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Foundation for performance: A quality Public Service

Dr David Kemp, MP
Minister Assisting the Prime Minister for the Public Service
27 September 2001

Ladies and Gentlemen: It gives me great pleasure to be able to speak to you today. I would like to thank the Australian Institute of Management for the opportunity to speak about the Government's vision for a quality public service. Most importantly, on behalf of the Prime Minister and Ministerial colleagues, I want to thank the Service for the way it has responded to the demands made on it in the last five and a half years.

A dynamic, high performing public service is vital to the democratic, economic and social wellbeing of any country and of its citizens.

Our capacity as a country to achieve sustainable economic growth and a sound future depends, as the Prime Minister has recently highlighted, on how successfully we master the challenge of globalisation. A modern public service is critical to that goal.

A public service distinguished by its responsiveness, professionalism and ethics remains an essential element of democratic governance. But to most effectively serve successive governments, its institutional structure needs to be characterised by innovation and responsiveness, not bureaucratic process.

An efficient and dynamic public service is crucial to the integration of the Australian economy and society. Though they may joke about the public service, Australians have high expectations of it. They quite rightly expect the highest ethical standards, quality service, creative ideas, strong stewardship of the public interest, integrity and value for their taxpayer dollar.

The performance of the public sector is a matter of vital public policy and concern. It must be a high priority on any responsible government's agenda. As the OECD has stressed, 'the quality and effectiveness of governance is crucial to national prosperity'.

The question of how to improve the management performance of public services has become a major preoccupation of governments throughout the world. Australia is an acknowledged leader on this front and is increasingly looked to as an example of best practice.

The OECD has singled out Australia for its strong economic performance underpinned by its remarkable record of growth and pick-up in productivity. It has commended our structural and labour market reforms of recent years and how well they have prepared us to cope with adverse economic shocks.

A new framework for performance

Our success has not been accidental. This Government came into office in 1996 with a clear policy and vision for reforming public service administration and workplace relations. We saw both as key strategies for building a more internationally competitive Australia. Since then, we have systematically implemented the fundamental changes required to turn that vision into reality.

A driving force was to give agencies and their employees greater scope and encouragement to develop and perform to their true potential. The aim was to provide the public service with the freedom to do things better. It has.

A comprehensive revamp of APS employment arrangements and management now provided greater flexibility in the workplace. It has encouraged the development of workplace structures, systems and cultures that emphasise productivity and responsiveness and recognise and reward individuals for their performance.

A new environment of contestability and competition is ensuring that public resources are used more effectively and efficiently. It is also acting as a catalyst for innovation and management improvement.

At the heart of the Government's public service reform agenda is the devolution of responsibility for management and employment arrangements to agencies. This has given those who do the work the flexibility to determine the arrangements that best enable them to get the job done.

This approach is reflected in the new Public Service Act introduced by the Government in 1999. The Act established a modern, principles based, approach that articulates the distinctive character of Australia's public service.

It removed the unnecessary prescription and rigidity that characterised its predecessor. It gives agencies both the authority and the motivation to tailor working arrangements and management approaches to their own business requirements.

This flexibility is balanced by a strengthened accountability framework, based on clearly articulated APS Values. It is these Values that have become the benchmark for behaviour and decision making in the Service, rather than the red tape and prescription of the past.

The Values also place a new emphasis on workplace diversity. Agencies are recognising the positive contribution that a diverse workforce, working together as teams, can bring to their business goals. Different backgrounds and perspectives are a source of innovative ideas and creative ways of working. Organisations whose cultures are based on principles of inclusiveness, diversity and equity are more productive and rewarding places in which to work. They are the ones that encourage all employees to perform to their full potential.

Also central to the new APS framework, has been a more systematic approach to performance management. Agencies have embraced formal performance management as a powerful tool to improve organisational capability, meet broad organisational objectives and to deliver high quality outcomes for the government of the day.

That performance management has become a real organisational priority and an integrated element of corporate planning in the APS is clear from a Management Advisory Committee report released last week. The Opposition, who seek to turn back the clock on devolution, should read the Committee's findings carefully. The report emphasises that CEOs must continue to have the ability to implement flexible performance management regimes tailored to the particular needs of their agency.

A quiet revolution is underway. The soon to be released findings of the Survey of APS Agreement Making, undertaken by the National Institute of Labour Studies, indicate that 95% of agency respondents have now implemented performance management arrangements. Impressively, 81% of these arrangements involve an assessment of behaviours in achieving outcomes -an important vehicle for embedding the APS Values in the day-to-day work of public servants.

The system of quasi-automatic salary increments is a thing of the past. Salary advancement and, in some agencies, access to pay increases or bonuses are now linked directly to individual performance.

Agencies are now more accountable for their performance and application of the Values. The Public Service Commissioner reports annually on progress against the Values in the State of the Service Report.

Agencies are responsible for financial management, with the move to accrual and outcomes based reporting strengthening their accountability for the effective use of resources. Service charters are also proving to be a strong performance and accountability tool and a powerful instrument for achieving a more responsive service culture.

Leadership

Of course, the new framework can only be enabling. How effective it is in practical terms depends significantly on the quality of leadership at all levels of the Service.

The demands on leaders in the current environment of rapid change are greater than ever before, requiring more than just focus, fiscal discipline and a commitment to continuous improvement. Effective leadership requires the establishment of shared vision and a sense of purpose, the translation of that vision into action, and gaining staff commitment and ownership.

The Government has pursued the transformation of the management and leadership culture in the APS as a key priority. A strong foundation is now provided by the Senior Executive Leadership Capability Framework, which spells out the crucial qualities in senior managerial roles. Development programs for the Senior Executive Service have been redesigned to reflect the new Framework.

A Career Development Assessment Centre has been established by the Public Service and Merit Protection Commission in conjunction with agencies to help executive level employees with leadership potential identify their development needs and pathways.

Workplace Reform

The Government has seen workplace relations and public service reform as clearly intertwined. Both are premised upon the liberating effects of devolving authority to individual agencies.

The Government has put the focus on a more direct relationship between employers and their employees, allowing them to take responsibility for developing working arrangements tailored to their specific needs. It has also provided greater choice in collective and individual agreement making.

Underpinning its approach has been the principle that the APS employment arrangements should operate on the same basis as the private sector, unless there are valid reasons as to why this should not be so. Responsibility for determining terms and conditions of employment now rests with agencies through agreements made under the Workplace Relations Act, guided by the Government's Policy Parameters for Agreement Making in the APS. These Parameters set very few constraints on agencies beyond requiring pay increases to be linked to productivity and performance. The days of centralised regulation, I would like to believe, are over.

The beneficial effects of these wide-ranging reforms are clear.

Agencies have shed the shackles of the "one size fits all" culture that has permeated the APS for much of its 100 years. They are now paying far more attention to people management, the working environment and how best to balance work and personal life. They are linking individual performance to organisational outcomes in a more systematic and strategic way. They are looking to be more innovative in how they structure working arrangements to suit their business needs and those of their employees.

Look at the APS today and you will see a diversity of working arrangements and creative approaches as individual agencies move to align their cultures and approaches to business priorities. The progress has been remarkable.

In December 1995 the APS largely operated under an APS-wide agreement. In December 1997, there were still only four agency certified agreements operating in the APS. Now there are 100, covering nearly everyone in the APS. There are also more than 6,500 Australian Workplace Agreements or AWAs including for all senior executives and, increasingly, for middle managers.

The willingness of the public service to drive reform has been exceptional. Indeed, the upcoming 2001 Survey of APS Agreement Making concludes that:

agreement making has been taken up with more gusto in the Australian Public Service than in any other industry.

The point is underscored by the significant increase in stand alone agreements-that is, comprehensive agreements that provide for all of the pay and conditions entitlements of employees - indicating a growing maturity in bargaining infrastructure and confidence among agencies.

Agreement making has clearly stimulated the corporate imagination. Remuneration arrangements now incorporate a stronger link with performance appraisal and performance. They also encompass a far more flexible use of classification structures, including through broadbanding.

Many agencies have introduced more flexible working hours arrangements, including allowing for extended opening hours. Leave arrangements, allowances and penalty provisions have been simplified.

Measures to enable people to better balance their work and family responsibilities are common. Agreements have also been used to secure commitment to organisational and cultural change.

I do not argue that the transition to new ways of working has been easy. Its success has been largely due to the professionalism and commitment of the public servants who have driven it. And I am confident that, as a result, the APS is now a more satisfying and rewarding place to work.

Clearly there was a real need for improvement. The 1995 Australian Workplace Industrial Relations Survey revealed that many public sector employees felt they could not trust management. Indeed, public sector workers were more likely than their private sector counterparts to be dissatisfied with their job.

The reforms of the past five years are changing these perceptions.

One significant indicator of workplace morale, stress claims, had risen to unprecedented levels by the mid 1990s. That has now been dramatically reversed. Stress claims fell from their peak of 2280 in 1994-5 to 620 in 1999-2000 - a decline of almost 75%.

There are many reasons for this. But it seems to me that the more flexible working arrangements, the increased use of staff surveys, the almost universal introduction of employee assistance and counselling programmes and the growing use of 360 degree feedback on management performance - these, and many other recent initiatives, are building a better workplace.

The results are showing through in a number of agency staff surveys. For example, surveys undertaken in Defence, DEWRSB, the PSMPC and DETYA have highlighted a strong sense of job satisfaction, people liking and enjoying their jobs and more positive attitudes about team work and their work environment.

The success of the Government's approach is also evidenced in the demonstrated capacity of the Service to deliver its ambitious reform program.

Challenging reforms to the taxation and welfare systems have been delivered by the professionalism of the APS.

In the areas for which I have had responsibility, major reforms have included: the establishment of Centrelink and a competitive employment market through Job Network, Work for the Dole, new apprenticeship arrangements and national literacy and numeracy standards. I remember the scepticism about the Job Network when it was first established: yet today the OECD agrees that "the radical transformation of employment service delivery without parallel" is a viable option that other countries should consider.

The APS has shown a remarkable capacity to effectively develop and implement fundamentally different approaches to service delivery to achieve these outcomes. It has developed expertise in the contract management of outsourced delivery, committed itself to a strong service culture and been at the forefront in utilising new information technology, both in its own work and in transacting business with Government customers.

Maintaining the momentum

The reforms of the last five years have established the framework for high performance and the Service has responded impressively to the challenges set. We are all aware that the search for improvement is ongoing. We must capitalise on the gains already achieved and continue to seek more effective paths to success.

Sadly the policies of the Opposition threaten all this. They would see a return to the centralised workplace relations arrangements of the past - and, make no mistake, that is what the Labor Party is committed to. They would put at risk the significant improvements achieved in the capability and responsiveness of the APS.

Opposition proposals would reinstate a "one size fits all" approach through a return to APS-wide bargaining and the abolition of AWAs and performance pay. The terms and conditions of public servants would largely be settled between central agencies and union officials, and then re-regulated across the whole Service.

They would hamstring agencies as they seek to attract and retain high performing staff and encourage some high performing staff to leave the APS. They would kill off the performance culture that has taken root in the APS as a result of the Government's reforms.

Two things would happen. Diluting the productivity and performance focus of wage increases would have a marked adverse impact on the Budget. Equally important, the Opposition's approach would financially disadvantage thousands of public servants, particularly the strong performers.

The potential impact is clear from remuneration surveys commissioned by DEWRSB. The 2000 SES Remuneration Survey shows a continued widening of salary ranges. For instance, the difference between minimum salary for an SES Band 1 employee and the maximum salary for an SES Band 3 employee has more than doubled over the period since 1996- increasing from around $54,000 in 1996 to almost $117,000 at the end of last year.

The upcoming findings of the 2001 Non-SES Remuneration Survey show a similar trend. For example, the difference between the minimum salary paid to an Executive Level 1 employee and the maximum salary paid to an Executive Level 2 employee has also widened significantly - increasing from about $18,000 in 1996 to over $90,000 as at 30 June this year. Indeed at every APS classification level, salary ranges have widened since 1996.

At the same time and for all levels, the terms and conditions of employment now vary markedly from agency to agency. Some provide childcare, others flexibility in the length of the working year; some allow their employees to work at home, others to salary sacrifice their remuneration. I have a very simple question for the Opposition: how will you put all this diversity back into the straightjacket of centralised APS bargaining?

Narrowing salary ranges will necessarily disadvantage many public servants - most likely by freezing remuneration for some considerable period. Moreover, the Opposition's abolition of performance pay would deny employees continued scope to earn performance incentives and have their individual effort and contribution rewarded.

More than half the APS agencies have provisions in their agreements which enable individuals to gain greater remuneration on the basis of performance. Some 25,000 APS employees currently have access to such incentive payments under their certified agreements. The amounts involved can be significant. Performance payments for non-SES staff are increasingly common and range up to almost $30,000. About 80% of SES staff now receive an incentive payment, some as high as 32% of base salary.

The Opposition's proposal to abolish AWAs in the public sector would also disadvantage the employees concerned. These agreements have been important in ensuring that conditions are tailored to the needs of staff. The Opposition's approach is an ideological stance driven by union pressure to rebuild the past.

Not surprisingly, the Opposition is yet to come clean and spell out how it intends to deal with the differences in pay levels and conditions that currently exist across the APS. How exactly will the Opposition meet its undertaking of bringing employees who are on AWAs under new union-negotiated collective enterprise agreements on a no-detriment basis?

In the absence of any explanation, the experience in those States where governments have sought to re-centralise their approach to employment arrangements is illustrative of what could occur.

In Western Australia, for instance, the Gallop Government has recently sought to restore parity in wages and employment conditions for WA public servants by establishing a benchmark rate of pay. Employees covered by a collective enterprise bargaining agreement whose pay rates fall below the benchmark, will receive a pay adjustment bringing their salary to the benchmark rate.

However, the WA Government's approach puts in place an effective wage freeze on those WA public sector employees currently paid above the benchmark until such time as the benchmark figure catches up with their current salary. The Community and Public Sector Union estimates that, while this will deliver an immediate increase to about 5, 000 of WA's 30,000 public servants, up to 3,000 or 10% of them may not receive an increase for the term of the State Government, that is, until 2005.

Ironically, the CPSU now describes the WA State Government's wage offer as significantly inferior to the increases anticipated by members through agency based bargaining. This constitutes a resounding vote of no-confidence for centralised bargaining, once the practicalities of turning back the clock have been recognised.

Indeed State government efforts to negotiate centralised wage agreements in Victoria and WA have led to industrial action by public sector unions in both States. This contrasts with the situation in the APS, where industrial action has largely become a thing of the past as a result of the Government's workplace relations reforms. No longer are the Government and taxpayers held to ransom by the industrial guerrilla tactics of snap bans and limitations historically adopted by public sector unions.

I call on the ALP to come clean and provide details on how its policy will be implemented - in particular, its proposals to end AWAs and performance pay in the APS and reintroduce centralised bargaining; how these changes will be funded; what transitional arrangements will be put in place and what, if any, freedom there will be for agency agreements that establish different terms and conditions from those agreed for the APS as a whole.

I also call on the Opposition to desist in its efforts to score cheap political points by continually seeking to denigrate the professionalism and commitment of public servants.

Whether its bagging the performance of frontline staff at Centrelink or calling into question the professional integrity of the DEWRSB researchers who evaluate Job Network, the Opposition have shown an increasing predilection for playing the public servant not the politician.

Such overt political point scoring at the expense of public servants attacks those who in the traditions of the Westminster system cannot respond. It also undermines confidence in an apolitical public service willing to serve elected governments of whatever political persuasion.

In contrast to the backward looking approach of the Opposition, our policies will maintain the momentum already achieved. It will preserve the tradition of the APS while unlocking the creativity.

Our goal is to provide ever more effective delivery of services, reducing the costs of government, improving the conditions of employees and developing a more flexible managerial and industrial environment.

Our goal is to encourage new ideas and a culture of innovation and responsiveness. Our vision is to achieve a high performance public service for the combined benefit of national government, employees and the community.

The APS must be allowed and encouraged to get on with this task, to look forward and to continue to develop rather than be returned to, and constrained by, the red tape of out-of-date approaches.

Later today, I will be launching an exhibition and a book to celebrate the centenary of the public service. They show how Australia has been well served by the APS over the last hundred years, but also how it has changed over that time. How effective it is in meeting the challenges ahead of us as a nation and the quality and value it returns to the community are matters of policy choice.

We must ensure that the policies for APS employment provide the foundation for a dedicated, innovative and cost effective service. Its non-partisan professionalism should be respected. This is what the country requires, what the Service has shown is its own aspiration and what the Government is committed to building.

I have been proud to have had the responsibility for public service matters for the last four years. My respect for the quality and commitment of the APS has grown during that time. It is a national institution that deserves the flexibility to become more productive and the freedom to be more innovative.

The return of the Howard Government will ensure the direction of reform is maintained.