While the federal public service is relatively efficient, it must become more innovative and develop an experimental approach, according to a report to be published on Thursday.

Along with advice to work smarter, the report criticises the budget for attempting to minimise resources without a serious examination of how best to achieve aims with fewer resources.

“The assumption appears to be that smaller government is necessarily more efficient,” the report by the Centre for Policy Development says.

The report concludes the way public service efficiency is discussed “damages the country”.

Misuse of the term justifies policy approaches that can drive inefficiency and waste, and distracts from good ideas for genuine efficiency improvements, it says.

The value delivered by some agencies hit by cuts is overlooked, to bring “leaner, business-like ways of operating”.

Raising the efficiency dividend to 2.5 per cent will compound this, resulting in across-the-board cuts to services “regardless of their utility”.

Report author Christopher Stone said: “The budget assumes a smaller government is necessarily more efficient.

“It lacks a serious examination of how best to achieve aims with minimal resources and instead simply attempts to minimise resources.”

Public service goals are more complex than the private sector profit drive, and this special context requires an emphasis on professional accountability.

“Efficiency in public services is critical if we want our tax dollars well spent and our government to achieve all of what we as a country think that it should,” the report says.

“Unfortunately, public and political debates on this topic are too often mired in misunderstandings. The evidence on efficiency is misrepresented or ignored; the very meaning of the term is twisted to suit other agendas or evidence-free arguments.”

Terry Moran, former head of the Department of the Prime Minister and Cabinet and now president of the Institute of Public Administration Australia, says in a foreword to the report that the cost of all three levels of government in Australia is among the lowest in the developed world.

“However, none of this is to argue that we should be blind to the potential for improvements in the way public administration functions,” he says.

“This report highlights a number of examples where the implementation of one-dimensional ideas about efficiency have come at a very substantial cost but across all three definitions of ‘efficiency’ there is room for us to do better.

“We know that increased risk-aversion leads to more complex and prescriptive process and regulations.

“It is also clear that poor public sector performance management systems end up rewarding relatively unproductive work.

“There are also a number of examples where a breakdown in the relationship between ministers' offices and senior public sector staff has resulted in costly public policy mistakes.

“Much of this is the result of a complex interplay between political leaders, the community and public administrators, with each group perceiving their actions to be reasonable.

“If the community refuses to accept any risk, then politicians will respond to those demands.

“If public sector performance management becomes overly engineered and prescriptive, then public servants will focus on outputs and not outcomes.

“If ministers are encouraged to stop seeing their departments as a source of impartial advice, they will stop listening to it.”

The report says the public service can become more innovative through:

  • The creation of cross-agency teams to help drive innovative approaches to services.
  • Initiatives by agency heads to facilitate bottom-up innovations (such as temporarily implementing more permissive standards to create a window for experimentation with new techniques by front-line workers).
  • Taking a low-risk approach to pilot programs (such as running multiple simultaneous pilots to reduce the political risk of a pilot being seen as "failed").
  • Awards and other schemes to give recognition to innovative public servants.
  • An innovation investment fund to provide a public sector equivalent to venture capital, combined with mechanisms to capture and share information on implementing innovations.

The report recommends the Australian Public Service should: focus on organisational outcomes, with clearly defined priorities informed by a national planning process; improve accountability through closer engagement with service users and front-line public servants; reinforce efforts to increase trust between management and staff; and work for more constructive relationships between ministers and public servants.

The report was funded by the Community and Public Sector Union, the Becher Foundation and Slater & Gordon.