Management babble from Parkinson

 

Martin ParkinsonNow I am not against Martin Parkinson, short-term Treasury secretary, speaking out to defend his organisation.  This is what you would expect a leader to do.  It is miles ahead of Peter Harris, Chairman of the Productivity Commission, who chose to publicly denigrate the PC staff by calling them dull.  (Dull, my arse, but please, please, could the PC release shorter reports!)

Actually, there was quite a bit of interest in the speech Martin Parkinson gave to the Institute of Public Administration in Canberra this week.  There was the annoying self-congratulatory tone and the perennial excuse – we cannot defend ourselves in a specific sense because we do the bidding of the government of the day.

And, sadly, there was all that management babble which has become a hallmark of how public servants speak and write (private sector too?):

  • Strategic Review (one of the worst documents ever released by Treasury, confirming the usefulness of the (utterly fatuous) wellbeing framework);
  • Women in Treasury project;
  • Progressing Women initiative;
  • Inclusive Workplace Committee;
  • Capability Review

He didn’t mention the INDEPENDENT review of the Treasury’s forecasting record which was intentionally manipulated to deal with:

  1. the very short term;
  2. excluded the revenue projections of the Mineral Resource Rent Tax.

In other words, a pointless exercise which concluded that Treasury does a pretty good job, compared with private sector forecasters – that have about 1/10th of the staff numbers doing the same job,  by the way.

But here’s the sentence of Martin’s speech I really love:

While we can always be better and more active in engaging with business, I reject categorically the view that we simply don’t understand business.

Here’s the thing – there is plenty of evidence that Treasury does not have the faintest understanding of business – indeed, much sympathy for business.

When it came to the design of the RSPT, for instance, it was absolutely clear that the Treasury officials didn’t have a clue.  The difference between EBIT an EBITDA – crucial in mining – was not understood, for instance.

And what about the complete fiasco of the employee share option taxation arrangements … again not a clue, including the fact that there are multiple versions, a point that Treasury officials did  not understand?

Now I am very happy to read about the initiatives Treasury is taking to further contacts with business, including secondments.  And I do accept that governments make insane decisions and Treasury then has to come in to mop up the mess.

But I have enough inside knowledge to know that Treasury’s ignorance and naivety, when it comes to the details of business operations and particular industries, have been on show for years.  I can only hope there will be real improvements.

Update:  I forgot to mention the fiasco of the carbon price modelling exercise.  Recall the assumption that there would be a world carbon price by 2016 – sure. (Wake up, Judith.)

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26 Responses to Management babble from Parkinson

  1. H B Bear

    Treasury’s modelling of the carbon tax marked the point at which it ceased to be a useful participant in government decision making and became a pom-pom waving cheerleader.

    The place needs purging – starting with Parkinson, who should have resigned already.

  2. .

    Carbon tax modeling was dishonest crap which was not replicable. Time to shut it down and open a new ministry of finance and eject the ALP and Greens hacks.

  3. Econocrat

    The whole place is a total joke.

    Treasury needs to be abolished. Parkinson should be the last Secretary.

    Start a Commerce Department in Sydney, put tax and corporoate governance, financial markets stuff in that, and sack the clowns that are currently faffing arround with this stuff in Canberra. Move International to DFAT, Fiscal to Finance, and forecasting etc can just be done by Finance, ABARES, RBA, (and PM&C I suppose). Difficult to see how they could do worse.

    PC should be given a broader economic reform agenda.

    Treasury is about 20 years past its used by date.

  4. Judith Sloan

    PBO could do forecasting, like UK.

  5. Bear Necessities

    The biggest joke in their carbon modelling was that in 2015 there would exist a worldwide carbon market.

    The biggest assult on Treasury’s reputation has been Treasury itself.

  6. Rabz

    Treasury needs to be abolished.

    Gee, so does the AHRC and the ALPBC.

    Savings, savings, savings!

  7. Andrew of Randwick

    Judith, don’t underestimate the power of a Capability Review – if it is done at arm’s length to the incumbent management.
    The first step, and the hardest, is to turn all those ‘strategic goals’, ‘initiatives’, ‘outcomes’, ‘areas of focus’ into a tight set of tangible processes that then need resources (human, IT, capital), or if you like ‘capabilities’, to be executed.
    Then arguments will arise about ‘gross simplification’, ‘you don’t understand’ and other red-herrings because staff are now confronted with a streamlined process without the fluff around the outside.
    Human competencies required (and available) are then able to measured against the specific process activities. Gaps and over-qualifications normally abound everywhere.
    .
    What is then done? Gaps will be filled, over abundance will be noted and duly ignored. And the Department will sail on.
    .
    And Joe Hockey’s hiring freeze is the worst kind of PS human resource management, because it does nothing to address the above issues.

  8. Judith, at graduate school, I wrote on forcasting in the 1980s and early 1990s,

    Treasury forecasting errors were so large relative to the mean annual rate of change in real GDP and the inflation rate that, on average, forecasters could not distinguish slow growth from a deep recession or stable prices from moderate inflation.

    The biography of Keating by Edwards suggested that the Government of the day was well aware of the poor value of forecasts. So much so that forecasts may not actually played a significant role in monetary policy making in Australia in the late 1980s onwards.

    John Stone said this to Keating when he assumed office in 1983:

    As you know, we (and I in particular) have never had much faith in forecasting. Not infrequently, our forecasts turn out to be seriously wrong. …

    We simply do the best we can, in as professional manner as we can — and, if it is nay consolation, no one seems to able to do nay better, at least in the long haul.

    We always emphasis the uncertainties that attach to the forecasts — but we cannot ensure that such qualifications are heeded and plainly they often are not

    To cast my results in Milton Friedman’s nomenclature for monetary lags, the recognition lag on a forecast based monetary policy appears to be infinite because forecasters do not know if there will be a recession or 10% inflation afoot when their monetary policy changes take hold in 18 to 24 months.

  9. Squirrel

    When you’re drowning in managerialism, it must be difficult to focus on your real job.

  10. .

    To cast my results in Milton Friedman’s nomenclature for monetary lags, the recognition lag on a forecast based monetary policy appears to be infinite because forecasters do not know if there will be a recession or 10% inflation afoot when their monetary policy changes take hold in 18 to 24 months.

    I always cruise down the highway driving by looking only at the rear view mirror. Don’t you!?

  11. Grigory M

    And Joe Hockey’s hiring freeze is the worst kind of PS human resource management, because it does nothing to address the above issues.

    Andrew – I don’t agree. A hiring freeze (staff freeze) is actually a very effective way to save money, provided that there are few exemptions allowed for “essential” functions/positions. And what you seek to be achieved can be, if there is a concurrent independent (external) review and re-structure of the organization and all of its functions.

  12. will

    But I have enough inside knowledge to know that Treasury’s ignorance and naivety, when it comes to the details of business operations and particular industries, have been on show for years. I can only hope there will be real improvements.

    To be fair, it is often very difficult for outsiders to understand the peculiarities and imperatives of every industry. Even insiders probably don’t always understand their business model, they often just do what they do and know that it works.

  13. Econocrat

    From the Canberra Times:

    ”There are signs of progress,” he said. ”We have our first female senior executive service band 3 executive director, although it only took us 112 years.”

    So, appointing a woman to a massively overpaid and probably redundant position is now called ‘progress’ of some type.

    Sacking all SES B3s would be more in the nature of progress me thinks.

  14. dot, I must admit to not understanding your post.

  15. hzhousewife

    Andrew – I don’t agree. A hiring freeze (staff freeze) is actually a very effective way to save money,

    Grigory, it may save MONEY, but it will not improve the IQ, and that is what is desperately needed.
    Fire the dumbshits and move up some of the promising underlings.

  16. johanna

    hz housewife, the trouble is that over-promotion is one of the main problems in the APS today. There are some talented underlings, but when they get into management jobs (EL levels) after 2 or 3 years straight from uni, they are already way out of their depth. It was scary to watch people who had never even been through an election, let alone a change of government, advising Ministers on policy and procedure.

    Staff freezes are crude instruments, but they do (if done properly) reduce numbers and immediate costs, while longer term restructuring and reform is put in place.

  17. entropy

    Hiring freezes means when the talent moves on to greener pastures, you are left to use the dregs, with no opportunity to leaven them with people that have a clue. Even the talent you keep ends up becoming ever closer to retirement age, leaving a massive gap to the graduates.

  18. Alan Moran

    We should also remember that Parkinson was promoted to the post only after putting in a loyal shift heading up the Climate Change Department. His dedication to the need for destructive taxes to pursue lower carbon emissions – even if Australia were standing alone – gave him a solid recommendation to the ALP.

    In Treasury he took up those same cudgels, seeing in every murmer from China, NZ, Korea, Japan, more evidence that the world was coming to its senses and would be embarking upon the same destructive economic path he was pressing in Australia. He converted the outfit into a giant economic jusitfication machine for his carbon tax with “Strong Growth, Low Pollution” signed by three score or more treasury offices who had written it (surely strong candidates for dismissal alongside Parkinson himself) and scores more in the industry departments, CSIRO and other agencies.
    Who can forget the words of those two lions of economic acumen Wayyne Swan and Greg Combert who declared this piece of fantasy “One of the most comprehensive modelling exercises ever conducted in Australia”.

    All this is without considering his nefarious role in the mining tax and the fiscal stimulus.

  19. JC

    The biography of Keating by Edwards suggested that the Government of the day was well aware of the poor value of forecasts. So much so that forecasts may not actually played a significant role in monetary policy making in Australia in the late 1980s onwards.

    Why don’t they just poll a large bunch of economists… Not leftwing zombies… and average it out. You could fire the entire forecasting department and save money. In fact a trainee could collate the data and average it out….. Even a part timer.

  20. Nads

    I have considerable respect for the overall level of talent at Treasury but there’s self-serving pockets who dine out on expensive overseas engagement without much in the way of meaningful contribution. They would much rather connect with Paris and Geneva than corporate Australia. Some of the issues around the quality collapse of policy advice extend right across the service. While the public sector needs to be leaner and meaner, the process and uncertainty is having an effect on morale – tough love I’m afraid. The quicker this can wash through, the better.

  21. PP

    Without wishing to defend Treasury, “but you don’t understand our industry” is a frequent refrain from rent-seeking businesses. Qantas and Holden would have been heard muttering this line in recent times. In relation to tax expenditures favouring particular sectors you don’t need to understand the intracies of an industry to know that a tax preference can be removed. Do we have to be fully aquainted with the superannuation system to know that the tax benefits it receives should be scaled back?

  22. Rabz

    Greg Combert who declared this piece of fantasy “One of the most comprehensive modelling exercises ever conducted in Australia”.

    LOL. Was that the time Zombet was filmed addressing an empty room?

  23. I am the Walrus, koo koo k'choo

    Treasury’s modelling of the carbon tax marked the point at which it ceased to be a useful participant in government decision making and became a pom-pom waving cheerleader.

    The place needs purging – starting with Parkinson, who should have resigned already.

    Yeah, agreed, the carbon tax modelling was a complete and utter disgrace.

    But I disagree with people saying Treasury should be abolished.

    I would gut it, fill it with hardcore Chicago types who have the public interest at heart, and have it be a huge fracking Eye of Sauron sitting in the middle of the wasteland that is the public service. It could then see any rent seeker who dared waste public money or vex business, and zap them out into the private sector.

  24. Big Jim

    The hipster chairman made me laugh. I experienced something like that once: As a young entrepreneur, I was asked to front the new chairman of one of our quango customers. I put on my best/only pin-stripe and buffed my shoes, knowing he was pure Mosman blue blood, not likely to suffer hicks kindly.

    Five minutes into my solemn recitation, he cut me short: ” Yes. I get that your little company is a pillar of the establishment. But what NEW ideas do you have?”

    I was, to say the least, wrong footed. My ad-libbing did not go well (as you would expect from a tired thirty-five year old has-been). We were sacked at the chairman’s urging – replaced by a dynamic duo of nineteen-year olds. They turned out to be the Mosman hipster’s nephews, and they were soon sacked as the company guys refused to cooperate with ‘work experience’ consultants. In turn, the chairman was sacked (sorry, resigned citing personal reasons) – dobbed in to Canberra for corruption essentially – in an act of great courage by the local manager.

    The chairman, of course, bounced back as all good sociopaths do. Whenever I see him pop up in the Fin Review as the new head of this-or-that, I snigger.

  25. big Jim

    PostScript: lest anyone should derive the idea that this is our system working beautifully, I should add: The local GM, who saw off the corrupt chairman, was shortly afterwards replaced with a more professional fellow – to avoid this kind of unpleasantness happening again, don’t you know?

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