Former head of the public service Terry Moran has warned that chronic underinvestment by successive governments has rendered the bureaucracy "impotent" in solving the country's big challenges.
In a scathing assessment of the current state of the Australian Public Service, Mr Moran and Centre for Policy Development chief executive officer Travers McLeod, argue that the increasing use of consultants and contractors is undermining the APS's capabilities and reducing government accountability.
"Successive governments have made the APS impotent in solving big problems in the best interests of Australian communities," Mr Moran and Mr McLeod said.
Their comments follow Prime Minister Scott Morrison's decision to launch a series of changes to the public service including cutting the number of departments from 18 to 14 and dumping five department secretaries.
The Prime Minster has said he to wants to "bust bureaucratic congestion" and drive greater collaboration in order to improve the delivery of government services.
Mr Moran said some of the department amalgamations announced by the Prime Minster, such as bringing together education and employment and industry and energy, made sense.
But he cautioned that the government's extensive use of contractors was undermining the APS's ability to provide advice and deliver services.
"They have outsourced so much to the private sector that the APS no longer has a connection with what is happening on the ground, and is unable, in the interests of the citizen, to achieve joined-up service delivery," Mr Moran and Mr McLeod said.
In his government-commissioned review of the public service, former Telstra boss David Thodey urged the government to scrap its cap on staffing levels because of concerns it was narrowing the APS's capabilities.
Mr Moran and Mr McLeod echoed Thodey review concerns of acute risks for policy, regulation and service delivery if its recommendations were ignored.
"The Thodey report nailed the real problems of the APS," they said.
The government has accepted the majority of the review's suggestions, though many of them only in part, and has rejected several key proposals, including removing the cap on staffing, moving towards a common set of pay scales and work conditions, and making it tougher for politicians to hire and fire department secretaries.
Mr Moran said that if the Prime Minister wanted to improve the delivery of government services he should consider the "place-based approach" advocated by the Centre for Policy Development, which he chairs.
The centre is helping trial a model for service delivery in which the Commonwealth, in partnership with a revitalised local government sector and state governments, operates to deliver services through local networks, under the authority of local government.
"[Such partnerships] draw a line under the fantasy that outsourcing is a panacea," Mr Moran and Mr McLeod said.