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Relationships with other agencies are significant to public organisations. These relationships are especially important for a delivery agency that is defined in terms of the services that it provides for policy departments. This is even more the case when this relationship is formalised through purchaser–provider arrangements.
By far the most important relationship for Centrelink in its formative years was that with DFaCS. This accounted for most of its services. Centrelink also provided services to a range of other Commonwealth departments although the total proportion was relatively insignificant. They included DEWR, DEST, the Department of Health and Ageing (DoHA) and the Department of Agriculture, Fisheries and Forestry Australia (DAFFA). The most relevant central agency was the Department of Finance and Administration (DoFA) because of its role in overseeing financial management in the APS.
As Chapter 1 indicated, Centrelink was the product of an unusual opportunity in the mid-1990s, which dictated some of the features of the organisation in terms of key principles (such as purchaser–provider functions) and the need for streamlining to achieve savings. The original concept envisaged a policy/delivery split that would produce a large agency with several small policy departments. The delineation of the interface between policy and delivery ended up adding a middle area representing program management or operational policy. The department retained product design of delivery and program control and the policy department and agency competed in the middle ground.
There has been some confusion about the nature of the core relationship, how it should be conceptualised and depicted and the extent to which it has evolved with time. The relationship has come out of two impulses: one to separate policy and execution; the second to define the relationship in terms of purchaser–provider relationships. Neither required the other, and each was the subject of variation in practice.
Part of each role in a newly formed purchaser–provider relationship is to become skilled in contract management. This is complicated when each side includes former colleagues doing substantially the same job as before. The tension between the insistence on viewing the relationship as a partnership—as much management rhetoric has demanded—and a type of contract is an additional factor in the development of ‘smart buying’ skills. A further factor is the contrast between the concept of a one-stop shop, with its overtones of monopoly, and the conventional purchaser–provider model, with implications of competition among providers.
On the other hand, as noted in a study of social security delivery mechanisms (Mabbett and Bolderson 1998:9), one of the rewards of studying devolved administrative systems is that institutional separation brings out into the open issues that are repressed internally in a centralised system. In the case of the Centrelink arrangements, there were ‘repressed tensions’ as a legacy of the old DSS and new ones embedded in the very structural arrangements that Centrelink represented (Rowlands 2003).
From the point of view of the departments using Centrelink, a key question was whether or not they could become ‘smart purchasers’ of the ‘products’ of Centrelink as a delivery agency (Kettl 1993). The most obvious problem was maintaining sufficient understanding of program delivery to inform policy development and to enable it to specify policy ‘products’ to purchase from Centrelink. As one APS departmental secretary noted: ‘A lot of the policy comes out of administration and policy that is developed without fully understanding the way it’s going to be managed, almost always goes wrong’ (Halligan et al. 1996:15).