TOWARDS GOOD GOVERNMENT IN QUEENSLAND
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1. INTRODUCTION

This paper is a detailed version of a submission [see Covering letter  and  Summary Submission] to the panel established by the Queensland Labor Party  to identify and eliminate the causes of the Queensland Government's electoral setback in 1995.

Various reasons have been publicly suggested for the election result.

[In 2005 it it was revealed that privately "large sections of the ALP (had blamed) Dr Death for Labor's poor state election performance" (King M., 'Rudd learns to duck', Courier Mail, 25/1/05)].

This submission suggests that all these explanations are correct, but that all had an underlying cause which was a lack of substance behind the policies and claimed performance of Government. Such an underlying cause is clearly not generally seen to exist:

`Mr Goss ... has done nothing to justify his removal. His government by all measures has been reasonable and moderate and deserves another term (Editorial, Australian, 14/7/95)

`(Mr Goss) under-estimated his political opponents, and over-estimated his political skills.... his government was widely regarded as an effective financial manager, economic growth and employment rates were above the national average.... the conclusion is inescapable, he may have led a government of substance, but the voters would no longer cop its style ...' (Walker J., `Emperor Goss must pick up some new threads', Australian, 21/7/95)

`The savage swing against Labor in Queensland can be attributed to an unconvincing election campaign conducted by a competent if arrogant government' (Steketee M., `Why Goss was Ambushed', Australian, 17/7/95)

`The strategy (good fiscal management) has served Queensland superbly .... It laid the foundation for Queensland's economic success over the past decade ...' (Nahan M., `Champion of Sound Policy', Financial Review, 26/7/95).

Unfortunately the media and other analysts (who influence public opinion) lack means to assess the substance of governments which speak the rhetoric of trendy reforms. Such analysts consider only the stated goals, not whether the means being used to achieve them can be effective (which is increasingly difficult). The resulting inability to really judge Government performance threatens the ability of the democratic system to guarantee good government. It is also a strong justification for insisting on real competence in public service.

Themes of this paper are as follows:

2. WHAT HAPPENED TO QUEENSLAND'S PUBLIC SECTOR?

Seventy percent of its employees voted against the Government in 1995. This caused public sector reform to be partly blamed for the electoral outcome. The change process has also been defended:

However the reaction which public sector employees expressed electorally in 1995 does not primarily relate to `individual fears about job security, which had been reduced as an unavoidable consequences of essential reforms'. Rather it was the outcome of a marked decline in the relevance and effectiveness of their working environment (of which job security is only a part).

The problem with the `reform' process was not just that it was `introduced too quickly and with complete disregard for the human cost' (Koch op cit), but rather that it did not effectively achieve its goals of creating a modern and effective public sector. In fact, the process created a public sector some of which now has limited ability to achieve very much at all (See comments in Attachment A).

Furthermore the general public's electoral reaction does not reflect an inability to communicate Government's policies or accomplishments. Rather it resulted from deteriorating services, fumbled infrastructure planning, the absence of anything visibly happening in spite of a lot of talk, and general `angst' (eg about whether Australia can have more than `5 minutes of economic sunshine').

The style of `reform' used after 1989 had the unexpected and undesirable side effect of seriously eroding the base of knowledge and experience in the public service, as will be further considered in Sections 4. Direct observation of many cases, and numerous anecdotes show that merit was sometimes (often?) a secondary factor in senior public service appointments, despite rhetoric about merit (and despite possible good intentions).

A case study can be identified which invalidates any claims that senior public service appointments were necessarily based on merit. Details could be provided on request.

However, de-skilling was not solely a result of the re-structuring and restaffing process, but also of the introduction of a variety of mechanisms (eg large ministerial staffs) designed to strengthen political control, as outlined in Section 5. Such steps were counter-productive to the effectiveness of government as a whole (see Section 6).

3. DE-SKILLING WAS NOTICED LAST BY ADVISERS AND SOME MEDIA

There is a large difference between the `rhetoric' about trendy policy ideas which appears in the press, and the substantive knowledge of existing practices, related functions, technical requirements, staff capabilities, past reform efforts, and alternative options which are required to express competent policy or to put this into practice. Neither the political process, nor the persons with superficial knowledge and little experience who were allowed to control restructuring and senior level restaffing, could tell this difference. Experienced staff could immediately see the problem (impractical amateurism) but in the enthusiasm for `reform' no one was interested in the views of those who were being `reformed'. Staff at grass roots level soon detected the resulting absence of substantive skill in senior / middle management. And this significantly increased their discontent.

De-skilling led to an inability to judge the relevance and wisdom of `fashionable' policy ideas. For example, in the pursuit of economic goals, commercialisation of government services has been applied indiscriminately. This has adversely affected some public and social goods (eg government functions undertaken in regional areas, because economic or social value had been judged to exceed costs, and no effective market mechanism exists). The latter allowed the general public in 1992 to glimpse problems which had been apparent to experienced public servants in 1990.

The consequences of ignoring the need for real knowledge and skills are now, in 1995, becoming increasingly obvious to the public (noting emerging concerns about functions such as health, education and public works).

An Invisible Source of Errors: `When senior positions are occupied by inexperienced people who do not know the details of their functions, or whose policy knowledge is limited to trendy rhetoric, the normal rate of errors in dealing with new issues is compounded. Without a memory of the pitfalls `obvious' steps will be repeated and produce failures which real knowledge and experience could have anticipated.... Political popularity responds too slowly to invisible public sector changes to be a good criteria for public service reform' (From submission to MLAs, 5 May 1993).

Public awareness of the problem has been slowed because of the high level of political influence over Queensland's media which was identified by the Electoral and Administrative Review Commission (Report on Review of Government Media and Information Services, April 1993). Media relations were said to be managed primarily with political criteria in mind. This implies information was biased towards putting the desired `spin' on a story, rather than towards presenting facts.

Awareness was further impeded by academic analyses of the `text book' reform process, which typically put a favourable interpretation on the effect of putting current theories into practice (though as Attachment A shows this was not universal). Few seemed to realise that the only effective way to implement a good theory is to ask those with practical experience how to do it (because any theory over-simplifies reality). Also only 1 in 20 `good ideas' are both feasible and beneficial.

A Little Knowledge is Dangerous: `It's much simpler than that' was a common response in 1990 from staff in the Premier's Office when public servants tried to point out conclusions based on their knowledge and experience.

As ministers relied for information on political advisers, media reports, interest groups currying favours, and a compliant public service, the Government had little indication that anything was really wrong before the 1995 election.

However, the current PSMC Chairman's claim that reforms are `in the past and completed' (Koch, op cit) are optimistic. The deterioration in ordinary administration which resulted in the 1995 electoral result will not be corrected without remedial action requiring much greater skills than those displayed in recent years.

Furthermore de-skilling was not limited to operational public services, but also adversely affected high level functions such as:

Machinery of Government: Despite effort devoted to policy development and co-ordination, government's capabilities remain ineffective. For example, getting the policy process right was emphasised initially (Davis G. `Executive and Policy Coordination', in Stevens B. and Wanna J. The Goss Government: Promise and Performance of Labor in Queensland, Centre for Australian Public Sector Management, 1993). Because of the lack of concern for the substance of policy, this degenerated into an exercise in paper shuffling, and also contributed to loss of people who had the ability to deal with real issues. Program management was introduced to ensure that budget bids were related to strategic issues facing departments. However, it seems to be a formality without real concern for the necessity, adequacy or effectiveness of programs (See supporting document, The Paper Government: A Review of Queensland's 1994 State Budget). Politically driven, and public sector centred methods for regional planning were devised (eg through SEQ 2001) without considering their administrative feasibility, thus increasing `red tape' on investments in the region (See Craig J., `SEQ 2001: A Plan for an Under-developed Economy', Pacific Basin Studies Review, V5, N1, 1994). The Office of Cabinet was established on the basis of various assumptions (Rudd K. `Problems of Policy Coordination: The Role of Queensland's Office of Cabinet', in Davis G. (ed) Public Sector Reform under the First Goss Government: A Documentary Sourcebook RIPAA (Qld) and Centre for Australian Public Sector Management). Those assumptions appear dubious (ie that the objective of policy is to make government predictable (rigid rather than flexible?); that co-ordination is best combined with Cabinet procedures (which is unnecessary, and may have reinforced the view that process was more important than policy substance); policy development should be separate from implementation (which produces unrealistic policy); and that central management of government is a paper process (setting goals, assessing results) rather than a people process).

Evidence of this is presented in two supporting documents. Firstly The Paper Government: A Review of Queensland's 1994/95 State Budget suggests that the rhetoric about Queensland's strong performance is not based on reality (eg there is no necessary linkage between low government debts, and a productive economy). Secondly, More of the Same: One Observer's Assessment of From Strength to Strength showed that, though economics have been emphasised in recent years, the methods being used are inadequate to develop the economy (ie to ensure that growth occurs in high productivity sectors rather than in lower value added areas of existing comparative advantage).

Whilst high level deskilling can only be easily recognised by those with advanced knowledge and skills, its effect and costs will be very large in future.

Prior to `reform' Queensland's administration had first rate practical capability, and (with exceptions) only short term pragmatic policy capability. After reform the capabilities in both respects seem second rate (again with exceptions), and to be poorly connected, because reform policies often had no practicality (though they may have seemed to be good ideas).

Section 8 suggests methods to overcome such defects, and that attempts to respond positively to public expectations without such fundamental re-development at the same time could be devastating.

4. WHY DID DE-SKILLING OCCUR?

Public sector reform was a priority after 1989 nominally to: introduce modern administrative methods; implement the `Fitzgerald' agenda; and contribute to improved economic performance (by better administration, simplifying regulation, and catalysing needed economic changes).

However, the best goals can prove disastrous, in the absence of good means for implementing them. Change was driven `top down' by the clumsy method of `across the board' restructuring and restaffing, without realistic means to ensure that the changes being made were for the better.

The issues which government deals with are very complex. It was thus impossible to always recognise real requirements, as the political system only contains part of the knowledge on which the effectiveness of government relies. Furthermore, reviews of agencies by the PSMC were often only superficial, but were used as the basis for change without allowing their conclusions to be questioned. It is not only human values which require that those involved be consulted, but the impossibility of `getting it right' if they are not fully involved and committed.

Effective corporate renewal starts at the bottom through informal efforts to solve business problems. The view that change should begin at the top leads to reviews of organisation goals and cultures, producing new mission statements, engagement of professional human resource managers, organisation wide programs to push change (eg new organisation structures), performance appraisal systems, training programs to turn managers into change agents. Such methods are entirely ineffective. (Beer M., Eisenstat R and Spector B., `Why Change Programs Don't produce Change', Harvard Business Review, November - December, 1990)

`Queensland's public sector 'reform' essentially ignored all past knowledge and experience within the public service. The comprehensive process of restructuring and restaffing thus amounted to building 'castles in the air'. The result is that:

Such problems could have been substantially avoided. Potential difficulties and better options had been suggested in a May 1990 discussion of Changing the Queensland Public Sector (an outline of which is given in Attachment B). In the past, experience had shown that change was most successful when it built on existing knowledge and skills. This paper was circulated but never really discussed, as overcoming bureaucratic `resistance' to change was seen as the main problem, and no value was placed on existing public sector knowledge or skills.

Very similar methods for public sector reform had been used by Victoria's Cain Government in the 1980s, and reportedly produced severe difficulties (Attachment C). Yet apparently the only conclusion drawn from Victoria's experience was the need to avoid extravagant public spending.

5. THE PUBLIC SERVICE SHOULD HAVE BEEN THE SOLUTION, NOT THE PROBLEM

De-skilling was not solely the fault of those staff directly involved in the restructuring and restaffing process (who were just `following orders'). The real problem lay in the undeclared decision to over-ride the protection of the Westminster tradition of a permanent professional public service in the hope of a `quick fix' to the public sector, as it was seen as the main problem.

This view was entirely inappropriate, as the public sector had been through extensive reforms during the 1980s with similar goals to those introduced in 1989. Many of the goals which the reform agenda addressed were widely accepted by the public sector. All that would have been required was to encourage the public sector to see itself as `the solution'.

However, in practice the public sector was seen as the `problem', and this inevitably led to staffing biased towards political compliance (ie towards selecting those who are agreeable, or comply because they have insufficient knowledge or strength to express an informed opinion).

Politicisation had been seen as undesirable by the Fitzgerald Commission, who had warned about consequences such as: ignoring merit; political contacts rather than professional ability being sought by ambitious staff; poor quality advice; bad government decisions; failure to disclose problems; and official misconduct (Report of a Commission of Inquiry Pursuant to Orders in Council, 1987-89).

Merit in public sector employment had been endorsed in Labor policies prior to the 1989 election, and was consistently stated to be the Government's goal.

High Ideals: 'To ensure their independence it is essential that public servants belong to an established career structure. Their opportunities for appointment and promotion must be based on merit, not on the acceptability or otherwise of the advice they provide Ministers'. (From Return to Westminster: Public Service Reform under a Goss Government).

Despite this a high level of political responsiveness was probably seen to be desirable for several reasons. Firstly an apparent inability of bureaucracy to respond to the rapidly increasing demands on governments (especially social and environmental expectations) was first expressed in the 1970s. Secondly, a need to strengthen the economy emerged in the 1980s (and in Queensland in the 1990s this was seen to need a `market' approach, low taxes and more efficient services). Finally, there was an apparent lack of trust of the public service based on the view that it was already politicised.

Previous Politicisation: There had been one view that the Public sector had been highly politicised before 1989:

`The Goss Labor Government inherited a mismanaged, neglected and highly politicised public service from previous ... Governments' (Source: Document found near photocopier on 14th floor of Executive Building in 1990).

Politicisation can be considered to occur either: (a) when public servants are appointed to senior positions preferentially because of their support for the Government of the day or (b) when public servants do not fulfil their role as a source of competent independent policy advice (either because of unquestioning compliance, or because they are not allowed to provide such advice). In Queensland in the 1980s mismanagement had grown as the public sector became increasingly seen as a political instrument but the incidence of type (a) politicisation was very small. Far greater type (a) politicisation had emerged elsewhere because of arguments about the need to increase political responsiveness.

(Paraphrase from `Politicisation of the Public Service: Some Objections', discussion paper by the author, July 1990 submitted to Premier's Department corporate planning workshop).

In the 1980s, the public service had become less able or less willing to present independent advice about the increasingly difficult problems which existed, because it was not organised to provide such advice, and it lacked means to manage effective change (for reasons outlined in Attachment B). In the late 1980s, National Party governments encouraged increased political compliance by the introduction of a contract system for senior public servants because of the (erroneous) view that the lack of public sector efficiency / responsiveness was the main cause of problems being experienced. However the extent of overt politicisation was still very low.

Political responsiveness had been emphasised nationally since the early 1980s (and increased by measures such as: staff contracts; recruitment of outsiders; and interchanges between public services and ministerial offices). The perceived abdication of responsibility to public service `mandarins' was described as a major source of Australia's problems by present the Prime Minister. There is often an expectation now that public services will respond to the government of the day (rather than to the `public interest', which is seen as only able to be defined politically). All the independence now expected of a public service is that: it be well informed; provide comprehensive analyses; provide continuity of knowledge; and know of the diversity of opinion on any subject (Tingle L. `The Fall of the Mandarins', Weekend Australian, 29-30 July, 1995, and two subsequent articles).

As noted in Attachment C, Wilinski's assumptions about administrative reform have been widely adopted throughout Australia. He assumed that the main problems are to increase the political responsiveness of public organisations and to overcome bureaucratic resistance to change (Wilinski P. `The Battle for Reform', 1979; and Broad L. `Reform Strategies for the 1980s', GO, March 1986)

Wilinski apparently derived his proposals from the Royal Commission on Australian Government Administration which from 1974 to 1976 had considered the policy implementation difficulties faced by the Whitlam Government. He influenced the methods of reform used by NSW in 1977 and the Commonwealth in 1983. This also had a major impact on the reform style in Victoria in 1980s, and Queensland after 1989.

However accepting Wilinski's assumption (that the problem is to overcome bureaucratic resistance to change) shifted the focus from achieving real goals, onto changing the public sector as an end in itself. Thus it was difficult (impossible?) to realistically know what capabilities to seek through reform, and resulted in organisations which subsequently struggled to work out what to do and how to do it. Furthermore, this approach favoured `successful' managers who comply with superiors wishes, but may have only superficial knowledge of the functions of agencies and little experience.

Successful managers: `What do successful managers - those who have been promoted relatively quickly - have in common with effective managers - those who have satisfied, committed subordinates and high performing units? Surprisingly the answer seem to be that they have little in common. ...... although managers who are successful (that is rapidly promoted) may be astute politicians, they are not necessarily effective. In fact the so called effective managers may be the ones who do not in fact take care of people and get high performance from their units. ...... instead of looking for sophisticated technical or governmental approaches to the performance of organisations, the solution may be as simple as promoting effective managers.' (Luthans F., `Successful vs Effective Real managers', Academy of Management, EXECUTIVE, V8, N2, 1988, pp127-132)

`Successful managers' may not recognise required skills, or may feel threatened by those with deeper knowledge or skills (and thus eliminate them inadvertently, or deliberately). Thus simply seeing the public sector as the problem was sufficient to bias staffing towards compliance (rather than actively providing independent advice) whose effects are identical to overt politicisation.

Wilinski's approach allowed `successful' managers to wreak havoc in the name of desired changes, whilst increased staff mobility allowed them move on before the consequences become obvious.

Such effects of administrative `reform' are worrying considering the importance of knowledge and skill and of accelerated organisational learning to Australia's economic performance. And the assumption that the public service was the main problem proved self fulfilling. However, as will be argued in Section 8, this problem probably has no purely political solution.

6. COMPETENCE IS MORE USEFUL TO GOOD GOVERNMENT THAN COMPLIANCE

This section will show that the assumptions which favoured increased political compliance were false. Firstly an absence of responsiveness is not the major obstacle to policy implementation. Secondly, political compliance reduces (rather than increases) the public sector's ability to respond to community expectations, and thirdly it reduces the quality of administration.

Firstly, a lack of bureaucratic responsiveness is not the major reason for the failure of social policies, as Wilinski had assumed. The increased expectations of government which arose in the 1970s (eg social action programs) were an extension of the postwar success which governments were seen to have achieved in economic management, and a reflection of confidence in new policy tools such as systems analysis. However, such efforts experienced the same difficulties elsewhere as they did in Australia (eg in the USA where senior officials are often directly appointed politically). Broader reasons for failure in policy implementation exist, than a lack of compliance by the public sector.

Implementation Failure: The problem could be the impossibility of managing a complex of overlapping programs (See Pressman J. and Wildavsky A., `Implementation: How Great Expectations in Washington are Dashed in Oakland', University of California Press, 1973), or the non-linear behaviour of complex social systems which can make it impossible to understand how causes relate to their effects (See Forrester J., Urban Dynamics, MIT Press, 1969)

The fixation of Australian reformers on increasing bureaucratic compliance is a narrow view (which avoided the need to deal with `real world' obstacles to policy implementation, and reflects a lack of cross-disciplinary co-operation). A competent public service is more likely to overcome real obstacles to policy failure (whereas the compliant are likely to be ignorant of them).

Secondly political compliance may not make government more responsive to the community. Despite six years of `reform' to increase political compliance in Queensland, an observer recently suggested that the bureaucracy is cynically manipulating the Government's agenda in ways having nothing to do with community interests (Kolsen T. `Inexpensive Tasks Keep the Ants Happy', Business Queensland, 7/8/95). The reason that governments seem remote and unresponsive is that (in a changing world) a lack of `reality' responsiveness is an inevitable result of a high level of `political' responsiveness.

Why are Bureaucrats Bureaucratic: Attachment D records observations of economic reform efforts by successive governments in Queensland over the past decade. It suggests that the perceived quality of public administration will continue to decline as long as administrative change is politically oriented (ie compliant rather than competent people will tend to emerge in key positions, and the bureaucracy will still be seen as `the problem'). This allegory also illustrates how the structure of a complex system can cause well intended `rational' action to have self defeating outcomes, and how enforced political accountability can slow a government's rate of learning about changing requirements.

Queensland's community often blames public servants for administrative failings and encourages ministers to exert strong control - thus inadvertently creating the problems to which they object.

Thirdly competence rather than compliance can make government more effective, for reasons which go beyond those suggested under the Fitzgerald Commission's `legalistic' view of government. Some observations in Attachment E show the advantage of competence over compliance in terms of:

It was recently suggested that the public service needs to be solely politically compliant because of the need to make `tough' decisions, such as cutting back government spending (Dodson L. `Taking the Public out of the Service', Financial Review, 31/7/95). This is questionable, as:

Some theorists now argue that it is time to stop worrying about cost cutting and start thinking about new approaches to products and services. Advantage might come from forging a long term future view and then making it happen. (Domberger S., `Modern-day Seer has Vision for Business', Financial Review, 4/8/95). Competence is more likely to identify viable future options than compliance.

Furthermore, economic prosperity may now require that the process of economic development be undertaken through apolitical organisations (See Section 7). For the public sector to cooperate well with such a process, public policy can not be solely politically initiated.

Thus for many reasons a capable public service is more likely to contribute to a desirable future, than one which is politically compliant. The democratic political process is only part of our system of government. Government as a whole can be more effective and responsive if the political process does not seek to impose unilateral control.

7. ECONOMIC CHALLENGES HAVE NO PURELY POLITICAL SOLUTION

Economic considerations have strongly influenced Queensland's public sector reforms (and in the process distorted some functions which involve social and public goods as noted in Section 3).

Reflecting a `pro-market' economic approach, it was assumed that government's best economic contribution would be to concentrate on its `core business', which was further assumed to involve more efficient and effective service delivery (whilst maintaining a strong fiscal position, and relatively low taxes). However this approach is not doing Queensland's economy much real good.

The first problem is that the things which are being done (low taxes, some `assistance' to firms, commercialisation of government services) are not economically significant.

Economically Insignificant Programs:

(a) low taxes have only a second order effect on the location of desirable industries.

(b) direct government `assistance' to firms will be much less effective than upgrading the ability of business and the community to provide such support. Such `assistance' is the opposite of economic development.

(c) commercialisation of services, even those where market mechanisms can exist, can never have more than very limited economic impact. The view that government is just a large business and can be much more efficient by applying commercial principles is naive. It reflects no understanding of the effect which political pressures (which governments are set up to respond to) have in eroding scope for customer responsiveness (see Attachment F).

These matters are discussed in detail in a supporting document (More of the Same, June 1995).

Furthermore such efforts have been inhibited by public service de-skilling, and have the effect of biasing public sector skills away from those really required for `good government'.

Policy Support? `While the technological intelligentsia is resistant to traditional forms of bureaucratic authority and open to rational debate, its members .. are likely to be illiterate in the knowledge and skills required to make judgements about the substantive purposes of public administration and service. Worse they are likely to have a trained indifference towards what they dismiss a `philosophical', academic or abstract questions. (Yeatman A., `The Concept of Public Management and the Australian State in the 1990s', Australian Journal of Public Administration, V46, N4, 1987).

The second problem is that the things which need to be done to develop the economy as a whole are not being done. Australia's real economic problem is a lack of productive capability in the community itself. But focusing on government's own services and activities does not lead to concern for the effectiveness of other institutions and mechanisms within society (which comes into the ambit of government's real `core business', governing). In fact Queensland's Government often competes with, rather than complements, the community (eg through its financial business operations).

It has been assumed that nothing significant can be done (eg via industry policy) to enhance the economy's performance, and that a relatively `free market' approach (eg deregulation and a `hands off' approach by government) is the best that can be achieved.

However a `free' market does not automatically produce desirable outcomes. Market failures still exist, and the rate of economic development is slow (eg because of the `chicken and egg' problem of creating the components of a mutually dependent cluster of enterprises in an industry).

The reasons there is now a need for mechanisms to develop the economy as a whole are complex, and are considered outline in Attachment G. This also suggests why politically accountable bodies can not take such roles.

Economic development (ie increasing the ability of business and the community to initiate and support high productivity enterprises) involves an economy `learning' (or re-organising itself) in response to emerging opportunities and threats. The effectiveness of economy wide networks and processes is as important to overall economic capability as is the effectiveness of enterprises.

Australia faces a serious economic predicament (declining relative incomes, current account problems which threaten repeated `recessions we have to have') because it has not dealt with this challenge (See supporting document, A better Way of Sustaining Growth, June 1995).

And, despite Queensland's growth, the state has a poorly developed economy. Queensland's growth occurs due to interstate migration and the expansion of low value added sectors (such as tourism). This does not maximise community prosperity (in terms of wages, business profits, a deep tax base, and sustainable rapid growth) or ensure long term security.

Why no Economic Debate? The weakness of debate about economic issues prior to the 1995 election reflects:

(a) misleading official data about Queensland's economic performance which ignores: per capita growth comparisons; comparisons with leading economies; the economy's productive capabilities and level of development; and the state's (probable) contribution to Australia's current account deficit (See The Paper Government, Section 4).

(b) the lack of general understanding in the community of the supply side of a developed modern economy; and

(c) the absence of the skills and organisation required to create such an economy (probably because of past dependence on foreign investors to take major initiatives). Such knowledge has little to do with branch office or small business operations, or with the provision of minor government `assistance' to such firms.

Thus there was little good `raw material' for anyone to debate.

However just leaving Queensland's under-developed market economy to its own devices, whilst concentrating on public services and a strong Government fiscal position, is not enough.

Real Economic Development is Needed: Serious efforts to increase the ability of business and the community to initiate and support high productivity enterprises and industries are vitally important to:

`Recessions we have to have' and declining relative income will remain a risk until this is addressed.

8. TOWARDS GOOD GOVERNMENT

There is a risk, if present practices are continued, of a further weakening in basic administration. And the problem is not easy to solve politically, because effective outcomes from political decisions require a competent public service, and because political interventions have caused the problem.

Some observers have equated Queensland's current political situation with that in South Australia in 1989 (Mitchell S., `Mean, Lean and Hounded', Australian, 26/7/95). Subsequent events included backing for financial adventures by the State Bank of South Australia. Thus a decision now to become pro-active could make Queensland's situation much worse.

A decision to become more responsive is also risky as shown by Victoria's experiences in the 1980s (See Attachment C). After public sector `reform' like that in Queensland in the 1990s (and the pursuit of appropriate economic goals by poor methods), the second Cain government experienced administrative failures, and large losses. The third state Labor administration was reported to have tried to solve its problems by constant fiddling with administrative structures and staffing, which inevitably made the situation even worse. And in an endeavour to regain popularity, widespread consultations were also held with interest groups (who would not know how to fix the real problem) which led to expanded ineffective spending. Queensland seems to be on a similar path.

`A major restructuring of the Transport Department in the wake of the backlash over the decision to proceed with the $700m South Coast motorway from Brisbane to the Gold Coast would provide more responsible decisions' (Emerson S., `Goss Plans Tollway Task Force', Australian, 10/8/95). [However anecdotes suggest that problems resulted from a politically driven planning process like that devised through SEQ 2001 (which impeded a systematic professional approach). Further politically driven restructuring of the Department can only reduce its ability to be `reality responsive'].

`The Queensland Government says it will extend its consultation with community groups ...(as) they wanted to have a greater input into government decision making' (Fagan D., `Electorate will have a greater say: Goss', Australian, 26/7/95). [Unfortunately increasing public input through politics will not mean that government can become more `reality responsive' or operationally effective, and could lead to increased spending demands which could not be managed].

No matter how desirable it may be to respond to community expectations, it could be dangerous to do so without simultaneous fundamental redevelopment of the competence of the public sector.

A number of steps which could assist are speculated in Attachment H. The general goals are: to make agencies more `reality responsive' rather than politically responsive; and to focus on developing people rather than paper shuffling.

Of particular importance is that politically determined structural changes not be seen as real solutions (eg re-organising, eliminating individuals) because there is far more to establishing a desired function than saying `Let it be'. For example, one reform option which might be considered would be to reduce controls through central agencies, and emphasise a consultative and co-operative central government approach. This can not be achieved just by asking for it.

Establishing a Consultative / Cooperative Central Government Approach is not Trivial:

All other things being equal, steps like those suggested in Attachment H should allow a competent system of administration to re-emerge within a decade.

Unfortunately it is most unlikely that `all other things will be equal'. There is a real possibility of an economic crisis (eg because of Australia's failure to develop its economy fast enough to ensure sufficient productivity and competitiveness to reverse the current account deficit). Macro-economic solutions proposed to the current account problem can not be sufficient on their own (See supporting document, A Better Way of Sustaining Growth, Section 8.5).

Australia is not far from the point where large cuts in national spending (including Commonwealth payments to the states) could be enforced by an inability to gain sufficient foreign investment on attractive terms. An economic crisis could become a crisis of the political system also, if government administration is ineffective (leading to a real `banana republic'). Thus support for serious apolitical efforts to develop Queensland's economy is required as well as administrative re-development.

It appears to be time to `take a cold shower', and take the job seriously. However it is not only politicians who need to be more effective. So also do: media (in understanding what is required for good government); bureaucracies (in becoming competent, and a viable source of independent advice); and apolitical community leaders (in leading practical economic development).

J. D. Craig Centre for Policy and Development Systems