The Australian Public Service

Philip Hamilton, Politics and Public Administration

Key issues
The APS Review is due to report in mid-2019.
The Coalition Government will maintain the efficiency dividend at two per cent in 2019–20 and 2020–21, with exemptions for agencies with an average staffing level of below 200 and a number of specific agencies (including the ABC and SBS).
The Budget-related statement Building stronger regional communities lists agencies and positions by location, and outlines the next round of agencies and positions to relocate under the Government’s decentralisation policy.

What is the APS, and what is not?

The Australian Public Service (APS) comprises entities that employ their staff under the Public Service Act 1999 (PS Act). This includes all departments of state, and some other entities (105 as at 30 June 2018). Generally, APS agencies are ‘non-corporate’, being components of the legal entity that is the Commonwealth. The responsibilities of the Australian Public Service Commission (APSC) include shaping the APS workforce, building workforce capability and promoting integrity.

In contrast, corporate Commonwealth entities (CCEs) are generally established through legislation—consequently, each of the 70 or so CCEs has a legal existence that is separate from the Commonwealth. Although there are exceptions, employees of CCEs are generally not employed under the PS Act and so are not part of the APS or under the purview of the APSC. The Commonwealth also controls some companies established under the Corporations Act 2001 as a third category.

The Department of Finance provides comprehensive information about public sector governance arrangements, foundational elements of which are the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and the subsidiary PGPA Rule 2014.

APS workforce

Workforce size

Data published by the OECD in its Government at a Glance (GG) series indicates that for 2000, 2008 and 2013, employment in the Australian public sector was around 15 per cent of the total labour force (including federal, state and local levels). In 2013, the OECD average was 19.3 per cent. More recent data about Australia was not available to the OECD for inclusion in its GG report in 2017.

The APSC reported that as at 30 June 2018 there were 150,594 staff employed under the PS Act—down 1,836 from 152,430 in June 2017. The 2018 APS staffing total represents about 1.1 per cent of the employed Australian labour force. Figure 1 shows the change in total APS employee numbers since June 2000.

Figure 1: APS employee numbers, 2000–2018

APS employee numbers, 2000–2018

Source: Australian Public Service Commission, 2018.

The adjusted line takes account of coverage changes in the APS each year, by adjusting total APS employee numbers by the number of employees performing functions moving into or out of coverage of the PS Act.

Contractors and consultants

In 2018 and 2019, as part of an inquiry into procurement contract reporting, the Joint Committee of Public Accounts and Audit (JCPAA) examined Government entities’ use of consultants and contractors.

The Australian National Audit Office indicated that, as reported in AusTender, the total spend on consultancy contracts in 2016–17 was close to double the expenditure in 2012–13. Based on submissions to the JCPAA inquiry, media reporting noted that spending on contracted labour had doubled in five years. The Government responded that ‘the overall cost of government administration continues to fall as a proportion of overall government expenditure, which itself is also growing more slowly than it has in the past’.

The JCPAA inquiry lapsed when the House of Representatives was dissolved in April 2019.

APS Code of Conduct—social media

In a complex case currently before the High Court, a former APS employee who used her personal Twitter account to post anonymous tweets critical of Government policies, is challenging the termination of her employment. Depending on how the case proceeds, the Court may, among other matters, provide clarification relating to public servants’ use of social media, particularly in the context of the APS Code of Conduct contained in section 13 of the PS Act. It is possible that the Court could also consider the implied freedom of political communication in the Constitution.

Reviews

In May 2018 the Government commissioned a major review of the APS led by David Thodey. The APS Review published preliminary conclusions in March 2019, and is scheduled to report to the Government in the first half of 2019.

In September 2018 the Department of Finance published the report of the independent review of the PGPA Act and PGPA Rule (co-authored by David Thodey). The review made 52 recommendations, including: eight on improving the quality of performance reporting; eight on improving the effectiveness of audit committees; and two on improving the accuracy and transparency of reporting about contracts and consultancies. In April 2019 the Government accepted in principle 48 of the 52 recommendations.

The 2019 International Civil Service Effectiveness (InCiSE) Index has rated the APS as the ‘fifth-most effective civil service in the world’. The Mandarin noted that InCiSE rankings are ‘based on 12 indicators: capabilities, policy making, fiscal and financial management, regulation, crisis and risk management, procurement, human resources management, tax administration, digital services, inclusiveness, integrity and openness. It does not measure service delivery outcomes for citizens, for example in areas like health care and education’.

Budgeting for the APS

Program funds and running costs

Most Budget appropriations for public service agencies are classified as either administered or departmental.

Administered funds are expended by an agency on behalf of the government for the benefit of parties who are external to the agency, generally through programs. For example, the Department of Human Services (DHS) provides income support payments. Agencies have no discretion in how administered funds are spent. In another example, DHS must make income support payments to applicants who fulfil eligibility requirements. Other examples of administered program funds include grants, subsidies, and other obligations arising from legislated eligibility rules and conditions.

In contrast, departmental funds are generally intended to cover agency running costs such as employee salaries and the purchase or rental of equipment and property.

Departmental expenditure is considerably less than administered expenditure. For example, based on analysis of Budget Paper No. 4, the Library calculates that, in 2019–20, departmental expenditure will be approximately 25 per cent of total Commonwealth expenditure, and administered expenditure will be 75 per cent. (In this assessment, the Library has excluded operations of the Australian Office of Financial Management related to debt issue and repurchasing. Other valid methodologies could arrive at different percentages.) Notwithstanding possible differences between analytical methodologies, it is clear that even a significant cut to departmental expenses may result in only a minor impact on total government expenditure.

Efficiency dividend

In place for over 30 years, the efficiency dividend (ED) is an annual funding reduction for Australian government agencies, in general applied to departmental expenses. The ED has ranged from 1 to 4 per cent over its life. The 2016–17 Budget provided that the ED will be maintained at 2.5 per cent through 2016–18, before being reduced to 2 per cent in 2018–19 and 1.5 per cent in 2019–20. However on 17 May 2019, just prior to the 2019 election, it was reported that the Coalition would maintain the ED at 2 per cent in 2019–20 and 2020–21, reducing it to ‘1.5 per cent in 2021–22 and 1 per cent the following year’.

The Mandarin reported that ‘all agencies with an average staffing level of below 200 would be exempt from the efficiency dividend’, with exemptions also for a number of specific agencies including the National Disability Insurance Agency, the ABC, SBS, Safe Work Australia, the Australian Signals Directorate and the Office of National Intelligence.

Decentralisation

In April 2019 the Budget-related statement Building stronger regional communities (BSRC) noted that, under the Coalition Government’s decentralisation agenda, ‘all Australian Government departments and agencies have undertaken a thorough assessment of their functions to identify opportunities to locate appropriate functions and staff closer to communities and relieve the pressure on our capital cities’. BSRC also noted that ‘approximately 14 per cent of the Australian Public Service (APS) staff are now located in regional Australia, up from 12 per cent in 2012’.

BSRC lists the next round of agencies and positions to move, and also includes information about agencies and positions by location, in portfolio-specific reports and in a whole-of-government table.

Procurement

The Department of Finance website provides comprehensive information about government procurement, noting that ‘the Commonwealth Procurement Rules [CPRs] govern how entities buy goods and services, and are designed to ensure the Government and taxpayers get value for money’. The most recent revision of the CPRs came into effect in April 2019.

The Mandarin provided a brief summary of changes in the CPRs, noting that with the commencement of the Government Procurement (Judicial Review) Act 2018 on 20 April 2019 ‘companies now have more options to challenge Commonwealth procurement decisions in the Federal Court’. The Parliamentary Library’s Bills Digest on this legislation provides a good introduction to the procurement framework and how the new arrangements for judicial review are to operate.

ICT-specific procurement issues are discussed in Public sector digital transformation in this Briefing Book.