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

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Part 4 – The Blueprint for Reform

Reform 9: Improving agency efficiency

Efficiency in the public sector is critical to ensure the best possible outcomes are achieved for the level of input. In a tight fiscal environment it is particularly important to drive efficiencies to increase productivity and to minimise the impost on taxpayers.

Consultations and submissions expressed concerns about the tools used to create efficiency, such as the efficiency dividend, and the general level of efficiency across the APS and within agencies.

Actions to make this happen

• Finance with Treasury and PM&C would review for Government consideration, the effectiveness of existing mechanisms, such as the efficiency dividend, and consider alternative mechanisms to encourage agencies to be efficient.
• The review would address concerns expressed about the unintended impacts of the efficiency dividend and its interaction with additional efficiency requirements in areas such as IT, central purchasing and property.
• Rolling budget audits (based on approach taken in the Defence Budget Audit Report) should be an option considered in the review.
• As part of the review Finance, PM&C and Treasury would consider options, including:
  • Retaining an efficiency dividend in a form similar to the current model, that is, one that does not discriminate between agencies;
  • Removing the efficiency dividend entirely and relying on discretionary savings processes, driven by the Government’s budget priorities and offsets, to meet the Government’s fiscal objectives; and
  • Introducing a mechanism that makes a qualitative and/or quantitative assessment of the level of efficiency between agencies and arrives at an aggregate savings target across the APS in accordance with these assessments.
• The review would consider whether alternative mechanisms to replace the efficiency dividend would generate at least an equivalent level of savings to the Government budget.
• Efficiencies are also going to be achieved from the following recommendations:
  • Recommendation 1.3 – Deliver services in closer partnership with State and Territory and local governments;
  • Recommendation 1.4 – Reduce unnecessary business regulatory burden;
  • Recommendation 6.2 – Review the size and role of the SES;
  • Recommendation 7.3 – Expand and strengthen learning and development;
  • Recommendation 7.4 – Strengthen the performance framework;
  • Recommendation 8.1 – Conduct agency capability reviews;
  • Recommendation 9.2 – Strengthen the governance framework; and
  • Recommendation 9.3 – Small agencies to improve the efficiency of their corporate functions.

Actions to make this happen

• Finance would review the different categories of entities currently created, with a view to simplifying and rationalising them.
  • The simplification of categories will need to ensure fit-for-purpose entities.
• Finance would develop standard governance arrangements for inter-jurisdictional bodies under the Financial Management and Accountability Act 1997 (FMA Act) and Commonwealth Authorities and Companies Act 1997 (CAC Act) to ensure fit-for-purpose governance structures and clear lines of accountability.
• Additional guidance would be developed on the legal obligations of government employees appointed to company boards, particularly on conflicts between public servants’ duties under the Public Service Act 1999, and directors’ duties under the Corporations Act 2001. Standard guidance on board responsibilities would also be developed for all other Directors (non-APS employees) of Commonwealth companies.
• Finance would amend the current governance policy framework and seek the Minister for Finance’s approval to reissue the Governance Guide as government policy.
• Finance would scope relevant entities (including companies in which the Australian Government has an interest) with a more targeted review involving detailed work and consultation with agencies to identify:
  • Entities in portfolios that could be amalgamated either due to efficiency and/or synergies in structures and tasks; and
  • Opportunities for small agencies to be incorporated into departments or other agencies.
• The outcome of the review would be taken forward to Government.

Actions to make this happen

• Finance would assist agencies in considering whether their corporate functions might be managed better, and preparing advice for Government consideration.
• If agreed, the recommendation would be endorsed by Government as a policy requiring portfolio agencies to report back following examination of the effectiveness of their current practices.
• This recommendation would apply to the delivery of corporate function transactions (for example, payroll). Agencies would need to retain capability for their strategic function.
• The Chief Executive Officer of each agency would still retain accountability for the agency, including all compliance requirements, and strategic functions. Agency Heads would need to delegate relevant financial management powers to the Portfolio Secretary or the relevant agency to perform the necessary duties.

Implementation

Should the Australian Government accept the Advisory Group’s recommendations, a number of short, medium and long-term implementation activities would be required, including extensive consultation.

The first priority for implementation would be the development of a detailed implementation plan based on appropriate consultation and a thorough assessment of the steps required for each recommendation.

Full implementation of the reform agenda would take a number of years to roll out and embed. Lead agencies have been identified for each reform and would be responsible for developing more detailed implementation plans in consultation with other agencies and in some cases external organisations.

Priorities will depend on the impact on outcomes for citizens, significance as reform building blocks, and scope to implement quickly. An indicative timeline is set out at Appendix 3.

A panel, comprising a mix of high calibre public, private and community sector leaders, would meet to receive reports on progress of the Blueprint reform agenda from the APSC through the Secretaries Board and report on these to the Prime Minister.

The APSC has responsibility for monitoring and reporting progress across all reforms, including the provision of regular progress reports to the Secretaries Board.  While such an approach involves self-reporting by the APSC against many of the reforms, all Secretaries would have an opportunity to voice their views.  Reporting would be based on a model similar to that used by the CIU in PM&C, which operates with a degree of independence.

Financial implications

In a number of areas, reform would require an up-front investment. For example, a new funding model would be required to support the APSC’s additional responsibilities, including the coordination of workforce planning and agency capability reviews. Similarly the citizen-centred reforms, such as developing and establishing an APS-wide citizen survey, would require some resourcing early on.

Over the long term, however, it is anticipated that the reforms (when implemented as a package), would deliver efficiencies and a return on investment. By building capacity and improving effectiveness, several reforms will drive effectiveness and efficiency gains across the APS such as reducing the burden of internal red tape.

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