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Last updated: 4 July 2003

The Australian experience of public sector reform

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Chapter 3-Public service reviews

Change in management philosophy and practice in the Australian Public Service since the 1970s has been influenced significantly by a number of reviews.

The resulting reforms have progressively reduced centrally administered, detailed controls over departmental staffing and finances. As a result, individual departments and agencies now have opportunities for greater flexibility in how they manage their money and staffing. Most importantly, of course, this flexibility is subject to stronger aggregate financial controls and greater accountability for performance.

The reforms have given managers clear responsibility for their programs and performance and have placed greater emphasis on responsiveness to government, parliament and the community, whilst maintaining traditional public service ethical values.

This chapter discusses the influence of some of the most notable reviews of public service management. Chapter 6 discusses the parallel reforms to financial management, which similarly have devolved financial responsibilities to agency managers.

Royal Commission inquiry

The Royal Commission on Australian Government Administration (the Coombs Commission), established in 1974, was the first independent, wide-ranging inquiry into Australian Government administration since 1918-1919. Set up to inquire into and report on nearly all aspects of Australia's government administration, it undertook significant research under the chairmanship of Dr HC Coombs and eventually reported in 1976.

The Commission concluded that administration was unduly centralised and hierarchical, and that 'better decisions will be made and better service given to people if authority and responsibility are devolved to officials close to where the action occurs'. The report asserted that public service management had become rigid and excessively structured.

Its research and recommendations reflected three themes that have emerged time and again in the reforms of the last 25 years:

responsiveness to the elected government
improved efficiency and effectiveness, including through more results-based management and less prescription
community participation.

Increased responsiveness to the elected government was a key focus of the reforms in the 1980s, and can be seen in subsequent changes in the 1990s, such as contracts for departmental secretaries and performance pay.

With the drive towards achieving greater economic competitiveness, the focus on efficiency and performance increased. This led to program budgeting and progressive delegation and devolution of financial and personnel authority to agencies during the 1980s and 1990s; another development was the use of purchaser-provider splits, along with privatisation and outsourcing. These developments are discussed further below and in Chapter 6. This 'managerialism agenda' may be seen to have originated not only from international economic pressures on national budgets and restrictive government controls, but also from the unhappiness of government in the 1970s with the performance of the public service, and from the findings of the subsequent Coombs Commission.

Attempts to open employment in the Service to a more diverse cross-section of the community began before the Coombs inquiry, but gained momentum from the report's support for equal employment opportunity policies and changed attitudes in the Australian community in the late 1970s and 1980s. A parallel development has seen a strong focus on involving members of the community in policy development and design of services.

The Public Service Act of 1999 represents the culmination of these reforms, merging the new culture of performance and achievement orientation with traditional Westminster principles and a modern employment framework. It confirms the powers and flexibilities of agency heads but with firmer accountability requirements. The enduring framework is principles-based, defined by the APS Values

Many of the Coombs Commission's other recommendations, along with international influences, contributed to bringing about significant changes to APS administration over an extended period. These include:

statutory expression of the merit principle in the Public Service Act
special employment arrangements for Ministerial staff
a separately defined Senior Executive category
simplified processes for review of employment decisions.

Review of Commonwealth functions

From the late 1970s, increased government emphasis was placed on maintaining strict control over the size of the public service. In 1980 the Prime Minister announced a Review of the Functions of Government and of Public Service Staffing Levels (Review of Commonwealth Functions-RCF) with the explicit aim of achieving smaller government by eliminating what the government saw as waste, duplication and unnecessary costs.

The RCF brought about substantial public service staff reductions. It resulted in many functions being deferred, wound back or transferred to the states or the private sector, and cost recovery being instituted for many of the services that were retained. The Review endorsed the existing Interchange Program, designed to improve communication and understanding between the public and private sectors, by way of short-term staff exchanges.

Review of Commonwealth administration

During 1982-83 a number of widely publicised problems in administration prompted the government to initiate a further examination of the federal bureaucracy. The Review of Commonwealth Administration (RCA) made recommendations on 'the requirements for an efficient and effective public service in Australia'. The RCA was also required to take account of Service needs in respect of high standards of conduct, good morale, professional managerial skills, provision of constructive and imaginative policy advice, and accountability within a non-political career public service framework.

The report addressed:

ministerial responsibility and accountability
administrative review activities
the role of central government agencies
financial management
management structures, practices and systems
staffing the senior managerial ranks of the APS
measures for achieving better Commonwealth administration.

A change of government early in 1983 meant that the RCA views and proposals were not implemented directly, but, again, they were to influence later reforms.

Public Service Reform Act 1984

The incoming Labor government in 1983 developed its own reform agenda for the APS in a White Paper setting out its priorities and incorporating the main themes of the earlier inquiries, including:

reassessing the roles of central agencies
more effective central management
creation of a Senior Executive Service
improving the allocation of resources
increased responsiveness to the elected government
providing an equal opportunity for all Australian citizens to compete for positions in the APS.

The Public Service Reform Act 1984 addressed the common theme in the three preceding reports-perceived needs for a more open and efficient public service. Devolution, deregulation and the integration of the APS into the national industrial relations and employment framework were all strong focuses of the reforms.

The 1984 Act provided a legislative basis for the establishment of the Senior Executive Service (SES) as a cohesive senior management group sharing core leadership skills and values, and, in principle, able to be redeployed across the Service in response to changing priorities.

Public Service Act Review Group

In 1994, a further review was initiated to undertake a wide-ranging examination of the frequently amended 1922 Public Service Act. The Review Group was asked to make recommendations that would provide a modern and flexible management framework, while maintaining the reforms of the preceding decade in a fully accountable public service.

In its report, the Review Group noted that a new Act could focus more on values, principles and standards with Service-wide application, with the details being covered in regulations, awards, workplace agreements or central agency instructions and guidelines. The report also recommended that a new Act should incorporate a statutory code of conduct.

A change of government in March 1996 again affected the implementation of these recommendations.

A new reform agenda

On 21 June 1996 the Minister Assisting the Prime Minister for the Public Service announced the new government's reform intentions in the following terms:

The Government will embark upon a consultative process to develop a reform package for the Australian Public Service.

.to ensure the public service provides a professional and rewarding environment in which to work and is able to deliver a quality service to Government and the Australian people.

.to make certain that workplace structures, systems and culture in the APS emphasise innovation and recognise creativity and commitment.

The stated reform intentions were translated into a 1996 discussion paper, entitled Towards a best practice Australian Public Service .

Shortcomings of the then APS, as listed in the paper, included 'outdated, rigid and cumbersome regulations, systemic inflexibilities and a culture which does not sufficiently promote or recognise innovation'. Accordingly, the paper maintained that the Service had fallen behind best practice overseas, interstate, in the private sector and in government business undertakings. It was bound in red tape and continued to operate under terms and conditions no longer appropriate or realistic in a community-wide labour market.

The paper canvassed options for reform and addressed other issues, such as the need to maintain and better articulate important public service traditions; to enhance the quality of APS leadership; and to achieve effective devolution by giving heads of individual agencies much of the control over employment matters.

There were widespread discussions on the paper. The general outcome of consultations was twofold: firstly, to record general, wide-ranging support of the need for changes to the formal framework in order to achieve a better workplace environment for the APS. Secondly, to set out, in broad terms, the proposed framework of a new streamlined, principles-based Public Service Act.

The Public Service Act 1999 gave effect to a broad range of the proposed reforms and continues to provide the formal framework for the administration of the APS. The legislation was discussed in more detail in the previous chapter, and its impact in subsequent chapters.

State and territory public sector reviews

Significant public service and public sector reviews have been undertaken in all Australian states and territories since the 1970s. Reasons for these reviews have generally been similar to those which led to the APS inquiries, with varying focus on the functions and responsibilities of public service agencies, the efficiency and effectiveness of their operation, and their responsiveness, both to the governments they serve and to the wider community.

In some cases, reviews drew upon the same inquiry expertise. For example, prior to his appointment as Chairman of the Commonwealth Public Service Board in 1983, Dr Peter Wilenski had been a special adviser to the Coombs inquiry, conducted a review of the New South Wales public service between 1977 and 1982, and was a consultant to the governments of Tasmania (1977) and South Australia (1978) on machinery of government and public service questions.

As with the APS, more than one such review was undertaken in several jurisdictions during the period, in response to changed needs and policy objectives. While review outcomes have varied, all public services have benefited from being able to take account of lessons learned and proposals implemented in other jurisdictions. It has not been uncommon, therefore, for some similarities to be featured in public sector employment legislation throughout Australia.

A STATE GOVERNMENT PERSPECTIVE
South Australian Public Service reviews Since the early 1980s, several key reviews have influenced the strategic directions of the South Australian Public Service. A wide-ranging review in 1983-84 led to the replacement of the Public Service Act and Public Service Board with a Government Management and Employment Act, a Board of Government Management, and an Office of Commissioner for Public Employment. The new Act applied consistent policies of management and employment across the entire public sector and gave greater management responsibility to heads of government organisations. In 1990, a Government Agencies Review Group was established to stimulate major public sector reform. It directed its attention particularly to identifying existing government activities of low priority; improving both public sector productivity and levels of service to the public; and fostering innovation in management-operational activities. The activities of the Review Group resulted in significant restructuring and staff reductions without the necessity for forced staff redundancies. Reviews of the South Australian economy, and of public sector finances and structures, were followed by a new Public Sector Management Act in 1995. The Act provides an increased focus on issues of management and accountability, and has generated ongoing discussion about the most effective balance between the responsibilities and accountabilities of central and line agencies. A Senior Management Council was established in 1997 to provide a strategic focus on whole of government issues and leadership across the public sector. It comprises chief executives from the ten portfolio groupings of agencies covering all government business, with the Chief Executive, Department of the Premier and Cabinet as chair. The Commissioner for Public Sector Employment is a member of the Council, and has a particular responsibility for leading strategic human resource management throughout the South Australian public sector. Following recent reviews of the public sector, the Government, in 2003, is considering a range of recommendations directed towards achieving improvements in public sector efficiency, effectiveness, workforce capacity, and leadership.

A STATE GOVERNMENT PERSPECTIVE

South Australian Public Service reviews

Since the early 1980s, several key reviews have influenced the strategic directions of the South Australian Public Service.

A wide-ranging review in 1983-84 led to the replacement of the Public Service Act and Public Service Board with a Government Management and Employment Act, a Board of Government Management, and an Office of Commissioner for Public Employment. The new Act applied consistent policies of management and employment across the entire public sector and gave greater management responsibility to heads of government organisations.

In 1990, a Government Agencies Review Group was established to stimulate major public sector reform. It directed its attention particularly to identifying existing government activities of low priority; improving both public sector productivity and levels of service to the public; and fostering innovation in management-operational activities.

The activities of the Review Group resulted in significant restructuring and staff reductions without the necessity for forced staff redundancies.

Reviews of the South Australian economy, and of public sector finances and structures, were followed by a new Public Sector Management Act in 1995. The Act provides an increased focus on issues of management and accountability, and has generated ongoing discussion about the most effective balance between the responsibilities and accountabilities of central and line agencies.

A Senior Management Council was established in 1997 to provide a strategic focus on whole of government issues and leadership across the public sector. It comprises chief executives from the ten portfolio groupings of agencies covering all government business, with the Chief Executive, Department of the Premier and Cabinet as chair.

The Commissioner for Public Sector Employment is a member of the Council, and has a particular responsibility for leading strategic human resource management throughout the South Australian public sector.

Following recent reviews of the public sector, the Government, in 2003, is considering a range of recommendations directed towards achieving improvements in public sector efficiency, effectiveness, workforce capacity, and leadership.

Further information:

Public Service Reform Act 1984—List of Sections http://scaleplus.law.gov.au/html/comact/5/2539/top.htm

For South Australian developments, see the SA Office for the Commissioner for Public Employment website http://www.ocpe.sa.gov.au/ or email ocpe@saugov.sa.gov.au

Older references not on the internet:

Public Service Act Review Group 1994, Report (RN McLeod, Chairman), Australian Government Publishing Service, Canberra.

Review of Commonwealth Administration 1983, (JR Reid, Chairman), AGPS, Canberra.

Review of Commonwealth Functions 1981, (Sir Phillip Lynch, Chairman), AGPS, Canberra.

Royal Commission on Australian Government Administration 1976,