Testing the health of public service

WHEN the state government’s Economic Audit Committee released its final report in December, it set a lofty goal for public sector reform.

The opening sentence stated: “Government will be supported by frank, fearless and well-informed strategic advice based on sound evidence and analysis of community needs and impacts.”

The report added later: “The public sector will be recognised as diverse, dynamic, talented and accountable.”

It went on to talk about giving managers appropriate skills and freedom, ensuring they have access to the systems and processes required to do their jobs, and providing clear accountability.

Premier Colin Barnett released the final report on December 14.

Four days later, the state’s highest paid public servant, health department director general Peter Flett, resigned.

His exit, and the challenges facing the health department and many other agencies, illustrated the wide gulf between contemporary practice and the Economic Audit Committee’s lofty vision.

Dr Flett, no doubt, thought he was providing frank and fearless advice when he disclosed the health department’s budget problems.

Like every other department head, he was told to cut spending by 3 per cent: the so-called ‘efficiency dividend’ demanded by the state government.

There was no meaningful leadership from the government on where the savings should be made, nor were spending programs axed to help achieve the goal.

The result has been a painful and, for the government, often politically embarrassing, series of small cuts across agencies.

Health has the largest budget of all government agencies and is one of the most challenging, because of factors such as the ageing population, constantly rising community expectations, and the powerful and often conservative influence of doctors.

This is not unique to Western Australia; across Australia, indeed in most Western countries, the same issues arise.

Dr Flett candidly revealed the budget pressures facing his department when appearing before parliamentary committees last year.

Not only did health fail to achieve its targeted cuts, it needed special finding allocations to pay the bills.

Auditor-General Colin Murphy and under-treasurer Tim Marney both criticised its performance.

The final straw was Treasurer Troy Buswell’s comment that it was “not acceptable” for Dr Flett to publicly speculate on the extent to which his department may or may not exceed its budget.

So much for “frank and fearless” advice.

While all of this has been happening, the government has failed to deal with some very large budget black holes of its own making.

In the 2008 election, the Liberal Party committed to replace Princess Margaret Hospital with a new facility on the QEII medical centre site and to retain Royal Perth Hospital as a 400-bed tertiary hospital and trauma facility.

Treasury’s recent mid-year budget update disclosed that the cost of these projects has not been built into the state budget.

Nor has the government considered the operational costs associated with the health system’s significant infrastructure development, which includes construction of the Fiona Stanley Hospital.

The budget papers also noted that a “significant backlog in replacing medical equipment has accumulated across the heath system over several years”. The cost of tackling this backlog is also in the pending basket.

The current state of health reform falls a long way short of the comprehensive plan mapped out by the Reid report, completed in 2004.

Let’s hope the public sector reform plan proposed by the Economic Audit Committee does not meet the same fate.

One of the authors of that report was Mr Marney, who has used his profile and rank to champion the public service; his example also showed that talented, young individuals can rise rapidly through the ranks.

But even Mr Marney has been warned to be careful about his public comments; at least that is how observers have interpreted slightly cryptic comments made last year by the premier, after Mr Marney revealed gaps in health funding.

The state needs to attract talented, skilled workers into the public service, if taxpayers are to get value for money.

Having role models within the public service, recognising their achievements and ensuring they have ministerial support would all help to achieve that goal.