Senior Liberal MP Malcolm Turnbull has begged public servants to be more creative, saying their fear of failure prevents them from experimenting with new ideas that Australia needs.
However, former top federal bureaucrat Terry Moran says innovation thrives in the public sector - as long as ministers are not involved.
Communications Minister Mr Turnbull told a Canberra audience on Tuesday night that one of the biggest problems any organisation faced was a "culture where the penalties for 'failure' are vastly out of proportion to the rewards for success".
"And that is very common in the public service, that you naturally have an incentive for any rational actor to do nothing, or to be very cautious if they ever do anything."
Mr Turnbull said it was crucial that public servants embraced experimentation in their thinking and approaches to work.
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"We've got to try new things and, if you try new things, a lot of them won't work. But so what? If you smash people because they try something and it doesn't work, then they'll never try anything new again."
Mr Turnbull also urged bureaucrats to learn more from their colleagues in other governments, saying "the public service is vastly less aware of what's happening in other jurisdictions than, say the private sector is".
The minister was speaking at the launch of The Mandarin website, which aims to help public service leaders share ideas.
However, Mr Moran, a former head of the Department of the Prime Minister and Cabinet who served under Kevin Rudd and Julia Gillard, said the enemies of progress were more likely to be politicians than public servants.
"There's a lot of innovation in the public sector but it tends to be in agencies and institutions that have a lot of devolved authority and their own governance arrangements: think public hospitals, schools, TAFEs, the Reserve Bank," Mr Moran said.
"The public sector is not departments of state. And if you look for innovation in departments of state you'll be disappointed, because innovation declines the closer you get to a minister."
Mr Moran, who is now national president of the Institute of Public Administration Australia, took a good-natured swipe at Mr Turnbull, saying "the secret of risk-aversion lies in Parliament House".
"So you're right about departments of state, which is what ministers work with; you're wrong about 90 per cent of the public sector."
Mr Turnbull agreed politicians needed to be set "the right expectations" by resisting the urge to tell the public "everything will be alright".
"So that, when the journalist says 'can you [the minister] guarantee that this program will work?', you've got to have the courage and the integrity to say 'no, I can't guarantee it will work'," Mr Turnbull told the audience.
"You've got to get across to people that we are living in an age of immense volatility and, therefore, you have to be nimble and innovative."