It’s not often that the hunters in the budget process become the hunted. The Department of Finance and Deregulation, as it is called in these highly-regulatory days, is not exactly the home of bloated programs and under-employed public servants. In fact, along with the two other central agencies, Treasury and Prime Minister and Cabinet, Finance has borne the brunt of the 24/Kevin Rudd management style of big initiatives demanded pronto, constant calls for detailed advice and delays while everything is channelled through one in-tray in the Prime Minister’s Office.

There is one saving that merits consideration across the central agencies, however, and that’s reforming the shadow structure of portfolio advice units in all three departments.

Finance maintains several “agency advice unit” divisions which in effect mimic line departments, monitoring policy issues and program management and expenditure. They run the Budget process for the Departments they are tasked with monitoring and provide advice from a Finance perspective on the issues Departments are grappling with. PM&C operates a similar shadow bureaucracy overseeing the work of Departments, especially those involved in high-profile issues or COAG processes. Treasury, too, keeps a watching brief over other areas of the Public Service, although more aimed at monitoring important economic issues than scrutinising what other Departments are doing.

Those shadow structures are also the source of central agencies’ “Coordination Comments” on Cabinet submissions, of the sort leaked last year during the Fuelwatch debacle. The Cabinet process is based on a sort of “marketplace of ideas” model in which other Departments and central agencies are encouraged to give their views on proposals before Cabinet, even if — especially if — they disagree violently with the proposal.

Finance and PM&C also have a gatekeeper role in the process. You won’t get into Cabinet at all unless PM&C is happy with your submission, nor will you get in unless Finance ticks off that the costings in your submission make sense. Neither is disinclined to make full use of their gatekeeper role.

In fact, under the Howard Government, there was an ever-increasing number of hurdles you had to jump over to get into Cabinet, each of them more bureaucratic than the last. Regional Impact Statements, Regulatory Impact Statements, Indigenous Impact Statements, Fiscal Impact Statements, Small Business Impact Statements… on they went. They even told Steve Fielding they were having Family Impact Statements, although they were more or less a tick-a-box exercise. But in the later Howard years, Cabinet submissions would consume vast resources as dozens of bureaucrats laboured to prepare an array of Impact Statements and then get them approved by other bureaucrats in other departments, many of whom had the sole job of making sure other departments ticked the right boxes.

And then you’d slip off the Cabinet agenda and have to do the whole thing again.

It’s time for the model of having two or three shadow bureaucracies to be re-evaluated. They could be replaced with one central agency area handling financial and policy oversight, budget coordination and COAG leadership. Much of the COAG agenda is, in any event, about Commonwealth-State financial relations. There’s a question of where such a unit would be located, but “whole of government” has been the new bureaucratic fashion for a couple of years now and a group shared between Finance and PM&C would exemplify it perfectly.

It would also shift the Cabinet model to one that was less combative. Finance’s Coordination Comments on any issue are rarely motivated by anything other than a desire to save money, even if convoluted policy rationales have to be developed to justify such a stance.

There’s also the argument that the best way to improve the quality of advice to government is not to establish a formal layer of vetting and filtering within central agencies but to improve the quality of senior bureaucrats within line departments.

The shadow bureaucracies are what happens when you graft an ever-increasing range of requirements, many political rather than policy-based, onto the traditional Cabinet process the Federal Government has retained for decades. There should be a smarter way of coordinating Public Service advice, and a less expensive one as well.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey