Better government wish-list: Andrew Podger Getting ready ... Opposition Leader Tony Abbott, who is likely to be Australia's next prime minister. The increasing emphasis in recent years on spin and media management has not only been at the expense of careful policy deliberation in the public interest, it's come at a high cost to good management of government programs and policies. Two former Department of the Prime Minister and Cabinet secretaries, Terry Moran and Professor Peter Shergold, made valuable contributions recently by suggesting (particularly in the June issue of the Australian Journal of Public Administration) some improvements to government processes. Yet some of their prescriptions are wide of the mark, and they failed to mention some matters that must be addressed by the incoming government. It would help to give departments names that reflect ongoing portfolio functions and responsibilities rather than the interest groups to be assuaged and buzzwords that are popular. The following is my list of priorities for improving government management. Administrative Arrangements Orders A central platform for good government management is the basic structure of cabinet, ministerial responsibilities, portfolios and departments. This structure is set by an incoming government's Administrative Arrangements Orders. The cabinet must be manageable, and all departments should be represented around the table. The 1987 reforms set the model for such an arrangement, with senior (portfolio) ministers in cabinet, and other ministers and parliamentary secretaries taking particular responsibilities within portfolios to support the portfolio ministers. To help cabinet focus on the big issues, ministers should not, as a rule, have responsibilities that cross portfolio boundaries; a rule now entirely ignored after it was chipped away under prime ministers John Howard and Kevin Rudd. The rule helps portfolio ministers, working with their assistant ministers and parliamentary secretaries, to manage most intra-portfolio priorities without close cabinet involvement. Former PM&C secretary Terry Moran's call for parliamentary involvement in vetting public service appointments is dangerous. The portfolio responsibilities should, as far as possible, reflect longer-term functional relationships, limiting the extent of administrative churn required as political priorities change and facilitating a focus on longer-term issues. The current mess makes a big change after the September election highly desirable - one that, hopefully, can then be maintained largely unchanged for the next decade or more. Thus, for example, climate change should move back to the environment portfolio, and higher education and research to the education and employment portfolio. There is also scope to reduce overlap; for example, by winding back Treasury's involvement in spending policies and letting the Finance Department again have primary responsibility for spending oversight. Better still, it would help to use names that reflect ongoing portfolio functions and responsibilities rather than the interest groups to be assuaged or buzzwords that are currently popular. We do not need an "industry, innovation, climate change, science, research and tertiary education" portfolio or a "sustainability, environment, water, population and communities" portfolio. Titles much to be preferred are "industry," "environment," "social security," "communications" and "finance." Organisational structures Former PM&C chief Professor Peter Shergold says the government must overhaul the management of indigenous affairs. Photo: Richard Briggs Moran is right to question the recent orthodoxy that responsibilities should be kept within departments of state as far as possible. The emphasis on departments may allow greater political control but this can be at the expense of reduced attention to service delivery and to independent administration where that is important. There are two particularly important areas where structural change would improve organisational performance. The first is indigenous affairs, which Shergold rightly highlights. While the former Aboriginal and Torres Strait Islander Commission had absurd governance arrangements, it had considerable specialist knowledge and a stable framework of regional service delivery with strong community links. A new indigenous affairs agency, separate from the relevant policy department, could focus on service delivery and on community planning, and other portfolios and agencies (including state bodies) would be expected to respond to it. It would still be responsible to a minister, but its primary focus would be on service delivery and achieving outcomes on the ground. This would require it to establish and maintain relationships, build its skill base and maintain staff continuity. The second is the Department of Human Services. There are benefits in a one-stop-shop approach to delivering many government services, but they did not require consolidating Centrelink, Medicare Australia and the Child Support Agency, and certainly not placing them all within a department of state. What was needed was considerable investment in new technology and data links, and in the skills of service-delivery staff, but the downsides of amalgamation are many and substantial. The biggest downside is having this huge service-delivery responsibility residing in a department whose natural focus is upwards, serving its minister. Another is the increased separation of policy from administration, because the two lie in different portfolios, not just different agencies within a portfolio. An example of this is the evident discomfort of the Minister for Human Services in being responsible for administering the decision to cut benefits for more than 100,000 sole parents. A possibly more important example is the separation of Medicare from the health portfolio. Medicare Australia, formerly the Health Insurance Commission, was not just a payments agency; it contributed to the Commonwealth's huge responsibility as the nation's health insurer. It should be helping to identify patterns of spending and emerging risks, and working with the department to advise on possible actions to better manage those risks, maximise health gains and minimise financial exposure. It now seems only concerned with administering benefits, no more than an extension of Centrelink, leaving the Health Department to reinvent its capacity for analysing data on the Medicare Benefits Scheme and the Pharmaceutical Benefits Scheme. The idea of Medicare extending this analytical role to study hospital utilisation and costs and aged-care patterns, in order to contribute to a national insurer role, seems now to be fanciful rather than an essential aspect of widening the Commonwealth's role in health financing. Medicare Australia should always have looked to shed itself of its Medicare offices as it introduced its electronic banking links through GPs, pharmacies and so on, and to work with Centrelink to provide any remaining office services required, but amalgamation was never needed or advisable. Cabinet processes Cabinet processes complement the AAO structural arrangements to ensure that collective responsibility is managed well. The idea of "whole of government" or "joined-up government" has been emphasised in the past decade, as new public management's emphasis on clear vertical lines of accountability for results, and devolution, was found to have a serious downside. Yet not everything must be tied to everything else all of the time, and collective decision-making can encourage "group thinking" if different perspectives are not properly presented. Cabinet committees can be useful forums for careful consideration of complex issues involving several portfolios, and they can be established as ongoing committees or ad hoc committees to address one-off issues. The expenditure review and national security committees have long proven themselves as effective clearing houses that study relevant issues in detail, but still report formally to full cabinet. A key reason for their success has been the participation of officials with ministers, ensuring ready access to data, analysis and experience not always conveyed adequately in documents. The incoming government should look carefully at the role and procedures of cabinet committees. Cabinet also needs to apply rigorously the rules set out in the Cabinet Handbook and consider strengthening some rules. While the 10-day rule of yesteryear may appear unrealistic today, it could still apply when major policy issues are under consideration with a known time frame. Much of the budget process and consideration of inquiry reports would fall within this category. Strictly enforcing a gap between lodgement of papers and their consideration in the room doesn't only give ministers time to read and absorb the material; it also allows departments to prepare briefings in light of proposals and coordination comments, including alternative options for consideration. The finance "green" is often the most critical document before cabinet and other agencies need to be aware of its content before they can finalise their own briefings. A common practice in the past would be worth reintroducing: providing the green to the departments most concerned at least a day before the cabinet discussion. A sad reaction to "leaks" a few years ago was the reduced circulation of coordination comments, particularly those from PM&C. These are almost as important as the finance greens in shaping the cabinet discussion and highlighting the differences in views that need to be resolved. Policy development and policy review Both Moran and Shergold suggest the need to improve strategic policy advice; Shergold emphasising the important contribution of those outside the public service and Moran encouraging greater public engagement by those inside the public service. There is something to both of these views, but some cautions should also be expressed. There has been considerable improvement in recent years in the extent of consultation and engagement between public service advisers and external groups, most recently promoted as "co-design" and "co-production." But there are major risks: of special interests dominating the public interest, and of short-term political management dominating longer-term policy considerations. Shergold's enthusiasm for a "competition of ideas" between the public service and external advisers (including ministerial staff) has a whiff of naivety. Too often, the competition is really just for the ear of the minister and the government, as Kathy MacDermott warned some years ago. External advice is essential, particularly to bring different perspectives, experience and expertise to the table, but it is vital that ministers refer such advice to their public service advisers for comment and assessment, noting their statutory obligation for impartiality as well as their professionalism and administrative experience. Similarly, Moran's encouragement for senior officials to speak out on "self-evident" policy issues and trade-offs requires care. I certainly share Moran's concern about the curtailment (with a few notable exceptions) of public speeches by senior officials over the last decade and more, as the risk of misrepresentation or being taken out of context in the media, and of subsequent pain as ministers and their staff respond, is seen by many as outweighing the public interest involved. I experienced such pain on several occasions, but remain firmly of the view that senior public servants have an important role in explaining policy and providing the evidence and analysis behind policy deliberations. This includes both public speeches and background briefings to trusted journalists and commentators, so long as confidences are not breached. There are other, more important measures to be taken if strategic policy advice is to be strengthened. First, there are structural measures. Too few departments today have central policy and policy research units, with responsibility for administrative data and analysis and for program evaluation. Resources are devoted excessively to providing immediate responses to immediate issues, distributed across portfolio programs and unable to focus on broader and longer-term strategic concerns. Perhaps also the concept of the policy cycle has become too ingrained, where policy decisions are seen to be followed by implementation then evaluation, followed by the development of new policy options and then a new set of policy decisions. This concept may have some normative value but, in the real world, most decisions are taken in response to events. The key to avoiding shallow political responses is to maintain a strong policy research capacity able to provide substance to advice when events demand a quick response. Strong research capacity also requires regular public exposure, through publications and networking with external experts who have ready access themselves to administrative data. One of the saddest decisions in recent years was the winding-up last year of the Social Security Journal, the Department of Families, Housing, Community Services and Indigenous Affairs' in-house journal for over 35 years. Specific policy reviews and inquiries are another valuable way to reflect on current policies and programs. Yet they must be well-designed for the purpose and there have been too many recently either poorly designed or poorly managed (the Henry tax review being a good example of the latter). Accountability: APS, ministers and ministerial staff Moran has made a number of suggestions to improve government. While drawing attention to important outstanding issues, he has not, in my view, offered the best options, and some of his suggestions would be counterproductive. Secretary appointments are now subject to advice from both the secretary of PM&C and the public service commissioner, and are made by the governor-general on advice from the prime minister. This does not constrain the prime minister directly but is likely to reduce greatly the risk of overt politicisation. Moran's suggestion to use the legislature to vet appointments, as is the practice in the US, is only likely to legitimise political appointments so long as the individuals have relevant expertise and experience; it is not a recipe for non-partisan, impartial appointments. And making secretaries even more directly accountable to Parliament than occurs now de facto would raise constitutional questions, absolving ministers of much of their entirely appropriate responsibilities. If we were to take further steps to ensure the independence of the Australian Public Service, the most sensible approach would be to consider the New Zealand system, whereby the state services commissioner is the employer of secretaries, making such appointments after consulting the prime minister and relevant minister, and overseeing performance and so on. Moran's idea of departmental boards is not silly. I have seen forms of such boards work well, in the old Department of Administrative Services and in the Health Department. In both cases they were advisory only, the secretary retaining the legal responsibilities (under the Public Service Act and Financial Management Act). In Health, for a while, we had Bill Scales, a former head of the Productivity Commission and former head of the Victorian Premier's Department, on our departmental management committee. While not all committee members enjoyed the experience, Scales encouraged more strategic discussion around organisational capability to lead future health and aged-care reforms, rather than the usual management issues. I had suggested, in the Department of Housing and Regional Development, a similar approach, but my then minister, Brian Howe, was uncomfortable with the idea, highlighting (as he had the right to do) his constitutional role to "administer the department." The use of a board with external member requires ministerial acceptance, even if the appointments are made by the secretary. An executive board would not work, in my view, as the accountability of board members vis-a-vis that of the secretary and the minister would be blurred. Another approach is to strengthen the role of internal audit committees. These days, such committees are typically chaired by an external person and have at least one other external member, they report directly to the secretary and they have a wide brief to advise on risk management, which can encompass advising on strategic planning and other top management issues. Making ministerial staff subject to a statutory code of conduct with formal sanctions seems to me politically naive and an overkill. Who might the Parliament agree would have authority to decide on a breach and impose a sanction? The code introduced in 2008, at then Labor minister John Faulkner's initiative, is an important benchmark for proper behaviour that can be adequately policed by political and media pressures. The remaining concerns about advisers - who are, rightly, a central part of the public administration framework today - relate to their number, their skills and experience, and the way they work with the APS. Notwithstanding Alan Henderson's review of their number and workload (which led to a partial reversal of the 2007 Rudd reductions), the numbers in Australia remain very high relative to those in most other parliamentary systems: New Zealand and Britain have fewer than 100 each compared with over 400 in Australia at the federal level alone. There is little doubt in my view that any number of advisers will keep themselves very busy, and a large number will only create its own large workload, presenting real dangers in terms of direct effects down the line and diverting attention from longer-term policy work and service delivery to the public. Perhaps of greater concern is the shifting skills and experience of these advisers. There is little data on this, but anecdotal evidence suggests a marked shift since the 1980s and 1990s, away from people with strong subject-matter expertise and experience who can engage with the APS on the substance of policy issues, to younger people embarking on political careers and rewarded for their ability to manage political risks for their bosses, particularly in immediate media management. In terms of public interest (and perhaps the longer-term political interests of a competent government), there would be advantage in a return to having more ministerial staff with subject-matter expertise and experience, who focus on engaging with the public service on the substance of policy. An important associated measure to improve the quality of the relationship is the appointment of suitably skilled and experienced departmental liaison officers. For a while, the Howard government seemed determined to limit the role of DLOs to administrative matters. This role is vital, but there needs to be a senior DLO, preferably an SES band 1 officer or an EL2 who is destined shortly to join the senior executive service. This person should be one of the department's best and brightest, likely to learn from the experience as they move up the APS ladder. They can bring several important benefits to the relationship: a demonstration to the minister and the office of the calibre of department people and the priority the department attaches to serving the minister; a capacity to engage directly in all the discussions within the office and with the minister, ensuring there is appreciation of the bigger policy and administrative aspects of the many day-to-day issues that often preoccupy the office; a capacity to quickly refer issues to relevant experts in the department; and, particularly important for a secretary, the experience and standing to ring the secretary directly and without hesitation when important or sensitive issues arise. Broader structural issues Moran has presented an interesting agenda for further reforming Commonwealth-state relations. These deserve an article or more in their own right. In many respects, I support Moran's suggestions and hope they get a full hearing in the review of federal relations promised by Coalition leader Tony Abbott, should he become prime minister. Let me make just a few comments and suggestions: First, a return to some ideal world where the responsibilities of the Commonwealth are sharply curtailed and distinguished from those of the states is not a serious option today and for good reasons. Globalisation, technological change and the expectations of the Australian public have all contributed to the increasing responsibilities of the national government, as well as to the role of government generally. This does not mean the subsidiarity principle is dead, but that the emphasis should be more on distinguishing roles than on distinguishing responsibilities, and accepting the likely continuing centralisation of taxing capacity and policy interest. The challenges are to limit the Commonwealth's involvement in policy detail as well as administrative detail, and to ensure the states have a real say in the development of national policies. Health is a good example, where the federal government should look to become the national government insurer, contracting out some of that role to private health insurers and relying heavily on private and state government service providers, as well as allowing the states the opportunity to contribute genuinely to the national policy framework. Moran's emphasis on regional and local delivery (also emphasised by Shergold) is also important and could be carried out cooperatively, reducing the extent of detailed management by both Canberra and the state capitals. This requires organisational arrangements other than federal or state departments (as indicated earlier) to have responsibility for most service delivery, whether they be non-government organisations or government agencies (e.g. hospitals, schools). Such an approach needs firm performance oversight, reporting both upwards to government and downwards to communities. Andrew Podger is a professor of public policy at the Australian National University, and a former federal departmental secretary and public service commissioner.