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Part 3: Summary assessment

The department has developed a strong reputation for delivery but since the machinery of government changes in 2007 it has been required to take on more explicit and strategic responsibility for advising on national transport reforms and elements of national infrastructure planning and investment.

The Minister regards the department as responsive and considers it to be performing well; industry stakeholders appreciate the effort over recent years to improve consultation and build relationships; and state and territory authorities talk of a trusted partner and productive working relationships.

Recent achievements include facilitating the creation of the national transport safety regulators, developing the first National Urban Policy and delivering the Nation Building Program.

The Secretary is an important part of this story of change and improvement. He is well regarded and external feedback on his contribution to the department's agenda is positive. He has firmly established his leadership of the organisation since his appointment in 2009. The Secretary brought to the role a deep background in the department's business and has shown a strong sense of personal leadership, an engaging style and activist approach—which have impressed stakeholders—and a disposition to review the department's performance which has seen development on a number of fronts.

In 2009, the Secretary commissioned an external review of the department's capabilities which identified a number of areas needing attention. In the past three years action has been taken on many of these. These have included the promulgation and reinforcement of a set of aspirations for the department, development of a stronger research and policy capacity, and an increasingly proactive approach to consultation with stakeholders. In a number of other areas identified by that review, including the development of a strong team culture that does not overly rely on the Secretary, the pursuit of a policy leadership role within government and the development of stakeholder engagement strategy, there is still some way to go, and in some cases a long way.

The departmental aspirations (the 'five directions' vision) promulgated by the Secretary include to:

  • be a leading Australian agency for investment strategy and planning
  • be a leading Commonwealth program and project delivery agency
  • be a respected policy reform driving agency
  • have a view on the right outcome
  • be an effective and leading regulatory agency.

Evident progress has been made in each of these five directions but the results are uneven. The department has made a commitment to becoming an informed investor rather than simply administering grants, and has begun to develop the capabilities necessary to provide better assurance to government that it is obtaining value for money from its investments in national infrastructure. It has enhanced its strategic policy capability through the establishment of a dedicated policy unit and is making more effective use of the analytical capability of BITRE . A cultural shift has taken place, with staff showing greater confidence in advancing policy positions, though more needs to be done to extend the department's external influence. It has recognised the need for a whole-of-department approach to the management of its regulatory responsibilities, though more can be done to ensure that there is a strategic and department-wide approach to best practice.

In some areas, follow-up to the recommendations from the 2009 review has fallen away and this review makes suggestions about revivifying the process. Overall, the process of review and action since 2009 has positioned the department well and in a number of instances the review found that desirable change was already being contemplated or initiated from within.

The Secretary's deep knowledge of the department's business positions him well to anticipate issues that require his attention and to identify emerging problems. This may not always serve to develop future capability, and it carries some risk. In some areas, including internal audit and reporting, the department's practices could be sharpened to better serve the current Secretary and any successor.

The department has come a long way in the past five or six years. It has serviced effectively a demanding agenda from its Minister; has made significant progress in strengthening its policy capacity; is regarded by most stakeholders as having markedly improved its consultative processes; and has been an effective participant in moves towards national approaches to infrastructure and regulatory issues.

However, the reform process rests heavily on the Secretary's advocacy skills and personal commitment. It has not been fully articulated or communicated across government and fundamental changes in the external environment could compromise its fulfilment.

A strongly led department

The Secretary is an inspirational leader who has put his stamp on the department. He has a forward vision. He is a forceful advocate, is effective in building alliances and has initiated very significant change processes in the department. Though, as the 2009 strategic audit noted, 'high performing organisations have a strong team-based culture' and responsibility for the leadership of the department necessarily extends beyond the Secretary and his deputies. Leadership qualities of other senior officers are reflected in the department's strong record of achievement, though leadership capability is not evenly spread. More could be done to strengthen the wider leadership team.

As already noted, the Secretary has been proactive in reviewing departmental operations and practices. In addition to the changes made as a result of the 2009 review, the department has undertaken its own internal reviews and initiated remedial action. A recent review of the processes and procedures under the Motor Vehicles Standards Act 1989 is one such example.

The five directions vision is explicitly linked to capability building and is, in essence, a statement of the Secretary's aspirations. The five directions are recognised throughout the department and are included in business plans. Senior staff understand and embrace these new directions and are driving an effective delivery culture. This is reflected in the Minister's positive view of the department's work in delivering the government's agenda.

The leadership's demonstrated capacity in allocating resources prudently and reviewing its operations on an ongoing basis could be tested in a more resource-constrained environment.

Continuous change in government policy priorities, in industry structures and in available resources suggests the need for more structured thinking about the appropriateness of current resource allocation and the capabilities required to cope in a different environment.

The executive works closely in managing the department and jointly explores emerging issues and develops appropriate responses. Responsibility for delivery has been effectively delegated to the executive directors; however, it would appear that they are not always actively engaged in development of issues at a strategic level. Consideration might be given to engaging the executive directors more actively.

Strategic vision and clarity of roles

Responding to the government's broadened remit for the department—in particular the superimposition of the responsibility for infrastructure—the Secretary has articulated a new direction for the organisation. This involves the development of a national agenda in regulation and infrastructure.

To build the trust necessary to work effectively in close collaboration with the states and territories, the department has need of sophisticated relationship skills and the flexibility to work with innovative new organisational forms. These skills are also vital in working with industry and other external stakeholders.

The Secretary has placed significant weight on these relational capabilities, and there are numerous examples of good practice in some parts of the department. More needs to be done to develop these capabilities to a consistently high level across the department.

The Secretary's new direction for the organisation demands a policy capability that is strategic in nature rather than just responsive. The department has always had a strong analytical and research base; this is now being integrated into the policy process and there are several examples where it has been deployed strategically to reframe the policy debate, including with the National Urban Policy.

Some aspects of this new agenda have been communicated through emphasis and re-emphasis of the five directions. However, the department's role has not been well articulated, and there is uncertainty among external stakeholders (industry representatives as well as state and territory officials) and even among senior executives within the department, as to the shape of its infrastructure remit beyond the transport sector. This is most evident in the confusion that exists around the respective roles of the department and Infrastructure Australia. External stakeholders are unable to understand, for example, why the development of the freight and port strategies was allocated to Infrastructure Australia rather than to the department. To many stakeholders, these appear to be close to the core business of the department.

These are matters for government, but this confusion over roles and responsibilities and the lack of a clear narrative have implications for organisational capability. There is no departmental corporate plan, and the reference to infrastructure in the Portfolio Budget Statements (PBS) does not address this issue strategically. Clarification of these roles would facilitate a focus on core capabilities in the years ahead.

The diversity of the infrastructure and transport portfolio, and the wide range of models through which policy is implemented, mean that a traditional corporate plan may not be appropriate for this organisation. Nevertheless, the necessity of working with the archipelago of independent agencies makes the development of a departmental strategy even more important.

The PBS is not the place for a statement of strategic intent, and the 'Strategic Direction Statement' published at the front of that document is functional rather than aspirational in nature. The departmental outcomes laid down in the PBS and its annual report serve to frame the various programs. They have a 12-month horizon and are not intended to provide a mid-term direction for the organisation.

It is not that the department lacks strategic capability. It undertakes long-range environmental scanning, has developed strategic frameworks for aviation and national transport regulators, has developed the Nation Building 2 Program and transport corridors on the east coast, and there are business plans for each division.

The five directions set out a number of aspirations for the department, but they do not constitute a strategy. The absence of a formal strategic plan and a supporting narrative to explain the vision and translate it into the departmental objectives and programs, means that implementation is somewhat patchy. Outside of the department—in central agencies, state and territory governments, and industry—the role of the department and its strategic agenda is not well understood.

As discussed later in this report, there might also be benefit in a strategic approach to consultation and stakeholder engagement, and to the department's regulatory responsibilities.

A joined-up department

The department has a diverse agenda. In addition to infrastructure policy it has functional responsibilities across all transport sectors, most of which require strong technical capability. Its functions include grant management, regulation and policy oversight. In some areas it faces complexity in delivery as many of the Australian Government's infrastructure and transport interests are delivered through external bodies, such as airports, safety regulators and state and territory governments.

While there are strong pressures encouraging specialisation, the Secretary actively promotes a set of common aspirations. However, high awareness of the five directions is not consistently matched by a clear understanding by all staff about how these should be implemented in their daily work.

A number of external stakeholders reported that the department does not present a unified front. This is particularly the case with the aviation sector, although it is not confined to that area. Staff also acknowledge that more could be done to engage with industry in a joined-up way.

Around half the department's staff is involved in regulating aspects of the transport industry. Not all these staff consider themselves to be regulators, perhaps because some also have responsibility for the relevant policy settings. There is a need for a whole-of-department approach to regulation (Box 1).

A leading regulatory agency

In June 2012 a Senior Executive Services (SES) management team meeting explored the question of what it means to be a leading regulatory agency and subsequently developed a set of questions to examine outcomes of current regulatory models, models of best practice and what they might look like in specific areas of the department. A Regulatory Context Statement is in the preliminary stages of drafting. This will seek to lay the foundation for a departmental approach.

A department that aspires to be an 'effective and leading regulatory agency' should ensure that it has a whole-of-department approach to the way in which it manages its multiple regulatory responsibilities. There is a case for a department-wide regulatory strategy. This does not mean that the department should seek to standardise its approach to regulation—given the variety of regulatory responsibilities the approaches adopted in different regulatory contexts are likely to differ. However, it should seek to develop a consistent regulatory philosophy, including: developing attitudes and approaches to risk; building capacity to benchmark regulators against international best practice; strengthening agency-wide capability in the evaluation and simplification of processes; exploring and disseminating new approaches to regulation; developing a central capacity to prepare rigorous Regulation Impact Statements; and ensuring there are systematic processes for consulting with affected stakeholders, particularly in the development of new and amended regulation.

Regulatory Lessons Learned seminars—a positive step—have been well received by staff, but there is a strong cultural bias in favour of the status quo. In a period of resource constraint and growing demand for services, the department must actively explore more cost-effective ways of meeting its regulatory obligations. Some work has begun which could form the basis of a new approach.

Consideration might be given to establishing a small centre of regulatory excellence, similar to the Major Infrastructure Projects Office or the Major Cities Unit, from within existing resources.

The department could do more to present a coherent approach in the way in which it engages with stakeholders. A draft stakeholder engagement strategy was developed in 2010 but it has not been given effect, perhaps because, as the document observes: 'Many senior managers in this Department and others express considerable ambivalence about the merits of stakeholder engagement.' While industry representatives were often complimentary about the department's efforts to improve consultation, others noted more could be done, for example, to coordinate multiple departmental approaches to industry and to ensure that staff are adequately trained to respond promptly to reasonable queries. Some stakeholders reported that staff turnover was not always accompanied by adequate knowledge transfer. Consultation appears to be conducted along modal lines. While this may be appropriate in day-to-day matters, in other cases a department-wide view is required.

The department could usefully pay more attention to the needs of stakeholders in other parts of the Australian Government. While there are good examples of consultation which the department has managed across government (such as the Sydney region aviation capacity study and shipping reform), central agencies cited late notice of new proposals and lack of regular engagement by senior SES . More could be done to ensure that the department uses all the opportunities available to it as part of 'one APS '.

A departmental strategy might assist in articulating the leadership's expectations about engagement, proactive industry consultation, approaches to communication, and relationships with central agencies to develop their knowledge of the department's perspectives and to enlist their support. Among other things, such an approach could increase the department's influence and its capacity to contribute to debate about policy priorities.

A high-performing department

The department is a prudent financial manager. It has the capacity to move resources internally to fund new priorities. It has demonstrated this capacity in the establishment of the Policy and Research Division, the Major Infrastructure Projects Office and taskforces for major projects.

Departmental performance is supported by business planning which features a clear line of sight from government priorities through to section-level activities and individual performance plans. Governance structures are strong.

Some elements of departmental culture reinforce a high-performance mindset. The department prides itself on a 'can do' mentality. It has a record of delivery, review and innovation and a reward and recognition scheme that is reinforced by ministerial engagement.

In other areas, however, departmental cultures do not sit easily with the concept of a high-performing organisation. The narrative, including the Secretary's five directions, contains no guidance concerning expectations of performance. There are no references to excellence or aspirations to high performance and some executives expressed discomfort with such language.

Numbers of officers identified underperforming staff as a serious issue throughout the department. This is of real concern, not least in a resource-constrained environment.

Some staff expressed the view that commitment to excellence and high performance could conflict with the department's family-friendly approach, referred to by some as a gentle culture. There is limited evidence that the two concepts could not co-exist as they do in other agencies.

Other staff, particularly more recent arrivals, consider that more needs to be done to encourage managers to address underperformance. Those managers who have chosen to do so acknowledge good support from the department's People and Performance Branch. However, there does not appear to be a consistent indication of senior level expectation on all managers to manage staff performance, and aggregated performance ratings of staff are not considered or examined centrally by the executive.

The departmental narrative might include a clearer articulation of the desire for high performance to empower managers to get the best from the workforce by managing individual performance in a more consistent way.

The department's approach to managing risk relies significantly on key people who have developed specialist expertise. In some respects this has served the department well. Current systems and processes are seen as reliable and alert to potential transport risks. They seem less effective in encouraging innovation, high performance and succession planning. The principal responsibility for risk management rests on the shoulders of key personnel in the department, often at senior levels. Relying on the tacit knowledge of key personnel is unsustainable. It may not enable systemic risk to be identified and takes responsibility for risk management away from those best placed to manage it. The department's reporting systems and the work of its internal Audit Committee could be further developed to place a sharper focus on risk.

The department has some serious workforce issues including overreliance on key persons, difficulty in attracting and retaining quality staff and management of underperformance. Some of these issues emerge quite strongly from employee surveys and the new workforce plan focuses on a number of them. To become a high-performing organisation the executive should take a strong lead, involving all managers in driving solutions to the department's personnel issues.