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False Economies: Unpacking public service efficiency

AUSTRALIAN government cuts could decrease public sector efficiency, according to a Centre for Policy Development (CPD) Report.

False Economies: unpacking public service efficiency is the third and final installation of a series of research papers. The previous papers showed Australia is relatively efficient compared to other OECD nations.

It showed:

  • Our public sector is ‘lean and keen’, operating on fewer resources than those of many nation’s public sectors which it outperforms
  • There are positive indicators about the public sector’s ability to do the right job
  • In some cases our public sector also has a similar level of efficiency to that of the private sector
  • Compared to other OECD countries, Australia is highly effective and low taxing, maintaining high efficiency over changing times, and the public sector is dynamically efficient.

The latest paper reports the Commission of Audit and Federal Budget are trying to gain efficiency through minimising resources, which could stifle rather than encourage efficiency.

According to CPD innovation is one of the two ways the public sector can achieve efficiency, with professional accountability demonstrating the achievement of goals the other.

Public sector innovation is:

  • Often driven from the bottom-up
  • Needs support from the top
  • Often a response to the internal identification of a problem

This means it’s frequently public sector workers themselves who have ideas about how to do things better, but common barriers to achieving innovation are:

  • An overemphasis on controlling employees
  • Low expectations about rewards for good work
  • A high level of formalisation and long reporting chains
  • A lack of clear organisation goals

One of the major inhibitors to innovation highlighted in the report is lack of resources: “… the uniform and indiscriminate means by which APS resources are frequently reduced, such as through the Efficiency Dividend and other across-the-board cuts or hiring freezes, are poorly aligned with the dynamics of innovation.”

The report suggest ways the Australian public sector can improve innovation, and in doing so increase efficiency. Recognising and rewarding innovation, top line support for bottom up innovations, using multiple low-risk pilot programs, and investing in resources are a number of ways the public sector can improve innovation and efficiency.

As far as the other driver of efficiency, professional accountability, quality performance management and a focus on outcomes and trust are the main levers.

The report concludes: “no discussion of efficiency should stop simply at considering the current resources we are using. We must consider the results we are getting for those resources, both now and as future investments.”

Find the full report here.



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