- Will the Rees Government have the guts for real reform ?

Address by Peter Debnam - Friday Lunch Forum at Parliament House 24 Oct 08

Ladies & Gentlemen, thank you for joining us again to discuss whether the NSW Labor Government could get any worse.

Well, yes it can.

Remember at our August Lunch Forum we predicted the demise of Morris Iemma and his Electricity Privatisation.

We discussed the likely tactics of the new Premier, whether Watkins or Rees, and we gave him advice on his first steps after taking over as Premier.

I’m pleased to see he took some of that advice: ditching Electricity Privatisation and Michael Costa, refreshing the Ministry and cutting back on the spin-doctors.

As Labor would say, he’s headed in the right direction, but there’s more to do. Much more!

This month let’s talk about Labor's Mini-Budget which will be delivered on Tuesday 11th November - Yes, Remembrance Day.

As well as remembering our war dead that morning, later in the day we'll respond to Labor's Mini-Budget and remember thirteen years of tax increases, thirteen years of rorts and featherbedding and thirteen years of financial mismanagement.

It was a surprising date to choose for the Mini-Budget but maybe it's also an indicator of the inept advice the State Government has been receiving from inexperienced Labor Party hacks masquerading as advisers.

Hacks advising hacks

As Kim Beazley Senior may have noted, we now see NSW Labor Party hacks advising other hacks who happen to be Ministers.

In fact in Question Time the other day, my colleague the Member for South Coast, Shelley Hancock, and I looked across at the "C" Team of Labor Ministers and remembered the good old days when Bob Carr dominated the Chamber and was reasonably competently supported by experienced ministers. We knew they weren’t generally working in the interest of the community but they gave that impression to the public.

How things have changed.

The Carr A Team has gone, the Iemma B Team electrocuted themselves and the Rees C Team is drowning.

The current Premier and his ministers now stumble from crisis to crisis each week.

Whereas previously Morris Iemma clung desperately to denial and that “deer in the headlights” paralysis, Nathan Rees and his Ministers now openly admit their Government is dysfunctional.

Premier Rees is clearly struggling with his own inexperience and the sheer exhaustion of his Government. Rees’ bravado is proving no substitute for his lack of parliamentary and frontbench experience and a lack of direction for his Government.

The fact is NSW’s Labor Government is punch-drunk and waiting for someone to throw in the towel. The trouble is the only people who can “throw in the towel” are Labor MPs who could cross the floor to vote No Confidence in the Government – but that simply isn’t going to happen in NSW.

I should say it actually did happen in Tasmania in 1982 when environmental politics caused two Labor MPs to resign from the Party, sit as Independents and vote against the Labor Government in a Motion of No-Confidence. Today I don’t see any NSW Labor MPs with the backbone and sense of community interest to follow their Tasmanian colleagues.

So for another two and a half years, we are left trying to convince or embarrass the NSW Labor Government into adopting good policy.

Our job in Opposition is not only to be the devil’s advocate holding the Government to account, but also to propose alternative ways of delivering better services and infrastructure. And if as often happens, the Government picks up our policies - then good, we are already governing from Opposition.

For Labor for the next two and half years, the appearance of competence is probably the best they may manage and to appear competent they may resort to advertising again to climb out of the deep hole they’ve dug.

Just as Morris Iemma began his Premiership with paid advertising to lift his public acceptance, expect to see Labor start radio and television ads after the Mini-Budget to lift the Premier and give a semblance of direction for his Government.

But the new round of advertising is likely to have limited effect as the Government is widely acknowledged to be rotten to the core.

Even within Labor, the only smiles these days are on the faces of Labor’s Godfathers - Joe Tripodi and Eddie Obeid. They know they still wield the real power inside the Labor Government.

The actual business of Government and Parliament remains a sideshow to these two and the real game to them is simply the power of incumbency and doling out the favours to the MPs who submit to their will.

Labor’s "power at all costs" raison d’etre is probably also the best indicator of the likely contents of the Mini-Budget.

A Mini-Budget as Circuit Breaker

The Labor Party see their Mini-Budget as the political circuit breaker from current woes – an opportunity to give a sense of direction to Rees and his Labor Government.

There will be winners and losers and these will depend on whether Labor opts either for real reform or simply newsworthy window dressing.

The questions for today are:

What would be real reform?

Who would be the winners and losers?

Does the State Labor Government have the guts for real reform?

Before we discuss these questions, let’s briefly ask what exactly do state governments do and what should they do?

The Nature of State Government

While Local Government is traditionally seen as Roads, Rates and Rubbish and Federal Government should be about Sustainable Economic Growth and National Security, State Governments provide the means and machinery to deliver public services and upgrade infrastructure.

As such, State Government is largely a management role and in NSW it involves managing some of the largest organisations and businesses in Australia and delivering the largest infrastructure projects.

Naturally in delivering services and infrastructure in a democracy, there will be no shortage of people to highlight failings and criticise performance. Voters and the Opposition will usually enthusiastically hold the Government to account at every opportunity.

But the more difficult challenge is identifying fundamental improvements to the way Government does its job. That challenge falls to Oppositions and academia and it’s clearly an urgent challenge in NSW.

Unless we change the nature of the NSW Government, this state will continue to suffer at best mediocre public administration or more often extraordinarily expensive mismanagement.

And the ongoing and expensive failures of the NSW Government will continue to be a burden on private enterprise, hold back economic activity and prove a drag on the Australian economy.

Remember the current departmental structure of Government in NSW is largely a leftover from mid-last century. It’s still a loose collection of fiefdoms trying to do yesterday’s job.

The ineffectiveness of the NSW Government machinery is highlighted week after week as most of the opportunities and difficulties in NSW fall down the cracks between those departments and agencies.
 
We need to commit to reshaping the machinery of Government into a more effective and efficient system for delivering services and infrastructure.

Mini or Mega-Budget

Regrettably, what we’ve heard from the Government to date about their November Mini-Budget is indeed very Mini.
 
Asking Ministers to find minor savings in their portfolios is very much playing at the margins – really it’s asking Ministers to simply do the job they’re already meant to be doing.

What we have heard from Premier Rees to date about his Mini-Budget is taken straight from Labor’s textbook on dealing with short-term threats to revenue growth.

Firstly, move as much capital expenditure as possible to the right.

Second, tell the public sector mandarins to deliver savings, which will inevitably be from the frontline (as far as possible from the fat cats).

And Third run an aggressive media management strategy showing the Government will leave no stone unturned in its search for savings but is still protecting vulnerable people by vetoing some “outrageous “ cutbacks suggested by “insensitive public sector bosses”.

It’s classic theatrical politics played out each year in preparation of the annual budget and this year, it is simply receiving a little more prominence as part of the Government’s Mini-Budget marketing plan.

Similarly, public threats and negotiations with unions, cancellation of Manly Jetcats and outsourcing rail maintenance are hardly going to turn around NSW.

The union argy-bargy we have seen for most of this year is simply part of Labor’s drawn-out negotiations with unions over pay increases. The pay rises will be resolved by mid next year and the public sector unions will then again co-operate with Labor for another few years especially in the run-up to the next election.

But what the NSW Community needs is a game changing strategy.

We don’t need a Mini-Budget – rather we need a Mega-Budget to change our public machinery and position NSW for the future.

When I talk about real reform, I’m talking about changing the nature of Government in NSW – reshaping Government to focus on frontline services and outcomes.

What would be Real Reform?

We can rationalise the structure of Government. It’s long overdue and as we know, since Nick Greiner began some reform of the public sector in NSW, very little has happened.

Indeed even the Corporatisation Model, which grew out of the Greiner reforms, has now been prostituted by Labor’s political operators - with the dysfunctional Sydney Ferries and inept RailCorp among the worst examples.

The Corporatisation Model has run it’s course in NSW and we now need either to bring them back under Ministerial control with the Minister also taking full responsibility or outsource the management to the private sector.

In terms of reforming the public sector, Jeff Kennett also made great strides in Victoria and we haven’t seen the same progress in NSW.

The bottom line is we can swap bureaucrats for nurses, teachers and police.

Through a bureaucrat recruitment freeze we can take the funding out of the bloated bureaucracy and move it to the front line services or tax cuts.

The added benefit of rationalising the bureaucracy is that it will also speed up decision-making.

One of NSW’s current and critical problems is widespread bureaucratic paralysis and rationalising bureaucracy will allow Ministers and Department Heads more direct control and faster implementation of decisions.

The last time I looked there were about 330,000 public servants on the payroll in NSW. That’s fulltime, part-time and casual State Government employees (and does not include Local Government or Federal Government employees in NSW).

That converts to about 266,000 full time equivalents and one hell of a lot of them are NOT frontline people. They fill backroom, bureaucratic and frequently political roles.

The Labor Government said two years ago that 20% or 53,000 of the workforce are NOT frontline or immediate support of frontline.

I think Labor is hiding bureaucrats and the size of the bureaucracy is closer to 30% or 79,000 of the total public sector workforce.

Just have a look at the Premier’s own Department. He has 807 staff in his personal castle.

Either way, there is plenty of room for productivity improvements in the bureaucracy and the combination of Bureaucrat Recruitment Freeze and a Restructuring down to nine departments will deliver billions in savings and speed up decisions.

Every year, more than 10% of public servants retire or resign. If those retirees or resignations are from the bureaucracy then don’t recruit from outside the public sector to replace them.

As we indicated in the run up to last year’s election a net reduction of 5,000 bureaucrats each year for four years will achieve savings of $4.2 billion which can fund more frontline workers as well as infrastructure and tax cuts.

As we found last year, a bureaucrat recruitment freeze is not only good policy, it’s good politics.

We can also institute real performance bench marking. That is something we’ve spoken about in NSW since before I came into Parliament 14 years ago. NSW has just never done it rigorously and this Government has resisted comparisons with other States in most portfolios.

And we can introduce Open Government by reversing the FOI concepts so information flows freely to the public unless an independent authority sees the need to withhold it.

We can lift secrecy around the budget process and around the infrastructure planning process.

One of the policies I proposed in the 1999 election, was to put on a website the list of current infrastructure, proposed infrastructure, whether it had been approved or not, it’s priority and how it was to be financed. That is a fundamental shift of information and power from the public sector into the public domain.

It’s also important that Government be focussed on outcomes not just inputs.

Time and time again you will hear the Labor Party tell you what a good government they are because there’s a record budget in health, there’s a record budget in police or there’s a record budget in something else. But of course, a record amount of money by itself does nothing in the public sector.

Whenever you hear Labor claim “record funding” just remember they are pouring a lot of that record funding into record numbers of fat-cat bureaucrats and much of the funding is wasted or used ineffectively because management problems haven’t been resolved.

State Government is not just about funding levels. It’s about policies, structure, culture and objectives within the public sector.

On election night last year, I said: “…the people of NSW have given Labor one last chance to fix the problems in this state.

We have laid out a policy framework in every single area of interest in NSW to fix those problems. And I say to Morris Iemma and John Watkins adopt those policies. Take them on board, because if you take them on board and fix the problems we will applaud you.”

Since the election, Labor has adopted a few of our policies and is now suggesting they may continue cherry-picking from our policy platform - adopting a few others such as the sale of State Lotteries and Waste Services.

But it is only by adopting the full arsenal of our election policies that real reform will be effective.

The NSW Government needs a total Cleanout and that’s can’t be done by playing at the margin.

There is no doubt over the last decade of prosperity, Australian Governments have grown fat, self-indulgent and insulated from community concerns. The NSW Government is probably the worst offender.

The fact is the NSW Government needs a total cleanout from top to bottom. Not a spring clean – it needs to be turned upside down and shaken.

After years and years of gross excesses, the public administration of NSW needs rebuilding.

The entire Government needs to be re-engineered to serve the frontline instead of just protecting ministerial backsides.

Who would be the Winners and Losers?

The winners and losers depend upon the extent of reform.

If Labor bites the bullet and re-engineers Government then the community will be the long-term winners and the bureaucratic juggernaut will be the loser in the short term.

Individual bureaucrats won’t lose out because downsizing will be through natural attrition but the political operators at all levels of the Government would also be squeezed out as would a large number of senior and middle level management.

Does the Rees Labor Government have the guts for real reform?

Does the Rees Government have the guts for real reform? The short answer is no, I don’t think they do for several reasons.

Firstly Rees inexperience does not allow him to see the forest for the trees.

Secondly, Labor culture remains firmly focused on political expediency and thirdly the upper echelons of NSW’s bureaucracy are Labor’s praetorian guard – they would be very reluctant to cut it loose.

But, real reform could be done by Labor.

In Victoria, Steve Bracks and now Premier Brumby had the courage to continue the Kennett model.

NSW Labor even had their own courageous Minister in the delivery of the Sydney Olympics.

Michael Knight did a good job in delivering the biggest logistical challenge on the planet – the Olympics.

Labor could now use that former minister to carve out a new NSW Government structure for the 21st Century.

Premier Rees could re-employ Michael Knight to restructure Government down to nine departments in the original Kennett model.

Rees could even minimise his political risk by involving both sides of Parliament in the restructuring through the vehicle of a short-term Joint Committee of Parliament to back-up Michael Knight.

Does anybody have the guts for real reform?

While 90% of the pressure is on the Rees Government at the moment, over coming months as we move closer to the next state election, the focus will increasingly turn to whether the Opposition has the policy solutions and the strength of our convictions to deliver real change.

In the years before the last state election, we announced a coherent set of policies and more than previous Oppositions had done. As a result, the Government and media were never able to call us a policy free zone and before and after the election Labor adopted many of our policies.

With the exception of our IR policy, which Labor successfully poisoned with Workchoices, our other policies were well received. And the vast bulk of those policies remain available for confirmation by the Coalition and they include real reform of the public sector.

The question about courage is clearly for both sides of Parliament. It’s not just the Govt in the firing line.

Having turned the tide against the Government at last year’s state election and consolidated the momentum in the mid-term by-elections, voters now want to see the strength of our resolve to fix NSW’s problems.

If for example we were to approach the next election with a small target strategy minimising exposure of policies and relying on the Labor Party to keep stabbing themselves, then voters could rightly ask – what will change if we are elected to Government?

NSW is beyond more of the same and unless we take the community with us on our reform program, we could also suffer the same one-term fate of the Greiner Government.

Part of taking the community with us is doing what we did in the run up to the last election that is openly discussing real reform. We must do that again – have the courage of our convictions.

So to my colleagues here today and others as they read this speech, we must ensure we stand for something.

Winning Government by default of a collapsing Labor Party will certainly give you a Ministerial salary but won’t give the community the policy debate and real reform they so desperately need in NSW.

Thank you.