Principal-agent thinking has been the foundation for many of the public service designs that have been introduced over the past two or three decades. This includes contracting structures and budgetary and performance protocols. Is this approach compatible with continuous improvement and contextualised or decentralised action? If the answer is negative, how is central accountability to be preserved and re-cast?  This workshop will explore these matters in the context of an alternative ‘learning-by-doing’ architecture. It will explore the conjecture that this latter approach best responds to contemporary imperatives. Alone among the alternatives, it promises to square the circle between contextualised programmes, continuous improvement and central accountability.

Governments around the world are grappling with new pressures and new constraints. More discerning publics, an aging population, a new array of behavioural issues (like obesity, drugs, and alcohol), burgeoning health costs and fiscal pressures are some of the elements. In response, an array of themes have come to the fore including innovation and continuous improvement, place based services, co-production and greater capacity to join-up programmes and agencies.

These themes may be fundamental – but how they can be reconciled in a comprehensive design remains problematic.  For example, the government is currently seeking to introduce a place-based approach in Indigenous affairs. It has bundled a number of siloed programmes into a single $5 billion commissioning fund. Two other approaches are also now widely favoured – a more comprehensive use of markets and/or extended pressure on professionals from wider dissemination of system performance (e.g. like the My School web site).

Some experienced public managers have however pointed to deeper, more systemic challenges. For example, Peter Shergold, the former head of the Prime I Ministers department (and architect of the Job Network and of the original joined-up Indigenous trials) has commented:

‘Too much innovation remains at the margin of public administration. Opportunities are only half-seized; new modes of service delivery begin and end their working lives as ‘demonstration projects’ or ‘pilots’; and creative solutions become progressively undermined by risk aversion and a plethora of bureaucratic guidelines……… the transformative potential of outsourcing has been undermined by the unnecessary intrusion of public service micro-management of third party administration. ……Often (public servants) are motivated by the impulse to avoid political risk on behalf of the ministers they serve. The well-known principal-agent problem has been given a distinctively governmental emphasis. In order to reduce agency risk, a burden of red-tape standardization is imposed upon delivery agencies. That stifles the creativity that might come from diversity……. …..

‘A different type of public service (is required), not just an improved version of what already exists…….. I believe that Australia needs to rebuild and rearticulate the structures of democratic governance, recognizing that it requires greater collaboration between the public sector (on the one hand) and the private and community sectors (on the other). New forms of partnership are required to provide public benefit in unexpected ways and, in the process, to revitalize participatory engagement of citizens in the life of the nation. To achieve these goals the operation of public services (collectively) and the role of public servants (individually) will have to be transformed (2013).’

Such comments are echoed in a variety of official and think tank reports both here and in Britain and New Zealand (countries whose political and administrative cultures are closest to our own).

For example in evidence to a parliamentary committee in the UK, Geoff Mulgan (director of NESTIA) commented:

‘If you treat departments as the only building blocks of government, (joined-up activities are) bound to be underperformed. If instead you disaggregate department and reshape teams, budgets and laws around the task rather than about departmental interests, then you come up with very different answers (2012).’

Similarly, Jill Rutter (Deputy Director of the Institute for Government), in evidence to the same committee, observed:

‘The whole system has to change. If you have got used to having direct levers and targets, you are not in that world any more (2012).’

The primary form taken by innovation in public services is also a pertinent consideration. Innovation in service sectors is different from the analogous processes in industrial activity, where patenting or start-ups provide proxy measures. In service setting, by contrast, many innovations take the form of incremental improvements or involve adaptation of technologies to particular local conditions. Small incremental improvements may not be identified or disseminated. Without deliberate effort, transaction costs create a barrier.

So (as the above quotations also suggest), a fundamental issue concerns systemic frameworks. Can continuous improvement and place based governance be accomplished within existing meta frameworks through piecemeal measures – or is the challenge more fundamental? And if the latter, what form might a new synthesising approach take?

In present approaches, principal-agent thinking has provided the dominant conceptual framework. It has underpinned much of the organisational and system design and budgetary and performance protocols that have been developed over the past two or three decades. This approach is fundamentally centralising and hierarchical. But is it compatible with innovation and contextualised or decentralised action – it may maximise economies of scale, but is it compatible with a concern for economies of scope? If the answer is negative, how is central accountability to be preserved and re-cast?  What are the wider implications?

To create a framework for this discussion, this workshop focuses particularly on a pragmatist or learning-by-doing architecture. This approach has been particularly associated with the work of the noted American scholar, Charles Sabel. The workshop will explore the conjecture that this design best responds to contemporary imperatives. Alone amongst the alternatives, it promises to square the circle between contextualised programmes, continuous improvement and central accountability.

Individual papers will explore this in the context of present efforts to improve outcomes. They survey programmes and approaches in a variety of areas – education, the job market, indigenous affairs, Medicare locals, homeless housing, food regulation, federal-state relations etc. In cataloguing the service and performance aspirations that have been envisaged in each domain, they will illustrate the ubiquity of the above themes. Each paper will then trace the experiments that are taking place – for example, services that are intended to respond to local contexts and/or accountability systems that are intended to foster innovation and learning. But they also document lingering shortfalls. Outcomes that synthesise decentralised services, co-production, accountability and local participation in a coherent design remain elusive. And finally, each paper will evaluate the feasibility of the pragmatist approach as a logical step in the evolution of programme designs and as a framework that can reconcile these otherwise disparate goals.

Starting from 1983, Australia’s public management system has been progressively transfigured by a variety of measures designed to enhance performance and value for money. These goals were pursued partly by increased authority and control for the central state and partly through an array of measures designed to introduce market-type pressures to the public sector (commercialisation and privatisation, contracting out, competition policy etc). This framework continued to unfold broadly until the late 1990s/early 2000s. Thereafter the public sector has absorbed an array of new pressures and aspirations – for example, the management of ‘wicked’ problems, a turn from siloed activity towards whole systems, and the beginnings of a new competitiveness strategy (oriented to innovation, education and social policy). This has developed in step with a concern for costs and a rhetoric around continuous improvement, decentralised governance, citizen engagement and co-production.

This workshop asks if the meta system into which these imperatives have been introduced is capable of accommodating them. If the answer is negative, is the pragmatist alternative a more effective approach?

For more information, please contact:
Mrs Nurdan Kulluk-Rennert
Manager, Executive and Workshops
Nurdan.Kulluk-Rennert [at]
+61 .2 62491788