Government super-departments: efficiencies gained, policy lost?

Large omnibus government departments are cost-effective and prevent silos, proponents argue. But could they actually undermine governance? The Mandarin investigates.

Despite the enthusiasm for squeezing ever more functions into a few giant government departments, there is little agreement that doing so actually works out better. Former New South Wales cabinet secretary Gary Sturgess even thinks so-called super-departments may degrade the quality of governance, saying it’s “entirely dubious” that the ever-larger departments are more efficient.

It’s often argued small agencies suffer from poor economies of scale and limited bargaining power in procurement. Greater pooling of resources is seen as a way of overcoming some of these disadvantages. Co-location of portfolios is also cited as a means of breaking down silos, ostensibly leading to better policy.

But Sturgess is sceptical. “I know of no evidence that super-departments deliver lower costs,” he told The Mandarin. “The economies of scale proposition is entirely dubious. People who push that line are talking ideology.”

Sturgess argues evidence from NSW, which has nine principal departments, suggests outsize departments have a detrimental effect. “The NSW experience seems to suggest that, at least in some cases, it makes co-ordination worse not better,” he said.

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