Our Top-Heavy Bureauracy

This article from the July 2014 edition of the IPA Review is by Ian Mence Fellow for Entrepreneurship with the IPA, Dom Talimanidis.

As far as cuts to the public service go, the 16,500 announced by the Coalition in the recent budget were mild.

Yet it didn’t stop the media portraying the cuts as ‘the most severe since the early years of the Howard Government.’

Despite his early vigour in reducing the size of the federal bureaucracy, John Howard would later oversee a rapid expansion of the Australian public service. Between 1999 and 2007 the number of ongoing staff grew by 41 per cent to 143,870. This expansion continued under the Labor governments led by Kevin Rudd and Julia Gillard, despite that government’s imposition of an ‘efficiency dividend’.

During this period the public service became increasingly top heavy. In the 14 years between 1999 and 2013 the number of executive level bureaucrats increased by 122 per cent to 41,721. As a result of this intense growth there is now one manager for every 2.5 workers.

We’ve seen similarly incredible growth in the senior ranks of the non-executive level employees, particularly the most senior category amongst them, APS 6, who now make up over 20 per cent of total federal bureaucrats.

Receiving a six figure median total remuneration package, APS 6 classification now represents the largest cohort in the public service.

This growth in junior and middle management has been mirrored by a fall in the number of lower category employees. Since 1999, the number of federal bureaucrats employed at APS levels 1 and 2 has shrunk by two thirds to just over 4,000 in total.

In a review of bureaucrat’s work levels in 2012, the Public Service Commission noted that ‘there [had] been a tendency to classify some positions on bases other than work value, particular to attract and retain staff.’

This practice, which often sees people move up the ranks without any noticeable change in their workload or the nature of the work being performed, is often termed classification creep. In effect it means that someone is earning very good money to do a job that could be done by someone on a lot less.

Most businesses would demand something more of an employee, be it in terms of workload or responsibility, before handing them a pay rise and a new title. But, of course, the APS is not most businesses. And although the APS Code of Conduct dictates that employees must use ’Commonwealth resources in a proper manner,’ one suspects the employment of staff at inappropriate levels is not the only time senior managers flaunt this rule.

With a total remuneration package of between $236,000 and $379,000 per year, SES level staff were once a rare breed. However, since the turn of the century, when they numbered just over 1,500, there has been a 76 per cent rise in their numbers.

Although a cap instituted in 2011 has meant that many departments have now limited the number of possible SES appointments, the fact remains there is no good reason that we should maintain the numbers of highly paid senior staff at nearly double what they were in 2000.

Yet any discussion of public service reduction, such as those in the recent Commission of Audit, is met with alarm.

Although the Coalition has pledged to reduce the size of the APS by 16,500 over the next four years, it is obvious that undoing some of the damage done early in this century will take a more extreme change, starting with the culture of the organisation itself.