Chapter 2


This chapter will provide the background information on the Australian Public Service (APS) required to contextualise the report. It will cover:
the role and profile of the APS;
the findings of the Independent Review of the APS;
the 2019 APS reform agenda set out by the Commonwealth Government;
the expectations of the Australia public for the APS; and
a selection of observations on the current capability of the APS.

Role of the APS

According to the Public Service Act 1999 (PS Act), the role of the APS is clear. It is established to be: apolitical public service that is efficient and effective in serving the Government, the Parliament and the Australian public.1
The APS was founded in the Westminster tradition as an impartial, professional and merit-based service operating for successive governments. This tradition has adapted to suit Australia's needs since 1901.2
As observed in the Independent Review of the APS (Thodey Review), while the Westminster APS tradition is still evolving, the elements it broadly requires can be characterised as follows:
Public servants to provide high-quality, independent and evidence-based advice to the Government, and implement the Government's decisions efficiently, effectively and ethically.
Public servants to ensure that their advice and implementation, or the perceptions of these, are not affected by political factors.
Mutual respect between public servants and ministers and parliamentarians, and between public servants themselves, to allow a free flow of ideas and information and ensure that responsibility for decisions is taken as and when required.
A career structure for public servants that is independent and based on merit.
Stakeholder confidence that decisions by public servants are not affected by their personal, financial, political or other interests or those of their relatives or friends.3

Statistical outline of the APS workforce

Section 44 of the PS Act stipulates that each year the Australian Public Service Commissioner issue a report to the agency's Minister for presentation to the Australian Parliament. The report is required to provide information on the state of the APS during the past year.4
In addition to the annual State of the Service report, twice a year the Australian Public Service Commission (APSC) releases a 'snapshot' of data concerning all APS employees as at 30 June and 31 December. The data is provided by agencies and is drawn from the APS Employment Database.5
The most recent APS employment data available at the time of the committee's inquiry was published on 3 September 2021. This data release provided a statistical outline of the APS workforce employed under the PS Act as at 30 June 2021 and covered 97 agencies.6
According to the data release, as at 30 June 2021 the employee headcount of the APS was 153 945. Of this number, 87 per cent (approximately 134 000) were ongoing employees, and 13 per cent (approximately 20 000) were non-ongoing.7
The headcount figure does not adjust for hours worked and includes employees who are on extended leave (for 3 months or more), including those on maternity leave and leave without pay. It should be noted that the headcount figure is different to Average Staffing Level (ASL) data which counts staff for the time they work and averages staffing over an annual period.8
Additionally, as the APSC only captures data relating to the number of people employed under the PS Act, the headcount figure does not account for those people working in the APS employed via labour hire arrangements.9 Further discussion on this matter can be found in a later chapter of this report.
The following infographics, reproduced from the data release, provide an overview of the make-up of the APS as at 30 June 2021 in respect to classification, age, geographical location and diversity indicators.

Figure 2.1:  Proportion of APS employees by classification – 30 June 2021

[Source: Australian Public Service Commission, APS Employment Data: 30 June 2021 release, September 2021, p. 1]

Figure 2.2:  Proportion of APS employees by age – 30 June 2021

[Source: Australian Public Service Commission, APS Employment Data: 30 June 2021 release, September 2021, p. 1]

Figure 2.3:  Proportion of APS employees by location – 30 June 2021

[Source: Australian Public Service Commission, APS Employment Data: 30 June 2021 release, September 2021, p. 1]

Figure 2.4:  Diversity indicators in the APS – 30 June 2021

[Source: Australian Public Service Commission, APS Employment Data: 30 June 2021 release, September 2021, p. 1]

Independent Review of the APS

The Commonwealth Government commissioned the Independent Review of the APS (Thodey Review) in May 2018. The review was led by an independent panel of six individuals with extensive public and private sector experience, chaired by Mr David Thodey AO. The final report was submitted to the government in September 2019 and publicly released on 13 December 2019.10
The Thodey Review examined the capability, culture and operating model of the APS. It engaged with more than 11 000 individuals and organisations, conducted over 400 consultations, commissioned eight reports and five surveys, and reviewed relevant reports, literature and other sources.11
The independent panel found that the APS needed 'a service-wide transformation' encompassing both short-term change and long-term reform in order to achieve better outcomes and more efficiently serve the government, the Parliament and the Australian public.12
The Thodey Review concluded that the APS needed to:
work more effectively together, guided by a strong purpose and clear values and principles;
partner with the community and others to solve problems;
make better use of digital technologies and data to deliver outstanding services;
strengthen its expertise and professional skills to become a high-performing institution;
use dynamic and flexible means to deliver priorities responsively; and
improve leadership and governance arrangements.13
The Thodey Review concluded that while the APS is 'not broken', it is 'not performing at its best today and is not ready for the big changes and challenges that Australia will face between now and 2030'.14
The final report made 40 recommendations and highlighted the need for the APS to have 'ambitious service-wide performance outcomes and targets to provide a focal point for transformation and hold the APS to account'.15
The report found that the APS was 'ill-prepared' for the future as a result of multiple factors. It detailed:
From the evidence gathered, the review concludes that the APS is ill-prepared to grasp the opportunities of the future for several reasons. It lacks a clear unified purpose, and is too internally focused. There has been long-running underinvestment in the APS's people, capital and digital capability, while siloed approaches, rigid hierarchies and bureaucratic rules create barriers to effective delivery. APS leaders do not always act as a unified team. Most of all, the APS is not changing fast enough to meet government expectations and deliver for Australians in a changing world.16
Additionally, the report concluded:
To be fit for purpose for coming decades, the APS needs to instinctively put the needs and interests of Australians first in everything it does. It requires upfront investment in digital transformation, public capital and its people.17

APS reform agenda

The government released its response to the Thodey Review on 13 December 2019. The response either noted, agreed in full, or agreed in part with the 40 recommendations.18
In addition to commenting on the recommendations, the government's response also set out an APS reform agenda titled 'Delivering for Australians'.19
The delivery and implementation of the APS reform agenda is led by the APS Reform Office, part of the Department of the Prime Minister and Cabinet (PM&C). The reform agenda is governed by the Secretaries Board, with the Secretary of PM&C and the APS Commissioner acting as 'chief change leaders'. Reform initiatives are supported by the APS Chief Operating Officers (COO) Committee, which is comprised of the COO from all departments and major agencies, and the Secretaries Digital Committee.20

Progress to date

During its inquiry the committee received information on the progress of the APS reform agenda.
PM&C advised that the APS Reform Office was established in February 2020 and commenced a three month 'planning sprint'. However, in April 2020 work on implementing the reform agenda was paused due to the onset of the COVID-19 pandemic.21
Mr William Story, First Assistant Secretary in the APS Reform Office, explained the process in the lead-up to the pause in work:
We commenced a three-month planning process in late February 2020, and that was designed to set out all the initiatives and actions that the government committed to in its response to the Thodey report… So we commenced that process and were working with agencies across the Commonwealth who were responsible for those different initiatives in order to define projects, the milestones, outcomes et cetera, for all that. The Secretaries Board, as COVID became a reality and a significant, overwhelming focus for the APS, decided at the start of April to pause that process in order to allow the APS to focus on the immediate priorities in responding to the pandemic.22
PM&C informed the committee that the Secretaries Board took the decision to pause work in order to free up APS resources and effort to focus on responding to the immediate needs of the pandemic. Mr Story expanded upon this:
As the secretary of PM&C and the commissioner [of the APS] said at the time, what they observed was reform in action that, in a way, was delivering on many of the commitments of the government or its aspirations for the APS.23
PM&C advised that in June 2020, the APS Commissioner and the Secretary of PM&C asked the APS Reform Office to recommence planning, with a direction to focus the work on the priorities that supported the APS to respond to the needs arising from COVID-19.24
The Secretaries Board convened at the end of July 2020 to agree upon three 'critical priorities' that the APS would focus on in the immediate term in light of the pandemic.25
On 4 September 2020, the PM&C secretary and the APS Commissioner released an 'open letter' to the APS sharing the three priorities:
Continue to support Australia's response to and recovery from the pandemic.
Accelerate the APS digital transformation.
Invest in skills to strengthen workforce planning and capability.26
The APSC highlighted to the committee that the mobilisation and collaboration experienced across the APS during the initial pandemic response had seen 'years of reform realised in just months'.27
Mr Peter Woolcott AO, APS Commissioner, explained the impact of the pandemic on the pace of reform:
When we were first grappling with COVID, there was a moment when the Secretaries Board decided that we needed to actually pause all this and focus on COVID. We quickly realised a few months in that quite a number of the reform measures that were part of the Thodey approach—acting as one enterprise, being much more joined up and being focused on the Australian people—were actually happening anyway as a consequence of COVID. So we then sought to pick up the speed again of a lot of the initiatives that were in the government's Delivering for Australians response to the Thodey report.28
The committee heard that the government allocated $15.1 million over two years to initiate the APS reforms arising from the Thodey Review, with $5.8 million in 2019–20 and $9.3 million in 2020–21 put to a range of initiatives through PM&C and the APSC.
For example, PM&C detailed that:
In terms of Prime Minister and Cabinet, in effect, this has supported the establishment of the [APS Reform] Office, the establishment of the reform program architecture and delivery. There are a range of practical things that the Reform Office has been involved in over the course of the last year. Just to highlight one: we have used some of that funding to support effective APS communications through the crisis. That wasn't a need that we anticipated in December 2019 when that funding was provided. But what it does is illustrate that we've sought to use that money [for] practical purposes over the last year.29
The APSC advised that its component of the $15.1 million was $5.46 million over two years, with $4.415 million committed as at March 2021.30
Various elements of the progress of the APS reform agenda are further discussed in subsequent chapters of this report.

Public expectations of the APS

The committee received evidence emphasising the high standard to which the APS is held by the Australian community.
As the Thodey Review noted, the APS is a foundational institution of Australia's democracy and its proper functioning is essential to the prosperity and security of all Australians.31
The Centre for Policy Development (CPD), a non-partisan, independent policy institute, provided the committee with evidence obtained through its extensive analysis over a number of years of Australian attitudes to democracy and the role of government.32 It noted that results clearly showed Australians believed services delivered by the government were of higher quality and more affordable, accessible and accountable than those delivered by private companies or charities.33
The CPD summarised its research as showing that:
Australians want more effective and more active government stewardship of services and deeper engagement in local communities. Nine in 10 Australians now think it's important for government to maintain the capability and skills to deliver services directly, instead of paying others to do it, and that number is up from three-quarters of Australians in 2018.34
The CPD emphasised that although this view was emphatic regardless of voting intention, Coalition voters were even more in favour.35
As Dr Travers McLeod, Chief Executive Officer (CEO) of the CPD explained:
They [Coalition voters] are the strongest supporters of more active government. When we asked them that question last year, 95 per cent of people who identified as Liberal and National voters wanted the government to maintain capability and skills to deliver services directly. The numbers are strong across the board; it's not a coloured result, but they were the strongest supporters.36
The CPD observed that evidence showed that Australians did not want the APS to be outsourced. It detailed:
Australians do not want their democracy, or the services on which Australians depend, to be wholly sublet. The experience of hotel quarantine and the vaccine rollout during COVID-19 has reinforced that Australians remain uneasy about the outsourcing of essential services.37
In discussion on this matter, the committee queried the CPD on whether a diminished APS capability had a detrimental impact on the Australian public's confidence in the institutions of government and in turn, the strength of democracy.
Dr McLeod responded:
… I don't think that's too big an assertion. In fact, we've found there's a direct relationship between the esteem and trust Australians have in their democracy and the effectiveness of the institutions in delivering big service systems and solving big problems.38

External observations on the current capability of the APS

During the course of the inquiry the committee found it instructive to consider overarching commentary on the current capability of the APS from a number of well-qualified, seasoned observers.
In an essay for The Monthly publication, Professor John Quiggin, a Laureate Fellow in Economics at the University of Queensland, argued that the
COVID-19 pandemic had revealed 'huge gaps' in 'nation-state capacity' at the federal level. Defining nation-state capacity as 'the set of tools available to government to achieve its policy goals', Professor Quiggin asserted that the capacity of the public service had been 'hollowed out', and that the nation-state capacity of the Commonwealth Government was now 'a shadow of what it was in the mid-20th century'.39
The CPD observed that the 'long run decline of APS capability' was something that successive governments must bear responsibility for, although it emphasised that the trend had accelerated since 2013.40
The CPD posited that a clear shift in the focus and orientation of the APS had resulted in an erosion of the quality of public service advice, an
ever-diminishing number of people with long-term experience of large service delivery systems, as well as a withdrawal of the APS from communities. It suggested that the 'cumulative impact of declining capability is frightening for Australia and Australian communities…'41
The CPD concluded:
A history of outsourcing the design and delivery of service systems to private and not for profit firms, and a similar predisposition to contract out for advice on policy development, has worn away internal APS knowledge, experience and expertise….
This loss of capability, creativity and depth has hurt the APS and operated to the detriment of all Australians. The capability gap has been laid bare by recent inquiries, reviews and royal commissions into aged care, employment services, vocational education and training, and the state of the APS itself. A clear theme emerging has been to invest more into public service capability, double down on place-based responses and use these to inform systems reform, embed a professions mindset into the APS, and restore public delivery capability or benchmarking to lift confidence in service delivery across the board.42
Mr Terry Moran AC served as Secretary of PM&C from 2008 to 2011. In this role he was the chair of the Advisory Group on Reform of Australian Government Administration, which was commissioned in 2009 by then Prime Minister the Hon Kevin Rudd MP to produce a blueprint for reforms designed to equip the APS for the future.43
In giving evidence to the committee's inquiry in 2021 in his current role as chair of the CPD, Mr Moran remarked that parts of the APS are 'not fit for purpose in the face of the challenges before Australia in the future'.44
Professor Andrew Podger AO, Honorary Professor of Public Policy at the Australian National University with a lengthy career at senior executive levels of the APS (including as secretary to several departments and APS Commissioner) gave evidence to the committee in a private capacity.
He agreed that the APS was experiencing a decline in capability. He highlighted to the committee that many of the capability issues canvassed during the inquiry had been raised multiple times by various reviews over the past two decades (most recently in the Thodey Review), but had failed to be addressed.45
He elaborated on this position:
Perhaps what surprises me most about the continuing failure to address these issues is that the measures needed are not radical. They would protect important institutions, improve the value for money and impose a more market oriented approach to administration. The opposition to them seems to stem both from concern not to constrain the increasing power of a political executive and from an unwillingness to admit that current policies are failing badly.46
John Halligan, Emeritus Professor in Public Administration at the University of Canberra, submitted to the committee in private capacity. He too pointed out that the capability issues of the APS had remained unaddressed for many years. He explained:
In many respects the 2010s were a lost decade for capability improvements. The language of transformation, capability gaps and stewardship for the Secretaries Board was apparent earlier in the decade only to be reiterated by the Independent Review at the end because too little had happened in too many areas.47
The Australian National Audit Office (ANAO) informed the committee that based on its audit assessments the APS performed well in a number of areas. As Mr Grant Hehir, Auditor-General, explained:
Our work has shown that overall the APS performs well, demonstrating strong capabilities in several areas such as policy development and the design phase of the delivery continuum. The APS implements many programs and, on the whole, does well in its areas of expertise, where it leverages past experience in delivery frameworks.48
However, the ANAO also observed that its audit program had identified several core areas where there was 'room for improvement' in current APS capability, including ICT transformation and cybersecurity; procurement; regulation; and performance measurement and evaluation.49
These insights from the ANAO, as well as those of the individual observers set out above, will be canvassed in more detail throughout the report.

Committee view

The committee agrees with the observation made in the Thodey Review that although the APS is not broken, it is also not performing at its best.
As this report will explore over the coming chapters, there is a clear and urgent need for transformation within the APS in order to halt capability erosion and restore institutional memory so that, as an institution, the APS is better equipped to serve the Australian public.
In saying this, the committee would like to make clear at the outset that it is not diminishing the tremendous amount of work done by individuals within the APS.
The committee acknowledges the extraordinary commitment, professionalism, resilience and flexibility that APS employees have shown over the past 24 months in dealing with the unprecedented crises created by bushfires, floods and the ongoing COVID-19 pandemic.
However, what is abundantly clear to the committee is that it is not sufficient or sustainable to rely solely on the individual efforts and goodwill of APS employees.
It is essential that the workforce be supported from an institutional standpoint to ensure that the APS is fit for purpose to face the challenges of the future. Only in doing this can the APS continue to work for the benefit of all Australians, through the provision of high-quality policy advice and service delivery.
It is to these matters of capability that this report will now turn.

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