A complex organisation with multiple stakeholders presents challenges to reconciling priorities and values. Each of the models identified in Chapter 1 for analysing different organisational imperatives offers a distinctive lens for examining conflicts between them. One model conceives of Centrelink as a customer-driven organisation responsive to recipients of its services and driven by customer relationships and satisfaction based on surveying and benchmarking. A second focuses on Centrelink’s relationship with client departments as an agent and provider operating under purchaser–provider principles and expected to behave in specified quasi-contractual ways. The political management model derives from the political environment of an organisation that although subject to special governance arrangements is still directly or indirectly subject to political direction. Finally, there is the concept of an entrepreneurial organisation competing in the market to secure existing core work and seeking new business.

Reference was also made to Centrelink as a statutory authority that was subject to public service legislation and in many respects not much different from a department of state because of the centrality of public service principles. A large agency with extensive public interactions invariably attracts close scrutiny from external organisations, such as the Auditor-General, the Ombudsman and parliament.

The tensions between the client and customer imperatives were clear and expressed through the question of the cost of services (high quality or sensitive to the scarcity of resources) and the handling of customers—the strong customer focus of Centrelink versus the concern of the parent department, according to Rosalky, with ‘accuracy, compliance, and assurance’ (Husock and Scott 1999b).

A fundamental question for Centrelink, then, was how to respond to these multiple demands, particularly when they were in direct conflict. The incorporation of conflicting models in complex institutional design produces complications (Aucoin 1990). In the case of Centrelink, several models had to be reconciled, while other tensions remained as structural elements to be worked through. The models continued to have relevance and contributed to the ambiguity in Centrelink’s environment. There were attempts to mitigate the environmental ambiguity through the reworking of several features.

The emphasis on partnerships facilitated more productive relationships, but the structural features of the original design meant that tensions remained and that energy had to be channelled into working though the resolution of issues as they arose. There were different interpretations about the relative importance of political and managerial dimensions as expressed through purchaser–provider principles, partnerships and political direction.

Purchasers and the provider came to agree about the limitations of the models related to the purchaser–provider arrangements. Centrelink’s nature and financial information meant that it did not work from the point of view of the purchasing department. Centrelink had an issue with regard to its location within the Family and Community Services portfolio as to whether it was operating under a separate service agency or a traditional departmental model. The eventual judgment was that it was not a proper purchaser–provider relationship. Ministerial priorities changed frequently and could not be readily captured through a purchaser–provider relationship.

Centrelink’s location and the requirements of public policy continued to constrain its potential to be entrepreneurial as an organisation. Despite different depictions of practice based on ministerial behaviour, Centrelink’s self-image was not simply that of a department of state.

The resolution of several conflicts came through the Uhrig process (2003–04), which provided the opportunity for the government to strengthen the role of the minister in direction, oversight and implementation. Centrelink became even more explicitly an arm of government. The role of the department as policy leader and the place of Centrelink as an agent of purchasers were made unequivocal. Moreover, the oversight of the agency and its new parent department was expanded through its location under DoFA. This meant that the opportunities for entrepreneurial activity became muted and that the customer responsiveness agenda was increasingly subject to this nexus of expectations.

Centrelink passed through several stages after its formation as the CSDA in 1996. One can track the agency’s movement through the stages as it pursued a developmental pathway while seeking to respond to its environment and most particularly government policy and directions. Finally, there was a period of consolidation. Centrelink, of course, was not a free agent when it came to responding to environmental challenges.

Leadership is critical in organisational change involving major processes. Transformational change also requires the attributes of transformational leadership that must be worked through interactions with the external environment and building management capacity through internal management systems. In Centrelink’s case, Vardon had a set of principles derived from Kotter (1996) as a basis for action and was able to create a sense of vision, communicate it to staff and seek alignments between the different elements.

The ability to combine high capacity and high responsiveness, depicted as key attributes of change, were apparent in Centrelink’s case. There was external advocacy from a base set of values and imperatives about mission and purpose and centred on improved delivery of customer service. The board and the CEO established clear strategic direction. These were built into an explicit plan of development for Centrelink (Vardon 2003c). Effective use was made of internal capacity—a product of scale of operation, the allocation of resources and strategic decisions about agenda setting—to produce and advance policy and service delivery ideas and innovations in public management.

The nature of and limits to transformation in a complex organisation are important questions for the study of public administration and the Centrelink case provides a range of lessons after its formative years of operation.

There are also specific lessons from the perspective of the chief executive about the timing of initiatives, the emphasis given to specific agendas and design questions (see Appendix 5; Vardon 2003c). These essentially cover models, roles and relationships and the handling of information.

Centrelink has operated now for 11 years. Counterpart organisations in other countries (for example, New Zealand and the United Kingdom), although not constituted quite like Centrelink, have been merged and reorganised. While Centrelink’s genesis was influenced to some extent by international agencification, there had been other agencies with special features as part of Australia’s long and creative tradition of creating different forms of statutory authorities and corporations (Wettenhall 2003, 2007).

The Australian variant was similar to the British executive agencies as a specialised delivery agency but otherwise different because it served multiple departments.

The politicians of the time recorded their intention to produce a historic innovation and the original design has now been demonstrated to offer durable features that could be reworked and finetuned to serve the government of the day.

As an example of integrated service delivery, Centrelink has received international recognition for its handling of responsibilities of numerous departments and across levels of government. Recently, Centrelink was joined by Service Canada as an agency relying on a similar model for delivering comparable services nationally.^[2] Centrelink continues to see itself as a primary model of integrated service delivery.

Centrelink can claim to have realised the original objectives specified by the government. These were essentially to make services more accessible to citizens and to improve the efficiency of service delivery.

As a multi-purpose delivery agency available to take on work on behalf of other departments and agencies, Centrelink has been highly successful. It has expanded from the several initial departments to 25 or more clients, including client agencies in the states and territories. Correspondingly, and also in response to new tasks required by the government, the range of products and services has more than doubled—from about 60 in 1997–98 to about 140 in 2000–01 (Hickey 2002).

Centrelink has been subject to a range of efficiency dividends imposed by the government as a condition of its operation as a statutory agency and as a consequence of its establishment as a merged body of several agencies. These funds are removed from the agency’s budget allocation on the presumption that the operational efficiencies will be achieved in the coming year. This dividend increased progressively since the agency was established and was capped at a continuing rate of 10 per cent per annum of an agreed budget base. This cut was in addition to the continuing, standard efficiency dividend of 1 per cent per annum that was applied to all budget agencies.

Centrelink has also been subject to continuing IT outsourcing savings amounting to $14.5 million in running costs and $10.9 million in capital costs. All of these reductions have been applied to Centrelink’s forward estimates of receipts. Centrelink reduced the cost of service delivery by approximately $211 million from 1999–2000, rising to $270 million by 2003–04, returned as efficiency dividends to the government. This resulted in cumulative savings to the budget of $1.352 billion for the period 1997–98 to 2003–04 (DFaCS 2000:228).

Structural reforms of government organisation involving functional boundaries can leave public officials with the problem of how to bridge vertical separation and horizontal divisions. In Centrelink’s case, the embedding of several models in its organisational imperatives led to debates about the division of responsibilities between the provider of services and the purchasing departments. The tensions between models also provided opportunities for advocacy of a distinctive agenda and employing smart practices in pursuit of public management innovation and inter-agency collaboration. Centrelink developed a new service delivery model and reformulated external relationships despite obstacles and the need to balance the several imperatives of customers, clients, competitors and politicians. Importantly, Centrelink was able to transcend relying on its own capacity within a competitive environment to develop inter-agency collaborative capacity with claims to thereby enhance public value.

Under Vardon’s leadership, a major new entity was created out of existing delivery networks. The organisation evolved through a series of developmental stages and Centrelink’s capacity was extended greatly as a multipurpose service provider.