Victorian Public Sector Reform

					Victorian Public Sector Reform
        Lessons Learnt

      IPAA NSW State Conference
               13 August 2009

                 Helen Silver
  Department of Premier and Cabinet, Victoria
Thank you for the invitation to speak today, I am delighted to be in NSW for IPAA‟s 2009 state

Creating opportunities in turbulent times is a well chosen theme for the conference.

If there is one constant in the public sector – it is change. Social, political and economic change
has created problems for us to solve and challenges for us to respond to. But – with the right
mindset – change can also create opportunities.

This morning I would like to speak about the changes that have influenced reforms in the
Victorian public service and the lessons we have learned in managing change. Along the way, I
will be providing examples of how Victoria has approached leading reform in turbulent times.

It is a timely opportunity to discuss reform in the context of departmental structure, as only
yesterday afternoon our Premier announced some significant changes to our Victorian
departmental structure.

He announced the restructure our largest department – Department of Human Services into two
      Human Services (with a focus on community services) and
      Health (overseeing all health services, mental health, aged care and prevention).

The Premier also announced important changes to our local government arrangements. These
reforms represent the most significant changes we have made to our departmental structure in
the past ten years.

It is an exciting time. A great deal of thinking about future challenges and how best to organise
ourselves for these has gone into these changes. I look forward to sharing my analysis of the
thinking behind these changes with you later on in my presentation.

In many respects, Victoria and NSW have pursued different reform agendas in the last 30 years.
But there are also some common elements in our states‟ approaches to reform and innovation.

During the course of my presentation that will become clear as you start to think „that sounds
familiar‟. It is important to acknowledge what we have in common as well as what we can learn
from each other.

The enduring role of the public service
There is no doubt that the public service has witnessed major changes over the years, yet the
fundamental ethos of the public service has endured.
This ethos can be traced to the Northcote-Trevelyan reforms of the British civil service in 1854.
These reforms introduced the principles of a merit-based, apolitical and professional career civil
service. The outcome was a civil service based on the values of integrity, honesty, and

The Northcote-Trevelyan Report had a lasting impact on what was then known as the Colony of
Victoria. Although Victoria‟s civil service was less developed in the 1850s, it still experienced
some of the same problems as Britain, especially in relation to patronage-based appointments.

In 1859, a Royal Commission was held into Victoria‟s public service. A number of reforms were
introduced based on the Northcote-Trevalyan Report, including measures ensuring that
appointments were based on competition and merit.

What is interesting about the influence of Northcote-Trevalyan era is that these public service
values still endure today. Victoria has a set of public sector values which are: responsiveness,
integrity, impartiality, accountability, respect, leadership and human rights. In Victoria, we have

enshrined these values in legislation through the Public Administration Act which was introduced
in 2004.

While the ethos of the public service has endured since the 1850s, the public service operating
environment has significantly changed, especially over the last three decades.

Reform in the 1980s and 1990s
The 1980s and early 1990s was a major period of public sector reform. This period of reform has
become known as the era of “new public management”. During this period, there was an
increasing emphasis on the influence of the market and the contestability of government

Government became a purchaser of some „contracted out‟ services and a provider of others.
The aims were to increase efficiency and cost effectiveness. There was a focus on
accountability for results and a shift to outcomes and outputs rather than inputs and processes.

These changes took place in Victoria after Jeff Kennett was elected as Premier in 1992. The
Kennett reforms had a significant impact on the Victorian public service. The reforms included:
    separating policy development from service delivery
    introducing output-based funding for departments and agencies
    adopting corporate planning processes
    creating mega departments similar to the changes recently introduced to your public

Under Kennett, 22 departments and 18 administrative offices were amalgamated into 13
departments. Following the 1996 State election, another round of consolidations reduced the
number of departments to 8.

There were two main reasons behind the creation of mega departments. One was that
government should concentrate on policy development. Service delivery was either contracted
out or assigned to agencies with a service delivery focus. Government‟s role was seen as
“steering not rowing”. This became a catchcry of the time.

The second reason was that strategic policy coordination was better done in large
multidisciplinary departments. This remains one of the most positive legacies of the

There have been significant benefits from the shift to mega-departments. First, they have
created better conditions for providing strategic policy advice. When ministers look to their
departments for advice, they receive a range of policy views and have to consider different

Second, mega departments generate better quality advice for the Premier and Cabinet. Policy
differences have to be thrashed out and resolved within departments. This means that
competing policies have been worked through by the time they are considered by the Premier
and Cabinet.

For example, the Department of Sustainability and Environment has policy responsibility for both
commercial forestry and the conservation of sensitive flora and fauna. The department has to
balance these potentially competing objectives to achieve balanced and workable policy

Finally, there have been financial efficiencies gained through shared services such as human
resources, IT and business systems.

The establishment of mega departments has had some downsides. Some departments are
sometimes seen as too large and internally complex. There are also administrative complexities
for Secretaries serving multiple ministers.

With any structure, it is critically important to review the „fit for future challenges‟ on a semi
regular basis. To ask – does our structure currently operate at best practice? and will it continue
into the future?

Does it fit the community it serves? Does it continue to meet expectations?

As I noted at the start of my presentation, we have been doing that thinking in Victoria – similar
to what you have been in NSW. Our recent focus has been the provision of Human Services
and Local Government.

The Department of Human Services was formed in the early 1990s. At that time, the model
represented leading thinking in integrated government services; however our new challenges
require new ways of working.

Our Department of Human Services had grown to the point where it accounts for nearly $4 in
early $10 that the State government invests in services. It directly employs around 13,000 staff
and more than 80,000 through its agencies.

Along with this growth, our challenges have shifted, challenges such as an ageing population
and the growing need to focus on preventable chronic disease. We also have the opportunity to
use advanced technology and lessons based in experience to better tailor and co-ordinate
government services to individual needs.

Whilst one mega department of Human Services delivered a good health system and social
outcomes for Victorians, our decision to restructure the department into two smaller departments
will allow us to build on this success and better meet our changing needs.
     1. the Department of Health: to oversee all health services, mental health, aged care and
         prevention; and
     2. the Department of Human Services: to deliver services for children, youth and families,
         housing services, disability and concessions.
Victorians‟ growing call on health and human services and their expectation of a better match to
their individual needs drove our desire to re-organise to extend capacity and reform service
delivery. Essentially, we are moving beyond a „one size fits all‟ model to a structure that will
facilitate our ability to tailor services to individuals, especially those with the most complex

This change is the most significant reform to the delivery of human services in Victoria for the
last ten years. Yesterday we also announced changes to the way we support Local
Government. In short, the change separates the dual roles of Local Government Victoria for
     policy advice and sector improvement; and
     responsibility for investigating and prosecuting breaches of the Local Government Act
A new Local Government Investigations and Compliance Inspectorate will be created under a
new Chief Municipal Inspector. Thus creating a dedicated, independent investigative unit
focussed on compliance. These changes to our local government functions are designed to
continue a proactive approach to ensuring the highest standards of accountability and
transparency in local government.

Whilst these changes may sound like common sense – getting them right and achieving an
integrated, whole of government approach is complex and difficult.

It is important to realise that these structures were, and are still not, set in stone. The structures
will continue to change from time to time to deal with new challenges.

On balance, since the 1990s, we have found in Victoria that the advantages of mega
departments have outweighed any disadvantages. We have retained the mega department
structure, and made strategic changes along the way. We now have 11 departments.

The shift to public value
The creation of mega departments was one reform of the 1990s which had lasting benefits.
However, during that decade, it became evident that there were limitations to some aspects of
the „new public management‟ approach.

The market model wasn‟t suited to all government services. It also had difficulty addressing
complex policy issues that spanned portfolios. In the last decade, there has been a greater
focus on “public value”. This takes into account what the public values. It also considers longer
term social, environmental and economic outcomes, not just short term inputs and outputs.

The shift in Victoria occurred with the election of the Bracks‟ Labor Government in 1999. This
government took a triple bottom-line approach to policy making, balancing economic, social and
environmental goals. This came together in Growing Victoria Together – or GVT.

GVT was launched in 2001, and is a long term whole-of-government strategic policy framework.
It has recently been refreshed. It is similar to the more recent NSW State Plan.

Growing Victoria Together identified the critical challenges for Victoria and provided clear
measures and targets. The GVT outcomes are integrated into Secretaries‟ performance plans.
GVT came out of a community summit. It demonstrated the government‟s commitment to
community consultation. The government wanted to hear from people about the impact of policy.

GVT marked the beginning of a new era of community consultation in Victoria. One of the most
enduring examples of the government‟s commitment has been „community cabinet‟ which began
in 1999. Community cabinet bridges the gap between the Government and the people.

As well as the usual closed cabinet meeting, community cabinet includes open forums on topics
such as business, youth, and multicultural issues. There are also opportunities for community
representatives to meet with Ministers and senior Departmental officials. So far this year,
Community Cabinet has been held in 3 bushfire affected communities – Gippsland, Yarra Valley
and Eaglehawke & Redesdale. This has provided an opportunity for Cabinet to thank
emergency services volunteers, and to meet with people directly affected by the fires.

New reform priorities and drivers of change
Today I believe we are moving to new era of reform, involving:
    engagement
    participation
    transparency
    collaboration.

The need for this reform is driven by a number of challenges that we face including:
    developing responsive public services that offer choice and personalisation
    engaging citizens
    streamlining regulation
    harnessing the power of new technology
    encouraging collaboration to resolve complex cross cutting policy issues such as climate
      change and social inclusion.

The public service landscape is shaped by a range of external drivers of change over which we
have no control. These external drivers will play out in different ways. Some drivers will emerge
gradually over time while others will be more immediate and disruptive.

For example, demographic shifts can be observed. Victoria‟s population is both growing and
ageing. This presents challenges across a range of policy settings including health care, aged
care, workforce participation, and retirement savings.

On the other hand, some drivers of change come without warning. These wild cards have the
potential to cause significant shocks. This year alone in Victoria, we have had to deal with:
    the fall-out of the global financial crisis
    the devastation of the Black Saturday bushfires
    the outbreak of the H1N1 virus
    an extreme heatwave resulting in major power blackouts and transport disruption
    a methane gas leak affecting hundreds of people in a large residential estate.

These events have presented enormous challenges for the Victorian public service. I am proud
to say that the Victorian public service has risen to these challenges and performed
exceptionally well.
However pandemics and financial crises are not new.

In 1918, we had to deal with the spread of Spanish flu and in 1957, it was Asian flu. Then there
was the Great Depression of the 1930s and the Black Friday bushfires of January 1939. What is
new is the speed and complexity of the changes caused by such events.

Globalisation has played a large part in this. The flows of capital, people, information and trade
have made the world seem smaller. Our geopolitical and economic boundaries are also
changing and becoming more interconnected.

Something else has changed in recent years.

The public now has an extremely high expectation of government‟s role in managing disasters.
We are expected to „jump into action‟ and deliver efficient solutions in situations of enormous

This year in Victoria, I believe that we have met this challenge. In the immediate aftermath of the
bushfires, there were comments doing the rounds such as:
       “Despite the horror, you‟d rather be here in Victoria than over there when they were
       mopping up after Hurricane Katrina.” [Note: Hurricane Katrina happened in 2005]

It made me proud to hear such positive feedback about the Victorian public sector. In these
kinds of situations, there is a limited window to act, and enormous pressure to get it right from
day one.

High public expectations are a double-edged sword. They can be daunting and sometimes verge
on the unrealistic. However, they also provide us with the impetus to excel and win public

Managing in a time of change
The challenges we face today demand new ways of working and new approaches. We need to
foster agility in our people, systems and processes. Central to this approach is a stronger focus
on achieving results that make a difference to the community.

The agility of government is tested by disasters.

As you are aware, in February this year, Victoria was devastated by the worst bushfires in
Australia‟s history. The scale of this tragedy was unprecedented.
    173 people lost their lives
    more than 2,000 properties were destroyed
    another 1,400 properties were damaged
    over 400,000 hectares of land were destroyed.

Three days after Black Saturday, the Victorian Bushfire Reconstruction and Recovery Authority
– or VBRRA – was established. VBRRA rapidly responded to the crisis and remains a highly
agile agency.

Why is VBRRA so agile?

VBRRA had overwhelming public support and a clear personal commitment from the Premier.
The early appointment of a senior and respected leader – Christine Nixon – gave the
organisation credibility and focus. Key staff were appointed quickly. This included senior
executives with extensive experience in operations management and track records of „making
things happen‟.

VBRAA staff were drawn from state government departments which „loaned‟ their people for the
duration. This made it a place where silos don‟t matter. It means that all departments have a
stake in VBRRA because it is staffed by „their‟ people.

The redeployment of public sector staff during this crisis was so important that it was enshrined
in legislation. Earlier this year, our Public Administration Act was amended to facilitate the
movement of staff within and between departments in the event of another major disaster.

The private sector has also contributed to creating a culture of innovation and agility after the
bushfires. Price Waterhouse Coopers quickly set up effective IT and business systems, and
BHP „donated‟ one of their senior executives for a year.

Importantly, VBRRA had a few big wins early on. It arranged for State and Federal governments
to jointly fund the clean up of bushfire sites. This led to public confidence that VBRRA had some
clout and that government was actually delivering on its promises.

One of VBRRA‟s biggest achievements the speed with which it undertook the clean up. It
tendered for and secured a preferred contractor for a $46 million dollar contract within one week
– which is virtually unheard of.

VBRRA had planned to clear up 2,000 properties in 6 months. But 3,000 properties were
cleaned up in 4 months. Such achievements created a powerful „can do‟ culture within VBRRA.

The „can do‟ culture within VBRRA has been a key factor in driving agility.

This type of „can do‟ culture has been a feature of our State‟s responses to the other crises in
the last 12 months, such as the outbreak of the H1N1 virus.

It is also evident more broadly in the Victorian public service, for example in relation to the
delivery of large infrastructure projects. We are on time and on budget in a number of our major
projects including channel deepening, the North/South pipeline, and the East/West link.

A „can do‟ culture is about driving towards goals, generating momentum and harnessing wins. A
„can do‟ culture makes innovation and reform possible.

Importantly, this kind of culture sits at the heart of „agile government‟.

And in turbulent times, the capacity of government to act with energy, speed and effectiveness is
more important than ever.

Agility in turbulent times
After the bushfires, the Victorian government demonstrated its agility by establishing a case
management system for people affected by this disaster.

This is the largest case management system in Australia's disaster recovery history - and was
established in 4 days. It is jointly funded by State and Commonwealth governments and is run
by the Victorian Department of Human Services (DHS).

Case managers provide one-on-one support. They link people with services, such as arranging
grief counselling, organising clean drinking water, finding accommodation, or liaising with
insurance companies.

Demand has exceeded expectations. The service has over 380 case managers, and around
5,000 clients in dispersed locations across Victoria. The system is working well and the „grass
roots‟ feedback is incredibly positive.

So, how was this system established so rapidly and effectively?

Firstly, the system used existing resources. In particular, there was a willingness of State and
Federal government to quickly redeploy staff. The Commonwealth government drew staff from
Centrelink‟s social work service, and the Victorian government strategically shifted staff from its
agencies. DHS also drew staff from non-government organisations.

And this engagement with the non-government sector required trust. There was no time to draw
up contracts. Agencies had to accept the guarantee that „we will pay you later‟.

The second reason for the system‟s success was the prioritisation of outcomes over rules. When
I spoke with the Manager of the system she put it bluntly: „We started the service and developed
the rules later.‟

Another success factor was the generosity and goodwill of people across all sectors and levels.
When they needed brochures printed quickly, the printer did it overnight.

So, the largest case management system in Australia‟s disaster history was up and running
virtually overnight.

What does this say about agile government? It demonstrates that people and systems can rise
to the challenge of solving problems quickly.

It also demonstrates that turbulent times can provide opportunities for reform.

The role of leadership and innovation
Today‟s challenges need resilience, perseverance and courage in leading and responding to
change. These challenges require:
    leadership with the strength to break with established ways of operating when there are
       possibilities for better ways
    leadership that perseveres when good ideas are not immediately accepted
    leadership with the courage to question and make tough decisions.

Above all, today‟s challenges need leadership with the resilience to experiment and innovate.
Public service leaders need to support the generation, development and implementation of ideas
at all levels.

Innovation is critical in meeting today‟s challenges, especially in a fiscally constrained
environment doing more with less.

In Victoria, we are embracing the role of innovation.

Last year I sponsored an on-line Innovation Forum for Victorian Public Service staff to send a
signal that ideas from all areas of the public service are welcome. Ideas were sought in policy
development, service delivery, workplace processes and collaboration.

The Forum ran for five days in September and included a two hour live session with myself and
the DPC Deputy Secretaries. Over 3,000 people visited the site.

We are continuing our focus on innovation with the development of a Victorian Public Service
Innovation Action Plan. The Plan is designed to embed innovation across the public service and
connect people, ideas and opportunity. It will also be developing innovation capability across the
Victorian public service. The Plan has been signed off by all Secretaries and will be launched
later this year.

Another example of innovation in Victoria is Action for Victoria‟s Future, a website which brings
together key Victorian government policy statements in a dynamic and accessible format. For
the very first time, there is a central point of access for the Government‟s key strategies and

It reflects our move to innovative and collaborative practices, which strengthen the development
and delivery of public policy in Victoria. The site makes it easier to research existing
government policy and to monitor emerging trends and practices. It also allows us to better
identify priorities and to understand the Government‟s agenda as a whole.

In closing, I would like to return to the three “i‟s” in the conference theme:
     identify, innovate, and inspire.

When we think about public sector reform in turbulent times, we need to:
   identify: opportunities, challenges, priorities and risks
   innovate: service delivery, policy development, regulation, systems and processes
   inspire: give citizens confidence in our public institutions, and give public servants
     confidence in our leadership.

I would add a fourth „i‟ to this list – invest.

People are at the core of the public service. We need to invest in our people to ensure that they
have the capabilities to meet the challenges ahead and can create opportunities in turbulent
times. These capabilities include creativity, relationship-building, collaboration, turning ideas into
outcomes, and capturing lessons learned.

In Victoria one of our recent capability initiatives has been to establish the Victorian Leadership
Development Centre. This Centre promotes a culture of leadership development, as well as
fostering a sustainable, skilled, diverse and professional leadership capacity within the Victorian
public sector.

Importantly, it identifies up-and-coming leaders who will be the ones to lead the state through the
challenges and reforms of the coming decades – challenges we cannot even begin to imagine

My presentation as a word cloud
I have spoken today about the impact of new technology on the public sector. It has transformed
how we work and communicate.

The term “web 2.0” refers to a new set of tools and technology that facilitate communication and
information-sharing on the web. It includes blogs, wikis, and social networking sites such as
YouTube, Twitter and Facebook.

The power of these tools is being recognised both in politics and the public service.

For example, the Premier of Victoria‟s website uses all of these tools to directly communicate
and engage with the public.

Word clouds are another feature of web 2.0. A word cloud visually depicts text and gives more
prominence to words that appear more frequently. Word clouds can be a very simple and
powerful way of communicating.

To close, I would like to leave you with a word cloud of my remarks today.

Thank you.

             My presentation as a word cloud

                  agility better   bushfires cabinet   challenges change
                  community complex created culture delivery
                  departments development                                         focus

                  government                            ideas   innovation
                  leadership management mega opportunities                    people
                  plan   policy public reform sector
                  service                  staff state system times together turbulent values

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