CPDS Home Contact Professionalism: Chronological Summary
Email +

Surely a more 'government-like' approach would be better (Email sent 20/3/10)

Peter van Onselen
The Australian

Re: Labor must lift game to retain economic credibility, The Australian, 20-12/3/10

I noted your suggestion that "if the [federal] government wants its approach to policy implementation to improve ........ it must stop acting like an organisation that handles other peoples' money (the public service) and start acting like an organisation that is handling its own money (a business).".

However even better outcomes would seem likely if the federal government, rather than acting as a 'business', tried acting more like a 'government' (ie instead of trying to 'do things' efficiently, it should focus on creating frameworks within which others can do so). My reasons for suggesting this are outlined in more detail below.

John Craig


Detailed Argument

The primary role of government is not to 'do things' (eg produce goods and services, which is what business is good at given an effective competitive market environment) but rather to create a framework within which others (eg business and the community) can 'do things'.

Government does have a secondary role which involves 'doing things', but this is only desirable for functions subjected to serious market failures - and in those functions the complexities that lead to market failures usually make simple 'business-like' methods inadequate (see Governing is not just running a large business in The Decay of Australian Public Administration).

Thus, even when it is involved in producing goods and services, the federal government is not necessarily well advised to try to be 'business-like' in undertaking what are typically non-business-like functions.

Traditional techniques for promoting efficiency in the production of public goods and services are available, which also take account of the complexities that businesses are not confronted with. The fact that 'business-like' methods have so often naively been seen as the ideal for governments to copy over the past couple of decades is one of the reasons that Australia's governments now so often tends to be dysfunctional (see The Decay of Australian Public Administration).

Furthermore, under Australia's constitution responsibility for the production of most public goods and services (ie those subject to significant market failures) falls to state governments. Thus,if the federal government wants to see policy implementation improve, its focus should be be on creating a framework within which states can effectively perform their functions. Moreover in doing so, it should not presume that it has superior wisdom about what should be done, any more than governments generally should presume superior wisdom about what citizens should do when they create a framework for the community's social and economic transactions.

Policy implementation in Australia has become very poor because, rather than nation building by creating a framework for effective state administration, federal governments have presumed that they have superior ability to analyse what should be done. By then imposing controls on the way tax revenues are used, federal government's have for decades made it effectively impossible for states to take responsibility for, or be held democratically accountable for, their nominal functions (eg see Centralized Public Administration: The Big Problem which refers particularly to public health functions).

Arguably the most important requirement for improved policy implementation in Australia would lie in a more balanced fiscal capacity within Australia's federation to remove this distortion (see Reducing the Advsere Effect of Vertical Fiscal Imbalance on Government Administration). Hopefully the Henry Review of Australia's Tax System has proposed this.