Five Things We Know from Public Sector Contestability Reviews

Craig Pandy

Principal in Aurecon's Canberra office, leading the Infrastructure Advisory practice.

I was recently invited to join Professor Mark Evans from the Institute for Governance and Policy Analysis at the University of Canberra for a  discussion on “Contestability and Lessons learned from the Reviews” with a group of developing public sector leaders in Commonwealth government. The Contestability Reviews form a key component of the current Government’s fiscal consolidation strategy. The Reviews identify both the potential for efficiency gains (through realignment, outsourcing, best value procurement) and new ways of delivering services (e.g. via the Digital Transformation Agency).  The Reviews were an opportunity to independently assess the role of Commonwealth government and its core business and other governments and sectors that have the capacity to deliver departmental products and services. In short, the Reviews provide an opportunity for both cost containment and innovation.  The objective of the discussion was to evaluate lessons drawn from the experience of reviewers for better policy-making.

Given that I’d conducted the Functional and Efficiency Reviews (FER) at the Australian Tax Office, the Department of Employment, and the Department of Prime Minister and Cabinet (PM&C), it made for an interesting discussion, as many participants were from those departments.  The topic is even more relevant in the context of the current Australian Public Service Review led by CSIRO Chairman and former Telstra CEO David Thodey, who also led the PM&C FER.

The central issues guiding the discussion focussed upon:

  • how the Reviews impacted Departments;
  • the role of the Commonwealth government as policy-maker, regulator, and service-delivery or enabling arms of government;
  • opportunities for rediscovering the core purposes of government; and
  • the challenges of service redesign and efficiency.

Having been engaged in several whole of organisational reviews, in both the private and the public sector over the last 20 years, it’s important to have a framework for rigorously and consistently evaluating the activity and rationale for agencies.  In service delivery agencies, this was reasonably straightforward; in policy agencies – less so.  In all instances, it is critical to first define the system that the agency operates in, and test the role of government in that system before addressing the role of the agency, and indeed that of other actors in the system.  An assessment of activity against that confirmed role reveals opportunities for redefinition of roles and collaboration.  Identifying the opportunity for achieving efficiencies in execution is the final stage.

The participants led the discussion which followed, exploring a range of the lessons from the reviews and identifying lessons from similar reviews I completed in the private sector, and at other levels of government.  The key points which resonated with the group included the following:

  1. There can be a clear tension between the ambitions of a Department conducting review to identify inefficient practices or more effective means of delivering service outcomes, and the broader efficiency and governance agenda which can be committed to savings without the appetite to forego the underlying activity.  This is mostly sharply brought into contrast if it relates to the governance burden, such as external oversight functions.
  2. Senior Government leaders lament the erosion of capacity for strategic policy development over the last decade.  One Secretary indicated that much of the technical competence now resided in the States, whereas 20 years ago it was in the Commonwealth.  A co-ordinated approach to data management and analytics across government could address this deficiency, but remains in development.  Digitisation of assets and infrastructure has taken huge leaps forward, and points the way in other spheres, once the Freedom of Information/privacy arm-wrestle is overcome.
  3. The rigour applied to internal expenditure and procurement could derive benefit if applied to the much larger pool of administered expenditure.  This is particularly the case in Departments responsible for small disparate legacy programmes, often administered by junior resources.  The lack of scale in the management of programmes can be inefficient, particularly when platforms for managing the administration are developed internally rather than leveraging existing platforms from across government.  This is improving, particularly where large organisations have engaged external expertise in the design and management of programmes in service delivery and administration.
  4. Separation of functions for reasons of independence or to maintain the separation of “purchaser/provider roles” can lead to some abnormal distinctions which undermine efficiency.  This is exacerbated when organisational change merely shifts the tribal divisions to new lines.  Organisational separation of policy, service delivery, technology, and assurance roles for a single function (payroll for example) across multiple groups, requiring any dispute to be resolved at the highest levels of the organisation is a clear example.
  5. Shared services aligned to major service delivery agencies can struggle to meet the needs of all customer organisations equally – which highlights the role that central agencies can play in moving the shared service agenda forward.  But underlying complexity in policy arrangements, as exemplified in basics such as enterprise agreements stymies progress on shared service in corporate support services.  The shared services experiences in Western Australia and South Australia point to the challenge of failing to address policy complexity.

Do agencies have the capability, and institutional knowledge to perform many of these reviews themselves?  The value of external expertise (consultants) in support of agencies was challenged by participants.  Quite simply, these reviews cannot be done in isolation from the Departments.  Working collaboratively with the host organisation is a hallmark of success in all Reviews.  Absence of collaboration is a recipe for disaster, as evidenced by several reviews observed – driven by benchmarking against unrelated organisational contexts, or sophisticated organisational theory imposed upon a (relatively) unsophisticated organisation.

Organisations typically engage consulting firms like Aurecon to achieve one of three things:

  • provide horse-power and skills to get a task done in a time or resource constrained environment;
  • access broader experience from other industries and technical expertise that may not be readily available to the organisation internally;
  • provide an independent lens or voice to an internally challenging issue.

The key features of advisory and consulting firms that distinguish them from simple body-shops are a depth of expertise – as evidenced by a body of intellectual capital, and some related bench-strength; and credible experience across the industry, or a relevant industry on similar issues.

If these lessons resonate with you, it would be great to hear from you at: Craig.Pandy@aurecongroup.com.

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