The DSS had developed a model of strategic management between 1990 and 1997, which left numerous planning legacies for Centrelink. The DSS initially based its portfolio program on a 10-year strategic outlook, but events had overtaken the original plans and short-term issues captured or diverted the attention of executive and business-level managers. Also, the DSS retained a primary focus on annual program or business plans to coincide with budget cycles. Nevertheless, the program planning process enabled staff to develop clearer program objectives and performance indicators, which provided the benchmarks for subsequent program evaluations. The department conducted elaborate multi-level planning to translate strategic plans into shorter-term business and functional-level work plans.

Throughout this period, the DSS stressed the value and utility of technology, information and reporting systems to assist operations at all levels of the organisation. The same attention to detail was taken with organisational design to support the network; however, the DSS directed its objective setting to existing structures rather than aligning service delivery network structures with portfolio strategies. The organisation retained segmented program delivery divisions in its national headquarters through the early 1990s while operational units (areas and regions) worked to combined program structures to facilitate local customer service. This infrastructure provided a pragmatic solution to the perennial policy/administration problem but perpetuated the fragmentation and complexity of the performance-management system.

Nevertheless, DSS strategic and business-level planning in the 1990s inculcated a culture informed by highly structured procedures and processes. This awareness provided a sound base for Centrelink strategists and planners and enabled a common understanding in Centrelink and the DSS of the nature of hierarchical planning needs in the newly established agency. This understanding was critical to the development of initial output performance indicators and standards within purchaser–provider agreements. The DSS experience meant that most of Centrelink’s founding executives and its staff had participated, to some degree, in formulating strategic plans for a large public policy and service delivery organisation. Additionally, the new CEO came with her own extensive background in public sector planning and practice.

This experience, combined with a clear message from the government to establish a different, more customer-oriented service organisation, stimulated Centrelink’s planners to formulate a ‘continuation-transformation’ strategy aimed at creating a viable, long-term business entity. The CSDA Act 1997 empowered the Centrelink board to decide the ‘goals, priorities, policies and strategies’ and the CEO was asked to prepare a strategic plan for Centrelink as the vehicle for meeting its legal obligations.

Vardon and her deputy, Ross Divett, selected Carmen Zanetti as the inaugural chief strategist to help them set a new direction for the organisation. Zanetti (1998) had been influential in the design and development of the new agency in 1996–97. She approached strategy creation as an inclusive process, obtaining information from local and overseas sources and discussing concepts with a wide range of government and private sector operatives. She recalled that the main driver in building the strategic framework for Centrelink was the need to make the shift from a transaction and procedurally based culture to one that focused on customers, streamlining and integration and achieving significant efficiencies. The board was instrumental in bringing financial discipline and a focus on outcomes to the process and highlighting issues about managing relationships with Centrelink’s clients. The pivotal architects of the framework, however, were acknowledged to be Vardon and Divett.

All existing strategic tasks and major activities flowing from the pre-agency arrangements were included in the draft CSDA strategic plan. The board agreed to a strategic framework for the period 1997–2002. The notion of local customer service improvement plans (CSIPs) within the planning hierarchy was introduced as a way of promoting strategic policy alignment throughout the organisation. The resulting strategic plan (Centrelink 1997) contained a five-year program designed to focus and guide staff efforts to:

Centrelink planners envisaged the organisation operating within renewable partnerships with government departments to provide services to the Australian public. The overarching context was that Centrelink was accountable to the portfolio ministers and parliament for efficient and high-quality services, and for the integrity of its service to its customers. Centrelink was bound by the contractual discipline of purchaser–provider arrangements, as well as intra-governmental contestability and potential competition in the marketplace. To survive as a provider, Centrelink needed to deliver consistently high-quality service at highly competitive prices. In the event, because of the complex and sensitive nature of the portfolio, the government allowed some leeway in transition and announced that Centrelink was the preferred central delivery organisation for government services. This diminished the immediate threat of divestiture through contestability.

The organisation’s monopoly–monopsony status was accompanied by some severe financial imposts. The agency received a special efficiency dividend designed to harvest the savings of combining the DSS and DEETYA networks amounting to more than $1 billion over five years. The obvious area for reductions was in Centrelink’s running costs, with its high staffing salaries and associated costs. Centrelink instigated a program of voluntary redundancies that, when combined with natural attrition, achieved overall staffing reductions of up to 20 per cent, or about 4000 staff. To maintain service levels and quality in the wake of these losses, it was decided to adopt more efficient processes and to make more innovative use of technology, especially IT.

Against this background, the agency established a suite of strategic directions comprising corporate goals, a vision and a mission as key elements of its strategic planning processes. It also formulated strategies designed to meet increasing community expectations of government services, especially about having ready access to reliable and responsive services. Centrelink sought to link its services, personalise solutions and to broker information on behalf of the community and other agencies. It aimed to improve the convenience of services beyond the usual contact modes with customers and to provide information for a range of organisations through online facilities as well as through its offices, mobile services, an extensive call centre network and other interactive services. The master plan was to deliver services more efficiently and cost effectively, provide ethical and accountable services and observe all laws (Centrelink 1997:8).

The Centrelink Strategic Framework, 1997–2002 was built on the understanding that the agency’s principal commitments were to its customers, employees and client departments. First, the agency looked to provide guidance, to listen to its customers and to be responsive in finding solutions and to excel in service delivery through innovation and effective use of IT. The marketing language declared that customer contact would be ‘welcoming, friendly, fair, courteous and respectful’ (Centrelink 1997:9). As well, the organisation aimed to provide correct and current information, assessment, referral and payments to its customers, making certain that they understood their obligations in receiving services and payments. Over the years, accuracy or rather the lack of it in these areas had produced unfavourable press and parliamentary questions for DSS ministers. As an improvement measure, the organisation was looking more frequently for feedback on service delivery and Centrelink customers would need to be satisfied with the level of knowledge of Centrelink staff and be confident that staff advice and the quality of service were accurate and consistent. There was also to be a greater emphasis on customers’ rights to privacy and holding personal information in confidence.

Second, in the best traditions of the human resources management maxim that ‘people are our greatest asset’, Centrelink wanted to keep its staff enthusiastic about the organisation’s goals. Commitments to employees included creating an environment in which people wanted to come to work; providing a satisfying and effective workplace; training and staff development, recognising that employees needed appropriate skills and knowledge to meet expected performance and customer service (an area of criticism contained in previous reviews of the DSS); and continual involvement in designing and refining business practices and processes. People-management planning was to be integrated with the overall strategic directions for the organisation.

Third, Centrelink acknowledged the importance of establishing and maintaining its commitment to its client departments. These commitments were to be reflected in the BPA protocols and to include maintaining a performance-orientated organisation focused on achieving client-department outcomes, being responsible for providing value for money and cost-efficient services, being responsive to the needs of client departments with high-quality, appropriate and timely information and being available to all other levels of government and community organisations for service delivery.

The 1997 framework set out multi-phased targets to be met in 18 months, three years and five years respectively for sub-components of each of the categories: stakeholder relationships, customer and community relationships, staff culture and service delivery support. On the basis of the application of the balanced scorecard in large public and private organisations around the world (Kaplan and Norton 1992), Centrelink’s executives saw this approach, discussed later in this chapter, as a useful means to help define, record and manage corporate performance across the six goals using best-practice and first-choice criteria. The strategic directions were to be reviewed annually to ensure that they provided a sound and current basis for annual business plans and programs (Centrelink 1997:19–24).

Following on from the strategic directions, and included in the same framework document, the Centrelink strategic plan spelled out key strategies and actions to implement the basic corporate thrusts. The plan detailed business outcomes and strategies centred on Centrelink becoming the ‘first choice of governments for the provision of government service for the next five years’ (Centrelink 1997:25). Each goal—business development, customer service, people, cost reduction, innovation and best practice—was elaborated in terms of high-level performance measures and accompanying strategies and activities to achieve the goal in the next two years.

Overall, the 1997 strategic framework was a transitional blueprint for the newly established organisation. It reflected the planning lessons of its antecedent departments, the DSS in particular, and introduced commercial concepts and content to indicate its new status as a provider agency. It was a groundbreaking publication that signalled the transformation of the organisation from a traditional public sector body to a more business-orientated agency. In particular, it demonstrated the change in strategy and culture to meet new ambitions and goals.

The experience of its establishment year caused the Centrelink board to reflect on its initial performance, review its strategic pronouncements and publish a revised framework (Centrelink 1998b). The new document contained two major sections entitled ‘Our business’ and ‘Our future’ and expanded on purpose, vision, goals and other strategic direction elements for an organisation depicted as one of the ‘largest business operations in Australia’ (Centrelink 1998b:22).

Performance against each of the agency’s six major goals and key strategies for 1997–98 was shown in Centrelink’s annual report (Centrelink 1998a:43). While the organisation set ambitious targets for itself, it had built on a historical foundation of service delivery and it was not surprising that it regarded its first public report card as highly satisfactory (Centrelink 1998a:41–89).

The agency evaluated its service delivery approach and foreshadowed significant developments involving brokered solutions, service offers and other holistic means for meeting customer demands and client-department outcomes. IT solutions in the form of electronic service delivery were expected to play a major role in changing existing processes.

A major change affecting Centrelink and its relationships with clients during this period was the government’s move to implement accrual budgeting. The 1999 federal budget presented appropriations in accrual budget format for the first time and required agencies and authorities to describe their planned program outcomes and to specify prices for the outputs that would contribute to those outcomes. Organisations were given at least 12 months’ notice that they would be required to set out the performance information needed to manage outputs and to monitor real outcomes. Centrelink’s major client department, Family and Community Services, subsequently redefined its program structure into an outcomes structure comprising three classes: stronger families, stronger communities and economic and social participation. Each outcome contained a series of output groups replacing the previous sub-program payments or service categories.

In response, Centrelink developed a simplified outcome and output structure. As a portfolio unit, the agency professed a single outcome—effective delivery of Commonwealth services to eligible customers—and a single output applicable to each of its client departments as: efficient delivery of services to eligible customers (DFaCS 1999). The 2001 annual report shows the relationship between Centrelink’s and its clients’ outcomes, reflecting the wide range of outputs delivered by Centrelink.

In its next strategic framework (Centrelink 2001b), the organisation published a list of achievements for the previous three years as evidence of the success of its program of continuous improvement in performance and service delivery. Centrelink also expanded the scope and content of its framework.

This plan revealed integrated Centrelink planning for three distinct organisational levels: strategic planning covering the longer term (to at least five years) and direction for the whole organisation and its macro and business environments; business/tactical planning focusing on medium to short-term priorities, dedicated projects and activities for the next three years; and operational planning to assist managers with short-term business decisions in local environments (Centrelink 1998c:1, 2001a:8).

At the same time, the organisation professed a ‘one business, one team’ concept that encompassed team functions and shared behaviours. This combination represented an interesting conflict between the many products and services designed, developed and delivered by the agency and the need for a unified, corporate image. Arguably, Centrelink had many businesses and many teams and it was simply protecting itself from opportunists who would emerge if Centrelink were ever opened fully to competition.

The 2001 plan placed great emphasis on business planning. On the one hand, this was an admission that previous planning had been too centred on higher-level objectives and that CSIPs had not provided the hoped-for implementation or corporate alignment at the working levels of the organisation. On the other hand, introducing business or operational plans at this stage was consistent with the longer-term strategies espoused by the CEO for organisational transformation building on previous phases of establishment and consolidation (Vardon 1998d).

While previous strategic documents emphasised the need for aligning plans and actions throughout the organisation, Centrelink’s planners refined processes to match the required cascading effect from goal to operational activity in the 2001 framework. There appeared to be clearer links between the planning levels and an emphasis on the importance of business improvement plans and the use of performance assessment and team and individual learning plans to contextualise and reinforce performance targets at the operational level. There was also an association drawn between a range of national supporting documents, which raised awareness of risk assessment and accountability. This created alignment and consistency between business design and delivery.

Another area of note was the inclusion of statements of corporate governance in the 2001 directions. This was complemented by the issue of a detailed handbook on Centrelink governance (Centrelink 2001c) and commentary on governance issues in the 2001 annual report.

A simplified business model for Centrelink is shown in Figure 3.1.

In 2002, the Centrelink board commissioned a comprehensive report on organisational efficiency from the Boston Consulting Group (BCG 2002). The report noted that since 1998, Centrelink had reduced the cost of services delivered by 21 per cent per workload unit, which was represented as an improvement in cost efficiency comparable with that achieved by banks. Other findings were that:

The report also recommended improvements through developing better performance-management information across the network, better systems for identifying and implementing internal best practice and working with client departments to reduce the cost and frequency of notifiable events (which accounted for more than 40 per cent of costs). It also suggested establishing tighter linkage between improvement projects and effective implementation.

There was a watershed in 2003, when in response to a raft of ANAO findings on payment administration and management processes (see ANAO 2001a, 2001b, 2001c, 2001d, 2002a, 2002b) as well as numerous internal reviews, Centrelink reviewed its strategic framework and strategic directions and presaged a new look in its planning. The new directions were negotiated with and approved by Minister Vanstone, who wanted an alignment with new government directions. The Future Directions document introduced a new mission and vision and reiterated the revised basis for local and national business planning, while concentrating on four new key themes: protecting the integrity of outlays, supporting participation outcomes, providing even more flexible services for all stakeholders and providing value for money (Centrelink 2003c). This change was intended to ‘simplify the planning framework, make it more clear and concrete and to capture a “whole of Centrelink view”’ (Centrelink 2003c). A complementary document on business planning was issued to assist operational teams to prepare business improvement plans as well as to identify operational issues to manage principal risks that could impede achieving the organisation’s goals.