 weeks with a median of 12 weeks. ⁶⁷ Consultations revealed strong support for reforms to current recruitment and selection processes, with 57 submissions calling for recruitment processes to be streamlined, simplified and sped up. The Recent Entrants Roundtable identified slow and complex recruitment processes as a barrier to entry for external applicants.

Critically, there was broad feedback in the consultations that the APS was not sufficiently or effectively investing in learning and development opportunities for all employees. Only seven per cent of agencies spend more than three per cent of their annual budgets on learning and development opportunities for employees. Further, a substantial 48 per cent of agencies report spending less than one per cent of their annual budget on learning and development.⁶⁸
The quality of learning and development is also a problem. Fewer than one in three APS employees rated the effectiveness of their learning and development programs as high or very high in terms of helping them to improve performance.⁶⁹ Submissions also highlighted the need for improved professional development.⁷⁰

Strong performance frameworks foster high performance cultures. Talent management and mobility are critical for retaining employees, yet few agencies approach talent management systematically. Only eight per cent of agencies have active talent management strategies in place. A substantial proportion of agencies (41 per cent) report facing some type of barrier or impediment to managing talent.⁷¹ These barriers include an inability to provide career and mobility opportunities.

Consultations also revealed concern about the management of underperformance. State of the Service data found that only a quarter of employees agreed that their agency deals effectively with underperformance.⁷²

A number of submissions called for a review of current APS classification frameworks and suggested movement towards greater standardisation across the APS. One submission noted that ‘high quality job design has largely been ignored by public sector agencies and by the APSC in recent years, other than determining classification guidelines’.⁷³

The APS classification profile has changed dramatically since 1994, reflecting the changing nature of APS work and labour market pressures. Officers are being promoted quickly to the executive level and once they reach this level, stay there longer. The number of employees at the APS1 level has dropped by 95 per cent since 1994, which could be linked to changes in work requirements and technology. At the same time, the SES group has increased overall by over 50 per cent (see Figure 9).

The dispersion of wages within a given classification level has also dramatically increased over time (see Figure 10). In each classification, the gap between the minimum and maximum of the salary range has increased, for example for:

• APS level three, the salary range has increased from eight per cent to 22 per cent;
• Executive level one, the range has increased from eight per cent in 1996 to 25 per cent in 2007; and
• SES Band 2, the range has increased from 24 to 37 per cent.⁷⁵

Consultations suggested that the APS is blurring the capabilities and skills development required by employees. The use of position descriptions that are not specific to roles may be masking the true skills required for many jobs. With the move away from separate technical and professional employee classifications in the APS, some have argued that different skill sets are now inappropriately valued.

Data from the State of the Service on how individuals classify their work supports the hypothesis that public sector roles are not clear. For example, similar proportions of APS employees classify their work as ‘policy’ (12 per cent) and ‘program management’ (11 per cent); however, anecdotal evidence from Secretaries and submissions suggests that, in practice, there are far more employees engaged in program and implementation management than policy development.

In their submission, nCompassHR called for a change in ‘the language and culture around performance management activities’ by senior managers:

Performance leadership is about [managers] developing the skills and confidence necessary to conduct meaningful conversations in order to build relationships, agree career and personal development plans, do coaching, and work on issues before they become major problems.⁷⁷

More than any other factor, the quality of APS staff will determine how well the APS meets the challenges outlined in Part 2. Emerging labour market pressures make recruitment and retention critical. Expertise will be needed across a range of specialist areas. For example skills ranging from economic modelling to international diplomacy will be essential to capitalise on trade opportunities with China and India. The diversity of the workforce will also need to increase if we are to genuinely understand the needs of citizens. Analytical and quantitative skills are required to compare the costs and benefits of regulatory options. The APS has a highly talented and motivated workforce conducting the most interesting and rewarding work in Australia. It must be appropriately supported.

D. Operates efficiently and at a consistently high standard

In the private sector, competition for profit drives an emphasis on efficiency and quality. The same driver does not always exist in the public sector but other motivations such as spending public funds wisely, can partially or totally achieve the same objective.

In a high performing public service, agencies should continually seek better ways to do business. Improvements might involve using technology innovatively, adopting creative or new business processes, or cutting red tape to reduce costs.

Incentives for efficiency and quality in the public service come in different forms, including:

• Strong accountability arrangements, for example public disclosure of information about an agency’s operations. Transparency in an agency’s operations will build pressure to improve performance.
• Funding can also drive greater efficiencies. Agencies are subject to an annual efficiency dividend that reduces administrative budgets each year in anticipation of efficiencies being found. This model has been used for over 20 years.
• A third approach is to assess agencies directly through external reviews that focus on quality and efficiency.

Agency efficiency can also depend on governance structures. For example larger agencies can achieve economies of scale that are not available to small agencies. In small agencies, different governance arrangements may have different costs. It is therefore important to consider what governance option will work best, particularly when establishing small agencies.

How are we going?

There is a lack of reliable data on agency efficiency. The APSC has noted that ‘an ongoing difficulty in assessing productivity and efficiency in the APS is that, unlike the private sector, no agreed methodology for measuring the value of outputs is in place’.⁷⁸ It is important to improve data in this area for better accountability, and to improve incentives for efficiency.

The main efficiency mechanism across the APS is the efficiency dividend, which yielded savings of around $662 million⁷⁹ in 2008–09. The efficiency dividend is used to recalculate agencies’ base funding each year.⁸⁰ Around one in ten submissions questioned the effectiveness of the efficiency dividend, as did employees in the consultations and online forums. It was generally argued that the efficiency dividend is a blunt instrument with which to pursue efficiency gains and has particularly harsh impacts on small agencies.

The Advisory Group also heard that recent additional efficiency measures in areas such as ICT and property have reduced agencies’ capacity to find further efficiencies to meet the dividend.

In the past 16 years, the efficiency dividend has been reviewed twice – a House of Representatives Standing Committee on Banking, Finance and Public Administration report in March 1994 and a Joint Committee of Public Accounts and Audit report in December 2008. Both reviews concluded that the efficiency dividend has succeeded in driving efficiency in agencies, but the 1994 report did recommend that the efficiency dividend be reduced from 1.25 per cent to one per cent and that agencies’ external receipts be exempt. The 2008 report found that the current efficiency dividend is placing significant stresses on agencies, particularly small agencies, and that the current mechanism was more than one per cent higher than the private sector achieves.

A possible alternative to the efficiency dividend is efficiency reviews. The recent Defence Strategic Reform Program is expected to generate savings of $20 billion over ten years from fundamental reform in the management of Defence, making the organisation more efficient and effective.

In Australia while programs are often evaluated, agency reviews tend to occur on an ad hoc basis. In the UK, Canada and New Zealand by contrast, systematic capability reviews are conducted of agencies to assess their systems, structures, leadership and people management. These reviews provide a mechanism to assess quality and efficiency.

A 2007 report by the Management Advisory Committee⁸¹ entitled ‘Reducing Red Tape in the Australian Public Service’ recommended periodic reviews of regulatory and administrative requirements across the APS. Red tape was also an issue commonly raised in consultations, being mentioned in a quarter of the submissions. Consultations have identified red tape in two key areas, first the volume of regulation and compliance requirements and second, the internal red tape agencies put in place to manage actual and perceived risk.

The Department of Finance and Deregulation has conducted a preliminary mapping exercise into the level of red tape within the APS. It identified over 2,000 legislative and administrative compliance requirements that apply to the FMA Act agencies. While many of these may promote transparency and accountability, there is a question as to whether they are essential. Red tape reduces agencies’ ability to be agile and effectively achieve Government objectives.

In terms of APS governance arrangements, there appears to be scope to rationalise some small agencies. At present, 63 agencies have fewer than 500 employees. New agencies are being created to address short term priorities, but are not being subsequently dismantled as priorities change. There also appears to be significant scope for small agencies to share corporate services to achieve efficiency gains. During the consultation period, the Chief Financial Officer (CFO) of one small agency revealed that corporate costs were approximately $5 million out of an annual appropriation of $15 million, suggesting that significant opportunities exist to improve efficiency in small agencies.

Part 2 highlighted fiscal pressure as a challenge for the APS, with the ageing of the population set to exacerbate this problem over time. Improving efficiency and effectiveness is a basic business discipline that needs particular attention in a tight fiscal climate. Ultimately it is about value for money for tax payers. The incentives need to be right to ensure agencies continually refine their structures, systems and management arrangements to deliver efficient, high quality outcomes for citizens.

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