Tuesday, November 28, 2006

AWB, Cole and Public Service Failure

"What you don't know you don't know", Mr Downer

"This matter might never have been discovered if it were not for the downfall of Saddam Hussein", Mr Howard

I suppose the thing that has puzzled and also concerned me most about the AWB scandal was the failure of the Public Service to identify the problem and then advise Government.

Statement of the Problem

Why is this important? Government depends upon its Public Service for sound advice in the first place and then for effective action in implementing Government decisions. Here the Public Service is not like business even though business models have been imported into the Service as part of the global revolution in public administration.

I can illustrate this very simply.

A standard management mantra in business is the need to make decisions quickly, recognising that some of them will be wrong. A good manager is one who gets the majority of decisions right or at least part right. The focus therefore is on the successes.

By contrast, in Government the focus is on the failures. Forget the 98 per cent of good or at least not bad decisions, it is the 2 per cent that go wrong that attract all the attention.

There are good reasons for this. When a company makes a bad decision people are affected, but the adverse effects are limited. When a Government makes a bad decision, the whole country can be affected.

Further, the decision frames are very different.

Even the most complex business problems are relatively simple and defined, although implementation may be difficult requiring great skill. By contrast, policy problems are often complex, ill-defined, full of shades of grey with uncertain outcomes. In business, the decision making processes and parameters are relatively simple, in Government complex in application because of (among other things) the need to balance so many differing interests.

An effective Public Service is critical in making this complex Government world work. Government may not heed Public Service advice because it has to take into account other factors, but it needs that advice as a starting point.

Why then, in the words of Mr Cole, do we have this situation? - "The critical fact that emerges is that DFAT did very little in relation to the allegations or other information it received that either specifically related to AWB, or related generally to Iraq's manipulation of the program."

In saying this I am focusing not on the detail of the case, but on the broader question of whether the Public Service reforms themselves over recent decades may in fact have created a systemic problem within the Public Service, one that poses a significant national threat.

When I was a senior public servant I used to see all the international cable traffic coming into the Department at all security classification levels from all posts and agencies. Each day I used to scan up to 200 cables looking for issues of relevance to my responsibilities. There was some absolutely fascinating material, and I must admit I sometimes got badly sidetracked. However, I was well informed.

In addition to the cable traffic, I was in constant contact with industry, industry associations, lobbyists, other agencies through phone, written material, at lunches and dinners, on site visits and at meetings and conferences. My staff also provided constant information and advice.

A key part of my role was to identify and manage potential issues within my responsibilities that might affect the Department, Minister or Government. Depending on the issue, I might follow up within the Department, with other Departments, with ministerial staffers (their focus was more political, mine policy, but the two always overlapped to some degree) or with the Minister. In the case of the Minister I might prepare a minute to him, arrange an appointment to see him or, if the matter was very important, simply pick up the telephone.

This background will explain why I find the failure of officials across a number of agencies to properly identify and act on the problem puzzling and concerning, why I fear that the case may be an example of systemic failure.

Now it may be that my concerns here are simply wrong, that there was in fact insufficient evidence to warrant more than a simple follow up with the company, that current knowledge is simply the benefit of hind sight.

Accepting that I have yet to read the report, I actually find this hard to accept because I ask myself what I would have done if I had some form of policy and program responsibility, if it had come across my past desk.

Starting from the premises that we were dealing with a corrupt regime, that it was likely that there was some form of rorting somewhere in the world, that this was a major Australian export industry, that if true it would be disastrous, I would have started by looking at the structure of the Oil for Food program so that I understood how it worked. I would have checked files and with colleagues to see if they knew anything.

If there was nothing around to show a problem, I would then have spoken to the company as happened. If I they assured me that there was no truth in the matter, I would have tried to test this with questions based on my knowledge of the scheme. If this was okay, then I would have accepted their word. However, as an older style public servant, I would have ensured that all this was carefully documented. I would also have informed the minister, even if only as a short reference in a broader information minute.

So at least I think that there was probably an initial policy process failure. I also think that when I go through the detail of the report I am likely to find compounding failures.

Accepting that I might change my view based on later evidence, it is important to understand how this failure might have happened. Here there are a number of possibilities.

Possible Reasons for the Failure

Part of the reason for the failure may simply lie in the nature of modern communications, including especially the importance of email traffic.

In the earlier period I talked about, all cable traffic was centralised and copied to key agencies. So a cable from the post in New York to DFAT reporting concerns would also have been automatically copied to a number of other agencies.

Now it may be, I do not know because I do not know how cable and email traffic is now managed, that the various warning signs were so fragmented that nobody could see the pattern. If so, this is an important issue that needs to be addressed.

A second more disturbing possibility is that we are dealing with failure across the linked dimensions of skills, structure and attitude. I have to be careful here because I am not as close to the Public Service in a day to day sense as I once was.

I have the strong impression that the Public Service has been dumbed down. I do not mean by this that our public servants are dumber than they were, they are not, simply that the type of reflective policy skills that I was taught are less valued. The focus today is on doing rather than on defining what to do.

This is reflected in the Service's structure and operating systems including the way performance is judged. Key features as I see them are:

  • The application of the private sector CEO, executive model means that the Service has become more centralised, more controlled. Unlike former permanent heads who were in position for a long time and saw their first role as advising the Government, agency heads now shift quickly and (as I see it) see their first role in terms of managing the agency. This is quite a profound shift. Among other things, it means less folk knowledge, reduced real authority for lower level officers.
  • Program structures appear to have become both less stable and more rigid. Less stable in that they change more often, more rigid in that it is harder to do things outside program structures. The second holds for both new things and things that don't fit exactly within programs. The type of more free ranging authority that I once possessed appears no longer possible. This is also reflected in one of the conclusions from Cole, that there were no places for Foreign Affairs officials to take their concerns.
  • Individual officers are busier and have less real support. Compared to my period, they spend more time on personal and program administration, more time on simple processing of work including document preparation/presentation. There is simply less time to think.

These things feed into the more complex question of attitude. While Cole's conclusion that there was no place for Foreign Affairs officers to to take their concerns reflects structural problems, it also suggests a major attitude problem.

I simply do not accept that that the absence of a place to go in structural terms should be the end of the story in either Foreign Affairs or in other agencies with an interest in the matter including Primary Industry. If it were true, then I would find this the most terrifying element of all because it implies that systemic problems associated with structural rigidities are such that important issues that do not fit into existing structures can simply drop into the cracks until they finally blow up.

My experience has been that people can work their way round systems where they consider the issue to be important enough. It may be that a key problem in the evolving scandal was that no one was prepared to take ownership of the issue, that it was seen as someone else's problem.


This post should not be seen as an attack on the public servants involved in the matter. I am not interested in the blame game, nor am I interested in short term responses.

We can already see that responses on both sides of politics are symptom based. Criminal action against AWB executives, tighter penalties for sanction busting, review of the single desk. These may be important but do nothing to address the question of why the problem arose in the first place and of the slow responses to it.

The key issue to me is the extent to which the whole affair has revealed systemic weaknesses in our system of public administration and, if so, what we do about it.

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