Following his disgraceful reaction to the rewarding last year of four Australia Post senior staff with Cartier watches, Prime Minister Scott Morrison set up a review of performance bonus payments in Commonwealth departments and agencies. The motivation for the review seemed obvious. It had little, if anything, to do with the merits or otherwise of bonus payments and how they might work best and everything to do with protecting the government from political embarrassment.
The review, conducted by the secretaries of the departments of the Prime Minister and Cabinet, and Finance, and the Public Service Commissioner, has been true to its apparent intent.
In March 2021, an interim report, not containing the names of the reviewers mentioned in the preceding paragraph, surfaced. What happened with that report and whether a final one was issued is not clear but in August "Performance Bonus Guidance" popped up on the Public Service Commission website without commentary. Into that vacuum stepped the Public Service Minister, Ben Morton, to urge the "exercise of rigor and restraint" and the need for Commonwealth agencies to act "in line with community expectations regarding remuneration". To put it another way, the setting of remuneration is not a matter of rational policy but of politics. Great.
The March report contains interesting summary information about bonus payments in the Commonwealth:
- They are uncommon and are used most frequently in government business enterprises.
- There is a great dispersion in their value, in 2018-19 ranging from $625 to one lucky devil who snagged $428,172, enough to buy more than 100 Cartier watches.
- In some agencies the average bonus to "key management personnel" as a proportion of total remuneration was relatively high, about 40-50 per cent.
- The more an agency used bonus systems, the better the systems were managed.
- Payments were mostly made to CEOs, senior managers and specialists like IT professionals and scientists.
- The number of agencies using bonuses declined from 74 in 2018-19 to 59 in 2019-20, a possible sign of the times.
Yet having spent 13 pages, backed up with several attachments, pulling together a pile of useful information, the interim report leaps directly to half a page of recommendations without any intervening analysis. The report contains no consideration of:
- The utility of the existing bonus schemes;
- The dismal failure of performance pay schemes introduced in the public service from the early 1990s, or;
- The desirable features that should be part of any bonus system.
The report is an analytical desert and those keen on evidenced based policy should look away. If this is typical of the quality of policy work in the contemporary public service, the cupboard containing its fundamental tricks should be stone, cold empty.
Could things be so dire? Maybe the reviewers, Rosemary Huxtable, Phil Gaetjens and Peter Woolcott, sniffed the wind, realised the government had an answer in mind for their review and they duly served it up. Why waste time on the hard yakka of policy analysis when it will not be appreciated or used or, worse, may suggest directions ill-fitted to the political interests of the government? That is to say, in this case, that the absence of policy analysis may not reflect an underlying inadequacy in its latent supply within the central agencies of the Commonwealth but rather that an answer had been predetermined and a retrospective justification sought. The reviewers seem to have taken the approach of the Swiss writer Robert Walser who confessed that "Anything forced upon me, whose necessity has been insisted upon from every side, I try to approach obligingly, and like it."
The government was embarrassed by Australia Post's four Cartier watches and, to a much lesser extent, by the tens of millions of dollars spent by NBN Co on its performance bonuses. It wouldn't have suited the Prime Minister to have a review advising on what would make remuneration policy good sense. No, no - more politically beneficial would be something to clamp down on performance bonuses and leave him less exposed to community wrath.
Staff will not work harder and better for the prospect of a jumbo bucket of Kingsley's chicken and awesome chips every month.
And that's precisely what the Huxtable/Gaetjens/Woolcott review has delivered. The review report recommends that any performance bonuses should "be in line with community expectations" and should be determined with "rigour and restraint", the very platitudes eagerly seized upon by Minister Morton. Of course, the review provides no guidance as to how consistency with "community expectations" might be assessed. Opinion surveys, focus groups etc. Nah. All that needs to be done with any bonuses that get towards the edge is to run them by the PM or subject them to the heat of Minister Morton's wisdom. If they don't detect any political stench, then let 'em rip.
So completes the degradation of remuneration policy in the Commonwealth. It's got nothing to do with setting rates based on levels for comparable work in outside labour markets as the primary foundation for recruitment and retention. The show has been comprehensively politicised - no political stench is the criterion for bonus payments while the base pay adjustments have been linked, as a matter of political convenience, to an irrelevant, sluggish index of wage movements in private sector. These policies not only have inherent political advantages but they could enable resultant savings to be usefully applied to community development grants biased towards right thinking, literally, electorates.
Then in August, out of the enveloping fog, the Performance Bonus Guidance arises on the Public Service Commission's website. The Guidance has a few vaguely expressed good bits and some not so good bits while it omits much that is important.
It says that any bonuses should be based on "measurable outcomes" and be "dependent on required employee behaviours", that "assessment criteria should be transparent" and that organisations should publish "information about their decision-making around awarding bonuses." These are the good bits, their teasing opacity notwithstanding. As for the not so good, the Guidance says that bonuses "would not be appropriate in most policy, service delivery, regulatory or corporate roles" although there would be "greater justification" for them in organisations operating "in commercial markets". No justification is provided for this discrimination. Thus, those who believe in performance pay in public sector organisations (and there are good reasons for unbelief) are left to ponder why an officer developing policy that improves life for the citizenry as a whole must be content with "psychic rewards" while those delivering letters and running a broadband network distinguished by high levels of complaint are lavished with bonuses in the tens of thousands of dollars.
Then there's what the Guidance doesn't say. Perhaps the most important point in both the practice of performance bonuses and its supporting analytical literature is that for such systems to have a chance of working, bonus payments need to be relatively large. That's why in several current schemes they are between 25 to 50 percent of total remuneration. It stands to reason - staff will not work harder and better for the prospect of a jumbo bucket of Kingsley's chicken and awesome chips every month. Yet the burden of the Guidance goes against sensible policy and practice, constantly stressing the need for restraint, the avoidance of "broad use" and the feigned utility of the dead weight of "community expectations regarding remuneration".
Thus the circle is squared and the unspoken rationale for the "Performance Bonus Guidance" is laid bare. The purpose of the Guidance cannot be to promote the better use of performance bonuses. It therefore must be to protect the political bottoms of the Prime Minister and his government, parts of their persons which recently have been under distressing assault. It's not a triumph of public administration, it's a triumph of political convenience rendering the image of a Cartier watch an ideal decorative motif which the Public Service Commission should affix to the Guidance document.
In his story "A Quieter Place Than Clun", the grand master of Australian prose fiction, Gerald Murnane, writes of a Victorian public service clerk who in the 1950s was famous "for spending all his weekends making a scale model of the Melbourne Cricket Ground out of dead matches". Can anyone imagine a more apt metaphor for the 2021 review of performance bonuses in the Commonwealth public service?
- Paddy Gourley is a former senior public servant. firstname.lastname@example.org