TRENDS IN PUBLIC SECTOR REFORM IN AUSTRALIA

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1 TRENDS IN PUBLIC SECTOR REFORM IN AUSTRALIA Andrew Podger Institute of Public Administration Australia, Australian National University IIAS Conference, Bali July 2010

2 REFORM TRENDS End of Certainty (1960s to 1980s) Abolition of White Australia policy Trade liberalisation, floating of $A Labour market deregulation Administrative law reforms (1970s and 1980s) New public management (1980s and 1990s) Management for results, performance Devolution Rediscovery of markets (purchaser/provider, commercialisation, privatisation, outsourcing) Deregulation Customer focus Responsiveness to elected government (1980s to 2000s) Introduction of political advisers Loss of tenure of agency heads Central control of communications

3 IMPACT ON ROLE AND SIZE OF GOVERNMENT No discernable reduction in role of government Government spending in Australia reasonably steady around 25% GDP Changes more in how that role is played less delivery, more focus on purchasing and regulating Some initial reduction in the size of the public service Both through functions moving outside the core public service, and through contraction More recent expansion including some coverage increase

4 TOTAL GOVERNMENT SPENDING* AS PERCENT OF GDP * FINAL CONSUMPTION EXPENDITURE AND TRANSFERS TO HOUSEHOLDS BY ALL AUSTRALIAN GOVERNMENTS

5 SIZE OF AUSTRALIAN PUBLIC SERVICE (WITH AND WITHOUT ADJUSTMENTS FOR COVERAGE CHANGES)

6 IMPACT OF REFORMS THE POSITIVE STORY Economic gains from trade liberalisation, labour market flexibility etc (sustained economic growth, inflation control, soft landings from external shocks) Rich getting richer, but no evidence of poor getting poorer Significant efficiency gains in public sector, particularly from competition reform and in public utilities (communications, power, transport) Some evidence of improved effectiveness (eg employment programs, social welfare administration) Some broader gains Rights of those affected by decisions, transparency Democratisation, increased competition for ideas Increased mobility, greater community involvement

7 IMPACT OF REFORMS THE OTHER SIDE Some serious failures (eg IT outsourcing, privatisation of a metropolitan railway, some PPPs) Some over-reaching full devolution of IR has reduced mobility within the APS and fuelled wage inflation devolution has also inhibited integrated public services, particularly in rural and remote Australia accrual accounting has confused and even distorted some financial assessments gaming of some performance based financial arrangements failure to understand the different values of NGOs and private business from those of the public service loss of some expertise has led to poorly informed purchasing

8 IMPACT OF REFORMS THE OTHER SIDE (CONTINUED) Broader downsides loss of bearing in public sector with excessive reliance on business approaches politicisation with public servants drawn more heavily into political processes and discouraged from providing frank and fearless advice and access to documents under FOI competition for ideas, or competition for the ear of the minister? excessive emphasis on the individual, rather than the team or the organisation or the profession

9 MORE RECENT ADJUSTMENTS AND DEBATES Connected government agenda since 2004 Increased emphasis on public value in leadership development and other dialogue Modifications of earlier initiatives Some winding back of accrual accounting Some winding back of performance pay Code of conduct for ministerial advisers Other measures to de-politicise government administration (eg more security of tenure for departmental secretaries, FOI reform, whistleblowers, government advertising oversight) Post GFC reflection by PM Rudd calling for re-appraisal of neo-liberalism But, as Australia winds back its successful stimulus measures, no evidence of NPM policies here being seriously displaced Review of Australian Government Administration

10 REVIEW OF AUSTRALIAN GOVERNMENT ADMINISTRATION Final report released on 29 March 2010, Government endorsement in May 2010 Nine recommendations across four areas A. Meeting the needs of citizens (more integrated services linking levels of government, using community and business organisations, exploiting new technology) B. Strong leadership and strategic direction (strengthened strategic policy advising, links with academia, strengthening role of APS Commission and role of departmental secretaries) C. Highly capable workforce (firmer career development, more investment in HRM, return to more centralised remuneration system) D. Efficiency (systematic agency reviews, reduced red tape, strengthened governance arrangements) Assessment that system is not broken, no radical surgery needed, but action to maintain and improve quality of service

11 RELEVANCE OF AUSTRALIAN EXPERIENCE TO OTHER NATIONS Balancing markets and governments Proven gains from opening up markets But reliance on competent, effective government to facilitate markets, regulate to address market failure, provide public goods and address the inequality markets entail Balancing politics and administration Administration must be democratically responsive but also impartial, non-partisan, professional Building professional culture takes time Fragility of this professionalism given pressures of 24/7 media etc Benefits from emphasis on performance management Sustained gains from NPM initiatives in this field Years needed to develop, implement and refine the system

12 RELEVANCE TO OTHER NATIONS (CONTINUED) Balancing centralisation and devolution Devolution and decentralisation can enhance agency performance in delivering services to citizens (flexibility, agility, responsiveness) But it can go too far It also relies upon a strong basic capability to minimise the risks So sequencing any reforms may be important Balancing contracting out and in-house service provision Importance of informed purchasing and appropriate oversight/regulation Need to retain strategic capacity inside Sequencing again important Increased importance of wide engagement With business and NGOs With citizens and clients Across borders both within the country and across nations Increased importance of professional skills Both depth of expertise and breadth of leadership and management capacity Increased reliance on formal education and training to complement onthe-job development