Australia’s public service challenge

| November 29, 2021

The announcement of the AUKUS partnership and that Australia will be acquiring nuclear-powered submarines was presented as a “fait accompli.” There was no public discussion around whether it was the appropriate strategic direction for Australia, or if operating nuclear-powered submarines is within Australia’s current capabilities.

A byproduct of no public discussion or warning is a lack of acknowledgment of whether the Commonwealth has the policy bandwidth to stand up a nuclear-powered submarine fleet as it tackles exiting challenges such as COVID-19 and climate change. Indeed, nuclear-powered submarines may represent an extra policy priority that may see the Australian Public Service (APS) pushed beyond its limits, with a likely ramping up of policy outsourcing and private consulting.

According to a report released by the Australia Institute in September 2021, the Australian government was spending more than $1.1 billion on private consulting in 2018-19. To add some context to the size of this consulting expenditure, the Department of Foreign Affairs and Trade’s (DFAT) budget for the same timeframe was $5.3 billion. The concern is not that the money spent on consultancy could be better used by the APS, but rather by 2018-19 numbers, the amount spent was equivalent to employing 12,346 public servants.

The utilisation of consultants is not a new phenomenon for governments or even something that government shouldn’t do. Consultants fill a niche that the public service often times cannot, that is providing specialist or seldom-needed knowledge. For instance, if the government is seeking to pursue a new policy field, such as nuclear-powered submarines, the public service may lack that capacity.

Consultants can also provide external reviews of documents, procedures, and public service structures. The use of private consulting is not solely the realm of Coalition governments either. In 2013, the Rudd/Gillard Labor government spent around $400 million on consultants.

The coming decade brings three significant policy challenges. In the short term is navigating out of COVID-19 restrictions and returning to a sense of normality. In the medium-term, the government will need to implement ambitious – by Australian standards – climate change policies to head off the worst of temperature rises, and Australia will need to stand up a nuclear-powered submarine fleet. These last two policy challenges cut across all aspects of the Australian government and society, representing significant changes to how Australia works.

Over the next 18-months, Australia, the UK, and the US will be developing a plan to deliver nuclear-powered submarines to Australia, but in the long term, Australia will need more than just a plan. The Commonwealth will need to invest in infrastructure and technical expertise to support the fleet. This means more investment into appropriate defence and civilian infrastructure, and supporting an industrial base that is able to cope with the construction of nuclear-powered submarines.

Most critically however, as Senator Rex Patrick has raised, in order to support the submarines Australia will need a more comprehensive domestic nuclear industry. Currently, Australia produces a third of the world’s uranium and operates a “lightwater reactor” that serves a research function while providing necessary radioisotopes for medical use. But this is not enough to support a nuclear-powered submarine fleet. What Australia needs is still unknown, but would require “legislative and infrastructure changes.”

The creation of a more robust domestic nuclear capacity would need to be done alongside addressing climate change. “The Australian Way” – the Morrison government’s climate change plan – emphasises technology and private business leading the way toward net-zero emissions, with the government investing $20 billion into the transition.

But getting to net zero is not as easy as investing in technology. As both McKinsey and the IPCC show, there is a need for “large-scale transformation of the global energy-agriculture-and-economy system,” in effect, changing the way we produce, transport, and consume. As such, a whole of government effort is needed to adapt e to a warming world. This is only further complicated with how climate change will affect diplomacy and security.

What will be required to address these challenges to the level that Australians expect is an APS that is knowledgeable, diverse, and experienced. The amount of consulting being used jeopardises this.

The Community and Public Sector Union, in their 2021 submission to the inquiry into the current capability of the APS, stated that “consultants were being used to do more strategic, complex work that APS employees should be doing.” The effect that this was having on the APS was that the public workforce was being relegated to administration and not being afforded the opportunities to develop their skills and expertise. As a result, the APS’ effectiveness to support and implement the government’s plans is being blunted as core functions are being undertaken by consultants.

The effects of consulting don’t stop at taking on core policy functions. There is some concern that agencies such as the Department of Finance, the Department of Defence, and DFAT are facing staffing shortages, in part because of consultancy firms hiring the people to fill government contracts.

This is not surprising given the doubling of consultancy spending in the past decade. Australia has become the fourth largest consultancy market in the world. Indeed, on a per-capita basis, the Commonwealth spends more on consultancy than any other country and double the amount of comparable countries, such as Canada and Sweden.

The use of consultancy is further exacerbated by the Coalition’s 2013 implementation of a staffing cap on the APS. The current “average staffing levels” has seen the APS capped to 170,428 people. This has, in part, contributed to the APS’ staffing issues and has led to a change in the nature of the relationship between the senior public servants and ministerial offices, leading to a “hollowing out” of the APS’ skills. Beyond the staffing cap, the Morrison government is working with 12,000 fewer APS positions, and the total APS “staffing levels are expected to return to 2006-7 levels by 2022-23.”

Over the next decade, Australia will be faced with significant policy challenges as it needs to address climate change. But, the announcement of Australia’s future acquisition of nuclear-powered submarines may very well represent the policy shift that pushes the APS to its limits.

Facing staffing shortages, a hollowing out of their capability, and blunting of core policy functions, the Commonwealth will rely more on private consultants to fill the gap it has created. As a result, the Commonwealth and APS may become slower to react to policy challenges with less sophistication than what past governments have traditionally had at a time that sees rapidly changing and dynamic domestic and international environments.

This article was published by the Australian Institute for International Affairs.