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1. Executive summary

Introduction

The landscape has changed significantly since the creation of the Senior Executive Service (SES) in 1984. With more than 20 years of reformist governments the Australian Public Service (APS) has undergone a major rethinking of its role and the way it carries out the task of public service.

The eighties and nineties saw a progressive emphasis on the accountability of Secretaries and SES staff for the timely, efficient and ethical delivery of outcomes that reflect Government priorities. As a corollary, Secretaries were given much greater flexibility in the way in which they marshaled their financial and staff resources – if they were to be accountable they needed to have to hand all the tools required to deliver outcomes. This included progressively greater departmental level control over SES numbers and classifications.

The recent rapid growth in the SES and the growth within the SES in the number of the most senior staff have led to questions about whether controls on SES numbers and classification levels would help constrain costs and maintain equity at little damage to the public good.

This review examines:

  • the rate, geographic location and causes of workforce growth
  • the likelihood of classification creep and
  • the role of the SES in current classification structures including the development of Work Level Standards for each level of the APS

and makes findings and recommendations in relation to these matters.

SES growth and the reasons for growth

The SES did not significantly expand between its establishment in 1984 and 2003. However since 2003 the SES has grown by 50 per cent. This rapid growth is the principal reason for this review.

The Review’s key finding is that there are clear forces driving much of this growth and that to halt or reverse it will require tackling these fundamental causes of growth.

The reasons most frequently given for rapid SES growth are:

  • growth in the complexity of work expected of the APS and the number of programs administered
  • significantly greater demands for interaction with and response to stakeholders including both Ministers and their offices, other levels of government and business and the community more broadly
  • the impact of information communications technology (ICT) and the 24/7 media cycle on the response time for requests and provision of advice including the extension of the ‘working day’ – 42 per cent of SES staff work 50 hours or more per week.1

There is strong evidence for a relationship between the growth in the SES and growth in the number of programs administered by the APS – measured by the number of budget initiatives. New policy and new programs require higher levels of oversight by senior staff. Since 2003 there has been an increasing tendency for the Australian Government to wish to deliver programs directly to the Australian people, bypassing the States and Territories. In all western democracies, there has been a proliferation of programs targeted at increasingly narrow demographic and geographic interest groups in the community. This is regarded as clever electoral politics. But it comes at a price in terms of administrative costs, risk and in particular growth in senior public service numbers in all our comparator political systems.

A heightened national security environment, deepening concerns about border security, the Global Financial Crisis, the complexity of the climate issue, and high levels of immigration have contributed to SES growth domestically and overseas.

Similarly significant pressures on senior skills have been driven by the growth in regulation, the increasing scope and use of administrative and judicial review, increased frequency of cabinet meetings and their location outside Canberra, the number of high level negotiations associated with an ambitious COAG reform agenda and a more fraught and complex international environment.

There is considerable anecdotal evidence of the impact of the growth of ICT on the complexity, density and time sensitivity of the relationship between the APS, the Ministry, the Parliament and the community. There is a strong presumption that this has increased the demand on the Executive and SES levels.

Finally there has been some reversal of the consolidation of Commonwealth machinery of government arrangements which took place in 1987, with increases in both the number of departments and of independent APS agencies under the Public Service Act 1999.

For the reasons outlined above since 2003 the SES has grown more rapidly than total Australian Government expenditure (41 per cent), and more rapidly than the Australian population over the period (22 per cent). It is not possible to quantify the growth in APS ‘clients’ (recipients of payments, tax concessions, taxpayers,subjects of regulatory constraints, users of government services) but it is highly likely that it has been much higher than the population as a whole for the reasons outlined above.

The SES has grown less strongly (50 per cent) since 2003 than did the numbers of APS staff in the Executive Level classifications, which grew by 65 per cent. Over the same period APS 1 and APS 2 staff numbers declined by 13 per cent and 31 per cent respectively, reflecting the impact of technology principally but also the contracting out of some routine tasks.

Chart 3.1: Total SES 1984 to 2010

Chart 3.3: Growth in employment by classification 2000-2010

The growth of the SES is consistent with the growth in the SES equivalent grades in the United Kingdom and Canadian civil services. They too have grown at a significantly higher rate than for their respective civil services as a whole. This suggests that some of the factors relating to complexity, national security, program proliferation, ICT, media scrutiny and the associated accelerating policy cycle may be common across jurisdictions.

In relation to other Australian jurisdictions the APS has a higher ratio of SES equivalent staff than the State public sectors. However if a comparison is made on a “like with like” basis by excluding the State front line delivery services (teaching, police, health etc) the proportions are very similar between the APS and the Victorian Public Service. There have been cuts in the SES equivalent grades in NSW and Victoria, offset to some extent by growth in senior non-SES specialist staff and greater use of contracting.

It proved impossible to get meaningful comparisons with the private sector in relation to the proportion of SES equivalent staff. Mercer Australia research findings suggests that the key drivers of private sector executive numbers, and changes in them, are:

  • business strategy and model (and changes thereto)
  • profit ratios & financial results
  • executive talent strategy
  • business effectiveness, efficiency and cost base, including the issue of span of control
  • a new chief executive officer causing a new direction and
  • acquisitions/divestitures and further changes as a result of post merger integration or demerger.

Chart 3.13: Growth in the SES in Australia, the United Kingdom and Canada

SES classifications and work level standards – the Audit

The Review constructed contemporary work level standards for each of the SES levels and tested these with Secretaries and through an audit of positions in a range of agencies. This audit also employed a widely available job assessment tool developed by Mercer.

The audit found that the proposed work level standards were, on the whole, a robust instrument and that most positions were classified appropriately. There was not evidence of widespread classification creep. However, the finding of a significant number of apparently misclassified roles in the audit is at least prima facie support for the view that some SES roles are designed with insufficient regard to job design principles or reference to appropriate work level standards. Few agency heads have developed agency specific work level standards for SES roles, or seek expert advice, to inform classification decisions.

The audit showed a higher proportion of Band 3 SES positions as being apparently over-classified.When these positions were examined a number were found to be in areas of high sensitivity and risk – although their scope and resource responsibilities might not be as broad and significant as more traditional Band 3 roles. The work level standards for SES Band 3 were amended to strengthen the relevance of innovation, policy, political and administrative risk in deciding to allocate positions to this level. This will enable departments to use an SES Band 3 level position to drive change and introduce policy or program innovations with serious risk or to provide close support to a junior minister – when change has been successfully managed and programs are in place and running smoothly these functions can often safely be carried out at the SES Band 2 level. The Review has recommended that the Australian Public Service Commission (APSC) examine this further before the work level standards are finalised and released for use.

Another possible reason is that points factor job evaluation systems used were predominantly calibrated against major private sector corporations and the State public sector and tend to heavily emphasize job size and decision making independence. Most private sector points factor job evaluation systems tend not to draw heavily on professional services and financial sector data. These sectors are most closely comparable to much of the Commonwealth policy environment, and are most directly competitive with the Commonwealth for senior staff.

To reduce inconsistent classification decisions within and between agencies the APSC should issue SES work level standards based on those developed as part of the review and the Public Service Classification Rules 2000 – the legislative framework for APS-wide classifications – should be amended to require their use by agencies in managing SES classifications. To ensure adoption of the new work level standards, the APSC –supported by independent experts knowledgeable of the APS – should undertake a risk based program of ex post assessments of SES roles in selected agencies.

The APSC should also develop supplementary classification management tools – namely a simple methodology for evaluating SES roles against the work level standards and a workbook to guide agencies in its use. The APSC should provide training to agencies in the use of the methodology. To embed the new arrangements, agencies should be required to undertake a job evaluation against the work level standards in respect of SES roles that become vacant and provide a copy to the APSC prior to a selection process commencing.

The three level structure for the SES continues to be appropriate A single three level SES classification structure will accommodate the requirements of the Senior Executive (Specialist) classification stream. Specialist career paths, including SES roles, can also be accommodated by the development of professional and technical capability frameworks without diminishing or detracting from a single flexible SES classification structure. Accordingly the review recommends that, as the Senior Executive (Specialist) classifications are not widely used, they should be phased out. Against this background the formal process specified in the Public Service Commissioner’s Directions 1999 (as amended) for assignments from a Senior Executive (Specialist) classification to an SES classification should be removed.Identical core criteria for SES and Senior Executive (Specialist) roles were adopted in 2000.

Controls for managing the SES – numbers and classification

At first blush the dramatic growth in the SES in the last seven years suggests that there could be scope for an across the board cut. At a time of great scrutiny on public expenditure and a drive on fiscal consolidation this could make a minor contribution to savings, but provide a larger signal to the service and the public of the importance the Government places on cost control.

However, the growth in the SES has been closely associated with a rapid increase in new programs and the number and pace of COAG and international negotiations, as well as border and national security issues – these are substantive drivers of demand for SES staff and the audit did not identify significant classification creep. Indeed despite the growth in the SES, the APS has been damaged by some significant failures in program delivery including the Australian Government housing insulation program and the Green Loans scheme, and at an earlier time in relation to immigration and quarantine matters. These failures have in substantial part been attributed by the Australian National Audit Office and other inquiries to insufficient senior management oversight and control.

There is also considerable evidence that poorly managed ‘downsizing’ in government and business, while attractive to voters and shareholders in the short run, results in poor performance over the medium to longer term.

For these reasons the Review is reluctant to recommend an across the board pro rata cut.

Successful downsizing exercises in the private and public sectors are linked to market, strategy, policy and program fundamentals and managed actively to ensure that the right people remain and the capacity of the organisation is not compromised. While there might be a savings goal linked with any overall program of fiscal consolidation, any reduction in SES numbers should flow from a careful review of expenditure, programs and other staffing and delivery expenses rather than being seen as an end in itself.

There are many Commonwealth grants programs where the administrative costs and risks approach or even exceed the value of transfers that take place.There are likely to be significant savings and few welfare losses (but some political pain) from a rigorous approach to program consolidation.

The existing agency SES caps administered by the APSC should continue to apply for a further five years. This will allow program reviews and strengthened arrangements for the use of work level standards to be embedded. A pressure relief valve, in the form of access to review by the Commissioner should continue. Consideration of additional SES positions in the new policy process, and in budgetary savings exercises should be no less rigorous than when agencies make an application for relief from their cap.

Where funding is sought for new SES roles as part of a new policy proposal, a preliminary evaluation of the proposed new roles should be undertaken as part of the costing process, with the creation of the new roles being subject to a more formal evaluation using the draft work level standards and proposed new scoring methodology.

The cost of resourcing the APSC to implement strengthened classification arrangements based on new SES work level standards and supporting tools can be offset by savings resulting from a reduced incidence of misclassified roles.


1 State of the Service Report 2009 – 10