Jane Halton, Secretary, Department of Finance, Australia: Exclusive interview
Jane Halton is in charge of leading a huge reform programme to cut costs as well as increase accountability. She tells Winnie Agbonlahor how it’s going
Seven years after the global financial crisis hit, developed economies around the world are still feeling the aftermath. While some have returned to modest, precarious growth, others are still stagnating. Australia, on the other hand, weathered the whole storm almost unscathed.
Along with a fiscal stimulus and interest-rate cuts, China’s apparently insatiable demand for Australia’s raw metals and minerals helped its economy expand throughout the financial crisis. But these days there’s less demand from China, whose nominal growth has slowed to its weakest levels since 1999; and thus, after 23 years of growth and a huge mining boom, tumbling iron ore and coal prices have put a brake on Australia’s economy. As a result, the Australian government too is under growing pressure to reduce spending.
Jane Halton, the most senior civil servant in Australia’s finance department, says the country’s experience leaves its government in an awkward position: “It’s a difficult budgetary environment, and particularly in this country where we haven’t had recession,” she explains. “It’s not like in the UK where everyone understood there was a recession and it was difficult. We’re not in recession but things aren’t economically easy. So the realisation that the good times we’ve had for the last few years aren’t quite as good anymore, which has implications for things like government spending, is a much more difficult message to sell.”
The small initiative
To cut spending, in 2013 the government launched a huge consolidation programme. As part of the Smaller Government initiative – designed to save the government billions of dollars it planned the abolition of a large number of government bodies. So far 286 government bodies have been announced for abolition, with further reductions to be announced as part of the 2015-16 Mid-Year Economic and Fiscal Outlook due in January. More than 17,300 officials have left the public service, saving some AU$1.4bn (US$1bn). Overall, the government wants to get the number of employees down to 167, 000 – compared to 167, 340 currently.
Halton assumed her role in July 2014 and has overseen the majority of these reductions, while at the same time trying to modernise services. Combining cuts and reforms can present a risk to workforce morale, but says officials have responded well. “People are very taken with the opportunity to look at what a modern public sector would be like,” she says. “I think they are also realistic that public sector jobs wax and wane as circumstances dictate.”
Asked how the government can abolish so many organisations without losing significant expertise, Halton replies that a lot of the scrapped bodies had offered “very boutique and specialised” services and that “in the modern world it’s very hard to do things in isolation.” In many cases, the functions were absorbed by parent departments – and this, she argues, provides ministries “with more leverage.” For mainstream departments, “having the opportunity to work across a broader range of issues” is a real benefit in handling “the complexity of modern policy and modern regulation,” she adds.
There have been some slip-ups, though. The government pledged to abolish the Office of the Australian Information Commissioner by the end of 2014, but Senate (Australia’s upper House of Parliament) crossbenchers have been unwilling to pass the necessary legislation – leaving the office carrying on with insufficient resources. “With any big reform agenda, not all of it goes as quickly as you might like, or sometimes in the way you thought it might,” she comments, adding that “communication and clarity of purpose” have ensured that in the main the programme has proceeded smoothly.
Another of the keys to success, Halton says, has been “learning lessons from offshore” and adapting them to the local context: “You can learn something from everywhere; but every single circumstance is different, so whilst you might get some ideas on what’s going on offshore, you need to create a new approach that fits in with your environment.”
Along with budgetary matters and organisational reform, Halton is tasked with improving accountability across government. She introduced a rule requiring department to submit a corporate plan to Parliament: almost all hit the 31 August deadline, she says, setting out their “objectives, performance measures and allocation of resources.” From next year departments will have to produce regular performance reports, enabling the public to “see whether they’ve delivered,” she adds.
So how did ministries previously explain their aims and budgets? Departments used a variety of formats in reporting to a range of parliamentary committees, she explains, but the system was “a bit disjointed.” Now all must follow a common process for publishing their objectives and results. “We’re trying to make it easier for people externally to see what we’re intending to do; but also to streamline the reporting so that things are coherent, meaningful and accessible,” says Halton.
Making things up
Another part of the government efficiency drive has involved cutting red tape. As Halton argued in a lecture to the Senate in August, the problem of overbearing bureaucracy is exacerbated by the fact that “people make stuff up.” She explains: “Very often somebody somewhere decides that existing rules are not enough for them, and you also need to do x, y and z to augment the rules.” Subsequently, she adds, civil servants accept the added layers of red tape – which she calls “urban myths” – without going back “to the source.” This way, “everyone not only assumes but believes it to be true, and you end up with bureaucracy that isn’t even real.”
This behaviour is “not malicious or ridiculous or anything else,” she adds. Using as an example procurement policy, which falls to her department, she says that “it’s an indictment of us if we have not done our job in making sure that people across the civil service understand what the rules say. So we have to think about how we can communicate about what you really really do need to do to meet your obligations and what you don’t.”
Part of the problem is based in civil servants’ attitude to risk, Halton believes. “A lot of people think that you should manage all risks to zero and you should manage them all the same,” she says. “But one of the things we all know is that you can’t manage all risks to zero because some risks aren’t amenable to that. And in some instances, the risk of something happening is infinitesimally small. And so the notion that you’d apply the same treatment [everywhere] is obviously a fallacy.”
Halton argues that this particular approach to risk is prominent in civil services around the world. She adds: “As I keep saying to people: just because you’re taking risk doesn’t mean you’re being reckless. But you should take risk in a way that is calibrated and appropriate to the context.”
In the minority
Halton took on her current role after more than 12 years leading the health department. Asked why she moved, she replies that “when the prime minister asks you to take on a new assignment it’s very difficult to say no.” (In Australia, all secretaries – civil servants in charge of departments – are appointed by the prime minister, while their deputies are appointed by departmental Secretaries.)
On her promotion to lead the health department, Halton became the second woman ever to run an Australian federal department – the first had been appointed some 17 years previously. And she’s now become the first ever woman to become secretary of a central agency (a department at the centre of government) – leading media outlets to dub her the “most powerful woman in the Commonwealth bureaucracy”. Even today, only five of the 19 secretaries are women: “To say that I am relatively used to working in an environment where there aren’t a lot of other women around is a statement of the obvious,” she says.
While she says that being the only woman in meetings “doesn’t particularly fuss” her, she is a strong believer in workplace diversity, which, she says, makes for stronger decision-making. Her government doesn’t have quotas in place, but there is a target that 40% of board members should be female. “Some departments, including this one, actually meet that target, which wasn’t always the case,” she comments. She adds that the government doesn’t support quotas, and that personally she wants to “see how we go on the target front for a little while longer.”
Being one of a handful of female leaders can add extra pressure to the job. But Halton says that, while she is “very conscious” that she’s seen as a role model, she doesn’t “spend a lot of time agonising about it.” There is, though, one message she wants to make clear: women can succeed in their careers whilst bringing up a family. “My children have both left home now, but I’ve managed pretty difficult senior jobs whilst raising them,” she says, noting that her husband “has always been a very equal partner in the whole parenting deal”. It’s important, she says, that she provides “an assurance to women that you can undertake these kinds of roles, be successful in them and still manage the other parts in your life which may be important to you.”
Perhaps that message is getting through. Since Halton became Australia’s second ever female departmental secretary, their numbers have more than doubled. And the country scores well in the Women Public Sector Leaders Index, which measures the proportion of women among senior civil servants in G20 countries: in 2014 it came in second place after Canada, with 39.2%. So if Halton’s right that a more diverse leadership fosters better decision-making, the government is growing better equipped to handle the challenges thrown at it – including the thorny matter of convincing the public that whilst the good times seem to be rolling on, the government should probably behave as if they weren’t.