The Robodebt Royal Commission recommended that the government “undertake an immediate and full review to examine whether the existing structure of the Social Services portfolio and the status of Services Australia (SA) as an entity are optimal” (Rec. 23.1).

It is hard, however, to reconcile the government’s agreement “in principle” with this recommendation last November and its recent actions.

The Royal Commission’s recommendation arose from evidence that poor relationships between the Department of Social Services and the then Department of Human Services had contributed to the fiasco. It referred to “the chasm” that had existed between policy and administration.

The Commission drew upon the report I provided at its request which recommended, inter alia, that SA be established as a statutory authority with an advisory board of secretaries of the relevant policy departments and a consultative committee of stakeholders. I also recommended that SA remain within the social services portfolio and that explicit protocols be established between SA and each relevant policy department to ensure close co-operation and consultation.

The Royal Commission commented positively about the more recent placement of SA within the social services portfolio and noted also the Thodey Review’s endorsement of the view that “A greater degree of independence can be warranted for service delivery, regulation, integrity and government business functions”. It therefore acknowledged that “Mr Podger may well be right that SA should become a statutory authority” but it “was not well placed to consider the matter”. Hence its recommendation instead of an immediate and full review.

When the government responded that it agreed in principle, it said that “it would be guided by the Royal Commission’s findings when considering the most (sic) optimal arrangement of functions and responsibilities between the Department of Social Services and agencies in the social services portfolio, and the status of Services Australia”.

Government’s actions so far

The SA chief executive, David Hazlehurst, was pretty convincing in an interview with The Mandarin recently that there have been considerable improvements to SA performance, culture and governance since Robodebt, assisted by significant financial investment by the current government. Among the developments has been the establishment of a ministerial consultative committee of stakeholders, a culture of “bringing the outside in” with early external engagement on emerging issues and “co-design” of responses, and a culture of internal “speaking up”, in contrast to the inward-looking and hierarchical DHS culture identified by the Royal Commission during Robodebt.

He did not comment, however, on how SA is addressing the vexed issue of linking policy and administration that was also highlighted by the Royal Commission.

SA is now in the Finance portfolio, having been moved out of Social Services in an amendment in late June to the Administrative Arrangements Order issued after the election in May. It remains an “executive agency” (a halfway house between being part of a department and being an independent statutory authority). Its chief executive is not subject to the somewhat merit-based statutory appointment (and termination) processes for departmental secretaries and certainly does not have the protections of a statutory officer.

While noting that machinery of government is a matter for the prime minister, Hazlehurst identified some benefits from the move to Finance. These include linking Minister Gallagher’s responsibilities for service delivery policy to her public service responsibilities and her Finance responsibilities, including for deregulation. SA is already providing central capacity for service delivery beyond its immediate responsibilities such as supporting the Electoral Commission during elections and the ABS in managing the census, but he claimed its location in Finance may allow it to “double down” on this role.

It is not clear, however, whether the government’s latest decisions about the location of SA concludes its assessment of “the most optimal arrangement” or “the status of SA”, or whether further restructuring is still possible.

Some more history

There is a long history to the relationship between social security policy and administration. Until the late 1990s, the two were within the one department and there was one portfolio minister who was in Cabinet. Within the department, the two were led by different divisions under different deputy secretaries, with the network of state and regional managers on the administrative side.

With the establishment of Centrelink in 1997, social security administration was separated from policy which remained in the department, but with both being in the one portfolio. A key objective was to bring together social security service delivery and related services, particularly employment services, as a “one-stop-shop” of integrated client-oriented services. Links between policy and administration were supported initially by an executive board including the key relevant departmental secretaries.

The gap between policy and administration increased with the creation of the Department of Human Services with its own minister as part of the Finance and Administration portfolio in 2004, overseeing not only Centrelink but also the Health Insurance Commission (later Medicare Australia), the Child Support Agency and some other service delivery agencies. The challenges involved were exacerbated in 2007 with DHS absorbing the different service delivery agencies, also opening up opportunities for greater political involvement in administration.

By the time of Robodebt, the separation had become “the chasm” identified by the Royal Commission.

Where to now

While I still think the benefits of service integration have been exaggerated and could mostly be achieved by data linkages rather than amalgamation of service delivery functions separate from policy, it is now simply too hard to return to the 1990s model. Nonetheless, while the risks of excessive political involvement are less with an executive agency than with the former DHS model, they are much greater than with a statutory authority. My firm view remains, therefore, that a statutory authority is the most appropriate structure for SA.

I also remain uneasy about the new location in the Finance portfolio. Despite the claimed advantages of the central location, Finance inevitably will focus primarily on efficiency. As has occurred with shared corporate services, the efficiency gains from associated economies of scale may well be at the expense of insufficient emphasis on the underlying policy objectives involved. Returning SA to the Social Services portfolio would reduce this risk (though Medicare policy and administration would remain in different portfolios).

Wherever SA is located, mechanisms are needed to strengthen links between policy and administration, such as the advisory board of secretaries and other measures I recommended.

There is no easy answer, but I hope the government does not think it has now done enough on the structure of SA and its related policy departments.

Author’s note:

The Royal Commission engaged me to advise on 10 specific issues (one being the relationship between policy and administration) with an additional general request to consider any other matter of substance. The Royal Commission drew on my report but said it “had neither the time nor the resources to examine whatever shortcomings exist in the APS as a whole, and is anyway conscious of a recent and expert review” (viz. the Thodey Review). While impressed with the Commission’s forensic report and pleased it drew on my report, I must admit to some disappointment. I had hoped that more of my detailed recommendations would be taken up and, more importantly, its explicit endorsement of a number of Thodey recommendations that I too highlighted (such as on secretary appointments (p643), the powers of the APS Commissioner (p638) and a legislated code of conduct for ministerial advisers (p647)) was not included in its own recommendations. As a result, the government has been able to ignore the Royal Commission views on these key concerns. I can only hope that APS leaders draw more carefully on the rich material in the Royal Commission report beyond its recommendations, and on my own report to the Commission.

An edited version of this article was published by The Mandarin, 22 August 2025

The views expressed in this article may or may not reflect those of Pearls and Irritations.