Memoir

Less than 20/20 vision

The impossibility of predicting complexity

EVEN A PERFECT metaphor runs its course. For decades, 2020 has offered a convenient label for conferences and strategic plans alike – perfect sight about the way forward, a convenient end date for planning. In the 1990s, Craig Emerson, later a senior minister but then a public servant, ran an influential series of public events under the 2020 label, inviting prominent speakers to think aloud about policy problems before that far and distant year. In 2008, I co-chaired a national version of this event, the 2020 Summit at Parliament House in Canberra. A thousand Australians, organised into ten policy streams, speculated about the decade to come. The conversation was invigorating and often prescient, but sadly few of us predicted something far more pressing: just months ahead the global financial crisis waited, which would abruptly end summiteer dreams.

Our fervent desire to guess the future makes us discount the failure of most prediction. There is little consequence for being wrong. Smart people promised a space odyssey in 2001, hoverboards in Back to the Future, fusion power just years away. Who do we now hold accountable for these gaps in our present?

Prediction struggles because our all-engrossing now shapes everything we understand – and ensures there is much we do not. Experts imagine they can step outside their moment and offer an outside view. But we are thoroughly captured by history, that endless store of inherited ideas and assumptions. Culture and language shape how we think and what seems credible. ‘The past is never dead,’ said William Faulkner. ‘It’s not even past.’

Still, no matter how hazy and unreliable, prediction cannot be avoided. We must continue making decisions about what issues matter, where to invest for the future, whether to marry, what to teach, how to plan services. All involve guesses about our unfolding present.

To illustrate the difficulty of this guesswork, let me explore a modest moment in public administration. It shows how good people, working hard with the right intentions, can still miss something fundamental. Since I was one of those people, it is also a story about my failure to grasp how the world moves around us. Not, of course, that hindsight reveals everything. Even looking back from 2020, our vision remains obscured. The past is so wildly unpredictable.

 

MALCOM FRASER WAS a demanding prime minister. He expected much from his public servants, and drove them hard. Though he portrayed himself as conservative by nature, Fraser was willing to overturn institutions when they failed to meet his exacting demands. In December 1976 he split the Treasury, which had operated as a single entity since 1901, into two agencies to encourage more diversity in economic advice. And in September 1982, he announced a review of Commonwealth administration.

This was a surprise – it was only six years since legendary administrator HC ‘Nugget’ Coombs delivered the multiple-volume Royal Commission into Australian Government Administration (RCAGA), the most exhaustive review – then or since – into the nation’s government agencies. RCAGA was commissioned by the Whitlam government in 1974. Its findings were devastating: the Australian Public Service (APS), concluded the report, was ‘excessively centralised, excessively hierarchical, excessively rigid and inflexible, and excessively resistant to organisational change’.

Nugget Coombs and his fellow commissioners devised many recommendations that resulted in new public service legislation: these included entrenching the merit principle for selection, expanding equal opportunity programs, recognising the role of ministerial advisers in the system and bringing the public service into standard industrial arenas.

But adoption of these measures was not swift; it would take a decade or more for the RCAGA’s proposed ideas to be absorbed, and this process was still underway when Malcolm Fraser took office. The Royal Commission’s report provided a repository of choices to be mined, but this was not Mr Fraser’s preferred style. He had no wish to wait. Even as the slow process of RCAGA implementation began, the economy had settled into prolonged recession, with only sporadic growth. Weak signals from the future were becoming louder: a new economics challenging Keynesian orthodoxy, arguments that public administration should henceforth pay more attention to business practice.

Mr Fraser’s new review – led by the Chair of James Hardie Industries, John Boyd Reid – would report in just four months, working through the Christmas break. When the Prime Minister duly accepted Reid’s Review of Commonwealth Administration (RCA) on 30 January 1983, he made clear his reasons for commissioning it: ‘not only to remedy deficiencies in administration,’ but to ‘look more broadly at the public service.’ Fraser wanted to think about the challenges ahead, including new computer technology and the changing expectations of government.

Mr Reid and his two fellow review panel members found pockets of excellence in the public service, even as it strained to meet contemporary demands. Good work went unrecognised – indeed, being rude about public servants was a sort of ‘latter-day blood sport’. The report identified many constraints on effective government administration. The public service needed better managers and enhanced public standing to attract the best and brightest. To usher in this change, the Reid report offered practical measures to encourage immediate improvements in the quality of administration.

Returning to the Reid report decades later is like revisiting the 2020 summit reports – lots of worthwhile ideas, but also a sense of ambition suddenly overtaken by history. If a global economic crisis overwhelmed summit aspirations, so a profound change in ideas about government organisations hovered just over the horizon of 1983. Within a few years, the APS would be altered much more dramatically than anything contemplated in RCA. While many recommendations from the Reid report proved lucid and sensible, the inquiry was eclipsed by a more profound revolution in organisational thinking. We can stand on the very edge, with a mandate to look to the horizon, yet still fail to see what is immediately ahead.

 

I PLAYED A minor role in the Reid Inquiry, and knew little about public service at the time. The experience proved unexpectedly formative – I would eventually divide my working life between universities and government work, participating as a panel member in two subsequent reviews of Commonwealth administration: Ahead of the Game in 2010 and Our Public Service Our Future in 2018–19. Trying to guess the future for Australian public administration and plan for its contingencies became all too familiar.

Early in 1982, I began doctoral study in political science at the Australian National University (ANU), writing a thesis on the independence of the Australian Broadcasting Corporation (ABC). This built on an honours project about politics and the media, but required work in public administration – a discipline little offered in my undergraduate classes. The ABC was created as a statutory authority, a unique Australian invention intended to mirror the Royal Charter sustaining the BBC. Understanding this organisational form meant examining relations between ministers and agencies, and exploring the budgetary, legislative and other controls a minister might exercise to influence ABC decisions. My 1982 proved to be a crash course in the literature of public administration.

Sometime amid this unexpected immersion, my doctoral supervisor, Professor Patrick Weller, was approached by George Nichols from the Cabinet Secretariat. Did Pat know any young scholars working on public administration who might assist with the Reid Inquiry’s research work? And so, on the afternoon of 5 October 1982, I duly reported to the temporary review office in Canberra’s Civic for an interview with Christine Goode from the inquiry. A month with the project promised a better understanding of Australian public administration – and some much-needed income to supplement a meagre Commonwealth postgraduate scholarship.

The following Monday I signed papers at the Department of Administrative Services and began as a Commonwealth public servant, Research Officer Grade 1. In the Civic office I joined fifteen or so colleagues working on the review, all of whom offered a friendly welcome to this evident novice. Then came my first assignment: to produce a background paper on different structural arrangements for public services in comparable nations, and describe how they selected senior managers, a subject about which I knew precisely nothing.

Thus began many weeks buried in the Public Service Board library: reading, seeking advice from the wise, and producing a series of briefing papers for the review. Mr Reid wanted to know why the public service did not run like a business, so describing differences between public and private organisations framed my next project. Clearly it was not the people – a revelation from working at the inquiry was the sheer dedication of Commonwealth officials: long hours, deep commitment to quality advice, a team that stayed at their desks late into Friday nights to finish a task. The secretariat leader invested significant time and care talking with me and suggesting a number of subtle changes to my draft paper on public/private differences for Mr Reid. No doubt he was bemused by the sight of this twenty-three-year-old with no experience in either sector trying to make sense of this world of work. Yet the interactions were professional and encouraging, the sense of duty palpable.

As the review progressed, agendas began shifting. Mr Reid and his colleagues called for ever more papers, and soon Christine Goode convened meetings to manage information flow. Time was scarce as the January deadline loomed. At one meeting I was asked to report on morale in the APS by the end of the week. Based on what evidence? Whatever I could find, apparently. By the end of October, the report outline was being circulated. My public/private paper was said to have ‘come up well’, and might make the appendices along with the paper on structural arrangements in various national public services. By contrast, the work on morale became a potted history of industrial disputes in the public sector, since these were the only data available. The project was abandoned and I was instead assigned a paper to sink the idea of a separate public service staff college, arguing for deploying staff from existing tertiary institutions across Australia.

This sudden induction into the world of public service ended just before Christmas, with my research tasks completed. There was a staff lunch on the balcony to say farewell, and a flattering, if unwanted, job offer from the training section of the Public Service Board. In the weeks ahead, I heard the team was scrambling to draw together the threads. Most abandoned their summer holiday plans to see the project completed.

As so often happens in public life, the urgency proved misplaced. Just a week after receiving the report, Malcolm Fraser called a federal election. He lost – and later told his first biographer that ‘20/20 hindsight is a cheap form of wisdom’. With the Fraser government went the rationale for the report and, it seemed, any prospect it might be implemented. Only when visiting Canadian academic David Corbett told an ANU seminar the Reid report was dead but at least the appendices contained worthwhile material did I feel all was not wasted.

In fact, the obituary proved premature: many of the detailed recommendations from Reid and his colleagues on personnel management were embraced by the new government. A December 1983 statement by Prime Minister Bob Hawke signalled a number of legislative changes proposed in the Review of Commonwealth Administration, and these were duly reflected in the Public Service Reform Act passed by parliament the following year.

 

IN HIS PREFACE to the report, Mr Reid conceded the exercise ‘did not find any startling new truths’. This he attributed to the narrow frame of reference alongside familiar lessons already established by previous reviews and a well-known set of international challenges for which there are no ‘easy panaceas’. Yet these words were written just as startling new ideas began to overwhelm nearly a century of public administration practice, recasting not just operations but the boundaries and responsibilities of government.

How to understand this change? Metaphors help. Traditional public administration, with its focus on legal rationality, could seem like clockwork. Public bureaucracies resembled a carefully constructed chronometer – accountability, neutrality, responsibility and merit, each tightly sprung to regulate the others. This intricate mechanism carried wheels within wheels, turning against one another to ensure balance. In essence, the Reid Inquiry was asked to reset that clockwork, since some cogs were not functioning as required. The review recommendations could address the defects, bring the machinery back into harmony.

Yet, as events transpired, it was John Reid’s passing question that mattered: why can’t the public service operate like a business? For a century the answer had seemed obvious – public service acts for parliament, is part of the state and is trusted with a monopoly of power. It therefore has a duty to behave with principles and accountability not demanded of business. Selection must be merit-based, to avoid any suggestion of patronage. Agencies should operate as part of a larger system, not as unilateral actors. Ministers, not managers, must lead. Because public administration lacks autonomy, a profit motive or an ability to change direction given legislated instructions, it cannot mirror the private sector. The difference between public and private is one of kind, not degree.

Yet even as we repeated these widely acknowledged verities for the Reid report, scholars in American and European think tanks were challenging this inherited understanding of public service. They asked the same question as John Reid and arrived at an answer now known as ‘corporate management’. Within the constraints of a legislative democracy, the public sector could be more responsive, more agile. It should break down hierarchy, empower managers, end onerous employment rules. ‘Let the managers manage,’ suggested economist Mike Keating, who was appointed Secretary of the Department of Employment and Industrial Relations in May 1983 and would later lead the Department of Finance and then Prime Minister and Cabinet. The result would be a more efficient, more responsive public service, using financial controls to manage and regular evaluation to weed out those services (and people) not contributing.

The chapter on management in the Reid report contained some elements of corporate management thinking – fewer central controls, more authority for chief executives. The long-standing Public Service Board, whose library I happily occupied while writing for the inquiry, was abolished in September 1987, a conspicuous casualty of new thinking.

Corporate management, though, proved just the first phase of more profound change. It would be supplanted by a new economics of institutions, a development of principal-agent theory. This was part of a wider shift across the world away from Keynesian economics and towards market logic. In the UK, the Thatcher government had already privatised a significant number of public agencies, and successive Australian governments would follow that lead. Under the influence of ‘micro-economic reform’, the scale and scope of the APS shrunk during the 1980s, even as the national population and economy grew. Long-familiar institutions, from airlines to post offices, departed the public service.

For those agencies that remained, it was no longer assumed public servants should deliver services. Government could be the principal, hiring agents to do its bidding. This introduced a new world of contracting – private firms undertaking work once exclusively reserved for administrators, hired on fixed terms with financial incentives to reduce costs. Unemployed Australians would find themselves talking not with the Commonwealth Employment Service but with a private placement company. The Department of Defence contracted out numerous non-essential services previously provided by uniformed service personnel; ‘If it doesn’t help us kill people, we shouldn’t be doing it,’ said then Secretary Tony Ayers, only half jesting.

Contracting went to the core of public administration, since it questioned claims of difference in kind. Yes, government might wield a monopoly of power in many areas, but it should not be a monopoly provider. Much government work – indeed most – could be contracted out to willing firms and charities. Those older rules about permanent employment, with equal pay and conditions to ensure integrity, need not apply to contract workers.

Over barely a decade, the APS underwent the biggest change in its history. It lost nearly a third of its full-time employees (though numbers began rising again from 2000). Tenure for senior public servants was replaced by contract employment, enterprise bargaining was introduced, common entry and mobility schemes were curtailed.

The Reid report anticipates little of this new world – it was asked to update the clockwork, not replace the entire mechanism. When Secretary of the Department of Prime Minister and Cabinet Terry Moran commissioned and led Ahead of the Game in 2010, the problems to discuss were squarely those of the new model: maintaining capability with fewer Commonwealth public servants, ensuring integrity in a contract state, designing departments that commission rather than do, managing rapid technological change with reduced resources.

These challenges also inform the latest review, Our Public Service Our Future, commissioned by Prime Minister Malcolm Turnbull in 2018 and led by experienced business chief executive David Thodey. Its terms of reference focus on the expectations of government in a digital world. Citizens have become accustomed to instant service provision from banks and utilities via their mobile phones. In this world of apps, the counters and elaborate forms of government services can seem archaic. Government must learn, once again, about service delivery from the private sector.

Much of the Thodey review focuses on the complex information systems the Commonwealth should acquire to deliver integrated services. Yet the public service must also tackle the problem of operating in a world of diminished trust, and here the accumulated legacy of new public management becomes paramount. Australians have asked the public service to maintain capability with reduced investment in people. Sizeable swathes of government activity have been contracted out to private providers – not only service delivery, but also much policy development, is now assigned to large consulting houses that employ people once destined for a public service career. Public servants remain professional, but new public management provides little room for innovation. The paradigm has exhausted its possibilities.

Our Public Service Our Future, presented to the Secretary of the Department of Prime Minister and Cabinet on 20 September 2019, proposes significant reinvestment in the sector, in particular for essential upgrades in digital capacity. It argues for greater recognition of professional expertise within the APS, enhanced probity arrangements, more secure employment for leaders, reinforced boundaries between the political and the professional worlds of government. The report seeks a new balance between traditional public sector values and the realities of constrained public spending. A further wave of change may be close, driven this time by the astonishing potential of artificial intelligence and cloud computing to automate government services. Until then, the APS seems in stasis, a system caught between theories of how to operate.

 

LOOKING BACK, MALCOLM Fraser and John Reid both perceived that a world of sluggish growth and flat revenues needed better ways of organising the work of government. They saw an answer in shifting towards business-like practices through empowering managers. Some of their proposals were already being trialled by state governments, notably in Premier John Cain’s Victoria. But it would take the rise of economists in central Commonwealth agencies such as Mike Keating, and a new generation of ambitious federal ministers led by John Dawkins, for Canberra to decisively shift its approaches to public management.

Nearly forty years later, the benefits of change are being assessed against realisation of the price. Did government go too far and hollow out the public service, leaving a shell that lacks policy capability and proves ill-equipped to advise on contemporary challenges? Why the conspicuous, continuing failure to address issues such as the gap in Indigenous outcomes despite all the supposed new management techniques? Through eighteen reviews over the past ten years, the Commonwealth public service has focused on the obvious deficiencies of the current model, not on its future. Perhaps there is a full circle in prospect, a return to more permanent forms of public organisation and employment so the machinery of state can provide stewardship amid political instability.

With 20/20 hindsight, the Reid review came at least a year too soon – an invitation to adjust the settings when there would yet be more radical prospects to contemplate. But that is to write the present onto the past. Those who framed the terms of reference, like those who wrote the Review of Commonwealth Administration report, worked in the world they knew. The assumptions of the history they inhabited are inscribed on every page of the report.

That report delivered some worthwhile outcomes, offering solutions to pressing administrative problems. It trained a number of senior officials who would use their learning to good effect in later years – and at least one academic who remains grateful for a temporary research role recommended by his doctoral supervisor. The document provided a survey of current issues. It identified concerns, such as the frequency of machinery changes, that remain a deadweight on efficiency decades later. Above all, the report asked officials and ministers to think again about the nature of public value. They did so, and this eventually yielded startling results.

There is no reason to expect our contemporary vision to be any clearer. Our condition, as Italo Calvino wrote, is to ‘hurtle into the future, inventing responses before we can understand the challenges’. We talk about looking forward, but reports are really about trying to understand the present. Hence the fact that every review, given enough time, displays the same fallibility, the same assumptions proved wrong as the apparently settled future suddenly vanishes.

Yet the work is essential. Since the current administrative paradigm is played out, there is an urgent need for alternatives. What thinking, now embryonic and scattered, might cohere in time as a prototype for the future? Our vision is always less than 20/20 perfect – and no less urgent for being, inevitably, wrong.

5 November 2019

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