ANDREW PODGER.-Trying to make sense of the Thodey Report and Morrison’s Response:(The Conversation 19.12.2019)

Dec 30, 2019

The final report of the Independent Review of the APS is much more substantial than its Interim Report. That is hardly a high hurdle, but its 18 page bibliography suggests considerable reflection beyond the (mostly disappointing) submissions and commissioned papers.

It still has, however, an excessive amount of rhetoric, and it is not an easy read.

Broadly, the report’s themes are:

  • A united service
  • Partnerships beyond the APS
  • Embracing new technology
  • Investing in people and capability
  • A more dynamic and responsive operational model
  • Improved leadership and governance.

There are many sensible recommendations, but detail is often missing and analysis weak, and some recommendations reveal a surprising lack of understanding of the public sector.

The central theme of a ‘united’ service is overdone, notwithstanding the case for greater coordination today. The APS does not need ‘an inspiring purpose and vision’ – the first object set out in the Public Service Act 1999 is clear: ‘to establish an apolitical public service that is efficient and effective in serving the Government, the Parliament and the Australian public’. The APS Values also define the role of the APS as an institution, and the Review might have made more of the High Court’s references to these in confirming the Constitutional standing of the APS.

The Review is right to press for a better coordinated Service today, retreating from the late 1990s devolution under New Public Management. That Australia went too far is very clear (particularly re pay and conditions), and public expectations in light of modern technology are also demanding much greater connectivity today. But the Review goes too far the other way. The APS performs a wide range of functions each requiring specialist expertise. The Secretaries Board is not like a private sector board: Cabinet and ministers are the primary decision-makers under the Constitution, and secretaries’ first responsibilities are within their portfolios, serving and advising their ministers and delivering services and implementing government policies. At the centre it will always be primarily the responsibility of the APSC and the Department of PM&C to do the administrative coordination, though necessarily in close consultation with secretaries and other agency heads.

Perhaps the most valuable contribution of the report relates to the application of new technology (Chapter 5). It makes a convincing case for very substantial new capital investments over many years, and for increasing allocations for minor capital investment. These, and the associated building of skills, are necessary for more citizens-centred services and for more digitally-enabled administration. The Review rightly calls first for an audit of current ICT systems and a blueprint.

The report is also on the right track with several other themes:

  • The need to invest in people and (re-) strengthen capability (Chapter 6);
  • To reduce hierarchy and promote more dynamic teamwork across the Service (Chapter 7); and
  • To improve governance and leadership, including by firmer merit-based approaches to appointments etc. (Chapter 8).

But the report pulls its punches about the causes of the problems being addressed, and could have been clearer about the ‘burning platform’ which needs to be fixed. Why has strategic policy advising capacity declined, and other expertise been lost? Why has evaluation activity and skills dropped away? Why has the APS become more risk-averse and hierarchical?

Let me add two anecdotes that point firmly at the source of the problem. Paul Tilley in his recent history of the Treasury ( cites his own personal experience in advising on tax policy when Treasury was asked to send to the Treasurer’s office options for changes to the tax system. A paper was sent with 40 options, some of which were ‘ridiculous’ in Tilley’s view, but there was no Treasury policy advice because the office specifically ruled that out – they would provide the advice to the Treasurer.

David Stanton in an as yet unpublished article co-authored with others compares the performance information in DSS annual reports for 1997-98 and 2017-18. The 1997-98 report had 24 pages devoted to the performance of the unemployment benefit program against the objective ‘to ensure unemployed people receive adequate levels of income to support themselves’, with detailed analysis of adequacy measures and trends. The 2017-18 report has fewer pages on the performance of the whole social security system, and is based on an over-arching objective to ‘encourage self-reliance and support people who cannot fully support themselves by providing sustainable social security payments and assistance’. Performance criteria relate only to sustainability, improving self-reliance and appropriate targeting – nothing about adequacy at the time people need assistance and no analysis about Newstart trends relative to wages or poverty measures or other payments.

Thankfully the Thodey Report does include recommendations aimed at strengthening the standing of the APS and to clarify relations with the Government and the Parliament, including:

  • The accountability and integrity of ministerial staff (Chapter 4, Recommendation 11); and
  • Secretary and other agency head appointments and terminations, the respective roles of the APSC and Secretary of PM&C, and the appointment of the APS Commissioner (Chapter 8 Recommendations 38 and 39).

Even if I disagree with some aspects, the report at least puts these things firmly on the table (see also my recent Parliamentary Library lecture .

On several other matters there is a disappointing lack of detail despite the identification of important issues and, in some cases, despite the report pointing in the right direction:

  • The discussion of the APS Values (Chapter 3) ends up proposing some new statement of ‘principles’ to supplement the Values: what is needed is to re-cast the Values to reflect more directly the APS’s unique institutional role (and return ‘merit’ to the list);
  • The important discussion of place-management (Chapter 4) fails to set out the architecture required at community and regional levels, and how it might link with State/Territory service delivery;
  • The discussion on budgeting (Chapter 7) rightly highlights the importance of adequate funds for capital investment, but totally overlooks the equally important issue of how running costs should be financed, seemingly accepting the continuing role of the efficiency dividend.

The Government’s Response

Michelle Grattan ( ) correctly summarised the response as solidifying the power of the Prime Minister and rejecting any recommendations that would strengthen the standing and independence of the APS. Sadly, the result will be that many of the recommendations ostensibly ‘agreed’ by the Government will not succeed because the drivers behind the reduced capability of the APS (and its risk-averse and hierarchical culture) will remain and will probably grow stronger.

The repeated references in the response to ‘Consistent with the Secretaries Board’s advice’ when a recommendation was not agreed is both odd and worrying:

  • Is it true that the Secretaries Board provided the advice claimed – can that advice now be made public?
  • If the advice was as claimed, I can only surmise that it demonstrates to the rest of the APS the leadership’s lack of frank and fearless advice: surely the Secretaries Board supports a more uniform pay and conditions framework, and a more robust process for their own appointments and terminations.

On a positive note, the Government agrees with the majority of the recommendations, particularly those relating to digital technology. Most of the responsibility for proceeding will lie with the APS itself, and whether the Government will eventually sign up to the capital funding Thodey believes will be needed (initially at least $100m a year after the audit is complete) is uncertain. At this point the Government has agreed only to $15m over two years to start work on all the agreed recommendations.

The Government’s Machinery of Government changes

Aspects of the Prime Minister’s earlier announcement about MoG changes have merit:

  • Reducing the separation of policy and administration by replacing DHS with an executive agency within the DSS portfolio;
  • Re-establishing strong links between education, employment and training;
  • Separating energy from the environment, recognising that the tensions between these major functions should be settled in Cabinet.

But the failure to recognise MoG changes only work if aligned to ministry arrangements is extraordinary – genuinely ‘amateur-hour’ public administration. The 1987 introduction of mega-departments was only partly to do with economies of scale. Mostly it was about streamlining Cabinet: allowing Cabinet to be small and manageable while still having every (portfolio) department represented, and allowing portfolio ministers to exercise, with their assistant ministers, more responsibility including over resource allocation within the portfolio.

The PM’s claim that his restructuring will ensure ‘congestion busting’ and a much improved ‘line of sight’ is contrived and almost certainly illusory. It cannot be achieved without ‘line of sight’ between ministers and the public service. The new Department of Infrastructure, Transport, Regional Development and Communications provides a classic example of the problems with the new arrangements:

  • It will have 8 ministers, 4 in Cabinet;
  • Several ministers will have responsibilities for functions in other portfolios;
  • There will be around 80 ministerial advisers;
  • The portfolio secretary and much of the SES will be pre-occupied with working upwards to the ministers and their officers dramatically reducing their capacity to focus on service delivery, or to pursue strategic policy research and provide associated long-term advice; and
  • Cross-portfolio and Cabinet processes will be made more difficult, not less.

We do not know what if any advice the APS provided about these changes. My fear is that APS expertise in such matters has deteriorated greatly in recent years. Apart from this misalignment between the ministry and the machinery of government, some of the details of the MoG changes are wanting. In particular, there remains a serious problem about the separation of Medicare Australia from health policy.

Where to from here?

The Morrison Government’s pronouncements over the last fortnight confirm its lack of real interest in the public service as an institution. Sadly, at present, it seems that much of the conservative side of politics has lost the sort of support of our institutions that Menzies and other traditionalists exemplified.

Equally, it would be wrong to rely upon the other side of politics to pursue the directions in the Thodey Report which the Morrison Government has ruled out. Not only would this ignore Labor’s contribution over the years to the current sorry state of affairs, but it would set up for partisan debate the appropriate governance and degree of independence of the APS, something inimical to what fundamentally must be non-partisan.

Instead, we need the Parliament to intervene, if not in the immediate light of the Thodey Report and the Government’s response, then before or shortly after the next election. A Senate Select Committee might be asked to undertake an inquiry into the relationship between the APS, the Government and the Parliament. It should examine:

  • The Constitutional role of the APS and how this is reflected in the Public Service Act;
  • The distinctive values of the APS in line with its Constitutional role;
  • The corresponding distinctive values of other components of the Commonwealth including within the Executive (ministers, their advisers, non-APS agencies), the Legislature (other MPs, the Parliamentary Service) and the Judiciary;
  • The processes for appointing and terminating secretaries and other APS agency heads;
  • The respective roles of the APS Commissioner and Secretary of PM&C;
  • The roles and responsibilities of secretaries, the SES and the Secretaries Board; and
  • the Members of Parliament Staffing (MoPS) Act, and associated accountability arrangements.

This inquiry should consider Thodey’s recommendations and other options, and be asked to come up with its own concrete recommendations, if at all possible with bipartisan (and cross-bench) support.

This inquiry should consider Thodey’s recommendations and other options, and be asked to come up with its own concrete recommendations, if at all possible with bipartisan (and cross-bench) support.

Andrew Podger AO, Honorary Professor of Public Policy, Australian National University

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