On 1 February 2020 substantial Machinery of Government (MoG) changes announced by Prime Minister Scott Morrison on 5 December 2019 will take effect. The changes will reduce the number of departments from 18 to 14 with five departmental secretaries losing their positions. The announcement was followed by the release on 13 December of the final report of the Thodey review of the APS together with the Government’s response.
This flagpost examines the administrative and legal structures that operate when a government makes MoG changes.
‘Departments’ and the rest
The changes apply to the 18 departments that constitute the ‘Departments of State’, but the ‘public service’ also includes the 82 statutory agencies that employ staff wholly or partly under the Public Service Act 1999 (the PSA), a further nine ‘Executive agencies’, plus eight somewhat opaquely categorised agencies that the Australian Public Service Commission classes as ‘Bodies with staff employed under the PS Act which operate with some degree of independence’. There are also the substantial ‘non-APS’ agencies created and governed under their own Acts (the statutory authorities). Nevertheless, the 2019 State of the Service Report figures suggest that it is the departments that constitute the core of the public service and the most significant employer.
Are these categories just semantics or are there real differences between them?
The significance of the departments of state is their basis in the Constitution, which provides (s.64) that the Governor-General ‘may appoint officers to administer such departments of State of the Commonwealth as the Governor-General in Council may establish’. Those officers ‘shall be members of the Federal Executive Council, and shall be the Queen’s Ministers of state for the Commonwealth’. The Governor-General in Council also issues an Administrative Arrangement Order (AAO) setting out the laws each minister is responsible for administering and the matters dealt with by each Department of State. The AAO is the basis on which a designated minister exercises powers under those enumerated laws and the departments a portfolio Minister is responsible for. Departments of state therefore may be likened to the ‘foundation stones’ of the public service, responsible for planning, budgets, and the delivery of policies, programs and services.
In contrast, each statutory authority is created by its own Act of Parliament, generally for a specific operational or regulatory role, such as the Australian Federal Police.
Agencies are grouped into a ministerial ‘portfolio’. These are the agencies that fall within a Minister’s responsibility. Thus, the Minister for Home Affairs portfolio includes the Department of Home Affairs (Department of State) and five portfolio agencies.
The Executive Agencies are provided for by section 65 of the PSA, by the Governor-General without the involvement of Parliament. The Parliamentary Library observed in 1999 that the rationale for the creation of Executive Agencies is not entirely clear, but, according to the Explanatory Memorandum for the PSA:
The purpose of the Executive Agency structure is to provide a degree of separation from departmental management where that is appropriate to the functions of the Agency, and something less than a statutory authority is warranted.
In the United Kingdom, Executive Agencies were established following a recommendation made in 1988 ‘to allow the delivery of executive functions of government to be carried out separately from—but within a policy and resources framework set by—a primarily policy-focused department.’
Since 1999 the Executive Agency structure has been used intermittently. Of the Executive Agencies extant as at 2 September 2019, at least four were created by the Morrison Government in 2019: the National Faster Rail Agency; the North Queensland Water Infrastructure Authority; the National Indigenous Australians Agency; and the North Queensland Livestock Industry Recovery Agency.
‘MoGs’ and the Prime Minister
As noted above, under the Constitution it is the Governor-General in Council who issues the AAO. In doing so the Governor-General acts on the advice of the Federal Executive Council, which consists of serving ministers. As such, a Prime Minister has wide capacity to vary the number, structure and composition of departments of state. This differs from the statutory agencies, which by definition, are created, amended or abolished by Act of Parliament.
As noted above, the Prime Minister also indicated that, from 1 February 2020, five departmental secretaries will not continue in office (it should be noted this is unrelated to the separate announcement that the Secretary of the Department of Health, Glenys Beauchamp, will retire on 28 February). Departmental secretaries are appointed and terminated by the Governor-General on the advice of the Prime Minister (PSA, Part 7). Secretaries are appointed for specific periods (five years or a shorter term) and can be reappointed, but they have no security of tenure—a secretary’s appointment can be terminated at any time by the Governor-General on the recommendation of the prime minister.
Implications and issues
An interesting aspect of the announced changes is the Prime Minister’s confirmation that ‘there are no changes to the ministry or portfolio responsibilities’.
Former Public Service Commissioner Andrew Podger argues that the new arrangements are likely to create considerable administrative complexity, citing the example of the new Department of Infrastructure, Transport, Regional Development and Communications which will have eight ministers (four in Cabinet), and several ministers will have responsibilities for functions in other portfolios. Other media commentary suggested that the changes were part of a broader trend towards the ‘sidelining of the public service as a frontline provider of policy advice’.
MoGs create other challenges. In publications in 2016, 2017 and 2018, researchers examined MoG changes in Westminster systems, with a focus on the significance of ‘cultural integration’, and found that many are expensive and highly disruptive, with high transition costs relating to staff being distracted from daily operational business as they change jobs, relocate, and develop new standard operating procedures.
More generally, merging substantial entities can generate a range of formidable organisational issues such as accommodation, integrating complex IT systems, pay, staff conditions, records management, decision-making processes, and governance arrangements. The development and bedding-down of new arrangements can in turn lead to increased risks for projects, contracting or fraud.