Tom Burton: digital dog days as government gap exposed

By Tom Burton

Sunday August 10, 2014

If last week’s headlines around metadata and the National Broadband Network suggest anything, it is the need to sharply lift the digital governmental game.

As Australia navigates and seeks to profit from the phenomena of our times — the global digital revolution — it is critical government in all its facets gets its technology act together.

But the laughable, if it were not so tragic, debate about data retention and a new audit of NBN policy reveals serious policy development process defects, and exposed just how shallow Canberra’s digital smarts are.

Since World War II the Australian government has been dominated by two master groups: the reconstructionists and the economists. The reconstructionists were led by Nugget Coombs and a gaggle of (male) departmental secretaries who famously often met at The Commonwealth Club to sort the affairs of state. These were indeed the mandarins: pragmatic, hard-headed technocrats who tightly controlled the Commonwealth government and led Australia through a period of solid, if not spectacular, growth during the 1950s and ’60s.

The early ’70s oil shock and demise of the Bretton Woods currency gold standard shook Australia and its policymakers, and was an early warning of the profound impact of globalisation. As international capital became deregulated public leaders — political and public service — were forced to come to terms with the implications of no longer being in control of their local economies. Like most western countries at the time, Australia went through a period of rapid economic deregulation.

This was led by a group of econocrats, largely neo-classical economists, heavily influenced by the conservative Australian National University economics faculty. Their influence was profound, most notably on then-treasurer Paul Keating. It was Keating who in the mid-’80s, with his infamous warnings of a banana republic, “converted”, with few exceptions, the mainstream Canberra press gallery into economic literates — a media few countries can claim.

The success of the econocrats’ endeavours are 23 years — and counting — of continuous growth, up there with the extraordinary efforts of Germany and Japan after the war.

Sitting at last weeks Australia and New Zealand School of Government conference at the Hyatt Hotel in the national capital, you could not help but notice the continuing dominance of this group of economists — in this case led by ANZSOG chief Gary Banks, the former head of the bastion of economic rationalism, the Productivity Commission (ANZSOG is a commercial partner of The Mandarin and Banks is a member of The Mandarin‘s advisory board).

Speaking on day one of the program was one of the doyens of this club, Professor Ross Garnaut, who has recently released his latest book, Dog Days. The book’s message is similar to the recent Business Council of Australia/McKinsey report: that tough times lie ahead if things don’t change.

The agenda for the conference was heavily economic and focused on issues of productivity, growth and fiscal stability. No criticism there, but meanwhile just up the hill, the Prime Minister and his Attorney-General were making hard work of their new data retention plans. As the government took four days to get a half-sensible explanation, it was painfully apparent to all just how shallow the technology capabilities of the government leadership are. Ditto the press gallery — which in the main most openly admit.

At the same time the government tabled a review of the NBN policy process by another former Productivity Commission head, Bill Scales. It confirmed — if we didn’t already know — just how chaotic and dysfunctional the whole NBN policy had been. It’s an eye-opener on just how crude the development process for the NBN was and a must-read for any student of government.

Scales was particularly scathing of the Australian Competition and Consumer Commission and barely hid his disdain for former ACCC chair Graeme Samuel (Samuel is also member of The Mandarin‘s advisory board). Samuel was a strong public supporter of the fibre to the home network the previous Labor government had opted for.

Scales — himself an economist, but also an apprenticed fitter and machinist — spent several pages of his report critiquing the ACCC for going beyond its competition brief when it advised a fibre to the node network would leave much of the kit obsolete or “stranded” when it was needed to upgrade to a fully fibre system.

Ironically, one of Samuel’s stated reasons for the ACCC preferring the all-fibre network was the benefit of finally getting Telstra out of the base network delivery game — what the wonks called structural separation.

This had been one of Canberra’s great unfinished battles, from the early 1990s when a desperate prime minister Bob Hawke did a deal with the left-leaning Telecom (as Telstra was called) unions to let the telco retain the base copper voice network, in return for Left caucus support for his weakening leadership.

His leadership rival, Keating, and Treasury vociferously fought to split Telecom into a network operator and retail provider, arguing Telecom would throttle competition for as long it controlled the network. It was one of the great policy blood sports of the period, and Keating’s pretorian guard was headed by a gaggle of younger economists who went on to lead departments and agencies over the next decade — people like Don Russell (Australian ambassador in Washington and Industry secretary under Julia Gillard) and the previous secretary of Treasury, Ken Henry (also on The Mandarin‘s advisory board.)

When the opportunity came over a decade later to reset policy with the NBN, Treasury seized the moment — and George Bush junior like returned to the former battlefield, embracing the all-fibre technical proposal which finally would have Telstra separate its wholesale and retail businesses.

This also helps explains Scales’ observations and criticism of what he says was a failure by the senior public sector leadership to stand up to the all-fibre proposal. Relations between Telstra and then-communications minister Stephen Conroy had become poisonous and the Canberra policy bureaucrats in the central agencies became unwitting allies in this jihad.

It remains still arguable about the merits of both network architectures — and at the time the boxes which powered the fibre to the node network were largely single purpose only.

Savvy technology and comms companies have gone either way, depending on a raft of technology and market issues. Google itself is rolling out all-fibre networks in the United States and and the South Koreans are years ahead of the world in connection speeds, thanks to their widespread deployment of fibre to the home. Conversely, the US telco behemoth AT&T had committed to fibre to the node as a commercially sensible rollout option.

Turf war in an APS that lacks tech smarts

That’s all history, but what the Scales report does reveal is the superficiality of the analysis of the technological issues critical for a reasoned understanding of the two fibre options.

The blunt point is both the NBN fiasco and the metadata issue reveals there just is not the capability in the Australian Public Service to make these major calls. And maybe instead of hiring chief economists, departments need to start finding chief digital officers to lead their agencies into the modern era.

There are some signs of change. When Communications secretary Drew Clarke took over the reigns last year he brought in Boston Consulting Group, which identified the digital gap, and earlier this year DoC rolled out a major shift in focus to build digital capability.

The metadata policy also highlights a jurisdictional issue. Over the last few years the Attorney-General’s department has made a very successful land grab to own the civilian security aspects of digital. At one level this makes sense given the portfolio includes the Australian Federal Police and Protective Services. But my observation is if the econocrats are struggling in the new digital era, the lawyers that form the other dominant class in the APS are light years behind.

I’m sure there are notable exceptions. But the risk averseness and Dixonian black-letter obsession of your typical APS lawyer suggests this is not the group which will lead the government into world-best digital policy. Almost the reverse.

The security issues around digital and especially cloud installations are very real and non trivial, so the risk becomes digital policy becomes captured by these concerns and a coterie of lawyers, struggling to brief their ministers.

The metadata issue also revealed the lack of cohesion and strategic alignment within the federal government. I am not talking about forgetting to invite the Communications Minister to the cabinet meeting. The government’s e-government policy released before the election was one of the best pieces of work of the then-opposition. The plan was to reboot the current ICT leadership arrangements to create a more coherent digital policy.

Nearly 12 months into government and we still see the government’s digital program fractured across the civil and defence security agencies, the traditional ICT world led by the Australian Government Information Management Office in the the Department of Finance, the Communications Department rapidly seeking to skill up its capability and the big industrial digital players such as the Department of Human Services and the Australian Tax Office. Co-ordination is through a spaghetti soup of boards, high-level committees and working groups.

The metadata issue underlines the need for government to get its act together. The digital revolution is profoundly impacting both the private and public sectors, yet in government it is still being largely treated as a third-tier curiosity issue.

The much bigger challenge around metadata is not security concerns, but the privacy issues about how government manages its own data collections and sets policies for the broader economy.

Australia is a world laggard when it comes to data management. Within the government there is virtually no skills or capacity around critical issues such as cookie policy, behavioural tracking, do not track and forget me policies.

It is a case where the both the market and the technologies are way ahead of the policy and regulatory establishment. There has been a feeding frenzy of acquisitions by the big customer relationship management players over the last 18 months of the big marketing automation platforms — brands such as Eloqua, Marketo and Pardot and Silverpop.

And out in the world of digital commerce Australians are already being tracked within an inch of their life with consumers having little insight or understanding of what is happening. Much of this data sits in US-based servers. The secret sauce in this world is metadata — the sophisticated marketing platforms are industrialising tracking identity and behaviours at a level which would shock most, if they understood how pervasive it is and how personal and revealing the data is.

In both the US and Europe there have been sophisticated policy debates and regulatory responses to these issues, yet in Australia until last week’s announcements there was almost silence.

The issues are challenging and the responses need to be deep, coherent and strategic.

BCA chief executive Jennifer Westacott, in a thoughtful but provocative speech to the ANZSOG conference, listed nine areas government can learn from business. Westacott is a rare player with senior government and business experience. She previously headed up the Victorian Department of Education, as well as the New South Wales Department of Infrastructure, Planning and Natural Resources.

Point four of her speech was about innovation and the need to move away from rigid privacy concerns which can block innovation and consumer benefit:

“My hypothesis, however, is that the community is increasingly open to sharing personal data, and having it analysed, because people see the benefits. When you get an email from Coles or Woolworths about the weekly specials on products you have a pattern of buying, you don’t think ‘how dare they’. You pull out your credit card.”

Balancing between personal privacy and public good is a massive issue. There are huge public gains to be made from sophisticated use of big data analytics — traffic management and healthcare being just two examples. Yet as the Commonwealth government rapidly rolls out large-scale digital infrastructure in areas like Centrelink and the ATO, where is the coherent policy thinking about how to balance the obvious privacy and digital identity issues?

That is the context in which the security agency requirements for metadata should be considered. Former Privacy Commissioner Malcolm Crompton is a world guru in this space and argues we have to get away from the user control model which has tended to be the response to date to privacy concerns. Crompton argues these — who actually ever reads let alone understands the pages of permission legalese when they sign up to a service? — simply are not working:

“Finding an approach that works will involve the understanding of two truths. Firstly, as humans we are subject to cognitive behaviours that limit our ability to optimally negotiate issues of privacy in the modern information society. Secondly, as the rate of data generated and used by society increases at a blistering pace, attempting to control everything at an individual level becomes impossible. It follows that we have to move beyond user control, and we must zoom out to examine how the data is being used.”

This demands a far more sophisticated and dynamic policy framework, not to mention execution piece, than was evident last week. It also requires strong leadership, intellectual grunt, digital skills and knowledge that sadly are struggling to be found in the APS as it currently stands.

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