3.4 Potential for clearer delineation between policy and service delivery
The Commission was asked to examine the potential for a clearer delineation of responsibilities for policy and service delivery at the Commonwealth level. It has also examined connections between the two.
As highlighted in the Commission’s Phase One Report, the activities of government typically extend across policy and delivery functions, where policy is about deciding what to do, and delivery is doing it.
As a rule, the Commission considers portfolio departments should undertake policy development, while agencies for the most part should deliver programmes and services.
Between the categories of policy and service delivery choices need to be made about how things get done.
At the Commonwealth level, most service delivery functions have already been separated from policy functions. For example, the Department of Human Services now delivers Medicare, Centrelink, and Child Support services as well as a range of income support services on behalf of social policy departments.
Policy advice on tax revenue is undertaken by the Treasury, while the Australian Taxation Office collects revenue. There is also a range of delivery agencies and third party providers delivering services such as financial regulation, telecommunications, health, disability and employment services.
The Commission’s Phase One Report recommended further separation between policy and delivery functions in some areas, including the establishment of a separate border protection agency and potentially outsourcing visa processing.
The challenge, therefore, lies not so much in the separation of policy and delivery, which already exists, but in working out how to connect them more effectively.
For the policymaker, this is about effective processes of implementation, so that those charged with delivery are more responsive to policy. For the front line public service manager, however, it is about more effective processes of consultation, so that policymakers have a more realistic understanding of what their proposals will mean in practice. Front line managers would also argue for simpler policies that are less prescriptive and change less often.
The Commission considers the interface between policy and service delivery needs to improve. There are opportunities to rethink the way services are commissioned. There is scope to improve communication between policy departments and service delivery agencies. There is also untapped potential to use data analytics and randomised controlled trials on the ground to inform policy choices early in the policy process.
The separation of policy and delivery in social services
The clearest example of the delineation of policy and delivery functions at the Commonwealth level is the separation of social policy from the delivery of social services.
The current delivery arrangements had their origins in the creation of Centrelink in 1997. Centrelink was established as a statutory agency within the social security portfolio, with responsibility for delivering services and benefits to unemployed Australians and social welfare recipients.
Centrelink was not set up as a budget-funded agency. Rather it was funded directly by the organisations for which it delivered services. As its funding came principally from those departments and agencies, each organisation negotiated a purchase price for the services Centrelink agreed to provide using resources appropriated in the Budget.
These purchaser‑provider arrangements were governed by negotiated contractual agreements with each department. Centrelink was required to report to its client departments on its performance against a series of detailed indicators.
In 2004 the Department of Human Services was established, bringing together a range of service delivery agencies, including Centrelink, Medicare, Health Services Australia and the Child Support Agency to improve service delivery arrangements.
The Human Services portfolio was created partly in response to the Uhrig review of corporate governance of statutory authorities and office holders. The direct purchaser‑provider model, and independent board were replaced by more traditional governance arrangements. The heads of four of the service delivery agencies (Medicare Australia, Centrelink, Health Services Australia and Australian Hearing) then reported directly to the Minister through the Secretary of the Department of Human Services.
In 2011 the former Human Services agencies — Centrelink and Medicare — were integrated into the Department of Human Services, bringing together the department’s frontline service delivery networks into a single customer facing network.
Overlaps between policy and delivery
In some organisations, the line between policy and delivery is not clear. This is a claim often made in respect of national regulators. There are perceptions that some regulators consistently seek to extend the law in addition to enforcing it.
For example, several national regulators in the food and grocery sector are able to make and enforce rules resulting in the potential for regulatory activism: the ability to expand the range of activities to be regulated and to create their own work programme.
The Australian Competition and Consumer Commission will often test the law (including Australian Consumer Law) by taking on legal cases where the outcome is less certain. The fact that this organisation has incurred operating losses partly reflects this strategy. There have been significant financial impacts when unsuccessful court cases result in costs being awarded against the Commission.
Regulatory agencies, as well as other service delivery entities, should confine their functions to administering agreed policy.
This should not, however, prevent regulators and other service delivery agencies from exercising the discretion required to adopt appropriate risk management strategies and from providing feedback to the relevant portfolio department on policy shortcomings or any impediments, or opportunities, to enhance service delivery arrangements.
‘Commissioning’ of services
Governments have a variety of instruments to implement policy – direct delivery, contracts and grants, loans and loan guarantees, taxes and tax expenditures and market design and regulation.
Which of these is best, and thus how the relationship between policy and implementation should be constructed and navigated, will depend on the circumstances.
A ‘commissioning’ arrangement has the potential to improve aspects of the traditional relationship between policy and delivery.
Commissioning is the process through which providers are granted authority to deliver services designed to meet specified social and economic outcomes. It is a relatively new concept in public administration, having been developed over the past decade or more in the United Kingdom.
The process of commissioning involves identifying and prioritising outcomes, and designing measurable performance objectives that will inform government whether outcomes are being met and whether they are being delivered in an effective and efficient manner. In many regards it is a ‘localised’ version of the programme accountability framework outlined in Section 3.3 above.
A key challenge in commissioning public services is the specification of outcomes and the design of performance measures that serve as appropriate surrogates for them. Governments face a number of difficulties in doing this:
- The temptation to adopt multiple and sometimes inconsistent outcomes as a way of attracting broader support for new initiatives.
- The difficulties involved in getting governments to settle on (and persist with) a relatively small number of priorities.
- The inclination to assign additional responsibilities to an agency that is doing a good job of delivering its existing outcomes.
- The challenges involved in specifying social outcomes in a manner that is independently observable and objectively measurable.
- The well-recognised challenges involved in finding suitable measures for many social outcomes.
By specifying outcomes or high level outputs, rather than processes or inputs, performance measurement can be employed in a way that gives the providers of services the room and incentive to innovate.
One advantage of a commissioning approach is it better ensures services are fit for purpose and that they are delivered in a timely and cost effective way. It can be a tool for challenging policy makers to ensure they have clarified the outcomes that programmes and policies are meant to achieve.
Often policy and commissioning functions are collated in the same organisation. In some cases it will be difficult to draw a clear boundary between the two functions – both policymakers and commissioners may have responsibility for aspects of system design and development.
In other cases services should be commissioned through an iterative process, weighing up the intended outcomes, the ease of implementation and affordability through repeated rounds of development and re-assessment. This can lead to innovation, as tends to happen in the private sector.
This iterative approach may be best achieved by separating commissioning and policy functions to give those doing the commissioning more freedom to innovate outside the traditional, slow moving policy cycle.
Many departments currently undertake substantial programme administration and implementation work, such as contract management, grant administration and performance monitoring within policy teams. Not only could commissioning be improved by separating and grouping these functions, but economies of scale could be achieved by grouping similar administrative activities. Policy teams may also benefit from spending less time on day‑to‑day administration, and more time on policy analysis.
The Commission considers that commissioning should be improved in the Australian Public Service through a combination of measures, including strengthening the role of the Cabinet Implementation Unit that currently exists within the Department of the Prime Minister and Cabinet, and by building commissioning expertise within departments and agencies.
Implementation planning and commissioning
The Cabinet Implementation Unit was established in 2003 to report to Cabinet on progress with the implementation of Cabinet priorities. Where implementation problems were identified they were brought to the Cabinet’s attention and the Unit worked with agencies on remediation planning.
In recent years the Cabinet Implementation Unit has maintained regular Cabinet reporting, while taking an active role in advising departments on implementation planning early in the policy process. This has involved:
- assessing all submissions and new policy proposals going to the Cabinet for implementation and delivery issues planning;
- building capability across the Australian Public Service on implementation planning through training and the development of guides; and
- maintaining an implementation network for senior executives to share implementation and delivery experiences.
The Commission sees merit in the Cabinet Implementation Unit taking a strong role in working with policy departments in the design of outcomes, outputs and contracting arrangements with providers to strengthen departments’ capacity in this area. It should continue to drive performance and ensure targets remain prominent, particularly given the delivery challenges faced by agencies and the lag between policy decisions and outcomes on the ground.
Stronger links between policy and delivery
For those tasked with the delivery of front line public services, a significant gap often exists between policy and delivery. The world imagined by policymakers rarely resembles the world experienced by those who deliver services day-to-day.
Front line managers often report that they are consulted late in the process, once policy development has been largely completed and there is insufficient time for effective feedback. Also policy agencies are not always receptive to advice from the front line.
For example, the recent Capability Review of the Treasury noted that stakeholders described Treasury officers as dismissive of the expertise of line agencies or business. Instead, they tend to revert to first principles to build an understanding from scratch.
This deficiency is not limited to Treasury. It is evident that significant cultural change is required and that policymakers should be more prepared to learn from and access the ‘lived experience’ of front line workers. Practical issues around delivery should be built in to the foundations of policy design.
Opportunities to improve the interaction between policy and delivery include:
- encouraging mobility and exchange between sectors;
- providing avenues for interaction between policy and service delivery networks;
- undertaking analysis and providing mechanisms to take greater account of provider views;
- collecting information on user experience; and
- better programme evaluation.
A mandatory rotation programme for new graduates in the Australian Public Service has the potential to address some of these issues. Most departments and agencies provide graduate recruits with two or three work rotations within the organisation during their first year. Graduates in policy departments should be provided with an opportunity for a rotation in a front line delivery role, and vice versa. Over time this will help to build networks and a better understanding between organisations.
Effective programme evaluation mechanisms, which involve both policy and service delivery agencies testing the efficacy of a proposed intervention and alternative approaches, are particularly important. As recommended in the Phase One Report, government should improve its use of data and data analytics to achieve these goals. In particular, there is potential to make greater use of randomised controlled trials to test delivery outcomes and inform policy development.
Randomised controlled trials are used extensively in medical research and international development, but they are not used widely in areas such as social policy, even though the administrative data and systems are often already in place.
The Commission sees merit in making greater use of randomised controlled trials to help support links between policy and service delivery agencies and to improve outcomes, for example, in relation to services to disadvantaged populations such as Indigenous Australians.
Recommendation 13: Clearer delineation between policy and service delivery
At the Commonwealth level, most service delivery functions have already been separated from policy functions. However, the Commission has identified a number of opportunities to better connect policy with service delivery:
- regulatory and service delivery entities should confine their functions to administering agreed policy, but should not be prevented from providing feedback to the relevant policy department on ways to enhance service delivery arrangements which go beyond their delivery mandate;
- implementation and 'commissioning' capabilities across government should be improved with a strengthened role for the Cabinet Implementation Unit;
- graduates in policy departments should be given a rotation in a front line delivery role, and vice versa as part of their graduate programmes; and
- greater use should be made of data analytics and randomised controlled trials to strengthen links between policy and service delivery and inform evidence-based decision-making.