Scott Morrison’s decision to abolish four departments was not raised in Thodey review, a department secretary confirms

This article is more than 9 months old

This article is more than 9 months old

Scott Morrison’s decision to abolish four federal departments in a massive public sector restructure was not canvassed in the Thodey review of the public service, a department secretary has said.

Instead submissions by federal departments called for a relaxation of staffing caps and rules that demand offsets before they undertake new spending, with these policies blamed for spiralling consultant costs and a lack of investment in systems such as IT.

The departments also highlighted the importance of the public service’s role in delivering advice to government, in marked contrast to Morrison’s view that its primary role was service delivery.

On Thursday Morrison announced a major shake-up of the public service, a week before the government was expected to release its response to the review led by David Thodey, commissioned by Morrison’s predecessor, Malcolm Turnbull. The restructure abolishes four departments and results in five departmental secretaries being sacked: Kerri Hartland, Renée Leon, Mike Mrdak, Daryl Quinlivan and Heather Smith.

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Mrdak, the head of the communications and arts department, told staff he was first informed of the changes on Wednesday. A spokeswoman for the department of human services said its secretary, Renee Leon, also found out on Wednesday.

One department secretary has confirmed to Guardian Australia that portfolio restructures were not raised in the Thodey review in multiple rounds of consultation.

In a March 2019 issues paper, the Thodey review revealed it was considering calling for greater checks and balances on the termination and appointment of secretaries, and believed a “codified process” for appointments and clear criteria for performance were needed.

Government sources said Morrison plans to announce further changes consolidating the number of government agencies and proposing more investment in information technology systems.

In its Thodey review submission, the agriculture and water department blamed underinvestment for the poor state of IT systems, warning the department “lags in digital transformation and the technical capabilities needed to keep pace with developments in agricultural industries”.

“It is not seen to be possible to fund the necessary level of investment within the current budget rules and processes, and the current arrangements require that we keep old systems operating or apply Band-Aid solutions beyond their natural lives,” it said.

The current funding level “does not generate the step change in investment the department requires to overcome historical investment deficits and the absence of a financial model to support sufficient system investment”.

The home affairs department agreed that long-term investment was “hampered by the short-term nature of the budget process”.

“The current approach to four-year budget estimates, coupled with the election cycle, inhibits APS agencies from building a case for significant long-term reform, and securing long-term funding to support it,” it said.

“Current budget process operational rules require agencies to identify offsets for new proposals, even where there is no corresponding saving, or where the work is to address a specific risk that has been identified.

“Changes should be considered to the way departments manage risk, procurement rules, and the appropriation of funds for development work.”

The Nine newspapers have reported that Australia’s Border Force cut patrols to achieve budget savings which were approved by minister Peter Dutton.

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In 2014 Morrison, then immigration minister, announced the creation of the home affairs mega-department, a move which the Australian National Audit Office later found failed to bring the budget savings it promised and was beset by poor record-keeping and high turnover.

But the home affairs department submitted to the Thodey review that its creation from six original agencies was a success due to “strongly defined governance structures” such as updated delegations.

It suggested the review could “[learn and adapt] its example more broadly across the for future machinery of government changes”.

The home affairs department also submitted that “responsibility for developing policy advice to government should remain a core role of the APS”.

In August Morrison warned public servants that they must be “an enabler of government policy not an obstacle” and that once the government sets its policy direction he “expects them to get on and deliver it”.

Several departments called for greater flexibility in the average staffing level cap applied across the public service.

The infrastructure department said the cap “is a good discipline on recruitment” but had also increased the use of labour-hire contractors, which cost “around 40% more than permanent staffing” and caused a loss of corporate knowledge when they leave.

The home affairs department suggested “more flexibility and devolved authority to agencies to manage average staffing levels” within certain budget limits would help “more optimally meet the demands of growth in workload, [and] deliver programs with improved services”.