Reflections on Australian politics and policy

I came not knowing much about Australian policy or its political system. That’s partly because it was never really on my radar, but also because it – unduly in my view – seems to receive scant reporting overseas. To be fair I probably still don’t, but it’s been a fairly intensive time here and I’ve been fortunate to meet with politicians past and present as well as senior officials from six of the nine governments here. So, for what they are worth, here are some personal reflections on policy and politics down under…

First, it’s very clearly a new era. Like when you look back at an old photo and suddenly realise your hair cut was out of date even for then, Howard represented a bygone period, and the legacy of his time in office was as much a lack of action as taking the country in some unpleasant directions (like the migrant detention camp in Nauru).There’s now a lot of goodwill and optimism for the future, and strong economic foundations on which to realise progressive goals on health, education, the environment and fairness. On the downside too many issues were pushed into the “too difficult” box for too long and are now long overdue for attention – in particular national infrastructure, social equity, and the natural environment.

Second, the new Prime Minister Kevin Rudd is an interesting and rather unusual leader but ultimately underwhelming. A former public servant, he came into power on the wave of a public desperate to come up for air and look to the future. He has made some good steps forward – on reconciliation with Indigenous Australians, on international engagement, on climate change, on investment in skills and infrastructure. Yet he’s beginning to slip into the territory of endless reviews and initiatives with no clear sense of how they will all land or fit together. Of course this view may be a little premature – he is only one year in – but with a reputation built on technocratic expertise you have to deliver or you’ll fall; and when you do it’ll be fast. Most critically, he lacks a capacity to compelling describe a vision or excite people around that. Change not from, but to.

Third, policy making and public services here are going through a real culture shock after years of relative ease and inaction. There’s much to improve on: a lack of statistics and robust evidence base; weak think-tank and research groups; sloppy policy making processes; an absence of real scrutiny and rigour. In so far as there are articulated ends for public investment there’s still an insufficient account of the means to get there. Blair may have found them late, but the ideas behind market design and user empowerment were fundamentally right. One of the biggest challenges for Rudd will be creating this ‘enabling’ policy infrastructure and capability to drive the outcomes he’s after – and it won’t come quickly or without some heavy lifting.

Fourth, all countries have imperfect governance arrangements and Australia’s is its nine-government federalism. You can obfuscate into the language of vertical fiscal imbalance, or decree that it’s always been that way, but it is broken, doesn’t work for the challenges that Australia faces, and needs to be fixed. The proposed National Partnership Payments won’t solve it, are disingenuous, and will leave the problem to fester for another political generation. I don’t have a perfect solution by any means but a better start would be an honest and principled discussion of where roles and responsibilities should sit and how they might be exchanged.

Fifth, a very positive feature here, and also a good thing about having states, is that policy is made much closer to the community. They are more involved in decisions; policy makers have more regard for the genuine outcomes of policy and not just whether it is theoretically pure and tractable; and politicians devote their time and effort to understanding individual stories and experiences. Just to take one example: there’s much the UK could learn for its next spending review from Queensland’s Toward Q2 work on how to engage, involve and communicate priorities to the public.

Sixth, the policy challenges are unsurprisingly very similar to the UK. Both countries struggle with how to ensure all regions and citizens benefit from a more globalised and knowledge based economy. Both look to prevention, early intervention and personal responsibility to address rising expectations and demands on public services. Both are committed to addressing climate change, and weigh up difficult tradeoffs in how best to transition to a low carbon world. And both the British and Australian public cite quality of life, family and community as the most important things in life yet their politicians jostle to find the appropriate narrative and tools to reach them.

Yet there are also some subtle differences. The most pressing social challenges are here found in extremely remote areas, and this brings with it distinct service delivery challenges not found in the UK. Moreover, Australia’s economy and population are growing much faster than the UK, with consequential upsides and a need to manage changing hotspots like on congestion and infrastructure. Finally, a more balanced and diversified economy than Britain’s, policy makers down under ponder about Australia’s economic future and what balance for risk and reward to target.

But overall I’m left with an impression of optimism and of a country and policy environment that isn’t hostage to a past and has great opportunities to forge new directions. All of which means there’s much to watch in the future…

Water markets in the Murray-Darling Basin

The best bit of Per Capita’s ‘market design’ conference proved to be the case studies of public markets in Australia, rather than any gems about market design per se. One of those related to water markets operating in the largest surface water system in Australia, the Murray-Darling Basin. Straddling five jurisdictions, the basin carries water from the Murray and Darling rivers over an area equivalent to the combined size of France, Germany and the UK. Water shortages here are not a new problem by any means but have got much more extreme in recent years with:

• Reduced rainfall: rainfall in the last five years has been around 10% of the historical average;
  


• Changed rainfall patterns: with rain falling in different seasons the traditional autumn rainfall over the Murray-Darling Basin has disproportionably fallen;
  


• Over allocation of water rights: which were based on assumptions of higher trend rainfall and lower levels of land utilisation; and
  


• Higher temperatures: with three of the last five years having broken temperature records there has been increased evaporation.
  

How does the market work?

• A new inter-governmental organisation called the Murray Darling Basin Commission has been established to oversee water use: this brings together six governments (the Commonwealth plus Queensland, New South Wales, Victoria, South Australia and the Australian Capital Territory). Beneath this is a highly complex governance arrangement – each can send three Ministers to the MDBC’s Ministerial Council and a further two as MDBC Commissioners.
  
  
• State-level caps on diversions: which prevent upstream States unfairly diverting water, or building dams to reduce flow. (These first came into existence in the mid 1990s.)
  
  
• Inter-state water trades: the six governments are able to trade water rights using fixed exchange rates determined by the MDBC (or by individual states if transparently reported to the Commission).
  

Where’s it all at?

The market is still in very early development and the region remains in a semi-crisis state. Nonetheless it already appears to be triggering some of the innovation and efficiency adjustments you’d expect. For example, there’s been a recent shift in economic composition in the basin, with an increased value of wine production (a falling quantity effect being more than offset by rising quality). There’s also been a shift in use of water as a factor of production with dairy farmers trading their water rights and importing animal feed rather than growing within the basin region.

Where could the market go next?

As the market evolves it could employ a few further features:

• Leasebacks: where one entity buys the rights and then leases back some of the allocation to the user. This would be a good way to spread risk and reduce transactional economies of scale.


• Covenants: this would permanently transfer the environmental rights. Indeed this is happening in part through a Federal buyback scheme worth $10bn.


• Future and options exchange: this would allow for trade of water (and future water rights) in the same way in which that oil exchanges work. So instead of an ‘exchange rate’ you’d get spot prices. For this to work you’d need a fair degree of depth in the market – both buyers and sellers.

I don’t know enough about environmental economics to fully appraise the emerging market here, nor know if there are better examples elsewhere, but it strikes me as a potential good case study for water rights issues occurring in much more extreme environmental and governance circumstances such as the Nile Delta region.

Achieving Culture Change

I gave a talk on ‘culture change’ today to the communities and indigenous policy parts of the Queensland Government. (The supporting slides are below – and are a slight excuse to test out a new Google PowerPoint embedding function).





My argument was in four parts:

• First, that people’s cultural influences really do matter for the choices they take in life – and in turn these are particularly driven by the influence of our family, peers, community, as well as the organisations we spend our time in.
  


• Second, that the attitudes, values and norms we derive from these affect our behaviour in often quite unpredictable ways along with other factors like the legislation, information or rewards we face. So we might have a value of a university education being important because the people around us have reinforced this, but it’s only when we are provided with the information and financial support to actually go that it becomes a ‘behaviour’.
  


• Third, that government policy needs to get more sophisticated at understanding the different influences acting on different people. Sticking with the example, providing simple information about university options may be enough for some but others might not even value it in the first place. In which case policy needs to consider much more about how to promote different courses of action ‘upstream’, for example through thinking about the nature of relationships and relationship support.
  


• Fourth, following this approach seriously has some quite big implications for government: being able to develop the case to target different people with different types of support; using a range of disciplines and approaches to get better insight into how people make decisions (and not just economics); and being ready to invest in securing big change for the long term and not just looking for the quick wins (which the more punitive legislative approaches tend to provide). And all the while treading the ‘elastic band of public opinion’ carefully to avoid crossing the boundary into paternalism and the nanny state.
  

Whether any of this is relevant for communities and indigenous policy here is I think part yes and part no. Yes in that current policy like the Northern Territory intervention applies a very limited set of levers in a very intensive and indiscriminate manner. So it places the entire community under income management whereby an adviser decides how to spend your money (unlike the welfare reform pilots in Queensland which will use income management in a limited and targeted way). My view is that the Northern Territory intervention will only serve to reinforce negative signals about community development and personal responsibility. The culture change work is also relevant because of the broader messages about promoting strong families and positive role models, as well as provision of support and advisory services.

Yet the real missing piece is on the supply-side: namely that most indigenous communities are so remote and so lacking in real jobs that there’s little to practically aspire to. There are jobs in the mines, but these merely replace one form of passivity with another and don’t offer a diverse set of life courses.

To a certain extent it reminded me of a visit to Salford I made in writing the original longer discussion paper. What Salford has been doing quite effectively is integrating their community redevelopment policy with the local economy and businesses (not least helped by the BBC’s move up there) along with adopting some cultural and behavioural support policies. What this could mean in community policy speak would be shifting away from the intense place-based initiatives of the past to integrating policy on community assets and opportunities with policies on skills, capabilities, and with cultural capital and personal and mutual responsibility. All of which returns me to my conclusion from the Aurukun blog: that welfare reform and community development is only going to work once someone’s got a sustainable economic vision for these remote communities - which would let loose a whole virtuous circle of cultures, behaviours, and outcomes.

End of the week...

Sorry for the gap in blogging this week – product of a mostly wasted week that culminated in a lesson why never to try doing a job interview by teleconference (or equally when in a different time zone).

So finishing up the week here’s a pick and mix of recent themes of the blog:

• Public administration: my work on public service reform and helping set up a new Public Service Commission has come to end. Last task was writing a speech for the new Chair on priorities for the Queensland Public Service. Set in the context of the Premier’s new Q2 targets, it argues the Government will need to build higher performing organisations, get serious about leadership and skills, work more effectively across agencies and continue to build on some good public engagement work. Accompanying slides with my favourite age-grade chart here, and further comment on this in a previous blog.
  
  
• Welfare reform: looks like a big plank of the welfare reform pilots could be in doubt with legal questions being raised whether income management is in breach of the Racial Discrimination Act. While specifically about the ‘intervention’ in the Northern Territories this would no doubt have implications for the welfare reform pilots about to start in northern Queensland (although the Government don’t seem ready to concede as yet).
  
  
• Crocodiles: the croc believed responsible for killing Scot Arthur Booker is off for a breeding programme because it exceeds – by 30cm – the cut off for ‘iconic crocodile’ status. It’s one thing to keep it, but you’d think they could quietly shunt it off to a retirement facility rather than an active breeding programme.
  
  
• Bad policy: legislation in New South Wales ‘accidentally’ allows tobacco sponsorship of racing events following a supposed drafting error. Clearly no accident and a disappointingly mild reaction from Action on Smoking Health (Clive: a cousin of the British group?) who are said to be ‘disturbed’. This comes at the same time as revelations in the UK about Blair’s involvement in the F1 exemption debacle a decade ago.
  
  
• Crap politicians: more evidence of the low bar for Australian politicians – a probe into Andrew Stoner’s comments that Federal MP Alby Schultz’s should be ‘blindfolded and shot at dawn’, and a new Committee being set up to find ways to punish bad behaviour in Parliament. Ultimately, the Australian public don’t seem to sanction such raucous characters at the ballot box which would be the best quality-control measure. Meanwhile in Queensland revelations about Ministerial interests still developing – a not unusual story but surprising no code of conduct exist here to prevent such holdings or set down clear standards about disinvestment procedures.

The worth of charts

People say a picture is worth a thousand words; so too a good chart. Here’s an age-grade profile of the Queensland Public Service using data from the former Office for Public Service Commissioner. It plots the 10,200 public servants working in Queensland’s management roles – from junior level up to the most senior executives.


What is it showing?

• An aged workforce: the average age of managers in the public service is around 50, and the median higher again.
  


• Huge concentration of people in the latter phase of their careers: 75% of all people in management grades are between 45 and 60 years old. 0.9% are under the age of 30.
  


• Some odd skews: for example middle managers are on average older than senior executives.

Cause for concern?

Of course one would need to supplement with other data but there are some potentially worrying things in this. For example:

• Succession planning: if you were running this show you might have genuine cause for concern about where your next cadre of leaders are going to come from. Especially if – like many other public services around the world – you want to increase the scale and scope of leadership roles.
  


• New ideas: okay so you don’t want all your vital services run by teeny boppers but with less than one in a hundred managers aged under 30 you might worry about whether there are enough fresh ideas and challenging of the status quo. Indeed it’s another three grades below the junior management level where the under 30s start appearing in numbers.
  


• What’s happening with entry and exit: the data looks suspiciously uniform almost like there’s a lot of grade creep going on with people moving up based on age profile. And if that’s the case one might being worried about whether there’s sufficient entry and exit going on and if your managers are actually any good (another clue to this is that less than 1 in 20 senior executives are recruited from outside the public service – and I imagine the existing stock much lower still).
  

What should it lead one to investigate?

Further questions to ask, like…

• What exactly do these roles entail and what skills are needed to fill them? I’m always suspicious of the line that public servants uniquely need vast amounts of experience. Many business leaders are in their 30s and early 40s; national leaders often not much older again. Indeed, Queensland’s Treasurer Andrew Fraser is himself a mere 32 years old (it must be an odd experience for him to very rarely if ever meet people of his own generation working in his department).
  


• What is the pitch and proposition to attract new talent? Have agencies thought about, or better still got, policies for succession planning?
  


• Should there be more recruitment from outside the public service and if so how do you get these people? Pay flexibilities? Stronger brand promotion?
  


• What are the barriers to external recruitment and how can you tackle them? Targets? Cultural change?
  


• What are the implications more generally of an ageing workforce? How do you motivate and retain the good ones and exit the poor performers?
  


• How can you effectively talent manage the workforce? Mentoring and staff development? Talent pools?
  

Anyhow like all good charts if poses as many questions as it does answers (although I fear my word count a little short of the 1,000 mark)...

Implementing Government Priorities

I’m doing a talk today on ‘Implementing Government Priorities’ at Griffith University.

The context is the recent launch of Queensland’s targets and policy ambitions for the future – called 'Toward Q2: Tomorrow’s Queensland'. It’s essentially a set of targets that will go alongside a new performance management approach to drive public services here. It is in many ways quite similar to the UK’s ‘Public Service Agreements’.

I’ve been fairly involved in producing this, and am generally supportive despite having a few quibbles. Anyhow my argumentation today is that:

• Priority setting and performance management can be an effective model to drive public services – both politically and pragmatically
  
  
• But there have been a number of drawbacks with over reliance on the model – e.g. too one size fits all, risks disenfranchising front-line professionals
  
  
• Therefore need to refine how we use it – more devolution, proportionate intervention models, more engagement with citizens in its design and delivery
  
  
• But also we need to drive public services through other approaches – including use of public service information and transparency; user choice and voice; service devolution and autonomy; customer transformation; markets and contestability; and the public value and co-production model. Critically drawing on the most effective lever for each area.
  

This isn’t new stuff as such in the UK but certainly something not on the agenda here as yet.

The Art of Strategic Government: ten principles for modern government

After spending the last few weeks on visits to several state and commonwealth departments I've become strongly of the view that strategic capabilities really need beefing up down under. I'm intending to test the waters on this soon based around the following principles.

I'd be grateful for views -- anything missing, need adding or re-framing?

1. Have a clear sense of the big picture - after all governing is about more than just a technocratic exercise, it's about that society which an elected government seeks to create and that which it seeks to avoid.
   
   
2. Organise people, programmes and resources around this - for example through a clear and consistent approach to public service reform.
   
   
3. Create institutional spaces for strategy and high-level policy analysis, and to act as an innovation bridge between local and national.
   
   
4. Establish rules and incentives for the strategic and long-term - for example through targets, performance management, accounting reform.
   
   
5. Use strategic systems management to drive results - New Public Management mostly worked well for the Democrats and New Labour. But now we need a more nuanced and differentiated account of public services - for example harnessing various approaches from information and accountability to customer transformation to choice and empowerment when and where they work best.
   
   
6. Recognise the different roles and relationships between the state and citizens in today’s society (e.g. as citizens, subject, service users etc…).
   
   
7. Build public value through debate and dialogue on the key long-term issues (e.g. climate change, obesity).
   
   
8. Make ready to test, trial and evolve policy ideas over time.
   
   
9. Invest in the capacity and capability of the workforce.
   
   
10. Be decisive on making tough choices, especially where these involve costs now.

Taking the long term view in policymaking

I spent last week at Sydney's Graduate School of Government. It's run by Geoff Gallop who is the ex-Premier of Western Australia and good friend of Tony Blair's since their college days together. Geoff was kind enough to invite me to Sydney as a visting fellow and guest lecturer at the University.

I gave a number of talks on strategy and policymaking, as well as an evening address on long-termism in government (rather embarassingly to most of the public service's top brass from past and present). It'll be podcasted soon, but otherwise available here.

My argumentation was that we should broaden the concept of long-termism; and that governments are typically poor at planning for the long-term, but increasingly need to get better at it, and can do so through:

1. Creating spaces for long-term thinking in the architecture of government, with examples of the Strategy Unit, Foresight and so on
2. Using independent reviews and more independent analysis to create public value and consensus on long-term issues, such as through the Nick Stern Review of the Economics of Climate Change
3. Designing systems, rules and incentives for long-termism through reform to national accounting rules and performance management approaches
4. Developing a culture and practice of long-termism in the public service workforce
5. Aligning strategic policy analysis to a level most appropriate to taking the long-term view

Interestingly, in so far as these are the right components, I think the UK is ahead of other countries. In discussion I also tried to emphasise that different combinations of these will be approporate in different circumstances. So, for example, simple accounting rules is unlikely to be much use in addressing the long-term threat of climate change, but the public value approach through honest and open debate might be more so.

Federalism

One thing I hadn’t quite anticipated before coming to Queensland is the depth of wrangling between State and Commonwealth governments. I perhaps also thought that even if things have been tense at other times, it’d be much smoother with Labor governments now in power at all levels. Not so.

The heart of the issue is at which level should sit various policy responsibilities. For example, on health policy the Commonwealth pay for GPs and primary care, the States for community care and public health with consequential challenges particularly around coorindation, funding, and accountability. In the debate about what sits where I find myself increasingly siding with the Commonwealth.

It’s again a hot topic following an impassioned speech by Queensland’s Premier Anna Bligh billed as a ‘spirited defence of federalism’. It’s definitely worth a read, even though it contained some bad along with the good.

The Bad

• A good use of the ‘subsidiarity principle’ (i.e. that power should sit at the most local level possible) but needs more detail on the underlying rationale. I also believe in subsidiarity though could equally use it to construct an argument for aggregation e.g. with the various tests I previously posted. And, perhaps ironically, other advocates of subsidiarity might note it’s a strong argument for devolving power to local agencies and bypass states altogether.
  
  
• A number of dodgy factual claims. The worst offender of which is the statement that ‘Federated structures like Australia … have higher rates of per capita GDP’. (Note this isn’t a claim that one causes the other, but it’s certainly intended to imply that.) I read the research report on which this was based on and what the analysis used is a simple comparison of average per capita GDP in federal countries (i.e. US, Switzerland, Australia) compared to unitary systems (i.e. UK, France etc). Pretty ridiculous really.
  
  
• Some select interpretations on global trends. For example, Bligh says ‘let’s acknowledge the global trend towards federalism’. No, let’s not. What seems to be happening is a slow but steady trend for more complex, multi-faceted and tiered governance arrangements but not really in what could be called federalist in the sense of multiple layers within the same political system. For example, aggregating some functions up to higher levels like the EU and major international institutions, devolving others down.
  
  

The Good

• The concept of exchange of responsibilities. A bargaining between State and Commonwealth levels about which responsibilities should sit where will help ensure the process is thoughtful rather than a simple power-grab.
  
  
• Application to education, health, and climate change. It makes the debate real and has put some issues on the table for debate.
  
  
• Excellent timing and thoughtful contribution to the debate that’s put Queensland in a lead position in negotiations over the next 6 months or so.

Strategy in government

One of the things that seems have recently dawned on the Government is that an ambitious reforming agenda kind of requires a public service that is fit for purpose. Rudd’s recent attack on the public service backfired somewhat, although there’s more considered thought going on about how to beef up the Government’s analytical and strategy capacity. As an example see Rudd’s speech on public services.

So today I gave a talk on what makes for a good strategy function in government, drawing on (in my view) the lessons of the UK’s Strategy Unit. My magically neat recipe of 10 ingredients was:

1. Have a clear commissioning structure: responsive to needs and priorities but also two-way exchange (‘intelligent customers’)


2. Be flexible in recruiting: control of recruitment, flexible on T & Cs, mix of backgrounds, international experience, analytically superb


3. Keep a flat structure with few hierarchical chains, mostly relatively senior roles, commission out work, regularly bring in new staff


4. Manage a mixed portfolio of work and try to balance over time (surges/ troughs)


5. Invest in intellectual capital and have clear knowledge management processes


6. Prioritise quality control (e.g. red-teaming, critical friends, steering groups)


7. Have a consistent and long term approach to stakeholder management


8. Clear about the need to both master the analytical trends but also see the big-picture (i.e. tradeoffs, narrative, framing of choices)


9. Be inclusive and outward-looking to avoid group-think (e.g. think-tanks, academia)


10. Be forward-looking: anticipate the future trends and policy challenges in short/medium/long term (e.g. horizon scanning)
    
    

Against these the Strategy Unit probably got better over the years in relation to its commissioning structures, analytical capacity and knowledge management processes. It probably slipped a bit on actually generating the ideas in the first place, and is arguably, though perhaps necessarily, more introspective and short-term focused than ever.

Overall though I think the UK’s Strategy Unit is still the premier organisation of its type anywhere in the world; if Rudd does want to beef up capacity here he would do no harm drawing heavily on its model.