Professor Peter Shergold presented his report on the home insulation (or "pink batts") program and related matters, Learning from Failure, to the Environment Minister in August this year. But it wasn't released until six months later – last month – when it emerged without fanfare on the Public Service Commission's website. No doubt, the old trifecta of supposed Labor incompetence (the home insulation program, the national broadband network and the "building the education revolution"), which Tony Abbott had exploited relentlessly, carries less political mileage in the Turnbull era.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
But Shergold's report is much more than a reflection on specific failures, though his terms of reference required him to take account of the Hanger royal commission on the pink batts scheme and the Scales review of the NBN. It is a general manifesto on future directions for the Australian Public Service, derived from Shergold's extensive experience as secretary of a number of departments, culminating in five years as head of the Department of the Prime Minister and Cabinet. It is also a personal testament, eloquently expressing Shergold's own commitment to the values of public service, broadly understood. As such, it deserves to be read and discussed widely.
The report is structured around six general themes: providing robust advice, supporting decision-making, creating a positive risk culture, enhancing program management, opening up the APS, and embracing adaptive government. The overall approach begins with more concrete and pragmatic issues, such as the need for advice to ministers to be robust and the importance of engaging directly with ministers (i.e. keeping ministerial staffers in their place). In the later sections, Shergold becomes more evangelical, outlining a vision of what he calls "adaptive government", a term that encompasses all the current enthusiasms for agility, flexibility, innovation and so on. Traditionalists and disrupters alike will find evidence and arguments to embrace (and contest).
The home insulation scheme must be the most scrutinised government program in recent years, having been the subject of reports by Allan Hawke, a Senate committee, the Australian National Audit Office and the Hanger royal commission. Drawing on these sources, as well as a series of interviews, Shergold provides a trenchant summary of the program and why it failed. As was evident at the time, once smoke from the Abbott-led barrage against environment minister Peter Garrett had cleared, the underlying cause of failure was undue haste driven from the centre. For this, prime minister Kevin Rudd and his assisting minister, Mark Arbib, must take responsibility, along with their close advisers in PM&C and the Treasury. Their unwillingness to countenance any delay in spending the money discouraged public servants down the line from insisting on proper procedures.
However, Shergold refuses to exonerate the Department of Environment, Water, Heritage and the Arts (as it was then), which had carriage of the program. He summarises the mistakes that were made in planning, risk management and implementation. Rather than blaming individuals, however, he focuses on systemic reasons for failure, from which he draws lessons for the future.
One weakness – already emphasised by Justice Ian Hanger – was the paucity of written records, particularly of advice sent to superiors. This not only impeded later attempts to explain what had happened in the interests of accountability. It also contributed, at the time, to the program's problems. In Shergold's view, much of the program's failure can be sheeted home to public servants who failed to alert their superiors to risks associated with the program. Too often, written advice tended to skirt over difficulties and reasons for caution, which were either conveyed only orally or suppressed altogether.
Shergold is committed firmly to the value of free and frank advice delivered in writing, which he sees as systemically underappreciated, reflecting a lack of "fortitude" on the part of senior public servants. He is also squarely in the camp of those who see freedom of information as a contributing factor. If FOI has discouraged frank written advice and if the reduction in such advice has contributed to weaker government performance, FOI is a cause of poor government performance. Shergold therefore recommends revising FOI legislation, allowing for better protection of internal deliberative processes.
This is a plausible argument that the pro-FOI lobby is reluctant to take seriously. There is a strong case for a major review of FOI, but only within a broader attempt to reform public service culture. Reform needs to be grounded in the twin objectives of encouraging more robust, written advice to superiors and ministers, and, at the same time, emphasising the value of proactive disclosure for the great mass of public information to which public servants have access. Mere tinkering with the legislation would be insufficient.
Another pervasive fault in the home insulation program was the failure to adequately assess the risks surrounding its rapid roll-out. The list of neglected risks is legion, including technical dangers to health and safety, deficient installation, fraud and waste. Shergold adds his voice to those, including the previous auditor-general, Ian McPhee, who argue that the APS is generally deficient in risk management. He refers approvingly to the Public Governance Performance and Accountability Act of 2013 and related efforts by the Finance Department. But he says more should be done to instil a "positive risk culture", which incorporates awareness of potential risks into planning at all stages.
He therefore recommends that all departments and agencies should appoint a "chief risk officer" with the function of "embedding a strong risk culture and behaviours across all levels of the organisation". In addition, all major cabinet proposals should be supported by a "risk-management plan", endorsed by the relevant minister and vetted by PM&C and Finance.
Whether such an elaborate and cumbersome approach would deliver value for effort is questionable. The new structure would consume considerable resources and could easily degenerate into a routinised, box-ticking process, which would compound the problems it was designed to solve.
Shergold's recommendations raise wider difficulties with the whole notion of isolating "risk" as some special, additional element in management and decision-making. In essence, "risk" is just another term for "what could go wrong", a consideration that's integral to all sensible planning (and, indeed, daily living). Assessing "what could go wrong" is obviously highly context-dependent and requires judgment, relevant experience and (dare one say it?) common sense.
The dangers of treating "risk" as a specialised, context-free, managerial component were well illustrated in the home insulation program. Beleaguered Environment officials, struggling with developing a new program from scratch without the necessary in-house skills or experience, resorted to consultants to provide a risk-management plan. The consultants, members of a well-known Canberra firm, applied their standard risk-management framework, which concentrated on generic problems (overspending, delay, etc) and found little room for specialised knowledge of home insulation. As Hanger remarked, failure to adequately consult industry experts was the most glaring omission in the whole sorry saga. If officials had started with more concrete, context-dependent questions – such as "what can go wrong with installing home insulation and whom should we ask about it?" – they might have directed their attention to the right people with the relevant skills and expertise.
When questions of management are generalised, they inevitably leave out the contingent issues of local and specific significance, which define most actual management problems. This logical truism bedevils most attempts to impose system-wide management frameworks on the APS, including the latest Finance Department initiatives in the PGPA Act. Shergold's proposed risk framework, which seeks to impose a similar system-wide structure, would face the same difficulties.
Shergold's willingness to embrace such a centrist, one-size-fits-all approach to risk management sits uneasily with his support for "adaptive government". His overall message is that public service culture needs a major overhaul, to encourage a greater willingness to innovate and experiment. He would like to see more pilot programs, so as to test new policies while allowing scope to adjust them or abandon them altogether. Such an approach, if used for the home insulation program, would have avoided much harm. He also wants public servants to shed the disdain for implementation that pervades the central policy departments. Canberra mandarins should become more outward-looking by working closely with other levels of government and other sectors. They should be happy to work through networks as well as hierarchies. These views reflect Shergold's own background in running line departments before moving to PM&C and his current close engagement with the community sector.
At the same time, as Shergold recognises, the centre will always need to exert some control. Ministers must take ultimate responsibility. The imperatives of political accountability require officials to focus on the chain of bureaucratic command, which may leave little room for daring experiment or power-sharing with external networks. Increased flexibility and tolerance of experimental trial and error on the part of public servants will only come about if ministers support it. So far, ministers, and politicians in general – not to mention the media and the wider public – have shown little appetite for living dangerously.
In the end, one suspects, the main lesson for public servants from the home insulation program will be to reinforce the traditional values of caution and due process, as well as frank and fearless advice. The program – along with its companions in notoriety, the NBN and BER – will stand as warnings against the dangers of the new values of innovation and agility, not as evidence in their favour.
Richard Mulgan is an emeritus professor at the Australian National University's Crawford School of Public Policy. richard.mulgan@anu.edu.au
