Australian Public Sector Reform

Steve Sedgwick
Public Service Commissioner

2010 Government Business Conference

Good morning and thank you very much, Megan, for your introduction and for inviting me to speak.

The AGLN does very good work here in NSW and, indeed, across the country.  We in the APSC are very pleased to work with you to support the APS.

This conference certainly comes at a most opportune time, as we are upon the cusp of some of the most significant reforms to the public sector in recent memory. 

As you probably know the government has received a report from an Advisory Group established by the Prime Minister under the chairmanship of Terry Moran, Secretary of PMC, which recommends a number of significant reforms – indeed a Blueprint for reform of the APS.

I was a member of the Advisory Group and, accordingly, am particularly pleased to talk to you today about some of these recommendations, what they mean for the broader Australian Public Service and, particularly, what they mean for the Australian Public Service Commission.

I am conscious of the fact that Terry Moran will be speaking in more detail this afternoon about the Reform Blueprint, so I will not range too widely beyond the remit of the APSC.  

And we are both conscious that the government is yet to announce its response to these recommendations, though the auguries are good that their response will be a positive one.

To set the scene, however, I would like to talk briefly about some of the context against which the recommendations were framed, and set out what the Blueprint suggests to be the key elements for the development of a high performing Australian Public Service.

Challenges facing the Australian Public Service

I’d ask that you pay particular attention to this section because I will have a question for you about it towards the end!

I think we can all agree that we are in a time of constant change and rising expectations.

Rapidly-improving technology has multiplied the speed and volume of communications between us as individuals, as families, but just as importantly between citizens and their government.

It enables a range of solutions to client engagement and service delivery that we could only dream about even ten years ago.

Technology is enabling citizens to be better informed and is leading to higher expectations of the quality and responsiveness of Government policies, and the services government delivers. 

On line access tools, news services and social networking sites like Facebook and Twitter are manifestations of the fact that the world is live 24/7  -  and citizens expect ubiquitous access to information and advice from the public sector on similar terms to those they experience from private providers.

The news cycle also places demands on Ministers to provide instant information and, at times, virtually instant solutions to problems.

Pressures like these imply that Ministers and, the APS that supports them, need to be able to react more quickly than it has in decades past. 

The needs of citizens are also constantly evolving.  There are growing expectations of the services that citizens receive, and increasingly, citizens are seeking to determine not only how they will be served but also how they wish to receive the services they are entitled to.

Citizens are rightly intolerant of sloppy work or incorrect advice and, seemingly, although the complexity of government has increased, tolerance of mistakes seems, if anything, to have declined.

And citizens are increasingly looking for easier ways to interact with government and the myriad of programs that are available, including across different jurisdictions.  

And now for my question – has anyone here heard a presentation along those lines before?

Of course you have - these pressures are not new.  The public service has been dealing with them for some time.

For example, these were amongst the forces that led to the establishment of Centrelink, as a first stop shop for a range of Commonwealth government services, in the late nineties – and I know that there are several representatives of Centrelink here  today for whom this would be especially familiar.

However, the technological options seem to expand inexorably, as do the public’s expectations of the range and accessibility of government services – and the work of reform is never complete.

Moreover, the policy problems our society faces now also seem more complex – a number are considered to be complex, or “wicked”, seemingly intractable issues that defy easy definition and analysis.

Increasingly these problems are multi-dimensional, multi-jurisdictional, and even international in their scope.  Think climate change as an example.

They require new thinking, greater collaboration both across agencies as well as with other governments, and external partners in the private and the third sector; many are amenable to using government 2.0 type approaches to solicit the best ideas available from international communities of interest and other on line forums.

A number of these problems require a much more “joined up” approach to service delivery and policy formulation to ensure that they are addressed effectively.

We also face the challenge of an ageing population.  This directly affects the nation’s budget but also has a big impact upon the pool of available labour from which employers can draw. 

Moreover, the increasing complexity of work implies that we will be seeking a higher proportion of people with higher order skills – but so will most other employers with whom we compete for workers.

These two forces together imply that the already stiff competition we face in attracting talent to our ranks is likely to intensify in years to come. 

And this at a time when the APS will be facing the prospect that 72% of the Senior Executive Service and 48% of the Executive Levels will become eligible for retirement within the next decade or so. 

And of course the fiscal situation is tight, tighter than it has been for a decade or more, which limits the government’s options and strengthens the imperative for the APS to operate at maximum efficiency.

All in all, these challenges could create a perfect storm for the public service, simultaneously facing the rising expectations of citizens and governments and changing enabling technologies, in a world of increasingly complex problems, a tighter labour market for talent and limited financial resources.

Overview of the Reform

So this is the background against which the Advisory Group went about its work.  As I’ve said, it is in many respects a familiar picture for most of us – but it is none the less compelling because it is familiar.

The Group’s Blueprint for APS Reform was published a little over a month ago, on 29 March. 

My impression is that, largely, it has been positively received by most commentators and stakeholders both inside and outside the Australian Public Service. 

The Advisory Group had consulted widely and received a large number of submissions from individuals and organisations. 

A relatively novel, but very valuable, consultative mechanism was a dedicated online space at the Department of Prime Minister and Cabinet’s website. 

This produced a mixture of robust, and at times passionate, views of the future of the APS by members of the APS, together with a number of submissions that were concise and focussed upon specific areas of concern. 

The first point to make about the conclusions of the Group is that we do not believe that the APS is a broken institution.

We are all acutely aware of:

• the high standards of professionalism that underpin the values of the APS;
• the many policy successes attributable to timely and effective support to government from the APS (some examples of which are recorded in the report);
• the many instances of effective cross agency collaboration that routinely occur  in the ordinary course of business; and
• the innumerable instances of innovative policy development, regulatory practice or service delivery that improve outcomes for citizens everyday.

That said, however, there is always room for improvement and new opportunities to do things better are always presenting themselves, so several specific areas were identified as prime candidates for more intense attention in future if the APS is to best serve the needs of our country and its people.

The Advisory Group’s Report was called Ahead of the Game for a very good reason – the Australian Public Service is constantly challenged to renew itself, to be responsive, to be agile, to be flexible, in addressing issues for government and for citizens.

We cannot meet such challenges if we are static.  We need to be able to adapt, to change, and to do so quickly, effectively and efficiently. 

Indeed I firmly believe that one of the things that sets public servants apart is that despite its vested interest in preserving the status quo (a natural human trait) the public service (federal and state) needs continually to be self critical, evaluative and dispassionate about its own opportunities for renewal – just as it is called to be critical, evaluative and dispassionate about opportunities to renew the public policy settings that apply to other vested interests so as to achieve the best possible outcome for government and the citizens it serves. 

To that end, the Blueprint identified four key components to a high-performing public service:

• a high performing public service meets the needs of citizens, that is “citizen-centric” and provides high quality and responsive services;
• a high performing public service provides strong leadership and strategic direction – not just reactive to the needs of Government but anticipates them through strategic thinking and planning;
• a high-performing public service has a highly capable workforce that invests in and develops its talent and leadership; and
• a high performing public service operates efficiently and at a consistently high standard, seeking out and implementing innovative approaches to everyday business, and provides the government – and Australian taxpayers – with real value for money.

The Blueprint proposes nine reforms under these four key performance components.  There are twenty-eight recommendations in total, a number of which have several parts.

I do not intend to go into the specifics of the reforms or the recommendations, though I will touch lightly on a number of them as I talk to you about the likely role of the Commission arising from the Report.

Rather than take you through a roll call of the measures I would like to reflect a little on a couple of keys themes that animate the recommendations that affect the work of the Australian Public Service Commission.  These are arranged under three headings:

• Beyond people management to Human capital management;
• Not just the present but also the future; and
• Have we got a new APSC for you…

The Importance of Human Capital

Put simply, the Advisory Group believes that the APS needs to refresh its approach to one of its most important resources – its workforce.

Amongst other things this will require much more consistency and coherence across agencies in respect of workforce planning and capability development. 

As noted in the Blueprint, the private sector increasingly recognises human capital management as a key source of advantage in the marketplace, recognising that investing in people provides significant improvements in productivity and performance. 

Indeed, the best private sector firms invest significantly more than we typically do in effective recruitment and retention, capability development and the nurturing of talent.

The Advisory Group recommends a renewed focus on the development of our people, ensuring that we are able to renew and reinvigorate the APS. 

The preferred approach goes beyond treating people well and managing performance, especially poor performance.

Human capital management takes a holistic approach to our workforce challenges, recognising that the capability of organisations needs to be planned for and systematically developed so that we not only meet the needs of today well but we also equip our organisations (a) to meet the challenges expected to confront it in future and (b) to be resilient and adaptive in the face of the unexpected.

Feedback received in the course of the review suggests that many APS agencies have more to do here, especially to build key capabilities in respect of strategic policy formulation, risk management and program delivery.

To assist agencies in these areas the Report recommends that the APSC develop a number of new policy frameworks, tools and monitoring mechanisms.

These include advice in respect of human capital management and development, workforce planning, and talent management; and new approaches to leadership, learning and development.

Human capital benchmarking and agency capability reviews (about which I will say more shortly) are amongst the range of new tools proposed.

Not just the present but also the future

We’ve touched a little on this topic previously when we acknowledged that a systematic approach to human capital development would build capability for the future; capability to meet the new but expected and resilience to respond when the unexpected occurs.

Older folk like me can recall the debates of the seventies and early eighties about the role of the APS.

Ministers had grown tired of what they perceived as a self referential, unresponsive culture in the APS – one that almost asserted primacy over the elected government of the day.

Of course there were elements of caricature in such perceptions, but there were also uncomfortable elements of truth.

In those days there was also a strong emphasis on process compliance in the assessment of the adequacy of the performance of the APS, with results achieved seen as much less important than process compliance.

Little wonder then that the reform agendas of those times placed strong emphasis on the need for the APS to focus on achieving results consistent with (and responsive to) the agenda of the government of the day.

Those attributes remain a fundamental underpinning of any assessment of the adequacy of the performance of the APS.

However the Advisory Group also reminds us that the APS has obligations not only to the present minister and government but also to the future – that the APS is a long lived institution that needs to think ahead, research emerging issues and build the capability necessary to serve emerging needs as well as present day ones.

And it needs to preserve the capacity to respond to the different styles and needs of different ministers over time: so even if, for example, a Minister comes to government with a self sufficient policy agenda his or her APS advisers cannot let their own strategic policy advisory skills atrophy because the next minister’s needs will almost certainly be different.

The Advisory Group has captured this thought by discussing the obligations that Secretaries have for the stewardship of their agencies and for the APS as a whole.

It recommends that these responsibilities of Secretaries should be enshrined in legislation and added to those already identified in the Public Service Act.

The Group also recommends revised governance arrangements that specifically address these stewardship responsibilities. 

These include the formation of a Secretaries Board, comprised of Secretaries and the APS Commissioner, with particular responsibilities in these areas and the reintroduction of performance appraisal for secretaries that includes an assessment of performance in each of these domains.

Importantly, the Group’s articulation of the stewardship issue challenges us to align processes and systems across agencies to realise the idea that the Australian Public Service is a truly unified organisation with shared goals and commitments, as “one APS”.

Amongst other things this challenges us to see the talent within the APS’ ranks as a shared strategic asset to be recruited, managed, retained and developed to maximise the effectiveness of the Public Service overall and not simply any single agency within it. 

The development of a human capital framework will also support the effective and targeted use of learning and development to meet our future needs. 

The Blueprint further proposes that agency heads make much stronger commitments  to provide learning and development opportunities to their staff, and give heightened attention to talent management, succession planning and capability development within their organisations.

Have we got a new APSC for you…

The fifth reform proposed in the Blueprint is the introduction of a new Australian Public Service Commission to drive change and to facilitate strategic planning, to take a proactive approach to improve human capital development across the APS, and to breathe life into the concept of “one APS’ that takes its stewardship responsibilities for the future seriously.

It posits a vision for the Commission as an organisation that:

• unites and leads the Australian Public Service;
• provides effective support to agencies that are looking to improve the performance of their people;
• actively fosters talent and leadership;
• is cognisant of, and equipped to deal with, future workforce challenges;
• drives change across the Australian Public Service;
• values and invests in the APS workforce; and
• responds to issues affecting the whole of the APS, including diversity, the responsiveness of government services and access to government information.

That’s quite a duty statement!

At last count the recommendations imply almost sixty separate projects for the Commission to implement over the next two years, as well as proposing a significantly upgraded and enhanced role continuing into the future. 

Speaking broadly, under the proposed reforms the Commission could be expected to take an expanded leadership role to include specific areas such as:

• developing frameworks that support agencies to develop their competence in respect of human capital and workforce planning;
• developing revised approaches to performance management, which includes not only clearer guidance relating to the management of underperformance but also a renewed focus on identifying and managing high potential employees;
• securing reforms to recruitment and induction, along with drafting simplified guidance documents;
• implementing major reforms to learning and development activities – which I’ll discuss in further detail shortly; and
• strengthening the central oversight of APS pay and conditions, and promoting greater consistency in pay and conditions across the APS, particularly as a means of supporting greater mobility across agencies.

Let me expand on the Advisory Group’s thinking about the Commission’s new and proposed roles and challenges under three further headings –

• learning and development;
• monitoring and oversight; and
• the internal changes we in the APSC need to make to realise the Group’s challenge to effectively lead and shape the kind of Australian Public Services envisioned by the Reform Blueprint.

Learning and Development

Learning and development is absolutely central to the management of APS human capital. 

Under the proposed reforms, the Commission would be encouraged to work with the Secretaries Board to develop coordinated approaches to developing employee skills and to addressing key skills gaps at the whole of APS level.  

Each year the Commission would analyse the outcomes of agency based workforce planning to establish the human capital priorities for the APS.  These would be presented to the Secretaries Board for endorsement.

It is also proposed that the Commission undertake new regulatory and quality assurance roles, supported by centralised purchasing or brokerage of certain core learning and development options consistent with these national priorities.

These would assist agencies to make informed choices about how best to secure the learning and development opportunities they seek; or exploit economies of scale to procure certain core programs (still to be defined).

These activities would be undertaken by a new Strategic Centre for Leadership, Learning and Development oversighted by an Advisory Board comprising Agency heads and external experts to ensure they are strategically aligned to the needs of the APS.

The Commission’s on-going functions as a provider of such services would be separated, structurally, from those of the Strategic Centre to avoid actual or perceived conflicts of interest.

The Strategic Centre would also administer a new and, for us at least an innovative, approach to talent management at the whole of APS level. 

Those officers selected would be provided with personalised interventions to assist them to reach their potential, improving the prospects that the Australian Public Service continually renews its leadership and grows, organically, the highest quality people to lead agencies through future challenges.

Monitoring and Oversight

This brings me to the second aspect of the proposed new role for the Commission arising from the Blueprint’s recommendations.

The framers of the Blueprint expect that the Commission will be activist, working closely and proactively with agencies to drive the required changes in culture and human capital practice across the Australian Public Service. 

In support of this idea the Commission would have an expanded remit to monitor and report, a remit currently reflected particularly in the Commissioner’s annual State of the Service Report to parliament.

An important new element of this remit would be the regular external review of the capabilities of public service agencies. 

This recommendation draws on the experience of other jurisdictions, especially the United Kingdom. 

Each review would cover key aspects of an agency’s capability, including its strategic capabilities, leadership, workforce capability, service delivery, and broader organisational effectiveness.

It is anticipated that they would lead to agreement between the agency head and the Australian Public Service Commissioner about the actions the agency will take to improve its capability, with the agency head held accountable for progress against this agreement, including through their performance appraisal.

Indeed the proposal is to reintroduce performance appraisal for secretaries.

The appraisal is to be conducted by a committee comprising the Secretary of PMC, the APS Commissioner and an independent person.

This is good practice and will assist secretaries to continue their own professional development as leaders of complex and evolving organisations.

The arrangements, however, are also intended to provide a degree of transparency to senior ministers about how well we are discharging our stewardship obligations. 

This hopefully will assist to give them comfort that resources devoted to these purposes are well applied since the agency head’s activities in this respect will typically not be subject to direct observation or oversight by the minister.  

Additional monitoring mechanisms could include the introduction of Human Capital Benchmarking to identify best practice, and to highlight areas across the Service that require improvement. 

Systematic analysis of workforce planning conducted by agencies, wider labour market research, lessons drawn from benchmarking, and the findings of capability reviews could help to identify trends and implications relevant to the stewardship of the APS as a whole. 

This information could in turn inform the development of the APS human capital priorities plan, contributing in a real and meaningful way to the development of strategies and actions to address identified needs.

The Reform Blueprint also has an explicit recommendation to establish a reporting framework that monitors implementation of the Blueprint’s recommendations in their entirety.

These reports would initially be provided to the Secretaries Board, and then ultimately to an expert external panel that it is proposed will advise the Prime Minister on progress against the recommendations ultimately adopted by the government.

The reports would cover all agencies – and, just as importantly, will also include an assessment of the Commission’s own achievements in meeting our responsibilities under the Blueprint. 

Internal challenges for the Commission

The Blueprint poses considerable challenges for the APSC to evolve to realise the full potential of the vision it has for the APS. 

The challenge is not just to add some new policy statements, reporting requirements and expanded human capital frameworks to those that exist; or even to make over the APSC’s involvement in learning and development activities and expand into talent management and workplace relations.

Nor is it just to elevate the appreciation and practice of activities that support “one APS” and the stewardship of this institution for future governments and emerging issues.

It is all of those things.

But, in addition, the Blueprint charges us to build our own new capabilities, a new organisational architecture and a more client centred culture that supports them.

The Blueprint has given us the opportunity to rethink how the Commission goes about its business, so that we can build upon pre-existing synergies and capabilities to meet an expanded role.

This represents an agenda that the Commission has to take ownership of, one that we look forward to progressing, recognising that it also requires us to adjust our thinking and the way we work with agencies.

Therefore we are looking to develop new approaches to engaging with departments and agencies, not so much through the lens of specific programs as currently but much more in a holistic and a strategic manner.

The Blueprint challenges the APSC to play a more active role as a thought leader and a champion for good human capital management – both within individual agencies and at the level of the APS overall. 

Yet, this approach recognises that much wisdom rests in departments and the Commission has no realistic prospect of successfully advancing this agenda alone.

It is undeniable that that we will all achieve better outcomes if we move forward in partnership – partnerships based on respect where each party adds some value.

And, indeed, in progressing the Blueprint’s agenda that is what we would seek to do – identify and leverage good practice wherever it is to be found but add real value by contributing useful information, world class research and practical ideas born of experience.

There are major opportunities looming for all of us to contribute – from Secretaries down!

We have begun to compile a list of the key networks and communities of interest concerned with human capital issues across the APS.

We hope to engage broadly with the APS, especially through such groups (and, indeed, through the AGLN itself).

Please take full advantage of the opportunities that we hope to create to share perspectives and contribute ideas.

One of our earliest tasks will be to engage especially the human capital of leaders of agencies and of the APS to establish a common understanding of what are the strategic issues that need to be captured and managed at the APS level.

Our objective is to ensure that our efforts add value and are well directed – and that any data gathering and analysis is purposeful and cost effective.

As for the APSC’s internal operations, we aspire to a culture of continuous improvement and critical self-examination – one in which our people are empowered to act sensibly, and are trusted to use their knowledge and judgement to advance the shared agenda in an accountable fashion.

We will examine our own organisational capabilities, in order to ensure that we have the required breadth and depth across multiple dimensions, including client engagement, relationship management, human capital expertise, analytical skills and a range of others. 

We want to develop our talent but also recruit well from a pool of people excited by the prospect of working with us and responding to the Blueprint’s challenge for APSC to drive change across the APS in conjunction with agencies and their leadership teams.

If you are one of those people excited by such a prospect then we would love to hear from you!

Our overall goal is to be a leading edge centre of excellence for the APS, in meeting our existing statutory functions and in discharging our expanded responsibilities for human capital development, stewardship, and monitoring and evaluation – a centre of excellence whose advice is valued and sought out, not just domestically but internationally too.

And, frankly, you are entitled expect no less from us!

Of course the government has yet to announce its response to the Blueprint.  Hopefully this will occur in the budget context.

Conclusion – it’s the people, stupid

I guess it is inevitable that a presentation like this has to deal with concepts and principles that may appear a bit rarefied:  APS stewardship, capability and human capital management are not terms often heard around the water cooler, after all.

But in the end we are talking about people:  how skilled, how motivated, and how well led they are. 

It is people who think the policy thoughts, design the regulatory frameworks and provide the interactions with clients that define the public’s experience of the APS and the effectiveness of the government’s policy frameworks.

The Blueprint challenges the leadership of the APS to recommit itself to leading and developing its people well.

Not just as an end in itself – though our people are entitled to expect no less – but also because the Australian government touches the lives of Australians every single day and this touch is mediated through the Australian Public Service.

The challenge we face is to be both introspective and outward looking, with the needs of citizens uppermost in our minds; to be honest with ourselves, resilient, open to renewal and continuous improvement and adaptable, so that we can optimise the effectiveness of the touch of the APS for citizens. 

However the APS is far from broken and this is a challenge that we will undoubtedly meet. 

Thank you again for your time today, and I would happily take any questions from the floor.