ADAM SHIRLEY:
I wonder whether at work you’ve had a consultant come in before, whether you are a consultant yourself? Because often when things could be improved, when there’s a problem or whether organisations, large and small, are looking to sharpen, sharpen up what it is they do, consultants come in. It’s been a part of the landscape in federal government for many a year, to quite a tune as well, tens of millions of dollars can be paid to the big boys and girls from places like PwC, EY and others, McKinsey, to name a few. And the current federal government reckons that there’s a bit too much money historically that’s been going to those consultants.
Dr Andrew Leigh is Assistant Minister for Treasury and the Member for Fenner here in the ACT, and he’s talking about a new Treasury evaluation unit which is aiming, amongst other things, to identify all the consultants and maybe cut back on the spending on them. Dr Leigh, good morning to you.
ANDREW LEIGH:
Good morning, Adam. Glad to be with you.
SHIRLEY:
Lest people think this is a bit of a hobbyhorse or something that is a good sound bite, what is the purpose and the potential saving of doing this?
LEIGH:
Well, this is an evaluation unit that will be at the heart of government that will basically ask the question: does it work? At the moment an assessment of evaluation across the public service found that it was piecemeal, that a lot of significant programs aren’t being properly evaluated. The science of evaluation has advanced a lot, but we haven’t done enough to measure what works.
So this is about spending taxpayer money more wisely and making sure that we’re refining programs so they’re as effective as they can be. It’s the sort of approach that’s been at the heart of the British Government for a long time, the Obama White House took it up, countries like Sweden and Finland have taken to doing high‑quality evaluations. And we know that there’s a lot of low‑quality evaluations that go on in the public sector at the moment, often outsourced to consultants. And so what we’re aiming to do here is to try and bring some of that work back in house, to build up the public service expertise and to ensure that the public service has the ability to rigorously assess the effectiveness of its programs.
SHIRLEY:
Prior to the last election you were one of the chief voices criticising the then government for their use, their extensive use sometimes, of consultants in various departments and programs. What risk is there that this is simply or could be seen as you chasing up an ideological bent and something you didn’t like about how the previous government did things?
LEIGH:
Look, there’ll always be a place for consultants. If you’ve got a temporary job where you’re not going to need to keep the skills in‑house, then it might make sense to hire consultants. But for something like evaluation, I think of that as really being a core purpose of government. It ought to be part of what we do. Just as sports people are constantly looking to continuously improve, good businesses are looking to refine their practices, so, too, governments should be making sure that their programs are as effective as possible.
And we’ve got, revolution now in evaluation through the use of high‑quality randomised trials. So you can have clear counterfactuals. It’s how we assess the efficacy of new medicines. And increasingly people are being able to use it in assessing the effectiveness of new policies.
SHIRLEY:
How will you ensure and how will the unit ensure that it’s measuring accurately to what degree consultants or useful or not and whether to scale back the spend on them?
LEIGH:
I don’t know if we’ll be evaluating consultants, although it is an intriguing idea. But we’ll be asking agencies to say to themselves: could this be done more effectively through the centralised evaluation unit? And that way we’re building up the public service capacity, we’re joining up government, and so Treasury is better linking true line agencies that are delivering programs, and we’re ensuring that Australian taxpayer dollars are as well spent as possible.
SHIRLEY:
Is it your view, Dr Leigh, and that of the government that to this point, at least in the last decade, federal government, the public service, has relied too heavily on external consultants?
LEIGH:
I think that’s undoubtable. We were very clear at the last election that we wanted to reduce the dependence on external consultants. You know, you’ve seen instances of policy development being done by outside consultants. And it really worries me when the public service has been run down to the point where under the former Liberal Government they weren’t able to do new policy development. That’s changed under us, we’ve said there will be appropriate moments to use consultants but it shouldn’t be the reflex approach of an agency.
Sometimes agencies were doing it because of that mindless public service staffing cap, and so they needed new bodies, but they’d hit their staffing cap and so then they’d go to consultants. And that was terrible for the institution and more expensive for the taxpayers. So we’ve removed that arbitrary staffing cap as part of the reforms that Katy Gallagher and others are putting in place.
SHIRLEY:
Who will head up the unit, and how will you decide who that person is?
LEIGH:
Well, it’s an announcement coming in Budget, so it’s all in the process of being established. But what I’m really keen to do is ensure that we’re tapping into the great work and evaluation that’s being done around the world. We know that there’s a revolution in randomised trials that’s occurring in developing countries, it’s occurring in business. Firms such as Apple and Google and Amazon are constantly conducting randomised trials. And they’re doing so because that’s a very effective way of testing whether a policy works. Increasingly when we’re looking at our own lives, we might well use randomised trials. Take an example from my own life, I’m a regular runner and I use compression socks based on a randomised trial done on Sydney marathoners where half wore compression socks, half didn’t, and the half that were randomly chosen to wear compression socks had better recovery times.
So we’re excited by the potential of that new technique, and, of course, there’ll be natural experiment studies being done as well, and the overall goal is to make sure that we figure out what works, better refine government programs and better use scarce taxpayer dollars.
SHIRLEY:
At 12 to 9, this text sounds like it’s someone from the public service: “Dr Leigh, I will put it to you as a question. Job‑specific skill allowances will be needed, though,” says this texter. “We need consultants because we can’t attract quality candidates and match the salaries and benefits offered by the private sector.” How much truth is there in that?
LEIGH:
I think the public service needs to make sure that it is an employer of choice. Katy Gallagher has said very clearly that she wants the public service to be a model employer and to build up those critical skills. There’s a huge investment in data, so we’ve had a new data profession set up headed by David Gruen and the Australian Bureau of Statistics, 300 data specialists hired last year. That’s exactly the sort of skill set that I imagine your texter has in mind there. People who have very specialist skills, who’d be highly in demand from the private sector but have chosen to work within the Australian Public Service because they know what they can learn through the data profession and ensuring that they’re working with the reams of new administrative data that are allowing us to better improve programs in the interests of Australians.
SHIRLEY:
As you mentioned, Dr Leigh, at 10 to 9, the final touches and the hard work being put into the budget, it’s all coming to a conclusion. Many of your constituents, as you probably know, in Fenner are really struggling to find a place to rent or with their mortgage payments. What serious consideration is the federal government giving to trying to provide real relief to a place where the rate of affordable housing is the lowest in the nation and our rents are sky high, only bettered by Sydney?
LEIGH:
When people say Canberrans have it easy, I always say, well, there’s two features: the winters are cold and the housing is expensive. They’re two challenges that has made it tougher for those in poverty in Canberra. We’ve invested in housing and homelessness services, working to set up the Housing Australia Future Fund, a $10 billion fund that will build social and affordable homes. We’ve announced our Help to Buy program, which will ensure that the government goes in as an equity partner for people to buy a home. That will really matter for a place like Canberra where a young couple who might find themselves unable to afford the repayments on a million‑dollar mortgage would instead be able to take out a $600,000 mortgage with the government as equity partner.
SHIRLEY:
There’s a strong argument to say some of those initiatives you haven’t announced won’t touch the sides in the situation we’re in month to month with inflation as it is and interest rates as they are. And you know that the stage 3 tax cuts you’ve committed to as a federal government would help a lot for people, particularly who wouldn’t benefit at the higher end. Are you giving consideration to maybe not clearing those stage 3 tax cuts?
LEIGH:
Our position on the stage 3 tax cuts hasn’t changed.
SHIRLEY:
Sure, but should it?
LEIGH:
We’ve said we’re not going to change our position on that.
SHIRLEY:
But do you think it should? I mean, if a government is agile and looks at the situation in front of it compared to what it was even six months ago, should you reconsider your position on the stage 3 tax cuts?
LEIGH:
No, look, our position on that hasn’t changed. But I would go to your critique before that the individual initiatives don’t solve the problem. I think we need to be really wary in public policy of magic bullets and the idea that a single solution will do everything. We’re pushing on a host of different fronts, the National Housing Supply Council, the homelessness initiatives, the Help to Buy program, the Housing Australia Future Fund. We need a whole range of initiatives here to deal with the big challenge that is housing affordability in Canberra. No single solution will solve the problem. That's why we're committed to working across a range of fronts and engaging constructively with states and territories.
SHIRLEY:
Another key issue on affordability – and some of your colleagues in the Canberra region, in Canberra federal seats, are making noise about this, NewStart, JobSeeker, as it’s called, that doesn’t touch the sides for a lot of people trying to live. So should it be increased in your view?
LEIGH:
We’ve not yet reached a formal position on that. Certainly the advisory committee came forward with a range of recommendations, 37 recommendations, one of which was to increase the JobSeeker allowance. I understand the strong case that’s been made there. I also understand the range of useful recommendations that have been made around employment programs, parenting programs and, indeed, one of the recommendations out of that committee was around better evaluation. So we understand the concerns. People have to recognise, though, after nine years of Coalition stuff‑ups we can’t solve everything in one or two budgets – it’s going to take a while for us to get the country back on track.
SHIRLEY:
If JobSeeker is not raised in this Budget, how hard might it be for you to look some constituents in Fenner in the eye and say, “sorry, we couldn’t afford it”?
LEIGH:
Well, there’s a whole range of things we’re doing to tackle disadvantage. I mentioned the homelessness initiatives before. Bill Shorten is working to make sure the National Disability Insurance Scheme is on track. Our aged care reforms are absolutely critical in terms of looking after vulnerable, older Australians, and the expansion of early childhood ensures that early childhood workers and those who rely on earlier childhood are taken care of.
There’s just a whole host of things that we need to do right across the community. JobSeeker is one issue. It’s an important issue, but it’s not the only game in town.
SHIRLEY:
As always, Dr Leigh, really appreciate your time for discussing these things. Thanks for your time today.
LEIGH:
Real pleasure.