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Ch10 Constancy and change

The first federal Public Service Act received the Royal Assent a little over 100 years ago, on 5 May 1901, coming into effect some eight months later. It is now timely to look at some of the features of the legislation which has governed the public service through the 20th century.

As noted in the Commission’s Centenary of Federation publication, the century has seen many dramatic changes in the roles and responsibilities of the APS with marked changes in Australia’s economic, social and strategic circumstances, along with changing community expectations and government policy imperatives (PSMPC 2001a, p. 70). Some of the key issues have been touched on in this history as background to an examination of the three principal Public Service Acts and related legislation.

If the size and functions of the federal public service have varied considerably over the last 100 years, the three Public Service Acts during that period have been characterised by some fundamental, common principles and recurrent provision for the performance of particular functions (albeit with progressive evolution of their interpretation and application), along with the introduction of significant new provisions.

Enduring elements

We need to look first at some of the more significant enduring elements.

The career public service and merit

Whether frequently affirmed or significantly qualified as to the extent of its current applicability, it is still common to attribute the stability and integrity of the public services in Australia to their origins in British civil service reforms in the 19th century. The particular impact of the Northcote-Trevelyan Report, with its uncompromising rejection of corruption, nepotism and patronage, has served to underpin the perceived necessity for Australia to maintain a permanent career public service, at each of Commonwealth, state and territory levels, throughout the 20th century.

For the Commonwealth, essential elements of a career public service at Federation constituted merit-based staffing of positions from the point of initial entry to the Service, through subsequent progression by way of merit promotion, security of tenure to retirement, and protections against arbitrary termination of services. The 1902 Commonwealth Public Service Act legislated variously to this effect, with entry to the Service essentially based on open and competitive assessment by way of formal examinations. While the primary basis of promotion was then to be efficiency, the latter was defined in terms of qualifications and aptitude for the duties to be performed along with merit and ‘good and diligent’ conduct (section 42). Minimal variation occurred to this definition with the enactment of the successor Commonwealth Public Service Act in 1922.

While the principles were maintained, however, their application varied significantly over the life of the two Acts. In the public service of McLachlan’s time, and well into later decades in Public Service Board times, the merit principle operated very selectively by current standards. Restrictive recruitment age limits were in place. Employment opportunities were limited significantly for women, and virtually non-existent for Aboriginal people and those with disabilities or coming from a non-Anglo-Saxon background. Returned soldier preference provisions, accepted as an inescapable consequence of political and social pressures from World War I, remained in place and were enhanced during, and subsequent to, World War II, with resultant dilution of normal recruitment standards and significant adverse effect on youth recruitment.

As noted in earlier discussion of the issues, the problems thus created began to be addressed in a meaningful way with the implementation in the early 1960s of a range of recommendations of the Boyer Committee report on public service recruitment standards and processes. Directly as a result of these recommendations and of its own initiative, the Public Service Board moved progressively to raise recruitment standards and remove or relax appointment age limits and earlier barriers preventing or limiting entry to the Service of people with disabilities. Removal in 1966 of the legislative barrier to permanent employment of married women was to be followed by implementation of a range of measures, directed to enhancing employment opportunities not only for women, but also for Aboriginal people and people from non–English-speaking backgrounds. From the late 1970s, the Board continued to improve the equal employment opportunity framework culminating, legislatively, with the enactment of specific EEO provisions in the 1984 Reform Act.

By 1984, appointment age limits had been removed, as had the longstanding 10 per cent limit on graduate recruitment at the clerical–administrative base range. By this time also, the bulk of the returned soldier preference provisions had been withdrawn.

The above changes served to modify progressively the realities of a career service as it had evolved in the federal public service over more than 80 years. The range of Reform Act amendments in 1984 included more specific articulation of the merit principle, in relation both to entry to the APS and to subsequent promotion.

In relation to appointment to the Service, the previously existing provisions for qualifying examinations and tests or for recognition of external educational qualifications became subject to an overarching legislative requirement for application of the merit principle to assess the credentials and relative suitability of applicants for appointment. At the same time, new provisions were inserted in the Act proscribing patronage and favouritism or unjustified discrimination on grounds of any of 12 specified characteristics of individual applicants in relation both to appointment and promotion processes.

In respect of the promotion process, the 1984 Act brought to finality some earlier enacted amendments, requiring the most efficient of the applicants to be selected for promotion, having regard to the respective claims of those applicants according to five specified characteristics and in relation to their future potential.

The 1999 Public Service Act has taken further the evolution and explicit statement of the nature of the merit principle, with the APS Values now affirming that the APS is a public service in which employment decisions are based on merit (para. 10(1)(b) of the Act). Supplementing the Values, this section also provides a consolidated and shortened definition of the characteristics of merit, in relation both to engagement for employment and for promotions, drawing on some of the earlier terminology. Separately, the proscription of patronage and favouritism has been maintained (section 17); nondiscrimination and diversity are affirmed by Value 10(1)(c); and employment equity must be promoted through agency workplace diversity programs (section 18). A new provision specifies that an agency head is not subject to direction by any Minister, in relation to the exercise of SES and non-SES employer powers over particular individuals (section 19). Merit and diversity provisions are subject to further reinforcement by the Public Service Commissioner’s Directions.

Merit-based staffing was an underlying principle for the Commonwealth Public Service at time of Federation. The understanding and expression of merit has undergone significant evolution over the intervening 100 years, but it remains a key feature of the APS at the beginning of the 21st century.

Accountability

Whilst direct references to the principle of merit-based staffing appeared in each of the 1902 and 1922 Public Service Acts, and were given additional prominence in the 1999 Act, less explicit legislative recognition has been accorded another principle which has been seen as fundamental for the federal Public Service—accountability.

Historically, the term had been considered as applicable more to Ministers than to public servants. Within that framework, the departmental permanent head was responsible to the Minister ‘for its general working and for all the business thereof’—a formula incorporated into section 12(1) of the 1902 Act and repeated, unchanged, in section 25(2) of the 1922 Act. The 1984 Public Service Reform Act further reinforced the formulation by addition of the phrase ‘under the Minister’, with the express intention of making it clear that ultimate responsibility for the administration of a department was vested in its Minister, in accordance with section 64 of the Constitution. Under Westminster tradition, the Minister was then accountable to Parliament for his administration.

In more recent years, the evolving nature of the relationship between Minister and departmental Secretary has served to modify the traditional responsibility/ accountability distinction and usage of the terminology. The increasing diversity and complexity of government activities, along with changing perceptions and expectations in relation to the role of the contemporary Secretary in both policy advising and management, have meant that the latter will now be seen as accountable for his or her actions and decisions. Ministerial accountability, if unchanged in principle, has come to be regarded as shared, and perceived by some observers to be diluted.

The 1976 report of the Coombs Commission noted the changes which had already occurred, the modern realities and potential problems. While it was clear that a Minister could no longer be expected realistically to be aware of, and accept responsibility for, all Class 1 departmental activities and acts of officials, it had become increasingly important to seek to clarify the nature and extent of shared responsibilities and related procedures for their assessment. The objective:

… to provide that those responsible at all levels will be accountable for their performance. Until then no-one can fairly be called to account for failure or poor performance (Coombs Report 1976, p. 42).

As noted by the Commission, however, the dividing line between ministerial and departmental responsibility continues to be both difficult to draw and, once drawn, to achieve undisputed acceptance by the affected parties.

If the 1902 and 1922 Acts did not use the specific accountability terminology, therefore, the concept can be seen to have been inherent in the abovementioned specifications of permanent head responsibilities. Additionally, as an independent official, with an overarching responsibility for the efficiency of the public service, the first Public Service Commissioner, and his Inspectors, were seen by the 1902 legislators as sharing that efficiency responsibility with permanent heads, and being accountable to parliament for their stewardship. In furnishing his annual report to Parliament, the Commissioner was required to report on the ‘condition and efficiency’ of the public service and to propose any necessary changes for improvement (section 11)—an obligation taken seriously by McLachlan, as reflected in the content of his reports.

McLachlan’s commitment to achieving improvement in public service efficiency did not prompt him to seek specific legislative powers in that area under the 1902 Act, nor did his 1919 Royal Commission report include any such proposals. The Economies Commission, however, took a different view, lamenting the non-existence of an independent auditor of public service efficiency. In the event, the 1922 Act charged the new Public Service Board with responsibility ‘to devise means for effecting economies and promoting efficiency in the management and working of Departments’, with additional specification of particular areas for attention, including the maintenance of ‘a comprehensive and continuous system of measuring and checking the economical and efficient working of each Department’ (section 17 refers). The same annual reporting requirement was imposed on the Board as had existed for the former Public Service Commissioner.

For varying reasons, including the consequences of the Depression and World War II, the Board was to make maximum use of its section 17 powers for a relatively short period in the late 1940s and the 1950s, with subsequent, progressive transition to less authoritarian management improvement review and advisory activities.

The last decade of the Board’s existence was to see a lower priority accorded to those activities, as new people management imperatives emerged in areas such as equal employment opportunity, industrial democracy and other initiatives directed to achieving an efficient public service through making it more open and responsive to both the needs of government and those of the wider community—arguably, accountability in one of its variants. This emphasis would continue as a significant characteristic of the Public Service Commissioner’s office from 1987, with the section 17 provisions effectively becoming redundant in the new, devolved management environment, and with the disappearance of any significant central personnel authority role in the traditional ‘economy and efficiency’ fields.

The 1999 Public Service Act addresses both traditional and current understandings of accountability, and provides contemporary legislative expression of the principle at a number of different levels, with free use of accountability terminology.

The essential elements were outlined by Minister Reith in introducing the then 1997 Public Service Bill:

  • The new Public Service Act was to provide an effective legislative basis for public accountability, with an interlocking framework of powers and responsibilities, exercised in a devolved managerial environment.
  • Secretaries of departments would be required to uphold specified public service values and would be held accountable for the manner in which they exercised administrative powers, including employer powers in relation to APS staff.
  • Both Secretaries and the staff under their control would be bound by a legally enforceable Code of Conduct, reflecting the standards of behaviour expected of public servants.
  • There would be enhancement of Parliamentary scrutiny in relation to the way in which the public service discharged its responsibilities on behalf of government, including a specific requirement for the Public Service Commissioner to report to Parliament annually on the state of the APS (PD House 26 June 1999, p. 6461 ff).

Each of the above elements is now reflected in the 1999 Act, along with some accountability specifics:

  • APS Value 10(1)(e) affirms that the APS is openly accountable for its actions, within the framework of ministerial responsibility to the government, the Parliament and the Australian public. Compliance with this Value (as with all APS Values) is a specific requirement of the APS Code of Conduct (section 13(11)).
  • Both the departmental Secretary and the head of an executive agency are required to assist the agency Minister to fulfil the Minister’s accountability obligations to the Parliament.

The Act retains the terminology of its predecessors in reaffirming that a Secretary’s departmental management responsibilities are exercised ‘under the agency Minister’. Likewise, annual reporting by the Public Service Commissioner, the Merit Protection Commissioner, agency and executive agency heads must be in accordance with Joint Committee of Public Accounts and Audit guidelines. Additionally, agency heads must comply with directions issued by the Prime Minister (section 21) and the Public Service Commissioner (section 42(2)). Accountability mechanisms may be brought into play under various other provisions of the Act including, particularly, the section 41 inquiry and reporting powers of the Commissioner.

The Public Service Commissioner’s more recent annual and State of the Service reports have continued to stress the fundamental importance for the APS of the principle of individual and corporate accountability, translating and applying the traditional concepts to the realities of the contemporary political and administrative environment. In this regard, it is necessary to take into account the range of other accountability mechanisms for the APS, which have either applied historically or become more significant in recent years, through the operation of parliamentary inquiries and committees, the Auditor-General, courts and tribunals, and other regulatory authorities.

Review of actions

Section 33 of the 1999 Act establishes the entitlement of an APS employee to review of ‘any APS action that relates to his or her APS employment’, other than an action involving termination of the employee’s employment (section 33(1)). The section sets down the broad outline of the review process, and the particular role of the Merit Protection Commissioner. More detailed review arrangements are spelled out in Part 5 of the Public Service Regulations 1999.

Provisions for the review of decisions affecting Commonwealth employees in their employment had existed in both the 1902 and 1922 Public Service Acts, but the nature and scope of such provisions have varied significantly over the last 100 years, notwithstanding obvious common elements.

In principle, section 50 of the 1902 Act had the appearance of affording federal public servants wide-ranging review rights. Any officer ‘affected by any report or recommendation made or action taken under this Act’ had prescribed rights of appeal to a board, comprising one of the Commissioner’s statutory inspectors, the chief officer of the department to which the officer belonged or the chief officer’s nominee, and an elected representative of the Division to which the officer belonged. A right of appeal was specifically precluded, however, in relation to processes applicable to appointments without examination, disciplinary and forfeiture of office processes, incapacity for duties or compulsory retirement. Board recommendations after the hearing of appeals were submitted for decision by the Commissioner, or recommendation by him to the Governor-General, where exercise of the latter’s powers were involved (for example, promotions in the Administrative, Professional and Clerical Divisions, or dismissal of an officer from the public service, as a consequence of a recommendation by a specifically constituted Board of Inquiry for alleged serious offences).

Although the review of actions provisions were of very modest dimensions compared with processes adopted in later years, McLachlan took the view that their application entailed excessive and inefficient use of departmental resources and unreasonably constrained management—views which were to be expressed many decades later about the then appeal and review provisions of the 1922 Public Service Act. Criticisms in the 1990s of excessively resource-intensive processes and allegations of existence of a ‘prevailing grievance mentality’ would no doubt have resonated for the first Public Service Commissioner.

McLachlan’s Royal Commission recommendations in these areas sought to remedy the problems he perceived. While he pressed for retention of Commissioner authority for ultimate determination of appeals (or Commissioner recommendation to the Governor-General, where relevant), he moved for the use of a more independent Appeal Board system for the bulk of disciplinary appeals, and devolution of promotion responsibilities to permanent heads, thus allowing exercise of Commissioner powers only at the appeal stage, and not in having to review his own original selection decision.

McLachlan’s recommendations found favour and, after a temporary falter in the case of promotion devolution, were incorporated in the 1922 Public Service Act. His uncompromising opposition to the introduction of any form of Appeal Board for the determination of promotions appeals was accepted also, with the newly established Public Service Board continuing as the sole assessment and determining authority until 1945, and remaining generally in sympathy with the McLachlan philosophy:

The view cannot be expressed too strongly that the remission of appeals to a formal Board of Appeal would involve a distinctly retrogressive step, and the retention of the present system with all its manifest defects, would be preferable to the constitution of Boards of Appeal carrying no responsibility as to the ultimate outcome of their recommendations. The future administration of the Public Service is too important and serious a matter to be prejudiced by endeavours to obtain theoretical justice (McLachlan Report 1920, p. 48).

By the end of World War II, however, the then incumbent Labor Government was disposed to respond to persistent union representations for reform of promotions appeal arrangements. As noted earlier, it accepted Bailey Committee recommendations for establishment of a Promotions Appeal Committee system, with independent committees able to hear and determine appeals, other than for senior executive promotions and those to the higher-level clerical–administrative, professional or specialised positions.

The essentials of the promotions appeal arrangements were to remain in place for more than 50 years, but not without significant modifications. Through to the 1980s, a growing volume of appeals cases led to long delays in their hearing and determination. Thus, in its 1982–83 annual report, the Board noted that more than 4700 officers were then awaiting appeal hearings, despite the operation of 20 full-time appeals committees (with a necessity for up to 26 committees reported in the following year).

The growing volume of appeal traffic had been influenced by a variety of factors. The most significant of these seems likely to have been reduction of promotion opportunities as a consequence of APS staffing restraint policies. Additionally, a series of Federal Court judgements, necessitating preparation by committees of ‘reasons for decision’ statements, to establish that ‘due process’ and ‘natural justice’ considerations had applied to their deliberations and decisions, impacted significantly on processing time for both promotions and appeals.

Union and staff concerns, relating not only to the long delays in resolving cases but also to the real ‘independence’ of the committees (committee chairpersons were appointed by the Board), generated new pressures for changes. Associated criticisms of process, and cost concerns, expressed by the various reviews initiated by the Fraser and Hawke Governments between 1976 and 1983, were to culminate in various legislative changes through the 1984 Reform Act and 1986 Streamlining Act.

The reforms thereby enacted served to reduce progressively the range of promotions subject to appeal. The Reform Act precluded appeals against promotions to the newly established Senior Executive Service (SES) and to promotions resulting from the unanimous recommendation of a Joint Selection Committee, which included a staff organisation representative. The streamlining legislation removed non-SES promotion appeal rights for the then top three clerical–administrative levels, and for equivalent grades in other APS occupational groups. Additionally, where rights of appeal continued, they could be exercised only by officers who had applied originally for promotion to the subject vacancies.

Concurrently with the Reform Act changes, overall administration of the promotions appeal process ceased to be a Board responsibility, and was taken over by the new Merit Protection and Review Agency, along with the Board’s former administrative responsibilities for APS disciplinary and redeployment and retirement appeals, and the handling of grievance applications initiated by APS staff, under longstanding provisions of the Public Service Regulations.

Along with the abovementioned reduction of appeal options (and a lessening incidence and impact of Federal Court interventions), structural changes within the APS, transfers of functions to the private sector and, probably, perceptions of a further lessening of job security in the APS contributed to a progressive reduction in promotions appeal traffic, through to the advent of the 1999 Public Service Act. As indicated earlier, the appeals regime was then to give place to Merit Protection Commissioner review processes, but with ultimate decision-making authority resting essentially with agency heads.

Staff training and development

The 1902 Public Service Act, and the first set of Public Service Regulations which came into effect in January 1903, contained no references to the training of staff. The annual reports of Public Service Commissioner McLachlan, however, made it clear that he attached great importance to the activity, as the means of developing the capabilities of public service staff and of improving immediate and longer-term public service efficiency and responsiveness. To this end, he pressed for the earliest possible establishment of Training Institutes, but with individual departments having the basic responsibility for staff training (PSCr AR 1913, p. 53).

The significance accorded training by McLachlan would have no doubt been influenced by some of the problems experienced in establishing an efficient federal public service, from the disparate staffing elements ceded to the Commonwealth by the states in the relevant areas of new Commonwealth responsibilities. Severe criticism of management and staff performance in the Post Office, as expressed in the 1910 report of the Postal Services Royal Commission, could be expected also to have had impact. Nonetheless, McLachlan did not view the provision of training as an appropriate function for his own Commission, notwithstanding the common tendency for departments to focus on training for their own specialised functional needs, rather than training to meet needs for upgraded management and clerical skills throughout the Service.

McLachlan did not address the issue of training in his later Royal Commission report and, in proposing retention of a single Commissioner (rather than the Board of Management model advocated by the Economies Commission), made no reference to training in the functions which he proposed for the Commissioner.

The responsibilities proposed by the Economies Commission for the Board of Management, however, included ‘the improvement of the training officers’. That formulation was included in the 1920 Public Service Bill, and was then carried over, in identical terms, to become one of the responsibilities of the Public Service Board under the 1922 Public Service Act (section 17(1)(a)(vi)).

As in earlier years, most training and development activity continued to be undertaken in departments, particularly in relation to their ongoing needs in professional, technical and trades areas. Within the limits of its own resources, however, the Board worked towards upgrading the skills and qualifications of staff occupying clerical and administrative positions, as well as those of staff in the more specialised types of departmental positions. Attention was paid particularly to the needs of returned soldiers and, within the first decade of its existence, the Board had moved to encourage clerical staff to pursue post-secondary education. A limited provision for assisted study schemes was initiated, and increased emphasis was placed on obtaining tertiary qualifications— further underlined by the enactment in 1933 of provisions for graduate clerk recruitment, under the then section 36A of the Act.

The Board’s training activities were to be constrained significantly by two major events outside its control—the Depression and the Second World War. Resources for training inevitably had to be accorded low priority in both situations, and no significant change was to occur until after reconstitution of the three-member Board in January 1947.

Reference has been made previously to the major upgrading of the Board training function in the early post-war period, the commencement of a significant involvement in international training activities and an early, wide-ranging involvement with training in the ADP field. The Board’s post-retirement tribute to Sir William Dunk noted specifically his role in ‘instituting advanced training’ (PSB AR 1961, p. 21).

Involvement in training was to remain important from the immediate post-war period through to the time of the Board’s 1987 abolition, but with important changes in emphasis. The number of training courses organised by the Board (conducted both in Canberra and by the Board’s state offices) decreased progressively, along with an increasing emphasis on instituting broader-based staff development programs. Such programs ranged across extended schemes for developing or upgrading administrative and management capabilities and skills (such as the Executive Development, Administrative Trainee and Personnel Management schemes, and the Interchange Program) to shorter, topic-specific courses or seminars, in areas such as administrative law, financial management and media relations. Increasingly also, use was made of external consultants and other subject specialists, with departments bearing the attendance costs for their own staff.

The new Public Service Commission progressively came to play a significant role in staff development activities, with characteristics of a similar nature to those of the former Board’s role—in the SES area, and through various non-SES activities and programs, with particular involvement in Service-wide cooperative programs such as JAPSTC, middle management development and PSETA.

While McLachlan stressed the importance of staff training for purposes of achieving an efficient federal public service, he did not seek to have it recognised legislatively in the 1902 Act, or as a particular responsibility of the Public Service Commissioner. Almost a century later, the 1999 Act provides that one of the specific functions of the Commissioner is ‘to coordinate and support APS-wide training and career development opportunities in the APS’ (section 10(1)(i)).

Other commonalities

With the partial exception of staff training and development, each of the four enduring elements discussed above have featured prominently in the three principal Public Service Acts since Federation. In concluding this section of the history, brief reference is made to three other important elements of commonality in the evolution of the contemporary APS—elements which have commonly had less explicit legislative expression themselves, but which have nonetheless impacted on the approach to, and content of, each of the Acts.

Emulating the private sector

The APS reform processes initiated by the Howard Government in 1996 was unambiguous in commending changes which would emulate best private sector models and practice:

The Government is committed to an APS that has embraced the best practice of contemporary management and is able to benchmark its performance against the private sector (Reith 1996, p. viii).

Elsewhere in that paper, and as reflected in the Minister’s Second Reading Speech on the 1997 Public Service Bill, it was made clear that APS employment provisions would largely accord with employment processes applying to the wider community, consistent with provisions of the 1996 Workplace Relations Act.

The general thrust (and some specific elements) of the Government’s intentions came to be reflected ultimately in the 1999 Public Service Act including, particularly, the devolution to agency heads of employer powers and responsibilities, similar to those exercised by employers in the private sector.

Private sector comparisons and benchmarking, however, had been seen as a significant objective for the federal public service from its origins. McLachlan was characteristically forthright:

… it is … highly important [for] the Public Service … to be brought more into accord with the best examples of private and commercial enterprise and administration, and so secure public approbation (PSCr AR 1906, p. 47).

As noted previously, McLachlan took very seriously his obligation to report annually on the ‘condition and efficiency’ of the public service and, in so doing, was never averse to private sector comparisons. He took exception readily, however, to external criticisms of public service administration—notably, in his response to the report of the Wilks Royal Commission on Postal Services. He criticised inadequacies which he perceived in their examination and reporting on the Postmaster-General’s Department, and opposed rigorously the Commission’s proposal for a departmental Board of Management. Some years later, he was to express similar strong opposition to the Economies Commission’s proposals for establishing a similar Board for the public service at large.

In the event, a Board was to replace the Commissioner in the 1922 Act, with its responsibilities including the ‘efficiency and economy’ elements advocated by the Economies Commission. In the particular context of the present discussion, however, it is pertinent to note that the government had set out deliberately to appoint to the Economies Commission highly regarded successful businessmen.

The Board’s pursuit of its assigned efficiency and economy responsibilities was not to occur in any significant measure until after World War II, and was to be relatively short- lived. In the intervening years, however, governments often found need to obtain advice or special expertise from the private sector, to supplement or enhance normal public service advice. The 1930s Depression and World War II provided notable examples and, in the latter case, included instances of prominent figures from the business world serving temporarily as chief executives of key government agencies.

Although the public service was to continue to grow rapidly in the first three decades after World War II, resort to private sector expertise remained common. The Defence group of departments used business representatives on various advisory boards, as did other departments with activities of particular significance to the private sector, such as in the transport and natural resources fields.

In more recent years, increasing use has been made of private sector consultancy services, both in departments and in Ministers’ offices. From the late 1970s, the Public Service Board commonly engaged consultants to lead its Joint Management Review teams, and to develop and conduct a wide range of staff development programs. Likewise, most departments have made extensive use of consultants in discharging their particular functional responsibilities, or for undertaking independent reviews. Downsizing and outsourcing of many traditional government activities have provided additional incentive, or need, to utilise external services.

Emulating best private sector practice has been a motivating force for governments and central personnel agencies since Federation. Over the years, it has extended progressively to rely on external expertise and resources in the day-to-day performance of government functions. It has impacted further also into the giving of advice to government, with both Labor and Coalition governments endorsing the notion of ‘contestable’ advice from sources outside the public service, variously involving external consultants, academics, advisory committees and policy think tanks.

Rewarding competence

Monetary recognition for achievement of expected standards of work performance and rewarding higher levels of performance have occurred in a number of different forms in the last century.

Salary increments

For McLachlan, concerns for achieving an efficient public service were matched by recognition of the need to maximise individual performance at the workface, in the absence of the broad range of incentives which commonly motivated private sector employees to strive for success.

Under the 1902 Act, rewarding public service performance came about essentially by way of promotion and incremental salary advancement. In a relatively small public service in which it was rare for any promotion or transfer to be other than intra-departmental, career progression through promotion would inevitably be slow. McLachlan firmly believed, however, that careful and conscientious administration of the awarding of discretionary salary increments under section 21 of the Act, based on departmental assessment of the officer’s ‘conduct, diligence and general efficiency’ constituted a powerful incentive to strive for high-quality performance. He believed that an additional incentive derived from staff having to compete for the number of incremental opportunities available at any given time, according to funds and classification structure constraints then applying.

Despite tight legislative prescription of incremental advancement and strong Public Service Commissioner support for their rigorous application, the degree to which the system contributed significantly to the achievement of improved levels of personal performance remains unknown. Arbitration proceedings in 1913 saw the beginning of automatic increments for trades and related categories of staff in the public service, and an admission to the Arbitration Court two years later that ‘the granting of increments was quite haphazard’ (PSMPC 2001a, p. 193). The then wartime environment, and the immediately ensuing moves towards public service reforms and a new Public Service Act presumably saw little significant change in the effectiveness of administering the incremental system.

McLachlan acknowledged the need for change:

The present system of discretionary increments imposes a heavy burden on administrative officers in making inquiries into individual claims, and is a serious tax on the time of the Commissioner and Inspectors in adjudicating upon such claims without commensurate results (McLachlan Report 1920, p. 42).

By way of solution, he recommended that direct administration of increments (to be granted automatically, subject to satisfactory service) be devolved to departmental permanent heads and chief officers, with the individual officer having right of appeal to the Commissioner, if an increment were deferred or denied. The substance of his recommendations was accepted, and duly enacted in section 31 of the 1922 Public Service Act.

In its first report, the newly appointed Public Service Board noted specifically that McLachlan’s recommendation had been predicated on the adoption of a system of short ranges of salary classification, but it had opted rather for more variable classification structures, thus enabling it to ‘afford the fullest scope of fixing the work value of positions … in accordance with the circumstances of the particular office’. On this basis, the Board went on to make it clear that incremental advancement ‘will only be retarded because of misconduct, lack of diligence or manifest inefficiency and not by the granting or withholding of increments on the basis of work value’ (PSB AR 1924, p. 34–5).

Over the next 40 years, the classification system established by the Board was to become increasingly complex, with overlapping salary ranges and varied structures, often containing multiple incremental points—a system which was to be substantially reformed and simplified through the progressive establishment of new classification and pay structures, as initiated by the Board in the 1960s, under Chairman Wheeler.

The basic incremental advancement provisions of section 31 remained essentially unchanged until the 1980s. The Board’s annual reports throughout the period made only limited reference to them, but it seems doubtful that McLachlan’s aspirations for a more rigorous and effectively managed system were ever achieved, notwithstanding issue by the Board of written guidance and directions.

The volume of General Orders, issued by the Board in March 1938, included a section on salary increments, setting out procedures to be observed for their approval and general administration, with subsequent volumes of the General Orders continuing to do so until the 1970s. Such admonition and guidance, however, would not seem to have produced the ‘commensurate results’ for administrative effort, non-achievement of which in the early years of the federal public service had prompted McLachlan’s reform proposals.

The rituals were observed, not uncommonly with conscientious attention to obtaining written reports on the ‘conduct, diligence and efficiency’ of an officer due for incremental advancement. Perhaps more commonly, the assessment and reporting processes were seen within the public service as time-consuming irritants of limited value—views reinforced by external criticisms.

Annual increments are virtually automatic as misconduct and inefficiency are dealt with in other ways (Caiden, 1967, p. 360).

In theory, increments are granted … subject to satisfactory performance but, except in isolated cases where a qualifications barrier exists, they have become nearly automatic (Coombs Report 1976, p. 196).

Despite acknowledgement of its deficiencies, the section 31 incremental provision remained virtually unchanged, until its repeal by the 1986 Public Service Streamlining Act. By that time, incremental advancement had effectively become covered by the more flexible arrangements of a determination of the Board, under section 82D of the then Act. Inserted by the Public Service and Statutory Authorities Amendment Act 1980, this allowed the Board to determine a range of conditions of employment, not inconsistent with existing Public Service Act provisions.

While the conversion to determination coverage served to simplify the prescriptive framework, the longstanding provisions governing award of increments were not modified in any material way. The later streamlining changes enhanced available powers, by allowing a particular increment to be deferred more than once and incremental advancement to be withheld where the particular officer was subject to disciplinary action or inefficiency proceedings. Other developments, however, had then begun to impact on the conditions governing the salary progression of APS officers.

Staff appraisal and performance pay

The Coombs Commission had commended the need for increased attention to the development of better staff appraisal systems. Observing that methods for assessment of individual performance were basic to any adequate system of merit advancement, work motivation or performance accountability, and of consequent intense interest to both managers and individual staff, it noted that no consistent or systematic approach had been followed across departments in their introduction and use. Such schemes as existed had generally been developed with varying degrees of formality and sparse documentation, and their reliability was largely untested. While management was likely to regard them principally as a means of achieving improvements in the performance and efficiency of staff, individuals subject to their use were more likely to see them primarily as instruments for conferring or withholding reward through pay or promotion—the personal incentive characteristics underlined by McLachlan more than 50 years earlier.

The Commission encouraged the Board to pursue its earlier initiatives, directed towards offering guidance and assistance to departments and agencies in the development of staff assessment schemes, supporting also the use of assessments in promotion and promotions appeal processes, and the Board’s view that introduction and usage of schemes should be at the discretion of permanent heads, with the support of Board guidelines. Neither the Commission nor the Board believed that a uniform, Service-wide scheme was a realistic objective (Coombs Report 1976, p. 200–201).

Prior to this, the Board had maintained essentially a watching brief on Australian and overseas developments in staff reporting and appraisal, undertaking periodic surveys and research, and providing limited assistance to departments in the design and implementation of schemes.

From 1977, the Board expanded significantly its guidelines activities, with its progressively produced material on the design, implementation and incidence of staff appraisal schemes as appearing in its final form in 1982 in Volume 3 of the Board’s Personnel Management Manual. This emphasised that appraisal schemes needed to be designed to meet specifically identified objectives, going beyond normal job performance assessments for promotion and placement purposes to areas such as identification of staff needs in varying organisational situations, skills inventories for workforce planning purposes, and analysis of training needs—a single form of appraisal being unlikely to satisfy all objectives.

Higher profile Board advocacy for the use of staff appraisal systems did not generate immediate significant increase in departmental schemes. The Hawke Government advocated a more directive approach. Citing like views already expressed by the Joint Committee of Public Accounts (JCPA) and in the January 1983 report of the Review of Commonwealth Administration, it expressed clear intentions:

… departments will be required to develop and introduce staff appraisal schemes in accordance with general guidelines issued by the Board.

It is intended that the appraisal system would cover all staff in the SES and, on a voluntary basis, those ranks immediately below the SES. The information would be used for staff placement and counselling, and the planning of staff development. It would include in each case a statement of the career interests and staff development priorities of the person concerned (Dawkins 1983, p. 2.3.32–2.3.33).

No move was made to give legislative backing for upgraded appraisal arrangements in the ensuing 1984 Public Service Reform Act. Possibly affected by consequences of the Board’s abolition three years later, guidelines on SES performance appraisal were not issued by the new Public Service Commission until 1990, with a further two years elapsing until the issue of guidelines for the Senior Officer categories.

No direct relationship had been envisaged by the Board between appraisal and pay. By 1992, however, the consequences of the introduction of new classification structures and enterprise bargaining arrangements had begun to be influential. The 1992–94 Enterprise Agreement, Improving productivity, jobs and pay in the Australian Public Service, provided for performance pay for both SES and Senior Officer staff, by means of a standardised approach across all agencies.

The development almost immediately generated reservations and criticisms by parliamentary committees. While supporting performance appraisal, the JCPA expressed reservations about performance pay (Punch Report 1993, p. 67). In the same year, performance pay was the specific subject of a report by the Senate Standing Committee on Finance and Public Administration, in which it was maintained that there were ‘fundamental conceptual problems’ with the APS performance pay system (Coates Report 1993, p. 59).

Performance appraisal and performance pay attracted attention also from the Public Service Act Review Group. Their report noted deficiencies in APS performance management systems and considered that it should be obligatory for departments to have in place systems of appraisal for staff at all levels (McLeod Report 1994, p. 7.10, 7.25). In the particular area of incremental advancement, it likewise considered assessment and reporting procedures were being undertaken generally on a token, ineffectual basis. Its conclusion:

A routine performance management system …would enhance the value and benefits of increment reporting. It would also provide a more direct link to the monetary reward involved, and provide new employees with some understanding of the more direct links between performance and rewards which operate at senior levels (McLeod Report 1994, p. 7.18).

Their findings and recommendations were to be overtaken by new reform agenda following the March 1996 change of government. In the interim, other significant developments had impacted also on the performance–pay linkage. The earlier Enterprise Agreement was superseded by Continuous improvement in the APS: Enterprise agreement 1995–96, which included new performance pay arrangements, related to performance appraisal, for both the SES and Senior Officer categories.

The framework provided by the new Agreement attracted less than universal approbation. Dissatisfaction both with limitations on the overall amounts available for the payment of performance bonuses and with processes for determining the individual recipients served to militate against achievement of some of the original objectives and to result in unintended modifications. Here again, however, the 1996 change of government and subsequent passage of the 1996 Workplace Relations Act created a new environment.

The current situation emphasises agreement making at the agency level, with individual agencies having the flexibility to develop their own systems for linking pay to performance. Take-up of such arrangements occurred widely, if not always without some residual reservations:

The use of performance based remuneration increased significantly. Various approaches were adopted, the two most common being performance-linked salary advancement (allied with the removal of automatic increment arrangements) and the payment of performance bonuses. The latter, in particular, continued to be a matter of some debate (PSMPC 2001a, p. 195).

The PSMPC Certified Agreement 2000–03 illustrates the type of linkage between performance appraisal and pay which can now be established (without necessarily mirroring the situation in other agencies). Applicable to all non-SES staff in the Commission, the Agreement specifies

  • the basic salary scales applicable from the time of its certification in May 2000
  • automatic increases to maximum rates payable from July 1 in each of 2000 and 2001
  • provision for specified increases in salaries
  • any associated bonus payments from the above dates and from 1 July 2002.

Rates of salary increase and bonus payments are dependent on the individual employee’s appraisal rating under the Commission’s performance appraisal scheme, the essential nature of which is outlined also in the Agreement. Additional rates of salary increase became payable from 1 July 2002, subject to demonstrated productivity gains and consistency with the government’s APS remuneration policy.

Performance pay and associated appraisal mechanisms for SES employees are now commonly covered by individual Australian Workplace Agreements. For the Commission’s own SES employees, the Agreements incorporate provisions broadly consistent with those of the PSMPC Certified Agreement. The terms of individual AWAs remain confidential, within the Commission and elsewhere. Application of performance pay provisions, however, is known to vary widely across agencies.

Performance pay came into effect also for departmental Secretaries in 2000, in accordance with parameters defined in 1999 by the Remuneration Tribunal. It is determined by the Prime Minister, on report from his departmental Secretary and the Public Service Commissioner, after consultation with the relevant agency Minister. As with SES employees, details remain confidential.

Performance pay and appraisal are not explicitly mentioned in the 1999 Public Service Act. APS Value 10(1)(k), however, asserts that the APS ‘focuses on achieving results and managing performance’. Associated Public Service Commissioner’s Direction 2.12(1)(e) requires establishment in each agency of:

… a fair and open performance management system that: (i) covers all APS employees; and (ii) links performance to remuneration and rewards and is linked to Agency organisational and business goals and the maintenance of the APS Values; and (iii)provides each APS employee with a clear statement of performance expectations and an opportunity to comment on those expectations; ….

The then Public Service Commissioner reported on progress by agencies in the development and implementation of performance management systems. Adverting to data from SES and non-SES remuneration surveys, in May and October 2001 respectively, she noted that

  • Agencies mostly used both Certified Agreements and Australian Workplace Agreements for performance based remuneration purposes.
  • For non-SES staff, performance linked salary advancement occurred commonly through multiple pay points within a classification or broadband of classifications, sometimes in combination with access to performance bonuses and productivity bonuses.
  • Varying approaches had been adopted under AWAs for SES performance-based remuneration, with performance bonuses far more common in this area than for non-SES staff.
  • Semi-automatic increment payments had become less common, with agency development of performance criteria and advancement arrangements particularly suited to their own organisation and few agencies retaining the older ‘efficiency, diligence and attendance for duty’ assessment criteria for awarding of increments (PSCr 2001, p. 113–122).

The importance placed by McLachlan on establishing a clear linkage between high- quality personal performance and remuneration progression has remained a feature of federal public service philosophy and regulation, therefore, through to the present day.

As illustrated above, however, there have been significant changes in approach and practice. In principle, salary progression by way of relatively automatic incremental advancement has been replaced by systematic appraisal of personal performance, sometimes allowing for additional bonus payments for demonstrated superior performance.

The progression has led to performance-based remuneration becoming a common feature of contemporary agency management practice. As noted also by the Commissioner, however, some significant reservations continue to be expressed:

  • The September 2001 report of the APS Management Advisory Committee noted a diversity of agency approaches to performance-based administration, and differing views on the usefulness of the various approaches, including performance incentives. In the latter situation, performance bonuses were seen variously as either means of motivating and rewarding high performance, or counterproductive to motivation and solidarity in work teams.
  • In similar vein, the October 2000 report of the Senate Finance and Public Administration References Committee on Australian Public Service employment matters recommended against the use of performance bonuses, believing that individual performance could not be assessed with significant rigour and fairness to warrant linkage to an individual reward. If bonuses were to be used, they should be awarded only for ‘outstanding’ individual or team service, and not simply for achieving expected levels of minimum competent performance. In its response in June 2001, the government disagreed with the Committee’s recommendations, adverting rather to the importance of performance pay for attracting and rewarding high-performing staff (PSMPC 2001b, p. 121).

Inevitably, any system which involves appraisal of an individual’s work performance will produce instances of disaffection and criticisms of process, going both to the integrity and fairness of the system itself and, in some instances, to perceived prejudices on the part of those undertaking the appraisals. Just as inevitably, the need for appraisal of performance will remain inescapable for achieving optimal levels of people management. As in earlier years, the challenge will remain to continually review and refine the process to achieve the highest possible levels of confidence in outcomes.

Managing underperformance

As the issue of appropriately rewarding competence by way of financial incentives has consistently attracted the attention of administrators from the time of the 1902 Public Service Act, so also have the challenges presented in seeking to find effective means of dealing with problems at the opposite end of the personal competency or efficiency spectrum—namely, the management of underperformance.

Addressing the issue legislatively has been among the least of the problems. Adopting terminology derived from pre-Federation State Public Service Acts, section 65 of the 1902 Act empowered the Public Service Commissioner to either transfer to other duties, or retire, an officer found to be ‘incapable of discharging the duties of his office efficiently’. The process, however, was not simple, and included a report from a departmental Board of Inquiry, before the Commissioner could take any action. As his 1918 Royal Commission report was subsequently to make clear, McLachlan was less than impressed by the process, and was characteristically forthright in pressing for change:

… It is found that, as a general rule, members of Boards are most reluctant to declare an officer incompetent, and it is only in cases where the evidence discloses absolute physical or mental incapacity that a decision is given adverse to the officer. In many cases sentimental considerations are allowed to outweigh a sense of duty, and in the rare cases where an officer is found by the Board to be incompetent in his present position, not infrequently a recommendation is made that he be transferred to other duties, where he will in all probability prove equally incapable of performing duties commensurate with his salary. From my experience of the operation of the Public Service Act, I am convinced that the Service will never be relieved of the incubus of incompetent and inefficient officers so long as the present provision on the statute-book remains unaltered—[The] provision … casts the onus of decision upon a Board not directly responsible for the efficiency of a department or of the Service generally, and which almost invariably will be swayed by feelings of compassion for or sympathy with a fellow officer whose livelihood or remuneration is in the balance. In such cases the public interest is subordinated to the interests of the individual, and the object aimed at by the Legislature has been largely stultified.

… Even the heads of branches, who are directly responsible for the output of work and the efficiency of the service rendered by officers, will not hesitate to shield men who are "decent duffers", and have been known to overburden themselves with work, or transfer duties to a smart junior which ought to have been performed by the incompetent senior who is paid to do the work. It is obvious that such heads of branches, who in their mistaken attitude of loyalty to subordinate officers are failing to discharge their responsibilities towards the department, cannot be relied upon for satisfactory evidence before a Board of Inquiry. Thus the departments continue to retain the services of officers overpaid for the work performed by them, or so manifestly incompetent through lack of physical or mental capacity that their maintenance in the Service is unjustified. Shielded and aided by their fellow officers, they continue ostensibly to fill the positions, while the general efficiency of the Service suffers (McLachlan Report 1920, p. 58).

In broad intention, if not precise detail, McLachlan’s recommendation for legislative reform came to be reflected in the terms of section 67 of the ensuing 1922 Public Service Act. The earlier Board of Inquiry requirement was removed, and the new Public Service Board was empowered to conduct investigations and undertake remedial action (transfer to other duties or termination of services, as before), after receiving a report from the departmental chief officer.

In the event, the legislative change was to have little practical effect. No direct evidence is readily available of actual use of the section 67 provision for dealing with cases of incompetence or underperformance, for other than medical reasons. The Board acknowledged this situation in the course of providing background information to the Coombs Royal Commission:

Although this provision is used regularly for ‘invalidity’ retirements, action under the section on non-medical grounds has seldom been taken (PSB 1974, p. 91).

The Commission itself obviously believed that there were grounds for a stronger comment, adding a possible explanation:

… the grounds of ‘inefficiency’ and ‘incompetence’ have never been invoked, perhaps because of diminution of superannuation entitlements where a retirement is for other than invalidity (Coombs Report 1976, p. 8.4.91(b)).

It then endorsed the view also put to it by the Board in its formal Second Submission that the primary responsibility for compulsory retirement of staff because of inefficiency or limited efficiency should rest with departmental management, and recommended delegation of the Board’s powers in this area (Coombs Report 1976, p. 8.4.93).

Again, while the Board was disposed to proceed on this basis, effective outcomes were to be minimal, notwithstanding a significant change to the legislative framework. With the Fraser Government’s enactment of the 1979 Commonwealth Employees (Redeployment and Retirement) Act (the CE(RR) Act), effective from February 1981, section 67 of the Public Service Act was repealed, with the new legislation, and related regulations and administrative procedures, intended to provide an improved framework for both redeployment and compulsory retirement (including retrenchment). A Tribunal was established also, able to deal with appeals against redeployment and retirement decisions.

The Review of Commonwealth Administration found that the new legislation had not changed the situation materially, noting reluctance of APS managers to embark on processes seen to be time-consuming and open to repeated challenge. It pressed, however, for a firmer resolve:

We consider that departments have an obligation to use the processes embodied in legislation. They should not be deterred from doing so because they might encounter difficulties in execution. We believe that strenuous efforts must be made to utilise these provisions where circumstances warrant. We do not believe for a minute that the Service is littered with poor performers. They will be the exception rather than the rule. The Service is however likely to win greater respect from the community at large if it is seen to deal properly with misconduct or inefficiency. Not to do so damages its credibility in the eyes of government, Parliament and the community (Reid Report 1983, p. 8.34).

In December of the same year, the Labor Government’s statement of its reform intentions for the APS echoed the earlier expressed senior management concerns on processes under the new Act, but within the particular context of its proposals for establishment of the Senior Executive Service:

2.3.28 Neither the Government nor the community can afford to keep in key positions senior executives who are not performing satisfactorily. At the same time, the government recognises that poor performance at senior executive levels is generally a very sensitive matter, and is often caused by circumstances beyond a person’s direct control. Improved selection and placement of SES staff should help to minimise the number of poor performers; nevertheless, an effective mechanism is needed for dealing with those cases that arise.

2.3.30 The procedures of the Commonwealth Employees (Redeployment and Retirement) Act are cumbersome and time consuming, and in some respects are not well attuned to the particular sensitivities and requirements at senior levels. That Act will continue to apply to the SES in respect of invalidity or medical unfitness for work, but a new set of procedures will be introduced for SES staff who are surplus to requirements or whose performance continues to be unsatisfactory (Dawkins 1983, p. 18).

The 1984 Public Service Reform Act amended the Public Service Act, variously, to establish the Senior Executive Service and make provision for Public Service Board management of the recruitment, transfer, promotion, retirement and redeployment of SES staff.

Perhaps in recognition of ‘the particular sensitivities and requirements at senior levels, the terminology of the new SES provisions omitted reference to Board action against an ‘inefficient or incompetent’ officer, as mentioned in section 67 of the 1922 Act. Instead, on the basis of being satisfied that an officer could not ‘reasonably be used in the Service’ at his or her existing classification level, the Board was empowered, under a new section 76L, to notify the officer of intended reclassification to a lower level, or retirement from the APS. In determining whether such a notification should issue (it being open to appeal to a Redeployment and Retirement Appeal Committee, constituted under the Merit Protection Act), the Board was required to have regard to a number of factors including the standard of the SES officer’s work performance, and any relevant performance appraisals.

The Board’s annual reports and statistical bulletins for the following three years do not contain any reference to cases of SES officers separating from the APS as a consequence of inefficiency processes. During this same period, however, the Government moved to repeal the CE(RR) Act, on grounds that its relatively complex provisions had failed to provide a satisfactory basis for the redeployment and retirement of staff. At the same time, new provisions for these purposes were inserted in the Public Service Act by the 1986 Public Service Legislation (Streamlining) Act, providing processes for reduction in classification or retirement, for which departmental Secretaries would have more direct responsibility.

The new provisions sought to remedy a previously perceived problem in the CE(RR) Act of a complex definition of inefficiency, depending on whether it could be demonstrated that the reasons for an individual officer’s inefficiency were within or beyond that person’s control. Unlike the SES, grounds for inefficiency proceedings were stated explicitly:

… an officer is inefficient if and only if the officer fails, in the performance of the duties that he or she is required to perform, to attain or sustain a standard of efficiency that a person may reasonably be expected to attain or sustain in the performance of those duties (Public Service Act 1922, s. 76S(2)).

The Board’s support for the streamlining change had been predicated on its acknowledgment that, for all practical purposes, termination of services for inefficiency reasons (other than relating to disciplinary offences) was not known to have ever occurred—as had been maintained in the Coombs Report. Any optimistic expectations for achieving demonstrable improvement, however, were not to be realised. Despite issuing extensive guideline material on the streamlined provisions shortly before its abolition in July 1987, the Board and, more particularly, the Public Service Commission were not to see noticeable change.

Lack of success in this area was commonly claimed by departmental managers to be due to the processes continuing to be long and complex. It would probably not be unreasonable to assert also a continuing, understandable reluctance of managers to institute proceedings which would almost inevitably generate personal animosities and disruptions in the workplace. McLachlan would no doubt have maintained additionally, as he did in 1918, that a ‘mistaken attitude of loyalty to subordinate officers’ would have been likely to have been a factor in some cases.

As had been the case with moves through the 1990s to link more closely remuneration to assessed work performance, so also the procedures for dealing with underperformance moved away progressively from the legislated prescriptive base to coverage through workplace agreements, now commonly involving the related application of performance appraisal systems. In 1992, revised procedures for dealing with underperformance were included in the Service-wide Enterprise Agreement and, from early 1998, generally came to be included in the Certified Agreements negotiated in individual departments and agencies. By way of example, Part G of the PSMPC Certified Agreement 2000–03 contains nine substantive paragraphs on the management of poor performance and the related application of the Commission’s performance appraisal scheme.

The ultimate authority for termination of employment remains in legislation. Paragraph 29(3)(c) of the 1999 Public Service Act specifies that ‘non-performance, or unsatisfactory performance, of duties’ provide grounds for termination, by an agency head, of the services of an APS employee, with Public Service regulation 3.11(2) authorising the application of the procedures of individual agency agreements to establish any justification for such action.

As illustrated by the preceding commentary, the management of underperformance has featured in each of the three Public Service Acts since Federation, and has continued to exercise the minds of legislators, public service managers and reviewing bodies. Despite progressive refinements to legislation and processes, however, perceptions of inadequacies continue. Thus, while noting that procedures for the management of underperformance represented a core element in most agencies’ performance management systems, the Public Service Commissioner observed:

… the prevailing view appears to be that, in general, the APS does not do well on this front. Staff surveys in a number of agencies highlight a perception that little is done or achieved in dealing with poor performers. The MAC review concluded that failure to address underperformance in the workplace is one of the persistent factors that could undermine the credibility of, and produce cynicism about, a performance management system (PSMPC 2001b, p. 120).

New principles and practices

APS Values

Each of the Public Service Acts since Federation, and their related Public Service

Regulations have included provisions bearing on the core elements of the engagement, and expectations concerning the behaviour, of public servants. Progressive articulation of the underlying merit principle has already been discussed. Beyond this, prescriptive rules governing behaviour were set down in the Public Service Regulations, dealing with conduct in the workplace and, in some cases, permissible behaviour in private life, insofar as the latter might be seen to bear on performance of public duties.

The prescriptive approach was maintained, with relatively minor adjustments through to the final decades of the last century. The approach broadened significantly, however, with the development and publication, in the late 1970s, of the Public Service Board’s official conduct guidelines, designed to reflect both the rules and the conventions relevant to ethical behaviour by public servants. Soon after, attention began to be directed to more fundamental, underlying values underscoring official behaviour expectations, touching not only on compliance with rules, but also on broader considerations of equity and social justice. Those developments were later to be given legislative form in the 1999 Public Service Act.

The 1999 Act contained, for the first time in primary Commonwealth public service legislation, a clear declaration of APS Values (section 10). Already quoted extracts from the ADMF Paper, and Minister Reith’s Second Reading Speech on the Public Service Bill in June 1997, summarised the broad intent of the Values. Agency heads are obliged to uphold and promote the Values (section 12 of Act), with elaboration of their intended application provided in Chapter 2 of the Public Service Commissioner’s Directions.

The Values are tailored to the particular environment and circumstances of the APS. As might be expected, however, their ultimate expression represented an effective drawing together of developments in the 1980s, and successive inputs from other sources through the 1990s. Thus:

  • The mock-up for a new Act, developed within the Public Service Commission in 1990–91 included, variously, proposed principles of public administration, human resource management and ethical conduct, drawing on principles then expressed in the South Australian Government Management and Employment Act. Similar formulations had occurred, or were being developed, in public service legislation for other Australian states and territories—likewise, in the United Kingdom and New Zealand.
  • The ensuing Bill for a rewrite of the Act, prepared by the Office of Parliamentary Counsel between May 1992 and June 1993, included draft principles of public administration and of human resource management. It made provision also for the Public Service Commissioner to ‘determine’ standards of conduct for APS staff.
  • By June 1993 also, a joint publication of the Management Advisory Board and its Management Improvement Advisory Committee (MIAC) had endorsed proposed inclusion in the Public Service Act of six key values and principles, to reinforce traditional longstanding public service values. In outline, the new values and principles dealt with:
    • responsiveness to governments
    • a close focus on results
    • merit as the basis for staffing
    • the highest standards of probity, integrity and conduct
    • a strong commitment to accountability
    • continuous improvement through teams and individuals (MAB 1993:5).
  • The Public Service Review Act Group supported the MAB/MIAC approach, recommending that the new Act should be built around principles and values, and should incorporate a Code of Conduct (McLeod Report 1994, p. 62–4, 162–4).
  • Following the March 1996 change of government, the MAB/MIAC approach was endorsed, in turn, by the Prime Minister and the National Commission of Audit and, along with the work of the Public Service Act Review Group, served to influence significantly the subsequent enactment of the APS Values in the 1999 Act.

APS Code of Conduct

As reflected in the preceding section, the Code of Conduct, now appearing in section 13 of the Act, had its antecedents in various provisions of the Public Service Acts and Regulations, dating back to Federation. The evolution of a broad, statutory code, as distinct from a range of specific provisions, however, has occurred in more recent times, running largely in parallel with the move towards including broad underlying principles and values relevant to public service employment.

Breaches of individual provisions of the 1902 and 1922 Acts and the Regulations constituted grounds for possible disciplinary action against a public servant. Not uncommonly, however, linkages to the precise provisions were not easy to establish, thereby tending to diminish prospects for successful remedial action.

Under the 1999 Act, the statutory Code of Conduct itself establishes directly the grounds on which an agency head is able to initiate misconduct proceedings against an APS employee. From the point of view of the employee, the individual elements of the code state clearly expected standards of ethical conduct, and agency heads are obliged to establish, and notify their employees of, the procedures which will be followed for purposes of determining whether a breach of the Code may have occurred.

The new Code framework and associated procedures for dealing with breaches would appear to offer good prospects for overcoming the difficulties experienced with disciplinary processes under the 1922 Act, in terms of their perceived complexity and legalistic nature. As with any definition of expected standards of behaviour or practice, however, the effectiveness of the new Code remains dependent on managers being able and prepared to show persuasive grounds for action against an employee for alleged breach of one or more of the defined requirements, and then to institute appropriate remedial procedures.

As previously mentioned, the Commission’s August 2003 publication (the Guide) now provides revised official conduct guidelines with direct linkage of conduct requirements to the APS Values.

Protection for whistleblowers

The immediate precursor paper to the 1999 Act noted that no effective mechanism was in place in the APS to enable its employees to disclose mismanagement or corruption in the Service (PSMPC & DIR 1997, p. 21).

Historically, in the APS as in other fields of employment, whistleblowing has generally been viewed as action potentially detrimental to the whistleblower’s own employment, with possible retaliatory action on the part of fellow employees and/or management. In those circumstances, legitimate complaints could have been withheld altogether or submitted anonymously, precluding or limiting effective response or remedial action.

Where submitted openly, the complaint was likely to have become subject to review processes ill-equipped to deal with a third party, other than the complainant.

With the 1994 report of the Senate Select Committee on Public Interest Whistleblowing attesting to the legitimacy of whistleblowing action (Newman Report 1994, p. 12), and in the absence or failure of other remedial action possibilities, section 16 of the 1999 Act has provided a process for the submission and investigation of a report by an APS employee of breaches (or alleged breaches) of the Code of Conduct.

The Act (and Division 2.2 of the 1999 Public Service Regulations) proscribe victimisation or discrimination of the complainant, and provide for investigation of the complaint in various circumstances by the Public Service Commissioner, Merit Protection Commissioner or agency head (or persons authorised by them). The Public Service Commissioner has the option of exercising the special inquiry powers attaching to that office under section 43 of the Act.

The provisions provide new avenues for lodging whistleblower complaints (but do not provide for reports by persons outside the APS). In the ultimate, individual perceptions of the independence and effectiveness of the processes will provide the measure of their success.

Ministers and the APS

As discussed in Chapter 8, the 1902 Public Service Act contained few references to Ministers, and none to the Prime Minister. Such references as occurred related essentially to the receipt and transmission to Parliament of certain statements and reports, and to approval of some relatively routine staffing transactions.

Overlaying the specific Public Service Act powers, the Constitution provides for the exercise of the executive powers of the Commonwealth by the Governor-General with the advice of the Federal Executive Council. Matters requiring Council approval necessitate the approval and signature of Ministers, thereby involving Ministers in the performance of various departmental functions in ways not immediately obvious in specific Public Service Act provisions.

In like manner, Cabinet and ministerial decisions impact directly on agency operations and the exercise of agency head powers.

While possible ministerial involvement in these ways has always been a practical reality, tensions have sometimes arisen in relation to the propriety of such involvement, or perceived intervention, in relation to exercise of various Public Service Act policies and powers. The 1999 Act has addressed such issues directly in a number of ways.

Directions on government policy

The APS Values state that the Service is apolitical (s. 10(1)(a)). Elsewhere, the Values affirm that the APS is accountable for its actions to the government, within the framework of ministerial responsibility (s. 10(1)(e), in part), and that it will be responsive to the government in provision of advice and in implementing the government’s policies and programs (s. 10(1)(f)). No equivalent, general formulations of this nature appeared in the 1902 and 1922 Public Service Acts.

The new Public Service Act would provide the framework for a more devolved APS environment, but with the government continuing to set policy directions for the Service, as had been the case previously (ADMF Paper 1997, p. 9). Unlike its predecessors, however, the 1999 Act translated the principle and practice of government direction into a specific legislative provision. Thus, section 21 of the Act allows for the Prime Minister to issue general, written directions to agency heads, relating to ‘the management and leadership of APS employees’, with obligation to publish any such direction in the Gazette, within 14 days of it being issued. As noted earlier, only two Prime Minister’s Directions have been issued to date, neither of which could be viewed as impacting in any significant manner on the principle of maintaining an apolitical APS.

Ministerial directions to agency heads

Section 57 of the Act retains the 1984 Public Service Reform Act formulation that the departmental Secretary (an agency head for purposes of the various staffing provisions of the Act) exercises his or her powers ‘under the agency Minister’. The section elaborates also on the role of the Secretary in assisting the agency Minister to fulfil the Minister’s accountability obligations to the Parliament in relation to providing factual information on the operation and administration of the department.

Again in this area, the Minister/agency head relationship is governed by a legislative prescription—in this case, a qualification of the Minister’s powers. Section 19 of the Act provides that the agency head is not subject to direction by any Minister in relation to exercise of the agency head’s powers in respect of particular individuals, whether APS employees generally or SES employees.

Public Service Minister

Historically, the Public Service Act has been, and remains, an enactment administered by the Prime Minister. At least from the latter part of the 20th century, however, some of the Prime Minister’s responsibilities in relation to administration of the APS have been exercised on the Prime Minister’s behalf by a ‘Minister Assisting’, variously designated by different governments. The current title is Minister Assisting the Prime Minister for the Public Service.

There is no specific legislative authority for ‘Minister Assisting’ appointments, but section 19 of the Acts Interpretation Act 1901 allows for a Minister to act ‘for or on behalf of’ another Minister. In earlier years, Ministers so acted without formal assignment of the ‘Minister Assisting’ title. Both then, and in more recent years, the Ministers concerned exercised their normal portfolio responsibilities, along with their APS-related responsibilities, as assigned to them by the Prime Minister. Any Minister may be assigned the public service responsibilities without specific association with the Minister’s normal portfolio responsibilities. Consequently, the role has been performed, over the years, by Ministers variously having principal portfolio responsibilities in areas such as industrial relations, education, finance, Aboriginal affairs and public works.

While the ‘Minister Assisting’ role remains in place, the 1999 Act has provided for certain powers to be exercised by the ‘Public Service Minister’, defined in section 8 as ‘the Minister who administers this Act’. As indicated above, the Minister concerned will be, at first instance, the Prime Minister. Otherwise, the powers may be exercised, on the Prime Minister’s behalf, by another Minister, usually the Minister Assisting. The Public Service Minister may delegate any of his or her powers to another Minister or to a Parliamentary Secretary (section 78(2)) and any of his or her powers and functions under sections 23 and 73 of the Act to a ‘senior official’, as defined in section 78(12).

Under current arrangements, the Minister Assisting has been delegated powers to:

  • make rules about the classification of APS employees (section 23(1))
  • be consulted by the Merit Protection Commissioner in relation to a report on a review (section 33(6))
  • refer to the Public Service Commissioner, for consideration and report, any matter relating to the APS (section 41(1)(d))
  • request the Merit Protection Commissioner to inquire into, and report on, an APS action (section 50(1)(c))
  • receive, for presentation to Parliament, the annual report of the Merit Protection Commissioner (section 51(1))
  • appoint a person to act as Merit Protection Commissioner (section 55(1)).

Additionally, the Minister Assisting is authorised to exercise the Public Service Minister’s powers under Parts 5 and 6 of the Act (relating to the Public Service Commissioner and the Merit Protection Commissioner), except in relation to receiving a ‘report from the Public Service Commissioner under section 41(3)(b) concerning an alleged breach of the Code of Conduct by the Head of an Executive Agency’.

Agency Minister

The Act assigns a number of powers to the ‘Agency Minister’—defined in section 7 as the Minister administering a department, executive agency or statutory agency.

Consistent with the section 19 limitation on Ministers issuing directions to agency heads in relation to particular individuals, the powers of agency ministers relate, in their specifics, to the appointment, termination, remuneration and other conditions of employment of the Public Service Commissioner, the Merit Protection Commissioner and the heads of executive agencies administered by the relevant Ministers.

More generally, agency Ministers have responsibility for:

  • presenting to Parliament of the annual reports of the agencies which they administer (sections 44, 63 and 70)
  • requiring forfeiture by an agency head of all or part of any non-Commonwealth remuneration received for performing agency head duties (section 31)
  • issuing directions to agency heads, regarding both the engagement of a particular person as an APS employee to enable that person to become a head of Mission, and the assignment of particular duties to the person so engaged (section 39).

As with the Public Service Minister, an agency Minister may delegate any of the Minister’s powers or functions to a senior official (section 78(4)).

The 1999 Act has moved significantly in the direction of identifying and defining the nature and scope of the contemporary realities of the involvement of Ministers in the administration of the various agencies for which they have responsibility.

Devolution of personnel management powers

As already noted, personnel administration in the federal public service was highly centralised under the first Public Service Commissioner and, initially, under the Public Service Board. In later years, the Board moved progressively to delegate a wide range of its powers to Secretaries, and various enactments over the last 10 years of the Board’s existence began to bring about formal devolution of Board powers. The process was largely arrested in 1987, until passage of the new Public Service Act late in 1999.

In the interim, amendment of industrial relations/workplace relations legislation, and changes occurring progressively in other areas had resulted in APS departments and agencies acquiring authority over various aspects of pay, conditions of employment and other areas of the personnel system. Thus, while achieving significant amendment of the Public Service Act itself proved to be a prolonged process, a good deal of relevant groundwork was occurring, with direct bearing on the ultimate outcome:

The 1999 Public Service Act represented the culmination of about twenty-five years of reform in Commonwealth public sector management. Together with the financial management reforms that had already occurred, it provided for a highly devolved resource management and employment framework (PSMPC 2001a, p. 188).

The broad thrust of the 1999 Act and its key provisions have already been described. In the new devolved framework, agency heads had vested in them all the powers of an ordinary employer and direct responsibility for managing their respective agencies. While constitutionally the Crown, in right of the Commonwealth, remained the ultimate employer of APS employees, section 20 of the Act conferred on the agency heads, on behalf of the Commonwealth, ‘all the rights, duties and powers of an employer’ in respect of their APS employees.

Translated into specifics, the newly acquired powers included:

  • power to engage APS employees within any of the three specified categories of employment, with the option of specifying conditions to apply to such employment, including conditions dealing with matters such as probation, citizenship, formal qualifications, security, character or health clearances (section 22)
  • authority to determine remuneration and other terms and conditions of employment (section 24)
  • power to terminate the employment of an APS employee on any of the specific grounds allowed for in the termination provision (section 29)
  • obligation and power to undertake, at the request of an agency employee, review of any APS action that relates to that employee’s APS employment (section 33).

Unless otherwise legislatively excluded, therefore, the 1999 Act brought about a further major transformation of public service personnel management, from its highly centralised origins at the beginning of the 20th century to a personnel and workplace relations regime with devolved agency powers, in ways consistent with the devolution which had already occurred in other aspects of APS management.

Executive agencies

Provisions for the establishment of, and broad operating framework for, executive agencies occur for the first time in the 1999 Act (sections 65–70).

While explanatory material relating to the Act makes no reference to any immediate motivation for their inclusion when the legislation was introduced, the Senate Explanatory Memorandum for the 1999 Bill states that the executive agency structure was being inserted ‘to provide a degree of separation from departmental management where that is appropriate to the functions of the Agency and something less than a statutory authority is warranted’ (EM Senate 1999 ,p. 85, para. 9.2).

The Memorandum (paras 9.2 to 9.4) summarises briefly key features and perceived advantages of executive agencies:

  • direct access to a Minister, with ability to pursue particular goals, distinct from necessarily wider-ranging departmental priorities
  • greater flexibility in appointment, tenure and remuneration arrangements for the heads of the agencies, who might or might not be public servants and who would be directly accountable to their respective Ministers
  • staffing of the agencies by APS employees, under the direction of the respective agency heads, rather than the Secretaries of the parent portfolio departments.

Historically, occasions have arisen where Ministers and Secretaries have seen need to put in place arrangements for identifiable separation from departmental operations of particular portfolio functions and responsibilities, but without the necessity of, or justification for, resorting to separate statutory authority legislation. The executive agency structure now provides a ready means of realising such arrangements through Ministerial action.

In the following years after passage of the 1999 Act, a number of executive agencies have been established and abolished, with the following eight in existence at the end of 2003:

  • Aboriginal and Torres Strait Islander Services
  • Australian Greenhouse Office
  • Bureau of Meteorology
  • CrimTrac Agency
  • Insolvency and Trustee Service Australia
  • National Archives of Australia
  • National Oceans Office
  • National Office for the Information Economy.

The 1999 Act as realised

Leaving aside the intrinsic merit of its individual provisions, the 1999 Act can be viewed as reflecting, in broad intent, both the fundamental principles and central staffing provisions of the 1902 and 1922 Acts. At the same time, it incorporates significant new provisions of ongoing relevance for a contemporary federal public service moving into the second century of its existence.