More changes are needed to diffuse digital technologies in government

Some argue that governments are inherently slow or inept in applying digital technologies (Fishenden and Johnson 2014, p. 2), and indicate that greater application of digital technologies, if adopted well, could fundamentally change the way that governments operate (Johnson 2014). Commentators point to apparent obstacles to the adoption of such technologies — risk aversion, inadequate skills, outdated procurement practices, siloed departments, poor cooperation between governments, and the lack of commercial imperatives for change.

While Australian governments are lagging households (but on a par with the private sector businesses) in their low rates of adoption of new technologies, there is little evidence that they are passive in adopting digital technologies. Nor is there much in the literature to suggest that bureaucracies are inherently lacking in innovation or opposed to change (Ritchie 2014). It is clear from the discussion in this report that Australian governments (particularly at the subnational level) have already made increasing use of digital technologies in on-the-ground service delivery — sometimes in novel ways. Exemplars are the release of data for private development of apps, and the use of drones and sensor technology in managing infrastructure. At least some Australian jurisdictions have developed regulatory regimes that have allowed the entry of ride-sharing (a permissiveness that is not true of many other countries). Many routine, but important, processes of government have been automated through online tools (such as eTax). It is also clear that governments intend to exploit further the benefits of such technologies, even if there are obstacles to their immediate implementation (e-health being a classic example). This

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counters claims that Australian governments are doing little, but does not rule out the possibility that they are not doing enough.

Some argue that governments need to be ‘agile’ to realise the benefits of innovative technologies. For example, a UK civil servant who is an advocate for a different model of bureaucratic decision-making argued that ‘agile is a mindset, a culture, around delivering small steps forward fast and often’ (Ollerhead 2015). Of course, the ‘Agile Manifesto’ that initially originated in software development decades ago might sometimes be useful for government policy making (GAO 2012). Few would contest the value of agility if it entails breaking tasks into manageable components executed efficiently, engaging and collaborating with diverse stakeholders to develop and test new policies, demonstrating early working versions of a policy (trials) and a willingness to change policy direction as new information becomes available. The challenge is to operationalise that in a way that policymakers would see as implementable.

Actual experiences of the application of Agile methods in the United Kingdom found many positives, but also some defects (NAO 2012). The extent to which it can apply to policy formation, rather than policy delivery is also less clear (for example, working models can be hard to trial and the scope for collaboration with external parties is sometimes constrained). Further, many government initiatives should be slow, cautious and deliberative, as demonstrated by decisions about public infrastructure (PC 2014b) and big social programs, such as the NDIS, where careful implementation is required (PC 2011). Regulatory history is replete with examples of ill-thought out, ostensibly agile responses to emerging problems.

Regardless of the pace at which initiatives are developed and introduced, there remain genuine issues that confront governments in fully realising the benefits of digital technologies, and the solutions are not necessarily straightforward.

Changing a risk-averse culture

The public service role should be about identifying the risk factors and risk tolerance levels around new technologies, not about trying to eliminate all risk. However, the willingness to adopt new technologies and innovative approaches (particularly in national level policy making) is often stifled by risk aversion and a belief that failure is unacceptable — the status-quo is often considered easier and less risky to manage than exploring other options.

Mazzucato (2014) notes that the public discourse on innovation and risk taking focuses almost exclusively on failures of government. In this light, Ritchie (2014) notes aversion to change is not necessarily surprising as incentive mechanisms emphasise avoiding negative feedback rather than gaining positive outcomes.

While a greater weight on bipartisan politics, or senior managers and elected officials providing some backing for public servants, or a media less driven by a ‘gotcha’ mentality might help, none of these are realistic eventualities on a broad scale. Rather, some possible strategies are:

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• Encouraging internal units within departments whose purpose is to be innovative (for example, nudge units that exploit the low costs of randomised experiments using different online forms to test the best approaches to encouraging tax compliance or organ donorship). To be successful, these units would have to be seen as an integral part of delivering on an agency’s core functions — not simply as a specialist unit doing side projects.

• Drawing on precedent in other jurisdictions locally or globally provides a basis for innovative policies (for example, decisions by the ACT and NSW Governments on Uber provide legitimacy to ride sharing services and an example for other governments to follow). A Behavioural Insights Team was developed in the United Kingdom in 2010, and the imprimatur and respectability it received from the British Government made it easier to set up similar units in the Victorian and NSW Departments of Premier and Cabinet, and most recently the Behavioural Economics Team of the Australian Government.

• Providing the Minister with a good faith defence. For instance, the Office of the Australian Information Commissioner provides public sector agencies with advice on privacy. If an agency following the advice of the Commissioner were subsequently found to have contravened privacy, then the responsible minister can legitimately argue that the relevant agency reasonably acted in good faith on advice from an expert body.

• Drawing on recommendations and stakeholder engagement processes by external independent bodies for innovative, but risky, policy options (in part, a role of the Productivity Commission).

• Trials that can test new ideas before their rollout — they can be both innovative and cautious at the same time. Leading government agencies around the world are increasingly investigating (and using) policy experiments or trials in order to learn what policy features are effective once implemented on the target population and adapt the policy design to make best use of this information. In this way, governments can experiment on a small scale with initiatives that make particular assumptions about policy implications, and roll them out on a larger scale if the policy is found to be effective in meeting its objectives. Breckon (2015) sets out how and when experiments can best be used by governments.

• Attempting to obtain agreement from all relevant parties (such as all states and territories) for a new policy. Each can defuse the blame if the policy fails, and inevitably (in the case of states and territories) the failure will be the responsibility of all sides of politics, given that states rarely share a single political ideology.

• Adopt measures that make lobbying more transparent, reducing the returns from hidden advocacy against policy innovations.

Of course, factors such as leadership and crises that necessitate action (because the status quo is no longer feasible) can be sources of innovation, but these cannot be manufactured.

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Government procurement

Procurement on behalf of the Australian Government is governed by the Commonwealth Procurement Rules, which mandate the use of AusTender, the Australian Government’s centralised web-based procurement information system. There are standardised contracts for lower-risk, lower-value tenders and procurement panels are often used for regular ongoing purchasing. In recent inquiries into the process, concerns have been raised over the complexity and liability issues around contracts, and the cost to business of participating in multiple procurement panels (Senate Finance and Public Administration Committee 2014). Furthermore, Fishenden and Johnson made the following observation:

… industrial age procurement processes are not only a significant driver of red tape but are out of sync with the dynamics, timeframes and innovation required in digital government administration. (2014, p. 11)

Government policy has recently placed a greater emphasis on the use of coordinated (whole-of-government) and cooperative (multi-agency) procurement arrangements. A downside of the larger-scale procurement models is their tendency to favour large, established firms, because smaller enterprises may be unable to deliver goods and services on the scale required. While this may be desirable if larger firms can access economies of scale to deliver at lower costs, it also limits the competitiveness of the tender process.

The Digital Marketplace was announced as part of the recent National Innovation and Science Agenda (Australian Government 2016a). Currently under development (led by the Digital Transformation Office), the Digital Marketplace will break large-scale information and communication technology (ICT) procurement requirements into individual components which smaller suppliers are able to deliver. The project is based on the recently launched UK Digital Marketplace.

However, there remain — for legitimate reasons — limits on the extent to which procurement can be used to enhance public sector adoption of technology. For example, the Australian Government Cloud Computing Policy, adopted in October 2014, mandates a

‘cloud first’ approach, meaning agencies must adopt cloud technology where it is fit for purpose, provides adequate protection of data and delivers value for money. However, due to the security issues surrounding cloud computing, many suppliers are not permitted to supply cloud services to Australian Government agencies.

Development of skills

The skill sets required within the public service need to evolve in tandem with technological change. At a minimum, a core set of public servants need to be able to understand new technology sufficiently to assess its risks and likely impacts, and provide appropriate advice. In many instances, governments face no greater problems in acquiring skills than does the private sector — they employ or contract people with expertise. The

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issue then is to ensure an adequate supply of people with the right expertise at the economy-wide level (chapter 2).

Staff who are willing to try new approaches need to be supported by management (Ryan and Ali 2015). There are no obvious obstacles to appointing senior bureaucrats familiar with the new technologies or developing champions for technological innovation across the public sector (indeed, this has already happened in some agencies). A reoccurring message, however, from the Commission’s regulatory and policy reform work has been that even where senior bureaucrats are supportive of change, the practical implementation by middle level and front-line staff often lags (PC 2013d).

One (relatively modest) obstacle to technological diffusion is that public sector performance management systems are often cumbersome, and not suited to shedding people whose performance in new working environments may be inadequate. Given budget constraints, this limits new hires. Recent significant re-structuring and downsizing in the Commonwealth public service suggests that public sector agencies are able to shed people without adequate skills through standard redundancy arrangements. Nevertheless, the Commission’s report into workplace relations indicated that the removal of terms that specify unnecessarily lengthy, costly and inflexible performance management and termination processes from agency enterprise agreements would better enable workplace restructuring, but also noted that this would come at some cost (PC 2015e).

Better coordination between agencies within governments

Increasingly, appropriate policy responses do not fit neatly with the competencies and responsibilities of any single agency. Good policy design and implementation therefore necessitates good coordination between government agencies, and a single entry point of contact/advice — that is, improved ‘horizontal governance’ (OECD 2015b, p. 240).

Better coordination between national, state and territory and local governments is also necessary to realise the benefits from technology-enabled information sharing. While national policy makers may have the data or analysis to inform regional level policy making, regional agencies may have better information on local needs that could inform and improve the effectiveness of national policy. For example, a national government may finance a public research body developing blue sky technology, while a regional initiative to link up firms in the area with the research facility could help extract more economic benefits from the national investment (OECD 2015b). The Productivity Commission (2015b) similarly highlighted the importance of local involvement in the implementation of innovation policies. Clarity on the roles of particular levels of government and government agencies sets the stage for better coordination and avoiding wasteful duplication.

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Improving policy making processes

The adoption of technological tools that use connectivity and real-time information sharing can (in some policy areas) give agencies timely access to information and the ability to change direction quickly and pursue policy goals more effectively. This can allow policy makers to engage with networks of people and organisations more effectively in policy design and implementation. Such engagement is essential to ensure policies are appropriately targeted, reflect tradeoffs that citizens are prepared to accept (for example, between quality and price) and are able to deliver outcomes valued by the community.

New communication technologies allow government to include a diversity of stakeholders in policy development processes who are affected by policy changes, but lack an organised representative organisation. Such engagement can reduce capture by vested interests and enable more innovative policies than those that emerge from traditional processes involving just the central players (OECD 2015b).

Small changes in policy design can have significant implications for policy effectiveness and efficiency (OECD 2015b). Small scale, frequent milestones are important to gather and evaluate information, enabling responsive changes in direction. Rapid changes in technology mean there needs to be a much stronger focus than in the past on diagnostic monitoring and evaluation, and these processes need to be embodied in programs and policies from the outset. This is particularly important for new and emerging areas of policy where the scope for learning and identifying good practices is greatest.

Using digital technologies for more accountable government

Accountability of governments largely rests on timely (and relatively complete) divulgence of reliable information about their actions, and some responsiveness to the resulting feedback. As highlighted above, digital technologies have made it easier for governments to convey information to people, easier for people to find out about government activities, and easier to provide feedback and other information to governments. This includes greater scope for real-time monitoring of, and commentary about, government activities and services.

These developments are likely to make governments more publicly accountable than in the past as any apparent lack of transparency by a government in its policy making and processes is considered indicative of a potential problem. Australia has recently joined the Open Government Partnership (with 68 other countries) to implement open government reforms.²² Many of the suggestions emerging from the Partnership appear to be pragmatic and specific (for example, online divulgence of grants).

Any vision that open government initiatives enabled by technology will fundamentally transform policymaking is, however, likely to be idealistic, and indeed designers of

22 See https://ogpau.govspace.gov.au/

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accountability tools need to be mindful of their potentially perverse effects. For example, tools such as TheyWorkForYou.com and GovTrack.us apparently elicited strategic behaviour by UK and US politicians respectively to make them be seen to be more politically active in debates and leadership, even when they were not (Tauberer 2014).

Furthermore, most policy makers and politicians still evidently feel the pressure to respond quickly to problems as they arise, locking in details of policy responses at early stages without scope for consideration of alternative options or re-evaluation on-route to the end objective (PC 2012). Another consequence of such an approach is a tendency for some governments to react to an apparent problem with more regulation, rather than take the risk that the problem may escalate before a more appropriate policy or market solution is found. Nevertheless, greater divulgence is very likely to increase the scope for citizen participation and provide more useful information about the activities and performance of government agencies.

FINDING 4.9

Governments (particularly at a subnational level) have already made increasing use of digital technologies in on-the-ground service delivery. Some adoption of technology in regulatory processes is also evident. There remain, however, issues that governments need to confront before the benefits of digital technologies can be more widely realised.

• A risk averse culture in the development of policies that are wide-reaching within the relevant jurisdiction could be assuaged by measures such as: greater use of policy trials, relying on precedents from other jurisdictions; and drawing on recommendations and advice of independent agencies.

• Skill sets within the public service need to evolve in tandem with technological change. The capacity of agencies to recruit staff with relevant skills and shed those with inadequate skills could be enhanced by more flexible performance management and termination conditions in agency enterprise agreements.

• A sharing of data and cooperation between agencies would improve capacities to solve complex problems that do not fit neatly into the competencies of a single agency.

• Governments need to find ways to:

– exploit, in their program delivery and policy making processes, the increased transparency that comes with digital technologies

– avoid locking in details of policy responses at early stages without scope for genuine re-evaluation ‘en route’ to the end objective.

As digital technologies deliver better outcomes for consumers by disrupting some long-established ways of doing business, there are equal aspirations that digital technologies can also improve how government functions. Taking a considered approach to the opportunities offered should see considerable improvements in the productivity of the public sector, as well as in the private sector.

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