Westmin-Ovation: Valuing people in reform of NSW public services – Barry O’Farrell

The Hon Barry O’Farrell, Premier of New South Wales, addressed The Sydney Institute on Monday 4 July 2011. His speech marked the end of the first 100 days of the newly elected Liberal-National Coalition NSW government following a landslide win at the March 2011 state election. With a larger than average task ahead of it, the O’Farrell Government took office after a decade and a half of Labor in charge of New South Wales. In his speech, Premier O’Farrell outlined the directions that would underpin his leadership of the state.

“WESTMIN-OVATION”: VALUING PEOPLE IN REFORM OF NSW PUBLIC SERVICES

BARRY O’FARRELL

In my last address to The Sydney Institute, I argued among other things that people, not governments, create civil society. I would add to that my belief that Westminster traditions and processes that were established in the nineteenth century are in fact our strongest resource to take the NSW public service into a brand new era of innovation, and that responsive and innovative governments are the expression of good people. Because public administrations cannot be their best if we forget that public service is the sum of individual contributions, and the quality of public sector leadership. So, as we approach this first 100 days in office, we have championed good people – and merit – in re-shaping our public service to meet contemporary challenges.

I would like to thank Gerard Henderson and the members of The Sydney Institute for again extending an opportunity to speak about the significance of people in restoring good government to NSW.

Fixing the problems

For much of the last 16 years hard working citizens in NSW have been let down by a failure of political leadership to articulate a strong direction and clear priorities. Despite the energy of our citizens, and our natural and intellectual resources, families and businesses have had to work even harder to reach their goals because previous political leadership failed to map a pathway that provided people freer choices.

In establishing a plan to restore NSW’s fortunes – to make us “Number One again” – the NSW Liberals & Nationals’ team drew up an Action Plan that we believed reflected people’s expectations. Growing our economy.  Improving our services. Renovating our infrastructure. Restoring honesty to government. Giving people a say. An Action Plan supported by detailed policies.

On 27 March, we faced the reality of a $5 billion-plus black hole. A public service battered by scapegoating and murky political deal-making.  And a road map – if there really ever was one – whose pathway had been corrupted, dead-ended or trashed by political dealmakers more focused on their own fortunes than those of the people they represented. The 2.1 million people who voted for change in NSW, along with others around the nation who know the importance of a vibrant NSW to the Australian economy, wanted us to get on and fix it.

Business schools are full of case studies of CEOs inheriting basket cases. Management academics like Jim Collins[1] have made careers writing books about “hedgehogs”, and “putting people on the bus”. I’m sure some here have read your fair share. Public administration and military engineering don’t always sustain comparison. But as a reader of our own rich Australian history I’d prefer to draw on the experience of an engineer who, in 1908, accepted the command of the Victorian section of the Australian Intelligence Corp. The citizen-soldier General Sir John Monash.

For a Corp whose bread and butter was knowledge of the places in which they might have to defend Australian interests, Monash was shocked to discover the service actually had no maps!  No maps of Australia – let alone anywhere else Australians might need to go. Monash knew the answer started with good people. He immediately tackled his own “basket case” by selecting a staff of 15 specialists to do the necessary jobs – people who were “educated, courteous and disciplined and prepared to get their hands dirty, literally”[2], and set them to work in a “collegiate atmosphere”. His team included engineers, scientists and logisticians, librarians – and accountants who could balance the books.

Monash took the initiative and invested in looking beyond the immediate horizon.  He sought to understand the risks and competition ahead. And of course he got on and created those maps, sending his people out on bicycles around the countryside to draw them. These early responses helped to establish the capability to win a bigger battle – the victory in Europe – for which Australians under his leadership deserve immense credit.

What inspires me about Monash is that when he inherited a fundamentally awful problem, he knew immediately that, the way to fix it, was to assemble a great team of good people.  Blaming the system, or surrendering to the status quo, was not the answer. So he took the initiative in the best Australian way.  A “can-do” approach that also respected the best of the military traditions underpinning the ingenuity and innovation of his team.

Preparing for change

There is only one good thing about Opposition – and that’s the opportunity it provides to do your homework. To think about ways to do things better. From the depths of Opposition, my team knew that if we were to successfully implement our policies, if elected to government, we would be relying on a public service whose detailed workings were largely obscure to us. Our then Shadow Cabinet knew it would be good people – more than any systems – that would be the difference between meeting community expectations or delivering ‘more of the same’.

A lot has happened since the people of NSW voted overwhelmingly for real change 100 days ago – and in the 93 days since my government was sworn in. Over this time we have come face to face with the men and women of a state administration that, until 27 March, was only an oblique reflection in the mirror of Opposition. And the observations, prejudices and assumptions made over 16 years had to be confronted, interrogated, accepted or rejected. Because regardless of who had caused the problems, it was up to us to not only fix it but “own” it.  Of all the messages we received from voters, the clearest was “We know it’s stuffed, just get on and fix it”.

I was not disappointed. My impression of those first few days was of professional people, bringing expert advice to my team and I on how our detailed agenda could be implemented. I was doubly inspired – because I could see that what I knew was an ambitious agenda could be shared with a team of professional people who were hungry for direction and keen to roll their sleeves up and, as Monash would expect, “get their hands dirty”.

Why people matter

People have high expectations of us. And high expectations of their public service. After all, it costs $27.7 billion a year in salaries. And with 7.2 million people across our great state, it’s a cost they bear of about $3,800 per year. Our core business in government is meeting the needs that the market others can’t or won’t meet, and to deliver on behalf of citizens those things which people delegate, in limited ways to us, to do on their behalf – regulation, compliance, public infrastructure and certain services. Meeting those needs demands good people designing and managing the systems to procure, implement and evaluate. So it’s all about people. And since governments generally don’t manufacture things, our policy, services and regulatory responsibilities require that our “assets”, to adopt the management jargon, are people:

Around 322,000 public sector “assets”[3] walk in the door of state agencies every day. But it has troubled me that too often our public service is characterised as a faceless cohort, an anonymous “workforce”, a group for whom one approach fits all. I believe this demeans and undervalues the uniqueness of each employee and their contribution. When someone is treated in a hospital, or suffers a robbery, the patient or victim, generally praise to their friends and family the individual nurse or officer whose actions made that extra difference.

The Senior Constable who performed his job with dispassionate and consummate professionalism last week in the so-called “burqa incident” deserves our praise for his handling of the situation.  Individuals in public service like Senior Constable Fogarty and others, in the most challenging and unpredictable front line situations, set the tone of trust and dependability in our civil domain – the only basis on which we can sustain mature and honest democracy.

It’s a shame that for too long the idea of individuals in our public service has been obscured. By contrast, very large customer focused businesses like Bunnings or McDonalds proudly celebrate their outstanding individuals with “employee of the month” or similar accolades in their store entrances. In the same spirit, I’d like us to be more focused on developing and rewarding individuals in our public sector, who, as in business and the not-for-profit sectors, contribute value and reputation in the eyes of customers, stakeholders and shareholders. This is because in my view the logical way to motivate outstanding innovation and customer service to citizens is to foster a public service in which individuals are truly visible and meaningful, regardless of the size of the team of which they are a part.

The first 100 days of reform

Governments are measured on many milestones and our 100 Day Action Plan is one on which I will welcome scrutiny next Tuesday. Our Action Plan set out to deliver:

• The creation of bodies such as Infrastructure NSW and Destination NSW;
• Commencement of the Commission of Audit, and the Review of the State’s planning system;
• Desperately overdue Budget control; A start on vital infrastructure like the North West Rail Link and the Convention Centre; Restoration of honesty and trust in government, with measures to strengthen ICAC, public sector and ministerial ethics framework, an end to taxpayer-funded political advertising;
• Tax reforms to boost regional whole-of-state job growth, and to improve home
• affordability; and Downward pressure on the cost of living, with the Tamberlin Inquiry established to get to the truth of Labor’s power sell-off, and set a future course.

I am pleased to report our Action Plan is on track. It has enabled us to deliver some priorities while the groundwork commenced on other commitments, to be delivered in the September Budget. Whilst there is no dispute from any quarter we inherited a fiscal basket case, it has been my express direction to bureaucrats that we will honour our promises, and reflect these as priorities in the next and following Budgets. That is to say we will not let Labor’s $5 billion-plus black hole be a reason not to deliver.

I am proud of the start we have been able to make. I am proud that my team invested time in Opposition planning transition priorities that would be vital in the event we were successful. This included policy implementation and costing, drafting the outline of key legislation, detailed structural thinking – and most important of all, understanding that getting the right people into the right places would be crucial to success. So let me focus on two aspects of delivering our Action Plan:

1. Outstanding people in public sector leadership; and
2. Combining the traditions of Westminster with leading edge innovation.

Outstanding people in public sector leadership

I was amused to read histrionic predictions by pre-election commentators that a NSW

Liberals and Nationals victory would result in a “night of the long knives” decimating the ranks, and be followed by a tsunami of partisan appointments to the most senior public service positions. These commentators failed to understand that our vision for the restoration of a professional public service which valued integrity and Westminister traditions is exactly what we intended.

When I told the Institute of Public Administration Australia in June last year that any public servant who wants to be part of our reformist agenda; wants to use their skills to deliver the reliable, quality services our citizens deserve; wants to help secure the State’s future prosperity and opportunities, will be welcomed – whatever your background, whatever your history’ I meant it. I won’t apologise for disappointing the commentariat. Although I forgive them for thinking that Labor’s endemic public service politicisation was the norm of any government.

The appointment of Chris Eccles as the Director General of the Department of Premier and

Cabinet proved our intention to restore genuine Westminster public administration to NSW. Chris Eccles represents a new generation of professional public servants, combining a distinguished public sector career in Victoria, Queensland, South Australia and Canberra, with experience in the private sector, law, and in vocational skills and training. It is a combination of experience that I believe is well suited to leading the NSW public sector to respond strongly to the customer focus, accountability and diverse service delivery modes that our community increasingly seeks. We recognised existing professional skills and talent in other key appointments and aligned those skills with our new cluster structure, with Michael Coutts-Trotter appointed to head up the new department of Finance and Services.

We have attracted outstanding expertise to the role of Director General of Health with Dr Mary Foley, and former federal departmental head Mark Paterson has recently taken up the leadership of Trade, Investment, Regional Infrastructure and Services. We advertised worldwide for a new Secretary of Treasury, to align new leadership with central agency challenges including boosting productivity; and for an outstanding educator to lead the Department of Education and Communities. The new CEO of Infrastructure NSW, Paul Broad, brings a mix of public and private sector infrastructure and utilities experience to infrastructure project selection, finance and delivery.

I am pleased to announce that Cabinet today approved the appointment of Yasmin King as NSW’s first Small Business Commissioner. Ms King’s expertise includes economics, finance, arbitration, and non-executive directorships. She was an associate commissioner in the ACCC, and she has direct experience in small business through her own consultancy and a family business. As Small Business Commissioner Yasmin King will champion the interests of small business in government policy and ensure the concerns of small businesses – the engine-room of jobs across our state – are not monstered by “big bureaucracy”. I want to make sure that we do whatever we can to enable business to thrive, innovate, employ, export and compete.  I look forward to Ms King being a burr under the saddle of government to make that happen. Ms King was appointed from a competitive field of applicants in response to public advertising for the position.

These outstanding individuals add to continuing CEO’s who have embraced the chance to respond to a new agenda and are producing exciting ideas, many of which had been sidelined under the previous administration. We look to our public service leaders – as well as to the middle and front lines, for a healthy and constructive tension that preserves the public interest, defends public value, and adds professional quality and value to the commitments of an elected government.  In other words, frank and fearless advice. Over the last 93 days my staff have occasionally expressed indignation when the department has recommended “no” to a proposition. But, if the department’s view is evidence-based and well argued, I have commended them for it.  It’s their job.

A centerpiece of our public service policy is the establishment of a Public Service Commission, and the appointment of Professor Peter Shergold signals again that we are serious about building the integrity, professionalism, innovation, independence, and capability of our public service, and the individuals in it. Recruitment for the position of Commissioner was launched three weeks ago, and we expect the Public Service Commission to be operational within the next few months. And in our own ministerial office staffing, we were determined to recruit on merit and capability.

If you heard whisperings about a “star chamber” they were true – an independent panel that put candidates through a rigorous examination to ensure Ministers had a quality pool of individuals to consider, and taxpayers could be sure that merit underpinned this segment of public spending. And we’ve put an end any prospect of nepotism in Ministerial staff appointments, with an independent process to screen any such applicants.

Westminster and innovation

I said at the outset that Westminster traditions and processes established in the nineteenth century are our strongest resource to take the NSW public service into a brand new era of innovation. Maybe we could call it Westmin-ovation! The NSW Liberals & Nationals honour the institutions of our parliamentary democracy.  We are re-instating proper Westminster processes – Green Papers, White Papers, proper Cabinet process, genuine Question Time, presentation of petitions and restoration of a working committee system.

But this is not to say we are “conservative”, or resist innovation. On the contrary, it is by honouring the institutions of an independent public service, and the maturity of its systems and unique specialisations, that we have a solid foundation from which we can confidently innovate. And sometimes innovation means accepting risk. Risk is good – if assessed stringently and with tolerance for failure within acceptable limits. You simply can’t make these assessments if your fundamentals aren’t well grounded. We will encourage individuals across the public service to innovate, with the confidence of

• Good strategic planning (why are we doing this and what will success look like?);
• The right skills (are they the best, are they relevant?); and
• Honest evaluation (did we get it right? – is there a better way to do it?).

None of this can succeed if the public service is politicised, unfocussed, demoralised, and without clear direction and relevant incentive. Our first step in Westminster-enabled innovation was to implement improved structural efficiency, and: focus clusters on clear strategic priorities; give Ministers and Directors General unambiguous accountabilities and working relationships; centre whole-of-government strategic policy and regulatory overview in the Premier’s cluster; shape clusters to force stronger relationships between agencies with close collaborative imperatives; and create clear Budget accountability at cluster level.

Many private sector CEOs report to shareholders, and must have the flexibility to allocate scarce and valuable resources to the priorities its customers and shareholders want. The public service should be no different.  Taxpayers deserve to have confidence that the $27.7 billion spent each year on public service salaries returns the highest quality and value. Regrettably, the last 16 years has seen political masters advance their selfish party interests while taxpayers fork out more and more – for less. Senior bureaucrats have been hamstrung by past political manipulation which prevented them from putting the right people in the necessary places. If we are to expect public sector CEOs to deliver on their KPIs, they must have the flexibility and autonomy to deploy their people, and acquire the necessary skills, to do the job.

And Labor has learned nothing – because when we resolved to actually implement a perfectly sensible Labor wages policy which they had re-stated every year but ignored in practice, their imagination was limited to reciting Jurassic slogans and turning the Upper House into an expensive circus. So in addition to confirming wages policy to help bring NSW’s finances under control, we have abolished Labor’s ‘no forced redundancy’ policy so that employees who are for whatever reason ‘excess’ to the requirements of citizens in delivering efficient and relevant services, may be fairly and respectfully separated from public employment.

So for a NSW Liberals & Nationals government what matters will be the shape, not the size of government, and the outcomes it delivers for citizens and customers. Taxpayers and battling businesses around the state are right to expect that government respect the real pressures and costs that drive them, and don’t create, at their expense, a public sector environment out of touch with all reality.

Competing for the Best and Brightest

Many people will remember that aspirants for a public service career used to do an exam. This test created a real sense of pride in those who met the standards.  It defined a public service career as a prestigious and competitive choice. In thinking about how to attract a new generation of “best and brightest” to public service, I wonder if perhaps there is something to be gained by revisiting that Westminster tradition, and adapting the values to achieving our contemporary objectives, to define the public service as an admired and competitive career choice; develop a cadre of young professional thinkers; and once again have a broad community view that success in entry to a public service career is a prestigious outcome for an individual.

I’m certainly not suggesting we revert to entry exams on Latin or colonial history! We want to recruit widely and not put in place clunky barriers to entry.  Our objective is to get the right people in the right places, delivering the right results. So, the contemporary version of what we used to know as a “public service exam” could be to rethink our recruitment and interview practices to emphasise selection of our best and brightest individuals who are innovators, customer focused, outcome and devolution orientated.  We have much to learn from employers such as management consultants who compete with us for talented people.

When the Public Service Commission is up and running I hope the prospect of upgrading our recruitment methodologies to define the high standards of a world class, innovative and contemporary public service might be considered among the many reform ideas that I look forward to seeing emerge from the Commission.

Conclusion

John Monash needed new maps – and so, metaphorically, does NSW. I will say more about this in the coming days, but it’s as important to have a plan for the other 1380 days in a four year term as it is to have one to guide you through transition to government. A map or forward plan is central to establishing trust across the civil domain, and to evaluating success or failure.

A good map articulates a journey and the targets to be reached.  For NSW, overwhelmingly this is ‘to be Number One again’. Delivering our policies and achieving the service results and objectives overwhelmingly demanded by citizens in March, requires us to bring the imagination and capability of every single individual in the NSW public sector together to make the best use of every taxpayer dollar.

We will look to the front line, the middle and the senior ranks for their ideas and experience to:

• Bring choice and contestability to public services
• Work with the private and not for profit sectors
• Find ways to devolve decision making as close as possible to the people affected by those decisions
• Make government more transparent and accountable
• Put the citizen, the customer, at the centre of public services.

We must use the strength of our Westminster traditions to give people confidence to try new ideas and extend beyond our comfort zone in rapidly developing challenges. And in doing so enable individuals in the public service to draw their own lines on that map and be acknowledged for their contribution to the quality and life and opportunity for the people of NSW.

ENDNOTES

[1] Jim Collins Good to Great Arrow Books 2001

[2] Roland Perry Monash, The outsider who won a war, Random House Australia 2004:118-119

[3] The average number of full-time equivalent (FTE) employees in the NSW public sector at 30 June 2010 was 322,452.  The  number of people (headcount) who were working in the NSW public sector at 30 June 2010 was 386,185.