In 1996, Nexus Management was established, providing consulting services to government, not-for-profit organisations and universities across Australia. It was the year John Howard was elected to replace Paul Keating as Prime Minister and Morris Iemma was NSW Premier. Since that time, we’ve had five Prime Ministers (six, if you count Rudd twice) and five NSW Premiers, though none who have served longer than Iemma’s three years and 33 days.
The 20th anniversary of Nexus prompted us to reflect on the changes that have occurred in the public sector over that time. To better understand these changes, we conducted a small survey late last year among colleagues and clients. The survey asked whether they believed the public sector had changed much over the last 20 years, as well as what changes had been for the better and what changes had been for the worse.
The overwhelming consensus was that that the public sector had experienced significant changes over this time, although there was some disagreement about the extent of the change. The survey responses, combined with our perceptions from dealing with public sector organisations over the last 20 years (and working in them before that) highlighted six key trends.
- An emphasis on outcomes
The last 20 years has seen an increased emphasis on outcomes, as opposed to inputs. This is most apparent in the language used by government agencies. Treasury no longer funds agencies or programs—it purchases outcomes. Agencies don’t fund grants, they work with partners to secure outcomes for the community.
- New delivery arrangements
There has been a fundamental change to the way public services have been delivered. One of the most profound, of course, has been the transformation associated with new technologies and the explosion of online information and services. Many public services have been privatised, while others are provided by third parties, such as private sector organisations (prisons, infrastructure and transport services) or not-for-profit organisations (employment, welfare and disability services). As a result, the role of government agencies has shifted from a direct service provider, to a system manager and purchaser of services.
- An emphasis on customer service
Putting aside the debate on whether consumers of government services are customers at all, it’s clear that the public expects government agencies to provide services that are more timely, accessible and customised than ever before. Waiting in a queue for a service that is only open for a limited amount of hours is no longer an acceptable way to renew a driver’s licence!
- The increasing complexity of commonwealth-state relationships
The last 20 years has seen the Commonwealth expand its sphere of influence into matters that were previously led by the states, such as vocational education and training, urban planning and infrastructure development. This involvement (some would say intrusion) is largely a product of vertical fiscal imbalance—the fact that the Commonwealth collects most of the revenue while the states have the constitutional responsibility for delivering most of the services.
Given that the Commonwealth is funding a considerable proportion of states’ activity—for example, about two-thirds of the Tasmanian government revenue is via GST and specific purpose payments allocated by the Commonwealth—it believes it has a right and responsibility to call the shots over how this money is spent.
The growing influence of the Commonwealth also acknowledges that in a globalised economy, it’s futile for individual states to take the lead on big policy issues such as energy and the environment. There are increasing calls for a national response to these issues, irrespective of constitutional niceties. For example, it’s hard to imagine the Australian government ignoring recommendations from the Royal Commission to introduce a national approach to improving child protection systems.
- A stronger emphasis on efficiency
There has been a relentless pursuit towards doing more with less. Some of this is a reasonable response to community demands and some by ideological dogma that maintains a small government is, by definition, a good government. One example of this is the current obsession over whether the government as a proportion of GDP is growing or not. A variety of tools have been employed in this quest for efficiency: the blunt tool of annual efficiency dividends; outsourcing; privatisation; the introduction of user changes; market testing; and more recently, the implementation of contestability frameworks.
- Governance and management reforms
Underpinning these trends is a series of ‘reforms’ to financial, governance and management systems in the public sector. Financial reforms include new budget management systems that attempt to link allocations (or investments) and outcomes, as well as align strategic planning and budgeting cycles. They also include the use of new funding models, such as activity-based funding in the health system and market mechanisms like social bonds and the short-lived carbon tax. Personnel management practices have also changed significantly. The most significant has been the shift from permanency and tenure in public sector employment, to contract-based employment and casualisation of the workforce.
Each of these trends offer benefits and challenges that will determine how much impact they’ll have on the future of the public sector in Australia. We’ll address these in the next two opinion pieces, so you can take the lessons learned over the last 20 years and apply them to your organisation today.