Each major crisis is different, but public sector leaders can learn from the successes and failures of past responses and apply them to present and future crises.
The role of government in a crisis has been a key theme through ANZSOG’s activities this year, and students in the 2020 Executive Master of Public Administration were able to hear firsthand from former Australian Prime Minister Kevin Rudd about how his government dealt with the Global Financial Crisis in 2008/09, and his views on the Australian National Cabinet and the response to COVID-19 pandemic.
Mr Rudd spoke as part of a virtual panel for the EMPA subject Designing Public Policies and Programs (DPPP), delivered by ANZSOG’s Associate Dean, Dr Christopher Walker, on the topic of policy centralisation, the role of the Australian National Cabinet and he also took questions from students.
He outlined the steps needed to address a major national crisis: beginning with a careful analysis of the crisis, and the essential decision-makers and advisers needed for the response.
“Then the implementation of required measures, followed by communication to all stakeholders beyond the decision-makers, and finally the institutional flexibility to understand when to exit from crisis mode into normal operations,” he said.
He spoke of the difficulty for politicians of making important decisions quickly, and often with imperfect information.
“You have two categories of key decision-makers: those who offer advice on the nature of the unfolding crisis, and those with the expertise to produce policy. These are not identical skills. You also need to have people monitoring every twitch of the financial markets and develop that intelligence you need to make decisions.
“The Global Financial Crisis was a crisis of institutional stability and a crisis of the stability of markets. The key decision makers were myself, the Deputy Prime Minister, the Treasurer and the Finance Minister, and the key was breaking up tasks into manageable chunks.
“One of the advantages of the GFC response was that it was based on regulatory decisions that had an immediate effect on their implementation and could be made by the Commonwealth government.
“My observation of the COVID-19 crisis is that states have to be involved more because they have so much responsibility.”
Mr Rudd warned that the importance of communication could often be underestimated by people making policy decisions.
“Communications can be lost internally, because everyone’s exhausted by the time they get the decisions done. But unless you bring the country with you on a rolling basis you can lose all the good work that you’ve done.”
“This final issue of when to exit crisis mode can be very hard to judge, during the GFC we used the LIBOR (London inter-bank offered rate) returning to normal levels as a key marker for the end of the immediate crisis.”
“The GFC response overall was a success – no financial institution failed and we avoided recession”
He said that during the GFC, despite the centralisation of the response, the Commonwealth government had done grassroots work with other jurisdictions – such as putting together local jobs packages for communities “where we could predict that the unemployment rate would be three or four times higher than the rest of Australia”.
Mary Ann O’Loughlin, a senior public servant at state and Commonwealth level and Executive of the COAG Reform Council, said that any national crisis would go to the centre to start, because of the need to work out which aspects of the crisis the centre would be best to deal with.
“There have been different experiences in a few areas with different crises, based around the cause of the crisis, the government levers involved and how the crisis evolves,” she said.
“The Global Financial Crisis in 2008 was one where all the levers were held centrally, compared to COVID where Premiers and Chief Ministers had to be involved because they controlled a lot of the levers, and because things played out differently in different states and that changed their response.”
“A lot of the keys to the response, such as contract tracing, were done at a local level, and states like NSW did that response very well. The crucial thing was a nuanced understanding of local issues.”
Sally Washington, a past director of the New Zealand Policy Project, made the comparison between the Christchurch Earthquake and the COVID-19 response, saying that the response could be divided into three themes – policy, operations and communications – to mobilise the collective capacity of government.
“There’s lots of innovation in the public sector during a crisis because people have had to start working together urgently. So, how do we scale this innovation outside of a crisis? I think not doing this was one of the failures of Christchurch and I hope this time, under COVID-19 things will be different.”
Professor Gary Sturgess, NSW Premier’s ANZSOG Chair in Public Service Delivery, warned that the way governments could operate during a crisis was not necessarily sustainable.
“We need to know how to work together in a crisis, but the big lesson in the aftermath of a crisis is that people will make sacrifices to get through a crisis that won’t happen in normal circumstances,” he said.
Ms O’Loughlin said that the centre needed to devolve power to deal with non-urgent crises and systemic failures in social policy.
“A crisis isn’t always a huge thing that everyone knows about, or cares about. How do we respond to those areas of social policy failure? I look at issues like child protection, homelessness, domestic violence – they are not going to be solved by clever people sitting around a table, the centre has to give resources and structure policy but also has to cede control to people on the ground who know what is going on. You also need to accept that you are going to fail, and that you need to iterate towards success.”
Improving state/commonwealth cooperation
The creation of National Cabinet has been one of the key features of Australia’s coordinated response to COVID-19 and has given rise to hope that the pandemic can lead to a more effective federation in the long-term.
The panel’s discussions also turned to the future of the federal system and how to create better forms of collaboration and better relationships between the tiers of government.
Professor Sturgess said that centralisation was only one mechanism of cooperation, and that looser, non-hierarchical forms of cooperation could deliver more in the long term.
He spoke about the work done in the 1990s, following the Premiers’ Summit in 1990 to develop ways for the states to co-operate.
“National Competition Policy didn’t just work because the federal govt handed over bribes, the issue was much more about non-hierarchical co-operation, and a form of horizontal federalism that could get sovereign states to co-operate. For example, the National Energy Market was devised by the states collectively.
“We don’t invest enough serious resources into developing the capability for more sophisticated cooperation.”
ANZSOG Dean and CEO Ken Smith said that the principles of subsidiarity and cooperation were important.
‘A lot of effort needs to go into determining where decisions are best made, and determining where we need local knowledge, not a one-size-fits-all approach,” he said.
“There are many reforms in the Australian system that have emanated from the states, such as the national curriculum.
Mr Rudd said that he thought he was ‘the most federalist Labor Prime Minister we’ve ever had’.
“That came from my experience in government in Queensland, and an intellectual understanding that under no circumstances could the federal government do any better in terms of direct service delivery.”
“The best form of federalism is one with many forms of collaboration, and one where leaders and bureaucrats have built up high levels of mutual trust.”
He said that National Health and Hospitals Reform was an enduring reform put in place by his government, that had put a floor under what the Commonwealth government would contribute to hospital costs.
“I had made an election commitment to end the blame game, and the slump in funding from the Commonwealth to 35 per cent of the overall cost of hospitals,” he said.
“The final reforms went broader and took in primary and acute care, post-acute and aged care and how they all fit together across the system and across geography.
“As a political leader I was deeply dependent on senior health department staff to make this happen.”
Mr Rudd said that despite the strength of the Australian public services, one of the gaps in public service policy capability was long-term national policy planning in areas other than Defence.
“We need to develop institutional capacity in government to manage these social, economic and environmental policy questions,” he said.