Making the most of changes to machinery of government

By Bob McMullan & Sean Innis

Thursday May 16, 2019

On the surface, the choice to restructure of government departments and agencies looks easy. But don’t be fooled.

To Australia’s elected Prime Minister

Congratulations on winning the election and your appointment as Prime Minister. I am sure you are both humbled by the responsibility and eager to implement your government’s plans for our nation.

Soon you will be asked to decide on the structure of government departments and agencies. These decisions will be amongst the earliest you take as Prime Minister.

On the surface, the task looks easy.  At a stroke of a pen you will be able to create new departments, abolish old ones, and shift responsibilities from one department to another. But don’t be fooled. Poor machinery of government decisions (as they are known to public servants) impose substantial costs on our citizens and making good decisions is harder than it seems. Caution should be your watch-word.

Past Prime Ministers have exercised the power to make machinery of government changes freely.  More than 200 changes have been made since 1993-94 with most occurring shortly after elections. The scale of past change has sometimes been vast.  In 2015-16, machinery of government changes involved the movement of 8000 staff in 21 separate changes.  It can also be expensive. Changes following the 2013 election, which involved the movement of  12000 staff, cost an average of $14 million per agency.

You will find that no set process exists for making machinery of government decisions, but that some conventions tend to be observed.  The first is that, ultimately, these are decisions for you and you alone. You will decide what changes are made and when they are made. Your decisions will, of course, need to be formalised by the Governor-General as part of a new administrative arrangements order. But the decision making responsibility rests firmly in your hands.

“For most areas of government activity, transparency and a considered process are key to good decision making”

The second is that the secretary of your department will provide some advice as part of the incoming government briefing process. This advice will be informed by other departmental secretaries, who often have differing and sometimes conflicting views of what changes should be made. You can expect your Secretary’s advice to include plans for implementing any election commitments the government have made involving structural changes to departments. Election commitments are taken as gospel by public servants, and it would be very unusual for a secretary to brief against implementation of a clear election commitment.

The third is that consideration of machinery of government changes tend to occur alongside the selection of your ministry. As part of this process, you can expect at some of your colleagues to propose departmental changes which align with their own interests and objectives. This will no doubt complicate your decision making.

The final convention is that there is a clear expectation that the public service will move effectively and efficiently to implement your desire structure. This expectation is appropriate and important. You should take decisions confident that they will be implemented well.  A recent audit report suggests that the public service generally meets this expectation, if not always perfectly.

For decisions of such importance, machinery of government changes receive little attention outside Canberra. Relatively few people tend to be involved in the decision making process and little external scrutiny is generally applied. This is a shame.  As for most areas of government activity, transparency and a considered process are key to good decision making.

You should be aware that observers of machinery of government changes have, for some time, been concerned about quality of at least some past decisions. These concerns are widely and sincerely held within the senior echelons of the public service and those who take an interest in the quality of government administration. The strength of these concerns was captured neatly by the current Secretary of the Department of the Prime Minister and Cabinet, Martin Parkinson, who in a recent speech urged “against regarding the APS as a set of Lego blocks to be painlessly recreated” and called for future change to focus on “improving the lot of the citizen”. This is wise advice.

“Change should only be considered when net benefits for the citizenry as a whole, can be clearly and compellingly articulated”

Concerns about past decisions should not frighten you off making change. The whole purpose of machinery of government changes is to ensure that the public service properly supports the government of the day – the government you lead. It is important for the public service to be structured in a way gives the your government the best possible opportunity to serve the people of Australia well.

There are many good reasons to adjust the structures of government departments. Improving service delivery, greater efficiency in the use of taxpayer funding, and improving the regulatory and policy effectiveness all provide a sound basis making change. However, capturing these benefits can be very hard and in taking decisions it is important that you consider potential costs, and not just aspirational benefits.

At the end of the day, there is no perfect structure for government and no rule book for you to follow. Public service analysis of options can help, as can external advice, but decisions will inevitably a matter of judgment. In making those judgements, the four principles outlined below, which draw on past experience, may help you chart an appropriate course.

Principle 1:  Design for the citizen

Martin Parkinson’s call for a focus on the citizen is a good one. Machinery of government changes should benefit the public and not just the government. Yet too few past changes have had this focus, with many appearing to reflect ministerial desires rather than any clear public benefit.

Any changes you consider making should carefully assess the short and long-term impact they will have on citizens. Change should only be considered when net benefits for the citizenry as a whole, can be clearly and compellingly articulated. Moreover, where possible, the impact of change should be measured over time to improve transparency and inform future decision making.

While it may be difficult, you should avoid making changes that simply respond to the preferences of your ministers.

Principle 2:  Real change takes real time

Many machinery of government changes occur quickly and efficiently, with little disruption except to the staff directly affected. But major change, involving large functions, complex delivery systems and thousands of staff, is a different matter.

Disentangling financial structures, IT support structures, property responsibilities and HR systems from old organisations and reintegrating them into new ones takes considerable time and effort. Some changes after the 2013 election, for example, took more than a year for new arrangements to come into effect.

You should bear in mind that the change process extends well beyond putting these new arrangements into place. Developing well functioning management structures and accountability mechanisms can take much longer. And achieving cultural alignment, the most important component of any successful change, takes longer still. It is only when all of these things are in place that the benefits of change to citizens are likely to be fully realised.

The time and effort required to implement effective change should not be a barrier to your decision-making but it should be a major consideration.  You should expect that major changes will take several years to bed down, and that this process will extend well beyond the term of government in which decisions are made.

Principle 3:  Stability and stewardship have value

Creating a strong foundation for implementing a new government’s immediate priorities and commitments is a common driver of machinery of government changes. For you to pursue this objective is obviously appropriate.  Implementing the government’s commitments is a fundamental part of your bargain with the electorate. Having the freedom to design structures that implement those priorities well is a right you, and every prime minister, should have.

However, in taking decisions you should bear in mind your responsibility to ensure that government has the structures and capabilities in place to deliver on the enduring functions of government now and into the future. Stability and continuity has a value that is often overlooked.

Your decisions should also consider the impact (both positive and negative) of proposed changes on-going ability of the public service to discharge its deeper stewardship functions, including its ability to deliver high-quality, timely and practical advice to government on issues of the future. The long-term erosion of this capability has been a strong theme of the current review of the public service. A sensible rebuilding of the public service’s stewardship focus and capability would likely serve your and future governments well.

Principle 4:  Avoid merry-go-round decisions

Past machinery of government decisions are littered with examples of major responsibilities bouncing from department to department over time. Responsibility for child care, aged care, and Indigenous affairs (to name a few) have all been the subject of multiple shifts in the past decade. In some cases, the functions have moved out of one department only to return to their original home a few years later.

Most merry-go-round changes are made to align structures with the philosophy and priorities of the government of the day – whether child care should have a stronger focus on education or a stronger focus on supporting work force participation, for example. Placing the function in the department with the most natural connection to the government’s current agenda priority has a logic.

However, the reality is that merry-go-round changes can result in some perverse – but understandable – behaviours within the public service.  Rather than integrating into their new departments, areas subject to frequent change sometimes seek to stay separate, knowing that further change may just be round the corner. Staying separate lowers the cost of future moves, but can defeat the purpose of change.

Much more importantly, the distraction created by merry-go-round changes shifts public service attention away from designing and delivering policy in the public interest. The costs of this distraction can be very large. It is, for example, an open question whether those responsible for the aged care system would have been better placed to foresee and address the issues now emerging in the Royal Commission had they not been distracted by managing the merry-go-round of moving out of, and then back in to, the Department of Health.

A final word

As important as they are, structural changes are not everything. No matter how you design the structure of the public service, boundaries will exist, differing views and priorities will need to be reconciled and coordination will be needed.  One of the potential strengths of Australia’s form of government flows from having differing ministerial perspectives emerge and be discussed. This contest of ideas is important, even when it only occurs behind the walls of government.

In setting structure, you should also think carefully about the processes of your government and how best to ensure that reasoned debate can occur within the structure of government, while ensuring that informed decisions and actions are able to be taken that reflect the views and priorities of the government as a whole.  This is, of course, no easy task.  Good luck.

READ MORE: A 10 point guide to the lure and pitfalls of machinery of government changes

Bob McMullan is a former Minister for Trade and National Secretary of the Australian Labor Party.  He is currently Director of the ANU Crawford Leadership Forum. Sean Innis is inaugural Director of the Public Policy and Societal Impact Hub at the Australian National University. Before joining ANU, he was Special Adviser to the Productivity Commission and held senior executive positions in a number of APS departments.

The Public Policy and Societal Impact Hub was established by ANU in 2018. Its mission is to maximise the contribution ANU makes to policy discourse and making. In doing so, the Hub is committed to facilitating high-quality civic discourse about issues which will shape the long-term future of our society.

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