Australia-US Lessons on Public Sector Stewardship and Capability

Feb 27, 2018

The NAPA White Paper, Strengthening Organisational Health and Performance in Government, draws on international as well as US experience and research; it also offers practical guidance for international as well as US public sector practitioners.

The Australian experience summarised in one of the paper’s published reference documents includes recent efforts to address systematically organisational capability as well as organisational and program performance – to consider ‘how’ as well as ‘what’. The Public Governance, Performance and Accountability Act passed in 2014 replaced the previous New Public Management-based financial management legislation and provides a more coherent approach for all national government bodies. Importantly, it also added mandated corporate plans to the existing performance budgeting cycle of ‘portfolio budget statements’ (setting out program objectives, performance measures and performance targets) and agency annual reports against these objectives and targets. The corporate plans must include strategies to ensure the capability to meet the performance requirements. Annual reports must now include performance reports against both the budget statement and the corporate plan.

The Public Service Act was amended around the same time, inter alia adding ‘stewardship’ to the responsibilities of departmental secretaries. ‘Stewardship’ implies not just responsibility for performance today, but responsibility for the capability of the organisation – and the public service as a whole – to meet likely future requirements. Corporate plans provide the opportunity to consider the changing environment including possible changes in community expectations, as well as an organisation’s strengths and weaknesses, to help identify the capabilities that need to be strengthened and the strategies for doing so. Corporate planning is not new in the Australian public sector, but it was not previously mandated and had fallen into much disuse.

 Between 2011 and 2014 the Australian Public Service Commission arranged ‘capability reviews’ of all Commonwealth departments and major agencies. These involved both external reviewers and internal teams – not so much ‘audits’ as learning exercises. The capability reviews used a UK-based methodology exploring specified capabilities under three headings: leadership, strategy and delivery. Review reports have been published with short, sharp (and frank) conclusions, colour codes identifying whether a particular capability was ‘strong’, ‘well-placed’, a ‘development area’ or of ‘strong concern’. The reviews drew upon internal reports and studies and some external consultations, and also on the APSC’s annual employee census.

Some common areas of concern emerged, particularly around strategic policy advising (under ‘strategy’) and human resources management capabilities (under ‘leadership’). It seems likely that earlier reforms, notwithstanding their achievements, may have caused some ‘hollowing out’ of expertise and a focus on short-term tactical advice rather than longer-term strategic policy advice. (To my surprise, the reviews also found ‘delivery’ capabilities generally to be a strength though this may need re-assessment in the light of some serious failures both before and after the reviews.)

The NAPA White Paper has some similarities in its focus on organisational health and capability as well as performance. It suggests taking more advantage of the US employees survey than Australia has so far done with its annual employee census, and it has a much stronger ‘bottom-up’ flavour that we in Australia can learn from. Using an ‘employee engagement’ index as a diagnostic tool to identify business areas that seem to be facing difficulties, and then conducting more detailed work on the health and capability of those business units, as recommended by the NAPA Panel, offers a practical way of complementing the more top-down systematic approach so far adopted in Australia. A combination of the two offers obvious and considerable advantages.

I am also conscious that, despite Australia’s strong record of public sector reform in the 1980s and 1990s, there has been some backsliding more recently and the renewed effort to address capability is therefore most welcome.  Renewed evaluation effort is also needed in Australia; the Foundations for Evidence-Based Policy Making Act passed by the US House of Representatives last November demonstrates this is also desired in the US. But government agencies and public servants cannot solve the problems of capability and performance on their own: they need support from political leaders who recognise the importance of public service capability and the need to invest in it while also pressing for efficiency and firm cost control. In both countries, that remains a challenge.

Andrew Podger is an Honorary Professor of Public Policy at the Australian National University. He is a former career executive with the Australian Public Service where his public service appointments include that of secretary of various Australian departments and the Public Service Commissioner. He has also worked at senior levels in the departments of Finance, Defence and Social Security. He is a NAPA Fellow and contributed to the White Paper on Organizational Health.