28 May 1999

To Members of the Legislative Assembly

Does Parliament Also support Public Service Politicisation?

I have written previously about the loss of Public Service capabilities resulting from basing 'senior' appointments on political criteria (eg 4/8/98; 28/9/98; 11/12/98; 3/3/99).

Despite this, a recent press report indicated that both the government and opposition parties support Public Service politicisation. This is detailed in an enclosed letter (of 28 April 1999) which again outlines the results of such policies. I should like you to be aware of the responses to that letter, but I cannot do so - as I do not appear to have received any.

This reflects tolerance of a system which brings injustice to those Public Servants who see politics as part of our style of government - but not as the key to their career advancement.

The Poor State of the Public service: Some Anecdotes

In case there is any misconception about the consequences, some views of a range of middle-rank Public Servants about their current predicament are recorded below. These anecdotes (which I do not have the resources to check) are not a basis for optimism:

• "interagency relationships revolve around politics and position. They are not robust enough to allow the honest exchange of ideas which is required for creative solutions";
• "there is infighting amongst agencies. This reflects the fact that senior staff are scrambling to be associated with whatever is happening. There is not enough really happening to go around";
• "senior staff are not contributing well (ie in taking initiatives; making decisions). They often attend training sessions - which do not change their performance. The problem is that, instead of training juniors selected as having potential, senior staff with little potential are being trained - and it doesn't help";
• "many (incapable) SES staff in one agency are being replaced - on the basis of cronyism";
• "one important agency was re-organized so as to provide jobs for senior staff, without considering the tasks to be performed. It took a very long time for arrangements to be made";
• "the CEO of one agency is virtually only involved in dealings with the political system, and takes very little interest in the agency's activities. This irritates staff who prefer to work for their pay".
• "there are technical problems plaguing initiatives which are being taken eg
  • a whole-of-government focus is sought, though Queensland agencies are often decentralized, and not able to be effectively committed by decisions made in their head offices;
  • integrated whole-of-government call centers are proposed which are not compatible with the divergent capabilities and systems which exist within agencies;
  • a process proposed to rationalize service delivery envisages a single point service. This would be effective for simple 'transactions' - but not for 70% of the activities of government;
  • an initiative for the development of a standard operating environment for computer systems involves standardization on a specific product - rather than examining what is really required for inter-operability. This neglects large existing investments in systems' development, and the potential for public sector purchasing to stimulate product development and competitive advantages".

If correct, such claims indicate current weaknesses in the applied knowledge and skills of the Public Service, which destroy part of the public sector's value to the community (see below).

The prediction in my letter of 4 August 1998 (enclosed) about a Public Service 'mess' may be on track. Though needed capabilities take time to acquire, time alone can't reduce problems like those indicated by these anecdotes without a new deal to prevent the ongoing erosion of the Public Service's skill base by politically motivated 'senior' appointments.

Politicisation Destroys the value of 'Intangible' Public Assets

New methods have been introduced in Queensland designed to improve the management of public assets, and to increase their value (for reasons argued by the 1996 Report of the Queensland Commission of Audit, and by the Queensland Treasury).

For example, methods like accrual accounting are now being used. This includes the presentation of a balance sheet, reflecting the value of the Government's tangible assets. However such efforts are ultimately quite futile in the face of Public Service politicisation.

The share-market typically values a large company as much more the total market value of its tangible assets valued separately (eg $26.2 bn and $7.5 bn respectively for a sophisticated mining company - Runge I., Mining Economics and Strategy, Society for Mining, Metallurgy and Exploration, 1998). Thus intangible assets (the tacit knowledge of staff, and the institutional structures that allow them to work together) can provide most of such a company's value to its stakeholders (op cit). This is because, for example, such skills determine whether tangible assets can be well used.

Though its intangible assets are not included in the Queensland Government's balance sheet, they are equally significant to the Public Sector's value to its stakeholders. And it is those intangibles which are destroyed by Public Service politicization and de-skilling.

Though some Public Assets are Intangible, the Cost of Destroying Them is Very Real

As mentioned in my letter of 4 August 1998, Public Service de-skilling has slowed the development of stronger economic capabilities. A recent analysis highlights a result of this:

The Price of Failure: Clusters of ghettos are emerging in Queensland after a doubling of the number of poor over 14 years. One in five households (250,000) now live in poverty, and there are 25 regions where more than ¼ of the people rely on welfare. Queensland has 20 of the top 40 regions of highest unemployment in Australia, and is regarded as Australia's poorest state. Development in Queensland has been unequal and uneven (Retschlag C., 'Poor one day, poorer the next', Courier Mail, 8/5/99 - quoting a People and Place report by the Queensland Council of Social Services and the Social Action Office).

Certainly these problems have historical roots (eg a lack of adequate education; changed fortunes of resource-based industries). However change has been obviously needed (and sought) for 15 years. Thus the current community costs also reflect the failure of strategies to develop the capabilities required for success in the 'new' (knowledge based) economy.

That failure resulted from eroding the skill base of the Public Service through making critical 'senior' appointments based on political criteria; and from the desire for economic strategies to be seen as major political initiatives. The latter prevented business and communities from participating in an enterprising way in developing those strategies, and as a result:

• practical information required to give real substance to strategies could not be obtained;
• communities learned little about their strategic challenges - or about their viable options;
• related initiatives could not be taken, so on-the-ground outcomes were very limited. Thus the now-too-visible results of failing to achieve change emerged, and opposition to the costs of microeconomic reform grew strong in regions which had few off-setting gains.

Based on experience and study, such problems were highlighted internally as early as the 1988 Quality Queensland strategy. But the same mistake was repeated several times over the next 10 years, as politicising 'senior' appointments often supported autocratic ignorance.

The Search for a Solution is not yet Over

The present government appears to hope that the problems of undeveloped and disaffected communities' can be solved by directly involving the latter in a new inclusive politics (eg by 'Community Cabinets') (Rothwell N., Beattie's Sunshine Politics', Weekend Australian, 8-9 May 1999).

Unfortunately this reflects yet another process which must fail because:

1. the number and diversity of requirements will overwhelm political leaders who attempt to help with solutions to particular local problems. Political support can only practically be provided through general policies, which must be formed through careful analysis of their effect on the whole community - rather than through pressure from small groups;
2. even 'third way' political involvement can not, by itself, create the capabilities that the 'pockets of poverty' need for prosperity. Stronger economic capabilities can be learned only in an enterprising framework (eg while exploring business-like options for taking advantage of market opportunities), and from institutions which understand such issues;
3. 'pockets of poverty' are not the only problem, as 'successful' regions also remain poorly developed (as shown by long term decline in per capita production relative to developed and developing economies - a decline which continues despite micro-economic reform).

Ongoing decline probably results from giving priority to encouraging investment (eg in low value-added activities such as tourism / basic mineral processing), rather than to the knowledge assets which are now vital for investment to result in higher value-added (eg assets such as an educated community; a relevant knowledge base; institutions to obtain, analyse and use market relevant knowledge; and organizational styles that facilitate learning). In other words, ongoing decline results from emphasising 'tangible' assets, without creating appropriate 'intangible' assets to allow value-added to be increased.

Inclusive politics are also undermined by the 'emptying' of the Public Service's skill base. The Service now contains too little of substance for governments to give to meet real community needs - though (as an 'emptying vessel') it helps make a noise. Informed community leaders will soon see through this. But experience suggests that, popular opinion is unlikely to do so for some time - because the media can only report the policy rhetoric of governments, not whether their policies are likely to be successfully implemented in practice.

A Question

Does Parliament really support Public Service politicisation, as the major parties do?

[Signed John Craig]