On Thursday 27 September, the review’s Chair David Thodey spoke about his work on 2 public sector reviews for the Allan Barton memorial research lecture.
Delivered at the CPA Congress, this speech covers the now finished review of the legislation governing use of public money and the current review on the future of the public service.
Panel member Gordon de Brouwer gave a response to this speech, talking about the importance of the governance Act and where there’s room for improvement.
Introduction
I would like to begin by acknowledging the traditional custodians of the land on which we meet today, and pay my respects to their elders past and present. I extend that respect to Aboriginal and Torres Strait Islander peoples here today.
Thanks also to CPA Australia’s ACT branch and the Australian National University for this kind invitation to speak. I feel privileged to be giving the Allan Barton Memorial Research Lecture. Allan was an outstanding academic who contributed enormously to the thinking of public administrators, policymakers, academics and accountants.
I should stress that I have not had a career as an academic or an accountant. But I do share an ambition for good governance, performance and accountability in all institutions, and I strongly support the need for a capable and vibrant public service.
Recently, I have had the opportunity to be part of two reviews considering the institutions and structures that underpin public administration in this country. They include:
- A review of the legislation that governs the use of public money — the Public Governance, Performance and Accountability Act 2013 — conducted with Elizabeth Alexander. The recommendations for this have been finalised and the report tabled in Parliament.
- An ambitious look at the future of the Australian public service. This review is planned to finish in the middle of 2019.
Tonight I would like to share some insights from both of these projects and also explain my views on the foundations for a successful public sector.
Premable
But first, some context.
People have always drawn comparisons between the public and private sectors.
There are those who see them as the same. I often hear commentary from the business community that goes something like this:
’If only the government would behave more like business, take a more business-like approach to things — how it identifies opportunities and engages with risk, how it deals with red tape, how it structures its systems and processes, how it manages its costs — then things would be better.’
It’s an idea echoed in politics. Last year the Washington Post reported this comment by President Trump’s son-in-law and adviser, Jared Kushner:
’The government should be run like a great American company. Our hope is that we can achieve successes and efficiencies for our customers, who are the citizens.’
I have also experienced this. Having led a major listed corporation in the past, people often assume I know what it takes to turn the public sector on a coin and make it operate like a great Australian company. But that’s not how this works.
Still others acknowledge similarities between the public and private sector but question their significance. Lembit Suur, the senior official who put the governance Act in place, pointed me to this quote from Columbia University professor and political scientist Wallace Sayre (source below). He famously said ’public and private management are fundamentally alike in all unimportant respects‘. I assure you that’s not how this works either.
At the other end of the spectrum, some see irreconcilable differences. I have also encountered this view — that because I come from the private sector, I can’t possibly understand the unique challenges of government administration.
The truth is there will always be valuable insights to share between different sectors and areas of practice. Yes, operating context is important. But organisations are always made up of people who engage in activities that use processes and technology, to create something of value.
This means there is much to learn from each other — in fact we must learn to collaborate more than we do today whether in public, private, non-profit or academic sectors. So, this is the perspective that I come from. I have had a satisfying career in industry, and am grateful for the opportunity to contribute to the discussion on how to make Australia and its public service more successful.
Let’s start with the legislation which governs the use of public sector resources.
The Act that governs the use of public resources
Late last year, Elizabeth Alexander and I were asked to do a statutory review of the Public Governance, Performance and Accountability Act.
After 10 months of work, over a hundred submissions and numerous conversations and interviews, we recently completed our final report which is now available online.
Tonight I’ll talk about the four main themes which seem the most emblematic of the operating environment and culture in the Commonwealth and Australia’s public service.
Strong governance, performance and accountability drive enormous value for organisations – both in the public and private sectors. But each is different in their art and execution.
Both have the challenges of fast-changing technologies, scarce resources and shifting market and social environments. But in government these are overlaid with the legitimate and contesting interests of multiple stakeholders, intense public and political scrutiny, and the growing expectations of the people they serve.
In practice, we ask government to be responsive, flexible and forward-looking… while also being consistent, predictable and always right.
Now the governance Act defines the core principles and clear standards for the Commonwealth Government’s use of public resources. It also sets out the duties of public sector officials and leaders.
Because it is principles-based, the governance Act can accommodate the diversity of Commonwealth operations — from mainstream departments providing policy advice, to market regulators, national broadcasters, and companies that build the nation’s infrastructure. It allows for fast-paced changes in technology, policy priorities and public expectations, and is largely successful in avoiding routine operational issues.
The feedback we received on the governance Act was very positive. It compares favourably with similar public management frameworks in other countries and makes way for a high performing public sector.
But while those structures and legal requirements set a good framework, they can’t and won’t drive culture and performance.
Tonight, I would like to focus on four themes from the review that do play a major role in culture and performance — leadership, risk, outcomes-driven objectives and transparency.
Leadership is critical for success
Leadership is at the core of any successful reform, transformation or sustained improvement.
The characteristics and qualities of leaders are as varied in the Commonwealth as they are anywhere else. People come from different backgrounds and life experiences, and have varied personalities and technical skills.
There are different levels of maturity across the system in areas like performance reporting, managing and engaging with risk, and cross-government cooperation.
While the leadership capability in the public service is generally strong, the investment in leadership development is inconsistent.
Investing in leadership is challenging for the public service. Some say there’s not enough budget or the public will disapprove of it being used that way. Neither of these should be impediments. As the private sector knows, leadership development is critical to the long term effectiveness of an organisation and should be prioritised for expenditure. Any external criticism of appropriate investment is misplaced and unhelpful.
There are some encouraging initiatives.
A talent council has been established for the Australian public service which is charged with the responsibility of identifying and developing leaders. CSIRO has implemented a robust program of succession management and leadership development. Also, the NSW government has a well-structured development program overseen by the NSW Public Service Commissioner.
Investing in leadership is essential for good performance, governance and accountability in the Australian public service.
The value of audit, risk and structured reviews
Risk practice in the Commonwealth is also inconsistent and sometimes rudimentary.
There is an obsession with downside risk and little evidence that upside or shared risks are considered. This limits innovation and constrains good leaders and employees from getting things done.
Shared risks are a particularly serious issue for the Commonwealth who need to collaborate with others more often to deliver on large and complicated issues.
A recent report from the national audit office found ‘the identification and management of shared risks is one of the least mature elements of entities implementation of the Commonwealth [Risk] Policy.’
The governance Act encourages ‘joined-up working’. But vertical accountabilities and ways of thinking can get in the way, including responsibilities to Ministers and the Parliament.
The role of external advice is essential to addressing this.
In the private sector, independent non-executive board directors actively engage on audit and risk matters. Their responsibility is to provide oversight of the processes, finances and risks of the organisation.
They are seen by senior management as a valuable external resource to help identify issues, ensure appropriate controls are implemented with clearly defined metrics and make the team successful. They bring unique perspectives from other industries and actively seek input from outsiders.
The accounting and governance structures of the public service are different to the private sector in that they must be accountable to the government, the wider public service and the people of Australia. However, externally appointed directors can bring immense value with the correct induction and education.
At CSIRO, we have a group of former industry executives, academics and public servants who help the management team address issues and manage risks. They are actively engaged in reviewing strategy, culture, leadership, accounts and operational performance — balancing these matters with their requirements under legislation to support government. It’s not perfect but it makes a difference.
Structured reviews also have a role to play, as does the independent performance review work of the Australian National Audit Office.
A well-functioning system needs independent scrutiny at all levels to know how it is travelling, whether it is on track or keeping pace with others — and if it isn’t, what it needs to do to improve.
The Australian public sector must continue to seek outside influence and relationships. External committees are one excellent way for this to happen.
Outcomes-driven objectives and cross-government initiatives define the next decade
One of the objectives of the governance Act was to drive greater cross-government collaboration, but we found little evidence the legislation was having that impact.
The demand for greater collaboration on complex issues is growing. Just look at population growth, the movement of people and goods, pandemics, climate change and terrorism. No single Commonwealth entity can solve such issues alone. Cross-government taskforces and changes to departmental structures, whether internal or machinery of government, are not enough.
Our search for a longer term solution for sustainable collaboration led us to the value of measurable cross-government objectives focussed on outcomes. This practice would require different processes, governance, funding and management.
New Zealand, the United States and NSW governments have started down this road, with New Zealanders ahead in their implementation. We observed outcome-focussed objectives need to:
- be multi-year with bold targets clearly and widely communicated
- drive collaboration at Ministerial and departmental level
- be in partnership with private sector and all levels of government
- have funding that is not limited by the four year budget cycle
- include shared resources, shared risk and transparent reporting
Agreed across government, these objectives will drive collaboration and deliver tangible results for the community. More work should be done in this area.
Greater transparency must be our objective
Accountability and transparency are inextricably linked. Trust is a product of sustained performance, and trust in government is essential for the successful delivery of services.
In the private sector poor performance, poor behaviour and a lack of openness destroys trust and shareholder value. The same is true in government, but the currency is public satisfaction rather than financial results.
The consumers of government programs and services are empowered by information — how they operate, what is achieved, who delivers for whose benefit and how much it all costs. Good information shapes the knowledge, understanding and thinking of citizens, in turn helping them articulate what they want from government.
This is why the corporate plan and the annual performance statement are not just another set of documents to be published. The corporate plan allows Commonwealth entities to unambiguously state their aspirations, objectives, challenges and opportunities. The annual performance statement allows entities to show their achievement against those objectives and explain any discrepancies.
Yet I have noticed a reluctance in the public sector to commit to absolute targets and outcomes. They are often heavily qualified. This is understandable. There are many elements outside the authors’ direct control, including the political process. While there are also uncertainties in industry, the private sector tends to measure outcomes more than programs.
The Australian public service should be leaders in setting quantifiable relevant objectives as well as transparent reporting of results and impact. I note that some countries now publish job goals for departmental heads as well as their annual appraisals.
We need to talk about the operations of government, hold it up to scrutiny and be prepared to change how things are done for the better.
Wrapping up the review of the governance Act
To summarise:
- the Public Governance, Performance and Accountability Act has been well accepted and many entities are getting value out of it
- our review of the Act made a number of recommendations to improve implementation, including the use of independent risk and audit committees
- there are 4 themes for improvement — leadership, risk, whole-of-government outcomes and transparency
The future of the Australian Public Service
The similarities
There are similar themes emerging in our review of the future of the Australian public service. We have repeatedly heard from many people and organisations about the importance of:
- leadership and its changing nature in the public service
- developing the workforce, devoting adequate time and resources to maintain core capability, and fostering future skills and capabilities
- acknowledging, measuring and calibrating risk
- being driven by outcomes, the needs of citizens, a shared culture and purpose, and cross-government collaboration
- contemporary governance, management processes and organisational design
Of course, these are just early reflections on the topics people are passionate about.
What’s different?
However, there are some significant differences to this review. This is about the future of the Australian public service over the next 2 decades. Its scope is much broader, focusing us on the need for clear purpose and a longer term horizon. And we’re receiving a much larger range of input.
In just 3 months of consultation we’ve collected 700 submissions, started a program of workshops in cities and towns around the country, and gathered countless insights from a wide range of people and organisations.
Now is a time to listen and learn, and we’ll increasingly start testing ideas as we approach the end of the year.
The familiar themes from the review of the governance Act are not the only ones emerging in the public service review. There’s also:
- how we value and respect the institution of the Australian public service and the people who work in it
- developing innovative approaches to policy, corporate, regulatory and delivery functions
- ensuring the service is responsive to meeting evolving expectations from governments and the people of Australia
- the need for agile structures and the impact of new technologies
How do we look ahead to the future?
The Australian public service has served the people and successive governments very well.
But we must consider where we think the public service needs to be in 2030-5.
The world will be a very different place by then — but different in what ways? And what will that mean for our public service?
We cannot accurately predict the future but 2030 is likely to see:
- the world’s population at 8.7 billion, with Australia’s predicted to rise to 30 million just 5 years later
- 25% of the population over the age of 60 in the developed world
- technology advances in artificial intelligence, data, blockchain and connectivity will require new skills
- citizens expecting the same level of service and personalisation they get in other aspects of their lives
- a shift in the nature of work, with people working more flexibly and new jobs that don’t yet exist
- changes to public health, the environment, and the availability and use of our natural resources
We don’t know the full impact of these trends for the public service. It’s unclear:
- how quickly new technologies will be adopted
- how inequality will change between and within countries
- how the roles of the public and private sectors will develop
As a nation we need to understand these trends as best we can, and consider their potential impacts for Australia. We will certainly be doing so as part of this review.
It’s interesting to note individual departments and agencies do have some long term perspectives. However, there is no integrated view of the future operating environment for the Australian public service.
Which brings us to the rare opportunity for this review. How will we measure effectiveness a decade from now? Will the structures and processes in place to rule our public sector organisations need to look different? And what does accountability look like in that context?
Fit-for-purpose?
The terms of reference for this review talk about a public service that is ‘fit-for-purpose’, and it’s a useful way to frame our task.
I am a firm believer in the importance of purpose in any organisation, but particularly an enterprise as large and complex as the national public service.
Our public servants have many roles — giving advice, making payments, exchanging help and information, inspecting mail, issuing passports, deploying defence personnel, regulating industries and dealing with people.
That’s just the tip of the iceberg. Each of those tasks need different approaches. And the organisations delivering them will of course vary.
There are, however, widely accepted ideas and standards that give all entities and employees something in common. The one most commonly cited is being in service to others, including the people of Australia, the government and a common good such as the nation, society or successive governments.
In the governance Act, these shared ideas are referred to as ‘high’ standards, using resources ‘properly’ and providing ‘meaningful’ information. In the other major piece of the legislation, the Public Service Act, it’s in the objective of ‘establishing an apolitical, efficient and effective public service to serve government, Parliament and public’.
The Public Service Act is also the source of the public service values including being impartial, accountable, respectful, ethical and committed to service.
Interestingly, those values in the legislation don’t mention the Parliament. Instead the beneficiaries of that service are identified as Government, the Australian people or the Australian community.
Last but not least, most departments and agencies have mission statements or similar. Each is very different and they are often shared through the corporate plans I mentioned earlier.
On that basis, it’s not surprising the last survey of public servants found over two-thirds are proud to work for their particular agency. But what of the broader institution?
I wonder whether a single, clear, aspirational purpose statement would help clarify this central role? Could that give the system and its leadership another tool to bring people together, work across organisations and ensure the focus remains on the people of Australia and our common good?
According to Harvard Business Review research, executives say it’s easier to deliver revenue growth, successful innovation and transformation in organisations where purpose drives strategy and decision making.
Could digital be where this all comes together?
Digital technology and service delivery is a wonderful example of where all the issues I’ve spoken about so far are converging.
The submission to the review from the government’s Digital Transformation Agency is a case in point. It asks for:
- a clear and ambitious direction for digital transformation in government
- digital to be a necessary skillset for everyone in the public service
- a fresh look at risk using transparency, security and a way of working that responds to changes in context, learns from failure and makes smaller investments
- incentives and accountabilities to encourage cross-government working
- a more open approach to data and engaging people in the design of services
You can see how large this change is. How it touches every part of the governance, performance and accountability rules and processes we take for granted in the organisations we work with today.
My own view is that doing things in an entirely new way should be within reach for the public service. Innovation is not an end point in itself, but it is a means to a greater end.
By necessity, technology forces us to look well into the future. Recent decades have proven how fast it moves and how profoundly it can change our lives. I see no reduction in the rate of technological innovation.
Technology is an enabler. Technology is at its best when combined with a higher purpose, a good understanding of the people who use it and a clear-eyed view of how it can be used or misused.
For example, the impact that social media has had on the world was difficult to imagine 10 years ago — fake news, industry restructures, the 24-hour news cycle, and the way we gather and filter information or reach out to others.
Digital comes with these risks and I have always argued we need to look closely at them, talk about them openly and see what we can do to manage them better.
Of course it’s important to note the upside risk of digital innovation. According to the CSIRO’s Data61, it could yield $315 billion in economic value to Australia over the next decade. In a commissioned report they’ve explored the regional export potential for eight industries — healthcare, agriculture, urban management, supply chain integrity, cyber security, government, law and resource production. That’s an interesting upside.
Technology can be the enabler and driver of the future of the public service.
Conclusion
To finish, I’d like to revisit Allan Barton’s record. Because, just like the public service, what stands out is his service to others — to generations of students, to teaching and higher education, to good administration by example, to furthering the way our public sector operates, to your profession and to your future leaders.
A university biography says he was ‘possessed of a sharp insight and sometimes frustrating strength of opinion’ which is a wonderful commendation. One obituary painted a picture of an advocate, critic, teacher and challenger. In these characteristics he had the hallmarks of a leader, and qualities we need in all aspects of public and private service.
Good governance, clear accountabilities and strong performance are the foundation of any large institution, and the Australian public service has always been held to high standards. The Public Governance, Performance and Accountability Act provides a well-documented set of principles to help Commonwealth entities improve in this area.
Essential to the effectiveness of our national public service is a view of the future and an ability to adapt to our changing world — to be truly fit-for-purpose.
Common themes of leadership, capability, outcomes-driven accountabilities, purpose, culture and values, new flexible structures and governance, citizen-centricity, digital capability, trust and talent are in both these reviews.
I look forward to all of us working together to ensure Australia’s public service continues to be a great institution — SERVING all Australians and governments — for decades to come.
Note: the Wallace Sayre quote is from his article on the ‘Premises of Public Administration: Past and Emerging’ in the Public Administration Review journal, vol. 18, no. 2, 1958, pages 102-105.