Richard Besley is a Partner in Panorama, Saxton Bampfylde’s global partnership, and is Founding Partner of Cordiner King in Melbourne. He talks to us about the changing face of public service delivery and ownership in Australia and the challenges and opportunities facing this continuously evolving sector.
Can you tell us more about the relationship the Australian government has with arms-length entities as a specific area of interest?
Australia has many arms-length entities, often referred to as State Owned Corporations ( SOCs) or Statutory Authorities. Much like arms-length bodies in the UK, SOCs have independent Boards and an arms-length mandate to serve the government. Arms-length entities are a widely used model in Australia, and there are multiple complexities that public sector executives need to navigate daily.
One example is the Australian water sector, which is government owned via State SOCs and which provided a most interesting comparison for me when visiting OFWAT with the Saxton Bampfylde government team in London. The private ownership of water assets in Britain was quite a contrast in itself, but additionally the public regulator OFWAT has huge responsibility - as reflected in the significant size and scope of the organisation. The operational model in Australia means the water regulation task is not as significant, but the systems and relationships are similarly complex in their different ways.
With eight different State and Territory administrations in Australia, how consistent is the approach that they take and how involved are they?
In Australia, there are a total of six State and two Territory administrations, which sit below the Federal government. Each State differs in geographic and community challenges and requirements, but all the States’ governments have quite significant on the ground service delivery responsibilities so the scope of responsibilities is similar. These State governments have to be ‘hands-on’ and deliver services through a range of public sector bodies. What changes from state to state is the emphasis and priorities which arise with newly elected state governments every three years. Some can be more interventionist or directive, and others more focused on policy settings and allowing the public sector entities to operate more independently within State-set frameworks.
In the UK a number of arms-length bodies need to deliver commercial returns whilst balancing that with a public service mission and focus. How do the arms-length organisations in Australia navigate that balance?
I think the board members and key executives who work in this world and gravitate to these entities have a passion for making a difference within the communities they serve. They also recognise that they need to strive for best practice in culture, talent management, process and governance, which compares equally well to best practice in the commercial sector.
In essence, there is a recognition that commercial objectives can coexist with public service obligations and that decision-makers need to consciously balance and navigate those objectives. Skills in proactive communication with government departments, Ministers and Advisers and stakeholder groups are essential.
Many of our government organisations strive for good commercial practice comparable to the private sector, without such relentless chasing of returns that the public service mission could be compromised. It is a challenge, but with people possessing the right professional credentials working in this system with a passion for what they do, these do not have to be conflicting objectives.
How have Australian governments and SOCs been navigating the changes brought by privatisation and part privatisation in recent years?
There have been privatisation pushes in Australia, but perhaps not as extensively as in the UK. In Victoria there was significant privatisation after the early 90’s recession, dubbed the “sale of government assets”. But there were limits as to how far it went: the rail industry in Victoria is a good example. VicTrack is a State Owned Company with an independent Board. The organisation owns the land, track, signalling and communications infrastructure – significant assets with capital renewal challenges like track and sleeper upgrades and new signalling technology. This is a complex and important community asset, with increasing population and road congestion driving demand for public rail transport. Therefore, the federal and State governments feel this is best held in government ownership.
From this base of control, the State government has then outsourced the rail train operation to the private sector to drive best practice in passenger services and timetable. So, we have a balanced approach here where the monopoly assets are in government ownership and the daily use of those assets is contracted to the private sector. Of course if the private sector operator starts to fail in daily delivery of passenger service the government gets the blow back, meaning there is a tight interface between government and the private sector.
In Australia, as in the UK, there has been a period of political upheaval - four Prime Ministers in the past seven years, many of whom have had very different characters. What effect has that level of change had on the way central and State governments have managed their relationships with the SOCs?
In Australian politics the governments are changing all the time, at both State and Territory level, with elections every three years. Two of the changes of Prime Minister have been a result of leadership crises rather than elections, so that can cause some real upheaval in the Federal government. However, the State governments are closer to the ground and to most of the SOCs than the Federal government is – that cushions the SOCs to an extent, but with State governments also changing every three years, change is a constant here.
In a sense, leaders in the public sector in Australia just have to accept that there is going to be constant change, and have or develop the skills to work in and with the government system. The best leaders approach it positively and proactively, and aim to have a constructive influence on policy. Combative styles come to quick endings, and selection panels in the public sector look very closely at these attributes.
We’re in a period of ongoing change in both Britain and Australia – the changes are different in some ways, but there are some deeper similarities around the challenges of demographic change, the need for long-term investment, and challenges to the traditional models and workings of government. That makes it all the more important for public-sector executives to manage their careers, and to round out their experience. Some of the strongest public-sector executives in Australia are those who have spent time in the UK or New Zealand public sectors as well – very similar systems, but ones with different perspectives and ways of doing things and which really add richness and colour to people’s experience.
Finally, what developments do you expect to see over the next few years?
Many of the assets and operations deemed as necessary to stay in government ownership are coming under gradual and subtle pressure. The assets, culture, people and operations need to evolve and be invested in, but at the same time government funding is constrained and targeted by competing funding obligations. In addition to this, our communities are growing in size and complexity. These challenges are fascinating, and continuously evolving - I couldn’t think of a better sector to operate in than this one.