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PUBLIC ACCOUNTS COMMITTEE

INQUIRY INTO AMENDMENTS TO THE PUBLIC SECTOR MANAGEMENT ACT 1994 (WA)

TRANSCRIPT OF EVIDENCE

TAKEN AT PERTH WEDNESDAY, 12 MARCH 2014

Members

Mr D.C. Nalder (Chair) Mr B.S. Wyatt (Deputy Chair)

Mr W.J. Johnston Mr M.H. Taylor Mrs G. Godfrey

__________

Public Accounts Wednesday, 12 March 2014 Page 1

Hearing commenced at 9.42 am Mr MALCOLM WAUCHOPE Public Sector Commissioner, examined: Mr DAN VOLARIC Deputy Public Sector Commissioner, examined: Mr JOHN LIGHTOWLERS General Counsel, Public Sector Commission, examined: Mr LINDSAY WARNER Director Policy and Reform, Public Sector Commission, examined: The CHAIR: On behalf of the committee, I would like to thank you for your appearance today. At this stage I will introduce myself and the committee. My name is Dean Nalder, chairman and member for Alfred Cove. To my left is the deputy chairman and member for Victoria Park, Ben Wyatt; and fellow committee members, Bill Johnston, the member for Cannington; Glenys Godfrey, the member for Belmont; and Matt Taylor, the member for Bateman. Today’s hearing is a proceeding of Parliament and warrants the same respect that proceedings in the house itself demand. Even though you are not required to give evidence on oath, any deliberate misleading of the committee may be regarded as a contempt of Parliament. Before we commence, there are a number of procedural questions that I need you to answer. Have you each completed the “Details of Witness” form? The Witnesses: Yes. The CHAIR: Do you understand the notes at the bottom of the form? The Witnesses: Yes. The CHAIR: Did you each receive and read the “Information for Witnesses” briefing sheet regarding giving evidence before a parliamentary committee? The Witnesses: Yes. The CHAIR: Do you have any questions relating to your appearance before the committee today? The Witnesses: No. The CHAIR: Thank you. Today’s hearing has been called as part of the committee’s inquiry into the amendments to the Public Sector Management Act. The purpose of the hearing is to allow the committee to acquire a greater understanding of how the act works in practice following the 2010 amendments, with a particular emphasis today on CEO appointment and management processes. The committee also has a series of questions relating to the accountability framework currently applicable to the office of the Public Sector Commissioner. We will look to cover other aspects of the terms of reference at a subsequent hearing. The committee has provided you with a series of questions in advance and we will proceed through these in the order that they were provided; however, members may look to ask additional questions as we go along. For several of these questions, to assist members, the screen to my left will display relevant aspects of your submission and the act. Before we move to any questions, would you like to take a couple of minutes to make a brief opening statement addressing the inquiry’s terms of reference? Mr Wauchope: No, Chair, I will proceed with the questions if that is okay.


The CHAIR: Very good; I will jump straight into it and we will go through in the order in which the questions were supplied to you. Section 3 of the act defines the “responsible authority” in relation to a department or an organisation. The responsible authority can be a board, a committee or other body, or the minister responsible for the department or organisation. Can you provide a list of the agencies that have a minister as the responsible authority? Mr Wauchope: Yes, we can, but I would not mind giving a bit of background to the table that we will submit. An agency is defined under section 3 of the Public Sector Management Act as being a department or an SES organisation and CEOs of departments or SES organisations are employed under section 45 of the Public Sector Management Act. Departments are established under section 35 of the Public Sector Management Act and they exist primarily to assist the minister. They are the main departments of government. In that sense, the minister is the responsible authority. SES organisations, listed in schedule 2 of the act, generally have a board as the responsible authority. The list that we are providing, as requested, is a list of agencies that have a minister as the responsible authority. That is available for the committee. The CHAIR: We will take that as supplementary information, thank you very much. We will move straight onto “consult”. Your submission and the Public Sector Management Act 1994 both make reference to occasions where you are required to consult the minister, the responsible authority and/or the responsible minister. Can you please define the term “consult” for the purposes of this act and explain how it works in practice under the following scenarios. Will I go through them one at a time or would you like me to read them all out and then you respond? Mr Wauchope: Whichever way suits you, Chair. The CHAIR: I will go through them all. Section 50(2) — CEO transfers: perhaps you could use the recent example of the Under Treasurer’s transfer to the position of Mental Health Commissioner. Were the transfers of Mr Marney and Mr Bartnik initiated by yourself or a minister of the government? To what extent were the Treasurer and the Minister for Mental Health involved in the consultation process? We can start with that. Mr Wauchope: Okay, thank you. Going to the definition of “consult”, the act does not define the term at all, so one tends to rely on the Oxford English Dictionary meaning and I will quote that. It defines “consult” as —

Seek information or advice from (someone, especially an expert or professional) or, have discussions with (someone), typically before undertaking a course of action.

We have had previous legal advice—informally, not in writing—some years ago that advised that the intent of consultation is to have a clear mind in relation to a proposal. When consulting ministers—this can be undertaken in writing by either a formal letter or email, via a phone conversation or in a face-to-face discussion—it can be with the minister or with the minister’s agent; that is, the chief of staff or some other recognised person. In relation to the transfer of Tim Marney and Mr Bartnik, I think it is fair to say that the actions that took place were at the request of the Minister for Mental Health, but I was involved and informed of her views early on in the piece about how she was seeing developments in the Mental Health Commission, particularly the amalgamation of the Mental Health Commission and the Drug and Alcohol Office, which is one of the machinery-of-government changes that were introduced after the last election. As I said, it would probably be fair to say that that was initiated by the minister. Both the Minister for Mental Health and the Treasurer were consulted. The consultation with the Treasurer was a bit more complicated because he was overseas at the time. It was undertaken through the Premier’s office to the Treasurer’s chief of staff and confirmed that the Treasurer was comfortable with the proposed arrangements.


Mr B.S. WYATT: Can I just ask a follow-up question? Was there a selection panel in place to recruit a new Mental Health Commissioner? I am unsure whether there was a process already happening to replace Mr Bartnik and as a result Tim Marney applied through that process. [9.50 am] Mr Wauchope: No, there was not a selection process in place. There were some issues emerging around perhaps the need to have a new Mental Health Commissioner and some discussions between the minister and relevant people. My understanding is that following one of those meetings, Mr Marney signalled his interest in the job to the minister and that was discussed with me. In the circumstances, given Mr Marney’s background and experience, it was considered an appropriate transfer to make. Mr B.S. WYATT: Just to follow up on that, it was a transfer as such from one CEO position, effectively, to another. I think we would deal with this later on, but I will ask it now: in that transfer process, you do not need to go through the ordinary process of selection panels? Mr Wauchope: No. Mr B.S. WYATT: You do it by appointment? Mr Wauchope: Yes; it is a transfer rather than a selection process. Section 50 of the act specifically contemplates that. Mr B.S. WYATT: Just one more follow-up regarding the consult. Obviously, consult is a matter of, clearly, unofficial conversations with ministers, phone calls and so on—just so I have that clear. Mr Wauchope: Yes; it can range from a high level of formality through to a fair degree of informality. Mr B.S. WYATT: A phone call to the Treasurer when he is overseas, for example. Mr Wauchope: Yes; that is right. Mr W.J. JOHNSTON: Can I just seek clarification? Tim Marney is an outstanding public servant and I am sure he will do an excellent job, but who was it that let you know that Mr Marney was interested in the position? Mr Wauchope: Mr Marney. Mr W.J. JOHNSTON: Mr Marney. So how did he know that the job was available? Mr Wauchope: He had been part of the discussions around how the Mental Health Commission needed to move forward, particularly the amalgamation with the Drug and Alcohol Office. Mr W.J. JOHNSTON: Right; so how did you know that there was a vacancy then? So, he came to see you? Mr Wauchope: I was part of the conversation with the minister about her concerns about how the new entity was to take place and where the Mental Health Commission was and where it needed to go. Can I just add this comment: everyone acknowledged that Mr Bartnik had done a first-class job in getting the Mental Health Commission to where it was. There were some issues going forward into what the new model was going to require and that is where the minister was coming from. Mr W.J. JOHNSTON: The minister was not satisfied and, as you say, Mr Bartnik was a good public servant who had done an excellent job, so it is not a question of failing to do good work, but, rather, that you are saying that there is a new era for that organisation. So, the minister formed the view that he was not the right person to take it further? Mr Wauchope: Yes, that is correct. Mr W.J. JOHNSTON: And she communicated that to you? Mr Wauchope: Yes.


The CHAIR: Just taking the next step on—it is probably the same response—section 51(3), which is regarding the appointment of acting CEOs, with regard to the term “consultant”, is it exactly the same thing, or is there any difference with that? Mr Wauchope: Yes; there is still a requirement to consult and it can be formal, but it tends to be, often, very informal because acting arrangements often come up at short notice and someone needs to be identified. In doing that, a range of options have been applied in the past. Sometimes I will do an expression of interest and go out to the public sector generally to see if there is a field out there that might be interested in acting. Sometimes where it is more pressing or where the field looks like it is going to be pretty small at any rate, we will simply direct somebody to act in that position for up to a maximum of 12 months. Mr B.S. WYATT: I am a bit curious about that. So you can be in the acting CEO position only for 12 months, or it has to be renewed each 12 months? Mr Wauchope: It has to be renewed. Mr B.S. WYATT: It has to be renewed each 12 months. Mr Wauchope: Yes. Mr B.S. WYATT: And that can go on for years, presumably? Mr Wauchope: It can. Mr W.J. JOHNSTON: With that acting CEO, I imagine you would consult with the minister? Mr Wauchope: Yes. Mr W.J. JOHNSTON: Sometimes does the minister say, “The deputy director general knows everything; why don’t we just give him the job”? Is that the sort of thing that happens? Mr Wauchope: Often that is the case, that there is obviously a good second-tier person in the organisation who can step up at least for a period of time. Mr W.J. JOHNSTON: What about where the minister might suggest somebody who is not in the public service? Has that happened occasionally? Mr Wauchope: I might stand corrected by one of my colleagues, but my understanding is that the act does not provide for direction to be given to someone who is not in the public sector; that is correct, yes. Mr W.J. JOHNSTON: So how does somebody who is not in the public service end up being an acting DG? Mr Wauchope: As far as I know, they cannot. Mr W.J. JOHNSTON: How did Peter Conran get the job? Mr Wauchope: He applied for the job. Mr B.S. WYATT: He was not acting; he came straight in. The CHAIR: Moving on to question 3—it is quite a long question —

There appears to be discrepancies between the legislation and the current processes regarding ministerial involvement in the CEO recruitment and appointment process. According to section 45(4) of the Act the Commissioner must invite the Premier, responsible authority and or responsible Minister to ‘inform the Commissioner on any matter that they wish the Commissioner to take into account in recommending a person for appointment…’ According to the flow chart in your submission, there are multiple opportunities for ministerial involvement in this process. Can you please clarify the following:


a) is the responsible authority invited to participate as a panel member during CEO recruitment? I. When a Minister is the responsible authority, is it common for them

to sit on the selection panel? II. Is it common for the Premier to sit on the selection panel?

Mr Wauchope: Taking those questions in turn, if the responsible authority is not a minister, it is a board; the board chair is invited to sit on the panel or have a nominee of the board to sit on the panel. I do not know that there has ever been an occasion either before the changes to the act—certainly not since the changes to the act—where a minister has sat on a panel, and, indeed, or the Premier. Mr B.S. WYATT: Can I just ask a third point? How is the selection panel formed? Is that solely your discretion as the commissioner or can a minister suggest personnel who need to be on that selection panel? Mr Wauchope: The processes for selection of CEOs were pretty well set back when the inaugural Public Sector Standards Commissioner, Digby Blight, was appointed, and pretty well everyone has followed the same processes subsequently. I will meet with the relevant minister—the responsible minister—to talk to them about a number of things, such as what are the priorities for the job, are you looking for a reformer or somebody who is steady as she goes, what are the characteristics you are looking for in an individual, and we talk about prospective panel members. Generally speaking, I would want a director general of one of the departments to chair it, and then we go from there in terms of talking about the other sorts of people who might be suitable to be on the panel, such as industry experts from outside the sector and other people from in the public sector. So, yes, there is a conversation around those types of issues. Mr B.S. WYATT: The only requirement you have as commissioner—this is your requirement; it is not set in the legislation, I do not think—is that a current DG of another department chairs the process, and then depending, I guess, on the CEO position, that will then dictate to a certain extent the sort of people you are after? Mr Wauchope: The composition of the panel, yes. Mr B.S. WYATT: That is your role, to establish a selection panel? In your authority that happens? Mr Wauchope: Yes, under my authority, but certainly in discussion with the relevant minister. The CHAIR: Could you just perhaps discuss the process used to appoint Mr James McMahon as Commissioner of Corrective Services? Mr Wauchope: Yes. Essentially it was as I described there, that I met with the Minister for Corrective Services after there was a vacancy to ascertain, again, what type of leader he was looking for in that particular department, which had had some issues, and also to talk about the prospective selection panel—what type of person he would be looking for to be on the panel. I think both of our issues there was getting somebody who understood the Corrective Services issues on the panel, which we did. We agreed on the panel, which was I think chaired by Peter Conran and had Dr Ruth Shean and John Paget, who was the corrective services expert consultant from, I think, South Australia. Again, it was that kind of conversation. A panel was established, they short-listed—in front of that process, of course, we had advertised and put in an executive search. All that process had led to a number of people who had applied for the job or been considered for the job, the panel short-listed those people and interviewed those people and ended up with, I think, three suitable candidates. Mr Volaric: There were eight deemed suitable for interview.


Mr Wauchope: Yes, but at the end of the interview, there were three. Those names were then put to the minister for consideration. He gives me a view about which person he preferred, which happened to be Mr McMahon, and then it went through the normal process of cabinet and to Executive Council. Mr W.J. JOHNSTON: Was Mr McMahon found through an application or the executive search process? [10.00 am] Mr Wauchope: My colleague tells me it was executive search, but if there is any doubt about that, we will confirm it and come back to you. Mr B.S. WYATT: Is the process to give the minister a selection? The selection panel does not go to the minister and say, “We’ve done our processing; this is the one person”? Mr Wauchope: No. Mr B.S. WYATT: There is usually a selection of people? Mr Wauchope: My strong preference is to be able to provide a minister with a number of names that are deemed to be suitable and ideally ranging from this type of characteristic to that type of characteristic. Sometimes you do not get there because the fields are thin, but the objective is to get that type of thing. I generally like to go with three names, if I could. The CHAIR: Do the ministers tend to then meet with them or interview them themselves? Is that the process they would normally follow? Mr Wauchope: That is certainly open to them, and they are advised by me that they can do that, provided they, obviously, treat it confidentially and they make it clear to the person that they have not been appointed. It is taken as part of the ongoing, if you like, assessment process. Some ministers have taken that up, but where they know the person or know of the person, sometimes, or often, they elect not to have that sort of conversation. But that is open to them and I let them know they can do that. Mr M.H. TAYLOR: Is the ultimate decision the minister’s? Mr Wauchope: No. Mr M.H. TAYLOR: Out of the short list of candidates that you provide to the minister, do they then make a selection that is then recommended to cabinet for appointment? Mr Wauchope: They indicate a preference, and that is the name that then goes to the minister for public sector management, who is the Premier, and that then becomes, normally, the basis for a cabinet submission to recommend appointing that person. Mr M.H. TAYLOR: Does your involvement cease at the point of suggesting or recommending a short list to the minister? Mr Wauchope: No; we then obviously take his response, and that then forms our advice to the minister for public sector management. Mr B.S. WYATT: Has there ever been a situation since the 2010 amendments when the minister said, “No; out of the three you’ve given me there is not one person that I am interested in. Go back to the process of finding names”? Mr Wauchope: We think there is one occasion and we are still checking our files to make sure that we are absolutely certain. But the one occasion that we can recall is that we went out to the market for eight Regional Development Commissions at the one time, had multiple applicants, cross-applications for different jobs, and, at the end of the day, there were some changes around that where the minister was not happy with some of the nominations. I know Mr Volaric can add a bit more to that.


Mr Volaric: As the commissioner has indicated, the eight Regional Development Commission positions were advertised. It led to a panel making a recommendation and, in consultation with the minister, the minister sought further nominations with respect to several of those appointments. The commissioner then considered the information provided by the minister following his consultation, took on board the consultation with the responsible authority—which was the board chair—and took into account also the selection information through the selection panel, then subsequently recommended an alternative candidate for several of the positions. Mr W.J. JOHNSTON: In respect to the job of Commissioner of Corrective Services, when we talked about Tim Marney’s appointment you explained that the minister decided that the previous commissioner was not suitable—not reflecting on his capacity, but was not the right person to take the organisation forward. How did you know that Mr Johnson, the previous Commissioner of Corrective Services, was not the right person to carry the organisation forward? Mr Wauchope: Chair, I initiated a meeting with the new Minister for Corrective Services not long after the election to raise with him my concerns about the department’s performance on a number of issues. We had been involved in a number of reviews; some of those had been at the request of the CCC. There were issues across the board around the performance and, if you like, integrity and accountability. As it turned out, the minister, as an incoming minister, had formed a similar view and lacked confidence in the CEO. That led me to have a discussion with Mr Johnson about the concerns and, ultimately, his departure. Mr W.J. JOHNSTON: So the minister lacked confidence in the commissioner. If the minister had in fact expressed confidence, what would you have done then? Mr Wauchope: I would have had a further discussion around what needed to be done in the agency at least. The CHAIR: On the same angle but with regard to the Premier who, previously under section 45(12), had the right to reject a candidate nominated by the commissioner and nominate an alternative appointee to the Governor. This clause was removed in 2010. What process would you now follow if the Premier indicated he did not support a nominated candidate? Mr Wauchope: Chair, can I just preface my answer by correcting that question a little bit. The way it is presented is not quite right. Under the previous provision, the Premier certainly reserved the right to reject a candidate nominated by the standards commissioner, but he was not able to nominate an alternative appointee to the Governor. He could request from the standards commissioner the nomination of an additional — Mr B.S. WYATT: Somebody else? Mr Wauchope: Yes. That was the process that was provided in the act then. If we got to the position that the Premier did not support a candidate again, there would be serious conversations between the Premier, myself and the responsible minister. The options open to us are: we could go out for further nominations, we could extend the search process, we could consider a transfer of someone within the system if that was appropriate, or we could elect not to make an appointment at that time. They are basically the alternatives that I would see. It certainly would be prefaced by a lot of discussion around — Mr B.S. WYATT: This is a bit of an artificial process. The minister gets the three names. The minister says, “I like this person.” Then you go to the Premier as the minister for public sector management. The Premier at that point says, “I’m not so keen on this person.” That is a bit artificial. That way, that is resolved before a cabinet submission is then prepared and presented to cabinet. Mr Wauchope: Yes.


Mr B.S. WYATT: If the Premier of the day just does not want that person in the role, that will happen well before a cabinet submission? Mr Wauchope: I would have thought—I agree with you. Mr B.S. WYATT: It is very unlikely it goes to cabinet and is then rejected, you know what I mean? Mr Wauchope: I would think it would be an interesting cabinet process otherwise! The CHAIR: We would like to seek clarification on a point you made about deleted section 45(12) not being correct. It said —

If the Commissioner does not nominate any person suitable for appointment to the relevant office or a nomination or further nomination by the Commissioner is rejected, the Minister — (a) may recommend to the Governor that —

… (ii) a named person other than a person nominated by the Commissioner,

I will bring you a copy of the act. Mr Wauchope: Chair, I accept the point that is being made. I was going to the next stage which required the Premier to request another nomination. But you are quite right; subsection (12) gets you down to the point where the minister can nominate. The CHAIR: Regarding the flowchart that was on page 16 of your submission, it makes reference to further action you can take if cabinet does not endorse the nominated candidate. I think we might have come to this. We have covered that; sorry. Moving on to question 4: in the Council debates for the 2010 amendments, Norman Moore confirmed that a provision for the government to direct the Public Sector Commissioner to appoint a person as a CEO on a term-of-government basis was removed from the original version of clause 45 of the 2009 reform bill. The copy of the document is on the wall for your benefit. According to Mr Moore, this amendment act came about following consultation on the original bill with numerous stakeholders, including the opposition. Were you one of the stakeholders that took part in the consultations that led to this amendment; and, if so, what was your position on this amendment? [10.10 am] Mr Wauchope: I guess I was more the agency proposing it rather than the stakeholder. I will get Mr Warner, who was the instructing officer, to talk a bit about that process and the sort of discussion. The short answer is, yes, I supported the change. Mr Warner: Basically, the provision in the original act that was subsequently amended enabled the Premier to direct the commissioner in relation to an appointment of a particular person. But following consultation with members of Parliament in briefings, and other stakeholders who had raised concerns about that provision, the Premier came to the conclusion that it should be removed. As an instructing officer, I was involved in some of those consultations with stakeholders. Mr B.S. WYATT: I know I am probably taking you back a bit: Was the concern because it effectively allowed the Premier or the cabinet, whatever the process was, before the minister to recommend to simply pick—remember he or she wanted to be CEO—without necessarily having a process at all surrounding it? Was that the general concern? That is a fairly strong power of the minister of the day to say, “Regardless of any process to consider merit or experience, I want so-and-so in that role.” Was that the major concern from MPs at the time? Mr Warner: My recollection is that you are probably summarising the situation reasonably clearly there. I think the other important thing is that the clause actually would require the Premier to


gazette reasons in the text of the direction to the commissioner in that regard. It would also have provided some clarity and certainty about the position by the Premier. The CHAIR: In the debate that existed at the time there were discussions around the direction of appointment of CEOs on a term-of-government basis. Are you of the view that the provision exists within the current act for the government to direct the appointment of CEOs on a term-of-government basis; and, if so, where is that provision? Mr Warner: Chair, I do not believe there is such a provision in the act. Nothing would prevent contracts of appointment that are entered into between the commissioner and a CEO to coincide with a term of government. That was the preferred outcome. There is no specific provision in the act to appoint a term-of-government CEO. The CHAIR: So it is something that is happening practically but is not necessarily in the act? Mr Wauchope: I do not think it is happening practically. But, I guess, now that we have fixed-term elections, you can align somebody’s contract to an end date—the fixed-term election date. Mr B.S. WYATT: Does the minister have the capacity to request that? For example, if a department has been particularly problematic or has gone through a big reform process and it only wants a short-term CEO—let us say three years—can the minister request a short-term person to deal with the issue and then go through the process again for a longer-term appointment? Does that capacity exist? Mr Wauchope: Yes; and that happens from time to time. Mr W.J. JOHNSTON: To explore that a little further, you might have a particular problem in a portfolio area and there is a CEO in New South Wales who has done a good job. Can a minister come along and say, “Look, John Smith in New South Wales is superb, why don’t we get him to do this job?” Is that something that could happen? Mr Wauchope: In terms of a direct appointment? Mr W.J. JOHNSTON: Yes, or — Mr B.S. WYATT: Or influencing the process enough so that John Smith is employed? Mr W.J. JOHNSTON: Yes. Mr Wauchope: Chair, in going through a recruitment process, I would always say to the minister that if they were aware of anybody out there that should be considered, let me know and we will put their name to the consultant. That is certainly available, and I think encouraged, because we try and get as wide a field as we can. Mrs G.J. GODFREY: Commissioner, do you see any link between the term-of-government contract and performance management? Mr Wauchope: Not specifically. I guess performance management and any contractual arrangement has a relationship, but term of government would be more around the fact that automatically a contract would come to a conclusion at a particular time. That is the way I would comment on that. Mr Lightowlers: I was just checking with my colleague, and I think it would be right to say that there are no CEO appointments that have been made to date on a term that expires on the set election date. Whereas that is common practice for ministerial offices, it is not common—in fact, it has not happened at all with a CEO. No CEOs have been appointed to date on a term-of-government basis, even though that capacity exists under the act; it just has not been done. Mr M.H. TAYLOR: Just to round it off, given that you have had a lot of experience in this area over the years now and you understand how the system works, did you want to comment on any sort of constraints or opportunities within the act in relation to the appointment process? Is there any


recommendation you would make to improve the process or highlight any constraints towards achieving a better system? Mr Wauchope: Chair, I guess I would make the comment that the system has been in place for almost 20 years now and it is significant that the commissioners from Mr Blight onwards have maintained much the same process. I think there has been a general acceptance by government and others that it is not a bad process; it works pretty well. Sometimes it takes longer than you would like and sometimes it reflects the difficulties of recruiting into the public sector environment, particularly when we have a very strong private sector and we are not paying the same kinds of salaries. Some jobs are particularly difficult to recruit for, but the act has been refined and it has left enough discretion in the management of the relationship between government and the bureaucracy to be had, with the processes, as I said, being tried and tested over a long period of time and, as I said, basically being the same over that time. So, I think it works pretty well. Mr M.H. TAYLOR: In practice, the outcomes have been as good as one could expect? Mr Wauchope: I would think so. I have not made any direct comparison with other processes outside the public sector. But I had somebody who had come in from the private sector who actually complimented us on the process that they had gone through compared with some of the processes they had gone through in the private sector. Mr W.J. JOHNSTON: When we asked you before about Mr Smith in New South Wales and I note that when we were talking about Mr McMahon at corrective services, you said that he was approached by the executive search team. Who suggested getting the executive search team? Was that the minister or somebody in the bureaucracy? Mr Wauchope: Yes; it was from somebody in the bureaucracy who was aware of what Mr McMahon’s background was, but particularly it was doing some consultancy work in the Department of Aboriginal Affairs, I think, and had been doing some other work in and around government and was well regarded as somebody who would have the sort of characteristic we were looking for. The CHAIR: I would like to move from appointments to reappointments and transfers. The act does not require involvement of the minister or the responsible authority; however, in your submission you make reference to the fact that you seek advice from the responsible minister and responsible authority to determine support for the CEO’s reappointment. Is this a statutory requirement or is this just common practice that you have adopted? Mr Wauchope: No, it is not a statutory requirement but we have considered it over time to be a good practice. The CEO, the minister and the responsible authority have to work closely together. It would be problematical if they were reappointed without that sort of consultation. I might add that section 105(2)(b)(ii) contemplates consultation on reappointment. It does not require it, but it does contemplate it. The CHAIR: I think we covered question 6 earlier, so I will move to question 7. Section 46 of the act exempts several department CEOs from part 3, which includes the provision relating to CEO reappointment. Given these exemptions, can you explain the reappointment process, including any role you played in the following CEO appointments—the Commissioner of Police and the Electoral Commissioner. They are the only two. [10.20 am] Mr Wauchope: I have no statutory involvement in those appointment–reappointment processes, but sometimes the relevant minister will request our assistance simply because we do selection processes all the time. Some of those agencies might do that once every five years and not necessarily have the expertise to handle it. I have been requested by ministers to undertake that process on a number of occasions, and on other occasions we have participated in assisting an agency to do it. That is not a statutory role that I have, but will assist a minister if requested.


The CHAIR: Would you please clarify the level of ministerial input when a CEO is removed from office under the following scenarios: section 79(5B), terminating the employment of a CEO for substandard employment and section 89, dismissal of a CEO for breach of discipline? Mr Wauchope: To the best of our knowledge, no CEO has been dismissed for either disciplinary or substandard performance, so that occasion has not arisen. But, should it arise, there obviously would be extensive discussions with the minister around what the issues were and why certain actions were being proposed before we got down that far. Mr B.S. WYATT: I am coming back to using the example of the former Commissioner of Corrective Services, and you have outlined that there were some other issues at play there. If a new minister comes into the role and for whatever reason has a dysfunctional relationship with the CEO—or trust, and the minister comes to you and says, “I can’t work with this person”, how do you respond to that? Is that then a base upon which you can then move or transfer a CEO, simply because of a breakdown in personal relationship or political views? Mr Wauchope: Generally speaking, where there is a movement of the CEO out of a role it is because there has been a breakdown of the relationship for one reason or another—loss of confidence. Sometimes it is a personality thing, so you just do not get on that well. They can get on very well with the previous minister and not with the current minister. I would always try to seek alternative arrangements. If there was some way of making a relationship work, I would be trying to work on that, but clearly I have to have regard for the public interest; if something is not going to work, there is no point forcing the issue. We will try, when we can, to offer alternative possibilities for the CEO, and it may not happen immediately, but over time we have been pretty successful in getting people into new roles, and that would be my preference. Occasionally, I can see that there is no other alternative and the person may not want to stay on in the system, and the only other alternative then is termination and bringing the contract to a conclusion, and they leave the sector. The CHAIR: Just on the substandard performance, you have never had anyone terminated. Can I assume, therefore, that is as a result of people resigning before termination as opposed to no-one ever having had substandard performance? Mr Wauchope: Effectively, Chair, I think that would be the position, that things get worked out prior to reaching that point. Obviously, there are formal provisions under the act that you would have to initiate to terminate people for those reasons, and it could be some of those things that lead to the loss of confidence or the breakdown in the relationship, but it gets to a point where there generally would be an agreement that the relationship will cease. If it is of a kind that we cannot get somebody relocated into another role, then generally they leave the sector. Mr W.J. JOHNSTON: Using Mr Johnson as an example, do you negotiate severance arrangements with the departing CEO? Mr Wauchope: Yes; compensation under section 59 of the Public Sector Management Act. Mr W.J. JOHNSTON: So that way, as you would do in business, you are “buying out the problem”. Just again, using Mr Johnson as an example, I understand he had been in the job for seven years, I think it was. Mr Wauchope: Around about that, I think. Mr W.J. JOHNSTON: So he must have been having performance reviews? Mr Wauchope: Yes. Mr W.J. JOHNSTON: Even on some confidential basis, could you just provide an example of previous performance reviews, because seven years is a long time in the job? If he gets paid out because, effectively, you were not satisfied that the department was in proper order, because you said there were CCC matters raised with you and problems that the minister had identified and


problems you had seen yourself. Obviously, we would like to know—and, say, if it was to be done, in closed evidence—just so that we can get a picture of it. Mr Wauchope: Okay, having regard to, I guess, Mr Johnson in his retirement. I think it is fair to say that Mr Johnson’s performance early on was very good. When there was the decision to split the Department of Justice into the two departments and set up a new Department of Corrective Services, I think it was all done very well. As things went along, there were some issues in the department that, I guess, probably got worse as time went on. In the latter couple of years, there were issues of concern that we had—obviously, the CCC. At least one minister had raised issues with me. You have got to remember over that time that there were probably four or five ministers. Mr W.J. JOHNSTON: Are you able to provide information to us? Mr Wauchope: I can provide what I have got from—Dan, have we got that performance comment? Assessment, yes. So, in confidence? Mr W.J. JOHNSTON: Subject to the Chair’s — The CHAIR: Closed, yes; we will provide closed evidence. Mr Wauchope: Okay; thank you. Mr W.J. JOHNSTON: Just a final question on that. My next question was about the previous minister’s views of Mr Johnson. Mr Wauchope: That would probably be contained in this material. Mrs G.J. GODFREY: Can I ask a question about Mr Marney and when he was transferred to another position. I understand that Mr Marney’s salary was much higher than Mr Bartnik’s. Can you just give me the reason it has come about that when you get transferred you stay on that higher salary, albeit that you are going to a less demanding job? Mr Wauchope: It is a provision in the Public Sector Management Act that has been there from 1994. If I can quote it —

Subject to the provisions of this Act relating to the management of the redeployment and redundancy of employees, a chief executive officer who is transferred under subsection (1) retains for the remainder of the term of his or her contract of employment a level of classification equal to the highest level of classification of any office previously occupied by him or her during that term.

The act actually says that is what happens; you carry the contract with you. Mrs G.J. GODFREY: I understand that, but in your opinion, what is the benefit of that? Mr Wauchope: I think the benefit of that provision is that it was originally to prevent political interference about treating people unfairly and transferring them to some lower level jobs because of relationship issues or whatever. The benefit in this case is that changes that were being undertaken in the mental health area with the Drug and Alcohol Office, together with some other issues that were happening in the portfolio, required a different skill set, which Mr Marney has. The value, if you like, to the system is that you are getting that sort of extra skill level that would be necessary going through the particular changes. The organisation he will be heading, ultimately, will be quite different from the one that Mr Bartnik was. The CHAIR: Just for the record, could you quote the section. Mr Wauchope: Section 50(3). The CHAIR: Can I just confirm, though, did you say that was for redeployment and redundancy provisions? Mr Wauchope: It says —


Subject to the provisions of this Act relating to the management of the redeployment and redundancy of employees …

That is the front end of the — The CHAIR: But I was not aware that Tim Marney was classified as being redeployed or made redundant. Mr Wauchope: No, he was not. The CHAIR: So how does that apply to Tim Marney’s situation? Mr Wauchope: That basically allows for the redeployment and redundancy provisions to override that other part. The CHAIR: I am trying to deal with Tim Marney’s situation. Tim Marney has been transferred across. You advised us earlier that he applied for a job in a lower paid, lower area, but he has maintained his salary. You have read a provision in the act that says, “in the provision of redundancy or redeployment”. My understanding is that Tim Marney was not in that position of being redeployed or made redundant out of the Treasury role. Mr Lightowlers: The provision that was read is for the transfer of CEOs. Section 50(3), which is headed “CEOs, transfer of”, says subject to redeployment or redundancy, they have their salary maintained, so unless they are redeployed or made redundant. [10.30 am] The CHAIR: Sorry, unless they are redeployed or made redundant. Sorry, I thank you for the clarification. Can you please just clarify what happens when Mr Marney’s contract is renewed regarding his pay scale? Mr Wauchope: That is a good question. Mr B.S. WYATT: I know someone will be reading this transcript! Mr Wauchope: That is the conversation I had with Mr Marney when he proposed the arrangements, so that would have to be addressed closer to the time. The new role that he will ultimately put in place at the combined organisation, would have to have its classification level assessed anyway because it will be a new job and it will be a bigger job than the current Mental Health Commissioner’s job. So, there are a few imponderables that will need to be addressed closer to the time. It will be something that will be subject to the Salaries and Allowances Tribunal’s determination. So, once we have a new organisation and we know what it looks like and we have a new CEO position, we will be taking that to the Salaries and Allowances Tribunal for determination. Mr W.J. JOHNSTON: I just ask a general question about the performance management process. In your most recent state of the public sector—I cannot remember the proper name of the report you tabled — Mr Wauchope: State of the sector, yes. Mr W.J. JOHNSTON: That was it? You made comment about the low number of discipline matters in the general public sector. Mr Wauchope: Yes. Mr W.J. JOHNSTON: I just wonder whether there is any comment to be made about the fact that there is not a single CEO who has had discipline issues. Mr Wauchope: I do not think there is a connection between the two. I guess that is all I can say.


Mrs G.J. GODFREY: Are the CEOs responsible for lack of morale within their departments? Is it measured by KPI? Mr Wauchope: CEOs have a number of responsibilities set out in the act. I think section 29 sets out the functions of the CEO. They are quite extensive and fairly high-level statements, but that is, basically, what they are required to do. So, CEOs, in broad, are responsible for the management of their departments, so all aspects of it including the human relations side of things. So, if there is a morale issue or if there are issues around poor performance, then the CEO is responsible for the management of the department. Mrs G.J. GODFREY: Are there exit interviews done to check for morale? Mr Wauchope: Some agencies do it; not all agencies. We do employee perception surveys across agencies. We select a number of agencies every year and we do a survey and that gives us a bit of a take on the climate of a particular agency. Where there is an issue or we are getting some interesting ratings, we will then be having conversations with the CEO and senior management to try to get behind what the issues are. Mr W.J. JOHNSTON: The member for Belmont’s question raised something in my mind about the KPIs. I remember it was two years ago in estimates one of the KPIs for, I think it was, the Department of the Premier and Cabinet was the revenue share from the GST, which is something actually beyond the control of the department. I am just wondering: what sort of arrangement do you work with the departments on their KPIs that you end up with a KPI that is so meaningless in the budget papers? Mr Wauchope: The KPIs that appear in the budget papers are a matter for the Treasury. They are done between the Treasury and the relevant agency. We do not generally get involved in that at all, so I cannot comment on that. Mr W.J. JOHNSTON: So you have other KPIs that you measure? Mr Wauchope: We look at things through our employee perception surveys, and they have been done for many years, so you get some sort of a benchmark about what is acceptable and what is not. Interestingly, that is one of the things that we did with corrective services. The CHAIR: Can I just clarify that as well: if the KPIs are set between Treasury and the departments, they do not form part of something that you look at in assessing the performance of the CEO? Mr Wauchope: The assessment—we have some questions on that a bit later—of the performance of the CEO happens between the CEO and the minister and it is really around the portfolio issues. The stuff that appears in the budget papers is around, if you like, financial management reporting and stuff done under the Financial Management Act. So, again it is done under a separate piece of legislation. The CHAIR: But it is not something you consider in the assessment of the performance of a CEO? Mr Wauchope: Not specifically, no. The CHAIR: I find that interesting. I will come back on track. The flowchart on page 23 of your submission makes clear the requirement of your endorsement of a performance agreement. For the record, where is the provision for this endorsement in the act? Mr Wauchope: My understanding is it is section 47(1). It says: enter into an agreement with the commissioner and the responsible authority of the agency of the CEO. So, the agreement is between myself, the CEO and the minister. In relation to setting up the performance agreement, as I indicated, the portfolio issues, so matters between the CEO and the minister; the minister and the CEO agree on what the priorities are. In relation to my involvement in the performance agreement, I


have some sector-wide issues that I have incorporated into their performance agreement and they are required to report on those. The minister has issues that he or she wishes to have considered as part of the performance assessment and I have some issues that I have as part of the performance agreement. The CHAIR: Okay. According to the act, section 47(4), the responsible authority is required to conduct the CEO performance assessment. Under section 5(4) of the PSC “Approved Procedure 8: Timing and Assessment of CEO Performance Agreements”, the responsible authority or the commissioner should assess the CEO’s performance. Can you please clarify your level of involvement in assessing CEOs’ performance? What would happen if the responsible authority had a differing opinion to you regarding the performance of the CEO? Mr Wauchope: The assessment is made by the minister in relation to the CEO’s performance. Mr Volaric’s area of the commission looks at the material coming forward and forms a view around the information that has been provided. Are the indicators measurable; are they relevant; are they timely—the normal measures. They will provide a comment for Mr Volaric and myself. If I had a strongly differing opinion with the minister, I would have a conversation around that. Where that leads to, of course, depends on whether the minister sees a different perspective after I have had that conversation. The CHAIR: Does the commissioner follow up with the minister to see that the CEO assessment has been conducted? Mr Wauchope: We require the assessments to be conducted. Sometimes they are not done in a timely way as we would like, but Mr Volaric can comment in more detail on that. Mr Volaric: Mr Chair, yes, we do. As part of the administrative responsibilities we undertake with the framework, we have regular follow-up with the CEO and the minister’s office with regards to completion of the agreement and the assessments. The CHAIR: Okay. Since the amendments to the act took effect in 2010, how many CEOs have been removed from office or have not had their contracts renewed due to substandard performance and/or failure to meet mutually agreed KPIs? Mr Wauchope: I think the answer is there have not been. They have disappeared for other reasons, but on occasions those other factors might lead to that. Mr W.J. JOHNSTON: Can I just ask a subsequent question. I understand nobody has — The CHAIR: Not formally but have some left? Mr W.J. JOHNSTON: Some have left, yes, I understand that. I was going to a different category. Is there anybody who has got like a counselling note on their file. Like, is there anybody that you have had say—how many have you had say, “Look, we don’t think you’re so bad that we are going to get rid of you, but these are the areas you need to improve”? Mr Wauchope: Chair, I have certainly had conversations with CEOs along those lines that there are things that need to be addressed and need to change. Sometimes that is at my own initiative; sometimes it is because the minister has made that point clear to me. Those conversations occur, hopefully, in an appropriate way, but from time to time that is necessary. If things do not change, ultimately, it leads to that. [10.40 am] Mr W.J. JOHNSTON: They have got their specific KPIs that are part of this performance agreement. Is any of their pay at risk for not meeting their KPIs? Mr Wauchope: The answer is no. It would be more an all or nothing. If the system was unhappy, they would leave.


The CHAIR: Just on this whole performance management, it concerns me that there is no-one leaving, yet out in the corporate sector there are often people on the move. Some of the potentially anecdotal noise that we receive out of the system is that there is not a lot of discipline around performance management processes in the public sector. Are you able to comment on that and provide any sort of view on that issue? Mr Wauchope: I think it is fair to say that performance management could be done better in the public sector. It has always been the case. I think it is being done better than it was previously. I think the sorts of conversations that are being had these days probably did not happen in times gone by. I would have to go and have a look, but I am not sure that it is true that CEOs do not leave the system. I think they do and other senior people as well. The CHAIR: I am just wanting to take that to another level. I need to seek clarification on a point. Just on the performance management, you said that we can always do things better. How can it be done better? What can we do? Mr Wauchope: It is about having the early conversations, to be honest. Right across the board there is the tendency to avoid having a conversation around performance when it should be happening earlier on in the piece. There is this formal process in place. There are performance agreements with employees, and those sorts of conversations take place, but often they are not the type of conversations that should be taking place, so they address the formalities around performance management but do not necessarily go to the key issue. We tend to resile from those difficult conversations. The CHAIR: Are there any models in other jurisdictions that may be more effective than what we have? Mr Wauchope: There is a Public Service Commissioner’s conference a couple of times a year, and it is interesting that the difficulties that we have are pretty well across the board. The sectors that you look to for best practice are places like the Australian Public Service—New Zealand is very good—but they have problems with the management of poor performance as well. Again, it is something that could be done better. The CHAIR: I know these challenges are faced out in the corporate sector as well, but do you ever look to the corporate sector’s models and consider whether they can be translated into the public sector? Mr Wauchope: We try to stay across what is happening, generally speaking, in the HR world, and we certainly do not close off what is happening in the private sector, but the public sector does have a different flavour to it and we have to put our HR systems and processes in that context. The CHAIR: Using that term “HR”, in the public sector, do you see the role of the Public Sector Commissioner as really the head of HR for the public sector? Mr Wauchope: Certainly the Public Sector Commissioner has a responsibility for the development of the public sector, and that goes to things like human resources management where you would see a lot of this taking place; so, the answer is that we certainly have a strong role in developing the HR function for agencies to have in their own agencies. For example, we run a program called FOGHR—Foundations of Government HR—which brings in the HR practitioners across the sector and they run through a 12-month program and they get a cert IV at the end of that, so we are very much involved in that side of things. Mr M.H. TAYLOR: Do you believe that there are clearly defined consequences for not achieving KPIs either at CEO level or below? How does that get endorsed? How do you go about actually achieving the implementation of consequences? My understanding is that there is almost a common belief that if a KPI is not met, there is not necessarily a consequence to that, and there is a cultural flow-on effect as a result throughout the public sector. I am curious about your comments on whether there are real consequences for not achieving KPIs and how they are implemented?


Mr Wauchope: I think there are, ultimately. The point I made earlier is that some of it is not done in a timely way. Eventually, failure to meet key things for ministers will lead to a loss of confidence and that would then lead to—possibly the ultimate consequence would be losing the job. I think it occurs. The point I was making earlier is that I do not think some of that happens early enough. Sometimes that could be preventable if there was early intervention. Mr M.H. TAYLOR: In practice, does it occur enough to create a real threat to not achieving the KPI? There seems to be some anecdotal evidence that if you do not achieve your KPI, then there is no real consequence and that culturally flows down through the public sector. Mr Wauchope: No, I would not agree with that. My experience with the CEOs in the state public sector is that they are highly committed to meeting the outcomes that they are required to meet, often under difficult circumstances, obviously with the odd exception. But I think that they show great leadership to the people who work for them. I do not think that is the issue at all. The CHAIR: Having worked in the federal public sector, there were performance management processes in place but they were not being followed. The number of people who were shifted into unattached roles or unallocated roles because they were not performing their job, and it was far easier to backfill them with someone who could then deal with the issue, was really strong in the federal public service. I cannot say that for WA, but I am concerned that it may exist. Further to that point, can the public sector standards or the approved procedures be made more explicit to improve the CEO performance assessment processes? Mr Volaric: Mr Chair, I certainly believe that the current approved procedure is fairly detailed in terms of the expectations of the framework and what is required. As with any performance agreement framework or any performance agreement model, it is not so much the template and it is not so much the model that is in place; it is the practical application of it, so it entails both parties entering into discussions about performance and issues. The approved procedure that we currently have in that regard identifies issues that CEOs and responsible authorities should consider in undertaking the performance agreement framework. We are fairly detailed in terms of the sorts of things that they would need to do to complete a performance agreement. I am not necessarily concerned that there is not enough detail; there is not enough information to provide the parties with the practical detail to undertake that framework. Mr Lightowlers: Can I add a comment? The act, particularly in relation to CEOs, is fairly blunt. Section 49 says that the CEO can be removed from office by the governor, full stop. There is no cause required, so no grounds need to be made out for the removal of a CEO. Section 52 says that CEOs cannot litigate their employment. Not only can you be removed without notice, without cause and without compensation, but also you have no recourse either. It is a pretty blunt weapon, ultimately, and I think that is why, as the commissioner says, most CEOs will come around to saying, “I would be better to go before I am tossed.” [10.50 am] Mr W.J. JOHNSTON: It is inevitable, is it not, apart from serious wilful misconduct? Most employees resign as well. Indeed, in the senior levels in the private sector there are plenty of managers who get moved on to explore their future career opportunities with a six-month payout, or something, rather than being told that they are sacked. You have already given the evidence that that has never happened. Mr Wauchope: No. Mr M.H. TAYLOR: How often are you approached by CEOs to assist in the application of discipline around KPIs within their departments, and to what effect do you have involvement in that respect? Mr Wauchope: I missed the first part of the question.


Mr M.H. TAYLOR: I am wondering how often you get approached by CEOs to assist with the application of discipline around KPIs within their departments. Do you get approached often by CEOs saying, “Can you please help? I have got an issue around the application of discipline of KPIs”? How do you respond in those cases? Mr Wauchope: I am not sure I understand the question. We get approached by agencies frequently, agency support being one of the divisions that we have to assist on a range of matters. It could be around the fact that they have a particular problem in the department at the time that they might want to solve by a restructure of the organisation. Sometimes there might be an issue that has arisen—you mentioned the word “discipline”; that is what I am focussing on—around an issue of discipline in their agency that they do not feel that they can take on themselves, either because it is too sensitive and might be too high in the organisation—it might be somebody who reports to them—or they do not have the capacity. Some of the smaller organisations simply do not have the skills to do it. We certainly get involved in helping agencies do that. Almost always, if we are requested to assist, we would and we do. Mr M.H. TAYLOR: Is that a frequent occurrence? Mr Wauchope: Often enough. The CHAIR: Has that been some of the problem? Mr Volaric: I think it is fair to say that it is pretty frequent. We have a small unit that would deal with a lot of the disciplinary matters that the commissioner has mentioned, and they are kept fairly busy. Mr M.H. TAYLOR: The resolution of those issues, can you comment on that? Mr Wauchope: Sometimes it is simply issues like poor governance, and redesigning the governance arrangements solves the problem. Sometimes it is a genuine disciplinary matter and the act has particular consequences there. What we did do in the changes to the legislation in 2010 was to provide for greater flexibility in how CEOs might deal with some of those issues. There was a lot of very minor HR stuff at times, which was getting elevated to disciplinary matters because CEOs felt they had no other alternative. The changes in 2010 provided for improvement actions, which enabled CEOs to say, “Okay, I’m not going to commence a disciplinary process here, but you’re going to get counselling and you’re going to go off and do this particular training.” So there is now more flexibility for CEOs to manage the problem without elevating it to a formal disciplinary process. The CHAIR: I think we will conclude around the performance management aspects and move into more accountability framework and reporting requirements. The transitional provision of the act, schedule 7, clause 2(2), confirmed your appointment as Public Sector Commissioner for a term of five years. Can you confirm the commencement date of your appointment under this provision? Mr Wauchope: It is 1 December 2010. The CHAIR: Under section 17(1), your position is appointed by the Governor on the recommendation of the Premier in his capacity as minister responsible for administering the act. Can you confirm whether a job description form and formal selection criteria had been established for the position of Public Sector Commissioner? Mr Wauchope: The functions and responsibilities of the commissioner’s role are set out in the legislation. Because of the transitional arrangements, the position was not advertised. If it gets to that stage where a job is advertised, it may well be that a JDF is part of that process, but it has not been an issue at this point in time. The CHAIR: Under section 4(6) of the act, you are exempt from the appointment, reappointment and performance management provisions applicable to other CEOs under part 3. Is your position subject to a performance management agreement and review? If so, how is your performance


agreement established? Who conducts your performance review and how often are they conducted? Is your performance measured against a set of KPIs? If so, could you describe those KPIs or, if preferable, would you be prepared to provide the committee with a copy of your KPIs on the understanding that we will treat the document as closed evidence? Mr Wauchope: Thank you, Chair. The Public Sector Commissioner is not required to have a performance agreement, and I understand this is pretty well the same that applies to the Ombudsman and the Auditor General. The agreed set of KPIs are those that I referred to earlier, which are the ones that are developed with Treasury as part of the budget process, and they are on the public record—although, I think the current budget process is not at this stage. The efficiency and effectiveness indicators are audited annually by the Auditor General. So, those are subject to audit in the same way as any other CEO’s are. I also, like any other CEO, have a resource agreement that I am required to sign as part of that budget process. I also provide the Premier annually, in his role as minister for public sector management, with a statement of intent, which outlines the priorities that I intend to pursue over the next 12 months, and invite any comment or views on his behalf. So, there is an indicator of what the commission will be undertaking as part of its 12-month program. Mr W.J. JOHNSTON: You specified that the Auditor General and the Ombudsman were the examples of officers who are in the same position as you in having less performance agreements et cetera. They are officers of the Parliament. Do you have a view about whether the Public Sector Commissioner should be an officer of the Parliament? Mr Wauchope: I do not, no. It came up for discussion previously—I think it was probably an appearance before other committees that may have raised that—but the answer is I do not have a particular view. The CHAIR: In the event that you seek reappointment in 2015, is the process that follows similar to that for departmental CEOs under section 46, with the exception being that the Premier makes the recommendation for your reappointment to the Governor? Have you been advised of the factors that will be taken into account when considering your reappointment? Is the reappointment contingent upon the satisfaction of performance benchmarks linked to KPIs? Mr Wauchope: I imagine this will be a matter for discussion with the Premier closer to the time, but, clearly, the discharge of the statutory functions will be one consideration I would think he would have regard for. That conversation has not been had at this stage; closer to the time, obviously it will. Mr B.S. WYATT: In a hypothetical situation, if you decide you are not going to seek reappointment—at the end of next year, I think—what would be the process to replace you? Who would take over that role to replace you in the role of commissioner? Mr Wauchope: Well, it would be the responsibility of the Premier and he would probably—I am speculating—have his department, I guess it would be Premier and Cabinet, undertake the recruitment process. I have not had that discussion, so I am merely speculating. Mr B.S. WYATT: Would you presume that would also be a similar process where an advertised short list is provided to the Premier as per a CEO of another government department? Mr Wauchope: Can I go back in time to when the previous Public Sector Standards Commissioners were appointed. Certainly, at least one or two of them went through that process. In fact, I think the last two before me went through a formal selection process. I can confirm that. I can come back to you and can confirm that, but I am pretty sure that is the case. Part of the process, of course, in the appointment would be consultation with the parliamentary leaders—the leaders of the parliamentary party. So, whatever processes apply, statutorily, the Premier would be required to consult the Leader of the Opposition, the Leader of the National Party.


The CHAIR: Thank you. Given your exemptions from the disciplinary process under parts 3, 5 and 6 of the act, what disciplinary processes are you subject to other than the suspension or removal from office provisions under section 18? [11.00 am] Mr Wauchope: I am subject to sections 8 and 9 of the Public Sector Management Act, which basically go to things around personal behaviour and conduct. I am also subject to the oversight of the CCC and, obviously, any other misconduct matter that went into matters of criminality, the police. But, obviously, the CCC and the requirement to comply with sections 8 and 9 of the Public Sector Management Act. Mr B.S. WYATT: I just want to pose a similar question as I did before. We discussed earlier on the situation when a new minister comes in and for some reason the personal relation between the new minister and the director general is dysfunctional. You explained what processes would take place. What would happen if a similar thing occurred between the Public Sector Commissioner and a new Premier? I mean, section 18(4) says the Governor can suspend you from office if he determines you have shown yourself “incompetent properly to perform”. Now what I am talking about does not reflect on competence; it reflects on, for whatever reason, a personal relationship between the Premier and the commissioner of the day. How would that be handled? Mr Wauchope: Well, I guess it would be handled with delicacy! As I have been saying with a lot of the others, it would certainly be a conversation and, hopefully, a mature arrangement. I mean, it is a different role from the director general–type role, so I think it would have to be addressed differently. But, yes, seriously speaking, I have not given it any consideration. Mr W.J. JOHNSTON: In 1988, when the government changed in New South Wales, Gerry Gleeson was the head of the Department of Premier and Cabinet, which included most of the functions that you have. On the day that Nick Greiner arrived in office, Gerry Gleeson famously went in with his resignation letter already signed. Nick Greiner, of course, turned down the resignation and asked him to stay for two years. Is that the sort of transition that you might imagine or do you think that you would have a conversation and work it out afterwards? Mr Wauchope: One of the first things I would be doing with an incoming Premier, of whatever persuasion, would be to brief them on the sector and the issues. As far as I am concerned that would be an introduction to any other conversation. Mr B.S. WYATT: Moving into committee oversights and noting your annual appearance before the Assembly estimates committee: What is the extent of your involvement with other oversight committees? How often do you meet with the upper house Standing Committee on Public Administration? What matters are raised during those appearances? Mr Wauchope: I will be seeking some advice on this. I have met with the public administration committee on a number of occasions, but they have been private hearings, so I am not sure if I am at liberty to disclose what was discussed. The CHAIR: No. Mr Wauchope: Okay, but I have met with them on three occasions. I have also been asked to attend a meeting of the Economics and Industry Standing Committee in relation to the Kimberley Ultramarathon. I cannot remember which committee it was, but I appeared before a committee dealing with the One Movement inquiry. I was recently requested by the Education and Health Standing Committee to respond to some queries in relation to the Fiona Stanley inquiry. My submission, or responses, is on the record—the website of the department. Mr W.J. JOHNSTON: You just appeared in front of an upper house committee looking at that? Mr Wauchope: Oh, sorry, I beg your pardon, yes, twice—the Standing Committee on Legislation.


Mr W.J. JOHNSTON: And that transcript is public as well? Mr Wauchope: Yes. The CHAIR: Are there any committees that you present to more about the operation of your department, as opposed to your input to other departments? Mr Wauchope: I guess the obvious one is the assembly estimates committee; we get our hour, hour and a half, following Premier and Cabinet, and we are asked a number of questions there. The CHAIR: Okay, we will just keep moving forward. Other than the provisions of section 22D of the act, are there any guidelines that determine what must be included in your annual report to Parliament? Mr Wauchope: No, it is pretty well open to me to determine what is provided as it relates to state of the public sector compliance with principle standards, commissioner’s functions et cetera. What I have endeavoured to try and do is to use the state of the sector report to actually provide some positive stories around the public sector, and change it from simply a compliance report to a report that has a bit of a narrative about what the public sector is doing and what the challenges are going to be for the future. That is not dissimilar to what other public sector commissions across Australia do. Mr W.J. JOHNSTON: Can I just ask a question arising from that answer? A couple of years ago the state of the sector report included, sort of, a prediction of how the sector might need to grow into the future, and I do not think that was in the most recent report. Mr Wauchope: No, what we try to do is to do some thematic changes from year to year. As a group we talk before we embark on the process; and we are actually into that process now of talking about what it is we want to get out there this year. Mr W.J. JOHNSTON: You are not saying that the issues that you raised a couple of years ago are no longer relevant, simply that they were not an issue for this report? Mr Wauchope: No. That we wanted to move on to some other issues, yes. The CHAIR: In what circumstances would you prepare a report under section 22E of the act? Mr Wauchope: If I formed a view that a matter consistent with sections 22D(a), (b) and (c) of such significance to involve a matter of public interest that warranted reporting to Parliament prior to the publishing of my annual report. In other words, if there was something happening now that perhaps needed to be put out there, I would do that. The CHAIR: Can you provide the committee with a list of the reports that you have prepared under section 22E since the amendment to the act, effective 2010? Mr Wauchope: The ones I have here are the review of the National Trust WA, February 2012; “Investigation Report Matter involving the report titled ‘Orchestrating Lives: An Evaluation of the Early Intervention Conductive Education Trial Conducted at Carson Street School”, August 2011— Mr B.S. WYATT: I read that one. Mr Wauchope: You know something about that? “Assessment Report Alleged Breaches of the Code of Ethics by Ministerial Officers”, March 2012; “Report on the examination of the relation between Office of the former Minister for Training and the Department of Training and Workforce Development”, September 2013; and, the most recent one, “More than a matter of trust: an examination of integrity checking controls in recruitment and employee induction processes”, November 2013. Mr W.J. JOHNSTON: I have a question arising from that. The report regarding the communication between the former Minister for Training and the department, there was an FOI request made to the office of the commissioner at the time and a number of documents were


exempted on the basis that they may disclose the investigation of a criminal matter or a potential criminal matter; I am just wondering what that was? Mr Wauchope: I think we have answered that question before. Mr W.J. JOHNSTON: Well, no. Not in my view anyway. Mr Wauchope: Look, I think the report I tabled in August last year says it all. There were two stages to it. The second stage involved an examination of the Department of Training and Workforce Development in terms of how it was going following its creation and whether or not it was structurally operating as it should do. The first part of it was when there was an issue that was apparent between the department and the minister—I have to say that is not uncommon, it can occur—I recommended a number of courses of action to the Department of the Premier and Cabinet, which is responsible for managing ministerial offices, and it reviewed the section 74 communication agreement. In other words; is that tight enough, is it actually part of the problem? The review of the systems and the procedures in the minister’s office to determine how the communication may be improved, conduct a refresher of the accountable and ethical decision-making training for ministerial officers and there was an additional line item, which was subject to the minister’s and director-general’s approval, that placed two departmental officers in the minister’s office for a limited time to assist with some of the workflow. [11.10 am] We subsequently recommended an examination, as I said, of the Department of Training and Workforce Development, which we undertook, Mr Volaric, I think, undertook and that was completed. But given the issues that had arisen in the public interest I decided ultimately to put that together in a report and table it in Parliament in August last year. Mr W.J. JOHNSTON: There was published on the Good Oil website a series of SMS messages between the former chief of staff and yourself. I am wondering, firstly, were they actually texts or the messages that were forwarded? Mr Wauchope: I have not looked at the website, so I do not know. Mr W.J. JOHNSTON: I wonder then, is it a good idea to communicate on those important issues via a text message whereby a document is not created that would have been subject to FOI? If it had been an email, the email would have been discovered by the FOI process, although, of course, it may be that the content would be exempt. But the document itself would have been discovered, whereas an SMS, apparently, is not thought to be covered by the FOI act. Mr Wauchope: Look, I have a former FOI commissioner sitting on my right here, who could probably answer the FOI issues much better than me. I think you will find that texting and other forms of communications is how the world is running these days. The rules surrounding that are slow to catch up with it. If someone texts you; normally you will respond by text, rather than wandering out to try and find a computer to send an email. Mr W.J. JOHNSTON: You do not have a smartphone? Mr Wauchope: I do. Mr W.J. JOHNSTON: So you could have actually replied as an email? Mr Wauchope: I am not sure that I had it at that stage. The CHAIR: We will keep moving. How often do you meet with the Premier in his capacity as the minister responsible for administering the act? Can you give an indication as to the general matters that may be discussed at such meetings? Mr Wauchope: Chair, I had a look at my diary for last year and it indicated nine scheduled meetings. I cannot be certain that all of those meetings took place, but I would have to go and check with his office. The sorts of issues that we talk about depend on what is happening at the time. But


last year, I remember, it was post-election. It was a short year in the sense that you had the January and February caretaker period. The discussions were around these types of issues—the machinery of government changes that he was wishing to put in place post-election; upcoming CEO appointments, upcoming CEO reappointments; the legislative program going forward, such as any further changes to the Public Sector Management Act—whether or not the lobbyist bill was going to be built on; changes to the CCC legislation and the Workforce Reform Bill. We talked about the Premier’s Awards, which is an annual event held in November. We talked about some of the proposed initiatives that I had, as commissioner, and broadly any other public sector issues. That is the flavour of the sorts of things that get discussed. Mr W.J. JOHNSTON: Are those meetings minuted? Mr Wauchope: No. Mr W.J. JOHNSTON: Do you think it is good practice not to minute meetings with the Premier? Mr Wauchope: Generally speaking, I will make a note myself, but they are not formal. I mean, for the purpose of if there is follow-up stuff, I need to know what I have to do. Mr W.J. JOHNSTON: Do you think it would be better to have them minuted? Mr Wauchope: On some matters it might be, yes. But generally speaking, these are the sorts of conversations that you have fairly informally. We do not walk in with an agenda, necessarily. Mr W.J. JOHNSTON: Yes, but I mean if you talking about restructuring the public service and the machinery of government, surely there should be some notes taken that make sure you understand what is happening. Mr Wauchope: Yes, well certainly there are notes taken about what has got to be done in relation to that. The CHAIR: Just moving from the Premier to dealing with the ministers, can you provide examples of the sorts of matters that you advised ministers under section 21A(b) of the act? Mr Wauchope: Some broad categories are agency governance and accountability; board governance and accountability, which is an issue that is an increasing focus for us; better practice about how their agencies might do things differently; efficiency and effectiveness in terms of, again, how the operations of the agencies might be better handled; the machinery of government changes as it applies to their particular portfolio; and functional reviews such as the ones that we are currently doing around the Equal Opportunity Commission and the one we did last year or the year before on the children’s commissioner’s functions. They are the sorts of things that we might talk to ministers about. The CHAIR: If I could just ask, coming back to the comments you made earlier, you used the term “efficiency and effectiveness”. Through the budget process, the Treasury sets KPIs but they are done separately to the KPIs that you set from the performance agreements. Is there potentially a gap in the performance management of CEOs when you talk about this efficiency and effectiveness in the delivery of budgets? I would imagine delivery to your budget would be a key KPI and that you would still want them to be held to account—or hold them to account—in a performance agreement. I get a bit confused as to what the Treasury is setting and what you are setting there. Mr Wauchope: Again, section 7 of the act sets out the public administration and management principles. Against the act that I have responsibility for administering, 7(g) talks about proper standards of financial management and accountability to be maintained at all times. So, again, it is actually part of their obligation under the Public Sector Management Act as well as what they might be required to do under the FMA in relation to the Treasury function. The CHAIR: So they might be the subheadings you are talking about as far as KPIs the Treasury set, but the overall outcome is delivering the budget outcome?


Mr Wauchope: The budget responsibility—the management of that—lies with Treasury, and it always has. But if there was a failing—or a significant failing of an agency—that would be something that I would certainly have regard for in terms of overall performance. Mr W.J. JOHNSTON: Famously, education and health always blow their budget. Accountability lies with the CEO in education. You have been there for a while, what are the consequences of the fact that she has blown the budget? I am not picking on her, because the previous CEO probably blew their budget, too. Mr Wauchope: I think everyone has regard to context and I think you have probably got to identify them. Those departments in particular are difficult departments in a budget sense with whatever is happening. But you could have a situation where, due to poor management oversight, there was a significant financial failing and I would have thought Treasury would pick that up earlier than what we would because they are the people who have monthly contact with those agencies. The CHAIR: Can I just take that up because it is not about education but about the role you play when things like that are happening. If education has gone over a number of times, can you describe what your team has done with regard to that, because it has been apparent every year where education has this issue? Do you just accept that it is over? Mr Wauchope: I think I need to point out that I am not involved in the budget process—the EERC process. Those relationships are controlled through the cabinet, the budget subcommittee, Treasury and the agency. We are not involved in that at all. The CHAIR: Yes, but the broader question is: should you be? Mr Wauchope: It is debatable. The CHAIR: Given that you appoint and set the performance management processes, is there something that perhaps we should be considering that you should have greater authority or ability to act on? Mr Wauchope: I accept there could be an argument for that. Mr B.S. Wyatt: Just while we are using education as an example, has there been—again, I will take it since the 2010 amendments—complaints from the minister about KPIs around meeting your budget targets? Have ministers taken it up with you as a lack of performance from the director general, whether it is education or any other? Mr Wauchope: In relation to budget management? Mr B.S. Wyatt: Yes. [11.20 am] Mr Wauchope: Not that I recall. But if I can just add, I think that is because they see that as a Treasury issue. The CHAIR: It has just got me intrigued. I am learning. There are probably some more questions I have on that, but I need to get my head around that. Mr W.J. JOHNSTON: It is slightly off the topic we are talking about, but in my mind it is actually connected, this thing that the minister can only talk to their own DG. So the Treasurer can only speak to the Under Treasurer, but the budget problem might be in a different department. Is that an issue that anyone raises with you? Mr Wauchope: No, I think the process through the EERC process actually addresses that because agencies and their ministers come in and there is Treasury and the Treasurer and the other ministers who sit on the EERC, and they meet often enough, so I think that the process is probably a pretty good one in terms of those sorts of conversations that need to be had, and I am pretty sure some of those conversations are robust.


Mr M.H. TAYLOR: You mean that that system is adequate? Mr Wauchope: I think it works pretty well; nothing is perfect. But it has been pretty well a system that has run under both governments for some period of time. It is pretty time consuming. It takes up a lot of time of the ministers and it takes up a lot of time of the senior Treasury officers but it does exactly what you are looking for. It actually brings the agency, the ministers, and the Treasurer and the Premier altogether in one. Mr W.J. JOHNSTON: On this topic—I am trying to get my words together now—you are saying there is a separate process for the budget and that is not something that you have been concerned about, but

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