MoG change reporting ‘inconsistent and incomplete’

By David Donaldson

Friday May 6, 2016

The Victorian government needs to develop a framework to ensure the consistent reporting of machinery of government costs and benefits across the public service. That’s the findings of the final report of a parliamentary committee inquiry into the post-2014 election MoG shakeup.

The Legislative Council Legal and Social Issues Committee “discovered that there is very little guidance for departments in Victoria in relation to tracking machinery of government costs”, says the report released on Thursday.

The result has been “inconsistent and incomplete reporting of associated expenditure and outcomes”.

This lack of a consistent reporting method has been an ongoing problem for the inquiry, which complained in December that the issue was making it difficult to assess the efficacy of the MoG changes.

Estimates of the cost of the changes now sit at around $5.2 million.

“… significant inconsistencies in the reporting of costs between departments …”

The final report found “significant inconsistencies in the reporting of costs between departments”, and that “indirect costs were neither recorded nor accounted for”.

The committee recommends the Department of Premier and Cabinet or Treasury and Finance collaborate with the Victorian Auditor-General’s Office to formulate a clear framework for monitoring and recording expenditure and outcomes of MoG changes and that it be applied consistently across government.

Queensland and the Commonwealth have both introduced checklists for tracking MoG rearrangement costs, which could provide useful reference points in the drafting process.

An objective reporting process should be implemented to ensure transparency and allow for greater scrutiny and evaluation of the merit of the changes, the committee argues, and MoG costs should be included in departmental annual reports.

MoG v business-as-usual costs

Part of the problem at present is in how to distinguish between MoG and business-as-usual costs. This issue was raised by Department of Economic Development, Jobs, Transport and Resources secretary Richard Bolt when discussing the costs spent on payroll and financial system upgrades:

“There are always going to be requirements to update systems by new versions of software or switch to new versions, and so to an extent some of this is measuring costs that to an extent would have been incurred anyway.”

DTF secretary David Martine recommended the implementation of a consistent framework, with which the committee concurred:

“It can get quite difficult to work out what is the direct cost of a MoG change because in a 12-18 month period after a MoG change, as you alluded to, other things do happen …

“That is why my view would be definitely a better framework and guidance to departments to get that consistency, because it does appear we are a bit inconsistent across the bureaucracy in how we report these things, and then perhaps limit it to a particular time period, which might be that 12-month period after a MoG change.”

The inquiry also uncovered a number of departmental inefficiencies. Integration and collaboration between departments “is insufficient, as evidenced by high migration costs in areas such as IT, payroll and human resources”, the report states:

“Furthermore, there are clear whole-of-government inefficiencies which were evident in the different approaches and designs of departmental websites.

“The committee believes that more effort towards systematic approaches to collaboration would benefit the government and may also assist in limiting any future costs associated with MoG changes. Benefits may also be seen with regard to ongoing operational costs.”

Despite the lack of a consistent accounting system, the machinery of government change received high praise from Victoria’s top public servants. DPC secretary Chris Eccles attributed the effectiveness of the process to collaboration and a focus on timeliness:

“It is my considered view that the implementation process of the MoG changes following the November 2014 election was effective and efficient, and I would even go so far as to say, having been involved in machinery of government changes in other places at other times, that it was remarkable in its efficiency and its effectiveness.”

Martine, who has experienced previous post-election shakeups, agreed:

“I am happy to say that I think that went quite smoothly in terms of both losing and gaining departments coming to that mutual agreement, which from time to time does not happen and someone centrally, whether it is the Treasury of the jurisdiction or someone else needs to step in and broker a bit of a deal.”

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