Australian Government - click here to go to our home page

go to start text resizing

Australian Public Service Commission
About the Australian Public Service Commission. Click to go to the Corporate page

go to related resources

Information

on our site

Site help

help with using this site

Site menu

news

Home page
> About the Commission > Public Service Commissioner > Media archive > Speech
‹ Previous page

The emerging framework of Australian government administration: Efficient, agile and accountable

The unified civil service: is the Commonwealth model sustainable?

Andrew Podger
Australian Public Service Commissioner
CAPAM 2002 BIENNIAL CONFERENCE
11 September 2002

Government administration under the Commonwealth model has never been entirely unified. In Australia, there has been a long history of shifting boundaries between the core civil service ("the Australian Public Service") and employees in other public sector agencies usually distinguished in some way because of their more commercial orientation or other reason for greater independence from Ministers or central bureaucratic control.

In more recent years there has been a clearer articulation of the core civil service in Australia and the remainder of the Commonwealth public sector, and major shifts in the approach to management and accountability in both sectors.

The Australian Public Service, and the public sector more generally, has undergone sustained, incremental reform over the last 25 years. In some respects, the Royal Commission into Australian Government Administration (the Coombs Royal Commission) set two of the key themes in its Report in 1976:

The first theme led to progressive devolution of financial and employment powers to agencies in conjunction with program budgeting in the 1980's followed by the outcomes/outputs framework introduced in the late 1990's. The financial reforms also involved an increased emphasis on markets with the greater use of purchaser/provider splits and market testing in the budget dependent sector, and commercialisation and privatisation in the non-budget dependent sector. This restructuring also led to some activities shifting out from the budget dependent sector into the non-budget sector as they became financially dependent on competitive-based decisions by government agencies, rather than on direct appropriations; in addition, a lot of activity shifted from both sectors into the private sector. A major driver of this reform agenda was the pressure of global competitiveness requiring the public sector, like the private sector, to increase productivity and match international benchmarks of performance.

The second theme led in particular to clearer articulation of the role of Ministers in the administration of departments, and to a series of changes in the terms and conditions of secretaries and other agency heads. The program budgeting framework, now the outcomes/outputs structure, is also firmly based on Ministers and the Government setting the objectives, targets and priorities that bind agencies.

The current framework is described briefly below.

Financial Framework

Reform of the financial management of Australian Government agencies was encapsulated in principles-based legislation from 1 January 1998. Collectively, the Financial Management and Accountability Act, the Commonwealth Authorities and Companies Act and the Auditor-General Act provide a legislative framework which emphasises performance, propriety and accountability. They were designed to improve the quality and clarity of understanding of the Commonwealth's financial management framework and to sharpen accountability for financial performance.

Specifically, the FMA Act covers those agencies that have no separate legal financial existence from the Commonwealth, including most agencies which are budget-dependent. This Act represents a major reduction of detailed, prescribed rules whereby Chief Executives have greater flexibility and autonomy in their financial management. They are required to promote "the efficient, effective and ethical use of resources".

The CAC Act covers those Commonwealth bodies that are separate legal entities (bodies corporate) and hold money on their own account. The Act provides a single set of core reporting and auditing requirements for directors of Commonwealth authorities and sets standards of conduct for officers. Many of these requirements are modelled on comparable areas of Australian Corporations Law and, where practicable, apply standards and principles applicable to private sector corporations. Chief Executives are responsible to their Boards who in turn report to Ministers and the Parliament.

The Auditor-General Act contains a much more streamlined set of auditing provisions and focuses on audit goals rather than processes. The Act also sets out the mandate, powers and responsibilities of the Auditor-General, including the establishment of the Auditor-General as an independent officer of the Parliament.

Within this legislative framework, which provides considerable flexibility to individual agencies, the Government sets a policy framework based on identified objectives and priorities. For budget dependent agencies, the Outcomes/Outputs structure involves setting clear objectives for particular functions (within or across agencies), spelling out performance measures and targets, and allocating resources for the budget year and the three forward estimate years. In the case of CAC Act bodies, the arrangements vary but typically for commercial activities the relevant Portfolio Minister and Finance Minister are the shareholders and they approve strategic plans and financial targets proposed by Boards, with Cabinet consideration of equity and dividend arrangements. The Auditor-General has authority for external auditing of all agencies, though he may choose to have commercial auditors assist.

Employment Framework

The Public Service Act 1922 was a very lengthy and prescriptive Act which imposed substantial central control. Partly as a result of this, increasing parts of Australian Government administration have moved outside the ambit of the Act since the 1960's, particularly those agencies with significant commercial activities or specialist workforce requirements. During the 1980's and 1990's, powers under the Act were progressively devolved to Agency Heads, but the rules remained complex and prescriptive.

In 1999, a new Public Service Act came into operation. The new framework comprises a risk management formula whereby maximum flexibility is provided through the devolution of employment powers to Agency Heads who are held directly accountable for their use of those powers, which are exercised within a framework of shared APS Values and a Code of Conduct for all APS employees.

The PS Act has substantially advanced public sector reform and provides much needed flexibility to respond to changing needs to enable APS agencies to become more responsive, cost-effective and customer focused. It also contains a succinct message about the expectations of a public service within a democratic system of governance appropriate for the twenty-first century.

The legislation is essentially principles-based with APS Values set out in the PS Act providing the enduring framework within which APS Agencies operate, with considerable freedom to establish their own detailed procedures.

The APS Values and Code of Conduct essentially establish:

The employment provisions of the PS Act are also consistent with the more broadly based Workplace Relations Act 1996 and so have put the Commonwealth in the same position as a private sector employer, except where there are public policy reasons not to do so. The Workplace Relations Act has modernised Australia's industrial relations system and has been an important element in achieving wider economic reform.

Reflecting these industrial relations reforms, the PS Act gives Agency Heads direct power over the engagement of staff, as well as authority to determine their remuneration and terms and conditions of employment. This authority must be exercised within the Government's Policy Parameters for Agreement Making, which provide agencies with the flexibility to develop innovative agreements tailored to their particular needs and circumstances, that benefit both employees and clients, while maintaining the features necessary for a cohesive and efficient APS. The Policy Parameters promote the Government's interests as the ultimate employer of APS employees, while continuing to devolve responsibility for agreement making to agencies.

In many respects, these reforms represent a culmination of the changes that have been initiated over the previous ten years. The PS Act nonetheless is groundbreaking, and many other jurisdictions in Australia and overseas are closely watching what we have done. The key issue is whether the risks associated with shifting away from prescriptive rules of process to legislated principles are manageable, to the satisfaction of the Parliament and the public as well as the Government.

A significant part of the Australian Government workforce remains outside the scope of the PS Act. For those agencies there are no central legislative requirements regarding employment other than the Workplace Relations Act. The Government's Policy Parameters for Agreement Making nonetheless provide guidance to these agencies.

Accountability

To achieve maximum flexibility while maintaining a high level of accountability, the PS Act represents an interlocking system of powers and responsibilities, integrated within a genuinely devolved managerial environment. For the first time, the primary legislation provides a model of accountability in which the public interest is clearly articulated.

While employment decisions are the responsibility of individual agencies, public accountability is monitored for the APS as a whole. As Public Service Commissioner, I have both statutory powers and policy responsibilities. A key part of the improved accountability arrangements is the requirement under the PS Act for me to report annually to the Australian Parliament on the state of the APS. I also have specific responsibility to evaluate how Agency Heads are upholding and promoting the APS Values and the systems and procedures they have to ensure compliance with APS Code of Conduct.

While the Commission does not become involved in the management of agencies on a day-to-day basis, it takes a balanced 'hands-off' approach by providing guidance, advice and encouragement in accordance with Directions issued by the Commissioner.

The removal of much of the central safety-net of prescribed rules and regulations, which frequently caused irritation with its rigidity and its one-size-fits-all approach, has required agencies to think carefully about the most effective and efficient process for their particular environment or workplace. It has sharpened agencies' focus on the various systems that are necessary for integrated agency management to ensure that accountability for the use of public funds is not only in place, but is seen to be in place.

Report Card

Evidence to date indicates that agencies are responding well to the challenge of using the new flexibilities to develop strategic and innovative approaches. We now see growing variation in the approaches taken to conditions of employment to suit the needs of agencies. Agency Heads are responsible for negotiating industrial relations agreements with employees ("Certified Agreements" for groups of employees and "Australian Workplace Agreements" for individual employees, under the Workplace Relations Act) and many are now finalising third-round agreements, tailored specifically to their operational needs. Typically, these agreements link closely with each agency's corporate plans and directions, and support such agency-specific requirements as performance management, learning and development and career planning.

The problems inherent in differences in pay and conditions between agencies have not eventuated to the extent to which some pundits had suggested. In part, this is due to the need for agencies to meet the cost of pay increases from productivity improvements, resulting in more modest rises and variations than originally anticipated. Most of the variations appear to reflect genuine labour market requirements (eg to pay particular experts, or to reward top performers) and reflect exactly the intent of the flexibility provided.

Some practical issues have needed to be addressed, however, in terms of mobility across the APS. In particular, arrangements that apply following changes to the structure of the APS, most notably after a federal election, result in compulsory movements in staff and functions between agencies. In the new environment of devolved pay and conditions, such movements have raised implementation issues which have now been addressed.

As a result, changes announced following the November 2001 federal election were facilitated more smoothly by the streamlined and consolidated provisions set out in the PS Act and Regulations, especially in relation to the arrangements for determining the remuneration and other conditions of employment of employees affected by such Machinery of Government changes. These PS Act provisions reflected earlier amendments to the Policy Parameters in order to further facilitate mobility, by maintaining structures that are consistent with Service-wide Classification Rules and by retaining the portability of accrued leave entitlements.

The reform framework is now well established, with the contemporary APS now increasingly covered by values rather than rules. At the same time, it is vital that, as required by legislation, agencies continue to uphold and promote the APS Values and that proper accountability is a focus for attention. Agencies need to build on the progress they have already made in lifting staff awareness of the Values to embed them into management systems and approaches that underlie the culture of the agency.

Challenges for the Future

Using the flexibilities available to produce higher performance is an ongoing task for agencies, particularly those with potential for greater tailoring of management approaches to agency needs and circumstances. The challenge has been to identify some enduring principles within which the Service could continue to operate as an institution of government but with increased capacity to respond to the needs of the elected Government and to adapt to other changes and developments affecting the delivery of services.

The more contestable and commercial environment in which the APS operates heightens the need for agency systems and behaviour to be grounded in, and consistent with, appropriate accountability mechanisms. These issues, along with some concerns for example about record-keeping and risk management, will be monitored in my future reports to the Parliament.

Another challenge is to ensure within a devolved environment the capacity to address whole-of-government concerns. Of itself, devolution has not added significantly to this problem, because the old centralised and detailed rules were themselves an obstacle to the agility needed to address problems that cross organisational boundaries. This challenge is being addressed at a number of levels. The APS Commission has been promoting a leadership capability framework for use across the Service which emphasises qualities such as cultivating productive working relations, communicating with influence and shaping strategic thinking, aimed at encouraging senior executives to look "outwards and upwards". The Management Advisory Committee, consisting of all the key Agency Heads and supported by the Commission, has also been examining particular areas where cross-agency cooperation is essential : a report is about to be issued on Information and Communications Technology (ICT) suggesting a "federated" governance model which continues to emphasise business-driven ICT investment and management, but with whole-of-government consideration of issues such as interoperability. In addition, special taskforces and coordinating arrangements are addressing priority whole-of-government issues such as salinity, border protection, welfare reform, Indigenous development and demographic pressures.

Finally, as mentioned, our model represents a particular risk management approach relevant in a context of a reasonably well embedded culture based on public sector values. In the event we experienced major incidents of fraud and/or corruption in the Australian system, it is possible that we would need more powerful investigatory and policy mechanisms (though the Public Service Commissioner and the Auditor General have significant powers available, and agency fraud plans allow for escalating levels of police involvement). Interestingly, some Australian States, such as New South Wales and Queensland, have established anti-corruption and anti-fraud agencies which conduct investigations and hearings and provide corruption prevention advice. They are also seeking to couple these accountability mechanisms with preventative measures based on guidance and education similar to that achieved in the APS by way of the Values.

Conclusion

The Australian model is one based on risk, but it is not risky. It is balanced by a framework of accountability mechanisms, including my annual report to Parliament. Research for this report indicates that the APS Values are well entrenched and staff have a reasonable level of understanding in relation to their own roles and responsibilities. There remains, however, the need for the Commission to continue to pursue a quality assurance role in terms of how the Values and Code of Conduct apply more broadly to the responsibilities and organisational goals of their colleagues, their agency and the APS. The Commission will continue to assist all agencies to ensure that the Values and Code of Conduct are reflected in their governance arrangements and how we might fully make use of the framework now in place.

The Commission also has a role to assist the APS to position itself for the future, by promoting leadership and enhanced human relations management, and by encouraging in collaboration with agencies, continued management reform.

The modern public sector environment will continue to give rise to challenges in meeting the high standards of performance and accountability expected of the public service. We will continue to face the challenges of seeking to strike the right balance between the devolved management and strengthened accountability that underpin the frameworks now operating in the APS.

go up Start of page