Modernising Public Sector Management: Recent Reforms in Western Australia

ETHOS Issue 09, June 2011

INTRODUCTION

The New Public Management agenda of “less government” in the 1980s and 1990s has given way to a renewed focus on public value, accountability, efficiency and effectiveness in public administration, and multipartite collaboration.¹ The insights of Public Value Theory have informed important new perspectives such as those offered by Mark Moore² and the evolving New Synthesis project being developed by Jocelyne Bourgon.³ Greater collaboration with the third sector, citizen co-production and new models for networked governance have become important aspects of current public management thinking.

In this spirit, a newly-elected Western Australian Government embarked in late 2008 on two key initiatives as part of its electoral commitment to public sector reform⁴ to improve public sector productivity, and to promote a more integrated approach to public service delivery. One key initiative was the establishment of an Economic Audit Committee (EAC) to undertake a comprehensive and reform-oriented audit of public sector service delivery arrangements.⁵

The EAC REPORT: A CONTEXT FOR CHANGE

The EAC’s final report in November 2009⁶ covered a number of themes, including “Modernising Public Sector Management”, for which the EAC concluded that the Western Australian (WA) public sector:

• Faced significant challenges in building and sustaining a skilled and capable workforce for the future in the face of a tightening labour market and increasing service demands;
• Was not sufficiently agile and flexible;
• Tended towards risk avoidance over risk management; and
• Was driven by compliance rules and processes that were seen to be impediments to responsiveness, collaboration and innovation.

To address these issues, the EAC proposed a reform vision for the WA public sector in which:

• Agencies take a long term view about service needs and labour supply, actively plan for the future composition and profile of their workforce, and make increased use of underutilised sectors of the labour market, such as people with disabilities, indigenous people and older workers.
• Agencies strive for continual improvement in service delivery and productivity to deliver benefits to the Western Australian community.
• The compliance regime provides managers with the freedom and skills to manage in flexible, innovative and responsive ways while promoting and ensuring the highest standards of conduct, integrity and professionalism.
• A diverse workforce is comprised of talented people who act responsibly, are accountable for their actions and are proud to serve the community of Western Australia.

In parallel with the Economic Audit programme, the Government acted on a second key commitment by establishing a Public Sector Commission. Announced in September 2008 as an important step in enhancing the independence, professionalism and integrity of Western Australia’s public service, the role of the Public Sector Commission (PSC) was to focus on:

• Public sector leadership;
• Building the capacity of the public sector;
• Evaluating performance of the public sector;
• Developing public sector management policies and practices;
• Public sector reform; and
• Advancing the diversity and accountability agenda.

The PSC took over a number of public sector management functions previously administered by the Department of the Premier and Cabinet. The Public Sector Commissioner, a member of the EAC, oversaw reform of the regulatory environment for public sector management and administration.

REGULATORY REFORMS RELATED TO PUBLIC SECTOR MANAGEMENT

Recommendations from the Economic Audit process informed the PSC’s development of a Public Sector Reform Bill. Enacted as the Public Sector Reform Act 2010, the new legislation provides for several key regulatory changes:

1. Strengthening the public sector management framework by simplifying oversight structures

A new statutory office of the “Public Sector Commissioner” combines the public sector management functions of the Minister for Public Sector Management and those of the Commissioner for Public Sector Standards. This new office is empowered to issue mandatory “Commissioner’s Instructions” to public sector agencies and employees in matters related to public administration and human resource management. The Commissioner also enjoys statutory independence to perform his functions (apart from a limited number of functions subject to Ministerial direction) and reports independently to Parliament on broader governance, administration and management issues, beyond compliance with standards.

2. Removing unnecessary prescription to disciplinary arrangements

The complex, restrictive and highly prescriptive disciplinary provisions in the previous Public Sector Management Act 1994 have been streamlined. High-level directives (“Commissioner’s Instructions”), which can be amended in case of future reforms without Parliamentary assistance, replace the former arduous three-stage process. “Improvement actions” (such as counselling or training) have become an additional alternative to disciplinary action where appropriate and disciplinary action can now be taken against former employees.

3. Enhance employment flexibility to support responsive administration

Changes introduced by the Reform Act, designed to increase flexibility and mobility in public sector employment, make it possible for public sector officers to hold more than one position and for a Chief Executive Officer (CEO) to delegate authority to a person that is not an employee (subject to certain controls). In addition, new standards in human resource management allow appropriately qualified, highly suitable and successful officers to be appointed to certain positions under a merit selection scheme, without having to participate in an open competitive selection process. These changes would support agencies in implementing “joined up” and collaborative service delivery models, and aid recruitment for highly specialised positions and regional appointments.

4. Measuring public sector performance

The Public Sector Reform Act 2010 expands the monitoring and reporting function undertaken by the Public Sector Standards Commissioner from its previous legislative focus on compliance with Human Resource Standards and Ethical Codes, to a broader consideration of the state of public sector administration and management⁷ across the sector, including areas administered by other agencies. Work is underway with these other central government agencies to devise a common accountability map, in order to develop a shared conceptual framework for measuring, monitoring, reporting and managing sectorwide performance. Much of this evaluative work is in progress. A 2010 State of the Sector report⁸ includes a maturity model for measuring an agency’s, and the sector’s, overall capacity to administer and manage particular governance areas. This new approach to monitoring and reporting the state of public administration and management is in its infancy and continues to evolve.

OTHER MODERNISATION AND REFORM INITIATIVES

Beyond legislative reform, the Economic Audit also advocated the development of policy capability and leadership capacity in the WA public sector. Accordingly, the PSC, with a division devoted to Capability and Development, also plays a key role in promoting and facilitating skills- and capacity-building in the public sector workforce.

Workforce Planning

The PSC sees robust workforce planning as a priority, particularly for agencies with a large front line service delivery workforce (e.g. health, education, police). To help facilitate this work, the Commission produced the publication Strategic Directions for the Public Sector Workforce 2009-2014 (SDPSW). This document points to both legislative and system level changes required to modernise the public sector, involving areas such as:

• Streamlining recruitment;
• Improving workforce planning;
• Engaging the diversity of the community in public sector employment;
• Optimising flexibility in employment arrangements;
• Addressing regional workforce challenges; and
• Building the capacity and the productivity of the sector.

A reference group of key employers is now working across the WA public sector to build on the foundation of the Public Sector Reform Act 2010 through practical initiatives and information sharing. Priority areas are improving the quality of workforce data and building modelling and planning skills.

The Economic Audit also recommended development in a number of areas such as leadership, policy formulation, procurement, contract management, project management, service brokerage and evaluation. While it is clear that all the Central agencies have roles to play in nurturing such capabilities across the sector, the PSC is supporting this effort with training needs and capability gap analyses to ensure that future training programmes can be effectively targeted against identified gaps and priorities.

Mobility and Leadership

The PSC is promoting a range of strategies to support enhanced mobility, as a goal in its own right but also as a way of building a whole-of-sector leadership perspective, and as a means of stimulating improved collaboration. Reforms to human resource standards are therefore seen as crucial. The Commission is also considering a talent management system that can help identify opportunities for senior officers to share their skills and experience in different strategic and operational environments.

Human Resource (HR) Management Capability Profile

Addressing the need for better HR management support for CEOs of public sector organisations, the PSC is developing a Human Resource Capability Framework, based on the Australian Human Resources Institute Model of Excellence and complementary to its current Leadership Capability Profiles. The PSC consulted with more than 160 CEOs and executives, and about 400 HR practitioners during the development of the framework to ensure that it represents core capabilities that are essential to supporting effective human resources management into the future. To support its implementation, the Commission is also developing learning resources and a range of development strategies.

CHALLENGES AHEAD

The Western Australian public sector faces many challenges in supporting growth in the economy while responding to its socioeconomic effects on the diverse state community. Not only must the sector adapt quickly to new policy, service and regulatory challenges, but it must do so at a time of rapid demographic change. Such change affects both the demand for different public sector services and also the availability of the very skills that are needed to sustain and enhance services. This imperative requires innovation both in public sector services and in agency administration and management.

The challenge for the new Public Sector Commissioner in 2011 and beyond will firstly be to establish the foundational elements of the reform agenda, and to develop appropriate support strategies so that the public sector can derive maximum benefits from the changed regulatory environment. He will need to do so in a way that promotes good decision-making at the agency level, enhances flexibility without compromising accountability and streamlines compliance without diminishing essential oversight.

The further and more critical challenge will be to measure the success of these key reforms at both the agency and sectoral level, and assessing the extent to which the new regulatory framework is making a positive difference to the efficiency, effectiveness and overall productivity of the WA public sector and to the lives of Western Australians.

NOTES

1. Value for Money in Government, Public Administration after New Public Management, OECD publishing, June 2010.
2. Moore, Mark Harrison, Creating Public Value: Strategic Management in Government (Harvard University Press, 1995)
3. Bourgon, Jocelyne, A New Synthesis in Public Administration, http://www.nsworld.org/about
4. In the 2008 elections, a minority Liberal-National Conservative Government led by Colin Barnett replaced the Labour Party which had governed Western Australia for 7 ½ years. As part of its electoral platform, the Barnett government committed to improving the efficiency, effectiveness and productivity of the public sector, and also sought to promote a more integrated approach to service delivery including enhanced cross-agency and cross-sector partnerships involving private and community sectors in service delivery. See: Partnership Forum.
5. The brief given to the Committee by the Treasurer was to review the financial performance, management and service delivery standards of government agencies, examine the structure of government agencies and suggest options for greater accountability and transparency. See: State Government of Western Australia: Media statements: http://www.mediastatements.wa.gov.au/Pages/WACabinetMinistersSearch.aspx?ItemId=130793&sear ch=2009-10
6. The Economic Audit Committee final report and related information is available via: http://www.dpc.wa.gov.au/Publications/EconomicAuditReport/Pages/Default.aspx
7. The regulatory framework for monitoring and evaluating and managing public sector performance expands across a number of central government agencies including the Department of Treasury and Finance (DTF) (Financial Management Act 2006), the Independent Office of the Auditor General (Auditor General Act 2006) and the new Public Sector Commissioner (PSC) (Public Sector Management Act 1994 and the Public Sector Reform Act 2010). They are also articulated through the Outcome Based Management Guidelines and Model Annual Reports published by DTF and the Annual Report Framework published by the PSC.
8. The 2010 SOTS report is available via: http://www.opssc.wa.gov.au/Documents/Reporting/State\_of\_the\_Service\_reports/State\_of\_the\_Sector\_Report\_2010.pdf