Afternoon everyone. I’m very pleased to be here with you today, so thank you, Gordon, for the opportunity.

I would like to start by acknowledging the Ngunnawal people, Traditional Custodians of the land on which we gather today, and pay my respects to their Elders past and present. I extend that respect to all Aboriginal and Torres Strait Islander peoples here today.

The year in review

I’m a great believer in celebrating success, acknowledging failure and recognising where we can do better.  
So to me it is important that we come together to reflect on the year that has been—especially in a climate of such rapid change here in Australia and, perhaps even more importantly, overseas.

I want to start by taking this opportunity to thank you all for your contributions over the past 12 months.

When you think about the year that has gone, we can divide it into pre- and post-election. And of course, that bit in the middle.

Prior to 2 July, we were very busy implementing policies of the Government and preparing a Budget which bore the stamp of our new Prime Minister —our 5th PM in 6 years.

As for every election, we headed to the polls uncertain about the outcome and how it would affect our work.

The elongated Caretaker period bought with it a new set of challenges, but in my view, the APS supported the workings of government professionally.

For some, post-election was business as usual; for others — like many elections before and in the future — there was an adjustment to a new Minister or to Machinery of Government changes.

Subsequent to the election, we’ve had to navigate the dynamics of the new cross bench, though many in the Service already had experience of this from the Gillard minority Government days.

Now, like all second term Governments, the focus of the administration is different to that of the first term.

For this Government’s second term, the focus of the domestic agenda is clear—boosting investment, jobs and growth.

Since its re-election, the Government has progressed reforms in areas such as vocational education and training; superannuation; industrial relations; and ending the perfectly preventable mess that has been VET-Fee HELP. It has initiated the Finkel review of the security of the National Energy Market, and continued to deliver real momentum in the campaign against Domestic Violence.

The Government’s second term is also characterised by a sharp focus on implementation of existing commitments.

This covers the massive—potentially game-changing—investments being made in the National Disability Insurance Scheme; the National Broadband Network; the National Innovation and Science Agenda; and in Cities and Infrastructure. And I haven’t even mentioned Naval Shipbuilding, where the intention is not just to build Naval ships, but to build a Naval shipbuilding industry capable of holding its own against global metrics.

These are huge projects with enormous policy impacts for Australia, and the challenge of delivery cannot be underestimated.

The shipbuilding work, for example, will see Government investment of at least $89 billion over the coming decades—think of the cost to Australia in foregone opportunities if we get that wrong!

And all this occurs against the backdrop of the increasing urgency to restore our fiscal situation.

On current plans we return to surplus in 2020-21, over a decade after we slipped into deficit and eight years later than the first projected surplus in 2012-13.

Now it’s easy to blame this solely on the Senate, but Australian Governments have rarely controlled the Senate — indeed, other than 2004-2007, one has to go back to 1980-83 to find a period where this was the case.

To me, the issue is not control of the Senate. It is the fragmented vision of Australia’s future that causes the biggest difficulty today — and it is that fragmentation which is behind the composition of Parliament.

Efforts to return to fiscal health are hampered by the unwillingness of the community to acknowledge the risks Australia is taking.

But if the community will not acknowledge it today, watch how they attribute blame if the rating agencies remove our AAA rating!

Globally, economic growth remains sluggish.

In many developed economies, inequality has risen and the public feels as though the social compact is broken, leading to a backlash against free trade, globalisation, and immigration.

Despite the superficial attraction of such attitudes, if we want a resilient economy, we need a serious commitment to improving productivity growth and a fundamental openness to trade and investment that brings with it new jobs and competitive firms.

The Prime Minister has been forthright in his belief that the generation of ideas is the key to Australia’s economic success—that we must make innovation and disruption our friend if we are to keep pace with the world.

Disruption and innovation in the APS

We’ve heard that phrase many times—disruption and innovation.

I’ve talked about it in speeches — including what it means for our economy and for our organisation—I’ve espoused it on panels and I’ve robustly suggested that APS staff embrace it.

But I realised recently that I’ve never really spoken in detail about what that means for the APS.

And perhaps that’s why I shouldn’t be so surprised by my conclusions as I look back over this year.

In my first year as head of the public service, I’ve been very impressed with a lot of things that I have seen.

But one thing that has surprised me is the complacency, yes, complacency, which many in the public service have regarding the disruptive forces operating around us.

Disruptive forces—like the fundamental shift in public expectations of government, consumer-directed demand for government services and the ever-changing capacity of technology to support and improve service delivery—are certainly not unique to the public sector.  Indeed they impact on our work just as much as they impact on the private sector. 

But despite this, it seems to be that in the APS we think that disruption is something happening to other people. And, conversely, we seem to regard innovation as a buzzword or something that’s ‘nice to have’.

I want to be clear—this is a false reality. And a dangerous one at that. And it feeds into my concern that the APS is at risk of the fatal combination of arrogance and ignorance.

So what do I mean when I talk about innovation in the APS?

What does it look like on a day to day basis—for the APS graduate doing a rotation; for the EL2 in HR; or for the Secretary of a Department for that matter?

First, we have to be an organisation that stops squirming at the word ‘failure’.

I know we have had it ingrained in us for so long that failure is inexcusable that we have either ‘Risk Managed’ the life out of decisions or we have simply refused to admit they were in fact failures.

But look at reality—we are an organisation with some incredibly high profile failures. I’ve already mentioned VET Fee HELP, but let’s not forget the Home Insulation Program, eHeath, or, this year, the Census and the failure to effectively de-identify health records.

Despite this, there is such a thing as an acceptable level of failure.

Now, I’m not suggesting everyone goes rogue and adopts the ‘I’d rather seek forgiveness than ask permission’ mantra which, frankly, can just be an excuse for poor preparation or a disregard for process.

We must still do our due diligence. We must still base decisions on a solid evidence base. And we must still operate within some kind of structure.

But, if we are going to truly create a safe space for people to think and innovate, we need to create better frameworks to test ideas.

Better still, to emulate GE, we should be prepared to fail fast and then decide to persevere or pivot, based on data analytics and clear-eyed judgement.

We must learn to recognise early whether what we are seeing is an unacceptable level of failure or whether, with some adjustment, a project can be saved and is worth fighting for.

Our relatively weak capacity to evaluate potential success or impending failure is a capability gap in itself.

Analysis and the ability to assess risk and develop risk mitigation and minimisation strategies must be core skills if we are to successfully venture into the brave new world.

Yes, innovation can take courage.

But increasingly, it has to be the response to clear expectations.
We certainly have a Prime Minister who is an early adopter of technology and puts a lot of stead in its ability to transform the way we work.

In its own way, the PM&C Incoming Government Brief team rose to that challenge.

The IGB team took an idea developed in the Department of Communications and the Arts and worked with our own IT and Security colleagues to develop a new, user friendly, way of delivering the IGB electronically—which I’m sure is music to the ears of anyone who has ever been involved in an IGB process.

This was more than just an app. It was a whole new way of thinking about how to engage the Prime Minister, and it’s been a resounding success.

It allowed the PM to ask questions, receive answers and make decisions on the brief in real time—and he is keen for this approach to be rolled out more broadly.

There are many other ways this approach can be used, and we’re now using it for QTBs and international briefing packs which are often updated in real time.

I suggest you think about how it might be used to serve your Department, your Minister, or your team. More importantly, in the same way we built on the Department of Communications initial efforts, think about how you can build on PM&C’s.

But, remember, innovation is not confined to technological changes.

Indeed, the APS and Government have to think differently when it comes to policy development and implementation.

This year, the Minister for Social Services announced a trial of the Australian Investment Approach to Welfare.

Now, the provision of income support is by no means a new policy. But, through the Investment Approach, we are trying a different, data-driven approach in order to achieve a better outcome.  

Rather than providing a series of short-term fixes, the Investment Approach draws on actuarial analysis applied to 15 years’ worth of social security, ABS and longitudinal survey data to better identify which groups in our community most likely to be long-term recipients of welfare payments.

This evidence-base—which we had not previously had access to—allows funding to be better directed to specific groups at specific times within the lifecycle to deliver improved results. 

One of the groups most vulnerable to long-term dependence on welfare is the 11,000 young Carer Payment recipients under 25.

The data available to us suggests that over the next 70 years a minimum of 40 per cent of these 11,000 Australians under 25 can be expected to access income support payments.

Indeed, on average, the 11,000 young carers are expected to be on income support at some point each year in 43 separate years over their future lifetime.

Sixteen per cent of this group, about 1,800 young people, will access income support each year for the remainder of their lives.¹

And so a fresh approach—combined with the availability of the right data and the right analytical capacity—has the potential to vastly improve the effectiveness of our social services through a data-driven, targeted approach to payments.

So, while the Government gets a better outcome from their spend, the biggest win is that vulnerable people are likely to have greater control over their lives and more connection with, and contribution to, their community.

Further, the staged implementation of the Australian Investment Approach is a fantastic example of small-scale policy testing. That is, creating the framework in which to test the merits of a policy idea — while accepting that it might not work.

The $96 million ‘Try, Test and Learn’ fund which will seek innovative ideas from experts within and outside government—including the social sector—on interventions to achieve the Investment Approach goals and rigorously evaluate them before broader implementation. 

I should also mention that the idea behind the Australian Investment Approach—in much the same way as Crowded House and Pavlova—was borrowed from our Kiwi cousins. And, like a successful Aussie Pav, we gave it our own twist to better fit our circumstances.

These examples—digital QTBs and the Australian Investment Approach—are a reminder that innovation is not invention.  

Only very occasionally, the ideas behind innovation are truly original. Most of the time, innovation is the result of the adoption or adaption of an existing idea.

The tools we need to make our working lives easier or more productive and responsive already exist; we just have to take that step back and ask ourselves ‘what if?’.

‘What if’ I ask my team mates, or indeed, the rest of my Department—or more scarily still, the community—for their ideas?

‘What if’ we make all roles flex?

‘What if’ we stop flogging a dead cat and look differently at that persistently difficult policy question?

There are many ways we can recognise disruptive forces and actively choose to innovate, rather than playing catch up with what citizens and businesses need.

There is only one certainty in the current environment and that is simple—if we don’t get on board, the APS will be left behind.

Leadership and disruption

Now, without a doubt, doing things differently comes with a level of emotional discomfort, and resistance—including, at times, from Ministers.

And, if ‘failing fast’ is to be part of our ethos, both Ministers and the ANAO need to be realistic about what that entails.

The ability to recognise and be comfortable with ambiguity is a key skill of high-performing leaders in the APS.

Leadership is not about what you know, but how you act. It is about values and behaviours, the environments we create, the way we respond to failure, the messages we send.

In times of uncertainty and change, quality leadership is more important than ever. We need to be able to lead through those times when we are not sure what the outcome will be and yet still keep our team calm and focused.

Recently my colleague Finn Pratt has led the Secretaries Talent Council in isolating five key attributes for our most senior APS roles.

The attributes or capabilities are: to be visionary, to be influential, to be collaborative, to be enabling and finally, to be entrepreneurial.

I spoke earlier of the importance of undertaking due diligence to back up new thinking. Building the evidence-base for new ideas is a sure‑fire way to mitigate some of the emotional discomfort associated with approaching problems a new way.

How successfully we do this is critical to developing a successful ideas eco-system across the public service. This is a concept which I am passionate about and which basically translates to the ability of the public service to generate and prosecute new initiatives.

I spoke earlier about some of the settings we need to do this — a re-balancing of our risk appetite; an inclusive and respectful environment in which to test ideas; and the commitment to back our proposals with an evidence base.

But a successful ideas eco-system will also requires investment in yourself.

Read widely about current affairs and policy.

Look beyond the scope of your policy area.

Develop and invest in communities of practice to share and learn about new ideas.

Our Prime Minister, for example, is particularly interested in initiatives being implemented, successfully and unsuccessfully, overseas.

In short, be bold, be curious and be engaged with your work. And have the courage to act to realise outcomes where you think they can be improved.

Our people

Another question we need to ask is: are we bringing in the right people to achieve these objectives?

There are a couple of areas which we need to focus on here.

One is diversity.

We must stop picking people like ourselves.  

The Race Discrimination Commissioner, Dr Tim Soutphommasane, recently released a publication called Leading for Change: A blueprint for cultural diversity and inclusive leadership which you may have come across.

It showed that, of the 124 heads of federal and state departments, only two come from non-European heritage— and that’s halved since Peter Varghese retired—and only one has an Indigenous background.

The vast majority—82 percent—have an Anglo-Celtic background.

We are less diverse than the ASX 200 CEOs or the Federal Parliament.

That’s why the Secretaries Board has established the Equality and Diversity Council to drive initiatives to break down formal and informal barriers preventing all APS staff—no matter what their background or circumstances—reaching their potential.

As an aside, hands up if you were aware of the Council.

This is also about gender diversity and a key focus of the Council is delivering the Government’s APS Gender Equality Strategy through a mandatory set of requirements for all Departments and agencies.

Again, hands up if you were aware of the Strategy?

Conclusion

I’d like to end today by reflecting on some remarks made by the Prime Minister early this year in his IPAA address.

In his address, he spoke about the ‘clay layer’ which can stunt progress in organisations.

It’s usually those who are not digital natives and refuse to embrace technology out of fear or stubbornness and who, being in powerful positions, can impact on its uptake throughout the organisation.

But, as I’ve made clear, it’s not just our ability to engage with technology—but our capacity to come up with new policy ideas, and our ability to be influential in prosecuting these ideas.

That clay layer can also obstruct innovative thinking and recognition of the opportunity inherent in disruption.

But it must not because, as they say in the classics (aka, the Borgs in Star Trek), “resistance is futile”. Not only futile, but foolish.

Innovation starts with each and every one of us. No matter what level we are or what department or agency we work in, we can all ask ourselves how we can work differently.

As public servants we deal in the creation, implementation and assessment of ideas, we need to be a natural home for innovation and blue-sky thinking.

There is nothing new in what I am saying—you can see the same themes I am raising reflected in speeches given by other Secretaries — Michael Pezzullo, Martin Bowles, Jane Halton, Heather Smith, Dennis Richardson and Finn Pratt, just to name a few—here at IPAA over the last year. The fact there is such consistency in themes should constitute an unmistakable message to you all.

So here is my challenge to you for 2017:

• Be bold and creative in your thinking—but do the work to back it up;
• Take a wider view of the world around you—look at what policy or programmes are working well in the states or overseas; and
• Create a working environment where colleagues feel valued and safe bringing different ideas to the table, and which promotes collaboration.

Scott D. Anthony, author and managing partner of consulting firm Innosight, sums up what innovation in the workplace is. It is ‘The courage to choose, the clarity to focus, the curiosity to explore and the conviction to persevere’.²

It is the Prime Minister’s expectation—it is my expectation—that the APS will lead on innovation. I have every confidence that, given the opportunity, we will.

I thank you for all your work this year. I hope that however you choose to celebrate the upcoming Christmas season, it is restful, joyous and safe.

END

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