Altogether too much red tape in Australia's public sector

WE have just had a tax forum largely debating how to raise revenue. Yet the government could save up to 20 per cent of its expenditure by overhauling traditional policy-making and accountability processes in the delivery of public services.

If we think of schools, hospitals and prisons as firms, then the regimes that regulate them amount to the worst red tape imposed on any sector of the economy, resulting in billions of dollars of lost productivity each year.

I know what defenders of the traditional approach will say, so let me make clear that I am not arguing for any reduction in accountability but for accountability that is more effective.

It may seem strange that I should criticise my old profession. But I have spent 17 years working with a British-based company that employs 70,000 people worldwide, most of whom deliver public services for governments under contract, and I have developed a deep respect for front-line public servants. We should take some of the frustration out of their jobs and make them more productive.

The chair that I have taken up with the Australia and New Zealand School of Government is explicitly designed to look at the delivery of public services through the eyes of front-line management and staff, rather than studying them from the top down.

Since taking up the chair, I have revisited the literature on policy implementation and I find it differs in fundamental ways from a service delivery model.

The implementation model assumes that policymakers dream up policies, give them legal or structural form and public servants then implement those policies. That sometimes happens when policymakers generate an original solution.

But most of the time they are tinkering with longstanding public services such as hospitals and schools. In those cases, a policy initiative is merely another intervention in the way existing services are delivered.

Of course, policies change from time to time, human resource practices should be improved and those who deliver public services must be held accountable for the expenditure of public funds and the exercise of state power. But the processes we have developed are grotesquely inefficient. We should develop models that cost less.

Policymakers have to stop tinkering. Interventions should be strategic, not tactical, and where possible bipartisan. We have come to believe that democratic accountability means that politicians and policymakers, and middle managers in head office, have the right to intervene in delivery whenever they feel it is necessary.

They reserve the freedom to endlessly adjust policy settings in the interest of "getting it right", failing to understand the immense cost they impose on service providers, in terms of efficiency, innovation and service quality.

I recently interviewed an experienced private-sector project manager who spent several years in a large state government agency and I asked him what was different. He said that government's intention was never clear; there was no real plan. And government delegated much less responsibility to line management: "Most project managers in government aren't managing their budget": responsibility for the cost of capital belonged with someone in Treasury.

Public service managers point to three advantages of the contractual as opposed to the traditional model. First, a contract provides a clearer sense of what they have to do and how it will be judged. Second, it gives them much greater autonomy; having been given a mission they know it will remain constant for the life of the contract and they can get on with deliveryFinally, they feel more accountable for outcomes.

We must shift from process accountability to performance accountability, with front-line managers given a clear statement of outcomes and time to deliver.

To have the public service in perpetual fear of being named in parliament or humiliated in the press is not effective accountability and it results in dreadful distortions. Institutions are designed to minimise the opportunity for scandal and not to maximise value for money and the quality of service.

Governments need to make more use of contractual models in delivering public services, without necessarily using the private sector. They also must appoint quality people to front-line management and learn to trust them. They must change the risk-reward ratio, identifying and honouring those who succeed, while protecting those who take measured risks and fail. We must encourage innovation in front-line services that is systemic rather than heroic.

Politicians tell us we need to raise national productivity. Physician, heal thyself.


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