Once upon a time, Australian Public Service staff were absolutely prohibited by legislation – regulation 34(b) – from making any public comment on any matter relating to official business.
The regulation could be taken seriously. In the early 1960s, the director of the Commonwealth Serum Laboratories (then part of the Health Department) was bold enough to publicly criticise legislation affecting his organisation. He was charged with improper conduct and had his rank and salary reduced as a result of actions taken by what The Age newspaper called "the Pecksniffian chiefs of the Public Service Board".
Regulation 34(b) was based on an apprehension that if staff were to get caught up in partisan political debate the public would lose confidence in their ability to serve whatever government they elected. In turn, this would tempt governments to ditch merit and fill public service positions with political cronies. That's standard practice in some countries, including the United States. Indeed, in the 1980s, the Hawke government came within a hair's breadth of reserving a proportion of senior executive service positions for political appointees.
The problem with regulation 34(b) was that its absolutism was disproportionate to the politicisation risk. For example, it was one thing for the Treasury secretary to wade fearlessly into public political debate. Indeed, one (John Stone) did and his actions did much to tempt the Hawke government into compromising merit staffing in the SES. On the other hand, there would be little untoward if the local postman (up until 1975 a member of the APS proper) were to write a letter to the editor of his (and they were all men) local newspaper accusing the prime minister of being a dill. Public confidence in the postal service as ever rested on whether the letters turned up in one's postbox.
Thus, the regulation was repealed in 1974. The Public Service Board explained that the aim was "to give public servants greater freedom by minimising the restrictions on public comment, but at the same time seek to avoid the involvement of staff in public controversy where this could prejudice the identity of a politically impartial career public service". At the same time, guidelines were issued and staff who overstepped the mark could be disciplined.
And so it has remained and, while their purpose is unchanged, the guidelines have been revised from time. Indeed, the Public Service Commission is examining them to see if they're adequate amid the perils of "social media" in the modern world.
The Public Service Commissioner, John Lloyd, appears to have been properly vigilant in administering the public comment guidelines. However, he has done himself no favours by writing an article in the Murdoch press barracking to re-establish the Australian Building and Construction Commission, a matter that has nothing to do with his current responsibilities and is a political hot potato if ever there was one. Anyway, not much harm seemed to be done as there were few if any ructions as a consequence of Lloyd rushing into print. And why should there be, as the resuscitated construction watchdog is unlikely to do anything to improve productivity in the industry as it can do no more than try to treat the symptoms of its dysfunctions and not their causes.
But Lloyd's intervention in policy debate outside his current responsibilities brings to mind the general position of officials who, like him, occupy statutory positions outside the public service. Typically these statutory-office holders perform functions independent, in differing degrees, from ministers and their circumstances are different from public servants in departments, who are directly responsible to their ministers. Indeed, many statutory-office holders have legal and less formal responsibilities to engage in open debate and, at times, advocacy.
Nevertheless, the general principles underpinning the rules about public comment by departmental officials also apply to statutory-office holders. That is to say, they should avoid being seen as politically partisan so as not to cause public concern about their ability to perform their duties in an impartial way or cause political parties who are on the sharp end of their tongues to think about giving them the flick if the opportunity should arise.
With his hands on several major economic levers, Reserve Bank governor Philip Lowe works in a charged political environment. Yet the public utterances of Lowe and his stern predecessor, Glenn Stevens, are in many ways models of how statutory officials should conduct themselves in public. Their speeches are even-handed, take great care to analyse evidence thoroughly and they avoid taking partisan positions. Even then, hazards remain when hapless journalists distort the governor's remarks for the sake of a headline. For example, a Financial Review journo reported that, in a recent speech, Lowe said he was "backing corporate tax cuts". The governor did no such thing.
The small business and family enterprise ombudsman, Kate Carnell, should take a leaf from the Stevens-Lowe songbook. While the ombudsman is legally obliged to be an advocate for small business by conducting research, advising ministers, contributing to inquiries and "national strategies" and promoting best practice, she is stretching these responsibilities to breaking point via public statements chock-a-block with the crude political advocacy of second-rate politicians.
In a recent article in the Fairfax press, devoid of analysis and full of assertion, Carnell puts her shoulder behind tax cuts for small businesses, arguing they would boost confidence in the sector and create jobs and investment because "owners won't pocket the savings". But she says all this is at risk because "one of the major parties continues to argue against what would undeniably be a vital stepping stone for the future expansion of the sector". Then, for those not in the know, she adds that, yes, "the federal opposition continues to oppose the flagged tax relief for small business".
To gain a better understanding of her thinking, Carnell was asked about her estimate of the effective rate of tax in the small business sector, if she thought, as she said, that all owners "would not pocket" a tax reduction or, if not, what proportion might and what estimates she'd made about the employment effect of a tax reduction to 27.5 per cent.
Rather than answer the questions, Carnell blustered, saying the effective tax rate is hypothetical, that "when big businesses are downsizing, small and medium businesses are creating the new employment opportunities", and speculated that a quarter of the three million SMEs may each take on one new employee.
It's hard to know where to start with this kind of distorting commentary, but let's make some points:
- In the eight years to 2014, employment growth rates in medium to large businesses were three times that in small ones (23 per cent to 8 per cent) while, in the five years to 2016, small businesses created only 5 per cent of the growth in private sector employment.
- If a tax reduction to 27.5 per cent were to result in a 750,000 increase in employment in SMEs, as Carnell hints, that would reduce unemployment to zero and be more than half as much as the total employment growth to 2020 predicted by the Employment Department, and three times more than the growth the department predicts in the fast-growing healthcare and social assistance area.
- The effective tax rate is not hypothetical for small businesses: it's what they experience and one could be excused for thinking that Carnell has not bothered to find out what it might be.
- It's London to a brick on that some small businesses would "pocket" a tax cut, and who could blame them if they're struggling to stay alive given the special difficulties under which they operate, like – as recently summarised in a Reserve Bank paper – greater susceptibility to demand fluctuations, lesser economies of scale, higher fixed costs and often greater difficulty in attracting capital.
- For those who believe in the so-called "trickle-down" economics of corporate tax cuts, to the extent that these would lead to greater increases in capital in larger enterprises, there may be a sounder employment case for tax reductions for bigger enterprises than smaller ones.
There may be a case for a tax cut for small business. However, the kind of partisan political tactics to which Carnell has resorted is counterproductive. She's failed to make any rational case for them. Her methods do not foster an open-minded consideration of tax options on their merits. They encourage responses in kind, making it less likely she will be able to advance the interests of her small business constituency. Moreover, it is inappropriate, for the reasons already canvassed, for Commonwealth statutory officials to deliberately take provocative, partisan positions in public debates.
The apparent increasing preference of politicians of all hues to advocate policies on the basis of cheapskate politics rather than the logical analysis of facts and evidence, as best they can be defined, is seriously restricting the federal government's capacity to improve its management of the economy. The masses are sick of it. The contributions of the Reserve Bank governor and the likes of Productivity Commission chairman Peter Harris may help; those of the small business and family enterprise ombudsman on tax cuts and other matters are unlikely to.
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But to conclude on a lighter note.
On March 1, the Institute of Public Administration Australia and the Public Service Commission put on a $130-a-head do in the Glandel Hall at the National Gallery to mark the approximate second anniversary of the McPhee report on public service personnel management.
A wake might have been better, because this report was almost certainly the worst of its kind in Australia. Any doubt about that could be dispelled by a reading of the 1958 Boyer report, relevant sections of the 1975 Coombs royal commission report, or the public accounts committee's report in the early 1980s on senior management.
Among other things, the McPhee report encouraged a dilution of merit, proposed measures that confused responsibility for staffing, and entirely ignored the dog's breakfast of remuneration policy and practice.
The institute and the commision now say that "a key recommendation" of McPhee's report was "the development of a new employment brand for the APS". That's a revealing comment about how inconsequential some of the report's lesser recommendations were.
Anyway, on the strength of the "key recommendation", the institute and the commission organised what it called a BRANDit competition, saying a new brand would lead to better engagement and reduced turnover. Entries were sought and more than 700 were received. They were judged by a committee composed of Department of the Prime Minister and Cabinet secretary Martin Parkinson, Lloyd and two people from outside the public service.
At the knees-up at the Glandel Hall, presentations were made on "the exciting and innovative work" that been done on McPhee's recommendations and the BRANDit winner was announced.
New APS recruiting slogan: 'Shape Australia. Create your Future.' | #apsbrandit The Mandarin https://t.co/m4O5SSANgh
— IPAA ACT (@IPAAACT) March 2, 2017
And the winner is, according to an excellent Tweet from Lloyd, "Shape Australia – Create Your Future". While shaping Australia is a neutral notion – shaping can be good or bad – it's to be hoped this brand will keep staff turnover in check. The only discordant note is that, at present, a government at odds with itself is largely leaving the shaping of the country in the hands of others.
Paddy Gourley is a former senior public servant. pdg@home.netspeed.com.au
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