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Terry Moran in conversation: full transcript

Former Secretary of the Department of Prime Minister and Cabinet, Terry Moran AC, has called for the strengthening of the Australian Public Service. Alan Porritt / AAP

Terry Moran was Secretary of the Department of the Prime Minister and Cabinet from 2008 to 2011. He is now President of the Institute of Public Administration Australia and a governor of the Committee for Economic Development of Australia.

He joined John Alford, Professor of Public Sector Management at the Australia and New Zealand School of Government and at the Melbourne Business School, in conversation on the future of Australia’s public service.

They discussed how the public service has changed, how it should operate, and the vexed question of the role of ministerial advisers.

John Alford: I invite you to think about when you first joined the public service. Do you think the public service will change as much in the future as it has since you joined it?

Terry Moran: I think that devolving more authority to deliver services to the lowest possible level is already underway. It’s gone furthest in Victoria but it has to go a long way in other states. Devolving responsibility into new governance structures is a critical change. That will in turn shake up what government departments think their business is, particularly in social policy, environmental policy and aspects of industry policy.

It will have a huge impact on how the commonwealth thinks its job should be described and how state governments think their jobs should be described. All of these things can be sorted out in a technical sense. The variable is the political impetus.

John Alford: Could you talk about a couple of the major ones?

Terry Moran: I think that devolving more authority to deliver services to the lowest possible level is already underway. It’s gone furthest in Victoria but it has to go a long way in other states. Devolving responsibility into new governance structures is a critical change. That will in turn shake up what government departments think their business is, particularly in social policy, environmental policy and aspects of industry policy. It will have a major impact on how the commonwealth thinks its roles should be described and the same for state governments. All of these things can be sorted out in a technical sense. The variable is the political impetus.

John Alford: What is your prognosis as to the likelihood of some of those things coming to fruition?

Terry Moran: I think we are facing years of fiscal constraint in Australia, not as significant as in Europe and the US, but nonetheless significant.

I can’t see the long term average proportion of GDP devoted to government activities going up; it’s actually down below that long term average at the moment because of the contraction in revenue effecting the commonwealth and state governments. Of course, it will return eventually to the long term average.

The commonwealth and the states and territories are going to have to look harder at what their core business is. At the national level we are seeing an argument emerge on both sides of politics along the lines of, “we want more activities shipped out to the states”. The current federal government has done that in a number of ways. Take the 2011 reforms to public hospitals. These go past the state and territory governments to self-governing public hospitals, to which governments will pay fixed proportions of the efficient price for delivery of service. This can become a template for other areas of social policy in the future.

John Alford: What do you think public services will need to be good at to pursue these kinds of reforms?

Terry Moran: It depends. If you are working in a line department, most of the service delivery will have gone elsewhere, for example to local bodies. Innovation in service delivery will flourish at the local level. Efficiency will increase. Productivity will be up. At the head office of government departments, people will be focused on policy work, strategic interventions in service delivery systems, funding and budgeting, accountability, how to find good people for governance with less participation in actual service delivery at the centre.

Public sector employees working in the more devolved areas where service delivery happens will need higher level skills in public sector management to handle the challenges of service delivery, the capacity to innovate continuously, plus a sufficient understanding of policy to enable effective interaction with the smaller, more strategic head office.

John Alford: Right. And of course one of the factors that bears on this is the relationship between the bureaucracy and the political sphere. One thing that has come up is the role of ministerial advisers. Do you think they make it necessarily harder or easier, for public servants to have a productive relationship with elected politicians?

Terry Moran: I think there is a big problem. Ministerial advisers have become the black hole of accountability within our parliamentary democracy.

The reason for that is that the old conventions governing their roles no longer hold true. In the past, if a public servant told a ministerial adviser something it would be deemed that they had told the minister, and the adviser would make sure the minister knew. In turn an adviser would speak with authority if they actually knew the minister’s wishes or had good reason to know what they would be.

There is insufficient accountability because there are so many ministerial advisers now with few, in some jurisdictions, who actually possess a grasp of the business of government commensurate with their responsibilities. No one can suggest that they are an expression of the “persona” of the minister any more. Now the minister isn’t accountable for what they do, because now a minister can say, “Oh that was one of my advisers, I did not know about this”.

Well, if ministers are using that to escape accountability, they can’t escape the proposition that it’s time the advisers were made more accountable for defined roles, and became answerable in the same way as public servants to all the investigatory and accountability bodies, including parliamentary committees.

If prescribed roles and a code of conduct were legislated, it would force ministers to engage people in ministerial office roles who were actually experienced in the business of government. Most advisers in some jurisdictions now operate tactically in pursuit of short term partisan interest and gain while on the public payroll. This can be at a cost to the long term, enduring national interest.

John Alford: Do you think it would make a difference if there were to be a cap placed on the number of ministerial advisers?

Terry Moran: It would help, because it would be another means of forcing a hard look at what jobs they do. So when the Coombs Royal Commission reported in 1976, there was a definition of the role of ministerial advisers that seemed reasonable to everybody at the time. That’s fallen away. Now, in some jurisdictions, you have tribes of younger, inexperienced people who crowd out mature policy debates while they pursue hyper active issues management. This is corrosive of good government.

John Alford: This of course raises a broader question. Traditional public policy thinking tends to posit a clear dichotomy between the realm of politics and the realm of administration. Do you think there is actually a clear line, and how is it discerned?

Terry Moran: There is in some respects, but not in others. Clearly there is a line around party political issues, which public servants should not cross. It gets fuzzier when you talk about what support public servants should provide to ministers in respect to dealing with media queries and it’s well accepted that is OK too. It has been accepted at times that, with the agreement of ministers, senior public servants may brief journalists on background so that they understand the context of a policy initiative. This is not partisan activity.

John Alford: I hear from some public servants that while it’s understood they shouldn’t be involved in politics, particularly in party politics, sometimes it’s actually difficult to do their job unless they stray across that line. Do you agree with that?

Terry Moran: I think that danger is present but partisan activity is the province of politicians, not public servants. An obligation rests on public servants to ensure programs are administered without partisan favour.

John Alford: If you were king for a day, what changes would you make to the public service?

Terry Moran: Well first, I think accountability has to be improved. So I would make the heads of agencies and departmental heads more directly accountable in their own right to parliamentary committees for delivery, particularly through the examination of their annual reports. These reports should actually provide more useful information about departments and KPIs to use in assessing performance.

I’d have more involvement for parliamentary committees in considering proposed appointments of departmental and agency heads before the appointments were submitted through the head of government to the Governor-General, a State Governor or Territory Administrator. This would have the effect of establishing an individual’s professional credentials for a job and relative security for the duration of the appointment.

I’d move to better define the role of ministers for the purposes of ministerial responsibility. At the moment, the media is prepared to hold ministers in many portfolios responsible for anything that crops up. In practical terms this cannot work. It creates confusion, public dissatisfaction, the removal of any real sanctions for poor performance and exhaustion for ministers over time as they cope with immense and impossible pressures.

I’d try and sort out better demarcation in some areas between the commonwealth and states in our federation. I’d decide whether we want the best arrangement for delivering services, or the best arrangement for delivering power to one group or another. To start with the best way to manage service delivery provides the easiest way into a fresh approach to cooperative federalism. The hospital reforms championed by the Commonwealth through COAG are an example of how to approach the problem.

The capability in the public sector has to move with the times, both on the policy front and in terms of the public sector management skills required to get the best bang for our buck in delivering services to citizens.

A lot of functions are best decanted out of cumbersome departments into agencies which have credible, professional governance structures. I’d bring people with expertise from outside government into these structures, men and women who can take more responsibility for effective and innovative service delivery, specialised policy advice or necessary regulation. At the commonwealth level, we have reached the unfortunate position where some departments are vast, complex public sector conglomerates. They have lost strategic focus and the innovative edge of which they are capable. Often these particular departments are less efficient than their leaders would wish them to be. The solution lies in sorting out which functions should be kept at the commonwealth level but done through new style agencies; or which functions could be devolved to the states.

Finally, at the state level, service delivery has got to be well and truly devolved to new style governance arrangements of the sort you see in Victoria and elsewhere for hospitals, schools, vocational education and training under modern purchaser-provider arrangements. This supports more competition between providers where possible and thus more innovation. Competition between public sector providers and entities in the private sector can deliver good results for citizens and enables public sector people to demonstrate the quality and efficiency of which they are capable. But in order for that to happen, as we see with the Gonski recommendations for schools, you have to actually put money into the system to enable public sector providers and others wishing it to address disadvantage effectively. The design of funding systems for both the public sector agencies and private delivery bodies is critical.

John Alford: It’s sometimes said that commonwealth public servants are very good at policy, but there is an issue with service delivery.

Terry Moran: At the commonwealth level, some of the service delivery standards are exceptionally good by world standards. The tax office, customs and border protection, what has been Centrelink and Medicare and others. They have been so successful and are so well regarded overseas, largely because their job is clear, although it can be complex, and they have experienced strong, capable and committed leadership. Agencies such as the ATO are extremely well regarded internationally and have had a succession of remarkable leaders to this day. These leaders don’t get the recognition they deserve.

John Alford: Is that because their job involved mobilising the people within their organisation to do particular things and they have some control over them?

Terry Moran: It does. It also means there is a measure of co-production. As you would know with the tax office, these agencies are increasingly shifting to online processes where people do the data entry themselves. If you go back to the decades long debate about mixing or separating policy and service delivery, both are now so complex and require such sophisticated skills and knowledge that cohabitation of specialists in both streams seems not to deliver the best results in either.

So I am actually in favour of handling discreet, specific and measurable tasks in agencies with new style governance and accountability arrangements. Modern IT systems enable policy departments to be far better informed than ever before if sophisticated information and performance management systems are used. You can then have more of an emphasis on policy groups and departments that are largely about policy, budgets and funding, accountability, legislation and support to ministers, more than anything else.

Even in these cases I would favour the UK initiative, which sets up a departmental board in policy departments where you’ve got non-executive directors who come in from outside of government to supervise management performance in departments.

John Alford: In terms of developing the capacity of public servants, there is a distinction sometimes drawn between the learning that occurs in formal academic programs and the learning that occurs in training in executive programs and learning on the job. Usually it’s 70%, 20%, 10%. Do you see there is a need to emphasis one rather than another?

Terry Moran: Hopefully through an undergraduate education young students acquire the foundations of thought and expression to serve them in any career. But then what has been neglected is contemporary professional development for public servants. We are seriously under investing in this at the moment, even when compared with what was accepted in the sixties and seventies.

Not all agree, but I would say that in terms of professional preparation, public servants need to cover policy and public sector management. After that, there are parts of the public sectors which provide for the ongoing professional development of their employees extremely well; in particular the defence force, police and emergency services. The underinvestment elsewhere is not a trivial matter. Where underinvestment occurs public sector organisations are not as efficient, effective and innovative as they could be. Organisations, which actually cultivate improvement in the skills and knowledge of their employees, are more productive and innovative.

John Alford: And this of course is a difficult argument in times of austerity, because some say we would rather spend the time on frontline services than on training, for example.

Terry Moran: That’s perhaps true in some cases, but not in others. It comes down to what decisions are taken by the people leading those organisations. In the review of the APS which I headed (the Ahead of the Game Review), a key point made is that for departments in the APS, secretaries are stewards of their departments as institutions, and have a responsibility to get them in as good shape as possible so that when they go and the next secretary comes along there is a passing on of a worthwhile organisation. Collectively, secretaries are stewards of the professionalism and capability of the entire public service. I think that secretaries in the APS take those responsibilities very seriously. The culture of the APS remains very strong. Its independence and integrity remains very strong and is more evident than in most other jurisdictions.

John Alford: Of course we know the public sector is beset with a whole pile of investigative and indeed inquisitorial agencies that can be construed as making life difficult for public servants and their work. What can be done about this?

Terry Moran: One of the consequences of what happens in nearly all jurisdictions is that the public comes to feel that public services are riven with inadequacy and incompetence. This is just not true.

If you look back over the past 40 years, the transformation of Australia in an economic and social sense would have been impossible without the drive and implementation capacity of the public services of Australia. That change has transformed Australia so that we are far more prosperous, and, in other respects have all done better than would have otherwise been the case.

If Australia is much better because of what has been done by governments and the public services over the past 40 years, we have to ask why it is that the public has now reached a point where it is almost conditioned to believe that poor performance is endemic.

I think it’s good that there are such investigative and inquisitorial bodies, which are there ultimately to lighten the load of parliament itself, but I think it’s probably time for a Commission of Inquiry to look into how these bodies could relate more effectively to the Australian Parliaments.

It may mean that we have more or fewer of them or a clearer definition of what they do and how they may do it. As an example, for all the performance reviews done by Auditors-General since the late 70s, reviews written at times to feed headlines to the media, we still don’t have a consistent and persuasive pressure through these reviews to achieve the one thing that they should teach us to adopt – reliable, sensible performance measurement for the programs and operations of departments and agencies. We aren’t getting the full story the system actually needs.

Basically public servants are not in a position to answer back with a clear voice. Therefore, if there were more emphasis on parliamentary committees playing a stronger role in the consideration of these review reports, and if these reports paid more attention to sensible performance measurement, and if public servants themselves were able to challenge methods and conclusions before parliamentary committees, I think we would achieve even better public services more speedily.

John Alford: If you were approached by a young graduate who was trying to work out where they were going to go career-wise, would you advise them to join the public service?

Terry Moran: Yes I would, as I did my son and daughter. But I would not encourage a cradle-to-grave career for such young people. Increasingly the most successful public servants are those who have experienced diverse employment, in the public, private, not for profit and academic spheres. And it’s also been the case that since the late 70s and early 80s public services have been recruiting a lot of people from outside at all levels. They are still supposed to do it according to the principle that those who are appointed are qualified for jobs and selected on relative merit.

So we have to recruit lots of capable young people and we still do. We have to try to keep them and we do in large numbers. We’ve got to recognise that we have a very diverse labour market now and many will go off and do other things. Therefore we’ve got to be able to attract back people with 10-20 years experience and see how we best use them. We do this as well

And in the midst of all of that, the traditional culture of public service appropriate to our Westminster style of government continues, and as I have said the public services have been responsible for a huge range of reforms to themselves and to our economy and to society. I have said before and repeat: Australia has amongst the very best public services in the world. It didn’t happen by accident.

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