My, How Things Have Changed

I joined the public service in the mid 1960s. The purpose of this essay is to review and reflect upon the changes that have taken place since in the way we are governed, and to hazard some thoughts about whether the way we are governed now is fit to meet the challenges we face.

The story that emerges is one of governments wrestling with the relationship between government and the public service, especially the relationships between ministers and their department heads, the services to be provided to ministers to enable them to discharge their ministerial functions, and the relationships between ministers’ officers and their departments. It is also a story about the role of Cabinet, the functions of statutory authorities and office holders, and of the evolution of Commonwealth–state financial relations.

The 1960s Commonwealth service

The service I joined in 1966 was substantially the same service that had been established immediately after Federation. The first Public Service Act was passed in May 1902.1¹ It was replaced 20 years later by the Public Service Act 1922,² and the Act that was in force when I joined was simply that Act with incremental amendments.

Contained in both Acts were provisions for the heads of departments to be permanent: they were described in the legislation as permanent heads, and were referred to as such until the 1980s. Both Acts provided that ‘The Permanent Head of a Department shall be responsible for its general working, and for all the business thereof, and shall advise the minister in all matters relating to the Department.’

The effect of this provision was to give the departmental secretary a monopoly of the formal process of advising the minister: the minister was supposed to look to the department for advice, and the department was expected to provide all the advice that the minister would need in the performance of their duties. If there were a need for external advice, it would be for the secretary to decide that and to seek it out.

All departmental officers acted on delegated authority from the secretary. The secretary could delegate any of their powers, other than that power of delegation, to any officer. The service was highly centralised. Its staff were ‘officers’—holders of an office, not ‘employees’. The offices they held were created by the governor-general, on the advice of the Public Service Board, for which purpose the Public Service Board needed a report from the permanent head.

The public service I joined was very white; the White Australia policy was still the order of the day. The service was not only very white but also very Anglo-Celtic: the children of postwar settlers were not yet making their way through university and entering the junior ranks of the third division. Indeed, it was so Anglo-Celtic that one did not need to be an Australian citizen to join—the requirement was to be a British subject. So when I joined in 1966, an Englishman ‘fresh off the boat’ could join the public service, but a person of Aboriginal origin could not even be recorded in the census—the latter was only made possible by a referendum the following year. It was also very male. Until November 1966, married women could not join the service, and female employees who married were at that point ‘deemed to have retired’.

It was a permanent, career service. The presumption was that one joined the service for life, and had a job for life. A corollary of this was that entry was at the most junior levels and most vacant positions in the service were closed to outside applicants and advertised only in the Commonwealth Gazette.

Permanent officers had access to superannuation, and had to decide on their first day whether they intended to retire at age 60 or 65, because that would determine the superannuation contributions to be deducted from their fortnightly salary. If they had the misfortune that the office they held was abolished, their department would be expected to find them another position at their classification level.

The thinking that underpinned this career service was that the staff would be better able to serve the government of the day in a detached and professional manner, and faithfully carry out its lawful instructions, if they had no need to fear a change of government and no need to worry about their financial situation in retirement.

Technologically it was another era. All typewriting was manual. Photocopying was in its infancy. Computers were huge machines housed in air-conditioned caverns, fed by paper tape or punch cards, and attended by men in white lab coats.

It was a more formal and courteous age. Everyone who wrote a letter to a minister received a reply signed personally by the minister, usually within 21 days, which reply had to be manually typed without error or erasure. When dealing with fellow public servants for the first time, one addressed them as ‘Mr …’ or, on that rare occasion, ‘Miss …’

Relations between the citizen and the state were weighted in favour of the state. There was no presumption of access to government information—the guidelines for giving a ‘confidential’ classification to documents included the possibility that the release of the document ‘could cause administrative embarrassment’. Avenues for the rectification of administrative error or injustice were few, far between and expensive.

The Canberra in which we worked was an emerging city of 80,000 people, growing at 10 per cent per annum, with a construction workforce that exceeded the size of the public service.

The nation in which we worked (including its external territories, of which PNG was one) ended at the three-mile limit, where international waters began. States had no exclusive rights to the marine or mineral resources of their offshore waters or continental shelf.

One thing about that Commonwealth service that had scarcely been reformed in 70 years: it had proved itself fit for purpose. Whatever its faults, it had seen us through two world wars and done a very sound job of assisting Curtin and Chifley with the planning and implementation of postwar reconstruction.

The Whitlam years

If change had been incremental until the early 1970s, things began to move quickly with the election of the Whitlam government on 2 December 1972. Whitlam came to office on a clearly articulated policy platform that envisaged dramatic changes to an Australia that had become rather complacent about policy reform after 23 years without a change of government. There was a major reshaping of the federal bureaucracy, and the initiation of a wide range of new government programs.

Many of these were to involve direct Commonwealth intrusion into matters that are constitutionally the business of the states, such as the layout and design of cities, the promotion of decentralisation to regional ‘growth centres’ and improvements to urban public transport. The Commonwealth’s leverage in these areas would be derived from section 96 of the Constitution, which provides for the Commonwealth to make grants of financial assistance to the states on terms and conditions determined by the Commonwealth. In the early years of Federation these grants were so-called General Purpose Payments (GPPs), payments that the states could use as they saw fit. In 1923 the Commonwealth began to make ‘Special Purpose Payments’ (SPPs) that were earmarked for roads, and from 1945 it began to make SPPs in the education sector. From Whitlam’s time on they became a major feature of the financial relationship between the Commonwealth and the states.

Although many people associated with the incoming government entertained profound suspicions of the public service—apparently it was the fault of the public service that the Coalition had been in office for 23 years—no major changes were made to the basic APS employment framework in the Public Service Act. The Prime Minister’s Office became larger and more influential, and major changes were in contemplation, but they would come only after full and thorough inquiry.

At the end of 1973 the Public Service Act was purged of the word ‘Commonwealth’ and replaced by the word ‘Australian’; the Commonwealth service became the Australian Public Service (APS).³ In June 1974 prime minister Whitlam announced the appointment of a royal commission, under the chairmanship of Dr H.C. Coombs, to inquire into and report on the APS, statutory corporations and other Australian government authorities.

This was to be a very thorough review, which would tackle issues such as the appropriate role of ministerial departments, statutory corporations and other authorities; the relationship of the APS and statutory corporations and other authorities with the parliament, ministers and the community; parliamentary scrutiny and control of administration; responsibility and accountability of public servants, and their participation in forming policy and making decisions; the functions of the Public Service Board, the auditor-general and the Treasury and so on.

By 1975 the Whitlam government was less concerned with public sector reform than with its own survival. It did, however, manage to establish an Administrative Appeals Tribunal, to provide independent review of a wide range of administrative decisions made by the Commonwealth Government and some non-government bodies.

The cutting short of Whitlam’s second term meant that the Coombs Royal Commission reported into a much less welcoming environment than the one in which it had been launched. Nevertheless, many of the commission’s recommendations contributed to bringing about significant changes to APS administration over an extended period. The report opened up an important discussion about the relationship between ministers and departmental heads, and between the Public Service Board and departmental heads.

Interestingly, in light of later developments it canvassed the arguments for and against guaranteeing departmental heads ‘permanence’, whether they should have fixed-term appointments or should be removable ‘at pleasure’. Acknowledging the need to reconcile the government’s desire for flexible and responsive administration at the top; the need for experienced administration; and need for claims of senior officers, and the career service as a whole, to have appointments and movements made without caprice and after due process, it came down in favour of departmental heads retaining tenure but being rotated between departments from time to time.⁴

The Fraser years

As far as his approach to Cabinet government was concerned, Malcolm Fraser was a traditionalist—Cabinet was the place to make the big decisions. In Commonwealth administration he was also a centralist—he strengthened the role of the Prime Minister’s Department, and established six Cabinet subcommittees, which gave the central agencies greater oversight of the other departments.

Fraser came to office with little inclination to reform the public service, but with a strong political imperative to make big changes, to validate the ‘extraordinary and reprehensible circumstances’ justification he had used for his role in bundling an elected government out of office. An important part of this story was the proposition that Labor’s profligate spending was such a danger to the economy that we could not afford to wait until the election that was due the following year. Accordingly, Fraser was a man in a hurry.

Fraser’s main approach was to seek to reduce the size of the public service by means of a tighter focus on government priorities, and what he saw as the unnecessary duplication and overlapping of activities more properly carried out by the states. This accorded with Fraser’s inclination to roll back the Whitlam government programs that conservative politicians saw as intruding into the business of the states—levels of intrusion that had seen SPPs to the states grow from around 20 per cent of Commonwealth grants to the states in 1970–71 to around 45 per cent in 1975–76⁵ (roughly the level at which they stood in the 2018–19 Budget).⁶

Fraser had three runs at this. We saw in turn the appointment on 22 December 1975 of an Administrative Review Committee (ARC) headed by former defence secretary Sir Henry Bland; the establishment in November 1980 of a ministerial committee (better known as the ‘Razor Gang’) to review Commonwealth functions; and the establishment in September 1982 of a Review of Commonwealth Administration, under the chairmanship of J.B. Reid, the one private sector member of the Bland ARC.

None of these efforts was spectacularly successful. A key problem for Fraser was that while the states would have been happy to take sole responsibility for the interventionist programs, they wanted the money that went with them, which of course would have denied Fraser the opportunity to book the savings he was seeking. Nevertheless, Fraser was able to report to the parliament on 30 April 1981 that since 1975–76 ‘the proportion of total Commonwealth assistance provided as untied general revenue payments has risen from less than 40 per cent to around 50 per cent’.⁷

In addition to these reviews, Fraser strengthened the Department of the Prime Minister and Cabinet, and in November 1976 he announced the separation of the financial management and control activities of the Treasury from its role in broad economic policy analysis and advice to government. The financial management and control functions were located in a newly created Department of Finance.

In summary, the reform program of the Fraser government after 1975, while pursuing changes in policy, priorities and functions of federal government, directed little attention to the basic employment framework and legislation.

Fraser did introduce some important reforms concerning permanent heads. The Public Service (First Division Officers) Act 1976 established a standardised, legislated procedure for the appointment of permanent heads.⁸ It also enacted the first breach in the presumption that permanent heads would be tenured career public servants—a reform that was to have far-reaching consequences. From the time this Act was proclaimed, governments could appoint department heads of their own choosing from outside the service, and when there was a change of government the incoming prime minister could recommend the termination of the appointment of any permanent head who had been appointed by the outgoing government.

To the surprise of many, Fraser continued the improvements of citizens’ rights in dealing with the state that had begun with Whitlam. The establishment of the Federal Court in 1976 gave citizens an opportunity to have cases on a wide range of matters heard without having to approach the High Court, and 1976 saw the establishment of the Commonwealth Ombudsman, to consider complaints from people who believed they had been adversely affected by the defective administration of Commonwealth departments or agencies. The Administrative Decisions (Judicial Review) Act 1977, which came into effect in 1980, facilitated judicial review by the Federal Court of some exercises of Commonwealth power.

The Freedom of Information Act 1982 extended the right of the community to access information in the possession of the Commonwealth Government, and in so doing delegitimised one of the grounds for classifying a document—that it might cause administrative embarrassment.

Reforms of the Hawke–Keating era

Very early in its term, the Hawke government made major reforms to the public service, most of them embodied in the Public Service Reform Act 1984,⁹ which inserted an Australian citizenship requirement for appointment to the APS in most circumstances, in place of the former British subject requirement. Introducing this legislation, John Dawkins stated that the government’s objectives included closer supervision of their departments by ministers, and the greater involvement of ministers in their processes of resource allocation.¹⁰

An important companion piece of legislation was the Members of Parliament (Staff) Act 1984 (the MOPS Act), which provided authority for ministers, other members of parliament and parliamentary office holders to employ their own staff, with authority also for ministers to engage consultants. To this point, staff in these categories had been engaged under Public Service Act temporary employment provisions, with decisions about their engagement being taken formally by the then special minister of state. Typically, ministerial staff had been seconded to ministers’ offices from their department.

In a later reform, the Prime Minister and Cabinet (Miscellaneous Provisions) Act 1994 provided for (renewable) fixed-term appointments for departmental secretaries—such appointments were to be terminated if the office was abolished, at which point the person concerned would be deemed to have retired.¹¹

The changes to the status and tenure of departmental secretaries introduced by Hawke and Keating left the public service in a situation rather remote from where Coombs had come out; as noted above, Coombs had favoured retention of tenure. The path was now open to wholesale sackings upon a change of government.

In 1987 Dawkins announced further changes to the public service in the form of departmental mergers to form ‘mega-departments’, changes that in my view went to the heart of what Cabinet government is about. The rationale for the mergers was that they would bring about greater efficiency, would enable more integrated policy approaches and would reduce conflict in Cabinet. My objections are both ‘in principle’ and practical.

To deal first with the matter of principle, reducing conflict in Cabinet is a nonsensical objective. Cabinet is the highest decision-making body in the land. It is an informal grouping of the most senior ministers, convened by the prime minister, to determine a common position on the most important matters of the day. It is this body that determines where the government of the day believes the national interest lies. The highest and best use of the limited time of these senior ministers is when they turn their minds to complex matters on which differ- ent aspects of the national or public interest collide. There is conflict because different aspects of the public interest are engaged, and the answer is not obvious. When these colliding interests are merged in a single department, we are leaving the resolution of these conflicts to unelected officials within that department, rather than the most senior elected politicians deliberating as a group.

That is why it is wrong in principle to have, for example, a Department of Energy and the Environment. When there is a question of coalmining under a Sydney water catchment,¹² or when a proposed coal mine (Shenhua) threatens the water table on the Liverpool Plains,¹³ where do we want the decisions to be made—in the relevant department or over the Cabinet table?

John Howard and beyond

John Howard brought to the office of prime minister a very presidential view of his role and prerogatives. Cabinet was not the place where the big decisions were made; the decisions to invade Afghanistan and Iraq, and not to ratify the Kyoto Protocol, were made by Howard, without consulting Cabinet and without the benefit of public service advice.

He took full advantage of the opportunities presented to him by the earlier reforms; six departmental secretaries suddenly found themselves out of a job. This is in stark contrast with the approach of Howard’s hero Sir Robert Menzies, who, on coming to office in 1949, kept in office the Labor-appointed Mandarins—the legendary ‘seven dwarfs’—who had helped Curtin and Chifley plan for postwar reconstruction.¹⁴

Not only did Howard get rid of departmental secretaries who were not to his liking; he came to office determined to make major changes to the public service itself, changes that were embodied in his Public Service Act 1999. ¹⁵ Under the new Act, departmental secretaries would be appointed, and could be terminated, by the prime minister rather than the governor-general, and the emphasis would be on the managerial rather than the policy role of the departmental secretary.¹⁶

His ‘presidential’ view of his role had other important consequences. He loathed the idea of statutory office holders and statutory authorities with powers and duties to make independent decisions, based on legislated criteria, without being subject to direction from the government of the day. His attitude was that he had won the election and so should be able to give direction to any government body or official; anything else was undemocratic.

Secretaries of departments were constantly reminded by the secretary, Department of the Prime Minister and Cabinet, that the prime minister set no store by their ‘frank and fearless’ advice—secretaries were simply expected to get on and implement government policy. And there was a steady stream of reports that proposals by ministers to appoint an individual to a statutory position or a statutory authority board had been met with the prime ministerial query, ‘Is he blue [i.e. Liberal] enough?’—the apparent attitude being that any appointee who is going to have statutory independence had better be ‘one of us’. This approach seems to have found full expression in the current government’s approach to the Administrative Appeals Tribunal.¹⁷

Howard’s attitude to the public service lives to this day. It was reflected in Scott Morrison’s 19 August 2019 speech to the Australian Institute of Public Administration, in which he said that it must be ministers who set the policy direction, and ‘the public service is at its best when it is getting on with the job of delivering the services Australians rely on and ensuring governments can implement the policies they have been elected to deliver for the Australian people’.¹⁸ The message was clear: the Prime Minister wasn’t interested in ‘beautiful policy documents—it’s about the implementation’.

None of this came out of a clear blue sky. The hankering for a ‘more responsive public service’ is present in the Coombs Report, the Fraser quest for greater efficiency and the Hawke government’s reforms of 1984. There are strong echoes of this in Morrison’s statement quoted above.

I have not seen public servants be other than ‘responsive’ to the wishes of the government of the day—it’s what people join the public service for, and they work very hard at it. In my view the call for ‘responsiveness’ was code for the politicisation of the public service in the sense described by Professor Richard Mulgan—a secretary need not necessarily be a ‘true believer’, but must definitely be the government’s man/ woman, one who would enthusiastically carry out the government’s wishes without asking awkward questions about whether what the minister had in mind was a good idea—the sorts of awkward questions that usually result in better policy and at times save government from disaster.

Howard’s termination of six departmental secretaries appointed by his predecessors, and arrogation to himself of the power of appointment and dismissal, completed the politicisation of the public service—politicisation in the sense used by Mulgan in a paper of 1998 for the Parliamentary Library’s Politics and Public Administration Group. Mulgan wrote that:

… the term ‘politicisation’ should be understood as more than simply appointment on partisan grounds. It should properly imply any type of appointment which is contrary to the principles of a politically neutral or impartial public service. In this case, politicisation also covers the appoint- ment of public servants known to be associated with a particular policy direction associated with the govern- ment of the day. It also includes the replacement of incumbent secretaries and the appointment of new managers to implement a new government’s program. All such instances represent a breach of the principles of a politically neutral public service.¹⁹

Sadly, this trend has continued with each incoming Coalition prime minister. Tony Abbott sacked four department heads on arrival, Malcolm Turnbull three and Scott Morrison, following the 2019 election, five. Most ‘political’ of all these appointments, Morrison selected his politically aligned chief of staff as his new secretary, Department of the Prime Minister and Cabinet—the person who sits at the pinnacle of the public service.²⁰

It was my misfortune to settle definitively just how fragile the situation of departmental secretaries had become. In 1999 I challenged the right of a new defence minister, John Moore, who came to office with a particular secretary in mind, to terminate my appointment, 18 months into a five-year term, other than for ‘cause shown’. The upshot of two Federal Court hearings and an appeal to a Full Bench, in which it was common ground that the termination was not related to incompetence or misconduct,²¹ was that ‘policy or political considerations may have a bearing upon the selection of a departmental head’ and that if a minister expresses a lack of confidence in a departmental secretary, it is not necessary to establish whether the loss of confidence is well founded. Thus secretaries are not even safe from the government that appoints them.

Clearly this is the understanding departmental secretaries have of their situation. When Abbott sacked four secretaries on becoming prime minister, there was no indication in contemporary media coverage that any of them sought to go through the motions of having a ‘hearing’.²² Significantly, Abbott reportedly told treasury secretary Martin Parkinson he did not have the confidence of the government.²³

This situation does not eliminate the possibility of a secretary giving frank and fearless advice to a minister, but it puts that possibility substantially at risk, and it inevitably has a chilling effect right down the line on willingness to express inconvenient views. A rational secretary with a family and a mortgage could be forgiven for thinking it would be a good idea always to tell the minister what the minister wants to hear, and to never seek to dispel any of the minister’s illusions, no matter how ill-founded they might be. This means that subordinates who give frank and fearless advice to the secretary become a risk for the secretary, because they might put the secretary in the position of having a duty to give to the minister advice that the minister doesn’t want to hear.

The pendulum on departmental secretary appointments and role has swung back somewhat since Howard’s time. Under the Act as amended by the Gillard government, the secretary is once more appointed, and if need be removed, by the governor-general.²⁴ This perhaps raises the bar slightly, but only slightly, for a departmental secretary to be removed from office.

The Thodey Review of the public service has recognised the importance of this issue. It has recommended measures to support effective minister–secretary relationships, to resolve difficulties when they arise, to ensure that robust processes govern the termination of secretary appointments.

One of the options it has proposed is that the government amend the Public Service Act to require termination only on specific legislated grounds, consistent with the underlying principle that secretaries be entitled to serve the term specified in their instrument of appointment.

Under the changes introduced by Gillard, the secretary has become something more than the department’s ‘manager’, but the breathtaking simplicity of the provision that the secretary was responsible for the department and all the business thereof, and would advise the minister in all matters relating to the department, which stood from 1922 until 1999, has been replaced in section 57 of the current Act by complex statements on the ‘roles’ and ‘responsibilities’ of secretaries.

The point of all this is that from 1984 to 1999 we moved from a situation where there was a single, tenured point of accountability, with the requisite standing and powers, for everything that happened under the minister’s purview, to a situation in which policy formulation, implementation, service delivery and even organisational design and organisational effectiveness are a highly contested space. The contemporary APS departmental secretary is a person with ambiguously defined ‘roles’ and ‘responsibilities’ under the Public Service Act, who, notwithstanding being defined as the ‘accountable authority’ under the Public Governance, Performance and Accountability Act 2013, is obliged to compete with a shift- ing population of advisers and consultancy marketers peddling their wares.

Howard’s disdain for the public service, and determination to shrink it, saw a massive growth in the privatisation of government service functions (e.g. childcare and the Commonwealth Employment Service) in the practice of outsourcing core public service functions such as policy development and the design of agency management functions to private sector consultants, notably the big four accounting firms. On top of that, various agencies have had inflicted upon them a bewildering array of external panels to advise them how to do their business. Outsourcing has grown to the point where an auditor-general’s report revealed that in the five years, 2012–13 to 2016–17, Commonwealth agencies spent $129 billion on consultancy services, the content of which no doubt included a great deal that would traditionally have been regarded as core business for the Commonwealth, and for which both the Public Service Act 1999 and the Public Governance, Performance and Accountability Act 2013 would indicate agency heads have prime responsibility and accountability.