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In focus - Operational challenges facing the Australian Public Service - EY - Australia

In focusOperational challenges facing the Australian Public Service



Sweeping operating and efficiency reforms across the Australian Public Service (APS) mean that reduced workforce numbers and smaller investment options are the likely reality for most Agencies today.

Recent Mid Year Economic and Fiscal Outlook (MYEFO) and Budget announcements (e.g. increased efficiency dividend (ED) and reducing Department capital budgets for FY13) have a compounding effect when we consider the APS prior years’ operating reforms such as Operation Sunlight, Gershon Review, Coordinated procurement and the APS Blueprint just to name a few.

These initiatives have generated significant savings, efficiencies and benefits across the APS. However, in doing so, Departmental Secretaries and Agency Heads now have very little flexibility to reduce costs without impacting staff numbers and service levels.

Some could argue that the APS management challenge has not changed: the APS needs to do more with less while managing its risks. This, however, is becoming a very tough equation.

Most Agencies costs exist within the staff and supplier categories with the major elements of supplier costs being assigned to property, travel, training, licenses, research and consultancies. Not that long ago, the ratios of staff to supplier costs were around 55:45 or 60:40, whereas today most Agencies are more like 75:25 or 80:20, this is due to:

  • Previous years operating reforms predominantly reducing supplier costs; and
  • Staff profile and remuneration increases

The major supplier cost for most Agencies is property, which is a relatively fixed cost with stepped review points over time. It is difficult for Agencies to reduce costs in the desired timeframes to meet the reduced resources without impacting staff numbers and service levels. This raises questions for Secretaries and Agency Heads, such as:

  • How will we deliver Government outcomes, maintain service levels and manage risks with a reduced workforce?
  • How do we invest to generate future savings to fund the ED and Enterprise Agreement increases with a reduced capital base?
  • How do we maintain our assets and keep pace with technology advancements with a reduced capital base?
  • What capabilities do we need to invest in, not just for today but for the future?
  • How do I downsize my workforce while retaining the most valuable employees?

A range of initiatives have been implemented in Agencies to identify extra cost saving areas. A number of Agencies have enhanced video conferencing to reduce travel costs or reduced the number of printers on desks while also mandating double-sided printing. Although these are good initiatives and environmentally responsible, it is evident that there is not a single solution at the individual Agency level to solve this major issue in the short to medium term.

Agencies must look at doing things differently. They cannot expect to do the same things in the same way, and expect a different outcome. Agencies need to start thinking about how they can leverage what others have or are providing across the APS. But before they do, they need to consider:

  1. What are their priority areas for Government?
  2. Where are their greatest risk areas?
  3. What aspects of business activity can they stop, reduce or postpone?
  4. What are their major cost drivers?
  5. What workforce do they need?
  6. Where are they located and why?

Looking beyond the needs of individual Agencies to solutions that span across the APS will be the key to addressing these challenges.

Key focus areas would include:

Most Agencies are looking to downsize across their organisations, and many are geographically dispersed. This means that there will be dead rent in a number of office locations. It is time to question why those property holdings cannot be joined up, and accommodation shared in particular States?

More radical suggestions are a single network for a range of Government agencies or do they need a network at all? Could service delivery functions of particular networks be provided by a third party provider?

Rather than investing in building systems, Agencies should leverage what others have developed or are using. A major challenge is how this information is shared across the APS and assessed against different Agencies’ particular business needs.

There are good examples of Agencies working collaboratively with grants management but further opportunities exist across the APS. If these options are not considered and Agencies continue to operate in silos and build their own systems, not only is this a lost opportunity and waste of resources but they will also continue to poach from one another thereby creating a market that benefits individual staff, not the broader APS.

In the past shared services have not always worked well. A key blocker has been the perception that Agencies need to own and run their own system to ensure their needs are met.

With reduced resources these past barriers need to be overcome. Cross Agency governance arrangements and resourcing pools should go some way to alleviate these tensions and provide assurance that individual Agency needs are prioritised.

Once investment decisions have been made which generate future savings, projects need to be carefully tracked and benefits harvested. Sounds simple, but this is rarely done well.

In doing more, with less, while managing risk, the challenges facing the APS at present are significant. They key to addressing these challenges requires solutions that span across the APS, within property, systems, shared services and benefits realisation.

 






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    Bruce Hunter
    Partner, Performance Improvement,
    Finance Advisory
    Tel: +61 2 6267 3855
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