No. 107

STONE the crows! What a relief the government doesn’t do the governing. As the Labor Party makes the Republican primaries look like a process of policy and politesse, it’s good the real government is getting on with it with the public service keeping the country ticking over.

Err no. The cage-fight in Canberra ensured nobody much noticed the release of the Schott Report last week. This review of the NSW public sector showed what happens when politicians don’t keep the administrators under control.

According to Dr Schott, the state employs 322,000 FTE working in 4,400 agencies led by nine director generals and “hundreds” of chief and other senior executives. Given the sheer size of the operation, the 22 ministers involved clearly do not have a clue whatever everybody is up to.[i] Or whether they are earning their $22 billion in wages or being overpaid.[ii]

Schott suggests lower level staff earn more than people in equivalent private sector positions.[iii]

Could this, the Crows ask, be because ministers – especially Labor ones – hate to take on the public sector unions, the last bastion of organised labour? (Some 41 per cent of public sector employees are union members, compared to 14 per cent of private sector workers.) [iv]

The last thing any minister wants is a strike by police, nurses or teachers and in NSW, as with other states, the public service associations took advantage of the GST to extract pay rises.

For nearly all of the last decade public sector wages rose by nine per cent per annum. Starting at $43 bn in 2001, the Australian Bureau of Statistics estimates employment costs increase to $94 bn by 2010-2011 (with local government workers costing another $10bn).[v]

But while the public sector has been picking up pay rises its working conditions hardly encourage productivity. As Dr Schott puts it:

It is astounding to note the problems that management has faced and a credit to the public sector as a whole that service delivery has continued. [vi]

So, who is to blame? The easy answer is the unions. Dr Schott certainly calls the comrades to account:

Workforce management has in the recent past been politicised in some circumstances and in some clusters, with inappropriate weight given to union views. The Commission has been advised that many staff in Human Resources (HR) sections see themselves as employee advocates, rather than ensuring the needs of the business are met. [vii]

Ah, idealists argue, this is what happens when a government long in power sends staffers looking for a quiet life into public service jobs and managers with party connections prosper.

Thus Schott reports on a redundancy program which retrenched not a soul:

In some cases ministers refused to support agencies submissions for redundancies. In other cases, agencies “second guessed” the likely reaction and did not proceed with action. [viii]

In any case ‘twas ever thus, at least since Sir Robert Walpole created the publicly funded political machine ministers have used public money for patronage.

The answer, they say, is to leave officials alone so that the mandarins can administer independent of ministers doing favours for mates and cultivating the comrades.

Up to a point Director General Copper.

When left to themselves, apolitical administrations are neither efficient nor saved from squabbles over the spoils. James Madison explained why in The Federalist 51:

If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. [ix]

The rule of law governs the MPs but they must keep an eye on the public servants – who will stuff things up when accountable only to each other, what with the way ministers take the heat when bureaucracy balls things up.

For an example of what happens when administrators are largely left to themselves the Crows wave a wing at the Australian Defence Force.

It is not that the general officers and high officials are corrupt or inclined to coups – they always have and the Crows see no reason to doubt always will obey whoever commands a majority on the floor of the House of Representatives.

But, given the armed forces standing in the community, the military are largely left alone with ministers acting on advice and careful with the criticism. It has taken spectacular stuff ups for present minister Stephen Smith to say anything unkind.[x]

And, when it comes to kit, commanders get much of what they want. The generals thought heavy armour would be nice a bit back, and so we bought second hand Abrams tanks which never have (and the Crows suspect never will) fire a round in anger. The air marshals like the idea of F-35s and so we will buy the smickest fighter flying (although perhaps not as many as they want). And whatever sort of submarine ends up replacing the P-76, sorry Collins class, you can bet it will be the favourite of at least one faction in the fleet.

Factions? ‘Fraid so. Whether the budget be big or small, however few or many the employees, however slight or vast the authority, every organisation is divided between factions contesting for control. The bureaucrats in Max Weber’s iron cage slug it out for power over each other as well as the ability to boss the rest of us about.

Which rather gets in the way of ADF officialdom keeping the combat forces supplied, demonstrated by the endless inquiries into the administration of equipment and the purchase of kit that does not work.[xi]

Even in the understated language of Paul Rizzo’s review of Navy maintenance, the shambles in defence materiel is obvious:

The inadequate maintenance and sustainment practices have many causal factors. They include poor whole of life asset management, organisational complexity and blurred accountabilities, inadequate risk management, poor compliance and assurance, a “hollowed-out” Navy engineering function, resource shortages … and a culture that places the short term operational mission above the need for technical integrity.[xii]

Planning is equally fraught, according to ASPI:

The inherent risks in defence projects are exacerbated by a systematic tendency to underestimate costs and lead-times, at least in the early stages of projects. In part, this reflects the intrinsic optimistic bias of defence planners—something observed elsewhere in the private and public sectors. And when the overrun and delay chickens come home to roost, there’s a tendency to respond by delaying the project rather than cancelling it, thereby rewarding the optimistic bias. Moreover, there’s no doubt at times an element of unrealistic optimism on the part of project advocates (in both industry and Defence) who are eager to lock the government into their preferred course of action. Unavoidably, it’s the government rather than Defence that ultimately bears the consequences of poor decisions. [xiii]

Perhaps Defence could bring in some NSW officials to sort it out.

But it would be better if they brought ministers committed to keeping the public sector functioning.

And now the Crows return you to the shambles in Canberra.

ENDNOTES


[i] Kerry Schott et al, “New South Wales Commission of Audit Interim Report, Public Sector Management”, (2012) 11, @ www.nsw.gov.au/sites/default/files/pdf/NSWCommissionofAudit_InterimReport_PublicSectorManagement.pdf recovered on February 25

[ii] Schott, op cit, 71

[iii] Schott, op cit, 73

[iv] Australian Bureau of Statistics, “Employee earnings, benefits and trade union membership, August 2010” May 6 2011 @ www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/6310.0Main%20Features2Aug%202010?opendocument&tabname=Summary&prodno=6310.0&issue=Aug%202010&num=&view= recovered on February 25

[v] Julie Novak, “A growing risk: the impacts and consequences of rising state government employment,” Institute of Public Affairs, October 2009 @ www.ipa.org.au/library/publication/1255913936_document_paper_-_state_bureaucracy.pdf recovered on February 25, Julie Novak, “State finances at the crossroads: the states’ budget problem and what to do about it,” Institute of Public Affairs, (May 2009), 20,   @ http://ipa.org.au/library/publication/1241392867_document_novak_-_state_finances_at_the_crossroads.pdf recovered on February 25, Australian Bureau of Statistics, “Employment and earnings, public sector Australia 2010-2011”, 21/12/2011 @ www.abs.gov.au/ausstats/abs@.nsf/PrimaryMainFeatures/6248.0.55.002 recovered on February 25

[vi] Schott, op cit 76

[vii] Schott, op cit 90

[viii] Schott, op cit 78

[ix] The Federalist No. 51, “The Structure of the Government Must Furnish the Proper Checks and Balances Between the Different Departments” @ www.constitution.org/fed/federa51.htm recovered on February 25

[x] Dan Oakes, “Equipment bungles target of national hearings,” Sydney Morning Herald, February 11

[xi] Derek Woolner, “Why Australia’s defence procurement is lacking military precision,” The Conversation, July 5 http://theconversation.edu.au/why-australias-defence-procurement-is-lacking-military-precision-2136 recovered on February 25

[xii] Paul J Rizzo, “Plan to reform support ship repair and management practices,” July 2011 @ www.defence.gov.au/oscdf/rizzo-review/Review.pdf recovered on February 25

[xiii] Mark Thomson, Andrew Davies and Chris Jenkins, “Three views of risk: selecting and acquiring military equipment,” Special Report 42 (November 2011) Australian Strategic Policy Institute, @ www.aspi.org.au/whatsnew/publications.aspx recovered on February 26

'2012