Speeches → 2023

SPEECH

Annual statement on APS Reform

SENATOR THE HON KATY GALLAGHER
Minister for Finance
Minister for Women
Minister for the Public Service
Senator for the ACT

Date: Wednesday, 1 November 2023

Thank you very much Selina for Welcoming us to Country. Her grandmother, Agnes, was a remarkable Canberran and I was very fortunate to know her and learn from her and take her advice.

She has left a big hole, I think, in our fabric, our social fabric. But I can see from Selina and her family that her grandmother would be very proud of her achievements to date. 

I would also like to begin by paying respect to the ancient Ngunnawal people upon whose land we gather this morning.

I thank them for their custodianship and for their care of this beautiful country. And I extend that respect to all Aboriginal and Torres Strait Islanders joining us here today. I acknowledge Professor Janine O’Flynn and the staff of the Crawford School. Thank you very much for having me here. 

I’d also like to acknowledge our guests here today. I see my friend and colleague, Alicia Payne, the Member for Canberra. Thank you for coming.

To the Secretary of PM&C, Glyn Davis, to the APS Commissioner, Dr Gordon de Brouwer, Secretary Jenny Wilkinson who I see here, and other Secretaries and leaders of the APS, APS staff and other interested people who join us today. 

Before the 2022 election, the now Prime Minister promised to invest in and rebuild the Australian Public Service.

From Opposition we had witnessed up close the impact of almost a decade of eroding and devaluing the APS.

And we knew there was a big job ahead of us if we formed Government following the election in May last year.

Throughout the campaign, we argued the merits of building a stronger public service that delivers better outcomes for the community, delivers frank and fearless advice to government, acts as a model employer, and through its policy work or delivery of programs contributes to building a fairer and more inclusive Australia. 

We recognise that the public service is an enduring institution central to the strength and success of our proud democracy.

While it's not the election policy that will garner much attention in the heat of battle, under Anthony Albanese’s leadership we were open and upfront that we thought the APS needed reform for it to be able to do the job we needed it to do.

So, in addition to our commitment to a National Anti-Corruption Commission, we also committed to begin this work by abolishing the ASL cap which distorted the shape of the APS workforce, completing a Government Spending Audit, improving pay, conditions and fragmentation for APS employees, undertaking the Audit of Employment, reducing the reliance on consulting and contracting, and converting insecure and expensive external labour arrangements into good permanent jobs where it was appropriate.

Eighteen months in and we have done all of these things, but there is much more to do. 

Around this time last year, I had the opportunity to deliver the first speech, outlining our agenda for the reform of the APS. We placed integrity and trust at the centre of this agenda.

A public service that is trusted by Australians and that operates with integrity.

We set about rebuilding the service to restore capacity and capability, outlining the reforms needed to ensure lasting change with a Secretary appointment responsible for APS Reform.

I acknowledge the APS Commissioner today, the APS Reform team, and staff from the APSC – those who are here and those who aren’t. This work would be impossible without this support. They responded so enthusiastically to our reform agenda and who are now shaping it going forward. 

Some of the most urgent work in the early days was to get across the extent of the underfunding and funding cliffs which existed across the Budget and addressing those.

Whether it be a greater investment in Services Australia, Veterans’ Affairs, aged care, health, NDIS, or money to stop the roof from falling off our national cultural institutions and keeping Australia’s biosecurity system operating.

And we have dealt with these.

Twelve months ago, we also announced our foundational priorities – or pillars – for public service reform.

To refresh your memory, there are four pillars to which our reform agenda aligns. They are: 

  • An APS that embodies integrity in all that it does 
  • An APS that puts people and business at the centre of policy and services 
  • An APS that is a model employer 
  • An APS that has the capability to do the job well 

Under the first stage of the reform work, all of our projects have aligned with these four pillars and that will continue under stage two, which will be the focus of my remarks this morning.

Stage one was to design a reform agenda that has integrity and trust at its foundation.

We’re now entering stage two, which is implementing the reforms and embedding them across the APS.

This includes moving the APS Reform Office into the Australian Public Service Commission so that reform and continued improvement is baked into the public service itself, considered business as usual and is not just seen as a one off. 

And before getting into the new areas of reform, I want to take this opportunity to say that the APS is an outstanding institution of which we should be very proud.

It is full of incredible leaders at every classification level, from those who have dedicated their entire careers to public service to those who have recently joined, spurred on by the prospect of working on some of the biggest challenges facing the country.

I met yesterday with finance department graduates, a seriously impressive bunch of young people embarking on their careers.

Exactly the sort of talent that we need to attract to the APS.

And as I’ve travelled around workplaces and talked with APS employees, or, like Senate Estimates, when I appeared with public servants for over 40 hours – people are proud of their work.

They're dedicated to delivering the outcomes their agency is responsible for and they are incredibly professional in the discharge of their duties.

So there is a lot of good work going on supporting a very busy Government, often in very difficult circumstances and often within a constrained environment. 

But it is also important to admit there are areas that need to improve and areas where we need to implement further reforms to strengthen the APS.

The Government recognises the Public Service has come under heavy scrutiny over the past 15 months, with the Robodebt Royal Commission, various Code of Conduct inquiries, audit reports, Ombudsman's inquiries, the PWC scandal and the associated focus on contracting across the APS.

These reports and various recommendations show that there is more work to do to strengthen the trust, integrity, independence and capability across the APS.

And I don't make these comments to apportion blame or shift the focus.

But I do believe that honest assessments help drive the improvements and accountability needed going forward. 

So, under that first priority area for us, an APS that embodies integrity in everything it does, a year ago we put this firmly at the centre of our APS reform agenda.

We want an APS that embodies integrity in everything it does.

Whilst establishing the National Anti-Corruption Commission or implementing Set the Standard recommendations in Parliament attracted a lot of attention, what perhaps attracted fewer headlines – but is equally as important – is the reform work underway to strengthen the integrity of the APS at all levels of the Service.

We've made the expectations of senior executives in the APS clearer and stronger.

We announced the intention to include behaviours as well as outcomes in SES performance reviews, with a framework recently signed off by Secretaries.

This framework will ensure that our most senior APS leaders serve by example.

They will lead by strengthening the behaviour in their respective agencies.

We know that good culture driven from the top delivers better results, better outcomes for government and ultimately optimal outcomes for Australians.

Leadership matters in the APS and the SES are key to driving positive culture across their workplaces. And I know how seriously they take this responsibility. 

We have also introduced legislation to strengthen the Public Service Act, which includes enshrining the value of stewardship across the APS.

This legislation makes it clear that Ministers cannot direct an agency head on employment matters and entrenches in law agency capability reviews.

We're improving transparency through releasing the APS Employees Census results publicly, along with action plans to respond to the results. 

Today is the next stage of APS reforms. Under this first pillar, we will introduce reforms to the appointments process and performance management of senior public servants.

These changes create an enduring framework that strengthens the employment, merit and integrity framework of the APS going forward.

The next phase of APS reforms will include requirements for the PM&C Secretary and the APS Commissioner to conduct merit-based appointments processes for Secretary roles to build rigour into the advice provided to the Prime Minister on candidates.

We will also publish a Secretary’s Performance Framework and process and put in place better handling of sustained underperformance of Secretaries, including appropriate consequences.

As well as this, we will improve transparency and consistency in how agency head appointments, performance and suspension for executive, statutory and non-statutory agencies are conducted – including having merit-based appointment processes and creating a power to suspend agency heads, including without pay – and applying sanctions following breaches of the Code of Conduct by agency heads for executive, statutory and non-statutory agencies. 

While there will be a separate, detailed government response to the specific matters raised in the Robodebt Royal Commission, our reforms in the APS space will provide for:

  • New own motion powers for the APS Commissioner to initiate reviews and investigations into Code of Conduct breaches by current and former agency heads, including Secretaries, and APS employees; 
  • New powers for the APS Commissioner to inquire into Code of Conduct breaches by former agency heads, including Secretaries, to match the existing powers to investigate current agency heads; 
  • And thirdly, build safeguards into the APS Commissioner’s appointment process to complement the expansion of their own motion and inquiry powers. 

This work will also complement the work already underway by the APS Integrity Taskforce and the Lynelle Briggs Review of public sector board appointment processes which is currently before Government. 

Under our second priority area, an APS that puts people and business at the centre of policy and services, the second area of the Government's reform agenda was a commitment really to invest in the APS and put that focus on people and business.

The APS has a new Charter of Partnerships and Engagement that makes it clear on the commitment to genuinely partner engage with all people, communities, non-government sector, academia, and industry.

This new Charter highlights the importance of being open and responsive, transparent, and accountable, informed and collaborative.

This type of genuine partnership is already happening in several initiatives, such as the Connected Beginnings program being jointly run by the Department of Education and Department of Health and Aged Care.

It draws on the knowledge of Aboriginal and Torres Strait Islander communities to improve access to existing early childhood, maternal and child health, and family support services so children are ready to thrive at school by the age of five.

Connected Beginnings is community owned and led.

This means that Aboriginal and Torres Strait Islander people have a say in how activities funded by the grant are delivered to their people in their own places and on their Country. 

One of the other areas is in data and digital policy.

Now, Digital ID is a great example of putting people at the centre of policy and services and it's one of our priorities under the Data and Digital Government Strategy.

In developing this Strategy, the Government heard from members of the public, the community sector and business to formulate a vision of simple, secure and connected services.

The message from our consultation process was that Government must provide inclusive, accessible services with a focus on security and trust.

Digital ID is designed with the Australian people front of mind.

It will protect citizens’ identity and make it easier to engage with government and other services, and cut down on paperwork and personal admin.

We are working through the feedback from the consultations on the draft legislation, but the entire project is focused on how to make life easier and safer for people to engage with governments at every level. 

Now, one of the main challenges – but also one of the main opportunities – facing Government is the speed with which technology is moving and how to respond and see some of the opportunities that come with this time.

Earlier this year, we kicked off the first Long Term Insights Briefing, which was a commitment from the first phase of reform.

In putting together these briefings, PM&C has engaged with community representatives as well as subject matter experts, reporting back to the APS about what the future challenges lie ahead, and the readiness of people to face those challenges and how policy may be developed to meet them.

The very first Insights Briefing was on ‘how might artificial intelligence affect the trustworthiness of public service delivery?’

It was released last week on the PM&C website and is a resource for relevant agencies that are now engaging actively with AI.

The briefing paper details what needs to be considered when using AI in tandem with in-person delivery of services.

Empathy and human connection are a crucial aspect of so many parts of APS service delivery, and the Albanese Government believes that the role of the public service – and this is relevant to the Insights Briefing – is not only to respond to near-term challenges, but also to think beyond the electoral cycle and prepare for the complex policy challenges that lie ahead. 

Now under priority three, which is the APS as a model employer, investing in the APS will only be worthwhile if people want to work there.

And we believe that the APS should be a model employer, supported by the government to do so.

And that's why – if we just look back over the last 12 months or so – we've significantly increased the resourcing to a number of departments that had suffered, to the public detriment, from the ASL cap in particular.

We've converted over 3000 labour hire and external jobs into permanent jobs.

We've agreed on an APS-wide approach to workplace flexibility, with the Secretaries’ Board endorsing the principles of flexible work in the APS in March this year.

We've achieved a milestone of gender parity at the SES Band 2 classification with women comprising 50.1% of this cohort.

And women have now reached parity at every level from APS 1 to SES Band 2.

We've reduced the gender pay gap in the APS and have passed legislation to mandate public reporting on it from 2024. 

We've also commenced the first centralised bargaining rounds since 1995, which I might live to regret –but anyway, we press on... to progress fair and genuine negotiations between employers, employees and unions, and we do hope to reach agreement soon.

We've agreed on more than 50 common conditions across the APS, including a common term on flexible working arrangements.

And when the offer is accepted, we will reduce the pay fragmentation across the APS from an average of 25 per cent to 13 per cent from just this first round.

Importantly, by the end of the enterprise agreements, all APS agencies will offer 18 weeks parental leave for both parents once the agreements have settled.

We do want to attract the best and brightest to the APS and whilst pay and conditions aren't the biggest motivator for a career in the public service, we recognise how an employer treats their employees matters.

And as I said, we do hope to finalise the bargaining with the union soon.

But as an employer, there are areas where we have to do better. 

There are gaps that need to be closed.

The APS must boost First Nations employment in the APS to reach the established target of 5%.

As of the 30th of June, there were just over 6,000 First Nations employees in the APS, an increase of just 49 employees from the previous year.

This translates into about three-and-a-half percent of the Service’s employees. We need to recruit more than two-and-a-half thousand new First Nation staff to meet that 5 percent target.

And whilst we need to focus on that and do more to attract and retain First Nations employees, we also need to support more Aboriginal and Torres Strait Islander role models as leaders in the APS.

Today, we are announcing a new initiative called the SES 100 that aims to increase Aboriginal and Torres Strait Islander representation to 100 at SES levels by 2024-25 – from the 54 that we have currently.

Starting this month, the program will be another step, shifting the dial towards making the APS a model employer and setting the expectations needed to drive the change and meet these targets. 

The fourth and final area is around the APS capability and the capability of the public service to actually deliver the policies and services that government asks it to do.

The world would be unrecognisable to the people that established the public service in 1901 when the Attorney General's, Defence, External Affairs, Home Affairs, Trade and Customs, the Postmaster-General and the Treasury were established.

There’s quite a good photo of the seven men that headed up that organisation. 

So, it's pleasing to see there's been substantial change in that regard, since. 

But we know that the internal capability of the APS has eroded, particularly over the last 10 years, and one of the main symptoms of that has been the increased reliance on consultants and contractors.

We were onto this problem in Opposition, and we focused on it, and we started winding back these arrangements long before PwC became a household name for all the wrong reasons.

The Audit of Employment, undertaken by the Department of Finance, was really important to get an accurate picture of the state of our public sector workforce. And the results were shocking.

$20.8 billion in external labour, the equivalent to a shadow workforce of more than 50,000 people.

While the previous government had celebrated its policy of so-called “small government” with its cap on ASL numbers, at the same time, external labour costs were clearly ballooning.

On average, agencies spent approximately one in every $4 on external labour. That was money that was leaving the APS when, in many cases, it could have been spent on permanent employees and good jobs across the public service.

We've already put in place a number of measures to address this concerning trend, including the conversion of 3300 roles, which has saved $811 million over the forward estimates.

The Government has made a commitment to reduce reliance on consultants and contractors by bringing capability back in-house.

And on the other side of this, is how do we attract and retain people who want to work with the APS?

So, further work will be done to develop best practice recruitment and selection options across the APS, commit to consistent hiring practices, mandating the sharing of merit lists and strategies to maximise the use of those lists and enable movement across the Service, including a review of mobility mechanisms across the APS. 

One of the other areas we've focused on has been establishment of the in-house consulting model.

So, the pilot – under the name Australian Government Consulting – has started already to deliver on projects, including services in project and change management and organisational planning.

Exactly the type of work previously done by consulting firms.

There was a huge amount of interest in this work from outside and inside the APS, with over 900 applications for just a handful of positions in the first rollout, which, I think, demonstrates the level of interest in this type of work.

It is funded to deliver 10 projects over the next two years, as it expands.

The pilot work has already begun and includes partnering with the Centre for Australia-India Relations in DFAT to develop insights and learn best practice from States and Territories on subnational economic engagement with India.

And partnering with the Net Zero Economy Agency to help develop and embed an agency vision and conduct strategic business planning and implement robust project management.

This is work that would almost definitely have been given to consultants.

Complementing this function is the newly established Australian Centre for Evaluation, which has been championed and led by my colleague Dr Andrew Leigh, supported by $10 million in funding to improve the volume, quality and impact of evaluations across the APS.

Its purpose is to lead the APS to integrate high-quality evaluation into all aspects of program and policy development.

This will support evidence-based policy decisions that deliver better outcomes for all aspects of the APS and the people that they serve.

The APS has also just completed its pilot – sort of through the work of the APSC primarily – its pilot of future focus capability reviews.

There have been four reviews completed with two more to come.

And I think it's fair to say the reviews show mixed results.

I thank Infrastructure, APSC, Health and Agriculture for stepping up and being the first four to do a capability review.

Whilst the reports themselves are important, so is the fact that these reviews will become standard operating practice for the APS going forward with a process that isn't punitive or budget related – genuinely, I’m holding firm on that – but rather focuses on continuous improvement and open and transparent ways of operating. 

Common themes in the reviews done to date have emerged around workforce planning, providing connected strategic advice, using data better, and technology. And more has to be done to build capability in these areas.

And that's why last year we announced the APS Capability Investment Fund. This is funding our commitment to rebuild capabilities through a competitive process where agencies put forward proposals that have sector-wide benefits.

This year, the Fund supported 10 projects that are building vital capability in the APS, like embedding iterative evaluation methods in policy and program roles and building expertise in gender analysis, which should inform policy development and gender responsive budgeting.

The next round of Capability Investment Fund bids are now open and all agencies are encouraged to apply for a share of $6.5 million dollars in funding.

Priority areas will include issues that are front-and-centre of the challenges we’re grappling with as a country, including enhancing data analytics policy integration skills, adapting to a green economy workforce, building understanding of AI application in the public service, building capability for working in the Asia and Pacific, and supporting cultural and psychological safety in the workplace.

While the publicity around PwC has been everywhere this year, before this story broke, we were working on an important policy framework around the roles and functions in Commonwealth entities that should be delivered by APS employees.

And last week we released the new APS Strategic Commissioning Framework.

This Framework aims to strengthen APS capability through reduced reliance on contractors and consultants.

Core functions such as drafting Cabinet submissions, drafting regulations, leading policy development, or occupying a role on an agency’s executive must never be outsourced.

Agency heads should be accountable for rebalancing their workforce to prioritise direct employment, strengthen capability and ensure any use of external expertise enhances the work and knowledge of the APS.

The Strategic Commissioning Framework sets this policy direction for the APS and provides the advice and tools required for agencies to make this change.

This Framework outlines the limited circumstances in which external workforces could be appropriate and ensures the APS maximises the benefits of those external workforces or any external arrangements.

Over time, when supported by APS recruitment, skilling and mobility, this approach will deepen system-wide capability and reduce the risks to integrity, expertise and public trust posed by excessive outsourcing.

Monitoring and reporting arrangements will hold agencies accountable for their progress and agency heads must set targets by June 2024 to reduce their agency’s reliance on contracting and outline what will be brought back in house, how many roles will be affected and the anticipated reduction in expenditure.

Targets will be reported in each agency’s corporate plan from 2024-25 and updates on progress against these targets will be reported in the agency’s annual report. And it will also be recorded in the APS Agency Survey.

The APS Commissioner will provide me with an annual update drawing on agency reporting and progress, which will be published on the APSC website. 

Now, in conclusion – you're probably saying thank goodness - I don’t often give very long speeches so just bear with me. 

We recognise after years of attacks on the APS, where small government resulted in a diminished Service, where jobs were outsourced, where deep history and knowledge were ignored or eroded, that we needed to do things differently.

Now, there have been a lot of opinion pieces and calls for faster change and a focus on permanently enshrining more reform elements in a legislative reform package.

I’ve read those pieces. And I always, always listen to those voices with respect.

There is always more that can be done.

But not everything can be done at once.

And it is equally important to do things well and to deliver on the promises we’ve made.

The reforms we’ve already implemented, the ones that are underway and the ones that I’ve announced today I believe demonstrate the seriousness and commitment we have to rebuilding and permanently protecting the APS so that it is able to perform the job it needs to do on behalf of all Australians. 

This is a journey that requires the APS and the Government to work together to rebuild the culture of frank and fearless advice, integrity and stewardship.

Everyone who wants to play a role in that, has a role to play.

And I acknowledge the public service today.

I thank them for their work serving the Australian people.

And I thank them for their openness and willingness to make the great 123-year-old Australian Public Service even better. 

Thank you very much. 

[ENDS]

Senator the Hon Katy Gallagher, Minister for Finance