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DFS: “Business As Usual” after MOG

by Judy Hurditch •
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“It is business-as-usual at Finance and Services” a spokesperson for the newly created Office of Finance and Services (OFS) confirmed to Intermedium following the 23 April administrative changes which saw the previous Department of Finance and Services (DFS) become an Office within the NSW Treasury.  The spokesperson also confirmed that the changes “will have no impact on the ServiceFirst Request for Registrations of Interest–Provision of ICT, HR and Finance Services or similar initiatives”.

Despite this assurance, it is hard to imagine that it will be ‘business-as-usual’ for long.  Treasury is a predominantly policy agency with 524 Full Time Equivalent (FTE) staff. The previous Department of Finance and Services (DFS), has ten times that number of staff - 5420 FTE. 

It will be almost impossible for Treasury to swallow DFS without some indigestion. 

But equally it will be inefficient, not in accord with the Administrative Arrangements and ultimately costly to leave the lower level structures of the OFS and Treasury unaltered in the longer term if they are both to answer to the one Secretary.

When Treasury Secretary Philip Gaetjens’ 17 direct reports from OFS and Treasury meet, there will be titles such as Deputy Secretary, Associate Secretary, General Manager, Commissioner, Executive Director, CFO and General Counsel at the table.  Furthermore, these 17 potential direct reports are responsible for 76 business units in total.

Thus an organisational restructure seems inevitable.  It is also likely to be complex and potentially lengthy.  It may or may not involve external advisors and will almost certainly involve the two impacted Ministers – Treasurer Andrew Constance and Finance and Service Minister Dominic Perrottet. 

It is no surprise therefore, that just two business days since the totally unanticipated changes were announced, the practical view for each agency is that it is operating under existing structures and policies ie ‘business-as-usual’ until told otherwise. 

But in truth, it is unlikely to be ‘business-as-usual’ uniformly across the new OFS.  Wherever there are significant projects underway, there is likely to be a lessening of pace. Decision makers in either agency with project responsibilities that might be impacted by a future organisation restructure will be reluctant to take further major decisions until future arrangements, functions and policies become clarified.  

The Service First ‘Registrations of Interest’ process can without doubt proceed unimpeded, as per the OFS spokesperson’s response, but only because it is the initial stage of the procurement process where OFS will be assessing the market’s responses without necessarily having to take any next steps.  Far more likely to be impacted by the OFS move to Treasury will be the procurement process following the examination of the responses to the ROI.

It is possible that the blending of the two organisational structures may occur progressively.  An early, and obvious synergy would be the bringing together of the two corporate services divisions and within that, the ICT responsibilities for each agency.  Should this occur, it would impact DFS CIO Malcolm Freame and his team, who currently have an extensive IT change agenda on their hands.

The Government Services Division, currently headed by Deputy Secretary Anthony Lean incorporating as it does NSW Procurement, ServiceFirst, ICT Strategic Delivery, (as well as the State Records Authority and StateFleet) is the Division which variously has the most relevance and impact on the IT industry.  Treasury is a ServiceFirst client.

There will be synergies and overlaps of activity between the Government Services Division and at least two of Treasury’s Divisions – the Resource Allocation Group under Associate Secretary, Caralee McLiesh and the Commercial Group under Deputy Secretary Commercial Group, Tim Spencer as Treasury in the past has been responsible for such major reviews as the Review of Shared Services, and the Review of ICT Costs, the NSW Government’s version of the Gershon Review.

A number of the 12 OFS Divisions have major service delivery functions but managing a client service delivery agency is not within the career experience Treasury Secretary Philip Gaetjens.  As is the case with most Treasury Secretaries, he has instead a predominantly policy background. 

Prior to being appointed as NSW Treasury Secretary in 2011, Gaetjens had worked in policy and review roles within the Australian Treasury.  He was Chief of Staff to Peter Costello for 10 years (1997 to 2007), spanning the period when Costello was Treasurer.  Mr Gaetjens has also held senior positions in the South Australian Department of Treasury and Finance and the Department of the Prime Minister and Cabinet.

While Treasury departments are typically blessed with rock solid organisational stability, DFS has seen more change in Ministerial and departmental leadership since its initial incarnation (in 2002 as the Department of Commerce, the original NSW ‘mega-Department’) than most other government agencies, Federal or State.  Inevitably with such a state of flux, key decisions and strategic directions can be impacted, (Government Business Services being the most recent major example).

Since 2002, DFS has had two prior names and seven Directors-General – Kate McKenzie, Michael Coutts-Trotter, John Lee, Graeme Head, Peter Duncan, Coutts-Trotter for a second time and finally Laurie Glanfield.  This count does not include periods when others, such as David Callahan deputised while the permanent role was being filled.

In this time too, the fortunes of the role of the Whole of Government Chief Information Officer have waxed and waned.  Paul Edgecumbe, the inaugural CIO and Emmanuel Rodriguez both had relative short durations in the role. It was really only after the role was taken on by the Director-General Michael Coutts-Trotter that major achievements started to emerge, after a somewhat slow start during the first term of the Coalition government.

It was widely speculated that when Glanfield took on the role of DFS Director-General from Coutts-Trotter, after a 20 year-plus period as Director General of the Attorney General’s Department, he might not retain the role of WofG CIO but as it emerged, he did retain it throughout his period as Director-General and then Secretary of DFS. 

However, with the administrative changes, it is highly unlikely that Gaetjens, given both his policy background and his large workload as Treasury Secretary would either have the predilection or the bandwidth to be able to assume a WofG CIO responsibility.

In this context, it is of no surprise that all the spokesperson was able to say about the future of the role of the Whole of Government CIO was that “An announcement  will be made in due course.”

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