MICHAEL KEATING. The Productivity Commission on more effective government. Part 2 of 2.

Dec 14, 2017

The Productivity Commission’s findings regarding the effectiveness of Australia’s public services reflect the findings of many previous reviews. Fundamentally a change of culture is needed in favour of well-calculated risk taking and, I would add, greater independence based on the pursuit of evidence through comprehensive program and policy evaluation. 

In Part 1 of these two articles, I discussed the Productivity Commission’s recommendations for more effective government that covered inter-governmental relations and fiscal discipline. In this second Part 2, I will discuss the recommendations relating to Australia’s public services, and particularly to the Australian Public Service (the APS).

Is there a problem with the public service?

To an unusual degree, there seems to be agreement that Australia’s public services are not living up to expectations, and often it is suggested that they are not as good as in the past. For example, Laura Tingle in an important Quarterly Essay, a number of other distinguished commentators on that essay, and Terry Moran, a recent Head of the APS and the Victorian Department of Premier and Cabinet (see Pearls and Irritations, 29 & 30 November) have all argued that our system of public administration is in serious trouble.

In a recent posting on Pearls and Irritations (1 December), Mike Waller asserted that the answer to these complaints is ‘a Royal Commission into Australia’s public administration, covering all levels of government’. I respectfully disagree. As the Productivity Commission documents in its report, we are not short of reviews of government performance and capabilities. The difficulty lies in the follow-up, or perhaps more accurately in the lack of follow-up.  As the Productivity Commission describes: ‘Government and public service heads have largely accepted the proposals of the review reports … but, at least at the Commonwealth level, it is difficult to discern significant change’.  On the other hand, even the excellent report by the Coombs Royal Commission initially suffered a similar fate – it sat on the shelf for seven years, and was only implemented after the government changed and a number of new leaders were appointed to head critical public service departments who were personally committed to implementing Coombs’ recommendations.  (One of the most important of these new leaders was the late Peter Wilenski, who was instrumental in the original establishment of the Coombs Royal Commission in the first place.)

So what are the Productivity Commission’s specific findings about today’s public services, now forty years on from the Coombs Royal Commission report? The Commission draws on the large number of previous reviews of government performance and concludes that most important is the ‘non-adherence to standard requirements for due diligence on policies and a culture of excessive risk aversion leading to the belated discovery of mistakes and centralisation of decision-making’.  This aversion to risk-taking and upward referral is also consistent with what I have learnt from my own conversations with recent department heads in the APS. And very recently, the present Head of the APS, Martin Parkinson, was reported as saying that senior colleagues became more reluctant to apply for possibly controversial jobs after he and some other senior public servants were sacked by Prime Minister Abbott in 2013; in Parkinson’s case he alleges that was for following instructions from the previous Labor government.

In addition, the Productivity Commission found that:

  • avoidable mistakes have occurred because the justification and design of policy interventions were not based on adequate evidence,
  • the complexity of issues has not always been matched by the capabilities of staff,
  • there is an underlying need to strengthen policy advising capacity, particularly on the development of evidence-based policy,
  • the sheer workload on staff stifles strategic thinking.

What should be done to improve public service performance?

I personally agree with the Productivity Commission finding that most ‘importantly, a fundamental change in culture seems to be required’: agencies and staff should be permitted by ministers and their leaders to take well-calculated risks in pursuit of improvements in policy and administration. But I also emphasise that this necessary change in culture needs to go further and shift the balance between responsiveness and independence back in favour of more independence, while departments should continue to be responsive to the objectives of the government of the day. Furthermore, I also noted that none of this culture change will occur without the support of ministers and the leadership of their Department Heads.

Other recommendations by the Productivity Commission to strengthen policy development and delivery are:

  • all policy areas should be subject to proper appraisal – ex ante and ex post, while Regulatory Impact Statement processes should emphasise sound policy-making rather than simply adhering to rules,
  • to help ensure that programs remain well-targeted and administered, greater use should be made of sunset clauses and the completion of evaluations before new funding is committed,
  • similarly, continuation of program funding should be conditional on evaluation and rectification of all significant problems revealed in that evaluation,
  • wherever possible governments should make better use of information and evidence developed by other jurisdictions, including overseas.

I personally strongly support the intent of these recommendations, which I think are well directed to the principal problems with public administration today. As I have shown, there is broad agreement that cultural change is needed to:

  • encourage risk taking, based on a proper assessment of risks,
  • provide more independent advice, which is easier if:

o   public servants are less tasked, and encouraged to think more broadly and strategically,

o  they make much greater use of evidence, which must mainly come from the use of evaluations.

In particular, I draw attention to the finding by the Productivity Commission that:

‘At the Commonwealth level in the decade to the mid-1990s, all budget funded programs were required (by statute) to be evaluated every three years, with evaluations integrated into the budget process. Evidence suggests that evaluation findings made a substantial contribution to Cabinet debate and the development of policy options.  For example, surveys conducted by the Department of Finance show that across the 1990-91 and 1994-95 budget years, the proportion of new policy proposals influenced by the findings of an evaluation rose from 23 per cent to 77 per cent.’

In my own experience, this evaluation of programs not only provided the evidence for evidence-based policy, it also developed the skills of the public service and encouraged a culture of enquiry. Unfortunately, the Productivity Commission reports that this evaluation system was ended because of the alleged administrative burden of planning and conducting evaluations, and it was claimed that a shift towards greater contestability in policy advice lessened the demand for systematic use of evaluations. Even if that were true – which is most unlikely – it would be one of the most stupid decisions ever taken by governments. Contestable advice is only useful if it is informed advice, and unfortunately there is plenty of evidence that the main form of contestable advice, ministers’ offices, are anything but informed. More likely the reason for getting rid of evaluations and their associated culture was that they didn’t always coincide with what the policy-makers wanted to hear.


There is general agreement that our system of public administration could be significantly improved. Furthermore, we do know what needs to be done to achieve that improvement. We did have a good public service, which for the most part, was capable of strategic thinking, anticipating problems and providing expert advice on what worked and what didn’t. Luckily, in some parts of public administration those skills still persist, but all too infrequently.  We need to return to a system that makes evaluation and the development of evidence-based policy mandatory. However, that won’t happen without the support of ministers and the people they appoint as Departmental Heads; both of whom must be prepared to acknowledge the need for these inter-related changes in culture and capabilities.

Michael Keating is a former head of the Australian Public Service and before that was Secretary of the Department of Finance. He was heavily engaged in the reforms of Commonwealth public administration following the Coombs Royal Commission, and especially those relating to the budget processes.

Share and Enjoy !


Receive articles straight to your Inbox

How often?

Thank you for subscribing!