Senate committee's report is a missed chance for real reform

Perhaps I should be pleased that the (majority) report, led by the chair, Senator Tim Ayres, and supported by crossbencher Senator Malcolm Roberts, drew quite heavily on my submission and evidence. But it omitted some key points and went too far to accommodate union concerns.

Coalition members, led by Senator Claire Chandler, presented a dissenting report, claiming that the APS reform agenda supported and funded by the government is achieving results and that many of the recommendations in the majority report represent "little more than a wish list for the union movement."

There is some truth in this last point, but the dissenting report makes no reference to evidence other than from government departments. In fact, the CPSU presented a more substantial submission than any from a government agency (other than the Auditor-General). That in itself is a poor reflection on both the capability and the independence of the APS.

The one faintly positive thing to come from the inquiry is that the majority report does include some important recommendations and the dissenting report does not explicitly reject those recommendations, only saying that many of the recommendations by the Labor senators are politically motivated. Perhaps, therefore, there remains some room for eventual bipartisan support for real reform.

The committee's first two recommendations are to abolish the Average Staffing Level cap (and require agencies to manage staffing levels within the funding provided in the budget) and for the principal mode of employment in the APS to be direct, permanent employment (with short-term peaks filled in the first instance by redeployment of permanent staff or direct employment of APS non-ongoing staff).

The Thodey report of course also recommended abolition of the ASL cap, a recommendation the Morrison government rejected two years ago. But there are signs the government has recently been easing the cap, and the dissenting report does not explicitly oppose this recommendation.

The ASL cap undermines value-for-money use of administrative expenses, often forcing agencies to use labour hire, contractors and consultants even when APS employees would represent better value for money.

Where work is ongoing, permanent employment under the PS Act should generally deliver the competence needed as well as the integrity the public should expect (upholding the APS Values and Employment Principles). Where agencies face fluctuating workloads and need the capacity to quickly increase or decrease staff, value for money and assurance of competence and integrity will in most cases be better achieved by using non-ongoing APS employees rather than labour hire.

There will still be good reasons for continuing to use consultants and contractors where this genuinely represents value for money. The committee acknowledges this, referring to the Victorian government's guidance on engaging professional services which offers a framework for the valid use of external providers:

The majority report follows the two core recommendations with a series of more detailed recommendations. Some of these have merit, others would be unnecessary if the core recommendations were adopted; some, such as imposing a cap on expenditure on consultants, could constrain value for money just as the ASL cap does.

The majority report recommends that the government implement the Thodey report's recommendation to move towards common conditions and pay scales. Unfortunately, the Thodey report was silent on the basis for setting common rates of remuneration, and this report is similarly deficient by failing to do so. The report rightly criticises the government for its cap on public service wage increases tied to the Wage Price Index but fails to recommend a more comprehensive market comparison based on different occupation groups that would ensure the APS attracts, develops and retains the skills it needs. Instead, it has a long list of recommendations addressing the symptoms rather than the cause of the current problems.

The current remuneration mess is not the result solely of Coalition government workplace bargaining policies: Labor governments began the process in the early 1990s, and failed during the Rudd/Gillard years to fix the mess that had developed over time.

The government's linking of APS pay increases to broader market movements is not entirely wrong-headed: its inappropriateness is because it fails to use market mechanisms properly. We need base pay and conditions to be compared to those in relevant labour markets; constraining pay increases without addressing the base levels only locks in existing differences.

Again, the dissenting report makes no explicit comment on the central recommendation. Perhaps some LNP senators recognise there is a genuine issue here to be examined.

The committee also recommends publication of the APS Hierarchy and Classification Review and that the Secretaries Board and APS Commission act upon its recommendations as soon as practicable. The latter seems a bit hasty: we need to see the review report before agreeing it be acted upon. Classification and pay are inextricably linked, and as yet no proper market analysis of pay has been conducted. Moreover, simplistic suggestions such as changing the number of classification levels would not address underlying problems such as classification creep or hierarchical cultures, and could have unintended consequences.

The report devotes a chapter to digital capacity exploring implementation of the Thodey recommendations agreed to by the government. Two years on and the "urgent audit of government ICT capability, risks and needs" has yet to be finalised, let alone the "longer-term ICT Blueprint" promised.

That said, some progress is being made with regard to digital capability through the new professions stream. But a major obstacle is the pay offered by the public sector compared to that in the private sector. Given the paucity of information provided to the committee, it was reluctant to provide detailed recommendations, instead simply pressing for the early release of the digital review that the Secretaries Board established and implementation of the Thodey recommendations.

The report explores and generally commends implementation of a number of other recommendations from the Thodey report which the government endorsed, including with respect to professions, the APS Academy, graduate recruitment and mobility.

A separate chapter suggests in effect that procurement and contract management be another "profession" in the Thodey-endorsed professions streams.

The report's final chapter examines the continued importance of the Westminster tradition and the trend of politicisation within the APS. It calls on the Thodey recommendation to amend the PS Act to reflect key APS principles (apoliticality, stewardship, openness, integrity and adherence to merit) and to extend the application of these and the APS Values to Commonwealth agencies not covered by the PS Act.

While I'm pleased the report recognises that politicisation is damaging the capability of the APS, its recommendation does not go far enough and, in some respects, misses the mark. Changes need to be made to the respective roles of the APS Commissioner and head of PM merit needs to be applied more rigorously for agency head and departmental secretary appointments and terminations; ministerial staff need to be held more accountable; and, rather than a new set of "principles", the existing APS Values and Employment Principles should be revisited, giving merit more emphasis and highlighting the distinct role of the APS from that of other parts of the Commonwealth.