Digital transformation in the fourth age of public administration

The vast majority of public servants find it a little difficult at the moment to make sense of where the public sector stands.

Is it competent or not, valued or not, efficient or wasteful, meeting the needs of Australians, staffed by capable people, prepared for the future or stuck in the past?

The answers given are too often flavoured with untested policy assumptions, ideology or political convenience, even insincerity. There is no really fair reckoning of how the public sector stands overall. A little history might help.

“We have done it before and need to shape up to do it again.”

I would like to talk today about Public Administration 4, its central characteristic — the impact of new technologies — and its predecessors and five principles to guide the further evolution of our systems of public administration in line with this profound change.

The Australian public services, particularly those of Queensland and Victoria, owe a lot to the Northcote-Trevelyan Report in the nineteenth century with its emphasis on merit, impartiality, professionalism and continuity in the reformed British Civil Service. The reformed civil service which resulted enshrined many of the values which are recycled through the periodic reforms to our own public services. One might describe this distant period in Australia as Public Administration 1.

Public Administration 2 owes much to the 1976 report of the Coombs Royal Commission into Australian Government Administration although much of the reform had already started under the Commonwealth Public Service Board when chaired by Sir Frederick Wheeler.

It would take too long to explain all the strands of these reforms but greater responsiveness to the community, more accountability to ministers for success and failure, a gradual lessening of “permanency” at the top, a new emphasis on making government agencies easier to deal with and more “joined up” in their operations, a growing emphasis on public service capability (first through more degrees and then specialist expertise) and the beginnings of “ADP” (as it was called) come to mind. The states adapted the Coombs formulation to their own circumstances.

How Australia avoided becoming ‘the white trash of Asia’

Public Administration 3 went well beyond Coombs and reflected the thinking crystallised by Fred Hilmer in his major report on competition policy. In brief: the assignment of policy, regulation and service delivery tasks to different organisations; privatisation and outsourcing; competitive neutrality between public and private sector delivery; finally, tax reform and significant regulation reform. All were central to the period. However, a tight definition of the ongoing role of the public sector did not emerge.

It was in a sense a triumph for the economists. Over 30 years, public sector employment as a proportion of the total workforce declined from 25% to 16%; share of GDP devoted to the public sector became nearly the lowest in the OECD world, the economy grew rapidly — a record 25 years of constant growth — and we all found ourselves in the midst of constant innovation and change.

“The debate which should prepare us to devise strategies for reform and change is weak at best and certainly not front of mind for the political class.”

This period of reform and growth may not have happened. Nearly 50 years ago Australia seemed stuck in a rut. We were portrayed by the father of the current Prime Minister of Singapore, who visited last week, as likely to become the white trash of Asia. Protected, regulated and welfare dependent, we were failing in the challenge of adapting to compete in a rapidly changing world.

In what Paul Kelly later described as the “end of certainty”, we embraced a major reform program which, in three phases spanning nearly 20 years, changed Australia fundamentally.

However, this major reform period rested on the substance of a nearly 15 year long debate about what to do. Goaded by Horne’s conclusions in The Lucky Country, economists, academics, journalists, a small number of politicians, business and union leaders and public servants (many leading figures in Treasury and PM&C and some senior state officials) were critical to this debate.

New challenges

We now find ourselves with new challenges — at least as great as those tackled from the early eighties. The debate which should prepare us to devise strategies for reform and change is weak at best and certainly not front of mind for the political class. Even so, it should be high on our agendas. Should we be confident in our capacity to contribute?

Consider the changes over 150 years of public administration reform and adaptation. Are there any constants?

In Australia I see constant values and culture emphasising the public interest, honesty and the needs of citizens, respect for the authority of elected officials and the parliaments by departments and agencies, a record of solid innovation and creativity in the service of national development, security and community well-being. This is most definitely the case since World War ll.

You would never know it from most of the media but our public services have been efficient and often the cradle in which successful industries were nurtured. Think for example of education export, and public investment supporting the development of the contemporary tourism industry. We could do the same in export of health services.

But it is also the case that, in the time of Public Administration 3, our departments and agencies have suffered from disinvestment in people, capability and systems while many political leaders have surrendered to a tactical approach to the business of government and neglected investment in strategy and the long term. This has included caution in response to proposals to invest in system upgrades or new systems. This tendency must go into reverse.

Developing Public Administration 4 as part of the response to digital disruption linked to globalisation is our next big professional task.

Big data, open data systems, robotics, artificial intelligence and double digit shifts in productivity will require a further transformation in our workforces, a softening of the boundaries between public and private sector people in any given area of activity and changing community expectations of governments and the public services. However, the tested culture and values which guide our work must be preserved and nurtured.

Is dislocation and inequality unsolvable?

Recent events in America demonstrate the potency of social dislocation and inequality caused by globalisation and increasingly technology. The losers in the American economy are numerous and hostile. In Australia, the problem is less acute for now but will grow rapidly.

An important question is therefore: does globalisation and technology inevitably create unsolvable dislocation and inequality?

In the “End of Certainty” reforms, Australia made a spectacular transition. In a study of regions affected by the change, the Productivity Commission found that only one region went backwards in economic terms. This is because governments acted on transition problems and put money into programs which had a positive result. We have done it before and need to shape up to do it again.

Thus for Australia, globalisation and technology does not necessarily mean unsolvable dislocation and inequality if governments commit ideas and resources to transition management rather than hope for the best.

Beyond this task, governments face a number of other big challenges. For example:

  • Balancing the budget and reforming the tax system to achieve greater fairness as well as efficiency.
  • Defending globalisation in the face of attacks and preserving its benefits for Australia.
  • Finding our own path between China and America as tensions grow.
  • Creating new initiatives to resolve problems in our health, education and welfare systems while enhancing, not diminishing, equity.
  • Shifting attention to the needs of small and medium size businesses in pursuit of growth, innovation and new markets and possibilities.
  • Launching a renaissance for local government in order to harness its community connections to create a more devolved and joined up approach to service delivery.

These tasks are large but can reach a positive conclusion only if a measure of mature bi-partisanship is achieved over the next decade. We have a way to go on this!

Public Administration 4 will be a complement to the effort to chart new policy directions but also, a reflection of necessary changes within public administration itself.

Five principles for improvement

I would like to suggest five principles to guide the further evolution of our systems of public administration.

  1. Our analytical work needs to be rebalanced to treat distributive justice alongside technical efficiency. If governments are to maintain public acceptance of the next wave of technological innovation (and its huge impact on work) and to persist with open markets for goods and services, there are major social problems which need to be fixed. For example, it is simply wrong that more than 700,000 Australian children are living in poverty with diminished life prospects in the midst of one of the most affluent countries in the world. Our Treasury undertook pioneering work on a well-being index under the leadership of Ken Henry and Martin Parkinson. It is a pity that this promising beginning has been set aside in recent times.
  2. New technologies will make it far easier to devolve more responsibility for delivery to the local level. It will be easier to track the life journey of individuals, assess the need for interventions from a social investment perspective, transmit ideas, materials and examples of best professional practice to the local level and know more in real time about how the whole system is working. Critical processing tasks must be brought up to date to achieve efficiency gains and respond to new policy directions.The Department of Human Services has been left until recently to carry the dead weight of archaic systems. As iTnews reported in September 2015:

    “The DHS will migrate off its more than 30 year-old income support integrated system (ISIS), which is underpinned by Model 204 mainframe technology.

    “ISIS has become an increasingly sharp thorn in the side of the DHS.

    “A lot of the clunkiness of the current welfare application process is blamed on the age and complexity of the existing system, which has seen millions of lines of code bolted on over its decades of operation.

    “Customers are often requested to provide the same information to the department multiple times, in different paper-based and online forms. Much of this interaction is unnecessary and a duplication of effort,” tender documents state.

    “Centrelink staff are still required to intervene manually in the processing of many payments, presenting a barrier to the department introducing straight-through automation and self-service options.”

    Critically, state and Commonwealth governments must partner with local government to bring about a revolution in how we provide essential services so that the local level is empowered.

  3. It follows that we will need a more strategic approach to planning and assessing investments in our major government systems. The Prime Minister’s recent initiatives to look across government at digital investments, delivery and performance are a good beginning. We must start to think through how, in some areas, Australian governments can work together more effectively.More government departments must also look beyond Australia’s border to consider how regional developments will impact policy settings at home, and vice-versa. Policymakers should have one eye on Asia and consider how seismic shifts there — in demographics, health, technology, migration, governance and sustainability, for example — can be engaged collaboratively and productively.
  4. These reforms will be more reliable if we transform our approach to placing planning and management documents before the public. There will always be exemptions for national security, commercial in confidence and personal information but business cases, feasibility studies and the like should be on the web immediately a decision has been made to proceed with a new project or program. Only in this way can we go past the over reliance on guess work and the reluctance to ponder what the evidence actually suggests is the best approach to a problem or initiative. It follows that I’m in favour of a radical reform of FOI laws. New Zealand ranked 4th on last year’s Corruption Perceptions Index, largely off the back of this sort of transparency. We came in 13th.
  5. The public sector should match, if not better, the private sector in responding to new technologies and improving efficiency. We will be expected to achieve significant productivity improvements, a more dispersed approach to innovation, services tailored to the needs of local communities and joined up where necessary, the rapid deployment of new capabilities and systems, real time feedback and responses for service delivery. This new system cannot be micro managed from central bureaucracies which will need to redefine their roles. Without changes such as this the public service workforce will be dealt out of delivery over a ten to twenty year period.

In conclusion, Public Administration 4 is clearly not just about technology but the benefits of the coming digital revolution will only accrue in departments and agencies if we take on board the implications of the new technologies for how we organise and operate our big service delivery systems such as education, health, public order, community services and welfare. It will be a big job which will come to rival Public Administration 3.

This speech was delivered as Digital transformation — is current readiness of the public sector in Australia up to scratch? by Terry Moran AC, chair of the Centre for Policy Development, at the Technology One conference in Brisbane on 19 October 2016.

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