Australia gained a strong and deserved reputation for public sector reform in the 1980s and 1990s. More recent studies have revealed some backsliding and identified new challenges to be addressed. It's also timely to reflect on the possible downsides from earlier reforms that were perhaps insufficiently appreciated by the reformers at the time.
As the Finance Minister's independent review of the operation of the Public Governance, Performance and Accountability Act draws to its conclusion, it's worth exploring not only what we can learn from our experience, but also from others who are focusing anew on how to improve public sector performance and capability.
The act builds on the financial management reforms of that earlier era, while taking into account the findings from the Moran review of government administration and the Commonwealth financial accountability review. These reviews suggested the system was "not broken" but could be improved, with two particular messages:
- The need for a more coherent whole-of-government approach; and
- The need to address emerging capability problems, including in strategic policy advising and human resource management.
Without disagreeing with these messages, my view is that these two largely internal reviews were somewhat complacent, overlooking in particular some of the possible downsides of our reform history that critics warned of at the time. These include:
- the danger of "hollowing out" expertise as we pursued efficiency gains through contracting out, etcetera;
- the danger of isolation from clients and communities as "principals" relied increasingly on "agents" to deliver services;
- the risks to public service values and the career service of closer political control; and
- the assumption that non-government organisations (both for-profit and not-for-profit) without such values were at least as able to deliver quality services with integrity as are government employees.
The above two key messages shaped both the Public Service Amendment Act 2013 and the PGPA Act, with their emphasis on cooperation across government (and beyond), "stewardship" and addressing capability, including through mandated corporate plans. The independent review is required under the PGPA Act and is led by Elizabeth Alexander and David Thodey. A key question for them is whether the new legislation is orchestrating the action expected across the Commonwealth public sector and across the Australian Public Service in particular. The answer at this stage seems to be: not yet. Moreover, there is reason to believe some of the positive developments of the past have been forgotten and urgently need to be relearned, and some of the downsides of the past need to be acknowledged and addressed.
The problems are not all confined to the public service. As Martin Parkinson suggested before Christmas, there is room for Parliament to show more interest in performance information and place less emphasis on political point-scoring.
Departmental submissions to the independent review seem fixated on the excessive and overlapping requirements of the act's mandated corporate plans that are intended to complement portfolio budget statements. There is some basis for this complaint, though it mainly concerns the Finance Department's lack of clarity about the respective roles of corporate plans and PBSs. But the complaints also overlook far more important concerns, such as the weakness of many corporate plans in addressing serious capability issues, and the continued failure to systematically evaluate government programs and policy initiatives.
The respective role of PBSs and corporate plans should be clear and simple: PBSs are about "what" the government intends and the associated performance measures and targets; corporate plans are about "how" and "why", setting out the agencies' strategies to ensure capability to deliver the performance set by the government – and the capability to meet likely future performance requirements. The two must complement each other; ministers determining the PBSs and public service chiefs taking responsibility for corporate plans. Agencies' annual reports should address achievements against both: the performance targets in the PBSs and progress on the strategies in the corporate plans.
This is not particularly new; the basic framework was set out in a management advisory committee report on performance management back in 1999. Corporate plans were not mandated then, but were widely used. The quality might have been mixed but, nearly two decades later, one might reasonably have expected widespread improvement rather than the reverse. The Public Service Commission's capability review program following the Moran review, and the subsequent requirement for performance improvement plans, should also have sparked a renewed interest in quality corporate planning.
Apart from the areas highlighted by the capability reviews for urgent action – strategic policy advising and human resource management in particular – plans should be addressing other weaknesses emerging from three decades of contracting out and reliance on third parties to deliver public services. What strategies are agencies pursuing to retain sufficient technical skills to be informed buyers of support? What are they doing to ensure accurate feedback from clients and to nurture genuine engagement with communities?
Non-departmental submissions to the independent review rightly emphasise the importance of a renewed focus on evaluation. For a time in the 1990s, it was a requirement that cabinet submissions identify evaluation information in support of new policy proposals and to include a plan for evaluation of a proposal if agreed and implemented; departments were also expected to schedule evaluations of all programs. These requirements may well have been breached almost as often as they were honoured, but they did impose a discipline on the way policies were developed and reviewed within government. To be really successful, however, evaluation reports need to be made public and be available for scrutiny, including by Parliament.
In November last year, the US House of Representatives passed the Foundations for Evidence-Based Policy Making Act, which seems likely to be endorsed by the US Senate. It has three key elements: the strengthening of data available for evidence building, including through data linkage across government; modernising privacy protections (thus addressing the concerns of likely opponents of the first element); and strengthening federal evidence-building capacity, including by requiring all departments to have a chief evaluation officer. The last requirement might seem rather prescriptive, but Australian government departments do need strong strategic policy development and review capability, and to invest more systematically in evaluation.
With less clear separation of powers in Australia, and growing political control of public communications within government, requiring public reporting of evaluation may be more difficult here than in the US. But the Australian Parliament could take a more constructive position. For example, it could set aside time for estimates committees to focus on particular annual reports, or particular programs and policy areas, calling on both officials and external experts to explain and comment on performance information and evaluations. The Dutch have introduced an "accountability day" aimed at ensuring the legislature pays special attention to performance data, with a degree of acceptance that political point-scoring is not to get in the way of serious scrutiny and constructive deliberation.
An even more recent US development might also provide a useful model for practical ways to address capability and performance issues. The National Academy of Public Administration was commissioned by the Office of Management and Budget to advise on steps the office could take to strengthen the US federal government's efforts to improve performance. The academy's report, Strengthening Organisational Health and Performance in Government, was released in January. Like the Commonwealth financial accountability review and our PGPA Act, this report emphasises capability as well as performance management. But it has a strong bottom-up flavour as well, recommending strengthening unit-level health and performance, and creating a learning-based approach to improving results. It suggests using the annual government-wide employee survey to diagnose the state of unit-level organisational health. The employee engagement index could be used to focus on units exhibiting "health" problems; other data could then be used to further analyse performance and capability, encouraging the units to develop their own plans for improvement and to learn from each other through peer reviews.
It may well be possible for the Public Service Commission to develop a specific employee engagement index from its annual employee census, which could be monitored both over time and at sub-agency levels. Such an index is just an indicator of organisational health, and is not a measure of capability, but there is proven correlation between employee engagement and organisational performance, and the index could help start a more careful consideration of capability and performance.
I have found value also in each business area of a department having a short document of the skills and knowledge it needs to meet its responsibilities well. This helps to guide, for example, recruitment, staff development including initial orientation, the development and use of administrative data systems, preservation of corporate knowledge, and networking with external experts and stakeholders – all key elements of organisational capability essential for good performance.
Andrew Podger is a professor of public policy at the ANU's College of Arts and Social Sciences, a former federal departmental secretary and a former public service commissioner. He made submissions to the independent review of the PGPA Act, and was on the US National Academy of Public Administration's panel that prepared the Strengthening Organisational Health and Performance in Government report. email@example.com