Soon after his election in 1996 Liberal prime minister John Howard sacked six departmental secretaries (the chief executives at the top of the public service). A rumour spread that one was sacked by mistake. If so, the mistake was never corrected. Occasionally beheading an admiral pour encourager les autres is a well-established way to ensure obedience. Beheading six is much more effective.

It is less likely that Prime Minister-elect Tony Abbott will feel the need to do the same. After 13 years of Labor, Howard felt he had to assert the incoming government’s dominance over the public service and was highly suspicious of its senior people. It is different for Abbott. There have been only six years of opposition. The senior ranks of the public service still include many people promoted during the Howard years for demonstrating unswerving loyalty to the Coalition government. Abbott has worked closely with a number of them.

The only two secretaries about whom there has been speculation are Dr Martin Parkinson at Treasury and Dr Don Russell at the Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education.

Incoming Treasurer Joe Hockey while in opposition was asked, but refused to confirm, whether he would retain Parkinson. Treasury was seen by the Coalition as close to Labor and an enthusiastic supporter of Labor’s argument that it had saved Australia from the global financial crisis. The less-than-stellar record of Treasury revenue forecasts in recent years has also been a problem — although that is arguably due mostly to changes in the revenue mix arising from government policy.

Russell’s main failing is having been principal adviser to Paul Keating as Labor treasurer and then prime minister. A relatively recent appointee, he has not been as visible as Parkinson and has successfully managed a complex and difficult department through several changes of function and minister. At the very least, though, he is likely to end up with different responsibilities when Abbott announces his new ministry. That department has a vast and unwieldy span of functions, as indicated by its 11-word title. (The acronym, DIICCSRTE, is even worse. The new government would instantly improve public administration if it gives departments pronounceable names instead of strings of loosely connected nouns.)

The last three changes in prime minister have also resulted in a change at the head of the Department of Prime Minister and Cabinet (PM&C). That mini tradition may not continue this time. Dr Ian Watt at PM&C is the most conservative secretary of that department in living memory. That is, conservative in a philosophical, not a political, sense. He has never made a remotely political statement and has been a model public servant. He is, however, not a fan of change, dislikes risks and favours process.

His four predecessors each came to the job with a record in public sector reform. Terry Moran produced the “Ahead of the Game” blueprint for public sector reform, Dr Peter Shergold had introduced the new Public Service Act in 1999, Max Moore-Wilton reshaped the public service under Howard through massive cuts and changes (he was known as “Max the Axe”), and Dr Michael Keating led the reforms to public sector finances and management that now characterise the modern public service. Watt has never been guilty of such excesses. That may suit Abbott if he wishes to project an image of stability and reliability.

The new government will have plenty of other opportunities to change senior people over time. Many thousands of appointments are approved by the cabinet. This includes not only diplomatic posts — like Steve Bracks — but also the federal government’s many hundreds of boards, committees, statutory authorities and similar positions. As terms expire the government will have an opportunity to stamp its mark through new appointments. Labor curiously gave many of these to Coalition-aligned appointees; the Coalition rarely does the same in reverse.

“What the public service is really worried about is not changes at the top, which in any case affect only a few people, but the massive cuts in store for them.”

What the public service is really worried about is not changes at the top, which in any case affect only a few people, but the massive cuts in store for them.

The Coalition released its final update on policies last Thursday. The table of costings included the already foreshadowed public service cut of 12,000 staff through natural attrition. That is on top of Labor’s previously announced public service cuts from the last two budgets. It is phased over four years, and although tough could be manageable with current turnover rates. It will, however, be very hard, if not impossible, to do this through attrition if public servants bunker down and try to hold onto their jobs.

There is also an extra 0.25% efficiency dividend, which comes after Labor had already upped it from 1.25% to 2.25%. The efficiency dividend is an across-the-board cut to departmental expenses.

A further sting in the tail is various other references to cuts: under the carbon tax heading, to “discontinue land initiatives and unnecessary bureaucracies”; reduce “administrative and other expenses” from abolishing the mining tax; a possible public service share of a $1 billion dividend from stopping the boats (although that could come from reducing contractor payments rather than public sector costs — and is of course dependent on stopping boats); and “reduce former department of Climate Change” ($45 million). All of these come on top of the savings from the 12,000 staff cuts.

Some observers think that this will not come to pass. Marcus Mannheim in The Canberra Times argues that the only way to achieve the cuts would be for the Commonwealth to withdraw from large areas of responsibility like health and education and leave these to the states and territories. He doubts “whether Abbott and his cabinet have the stomach for it” and suggests they would prefer to keep control. If they do, they will need more public servants.

A lot will depend on how determined the new Prime Minister is to implement the full sheet of Coalition policies. He showed during the election campaign that he has extraordinary self-discipline and commitment. If he had control of both houses of Parliament one would be foolish not to bet that all of these cuts would be implemented in full. However, the likely Senate composition is the wildcard. The likely shape of programs and promises is still to be negotiated.

Experienced public servants are used to this. They know that with a change of government uncertainty reigns. Most will simply get on with the job and deal with whatever comes professionally and philosophically.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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