Shergold, Peter --- "The 30th Anniversary: Future Challenges for Administrative Review" [2007] AdminRw 4; (2007) 58 Admin Review 20

• The 30th anniversary: future challenges for administrative review

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The 30th anniversary: future challenges for administrative review

Dr Peter Shergold AC

Secretary, Department of the Prime Minister and Cabinet

Anniversaries are important; they provide a rare opportunity to reflect on the achievements of the past. So it is as we mark the occasion of the 30th anniversary of the Administrative Review Council.

There is much to extol in the history of the organisation and the manner in which it has provided oversight of Australia’s system of administrative review and advice to the Attorney-General on strategic matters. Thankfully, a generation since its establishment, the ARC continues to have an active presence. There are strong signs of institutional vigour: consider, as evidence, the ARC’s work on automated assistance in decision making and on the wielding of coercive powers by public sector agencies and its practical guidance to government decision makers on procedural fairness.

Maintaining the ARC’s ability to remain relevant has not been easy. The structure of government and delivery of public services has evolved considerably in recent decades. The corporatisation, privatisation and contracting out of government functions and service delivery have posed substantial challenges to processes of administrative oversight and review. Born in days when there was a sharper distinction between the public and private sectors, the ARC has necessarily had to respond to an increasingly complex environment in which the implementation of government has become far more ‘distributed’.

Thankfully, there is no evidence that the soothing hand of bureaucratic inertia has yet settled on the furrowed brow of the Council. Indeed, rather than basking in past accomplishments, the ARC intends to celebrate its birthday by seizing the opportunity to look to the years ahead. My comments seek to contribute to this admirable goal. Whilst I lay no great claim to foresight, I am keen to hazard my informed predictions on three new challenges that lie ahead. They are related, perhaps in unexpected ways.

The first development—and this is a matter of affirmation rather than prediction—is suspicion of legislative enactment. There is an increasing mood across virtually all jurisdictions that the deadweight of regulation needs to be lessened. Industry organisations, led by the Business Council of Australia, are advocating the benefits of reducing the red tape which imposes heavy costs on economic development. They seek to lower the impositions of regulatory delay and uncertainty by quietening the impulse to solve every public policy question through legislation.

Nor should it be thought that it is only entrepreneurial activity that feels constrained by the regulatory control of planning, investment and development. A range of other institutions—from universities to general practitioners to community organisations—are rising up against the burden of government-imposed reporting and monitoring.

Earlier in 2006 the report of the Taskforce on Reducing the Regulatory Burden on Business^[1], oversighted by Gary Banks, suggested how the regulatory impost might be reduced across a wide range of sectors and business activities. The Commonwealth Government has accepted the great majority of the Taskforce’s 178 recommendations.

The states and territories face similar pressures. At the Council of Australian Governments in February 2006 it was agreed that there would be a concerted cross-jurisdictional effort to ensure best-practice regulation making, to reduce the stock of legislation and to lessen duplication. The goal is to ensure that business can operate within a single stream of regulation and nationally consistent (or ‘harmonised’) legislation.

The Australian Public Service has responsibility for implementing this new regime at the Commonwealth level. It will require new approaches. Departments, as they prepare new policy initiatives on behalf of their ministers, will need to identify the costs as well as the benefits of measures. The case for regulatory action will have to be more persuasive than in the past.

One consequence of these changes is that the Cabinet gate‑keeping process is getting tougher. For the last year submissions have been required to demonstrate that agencies have planned to manage the risks associated with policy delivery. Major IT and infrastructure projects will now be scrutinised as they proceed through a process of ‘gateway’ review. And, in the latest move, departments will also need to apply a business cost calculator to new proposals. The object is to ensure that government decisions are taken in full knowledge of the scale of the regulatory costs that are likely to accompany implementation. This process will be driven by a strengthened, reoriented and renamed Office of Best Practice Regulation. The goal is to assess the net benefits of new policies.

Overall, there will be a substantially strengthened regulation-making framework. The Productivity Commission will undertake annual reviews of the cumulative stock of regulation with the goal of reducing it. And assessment of the continued flow of new regulation will apply not only to government departments but also to the proposals of boards, statutory authorities and regulators.

A key challenge is for the Australian Public Service to get its own house in order. The paradoxical dilemma is a commonplace of bureaucracy: the effort to reduce red tape externally actually sees processes prescribed which have the potential to increase the amount of red-tape internally. This remains an ever-present danger. There needs to be a concerted effort within the APS to reduce reporting that is of limited value.

With that in mind, agencies are now looking to review existing administrative requirements with the intention of streamlining arrangements and reducing costs. This is likely to include providing greater flexibility within the operational rules that govern the Budget process. It will almost certainly involve reducing the frequency or scale of reporting requirements across a range of government activities.

To help achieve these outcomes the Management Advisory Committee is working on the development of an implementation framework which will ensure a continuing reduction of red tape within the Commonwealth Government. It will be designed in the full and certain knowledge that regulatory intervention inevitably creeps back into bureaucratic process unless it is actively prevented. The challenge, of course, is to strike the right balance: what may bear down on me as an unnecessary encumbrance may appear to someone else as a mechanism for ensuring sufficient transparency to support the processes of administrative review.

The Administrative Review Council intends, as part of its future work program, to examine the effective and efficient application of administrative law principles to areas of complex and specific business regulation. It is apparent, from my preceding remarks, that such a review would be timely and influential.

The second development on the horizon is the growing emergence of policy intended to influence citizens’ behaviour. In Australia, as in many developed democracies in the English‑speaking world, there has been an increasing mood to look to market solutions to problems of public policy. Yet the challenges that now confront governments, whether they are traditional ones such as preventative health or more recent ones such as restoring community respect, often generate interventions that directly involve the government in areas of personal responsibility.

The irony is obvious. It involves moving responsibility from government to family and community and then, through government, seeking to influence the manner in which families and communities wield that responsibility. The motivation is equally apparent. The impacts of personal choice (such as smoking, poor diet and inadequate physical exercise) are increasingly affecting government expenditure (on diseases such as cancer, heart disease and diabetes). The detrimental influence of passive welfare and the breakdown of social rules result in significant costs.

Consequently, there is an emerging consensus that such matters are the appropriate object of government policy, although there is fierce political contest on the balance of information, incentives and punitive sanctions that comprise the best response.

It is becoming accepted that many important government priorities depend on getting people to act differently. It involves changing their behaviour if not their attitudes, preferably by persuasion but if necessary by enforcing compliance. It is apparent that such interventions—designed to build and sustain positive social norms—can be significantly more cost-effective than traditional service delivery.

This is true not just in the areas of health, education, welfare, crime and the environment but also in the domain of values. What values—as opposed to functional curricula—should be taught in schools? What values should be expected of migrants or of those who seek citizenship in order to preserve social harmony? How can people be persuaded to attach higher value to saving money or conserving water or reducing energy consumption? What can be done to improve the public expression of values, such as good manners, courtesy and tolerance, so as to combat the antisocial behaviours that impinge on the freedoms of others?

Such questions can rarely be answered by market mechanisms alone. To modify behaviours can often address the causes, which otherwise would cost government far more if exhibited in the effects of ill-health, social dysfunction or welfare dependence. Until now behaviour change has often been achieved by regulatory intervention (such as placing restrictions on water use or placing health warnings on cigarette packets). In the future there is more likely to be an emphasis on persuasion. Conditionality will increasingly be attached to government transfer payments.

The traditional public service organisation provides an admirable way of undertaking functional tasks, ensures that services are delivered fairly, ethically and reasonably efficiently, and articulates clear lines of authority and accountability that make administrative review relatively straightforward. Yet it becomes ever more apparent that the old structures of officialdom—hierarchical, vertically stove-piped and internal to government—are poorly designed to address new challenges.

The big issues that confront governments today—climate change, water availability, moving people from welfare to work, countering terrorism, addressing indigenous disadvantage—are ill-suited to such structures. Crossing bureaucratic demarcations, they require whole-of-government approaches with more flexible approaches to taking, funding and delivering decisions. But policy that is designed to influence citizens’ behaviour, to promote mutual obligation or inculcate civic responsibility, is more challenging again. Policy which seeks to motivate and reward socially beneficial outcomes requires administrative approaches that go beyond the bureaucratic horizontalism associated with effectively coordinated policy development and seamless service delivery. It requires a unity of public purpose designed and implemented between governments, public and private organisations, social enterprises and not-for-profit advocacy groups. Influencing public behaviour will involve building more effective relationships between citizens and government. Public administration will increasingly be built upon partnerships.

This bold assertion leads to the third development which this contribution anticipates: that the form and delivery of government programs will increasingly be modified and adapted in response to the needs of particular communities. Public administration will be ‘personalised’. If this is correct—and I hope it is—this has significant consequences for many aspects of public administration, from financial appropriation to auditing, scrutiny and review.

The focus on local communities is already evident in the approach to service in the United Kingdom and lies at the heart of the new approaches to Indigenous affairs which are being trialled in this country. The aim is not only to negotiate shared responsibility agreements with remote Aboriginal and Torres Strait Islander communities on the basis of discretionary funding but, more broadly, to modify the structure of national programs in response to locally determined priorities. To do so will require coordination of the delivery of services from a range of agencies and, where appropriate, greater flexibility in the application of the administrative program guidelines. The twin objectives are to influence Indigenous behaviour (by providing incentives for self‑responsibility) and to allow communities greater control (by negotiating government programs that respond to their own priorities).

These new approaches are driven by a growing recognition that governments can’t do things alone. There need to be better informed relationships between the users of government services and the service providers. There need to be far greater engagement and participation from citizens than in the traditional means of delivering government services. But such ‘co-production’ will present challenges to administrative review that go beyond those presented by contracted delivery.

Public services are traditionally very good at designing national programs and establishing a panoply of rules, guidelines and conditions to ensure that the programs are delivered efficiently and ethically. On matters of important routine—such as the scrutiny of tax reforms, the delivery of income support, the issuing of passports and visas, the provision of drought relief and the processing of health claims—bureaucracy generally works well. Administrative review is relatively straightforward.

The growing convergence of the public and private sectors, delivery of government through third parties and whole‑of‑government approaches have already tested our understanding of administrative review. It will become significantly more complex if, as I hope, the manner in which health, education, employment and family programs are delivered can be modified at the local level. Indeed, e-government presents the possibility of tailoring transactions to the individual.

Consider the challenging questions that are emerging in Indigenous policy, where the new approaches are already being trialled. Will it be ‘fair’ if some schools are allowed to access Indigenous tutoring outside the ‘national’ guidelines? Will it be ‘just’ if some CDEP [Community Development Employment Projects] schemes are allowed to undertake community work while others are restricted to labour market programs? How can one ensure that the same standard of service delivery is provided to all citizens without insisting that the same program provide it? Is it appropriate to reward certain types of self-reliant behaviour at the expense of those who continue to rely on ‘sit-down’ money?

I foresee a greater willingness to delegate decision making to the local level. However, a key challenge is that the power relations between governments and communities are asymmetrical, presenting difficult questions as to the authenticity of the outcomes negotiated. Similarly, providing community organisations with control over decision making on government programs will raise complex questions about accountability for public funds.

In a world of finite public resources the advantages of tailored flexibility, negotiated at the community level, are likely to raise interesting challenges to administrative review. So, too, a world in which there is less dependence on regulatory intervention but concomitantly more on interventions designed to modify citizens’ behaviour. Such challenges, and many others that I have not addressed or foreseen, will face the Administrative Review Council in the next 30 years.

Thankfully, on the basis of the last 30 years, it is likely that they will be met successfully.

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^[1] Rethinking Regulation, Commonwealth of Australia, Canberra, January.