To ensure nobody was left behind, Steven Kennedy opened his department doors to dozens of partner organisations. Digital services alone couldn’t reach all in need

By Stephen Easton

Friday September 6, 2019

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The new Commonwealth Treasury secretary says there is ample space for cooperation between all Australian governments, and he urges public servants to make it happen without waiting to be authorised by ministers all the time.

Dr Steven Kennedy is a big believer in working with others in different organisations, sectors, jurisdictions or levels of government. He prefers the idea of cooperative federalism to simple devolution, which leaves certain responsibilities entirely to state or local government.

He sketched out his vision of a well-functioning federation on his second-last day as head of the Department of Infrastructure, Transport, Cities and Regional Development, at a public sector governance forum run by the respective institutes of company directors and public administration.

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The full speech got a bit complex in parts, but the bottom-line conclusion was simple.

“Part of the solution of good governance supporting democracy is an open and collaborative relationship between the levels of government that recognises the strengths of governments. … The public servants of all governments must effectively work together. That is what the public expects.”

Kennedy can’t imagine the Commonwealth keeping out of regional issues and thinks most people probably expect it to play a role — although mostly, he thinks Australians have “little interest” in which level of government does what.

Rather, they judge public services on how they are delivered, and policy on the outcomes achieved. Public expectations are “higher than ever” while trust in government is low, he said.

Lots of Australians are turning to digital services and they want them to be quick, easy, and secure. But getting that right won’t be enough to rebuild flagging public confidence, according to Kennedy, who is also the new president of the Institute of Public Administration Australia, ACT Division.

While data governance, privacy and information security are now key factors in public trust, he believes people also have high expectations for service delivery to disadvantaged groups and the “more complex cases” that require tailored approaches and direct, face-to-face interactions.

“Public servants are very capable of meeting this challenge,” he said optimistically, offering a practical example of his former department taking the initiative and working together with a range of other organisations to improve policy implementation — without being told to do it.

The benefits of joined-up government

As part of the federal response to the drought, Kennedy said DITRDC went beyond the basics and reached out to other organisations to help it deliver assistance, earning strong support from ministers through decisive action instead of asking for permission.

This could easily have been run as just another grant program. “But when communities are under real pressure something else is required,” he said.

Special outreach programs to help improve the delivery of drought assistance were “a great example of agencies working together, and partnering with the right people beyond government, to respond to communities’ feedback and provide better service to communities in need”.

“This was a joint idea from my department and NBN Co. to improve Australian Government services to regional areas. We have partnered with the Australian Taxation Office, the Rural Financial Counselling Service, Centrelink, NBN Co., the Department of Employment, Skills, Small and Family Business, state government agencies, key farming bodies and non-profits like the Royal Flying Doctor Service and the Salvation Army to provide better-coordinated and personalised support.

“Agencies came together in local RSLs and town halls, set up tables, and offered one-on-one advice to farmers and community members experiencing hardship.”

More than 2100 people went to events in three southern drought-affected states in the first half of 2019, and the department began “collaborating with other agencies to bring targeted drought assistance to regional and remote Queensland” in August.

“We didn’t seek permission, but we kept ministers in the loop and they have been strongly supportive, with key ministers helping to promote outreach activities via media releases and tweets. This experience highlights that while digital opportunities will both allow some savings and offer improved services, they won’t be the whole answer.

“People with complex situations and people under pressure will require a more tailored approach. And if the public service doesn’t offer this service, people will lose trust in programs and the public service.”

Whizz-bang digital services are not enough

Inequality is an important issue to the new Treasury secretary, who noted Productivity Commission researchers had “made a similar point” about the need for special policies to address entrenched disadvantage. Not everyone benefits from a strong economy, he noted.

“For most Australians, sustained economic growth and reliable access to employment, coupled with investment in skills and education, offers opportunities for a better standard of living. But for some, growth and complementary improvements in skills and education policies will not be enough.”

Kennedy was “particularly taken” by former PC deputy chair Karen Chester’s comments about “a relatively small but significant group of Australians” stuck in a cycle of poverty.

“There can be a range of underlying drivers: mental health; chronic disease; intergenerational stories of poor economic participation by parents and poor educational outcomes for their children. Indigenous Australians continue to be well over-represented in these disadvantaged groups.”

He accepts the evidence that “standard government interventions” often don’t work for certain groups and in certain pockets of disadvantage, meaning a “hand-made or tailored approach” is usually required.

“Such an approach will need to be sustained, results will take time, and initially the return on investment can be modest. Moreover, as disadvantage is often concentrated geographically, the policy response should reflect the interaction with place.”

Kennedy said digital services were to be welcomed but emphasised the point that face-to-face contact would always be needed, often in providing “intensive support” to people and communities who are facing extraordinary challenges.

Steven Kennedy

He sees much promise in tailored and “place-based” approaches but is convinced they require a lot of collaboration to succeed — often within governments and across the federation, as well as with organisations in other sectors.

There are often roles for not-for-profit organisations in this and Kennedy says private-sector firms can also do more than provide consulting services or supplement departmental capability. He said the Barkly Regional Deal, for example, involved very effective partnerships with local businesses who were “embedded” in the project team.

Subsidiarity and cooperation

As Infrastructure secretary, Kennedy was at the forefront of Commonwealth intervention in local and regional matters, and he believes the “city deals” and “regional deals” administered by his former department are fine examples of the feds working in partnership with state and local government.

He says this federal policy approach created a very effective “platform to collaborate” and one clear result was the acceleration of various local projects that would have taken much longer to get off the ground otherwise.

“And the other thing I would say is that rather than confusing responsibilities, it has clarified the responsibilities of each level of government,” Kennedy said, answering a question from a fellow public servant in the audience.

The new Treasury chief sees value in the subsidiarity principle — that “nothing should be done by larger and more complex organisation which can be done as well by a smaller and simpler organisation” — but thinks it should be interpreted in a way that allows all parts of the federation to play a role in regional and local matters.

He can’t quite see the Commonwealth staying out of regional matters, as suggested by a Productivity Commission research paper in 2017 (and many other learned commentators).

“This would be a challenging policy position for any federal government to adopt, given that members of [federal] parliament are elected on a geographical basis.

“In other words: to suggest that issues arising in a [federal] member’s electorate that might relate to a region’s prospects would be simply passed to the relevant state or local government. I don’t think the public accepts that position. At the very least I suspect their expectations would be that their local member was aware and deeply engaged in the issues of their region.”

He favours a “broader reading” of the literature on subsidiarity, which allows for the Commonwealth to take an interest in “the capability of the level of government delivering the services” and find ways to support that.

“This is not to argue against applying the subsidiarity principle, where it can be applied,” Kennedy added.

Relying on the views of retired federal mandarins Andrew Podger and Ken Matthews, he argued the benefits of subsidiarity — such as “responsiveness to local conditions and preferences, a check on central power and the potential for efficiency gains” — require cooperative federalism to be realised.

“Andrew and Ken’s analysis points to why governments of all levels should take an interest in regional policy — that is, the capacity of policy to respond in a complementary way to address the issues of a region.”

Each region is different but he believes that even in policy areas like health and education, the “flexibility to accommodate the circumstances of the population they serve” is needed.

“This area of policy is often called place-based policy. A place-based approach recognises the impact of ‘place’ on individuals’ experiences and outcomes and incorporates this into strategies to improve social, economic and environmental outcomes. It embeds meaningful public participation in policy development and service delivery.

“The evaluation of whether such an approach is more effective is still a developing area. But it is worth trialling and evaluating.”

Can centralised authority enhance accountability?

Along with his thoughts on subsidiarity and what public servants can do to build public trust, Kennedy mused on the historical growth in the functions of the Commonwealth, which now contains about 170 separate entities by his count.

There are benefits of centralisation, he noted: lower overheads and the fact that executive power obtained through elections — and the accountability attached to it — is less diluted.

Some might blame this proliferation of instrumentalities on the old Iron Law of Bureaucracy — the alleged “unrelenting ambition of public servants to create fiefdoms” as Kennedy put it — but he says the opposite is true.

“In my experience, senior public servants generally resist the creation of new entities,” he said, suggesting they are actually more often created by politicians responding to the demands of the public, not the demands of a power-hungry bureaucracy.

He listed five good reasons why separate bodies are created with varying degrees of independence — which mainly went towards instilling confidence that a certain issue was being “taken seriously” and not left to politicians — before arguing that a new agency is not always the best answer.

“There is ample authority for the public service to join up and solve particular problems using its own initiative. Moreover, some new agency arrangements would ideally be time-limited to when an objective was achieved, so as not to leave a legacy of small agencies seeking a new reason for being, once the original problem was addressed.”

The new Treasury secretary thinks equally good or better outcomes can often be achieved through departments, with the elected government staying in charge, “holding senior executives to account” and in turn — hopefully — being clearly and ultimately responsible in the eyes of voters.

“Large numbers of agencies can be confusing to the public and may well create issues when trying to respond to multifaceted complex policy issues,” Kennedy observed, before delving into constitutional issues (with the help of Infrastructure’s general counsel Hilary Manson).

While acknowledging there are many compelling reasons to hand certain functions of government over to independent bodies that are largely free of ministerial oversight and control, he says this also arguably makes it harder for ministers to “discharge the government’s political accountability to the people” in meaningful ways that contribute to stronger public trust.

“A key question for the public service in preparing our advice for governments is: how does this increased complexity and diffuse responsibility impact on public accountability and, in turn, public confidence in our institutions?”

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