Kenneth Hayne is right: government is broken, the engine and the drivers

It's quite clear, from a few of Hayne's savage asides, that he doesn't think much of the driving either. He thinks some of the basic problems are man-made, by politicians and senior bureaucrats of the present era.

But he's right in thinking there is something structural in the increasing difficulty in making good and informed policy, and in the way in which slogans have become substitutes for reasoned argument and analysis. He's also right in thinking there is a democratic deficit in the unnatural influence that lobbyists for vested interests have on political and bureaucratic decision-making. Both contribute to the decline of respect, by ordinary citizens, for institutions of the state and of the commercial and community sectors.

Hayne's report on the collapse of business morality at all levels, but led from the top of the banking and finance sector, might explain some of the why.

In just the same manner, there could hardly be a better example of how money interests, including political donations, can undermine and undercut a royal commission's recommendations. For all intents and purposes, most of the businessmen and women whom the royal commission strongly criticised are back urging special favours for themselves, and softening of the commission's recommendations, and getting a jolly good reception from politicians.

I notice, for example, there appears to be a consensus in business and government, including at the top levels of the regulators, that it would be "inappropriate" visiting the criminal law on directors, bank executives or even the poor bunnies who actually consciously implemented plans to defraud ordinary Australians. Apparently it would be "better" if some sort of civil penalty (perhaps humbly cleared in advance with the malefactors, as seems to have been the case under the old "light touch" regulatory regime) were imposed on the institutions. That way, none of the great and good would be at risk of durance vile, involuntary wealth reduction, or further undesirable and unnecessary public disgrace. Let alone exposure to real criminals, such as rapists and fine defaulters.

It's far from clear the wider public will agree.

We have resumed, likewise, the old practice by which people who were players at the highest level in the finance industry take a term as regulators, before returning to industry and then becoming wise sages allowed to criticise the new generation. Typically, everyone announces they accept all of the criticism and all of the recommendations, before getting down to the real business of doing nothing much, other than renewing the arguments they lost during the review as if nothing had happened.

Playing for time - or, rather, the "reasonable delay'' caused by close analysis, discussion and mutual undermining of commission recommendations (mostly with the "stakeholders", as deeply vested interests are called) - is also becoming a systemic problem. It seems plain, if one pays only casual attention to the behind-the-scenes talk about what should happen, that most of the folk are again arguing that problems, if there were any, were caused by a few rotten apples, rather than by a complete corruption of public interest, of the law, and of commercial and ordinary personal morality in the top management of the institutions involved.

It's much the same in other government agencies, including departments, subject to review after review. At defence, for example, one can no sooner draw breath after the latest excoriation and set of recommendations before the next review, bound to contradict the last one, begins.

Hayne, talking to lawyers and law students last month, said there seemed to be more and more calls for royal commissions into problems of government, and that inquiries had some advantages over alternatives.

Commissions generally conducted public hearings and had processes for considering evidence, debating its significance and coming to reasoned conclusions. They listened to complainants, many of whom received some sense of vindication merely by being heard. Inquiries also called those engaged in the conduct in question, often providing a "real measure of public accountability", if one which is quite different from "the proper application of the law by regulators, appropriate prosecution of wrongdoing and adjudication by the courts".

(That sort of accountability by which, for example, lying and cheating bankers imposing fees for no service, or charges on the dead, were given a public opportunity to explain their conduct. It involves just the sort of public exposure likely to happen if there is a fair-dinkum rather than Micky-Mouse integrity commission investigation conducted behind closed doors - such as those of the Australian Commission for Law Enforcement Integrity - which typicaly never come to anything much. No integrity commission of the type favoured by Attorney-General Christian Porter would ever be likely to subject a minister, senior bureaucrat or banker to public exposure or criticism in the manner of Hayne's inquiry.)

Inquiries also provide a focus for public debate about the issues in question and, ultimately, a report summarising evidence and arguments received, and making reasoned recommendations about what should happen.

In short, a royal commission contains ideas of independence, neutrality, public and open discussion, and reasoned conclusions. This might be contrasted, Hayne said, with what some would see as the characteristics of modern political practice, "with its emphasis on party differences and with decision-making processes that not only are opaque but also, too often, are seen as skewed, if not captured, by the interests of those large and powerful enough to lobby government behind closed doors".

"Reasoned debates about issues of policy are now rare. Three or four-word slogans have taken their place. Political and other commentary focuses on what divides us rather than what unites us ... And political rhetoric now resorts to the language of war, seeking to portray opposing views as presenting existential threats to society as we now know it ...

"It may well be thought that our government institutions are framed on the premise that there can and will be reasoned debate about the merits of competing policy ideas. If that is right, does the premise remain valid? We seem to be unable to conduct reasoned debate about policy matters. Policy ideas seem often to be framed only for partisan or sectional advantage with little articulation of how and why their implementation would contribute to the public goods.

"Notice how many inquiries relate to difficult issues of public policy? How can we, how should we, look after the aged? How can be, how should we respond to mental health? Some are more particular. Has the course of criminal justice been deflected by the way in which a lawyer provided information to police? Does reference of matters of these kinds suggest that our government structures can deal effectively only with the immediate spot fire, and cannot deal with large issues?"

These are not idle questions for political scientists or lawyers. They are at the heart of much of the wider community's discussion about the authority, legitimacy and capacity of government to effect change. And of claims that government models are broken and that we need strongman governments - perhaps the Donald Trump model. People who talk of "draining the swamp", and people who believe that many political and bureaucratic decisions involve corruption, cronyism, and privileged access and influence going to insiders and mates of government, are using the sort of deficiencies to which Hayne points as their evidence.

There are other developments not so obvious to the broader public. Between the bureaucracy and the minister is a cadre of ministerial advisers, focused on injecting political considerations into decision-making. Their work is not accountable to the public or Parliament, and rarely documented. They listen - before and after getting bureaucratic advice - to lobbies, party people and other political operators who want secondary, perhaps improper, political considerations to be involved, such as (if anyone could imagine this) the diversion of public money to particular seats or to particular friends of the government.

There is depressing evidence that some ostensibly independent and neutral advice coming to government from the bureaucracy has been less than detached. Senior public servants have provided alibis attesting to the regularity of processes when they were plainly irregular, or to the propriety of conduct that manifestly "fails the pub test". Governments on both sides of politics have been addicted to putting mates and relatives in important patronage jobs, including in quasi-judicial tribunals. There have been attempts to use national-security issues for partisan advantage. The federal police gives every appearance of having lost its independence of government, and is strangely reluctant to initiate or carry to conclusion anything with the capacity to embarrass government.

That's in addition to problems caused by modern communications and technology, including the so-called 24/7 news cycle. The increased pace of the political day is said to cause a focus on short-term firefighting at the expense of longer-term considerations.

One bad Australian custom, getting worse by the decade, is frustrating good policy development. Any political official who thinks aloud has her or his statement closely parsed and analysed for the slightest deviation from established policy. Any open discussion about public funding, or potential public funding, is quickly denounced, by the opposite side, as a plan for a secret tax or for savage cuts to existing services. The media plays a depressing role of being thought police on such deviation - often seeming determined to suppress open debate rather than to be a forum for fresh ideas.

Some of the matters that could be considered abuses, such as the Rolls-Royce road to private-sector jobs on political retirement, are plainly evident in the Morrison government and would not have been tolerated 10, 20 or 30 years ago. But abuse has become a bipartisan sport.

It cannot be thought that modern public service reforms, in place or planned, will provide any relief from the problems. Most of the changes in place or under discussion have been focused on reorganisations, management flimflam and relatively meaningless crusades in favour of "leadership" and war against the imagined horror of "silos", duplication and regulation. These have not improved outputs or outcomes. On the leadership front, the current public service rear line is virtually unknown to the public - and even often inside their departments - particularly for any contributions on the policy front. Most are bland, incapable of inspiring staff, and terrified of the media and of leaks.

The answer is not, as some people seem to think, to remove politicians from the political process. But the answer surely embraces making politicians more accountable for their stewardship of public resources, for the regularity and openness with which public goods are rationed, and of policy choices made.

Since the election, Prime Minister Scott Morrison has seemed to suggest the public service is rather more concerned with implementing policy rather than developing it. That has been accompanied by an increasing use of outside consultants, many hopelessly conflicted, advising on policy, with only limited accountability or scrutiny for expertise, independence or judgment. Passive "leaders" in public service departments have also run down their policy expertise over the years, in part because of relentless "efficiency dividends". There are far too many former top public servants (and politicians) serving as government or policy consultants at top law, accountancy and consultancy firms. Cynics wonder which ones have organised their declining years on the public payroll around the prospect of future employment, ultimately paid by the taxpayer.

Some will puff up with anger at suggestions that government is becoming less, not more, efficient or effective, less, not more, imbued with concepts of public service, integrity and the public interest, and a lot less publicly accountable for its actions. Some will spout almost meaningless management words about best practice, responsiveness to government and stakeholders, and new concepts of partnership with the private sector.

Most public servants are of high integrity and love their jobs, seeing something noble in the concept of public service. It's not their fault that the job is now harder, the public interest sometimes more difficult to discern, and the messages coming from above more ambiguous and uncertain. Yet all, from top to bottom, must share in some collective responsibility for the problem's growth. To take a limited example - if one that would be familiar to Hayne - public servants in the Treasury and the Department of the Prime Minister and Cabinet, and in regulatory agencies, resisted the very idea of a banking royal commission with, if anything, even more zeal than their ministers. This was not in mere loyalty to the publicly expressed views of Morrison, who fought the good fight until being struck down at Damascus.

These advisers feared an inquiry might actually frustrate real reform and might damage the banks' reputations in a way that damaged Australia itself, as well as its credit policies. Though Australian politicians and public servants had managed the 2007-08 global financial crisis well, they attributed most of the "consumer" problems and loud noises from the people that banks had ruined as legacy matters from that crisis, now largely fixed up. They were wrong on almost every point, but few - least of all Morrison or his closest advisers -- are much embarrassed as a result. Certainly none have been called to account in any serious way.

In the short term, it can be politically convenient, even for public servants, if the system is broken. In the long run, good politicians and good bureaucrats know the value of fixing things. In-built problems compound, they don't fade. Deferred problems erupt, usually unexpectedly. And when they do, all of the discretionary powers, compulsive secrecy and reigns of terror supervised by tamed cops will not prevent a calling to account, perhaps by royal commission. As some bankers can attest, questioning by a genuine inquiry is not something similar to question time, where one can bluster, prevaricate, distract and otherwise fail to answer the questions.

Care and maintenance of the engine of government is more efficient and politically less expensive than fix-ups, improvisation and sticky tape.