Australia
Review of Public Administration
Study Visits
Study visit to Australia 26th – 28th February 2003
Constitutional Arrangements and Structures of Government
Australia, with a population of around 20million people, is a federation of six states and two mainland territories and island territories. In 1901 constitutional reform created the federal state of Australia (referred to as the ‘Commonwealth’) with powers previously operated by individual states. These legislative powers are set out in the Constitution. Those powers not listed in the Constitution are by definition the responsibility of the States. The Constitution does not make provision for local government. Each state has its own Constitution and Parliament.
State/Territory |
Population (‘000) |
Area (sq. km.) |
|---|---|---|
| New South Wales | 6532 |
801600 |
| Queensland | 3628 |
1727200 |
| South Australia | 1502 |
984000 |
| Tasmania | 470 |
67800 |
| Victoria | 4829 |
227600 |
| Western Australia | 1910 |
2525500 |
| Australian Capital Territory | 314 |
2400 |
| Northern Territory | 198 |
1346200 |
| Total | 19387 |
7682300 |
Source Australian Bureau of Statistics Social Trends 2002
Commonwealth Government
The Commonwealth level has the main powers for taxation, foreign policy, defence, trade and immigration. Most of the powers for the main public services, including health, education, policing and local government, lie with individual states and territories. However, the Constitution gives the Commonwealth a power to attach conditions to grants it makes to States and this is used to give considerable influence over these main services. Local government derives its authority from the state governments’ delegated legislation. Local government raises rates from commercial property and is heavily dependent on state funding.
Electoral system
The upper chamber, the Senate has 76 representatives, elected using proportional representation, twelve from each of the six States and two each from the Northern Territory and the Australian Capital Territory. The Senate’s main function has developed into one of robust scrutiny of government legislation and decision-making processes. The Senate is considered a powerful legislative upper chamber.
The lower house, the House of Representatives, elected on a preferential voting system, has 150 members, each one from an electoral area of equivalent population size (because of the population distribution some of these areas may be vast). The functions of the House are to make laws, determine the government, scrutinise the administration, and represent the people and control government expenditure.
Structure
There are 17 government departments, 45 Statutory Authorities and 7 Executive Agencies, employing almost 270 thousand people. The departments are listed below.
| The Department of Agriculture, Fisheries and Forestry | The Attorney General’s Department | The Department of Communications, Information Technology and the Arts |
|---|---|---|
| The Department of Defence | The Department of Education, Science and Training | The Department of Employment and Workplace Relations |
| The Department of the Environment and Heritage | The Department of Family and Community Services | The Department of Finance and Administration |
| The Department of Foreign Affairs and Trade | The Department of Health and Ageing | The Department of Immigration and Multicultural and Indigenous Affairs |
| The Department of Industry, Tourism and Resources | The Department of the Prime Minister and Cabinet | The Department of Transport and Regional Services |
| The Department of the Treasury | The Department of Veterans’ Affairs |
Source: Commonwealth of Australia Gazette No. S468 November 2001
State Government
Each state has its own Constitution, government and legislative framework; as noted, together the six states ‘gave’ some of their powers to the commonwealth government in 1901. State governments are subject to the national Constitution as well as their own state Constitution. A federal law overrides any state law not consistent with it. State government in Australia has constitutional responsibility for all of the main public sector services such as health, education, transport, state development, law and order, community services and housing, but as noted the federal government can achieve influence through the funding mechanisms.
States receive funding from the commonwealth by means of an assessment made by the Commonwealth Grants Commission using a needs based formula. They also have the power to raise state taxes, although this is not unfettered.
States remain very independent to such an extent that some still require extradition procedures with other states. Over the past two decades there has been a period of sound economic growth driven by a series of competition reforms that have brought about greater uniformity between states. Barriers to trade between states have been reduced following a mutual recognition act in 1993.
Local government
Responsibility for local government falls within the sole sphere of state governments which determine the number, size and funding arrangements of councils. Councils raise revenue largely from commercial rates base and parking fees. Local council responsibilities are set out in state Constitutions and legislation and are viewed as minor. Typically they include the maintenance of local roads and footpaths, garbage collection, town planning and libraries.
Co-ordinating arrangements
The Council of Australian Government (COAG) is a forum the aim of which is to develop and implement national policy reforms requiring cooperative action between the three levels of government. Its objectives include dealing with major issues by agreement and cooperation on structural reform of government and on reforms to achieve an integrated, efficient national economy and a single national market. It comprises the Prime Minister, State Premiers, Chief Ministers of the ACT and Northern Territories and the president of the Australian Local Government Association. The COAG framework supports around forty Ministerial Councils each with responsibility for a specific policy area. The aim of these Councils is to facilitate consultation and cooperation between governments in specific policy areas. The commonwealth government’s preference is to settle issues at the Ministerial Councils and reserve the COAG meetings for significant national issues.
The Table below sets out the responsibilities of each tier of government.
Commonwealth |
State |
Local |
|---|---|---|
Defence Foreign policy Immigration Trade and commerce Airports and air safety Postal services Telecommunications (retains 51% in Telstra) Employment and unemployment strategies National public works Social services such as pensions and family support Medicare and health funding Post secondary education Currency |
Education – state primary and secondary schools, curriculum and assessment, coordination of higher education Health – public hospitals, nursing services, ambulance services, coordination of aged care, children’s, youth, mental and community health services Transport – public transport, major roads, vehicle registration, transport accident insurance State development – encouraging investment, employment, workers’ compensation, IT, sport, recreation, racing and gaming, tourism. Natural resources and environment – agricultural development, electricity and gas supply, water supply and sewerage, forestry, land management, conservation and environmental protection, national parks Law and order – courts and tribunals, legal aid, police, prisons Community services – disability services, child protection, adoption Housing – public housing, rental assistance Fair trading – consumer affairs Fire and emergency services |
Maintenance of local roads and footpaths Garbage collection Town planning Building regulations Infant welfare centres Child care centre Libraries Meals on wheels Maintenance of parks and gardens Swimming pools |
Victoria
Victoria has had its own parliament in Melbourne for 150 years and was, before Canberra was established, the seat of the federal parliament. There are two houses in parliament, the Assembly as the lower House and the Council as the upper House. These are operated largely on Westminster lines with ministers in each house.
The state has a population of around 4 million people with 3.5 of those living in the Melbourne area. The state government has an annual turnover of around $20bn and a staff of around 25,000 servicing 10 government departments. There are 21 ministers, apart from the Premier, Deputy Premier and Treasurer, all have equal status and carry portfolios that cross different departments – each department has more than one minister and each minister relates to more than one department. The aim of this seemingly complicated arrangement is to facilitate joined-up government. There is a corresponding group of public servants working within each ministerial portfolio, although the departmental secretary advises each respective minister.
There are 79 municipalities in Victoria that might be seen by the state as a special type of statutory authority although they do provide local democratic accountability. They account for a total of $3bn expenditure and employ around 30,000 people. All councils have between 5 and 9 councillors and range in population terms from 360 – 192,000. In terms of income less than 50% is generated by rates, a further 20-36% is brought in from charges and the remainder comes from grants. The responsibility of councils in Victoria includes rubbish collection, rate collection, minor roads, local planning and child health. The state of Victoria has no current plans to devolve any additional powers to local government.
The Victorian government has introduced a cross-cutting policy aiming to ‘build cohesive communities’ and improve the performance of and the confidence in local government. The recently formed Department of Victoria Communities approach to community building has been to fund eleven local pilot projects, run centrally from the department with local government operating in a partnership role. Improving the performance of local government is based on four stages:
- informed communities – to create higher expectations
- capacity building – to support and educate staff and councillors
- incentives – to encourage good practice
- mandate – legislation, codes, and ‘Ministerial moral authority’.
Victoria has around 6,000 non-departmental public entities (including hospital and school boards) some of which are established under statute and others administratively, most have boards. All are directly responsible to the respective minister. These organisations range in size from Vic Roads with a budget in the region of $100m to small cemetery trusts.
Melbourne City Council
Melbourne City Council covers only the central business district of the metropolitan area. It has a resident population of around 57,000 and a daily visiting population of approximately 600,000. It is the state capital of Victoria and the second largest municipality in Australia. There are seven councillors, a Lord Mayor and a deputy Lord Mayor, both of whom are directly elected. The city operates on a budget of around $200m, about half of which is collected from rates, the remainder from charges and investment.
On a day-to-day basis Melbourne City Council delivers around 400 services, some of which are capital city services such as arts and culture programmes, and more typical local government services such as rubbish collection, local roads, statutory planning and child care services.
Reform in the Australian Public sector
Drivers for change
Two main elements formed the initial impetus for reform in Australia. Firstly there was the political desire to improve public services against a background of pressures on and inflexibilities inherent in public expenditure systems. The inefficiency of government and its impact on the economy and the community was a major finding of the Royal Commission on Government Administration of the Commonwealth of Australia (the Coombs Commission) that reported in 1976. Secondly there was a perception that public services were ineffective in meeting the needs of the public and that government was dominated by bureaucrats and was inflexible and unresponsive to the public and politics.
There was a need to improve transparency, improve staff responsiveness and a move away from a one-size-fits-all approach.
The introduction of the National Competition Policy (NCP) further developed the process of moving public services to a more efficient, effective and customer focused basis. This policy advocated that the public sector adopt private sector practices in order to provide improved flexibility in management within a more competitive framework.
Reform programme
Generally, the reform process in Australia has occurred in two phases, to date. The first phase, in the 1980’s and into the 1990’s began the process of increasing the financial flexibility of the public sector by introducing rolling forward estimates based budgeting and placing a clearer focus on outputs and outcomes. The second phase of the reform programme continued the financial development with the introduction of accrual accounting, privatising and outsourcing services, and an emphasis on human resource management reform to improve the flexibility of the public sector workforce. The aim of this second phase was to improve transparency in financial and management systems, to improve the responsiveness of the public sector staff to change, and to move away from a ‘one size fits all’ approach.
In recent years specific reforms included:
1995
- Competition Principles Agreement obliging governments to review legislations that restricts competition.
- Public Service commission and Merit Protection Commission established
1996
- Establishment of Small Business Deregulation Taskforce
1997
- Public Service Reform legislation introduced in Parliament
- Decision to introduce accrual based output and outcome focused management framework for the Commonwealth
- Service charters required for all commonwealth agencies dealing with the public.
- Establishment of Centrelink, one-stop-shop for the provision of government welfare and employment related services
1998
- Trial accrual accounting budget
- Interim report on the implementation of CTC in the APS.
1999
- Public Service Act 1999
- First accrual based budget
- Launch of Senior Executive Leadership Capability Framework.
2000
- Release of publications to support the application of the Public Service Act 1999 including Values in the APS and Guidelines on Workplace diversity.
2001
- Release of human resource Capability Model.
Reform results
The reform, driven initially by the Department of Finance, resulted in the removal of a culture of central control to one that gave managers the responsibility to manage. This process led to substantial devolution of responsibility to individual departments and agencies, large-scale privatization and corporatisation. There was substantial reduction in staffing and the number of federal government departments reduced.
The outworking of this agenda was in three main areas, budgets related to outcomes, human resources, and service delivery.
Budgets
There was greater flexibility in the management of budgets so the strictures of accounting for many separate budget lines was substantially removed replaced by a ‘bottom line’ and outcome focused budgetary system. Chief Executives were required to set out clearly the long-term outcomes and what was expected of staff.
Large-scale privatisation, corporatisation and contracting out resulted from the process of freeing up budgetary controls and focusing on customer service. This process aimed to give the citizen choice protected within a framework of quality of service standards. Large services were privatized, such as Quantas, others were corporatised – such as Telstra with 51% of ownership remaining within the public sector. Outsourcing of services such as human resources and ICT have occurred across government with variable experience.
Goods Service Tax (GST) similar to VAT was introduced within the past few years. The commonwealth collects this and the total amount collected is allocated to states using a needs based formula. This has guaranteed a funding stream for states that is not linked with commonwealth conditions.
Service delivery
Separation of policy and service delivery resulted in the development of Centrelink, a statutory authority, to deliver a range of social and welfare services to the citizen. Centrelink employs around 24,000 staff, has 430 customer Service Centres, distributes over $50 billion in payments, and administers 140 different products on behalf of 20 government agencies. It is listed in the top 20 companies in Australia. Centrelink currently provides services on behalf of ten Commonwealth government departments and a number of other agencies. Centrelink delivers a variety of welfare, housing and employment related payments and services to the public.
Human resources
The size of the Australian Public Service (APS) (the ‘civil service’) has reduced significantly in recent years by around 20% to 123,500 (June2002). The APS represents about 8% of all public sector employees in Australia with 74% employed by State and Territory governments. Public sector employment represents around 16% of all employees.
Substantial changes in human resources management resulted in a relaxation of central controls on the classification and the pay and conditions of staff employed by the Australian Public Service. The Public Service Act 1999 and the Workplace relations Act 1996 have had a substantial impact on the way in which the public service in Australia is run. These pieces of legislation have resulted in increasing devolution of control by individual departments and agencies on conditions of employment for staff, and a move to a value based rather than a prescriptive system of regulation. The result is that departments and agencies compete for staff, often from a similar pool of candidates, with many members of staff having individual conditions and pay awards.
Lessons
Improving services
As noted previously in the Reform Programme section of this report the introduction of an outcomes and outputs focus, away from the previous programme based focus, has made a significant impact on the way in which the Australian public sector delivers services. One of the aims of the Australian Government is to ensure that what agencies do fits with the Government’s policy agenda. This requires ministers to clearly express the policy agenda in terms of outcomes. In turn, there is a responsibility on agencies, through their chief executives, to make decisions and deliver outputs in line with the stated outcomes.
In 1997 Centrelink was launched as a ‘one-stop-shop’ designed to integrate customer access to a range of government services, provide improved value for money and to separate policy from service delivery.
Enhancing democracy
As noted earlier, the Council of Australian Governments (COAG) was formed to improve cooperation between governments on strategic reform policies – such as the National Competition Policy (NCP), reform of roles in relation to environmental regulations, water reform. Membership of COAG includes the heads of the Commonwealth, State and Territory Governments and the president of the Australian Local Government Association.
Involving communities
The Victorian Government has introduced a cross-cutting policy aiming to ‘build cohesive communities’ and improve the performance of and the confidence in local government. More detail on this can be found in the section of this report on Victoria (pages 6 and 7).
Better governance
An outcomes and outputs focus enables scrutiny of the ability of public administration to deliver results by helping provide answers to questions such as: why a particular agency exists, what it is attempting to achieve, how it is working towards that purpose and whether it is effective in doing so (Department of Finance and Administration).