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Research Paper No. 24 1998-99

Departmental Machinery of Government Since 1987 ISSN 1328-7478

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Published by the Department ofthe Parliamentary Library, 1999 INFORMATION AND RESEARCH SERVICES

Research Paper No. 24 1998-99

Departmental Machinery of Government Since 1987

John Nethercote Politics and Public Administration Group 29 June 1999 Acknowledgments

I wish to thank colleagues in the Politics and Public Administration Group and in Infonnation and Research Services for many valuable comments on a draft of this paper.

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IRS Publications Office Telephone: (02) 6277 2760 Contents

Major Issues...... i Introduction ...... 1 The 1987 changes 2 Cabinet and ministry ...... 3 Departments ...... 4 Department secretaries...... 9 Evolution of the Departmental Machinery of Government, 1987 to 1998...... 9 Central departments...... 10 Foreign Affairs, Trade and Defence...... 12 Industry departments ...... 12 Human resources departments...... 14 Welfare departments...... 15 Arts, Sport, the Environment, Tourism and Territories...... 16 Immigration...... 16 Veterans' Affairs ...... 17 Aboriginal Affairs...... 17 Functional nomads...... 17 Appraisal ...... 19 Endnotes ...... 25 Appendix 1: Departmental Machinery of Government, 1987-1998 29 Appendix 2: Chief executive personnel affected by the Machinery of Government changes, July 1987 ...... 31 Appendix 3: Departmental Machinery of Government: significant changes since ~lm 35 Departmental Machinery ofGovernment Since 1987

Major Issues

On 14 July 1987 the then Prime Minister Bob Hawke announced major changes to the ministerial and departmental structure of Commonwealth Government. A two-tiered ministry was established, composed mainly of Cabinet ministers heading departments, and other ministers each appointed to administer a particular department under a Cabinet minister. The number ofdepartments was significantly reduced.

Itis the purpose ofthis paper:

• To explain the background and character of the 1987 machinery of government settlement as it affected the ministry and departments

• To trace its subsequent history, and

• To offer some analysis of its durability, noting that because of other changes in administrative policy and practice, the departmental machinery of government has been less stable than appears to be the case in a formal sense.

The principal fmdings ofthe research are:

• The ministry was enlarged from 27 to 30, of whom 17 were members of the Cabinet. The number of departments was, by contrast, reduced from 28 to 18 by rationalisation and amalgamation. Of the 18, 16 were headed by Cabinet ministers. The exceptions were the departments of Veterans' Affairs and Aboriginal Affairs, the latter scheduled for abolition once a new statutory authority, the Aboriginal and Torres Strait Islander Commission, had been established

• in establishing the two-tier ministry it was necessary to overcome long-standing opinion that the Constitution, section 64, only permitted appointment of one minister to each department, a view held strongly by Sir Garfield Barwick but not by a number of other eminent lawyers such as Sir Douglas Menzies, Sir Kenneth Bailey and the then Solicitor­ General, Dr Gavan Griffith. In instituting the new structure, the Government acted on the advice of the latter. The new ministerial arrangements were upheld within two months by the Federal Court (Mr Justice Beaumont) in a decision of 16 September 1987

• as part ofthe changes, the Public Service Board was abolished. A number of its personnel powers, especially those relating to the Senior Executive Service, were vested in a new

1 Departmental Machinery ofGovernment Since 1987

statutory officer, the Public Service Commissioner. Pay and conditions of employment functions were assumed by the Department ofIndustrial Relations. Other powers, often by delegation, were transferred to chief executives (such as secretaries) within the field of public service employment

• as a consequence of the changes the following Cabinet departments continued, variously with augmented or reduced functions: Prime Minister and Cabinet; Treasury; Attomey­ General's; Finance; Administrative Services; Defence; .Industrial Relations (previously Employment and Industrial Relations); Social Security; Immigration, Local Government and Ethnic Affairs

• the amalgamated departments were: Foreign Affairs and Trade; Primary Industries and Energy; Industry, Technology and Commerce; Transport and Communications; Employment, Education and Training; Community Services and Health; the Arts, Sport, the Environment, Tourism, and Territories

• there were non-Cabinet departments, Veterans' Affairs and Aboriginal Affairs

• although some of the new departments were seen as 'giants' or mega-departments of the type created in Britain from the late 1960s to the mid-1970s, they were not only on a much smaller scale to counterparts abroad but also smaller than the largest Australian departments, Defence and Social Security, neither of which was significantly affected by the 1987 restructure

• the two-tier ministry has endured in all key respects. Since 1990, a new third tier, parliamentary secretaries, has evolved: there were four in the Fourth Hawke Government (1990-91); eight in the First Keating Government (1991-93); 10 in the Second Keating Government (1993-96) and the First Howard Govemment (1996-98); and 12 in the Second Howard Government (since 1998)

• although all the major amalgamations except Foreign Affairs and Trade have been altered, the departmental structure instituted in 1987 remains essentially in situ 12 years later notwithstanding a number of changes of name

• this is true both in terms of its organisational framework and most of the specific allocations

• in particular, with the exception of the Department of Tourism (1991-96) and the partial exception of the Department of Housing and Regional Development (1994-96), there has not been a reversion to the former practice of creating small, narrowly-focussed departments

• notwithstanding particular observations about specific aspects of the new structure, it was generally welcomed both in Parliament and by commentators in the media and elsewhere

11 Departmental Machinery a/Government Since 1987

• a particular indicator ofthe workability of the new structure is the absence of any changes in the departmental machinery of government following the 1990 elections, the first time this had occurred in more than two decades. The first change of significance occurred in June 1991 following Paul Keating's resignation from the Hawke Goverrunent

• unusually for machinery of government changes, but not surprisingly in this instance, there was, for nearly five years afterwards, continuing interest in the development of the new arrangement, and especially the fate of the larger amalgamations. Most of the commentary was by individuals with responsibility for making it work and the views were generally favourable. The absence of any running criticism, for example, in the press, suggests that the new arrangement did settle down with relatively few difficulties apart from those which often accompany major organisational change, and

• notwithstanding the general durability of the new departmental machinery of government, there has continued to be considerable organisational change within portfolios, especially through hiving off, corporatisation and privatisation, for instance, by creation of Centrelink, based on the regional networks of the departments of Social Security and Employment, Education and Training, or establishment of bodies such as the Civil Aviation Safety Authority and the Australian Maritime Safety Authority within the Transport portfolio.

111 Departmental Machinery ofGovernment Since 1987

Introduction

Three days after the general elections of 11 July 1987 for both the Senate and the House of Representatives, the Prime Minister, Bob Hawke, as he later reported in his memoirs, announced 'sweeping changes to the structure of Commonwealth administration'!. The number of departments was reduced from 28 to 18 and the number of ministers increased from 27 to 30. All departments except Veterans' Affairs and Aboriginal Affairs were to be headed by Cabinet ministers. Several departments were to have one or two other ministers of non-Cabinet rank, responsible for specific functions. As part of these changes, the Public Service Board was abolished; a number of its personnel functions, including those relating to management of the Senior Executive Service, were vested in a new statutory officer, the Public Service Commissioner; its industrial functions were transferred to the new Department of Industrial Relations; other powers were transferred to chief executives (for example, department secretaries).

Like most machinery of government changes, especially those which follow elections, there was very little consultation or discussion. At the media conference announcing the changes the Prime Minister said: 'This is a Hawke decision, in regard to which I have had consultation ... with a number of people,2. His memoirs show that there was consultation with various faction leaders, securing support for an enlargement of the ministry in the context ofreducing the number of departments.3

This restructuring of the ministry and departments was the most significant change in the departmental machinery of government in the history of the Commonwealth. It was more wide-ranging than changes occasioned by war (and, later, return to peace), and certainly on a scale unprecedented in peacetime. Even the expansion which had marked the establishment of the Whitlam Government administratively on 19 December 1972, or the major reorganisation of departments effected by Prime Minister Malcolm Fraser in mid­ 1982, which affected about one-third of staff, were less complex even if on a similar scale in terms ofnumbers affected.

The actual changes made in July 1987 have worn well, as a broad comparison with the departmental arrangements in place since the 1998 elections shows (see Appendix 1, columns 1 and 5). More significantly, the organisational framework of the 1987 departmental settlement have in all critical respects endured. With only one or two exceptions, notably the creation by the Keating Government of the Department of Tourism in December 1991 (subsequently abolished in March 1996) and, to some extent, the creation of the Department of Housing and Regional Development in 1994 (abolished in

1 Departmental Machinery ofGovernment Since 1987

1996 also), there has not been a return to the fonner situation of numerous, small, relatively narrowly focussed departments.

It is the purpose of this paper:

• to explain the background and character of the 1987 settlement as it affected the ministry and departments

• to trace its subsequent history, and

• to offer some analysis of its durability, noting that because of other changes in administrative policy and practice, the departmental machinery of government has been less stable than appears to be the case in a fonnal sense.

The 1987 changes

There were two inter-related elements to the 1987 changes. The first was to introduce a two-tier ministry. The second element was an extensive rationalisation of departments and consequential reduction in the number.

There were a range of reasons which led the Government to take these steps in July 1987 after it had resisted doing so in December 1984 following the previous elections and in the intervening period. There was pressure within the governing party (ALP) for a bigger ministry, partly justified by enlargement of the Parliament in 1984 and by the size of Labor's win in the 1987 elections.4 There was, however, opposition on political and administrative grounds to any increase in the number of departments which, under the practice prevailing until July 1987, would have been necessary to accommodate a larger ministry. As Hawke has written: 'I would have baulked at simply expanding the ministry,5.

At the same time there were strong views that a rationalisation of departments was needed for reasons of better policy, efficiency and effectiveness, including improved Cabinet coordination. A two-tiered ministry was essential if there was to be any expansion of the ministry and any rationalisation of departments. As Prime Minister Hawke saw it: 'The appointment of three additional ministers and the cost was minuscule against the massive savings effected by the restructuring.6

Constitutional considerations had been a major hurdle in introducing a two-tiered ministry. A long-standing opinion of Sir Garfield Barwick, Attorney-General, 1958-63 and Chief Justice of the High Court of Australia from 1964 to 1981, held that it would be unsafe to have more than one minister in a department. The weight of all other legal opinion (for example, Sir Douglas Menzies, Sir Kenneth Bailey and the then Solicitor-General, Dr Gavan Griffith) leaned the other way; that opinion prevailed in 1987.7

2 Departmental Machinery ofGovemment Since 1987

It was soon confirmed judicially. On 16 September 1987, Mr Justice Beaumont of the Federal Court of Australia, citing opinions by Professors Geoffrey Sawer and Enid Campbell, stated of the Constitution, section 64, that:

The language is general enough and there is no logical reason to restrict administrative arrangements which might be desirable in the interests of good government. On the contrary, there is every reason to suppose that flexibility was desirable and therefore intended to be conferred. Nor, in my view, is the principle of responsible government any obstacle: both Ministers would remain" answerable to Parliament. .. . [T]he provisions should be liberally construed so as to afford a proper opportunity to the Executive to introduce administrative arrangements which are appropriate in particular circumstances.'

In as much as it was relevant, experience of two-tiered ministries in Britain and Canada was mixed but it was felt that such problems as might arise could be managed, even in Australia where (some believed) egalitarian sentiment was stronger.

Cabinet and ministry

The essence of the two-tier ministry was that, as a general rule, all departments would be headed by a Cabinet minister and, thus, all departments would be represented at the Cabinet table (whilst, at the same time, keeping the size of the Cabinet at a reasonable number). Cabinet ministers would be supported by ministers who would be assigoed to departments specified with a designation and nominated responsibilities determined by the prime minister.

Under the arrangement established in 1987 there were 17 Cabinet ministers. Of this number, only one did not head a department-the Special Minister of State, Senator Susan Ryan, who was located in the Department of the Prime Minister and Cabinet with responsibilities for the Office of the Status of Women, the Bicentennial and the Australia Card. After she resigoed early in 1988, her place in the Cabinet was taken by the Minister for Trade Negotiations, assigoed to the Department of Foreigo Affairs and Trade but also with responsibilities in the Industry, Technology and Commerce and Primary Industries and Energy portfolios.

Several departments did not have a second minister: Finance; Industrial Relations; and Social Security. On the other hand, a number of ministers were assigoed responsibilities in several portfolios, for example, in addition to the Minister for Trade Negotiations whose responsibilities are outlined immediately above, the Minister for Consumer Affairs, located in the Attorney-General's portfolio also assisted the Treasurer in relation to prices.

This 1987 structure of the Cabinet/ministry replaced one in which all ministers headed departments but only the top 12-16 were members of the Cabinet, although non-Cabinet ministers customarily attended Cabinet for discussion of any submission they lodged. This

3 Depanmental Machinery ofGovernment Since 1987

system was instituted by the Menzies Government in 1956. It had prevailed since then except during the Whitlam Government which reverted to the pre-1956 structure in which the Cabinet and the ministry were co-terminous.

The Hawke Government, prior to the change, consisted of 27 ministers administering 28 departments, of whom 16 were members of the Cabinet.

Since 1987 the main principles have been maintained. The Cabinet has been kept to a size of 16 or 17, with most departments represented (on a small number of occasions particular ministers headed two departments; and, during the first Keating Government, the Minister for Tourism was simultaneously Minister for Resources in the Primary Industries and Energy portfolio). Only for a brief period has a Minister for Veterans' Affairs been a member of the Cabinet (also during the first Keating Government, 1991-3).

On the other hand, during the first two years of the Howard Government, the Attorney­ General was not a member of the Cabinet. And the Minister for Immigration and Multicultural Affairs did not join the Cabinet until after the 1998 elections.

The most important change since 1987 has been addition of a third tier, parliamentary secretaries. There had been some previous intermittent use of parliamentary secretaries under the Lyons, Menzies (1950s) and Fraser governments (two and three respectively). During the Fraser Government a statutory basis for parliamentary secretaries was provided (Parliamentary Secretaries Act 1980). In 1971-2, there were also six assistant ministers in addition to the 27 ministers (the McMahon Government).

Following the 1990 elections, four parliamentary secretaries were appointed. Prime Minister Paul Keating's first government had eight, his second, ten. Prime Minister John Howard's first government likewise had ten; there have been 12 since the 1998 elections.

The other observable change in ministerial arrangements since the 1987 changes has been discontinuation of the practice of assigning inter-departmental responsibilities to non­ Cabinet ministers. The main circumstance where ministers now have responsibilities beyond the boundaries of a single department is where a minister is designated to assist the prime minister in a particular field. At present five ministers have such assignments on matters such as the status of women, the public service, reconciliation and the Sydney 2000 games. The Ministers for Veterans' Affairs is also Minister Assisting the Minister for Defence: this is the only other 'minister assisting' arrangement.

Departments

There was, and had been for several decades, an almost if not exact correspondence between the number of ministers and the number of departments. During Hawke's 1984-7 Government there were 27 ministers and 28 departments. As mentioned earlier, this

4 Departmental Machinery ofGovernment Since 1987

correspondence was largely based on a view, held strongly by Sir Garfield Barwick, that under the Constitution, specifically sections 60--64, it was not possible to assign more than one minister to a department, although there was no impediment to a minister being responsible for two or more departments.

As the scope of the Commonwealth government had expanded, especially following the Second World War, this view meant an increasing number of departments, many of which were organisationally small and narrowly focussed functionally. This departmental administrative structure came under increasing criticism for a variety of reasons. Many decisions which desirably should have been made within a portfolio were made inter­ ministerially, sometimes even at Cabinet level. Because functional range was restricted, the scope for strategic direction and management of Commonwealth activity was similarly limited; likewise, the scope for expenditure and financial management based on funding new programs by elimination or modification of older, out-moded programs was limited; and there was a resource cost in terms of the corporate services each department maintained to support its operations.

Some of the professional sentiment about what was essentially the post-war departmental structure is conveyed by the following extracts from the 1976 report of the Royal Commission on Australian Government Administration:

It is widely agreed that departments should be organised around a coherent function and that, as departments increase in number, the problems of co-ordination become more difficult. These views led both the Bland Committee in Victoria and the Corbett Committee in South Australia to recommend a reduction in the number of departments. The desire to do this is stronger among those who consider that a large department Oike the Department of Defence or the Department of Transport) is the best organisational form for giving effect to government policy. Accotdingly, it has been pressed on us that we should recommend that, over a period of time, the number of departments be reduced to about fifteen. This, it has been urged, would make possible a relatively small Cabinet and more effective co-ordination of related government activities.

We are not tempted to specify an optimum number for departments or an optimum size. Administrative considerations are clearly important but ... they must sometimes be subordinated to political factors.

This is not to say that departments should be created, restructored or abolished lightly. Over recent years this has been done with insufficient planning; too many small and weak departments have persisted; and interdepartmental co-ordination has become more difficult ....

It is sometimes argued that departments should as far as possible be brought to a relatively uniform or 'ideal' size. We see no particular benefit in such uniformity. Nevertheless, plans for reorganisation should take size into account. On the other hand, there is inflexibility which tends to beset big organisations more than small, and the tighter esprit de corps and greater capacity for concentrated effort characteristic of smaller units. On the other, the more diverse resources of large departments can be a

5 Departmental Machinery ofGovemment Since 1987

source of strength, and can enable many conflicts to be resolved internally rather than by collective ministerial processes.

On the whole our inclination is towards reducing rather than increasing the number of departments. But if ministerial control is to remain effective, there would in some large departments be a case for more than one minister ....9

Another insight into the thinking of officials on the matter was provided by Sir William Cole, a former secretary to the departments of Finance (1976-8) and Defence (1984-7), and chairman of the Public Service Board (1978-83), who wrote in the wake of announcement of the 1987 changes that:

Over the years we have had too many Mickey Mouse departments in Canberra. With all the talk about mega-departments now, it should be remembered that on a world scale even our bigger departments are not really very large.

Some argue that the number of departments doesn't matter very much. But apart from added administrative overheads, more rather than fewer departments makes for more power bases and more pressures to spend. Priorities which might be better sorted out within a large department land on the Cabinet table for settlement.'o

The judgment that a general rationalisation of the departmental machinery of government was needed was essentially based on experience in Australia. It was not conclusive, however. Amalgamation of Defence in 1973 had worked, but not without difficulty,u On the other hand, the attempt to forge a unified transport administration between 1973 and 1982 had not endured. Comparable attempts in Britain and Canada to rationalise the departmental structure, extending over two decades, offered only limited lessons for Australia (one of which was the desirability of amalgamating at several levels of the hierarchy and not only at the most senior if expected benefits were to be secured).12 Especially in Britain, partly because it is essentially a unitary government in which the central government has many State-type as well as national functions, amalgamated departments, known variously as giant, jumbo or mega departments, were very much larger than any Australian counterpart and had a management task on a scale rarely encountered in Australia. This aspect, in fact, led Dr Michael Keating, Secretary, Department of the Prime Minister and Cabinet (1991-96), to write of the major 1987 amalgamations:

The description of those bodies as 'super' or 'mega' departments is a dreadful misnomer, because while the average number of employees per department rose in 1987, none of the new entities compared with the size of our two largest departments, Defence and Social Security-neither of which was affected by the 1987 changes. On average, the newly created departments are generally smaller than our largest private sector companies, such as BlIP, and they are certainly smaller than their equivalents overseas. 13

The 1987 changes had both general and specific purposes. The general purposes were set out at the time as:

6 Depanmental Machinery ofGovemment Since 1987

• enhanced ministerial control

• better coordination and decision-making processes

• broader perspectives and greater coherence in policy advice and program development

• greater scope for delegation to portfolios

• reduction in overlap and duplication-with consequent savings, and

• greater flexibility in portfolio operations and potential stability in machinery of government.

The specific purposes ofthe changes were identified as follows:

• allocation of export promotion of commodities and manufactures to the relevant domestic industry departments, and .merging responsibility for bilateral and multilateral trade negotiations with the Foreign Affairs portfolio; [this objective was accomplished by establishment ofthe Department ofForeign Affairs and Trade (author's note)]

• amalgamation of education and training and labour market function; [this objective was met by establishment ofthe Department ofEmployment, Education and Training (author's note)]

• drawing law enforcement functions under the Attorney-General's umbrella

• bringing health policy, community services and housing assistance under the one umbrella, and linking the Veterans' Affairs and Aboriginal Affairs functions into that portfolio; [achieved by establishment of the Department of Community Services and Health (author's note)]

• bringing together the major service functions ofTransport, Aviation and Communications; [accomplished by creation of the Department of Transport and Communications (author's note)]

• joining the related elements ofthe former departments of Arts, Heritage and Environment and Sport, Recreation and Tourism, and placing a separate ACT Administration within that portfolio; [the department to which this purpose was directed was Arts, Sport, the Environment, Tourism and Territories (author's note)], and

• placing most Government common services into one portfolio [Department of Administrative Services (author's note)].14

The departmental structure which emerged was thus:

Continuing departments (some with augmented, others with reduced, functions) were:

7 Departmental Machinery ofGovernment Since 1987

• Prime Minister and Cabinet

• Treasury

• Finance

• Attomey-General's

• Administrative Services

• Defence

• Industrial Relations (previously named Employment and Industrial Relations)

• Social Security

• Immigration, Local Government and Ethnic Affairs.

Departments based on amalgamations of two or more previous departments were:

• Foreign Affairs and Trade

• Primary Industries and Energy

• Industry, Technology and Commerce ( name not changed when it absorbed the Department ofScience)

• Transport and Communications

• Employment, Education and Training

• Community.Services and Health

• the Arts, Sport, the Environment, Tourism and Territories.

Non-Cabinet departments

• Veterans' Affairs

• Aboriginal Affairs

More information about the components of the changes is contained in Appendix 1, columns 1 and 2.

8 Depanmental Machinery ofGovernment Since 1987

Department secretaries

Whilst the changes added to the number of ministers, they also brought a reduction in the number of department secretaries, ten having been displaced, in addition to the three commissioners of the abolished Public Service Board. With two exceptions all those appointed as secretaries in the new structure had been secretaries immediately beforehand; the exceptions were Dr Peter Wilenski, chair of the Public Service Board (1983-87), previously secretary to the departments of Labor and Immigration· (1975) and Education and Youth Affairs (1983), who became secretary to the new Department of Transport and Communications; and Tony Ayers, previously secretary to the departments of Aboriginal Affairs (1979-81) and Social Security (1981-86), who was appointed secretary to the Department of Community Services and Health.

Former secretaries who did not receive fresh appointments retained their rank. Nine were assigned to particular departments with the designation of Associate Secretary; this number included two who had been commissioners of the Public Service Board. Others took various posts with statutory bodies, some full-time, others part-time. One was appointed Australian ambassador to the Organisation for Economic Co-operation and Development (OECD). Of those not immediately appointed to head a department in July 1987, only three eventually returned to secretary posts; one former commissioner of the Public Service Board was also subsequently appointed as a departmental secretary. It was only in 1996 that personnel changes from the 1987 restructuring finally worked themselves out, either by appointment to established posts or retirement. By June 1999 only four of the top level personnel involved in the restructuring were still on the government payroll, two heading departments, two in statutory posts. For details, see Appendix 2.

It took some time for the secretary arrangements to settle down. In mid-1988 three heads left their posts, one going to the United Nations as Australian ambassador, another returning to a university professorship and a third retiring. Two of these vacancies were filled by transfer, the third by elevation of a serving officer; of the two vacancies thus created, one was filled by appointment of an associate secretary, the other by a promotion.

Six vacancies arose during 1989. Two of these were filled by transfer, a third by an associate secretary; another was filled by appointment of a full-time statutory chief executive officer; the remaining two were filled by promotions. By contrast there were only three changes (two in the same department) during 1990, an election year; all were filled by elevation of serving officials.

Evolution of the Departmental Machinery of Government, 1987 to 1998

It was neither intended nor expected that the particular configuration of departments and allocation of functions set in place in July 1987 would be permanent. So it has been in the

9 Departmental Machinery ofGovernment Since 1987

past 12 years that there have been further changes arising from a variety of causes (different policy priorities, prospective improvements arising from a redistribution of workloads, for example). A number of changes bear the hallmark of a considered move fine-tuning particular arrangements (for example, some of those affecting the Department of Industrial RelationslWorkplace Relations and Small Business). A number have arisen following elections, though the 1990 elections are notable for the absence of any organisational change afterwards for the first time in more than 20 years. But, as is to be expected, a new Government taking office in 1996 made some significant changes at the time and more as it familiarised itself with the workings of administration. Ministerial resignations and subsequent reshuffles in 1991, 1994 and 1997 have also been occasions for change. The significant changes since July 1987 are contained in Appendix 3.

Notwithstanding the increasing frequency of change (partly the result of a new government taking office), what is of interest is that not only has the basic framework of the 1987 structure worn well, so too have the actual arrangements themselves (especially given the instability which had marked the previous decade and a half and the ease with which such changes can be made in Australia). This feature is evident from Appendix 1 (columns 1 and 5) but may also be readily seen in an examination, sector by sector, of the departmental system since July 1987.

Central departments

The departments of the Prime Minister and Cabinet, the Treasury and Attorney-General's have survived the period, though not without major change in the case of the latter two. There have been some small changes at the Department of the Prime Minister; for example, the Office of Multicultural Affairs, was located within its establishment until it was transferred, reduced in function and staff, to the Department of Immigration and Multicultural Affairs by the Howard Government. A post of Chief Scientist was also located in Prime Minister and Cabinet for several years; these science activities have now been relocated to the Department of Industry, Technology and Resources. An Office of Indigenous Affairs was established in 1993 and reports to the Minister for Aboriginal Affairs who is now within the Prime Minister's portfolio.

The Treasury, both departmentally and as a portfolio, has acquired a range of economic bodies from elsewhere in the administration, including, in 1996, several from Attorney­ General's, reflecting an increasingly market-based rather than law-based approach to business regulation. The then Industry Assistance Commission (lAC) was transferred from Industry as part of the 1987 reconstruction. It is now the Productivity Commission and has absorbed the lAC, the Economic Planning Advisory Council (EPAC) secretariat and parts of the Bureau of Industry Economics. Similarly, the Australian Competition and Consumer Commission (ACCC)) has been transferred to the Treasury portfolio. The portfolio also includes the Australian Competition Tribunal, the newly-established Australian Prudential Regulation Authority, the Australian Securities and Investments

10 Departmental Machinery ofGovernment Since 1987

Commission, and the National Competition Council. Various divisions of the Attorney­ General's Department concerned with business law, together with various business regulatory agencies, were transferred to the Treasury in March 1996.

The growth of the Treasury Department and portfolio illustrate some important characteristics of the post-1987 structure of Commonwealth administration. That structure is marked by a comprehensive definition of function where previously function had been conceived on a specialist, not to say limited basis. In so shaping the administrative structure, another feature of its predecessor has been increasingly diminished, namely administrative pluralism, an approach justified as providing ministers (in particular) with alternative (sometimes competing) sources of advice. As the Treasury portfolio has been enhanced, the Treasurer personally has had multiple sources of advice-for instance, the Department, the Reserve Bank and the Productivity Commission. But there is less scope for inter-agency discussion across portfolios as when EPAC was located within the Prime Minister's portfolio, the Industry Commission under the Industry minister and the forerunners of the ACCC within the Attorney-General's jurisdiction. This approach was often cited as a justification for the administrative structure developed by the Whitlam Government and underlined by Prime Minister Whitlam himself in his observation that:

We have not altered the traditional role of the Public Service in the policy making process, but by greatly increasing our sources of policy advice ... we have provided for a meeting of minds, a re-stimulation which is coupled with a leadership from the political level. Where this has resulted in tension it has in the main been creative tension, and that . b' 15 IS our 0 ~ect.

A reported comment from the late 1980s underlines the diminution of administrative pluralism:

... Suddenly we no longer had those arguments because there was nobody left to argue with ... they were all in this portfolio. So that was a great step forward. '6

In October 1998 the Australian Customs Service was transferred from the Industry portfolio to the Attorney-General's, thus bringing all Commonwealth agencies involved in law enforcement together in one portfolio; excise collection was transferred to the Treasury.

The departments of Finance and Administrative Services were relatively stable until October 1997; the main change was a period of a year when the Arts formed a part of what was called, at the time, the Department of the Arts and Administrative Services (DAS (1993-4)). In October 1997, in the wake of ministerial resignations over abuse of travel allowances, DAS was abolished and many of its common service functions were located in the newly-renamed Department of Finance and Administration, an augmentation of Finance. The change had been implicitly foreshadowed as long ago as 1994 when, following the election of that year, the Minister for Administrative Services was omitted from the Cabinet and DAS was brought, for Cabinet purposes, under the jurisdiction of the

II Departmental Machinery ofGovernment Since 1987

Minister for Finance. This arrangement was maintained by the Howard Government when it came to office in 1996.

Foreign Affairs, Trade and Defence

The Department of Foreign Affairs and Trade has proven to be a great survivor of the 1987 settlement. The two antecedent departments had historically been rivals, particularly when John (later Sir John) McEwen was the Trade Minister (1956-71) and Sir Alan Westerman the department Secretary (1960-71). After an uneasy start the new department appeared to rise above its history, so much so that Austrade, first located in the Industry portfolio, was transferred to Department ofForeign Affairs and Trade in 1994.

A contributing factor in the durability of Department of Foreign Affairs and Trade may have been the inclusion, most of the time, of both the Foreign Affairs and the Trade ministers (the latter under various designations) in the Cabinet, the exceptions being the first six months of the new arrangement and during the first Keating Government (1991­ 93).

The Defence Department was an early case of large scale amalgamation when it absorbed the functions of the departments of Navy, Army and Air, and parts of Supply, in 1973. The Supply component of that amalgamation periodically re-emerged in various guises­ Productivity from 1976 until abolition following the 1980 elections; and, in a somewhat different mix, as the Department of Defence Support from mid-1982 until abolition after the 1984 elections. Since then there has been widespread continuity in the basic framework ofthe Defence organisation.

Industry departments

The Department of Primary Industries and Energy was perhaps the most stable of the industry departments in the post-1987 era, neither acquiring nor losing major functions; this was a feature of one of its two predecessors, the Department of Primary Industry (1956-87; renamed Agriculture, 1974-5). Its other predecessor had a less settled past, its major functions being embodied variously in National Development (1949-72); Minerals and Energy (1972-75); National Resources (1975-77); National DevelopmentlNational Development and Energyffrade and Resources (1977-83); and Resources and Energy (1983-7).

And so it was that in October 1998, when the Department of Agriculture, Fisheries and Forestry was formed as essentially a commodity-focussed organisation, that it was the resources function which was transferred to the renamed Department of Industry, Science and Resources. [The secretary of the Department of Industry, Science and Resources,

12 Departmental Machinery ofGovernment Since 1987

Russell Higgins, was executive director of the Resources and Energy Group in the Department of Primary Industries and Energy prior to taking up his appointment as secretary in 1997].

The Industry department has been most active in terms of name variations, many of which have arisen from modest changes in functions. This is not, however, a new feature of the post-1987 era. In the previous 15 years the Industry portfolio had a variety of names­ Secondary Industry (1972-74), which was an up-grade of the Office of Secondary Industry located in the Department of Trade and Industry (1964-72); Manufacturing Industry (1974-75), an amalgamation of the Department of Secondary Industry and the residual parts of Supply not incorporated in the amalgamated Department of Defence; Industry and Commerce (1975-84), whose functions varied during its life, for example, transfer of some to the Department of Productivity in 1976; and Industry, Technology and Commerce, as the Department was named in 1984 when it assumed the technology functions of Science and Technology. Changes since then have been:

• July 1987. The Department of Industry, Technology and Commerce assumed the functions of the Department of Science and the housing functions of the Department of Housing and Construction (the construction functions were transferred to the Department ofAdministrative Services)

• June 1991. Housing functions of the Department of Industry, Technology and Regional Development transferred to the renamed Department of Health, Housing and Community Services

• March 1994. Upon transfer of regional development function to the new Department of Housing and Regional Development, renamed Department of Industry, Science and Technology

• March 1996. Renamed Department of Industry, Science and Tourism after absorbing the abolished Department of Tourism; the housing component of the also abolished Department of Housing and Regional Development; the science activities previously located in the Department of the Prime Minister and Cabinet; and consumer affairs functions transferred from the Attorney-General's Department, and

• October 1998. Renamed Department of Industry, Science and Resources following transfer ofresource functions from the Department ofPrimary Industries and Energy (now the Department ofAgriculture, Fisheries and Forestries).

The Department of Transport and Communications was among the most substantial of the 1987 creations in both departmental and government terms. Not only did it combine three former departments, the portfolio itself included major government business enterprises such as QANTAS, the Australian National Line, Telecom (now Telstra) and Australia Post, as well as various regulatory bodies. It was as close as the new creations came to a Jumbo' department and was the object of considerable interest because an earlier attempt to build a

13 Departmental Machinery a/Government Since 1987

single Department of Transport (1973-82), bringing together previous departments of Civil Aviation and Shipping and Transport, was not regarded as having been very effective.

The 1987 Department of Transport and Communications nevertheless survived until 1993 with reasonably good reputation administratively until the pay-TV and associated controversies of 1993. 17

On this occasion, however, amalgamation of the Transport function has basically survived: responsibility for maritime services was for a period assigned to the Department of Workplace Relations and Small Business, however, in functional terms (which may not have been decisive) because ofthe significance ofthe industrial relations aspects.

Since 1996 transport has been linked to regional development, known since 1998 as regional services. The department's present name is Transport and Regional Services.

The Department of Communications was recreated with relative ease late in 1993, shortly adding Arts, transferred from the DAS whose name then reverted to Department of Administrative Services. In October 1998, the department was renamed the Department of Communications, Information Technology and the Arts.

Human resources departments

The 1987 arrangements again saw a split in the industrial relations and employment functions as had occurred between 1977 and 1982. On this occasion the employment function was combined with education and training as the Department of Employment, Education and Training, becoming the Department of Employment, Education, Training and Youth Affairs in March 1996. (Youth affairs had previously been organisationally linked to education during the first Hawke Government, 1983-4, after which the Office of Youth Affairs was relocated to the Department of the Prime Minister and Cabinet.)

The Department of Industrial Relations created in 1987 differed from its immediate predecessor name-sake (1978-82) because it also inherited the pay and conditions functions of the Public Service Board which had been abolished in the reconstruction.

During 1997 it acquired some new activities from both Transport (maritime matters) and Industry (small business) and was renamed the Department of Workplace Relations and Small Business. With the advent of enterprise bargaining and a reduced central role within the public sector, the nature of its industrial relations responsibilities had changed dramatically, as illustrated by the new industrial legislation; the name change, from Industrial Relations to Workplace Relations, reflected this. (In the case of responsibility for maritime matters, it may be noted that, in an earlier period, stevedoring had been handled by the Department of Labour and National Service, a predecessor of the

14 Departmental Machinery ofGovernment Since 1987

Department of Workplace Relations and Small Business, rather than the then Department of Shipping and Transport).

Following the 1998 elections the employment function was transferred to the Department of Workplace Relations and Small Business, renamed Employment, Workplace Relations and Small Business, thereby bringing the two functions of employment and industrial relations together once again. The employment function, especially with creation of Centrelink and Employment National, is now of a very different hue to that separated out in 1987.

Welfare departments

In July 1987 the Department of Social Security was left largely untouched and remained an organisation in which administering a large range of payments was more conspicuous publicly than its policy activities. Many of the former activities have been transferred to Centrelink.

After the 1998 elections residual social security functions were combined with others from the former Department of Health and Family Services, the Attomey-General's Department and the Child Support Agency, previously located in the Australian Taxation Office, to constitute a Department ofFamily and Community Services.

The other welfare department emerging from the 1987 restructure was the Department of Community Services and Health, a combination of the Department of Community Services (formed following the 1984 elections from non-income support programs excised from the Department of Social Security) and the long-standing Department of Health (established in 1921) which, since 1975, had covered health insurance policy as well as matters of a professional medical nature).

In July 1991, in a ministerial restructure following Paul Keating's resignation from the Hawke Government and Brian Howe's elevation to the deputy prime ministership, responsibility for housing was transferred and the department took the name of Health, Housing and Community Services.

Following the 1993 elections the department was renamed Health, Housing, Local Government and Community Services, local government having been transferred from the Department of Immigration, Local Government and Ethnic Affairs which then reverted to its former name of Immigration and Ethnic Affairs (1975-87). During this period the Department had two ministers of Cabinet rank, Brian Howe, the Deputy Prime Minister, and Senator Graham Richardson.

In March 1994 this department was divided. One part, with the addition of regional development from Industry, Technology and Regional Development, became the

15 Depanmental Machinery ofGovernment Since 1987

Department of Housing and Regional Development; the other part was constituted as the Department of Human Services and Health which, in turn, became the Department of Health and Family Services after the change of government in March 1996.

After the 1998 elections, some functions having been transferred to the Department of Family and Community Services, Health and Family Services became Health and Aged Care.

The Department of Housing and Regional Development did not survive the 1996 change of government. Its housing and some local government functions went to the Department of Industry, Science and Tourism, whilst regional development was, as the name suggests, relocated in the now-named Department ofTransport and Regional Development.

Arts, Sport, the Environment, Tourism and Territories

The Department of the Arts, Sport, the Environment Tourism and Territories (DASETT), was an omnibus organisation in the 1987 plan, incorporating a disparate range of functions, a number having some relationship to one another, others being relatively self­ contained. The disparate character of these functions is illustrated by their eventual dispersal to other departments as what started as DAS progressively became more focussed on the environment.

The territories function was, in the main, transferred to the newly self-governing ACT although it continued in the name until 1997 because it also included responsibility for matters relating to Australia's external territories. This function has now been transferred to Transport and Regional Development. Tourism was hived off as a separate department in 1991. The arts went first to the DAS in 1993 and the next year to the Department of Communications and the Arts. Sport was transferred to the Department of Industry in 1997.

Following the 1998 elections the department took the name ofEnvironment and Heritage.

Immigration

There had been a Department of Immigration since 1945; it was amalgamated with the Department of Labor following the 1974 elections; the merged department was named the Department of Labor and Immigration. The Department of Immigration and Ethnic Affairs which was created in 1975 emerged from the 1987 changes with the addition of local government (from the Department of Local Government and Administrative Services, which again became the Department of Administrative Services). Local government was

16 Departmental Machinery ofGovernment Since 1987

assigned to the Department of Health, Housing, Local Government and Community Services following the 1993 elections and the Department reverted to its former name.

After the 1996 change of government, the Department was renamed Immigration and Multicultural Affairs, incorporating the Office of Multicultural Affairs which had formerly been located in the Department of the Prime Minister and Cabinet.

Veterans' Affairs

The Department of Veterans' Affairs was retained as a non-Cabinet department in the 1987 change, and has been variously attached to the Department of Social Security and the Department of Defence.

Aboriginal Affairs

The Department of Aboriginal Affairs was abolished in 1990 following establishment of the Aboriginal and Torres Strait Islander Commission (which also absorbed the former Aboriginal Development Corporation).

The Minister for Aboriginal Affairs was for a time within the Employment, Education and Training portfolio and has subsequently been located in the Department of the Prime Minister and Cabinet which, since 1994, has had an Office of Indigenous Affairs.

Functional nomads

Notwithstanding the durability of the basic structure since 1987 there have still been a number of functions which have not had a settled location. Several components of the 1987 Department of the Arts, Sport, the Environment, Tourism and Territories are in this category:

• The Arts: moved to DAS in 1993, and thence, in 1994, to the Department of Communications and the Arts (now the Department of Communications, Information Technology and the Arts), where it is currently located

• Sport: Transferred to the Department of Industry, Science and Tourism (now Industry, Science and Resources) on 9 October 1997

• Tourism: Separated in 1991 when the Keating Government came to office and constituted it as a department. The department was abolished following the change of government in

17 Departmental Machinery ofGovemment Since 1987

1996 and tourism was assigned to the Department of Industry, Science and Tourism (Industry, Science and Resources since October 1998), and

• Territories: Transferred to the Department of Transport and Regional Development on 9 October 1997.

What had been DAS, an omnibus organisation handling functions not readily located elsewhere, became simply the Department of the Environment on 9 October 1997 and the Department of the Environment and Heritage following the 1998 elections.

The Industry department has also been the location for a number of functions with no obvious departmental base:

• as already noted, former DASETT functions of sport and tourism were eventually located in Industry, the fust directly transferred, the second after forming a separate department during the Keating Government

• Housing: Part of Industry, Technology and Commerce from 1987 until 7 June 1991; transferred to Department of Health, Housing and Community Services in 1991; in 1994, transferred to Housing and Regional Development; returned to the Department of Industry, Science and Tourism in 1996 when the Howard Government took office

• Regional development: Following the 1993 elections, in a department called Industry, Technology and Regional Development; in 1994, transferred to Housing and Regional Development; after election of the Howard Govemment, relocated in Transport and Regional Development; remained in the present Department of Transport and Regional Services following the October 1998 elections, and

• Local govermnent: Transferred from the Department of Local Government and Administrative Services to the Department of Immigration, Local Government and Ethnic Affairs in July 1987; thence to the Department ofHealth, Housing, Local Government and Community Services following the 1993 elections; in 1994, assigned to the Department of Housing and Regional Development; now located in the Department of Transport and Regional Services.

A feature of the functional nomads is that they include a number of functions-the arts, tourism, housing, regional development (services), local government-which, irrespective of departmental location, governments often like to have visibly represented in the departmental nomenclature. At present, however, only the arts and regional services form part of a department's name.

18 Departmental Machinery ofGovernment Since 1987

Appraisal

It is relatively rare for major organisational changes in government to be fonnally and openly evaluated. This may be partly explained by their intensely political character, but also, and more significantly, by the formidable methodological difficulties in doing so on anything much more than an impressionistic basis, which is in many respects unsatisfactory. The 1992 Task Force on Management Improvement recognised as much when it reported that 'a judgment of success or failure must rely heavily on qualitative data, including perceptions'18.

Similarly, organisational changes are often seen as having short-tenn costs but bringing longer-tenn benefits, though, again, there is very little finn data to support this proposition. On this point Michael Codd has observed: 'There were substantial adjustment costs associated with these changes'. He added, without amplification, that: 'the changes have generated their own ongoing management challenges'. 19

Conversely, fonner Prime Minister Hawke, in his account, was anxious to explain that the restructuring was not a cost-cutting exercise notwithstanding the financial spin-off:

Although not the driving consideration behind the restructure, savings were nonetheless an important factor and were calculated at $ 96 million in the coming fmancial year.'o

Fonner Finance Minister Peter Walsh thought otherwise:

The Departmental amalgamations were supposed to aclrieve, over time, administrative savings ofthe order of $100 million a year. How much, ifany, was realised will never be known because it disappeared into a fog of additions to running costs, allegedly aligned to new poIicy. 21

The case of the 1987 changes is further complicated because they were integrally connected to-in some respects, derivative of-policy refonns. Thus, two scholars who reviewed the evolution of the new structure in the early 1990s observed:

It is ... difficult to separate structural initiatives for coordination from specific government reform programs. TIlls confounds any assessment of the effect of amalgamation on policy development and co-ordination by raising two problems: it is hard to determine what effect the amalgamation would have in an environment not dominated by the reform agenda; and it is difficult to determine whether the reformist policy agenda would have been possible without amalgamation.22

Notwithstanding these considerations there was, at the time, and in the ensuing five years especially, continuing interest in the workings of the new structure. In the print media, the day following the announcement, Maximilian Walsh wrote that the Prime Minister had 'produced a bold initiative of profound importance'. Michelle Grattan thought it 'administratively daring and politically cunning'?3 Sir William Cole, who was well-placed to understand what was involved, was forthright:

19 Departmental Machinery ofGovernment Since 1987

Successive Australian governments have had the bad habit of constantly reorganising !be structure of departments. Usually !be dislocation costs have outweighed any benefit. This time, however, !be Government may actually achieve something worthwhile?4

There were reservations about particular points. The Canberra Times' editorialist believed that the Department of Transport and Communications would 'in fact prove difficult to manage on any common theme', and thought, concerning the Department of Foreign Affairs and Trade, that 'there are good reasons for keeping some trade-policy issues distinct from pure foreign affairs ones (say, over trade with South Africa)'.The editorialist also thought that:

... [tJacking employment and training to Education (i.e., making !be education system more responsive to labour-market needs) is one of the cyclical wisdoms-in due course it will seem better to focus on purer educational issues and not on making it a handmaiden of industry.25

Other comment centred on how well the two-tiered ministry would work. Sir William Cole was not alone in thinking that the 'main risk' was whether 'the changes announced by the Prime Minister ... of more effective ministerial arrangements will work as intended. Whether the policies to be administered will be better is another matter,26. Former minister and Opposition front-bencher Ian Macphee was also reported as saying that the Government 'faced potentially serious problems in defining areas of responsibility between ministers in the two-tiered departmental structure'; he thought Junior ministers risked becoming "supernumeries" to the secretaries of the 16 mega-departments'. The report ofhis speech concluded:

...There is notbing wrong with !be super-ministries, but !be ... plan does nothing to prevent junior ministers becoming subservient to !be new breed of super-departmental 2 head, he [MacpheeJ said ?

Peter Walsh, who was not assigned a second minister in the Finance portfolio, later criticised the idea of junior ministers as such: 'a junior minister doesn't help much, especially ifhe/she is a dill'.28

A later newspaper report concentrated on what it described as 'the chaos, discord and loss of morale' created by the 'dramatic reorganisation of the bureaucracy just after the election .... It is widely predicted that very little of substance will appear for 12 months at best and two years at worst,29.

The changes were of sufficient importance to warrant a ministerial statement to the House of Representatives by the Prime Minister when Parliament again met.30 In his response the then Leader of the Opposition, John Howard, said of the two-tier ministry that there was 'merit in the concept of having a number of Ministers sworn to administer the same department. The old idea that one had to create a shell department in order to have another Minister performing in the same general area as an existing Minister was an anachronistic one.' [Howard, here, was drawing on his experience in 1977 as Minister for Special Trade

20 Departmental Machinery ofGovemment Since 1987

Negotiations. The department in question was located within the Department of Overseas Trade, the secretary of which was also secretary of the Department of Special Trade Negotiations. The Department of the Vice-President of the Executive Council, 1982-3, established by the Fraser Government, was another, even more nominal instance of the shell department device, which was only used on these occasions.]

Of the departmental arrangements Howard said:

" .." A number of the amalgamations and consolidations of departments that have been announced by the Government are also welcomed by the Opposition. They mirror, in a number of quite crucial areas, declared policy positions taken by the Opposition. I therefore welcome the opportunity of saying to the House that the Opposition will be 3 able to support large elements of the reforms announced by the Prime Minister. !

In the very earliest months of the new arrangements there were some incidents, such as the controversy about the aerial coast-watch contract with Amann Aviation, which raised questions about their viability. In the absence ofrepetition, interest was short-lived.

A clear illustration that the new arrangements were settling down was the very modest changes to the departmental machinery of government after the 1990 elections. The Department of the Prime Minister and Cabinet recorded in its 1989-90 annual report that:

In the past, after an election, it has been common for substantial changes to administrative arrangements to be made. Major changes made after the 1987 election have resulted in arrangements which made further changes immediately after the March 1990 election unnecessary32

Dr Michael Keating, also commenting on arrangements following the 1990 elections, has written that:

... [t]he ministry change involved no fewer than 32 individuals, including retiring ministers, but only four changes were made to administrative arrangements, only two of which were directly related to ministerial reorganisation.33

The most striking feature of the 1987 structure has, indeed, been its remarkably durable character both generically and even in specific terms. One study, drawing upon a 1992 address by Dr Michael Keating, Secretary, Department of the Prime Minister and Cabinet, has stated that:

One of the most obvious achievements of the 1987 changes is the major reduction in subsequent alterations to the composition of departments. The average annual number of changes per year to the administrative arrangements for the five govemments prior to 1987 was 18 changes, whereas subsequently this figure has been fewer than four. 34

Most significantly, apart from a couple of aberrations already mentioned (Tourism and Housing and Regional Development), there has not been any return to what Sir William Cole wrote of as 'Mickey Mouse' departments. Several of the particular unions have not

21 Departmental Machinery ofGovernment Since 1987

endured, such as transport and communications, employment and education, and primary industries and energy. It was, however, never intended that the specific arrangements made in July 1987 should be eternal. Several reasons can be suggested for the need for subsequent change such as the scope was or became too large and the functions too disparate; functions, in different circumstances, were simply more appropriately located elsewhere. The character of the 1987 framework was such that none of the departments appeared to have been designed simply to respond to the special interests of any individual minister in the manner that the Trade Department, later the Department of Trade and Industry (1956-72), reflected Sir John McEwen's interests. The nearest any departments came to fitting this category were the Department of Health, Housing, [Local Government] and Community Services, and , later, the Department of Housing and Regional Development, the functions of both of which were strongly influenced by the concerns of Brian Howe, Deputy Prime Minister from mid-1991 (following Paul Keating's resignation from the Hawke Government) until mid-1995.

The durability might also be a product of fatigue so far as departmental restructuring was concerned. After 15 years of frequent change, restructuring ceased to have the invigorating effects claimed for it and, moreover, was no longer seen as an effective means of addressing either policy or administrative problems. Speeches on questions of departmental organisation during the 1980s often included the following observation attributed to Petronius:

We trained hard; but it seemed that every time we were beginning to fonn into tearns we would be reorganised. I was to learn later in life that we tend to meet any new situation by reorganising; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency and demoralisation. 35

Not all commentary has been benign. Former Finance Minister Peter Walsh thought it a mistake to expand the ministry and to establish 'super ministries'. 'The new arrangement was unwieldy and unbalanced'. Two departments, Employment, Education and Training, and Community Services and Health, were 'too big and diversified for any Minister to manage and have never been under control'.36

There was also criticism from academic quarters, drawing to some extent upon the views ofparticipants:

A problem recogoised by observers at an early stage was the absence of a coherent development strategy for the administrative system as a whole. While the boldness of the machinery of government changes was clearly acknowledged, concerns were expressed that its full implications had not been adequately thought through.

As the degree of disruption and dislocation caused by the machinery of government changes became increasingly evident it appeared that the architects of the changes had substaotially overestimated the capacity of departments to cope with them, coming as they did during a period characterised by a rapidly expanding refonn agenda, ever­ increasing demands for complex policy work and prolonged fiscal stringency.

22 Departmental Machinery ofGovemment Since 1987

Furthermore, the management of the process of reform became the subject of growing criticism. In particular, it was argued that conununication and consultation with staff had been inadequate, that the changes had occurred without sufficient preparation and that they lacked a conunon purpose. A growing number of conunentators blamed the scope and pace of the machinery of government changes for what was perceived to be a growmg level of cynicism concerning the benefits of organisational change and a reduction in the level of morale within the public service. It should be noted that these difficulties were undoubtedly exacerbated by a range of other factors. For example, Dr Simon Heam cited 'a long period of across-the-board cuts, staff attrition, inadequate investment in training and office technology and a widening gap between public and private sector salaries' as contributing to low levels of staff morale within the Department of Primary Industries and Energy. This point of view was encapsulated in the following statement by John Baker, First Assistant Commissioner, [Public Service Commission]:

We seem not to have leamed that organisational change is something that needs to be 'managed' and led at many levels within the organisation. It canoot siroply be allowed to happen, thus risking large numbers of staff in the organisation becoming alienated and suffering from low morale. The consequence here is that the benefits and gains expected to flow from reorganisation are more than offset by the human toll, the costs resulting from its unintended consequences for, and impact upon, the organisation's people.37

One of these commentators, writing in 1994, thought that 'the functioning of key restructured departments has been problematic in the 1990s':

To acknowledge that individual departmental problems might derive from departmental organisation would have brought the overall reorganisation into question. In order to maintain structural stability overall, problems at the level of the individual unit were minimised. The challenges of managing employment and education in one department persisted. .. .. In the case of the complex 'mega-department', Transport and Conununications, it was not possible to contain the difficulties within the department; the two components were separated to form new organisations in 1993.38

[This last comment is misleading in that it fails to acknowledge that the transport function has remained unified and that the Department was split into two parts, not three as had previously been the case before amalgamation in 1987. (author's note)]

In many respects the durability of the 1987 structure is deceptive. It has in fact been a period of great and continuing change in the concept of departments and their functions. This is partly indicated by the drop in the size of the Australian public service from 143959 full-time permanent staff in June 1987 to 103 506 in June 1998, a reduction of 28 per cent. In several portfolios there have been major developments in the character of particular departments as a consequence of hiving off operational functions, and corporatisation. Perhaps the most significant case in terms of numbers of staff has been establishment of Centrelink, as a consequence of which the Department of Social Security dropped from 19354 full-time permanent staffin 1995 to 728 in 1998. In another instance, a large stream of work has recently been removed from the Attorney-General's

23 Departmental Machinery ofGovernment Since 1987

Department when the Australian Government Solicitor was converted into a statutory authority. One important reason for the durability of the unified transport administration as a result of the 1987 changes has been the hiving off of operational functions to the Civil Aviation Safety Authority (initially the Civil Aviation Authority) and the Australian Maritime Safety Authority. (The total full-time permanent staff of the departments of Transport and Aviation was 10 566 at 30 June 1987; the figure for the Department of Transport at 30 June 1995 was 757.) Commercialisation of many activities in the Defence portfolio has enabled a down-sizing of its organisation.

In some senses departments, a constitutional term, might now be more accurately described as ministries because their activities are more focussed on servicing the minister in policy and administrative matters, with operations in other hands. Similar approaches have been followed in Britain as a consequence of the so-called Next Steps initiative, and also in Canada to a lesser degree. These practices in Australia are something of a departure from the basically integrationist approach of much of the post-war period but they are far from out ofplace in a government culture which has strongly favoured the use of statutory authorities, not least because of a belief that they were better able to operate on a business basis.

As a general evaluation of the changes is difficult, so also it is difficult to comment on some of the goals set out on page nine of this paper. Any attempt to verify whether the goal of 'enhanced ministerial control' had been accomplished would at best be impressionistic. It is clear, however, that a consequence of the change has been a reduced Cabinet agenda. Michael Codd wrote in a 1989 paper that:

The volume of business being dealt with in Cabinet and its committees-both Budget business and other business-has been substantially reduced, with a counterpoint increase in the extent to which ministers take decisions themselves, either singly or in a collective fashion through more informal consnltation with colleagues. Associated with this, there is less intervention from the central co-ordinating departments and agencies.39

On some goals a clearer response might be secured-for example, the 'greater scope for delegation to portfolios' can, to a degree, be tested, and is certainly the case in terms of powers previously exercised by the Public Service Board; similarly, whether there has been a 'reduction in overlap and duplication' is probably capable of a degree of confirmation.

Much of the detailed analysis of the 1987 changes has come from interested individuals with responsibilities to make them work. It has been generally if sceptically confirmed, however, by observations reported anonymously in some academically conducted interviews during the late 1980s and early 1990s.4o Its basic validity, apart from occasional episodes, is also indicated by the absence of any sustained, serious criticisms of the type directed at the Civil Aviation Authority during its life. Commentary mainly focuses on instances of the new arrangements perceptibly working as planned or better than planned. The absence of comment about particular aspects of the system is an indicator that the

24 Departmental Machinery o/Government Since 1987

intended goals were yet to be accomplished. The benefits to which various observers point are reduced workload for the Cabinet itself (as noted above), opportunities for better policy coordination and, on another front, job enrichment. An underlying theme of several papers presented at a Griffith University conference and noted by the rapporteur, was the advantages derived from several years without change:

The stability of machinery of government arrangements from 1987 to 1992 has allowed managers to develop many of their managerial changes; the discussions in the book are based primarily on that-perhaps rare---experience of calm.4l

[This observation again alludes to the fatigue theme.]

Appendix 3 in particular shows there has been greater change following the past two elections, partly stemming from a new ministry placing its own stamp on the machinery of government, partly stemming from the unravelling of an organisational structure representing policy priorities more than a decade old. Even so, the benefits of periods of formal stability to policy development and implementation, as well as management practices, are frequently more important than is often recognised.

This paper simply focuses on the departmental machinery of government. The consolidations of 1987 removed what was seen by many government professionals as a long-running defect in the core, departmental organisation of Commonwealth Government. In the past decade the focus of endeavours to improve efficiency by organisational means has shifted elsewhere, in part by hiving off, corporatisation and privatisation. These developments have inevitably affected the role of departments, making them more clearly focussed on supporting ministers, policy development and monitoring, appraisal and evaluation. It is in increasing separation of policy and implementation in government, in various guises such as the so-called purchaser-provider split, that new areas for attention by administrative architects and analysts are likely to anse.

Endnotes

1. Bob Hawke, The Hawke Memoirs, William Heinemann Australia, 1994, p. 416. 2. Quoted in Canberra Bulletin ofPublic Administration, no. 52, October 1987, p. 17. 3. Hawke, op. cit., p. 416. 4. ibid., p. 415-418. 5. ibid., p. 417.

25 Departmental Machinery ofGovernment Since 1987

6. Ibid. See also R. J. L. Hawke, 'Challenges in Public Administration', 1988 Sir Robert Garran Memorial Oration, Australian Journal ofPublic Administration, vol. 48(1), March 1989, 9­ 16, atp. 11. 7. For a history of the law of this matter, see Gavan Griffith, 'In the Matter of Ministers and Section 64 of the Constitution', Canberra Bulletin ofPublic Administration, no. 52, October 1987,23-7, para. 1.5, pp. 24-5; see also Hawke, 'Challenges in Public Administration', p.11. 8. Zoeller v Attorney-Generalfor the Commonwealth and others (1987) 16 FCR 153, paras 39­ 41. 9. Report of the Royal Commission on Australian Government Administration (Chair: H. C. Coombs), Canberra, AGPS, 1976,4.3.28-4.3.32, pp. 76--7. 10. Sir William Cole, The Age, 16 July 1987, cited in Canberra Bulletin ofPublic Administration, no. 52, October 1987, p. 65. 11. See, for example, Defence Review Committee (Chair: J. W. Utz), The Higher Defence Organisation in Australia, 1982, PP. 407/1982, vol. 27. 12. Sir Richard Clarke, 'The Number and Size of Government Departments', Political Quarterly, 43, pp. 169-86, was an influential article in the early and mid-1970s. 13. Michael Keating, 'Mega-departments: The Theory, Objectives and Outcomes of the 1987 Reforms', Patrick Weller et al., (eds.), Reforming the Public Service, Macmillan, 1993, p. 9. 14. Michael Codd, 'Recent Changes in Machinery of Government', Canberra Bulletin of Public Administration, no. 54, May 1988, pp. 25-30 and 25. 15. E. G. Whitlam, Australian Public Administration and the Labor Government, 1973 Sir Robert Garran Memorial Oration, Royal Institute of Public Administration, p.17. 16. Cited in Colin Campbell and John Halligan, Political Leadership in an Age of Constraint, Allen and Unwin, 1992, p.179. 17. See First and Second Reports of the Senate Select Committee on Matters Arising from Pay TelevisionTendering Processes (Chair: Senator B. Cooney), September and December 1993. 18. Task Force on Management Improvement, The Australian Public Service Reformed. Canberra, AGPS, 1992, p. 82. 19. Mike Codd, Federal Public Sector Management Reform-Recent History and Current Priorities, Public Service Commission, Canberra, 1991, p.5. 20. Hawke, op. cit., p. 416. 21. Peter Walsh, Confessions of a Failed Finance Minister, Random House Australia, 1995, pp.17O-1. 22. Emma Craswell and Glyn Davis, 'Does the Amalgamation of Government Agencies Produce Better Policy Co-ordination', Patrick Weller et al.,(eds), op. cit., p. 204. 23. These citations are drawn from the selection of media comment published in the Canberra Bulletin ofPublic Administration, no 52, October 1987, pp. 48-9 and 54-5. 24. Sir William Cole, op. cit.

26 Departmental Machinery ofGovernment Since 1987

25. Canberra Bulletin ofPublic Administration, no. 52, October 1987, p. 48. 26. Sir William Cole, op. cit. 27. Cited ibid., p. 55. 28. Walsh, op. cit., p. 170. 29. Cited in Canberra Bulletin ofPublic Administration, no. 52, October 1987, p. 49. 30. R. J. L. Hawke, House of Representatives Hansard, 15 September 1987, pp. 43-6. 31. John Howard, House of Representatives Hansard, 15 September 1987, pp. 46-7. 32. Department of the Prime Minister and Cabinet, Annual Report 1989-90, Canberra, AGPS, 1990, pp. 60-1. 33. Dr Michael Keating, 'Mega-departments: The Theory, Objectives and Outcomes of the 1987 Reforms', Patrick Weller et aI., (eds.), op. cit., p. 9. 34. Task Force on Management Improvement, The Australian Public Service Reformed, Canberra, AGPS, 1992, p. 82. 35. Source unknown. 36. Walsh, op. cit., p. 170. 37. John Halligan, Ian Beckett and Paul Earnshaw, 'The Australian Public Service Reform Program', John Halligan and Roger Wettenhall (eds.), Hawke's Third Government, University ofCanberralRoyallnstitute of Public Administration Australia, 1992, p. 19. 38. John Halligan, 'The process of reform: balancing principle and pragmatism', Jenny Stewart (ed.), From Hawke to Keating, University of CanberraIRoyal Institute of Public Administration Australia, 1994, p. 9. 39. Michael Codd, 'Cabinet Operations of the Australian Government', Brian Galligan et aI., (eds.), Decision-making in Australian Government-the Cabinet and Budget processes, Canberra, ANU Federalism Research Centre! RAlPA (ACT Division), 1990, p. 14. 40. Carnpbell and Halligan, op. cit., pp. 177-183. 41. Patrick Weller, in Patrick Weller et aI., op. cit., p. 226.

27 Appendix 1: Departmental Machinery of Government, 1987-1998

\'1 \~I \-1 , 'I \JI Prc~Julv 1987 Post-July 1987 Reoreanisation Second Kcatine Government, March 1993 Post 1996 elections-Howard Government Post 1998 elections Howard Government Prime MiniSLef and Prime Minister and Cabinet Prime Minister and Cabinet Prime Minister and Cabinet Prime Minister and Cabinet Cabinet TreasurY Treasurv Treasurv Treasurv Treasurv Attornev-General's Attornev-General's Attornev-General's Attornev-General's Attornev-General's Scecial Minister of State Finance Finance Finance Finance Finance and Administration Local Government and Administrative Services Arts and Administrative Services Administrative Services Administrative Services Housine: and Conslruction Foreign Affairs Forehm Affairs and Trade Forcij!,t1 Affairs and Trade Foreij!,11 Affairs and Trade Foreign Affairs and Trade Trade Defence Defence Defence Defence Defence Industry, Technology and Industry, Technology and Industry, Technology and Regional Industry, Science and Tourism IndusLry, Science and Resources Commerce Commerce Development Science Primary Industry Primary Industries and Energy Primary Industries and Enerp'v Primary Industries and Energy Agriculture, Forest and Fisheries Resources and Ene~v Transport Transnort and Communications Transoort and Communications Transoort and Ree:ional Develonment TransDort and Ree:ional Services tl Aviation {l Communications Communications and the Arts Communications, Information Technology and the Arts Employment and Industrial Relations Industrial Relations Industrial Relations Employment, Workplace Relations and Small i Industrial Relations Business £. Education Employment, Education and Employment, Education and Youth Affairs Employment, Education, Training and Youth Education, Training and Youth Affairs Trainine: Affairs ~ Social Security Social Security Social Security Social Security Familv and Community Services g. S· Community Services Community Services and Health Health, Housing, Local Government and Health and Family Services Health and Aged Care Community Services ~ Health Arts, Heritage and Arts, Sport, the Environment, Environment, Sport and Territories Environment Environment and Heritage Environment Tourism and Territories ""~ Sport, Recreation and Tourism (created 1991) Tourism ~ Territories ~ Immigration and Ethnic Immigration, Local Government Immigration and Ethnic Affairs Immigration and Multicultural Affairs Immigration and Multicultural Affairs Affairs and Ethnic Affairs Veterans' Affairs Veterans' Affairs Veterans' Affairs Veterans' Affairs Veterans' Affairs r..... Aborillinal Affairs Aborillinal Affairs ~ "

tel Depanmental Machinery a/Government Since 1987 Appendix 2: Chief executive personnel affected by the Machinery of Government changes, July 1987

Position prior to 1987 chane;es Position after 1987 chane;es Subsequent posts Michael Codd Prime Minister and Cabinet Secretary, Prime Minister Relinquished post on Paul and Cabinet Keating's assumption ofprime ministership and retired the followin~ year Bernie Fraser Treasury Secretary, Treasury Governor, Reserve Bank, 1989- 96 Patrick Brazil Attorney-Genera]'s Secretary, Attorney- Retired in 1989 General's Darcy McGaurr Special Minister of State Associate Secretary, Resigned in 1989 to take Primary Industries and department head position in Ener~v Tasmanian Government Dr Michael Keating Finance Secretary, Finance Secretary, Prime Minister and Cabinet, 1991-6 Graham Glenn Local Government and Secretary, Administrative Secretary, Industrial Administrative Services Services Relations, 1989-92. Retired after relinquishing office Tony Blunn Housing and Construction Secretary, Arts, Sport, the Secretary, Social Security, Environment, Tourism and 1993-97; Secretary, Attorney- Territories, 1987-93 General's Department since 1997 Stuart Hartis Foreign Affairs Secretary, Foreign Affairs In 1988, appointed Professor, and Trade International Relations, AND Research School of Pacific Studies Vincent Fitzgerald Trade Secretary, Dept of Resigned in 1989 and joined Employment, Education and the Allen Consulting Group Training Alan Woods Defence Secretary, Defence Retired 1988 David Charles Industry, Technology and Secretary, Industry, Consulate-General, Berlin, Commerce Technology and Commerce 1990-93. Joined the Allen Consultin~ Group Greg Tegart Science Secretary, Australian Science and Technology Council, 1987-93 Geoff Miller Primary Industry Assoc Secretary, Foreign Secretary, Primary Industries Affairs and Trade, 1987-8 and Energy, 1988-93; Secretary, Tourism, 1992-3. Retired in 1994 after unsuccessfully seeking post of Director-General, Food and Agriculture Organisation Graham Evans Resources and Energy Secretary, Primary Secretary, Transport and Industries and Energy, Communications, 1988-93; 1987-8 Secretary, Transport, 1993-5. Resigned and took up position with BHP ,.

31 Departmental Machinery ofGovernment Since 1987

Position urior to 1987 chanl!es New uosition with 1987 chanl!es Subse~uent career moves Colin Freeland Transport Associate Secretary, ChiefExecutive Officer, Civil Transport and Aviation Authority, 1988-90. Conununications, 1987-8 Retired Rae Taylor Aviation Secretary, Industrial Managing Director, Australia Relations, 1987-89 Post, 1989-93 Charles Halton Communications Various assignments Unknown mainly within Employment, Education and Trainin2 portfolio until retirement Edward Visbord Employment and Industrial Australian Ambassador, Unknown Relations OECD, 1988-91 Helen Williams Education Associate Secretary, Associate Secretary Employment, Education and (Communications), Transport Training, 1987-8 and Communications, 1988- 90; Head, Commonwealth-State Relations Secretariat, Prime Minister and Cabinet, 1990-3; Secretary, Tourism,1993-96; Secretary, Immigration and Multicultural Affairs, 1996-8; Public Service Commissioner since 1998 Derek Volker Social Security Secretary, Social Security Secretary, Employment, Education, Training and Youth Affairs, 1993-6. Alan Rose Community Services Associate Secretary, Secretary, Attorney-General's, Attorney-General's, 1989-94; President, 1987-9 Australian Law Reform Commission, 1994-9

I Bernie McKay Health Associate Secretary, Unknown Health and Community Services, 1987-8 Pat Galvin Arts, Heritage and the Associate Secretary, the Unknown Environment Arts, Sport, the Environment, Tourism and Territories, 1987-8 Bruce MacDonald Sport, Tourism and President-designate, Special Consultant, the Arts, Recreation Proposed Data Protection Sport, the Environment, Agency, 1987-8 Tourism and Territories, 1988-9; Administrator, Norfolk Island, 1989-92 Jolin Enfield Territories Public Service Unknown Commissioner, 1987-91 Ron Brown Immigration and Ethnic Secretary, Immigration, Unknown Affairs Local Government and Ethnic Affairs until 1990. ,. Noel Tanzer Veterans' Affairs Secretary, Veterans' Secretary, Administrative Affairs until 1989 Services, etc., 1989-94 Charles Perkins Aboriginal Affairs Secretary, Aboriginal Unknown Affairs until 1989

32 Departmental Machinery ofGovemment Since 1987

Position Drior to 1987 chanl!es New Dosition with 1987 chaDl!es Subseouent career moves Peter Wilenski Chair, Public Service Board Secretary, Transport and Australian Ambassador, Communications, 1987-8 United Nations, 1989-92; Secretary, Foreign Affairs and Trade, 1992-3; Commonwealth Government Adviser, 1993-4 Roger Beale Commissioner. Public Associate Secretary, Associate Secretary, Prime Service Board Transport and Minister and Cabinet, Communications, 1987-93 1993-6; Secretary, Environment, etc., since 1996 Bill Harris Commissioner, Public Associate Secretary, the Arts, Sport, Head, ACT ChiefMinister's Service Board the Department, 1989-93 Environment, Tourism and Territories, 1987-89 Tony Ayers Efficiency Security Unit Secretary, Community Services and Secretary, Defence, 1988-98 Health, 1987-88

"

33 Departmental Machinery ofGovernment Since 1987

Appendix 3: Departmental Machinery of Government: significant changes since July 1987 5 March 1990: Abolition ofthe Department ofAboriginal Affairs. Its functions, and those ofthe Aboriginal Development Corporation, were assumed by the Aboriginal and Torres Strait Islander Commission 7 June 1991: Housing transferred to the renamed Department ofHealth, Housing and Connnunity Services 27 December 1991: Department ofTourism. created. DASETT renamed Department of the Arts, Sport, the Enviromnent and Territories (DASET) 24 March 1993: Following the 1993 elections, Arts was transferred from DASET (renamed Department of the Enviromnent, Sport and Territories) to a renamed DAS; and local govermnent was transferred to a renamed Department of Health, Housing, Local Govermnent and Cormnunity Services from a renamed Department ofImmigration and Ethnic Affairs 23 December 1993: Department of Transport and Communications split. Functions assigned to Department ofTransport and Department ofCommunications 30 January 1994: Arts function transferred to renamed Department of Communications and the Arts, DAS reverting to Department ofAdministrative Services 25 March 1994: Department of Health, Housing, Local Govermnent and Community Services split into Department ofHuman Services and Health and Department ofHousing and Regional Development 11 March 1996: When the Howard Govermnent took office it abolished the departments of Housing and Regional Development and Tourism. Regional development was transferred to the Department ofTransport and Regional Development whilst housing (except welfare housing) and tourism were absorbed by the renamed Department of Industry, Science and Tourism; welfare housing was assigned to the Department of Social Security. There were several substantial transfers of functions from the Attorney-General's Department which were not reflected in changes in the departmental nomenclature: business, corporations and securities law, and insolvency, were transferred to the Treasury; consumer affairs functions were transferred to the Department of Industry, Science and Tourism. The Department ofInunigration and Ethnic Affairs was renamed Immigration and Multicultural Affairs upon transfer of the Office of Multicultural Affairs from the Department ofthe Prime Minister and Cabinet 18 July 1997: Upon transfer of the small business function from the Department of Industry, Science and Tourism, the Department of Industrial Relations was renamed the Department of Workplace Relations and Small Business 9 October 1997: Department ofAdministrative Services was abolished, most ofits functions being vested in the newly named Department of Finance and Administration. The shipping and maritime functions of the Department of Transport and Regional Development were transferred to the Department of Workplace Relations and Small Business. Meanwhile, the territories function was transferred to the Department of Transport and Regional Development and the sport function to the Department of Industry, Science and Tourism from a renamed Department ofthe Enviromnent, and 21 October 1998: After the 1998 elections, the employment function was transferred to the Department of Employment, Workplace Relations and Small Business from the renamed Department of Education, Training and Youth Affairs. Communications and the Arts became the Department of Connnunications, Information Technology and the Arts; with the transfer of resources to the newly named Department of Industry, Science and Resources, the Department of Primary Industries and Energy became the Department of Agriculture, Fisheries and Forestry. Enviromnent became the Department of the Enviromnent and Heritage. A Department ofFamily and Connnunity Services was fashioned from the residual parts of Social Security following establishment of Centrelink, the Child Support Agency transferred from the Australian 'L Taxation Office and assorted related functions from the Attorney-General's Department and the Department of Health and Family Services, renamed Department of Health and Aged Care. Customs administration was transferred from the Department of Industry, Science and Resources to the Attorney-General's Department. Shipping and maritime functions were returned to a renamed Department of Transport and Regional Services.

35