Devolution has meant substantial change in the day-to-day operations of agencies. Agencies run their own recruitment campaigns; they have their own human-resource management strategies and industrial agreements. This means they have their own classification structures, job titles and pay scales. These changes overlay other agency-specific arrangements that reinforce the daily experience of public servants that they are agency employees: agencies have their own intranets featuring management billboards and staff billboards and agency newsletters. Employees have passes to get into their agency that do not work for other agencies—an arrangement that may not be directly traceable to devolution but certainly reinforces it every time an employee walks in the door. Even where service-wide administrative arrangements have been introduced they have to be ‘tailored’ to agency differences, as in the case of performance-assessment schemes. All this difference is intended to support the variation in the type of work done in diverse agencies, and their need to go about it differently in order to be effective. For this reason, agencies have their own CEOs, as Minister Reith wished them to be known, and those CEOs issue their own Chief Executive Instructions. These market-based operational models were intended to remove many of the long-standing protocols that agencies had in common while at the same time strengthening vertical connections running between agency employees and agency heads and through them to ministers, who were, in turn, intended to reap the benefits of the new arrangements in the form of increased productivity and responsiveness.

At the time it was recognised that ‘to achieve greater flexibility it was probably going to be necessary to sacrifice many of the aspects of the public service which had provided the “connective tissue”’^[27]—and these sacrifices were duly made. Certainly some of the ‘connective tissue’ of the public service was largely symbolic to begin with, but it was no less important for all that: organisational cultures often draw on symbols. When, for example, it was decided that agencies should move from service-wide to agency-specific logos, the change was regarded as symbolic of the new emphasis on a service-delivery culture and on building direct relations between agencies with the public. When the Government later decided—for reasons considered below—that it wanted ‘the removal of individual agency logos and establishment of a single distinctive “brand”, the Australian government, represented by the Australian coat of arms’, the change was met with ‘territorialism’ and ‘unexpected and sustained resistance’^[28] from agencies. Why was the resistance to abolishing agency-specific logos unexpected? The devolved model was never intended to support a ‘single distinctive “brand”, the Australian government’; indeed, the introduction of logos was part of a deliberate strategy of cultural change intended to align the hearts and minds of public servants—as well as those of the Australian public—to the agency’s particular business focus.

As the logo episode suggests, the alignment process appears to have been effective: by 2005, 60 per cent of APS employees saw themselves as primarily employees of their agency rather than of the APS.^[29] And so they were: their employer was their agency head; their workplace and performance agreements were with that agency head and with their line managers; they were bound by the agency head’s Chief Executive Instructions; they were accountable through the agency head to the minister. It was a ‘highly devolved public management model, [in which] the individual agency was the focus, individualisation provided the basis for public servant employment, and a disaggregated public service was the result’.^[30] The remaining service-wide cultural link between APS employees was described in 2003 by the Secretary of the Department of the Prime Minister and Cabinet (who had been the Public Service Commissioner between 1996 and 1998) as ‘a single, distinctive ethos of public service’^[31] sustained by the statutory APS Values and Code of Conduct. And even these were expected to be adapted to agency operations/priorities/activities through agency systems and then supplemented by agency-specific values if the agency head wished.^[32]

Many agency heads did wish to have business-specific values: by 2004–05, 78 per cent of agencies had their own values in addition to those that were in legislation and meant to apply service-wide. The annual State of the Service Report gives an indication of how effective the resulting combination of APS-wide and agency-specific values was in sustaining a common service-wide ethos in 2004–05. Responses to the Employee Survey showed that the proportions of employees in the 21 large agencies who reported that they were familiar with the actual legislated APS Values varied quite widely, as in previous years, ranging from 65 per cent in some agencies to 93 per cent in others.^[33] In addition, employees were often confused about which were the legislated values and which were specific to their own agency: the proportion of employees from large agencies which had their own agency-specific values, principles or behaviours and believed this to be the case varied from 25 to 81 per cent in 2004–05. In large agencies that had not developed their own values, between 33 per cent and 63 per cent of employees thought that they had.^[34]

Under the provisions of the Public Service Act (s.12), departmental secretaries and agency heads are not only responsible for arrangements that uphold and promote the APS Values, but also for supporting their employees in applying them. These are the individuals, as public servants in their agencies well know, who are operating on contracts (or letters of appointment) and under performance assessment and pay systems that to a greater or lesser extent have shaped their own application of the APS Values:

Not only has the incentive framework for secretaries purposely been put in place, but so too have secretaries themselves. Staff know whether they have a history as ministerial advisers, or as members of interest groups favoured by the government of the day. If they are long-standing public servants, they know their history and reputation, and whether or not they have been known to pull their punches. They know what the secretary said (or did not say) when the new minister announced that the department would be regarded as an extension of his/her ministerial office. They know which senior executives refer to government policy as ‘our policy’ and which obligingly revise draft responses to parliamentary questions to insert the usual political gibes. They know which do not. They hear (in person or on the net) the responses to Senate Estimates questions and compare them to their own experience of what occurred. Word gets around very quickly. When asked, 38 per cent of employees responding to the 2005–06 State of the Service Employee Survey agreed that the leadership in their agency was of the highest quality. 62 per cent did not.^[36]

These are the agency leaders who control how much employees hear about service-wide values. They control what the APS Values mean in practice by interpreting them through Chief Executive Instructions and agency systems and processes.^[37] They control the seriousness with which the APS Values are taken by the seriousness with which they themselves are seen to take them. As the State of the Service Report data suggests, there is considerable agency-to-agency variation in all of these matters, and a corresponding variation in agency employees’ own confidence in their capacity to apply the APS Values in their daily work for ministers and their advisers. Surveys have established a direct correlation between employees’ confidence in their ability to balance being responsive, apolitical, impartial and professional, and their views on whether senior managers in their agency act in accordance with the APS Values.^[38] In 2004–05, in 18 large agencies (from which statistically significant responses are available), between 63 and 76 per cent of employees were confident that their most senior agency managers did act in accordance with the APS Values; in one large agency fewer than 50 per cent were confident.^[39] In 2005–06, large-agency confidence varied from a low of 61 per cent to a high of 86 per cent.^[40]

As was noted earlier, agency protocols to guide interactions with ministerial offices constitute another factor that is correlated with employee confidence in their ability to balance being responsive, apolitical, impartial and professional. Whether or not agency heads have sanctioned and promoted particular protocols in their agencies to support the APS Values in interactions with ministers and their advisers is also subject to considerable variation. Table 2 sets out the number of large agencies (those employing more than one thousand people) with such protocols. It also sets out, for all large agencies with a given protocol in place, the variability in the proportion of employees who were aware of such a protocol.

The Table provides scope for speculation on the impact of agency systems and culture on individual decision making. Take the data relating to the availability of a written protocol for resolving staff concerns that may arise about the nature of requests from ministerial offices. In the best-case scenario, an employee who is concerned about something they have been asked to do by a minister or a ministerial adviser would be in one of the two large agencies (call them A and B) that has a protocol to assist them. If they are in agency A, they may be one of the 8 per cent of agency employees who are aware that their agency has such a protocol. If this is also an agency in which the agency head and senior managers are known to take a robust and supportive approach to the APS Values, many of the remaining 92 per cent of employees in agency A (or 68 per cent in agency B) would be able to turn confidently to their senior managers for advice. Some of those senior leaders may be able to refer them back to the relevant agency protocols. Others may even give them the same advice as that contained in the protocol—although in a devolved environment they may still be carrying baggage from another portfolio.

Note: The ranges provided are derived from agency-specific Employee Survey results of up to 15 large agencies in 2004–5 (and 12 large agencies in 2003–4) that reported the protocol(s) in place. They do not include the APS-wide results. Source: 2004–05 State of Service Report, Table 3.2.

In the worst case, agency employees who are feeling both under pressure and concerned about what they may regard as implicit and explicit political directions from the office of the minister will have no agency protocol, no reliance on agency senior leadership, and no trust in the ethical behaviour of their managers. There may be no real senior leadership to speak of, or they may experience their leadership as so focused on delivering outcomes for the government of the day that the end will always be assumed to justify the means. They may also feel that the systems of performance management in their agency and/or the culture in which they operate are weighted in favour of responsiveness and against due process (see Chapter 3). They may feel that this weighting is deliberate.

The Palmer Report into the conduct of affairs at DIMIA recommended that, in such circumstances ‘where an officer or a lower level manager believes that particular arrangements or performance measures are producing bad or negative outcomes, commonsense should prevail and the matter should be raised with executive management’.^[41] Common sense may prevail on many occasions. The data available suggests that in the particular subset of occasions when APS employees witness a serious breach of the Code of Conduct, around half do not report it.^[42] The main reasons for their silence are that the breach had already been reported or had been reported in the past and nothing had been done about it; concern about retribution or victimisation that would result from reporting; and concern about the negative effect reporting would have on their career.^[43] If they do report it and executive management takes no corrective action, employees have no recourse short of resigning or bringing a code of conduct complaint against their own agency’s senior leadership—a complaint turning on a question of balance in a matter subject to interpretation. And since confidence that discrimination or harassment would not result from reporting a suspected breach of the code of conduct by a manager or senior manager is correlated with overall confidence in the operation of the APS Values in the agency, the problem in poorly performing agencies could be assumed to be much more significant. An employee with ethical concerns about the behaviour of those up the line may have no recourse but to do nothing at the time and then to approach those affected ‘afterwards to say that he was deeply unhappy … and wanted to distance himself from the actions of his superiors’.^[44]

The cultural changes associated with devolution—the emphasis on vertical accountabilities and responsiveness, on one hand, and the loss of ‘connective tissue’, on the other—are accelerated by turnover. There were 10,482 separations of ongoing employees during 2004–05, an increase of 44.2 per cent on the previous year.^[45] Over time, these numbers will only rise. In June 2005, APS employees in the 45 and over age group, who would be eligible for retirement in 2014–15, accounted for 40.4 per cent of ongoing employees.^[46] In 1996, this group accounted for only 30.5 per cent of ongoing employees. The ‘old guard’ is leaving the public service and taking with them one source of informal advice and mentoring about the operation of service-wide conventions. If the staff replacing them believe that particular arrangements or performance measures are producing bad or negative outcomes, they will be increasingly dependent on going ‘up the line’ with their concerns—which may leave them more inclined to settle quietly into the default agency custom.

In particular, the ‘new guard’ may have a reduced capacity to pass on the service-wide conventions associated with the Westminster tradition. New employees may not even be aware that there are any lines to be drawn in delivering services to the agency’s ‘key customers’. An increasing proportion of APS vacancies are being filled from outside the APS, from 33.7 per cent in 1995–96 to 47.6 per cent in 2004–5.^[47] Whatever the undoubted skills and qualifications of these employees, they are unlikely to include an understanding of the application of the caretaker convention, or cabinet confidentiality, or mandated standards for record-keeping. At the same time, as noted in Chapter 1, the numbers of ministerial advisers are growing and with them the number of public servants at the other end of the telephone. In a devolved environment, and in an output-focused (‘can do’) culture, these employees will find themselves increasingly isolated when it comes to taking anything but the default agency standard of responsiveness to requests from ministers and their advisers. As has been noted, the Public Service Commissioner issued broad Guidelines on Conduct in 2003 and more comprehensive general protocols under the heading Supporting Ministers Upholding the Values in 2006. But the Public Service Commissioner is also operating in a devolved environment. As one employee reported to the 2004–05 Employee Survey:

Individual isolation is compounded by current technology and is likely to be reinforced by future technology. Email and mobile phones can be used to contact individuals at all levels of the bureaucracy, making employees accessible at all times, virtually anywhere. Technology enables ministers and their advisers to bypass layers of senior management and leave lower-level employees directly exposed to requests and directions that are personal, urgent, and possibly inappropriate. Ministers and their advisers also generally demand speed as part of overall public service responsiveness, often because the media demand it of them, but the overall effect of the demand for urgent turn-around of advice is to require public servants to choose between being responsive and meeting agency’s own clearance protocols.

Devolution has also given agency heads the power to reinforce vertical lines of control and to break down collective culture in their own agencies by putting into their hands the power of settling the agency’s industrial arrangements, the hiring and firing of employees and the setting of remuneration and terms and conditions of employment. The new industrial framework encourages responsiveness by encouraging competition in relation to performance ratings, access to accelerated advancement, and gaining the attention and regard of those well positioned to deliver either or both. People have always sought to behave in ways that would earn them promotion, but this is promotion compressed in time and raised in visibility. It has little to do with long-term mentoring relationships or skills development, and much to do with senior managers-as-audience. Direct supervisors may award ratings, but senior managers oversee ratings distributions and moderation. As a consequence, ‘People strive for visibility. They’re looking for opportunities in which they can achieve things, tangible results, quickly.’^[49] The system relies on short-term incentives and—as Allan Hawke predicted and both the State of the Service and Audit Office survey findings confirm—is ‘divisive and undermines relationships between staff’.^[50] (It is worth recalling in this context that employees in large agencies were unlikely to agree that their agency performance assessment system ‘contributes to a workplace culture where individuals work together effectively’; in fact, agreement was as low as 11 per cent in 2003–04 and 9 per cent in 2004–05). It is a model that, in the absence of active and judicious agency leadership, fosters isolation but not independence and nurtures a ‘control-motivated culture’.^[51]

In a control-motivated culture—where senior managers have sent a ‘clear message that process is paramount and should not be questioned’—devolved management can foster the fixation on rules it was meant to replace. When such an agency culture settles into place, ‘due process’ can become degraded to ‘mere process’, regardless of the formal guidance that has been put in place. In 2005–06, 62 per cent of respondents to the State of the Service Employee Survey agreed that their agency had procedures and systems that ensured objectivity in decision making. 12 per cent actively disagreed and 22 per cent neither agreed nor disagreed.^[52] This is a very mixed result, not least because ‘ensures objectivity’ may be difficult to interpret in this context. The level of systems documentation is not, of itself, the deciding factor. According to the Palmer Report, DIMIA was ‘process rich’ but uninterested in how its processes interacted with people.

In the case of the scrutiny conducted by the Department of Foreign Affairs and Trade (DFAT) of the Australian Wheat Board’s (AWB) contracts with Saddam Hussein's regime, the problem was, conversely, a lack of process (‘the exporter was not required to certify to the Commonwealth the accuracy or completeness of the contractual documents said to constitute the agreement with the foreign entity’^[53]). Process issues were also identified in the Senate report on A Certain Maritime Incident (‘The Committee is not questioning the integrity of the individual participants on the Taskforce, but finds substantial weaknesses in its basic administrative operations, including record keeping, risk management and reporting back’^[54]). In fact, it has been argued in the cases of DIMIA and A Certain Maritime Incident that the presence or absence of particular processes is not so much the point as the intersection of agency activities with an assumption culture, with the default set to responsiveness:

Once the political context is used to frame the administrative failures surrounding ‘Children Overboard’ and Cornelia Rau (and AWB), it appears that in each case ‘can-do’ outweighed ‘due process’. In each case ‘can-do’ was consistent with political if not departmental rhetoric, and in each case, we are assured, the Government did not explicitly ask for it to be done:

This may be true, but in a system that fosters and rewards responsiveness to ministerial expectations as well as ministerial requests, it is not a sufficient defence.