The New Super-Bureaucrats

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Public servants used to be seen but not heard. The old culture of government bureaucracy, inherited from the British public service, featured permanent heads of department, secure in their tenure and able to dispense free and frank advice to their ministers.

That system was already fraying under the Hawke and Keating governments. It broke down completely under John Howard who sacked a number of Labor-appointed departmental secretaries and placed the rest on performance-based contracts. Australia’s senior bureaucracy moved towards the US model, where partisan party operatives are often parachuted into senior roles at the change-over of each administration (as President Obama has done recently, despite objections from Republicans in Congress).

Following the night of the long knives after John Howard took control in 1996, the bureaucracy largely knuckled under and did the bidding of Howard and his abrasive head bureaucrat, Max Moore-Wilton. In the most notorious example of this politicisation, the deputy secretary of the Department of Prime Minister and Cabinet and then-chair of the People Smuggling Task Force, Jane Halton, publicly backed the dubious statements of minister Peter Reith during the children overboard affair.

Halton, who is now the head of the Health Department, later spoke of her experience to Canberra Times journalist Paul Malone. "One of the most difficult things in the public service is being a public face, because we don’t seek the limelight," she told him. "That’s not why we do these jobs. If I wanted to be a public face, I would not be a public servant."

Halton’s comment is worth revisiting this week, because two of the Government’s most senior public servants have been very much in the limelight. It may be something of a trend, which suggests interesting implications for the future of the Australian public service.

You don’t get much more public than Channel 7’s Sunrise with David Koch — especially when you’re a famously dull central banker. But that’s exactly where Reserve Bank governor Glenn Stevens found himself yesterday, discussing the niceties of the RBA’s boardroom seating arrangements with Sunrise‘s "Kochie". But after showing Kochie around the boardroom, Stevens then issued a trenchant warning on interest rates.

Stevens highly public intervention in the debate about Australia’s incipient property bubble was calculated for maximum effect. He specifically warned mum-and-dad investors about getting "leveraged up into property" and signalled, in the strongest possible terms, that the Reserve Bank would be lifting interest rates in the near future.

Meanwhile, at the little-known Weereewa Festival near Bungendore, Treasury secretary Ken Henry made a big splash about Australia’s water policy. Henry is a well-known environmentalist, who in 2008 took a month off to go bush on a zoological field trip to study wombats. "Water management on this driest inhabited continent on Earth has been a disgrace," he was reported as saying at the festival, adding that in three of the last 10 years in the Murray-Darling, "water extraction actually exceeded inflows."

It was a statement that could hardly have been seen as anything but political, given the sensitivity of water policy. In fact, with irrigation rights in the Murray-Darling a live issue in the recent South Australian election, it was arguably party-political, a place a senior public servant is never supposed to go.

The public profile of Henry and Stevens has been developing since before the last election. Under Howard, Henry criticised the former government’s $10 billion water plan, claiming Treasury was not even consulted. The Coalition took note, deciding that Henry had gone over to Labor. He has since tangled with the Opposition in some heated exchanges in Senate estimates. As a result, Henry has become a polarising figure in federal politics, seen as a fellow-traveller of the Government. Should Tony Abbott win the election this spring, Henry will be on his way out.

Stevens, meanwhile, has been hinting at a campaign on housing exuberance for some time. As Peter Martin points out today in the Sydney Morning Herald:

"Unstated but well known in the circles in which Mr Stevens mixes is that he has the power to ensure borrowing to buy property is no longer a ‘risk-less, easy, guaranteed way to prosperity’ and is thinking of using it. He told Parliament’s economics committee in February he was increasingly attracted to the view that where a boom became widespread and was funded by borrowed money, he should be prepared to slow it by ‘leaning into the wind’ and using all the tools at his disposal, ‘which would include interest rates, but not be limited to that’. One tool would be ‘open-mouth operations’ — speaking directly to the public."

The interesting thing about both the interventions by Stevens and Henry is that they come in response to manifest policy failures by successive Australian governments. The tax breaks and public subsidies that flow to property investment have long had a distorting effect on Australian housing affordability, as Fairfax’s Tim Colebatch points out today. But because no government is prepared to alienate the majority of Australians who already own a house, tax policy continues to encourage the irrational mania of the housing market.

As for water policy, Henry is merely stating what everyone from Bill Heffernan to Penny Wong already knows: we take too much water out of our inland rivers and, as a result, they’re dying.

Some, like Richard Farmer in Crikey yesterday, have decried the high-profile public exposure from unelected public servants. But for those trying to understand the way public policy is made in this country, the interventions should be welcomed. Henry and Stevens may not be elected, but they are pivotal figures in the Australian polity — as responsible for setting economic policies like the stimulus package as elected Treasurer, Wayne Swan, is.

The recent publicity for senior bureaucrats coincides with the release of a major new report by the current head of the department of Prime Minister and Cabinet, Terry Moran. Moran, a former senior bureaucrat in both the Victorian and Queensland governments, is a career mandarin with a smooth but ruthless style that has endeared him to Kevin Rudd, but less so to subordinates. Moran’s report lists 28 recommendations and canvasses some of the issues of the Senior Executive Service — the government’s ruling class.

Moran wants the Public Service Commission to have a say in the appointment of heads of departments — a move unlikely to be welcomed by governments. He also says that the number of positions within the SES has grown rapidly, without any evidence of a pressing need for more top brass. In fact, top executive positions in the federal government have grown by 80 per cent over the past 12 years.

Politicians retain the real power in our system of government but it appears the bureaucracy is becoming more influential. If that leads to power being vested in unelected, unsupervised officials, that’s a problem, but if it leads to more open and rigorous debate about public policy, it may well be a good thing for our democracy.

Ben Eltham

Ben Eltham is New Matilda's National Affairs Correspondent.

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