Embedding a Risk Management Framework in Public Sector Governance, Performance, and Accountability Practices: Insights from Australia
Public sector reforms have become an essential phenomenon of the Westminster system of governments. The reforms are commonly described under the banner “New Public Management” (NPM) which have intensified globally over the past five decades (Broadbent and Laughlin 2013; Hood 1995; Osborne and McLaughlin 2002). Despite NPM’s globally recognized characteristics (see, for details, Hoque’s Chapter 1, this volume), the actual embedding of the reforms in the various context has been wide-ranging (Hyndman and Liguori 2016). It is an incessant procedure of change in policies and practices that embodies public service organizations in Australia (Broadbent and Guthrie 1992; Guthrie and English 1997; Hoque and Moll 2001; Hoque 2008; Jacobs 2016; Moll and Hoque 2008). The reforms in Australia have been directed toward the design and implementation of better governance, performance, and accountability systems. On one hand, the overarching aim was to improve the quality outcomes (Arnaboldi et al. 2015; Cuganesan, Guthrie, and Vranic 2014; Lapsley 2009). On the other hand, constant changes to the ways in which public services are delivered are not letting embedding reforms by the appropriate implementation. This chapter discusses how the reforms in Australia embedded in the governance, performance, accountability systems and practices, and how these practices embraced, programmed, propagated, and imposed the ideas of risk and risk management. It also discusses how a risk management perspective provides the potential for an integrated framework for public sector governance.
The recent global COVID-19 pandemic (Andrew et al. 2020) and earlier financial crisis in the late 2000s and early 2010s (Bracci, et al.
* In Hoque, Z. (ed) (2021), Public Sector Reform and Performance Management in Developed Economies: Outcomes-Based Approaches in Practice, New York: Routledge (Chapter 4).
2015) have forced governments in Australia and globally to make budget cuts. This challenge has led governments to reassess the types and level of services they provide to citizens. It has caused job cuts and outsourcing of essential services in the name of budget repair across many countries. In Australia, NPM reforms over the years have resulted in outsourcing considerable public services to private companies (Podger 2018; Shergold 2015). Due to the rise of neoliberal governmentality and recent enchantment with the budget repair, many governments including Australia are trying to focus more on the financial management which reflects the dominance of the logic of “accountingization” or “fi- nancialization” (Rana and Hoque 2020). In recent times, budget risk management has become a buzz word for accountability and governance in the public sector. Recent public sector reforms worldwide are embracing the broader idea of risk and risk management and Australia is a good example (Barrett 2014; Rana, Hoque, and Jacobs 2019a). However, public sector organizations are increasingly placing greater emphasis on accounting and economic perspectives of risk management through the mechanisms of financial management (Hood and Miller 2009; Woods 2009). Consequently, the risk management logics are driven by accounting, economic rationalism, neoliberal ideas, budget pressure, need for collaboration, and innovation (Broadbent, Gill, and Laughlin, 2008).
The Australian National Audit Office (ANAO) reports highlighted repeated themes of problems of governance, performance measurement, and accountability. The ANAO reports reiterated what Barrett (2014,2019) has been contending for many years. Barrett (2014) argues that governments worldwide are suffering from a lack of public trust and Australia is no exception. Good governance, performance information, and demonstrating accountability is at the core of this trust (Barrett 2014). Further, Barrett (2014) argues that the lack of trust in public sector governance reflects disconcerting concerns about democracy and government. To improve governance, governments need to focus on risks and risk management to achieve the required outcomes. In response to these calls, the recent reform in Australia has been the introduction of the Public Sector Governance, Performance, and Accountability (PGPA Act 2013) (Barrett 2014; Rana et al. 2019a).
The PGPA Act requires the Australian Public Service (APS) agencies to establish a risk management framework and appropriate management control systems for management of the risk of failing in governance, performance, and accountability issues. This requirement has produced the Commonwealth Risk Management (CRM) policy which aims to help public sector organisations to embed risk management in governance, management control, performance measurement and accountability systems and practices. The introduction of the PGPA Act and CRM Policy has reasoned that, if embedded appropriately, the risk management perspective will integrate governance, performance measurement, accountability of APS agencies.
The challenges and problems of public services are not always constant but emergent and always changing, so does the need to embed reforms accordingly. Although considerable work has been focused on the ideas of reforms, these efforts will not be fully realized unless we examine their success and failure. We need to make the embedding of public sector reforms a reality, not just a catch cry. Therefore, the most important task for the government and APS is to understand how past reforms have been embedded and how the recent reforms are enabling the integration of management control, performance measurement, and accountability (Mahama et al. 2020; Rana et al. 2019a; 2019b). This chapter offers a framework for embedding reforms in Australia as it features the opportunities that present if risk management is used as an embedding perspective.
This chapter adopts a qualitative case study approach based on secondary data. It is based on an analysis of the relevant laws, legislations, reports, and documents to show how reform history, as well as the potential of recent reforms, play a key role in relation to integrating a risk management perspective. This chapter contributes to the literature by showing the tension between structural and policy changes through reforms and the way risk management can help embedding them. This dialectic highlights the weakness in governance despite many years of public sector reforms and the resulting opportunity to manage the risk of public services failure.