Table of Contents
As the performance assessment and pay data indicate, the impact of broader systems changes introduced under the rubric of NPM is best understood in the context of agency-specific systems and culture. While the ‘single, distinctive ethos of public service’[1] underpinned by the legislated APS Values and Code of Conduct was meant to sustain a service-wide link between APS employees, agency systems shape their daily experience. These systems implement the direct controls that agency heads and their executive are able to exercise over individuals; they ‘hardwire’ service-wide performance assessment requirements and other human resource practices into the daily experience of public servants. These in turn condition agency culture, including unwritten protocols around internal communications, record-keeping practices, and interactions with ministers and their advisers. The Comrie report pointed to the intersection of agency systems and culture when it referred to:
… inadequate training programs, database and operating systems failures, poor case management, and a flawed organisational culture all [of which] contributed to the approach taken in Vivian’s case. The convergence of these systemic problems provided the platform for failure.[2]
On the face of it, it would appear that the transfer of managerial power from central agencies to agency heads would mean a corresponding reduction in the power of the centre to affect the conduct of agency businesses. This was the experience with the implementation of NPM in the UK public sector, where it reinforced the relatively greater autonomy already in place and resulted in an increased diminution of control, referred to as the ‘minimalist state’.[3] In Australia, however, the institutional and practical implications of devolution have been quite different. Service-wide procedures and conventions were displaced by vertical controls.[4] Devolution increased the managerial and operational power exercised by departmental heads over public servants, but it also increased the power over departmental heads exercised by ministers and by the Prime Minister in particular: control over appointment and termination as well as performance assessment and pay. Within agencies, this has left employees increasingly exposed to the direction of senior managers, ministerial advisers and the ministers whom they serve.
Devolving the public service was critical to the implementation of NPM.[5] The process was slow and progressive, consistent with the desire to change cultures as well as systems. The aim was a public service reoriented along market lines, in which ‘the responsibilities of departmental secretaries and agency heads were … similar to those wielded by CEOs in the private sector.’[6] The analogy between the agency head in the public sector and the CEO in the private sector may be less than comprehensive, but it was clearly important to Minister Reith to pursue it:
The Government is considering the introduction of formal performance agreements for all Agency Heads. This acknowledges the important strategic leadership role of Agency Heads. Their role as Chief Executive Officers, responsible to the Minister for their agency's performance, needs to be explicitly recognised. The exercise of their wide-ranging managerial powers needs to be set in an accountability framework which articulates criteria for the measurement of performance. For these reasons, it is proposed that Agency Heads/Secretaries would be re-classified commonly as Chief Executive Officers.[7]
In addition to the reasons given, one further possible appeal of the term ‘CEO’ to Minister Reith was that it would reinforce on a daily basis how far agency heads had come from being ‘permanent heads’ since 1984, when the Hawke Government had amended s. 25(2) of the Public Service Act 1922 to make it clear they were no longer ‘permanent heads’ but departmental secretaries appointed to particular positions for a term of five years. In 1994 the Keating Government had introduced letters of appointment (commonly referred to as ‘contracts’) for secretaries that enabled the government of the day to terminate the appointment ‘at any time for any reason’.[8] The term ‘CEO’ reaffirms this arrangement rhetorically, setting departmental heads at an even further remove from permanent heads and closer to a model in which they can be terminated on ‘lack of confidence of a minister, whether or not lack of confidence was well founded’.[9] Importantly, Reith identified the expression CEO as explicitly recognising departmental heads’ responsibilities to the minister and for agency performance. It was his intention to free these CEOs from the ‘unnecessary restrictions and arcane details’[10] generally associated with the public sector, so that they could harness their ‘strategic leadership’ to their ‘wide-ranging managerial powers’ in the interests of more effectively ‘achieving the outcomes set by government’.[11] Using performance pay ‘as a tool for motivating people,’ and assisted by more flexible practices, they would enable the public service to ‘to operate efficiently and competitively within a dynamic environment that has made improved performance imperative for all sectors of the economy’.[12]
In institutional terms, devolution began with the progressive transfer to agency heads of responsibility for ‘running costs’ and proceeded to the dismantling of the centralised staffing controls of the then Public Service Board over fixing pay, establishing employment conditions, appraising staff and overseeing industrial relations. Between them, the Financial Management and Accountability Act 1997 and Public Service Act formalised the control of agency heads over staff management, workplace relations, agency finances, assets, resources and technology. By the time these pieces of legislation were passed, they were mostly confirming actual arrangements that had already been put in place administratively, some of which had been operating for some years.[13] By 2000, agency heads experienced relatively little regulatory interference from central agencies in staffing matters (with the exception of Public Service Commission controls over Senior Executive Service appointments and promotions and the strict controls maintained by DEWR on what agency heads could not do through their workplace agreements). As for other matters, the impact of NPM on the role of central agencies was for a time ‘resounding’. Progressive changes had:
… reduced the old Public Service Board to a shadow of its former self (Campbell and Halligan 1993). Finance moved through several stages during the reform era, eventually adopting a ‘strategic’ role (Wanna and Bartos 2003), but was so heavily purged in the second wave of market reform (in the second half of the 1990s) that debate came to centre on whether it would survive organisationally (one option being to re-integrate it with Treasury from whence it was originally derived). Finance’s experienced a loss of ‘policy’ competence (Campbell 2001) as its role was diminished by this pursuit of a minimalist agenda. The Department of Prime Minister and Cabinet had withdrawn from active intervention except where required and was no longer providing leadership for the public service.[14]
There appears to be widespread agreement at the top of the public service that the efficiency impact of devolution ‘has been largely beneficial’, that ‘[p]roductivity has risen progressively’ and that ‘[p]ublic servants now do more, better, with less’.[15] The former Secretary of the Department of the Prime Minister and Cabinet and the former Public Service Commissioner agree on this point[16] and there has been research broadly supporting their views—although no research can precisely quantify the productivity impact of developments in information and communications technology. The Management Improvement Advisory Committee of the Management Advisory Board (forerunner of the Management Advisory Committee) undertook the review of how best to achieve cost-effective personnel services in selected agencies and reported early gains in November 1995;[17] in 2001–02 and 2002–03, the ANAO undertook a benchmarking study of nine ‘people management practice areas’ in selected agencies and reported further improvements;[18] the DEWR bargaining guidelines have consistently required that ‘improvements in pay and conditions are to be linked to improvements in organisational productivity and performance’[19] in agencies. Despite the absence of measures of productivity growth in the APS (the Australian Bureau of Statistics does not produce measures of productivity growth in public administration[20]) the government demonstrated its belief in agency productivity growth by further increasing the efficiency dividend that it reaps annually from agency resources.[21]
However, devolved systems have also been in operation during many of those ‘failures of public administration’[22] considered by Dr Shergold to be the consequence of:
… inadequate managerial control, weak direction and poor organisational communication exacerbated by an unacceptable tardiness in acknowledging and correcting the mistakes that had been made. In the first matter [children overboard] there was a failure to balance carefully the twin demands of timeliness and accuracy—information was passed from public servants to ministers before it had been adequately corroborated. In the second instance [mistreatment of Cornelia Rau and Vivian Solon] relatively junior officers were not adequately trained or supervised to exercise appropriately the considerable powers that they wielded. Worst by far, failures in both instances were compounded by organisational silos, poor record-keeping, a reluctance to clarify the record and, in a few instances it would seem, attempts to cover up the initial mistakes.[23]
Were these failures simply isolated instances of bureaucratic inefficiency— ‘inadequate managerial control, weak direction and poor organisational communication’—compounded by failures of individual integrity? If so, undoubtedly they are of the type that could occur in any management framework. But the problem in the case of Children Overboard was not simply a ‘failure to balance carefully the twin demands of timeliness and accuracy’; it was the fact that ‘within three days of the initial statements, the story was known to be untrue’,[24] but no correction was made until after the election, a month later. The problem in the cases of Cornelia Rau and Vivian Solon was not simply lack of training, organisational silos, and poor record-keeping. In the case of Cornelia Rau it was also that ‘through its actions and approach, executive management has sent staff a clear message that process is paramount and should not be questioned’.[25] In the case of Vivian Solon, it was also, as DIMIA staff told the Comrie inquiry:
… that in some situations they deliberately left their actions unrecorded. They said they did this because of perceptions that they would be in breach of departmental policy if they tried to help suspected unlawful non-citizens with welfare-related matters.[26]
These are more than simple administrative lapses; they go to staff understanding of agency and ministerial expectations, and they resulted in broader systems failures. Could they have happened under old service-wide procedures and arrangements? In the case of DIMIA, Palmer referred to arrangements that were ‘ process-rich’ and ‘outcomes poor’—the same criticisms that had been levelled at public service throughout the period under consideration; but he also found that this conduct was not the result of outmoded practices but of a ‘clear message’ from management. The question, then, is not whether process-rich systems would have performed better; it is whether having, as we now do, a devolved system, there is scope for systems failure which is a consequence of devolution itself. How much does due process rely on systems themselves and how much on ‘strategic leadership’ and the agency culture in which the systems are embedded? To what extent do agency cultures interact with the service-wide culture that remains after systems are devolved? How has devolution worked in practice?
[1] Peter Shergold, ‘Regeneration: New Structures, New Leaders, New Traditions’, speech delivered at the Institute of Public Administration Australia National Conference, Canberra, 11 Nov. 2004, http://www.pmc.gov.au/speeches/shergold/regeneration_2004-11-11.cfm, viewed 26 June 2006.
[2] Neil Comrie, Report of the Inquiry into the Circumstances of the Vivian Alvarez Matter (Canberra, 2005), 77.
[3] See Glyn Davis and R. A. W. Rhodes, ‘From Hierarchy to Contracts and Back Again: Reforming the Australian Public Service’, in Michael Keating, John Wanna and Patrick Weller (eds), Institutions on the Edge? Capacity for Governance (Allen & Unwin: Sydney, 2000), 77.
[4] See John Halligan, ‘The Integrated Performance Model in the Australian Public Sector and its Consequences for Public Sector Organisations’, paper presented at Panel on Autonomy and Steering Models of Public Sector Organisations, 9th International Research Symposium on Public Management, SDA Bocconi, Milan, 6–8 Apr. 2005.
[5] The 1976 Report into government administration (Coombs Commission) recommended, among other reforms, devolution of responsibility, as well as greater flexibility and diversity in organisational styles; more efficient and economical use of human resources, and a more open public service. See Royal Commission on Australian Government Administration, Report (AGPS: Canberra, 1976).
[6] Peter Shergold, ‘The Australian Public Service in 2035: Back to the Future’, speech to CPA Annual Conference, Melbourne, 18 May 2005, at http://www.pmc.gov.au/speeches/shergold/ aps_2035_back_to_the_future_2005-05-18.cfm, viewed 25 Apr. 2006.
[7] Peter Reith, Towards a Best Practice Australian Public Service: Discussion Paper issued by the Minister for Industrial Relations and the Minister Assisting the Prime Minister for the Public Service (Canberra, 1996), 11.
[8] Andrew Podger, ‘What Really Happens: Department Secretary Appointments, Contracts and Performance Pay in the Australian Public Service’, Australian Journal of Public Administration, 66(2) (2007), 136.
[9] Ibid.
[10] Reith, Towards a Best Practice Australian Public Service, p. v.
[11] Ibid. 19.
[12] Ibid. p. ix.
[13] In addition to administrative implementation of some financial management reforms, the Workplace Relations Act 1996 and the Workplace Relations Regulations 1996 allowed APS employers to override prescribed provisions of the Public Service Act 1922 (principally those relating to dismissal and retirement) in agency agreements. In 1998 a number of provisions of the Public Service Bill 1997 were implemented by administrative means.
[14] Halligan, ‘Integrated Performance Model’, 5.
[15] Shergold, ‘Regeneration’.
[16] See, for example, Shergold, ‘Australian Public Service in 2035’; Andrew Podger, ‘Looking Upwards and Downwards: Key Issues and Suggestions for Managing Board/Minister/Departmental Relations’, paper presented to the University of Canberra Conference on Governance, Mar. 1996, pp. 2–3.
[17] Management Improvement Advisory Committee of the Management Advisory Board, Achieving Cost Effective Personnel Services (1995) and ACEPS Stage 2: Re-engineering People Management: From Good Intentions to Good Practice, at http://www.apsc.gov.au/publications/archive.htm, viewed 21 Feb. 2008.
[18] Australian National Audit Office, Managing People for Business Outcomes: Year Two, ANAO Audit Report no. 50, 2002–3 (Canberra, 2003).
[19] Department of Employment and Workplace Relations 2003, ‘APS—Workplace Relations Policy Parameters for Agreement Making in the Australian Public Service’ (Dec. 2003).
[20] MFP measures are not presented for public administration because the volume estimates of gross value added are derived using a method in which input data are used as measures of output. As a result, the measure of real gross value added effectively assumes that there has been no change in productivity. Australian Bureau of Statistics, Cat. 5216.0, Australian National Accounts: Concepts, Sources and Methods, 2000, at http://www.abs.gov.au/AUSSTATS/abs@.nsf/66f306f503e529a5ca25697e0017661f/65a7a1b617 fd3461ca2569a70003feef!OpenDocument, viewed 21 Feb. 2008.
[21] Public Service Commissioner, 2003–04 State of the Service Report (Canberra, 2004), 99.
[22] Peter Shergold, ‘Pride in Public Service’, speech to National Press Club, Canberra, 15 Feb. 2006, at http://www.pmc.gov.au/speeches/shergold/pride_in_public_service_2006-02-15.cfm, viewed 15 Mar. 2006.
[23] Ibid.
[24] Patrick Weller, Don’t Tell the Prime Minister (Scribe Publications: Melbourne, 2002), 4.
[25] M. J. Palmer, Inquiry into the Circumstances of the Immigration Detention of Cornelia Rau: Report (July 2005), 169, at http://www.minister.immi.gov.au.
[26] Comrie, Report, 32–3.