Stephen Bartos: relax, CoA cuts not as bad as you think

By Stephen Bartos

Friday May 2, 2014

The Commission of Audit estimates that its recommendations could lead to a loss of 15,000 Australian public service jobs. But that is less frightening for the public service than it appears.

Some are likely to arise from privatisations, which do not necessarily lead to job losses. For example, privatising the Defence Housing Authority would mean a change of ownership, but people will still be needed there to deliver housing to Defence personnel. While privatisation sometimes does lead to staffing reductions, it is not always the case.

Second, the government is not likely to accept all the recommendations. There may well be fewer job cuts than the commission recommends.

But most importantly, at least any cuts that come in the budget would be associated with specific initiatives, so public servants affected will know where they stand. There are good and bad ways to cut. The Commission of Audit sensibly rejects across-the-board efficiency dividends as a “blunt instrument” that has reached its limits.

Nevertheless, there are already public service cuts underway as a result of the past government’s additional efficiency dividends. Any further cuts will come on top of these, which will severely affect some agencies. Because the Commission of Audit is targeting particular types of cuts — for example, to Defence Force headquarters and executive-level staff — the Canberra economy would be hard hit (assuming, that is, the recommendations are agreed by the government and announced in the budget).

Some of the public service recommendations have been well foreshadowed in public comment — for example, cuts to the Defence materiel organisation and to climate change agencies, and mergers of a number of health agencies. Although there are new recommendations for abolishing or merging numerous Commonwealth bodies, many of those slated for abolition are committees or advisory boards where the main effects will be felt not by public servants by a very small number of board members.

Recommendations on e-government and transition to online service delivery could just as easily have been welcomed by the previous government. It is where all services, including public services, are heading. The Commonwealth lags behind states and other countries and has to pick up its game. Better online services can and should be implemented regardless of political preferences.

The report, especially in phase 2, includes numerous recommendations on improving public service performance.

Some of them are well overdue. The commission notes (recommendation 10, phase 2 report) that “there is no systematic evaluation of programmes at the Commonwealth level”. There used to be. All programs had to be evaluated and the evaluation reports published. That requirement was dropped in 1996; ironically, it might have been as a consequence of the Commission of Audit report back then. I have no inside information from that time, but have been told this was done on the logical (if impractical) rationale that every government service could be outsourced and therefore did not need evaluation. That is, the assumption was that contracting out would build in its own evaluation through tender assessment processes.

Return of evaluation would be a welcome improvement. Oddly though, the audit recommends that the reports be provided to the Department of Finance. Public accountability would be far greater if evaluation reports could be made public, or at the very least, to the Parliament.

This and other recommendations under the heading “public sector accountability and performance” will depend heavily on whether or not the public service itself takes them seriously.

Everyone claims to want better performance, but good intentions butter no parsnips. These chapters could have been written under any government of the last 30 years.

Public service performance only improves if ministers insist on it, are prepared to be held account for it in Parliament, and are supported in this by the senior leaders of the public service.

If the audit phase 2 report leads to strong resolution on the part of ministers to press for better performance, it will have done the country a service. An important question, though, is whether we will ever know. Alongside better performance information has to be transparency. The report suggests greater auditing by the Australian National Audit office of agency performance information, which will help, but lacks other specific recommendations on how to improve transparency.

There needs to be online publication of meaningful and digestible performance information, and willingness on the part of ministers and parliamentarians to interrogate public servants and pull them into line when performance is lacking. The Commission of Audit fails to address the incentives in our political system for both ministers and public servants to hide information on performance so as to avoid “gotcha” moments and negative headlines.

The phase 2 report also draws attention to the problem of “spans of control” (a bit of wonky HR jargon) that have led to public service departments becoming top-heavy with executives.  As with performance reporting, it is worth identifying the problem, but the only way to fix it will be through better leadership by the public service itself.   The suggested action (including “all portfolio secretaries and agency heads to prepare plans to improve management structures and spans of control for ministers within 12 months”) leaves implementation to internal processes within government. It seems that the commissioners exhausted their stock of tough and specific recommendations in phase 1 and left public servants to write most of phase 2.

The problem is that under current incentive structures the public service won’t make these changes of its own accord. The themes of better accountability, better performance, reduction of layers of management, better use of IT and better corporate services have all been around for years. If the public service had wanted to implement these for itself it could already have done so.

Ministers themselves will need to take action. They don’t have the capacity to manage departments. But they can insist on better performance reporting, enlist the public in the task by making that reporting more open, be prepared to accept the risks that come with change, and ask public service leaders who are resisting change to move on.

Most importantly, they need courage to stare down the negative headlines that will come. Change is never risk free. The major barrier to better public service performance in recent years has been ministers’ insistence that public servants make no mistakes. There is no way any manager, whether in the public or private sector, can guarantee they will make zero mistakes during a change to bring about better performance. A solution to the problem of ministerial timidity is beyond a commission of audit — it has to be up to the government of the day.

This article was originally published at Crikey

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