Eric Abetz on public service performance bonuses, wages ... and widgets

The Public Service Minister tells the Informant about his approach to the bureaucracy's upcoming wage negotiations.

What are the government's short-term objectives for this round of negotiations?

The most pressing matter is the lack of finances and the lack of financial capacity of the Australian public purse; that is the most concerning thing. If it had been honest, the previous government would have told us about this. Its 14,500-job cut to the public service was hidden away and only came to light after the election, which indicates how tough things were. Of course, that figure was unbeknownst to us [the Coalition].

We then went to the election talking about cutting 12,000 jobs by natural attrition. It's interesting that the Labor Party never attacked us by saying ''if you do that, that's going to be on top of the 14,500'', which indicates how hidden it was.

And that really gives us a headache now to make everything add up. It's going to be very difficult.

Basically, what we need is a lean, efficient, productive public service. Overwhelmingly, that is what, I'm sure, public servants do deliver.

The government's bargaining framework mentions removing restrictions that ''inhibit managers' ability to manage their staff''. Have public service leaders expressed a need for this change, and what types of barriers exist?


What we want is flexibility, so we can get the best out of our public servants individually and the best out of the public service as a whole. That is what the Australian taxpayers who fund them expect from us and that is what we will seek to deliver through the framework.

We have 117 agencies, so we are not going to have a one-size-fits-all approach. That is why the overarching framework leaves flexibility for individual managers to determine what are potentially the best approaches within their particular areas.

The Labor government began to move, albeit slowly, towards centralising some aspects of APS bargaining. You say you will reverse this trend because you support the devolved, agency-based model that's been in practice for the past two decades. Yet some commentators, and even a government report in 2010, say that that model creates widespread inconsistencies between workplaces. Why do you prefer the agency model?

Basically, the one-size-fits-all approach does not necessarily suit the huge variety of agencies that we have, from border protection and customs right through to dealing with pensions. The flexibility in hours that you would need people to work, the type of work they do, where they work - to try to have a one-size-fits-all approach to all those things is fraught with real issues. That is why we've had this degree of flexibility over the past two decades.

Having said that, ours is a hybrid model, which does have some overarching elements. But then we will also allow flexibility for the various heads to determine what might work best within their particular agency.

The Coalition is reintroducing performance bonuses for senior executives and agency heads, and will tie these payments to their deregulation efforts. The Howard government introduced bonuses into lower levels of the public service, too. In contrast, Labor began phasing out these bonuses because it felt they were inappropriate in the public sector.

What are your thoughts on the merits of a system of performance bonuses that all public servants could access?

As a matter of principle, we support performance bonuses. We all like to be, if I can use the word, ''incentivised'', to be our very best and to make our best even better. Clearly, if there's an incentive that encourages you to give of your very, very best, then of course that should be applauded.

In fairness, though, there is a difficulty in the public service. For example, if my job is to make 10 widgets per day, then for every widget per day thereafter I will get a bonus. It's easy to make the judgment for the performance bonus: you just count the widgets produced.

The public service doesn't quite lend itself to such a neat assessment, and that is why I do accept that judging performance is sometimes more difficult in the public sector. You have to tread carefully in these areas; it's not a matter of being 100 per cent ideological one way or the other. You see what can work and what would work, then go down that path.

The idea that we should not seek to incentivise our public service is not one that I would agree with. But I am conscious of the difficulty in making those value judgments; it's not as easy as counting widgets.

Eric Abetz is the federal Employment Minister and Minister Assisting the Prime Minister on the Public Service.