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Last updated: 28 May 1996

Towards a best practice APS - Discussion paper

Please note: This document is for reference purposes only and is no longer considered by the APS Commission to be current. It may contain good practice advice and/or advice on the transitional arrangements between the 1922 and 1999 Public Service Acts.

Issued by the
Minister for Industrial Relations and Minister Assisting the Prime Minister for the Public Service
The Hon Peter Reith MP
November 1996

Overview

Despite improvements in performance over the years, the challenge of public service reform still remains substantial and urgent.

To provide the Australian people with better government the Australian Public Service (APS) has to undergo significant change. It no longer enjoys a monopoly in the delivery of government services so it must prove that it is able to compete on cost and quality with best practice in the private sector.

This Discussion Paper poses the directions for change, whilst noting the commitment of the APS to adapt has been hampered by successive Labor governments unwilling to strike the best policy directions.

The shortcomings are immediately apparent in the complex array of outdated, rigid and cumbersome regulations. This is not the fault of public servants. The causes are systemic. The culture of the APS does not sufficiently promote high performance or drive innovation, and the important contribution of individual public servants is often overlooked or stifled by process and unnecessary regulations. There is evidence of a lack of collective vision amongst its leadership. Management remains cautious and conservative.

The Government's goal is to improve the overall performance of the APS and, by so doing, to provide public servants with a rewarding, quality working environment in which they can pursue their careers. The Government seeks to provide stronger incentives to attract and retain skilled, objective and professional public servants to the ranks of the APS. It needs these skills and a high standard of professionalism in order to implement Government policies and programs in the future.

The Public Service Act, introduced in 1922 and amended more than a hundred times since, is riddled with unnecessary restrictions and arcane details. It ties management of the APS in red-tape. For example, there are over 500 pages of legislation, guidelines and circulars specifying requirements for recruitment and selection; some agencies can take up to 29 steps when processing leave and entitlement applications; and the Act devotes 34 pages to prescribing the arrangements for dealing with misconduct. In 1996 permanent public servants are still employed to occupy a particular 'office' rather than doing a job of work.

The Government will not allow this to continue. This Discussion Paper makes it clear that the Act will be revamped, to remove its regulatory prescription. Instead, much simplified and streamlined, the Act will articulate the key ethical values, standards and principles of public service, such as accountability, party-political impartiality and fairness in dealing with the public. The Act's use as a mechanism of control will cease.

At the same time the employment arrangements for Commonwealth public servants will be brought more into line with those which apply in the wider Australian workforce.

This represents a considerable challenge.

The current APS employment framework is a complex array of regulation through various statutes and associated delegated legislation; Service-wide and agency-specific industrial awards; and certified agreements, reached on both a Service-wide and agency basis. It has produced a process-driven culture born of regulation and an entitlement mentality.

At present the APS largely bases its approach to terms and conditions of employment on unrealistic presumptions - that the APS is a uniform labour market and that equity necessitates identical treatment of individuals. Employment arrangements-such as the application of merit-are bound in a grievance mentality.

This has to change.

This Discussion Paper makes it clear that the APS will move to simplified awards (including the phasing out of paid rates awards, over time, under the auspices of the Australian Industrial Relations Commission) and will place emphasis on negotiating agreements and resolving workplace problems at the agency level. The focus of APS workplace relations will place greater emphasis on the individual agency and workplace.

Employment provisions-including remuneration, inefficiency and termination procedures-will be mainstreamed, largely with the same employment processes that apply to the wider community. The range of provisions that are peculiar to public service-such as the concept of 'office' and 'permanent' employment, external review of selection processes, payment of higher duties allowances and mobility arrangements that guarantee those who leave the Service a right to return-will be examined carefully to see if there is any reason for their preservation.

The Government will provide the APS with greater freedom to manage. It will provide a far more flexible employment framework. The APS must then seize the opportunities presented to develop a high performance culture. Its future role depends on it.

This Discussion Paper identifies a range of initiatives that might serve to improve public accountability for performance, increase competitiveness and enhance leadership: for example, a Charter of Government Performance, Government Service Charters, public performance agreements for Agency Heads and the SES, the replacement of outd bgcolor=powderblueated hierarchical controls with more contemporary team-based arrangements, greater devolved responsibility to the agency level, giving agencies flexibility to decide on their own systems for rewarding high performance and streamlined administrative procedures. This Discussion Paper seeks consultation on all these issues.

The Government is committed to an APS that has embraced the best practice of contemporary management and is able to benchmark its performance against the private sector. It looks to reshape and reinvigorate the APS and through that process ensure that the Australian public is provided with access to better government.

Equally important, the Government seeks an environment in which public servants have much greater say in the way they perform their work. The Government seeks to provide those who work within the APS with a quality job, within a learning organisation, in which their creativity is actively sought. Public servants, as employees, need more autonomy over their work practices and far greater employment flexibility. Most importantly, they should have an opportunity to benefit from a more direct relationship with their employers rather than be managed through rules, regulations and third party relationships. Building this relationship will be a key responsibility of agencies and a major test of leadership.

A strategic approach to the systematic management of risk will be encouraged. Enhanced public accountability will ensure that taxpayers' funds are not used fraudulently or wastefully. However, the Government wants to see the emergence of an APS in which managers are encouraged to seek maximum value for money rather than minimum risk taking.

The focus of the Government's far-reaching public service reform agenda is to shed the cultural baggage of the past. Its goal is to simplify and streamline unnecessary process, prescription and central control. In part this will involve rewriting the legislative framework; in part simplifying APS awards and agreement-making processes; and in part transforming management culture. The Government seeks action on all fronts.

This is a bold vision. This Discussion Paper seeks to open debate on how to achieve it.

Preface

The Government came to office with a very clear mandate for far-reaching economic and social reform. The immediate problems, such as balancing the budget, speeding micro-economic reform and lowering the burden of foreign debt are being addressed. An environment supportive of business and conducive to long-term investment is being created.

We are building an internationally competitive Australia which, through increased productivity, will allow Australian families to enjoy improved living standards, higher employment and better paid jobs.

A key to this transformation is to ensure more flexibility in the workplace. The Government has introduced legislation to provide employers and employees with much greater choice about how to regulate their relationships.

The Government seeks the creation of workplace structures, systems and cultures which emphasise innovation ... and that includes its own workforce, the Australian Public Service (APS).

The APS is a national institution in which the community can continue to take great pride.

Indeed, in recent years the APS has been through a deal of change. It has moved to adopt a system of performance management and program budgeting based upon an explicit evaluation of outcomes. It has taken steps to restructure the machinery of government to create more efficient and effective portfolios. There has been increasing recognition of the value of devolution. Many of the controls wielded by central agencies have been removed or relaxed.

The process of reform, however, has to be broadened and accelerated.

Revitalising and building a world class public service is a key part of the Government's far-reaching strategy to improve Australia's governance.

The APS makes a vital contribution to Australia through the advice and services which it delivers. The Government recognises and values the high ethical standards, professionalism, independence and quality of the technical policy advice it provides. Equally it demands that the APS be a modern and efficient employer which exhibits best practice, is committed to continuous improvement and exemplifies contemporary management techniques.

It is not there yet. With Government support it can become so.

While recent years have seen a number of reforms, the APS has not responded creatively enough in overhauling the way it does business. The APS is not yet equipped to operate efficiently and competitively within a dynamic environment that has made improved performance imperative for all sectors of the economy.

The shortcomings are immediately apparent in the complex array of outd bgcolor=powderblueated, rigid and cumbersome regulations, systemic inflexibilities and a culture which does not sufficiently promote or recognise innovation.

The National Commission of Audit (NCA) has argued with good reason that APS management has fallen behind 'best practice' of overseas, interstate, private sector and Government Business Enterprise operations.

The Government will not allow this to continue.

If the Government is to have access to a technically skilled and professional public service in the future, it must act now to build a work environment which recognises talent and enthusiasm and directly rewards innovations. In essence, the APS must compete with the private sector for the best skills, and to do so successfully it must provide access to equally rewarding and diverse career paths.

The challenge of public service reform is substantial and urgent.

The former Labor administration acknowledged the need for change and some measures were introduced in its 13 year tenure. However, implicitly noting the failure of Labor's approach, the 1994 Report of the Public Service Act Review Group (the McLeod Report) observed that reform still remained a high priority at the end of this long period of office.

The Report, which was never implemented, provides a useful point of discussion for the reform process. But the scope of the discussions must now be widened to take account of the contemporary landscape.

Organisational reform is needed, not only to improve the ways in which services are delivered but so that the APS has the capacity and flexibility to assimilate further changes in its operating environment. The Government is introducing structural reforms to the nature and delivery of services provided to the community.

The Government is looking at more effective ways of serving the Australian public. It is no longer appropriate for the APS to have a monopoly. It must prove that it can deliver government services as well as the private or non-profit sectors. This will require a new emphasis on contestability of services, outsourcing those functions which the private or non-profit sector can undertake better and ensuring APS commitment to the process of performance benchmarking and continuous improvement.

The APS must meet the challenges of market competition and ensure that its quality standards match those of the private sector. To do this it will need support.

The Government is determined to address barriers which lie in the way of the APS becoming a truly best practice organisation-one that is able to deliver quality service to government and the Australian people and, at the same time, provide a professional and rewarding environment in which to work.

To achieve this the employment framework governing the APS needs to be modernised. This must encompass:

• the legislation regulating the Service, most notably (but not exclusively) the Public Service Act 1922;
• the industrial framework and enterprise bargaining arrangements which establish APS terms and conditions of employment;
• the management framework which influences the culture and practice of individual APS workplaces; and
• the need for more effective leadership based on clear vision and communication of future directions.

If we are to ensure the best results at least cost for the Australian taxpayer, APS staff need an employment framework which supports that outcome. The effective application of the Government's new Workplace Relations legislation to the public service will facilitate that goal. But it will not, of itself, be sufficient.

The Government is committed to a program of better government. Reform of the APS is a central element of that agenda. The framework and directions of the substantial changes that will be required are set out below.

However the Government recognises the need for a process in which interested parties have an opportunity to contribute. Consultation will contribute to the effective management of the change process.

This Discussion Paper has been prepared to guide informed comment and encourage active discussion. I invite all readers to put their views to the Government-through submissions or written comments, at workshops organised jointly by the Public Service and Merit Protection Commission and the Department of Industrial Relations or through the direct consultations which I will undertake.

Ultimately, everyone working in the APS or who is affected by what it does has a strong interest in ensuring it is a best practice employer with a strong performance culture.

I look forward to receiving your ideas and views to assist the Government in finalising its approach to these important issues.

Together we can reshape and reinvigorate the APS-and through that process ensure that the Australian public is provided with access to better government.

PETER REITH

Towards a Best Practice Australian Public Service

Building better government

The purpose of this Discussion Paper is to canvass those changes necessary to achieve better governance through improving the quality of the APS. This involves examining the interlinked elements of APS employment arrangements-the legislative, industrial, managerial and human resource frameworks-to ensure that they can best contribute to the creation of an effective and efficient operating framework for the APS.

These reforms will complement other initiatives aimed to achieve better government. The Government is committed to improving the consistency, quality, transparency and public accountability of government activities. Key elements of this sweeping reform agenda include:

• the introduction of a Charter of Budget Honesty,
  • including the move to an integrated accrual accounting framework, with financial reports that provide the Parliament, and the taxpayer, with a clear understanding of how the business of Government is performing;
• a new planning and performance accountability mechanism to be known as the Charter of Government Performance;
• A 'Guide on Key Elements of Ministerial Responsibility' making explicit the obligations and responsibilities of Ministers for the ethical performance of their jobs; and
• the introduction of Government Service Charters across the Commonwealth public sector.

Together with the revitalisation of the APS, these reforms represent our commitment to building a better government for the Australian people.

Establishing a quality workplace

This Discussion Paper seeks to examine how we can build a high performance APS. It starts from the fundamental proposition that success will depend on the establishment of a rewarding working environment for public servants.

While the financial management and organisational structure of public administration has been improved, the Service's employment framework remains inflexible, its legislation antiquated and-as a consequence-its people management is tied down in process. Years of inaction have to be remedied.

This is not a criticism of individual public servants. They have been the victims of workplace structures, systems and cultures which seek to control through regulation rather than to manage through trust. A key objective of the public service reform agenda is to provide public servants with a more rewarding environment in which to work and one in which their talents and enthusiasm are recognised, not muted by process and unnecessary regulation.

The overwhelming majority of young women and men in the Service-the leaders of the future-want to see further change in the way their work is performed and managed. They want the freedom to be more innovative, to manage risks effectively and to achieve and to be recognised for higher levels of performance. They want the process-driven hierarchies to be replaced by more flexible working arrangements. In particular they want more direct relationships with their employers and to be treated with greater respect.

The frustrations that bedevil the public service workplace have to be addressed. Some of the more obvious causes for concern are:

• the lack of recognition for work undertaken, which too often sees senior managers claiming the credit for the work of others;
• the inertia which makes it difficult to get new ideas heard or accepted, especially for those without the status that comes from seniority;
• the unwillingness or inability of supervisors to provide constructive performance feedback on a regular basis;
• the slowness which too often characterises the processes of selection and promotion;
• the perception that, in spite of considerable process and paperwork, those selected for promotion tend to be clones of those who select them;
• the lack of effective mentoring, leadership training or successor planning; and
• the inability to exert any real control over the way in which work is performed, so that commitments to work and family are unnecessarily placed in conflict.

Today's APS remains bound in red-tape. It is too ready to control the workplace through process and regulations rather than managing people as individuals and treating them with respect.

It seeks performance through compliance.

This cannot be allowed to continue. The unfair stereotyping of the public servant as a paper-pushing bureaucrat has its basis in this culture of control. The Government is determined to provide the flexibility in the workplace that is required to promote innovation and to recognise creativity.

The APS, and its constituent agencies, must become learning organisations able to embrace change at every level. This will require widespread participation in decision making, an entrepreneurial ethic and a recognition that the process of change is enhanced by employing people with a diversity of skills and viewpoints.

Those in the APS want the satisfaction of knowing that they can deliver government services as well as best practice in the private sector.

They want the legislative, industrial and managerial cultures of the APS to become more supportive of new ideas and ways of doing things.

And-equally important-they want to be assured that the Government will be willing to support strategic risk management where it can result in a more effective use of taxpayers' money.

These are reasonable demands. The Government supports them. But it also needs advice on how they are to be achieved.

This Discussion Paper seeks to encourage public servants-all public servants-to be active participants in the modernisation of the APS. The future of the Service depends on it.

The imperative for change

The APS has made some progress over the last decade. It has moved from an emphasis on process to a stronger focus on results. The employment framework has become less rigid and job classification structures have been revamped. Responsibility for day-to-day operational matters has been devolved to individual Agency Heads. There has been growing commitment to customer service and productivity has risen.

However the pace of change has been neither as fast, nor as far reaching, as required. The commitment of the APS to change has been hampered by successive Labor governments unwilling to take the hard decisions. The principal legislation covering APS employment remains a major impediment to managerial flexibility. So, too, do many of the industrial agreements. Arrangements for agreement-making have been complex and have lacked the incentives for comprehensive reforms at the agency level; and leadership has been deficient.

The Government intends to accelerate the process of public service reform as an integral element of the broader reform agenda.

The underlying imperative is for the APS to benchmark the quality and efficiency of its operations against best practice and then work to overcome the gaps. Both in Australia and overseas the performance of government is under intense scrutiny. There needs to be considerable change to the way services are delivered, including the more widespread application of user-pays principles, increased market testing and greater contracting out of functions that are better or more appropriately performed by other sectors or other levels of government.

In this changed environment the APS needs to build on its traditional strengths-its professionalism, its high ethical standards, its responsiveness to government, its political independence and its public accountability. It must preserve the cohesiveness of the APS that derives from a commonality of purpose and values, consistency in responding to the purposes and strategy of government and commitment to being a servant of the public.

At the same time the continued relevance of the APS depends on it becoming a modern employer. Its success will depend on its ability to become a leading-edge employer with contemporary workplace practices and a culture which fosters and rewards high performance. The challenge is to provide maximum flexibility in a devolved environment and to encourage managers to use these new freedoms creatively.

New directions in workplace relations

This Government starts from a fundamental proposition: namely that the industrial and staffing arrangements for the public service should be essentially the same as those of the private sector. In general, the employment framework for Commonwealth employees should ensure that industrial relations and employment arrangements similar to those in the wider Australian workforce apply to the APS.

That will require significant reform. The current APS employment framework remains a complex array of regulation through various statutes and associated delegated legislation; APS-wide and agency-specific industrial awards; and certified agreements, reached on both an APS-wide and agency basis.

A principal object of the APS reform process is to provide a framework for co-operative workplace relations and encourage higher productivity. Consistent with wider industrial reforms, the focus will be to:

• ensure that the primary responsibility for determining matters affecting the relationship between employers and employees rests with the employer and employees at the workplace or enterprise level with a role for responsible union participation; and
• enable employers and employees to choose the most appropriate form of agreement for their particular circumstances.

As for other sectors, this will involve in the APS a move to simplified awards (including the phasing out of paid rates awards, over time, under the auspices of the Australian Industrial Relations Commission), emphasis on resolving grievances at the agency level, and greater emphasis on agreement-making. In conjunction with a new Public Service Act managers will have the necessary flexibilities and opportunities to stimulate and recognise high performance and provide a more rewarding professional environment for the women and men who seek to spend part or all of their careers in public service.

In addition, the Government's new 'fair go all round' approach to termination of employment provides scope for the APS to adopt less legalistic internal processes for dealing with matters such as inefficiency, redundancy and misconduct while still satisfying principles of fairness to staff. Current provisions relating to participative practices also need to be revamped to reflect the new emphasis on freedom of association and fostering more direct relationships between employers and employees at the workplace level.

The need for a new Public Service Act

The Public Service Act introduced in 1922 and much amended since, is riddled with unnecessary prescription and arcane detail. It creates a regulatory environment and an emphasis on process which is inconsistent with contemporary management philosophy and the prevailing community-wide industrial relations system and acts as a major inhibitor to innovation and best practice.

The urgent need for change has been apparent for at least a decade. Now it will be achieved.

The intention of the previous Government-never fulfilled-was to modify the Public Service Act so as to bring it up-to-date with past changes that had occurred in public sector administration. The commitment of this Government is to rewrite the Act so that it provides a firm foundation for the future.

The Government still sees an important role for a Public Service Act. Legislation can play a pivotal role in describing and establishing the core principles, values and characteristics which create the distinctive culture and ethos of the APS. Drafted carefully it can provide a clear, unified framework within which the APS can carry out its distinctive roles and responsibilities. In particular it should provide:

• a legal basis for the Parliament to express the important values and culture it wants in the APS;
• a mechanism by which Government decisions on Machinery of Government matters can be implemented;
• a framework for setting out the role and powers of Agency Heads, and their relationship to Ministers, in a clear and public way; and
• an unambiguous statement to those within the APS, and to the Australian people, of what is expected of public servants.

The level of detail and prescription in the current Act must be removed. Its use as a control mechanism is inappropriate.

The Government is committed to a streamlined, principles-based Public Service Act that supports a more flexible employment framework. It is to be an enabling and facilitative instrument. Elements which may warrant inclusion are:

• public service standards and ethical values and how they should be applied;
• the framework of public accountability;
• employment principles, covering such areas as merit selection, equity, recognition of family responsibilities, participative work practices, fair decision making; and
• the basis upon which employment powers are vested in Agency Heads.

The new Public Service Act will place a specific legislative responsibility on Agency Heads for maintaining ethical standards, ensuring public accountability, and promoting employment principles within their own organisations. The new Act will also reinforce the political independence of the APS by ensuring that Agency Heads cannot be subject to any direction by a Minister in relation to staffing decisions.

Standards will be set by the Public Service Commissioner-but the manner in which they are implemented will not be prescribed. Agency Heads will be encouraged to develop approaches which meet the needs of their own organisation. The Public Service Commissioner will provide guidance, promote good practice and report to Parliament on the maintenance of APS values.

The object of the exercise is to streamline and simplify the Act. Much of what is in the Act is no longer appropriate (e.g. the concept of office), does not require legislative force (e.g. job classification, performance management and reporting) or can be considerably simplified.

The new Public Service Act should not unnecessarily constrain the employment framework compared with organisations in other sectors or jurisdictions. For instance, the extensive mobility arrangements set out in the present Act, which currently guarantee return rights to those who leave the APS to work with other government organisations, need to be revisited.

The Public Service Act is not the only legislation which determines the APS's employment framework. The Government will scrutinise other legislation which impinges on the framework such as the Merit Protection (Australian Government Employees) Act 1984 and the Members of Parliament (Staff) Act 1984.

Through such reform the Government will free up the public service employment framework, stimulating the development of a high performance culture in the APS.

Maintaining the traditions of public service

The Prime Minister recently endorsed a statement of the key ethical values of the APS. This statement of values was developed by the APS Management Advisory Board (MAB) and defines the APS's dominant characteristics and the nature of employment in it. The values, which the National Commission of Audit described as 'a best practice method of setting the ethical standards for the public service', are:

• the highest standards of probity, integrity and conduct;
• a strong commitment to the community;
• responsiveness to governments;
• a strong commitment to accountability;
• a close focus on results;
• continuous improvement through teams and individuals; and
• merit as the basis for achieving excellence in staffing.

In endorsing these values, the Prime Minister made it clear that the provision of fearless and independent technical advice was one that he regarded as extremely important.

The new Act will confirm that the provision of apolitical policy advice in an impartial and objective manner remains a key responsibility of a core Public Service. The capacity to give independent advice (and the capacity to administer legislation impartially) is a characteristic which the Government is fully committed to preserving.

Responsiveness to governments and public accountability are equally important. The APS will continue to be responsible for ensuring that the delivery of programs and services accords with the public purpose set by government. To this end the APS will retain the role of oversighting service delivery whether it is undertaken by specialised APS agencies (such as the proposed Department of Social Security/Department of Employment, Education and Youth Affairs Shopfront), new authorities outside the Public Service Act (such as the Public Employment Placement Enterprise) or-under contract-by private or non-profit organisations. This continuing role is central to the maintenance of accountability to the Government, Parliament and the Australian public.

The Government places equal importance on traditional ethical values and believes it important that they should be stated clearly in legislation. They ensure that public servants are accountable for the way they exercise power on behalf of the Government and that they will perform their public office in accordance with accepted principles. They impose an obligation on public servants not to abuse the position of trust, power and privilege which they hold.

These are traditions which the Government is committed to preserving.

To this end the Government intends to strengthen the traditional ethos of public service. The Public Service Commissioner, as an independent statutory office-holder, will be given the powers to set standards for public administration and to evaluate people management across the Service. In this and other regards, the Commissioner will play an important role in ensuring the APS remains independent from political interference and that appointments and promotions are based on merit.

The clear articulation of public service values in legislation is vital. The need for a cohesive public service with common values remains strong. A better understanding of shared values, set out in a Public Service Act, will provide a unifying and motivating force for the APS as a whole. It will provide the foundation for a unity of outlook and behaviour across the Service. Moreover, it represents an approach which is consistent with best practice in the private sector.

A Charter of Government Performance

The Government's first priority for the reform agenda is the development of a culture of performance at government, agency and individual level.

The outcomes sought by Government will be clearly set out and the APS held publicly accountable for their achievement. To this end there will be a new, integrated planning and accountability mechanism known as the Charter of Government Performance. This is consistent with the Charter of Budget Honesty.

The Charter will provide a common approach to business planning and publications/output reporting. It will serve as a powerful tool for defining purpose and function across the APS. It will assist benchmarking and instil the appropriate incentives across the Service. It will provide the basis for effective performance appraisal.

Under the Charter all Ministers will be required to prepare and publish the performance plan for their portfolios. Collectively these plans will provide a cohesive and comprehensive overview of the Government's priorities.

The Charter will work to remove the duplication and overlap of government services; improve the quality, effectiveness, efficiency and accessibility of services; ensure transparency and accountability of administration and establish individual agency efficiency targets. It will be the framework within which the expectations placed on APS employees are set and assessed.

Managing for high performance

The managerial and industrial elements of the employment framework are closely related. Together they establish the employment environment and provide the authority, capacity and tools for effective delivery of government services.

Fully realising the potential benefits of a reformed legislative and industrial framework will require new workplace approaches by managers having both relevant skills and the will to seize the opportunities presented.

The Government is committed to delivering a framework in which Agency Heads can recruit, develop and deploy staff in a manner that delivers optimum performance and value for money to the Government and community. Both the Australian public and public servants will benefit as a result.

Enhancing the quality of leadership

Performance information is crucial in assessing whether policy goals have been achieved and how effectively the public service has performed. Such information is required to ensure that savings are not achieved by a reduction in the level or quality of services provided. At the same time the Government is determined to produce results not paper. It will ensure that multiple reporting processes are streamlined and simplified.

Performance plans-business plans-will include such matters as how the employment framework is being applied (and adapted) to ensure that government priorities are achieved.

The Government is considering the introduction of formal performance agreements for all Agency Heads. This acknowledges the important strategic leadership role of Agency Heads. Their role as Chief Executive Officers, responsible to the Minister for their agency's performance, needs to be explicitly recognised. The exercise of their wide-ranging managerial powers needs to be set in an accountability framework which articulates criteria for the measurement of performance. For these reasons, it is proposed that Agency Heads/Secretaries would be re-classified commonly as Chief Executive Officers.

Agency Head agreements would ensure that the performance objectives set by Government are known to the public. The results sought by the Minister would be known to all those within the agency. Agency Head agreements could specify the strategic use of a reformed, flexible employment framework.

But it is not just Agency Heads who need to be held accountable; so too does the executive leadership.

The Senior Executive Service (SES) was introduced to the APS in 1984. It was aimed to provide a mobile group of managers whose common skills could be used in a wide range of circumstances and roles. The SES was seen as a Service-wide asset whose shared values (and selection criteria) would help to build cohesion.

In that regard it has had only limited success. Recent evidence suggests that APS executives, when benchmarked against the private sector and a United Kingdom public sector organisation, are more divided in terms of mission, vision and pursuit of strategy. The SES leadership rates poorly in exhibiting and communicating a collective vision of the Service.

The Government is determined that the leadership potential of the SES be further developed. Commitment to devolution must be balanced by shared perspectives, effective communication, joint training and collegiality. Without collective leadership the traditional ethos of public service will be lost.

The success of the APS will increasingly depend on the ability of its executives to adjust to new challenges. The current SES selection criteria need review to ensure that they reflect what is needed for APS leadership and that they-and the selection processes employed-do not limit the ability of Agency Heads to select the executives best suited for the job. The objective is to ensure cohesive leadership not to impose inflexible selection methods.

The Government has not yet decided whether explicit written employment agreements should be introduced for members of the SES. Such agreements would bring the APS into line with arrangements applying to a number of State and Territory Governments and to the private sector. They could be underpinned by Australian Workplace Agreements (AWA) which link remuneration to an annual performance agreement. Where there is a continuing need for the work to be performed, the employment agreement could provide employment for an indefinite term but with specified periods of notice. Fixed-term contracts could be used where appropriate, for example, for a time-limited project.

Annual performance agreements could be used as dynamic tools to ensure that the intention of government reforms to the public service framework are actually put into practice. Through them the Government could make a clear public statement of what it requires of the APS leadership. They would send an unmistakable message that all of those in public service, from Agency Heads down, are to have their performance assessed.

Government Service Charters

Service delivery to the Australian public is a key measure of APS performance.

The Government is committed to the introduction of Government Service Charters as part of its wider public sector reform agenda. They represent a valuable addition to the public sector management and accountability framework.

The proposed introduction of Government Service Charters will improve the accessibility, transparency and responsiveness of the APS. Some of the broad objectives of this quality initiative include:

• setting out the nature and level of service clients can expect to receive;
• putting service quality alongside efficiency and effectiveness as a key evaluative criterion;
• developing explicit, intelligent and verifiable information on public services;
• improving transparency; and
• emphasising choice and a citizen's right to information, fair treatment, timely service, access and specific services of an appropriate quality.

Just as the Government is promoting codes of conduct to protect consumers in the private sector, so it is committed to ensuring similar standards across the entire Commonwealth public sector. At the same time, the Government Service Charters will ensure that all public servants know quite clearly the standards of performance that are required of them.

A flexible employment framework

The existing employment framework constitutes a major barrier to improving the performance of government programs. If the APS is going to be able to compete with private and non-profit organisations for the delivery of government programs that will have to change.

Employment conditions-including remuneration, inefficiency and termination procedures-should be left to the same industrial relations processes that apply in the wider community. The range of employment conditions that are peculiar to the APS-such as 'permanent' employment, external review of selection processes, payment of higher duties allowances and mobility arrangements that provide public servants who leave with guaranteed return rights-need to be examined carefully to see if there is any reason for their preservation.

Let us take an example. One of the differences between the private and the public services is that the public service operates within a framework of administrative law. Australian citizens, quite appropriately, are offered assistance and protection in their dealings with government. Yet, for less good reason, APS employees have access to the same administrative law processes, resulting in a wide range of forums and review rights in terms of employment-related matters. While some of these avenues may be desirable, others hinder personnel management with too many layers of review and overlap between the various jurisdictions.

One of the problem areas is that because APS employment processes are spelt out in such detail in legislation, the APS is exposed to litigation on the grounds that the legislation was not followed. The reduction of legislative prescription will work to reduce unnecessary and costly litigation.

A second problem area is that the existence of internal statutory appeal rights in areas such as promotions, discipline and redeployment and retirement has led to a defensive, process-oriented style of personnel management, aimed at minimising the risk of decisions being reversed on appeal or as a result of litigation. There is a need to reduce the level of defensiveness and legalism in APS personnel management, while at the same time reassessing the appropriateness and effectiveness of internal statutory appeal rights.

The APS of today carries the cultural baggage of the past. Current employment arrangements derive from a legislative and procedural framework which envisaged a Commonwealth-wide public service with strong centralised control, regulation of uniform conditions and permanent appointment to a lifetime career. As a result there exist complicated and convoluted processes for dealing with inefficiency or poor performance and discouragement of the development of skills which are marketable outside the APS. This has encouraged a 'captive' public service. In addition there are barriers to entry to the APS which discourage a more open outlook.

Employment arrangements which encourage a more flexible and responsive APS would have significant benefits for staff. They would lead to increased development of recognised and transferable skills and remuneration arrangements which better reflect levels of skill and performance. They would enable more options for working hours and leave arrangements allowing APS officers to better balance the demands of work and family.

The current APS employment framework continues to be dominated by process-oriented activities. It is based on a number of unrealistic presumptions: that the APS is a uniform labour market; that equity necessitates identical treatment of individuals and situations; and that there is an underlying commitment to the universal and detailed prescription of the rights of employees.

Arrangements are bound in a grievance mentality which focuses on the rights of individuals rather than systemic issues. This leads to conservative and cautious management.

Merit, for example, should be a system which is a mandatory alternative to patronage. It should not be expanded into the notion of a compulsory universal search for the perfect employee. Conversely it is not acceptable for organisations to have closed staffing systems, selecting managerial 'clones' who are safe. It is essential to seek out and bring into organisations staff with new ideas and who can invigorate the performance of the management team.

More generally the current APS approach to personnel services is burdened with process. The cost of recruitment and selection, management of attendance, payment of allowances, performance management and management of part-time work is much higher than in private sector best practice. In essence, all these added costs are passed back onto the community.

This has to change.

The Government is committed to removing a number of inhibitors to best practice in the APS including:

• the complexity of rules governing personnel management in the APS;
• the failure to devolve authority with operational activity to line managers;
• unnecessary duplication of processing activity in decentralised environments;
• ineffectual performance management practices and lack of a supporting performance culture;
• imbalance between concern for individual rights and need for organisational efficiency;
• failure to adopt appropriate risk management approaches; and
• lack of strategic focus in people management practices.

The focus of the Government's broad reform agenda is to sharply reduce unnecessary process and rigidities. In part this will involve rewriting the legislative framework; in part simplifying the APS awards; and in part transforming management culture. The Government seeks action on all three fronts.

Better workplace relations in the APS

The APS should operate, to the maximum extent consistent with its public responsibilities, under the same industrial relations and employment arrangements as apply to the rest of the workforce. Mainstreaming the employment arrangements for APS staff involves accessing the full opportunities available under the system which regulates employer-employee relations.

Public servants will enjoy the same protections as the rest of the workforce under the Government's Workplace Relations legislation. Certified agreements will be able to be reached with unions or directly with employees and such agreements are likely to continue to be the most prevalent form of agreement for APS agencies. It is the Government's expectation that AWAs are likely to be a particularly favourable option for discrete categories of employment, where this flexibility may be necessary-for example, they may be appropriate to the employment of Senior Executives.

Just as for the rest of the community, collective agreements and AWAs will be subject to vetting against a global no disadvantage test based on simplified awards.

Just as a new, more flexible Public Service Act will markedly increase the flexibility available to APS agencies, so too will the simplification of awards and the enhanced flexibility built into these provisions.

While paid rates awards will be phased out over time, workers under paid rates awards will not have their take home pay cut and that they will not suffer as a result. In addition, when APS paid rates awards are converted to simplified new awards under the legislation, the conditions of employment in simplified awards will not be reduced in terms of their standards.

At present the current APS Enterprise Agreement-Continuous Improvement in the APS 1995-96-operates in conjunction with extensive APS awards, various public service legislation and individual agency agreements.

When this Agreement expires at the end of 1996, the opportunity will be open to replace it with arrangements that mesh in with the Government's wider reforms-to a new Public Service Act, the Workplace Relations legislation (e.g. the award simplification process, the phasing out of paid rates awards and new provisions for agreements) and budgetary and management initiatives.

This will be pursued in a way that reduces overlap and complexity, and more sharply focuses APS workplace relations on the individual agency and workplace. Where unions are parties to agreements, support for particular workplace reforms from them (and the majority of employees covered by the agreement) will be required. This should work to promote employee participation in the reform activities of their agencies, while also sharing in the benefits of improved performance.

Experience with enterprise bargaining in the APS since 1992 suggests that, consistent with the principle of devolution, bargaining is often best conducted at an agency level. Decentralised bargaining was tried to a limited extent in the APS in the 1992-94 Enterprise Agreement, but its productivity sharing provisions were complex and involved disincentives to bargain.

The present Government will ensure a far more supportive environment.

Various options for productivity-linked bargaining exist. An APS-wide agreement could provide a basis for pay increases which could only be accessed through agency agreements based on genuine ongoing productivity initiatives. Such an agreement would not need to cover all areas staffed under the Public Service Act, if separate arrangements were seen as desirable for certain agencies (e.g. commercial bodies). Alternatively, agencies could operate under totally devolved arrangements although some transition period to enable management to prepare for this approach may be appropriate.

While encouraging agencies to develop their own agreements, some APS-wide parameters will need to be maintained in the interests of encouraging mobility across the APS, for example, portability of leave entitlements.

Maximum flexibility for agencies needs to be balanced against the ease with which governments can make changes in the Machinery of Government. Locking diverse agency arrangements into enterprise agreements for long periods can reduce the flexibility of the Government as the overall employer.

Care also needs to be taken in devising gainsharing arrangements to maximise incentives while ensuring that productivity gains are fairly distributed between agencies and their staff and the Budget on behalf of taxpayers.

The Workplace Relations legislation will outlaw discrimination in employment on a number of grounds, including age, membership or non-membership of a union and family responsibilities. Consistent with the principle of non-discrimination, the Government intends to repeal compulsory age 65 retirement-an issue where, under Labor, the Commonwealth lagged behind other jurisdictions.

Innovative Ways of Organising People

Private sector organisations have increasingly questioned the continued relevance of workplace structures based on hierarchical control and moved to more team-based arrangements. However the APS remains heavily dependent on rules-based approaches. It is in effect, a centralised, hierarchical organisation divided into many layers and boxes. This contributes, in the view of the National Commission of Audit, to 'a more conservative approach to management'.

The APS needs to embrace a results-oriented approach to performance. Yet much of it continues to be structured along traditional lines of authority, carefully regulated to ensure that as few mistakes are made as possible. These structures have been highly effective in providing maximum control of quality and maintaining public confidence in the integrity of decision-making. At the same time they have stifled creativity and imagination in the workplace and accorded little recognition to collective work.

The Government supports the progressive introduction of team-based structures across the APS. Not only do such approaches provide work groups with incentive and reward for high performance but they also benefit staff by providing more effective skills development, greater autonomy and improved job satisfaction. The new flexibilities provided to the APS will stimulate these new, more innovative ways of organising people.

Paying for performance

In general, remuneration arrangements should be set at the individual department or agency level, in a manner designed to attract and retain high quality staff. This includes recognition of superior performance.

The APS currently lacks effective performance management systems for staff. To strengthen the commitment to achieving the outcomes set by government, and to make best use of more flexible classification and remuneration structures, effective performance monitoring and feedback are essential. To do so it will be necessary to establish a clear connection between the work of each employee or work team to the Charter of Government Performance.

The form of this process will not be prescribed but it will be a mandatory requirement for all APS employment.

Until now experiments with performance pay have been unsatisfactory. Capacity to reward outstanding performance by individuals in pay terms in the APS has been limited. Performance pay was introduced in 1992 for the Senior Executive Service, and has since been modified as a result of concerns about transparency and accountability. Although similar arrangements were introduced for Senior Officers, they have largely lapsed.

If performance pay is to contribute to improved performance it needs to be implemented in a far more flexible fashion.

The Government believes that Agency Heads should decide, and be publicly accountable for, the application of performance pay arrangements within their agencies, subject to overall budget parameters set by government. There is a need for greater flexibility in the way agencies recognise and reward performance, both through tangible and non-pay rewards. The Government supports greater experimentation and sharing of experience in how best to reward outstanding team performance or individual goal achievement.

In leading private sector organisations, the focus of pay policies has moved from cost control to seeing remuneration as a tool for motivating people to achieve organisational objectives. It is now opportune to restructure APS remuneration policy to give agencies the ability to link their remuneration policies more clearly to their strategies for enhancing individual, team and organisational performance.

One way of achieving this would be to give agencies the option to adopt a new simplified classification structure. This alternative structure would involve moving away from the separate identification of all classifications and instead developing a single structure with a limited range of broad pay bands.

The Government would provide agencies with the freedom to adapt the new structure to best suit their needs. This would not be a mechanism to reduce public service pay, but simply a means to introduce more varied work and greater flexibility.

Streamlining administration

The complexity of employment conditions in the APS contributes to cumbersome arrangements for their administration. Human resource management, in particular, is poor.

It is not that the APS ignores personnel issues. Indeed the APS expends a significant amount of its resources in training. It is simply not effective. Comparatively little effort, or resources, is invested in people management strategies which relate training to corporate goals. Administrative tasks dominate attention. Strategic issues, such as workforce planning, career development and performance monitoring, get lost in the paperwork. The focus is on process not outcomes.

Current human resource management practices are expensive. The heavily prescriptive approach embodied in outd bgcolor=powderblueated legislation creates an inefficient and costly administrative structure. Once the legislation is brought into the twenty-first century it will be necessary to reform the process-driven culture which has been born of regulation.

The administrative costs resulting from the way in which personnel rules are framed, implemented, and administered are high. For example simple low value added tasks (such as processing leave and entitlement applications) can take as many as 29 steps.

This is unacceptable. Performance must be improved.

The Government has decided that all Ministers will review current personnel administration arrangements to ensure that the capacity for improvement identified in the MAB/MIAC Paper, Achieving Cost Effective Personnel Services, is realised. Individual agencies will be expected to take full advantage of the new legislative and industrial framework to develop new workplace practices that are more efficient and effective.

Making devolution work

Reforms proposed under a new Public Service Act and the Workplace Relations legislation will enable the devolution of most of the control over the employment framework to Agency Heads. However, there are other factors which constrain the behaviour of Agency Heads and managers in exploiting flexibility in the employment framework. These barriers must be overcome if we are to build a dynamic APS for the next century.

One inhibitor is the culture of the centre. It survives still. Central agencies must learn to 'let go' in practice as well as theory. Standards must be maintained, service-wide policies implemented, advice provided and best practice promoted. But the culture must be one of facilitation not regulation.

Devolution is crucial to improved performance. Exploiting the flexibility of the new employment framework must become a major part of each Agency Head's role. Agency Heads must ensure that their employment practices return the best outcome to the Government and the community, benchmarked against alternative service delivery organisations.

An Australian Public Service for the next century

The Government is committed to revitalising the APS as part of its broader reform agenda.

This Paper sets out the directions for change. It indicates the legislative, industrial and administrative flexibility the Government intends to provide to APS managers. The employment framework will be transformed, providing the APS leadership with the freedoms necessary to pursue more innovative ways of seeking high performance.

The Government looks to build an APS ready for the next century. It wants a cohesive Service welded together by shared values rather than bound to conformity by regulation and the standardisation of terms and conditions.

Australia will continue to need a highly professional and skilled Public Service-one which can contribute to the development of policy advice, implement legislation and oversight the delivery of government services to the Australian community. But it will no longer enjoy a monopoly. Its delivery of services will have to compete on the basis of quality, efficiency and effectiveness. To do this it needs to be freed up.

Those who join the APS in the years to come will be expected to have an understanding of and commitment to working in the public interest. They will be attracted by working on matters of national importance. They will not be obliged to choose a career for life: nor should they expect one. The APS of the future will benefit from increased mobility not only within the Service, but from movement in and out of State public services, the private and non-profit sectors and academia.

Those who work within the APS will enjoy a quality job, within a learning organisation, in which their creativity is actively sought. They will have more autonomy over their work practices and enjoy far greater employment flexibility. Most importantly, they will benefit from a more direct relationship with their employers rather than be managed through rules, regulations and unions. Building this relationship will be a key responsibility of agencies and a major test of leadership.

Notwithstanding this approach, where employees choose to join a union there is a role for responsible unionism in the APS.

A strategic approach to the systematic management of risk will be encouraged. Enhanced public accountability will ensure that taxpayers' funds are not used fraudulently or wastefully. It will require the emergence of an APS in which managers are encouraged to seek maximum value for money rather than minimum risk taking.

This is a bold vision. This Discussion Paper seeks to open debate on how to achieve it.

The Government welcomes your response.

Together we can build a best practice Australian Public Service.

Questions

1. What changes are needed to the APS employment framework to enable the APS to perform as efficiently and effectively, and with as much commitment to quality and service, as best practice in the private sector?
2. Given the substantial and urgent need for major reform, how should the management framework be overhauled to promote and achieve those objectives?
3. What management practices or executive conduct are the principal cause(s) of the decline in workplace morale and how could this be remedied?
4. What incentives and accountability arrangements are necessary to ensure public service leaders and managers utilise the flexibilities being established in the new employment framework?
5. What are the essential matters for inclusion in a new Public Service Act?
6. How is Government, the Parliament and the Australian community to be assured that the values and standards expected of the APS are being maintained and promoted?
7. Is there scope to reduce the range and level of legalism of the current APS internal appeal processes?
8. How could performance agreements be improved?
9. What obstacles must be overcome to create a performance culture in the APS?
10. Should Agency Heads be able to develop their own policies on how extensively opportunities for APS employment are advertised?
11. Should continuing employment be the norm for ongoing work subject to the ability to terminate on grounds such as poor performance?
12. What flexibility should there be to use fixed term employment?
13. To what extent, at what levels of the Service and for what modes of employment, if any, may AWAs be applicable in the APS?
14. What scope for remuneration flexibility should be available to APS agencies?
15. What would be the most effective gainsharing arrangements to maximise incentives for agency agreement-making that also ensured that productivity gains would fairly distributed between agencies and their staff and the Budget, on behalf of taxpayers?
16. Should there be Service-wide reform of classification structures, or should agencies have the choice of whether to adopt new models?
17. Would greater use of teams be facilitated by moving to a single, more broadbanded classification structure?
18. What obstacles must be removed to enable agencies to review and streamline personnel administration?
19. What role do unions play in the more devolved environment as the APS moves towards best practice?
20. What role should central agencies perform in a devolved environment in order to support the timely and effective adoption of more flexible employment arrangements by line agencies?

How can I give my views?

If you would like to participate in the discussions and consultations about the issues raised in this paper or other issues which you think are important to a reformed public service, you can:

• call (02) 6272 3665 to register an interest in participating in a focus group (limited places are available - participants will be advised of the acceptance of their nomination, the venue and the timing of focus groups);
• fax your comments to (02) 6273 2756;
• e-mail your comments via the Internet to apsreform@apsc.gov.au

Closing Date for submissions is Friday 31 January 1997

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