The Australian Public Service

Philip Hamilton, Politics and Public Administration

Key issues
Enterprise bargaining continues.
The Australian Public Service (APS) Commissioner has outlined future directions for the APS.
The Department of Finance is developing a new Commonwealth Performance Framework.
Recommendations of the review of internal red tape are being implemented.
A government transformation agenda has been announced, but with few details at this stage. ICT projects are likely to have a prominent role.

APS workforce

Workforce size

Data produced by the Organisation for Economic Co-operation and Development (OECD) indicates that for 2000, 2008 and 2013, employment in the Australian public sector was around 15 per cent of the total labour force (including federal, state and local levels). In 2013, the OECD average was 19.3 per cent.

The Australian Public Service Commission (APSC) has reported that at 30 June 2015 there were 152,430 staff employed under the Public Service Act 1999—down 5,526 (or 3.5 per cent) from 157,956 in June 2014. Figure 1 shows the change in total APS employee numbers over the past 15 years.

Figure 1: APS employee numbers, 2001–2015

Source: Australian Public Service Commission (APSC), Australian Public Service Statistical Bulletin 2014–15, APSC, Canberra, 2015.

The adjusted line takes account of coverage changes in the APS each year, by adjusting total APS employee numbers by the number of employees performing functions moving into or out of coverage of the Public Service Act 1999.

APS Commissioner John Lloyd PSM has observed that ‘over the past 10 years the number of non-ongoing employees in the APS has steadily increased. This is a healthy sign and reflects the changing nature of public sector work’. Figure 2 shows non-ongoing APS employees as a percentage of total APS employees from 2001 to 2015, including an apparent longer-term trend since 2010 and a more pronounced increase since 2014.

Figure 2: Percentage of non-ongoing APS employees in the APS, 2001–2015

Source: APSC, Australian Public Service Statistical Bulletin 2014–15, APSC, Canberra, 2015.

Enterprise agreements

The salaries of most public servants are determined in agency enterprise agreements, the majority of which expired on 30 June 2014. Negotiations towards new agreements have been protracted, most recently because the caretaker conventions effectively precluded significant steps in the bargaining process during the two-month election period.

A substantive point of contention is the position outlined by the APS Commissioner: ‘Government policy for the current bargaining round is to remove the more detailed policy and process content from enterprise agreements, and place this material in agency documentation.’ The Community and Public Sector Union considers that the use of agency policy documents rather than agreements would reduce employees’ access to dispute resolution procedures in some circumstances.

Future directions

In March 2016 the APS Commissioner outlined the future direction of the APS. Priorities include:

more effectively using employment types such as part-time, casual, fixed-term, contractor and labour-hire
reducing complexity and timeframes in recruitment
facilitating mobility of staff between agencies, and between the APS and the private sector
using talent management to identify high potential people and preparing them for business-critical roles
improving performance management
reducing the complexity and length of separation processes and
moving HR management beyond a focus on transactions and toward planning and strategy.

Budgeting for the APS

Program funds and running costs

Most Budget appropriations for public service agencies are classified as either administered or departmental.

Administered funds are administered by an agency on behalf of the government for the benefit of parties who are external to the agency, generally through programs. For example, the Department of Human Services (DHS) provides income support payments. Agencies have no discretion in how administered funds are spent. For example, DHS must make income support payments to applicants who fulfil eligibility requirements. Other examples of administered program funds include grants, subsidies, and other obligations arising from legislated eligibility rules and conditions.

In contrast, departmental funds are generally intended to cover agency running costs such as employee salaries and the purchase or rental of equipment and property.

In 2014, the National Commission of Audit reported that ‘of total Commonwealth spending in 2013‒14, some $360 billion (or 88 per cent) comprised administered expenses with less than $50 billion (or 12 per cent) categorised as departmental expenses’. As such, even significant cuts to departmental expenses have only a minor impact on total government expenditure.

Efficiency dividend

In place for over 25 years, the efficiency dividend (ED) is an annual funding reduction for Australian government agencies, in general applied only to departmental expenses. The ED has ranged from 1 to 4 per cent over its life. The 2016–17 Budget provided that the ED will be maintained at 2.5 per cent through 2016–18, before being reduced to 2 per cent in 2018–19 and 1.5 per cent in 2019–20.

In a first for the ED, the 2016–17 Budget indicated that public sector agencies can anticipate the re-investment of a portion of projected ED savings ($500.0 million) for ‘specific initiatives to assist agencies to manage their transformation to a more modern public sector’. This will mean a total estimated net ED saving of $1.4 billion over 2017–20.

Managing the APS

Planning and reporting

The Department of Finance is leading a Public Management Reform Agenda which, through a new Commonwealth Performance Framework (CPF), will result in significant changes to Commonwealth entities’ planning and reporting. In the 44th Parliament, the Joint Committee of Public Accounts and Audit (JCPAA) produced two reports on the CPF, the second of which recommended that Finance should produce an incoming brief about the CPF for the JCPAA of the 45th Parliament.

Reducing red tape

The 2015 report of the Independent Review of Whole-of-Government Internal Regulation (the Belcher Red Tape review) made 134 recommendations, most of which can be implemented administratively within the public service. However, full implementation of some recommendations will require consideration by parliamentary committees, the Senate or legislative amendments.

Outsourcing

Notable agency-specific outsourcing projects in progress include:

the provision of passport application lodgement services, for which the Department of Foreign Affairs and Trade sought potential suppliers by 27 April 2016 and
the upgrade and operation of the registry functions of the Australian Securities and Investments Commission, for which final bids for interest are due by 29 August 2016.

In a project likely to be of relevance to all agencies, in early 2016 the Department of Finance sought ‘the views of interested parties on the most effective and efficient way to consolidate shared and common service delivery’, in particular ‘whether opportunities may exist for partnering with the private sector to deliver shared services’. The first tranche of shared services will focus on ‘core transactional services’ considered to be low risk, low to moderate complexity, and high volume of activity. Examples include accounts payable/receivable and payroll administration.

ICT projects

During the 2013 election campaign, the Coalition undertook to‘improve the transparency of government ICT spending with the establishment of a US-style online dashboard so taxpayers can assess the performance and progress of major projects’.

In the 2016 election campaign the Coalition promised an expanded online dashboard enabling ‘public dashboard users ... to track the performance of key government services, including: cost per transaction, user satisfaction, and completion rates’. A performance dashboard of this type is being developed by the Digital Transformation Office. A US-style projects/spending dashboard is yet to be released, although an ICT dashboard is mentioned on the Department of Finance website in the context of government investment in ICT.

The number of projects that would feature in a projects/spending dashboard is likely to increase. One stated theme of the 2016‒17 Budget was transforming Government, including by ‘maximising the opportunities of a digital dividend wherever possible’.

The ICT capability of Medicare received some exposure in the 2016 election campaign, albeit in the context of a highly-charged debate over the possible privatisation of Medicare.

In August 2014 the Government sought ‘Expressions of Interest from the private sector’ for handling the claim and payment functions of both Medicare and the Pharmaceutical Benefits Scheme. However, during the campaign the Prime Minister gave a commitment that ‘every aspect of Medicare that is delivered by Government today will continue to be delivered by Government in the future, full stop’. While that statement aimed to address the privatisation issue, there appears to be a broadly-held view that Medicare’s ICT capability still requires attention:

During the election campaign, the Opposition health spokesperson stated that ‘the IT system is going to have to be modernised at some point’, and it was reported that in 2009 the then Labor Government had sought to improve Medicare’s systems in collaboration with the private sector.
The incoming president of the Australian Medical Association has described Medicare’s ICT as ‘clunky, 30 years old’ and ‘not fit for purpose’.
The Chief Information Officer of the Department of Human Services has been quoted as suggesting the Medicare system needs to be addressed within a four-year period.

One industry analyst has observed that a challenge will be bringing in sufficient external expertise without compromising on ownership of the final delivered systems, as ‘the worst answer would be for the pendulum to swing all the way back in the other direction and for the government to start coding a whole new Medicare system from scratch’.