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  • Australian Journal of Public Administration Volume 52 Issue 2 1993 (Doi 10.1111/j.1467-8500.1993.Tb00264.x) Don Fuller Bet Roffey - Improving Public Sector Accountability and Strategic Decision-Ma

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    Australian Journal of Public Administration Volume 52 Issue 2 1993 [Doi 10.1111%2fj.1467-8500.1993.Tb00264.x] Don Fuller; Bet Roffey -- Improving Public Sector Accountability and Strategic Decision-ma

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    Australian Journal of Public Administration Volume 52 Issue 2 1993 (Doi 10.1111/j.1467-8500.1993.Tb00264.x) Don Fuller Bet Roffey - Improving Public Sector Accountability and Strategic Decision-Ma

    Diunggah oleh

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    ‘Ausraian Journal of Public Adminstration Vol 52 No2, June 1985, IMPROVING PUBLIC SECTOR ACCOUNTABILITY AND ‘STRATEGIC DECISION-MAKING Dox Fuse ano Ber Rorrer* Abstract: This paper examines current public sector accountability arrangements within Australia and identifies factors which have inhibited progress towards public sector accountability It is argued that there are a number of key areas which serve as necessary prerequisites to accountability arrange ments within the public sector. These include an improved strategic approach to budgetary arrange ‘ment, infrastnicture support for these arrangements in the form of greatly improved management information systems, and systematic advances. in relevant performance measurement. Required improvements in these areas are principally the responsibilty of chief executive officers (CEOs) and supporting executive management levels. Without such essential underpinning itis further argued that moves toward management and administrative evolution are unlikely to succeed in improving the efficiency and effectiveness of public sector organisations. For over 15 years, commonwealth and state governments in Australia have been attempting {o face their obligations 10 improve the interdependent areas of management decision- making, resource use and accountability to the public. Beginning with the Royal Commission on Australian Government "Administration (Coombs 1976), on tothe Review of Common- wealth Administration (Reid 1983), through several important government policy papers and the Report of the House of Representatives Standing Committee on Finance and Public ‘Administration (HRSCFPA 1990), the under- lying proposed policy thrusts “have been essentially the same, The common thread has bbeem that financial and budgetary reforms must have as their key objectives: ‘ improving the processes of decision- making on government budgetary priorities; and ‘improving the information base and processes for parliamentary and public scrutiny of the budget. ‘The commonwealth has _ expended considerable effort in reiterating the importance of these overall policy objectives and packaging them as ongoing improvements in the financial ‘management of program expenditure. However, no state oF territory has attempted to formulate the main issues exhaustively (HRSCFPA 1990), For example, New South Wales, Westen Australia and Queensland have emphasised improved financial legislation; Victoria has paid substantial attention to the development of performance indicators. ‘While most states and territories have not ‘come 10 grips with the highly complex relationships between the private and public sectors, the recent spate of financial disasters uch as those affecting Rothwells and its involvement with the Westem Australian government, the Victorian division of the National Security Council of Australia and the ‘State Banks of Victoria and South Australia) illustrate monumental failure to achieve broad public sector accountability goals. ‘A main purpose of this paper, therefore, is to argue not only that ministers must be held accountable to parliament, but also that senior “Members ofthe School of Accounting, Finance and Management inthe Faculty of Social Sciences, The Flinders University of South Australia. The authors are grateful for valuable advice and critical comments from Lee Parker, Bob Wallace, lan Radbone and Neville Jones, bu are entirely responsible for the views expressed in the oper. 150 public servants must improve their account- ability both directly to their minister and to parliament, In an improved accountability relationship between chief executive officers (CEOs) and ministers, itis argued thatthe chief executive officer must become more closely involved in the strategic formulation of goals and objectives which reflect the government's main goals and objectives. Such involvement is required if the resources of public sector departments are to be better focused toward the achievement of the elected government's goals and objectives, through properly designed and ‘managed programs ‘The paper argues that major areas requiring faster and further development before appro- priate accountability arrangements can be established include: + an improved strategic approach 10 budgetary arrangements, + infrastructure support for these arrange- ‘ments in the form of greatly improved ‘management information systems, and + systematic improvements in relevant performance measures. Without such underpinning itis further argued that moves toward management and admini- strative devolution are doomed to failure. ‘The following section discusses the concept of accountability within a public sector context in Australia, The second par of the paper moves to discuss the need for a strategic management approach as a key component of the public- sector management cycle. The paper then tums to the need for program performance measures and supporting management information systems if progress toward management devolution is to occur. Finally, an integrated strategic management and planning approach is proposed as the principal means by which the interrelated goals of management devolution ‘and public sector accountability may be achieved. Executive accountability and the role of government Governments in Australia have contributed to the increasing influence of the public sector at the same time that influential bodies of economic theory wam that public sector ‘organisations, as distinct from private firms, FULLER AND ROFFEY have insufficient commutuality between owner- ship and motives for decision-making to ensure that public funds are spent efficiently and effectively (Breton 1965; Niskanen 1971; Rowley 1982. Public choice theory, for example, predicts that senior members of public sector bureaucracies have litle inherent motivation toward the efficient and effective use of resources under their control. Instead, Rowley (1982) argues that senior executives will be concerned not so much with the objectives of efficiency of resource use, but with the growth of their organisations, as this tends to be closely related 10 factors such as personal incomes, promotion prospects and increased influence. TO compound these motivational aspects, mono poly profits (rents) are more typically available in the public than the private sector. This is because public sector organisations tend to be ‘more monopolistic, less efficient, and infor- mation flows are more easily distorted. When such rents (or inefficiencies) are challenged, Sophisticated rent maintenance policies are deployed which often involve deliberate attempts to distort information (Niskanen 1971; Rowley 1982). More recently it has been argued (Dunleavy 1985, 1989a, 1989b) that it would not be in the interests of senior bureaucrats in all government bureaux to concentrate on simply inflating their agencies’ overall budgets. Rather, they have an interest in removing their organisation from line responsibilities because inthis way they become relatively better insulated from the impacts of overall government spending reductions. This model has been advanced as an_ important contribution toward explaining the recent marked institutional tendency in liberal democracies for a rapid expansion ina decentralised network of sub-central agencies, Al the centre of this bureau-shaping mode! isthe Fecognition that administrative systems are highly differentiated. In this approach, itis the ditect spending-delivery agencies which have the most obvious reasons to expect senior bureaucrats to maximise their bureaus’ budgets Such predicted behaviour has major implications for the accountability arangements adopted by senior public servants. Clearly defined and assessed accountability IMPROVING ACCOUNTABILITY AND DECISION-MAKING 151 of public sector organisations and associated business enterprises is a central requirement of paviamentary" democracies, Public account ability has ben defined “The oblguions of persons and autores tried wih public esoares report on the management of sich resources and” be fowenble for the fal managed program responsibies that are confemed Frokyo Desiaration 1966, In the contest of Australian government, the Management Advisory Board (MAB) and the Management Improvement Advisory Com- mittee (MIAC) report Accountability in the Pablic Secor defines accountability as existing. where there is a dec auboriy ‘lainship win which one party acount (0 person of boty forth performance of asks oF functions cofered orbit be confeme by thar person or ody = hs conept of terountay"..inelies seting goals providing and reporting on resus and the Tile consequres Tor ting things 8M Song. Ht so implies delegation of ‘sponsbily td authorty the dlegtr does tot Tse responsibilty for perfomance nd Imay be called to account (MAB:MIAC 1991, ph However, Waterford (1991) considers the MAB. MIAC approach to accountability 10 be far t00 narrow. as it docs not consider the wider accounability 0 the public, Waterford argues strongly that: Accountability is about giving an answer forthe try in which one bat spent money, etree over and contol, mediated right and used fiseretions vexed by avin the pubic iter is fundamenal ou system of goverment Lat those to whom such power and esponsbilies are piven are aque to exercise them in the public interest fay, and according 10 la Waterford 199i p45) ‘The overarching. political nature of public accountability ina democracy such as Australia has meant thatthe criteria for measuring public sector performance have often shifted. Con- sequently, itis. likely that there will be Continuing vigorous debate on what consiute sppropriate accountability criteria and mech- anisms. Guthrie and Parker (1990) discuss the Shifts in implicit and explicit definitions of Australian public sector auditing and accountability arrangements because of the complex machinery involved, such as “Parliamentary reviews, working parties, enquiries, legislation, the executive and the ‘ANAO [Australian National Audit Office] itself” Guthrie & Parker 1990, p. 5). ‘Under the Westminster system of govem- ment, from which Australia's system of goverment is derived (public servants are ministers; (ii) ministers are accountable tothe parliament; and (ii) parliament is accountable to the people. Bob Hawke, when Prime Minister, ‘commented (HRSCFPA 1990) on the difficulties fof relying on such seemingly well-defined relationships, and noted that the increased complexity of modem political and admini- strative realities make far more complex the relations between ministers. and officials, and between officals and parliament. ‘The underlying complexity and realities to which the then Prime from senior bureaucrats" i both the administrative and policy areas of govemment. This knowledge is powered by the extensive and highly skilled resource-base available to a senior bureaucrat, which usually far outweighs the resources directly available 10 a Minister. Uhr (1989, p.155) points to the challenge of determining appropriate public sector evaluation models which can take into account the “competing policy interests of ‘goverment, parliament, and bureaucracies the key stakeholders of legitimacy”. Uhr's position is implicitly supported by Weerakoon (1991), whose model of public sector performance measurement is discussed later. accountable 10 External and internal accountability ‘A strengthening of senior bureaucrats’ accountability responsibilities to ministers and to parliament requires higher priority to be given to what has been termed external accountability (ARSCFPA 1990). In addition, however, senior public servants must give increased priority to their internal accountability responsibilities. ‘This involves the requirement to account for the use of resources by their organisation in achieving goals, and the establishment of the 152 necessary intemal management and reporting structures to ensure that accountability responsibilities may be acquitted. Both external and intemal accountability are closely related Departments can only fulfil their extemal accountability responsibilities if they are performing efficiently and effectively with regard to their intemal operations. In contrast with earlier documents, the HRSCFPA Repon places an increased emphasis on the performance aspects of accountability compared to the more traditional areas of compliance (HRSCFPA 1990). However, critics — for example Considine (1988), English and Guthrie (1991), Guthrie and Parker (1990, 1991), Uhr (1989), and Yeatmen (1990) — have questioned whether the accountability dimension has been adequately developed. For example, criticism has focused on whether the issues of probity, equity and ethical behaviour continue to receive sufficient attention or ‘whether public accountability has in fact been diminished, rather than enhanced, by the recent emphasis on performance. Guthrie and Parker argue that the “accountable management” concept assumes that objectives canbe determined and achieved, ‘that inputs and outputs canbe measured, and that relevant performance indicators canbe constructed fr all public sector activities (1990, P36) It is useful to distinguish between public sector program goals and objectives (QEARC 1985. p. 2). Goals may be regarded as broad statements ‘of desirable conditions, while objectives are statements of attainable outcomes. Goals in this sense then, are pursued through established objectives. Outcomes are the results of actual achievements. A program is defined to be effective 10 the extent that it achieves the attainable outcomes or objectives for which it was established. Effectiveness therefore involves a minimum use of inputs to achieve 2 specified outcome or result. Efficiency, on the other hand, involves a minimum use of inputs to ‘maximise output for a given task or process. Measures of access, cient attitudes, satisfaction and service quality are generally accepted as part of effectiveness (HRSCFPA 1990, p.74). Public sector efficiency and effectiveness criteria cannot be separated from contemporary FULLER AND ROFFEY political considerations. Guthrie and Parker (1990), Guthrie (1989) and Waterford (1991) imply that the contested process of performance auditing is linked with the social and political context of public sector management. Guthrie and Parker suggest that the role and success (r otherwise) of public sector Performance auditing may be inextricably felaled to the motivations and perceptions of legislators and taxpayers (1990.46). Gray and Jenkins (1985) in tum express concem that public sector adoption of a managerialist ‘model may lead to an inappropriate emphasis on cost savings (i.e. economy and efficiency) rather than effectiveness, and that shifting attention to financial training and orientation may interfere with effective long-term strategic planning and control. A major challenge for accountable public sector management in the 1990s is to incorporate socially and politically appropriate accountability mechanisms while ensuring managerial authority and responsibility for long term strategic planning and strategic ‘management. Public accountability and devolution Australian public sector accountability is to be enhanced by increased devolution of control from central agencies to program agencies and within departments, from the chief executive and supporting executive office level, to program managers (HRSCFPA 1990; MAB- MIAC 1991), As Radbone (1991, p. 432) points ‘out, administrative history is characterised by ‘swings between the notions of devolution and centralisation. Devolution is seen to offer the promise of more flexible, responsive and efficient decision-making by line managers and hence the provision of enhanced services to users, English (1990) and English and Guthrie (1991) outline the Senate Standing Committee fon Finance and Public Administration [SSCFPA] Report's concems about appropriate Jorms of public accountability. The SSCFPA Report argues. that increased managerial accountability is a necessary component of devolution. However, public sector managers must be trained to develop proper accountability criteria, and supported by appropriate management information systems, Organisa- tional structures and decision-making processes. IMPROVING ACCOUNTABILITY AND DECISION-MAKING 153 Radbone notes that: ecentralisaion of responsibility. can bring With it the dangers of confusion in terms of who is actualy responsible for spending decisions as Well a5 a simple lack of information about decisions made within agencies (Radbone, 1991, p.438), ‘The lack of serious progress with the key methodological issues of how to measure program performance, as well as how to implement responsible management devolution within Australian public sector bureaucracies, leads us to question whether the dual objectives of measurable performance and management evolution are, in practice, incompatible. The potential implications of failure to achieve the objectives of program performance ‘measurement and implementation of responsible ‘management devolution for the key goal of improved accountability need to be addressed, Without either strategic goals and objectives or the means to monitor them, itis neither reasonable nor rational 10 devolve decision-making further down within organi ations on the grounds that “lower-level ‘managers can do it better”, or from central agencies to service delivery departments, unless there is direct accountability between lower- level managers and external bodies. Attempts to devolve management responsibility on the basis that it is somehow supposed to make govern- ‘ment programs more efficient and effective, thereby making lower-level managers more accountable for the results achieved with public resources, are both misplaced and doomed to failure. Such proposals seem somewhat akin t0 sending the players out on to the “level playing field” without the captain, and where the goal- ‘posts are continually on the move! Devolution — fumbling the hot potato? The development of management infor- ‘mation systems and supporting organisational arrangements is an essential prerequisite for management devolution. It is unrealistic t0 ‘expect project and line managers to develop their own performance monitoring information systems and criteria. Performance measures need to link with, and reflect, the broader corporate objectives, goals and strategies of the Gepartment or agency. The process of developing these goals and objectives is essentially the responsibility of senior ‘management, in close consultation with ‘managers and other Key stakeholders. In addition, senior management must make the related decisions to provide the necessary ‘management information system support, and assume final responsibilty for deciding whether to make the necessary investment in skilled human capital to develop the range of ‘conceptual and methodological approaches Fequired for appropriate performance measure- ‘ment. ‘Since 1983 there have been two main thrusts concerning devolution. The first has been to push decision-making and the associated responsibility further down the line within departments and agencies. The second has been to minimise the degree of central control by coordinating agencies, such as state treasuries and the Department of Finance at the commonwealth level, and to pass decision- ‘making responsibilities increasingly to program- oriented departments and agencies (HRSCFPA 1990). It is generally accepted that devolution relates 10 the distribution and delegation of ower and authority. The push is seen by its ‘managerial advocates to hold out the prospect of: + more responsive and effective services: + improvement inthe allocation and efficient use of resources; and + beter productivity through greater sharing of the contribution to corporate objectives by members of the organisation, In Tine with the shift towards a customer Service orientation, public managers will need to identify customer/client needs and. service satisfaction levels promptly and_ accurately Managers. who are able to deal directly and quickly with a customer service problem will: + improve the public image ofthe progra + improve system efficiency by eliminating time-consuming and expensive vertical ‘communication channels; + facilitate properly devolved quality assurance monitoring and + increase the manager's sense of appropriate public accountability. devolution of decision-making requires that’ supporting performance. infor- ‘mation and reporting systems are available and requires that these have been developed framework of corporate goals and objectives by senior management. Insufficient development of these fundamental prerequisites means that program and line managers will have a major incentive to resist increased responsibility for decision-making, In an environment of increased uncertainty due to lack of adequate information, program managers will rationally avoid decision-making due to an unacceptable level of risk they perceive to be associated with the probability of making an incorrect decision. Moreover, the adversarial nature of parlia- mentary proceedings, and ministerial politcal sensitivities, produce a defensive. managerial style in senior public servants which is likely to conflict with the more proactive, entrepreneurial ccustomer-oriented approach to public manage- ‘ment currently recommended at commonwealth and state levels. Individual program-based departments and agencies will have little incentive to expend the substantial resources necessary in the develop- ment of performance information without central agency coordination and support. Ths is largely because they understand that, in an environment of contracting — departmental budgets, substantial cost savings resulting from economies of scale can be realised from a ‘coordinated, public sector-wide approach to the development of performance-based information tnd the associated management information systems. “Many of the methodological approaches to performance measurement indicators are portable across and within, departments and agencies because of the existence of similar generic areas within a range of organisations. For example, most organisations will be concerned, amongst other things, with policy development, research, coordination, systems

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