A year of economic uncertainty and structural realignment

By The Mandarin

February 4, 2015

Prime Minister Tony Abbott has outlined his agenda for the year — which may or may not save his job. But what does 2015 hold for the public service?

“In my view,” former top Victorian bureaucrat Helen Silver said, “the most crucial challenge facing all governments in Australia is the uncertain outlook for the economy and the future state of the labour market.”

The Mandarin asked a number of bureaucrats, current and former, and government watchers what they expect over the next 12 months. The economy figured prominently. According to Silver, a veteran of the Commonwealth and state sectors and an editorial adviser to The Mandarin, the tight fiscal environment should prompt wider structural reform.

“This situation should encourage a more mainstream debate about the role of the different levels of government in influencing industry and employment outcomes,” she said. “What is the role of government? And what are the correct levers and policy interventions?”

Two white papers at the national level will begin that debate in earnest: on tax and reforming the federation. For the states, hamstrung by revenue shortfalls, the stakes are high.

“Both these work streams present opportunities for state and territory governments to encourage a realistic discussion about the growing unsustainable pressures on their budgets in the face of limited realistic revenue options,” Silver said. “Hopefully, this work also provides realistic options for a long-term realignment of appropriate roles and responsibilities between the states and territories and the Commonwealth with matching revenue flows …

“It will be interesting to watch how the different jurisdictions work — or do not — together prior and at any COAG and HoTs [heads of treasuries] meetings.”

In Western Australia, efficiency dividends continue to bite into budgets. Spending in Canberra, too, has tightened considerably under the Abbott government. David Gilchrist, a former bureaucrat in the West who calls efficiency dividends a “blunt instrument”, believes the challenge for public sector leaders is slicing spending in the right way, to “maintain their professional clarity and strategic direction … and to avoid the damaging short-termism that leads politicians to prescribe such palliatives”.

“… for the public service the issue is thinking through how to handle the conundrums buried in these challenges.”

“The key issue for the leadership within the public sector for 2015 will be to make discerning decisions such that the fabric of the sector is maintained and the governments’ policy intent can be achieved, today and into the future,” he said.

“It is much easier to say this than to do it, of course. However, this is an increasingly important management issue for public servants and their capacity to deal with such blunt instruments will be incredibly important for the future of public administration in our country beyond 2015.”

In Canberra, and elsewhere, contestability and strategic commissioning are the new buzzwords. Helen Dickinson, a leading public administration academic in Australia and Britain, wants to “make a reality of a commissioning-based approach”.

“Commissioning got quite a few mentions in the federal Commission of Audit and budget and many of the states have now also started to talk about this. Victoria, for example, has now made commissioning skills one of the core skills for the Victorian public service framework,” she said.

“One of the things I will be interested in watching is how these attempts are implemented and whether this is in a more expansive approach to strategic commissioning — or just more outsourcing.”

“People issues” top the list of one secretary in Canberra. In an interview with The Mandarin, Department of Employment boss Renée Leon identified leadership development as a priority for the public service in 2015.

Helen Silver agrees. She says “ensuring the prioritisation and enhancement of public sector human resource management” should be on every senior executive’s list. “For example,” she said, “in the development and implementation of policies and processes for the identification and management of high-performing officials at all key levels, and the continued implementation of innovative diversity programs.”

Leon is also focussed on co-operative policy interaction through inter-departmental committee. She’s a driving force behind the Shared Services Centre, a unit established to take on administrative functions across multiple agencies to save costs and minimise disruption in machinery of government changes. As secretaries look for further savings, the SSC in Canberra — and cross-departmental co-operation in other jurisdictions — will grow more important.

The 2015 policy agenda at the national level is daunting for a government intent on reform. After failing to pass major cost-saving initiatives and structural reforms last year, the Abbott government faces reworking reforms to Medicare and higher education, open debate on the GST and income tax system along with the federal-state responsibility matrix, and a fast-approaching budget deadline amid a worsening economic outlook.

That’s ultimately a political problem. But, as one former Canberra mandarin told The Mandarin, “for the public service the issue is thinking through how to handle the conundrums buried in these challenges”.

What are the key management challenges for you in 2015? Let us know in the comments …

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