My comments on the draft of the Shergold Review

Peter Shergold’s report on learning from mistakes is out. It advises on how to avoid the mistakes of the Pink Batts fiasco (He was asked to do this by a government that, pretty obviously, wasn’t the slightest bit interested in learning from its or anyone else’s mistakes. I expect we have a much better one now, but we won’t really know until, as seems probable, it wins the next election.) Anyway the art of the courtier is making some kind of silk purse out of this sow’s ear so I wish Peter – for whom I have a high regard – well.

Anyway, as part of the preparation for the report I spoke to Peter and his team and was sent some extracts of the draft of the report for peer review. I thought I’d share my feedback with readers (which I’ve slightly edited for clarity). I only saw drafts of the reports conclusions and supporting text on “Opening up the APS” and “Embracing Adaptive Government” which is therefore where my comments focus, though the report’s headline recommendations range much wider.

I’ve not read the final report yet so readers may beat me to understanding the extent to which my comments were taken on board. (Usually comments lead to fairly marginal changes in my experience. Too much water under the bridge, too much work hustling consensus out of a team, and the difficulty of girding one’s loins for another assault on the summit after the draft.)

Here are some comments with dot points grouped into themes by the larger gaps between them.

  • My most general comment is that I think the forces that push away from what you call ‘adaptive government’ are stronger and deeper than you portray them so I’d like to see that brought out more. You ask “There is evidence that they deliver results. Why, then, do these approaches so often remain at the fringes of public administration?” This seems to me to be at the heart of the report, yet it’s encountered very late in the piece. I think this is the frame for the report whereas it’s to a substantial extent an afterthought. That is; most of the report that I’ve read outlines the benefits of adaptive government, and doesn’t spend a lot of energy or space asking why, if it’s a superior way to do things – or often is – it’s so rarely pursued with real energy and when it is, it hasn’t seemed to go anywhere.
  • I thought the story of Job Network/Jobactive becoming “burdened in tomes of prescriptive guidelines” was very telling. In other words, people have been preaching the ‘adaptive government’ gospel for a long time and here was one set up by someone – you Peter – who stewarded it in as Secretary and then would have watched over it at PM&C. Yet it went the way of all bureaucratic flesh. Rather than just mention it as an example, I think the report could offer some greater guidance to practitioners if it really tried to sketch out clearly what the main mechanisms and drivers that saw it degraded from the vision of its initial stewards and then asked – how do we stop those forces, or give those fighting against them a fair chance.
  • Whenever I see reference to ‘risk aversion’ I always ask what kind of risk. Inevitably in my experience, ‘risk aversion’ is an aversion to risks as seen by the interests of the agency doing the work and its people. Almost invariably risk is actually increased, but certain kinds of process risk are reduced. Usually certain kinds of execution risks are minimised but what you might call outcome risk rises! – as it did with HIP. I think this is a more compelling way to talk about what’s going on that just referring to ‘risk aversion’.
  • When you talk about ‘commissioning’ it’s still commissioning for usually government identified outputs. This is well and good and Jobactive is an example of that or to a substantial extent it is. I think it’s worth distinguishing this from what is often a deeper level of innovation where this isn’t really the case. Thus for instance Family by Family was built to address government determined imperatives (reducing the number of families in crisis). That was its inspiration, but it doesn’t really define it. It has grown well beyond that. There are two things that are worth noting here.
    • In many ways with highly innovative or just community originated programs, scaling is harder for government than the considerable difficulties for the agency itself. I tried to sketch this idea out in this piece. I’ve never seen any discussion of the kinds of issues I raise in government reports or even in the academic literature (though I may have missed it). Such documents tend to imagine that governments are like customers in a shop, and though it’s a lot more complex than that, they can in principle just buy a bunch of services from the market. I’d argue that with programs like TACSI designs, scaling can’t properly be done without the Extend, Connect, Transform routine I sketch out – which is a pretty exacting requirement of government given its inability to do much simpler things – like get Jobactive to work the way it was intended despite the intention of those at high levels that it do so.
    • My familiarity with Family by Family has led me to wonder whether the idea of governments delivering services to citizens isn’t somehow reaching the end of its use-by date. Governments will of course continue to deliver services to citizens, but in the case of Family by Family you can say services are being delivered – but governments are leveraging resources available to them (money) to build the skills (outside of government in this case) to generate social capital outcomes. You can if you like call this ‘delivery of services’ but not only are the services delivered to the community but they’re also delivered to a very substantial extend by the community – in this case mentoring families.
  • In this regard one recommendation is for “Staged decision-making for large projects should incorporate the allocation of seed funding to agencies to develop a business case and proof of concept, which can be tested before the project moves to a further stage.” I’d like to see this extended. The recommendation might fit ‘marketised’ government services – like Jobactive, but things like Family by Family don’t really fit that model. I don’t really like even talking about them as being ’scaled’ so much as ‘grown’. So at least for such policies – and it’s far from inconceivable that they’d be delivered in some areas by federal government – I think a process which seeks to grow and adapt beyond ‘proof-of-concept’ is called for.
  • Ironically for a report that champions less ’top down’ ways of doing things, I found the flavour of the report pretty ‘top down’. Perhaps the clearest demonstration of this is that virtually all the breakout quotes I’ve read in it are from the Great and the Good – very senior public servants, politicians and ‘authorities’ (like Geoff Mulgan). You say “many public servants within the APS could blossom as ‘intrapreneurs’ if given a chance to work with greater autonomy on the design or execution of new policies” but if I were an ‘intrapreneur’ within the public service – after I’d been grateful for the mention, I’d wonder if you knew what’s stopping this happening.I expect you’ve convened groups of more junior public servants and asked for their input. I’d like to see much more made of their input. Particularly those who are trying to be innovative but who are finding the going tough. What do they think could break through the many obstacles? What recommendations have you made that would give them real heart that their voice will really be heard more now, that the obstacles will be lessened, that it might be harder to do them over for those higher up?
  • I wonder what involvement of those outside and independent of an agency might impose some kind of accountability for them to be innovative. That’s an open question by the way, I don’t know the answer. But I do know that unless there’s some pressure for it, a lot of the things that will be done will remain pretty token.
  • One thing that can be done with the stroke of a pen is to publish the State of the Service results agency by agency, question by question – as I suggested here something that the APSC patiently and repeatedly explained to me would lead to discomfort (something I saw as a feature, not a bug!).
  • Of all people I’m very loath to suggest league ladders of nations – partly because our role in Australia is not to beat other nations, but to live our own life as best we can and partly because of the recklessness with which lots of league ladders are constructed. But given how influential talk about Australia’s ‘ranking’ with other nations is in the national discussion, I’d like to see you say that we used to lead in a range of areas and have now quite clearly fallen behind the leaders.
    • From around 1985 till around 2001 Australia was perhaps the preeminent economic reformer in the world. In the area of digital Government 2.0 I think we were acknowledged as leaders with the US and the UK at around the time of the Government 2.0 Taskforce and now it’s quite clear that we’re back in the pack as you can find in two different rankings reported in this report. Perhaps something similar could be said about innovation in government. In any event I’d like to see your report say that – that after being pretty clearly seen as one of the leaders, we’re now clearly behind the US and UK on much of this.
  • Your discussion of payment by results goes straight to Social impact bonds. Yet SIBs are ironically a nice illustration of the very phenomenon of scaling before trialling!! You can say that SIBs – in the UK and NSW have been trialled on a scale that’s well below the level we might aspire to see them at, but $20 million in NSW is not a small trial! It’s good that we’re experimenting, yet I have some issues with SIBs. Most fundamentally they seem to me to be trying to run before we can walk. The walking would be paying commissioned interventions by results. I’ve never been able to get Family by Family paid by results despite the enthusiasm of NSW and SA Governments to have it. Meanwhile NSW goes out and spends $20 million – way more than on Family by Family on an SIB. I expect SIBs offer worthwhile learning – though there are lots of bugs in them – not least the incentive for governments to get debt off their books that bedevils the economics of PPPs here and in pre-crisis Greece! I think the priority is to experiment with more wide-scale PbR and to grow that where it makes sense into larger SIBs. I sketched out some ideas on this which can be downloaded here.
  • You talk about competitions and GovHack as if they’re an important part of the answer. In my work I’ve noticed a definite souring towards such things in the community of volunteers who attend them. I’m not suggesting that you shouldn’t cite them and cite them with approval and even enthusiasm, but I think it’s now important to move beyond them and that that’s where governments sights should be set by a report such as yours. GovHack, as you note, looks like a great success. They raised a quarter of a million in sponsorship last year and will grow it again this year. But the complaint within communities is that their very exciting and innovative work is ‘exploited’ by governments, and not very highly valued. I think the time has come to put pressure on agencies – perhaps through targets but certainly through some kind of oversight and reporting – to generate further value – products, ongoing processes – through GovHack and similar initiatives. And it probably makes sense to fund a small program a little like the Victorian Government’s Market Validation Program to help meet some of the cost of developing ideas from GovHack.
  • You write “Opportunities should be introduced which allow government to proclaim its adaptability. An annual, well-publicised competition might be held to gather good ideas from business and the community on how to improve the delivery of the government’s major programs.” While open competitions and so on are a good idea, I think it’s important to recognise that innovation is much more than that and in many ways an open ideas competition is actually a very easy way for agencies to look innovative, and to believe they are innovative, even when they’re not particularly. They might even pick up an idea or two and adopt it in some way. Yet being innovative really involves deeper transformation than funding the provision of some outside ideas in a regular competition and picking a few of them up.
  • I liked your reference to “information-sharing 1 often a condition of government funding” in the US. In this regard I think it might be worth referencing the Cutler Report and subsequent government policy that funding of research by government comes with obligations to make that research and the data on which it’s based public. You may find this ‘box’ from an unpublished report of Lateral Economics of some interest in this regard.

Box 4: Toyota reconfigures collective and competitive endeavour

Taking Henry Ford’s ideas about eliminating waste further even than Ford had, Toyota revolutionised factory production. The factory system had hitherto been one in which essential knowledge work was done by engineers and managers at the apex of an organisation like Ford or GM with instructions sent down the line with middle managers’ task being to minimise the cost of the inputs necessary to follow engineers’ master plans. Factory workers were unskilled and rewarded by piece rates and supply was taken from suppliers offering to the assemblers’ component design at least cost.

Toyota revolutionised this configuration, outspending their Western competitors on employee training by a factor of ten. Rather than pushing them to keep up with production lines over which they had no control, they were organised into cooperative teams empowered with statistical control skills and tools and ‘quality circle’ meetings in which they endlessly optimised their productivity.

Likewise, they gave suppliers incentives to innovate by allowing them to keep the proceeds of cost reducing innovations for some years until the next price review but also insisting that they form a ‘knowledge commons’ within the Toyota family. They did this by sponsoring regular open days and by the implicit threat that non-cooperation in the knowledge commons would lead to ostracism from Toyota’s patronage. This rapidly normalised the culture of sharing and collaboration thus increasing the rate at which successful innovations sped through the family of suppliers. In the upshot, Toyota plants often doubled their competitors’ labour productivity while exceeding their production quality.

  • At the highest level, one of the big drivers is 24/7 media management. You say “If adaptation and agility are to become widespread practice, the roles of the public servant and the minister will need to change.” You do then note some of the media pressures on government. I tried to outline the contours of some of these in this this article, which though it is ostensibly about secrecy as was my remit, is intended to suggest a much wider range of issues.
  • On the nudge unit(s) I hope you find this blog post of interest and use. I like your quote that what the behavioural insights team does is “research, plus a smidgen of common sense” and it seems to me to prompt the question of why it’s taken government so long. After all, business has been doing this, particularly in marketing, but also elsewhere for a long long time. As I intimate in the post, I’ve just linked to, I think the core lesson here is not any ‘tips and tricks’ from the literature that behavioural economics might supply, but the whole idea of encountering citizens and stakeholders as people with their own agendas which one is seeking to engage. In that sense TACSI seeks to do just that, but where the nudge unit’s engagement is usually easily scalable, ours is deep engagement and usually needs to be grown.
  • This leads me to suggest a finding which is that the Australian environment does not have the rich eco-system of innovators, what NESTA has called ‘iLabs’ that the UK and the US and a number of other countries do. We’re starting to get some more ballast in think tanks – Grattan and Mitchell – but not so much in ‘do-tanks’. There the only one independent of government that I can think of is TACSI. I’ve just come back from a NESTA function LabWorks which was an international get-together conference for such i-Labs. There were around four hundred people there – mostly from the UK, Europe and Asia – not a lot from the US. That suggests to me that we’re a long way behind in this regard.
Anyway I’m very happy to elaborate on any of these comments should you wish.

draft conclusions and supporting text on Opening up the APS and Embracing Adaptive Government.

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Bill Posters
Bill Posters
6 years ago

“the story of Job Network/Jobactive becoming “burdened in tomes of prescriptive guidelines” was very telling”

Perhaps the fact that the program was/is widely rorted by providers might explain why these poor suffering businesses living off the taxpayer tit have been lumbered with all these horrible “guidelines”. The poor dears.

Did you provide any feedback on Shergold’s proposal to gut FOI?

6 years ago

One thing that can be done with the stroke of a penis to publish the State of the Service results agency by agency, question by question – as I suggested here something that the APSC patiently and repeatedly explained to me would lead to discomfort (something I saw as a feature, not a bug!).

6 years ago

I’ve spent about 10 years in the public service and about 10 years in the private sector. I think the intensions of the public service are (nearly) always good, but the management arrangements stifle both efficiency and risk taking (a precondition to being adaptive).

1) At an individual level and divisional level, there is little incentive for voluntary actions to create a more efficient public service. Senior Managers’ salaries are based on the resources under their control (people and budget – inputs), not any objective measure of outputs or efficiency. Why would any senior manager do something more efficiently when the efficiency might reduce the resources under their control and jeopardise their personal job status? So the incentive is always to empire build, not be more efficient.

2) Similarly, because outcomes are not typically measured, there is no real means to measure the gains from taking risks, and no continuous driver to be innovative or adaptive. And from a public servants’ perspective, their person risk of poor performance can be mitigated by adding to process (which generally stifles innovation). This is further reinforced by issue #1 above.

Unless the metrics to measure the performance of the public service can be improved, and genuine incentives for efficiency and innovation established, we shouldn’t expect major improvements from the public service.

paul frijters
paul frijters
6 years ago

It is hard to envisage that the main drivers of change of the APS – the politicization of the civil service and the general loss of corporate memory and research capacity – are going to reverse. Where would the political pressure to reverse these trends come from? Nowhere.

So perhaps the way forward is to embrace the changes and speed them up rather than resist them: perhaps we should go into a clear ‘administration’ style civil service where policy development occurs in think-tanks associated with political parties who come in with a whole mob of top civil servants when they win office.

6 years ago
Reply to  paul frijters


You said “perhaps we should go into a clear ‘administration’ style civil service where policy development occurs in think-tanks associated with political parties who come in with a whole mob of top civil servants when they win office.”

Policy is pretty much outsourced already (consultants, think tanks, lobbyists, ministerial staffers and focus groups). The problem with this approach is that the think tanks etc usually belong exclusively to the left or right. So if you remove the public sector ‘policy filter’ altogether won’t we just end up with wild swings in policy every time there is a change of Government? And the wild swings would be implemented more quickly by a more efficient (but content free) public service. I’m not sure this would lead to better government either.

paul frijters
paul frijters
6 years ago
Reply to  Jim

Hi Jim,

the main problem in terms of outcomes is that at the moment, policy seems driven by small interest groups, who hence get private rents (of which some is shared with the politicians doing the favors) at the expense of the rest of the population. A set-up wherein policies are developed in more professional party think-tanks would seem better.

However, no guarantees, obviously, which is why the above is merely a thought-balloon. I am simply not sufficiently knowledgeable about how the APS works or could be reformed to do more than mentino the idea. Which is that if one openly takes away the pretense that the APS is into policy development, then there is more pressure (hopefully!) on the political parties to be more professional and population-oriented in their policy development.

derrida derider
derrida derider
6 years ago

… how to avoid the mistakes of the Pink Batts fiasco

OMG – you are still accepting Peta Credlin’s framing of issues. Take a look at the Pink Batts program. It was very cost-effective in terms of its stated goals. Now its safety record could have been improved but it was nowhere near the level of “fiasco” – after all the rate of deaths and house fires per house insulated was actually LOWER than before its introduction. And if there is a safety lesson to be learned it is “don’t pour Commonwealth money into industries where some State governments are known to be in the pocket of that industry”. Those deaths would not have occurred if NSW and (especially) Queensland had shown any interest in making employers observe building and safety regulations.

On Job Network surely the lesson of its history is precisely that “adaptive government” doesn’t always work! The history of JN is that it was privatised and deregulated on the theory that correctly setting the payment structure for results would create incentives for the desired outcome, so the process to that outcome would be moulded by the invisible hand of the market.

Well, it turns out that management by outcomes where outcomes are complex and hard to measure is a recipe for people to play endless games with the measurement – who coulda known? Of course actually the organisational economists did – google “theory of incomplete contracts”.

Each successive round of JN contracts had to be ever more prescriptive as to process, in an effort to close off the latest rort of taxpayer’s money and to try and ensure some of that money actually helped the people it was supposed to help. To the point that if you’re not going to abolish it entirely then it would now be simpler and probably cheaper to nationalise it all again.

6 years ago

I think you’d be better off annotating the ABC’s Utopia, which is rather more realistic than any government-commissioned and approved report can be about the policy drivers and constraints in practice. It certainly has a better prediction record.