Glyn Davis (Image: AAP/Alan Porritt)

One of Australia’s foremost public policy experts has strongly criticised the dramatic expansion in outsourcing of policy advice by the federal government, warning that it risks corruption and has created a vicious circle of declining public sector expertise.

Glyn Davis, a former senior public servant at the state and federal levels, former University of Melbourne Vice-Chancellor and a prominent public policy academic, on Friday delivered the annual Jim Carlton Integrity Lecture at the University of Melbourne.

He used three major reviews of the public service — by John Reid in 1983, Terry Moran’s Ahead of the Game review in 2010 and David Thodey’s review, commissioned by Malcolm Turnbull — as a guide to reflect on the shifts in the conduct of public administration at the Commonwealth level, and in particular the increasing outsourcing of government functions.

Not easy to reconcile

Glyn Davis is currently the CEO of the Paul Ramsay Foundation and distinguished professor of political science at ANU.

Davis noted that the dominant thinking around service delivery had moved to the idea of the public service as part of a network, and as a partner with communities and on-the-ground providers — a shift that had gone further in New Zealand. But “partnership is not easy to reconcile with contracting, which remains the dominant mode for delivering public services”.

“Contracts require standardisation and measurement,” he said, “while place-based partnerships are bespoke, shaped around a particular community, sharing resources and responsibilities that cut across organisational boundaries.” That presents a challenge exacerbated by “the loss of policy depth within the Australian Public Service”.

That loss is the result of increasing outsourcing of policy advice, which has dramatically increased under this government: “Fewer policy analysts so more need for external advice, more consulting reports so less need for internal policy specialists.”

But Davis particularly warns about the threat to integrity from greater outsourcing.

… outsourcing much government activity introduces significant additional hazards. Public servants must oversee contracts worth billions. Firms contracting to the Commonwealth have strong incentives to build close links with officials. They hire former public servants with the knowledge and contacts to assist winning the next tender.

He uses the three reviews to chart the rise in concern about corruption at the Commonwealth level, noting the Thodey panel’s support for a Commonwealth integrity body and other pro-integrity measures. That hasn’t been fulfilled, he noted, with the government belatedly offering a weak, very limited integrity body.

Davis also observed a shift in attitudes towards the public service with the arrival of Scott Morrison. Morrison in his response to the Thodey review rejected Thodey’s recommendations on improving accountability for ministerial staff — which the prime minister justified on the basis that “the government already ‘expects all ministerial staff to uphold the highest standards of integrity’”. As Davis drily notes: “the Morrison government has suffered some embarrassment at their hands. Not all political players in Parliament House, it turns out, uphold the highest standard of integrity.”

But he also sees something more: “Though public servants might offer advice, said prime minister Morrison in his foreword to Delivering for Australians, the job of the APS is to ‘deliver the government’s agenda. It is ministers who provide policy leadership and direction.’ … I see in the statement from the prime minister suggestions of a more fundamental shift. What was once a partnership to govern between ministers and public service experts is now described as a command and control system. The minister and their advisers are firmly in control, and the public service becomes the delivery arm of political goals.”

Cautious optimism

Even so, Davis ended with some cautious optimism. “So, if the Australian Public Service has lost significant capability, we can build it back. If corruption looms we can think harder about the alternatives, take what is worthwhile in a draft Commonwealth Integrity Commission, and push hard to expand its remit.”

Terry Moran, former head of Victoria’s Premier and Cabinet Department, and head of PM&C in the Rudd years, endorsed Davis’s comments, noting they were the latest “in a series of laments about residualising the APS in policy and delivery”.

“The outsourcing of services delivery was premised on efficiency gains, which have not been identified, and improvements in effectiveness, which has in fact declined,” Moran, who has previously delivered a Carlton Lecture himself, said. “We are falling behind New Zealand and Glyn’s address demonstrates how we missed opportunities to get it right over the decades.”

The steady erosion of integrity in the APS in recent decades can be tracked through the way major reviews try to get to grips with the issue. But outsourcing places corruption one step further out of sight — and the money involved is becoming greater every year.

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