Tuesday, May 18, 2010

Case studies in public administration

Earlier Kangaroo Valley David had one of his usual thoughtful comments on my post,  Rupert Murdoch and the future of blogging. The comment dealt in part with blogging, in part with the reasons for policy failure. I discussed the first part of KVD's comments in A conversation on blogging. This morning I want to pursue the policy success and failure question.

KVD's Challenge

KVD wrote:

You said:

“my colleagues and I spent a fair bit of time looking at the reasons for policy failure: these start from failure to properly define the problem to be addressed; continue with failure to establish a proper nexus between the problem and the proposed responses; are compounded by failure to properly define the proposed responses; and then collapse because of inadequate delivery”

So, were there any worthwhile resulting changes in approach you can report? (The bolding is David's)

In responding, I thought that it might be helpful if I answered David's question by describing the work that we did, the successes and failures, as a case study. I have written on some of this before, and will link back to past posts as appropriate. It's an interesting case because we were trying to do new things and in a structured and sustained way. We also had a longer term perspective. Just as the problems that we were trying to address had their roots deep in the past, so the solutions would take a number of years to come into full effect.

The official records from the period I am talking about will not start appearing on the public record until 2013. However, it appears that some of the papers we wrote can still be found in Departmental libraries.

I have listed some of the known material at the end of the post. I don't guarantee to have all the dates and details right since I am working from memory. I am also writing from a personal perspective.

In a comment on the post I wrote on John Button's death, Bob Quiggin a former staff member wrote:

I suspect that the decline of the industry department was due to any number of things. Many of the senior management positions were filled by people simply not suited to task. I recall one Secretary of the Department bagging out the Government's industry program (that HE had administered for some years) before swanning off overseas on a diplomatic posting.

Button's star declined in the endless pushpull surrounding the Hawke Keating relationship.

And did I ever disagree with the way cars were seen as the primary business and everything else came second!

However, at the same time the Ministry was morphing. When I came, it was a hidebound monster whose employees' natural career progression was from being a bureaucratic protectionist to employment with a tariff agent. When I left, it had become a forward looking and dynamic department, at least for those times. That was very good.

The Belshavik days were fun, and you, Jim, were a such a pirate you should have come with an eyepatch and parrot. The words 'safe harbour' didn't carry much weight with you and sacred cows were served up roasted, with potatoes on the side. It was FUN.

This post is the story of those days.


Prior to 1972, responsibility for industry development rested with the Trade and Industry portfolio, the bailiwick of Country Party leaders John McEwen and then Doug Anthony. The Department was one of the two main Canberra power centres, rivaling Treasury for power.

With the election of the Whitlam Labor Government in 1972, the Department was split into two, Overseas Trade and Secondary Industry. In June 1974, the name of the Department of Secondary Industry was changed to Manufacturing Industry and then, from December 1975, to Industry and Commerce.

I joined the Department of Industry and Commerce from Treasury as Assistant Secretary, Economic Analysis Branch, at the end of 1979 with responsibility for advising the Minister (Sir Phillip Lynch), Department and Australian Manufacturing Council especially on macroeconomics, tax, finance and business regulation issues.

I found a somewhat insecure and shell-shocked Department heavily involved in the administration of a crazy patchwork quilt of industry support arrangements that had grown like topsy over preceding decades. Moves to open the economy up driven especially by Treasury and the Tariff Board (later Industry Assistance and then Productivity Commission) were gaining momentum, but industry policy was still set in a world of export oriented primary industries on one side, protected manufacturing and service industries serving a domestic marketplace on the other. I also found a dearth of new policy ideas. I gave one example here.     

In 1981 and 1982, I took two years leave to work on my PhD thesis. This was quite important because it gave me time to reflect, while I was also looking at some of the historical antecedents of the policy problems I had been dealing with.

In 1983 I rejoined the Department and was given responsibility for the creation of a new branch, the Electronics, Aerospace and Information Industries Branch. Aware that it had the majority of its resources tied up in old industries, the Department was looking to create a new focus on emerging and high technology industries.

Initially, there were just four staff mainly working on computer hardware issues. They included one Director, Michael Blake, a very shrewd operator whose skills meshed with mine and who was to play a very important role in early developments.

Over the next two years, the Branch grew to 37 with both policy and program responsibilities, including the IT and newly re-established national space programs. With subsequent splits and transfers of responsibilities, the areas within the Commonwealth that can be traced back, at least in part, to activities that we began now probably employ more staff across agencies than there were in the total Department of Industry and Commerce when I joined it. 

The rest of this post traces the rise and to a substantial degree fall of the policy approaches that we developed. I also point to some of the unforeseen side effects that have, to my mind, had adverse results.

Institutional Structures

To understand what we tried to do and how we worked, you need to understand something about the formal and informal institutional structures holding at the time. These were very different to those holding today.

We were working at a time of transition, of fluidity, from the old public service to current centralised command and control structures. In a sense, we had the best of both worlds.

At the start of the period I am talking about, I reported as an AS first to my Division Head, initially Don Fraser. Don was pretty busy and largely left me to my own devices.

I also had direct reporting to the Minister, something that I had fought for and jealously tried to maintain. This meant that, within broad boundaries, I had freedom in what I said and wrote, helped by the fact that with time I established a reputation as an expert.

As an AS, I also represented the Department at estimates hearings, Public Accounts Committee hearings and at various Caucus committee meetings. This included briefings to back-benchers. I was also totally responsible for what are now called communications and stakeholder matters. This included press liaison in my area, as well as relationships with unions, the ACTU and industry bodies.

Outside a very limited number of highly classified documents that had to be circulated by hand or which dealt with personnel matters, every minute going to the Minister was circulated across the SES. This meant that everybody saw what I wrote, I saw what everybody else wrote, including minutes from the Departmental Secretary and Deputy Secretaries.

Within the Department, the main formal coordinating body was the weekly First Assistant Secretaries' meetings. Marked by much swearing, this allowed for discussion of common issues and transmission of information. I attended enough of them in my FAS's absence to get a reasonable understanding as to what was going on.

We developed close relationships with the Minister and Minster's office. You will get a feel for this from the post I wrote on John Button's death: John Button - a personal memoir. I say we, because I consciously tried to build relationships between my people and the Minster's office.

I saw the Ministerial staffers as natural allies. Their role was to vet material from a political perspective, while I focused on policy, although in practice I had to be aware of political issues as well.

Each Departmental minute to the Minister was checked by a staffer before it went to the Minister. We made it a practice of fully briefing every new ministerial staffer concerned with our work, then keeping them fully in touch. They knew who was working on what, and could contact staff directly.

I travelled a fair bit with the Minister, accompanied him to meetings with other ministers, sat in on his meetings with others where relevant and indeed sometimes represented him at things like union or caucus meetings.

My known direct lines to the Minister and his office were central to my ability to get things done and I was not frightened to use them.

Outside the portfolio, we dealt with a wide range of agencies.

The Industry Assistance Commission, now Productivity Commission, was both a natural ally and a natural enemy. It was driven by the need to get rid of the crazy patch-work quilt of past industry assistance measures, something that I strongly supported. The IAC also provided a mechanism for review and subsequent submission to Cabinet. Importantly, the Minister submitting a matter to the IAC had responsibility for the subsequent Cabinet Submission, something that Treasury had been trying to change to increase its own control. However, the IAC was also suspicious of anything that smacked of industry assistance of any type and that included the new things that we were trying to do.

We also had to deal extensively with the central coordinating agencies - Treasury, Finance and Prime Minister and Cabinet.

PM&C was only starting to develop the Prime Ministerial control and coordination role that was to come to full flowering under the Howard and Rudd Governments. Its comments were important and sometimes helpful from our perspective, but not dominant.

Within PM&C, the Cabinet Office was very important because it controlled the flow of material to Cabinet for decision. Our planning had to take into account the processes and timelines laid down.

Further, other agencies and especially Treasury were not averse to interfering to try to get matters taken off, or blocked from going onto, Cabinet agendas. We had to get our Minister to intervene, or at least threaten intervention, on a number of occasions to block this.

Finally, our relationships with Treasury and, to a lesser degree Finance, were critical but simple. They would support anything we did that freed the economy up or reduced industry assistance, oppose anything that smacked of direct assistance.

This created a real asymmetry, because we were working to open our industry areas to competition on one side, while putting in place development arrangements that would aid the transition to internationally competitive growth.

In crude terms, Treasury really lived in a neoclassical world of perfect competition, we lived in a world of imperfect competition.

I remember one meeting at Treasury dealing with space policy that encapsulated the difference. Treasury had been playing a blocking role. In frustration, I asked Treasury's David Borthwick, someone I had known well and for a considerable period, was there in fact anything that we could say that would shift Treasury's views?

David kindly explained benefit-cost analysis. He was trying to be helpful. The problem was that the things that we were arguing, including dynamic interactions, were simply not very amenable to standard benefit cost analysis.

Treasury could not be ignored. As a former Treasury official, I had a high opinion of Treasury intellect, as well as the way that Treasury's coherent world view allowed real delegation. It was quite normal for a relatively junior Treasury official to represent the Department at meetings where everybody else was four levels higher.

As a relatively small group trying to do new things in opposition to Treasury, we had to develop alternative views that would not just allow us to challenge Treasury, but also give all our people the coherent common world view that would allow us to delegate. We would fail if everything became centralised on me.

Finally, policy change agents can be uncomfortable people to deal with. I was very lucky during the initial change period when we were at our most successful that I had very good top cover from Tom Hayes as Secretary, Deputy Secretary Alan Godfrey and my FAS. I had been appointed to do new things, and they backed me through some sometimes uncomfortable moments.        

Starting Assumptions

Policy development does not begin in a vacuum. We began our work with certain assumptions based on previous experience:

  1. Australian industry had to internationalise. The previous policy regime had created industry structures that were simply unsustainable. The economy had to be opened up to competition. 
  2. Australian industry did have an international future. One of our problems lay in the commonly held and very simplistic assumption that comparative advantage dictated that Australia's future lay in the export of primary and resource based exports. However, we did not accept that this meant that our future lay solely in these areas. The analysis I had already done showed that Australian international performance was abysmal measured against equivalent countries.   
  3. The importance of cultural change. To bring about industry development we had to change industry culture. Every time we discussed the need for Australian industry to look to international markets, we got a yes but response.
  4. An existing poor base. Reflecting Australia's overall performance and previous import substitution focus, many of the things required for international success were lacking. Australia's total exports of electronics, aerospace and information industries goods and services, then huge growth areas in world terms, were less than $A400 million and had been declining. Further, we had very little original product to sell because of the combination of multinational dominance with domestic market focus.
  5. The importance of time. Time was required to change industry attitudes, to develop new products and to build the international knowledge and networks required for international growth. Selective support was required to support this.
  6. The need for broad industry definitions. Previous approaches had been based on such narrowly defined industries, the room air conditioner industry was an example, that the policy instruments available to support development were effectively reduced to tariffs or bounties. Up to a point, the broader the industry definitions used, the more instruments were available.
  7. Work the percentages. Not all firms or indeed industry sub-sectors would survive the change process. What we needed was an approach that would ensure overall results across sectors. We couldn't prop up individual firms or sub-sectors.
  8. Integration. We needed to find a way of integrating policies and policy instruments that affected our sectors, given that most lay outside the portfolio.
  9. Intellectual and policy hostility. Driven in part by responses to previous policies as well as the prevailing neo-classical climate, there was considerable hostility in Canberra to anything that seemed to smack of support for individual sectors. This was phrased in terms that we regarded as simplistic and also dangerous because they failed to take into account history, market structures and dynamics, but it had to be addressed.

While these assumptions provided the framework for our thinking, they were not taken for granted, nor were they static. We tested them at weekly seminars, and through staff research. As part of this, we looked at the history of industry policy, at past assumptions, at past policy failures (there had been in fact very few successes defined in our terms).            

The Overall Policy Approach

When I began setting up the Branch, I found that one critical policy step had already been put in place,the decision to send a series of integrated references to the Industry Assistance Commission covering the whole electronics sector. The first reference on computer hardware had already been sent.

The decision was an important one because it provided a formal structure requiring Cabinet consideration.

I also found that the basic information required for effective policy development was simply not there. As an example, given my Treasury background with its filing system stretching back to Federation, I got registry to find every Departmental file connected with aerospace. There was not a single policy file. As I looked further, we had no information on even the most basic issues connected with industry structure, conduct and performance.

Taking these factors into account as well as our starting policy assumptions, we used the following policy development approach:

  1. Wide industry definition. We developed the widest definition for the electronics, aerospace and information industries that we could get away with, combining manufacturing and services all centred on the application of systems approaches. When Barry Jones became Minister for Science and Minster Assisting in 1974 following the Department's acquisition of science and technology responsibilities, we further extended reach into information policy. All this was not as easy as it sounds, because we were pushing into areas extending far beyond the Department's traditional manufacturing ambit.
  2. Research and policy analysis. We began a research program intended not just to gather information, but also to articulate and argue our policy approaches. This included Branch seminars and the publication of policy papers.
  3. Matrix approach.One of the simplest but most powerful things that we did lay in the development of what we came to call the matrix approach. We had a number of sectors within the electronics, aerospace and information industries all affected in different ways by a whole range of varying industry and market conditions, as well as different policies and programs. We listed all our various sectors along one axis, all the policies and programs across the other. We then analysed the various sectors on one side, the policies and programs on the other.
  4. Integration. Part of the power of the matrix approach lay in the way it assisted integration. For example, we would analyse the aerospace industry in terms of its performance (the vertical axis) and then analyse, say, Government procurement (the horizontal access) in terms of its impact across the various sectors within aerospace. With time, we knew the impact of procurement policies, or of education and training or R&D policies, across the whole very broad sector.This gave us quite remarkable power and reach for such a small group because we knew what we wanted and why in a whole variety of policy areas.
  5. Consultation. We used very extensive industry and stakeholder consultation processes, well in advance of what was then the norm. We used them to test ideas and as part of the process of changing attitudes and cultures. They were also genuine consultative processes. While we knew what we wanted in terms of broad objectives, we weren't (as is so often the case now) telling industry or others what to do on specifics. We wanted stakeholders including industry and unions to help define and test. This was absolutely critical in getting change through, and led to to some fascinating scenes, as for example, unions and industry associations gathered in breaks to try to work out common positions.
  6. Chunking.  Change takes time. From the beginning, we set up a rolling process that would take a number of years to complete. The various IAC inquiries alone required four years. Our thinking here was that we couldn't do everything at once, that we needed to focus on the most important first, then build in a mutually reinforcing way.
  7. Flexibility. We simply didn't know whether everything we had in mind would work. Further, we had to take into account the normal crises that occurred along the way. Importantly, and this was hard to get across, so long as we were in what we called the plus-plus field, it didn't  matter whether any policy or program was perfect because they could always be adjusted in the light of experience.
  8. Language. We deliberately used language and semantics as part of the change process. For example, we changed the name of what was then called the defence aircraft industry to the aerospace industry. The traditional defence aircraft industry's role was seen as meeting Australian defence needs, whereas the aerospace industry had an international focus.
  9. Selective Intervention. I don't know how to describe this one properly, beyond saying that we would intervene on a selective basis to get what we wanted. When, for example, we were setting up new industry advisory councils, we recommended those who we thought would advance the cause. So we recommended Lindsey Cattermole not just because she was a woman and we wanted female representation, but (and far more importantly) because she represented a new sector. Conversely, certain people who had been involved and who might have expected nomination were dropped. Again, in encouraging the creation of an Aerospace Industries Association, we told one resistant CEO that if his firm joined the new Association he could expect to be on the industry council, but otherwise not. I have given industry examples, but this happened inside Government as well.

Horizontal vs Vertical Policy Measures

I have already mentioned that there was a pre-supposition against Government intervention.

We actually supported this on both theoretical and practical grounds. The history of industry policy was littered with policy failures. However, there is a difference between outright rejection of all forms of intervention regardless and closely justified and targeted measures.

A more important distinction lay in the difference between so-called horizontal and vertical measures. I mention this one because it is still with us today.

If, the argument ran, there is to be a Government policy measure then it must be universal. Vertical measures, those targeting say an individual industry sector, were selective and wrong for that reason.

We took a different view. Our analysis showed that so-called horizontal measures had quite differential on-ground impacts because circumstances varied so much. By contrast, vertical measures were likely to have more uniform effects because they could be targeted to different circumstances. We summarised this in the catch phrase horizontal is vertical, vertical horizontal.

I said that this is still relevant today. If you look, for example, at my arguments on Indigenous policy, I assert that uniform national policies are bound to fail because they fail to take into account diversity in the Aboriginal condition.      

Policy Successes

The policy process I have been talking about had some remarkable successes, especially in the earlier period. Just to list a few; over four years:

  1. Aerospace Industry policy structure. We created the first ever policy statement to guide the development of the Australian aerospace industry as an international industry. This included the re-establishment of a National Space program, something that Minister Barry Jones had been pushing hard.
  2. Computer hardware. This one belongs to Michael Blake, with support from me. We got rid of all tariffs on computer hardware, giving Australians access to computing products at world prices. In their place, we got a bounty on locally produced computer products wherever used. This one was quite clever, for it meant that computers embedded in other products were eligible for bounty. Local production expanded quite quickly.
  3. Communications equipment. We reduced tariffs on telecommunications equipment, while beginning the process of freeing up the telecommunications services marketplace. We did this in spite of a threat at one point from the telecoms union to call a national strike. We also set in place a Communications Industry Development Strategy.
  4. Information Industries Strategy. Finally, we created a broader Information Industries Strategy that was to survive, if in an increasingly attenuated form, for the next decade.
  5. Exports. Exports of electronics, aerospace and information industries goods and services started growing rapidly. 

Beyond all this, we had a quite disproportionate influence relative to our size across a range of portfolios and policy instruments because we actually knew what we wanted to achieve. 

Policy Failures 

These are not inconsiderable successes for a lower level SES officer and his team. However, our failures as well as some of the unforeseen side effects of some of the things that we did are equally instructive.

I said earlier that we wanted to open up Australian industry while setting longer term development structures in place. We succeeded in the first, largely failed in the second.

Our policy failures and the reasons for them can be summarised in this way:

  Program budgeting. I have always been a supporter of program budgeting well done. Central to this is the effective integration of programs, activities and objectives. When program budgeting first came in, our activities across the whole electronics, aerospace and information industries were counted as a program. This gave us added control.

Then, at the direction of Finance, activities had to be broken up by sub-sectors, weakening integration.  Later, and after I left, programs came to reflect changing Departmental structures, actually a total no-no so far as the concept of program budgeting is concerned. The original integration was lost.

This is not an insignificant failure given that our approach depended on integration.

In all this, I made one important error. I recommended that my branch should be split into two - Information and Service Industries, Aerospace and Scientific Industries - because of load factors. While the split made sense, I simply did not take into account the impact it would have on policy integration across the two areas. This largely vanished and quite quickly.   

Performance measurement and key performance indicators. When the Branch was first completed, I set down in broad terms the activities we expected to carry out over four years. Beyond this, our approach had always been flexible and, to a degree, free wheeling. From 1986, we were expected to indicate what we would achieve on a quarterly basis in terms of activities. Now I had to worry not about our core objectives, but about just what I had specified at the start of the quarter.

I tried to make the point that what was important was not the detail of individual activities, but their relevance to our overall objectives. We had to be flexible. I really struggled to get this point across. The position today has become still more rigid because of the frequent presence of cascading performance agreements; achievement on one level depends on achievements at levels above and below. Since  short term performance measurement can only be expressed in activity terms, the practical effect is the lock-in of activities regardless of validity.    

Corporatisation. At the start of the period in question, I was responsible to my Minister on one side, my Division Head (First Assistant Secretary) on the other. I had to be aware of broad Departmental objectives and of reporting arrangements, I had to be aware that every minute I sent to the Minister was seen by all my SES colleagues, but I could focus on my core job.

With corporatisation, I now had to take into account more formalised Departmental objectives as well as the rise of the Departmental executive. Increasingly, my performance came to be seen not in terms of industry development (the mission I had been given), not in terms of my contribution to my Minister and his objectives, but in my compliance to internal Departmental requirements. Further, I had now to take into account a more centralised decision making structure. In some ways, this process was still in its early days when I left, but the trend was clear.

It was in this context that I suffered my first major policy defeat.

We were working on what would become the Communications Equipment Industry Development Strategy. To help in the second stage of the Strategy, growth based on new product, Telecom and the industry had suggested that the Government should create a product development fund that industry could bid for on a competitive basis.

The idea was a simple one. We had a largely multinational industry that had a protected marketplace through Telecom procurement policies. This had to go. However, we had very little locally developed product. Given lags in product development, we needed to encourage greater exports by existing overseas owned players, but then needed new local product to support second stage export growth. The new fund would assist that.

All this was reflected in the proposed Communications Industry Development strategy: with industry, we set a five year export target of  $400 million based on existing product; the next $400 million was to come from new product supported by the fund.

I had sold the idea to the Minister, but was facing fierce opposition from Treasury and Finance. In the meantime, Terry Hilsberg as the new head of the Department's Technology Division was actively promoting the idea of what would become AusIndustry, a single point of contact for industry for all Industry programs. We agreed with the idea of one-stop shopping, but were concerned about the impact on what we were trying to do. We also had a particular problem in that Terry was arguing that so many of the things that we had been working on for several years really belonged to Technology Division.  

One afternoon, Deputy Secretary Alan Godfrey came to see me to tell me that after discussions between Terry and the Executive, the Executive had agreed that the product development fund must be dropped. Instead, we were to rely on partnerships.

We had been looking at this issue for several years.

Under the then offsets program, overseas firms selling to the Australian Government were required to place work in Australia as an offset. The local representative of Boeing had been arguing that replacement of offsets by long term industry development arrangements would benefit both Australia and Boeing. In the meantime, Bob Mounic (CEO of the newly formed Information Industries Association) had been putting forward similar arguments on the computer side based around the concept of partnerships. We had a great deal of sympathy for both viewpoints, and had been working on implementation issues.

My problem with Terry's success in selling his idea to the Executive lay in my belief that it could not work. It was based on the computer industry and could not work in in the way he wanted in the very different circumstances of the communications equipment industry. Indeed it did not. We lost our one product development mechanism without putting anything effective in its place. 

I was faced with a direction, not a suggestion. I was on the fourth draft of the submission and burst into tears at the news. Alan took me to the pub and fed me Scotch. That did help, but it left us with a half-baked approach. It also marked the start of a more centralised approach.  

Return of the central coordinating agencies. The period in which I was most effective in policy terms was also the first period of the Hawke Government when, for a whole lot of reasons, the Canberra system was freed up. As time passed, the central coordinating agencies began to reassert their power.

This had a number of quite pernicious effects in blocking out new ideas, compounded by the way in which senior officials in agencies responded. Rightly or wrongly, I formed the view that our hierarchy had come to measure performance by the regard of their colleagues in the central coordinating agencies, not the achievement of specific Departmental policy objectives.    

Policy instability. Our whole policy process required both flexibility and stability. We had to be able to change things, but we also needed to give industry the certainty they required for decision processes where paybacks could take a number of years. Indeed, we actually mapped product development times for different types of products and systems. All of the things that I have been talking about made for increasing policy instability, as well as increasing rigidity.

Loss of the policy debate. One of the reasons why some of the things that we did were so successful is that we actually attempted to create an intellectual structure to challenge then conventional orthodoxy. Some of the ideas we developed foreshadowed later ideas, but we didn't win at the time.

Errors in personal judgement. I have referred to this one before in the context of the aerospace industry. For example, at a time when Minister Button wanted to go for an aerospace industry development fund, I recommended against because I thought that industry needed more time to change to get the best value from the money. That recommendation actually meant no money at all, because circumstances then changed. This was not my only error of judgement.

Loss of vision and fragmentation. With time, the original development vision became progressively eroded, altered by what were seen as practicalities and day to day concerns. Responsibility became fragmented across agencies.     

All this probably sounds very academic. But let me give you some numbers.

  1. In 1982-1983 our exports of electronic, aerospace and information industries goods and services, a global trade growth area, had dropped to less than $400 million.
  2. The policy development initiatives we were targeting saw potential export growth of more than $4 billion within ten years.
  3. Exports started to grow very rapidly with very little direct Government cash.
  4. Export growth then went in the opposite direction as policy changed. Today, we are talking about the same growth issues as we were in 1983.        

Unforeseen Policy Side Effects

Earlier I mentioned that our policy approach had some unforeseen side effects. This was directly linked to our approach in identifying and trying to integrate policies that affected the growth of the electronics, aerospace and information industries. Just two linked examples to illustrate my point.

Our industries required new product to grow. For that reason, we focused on the commercialisation of university research as one lever.

By the early 1990s, a number of us began to worry that we had gone too far, that the emphasis on commercialisation had begun to excessively outweigh other parts of the university role, including blue sky research and the pursuit of knowledge for its own sake.

In similar vein, the 1967 Information Industries Statement marked the first time that Commonwealth funding was allocated to specific discipline places at universities.

If we were to grow the sector, we had to have the skilled people available. We became impatient with the Commonwealth Education people who tried to argue a counter view, leaving allocation of places to universities. By the mid 2000s, the allocation of Commonwealth funding for specific types of places had become so pervasive that I was beginning to wonder if the cure was not worse than the disease. I dealt with this a little later in Australia's Universities - a personal Mea Culpa.  

Current Manifestations

I have tried in this now very long post to give you a feel for a past policy development process.

Talking to current Commonwealth and State public servants, there is a deep pessimism about the way the system now works. I want to finish by looking at this malaise.   

The combination of activity based performance based indicators with broader corporatisation has become quite pernicious. Whereas, within limits, we could do things fast and flexibly, current public servants face multiple decision levels with greatly reduced real delegation. A division head or group general manager has less real power to do things than I had.

Let me illustrate this with a real example from a year or so back.

I was doing some work back within part of the public service system. In this context, I was formally project managing the roll-out of a changed approach. This had been announced by the Minister with hard public deadlines. My job was to meet those deadlines.

A decision was taken that the communications aspects of the project were so sensitive that they had to be dealt with at Division Head level, with clearances up the line. Now as project manager I faced a problem in that there were multiple decision levels between me and the finalisation of what was meant to be a critical element of the project.  Further, decision timing now depended not just on the time availability of senior staff, but on the scheduled meeting dates of Divisional and Departmental executives.

I was still formally responsible for roll-out, but no longer had any control over a key element of the project. In addition, whichever way I cut the timing, I couldn't see how the internal decision processes (so much time for this, so much time for that, so much time to get a professional editor etc) could mesh with the hard deadlines required for delivery on time. Further, my attempts to make people focus on the problem were making me increasingly unpopular. 

  I am not sure that I handled the situation very well, because I am used to getting things done. However, I did get the project through. To do this, I kept as much as I could out of the formal decision system. For example, we had to re-write a major policy that had not been amended since 1999 because it was seen as too complicated. We formed a representative working group to do this, but did not seek formal approval for this. Instead, we simply asked for nominations. By the time the Divisional hierarchy began to focus on this element, we had a draft policy ready for consideration.

On the communications side, I did two things. I stated that since I had no control over the communications elements, I had to treat them as out of project scope. They would come when they came. However, to meet the required deadlines I used an element that I did control, a series of workshops, to meet the most pressing communications requirements.

I got the policy out, but at a cost. It was clear that I didn't fit and resigned from my role, staying only long enough to complete the first critical roll-out,

A little later, I was involved in providing contract support on the negotiation of a particular National Partnership Agreement. I won't go into the precise details for confidentiality reasons.

The word Partnership implies just that, partnership. In this case, the Commonwealth agency involved essentially laid things on the table and said take it or leave it. The state in question said hang on, you are ignoring the particular features in our jurisdiction. In the end, time was of the essence, there were political considerations involved, and the state involved signed on the basis that issues could be sorted out in the implementation plan.

Negotiation of the implementation plan dragged. Not only would the Commonwealth not move, but the wording of the agreement required Commonwealth approval down to the level of the individual investment. Further, the Commonwealth required a whole series of sub-plans that really fell in the seems like a good idea at the time class.

Negotiations dragged on.

In March 2009, I emailed a colleague saying can we at least authorise preliminary work? If not, I don't think that we can deliver. The answer was no, it's too risky.

By the time the implementation plan was finally signed several months later, the original build plan built into the agreement was no longer possible. There was a scramble to try to find ways to comply with the formal indicators built into the original agreement.  During the time the implementation plan was being finalised , the relevant Federal Minister actually rang the state counterpart to abuse that minister for non-performance, when the problem lay at the Federal level.

I am often critical of the states, but not in this case. From my perspective there were weaknesses in the state response, one was not saying to Canberra that the state would not sign, but the core problem lay in a rigid Canberra command and control national indicator based approach.


As a management consultant, I have often said that form should follow function. By this, I mean that structures should follow and be based on what needs to be done. The challenges that are involved in developing a new approach to industry policy are not the same as those involved in rolling out a national insulation program.

As a manager and adviser, I have tried to plead the case for simplicity, flexibility and delegation. Again, the approach to be adopted depends upon the circumstances. What we call fitness for purpose varies.

You will always get failures in any administrative or management system. That's a fact. The problem that we have now is that our complex systems guarantee failures even where those complexities are designed to reduce the chance of failure. 

A few publications                            

Towards a new approach to industry policy one: the policy development process, Department of Industry, Technology and Commerce Canberra, 1986

Towards a new approach to industry policy two, Historical background, Department of Industry, Technology and Commerce Canberra, 1986

Towards a new approach to industry Policy three, Theory and Concepts one, Department of Industry, Technology and Commerce Canberra, 1986

The Australian information, aerospace, industrial electronics and scientific industries : analysis of structure and performance, Department of Industry, Technology and Commerce, Information and Service Industries Branch, Working paper 9/86. Published as appendix v of the Joint Submission to the Committee of Review on Government High Technology Purchasing Arrangements, October 1986, pp 134-164

The Australian electronics industry 1987-1997, Department of Industry, Technology and Commerce, Information and Service Industries Branch, Canberra 1987


Anonymous said...

Fascinating post Jim.

Thanks for taking my honest question seriously. I meant to leave any comment till I had absorbed the lot, but I'm now on your post of November 2006 and faced with a sentence beginning:

"In addition, the death of Milton Friedman (here, here, here, life also here, here)"

so I thought I'd best check in before I leave the planet entirely.

I hope someday you think about consolidating this into a chapter or two of a personal memoir (that probably should be "professional memoir")

Maybe when Apple introduces the ability to circle the good bits, or dog-ear the best pages.

(hope you don't mind but I have referenced this to my kin)

Jim Belshaw said...

Hi KVD and thanks. While my book writing focus is elsewhere just at present, I have been writing stuff wuth the idea that it might become a book or memoir.

I will add some additional stuff when I respond to your email.

Master of Public Administration said...

It offers a chance for the workers and the employees to take a decision as per the great demand and according to the demand.

Ayn said...

I think you take your self way toooo seriously
most of this is turgid naval gazing at best
move on with your life

Jim Belshaw said...

Maybe you are right, Ayn. Certainly I am a serious person by nature. Two comments if I may, however.

This one was intended as an example of approaches to public policy that can and did generate productive approaches to public policy.

Secondly and more importantly, I have been arguing across a number of fora that current approaches to management and especially public policy and public administration don't and can't work.

Yes,I can get boring about it, maybe turgid, but I stand by my position. It's not sufficient to show they don't work, blind freddy should be able to see that. You have to show why, and try to suggest how improvements might be achieved.