17/02/2004 - 21:00

Joe Poprzeczny - State Scene: Taking a collective approach

17/02/2004 - 21:00


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BUREAUCRATIC fashions, like those in clothing, constantly change. And the changes invariably sweep across the globe.

BUREAUCRATIC fashions, like those in clothing, constantly change. And the changes invariably sweep across the globe.

The latest to reach Western Australia is called ‘Shared Services’ (SS) and its promoters say it will save taxpayers $55 million annually after 2007.

So what is it and is it another case of the emperor’s new clothes?

Management theorists noted long ago that public and private bureaucratic units have common operational requirements – financial accounts, payrolls, staffing, procurement, mailing and printing.

Since government bureaucracies bill customers, pay employees, procure, print, mail-out and communicate, departments can do this collectively across government, rather than individually.

Potential advantages of a collective approach are the elimination of duplication, with significant economies – of commonality and scale – being reaped, meaning, hopefully, substantial savings.

A recent report on WA found 49 public agencies used 21 different finance systems, 12 human resources systems, and no fewer than 19 information management systems.

‘Systems’ here means computer hardware and software, none of which is cheap.

And, as even computer illiterates know, the more systems one has the less likely they’ll all be compatible.

In other words it’s like Australia’s early railway era, differing gauges because colonial governments went their own way.

It’s the vision of savings through standardisation, the search for economies, especially in the costly hi-tech area, that has prompted the Gallop Government to opt for what’s known worldwide as SS.

In June 2002 Dr Gallop convened a taskforce to review ‘Effective Delivery of Government Priorities’ which followed the Machinery of Government Review.

By December 2002 the taskforce had made 89 recommendations, one being the introduction of SS.

The premier then assembled a strategic management council, made up of departmental directors general.

Sub-committees were created to standardise governmental servicing provisions.

To advise them, a functional review implementation team (FRIT) was formed.

It was also decided across-the-board standardisation would be implemented via five so-called clusters, meaning groupings, of departments/agencies.

One cluster incorporates education and training, another health. The other three are still being finalised.

What this means is that the Government is reducing reliance by individual departments on out-sourcing requirements to private contractors.


Instead, there’ll be five over-arching monopoly agencies – clusters – doing the job.

In other words departments/agencies will outsource to five large public sector middlemen.

During the Court conservative years, bureaucracy was trimmed through greater out-sourcing to contractors.

Unfortunately, not all those arrangements meant savings and greater efficiencies, something that’s given Labor reason – over and above its ideological preference for the public sector – to do something about them.

It’s worth noting other left-of-centre governments have taken this route, including South Australia’s, Victoria’s, Queensland’s, and several Canadian provincial administrations.

Governmental SS, therefore, means departments continue out-sourcing but only ‘in-house’, only to five government monopoly clusters, meaning the discipline of the competitive marketplace is absent.

That’s the background.

A first step in implementing SS is to relocate all public servants in departments/agencies doing work that will now be done by the clusters to those clusters. That’s a big, costly and disruptive exercise.

According to a FRIT document, nearly 5,500 public servants will be affected, the public service’s biggest ever such upheaval.

Precisely what happens to them is difficult to say, since another FRIT documents says each cluster will have “staffing levels of between 300 and 400”, so between 1,500 and 2,000 people all up.

The remaining 4,000 or so will presumably be relocated to other duties, meaning public service hiring will fall-off during the SS’s implementation phase between 2004 and 2007.

Let’s hope WA’s private sector can absorb a further 4,000 new workforce entrants, otherwise youth labour market prospects will tighten until 2008.

And it’s not necessarily wise assuming the move to clustered servicing of departments will go without hitches.

Moves to interface all computer systems between departments/agencies and clusters will be a complex exercise.

Let’s also hope cost blow-outs – like those with the police and education departments’ ill-fated systems, SAP and PeopleSoft, respectively, plus Oracle Financial at various agencies – aren’t repeated.

Glitches of that costly magnitude would no longer only impact on one department, but across clusters, up to 40 departments/agencies simultaneously.

Does FRIT have performance bench-marks against which it’ll measure success or failure of the clusters in coming years?

State Scene learned of a July 2003 customer survey for longer term monitoring, undertaken across a statistically valid sample of agencies that sought two types of information.

It is apparently intended to conduct future surveys to help ascertain the extent to which the reforms achieve FRIT’s objectives.

In other words, success or failure will be measured on a very subjective basis rather than FRIT dollar costs compared with previous dollar costs etc.

Treasury claims clusters will save $84 million between 2004 and 2007, with implementation costing $70 million. Much of this would go on foreign-made and not always glitch-free software packages, so a net saving of just $14 million.

Beginning in 2008, $55 million annual savings are claimed.

Even if the plan is realised we’re looking a long way into the future before these hoped-for savings begin.

Such surprisingly modest projected savings – which may or may not eventuate – and the disruption to the public sector until 2008 means one’s compelled to say the jury is still out on the wisdom or otherwise of Dr Gallop’s attraction to SS clusters.

But when the jury is in, those with longer-than-average memories will know if the SS fashion should be dubbed ‘Geoff’s folly’ or ‘Geoff’s mini-bonanza’.

Probably by then he’ll be ensconced in Canberra in a Latham-led Government, just like predecessor Dr Carmen Lawrence joined that of Paul Keating.



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