Epilogue: Back to the future^[1]

As mentioned previously in this book, on a political level, the creation of Centrelink was hailed as ‘a unique model of public administration in human services’ (CSDA 1997c), which called for non-traditional governance arrangements. In keeping with the prevailing structural reform agenda in the APS, Centrelink’s enabling legislation provided for an executive board of management that reported to the Minister for Social Security (Chapter 6). The CEO reported to the minister through the board. As Centrelink subsumed the service delivery role of the former DSS, the CEO reported to the senior minister in the Family and Community Services portfolio.

This situation, however, changed after 2004. In early 2004, Vardon had alerted members of the guiding coalition to the possible outcomes and potential consequences for Centrelink of the Uhrig report. The most obvious concern was the likely abolition of its board of management and associated repercussions, which eventually came with an announcement by Minister Hockey (2005:18) during an address to the National Press Club:

The Human Services Legislation Amendment Bill passed on 5 September 2005, abolishing Centrelink’s board and amending Centrelink’s enabling legislation, the Commonwealth Services Delivery (CSDA) Act. By 1 October, regulatory changes brought the FMA Act in line with the CSDA Act as amended.

Another important change was the shift in portfolios. As an agency within the DHS, Centrelink now came within the Finance and Administration portfolio, instead of the Family and Community Services portfolio. This was presumably for increased management and business accountability, a view supported by the description of the new CEO’s role as ‘Financial and Staff Management in accordance with the Financial Management and Accountability (FMA) Act’ (Scott 2004).

The board continued to operate from December 2004 until 1 October 2005. During that period, Centrelink’s corporate governance arrangements were split between the Centrelink board of management and the CEO. The CEO was accountable to the board and to the Minister for Human Services. To meet his accountabilities, the CEO delegated responsibilities to senior executives in Centrelink and held them accountable for the decisions and actions taken on his behalf. The CEO also convened an executive committee to assist with decision making. Accountability was further devolved through subcommittees chaired by those reporting directly to the CEO (Centrelink 2005b:24).

With the abolition of the board, its powers, functions and duties passed to the CEO of Centrelink, creating a return to the traditional model of governance. The CEO became responsible, under the minister, for deciding Centrelink’s objectives, strategies, policies and priorities, its overall management and for ensuring that it performed its functions in a proper, efficient and effective manner. At that time, the CEO called on all staff members to assist him in fulfilling those obligations to the minister, the DHS, the purchasing agencies, customers and community and business stakeholders (Whalan 2005). At the same time, new internal governance arrangements and strategic frameworks were being developed.

While Centrelink’s corporate governance arrangements might have appeared to be innovative during the Vardon period, its internal governance arrangements were equally unusual for the public sector. Given the scale and extent of change involved in setting up Centrelink, and in the interests of a flat structure of participative management, Vardon had followed Kotter’s (1996) framework for leading change, including the concept of a guiding coalition. As already discussed, the guiding coalition was the peak internal management group consisting of all SES officers, and numbering approximately 90 in December 2004.

In setting the organisation’s new strategic framework, Whalan used the guiding coalition as one of his sounding boards, along with other stakeholders such as the minister, the secretary of the DHS, secretaries and client departments, the chair of the Centrelink board, area managers and staff at all levels through 33 workshops. The guiding coalition took into account feedback from these key stakeholders, which indicated that although Centrelink had fundamentally improved the customer experience, its operations and service delivery costs lacked transparency, it was unresponsive to customers and clients, governance and accountability needed improvement and Centrelink’s focus needed to be on delivery, not policy. Staff also wanted clearer direction as they felt there were too many goals, strategies and plans and a lack of clarity about for whom Centrelink was working—the customer or the government. From this feedback, the March 2005 guiding coalition meeting identified seven new strategic priorities to be the primary focus and to set Centrelink’s direction for the next six to 12 months. These were to:

Whalan’s brief, set out in a statement of expectations from the minister (Hockey 2006) aimed to bring the organisation back to a traditional model of administration and, in so doing, to increase efficiencies and effectiveness through improved accountability and customer service. Whalan’s Letter of Intent (<www.centrelink.gov.au>) in response to the minister demonstrated how he proposed to deliver on the expectations.

The guiding coalition initially advised Whalan on how to meet the expectations as the group continued to meet in early 2005. As part of the process of change, however, the term ‘guiding coalition’ was disbanded, even though SES executive roles were maintained. By mid-April, the ‘guiding coalition mailing list’ had been replaced by the ‘Centrelink SES mailing list’, under the new governance arrangements (Centrelink internal email, 15 April 2005). This was another step back to the future.

As the organisation ‘moved forward’ during the early months of 2005, Whalan communicated frequently with all staff about reviewing priorities, directions and structure using the Business Television network, through business briefings, ‘question and answer’ bulletins, emails and personal visits to teams. One of the most powerful communication channels was the ‘business briefing’, broadcast by Centrelink’s Business Television network, entitled ‘Moving Centrelink forward—the new Strategic Framework and changes to our structure’. The briefing suggested the primary reasons for change were twofold: a shift in focus on the part of the government by creating the new DHS, bringing a range of service delivery providers from across the APS under that department, and ‘for Centrelink, this meant reviewing our direction and priorities to ensure we could deliver the Government’s program’ (Centrelink 2005b:2).

This wide consultation produced a new strategic framework, which had five core elements: its purpose, core values, core business processes, strategic themes and strategic priorities. In essence, it set out Centrelink’s reason for being, what it aimed to achieve and how the organisation wanted to be seen. It was underpinned by a united leadership model that focused on the expectations of its leaders and cited the behaviours they were expected to use. The overall framework set the foundation for business transition.

The first noticeable change was in the purpose of the organisation. The new statement of purpose was given as ‘Serving Australia by assisting people to become self-sufficient and supporting those in need’ (Centrelink 2005c:2). There were no accompanying vision and mission statements and no goals, as the strategic themes set out what was to be achieved in the medium to long term and provided a high level of focus that integrated issues from the internal and external environment. The aim of the new model was simplicity, to provide a model that was more transparent and easily understood by staff and stakeholders than that which existed in the past, while building on the successful approaches used in the Vardon era.

The new strategic framework was simpler than the complex model called Future Directions developed during Vardon’s tenure. Future Directions was reviewed annually to ensure the organisation was focused on the issues of greatest importance and to draw out the key future issues. In contrast with the strategic framework, Future Directions embodied Centrelink’s mission, vision, values, risk-management framework and five goals that expressed the organisation’s aims and key performance indicators, targets and strategies for accountability to the government and client agencies, business and the community, customers, Centrelink people and the efficiency and effectiveness of operations and processes. The strategies, however, did not stand alone. At the core of Future Directions were the balanced scorecard, the business improvement plans and personal performance plans. Underpinning these elements were four themes (see Chapter 3) given to the organisation by Senator Vanstone, the then Minister for Family and Community Services:

The intertwining of these strategies and associated themes made for complexity in understanding, especially by those staff in ‘the network’ who were removed from its development and often received little explanation of what it meant and how it was to be implemented.

Through the transition to a simpler strategic framework, there were some elements that endured, including the core values. Vardon and Whalan saw the values as essential building blocks for the organisation and, more importantly, they had to remain as they had been included in the Public Service Act 1999—not as prescriptive rules of process or aspirational statements of intent, but as legislated principles. There was, however, one significant difference. Before 2005, the core values in Centrelink were given expression through the ‘shared behaviours’, discussed in Chapter 3, which were used as a foundation for how to behave in Centrelink (Centrelink 2001d). While these were part of the innovative administrative arrangements of pre-2005 Centrelink, great care had been taken to align them with the APS guidelines:

Another element of Future Directions that survived was the balanced scorecard, which needed to be adjusted to accommodate measurement of the strategic themes. Some new key performance indicators also needed to be developed. Other key performance indicators remained, as they were specific to Centrelink’s continuing purchasing agencies’ requirements. The Centrelink business plan and the local business plans were also retained but needed redeveloping for the new environment to ensure they aligned with the strategic directions.

At the same time as the new strategic framework was being developed, one of the then deputy CEOs, Graham Bashford, was heading a team to look at the internal structural arrangements and issues to support the new strategic directions. A transition plan was developed through April 2005 with a view to the new structure being in place by 1 July 2005. The plan was for the full transition to occur over 12 months in a number of phases. Accordingly, the new high-level management/governance structures for Centrelink were first to be announced, reflecting the priorities outlined in the strategic framework. Once again, simplicity was the key to its development, so that, ‘as far as possible, everyone understands who is responsible for what and to maximise support to the front line’ (Whalan 2005:1). As so often accompanies restructures, there was a cut in staff numbers, with two fewer deputy CEOs, two additional general manager positions and 10 fewer national manager positions. The reduction in national manager positions was the first step in reprioritising the deployment of resources following the key principle that the right resources must be in ‘the network’ and the right resources were supporting service delivery.

One noticeable feature of the new structure was the introduction of the traditional bureaucratic lines of authority and titles: deputy CEOs led groups, general managers led divisions, national managers led branches and business managers led sections. For example, the group level consisted of the CEO, two deputy CEOs, the chief information officer, the chief finance officer, the general manager of people and planning, the general manager of audit and risk and the general manager of communications.

The return to traditional administration was exemplified clearly in the case of Centrelink’s Virtual College, which was established on Vardon’s instigation in 2001 as another team within Centrelink, led by an SES officer. With the restructure that took place in early 2005, the Virtual College reverted to a branch and was given the conservative name, Organisation Learning and Development Branch, still headed by an SES officer. The innovative college concept and name were apparently unfitted to the more traditional structure post 2004.

The traditional model was considered to be a more appropriate structure to support the new directions for Centrelink and was based on a number of principles in that it:

During the first half of 2005, a new framework of strategic committees was developed to support the CEO in carrying out Centrelink’s broader powers and functions. The six strategic committees were the first to be established under the traditional model of administration and they served a purpose by which: a joint committee was required (contributing decisions required by accountable people from different groups); the decision being taken had significant impact on cross-agency/group/division stakeholders; or it was important to have a clear record of decisions and accountability for a complex or cross-program matter. The chair of each committee was empowered to make decisions and delegate responsibility for actions that aligned with the accountability statement of their own position, but, unlike a board, the committees themselves did not have any separate power. Committee membership was determined according to each committee’s scope of business, with terms of reference varying to provide for appropriate and continuing contributions.

Their role was to provide a forum for collaboration across Centrelink’s divisions and to advise the Centrelink executive. At the time of the abolition of the Centrelink board of management, there were six new subcommittees under the framework: people and planning, investment and major projects, IT, service delivery performance, welfare to work and finance. A new audit committee was also formed to coincide with the start of the human services legislation.

The strategic committees were considered to be a key part of the ‘governance committee framework’. A range of other meetings, however, relating to particular programs, steering committees that included non-Centrelink members and committees in support of group or division accountabilities continued to exist and were mapped to the governance committee framework in subsequent months. On the other hand, there were several meetings that occurred between senior executives that were not part of that structure. These included forums (National Support Office SES meetings held each Monday) and executive catch-ups (CEO and direct reports each Monday). These meetings had no formal agendas, minutes or actions arising and were primarily information-sharing meetings.

It is reasonable to suggest that these subcommittees with their underlying emphasis on accountability were established in response to the need for better definition and transparency of Centrelink’s costing structure, a focus emphasised by Prime Minister Howard in announcing the creation of the DHS and by Minister Hockey (2005) in his address Making life easier—the role of human services in improving Commonwealth service delivery.

This structure replaced the one built on teams, which dominated the Vardon period. Before 2005, the executive team consisted of the CEO, two deputy CEOs and the chief information officer. Customer segment teams representing life events dominated ‘the network’ and functional teams, such as people management, formed the structure of the National Support Office. Each team was led by an SES officer, all of whom were conceived to be of equal rank. The rationale behind this team approach was that a flatter structure enabled a more participative management and decision-making style of administration.

The Area Network Review was another extensive change-management project within Centrelink after 2004. One of the first decisions under this review was to keep the existing 15 area offices, with a view to possible boundary changes in 18 months, when the Welfare to Work initiative would be well on the way to being implemented. Perhaps the most significant change in this field, however, was the adoption of a business-lines model of operation in all areas, with some areas having already gone down this path. Business lines are divisions of work much like the customer segments of the early days of Centrelink. The difference after 2004 was that Centrelink defined customer groups within business lines and staff training and delivery systems for customers were similarly arranged. The reason for this change was that it was seen to create new opportunities to further develop the consistency with which Centrelink delivered service. Initially, three business lines were planned: Welfare to Work, seniors, carers and rural, and families.

One of the real drivers for a move to business lines was the further development of the government’s Welfare to Work agenda, which held ‘Work First’ as its primary platform.The conceptual basis for theWelfare to Work program was the notion of mutual obligations. Within this model, government, business, communities, non-governmental organisations and individuals were seen as having social obligations to society at large. It provided a framework from within which people with the capacity and availability would be expected to undertake some form of economic participation with the goal of returning to work. Others, such as those with permanent incapacities, would not be required to participate economically but their social participation would be seen as discharging their mutual obligation. The ultimate goal was a return to work so individuals could be released from dependence on benefits.

To deliver on these initiatives, Centrelink needed to position itself so that purchasing agencies, support staff and staff with service delivery roles had a clear focus on service to Australian citizens that was thoroughly consistent with the government’s agenda. One particular advantage of the move to business lines was the potential to link the stakeholder group with the service delivery group around process, practice and performance and the opportunity it would provide to give national stakeholder teams access to quick, unified and expert advice on product impact and potential issues with products on the ground.

Another outcome of the Area Network Review was the analysis and streamlining of support functions performed in the 15 areas to free up resources that could be moved to front-line service delivery.