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Delivering better government: speech to the APSC
SENATOR THE HON PENNY WONG
MINISTER FOR FINANCE AND DEREGULATION
Parliament House, Canberra ACT 2600 Australia ï Tel: (02) 6277 7400 Fax: (02) 6273 4110
PW 60/11 27 March 2012
DELIVERING BETTER GOVERNMENT
***check against delivery***
Thank you for that introduction, Steve.
Itâs a pleasure to be here today and to have this opportunity to speak directly with senior
members of the public service.
As we all know, dialogue between the APS and Ministers is central to improving the
workings of government.
Today Iâd like to outline how I see the public sector contributing to the delivery of better
government, and how this fits within the Governmentâs broader policy agenda.
Because âbetter governmentâ can mean many things.
And, as we implement measures to achieve better government; as we look for ways to
increase government efficiency, improve service delivery, have better frameworks and
decrease duplication, itâs important that we are clear about our objectives.
For me, as the Minister for Finance, it quite simply comes down to better services,
delivered more efficiently.
But underpinning this seemingly simple statement is a substantial body of work that is
being pursued by the Government to improve the services we provide and the manner
in which they are delivered.
And this work contributes across the entirety of the Governmentâs agenda.
It contributes to the delivery of our fiscal strategy, how we provide services both directly
and with different non-government providers, how we develop policies in the long-term
interest of the public, and how we can make taxpayersâ dollars go further.
âBetter governmentâ is more than just a phrase or a tagline.
Not only is it a policy objective in and of itself, but it is key to the effective delivery of all
policy objectives across government.
âBetter governmentâ means we work more efficiently and we deliver more effectively.
Importance of Better Government
The importance of a strong and sustainable public sector cannot be overstated in the
current international environment.
As sovereign debt concerns linger and leave an adjustment task that will be painful for
many countries, particularly in Europe, the capacity of governments to carry out and
fulfil their core functions is being called into question.
Financial markets are increasingly acting as the litmus test on governments and
whether their ability to govern is up to the task.
For better or worse, the confidence of investment in a countryâs finances through
sovereign ratings provides a proxy for the credibility of governments.
As Europe has shown, a Government that is not financially sustainable risks its own
Against this backdrop, Australiaâs position is one of strength.
We charted the course through the GFC where we avoided recession through swift
action that saw hundreds of thousands of working Australians keep their jobs.
The high demand for Australian government bonds reflects our strong fundamentals,
our low public debt and our strict fiscal rules.
Australia remains an attractive destination for investment.
Underpinned by a strict fiscal strategy, this Government is determined to return the
budget to surplus in 2012-13, notwithstanding the damage to budget revenues caused
by the GFC which has seen a $140 billion in revenue write downs over five years.
Indeed, we are making decisions now that will contribute to the fiscal sustainability of
government finances for decades into the future.
Across the public sector, this Government has reshaped the approach to public sector
spending through an ongoing commitment to efficiency.
Efficiencies driven by the Government and by managers like yourselves, have seen a
$10 billion saving in operating expenses since we came to Government.
That is equivalent to all government spending on pharmaceuticals this year.
And these efficiency savings have been re-directed to meet other government priorities
in areas like health and education.
The Better Government agenda, and the drive to achieve efficient government, sits
firmly within the Governmentâs broader fiscal strategy.
A strong budget underpins all other actions and establishes the capacity of government
to deliver services to the community.
And the better government agenda is not only about efficiency, it is also about
How we improve service delivery is equally important.
Because we know that expectations of governments inevitably continue to grow.
We also know that in the decades ahead, the fiscal capacity to respond to these
expectations will be under increasing pressure as the ageing population impacts on
In response to these forces, agencies need to be innovating and looking at new models
of service delivery to ensure that the standards this generation have come to expect are
available to all generations that follow.
This requires looking at the frameworks within which government operates, improving
the way we interact with the not-for-profit and business communities, and enhancing the
governance and the management of risk of program delivery.
And it is an ongoing process.
We can always improve; we can always find new ways to be more efficient; we can
always do things better.
Under this Labor Government, significant progress has been made to drive efficiencies
in the public sector.
From the outset I want to make clear that an efficient public service is - in its own right -
a policy outcome.
It is government policy, and it is one we strongly support.
And we have runs on the board, with over $10 billion in efficiencies realised since we
came to Government.
While it is easy for some to run around saying theyâll âend the wasteâ, such a slogan
doesnât actually measure up to methodical and consistent savings.
An embedded approach to behavioural change is a far superior long-term policy than
threatening to abolish a department of state.
We all have an obligation to see that taxpayersâ money is spent efficiently.
Since 2007, this Government has systematically pursued efficiencies in the public
These reforms have been achieved through top down reform, as well as bottom up
Taking different approaches delivers the best outcomes in efficiency; in getting the best
outcomes for less.
The primary mechanism for driving efficiencies is the âEfficiency Dividendâ - although
many in this room may not see it as entirely a “bottom up” measure.
The Commonwealth operates a devolved financial framework, with agencies and
Ministers in control of their own spending, subject to operating within the financial
This model - embodied in the FMA and CAC Acts - is a product of its time, when
government shifted from centralised control, to principles-based devolution.
The principle of letting managers manage saw the introduction of a framework that saw
control pushed from the centre to agencies.
Quite rightly, this approach saw senior managers like yourselves put in charge of
budgets, program decisions as well as implementation.
And this approach has served us well.
The Commonwealth public sector is without doubt more responsive and flexible than it
was 10 years ago.
The programs are more innovative, the approaches more targeted.
This same logic applies to the Efficiency Dividend.
While there are areas where specific policies and actions of government can yield
significant reform, as a Government there are also significant efficiencies that can be
achieved when we let managers who are closest to the operations seek out those
Decisions over staffing numbers and IT spends are rightly the domain of managers in
And that makes sense.
Because you know what you need in terms of resources - you and your staff are at the
coalface, if you like.
So, in setting the whole-of-government Efficiency Dividend - the Government is tasking
managers to achieve policy outcomes through the most efficient means.
Just as the Government takes tough decisions on what its priorities are through the
annual budget process, so too agency heads are required to prioritise spending across
One example is the decisions that have been made by the Secretary of my own
Department, Mr David Tune, who, in a message to all Finance staff, outlined the
approach to be taken in operating within the Efficiency Dividend, and still delivering high
quality advice to the Government.
By primarily focusing on non-staffing expenditures, Finance will be targeting reductions
in the cost of recruitment, advertising, hospitality, travel and the use of consultants.
These efficiencies will be added to by examining the functions across the Department
and looking at the sensible consolidation of functions, and reducing duplication where
This is just an example of one Department.
And Iâm sure similar moves are being made elsewhere.
Essentially, the Efficiency Dividend is the Government tasking Departments to be
innovative in delivering high quality services through more streamlined processes.
Coordinated efficiency processes
In addition to the bottom up approach to efficiency, there have been a number of
specific areas where a concerted and centralised push has yielded significant returns.
We have achieved significant reforms since coming to Government and will continue to
do more over the coming years.
There are areas where Government has identified waste and inefficient practices and
has acted to change the practices of the public sector to realise savings.
Underlying several of these measures is recognition that the devolution of some agency
functions passed the point of optimal efficiency, and that at a whole-of-government level
there was benefit in coordination.
Across services that are common to all agencies - travel, recruitment advertising or
ICT, for example - a devolved contracting and purchasing framework meant that
agencies were not benefiting from being part of a much greater whole.
ICT is the obvious example.
When each agency is contracting and procuring Microsoft products individually there is
an inherent inefficiency, as the Commonwealthâs purchasing power is diluted.
The Volume Sourcing Arrangement introduced by this Government saw all
Commonwealth agencies receive favourable pricing and licensing conditions through
This Government has also responded to what were seen as differing expectations
across government in terms of property use and contracting.
Using a principles-based framework, the Government is moving all agencies towards
the same density target over the coming years.
And, of the savings achieved through this process, one third was returned to agency
budgets to be re-allocated to higher priorities within agencies - whether they be
improved IT or additional staff.
The introduction of Guidelines on Non-Campaign Recruitment Advertising has also led
to significantly reduced expenditure.
Recruitment advertising expenditure has reduced from approximately $44.0 million in
2007-08 to $30.0 million in 2008-09, $17.0 million in 2009-10, and $14.8 million in
Shifting agencies from half-page colour ads in the weekend papers to standardised
advertising has reduced unnecessary spending.
In a competitive job market, the majority of agencies were using bigger and brighter ads
to compete with each other and ending this practice has seen recruitment advertising
drop by two-thirds since we came to Government.
As Minister, I have built on this work to achieve further reforms to recruitment
From 1 July this year, recruitment advertising - with some limited caveats - will move
online, with pages of ads in the weekend newspapers a thing of the past.
This is a common sense reform that will save agencies money, and better respond to
the needs of the employees.
These examples are an indication of the broader body of work that is underway across
And it is an ongoing process, and one that requires ongoing attention both from public
sector managers and government.
It is methodical, and it is getting real results.
Throughout this year I expect to be announcing further efficiency reforms that we want
to take forward.
It will require new ways of thinking and pushing the boundaries of existing practice to
deliver a more efficient government.
I have tasked my Department to actively reach out to the private sector, as well as to
draw from international experiences to test what additional ideas there are in this area.
Some of these will have application in Australia, others will not.
But we need to keep an open mind.
Indeed, many of the obvious opportunities to increase efficiencies have already been
Now we need to look more broadly for further potential efficiency reforms.
But ultimately that it is only half the equation of delivering better government.
Better Government also means that we need to improve how we deliver programs to
ensure that the services we provide the community are top class.
And key elements to this are better service delivery, better engagement, better
frameworks and better risk management.
Better service delivery
Key to delivering better government is improving the interaction between the public
sector and other sectors in the community, and the governance frameworks that ensure
risks are well managed and delivery is robust.
Technology and innovation will drive improvements in the areas of health, education
and social inclusion.
The National Broadband Network will be the backbone of the digital economy, just as it
can be the backbone of improved service delivery.
Harnessing its capacity in delivering services to the community will increase the
efficiency of government operations.
But technology alone is not sufficient.
The ability to translate the latest thinking into new policy responses and then into
program design and implementation will underpin the improvement in services over the
Bridging the gap between policy work and frontline delivery will also be vital.
Often, policy work may not fully grasp the diversity and complexity of real life
There is a significant body of literature that delves into this gap, and the various means
of overcoming it in practice.
Looking at it from another angle, it is argued that what is needed in the policy
development stage is the citizenâs perspective.
Indeed, in terms of service delivery, we need to flip the traditional approach on its head
and focus our policy responses on achieving simpler and better targeted frontline
service delivery for citizens.
This will likely require new ways of looking at policy development and service delivery,
but should provide a more holistic response.
However, new program design also needs to be supported by the right framework; one
that provides flexibility to agencies and assurances to government that the innovation is
tempered by appropriate risk management.
It also requires working better with other sectors of the economy to achieve public policy
We also need to recognise that government is not always best placed to be the provider
of certain services, and that government may not hold all policy answers.
This is not a criticism.
Indeed, far from it.
This recognises that government programs should be delivered to achieve our policy
outcomes in the most effective and efficient manner.
In community services, it is entirely appropriate to look to service provision in areas
where not-for-profit groups have specific skills and expertise.
Because this capacity is unlikely to be found in the public sector, and in many areas it
would not be appropriate as it would be unnecessary duplication of services that already
So, embedded in this approach is the need to improve engagement between
government and non-government sectors.
I recognise that âmore engagementâ may seem commonsense, but it is something that is
sometimes overlooked as an area that can improve service delivery.
Evidence of these benefits can be seen in the work that Minister Butler is doing on the
not-for-profit sector reforms, encapsulating various streams of work from across the
Government to improve the delivery of services in this field.
This is not only applicable to the social sector - it is also imperative to embed deeper
engagement with the business community.
In my portfolio we are facilitating this in the deregulation area through the Business
Advisory Forum, announced by the Prime Minister, Minister Bradbury and myself earlier
Seeking the views of senior business figures to feed into policy development -
specifically around deregulation and competition - will provide vital input to government
Over time, improving our engagement with non-government sectors will help shape
future policy reforms.
But for this to occur successfully, we need to put in place the right frameworks to
manage this change.
As the expectations of government change, so too must the frameworks of the public
We need to provide the flexibility and capability to meet the changing demands on
Much of the thinking behind the current financial framework is nearly 20 years old.
And, while the current framework has met the needs of government to date, it is
insufficient to meet future needs.
That is why today I am formally releasing the Commonwealth Financial Accountability
Review Discussion Paper that has been prepared by my Department to kick-start the
process of reforming the current financial framework.
While not pre-empting decisions of Government, the paper examines current
arrangements, and poses a number of questions to generate debate.
Indeed, I would encourage all of you present today to be engaged with this process.
Iâd also ask that you encourage any stakeholders that interact with government to
similarly get involved.
This process will be inclusive, and assist government in getting the right financial
framework for the next twenty years and beyond.
The discussion paper will be available on the Department of Finance website.
Better risk management and delivery
Vital to the approaches Iâve outlined today is appropriate risk management practices
because new approaches will inevitably present new risks.
This is unavoidable - but it is manageable.
For governments, and for the public sector, ârisk-freeâ is a term that sounds appealing,
but is ultimately impossible to achieve.
The transactions of government, the interface with other sectors, the interaction with
citizens, presents far too many moving parts for it to all be free of risk.
Furthermore, attempting to eliminate risk can actually have the perverse impact of
stifling the very innovation that will improve service delivery and the intended outcomes
for all Australians.
That is why a renewed focus on risk, balanced with the need to innovate, is an
important area of decision making - and one which the Government looks to the public
sector to advise us on.
Getting this balance right is important and can mean the difference for how successfully
a policy is implemented and delivered.
We have already made some progress in this area through the introduction of a number
of tools to assist agencies.
The Risk Potential Assessment Tool, which aids in determining and communicating the
risk of a proposal to Cabinet, not only informs the decision making process but also
indicates whether additional assurance processes should be applied.
The Government has extended the application of the Gateway assurance methodology
to apply to programs, given the complexity and implementation challenges that can
accompany program delivery, particularly cross-portfolio programs.
Last year, we also announced reforms to strengthen the role of internal audit within
agencies, to ensure that internal policy discussions aware of and able to manage risks.
However, these important measures cannot displace the need to continually build the
capability of managers across the public sector to better manage risks in program
design and implementation.
This Government has made significant progress on delivering better government and I
believe there is still more that can be done.
Better government is about continued improvement.
The way government works has changed.
The expectations of governments have changed, the complexity has increased, and the
As we all know, a significant amount of work goes into bringing a policy concept to
And as part of this, we need to look for ways to deliver these policies effectively and
We are now using non-government entities and the not-for-profit sector in service
We are increasingly moving service delivery online.
We are working smarter and delivering more.
Now, there are those who will simplistically quip that waste is everywhere in the public
And this perception certainly isnât helped when rare instances of bad behaviour and
mismanagement of taxpayersâ money occur and are aired in the public domain.
But as I said earlier, we all have an obligation to see that taxpayersâ money is spent
efficiently and, while there is always more to be done, I think it is fair to say that this
Government is undertaking serious work on this front.
âBetter governmentâ is more than just an efficiency dividend, itâs more than a catch-phrase.
Itâs not just about saving money. Itâs about saving time.
Itâs about cutting unnecessary processes.
Itâs about delivering better, and deepening our engagement.
Itâs an overarching approach to delivering good public policy that we - both politicians
and public servants - should follow and aim for.