Timid, defensive public service needs to stand up, take control of its destiny
It’s on again, politicians throwing stones at each other over the public sector. One side says too many and the other says too few. It’s an argument designed to score points politically, to play to the leanings of the electorate. One is either for or against the public sector. You either think it to be efficient, or inefficient.
So much for the claims by any politician that the public sector needs to be depoliticised. Not unexpected of course, they have allowed themselves to be in the business of point scoring. If only it were different, but it is their choice.
What I don’t understand is why the public sector allows itself to be manipulated. It’s not helpless, it just seems to think it is, or it chooses to be. If it wants to be an independent provider of fearless and frank advice and seen as a quality and efficient deliverer of public services, it needs to claim and defend that ground. Not wave in the wind at the whim of political point scoring and, frankly, public naysayers.
The debate over size is a nonsense, circular and unhelpful.
We need a public sector that is properly sized to provide good advice to parliament and implement the policy of the government that was chosen by the people. The government needs to be measured on the effectiveness of its policies, the public sector on the effectiveness and efficiency in delivering those policies.
One side of politics leans towards bigger government, the other smaller. This is an ideological debate about governments influence in business, the markets, the support to the unfortunate and the disadvantaged, and the governments intervention in our daily lives. The choice between the two is the choice of the voters. The certainty in Australia is that there will be a change of government, sometime.
Neither approach necessarily means a bigger or smaller bureaucracy. What we don’t need is to swing between big or small public sector, hiring and firing, in-house or contracted services every time we have a change of government. We don’t need politicians directing how many public servants are needed, conflating big government-small government with big bureaucracy-small bureaucracy.
The public sector leadership ought to be telling government what is needed to support delivery, in the same way as it argues for IT and other investments. The management of the public sector ought to lie within the public sector.
Unfortunately, is easy to form a view that without external pressure the public sector is slow, inefficient, and overstaffed. There is some evidence to support the conclusion.
More than 25% of Australia’s economic activity is attributed to the federal public sector. If a business makes 20% profit (and the average is about 11%) it only makes money on Friday’s. Thursday’s effort goes to the public good and the rest pays the wages and the costs of doing business. People don’t begrudge a public sector, they begrudge waste.
The Productivity Commission reports that Australia’s labour productivity has shrunk by 0.7% each year since 2020. The non-mining private sector has lifted labour productivity by 0.4% each year, the mining sector subtracted 0.2 percentage points, and public sector productivity declined 0.7 percentage points. That is an extraordinary gap, and unsustainable.
The public sector is a monopoly, without the competitive tension of industry that drives efficiency or product development. It is a public sector principle that competitive tension drives efficiency and value. None of that tension exists in the public sector.
The onus is on the public sector to generate its own tension internally to drive efficiency, and to prove that without competition it delivers optimum value. The public sector delivers a social outcome, based on policies chosen by the government chosen by the people. It is unlikely to ever match the efficiency of market facing business, but it must improve its contribution, not remain a drag on national productivity.
In the absence of demonstrable performance, the politicians will continue to interfere in what should be independent operations of the public sector, and the public perception of ineffectiveness will remain.
The Coalitions imposition of a staffing cap in 2015-16 was an attempt to control growth and drive performance. It was a poor lever. It created an industry of revolving door contractors doing the work of public servants at a higher salary. The public service leadership was complicit in avoiding the intent behind the policy.
In Defence the 2015 First Principles Review included recommendations to reduce the size of the procurement agency by two thousand staff and three Band 3s. There are now three procurement organisations each headed by a Band 3, and the 2,000 staff reduction became three thousand contracted staff through their Major Service Provider contracts. Again, the leadership actively avoided the intent, or didn’t have the imagination to do things differently.
The result has been the hollowing out of public sector capability and the creation of an overpriced and equally inefficient contracting market. The impacts of poor policy design sit with government. Intransigence, resistance to change, avoidance, and lack of strategic foresight led to consequences that were avoidable. That outcome sits with the public sector leadership.
The Labor Party removed the staffing cap and has overseen a reported 36,000 increase in public sector headcount. Some are undoubtedly revolving door contractors returning to the public sector, though with a full labour market, few have voluntarily chosen a significant drop in their earnings and lifestyle.
There is little evidence of sustained improvement in public sector delivery or affordability. It is a lumbering policy, equal to that of the staffing cap, imposed on the public sector without delivering benefit to productivity and the public.
Incumbent governments of both persuasions seek to control the public sector as if it were an arm of their party. It is not, but the public sector is, if not an active willing participant, at least compliant.
Consider the Prime Minister’s Office suggesting the public service respond to awkward questions at Senate Estimates with responses like “the data requested is not captured for reporting purposes and obtaining it would be an unreasonable diversion of resources”. (The PMO’s secret manual on sidestepping Senate estimates questions. )
That the government even suggested such responses is unconscionable. Given that they did, the public sector should have been fiercely protective of its independence, and of its duty to Parliament, Government, and the people. At the very least the APSC Commissioner should have been loud in his rejection of the attempted influence. You can’t run a values-based, independent, public sector by standing quietly on the side lines.
Public servants, especially senior staff, should be protected from such interference. Their jobs should not be at risk for delivering honest, frank advice contrary to a politicians’ wishes. Tenure, as suggested by some, might be too strong. Public servants, especially the leadership, should not be protected from poor performance. Accountability, responsibility, and the privilege of large pay checks, comes with a clear consequence for under-performance.
Public sector political football is going to continue until the public service takes control of its own destiny. It is time to stop digging in, defending itself, avoiding scrutiny, spinning responses. It needs to be apolitical, high-performing, and continuously improving. The public sector game needs to change from defence to offence, proving its value.
It can start by simply doing what it says it will do. Take procurement as a simple example. The published schedules for tender release, evaluation and contract signature are rarely met. There is no leniency for a tenderer, they all submit on time. It’s hard to have confidence in public sector delivery if it can’t manage those early activities, which are all within its control, or indeed have respect for a relationship where standards for buyer and seller are so different. There are a thousand simple ways to improve perceptions.
The big issue, though, is to move the dial on productivity and performance, From being a drag on national productivity to being a positive contributor.
Corporate plans and annual reports for each agency have been required since 2014. They are largely compliance documents, providing lip-service to the objective of improved transparency and accountability. Agencies set minimum standards, report on achievement of expenditure, and bland ill-defined outcomes. They rarely show meaningful data or a commitment to targets for improvement.
I doubt any CEO would get away with telling their Board they will aim to process 50% of applications with 100 days and fail to achieve even that low target (Veterans Affairs), or be more than 200 times worse in call centre performance than the industry standard (Services Australia), or close your Help Desk to calls and take no new applications from your clients for six months (AGSVA).
Every public company is held to a higher standard and undergoes greater scrutiny than any government department. With the freedom afforded the public sector comes a greater responsibility for self-criticism, for generating internal competitive tension, for driving performance and productivity, and actively eschewing inefficiency.
Change will not happen overnight, but a commitment to demonstrable improvement is essential if the public sector is to build a reputation as a valuable high performer. Politicians may still “poke for points”, but departmental positions will be at least defensible, tenable.
The past is the past, but it can’t be the future. The public sectors defence against ongoing political interference is to lead itself out of the doldrums by committing to performance and productivity improvement, and by demonstrating it has delivered against those commitments.
If it can’t move closer to community expectations and standards of performance then it will almost certainly come under continued political interference, greater scrutiny, governance and control. If it continues on the same path as today, it will be showing that the delivery of the public services that we need as a country is too important to leave to the public sector.
