24 October 1998

Mr Santo Santoro, MLA
Member for Clayfield.

Thank you very much for your considered reply to my letter of 28 September, and previous. Yours was the first serious attempt to grapple with the issue of merit in the public service, that I have encountered in six years of making representations on this matter.

Your letter argued to the effect that:

• MLAs can not do anything when persons such as myself argue that procedures established to deal with the public sector disputes have failed, because otherwise they can be accused of political interference in procedures which should be apolitical;

• thus the 'irresolvable injustice' which I suffered in 1992, really is irresolvable; and

• there would be value in putting forward suggestions about how legislation could be amended to prevent such problems reoccurring.

You also enclosed a speech (dated 16/9/98) which raised matters of concern about politicised CEO appointments under the present State Government.

I am happy to put forward suggestions about how such problems could be avoided (see later), though I am not sufficiently familiar with the legislation to express them in terms of amendments, and I strongly doubt that the problem can be fully solved that way.

Injustices Must not be Irresolvable

However I cannot accept your conclusions concerning my own situation. There is no credibility in a system of government where:

• the victims of injustices suffer major damage to their careers, and their family's welfare; while the perpetrators gain official respect and rewards;

• it is considered acceptable that there are injustices which cannot be resolved. The citizens of a society which accepted 'irresolvable injustices' would be entitled to rebel;

• the credibility of the senior public service in the informed community is low, and the 'official' position, established by my case and perhaps by others, is that merit need not be considered in senior staff appointments;

• myths about merit in public service appointments go unchallenged. I note for example, that Dr Glyn Davis seemed to argue in 'A Future for the Public Service', (Canberra Bulletin of Public Administration, August 1998) that merit should be the basis for public service appointments. It is thus no wonder that his Department (in its letter of 26/8/98 - enclosed with mine of 1/9/98) was too embarrassed to admit that my dispute with it is about the Department's explicit refusal to allow merit to be considered in relation to senior staffing;

• there is massive political interference in the public service by successive governments - advantaging those who play political games, but when others complain they are told that politicians can do nothing because that would be seen to be interfering;

• the community suffers major economic challenges, while ignorance of the nature of those challenges has become an almost essential qualification for senior public service jobs.

Furthermore, I simply cannot be forced to accept that the injustice I suffered is irresolvable.

My Position is not Weak

I know that many suffered similar abuses under the Goss Government's 'reforms' - and have had no choice but to accept those injustices as 'irresolvable'. However I am luckier than most. I have made very significant breakthroughs in understanding economic development as a systemic issue. Others are still years away from equalling this, as that understanding is based on synthesizing experience and ideas from a wide range of disciplines during more than 20 years of publicly funded research. This provides an 'edge' which makes it easy to destroy the credibility amongst professionals of sub-standard economic development proposals, and with this the credibility of governments that rely on sub-standard advice.

And this matter is of central significance to the community, because Queensland has a critical need to develop its economy.

For example:

• Queensland's growth is concentrated in low value added sectors, and the community thus suffers constantly declining real incomes by international standards. Low value added growth dominates because of emphasis on comparative advantages (ie the existing characteristics of regions) rather than on competitive advantages (related to the characteristics of organizations). The former seldom yield high value added, as all producers have the same advantages and thus lack the market power to gain high margins;
• unemployment is high. This can be said to result from policies not to accept the low wage rates which would price all who want to work into jobs (ie allow the labour market to clear). But it can also be seen to reflect the lack of the productive capability to create quality jobs for all;
• under-employment is even higher than unemployment, reflecting the poor quality of jobs emerging in low value added sectors (eg tourism);
• the standards to be met by a developed modern economy have risen rapidly (eg shifting from capital to knowledge as the major basis for high value added, and the major consideration in economic management), yet understanding about this seems virtually unavailable to the community. Though a global recession now appears likely, those higher standards can not be indefinitely ignored (ie they will be the standard for recovery from that (probable) recession);
• 'Solutions' to unemployment by more public spending will not increase total employment if this is financed by diverting resources which others would have spent anyway. Even if financed by borrowing or selling public assets (equivalent to borrowing), a current account deficit constraint could reverse any jobs gains from low productivity / make-work spending (see below). Public spending may not be much more useful now in reducing unemployment than it was in the 1970s (when such spending simply fed inflation); and in the 1980s (when such spending drove up interest rates, and thus cut private spending).
• Australia's current account deficit, and accumulated foreign obligations, reflect an imbalance between (high) national spending, and (low) national income. This constraint has moderated due to low interest rates, but it could (under some circumstances) put economic growth at risk, or even lead to a currency crisis. It is made worse by spending which contributes little to future income. Queensland's contribution to the defict and accumulated debts has never been formally estimated, but it is probably relatively high (given our economic characteristics);
• Overall Queensland's economic position seems unsustainable. 'Rapid growth' is achieved by consuming capital (ie reducing natural assets, and increasing financial obligations), and by constantly accepting cuts in relative income levels in order to price our people into jobs.

The Premier's Department's position is very tenuous because:

• Public sector 'reform' in the early 1990s eliminated most of the skill base that could have made real progress in developing the economy - and this cannot be quickly re-created;

• The victims of failure to develop our economy have become a significant political factor;

• My work is attracting interest amongst those who have to find 'real world' solutions;

• The Department will have to continue indefinitely defending its 1992 decision not to allow merit to be considered in relation to filling a Policy Innovation and Development position in its then Economic Development Division;

• There seems to be general support for merit in public service appointments. Thus the Premier's Department is now forced to 'defend' its decision in my case through pompous bluster, and refusing to admit what actually happened (see Department's letter of 26/8/98).

I doubt that it is necessary for MLAs to challenge the findings of any duly constituted dispute procedure to clear this matter up. My dispute could now probably be resolved, merely by forcing the Department to admit that it refused to allow merit to be considered - because this would expose as hypocritical all claims about merit in Public Service appointments.

Avoiding such Problems in Future

I am afraid that MLAs' challenge, avoiding such situations in future, is likely to be far harder than my difficulties in resolving this dispute.

The Public Service Acts and all political leaders already endorse merit in the public service - and procedures have theoretically been designed to promote this (even though those procedures did not allow merit as the basis for appeal against SES appointments in 1992).

But the core problem has not been poor procedures, or even the abuse of those procedures to promote deliberate politicisation. Rather it has been a political inability to know what merit is, because the knowledge and skills required for policy implementation in any area need to be far broader and deeper than those required for policy debate (where the main requirement is to impress the media, not to make anything happen). Furthermore, issues are now so interlinked, that specialist views about one area may be quite wrong overall.

My paper Towards Good Government in Queensland (with my letter of 25/898) suggested that the Goss Government wanted (despite appearances to the contrary) to promote merit, and avoid politicisation, but frequently failed as there was no way for it to tell what merit was. Its own view of this was oversimplified, so staffing preference often came down to supporters.

The failure of those concerned with public service 'reform' to understand the economic challenge and options was a particularly important source of these difficulties.

Major changes have been made to the public service over the past decade (ie the adoption of corporate management and commercialisation). A conventional view (eg that of Dr Glyn Davis, op cit ) sees these changes as the result of constraints on revenue, and a desire to improve efficiency in service delivery. However those changes were only a response to the symptoms of a deficiency in the productive capabilities of the community. Thus almost all effort has been concentrated on trying to solve only a small part of problem, and in the process the ability of the public service to perform its core role (ie to advise governments about governing) was eroded, and its ability to deal with the economic source of the problem was essentially eliminated.

To avoid this sort of problem the main requirement is political recognition that the public service adds value to government, complemented by procedures which allow those with most relevant knowledge and experience to be the 'judges' of merit. And, given that Queensland does not have other institutions where relevant knowledge and experience can be gained, the public service must be the main source of such 'judges'. A traditional Westminster public service was frustratingly slow (and could be improved), but it usually seemed to deliver the knowledge and skills which were required - because the people in charge knew from experience roughly what was needed to achieve results.

However, after the public service has been de-skilled (and there are thus no longer many reliable 'judges' of merit), what can then be done? My suggestion in Towards Good Government in Queensland about the 'regime' which was left by the Goss Government (which was very weak in practical experience, and not much better in knowledge) was not to try to 'fix it', but rather to allow time and the need to perform to 'separate the wheat from the chaff'. In practice the Borbidge Government tried to accelerate this process by selective senior appointments (and seemed fair at picking 'experience', but poor at picking 'knowledge').

And now, as your speech of 16/9/98 pointed out, the present Government's senior appointments seem more overtly politicised and less influenced by merit than any previous Queensland Government - a problem which makes large CEO pay rises outrageous.

There is a temptation to suggest that an inquiry into the Public Service is needed to clean up the mess. But this would not be helpful, as separating decisions about the 'public service' (as an inquiry would do) from decisions about 'what the public service has to do' (in the normal course of business) would make it almost impossible to assess real merit.

The best I can suggest is:

• establishing merit as an important issue, and showing the hypocrisy of claims that merit has been the basis of senior staffing in recent years (eg by forcing the Premier's Department to admit what it did in my case);

• adopting staffing procedures based on merit through to CEO level, where the 'judges' of merit are those with most relevant knowledge and / or experience - those 'judges' themselves being selected through a peer assessment process for the next 5 years; and

• (perhaps) applying a merit test to any who have gained unusually large pay rises in recent years - and reversing unjustified promotions.

I doubt that there are any easy answers.

Once again, thank you very much for your letter, and for your efforts to grapple with this problem.

[Signed John Craig]