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Changes in the Australian Public Service

Australian National Audit Office
29 November 2005

Introduction

I am very pleased to have the opportunity to be here today, to share my views about developments in the Australian Public Service—developments that have shaped our environment—and the challenges we are facing as a national institution:

Our ultimate challenge is to meet the expectations of the Government and of an increasingly demanding community—for quality policy advice and good service delivery from a professional, values-based and modern public service.

The Public Sector Environment

I would like to begin by considering the environment that we in the Australian Public Service operate within. Our environment has changed.

Some of you will be familiar with the extent of the change we have seen in the last two decades from your own experience, here at the ANAO and in other agencies. Others among you will have heard stories of the ‘good-old-bad-old-days’.

Our Workforce

Our workforce has been transformed. In the past, APS recruits usually entered at the base level, with the expectation of a career for life. They expected to progress to higher levels (but not necessarily senior levels) unimpeded by outside competition. And mostly they weren’t disappointed. Their pay and conditions were centrally negotiated and determined. Graduates, like myself, were a somewhat rarer breed, and were mostly recruited through formal graduate programmes.

Since the 1970s, however, there has been a declining role in the APS for people without qualifications. The tasks they performed have been contracted-out, passed to the private or not for profit sector, transferred to States and Territories or, assisted by technology, absorbed into the work of other employees.  APS 1-2 equivalent positions –about half of the workforce in the mid-1980s – now account for only about 5% of our employees.

This shift in the classification profile of the APS, and the opening-up of APS employment to external competition, has seen most new recruits to the public service (many with skills and experience in other sectors) commencing at the APS 3–4 levels or higher, and advancing fairly rapidly to higher levels.

In a related shift, we have become a ‘graduate workforce’. APS staff at all levels are increasingly likely to have tertiary qualifications (currently about half), whether they are recruited through graduate entry programmes or general recruitment processes. The proportion of graduates APS-wide is likely to increase as the number of new recruits who are tertiary qualified increases (two-thirds currently).

The decline in employment opportunities for younger people without qualifications and the increased recruitment of experienced, mature workers from other sectors have contributed to the rate at which the APS workforce has aged. During the 20 years from 1984 the average age of APS employees rose from 32 to 42, so that about 40 per cent of all ongoing employees are now aged 45 and over.

Unfortunately mobility in the APS has been declining. This has given rise to concern about the depth of our ‘institutional experience’ and our capacity for whole of government working.

Coinciding with these changes, the Australian labour market has begun a process of tightening that is projected to continue for several decades.  Whereas the working age population currently grows by about 170,000 each year currently, Access Economics forecasts that it will grow by just 125,000 for the entire 2020s ( ie less than 10% of the current rate of growth).

The Drivers of Change

So, what has driven these changes?

The 1974 Coombs Royal Commission into Australian Government Administration was the first independent, wide-ranging inquiry into the administration of government in the Commonwealth for over 50 years.

The Coombs report marked a water-shed in administrative thinking and reform. It recommended far-reaching changes to the structures and direction of public administration. The report’s key themes were: 

Coombs has been a catalyst for and has strongly influenced public sector reform since that time.

Coombs’ vision clearly resonates in the devolution of authority brought about by the financial and personnel management reforms that culminated in the Public Service Act 1999 – reforms that provide the flexibility and agility needed for strong public sector performance, while providing for stronger accountability and enhanced capability and responsiveness to Government.

The combination of public sector reform and broader labour market developments has produced an environment in the APS that is very different to that which we have been used to. Already there are signs of skill shortages in specialist areas such as accounting and economics and this is expected to worsen as the rate of new entrants to the labour force declines.

The institution that is the Australian Public Service, however, remains strong—we are bound by a common ethos of public service, of working in the national interest, and of working for the government of the day.

Against this background, a critical challenge for the public service— and the subject of the latest Management Advisory Committee (MAC) report, Managing and Sustaining the APS Workforce—is to attract develop and retain the employees we need. At risk, if we fail to do so, is the ongoing capacity of the Australian Public Service to deliver the high quality policy, programmes and services that the Government and the Australian community expect of a professional public service.

Our Duty

I want to take you through my latest thoughts on recent shifts in our operating environment.  There has been a lot of concern about politicisation of the Australian Public Service, which I think has been important, because it has made a think again about what it means to balance the APS Values of being both apolitical and responsive to the Government of the day.  The children overboard and DIMIA scandals (which I will touch on briefly later) have really highlighted this challenge.  At the same time, the business community has been reconsidering its ethical standards and board requirements in light of recent scandals.

One of the less noticed developments as a result has been an evolution of the public servant’s role.  Until recently, doing our duty tended to mean doing things according to rules and guidelines.  Today it means much more – a more flexible and thoughtful combination of skills to work effectively with others and across government, and to take responsibility for one’s actions.  At the national level in Australia, the concept of an official’s duty has now shifted sharply towards personal responsibility and accountability.  Contrary to public perceptions (including that of many public servants), from where I sit it has also shifted sharply under Dr Shergold’s leadership towards frank depictions of what is happening around us and a much greater understanding of just how accountable we really are. 

The concept of certain behaviours and actions being unacceptable is now extremely strong.  It is unacceptable to not fix mistakes.  It is unacceptable not to give clear and frank advice.  It is unacceptable not to inform senior managers and Ministers of important information and advice.  It is unacceptable to make decisions based on silent assumptions about the motives and desires of political and agency leaders. 

While this may not be altogether new, internalising acceptable behaviours and actions that more adequately meet community expectations is new and is really important for the health of the service.  If more widely understood, it should serve to restore the Australian public service in its own and in the community’s eyes.

The APSC/ANAO Relationship

Next, I want to consider the role of our respective organisations within the Australian Public Service.

The Commission’s role, in a nutshell, is to promote, review and evaluate a values-based APS, and to foster its capability.

As the Public Service Commissioner, I have specific functions relating to the Values and the Code of Conduct, for contributing to and fostering leadership in the APS, for learning and development, and for employment policies and practices. I am also required to report to the Minister each year on ‘the state of the APS’.

This year’s State of the Service report will be tabled in Parliament tomorrow. It provides a detailed picture of how the APS is performing against a range of indicators, relating to the APS Values and the Code of Conduct in particular, and sets out what, in my view, are the critical challenges facing the APS. The report draws on material from a large number of sources, including the ANAO, but is underpinned by data from our APS employment database and from the agency and employee surveys we conduct each year.

The ANAO’s role is, broadly speaking, about improving public administration and providing assurance to the Parliament. The ANAO, according to its Corporate Plan, “independently audits public sector administrative performance and accountability regimes to provide assurance to the Parliament about their efficiency and effectiveness including how they might be improved.”

The title of the ANAO’s publication to mark its Centenary “From Accounting to Accountability: a Centenary History of the Australian National Audit Office” very nicely evokes the way that public administration has been transformed, not just in the ANAO, but more broadly. It is no longer sufficient that the numbers add up. The Government, the Parliament and the community want to be assured that the outcomes for which the public service is funded are achieved, that we are efficient, and that we behave ethically—in short, that we are accountable. 

The APSC and the ANAO have complementary and sometimes overlapping roles in scrutinising public administration in Australia, and in ensuring that our  accountability standards remain high—thereby providing assurance that the APS is efficient and ethical and focussed on continuous improvement—or where there is reason for doubt, that remedial action will be taken.  And, I can say fairly confidently, that there are good relations between our organisations which mean we tend to work together well to reinforce each other’s messages.

We both have a role in what I consider to be a critical challenge for the APS (as I have said in this year’s State of the Service report), in building trust in the APS.

Why do I regard building trust in the APS as a critical challenge? The answer, simply, is because it matters. There has been a decline in community confidence in public institutions around the world.  The children overboard and DIMIA Rau and Alvarez scandals have made the task even harder here.

Trust matters because it affects the community’s readiness to embrace government programmes and initiatives, and affects their confidence that government services will be delivered fairly.  Trust affects our international reputation.

Trust also impacts on the well documented challenge we face in maintaining and sustaining the future capability of the APS. It affects how public servants feel about working in their agencies and in the APS, and it affects our ability to attract quality people into the public service.

Effectiveness and efficiency (and trust)

We are worthy of that trust. I am firmly of the view that ours is the best public service in the world. I say that on the basis of experience and research. That’s not to say that we have nothing to learn from other public sector jurisdictions, and we certainly can’t afford to be complacent.

It would be a mistake, too, to think that reform will ever stop, or that we will ever get beyond reform. Indeed, reforms arising from the ‘Uhrig review’ which looked at the financial and accountability frameworks that apply to Commonwealth Government entities, are currently being implemented and, as some of you are probably aware, I am currently undertaking a review of the PS Act. We can expect to see some significant regulatory reform in the not too distant future too.

Interestingly, reform no longer seems to be focussed on the size or shape of the public service: it’s now more about performance, defined in terms of effectiveness, accountability, innovative capacity and productivity. Much of the structural reform of the kind we have seen in the past few decades seems to have given way to what can be characterised as ‘cultural reform’.

An aspect of cultural reform that I want to consider for a moment, and which is reflected in this year’s State of the Service report, is employee engagement.

Engagement is a composite measurement of employee commitment to their organisation, how hard they work, and how long they stay with the organisation because of their commitment.  I am using this concept to bring out the clear links between employee engagement and their effectiveness and, in turn, between these and organisational productivity improvements.   

Research suggests that organisational culture and leadership have a much greater impact on employee ‘engagement’ than non-cultural factors, such as financial rewards.   

In 2004 the Corporate Leadership Council surveyed 50,000 employees worldwide (including in Centrelink in Australia).  Like other researchers doing similar work, they found that cultural factors are important levers for engagement. Information about some of the work being done in this area is reported in this year’s State of the Service report. Specifically, the CLC found that the top five cultural traits that have the maximum impact on discretionary effort – contributing to engagement, are:

On the basis of their research the Corporate Leadership Council estimated that only about 10 per cent of employees are fully engaged – they are the ‘true believers’.  Of the rest, more than ¾ are neither fully engaged nor fully disengaged.  What this suggests is that there is tremendous potential for managers and leaders in the APS to improve the commitment and productivity of their employees through focusing on engagement with them.

In this year’s employee survey for the State of the Service report I included a series of questions relating to employee engagement.

Those employees who indicated that their productivity had increased in the last 12 months also identified the five key factors that increased their productivity.  The vast majority indicated that they had been helped by increased experience on the job. Good working relationships were also very important to them (this result is confirmed in the job satisfaction results).

Beyond these two factors, the findings suggest that the manager is a critical conduit in the process of engaging and retaining employees and increasing productivity.  APS employees pointed to good working relationships with their managers; access to the information, resources and/or technology they needed to do their jobs; and working to realistic performance expectations—all managerial responsibilities—and to having a manager who encourages and manages innovation, as important contributors to increasing their productivity.

Conversely, poor management was among the top reasons that employees provided who intended to leave the APS.

I think it would be unfortunate if we did not act upon what the research is telling us about employee engagement and meeting our objectives.  This isn’t easy, but we’re looking at how we might do this in our next agency certified agreement.

Working together

Another aspect of cultural reform in the APS is our commitment to whole of government working.

The imperatives driving the Australian Public Service toward more collaborative approaches were explored in the Management Advisory Committee report, Connecting Government: whole of government responses to Australia’s priority challenges, released in 2004. This was followed by the publication earlier this year of ‘Working Together’, guidelines developed by myself together with Portfolio Secretaries to assist APS employees to work collaboratively.

Today’s whole of government approaches tend to look less at organisational restructuring and machinery of government changes, and much more at the development of organisational cultures and capabilities that support, model, understand and aspire to whole of government solutions.

What we are seeing is more a shift in our approach to collaboration, than to the substance of what we do:  where public servants move beyond agency-bounded limits to their thinking and embrace problem-solving that is integrated, efficient and focussed on achieving shared outcomes across portfolios, and across jurisdictional boundaries. It’s about finding ways to integrate policy and programmes between portfolios and achieve better implementation and service delivery. 

More often than not agencies may find that it’s more appropriate to go it alone, but I think we need to start from a bias for collaboration. If we get past the threshold questions about whose interests are affected, who’s accountable, whether there are efficiencies to be achieved, and so on, then it’s likely that we’ll adopt the right approach.

Thirty-eight per cent of agencies reported in the agency survey for State of the Service report that they have placed Working Together on their Intranet. We also know from the agency survey that there has been across-the-board growth in agency guidelines or policies to guide employees’ participation in formal, multi-agency decision-making forums such as interdepartmental committees or task forces.

One of the new questions in the State of the Service report this year, associated with whole of government activity, is whether employees see themselves primarily as agency employees operating in a devolved framework or primarily as APS employees.

When asked to choose between these alternatives, the majority of respondents (60%) indicated that they considered themselves to be primarily agency employees. This is not surprising given the immediate and continuing connection between employees and their workplace. That 40% of employees identified primarily as APS employees is, in my view, significant and reason to feel encouraged as we push ahead with collaborative initiatives.

Equally important from a whole of government perspective is the fact that 71% of employees agreed that they were proud to work in the APS—slightly more than the 65% who agreed that they were proud to work in their current agency.  On balance, these questions provide positive indicators of APS employees’ willingness to focus beyond agency specific outcomes and priorities and on the Government’s overall policy agenda and priorities.

Whole of government working might take any number of forms. There is rarely one right answer to any of the issues that confront us as public servants. Whole of government work is about making sure that problem-solving takes account of all of the options and competing interests in pursuit of the national interest, and is transparent.

We still have a long way to go, in my view, before our organisational and institutional cultures are sufficiently mature to maximise the benefits of whole of government working that is innovative, collaborative and with the sort of strategic focus that is expected of us.

And, if we haven’t properly developed the culture for whole of government working, we aren’t likely to have developed the capabilities. Project management, contract management and financial management have become important for the delivery of whole of government programmes on the ground.  Negotiation and relationship management skills are fundamental for the collaborative work we are increasingly involved in.

The Australian Government’s response to the Asian tsunami has been a text book example of connecting government in an emergency. The Prime Minister described our response as “the Australian Public Service working at its dedicated and professional best”. Similarly, our response to the Bali bombings has been swift, decisive and co-ordinated, with a focus on alleviating wherever possible the burden on those involved.

Whole of government working doesn’t, however, stop at crisis management. It is about how we operate every day, how we communicate as a public service, between levels of government and with the community; it’s about integrated policy-making and how that translates into service to the Australian people; and it’s about how, in doing these things, we manage the complexity that is inherent to what we’re trying to achieve.

We need the infrastructure, processes and practices that might promote better connections and remove any obstacles to collaboration.  It is a question of balance – finding the relevant skills, and information-sharing infrastructure and governance arrangements that focus on accountability on the whole of government outcomes that the Government is seeking.

The mainstreaming of the Government's Indigenous programmes is designed so that funding for Indigenous people from all sources is coordinated and effective, and that Indigenous communities at the local and regional level have a say in how it is spent.   It will also provide the framework for more cooperative work with the States, Territories and local governments, who play an important role in servicing Indigenous Australians.  

I want to speak for a moment about ways that the Commission and the ANAO might collaborate—indeed, should collaborate. There is still significant scope for our agencies to inform each other’s work, while respecting each other’s statutory responsibilities.  There is already some consultation between our agencies about our respective work programmes, but I think we can go further.

The ANAO might on the basis of its audit activity (as it did with the recent audit report on workforce planning) make specific suggestions about inclusions in our learning and development programme or other areas of the Commission’s work.

Similarly, the Commission’s evaluation work might generate ideas about issues that would benefit from inclusion in the ANAO’s work programme. And, of course, there is potential for us to work together on specific projects, as already happens on occasion.

The ANAO, as most of you will be well aware, is working with the Cabinet Implementation Unit to produce a Best Practice Guide on programme implementation, into which the Commission will have some input, particularly in relation to the development of relevant capabilities. I hope these sorts of collaborative efforts are a sign of things to come.

As central agencies with complementary roles in relation to the performance of the APS, it is incumbent on us to lead agencies towards collaboration by example. How can we promote, or even compel, agencies to work in ways that we haven’t already adopted ourselves?

Workforce challenges

I want to move on now to a related issue—one that demands our best efforts to work together, and is perhaps the biggest challenge for the APS: our workforce.

The latest Management Advisory Committee report, Managing and Sustaining the APS Workforce, launched by Peter Shergold and I last month, calls upon Australian Public Service agencies to begin implementing a series of actions to address the critical workforce challenges that it is now confronting.

The future of our workforce?

Public sector reforms, as I mentioned earlier, have given agencies the flexibility to adjust and develop their workforce in response to their changing business requirements.  The MAC report highlights the emerging demographic trends and suggests that changing career patterns and expectations will challenge agencies’ capacity to meet their business requirements. It calls for systematic workforce planning in all agencies, and sharpened processes for recruiting and retaining staff from outside the APS, especially graduates and other younger employees.

This of course is an area in which the ANAO has done quite a lot of work in the last few years, including:

We need to work on an APS-wide basis to position ourselves cleverly in the labour market.  Perhaps for the first time we are marketing the APS, and our individual agencies, as an exciting place to work – where our staff do interesting and important work, across a diverse range of organisations and work types; and where there is access to flexible working conditions. It is the nature of our work, our values and our fundamental decency that, in my view, gives us a leading edge as an ‘employer of choice’.

What we do in the APS is now overwhelmingly “knowledge work”.  We need to maintain an intellectually agile workforce that is multi-skilled, can turn its hand to anything and is able to respond to changing circumstances.  It is imperative that we do the workforce planning that the MAC report calls for, so that we understand our workforce, and can anticipate business requirements before they manifest as skill shortages or gaps in corporate knowledge.

It is important that we respond to our mature-aged workers, who, as the MAC report on Organisational Renewal in 2003 made clear, want flexible working arrangements to care for ageing parents, spend time with their families, or to participate in community activities. As the labour market tightens we will need to retain them in larger numbers.

And, at the same time we need to respond to the expectations of our younger recruits, who are looking for challenging and interesting work, and  for tailored development opportunities in the context of a ‘portfolio career’. 

If we fail to meet the expectations of our workforce it is likely that they—and especially our younger employees—will ‘vote with their feet’ and look for opportunities outside the APS.

In any case, we need to accept that many valued employees won’t be with us ‘for life’. They may move in and out of the public service a number of times. It is important, then, that their experience in the APS is satisfying, and we should be looking to make the most of the diversity of experience and expertise that this ‘revolving door’ approach can deliver.

The MAC report also suggests that as the labour market tightens we may need to consider strategies to recruit and develop school leavers and other younger and/or less experienced staff to address skill shortages (like those we are currently developing to address declining numbers of Indigenous employees, who, like younger people and people with a disability, have been disproportionately affected by the loss of base-level entry points and the focus on graduate qualifications). The Department of Education, Science and Training, for example, recently advertised one year apprenticeships, combining paid work and structured training (leading to a nationally recognised qualification), for people with limited qualifications who would like to work the APS.

The Leadership Challenge

Leadership is at the heart of the workforce challenge facing the APS. It is critical that we develop the next generation of leaders to replace the large number of baby boomers who are leaving the public service, and will continue to do so over the two next decades. 

People are getting to senior positions sooner than they once did, and are less likely to have worked in more than one agency. They don’t necessarily have the depth of experience of their predecessors—a nuanced understanding of the APS Values and of the Cabinet, judicial, legislative, financial, people management and other processes, and of the agency-specific cultures and styles of working that make for effective collaboration in a whole of government framework. The MAC report suggests a range of actions to improve interagency mobility, including systematic career planning for SES band 2 and 3 employees.

Given the complementary nature of our work, I support the idea of the Commission and the ANAO working together through a staff exchange to develop cross-agency relationships, and for the overall development of the staff involved. I anticipate that an initiative of this nature will begin next year.

Action oriented 

In all, Managing and Sustaining the APS Workforce sets out 36 actions in response to the workforce challenges we face. All agencies are responsible for the corporate aspects of the work arising from the report, while the Australian Public Service Commission will provide best practice guidance, policy development, programmes and develop an APS employment portal.

Key agencies are charged with establishing professional communities in areas such as accounting, statistics, and ICT. You will know that the ANAO will be working with the Department of Finance and Administration and relevant professional associations to establish an APS community of accountants.

Portfolio Secretaries and agency heads will be responsible for career development more broadly and the MAC will monitor the progress of action arising from the report. 

Conclusion

We’ve covered a lot of ground today. I hope my presentation has contributed to your understanding of the reforms and other developments that have taken place in the APS, and of some of the challenges we are facing:

All of these are challenges that intersect with each other at different points, and which also intersect with the objectives of each of our organisations. I hope there are new ways that the Commission and the ANAO can collaborate and leverage off each other’s work to help to address some of our challenges, in ways which model the sorts of professional, collaborative, innovative and strategic behaviours that we, in our administrative oversight roles, expect of others.

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