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ME_CPA Symposium-091204


									                        CPA SYMPOSIUM

    (a)       Introduction
What is the state of play of public sector governance in Australia?
What are some of the challenges that are emerging?

These are questions this paper addresses but with a note of warning: the
answers to these questions depend very much on the colour of the lenses
through which the world is seen.

As a past practitioner and current researcher of public sector governance I
attempt to study carefully what practitioners say as well as the criticisms made
by analytical researchers. Both perspectives inform the views expressed
here. Because my background is from the commonwealth public sector, the
paper reflects more on issues relevant to that level of government. However I
suspect there is also much overlap in what I have to say with issues that are
current at both state and local government levels. This paper will “canter” or
“scape” through what I consider to be the main issues or challenges facing
government today, with the hope that some of those issues are taken up in
later sessions at this symposium.

     (b)      Governance Concepts
What concept of public sector governance should we use? Different writers
have different views about what are the relevant elements of governance
depending largely on the circumstances being described. I happen to like a
definition used by the Commonwealth Auditor-General’s Guide on Better
Practice Governance:

        “Public Sector Governance has a very broad coverage, including how
        an organisation is managed, its corporate and other structures, its
        culture, its policies and strategies and the way it deals with its various
        stakeholders”. (Auditor-General 2003).

What I like about this definition is that it focuses on both the “vertical” aspects
of governance and the “horizontal” aspects: the former deal more with the
hierarchical and governance issues and the latter with greater involvement of
stakeholders including outside of the government sector and ultimately
including citizens. Another aspect of this definition that I like is, it is not just
focusing on the importance of structures and processes in the decision
making process, but it gets to the heart of governance which I believe is the
importance of the relationships of both individuals and of organisations. More
about that later.

It is currently common to talk about global pressures and technological factors
as key drivers of public sector reform. Competitive global pressures in

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particular have pushed governments in its recent reforms in the direction of
privatisation and adopting private sector practices to improve on public sector
efficiency. Technological advances are opening up many opportunities – in
terms of better service delivery but also in terms of involving citizens more in
policy development processes. A critical third driver of change arises from
citizens who are more demanding in terms of the type and quality of public
services they receive and, related, in their often cynical attitude to
government. It would appear that citizens have a less than desirable level of
trust in public sector organisations. This is a major factor causing
governments to continually reconsider whether citizens’ needs are best being
met. In a context of fiscal constraint, the government is also facing many
“wicked problems” on a scale not commonly seen before. These problems
require much more complex policy solutions and the involvement of many
more players for their solution, apart from those at the centre of government.
These wicked problems are a key cause of the current interest on “whole of
government” initiatives. Finally, I would nominate recent public sector
reforms, often called “New Public Sector Management” (NPSM) as another
pressure for change.

In the 1980’s, Australia with many other OECD countries, embarked on fairly
major public sector reforms, now referred to as New Public Sector
Management. In a large measure this was an attempt to adopt some of the
measures used in the private sector to gain efficiencies. We saw an
emphasis on privatisation, marketisation and contracting-out of services. In
this contracting-out environment, government tended to separate policy
departments from implementation agencies. A proliferation of agencies
resolved it. There was much gained from these reforms. For example, a
greater emphasis on reporting against objectives and more focus on
outcomes as well as greater attention to a performance management
framework led to considerable improvement in public sector operations.
However, in some directions the reforms can be considered to have gone too
far, if somewhat unintentionally. Relying increasingly on non-government
players to deliver public services, the government lost some control and often
did not have sufficient knowledge to ensure the effective delivery of services
or indeed effective policies. Related, good policy processes were hindered by
not having better links between policy, development and implementation.
Sometimes contracting out or outsourcing, when based on ideological
premises, led to more inefficient and not more efficient results. In particular,
we ended up with government sector agencies that operated too much like
sylos as if they were not connected to the rest of the public sector.

These developments occurred at the same time as the governments became
more and more concerned about the lack of trust of citizens in government to
deliver services in a way that they wanted and at the quality level that they
expected. This was the situation up until very recently.

It can be argued that what has taken place in the last few years in terms of
public sector reforms has evolved, more or less continuously, over the last 20
or so years. My observations suggest that there has been a serious re-think

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in the last couple of years, in particular, about whether we have in fact gone
too far in the direction of contracting and competitive practices. I have
particularly noticed a major shift in the last year or so in two directions at the
commonwealth level: in what is happening inside government in terms of
government structures and also what is happening in the relationships
between government and its citizens.

In this context, two reports have come out in the last year at the
Commonwealth that appear to be particularly significant. The first is the
report of John Uhrig (August 2004) titled
“Review of the Corporate Governance of Statutory Authorities and Office
Holders”. The second is the Management Advisory Committee report titled
“Connecting Government: Whole of Government Responses to Australia’s
Priority Challenges”.

One of the purposes of the Uhrig report is to clarify lines of authority and to
enhance the role of minister and secretary over the activities of statutory
authorities. There is an inevitable move towards the centre of government in
power terms as a result of this. One of the purposes of the Connecting
Government document is to show ways of moving from government to citizen
centred governance - towards a more collaborative way in which the public
sector operates in relation to other public sector agencies, private sector
organisations and also with citizens. Again, there are centralisation
tendencies here with an example of this being the recent establishment of the
Planning Cabinet Implementation Unit in the Department of Prime Minister
and Cabinet. Inevitably one problem that this Unit will need to address is the
implications of diverse players sharing quality and delivery outcomes and the
difficult accountability consequences of this.

This section touches lightly on some key issues and challenges I expect the
government to have to face over the next few years. The first challenge I
would nominate is to successfully implement the recent machinery of
government changes following the Uhrig Report. Immediately after the
election, the government gave priority to structural change of agencies in
order to reduce the independence of many of them, for example Centrelink
and the Health Insurance Commission. The aim was to bring them more
under central control. As a result the Department of Human Services has
been set up which incorporates those two agencies as well as four others and
which will have across all of those agencies an advisory rather than a decision
making Board.

The Uhrig Report recommendation of having templates to provide guidance in
establishing arrangements for new authorities do not appear to recognise
some of the distinctive characteristics of certain statutory authorities. One
example would be the Australian National University that would require a
different level of independence from either a commercially orientative board or
a board that the government might now consider should be more advisory. In
other words, the purpose of the organisation should govern the type of

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governance that should be determined before governance arrangements are
put in place so that the two are in line. (Elaborate).

A major challenge for the Australian government will be to implement these
structural changes in a way that does not lead to ambiguities in roles and
responsibilities (eg. between the policy and delivery arms) and in such a way
that it does not aggravate key organisations and other relationships. As
Robert Cornall, Secretary, Attorney-General’s Department has recently noted
in quoting Professor Kamarck of Harvard University: “Where do the boxes
disciplinary chart? is not an issue today but rather “how do they operate and
how do they communicate with each other”?

A related point is that we can expect into the future many more advisory
rather than decision-making boards. Expectations of members about their
roles could be quickly outlined with what government, in fact expects of them.
Probably even more important in this context is the potential danger of the
government being tempted to put onto these boards people who may not
have the necessary expertise or skills. There is the temptation for cronyism
rather than careful auditing of the relevant skills and experience for each task.

The first major challenge inside of government therefore, is to implement
successfully machinery of government reforms that follow on from the Uhrig
Report and election announcements. The second major issue that I wish to
identify as a potential challenge for government is to clarify the roles and
responsibilities of two decision makers. We can only wait and see whether
the relationship between Minister, Secretary, Chief Executive Officer and
Board (Advisory or Decision Making) will gain in clarity following the recent
machinery of government reforms. Meanwhile, the roles, responsibilities and
accountabilities between ministers, officers and the public service cry out for
attention. Much has been written about “accountability vacuum” at the top. It
may take a crisis before the government sees the need for greater clarity
about whether or not ministerial advisers can exercise executive
responsibilities and if so, whether or not they are called to account before
senate committees.

Another challenge which was not addressed by Uhrig or the government after
the report was released, is to ensure that the nuance of the existing agencies
do not take a prosado approach to their activities but get involved in whole-of-
government or outward looking structural arrangements. (Merge with earlier

The final issue I wish to identify here is the perilous state of Commonwealth
State relations. There is a real possibility of combative relationships
appearing (particularly on issues such as education and health) and not a
sustainable parity of structural arrangement. Already the Australian
government has taken measures to by-pass the State in setting up new
technical colleges and in funding schools via parent associations. Progress
on reforms may well be hindered following disputes about the use of
competition payments. ($2 billion of competition payments). We are at cross
roads here. COAG will meet early next year on water, health and competition

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policy issues. Can constructive relationships be built? The issues are too
important for that not to be pursued. The productivity commission sees the
lack of co-ordination between Commonwealth and State as the biggest area
of unfinished business in Australia’s economic reform. Without lack of parity
on respective roles and responsibilities, cost and risk shifting will continue and
accountability will decline.

There will be many more advisory bodies and it will be tempting the
government to put on to those boards people who may not have the
necessary expertise or skills. There is a danger of cronyism rather than
careful auditing of the relevant skills and experience for each task. Another
challenge which was not addressed is to ensure that the new as well as
existing agencies don’t take a stylo approach but do get involved in whole-of-
government or outward looking structural arrangements. The second issue
that requires identifying as a potential challenge for government is to clarify
the roles and responsibilities of ministers and their advisors and perhaps
senior public servants. Much has been written about an “accountability board”
at the top [see Ian Pratt??]. It may take a crisis before the government sees
the need for greater clarity about whether or not ministerial advisors can
exercise executive responsibilities and if so, whether or not they are called to
account before Senate Committees. The final issue I wish to identify here is
the powerless state of commonwealth state relations which is a danger of the
combative relationship appearing (particularly on issues such as education
and health) and not a sustainable collaborative structural arrangement.

The Australian government document on “Connecting Government: Whole of
Government Responses to Australia’s Priority Challenges” is a significant start
to a new agenda, both inside of government and in ways that are practically
discussed involving non-government players. There is a new language
coming from government in this report about collaboration, co-operation and
collegiality. This is welcome but is it only rhetoric or is it the start of different
behaviours by public sector players in relation to non-government players and
to citizens? Only time will tell. There are some important but ambitious
initiatives outlined in the report which would suggest some seriousness in
intent on the connecting government agenda (eg. Colegg Trials on Indigenous

But overseas experience would suggest that it is very difficult to make whole-
of-government initiatives work and to decide when we are not “join – not”.
Strong leadership will be required. Many challenges arrive here which have
not yet been fully explored, at least not fully in the above document. Some of
these would include:

        The extent to which policy capacity in good public policy processes
         make it neglected as the emphasis is placed more on service delivery
         and policy implementation driven from the centre.
        Whether it is intended to engage citizens beyond more intensive
         consultation. There is an important difference between these two, the

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        former involving hearing citizen’s views and the latter involving two way
        dialogue with the intent of both sides affecting decisions.
       Related – what is to be the role of information technology in citizen
        involvement, not just in feedback on delivery of services but in effecting
        policy outcomes? What if, for example, a group of citizens/experts or
        others wanted to initiate an on-line policy discussion. What would be
        the role of the public servant in this dialogue? To lurk behind the
        scenes, to come in on non-controversial notice or some other role?
        Obviously guidelines are needed here. It is only a matter of time
        before this will become a real issue.

The ultimate challenge here is one of sharing of power between those who
make decisions and those who wish to be involved in the decision making
process. That will be easier said than done, especially for those who have
been so used to controlling the consultation process. This point is well stated
by Roberts:

        “Direct participation requires power sharing among the citizens and
        public officials. It is not a form of control that enables those in authority
        to get citizens to do what they want them to do. Shared powers
        empower the citizens as opposed to power over citizens. Citizens are
        viewed as a useful part of the governing process ……….”

        “Public deliberation in an age of direct citizen participation”, American
        Review of Public Administration, June 2004: 320.

There is a very difficult task for the government ahead in “weaving” vertical
and horizontal reforms of the type mentioned above. Not everything can be
joined together and government hierarchies will need to continue, at least to
some extent. But the days of strict hierarchical government are ending. The
emphasis is moving toward the co-ordination facilities in such a way as to add
public value through collaborative efforts of multiple organisations,
government and across sectors. The horizontal and the vertical are bringing
both together but tensions will arise.

An expert public policy commentator, Wayne Parsons, sees a primary
challenge of the 21st century as the “capacity to weave the vertical
(institutional) ware with the horizontal wool of (cross cutting) policy problems.”
Difficult decisions will have to be made about which boundaries are to be re-
crossed or joined-up and when citizens will be involved in decision making

The second major tension emerging for governments is between the tendency
to centralise government activities currently occurring on the one hand, and
on the other, attempting to create an innovative public sector culture. The
word “innovation” is cropping up more and more in speeches of public
officials. But there is some evidence that the more centralised activities
become, the less innovation that occurs. Activities at the centre, such as the
Cabinet Implementation Unit, may present themselves as simply “facilitating”

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a co-ordination of activities, eg. delivery, but if the perception elsewhere is of
more of a “stick” approach (eg. reporting to cabinet on what is working and
what is not in terms of service delivery) then innovation could be stifled.

A third set of tensions arises in attempting to implement an Australian Public
Service (APS) set of values, not only within the core of government under the
APS Act but also with agencies that currently are not under the Act (such as
CAC Authorities). In addition, an understanding, if not alignment of values of
government and non-government players in delivering public sector services
will need some attention if good relationships are to be maintained and
expectations of government and non-government partners are to be realised.

Finally and more generally, there is real tension between the traditional notion
of “representative democracy” and emerging citizen engagement initiatives
that are put under the umbrella of “direct democracy”. Some cynics note a
real tension here and see representative democracy in the power of
parliamentarians threatened. Others are aware of the current “democratic
deficit” between elections and foresee direct democracy as simply
supplementing representative democracy between elections. Public servants
will face attention here between, on the one hand, being more responsive to
government’s directions, but also needing to be responsive to citizen needs
on a day to day basis.

What I have attempted to do today is to map the state of play in terms of
public sector governance issues and also identify some key issues and
challenges emerging for the future. Australia seems to have gone a long way
with it’s public sector reforms in recent years adjusting for some of the
excesses of the previous new public sector management regime. But in some
ways it is still early days in terms of knowing what works and what does not
work and whether the governance structures, processes and relationships we
are putting in place will be robust and sustainable. The next few years will
see much reform necessarily appearing in order to implement the two
agendas of government which I have identified inside of government and in
relation to engaging beyond it to citizens.

Since there is much reform yet to come and since some other countries’
experiences (and domestically across jurisdictions) have gone beyond our
own, we have much learning to do. We have learning about what works and
what does not work and what mechanisms and processes appear to be best
would seem to be wise to establish. Better practice forums, conferences, web
site exchange information all could assist in minimising on what could
otherwise be obvious mistakes.

Current directions in public sector reform would suggest that there are new
skills, experiences and behaviours that need to be encouraged in Australia’s
public sector including openness to creativity and innovation, a real
engagement and commitment to a task as well as relationship management
and other skills now being recognised as important. Given the aging of the
public sector workforce, attention needs to be paid to what external capacity is

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available to supplement if not work alongside, those within the public sector to
assist in solving key problems facing the public sector of the future.

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