The Australian
21 September 2012

By Jennifer Westacott
Chief Executive, Business Council of Australia.

This is an edited extract of a speech titled ‘Restoring a High-Performing Public Service’ by Business Council of Australia Chief Executive Jennifer Westacott to the Institute of Public Administration Australia, published in The Australian.

Business respects that a high-performing public sector is an essential element of a wealth-generating economy and a fair society that offers rising living standards for this and the next generation of Australians.

While business creates wealth on the ground, our elected representatives, together with the public service, create the environment in which that can happen, and in which wealth can be properly used and distributed.

I fear that many modern politicians have lost sight of the fundamental role of the public service.

Its authority has been undermined by political gatekeepers, often with little expertise and no accountability.

Its custodianship of the long-term policy agenda has been eroded by short-term thinking, and the necessary investment in capacity building, succession planning, technology and new ways of providing services just isn’t there.

The effect of these trends is felt most keenly by public servants themselves; the frustration from the lowest to the highest levels of seniority is palpable in every conversation I have.

But its impact on Australia is dangerously far-reaching.

One of the essential steps is for public servants and governments to get a better understanding of how business works. If they’d had a better sense of how particular policy decisions would affect business on the ground in recent years, chances are some of those decisions might have been very different.

If policymaking, decision making and how we set rules and regulations had reflected the standards of a high-performing public service we wouldn’t be seeing major policies unravelling before our eyes because:

• The process was poor.
• The architecture was wrong and was a predetermined political compromise dressed up as economic reform.
• The assumption is flawed.
• The consultation disingenuous.
• The communication, at best, opaque.

The fiscal implications of these flawed processes is huge. Complex things done badly, political reforms disguised as economic reforms, are hugely expensive.

And not only in financial terms. They squander the community’s appetite for reform, and its trust.

Looking back in 10 years at public-spending decisions made between 2005 to 2015, the questions will be asked:

• Have we got a high-speed train to anywhere or a different teaching/learning model in Australian schools?

•  Have we resolved Sydney’s congestion problems, and are our ports and freight systems supporting us to compete in the Asian Century?

In each case, I fear the answer will be no.

Business is not-anti rules or regulation. We just believe they need to be set according to sensible and transparent standards.

Poor, unnecessary regulation reduces business competitiveness and discourages productivity-enhancing innovation. It limits our ability to adjust quickly to changing circumstances.

Jumping to regulation in response to a hot media issue and without thorough proper discussion and analysis is not good process. Government has to understand the problem or policy priority first, and test the case for regulation alongside the risks and consequences of not regulating.

There is no escaping the demands of the modern political environment, but the public service needs to find ways of balancing those immediate demands with the essential task of developing and advancing longer-term policy reform.

A high-performing public service committed to good policy-making processes is the last line of defence against the whims of short-termism.
So, having made these suggestions to improve process, I want to suggest five practical game-changers for restoring the authority of the public service to act on them.

• Halve the allocation of personal staff in ministerial offices and establish a mandatory code that prohibits them from directing public servants.

• Reinstate the tenure of the departmental secretaries. I do not believe the contract system could give us a Nugget Coombs or a CJ Bradfield. It’s a system that cultivates and rewards reticence and timidity, not the tough thinking we need to deal with complex challenges. It opens the door on a culture of intimidation and bullying of public servants.

• The public sector has to be smaller, more focused and more productive. Public sector spending accounts for about 25 per cent of gross domestic product. If we improve public sector productivity, we improve national productivity. We need clear fiscal rules for determining the size of the public service based on our ongoing capacity to pay. This will avoid the boom and bust cycle that inevitably leads to painful corrections like those we are now seeing in Queensland.

• Rethink service delivery. We have to dramatically rethink the way we deliver some public service and let go of things that aren’t working. Consumers will dictate how they want services delivered but there’s a big question mark about the public sector’s capacity and willingness to respond. Leaving aside our views on the National Broadband Network decision-making process, the real conversation now has to be about how we use it to change the way we deliver public sector services and, across the economy, to lift our productivity.

• Improve performance management systems in all jurisdictions and remove the “no forced redundancy” policy. I know systems exist but whenever I ask public servants what problems they’re facing, one of their main concerns is that there’s no effective way of dealing with poor performance.

None of what I’ve suggested is easy but we can’t continue going the way we’re going when it’s clearly not where we need to be.

Public servants have no option but to take account of political realities of pragmatism, incrementalism and compromise. But it’s one thing to understand the art of the politically possible and another to second-guess it.

Australia can’t afford for public servants to be spectators or victims of political short-termism.