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A high performance Public Service

The Hon. Dr David Kemp MP
Minister Assisting the Prime Minister for the Public Service
Address to "Building the Momentum of APS Reform"
PSMPC Lunchtime Seminar
Canberra, 3 August 1998

Introduction

Public Service Commissioner, Helen Williams, Departmental Secretaries, Ladies and Gentlemen.

It gives me great pleasure to be with you today. It has been some time since I have had the opportunity to address such a gathering of members of the Australian Public Service (APS) in Canberra, and I appreciate the opportunity to reflect on the significant achievements of the Public Service over the last two years, to outline what the Government sees as the task ahead, and to launch three documents to further assist agencies and their employees take full advantage of the flexibilities in the new workplace environment.

It is a little over twelve months since I took on the role of Minister Assisting the Prime Minister for the Public Service. It has been a year of transition, and of far-reaching reforms. As the Government has been ensuring that Australia's economic fundamentals are strong and able to withstand the ravages of the Asian economic downturn, the Government's reforms have been laying the foundations for an Australian Public Service that will enable us to compete internationally on the quality of our government.

It has been a year in which a new legislative and administrative framework for a 21st Century Public Service has been substantially put in place. New, progressive workplace relations arrangements have been introduced. Understanding within the service of the new flexibilities has grown. The uncertainties of what the new framework will be are behind us, although we still have the Public Service Bill, an essential part of the reform agenda, to pass.

It has also been a year of significant challenges for the Public Service, and I would like to commend members of the service for the admirable way in which they have responded to those challenges. The opportunities created by the new framework are being grasped eagerly by many, and the move to high performance organisations has begun. The foundations have been laid. The task ahead for the Government and the APS is to build on them.

A high performance APS

On coming to power, the Government realised that it needed to change the prescriptive legislative framework that was a straightjacket on the APS. As a priority, the Government set out to provide the conditions necessary for Public Service agencies to become high performance organisations while reaffirming their sense of public purpose. Reform of public administration became a key part of our micro-economic reform agenda.

Australia faces great challenges in the global economy, and getting the role and organisation of government right is key to meeting these challenges and securing the future of our country.

Structural reform, including labour market flexibility, has been crucial to achieving high sustainable economic growth. The Government is committed to removing barriers to innovation and other hurdles that inhibit economic growth.

High performance organisations, through their strong performance culture, find continuously better ways of achieving their aims of providing value for money to citizens, delivering responsive services to customers and clients, and high quality advice to government. They are:

customer focused;
have clear directions and strong, committed leadership;
exhibit and promote a strong strategic vision;
continually benchmarking and improving their performance;
values-based, rather than rules-based; and
they see themselves as public sector enterprises, judged by results, operating in a competitive environment.

People who work in high performance organisations understand the business and the environment they are working in. They feel a sense of ownership of changes occurring within their organisation, and are committed to the external success of their organisation. This sense of ownership, and commitment to success, leads to a motivated and innovative workforce. High performance organisations are, as a result, more satisfying places to work.

High performance is now possible. We have devolved decision-making to agencies, removed swathes of prescriptive control and provided much greater flexibility for the improvement of workplace relations. It is now for each agency to choose how best it can manage itself, how it organises work, how it will be structured, how it makes decisions, and how it will select, motivate and reward employees to meet its performance challenges. A high performing Australian Public Service will provide the best advice to governments, the best services to clients, and the most satisfying workplace for its members. In two short years the freedoms that allow that to be achieved have been substantially provided and, to a remarkable extent, you have sought to make use of them.

Enabling high performance

The path towards high performance requires committed leadership and innovation. To enable the APS to realise that goal, the Government has taken significant action in four key areas. These reforms have provided the foundations for high performance - as agencies build on these foundations, the Government is seeking to continually improve them.

Focus on core activities

The Government acted at once to overcome the blowout in government expenditures and improve the effectiveness and cost efficiency of public administration. The Government reduced or terminated low priority activities; rationalised functions with those performed by other levels of government; and commercialised or privatised activities where they could be performed more efficiently by the private or voluntary welfare sector. The objective has been to focus the APS on its core activities - policy development, legislative implementation and the contracting and oversight of service delivery. This reflects the recognition that the role of government in a democracy such as Australia is to provide the leadership, the legal and regulatory frameworks, and the essential support for public goods and those in need so as to allow the visions and plans of the Australian people themselves to be realised.

There is still a task ahead for APS Agencies to continue to examine critically the way in which they perform their functions to determine whether they should be performed by the public service or through other service providers, and to implement performance improvement initiatives to increase cost effectiveness wherever functions remain in the Service. The process of outsourcing non-core Government activities will continue, particularly in areas such as information technology and corporate services. Public service monopolies are being progressively made contestable, to ensure that the government and taxpayers are receiving the best value and service.

More flexible workplace relations

The Workplace Relations Act 1996 has provided an unparalleled opportunity to mainstream arrangements applying to the APS with those in the community generally. The Government has been determined to see the Act applied to its own area of employment in order to provide a more flexible, less regulated workplace, with employees having the same opportunities to access better pay for higher productivity as now exists in other sectors. That devolution has transformed people management in the APS.

The effect has been dramatic. A very centralised, highly unionised and conservative workplace has - through Government opening the way and your efforts - been transformed. It is a matter of pride that the APS has been at the cutting edge of reform, in many ways setting an example to the private sector.

Industrial stability and freedom of association

Members of the Public Service are increasingly exhibiting the confidence to sort out issues at the workplace without the unnecessary intervention of third parties. Indeed, when the Government asked public servants in 1997 if they wished to continue having union dues deducted from pay, almost 40% of APS staff opted to have the deduction cease. It is apparent that most now feel able to be involved in decision making themselves, rather than simply voting on deals negotiated behind closed doors.

The Workplace Relations Act has seen a sharp drop in industrial action taken in spite of the pace of reform. Workplace bans and limitations, the bane of management in the old APS have virtually disappeared.

Industrial arrangements which gave power to a few have been replaced by a framework which allows all to participate.

Agreement making

This is clear from the innovative manner in which APS enterprise agreements are being developed and implemented. The authority to make agreements has been devolved to agencies, within broad policy parameters designed to protect the Government's interests as the ultimate employer. The new arrangements are brief, to the point and facilitative.

The first year of the Government's new arrangements has seen dramatic progress. The ambitious targets we set have been exceeded. No less than 48 agreements have now been certified and another 7 are awaiting certification. As a result, two-thirds of public servants are already in agencies with agreements certified by the AIRC and agreements covering a further 20% are close to finalisation. In addition more than 1,400 employees are now covered by individual Australian Workplace Agreements.

What is exciting is that about half of these agreements have been made directly with staff rather than negotiated directly with union delegates. A similar number are fully comprehensive, meaning that they stand on their own as a statement of workplace terms and conditions rather than simply as 'add-ons' to awards, determinations and previous agreements.

As a result, the complex panoply of industrial awards and public service determinations has less and less relevance for public servants. Over the term of the Government, over 900 determinations have been repealed and in February this year, a single comprehensive determination was enacted - not in order to prescribe but to help agencies amend and tailor terms and conditions to their own particular needs.

Another significant development has been the recent simplification of the APS awards. Last week the Australian Industrial Relations Commission handed down a decision that goes a long way to providing agencies with far greater flexibility than in the past. While the Commission did not give the Commonwealth everything it sought, it did go a long way to providing the APS with less prescriptive award arrangements. The ten existing APS awards have been rationalised into a single simplified award. The availability of regular part-time work has been freed up. The award redundancy clause no longer makes provision for specific retention periods. Overall, the new award provides a far more appropriate basis from which agencies can pursue devolved agreement making.

The APS award and determinations have been simplified and streamlined. But it is agreement making which is transforming APS culture. It has seen the introduction of positive initiatives that would have been unlikely, indeed impossible, only a few years ago. They include significant innovations that represent a profound break with the Public Service culture of the past, for example:

a variety of pay outcomes between agencies;
terms and conditions designed to reflect the particular needs of individual workplaces;
the replacement of automatic increments by productivity and performance linked salary progression;
the negotiation of more flexible hours of work and working arrangements which will enable significantly improved and more readily accessible service to clients;
the broadbanding and flattening of the public service job hierarchies;
very significant simplification of leave provisions;
the removal of specific penalty provisions for working overtime, or at higher duties; and
the removal of the restrictions on the numbers and hours of employment of permanent part-time employment.

Further flexibilities

The Government will give continuing workplace relations reform a high priority. The task ahead is to build on the foundations of the 1996 changes so that the benefits can be extended throughout the Australian workforce. As my colleague Minister Peter Reith has already indicated the Government intends to proceed further with workplace relations reform, building on the major successes to date, based on a review of the operation of the Workplace Relations Act. This will be of significant advantage to the APS as it will be to employers more generally.

Mr Reith has foreshadowed further moves on award simplification and measures to make agreement making even more accessible and to reinforce the focus on direct employer/employee relationships. Given APS agencies' record in taking up the opportunities already presented by the Act, they will be well placed to take a lead role in implementing these ongoing reforms.

The Government will move to provide even greater flexibility to agencies in agreement making. In order to maximise the devolution of agreement making in the APS the Government's Policy Parameters will be reviewed with a view to further reduction. In the future it would still be important that Government agencies, subject to approval by the relevant portfolio Minister, determine the content of their own agreements so long as they:

are consistent with the Government's workplace relations policy and APS wages policy; and
are funded within agency appropriations.

We will examine allowing three new areas to be negotiated in agreements: redundancy, superannuation and long service leave.

Presently agencies have to ensure that any revision to redundancy provisions is on a cost neutral basis when compared with the existing redundancy arrangements. This may be unnecessarily restrictive. The Government will consider allowing agencies to make agreements that revise the redundancy arrangements offered to staff.

Restrictive long service leave legislation currently covers the whole of the Commonwealth public sector and does not allow any streamlining of its provisions through agreements at an agency level. The legislation can adversely affect mobility. The Government will examine amending the Long Service Leave (Commonwealth Employees) Act 1976 to allow employees the opportunity to negotiate whether they wish to retain Long Service Leave as part of their terms and conditions or to vary those provisions, including whether they would prefer to cash it out.

In relation to superannuation, legislative changes have already been introduced to open up the choices available. The introduction of choice into superannuation arrangements, together with the closure of the last of the Commonwealth's defined benefit schemes in July 1999, will have significant impacts on future APS employment arrangements. Movement into and out of the APS will become much easier, and this will place a premium on ensuring that the conditions are in place to retain good staff. The defined benefit funds have tended to act as 'handcuffs' on staff who have accumulated several years of equity in them. This will not be the case in the future.

The Government will also provide more flexibility with regard to the individual AWAs signed by its SES staff. Now with the bulk of SES covered by AWAs, it can be expected that agencies will be turning their attention to the opportunities which this form of agreement making provides for staff below the SES.

The devolution of authority and accountability in the APS will be completed in the next two years. Further elements of central regulation will be removed and vestiges of central control will be devolved to agencies: for example, responsibility for the provision of executive vehicles and the setting of terms and conditions for public servants working overseas will now be a matter for agency determination.

While the core function of central agencies - administering the legislation underpinning the activities of the Government on the one hand and whole-of-government policy advice and co-ordination on the other - remains essentially unchanged by the current reform agenda, there has been a fundamental change to much of their traditional regulatory function. The role of facilitating governmental reform, always a central agency function, will now be done differently.

Better service to Government clients

The reforms I have been discussing have set the APS on the path to major client service improvements through increased choice and flexibility and placing a much greater emphasis on service delivery to clients.

There are now more than 100 Service Charters in place, covering all major service delivery functions. The Charters provide valuable information for benchmarking service quality and allow taxpayers to understand the standard of service that they should expect from the APS.

Modernising Public Service legislation

The Public Service Bill, introduced into Parliament in June 1997, is a modern piece of legislation that will protect the public interest of citizens and provide a more flexible framework for the management of employees. It establishes a strong framework for an apolitical and non-partisan Public Service and provides a fair balance between enhanced accountability and management responsibility. It includes the framework of values and code of conduct that are essential to a public service governed by values rather than regulatory prescription.

As you are all aware, the Senate has twice refused to pass the Bill. The Government is not prepared to adopt amendments that will turn back the clock on the reform process. In the interim, the Government implemented a number of its reforms through regulations. While these regulations represent a significant step in the Government's reform agenda, they cannot achieve all the changes to the employment framework what will be possible when the Bill becomes law. The full accountability framework, clearly establishing the role and responsibilities of Agency Heads, must await the new legislation.

The Government will not be deterred from completing its reform of the APS by the shortsighted obstruction of the Opposition and minor parties in the Senate. The effect of this obstruction is simply to frustrate the very many people in the APS who are keen to press ahead with a reform agenda to which they have contributed, and which they see as essential for building morale and competitive opportunities for the future.

Accordingly, the Government will continue to push for the passage of the Public Service Bill through the parliament.

Once the new Public Service Act is enacted, it will embody a new approach to protecting the public interest of citizens, while providing a far more flexible framework for the management of employees. The Bill will provide a legislative basis for APS employment that will allow the APS to provide better policy advice to the Government and higher quality, more accessible services to the community.

The Government and the public expect that certain general principles should apply to all employees on the public payroll. To this end the Government will consider whether it is appropriate to require all statutory authorities to develop their own set of values and code of conduct based on those applying in the APS. This will not apply to Government Business Enterprises, which operate within a clearly defined accountability framework based on corporations law.

The task ahead

The reforms of the last year have been a watershed for the APS. But the challenges facing Australia will continue, and we must maintain the momentum of reform.

There is an exciting vision for the future of the APS. It will be able to:

position Australia in a global environment to ensure that we are focussed and seeking out the changes that will guarantee our national future;
benchmark itself against all sectors to determine what it does best, what it can improve, and what is most effectively delivered by the market;
provide frank and honest and innovative advice to government; and
access the best service delivery skills, quality and cost, wherever they might reside.

Challenges remain

There are challenges in meeting this vision. Some of them the Government can deal with, but many are for you to address. The framework for the future has been set. Learning to use that framework to achieve this vision of an APS which is recognised and valued as a leading element of Australia's future success, is up to you.

My vision for a high performance public service and the inclusion of the APS values in legislation are not coincidental. Globally it is clear that strong organisational values are a key to performance. They provide a common point of reference for everyone in the organisation; they are the touchstone for people when they are faced with challenges and uncertainty. In the APS they play an even more important role because they define the essence of your unique contribution as advocates of the public interest.

To use these values as a tool to maximise performance, thrive and prosper requires two key steps:

first, that you identify what they mean in practical terms within the context of your organisation; and
secondly, that you identify the behaviours that are consistent with the values in your organisations.

Creativity and adaptability

Nations that thrive and prosper as we move into the 21st Century will be those which have the capacity and the will to adapt to change and the flexibility to seize the manifold opportunities which will present themselves. For Australia to be adaptable and creative we need an adaptable and creative public service.

Perhaps the most critical link to realising the full potential of the APS is the development of its leadership capability.

Leadership

Committed, robust public sector leadership is crucial to making the most of the new framework for the Public Service. Success in this new environment requires leaders who can establish a shared vision and sense of purpose, and inspire, coach and enable their achievement.

The Government has emphasised the priority that it gives to leadership in the APS. Agency Heads and the SES need to grasp fully the opportunities that the new APS reform framework provides. Strong leadership is critical to securing that outcome.

Already many agencies have realised that executive development is most effective when linked closely to the achievement of corporate goals. Several APS agencies are now developing leadership centres or programs. Agencies are testing a wide range of approaches to improve the quality of strategic people management throughout their organisations. Six agencies, employing some 7000 people, are already utilising the internationally recognised Investors in People standard as a benchmark to ensure that their organisational learning strategies are linked to the achievement of corporate goals.

It is a start but it is not enough. A critical development for the APS over the next two years is to strengthen and accelerate the development of our future leaders. To meet these challenges, the Government will act to revitalise leadership identification, development and training in the APS.

The Public Service Commissioner in collaboration with agency heads is about to embark on a major upgrading of leadership development in the APS. This development has four key elements;

the identification of the capabilities required of high performing APS leaders,
the alignment of leadership development programs with those capabilities,
the review of selection and assessment processes to ensure integration of the capabilities, and
the identification and communication of good practice in leader development and succession planning.

This work will be done collaboratively with agencies. It will only succeed if it reflects the real experience and needs of agencies and provides those agencies with information which enables them to make choices which advance their business needs.

Publications

To further assist agencies and their employees become high performing organisations and take full advantage of the flexibilities in the new workplace environment, I would now like to turn to launching three new publications.

The first - APS Reform: Building on Good Practice - outlines the Government's expectations of the Australian Public Service to become a high performance organisation and uses a series of case studies to highlight how the APS is responding to these expectations.

In a devolved environment, it is going to be increasingly important to draw together examples of good practice so that agencies can learn from each other and make better decisions about their choices. Good choices require good information.

The second publication, The Workplace Relations Act 1996: A Pocket Guide for Australian Government Employment, offers a practical, plain English explanation of the key features of the Workplace Relations Act for line managers and employees in Australian Government Employment.

The third publication that I am pleased to present is entitled, Workplace Relations Policy in Australian Government Employment. This publication has been developed to promote a better understanding of the Government's policy approach to improving workplace relations and the achievement of more rewarding and more productive workplaces.

I commend these three publications to all those managers, leaders and employees in the APS who are genuinely committed to continuous improvement and the achievement of high performance organisations.

Conclusion

The reforms of the last year - devolution, flexibilities and opportunities - are only the foundations that enable high performance organisations. It is the people here today, leaders of the public service at all levels, who can actually build the high performing public service we need to support our country in the decades ahead.

The Government's reforms and the Public Service's willingness to embrace those reforms and take full advantage of them has generated the momentum. We must continue to build on this momentum to create a high performance public service for the twenty-first century.