Senator the Hon. Mathias Cormann
Minister for Finance and the Public Service
Leader of the Government in the Senate
Senator for Western Australia
Date: Wednesday, 10 October 2018
Thank you very much and good morning everyone.
It is great to be here to talk with you about the important role of the Australian Public Service.
It is great to have such a senior delegation of leaders across the Public Service here with us, led by the Secretary of the Department of Prime Minister and Cabinet, Dr Martin Parkinson and also of course the Secretary of my own Department, Rosemary Huxtable, the Commissioner of the Australian Public Service Peter Woolcott, Glenys Beauchamp, the Secretary of Health and Heather Smith the Secretary of the Industry Department.
The Australian Public Service is world class and the ‘state of the service’ is strong.
In my role as the Minister for the Public Service I look forward to working constructively with all of you and all relevant stakeholders on how we can further improve and strengthen an already outstanding public service for Australia.
Our focus must be on continuing to modernise our public service, to ensure it is as effective, as efficient and productive and as responsive to the needs of the Australian community as possible.
As Finance Minister over the past five years, I have been actively engaged in addressing many of the challenges facing the Australian Public Service.
How best to increase efficiency;
Engage effectively with individual Australians and business to deliver the best possible results for the Australian community and our economy; and indeed
Together, as the Government and the Public Service, how best to work with all other relevant stakeholders to deliver good public policy and program outcomes.
Some of the challenges in front of us are relatively new. Some are not.
Some of the debates about what the public service should be what it should look like and how it should go about its business are long-standing.
But some of the context and some of the opportunities of how they can be addressed today have evolved – and inevitably will continue to evolve in perpetuity.
Today, individual Australians are better informed and more actively engaged. In the era of Twitter and Facebook and social media generally, Sky News, 24/7 media, all of you and all of us know precisely what that can mean from time to time.
New technology options and channels, more complex information and information flows, new capabilities and pools of expertise – offer us better opportunities to be more efficient, more productive, more effective and indeed more responsive to the needs of individual Australians, business and the community and indeed more user friendly. The community expectations in that context of course continue to rise.
The APS works at its best when it is open to new ways of operating and prepared to move on from old familiar ways – where it takes opportunities to anticipate the needs and requirements of the Government of the day on behalf of the Australian community.
The aspiration for a high performing, professional, influential and responsive Australian Public Service which holds itself to the highest ethical standards of behaviour are bi-partisan, even where our respective emphasis may differ from time to time.
The role of the public service
Back in 2001, in his address to the Institute of Public Administration, Prime Minister Howard reflected on the important role of the public service, and the relationship between the public service and government.
“The quality of any government is dependent, in large part, upon the quality of advice it receives. To believe otherwise – that a responsible and successful government can be sustained in the long term without the support of a dynamic and dedicated bureaucracy – defies logic and history.”
He also said that:
“whatever the extent and direction of change in the future, Australia must be assured that its governments, of whatever political persuasion, will be guided by considered, honest advice based on rigorous analysis, sound knowledge of administrative practice and sensible precedent.”
In that context, clearly defined roles and boundaries between Ministers and the public service are important, but they are not in themselves enough to ensure the effectiveness and integrity of our system of government.
Mutual respect is at least as important, as are transparency and accountability.
The most important thing of all, the thing that binds all of us together, is the pursuit of a common purpose.
Independence and responsiveness are not mutually exclusive.
Contestability of ideas is at the heart of the Westminster system. This exchange of ideas is well supported by public sector advice that reflects deep knowledge set in the context of government policy and objectives.
Prime Minister Howard in 2001 noted that “most change affecting the APS arises from the ongoing necessity for the Service to reflect the times and the environment in which it operates, the values and priorities of Australians, and the specific needs of government.”
Neither ministers nor the public service sit behind walls or exist in a bubble. We are part of the community we serve.
Many modern public policy challenges don’t fit neatly into the responsibilities of just one portfolio, or into the boundaries of a particular department or agency. Indeed individual Australians expecting their Government to find effective solutions to a variety of problems don’t look at the detailed machinery of government arrangements. They look at the Australian Government as a whole.
More than ever we need to ensure therefore that we use the proven and effective tools to facilitate cross-portfolio, cross-agency cooperation and collaboration. And may I say, during my five years in this role I have found the cross-portfolio taskforce arrangements across a whole range of public policy areas to be particularly effective.
In a 21st century context it is well understood and accepted that the public service does not have an exclusive monopoly on developing, packaging and providing a closed set of policy options to government, or on delivering services on behalf of government.
The public service is at its best and most influential when it undertakes broad engagement with stakeholder organisations, a thorough analysis of evidence and, in the case of delivery, when it has a clear-eyed view of technological advances, capability readiness and surge capacity.
The Australian Public Service will become even better, stronger, more responsive and even more trusted by engaging with, utilising and recruiting private and community sector expertise as appropriate and by enabling its employees to spend periods of time working in those sectors. A freer flow of people, ideas and perspectives helps build a depth of understanding and improves the quality of advice to government.
Also in this context, and it is a matter that has been discussed in recent months, which is why I might touch on it, the use of private sector contractors and consultants where appropriate is an efficient way to keep the overall cost of government administration low, when the business need to access relevant skills and expertise, or a surge in demand for certain public services is temporary, or when a particular set of skills and expertise is are more efficiently obtained and maintained in a dedicated private sector business with appropriate scale.
A recent review of the 2013 Public Governance, Performance and Accountability Act by Elizabeth Alexander and David Thodey found that tapping into a diversity of views and expertise in developing strategies and policy should be a matter of routine for government.
I strongly endorse this view.
We do it, but we could do more of it.
I know that the public service canvasses widely on issues; sometimes it buys in expert opinion, analysis and advice; and sometimes it releases proposals for public input to test options.
These are all good and sensible approaches to be encouraged and should never be seen as a weakening of the APS. To the contrary, I believe these are all approaches that strengthen the Australian Public Service.
Ministers and the public service have different roles, but one goal –good, effective government for Australia.
We work to achieve this in a legal framework and in an environment of public and parliamentary scrutiny. I am sure that many of you enjoy that exercise in Parliamentary democracy three times a year, also called Senate Estimates. I love it. Honest. I know that Rosemary loves it too. I do not think that Martin appears these days. The prerogative of the head of the Prime Minister’s Department I guess. He used to love it. When he used to love it, for most of the time I was on the other side asking questions. That was good fun too. But not ever to be repeated, for my part.
The Public Service Act of 1999 obliges public servants to behave in a way that upholds the impartial and apolitical nature of the APS, including when making public comments.
These principles have stood the test of time across governments of different political persuasions.
They will continue to develop, and they impact not just on organisations, but on the individuals who make up the APS.
I don’t accept the notion that the APS has over time, through legislative stealth or any other means, seen its professional role and contribution diminished.
I think, simply, that the world has changed and expectations have changed.
I see a highly professional group of people adapting to this changing environment and continuing to give their best advice fearlessly, frankly and competently in the best Westminster tradition.
Improving the way individual Australians and business can deal with Government
Government policies and activities have a significant impact on the economy.
Action and initiatives to improve efficiency, productivity and service quality demonstrates to the Australian community that we focus on them and on the future.
This is one of the reasons the Government asked the Independent Review of the APS, led by David Thodey, to look at how the APS can drive innovation and productivity in the economy.>
Our policies and services need to be designed carefully to ensure that individual Australians, business and other stakeholders can operate effectively and that they have a positive experience when they interact with us.
We have asked the Independent Review to look at how we can improve Australians’ experience of government and deliver fair outcomes for them.
Secretaries are also implementing a Roadmap for Modernising the Public Sector.
Each touchpoint, every interaction which government has with individual Australians and businesses gives us the opportunity to build trust and confidence.
Every time someone interacts with government, they will form an impression – is government responsive to my needs, is it delivering good quality and relevant services, is it professional, does it care, are my taxpayer dollars being well-spent?
Those interactions involve each and every member of the APS.
- 399 million Medicare services were provided;
- the Department of Human Services delivered $174 billion in payments;
- 897,000 job seekers received assistance through JobActive and Disability Employment Services.
In the same year, business entered contracts for $47 billion worth of goods and services to support government administration and to provide benefits and services to the community;
4.4 million people used business.gov.au and 3.8 million small businesses were registered with the Australian Taxation Office.
Every innovation, every small improvement, has the capacity to touch large numbers of Australians.
But every innovation, every improvement, carries risks and comes with challenges.
Government has to keep improving to stay ahead of the curve of public expectations.
Many parts of government are rising to that challenge.
I have mentioned the Department of Human Services, which is transforming the way its customers access payments and services. The majority of transactions will become digital, processing times will be shorter, and virtual assistants will create new, simpler, ways for customers to interact with the department.
Already around 254,000 students have access to automated assessment processes.
The claim application time for students has been reduced from 36 minutes to 12 minutes.
The transformation will roll out similar improvements to DHS’ seven million customers.
This work will not only improve the experience of individual Australians interacting with DHS, but it will also reduce the amount of time that DHS staff need to spend on manual data entry and paper-based processing.
This means more time to focus on individual Australians – who often need to engage with government when they are at their most vulnerable.
During TaxTime 2017 about 3.5 million individual taxpayers used myTax.
Both the Tax Office and the Department of Human Services, as the most significant public service organisations when it comes to the volume of regular and ongoing interactions with individual Australians and relevant entities continue to modernise the way they engage with their customers, continuously improving the user experience while driving increased efficiency and productivity.
Innovation won’t always be digital, but it will always mean working differently and in new and better ways.
Last year, the Australian Bureau of Statistics conducted the Australian Marriage Law postal survey, a unique undertaking for the public service, and one that is likely to be seen as a landmark event in Australia’s national story.
While the ABS conducts many statistical collections, the Australian Marriage Law postal survey was different in many ways.
It was designed and conducted in fewer than 100 days and that included dealing with a challenge in front of the High Court. It comprised a single question asked of just over 16 million eligible Australians.
The focus was on making it easy for people to participate and ensuring integrity around the process and the results.
The ABS worked and consulted with almost 30 different Government Departments and Agencies, who provided expertise and staff, to help deliver an excellent survey.
Any issues which emerged were managed effectively and responsively.
Ultimately, a national response rate of 79.5 per cent exceeded all expectations for a voluntary survey and assisted the Australian community to resolve an issue that had been left unresolved for a very long time.
Delivering Efficiency, Supporting Productivity
Australia has recently completed 27 years of continuous economic growth.
Stronger economic growth is what helps drive the increased revenue for government to fund the essential services Australians rely on and to sustainably fund a continued world class Australian public service which is fit for purpose.
Our challenge is to make sure that our productivity can be sustained and improved as our society and the economic environment continues to evolve.
Ultimately, productivity growth leads to a growth in living standards as the benefits are distributed through the community.
However, what is called ‘multi-factor productivity’ – the capacity to get more out of all inputs – is lower now than it was in the 1990s.
All sectors are grappling with this issue. The low-hanging fruit may have already been taken, and we have a more complex productivity challenge today than in the past.
The taxpayers of Australia want to see government build value for our nation.
When we improve the efficiency and productivity of the public service, we create space in the budget for outward facing programs and services, which directly benefit Australians.
I have for many years made the point that public service spending, yes should be as much as necessary but also should be as little as possible – that we should always focus on the value of activity and that we have a responsibility to ensure that taxpayer dollars are spent wisely.
Taxpayers want to see high quality government services delivered at a low cost, well-targeted, timely, and easily accessible. Now some of you might say that these are mutually exclusive objectives. I do not think they are mutually exclusive. They are certainly competing objectives. That is, it is certainly fair to say that it is a matter of finding the right balance.
As I said at the beginning of this speech, this is not a new challenge for all of us together to deal with.
The Public Service Act of 1922 talked about effecting economies and promoting efficiencies in the management and working of Departments, and laid out measures like improved organisation and procedure, the simplification of work, abolition of unnecessary work and avoiding unnecessary expenditure. We could have written that today.
Necessarily, we need to think about how we conduct and how we can improve our business.
Both efficiency and productivity are important.
But improving productivity goes beyond simple efficiency.
Being productive is securing the desired or intended result with less time and resources.
Across the economy, improving productivity increases the scope for better and better value goods and services produced with the same, or fewer resources, higher profits and wages, and lower prices for consumers.
In government, yes it helps save money, which helps ensure we can keep taxes low and our economy internationally competitive.
It also means we can use our limited resources to deliver better results and more tangible benefits to the Australian community.
It is not just about saving money, it is also about higher quality services delivered in new and different ways; about better public policy outcomes.
Those benefits arise when we take a co-ordinated approach in our operations and our procurements, to leverage the benefits of scale and to avoid duplication.
Controlling the cost of administration
Across the Commonwealth Government we have a pretty good track record when it comes to using whole-of-system controls to drive down costs.
Under the 1922 Commonwealth Public Service Act, the then Public Service Board did things like limit the number of staff to actual requirements, stop unnecessary expenditure and check whether the return for expenditure was adequate.
As they say in the classics, the more things change, the more they stay the same.
Nowadays, we achieve similar goals by exercising central policy controls and frameworks, which create discipline and transparency in how we operate.
Businesses and not-for profit organisations in the private sector have to constantly watch the cost of their administrative overheads.
Self-evidently so must we.
It is a matter of public record that when we came into government, a matter of observed fact, we inherited a rapidly deteriorating budget position and the size of the public service had ballooned somewhat, and in the context of an overall deteriorating budget position, in our view, unsustainably so.
As part of our overall budget repair strategy on coming into Government while in deficit, we reduced and then maintained the size of the public service at what we considered to be a fiscally more sustainable level.
A cap on General Government Sector employee numbers - the ASL cap - was introduced by our government in 2015. At a time when the community was asked by Government to make sacrifices to help get our Budget back under control, this has been an important part of our budget repair strategy.
The ASL offset rule has given the Government improved capacity to monitor and manage the prioritised allocation of public service resources across the whole of the government.
The annual Efficiency Dividend of course has been in place since 1987.
Both of those controls recognise that we operate within constraints, that we need to have the discipline to reassess priorities, to prioritise re-prioritisation when new pressures and new spending needs are identified and considered.
At a time when the budget is in deficit and there is an expectation that all sectors of the community are making a contribution to budget repair, it is indeed important that the public sector equally should also make its contribution and the Australian Public Service has.
These input controls have been effective.
Whether in business or in the charitable not-for profit sector, as I have mentioned the cost of administrative overheads as a proportion of overall turnover or overall expenditure for charitable purposes is a very important indicator of their overall efficiency and productivity.
The overall cost of the federal government’s administration as a proportion of overall expenditure, including, dare I say, the cost of consultants and contractors supporting government administration, has fallen from 8.5 per cent in 2007-08 to 6.8 per cent in 2017-18 and is projected to continue to fall to 5.6 percent by 2021-22.
This is probably not a bad time for a little advertorial for those of you who want to see a bit more detail around all of this and what it is that we are trying to achieve as a Government when it comes to the Australian Public Service. There is a great document, that is not widely enough read, I believe and it is called Budget Paper 4. Budget Paper 4, which is issued by the Minister for Finance has got a great preface in it and you can see much of this detail spelled out. So if you have not read it, when you go home, please Google Budget 2018-19 and it will be there.
Skill and capability issues for the APS
Improving the APS and making sure it is relevant for the future is about more than systems. It is also of course about skills and capabilities.
I support the sentiments expressed in the recent review of the PGPA Act by Elizabeth Alexander and David Thodey, who said that we could do better in cooperating and collaborating with other levels of government and with the private and not-for-profit sectors in delivering on our objectives.
The reviewers found that other countries, like New Zealand and the United States, were better at coordinating their efforts in key outcome areas than the Australian Government.
For the Commonwealth, considering ways to rotate public servants through state governments, private sector companies and the third sector offers one way to build understanding and familiarity across the different sectors in our economy and to improve the capacity to link up on all sides.
I have asked the new Public Service Commissioner, Peter Woolcott, to look at this, and to consider extending initiatives like the one that saw senior public service leaders go on a leadership retreat to Wagga Wagga to engage with indigenous elders, service providers and people working on refugee settlement.
I would also like to commend the Australian Public Service Commission for the work that it is doing to help agencies get the best value out of professional training in the public service.
There has been a lot of focus on boosting new skills to position the APS for the future – coding skills, data analytical skills, and so on.
But we also need to ensure that basic enabling skills – a knowledge of the role and structure of government, financial management, basic data literacy and analytical skills, communication skills, the skill of appearing before a Senate Estimates Committee perhaps – are also developed in a co-ordinated fashion.
In this regard, the Department of Finance and the APSC have been working together to use APS Census data to enhance our understanding of highly engaged teams. They have found that engagement, which is a driver of productivity—is higher in teams where new ideas are welcomed and encouraged. Ensuring that we build a public service culture that is open to innovation is a key leadership skill that will only grow in importance in the coming years.
The Independent Review of the APS is an important opportunity to reflect on what we need to do to capitalise on the new technology and global developments that are transforming the Australian economy and society, and which are challenging our citizens, business and the broader community.
But it also gives an opportunity to reflect on the value of the APS and the value public servants bring to their role.
I conclude by going back to the beginning.
It is so important moving forward that we continue to have an engaged public service.
It is important that public servants continue to work well with others and continue to engage broadly, including and especially with business and community stakeholders in developing their advice and finding the best possible ways to deliver public policy goals and public goods and services.
As a Government, we do not support the splendid isolation model of the APS, the past and outdated notion of a special and remote administrative class, which characterised the public service here and in other parts of the world in a long by-gone era.
That is an outdated and flawed model.
What we need to continue to work towards, protect and preserve, is a system, which is based on a strong code of principles, ethics and professional behaviours, with strong accountabilities, where the business of government is conducted as well as it can be, because people are enabled to do a good job and to advance the interests of Australia and of Australians.
We must always seek an efficient, effective and economical public sector, which delivers tangible benefits to all Australians, which helps drive innovation and productivity in the economy and helps to grow our living standards.
Let me close by thanking you all for having chosen a career of service to our community as members of the Australian Public Service.
The APS today, which has evolved over many decades and the APS of the future is very much an APS worth working for.
You are making a valuable and indeed valued contribution to our country and to our community. I hope and trust that this brings you great satisfaction and pride. Thank you.
 Elizabeth Alexander and David Thodey: Independent Review into the Operation of the Public Governance, Performance and Accountability Act 2013 and Rule, Commonwealth of Australia, September 2018, p.43
 Terms of Reference for the Independent Review of the APS, 2018.
 Commonwealth Public Service Act 1922, section17.
 Commonwealth Public Service Act 1922, section 17.
 “The system comes together well in a crisis. For example, in response to natural disasters such as floods, bushfires and cyclones, and in the case of the global financial crisis of 2007-2008, we have seen bold steps taken in short timeframes with significant cooperation between different jurisdictions and different sectors of the economy. It is a pity that examples of government and public officials coming together with others to work at their very best are event-centred, rather than regular. There are big structural challenges facing the nation in the economic and social sphere, and citizens’ expectations of government here are no less than they are in a crisis”. Elizabeth Alexander and David Thodey: Independent Review into the operation of the Public Governance, Performance and Accountability Act 2013 and Rule, Commonwealth of Australia, September 2018, p.45