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Sep 3, 2010

The myth of governmental

Contrary to its claims of administrative competence, the Coalition had a series of costly blunders when in Government.

“Competence” has proven to be a potent tool for conservatives here and elsewhere recently. Republicans have assailed Barack Obama as incompetent, particularly in the oleaginous wake of his handling of the BP oil spill. David Cameron hammered Gordon Brown, whose economic competence was once his principal claim to the Prime Ministership, over it in the lead-up to the UK election. And it was the central theme of Tony Abbott’s campaign against Labor that has him on the cusp of minority government.

It’s a longstanding theme in politics. The Left is soft-hearted, but has no discipline. The Right is hard-hearted, but good at management. In an ancient Simpsons episode from a generation ago, an elephant escapes and rampages through Republican and Democrat gatherings. The Democrats clutch placards saying “We can’t govern!” and boo the animal, while the Republicans, bearing signs like “We hate everything”, cheer. It sums the narrative up perfectly.

However, competence in a Westminster-based system, or a variant of it like Australia’s federal system, is altogether more complex than slogans might suggest, given that elections change governments, but not administrators. Politicians act as executives, and make major decisions, but the implementation of their decisions is left to unelected bureaucrats. Further, as more and more functions of government have been outsourced, much of the implementation of their decisions is increasingly in the hands of the private sector, acting either under contract to government, or acting unilaterally, but with some market-based incentive reflecting policy intentions.

The Howard Government is conventionally viewed as a competent government — fiscally lax in its last term, true, and it left us with a structural budget deficit, but it was solidly reformist in at least its first two terms.

But as I pointed out back in March, if the same standards that were applied to the Rudd Government by the Press Gallery in the context of the insulation saga had been applied to the Howard Government, a different perception might have emerged. There was a direct link between IR decisions by Howard Government ministers and the deaths of building workers. There was a direct link between the failure of the Howard Government to remedy the military justice system despite repeated warnings, and the deaths of ADF personnel. These deaths are far greater in number than those attributed to problems in the insulation program for which Peter Garrett was so unfairly pilloried.

Considered from the perspective of administration, too, the Howard Government’s record was very mixed, and not just in high-profile areas like Bronwyn Bishop’s kerosene bath disasters in aged care, or the nightmarish treatment of Vivien Solon, Cornelia Rau and Mohammed Haneef by a gung-ho Immigration Department. Crikey has examined the reports of the Australian National Audit Office from 1998-2007 in an effort to get a complete picture of how “competent” the Howard Government was, to compare with the ongoing campaign by the Coalition — which boasts considerable continuity with the Howard Government — to claim it is automatically more competent than Labor.

First, some perspective: nearly all ANAO audits find something to criticise. The auditors are advocates of Best Practice — or, as management-speak now renders it, Better Practice. About the highest praise you can get from them is the comment “there are some examples of better practice in the Department’s administration of this program” — the equivalent of a gold star from the hard-to-impress folks at Centenary House.

But we found 29 examples of serious criticism of Howard Government programs from the auditors, where they laid into the way programs were run or policies were implemented, not just for poor filing or not having KPIs identified right from the outset, but for errors that cost substantial amounts of taxpayer money.

Some were, in the scheme of things, not that important. The guns buyback scheme — probably John Howard’s finest moment — was rushed so quickly that millions of dollars ended up being spent buying weapons that were already illegal, from people who should have faced prosecution rather than been given compensation. The private health insurance rebate was initially set up so that people were able to double-claim millions of dollars. The Federation Fund was found to be entirely politicised in its administration by the Prime Minister’s own office. The $400m Plasma Fractionation program was badly administered by the Health Department.

But the Howard Government was repeatedly criticised for mismanagement on a much greater scale. The first tranche of the Telstra sale was badly underpriced, and it cost taxpayers $12b in 1997 dollars (the best part of $18b now). And the sale agency, the Office of Asset Sales and IT Outsourcing, didn’t even bother checking the invoices it got from high-priced sale consultants, and simply paid them, adding a huge premium to sale costs.

In fact, OASITO was ground-zero for mismanagement in the early years of the Howard Government. The agency was carved out of Finance and staffed by ideologues keen to implement the Government’s privatisation agenda, but they were so determined to flog Government assets they frequently botched it. For example, the sale of DASFLEET was badly bungled and led to litigation with Macquarie Bank that was still being resolved when the ANAO went back to do a follow-up audit on the debacle years later.

But it was OASITO’s handling of IT outsourcing that eventually led to it being discredited and scrapped. OASITO oversaw a comprehensive program of public service IT outsourcing that was opposed by nearly every agency head in the Service, and which was so badly bungled that entire departments frequently went days without functioning IT from their new private sector providers. This rarely made the news because it was happening in Canberra, within the Government itself, but tens of millions of dollars of productivity were lost as a consequence.

Private sector providers were so bad, the story went among bureaucrats, that John Fahey had demanded and got the insourcing of IT for his personal office so it could actually continue to function.

An ANAO audit later found that many of the purported savings claimed from the outsourcing program never materialised – and it never tried to account for the tens of millions of dollars lost from public servants going home because their computers stopped working for a day. A specific ANAO audit later of the outsourcing of the vast Health Department (which was still losing whole days to IT problems when I worked there in 2006) found that OASITO had botched the outsourcing process and left continuing problems.

By that stage, OASITO had been wound up and merged back with the Department of Finance, but asset sales were a problem across the board. In 2001, the ANAO looked at the sale of Commonwealth property and its leaseback to the Public Service and found that some departments like Foreign Affairs and Trade were paying so much rent for properties they had previously owned that it was a net cost to the Commonwealth – one agency was predicted to lose nearly $100m over the course of its 20-year lease.

There were other expensive examples of maladministration. Some agencies’ handling of foreign exchange hedging was caned by the auditors, who found tens of millions of dollars had been lost on currency movements. A 2000 review of the reliance of the Howard Government on consultants – worth $370m a year – was scathing, identifying systemic problems in the way agencies hired and used consultants. A review of the greenhouse programs established by the Howard Government as a cover for its inaction on climate change found that what carbon abatement the programs had obtained had been secured at prices ranging up to $150 a tonne. There were process problems in the $60m road blackspots program in the same Department that would shortly yield the monumental Regional Partnerships debacle.

And then there was Defence. Despite the Coalition’s efforts to wrap itself in the flag, it had a terrible time in Defence, with a succession of ministers going there and then promptly leaving politics after failing to pull the uniforms into line. Rare is the audit, big or small, in the Defence portfolio over the last decade and a half that doesn’t excoriate the Department (quite apart from the small issue of its accounts being qualified for several years). Individual acquisitions were criticised, although there were a couple of exceptions, like the Bushmaster vehicle.

Its entire system for acquisitions was criticised. Its testing and evaluation of acquisitions was criticised. The relationship between Defence and the Defence Housing Authority was criticised. The ANAO couldn’t even work out whether any of the tens of millions of savings meant to have been found by Defence in the Howard Government’s “Defence Reform Program” had actually been obtained.

But the point of this list isn’t just to compare conservative claims of competence with their record in government. It’s what this record tells us about how any government operates, and how it carries out its role, regardless of ideological flavour, because the ANAO’s long scrutiny of administration can tell us a lot about the pitfalls of government management no matter which side is in power.

Monday: politicians, bureaucrats and the exercise of power…

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111 thoughts on “The myth of governmental

  1. billie

    And of course you can’t measure the human cost of 200,000 IT professionals retrenched by the Howard government determination to offshore IT jobs to India.

  2. paddy

    Definitely playing to your strong suite Bernard.
    Nicely done and I’m looking forward to Monday’s piece. Ta.

  3. Delerious

    Kind of reminds me of the art of fascism. The coalition has their own mogul running propaganda for them through most newspaper outlets. As this mogul has the only paper or a major paper in each state we also have the pleasure of knowing that any journalist who wants to work in Australia (possibly overseas as well) needs to make sure they don’t question or look too closely into what News Ltd gets up to. The internet is the only place he can’t control but he sure wishes he could.

  4. shepherdmarilyn

    Of course it’s easy to look competent when the only thing you do for 12 years is the hideous GST and two wars, torture small children and pretend to be tough on border security by bashing refugees.

    You forgot the competence of Ruddock which saw 18 deaths in his hideous concentration camps.

  5. Stressed Chef

    Good piece. Niggly nitpick re the Simpsons reference: at the Democratic Convention the signs read “We can’t govern” and “We hate life and ourselves”. The Republican Convention’s signs read “We’re just plain evil” and “We want what’s worst for everyone”.

    PS is 1994 “a generation ago” yet? I feel craggy.

  6. Acidic Muse

    And just why is it so few Australian journalists were making this kind of comparison prior to the election, she cynically asks.

    The natural centre right bias of most of Australia’s mainstream media means they always hold the ALP to higher standards of accountability than they do the Coalition

    This is specifically why Toxic Tony knew he could run a viciously relentless smear campaign predicated on stopping waste that was massively overstated and paying down a debt that was comparatively small by world standards – and undoubtedly necessary in the circumstances of the GFC. He knew his grossly exaggerated negative narrative would be warmly embraced by journalists who traditionally accept the argument that Labor are poorer economic managers as an article of faith

    It’s a very well written piece Bernard but I would have been far more impressed if you’d had the courage to publish it prior to the election 🙂

  7. asdusty

    Astro? Troy C? Glenn? Where are all the usual suspects…Im interested in seeing how they talk [Moderator- this comment has been slightly edited] their way out of this one…

  8. twobob

    It’s a very well written piece Bernard but I would have been far more impressed if you’d had the courage to publish it prior to the election

    You stole my thunder Acidic Muse, they were precisely my thoughts.
    I also seem to remember that the previous government lost some emails about AWB and children overboard. Not that those two cost us taxpayers overly much but they are still pretty relevant when it comes to issues of competence. Did you run out of word space Bernard?

  9. Anthony David

    The tragedy of IT outsourcing has continued with market dominance emerging for the business that can cut costs the most. After taking on staff with employment conditions similar to those enjoyed by public servants in IT, conditions have been whittled away step-by-step. Training is one of the first expenses to be trimmed along with career planning. One perverse example is refusing to internally promote people to more senior positions because they lacked certificates that they would have gained if they were given the necessary training promised them.

  10. archibald

    After assuming office in 1996 and finding (gasp) the Beazley Black Hole, Howard and Costello made numerous cuts and one was to abolish the Dept of Administrative Services. This department had played a major role over decades in infrastructure construction (eg the Snowy Mountains Scheme, commonwealth housing projects etc). If there was expertise within the federal government that could have more successfully administered programs like the BER and the home insulation scheme, it resided in a department abolished – effectively privatised – by Howard and Costello. That the government was overcharged by private contractors in these schemes is sheeted home to the Labor government. The wisdom of this Liberal decision to outsource a critical government function and the ethics of price gouging private contractors seems to get no comment at all.

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