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The move to Super Departments in NSW Part 1

by Staff Writers •
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On 27 July 2009, the NSW Governor, Marie Bashir signed the Public Sector Employment and Management (Departmental Amalgamations) Order 2009.  This legislatively gave effect to the Machinery of Government (MoG) changes announced by Premier Rees as part of the 2009-10 Budget. The restructure creates the most administratively complex government arrangement yet seen in Australia. 

Opportunities exist in both the short and long term for the ICT industry to assist agencies with solutions that will help manage the changes efficiently and effectively.  However ICT companies must understand the context of the changes and the issues confronting government if they are to enter into credible dialogue at a time when agency decision makers are facing a raft of issues brought on by the changes.

The Context

160 departments, agencies, boards and trusts have been merged into 13 Super Departments.  These Super Departments support 54 ‘ministries’ (think of these as focus areas) and 23 Ministers.  The Super Departments have been created broadly along service delivery lines.  Adding to the complexity is that these Super Departments nest into 6 ‘policy clusters’. 

The restructure, according to Rees, is intended to cut costs and to make government more efficient by reducing the overlaps and barriers between agencies.  In so doing, it is intended to free up resources for front-line services and cut red tape for business. 

Despite the sudden way in which it was announced, the move was not altogether surprising.  A major re-structure of this kind has been mooted in NSW for some years and has its roots in the earlier restructures in Victoria and South Australia. 

In the mid-1990s the Kennett government in Victoria enacted a Super Department structure in response to the need to bring the State out of the large deficit created by the unexpected collapse of the State Bank.  The collapse of the State Bank in South Australia also led to that government reorganising its administration into super departments, again to cope with massive, sudden deficits.

The tipping point for both NSW and Queensland (Premier Anna Bligh enacted a similar super department restructure in March 2009) was the sudden and large deficits forced on the governments by the Global Financial Crisis. 

Anything that can be done to return the state budget to a surplus is therefore of the utmost political priority, especially given that there will be a state election in March 2011. The focus on super departments to deliver cannot therefore be overstated.  Only one last budget remains to the next election and the government faces grave electoral issues.

It is mandatory therefore that despite this massive change, the provision of business as usual services to the public must be maintained (and improved if possible).  In the context of the NSW political cycle, any degradation as a result of the restructure will be political and public service career suicide.

So above all there is a need to rapidly stabilise the decision making environment in the new Departments.  The cracks (and there will be many, some seriously large) need to be papered over to give the veneer of efficiency and normalcy, even if things are anything but.

It is therefore no accident that the Department of Premier and Cabinet has taken on even more responsibilities under the restructure.  The Director General, John Lee now has accountabilities to 10 Ministers in relation to 12 ministries. 

Crucial Timings

August / September is the start of the government budget preparation cycle.  Press reports indicate Lee has already written to all Directors General indicating that they must provide one consolidated budget for their agencies. 

The budget which will be framed between now and next March/April needs to offer as many electoral sweeteners as possible at the same time as identifying savings wherever possible.  This presents the new Directors General with major headaches as the disruptive element of major change inevitably increases costs in the first instance, (estimated to be as high as 20% in government) before savings can be identified and harvested.

Adding to this difficulty is the inevitability that the top 200 managers across these new agencies will be at least in part distracted by career survival issues.  There will be little room for collaboration when rapid action and rapid savings are being sought, and this will add to confusion and lack of ‘buy in’ at this key budget framing time.

The many relationships created by the complex structural arrangements result in significant co-ordination and communication issues for both Ministers and Senior Departmental management, with many more points of co-ordination and liaison required than previously.  Departmental Liaison officers (a key linkage between agencies and ministerial offices) will be under far more pressure than previously.

Next week, Part 2:  How and where ICT opportunities to support the changes are likely to appear


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